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

                                      FORM 10-K

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

     FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1996

                                          OR

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

     For the transition period from                 to                   
                                   -----------------  -------------------
                            Commission file number 0-10621
                                                  --------

                               AMERICAN ECO CORPORATION
                ------------------------------------------------------
                (Exact name of Registrant as specified in its charter)

           ONTARIO, CANADA                                52-1742490
     -------------------------------              --------------------
        (State or other jurisdiction                            (I.R.S. Employer
     of incorporation or organization)                       Identification No.)

                        11011 JONES ROAD, HOUSTON, TEXAS 77070     
                     -------------------------------------------
                       (Address of principal executive offices)

                                    (281) 774-7000                       
                  --------------------------------------------------
                 Registrant's telephone number, including area code:

     Securities registered pursuant to Section 12(b) of the Act.
                                             Name of each exchange on
               Title of each class                which registered
          ------------------------------     -------------------------
                     None                                   None

     Securities registered pursuant to Section 12(g) of the Act.

                             COMMON SHARES, NO PAR VALUE
                             ----------------------------
                                   (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 the 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 was $87,347,189 at March 17, 1997.

          At May 2, 1997, the number of Common Shares outstanding of the
     Registrant was 14,787,246.

          Documents Incorporated in Reference:  None

<PAGE> 

                                      FORM 10-K

                                  TABLE OF CONTENTS

                                                                          Page


        PART I

             Item 1.  Business  . . . . . . . . . . . . . . . . . . . . .    3

             Item 2.  Properties  . . . . . . . . . . . . . . . . . . . .   18

             Item 3.  Legal Proceedings . . . . . . . . . . . . . . . . .   19
             Item 4.   Submission of Matters to a Vote of 
                       Security Holders . . . . . . . . . . . . . . . . .   20


        PART II

             Item 5.   Market for Registrant's Common Equity 
                       and Related Stockholder Matters  . . . . . . . . .   21

             Item 6.  Selected Financial Data . . . . . . . . . . . . . .   23

             Item 7.  Management's Discussion and Analysis 
                      of Financial Condition and Results 
                      of Operations . . . . . . . . . . . . . . . . . . .   24

             Item 8.  Financial Statements and Supplementary Data . . . .   30

             Item 9.  Changes in and Disagreements with Accountants
                        on Accounting and Financial Disclosure  . . . . .   52


        PART III

             Item 10.  Directors and Executive Officers of the
                       Registrant . . . . . . . . . . . . . . . . . . . .   53

             Item 11.  Executive Compensation . . . . . . . . . . . . . .   57

             Item 12.  Security Ownership of Certain Beneficial
                       Owners and Management  . . . . . . . . . . . . . .   61

             Item 13.  Certain Relationships and Related
                        Transactions  . . . . . . . . . . . . . . . . . .   62


        PART IV
             Item 14.  Exhibits, Financial Statement Schedules, and
                       Reports on Form 8-K  . . . . . . . . . . . . . . .   63

					-2-


   <PAGE> 

                                        PART I

        Unless otherwise indicated all dollar amounts are in United States
        dollars.  For a statement regarding forward looking statements
        contained herein, see "Item 7.  Management's Discussion and Analysis
        of Results of Operations and Financial Condition Information Regarding
        Forward Looking Statements."

        ITEM 1.   BUSINESS

        GENERAL

             American  Eco Corporation (the "Company") provides industrial
        support services to the petroleum and petrochemical refining, power
        generation and forest products industries in the United States and
        Canada.  Within this general line of business, the Company provides
        industrial maintenance, environmental remediation and specialty
        fabrication services.  The Company's environmental services include
        hazardous material remediation and abatement, emergency hazardous
        spill containment and cleanup and hazardous material packaging and
        transportation. The Company's industrial maintenance services include
        the repair, maintenance and modification of boilers, pressure vessels
        and tubing used in industrial facilities as well as the provision of
        project management and engineering services.  The Company's specialty
        fabrication services typically involve the construction of custom
        steel and metal alloy products used in refineries, pulp mills and
        offshore oil drilling platforms.

             Management believes that several factors characterize the market
        for industrial support services.  The industries served by the Company
        increasingly hire independent contractors to provide industrial
        support services that had once been provided by their internal
        maintenance employees.  In addition, the market for environmental
        remediation services has been characterized by level to low growth
        over the past five years which has contributed to a general
        consolidation in the market as small, regional environmental service
        providers have been acquired or go out of business.  By expanding its
        capabilities and geographic presence through acquisitions and internal
        growth, the Company hopes to capitalize on these market trends and
        become a leading single-source industrial support service provider in
        the United States and Canada.


             At March 31, 1997, the Company operated primarily through the
        following first and second tier subsidiaries:  Eco Environmental,
        Inc., a Delaware corporation ("Eco Environmental");  C.A. Turner
        Construction Company, a Delaware corporation ("C.A. Turner" and,
        together with Action Contract Services, Inc., a Delaware corporation, 
        the "Turner Group"); Cambridge Construction Services Corp., a Nevada
        corporation ("Cambridge"); Lake Charles Construction Company, a
        Louisiana corporation ("Lake Charles Construction" and, together with
        its wholly-owned subsidiaries, the "Lake Charles Group");
        Environmental Evolutions, Inc., a Texas corporation ("Environmental
        Evolutions" or "EE"); Industra Service Corporation, a British
        Columbia, Canada corporation ("Industra Service"); MM Industra, Ltd.,
        a Nova Scotia, Canada corporation ("MM Industra"); United Eco Systems,
        Inc., a  Delaware corporation ("United Eco"); Separation and Recovery
        Systems, Inc., a Nevada corporation ("SRS"); and Chempower, Inc., an
        Ohio corporation ("Chempower").

             The following table lists the Company's subsidiaries by business
        segment:

            INDUSTRIAL        ENVIRONMENTAL          SPECIALTY
            MAINTENANCE        REMEDIATION          FABRICATION
             SERVICES            SERVICES             SERVICES
           ------------        ------------          ----------
           Turner Group     Eco Environmental       Turner Group
           Lake Charles             EE           Lake Charles Group
               Group            United Eco          MM Industra
         Industra Service       Chempower         Industra Service
             Chempower             SRS               Chempower
                SRS             Cambridge
                             Industra Service


                                         -3-

   <PAGE> 


        DEVELOPMENT OF THE BUSINESS

             The Company was organized under the laws of Ontario, Canada in
        1969 and entered the environmental business in 1987 under the name ECO
        Corp.  Between 1987 and 1992, the Company developed and marketed
        certain environmental technologies, including commercial and
        residential food waste composting systems.  The Company discontinued
        its composter operations, which resulted in the eventual write-down or
        sale of substantially all of the assets associated with such
        operations by 1993.  The Company continues to license these
        environmental technologies to other companies, but revenues derived
        from the licensing of such environmental technologies accounted for
        less than one percent of the Company's total revenues during fiscal
        1996.

             The Company has entered its current lines of business and has
        grown substantially through the acquisition of other companies.  The
        Company acquired nine companies between fiscal 1993 and fiscal 1996,
        and its revenues grew from $7.6 million to $119.5 million during such
        period.

             The Company first entered the environmental remediation business
        in fiscal 1993, with the acquisition of Eco Environmental, a provider
        of such services based in Houston, Texas.  Subsequent to this
        acquisition, Michael McGinnis, who had been the President of Eco
        Environmental, became President and Chief Executive Officer of the
        Company.

             In November 1993, the Company purchased the operating assets and
        businesses of the Turner Group, which is located in Port Arthur, Texas
        and provides construction, maintenance, demolition, and industrial
        maintenance services to petroleum and petrochemical refineries along
        the Gulf Coastal region of the United States.  Management believes
        that as a result of the acquisition of the Turner Group, the Company
        is well positioned to provide industrial maintenance services to the
        petroleum and petrochemical refining industry.  The Turner Group has a
        50-year operating history and is located in a region that has the
        largest crude refinery capacities in the United States.

             In June 1994, the Company acquired Cambridge, a construction
        management company located in Dallas, Texas which provides project
        management consulting services to small contractors.

             In July 1995, the Company acquired the Lake Charles Group, a
        construction company located in Lake Charles, Louisiana.  The Lake
        Charles Group commenced operations in 1986 and provides general
        contracting, industrial maintenance, heating and air conditioning and
        industrial sheet metal services to commercial and light industrial
        clients.

             The Company accelerated its acquisition program during fiscal
        1996 by adding five new subsidiaries to the Company.  The Company's
        revenues increased 156% to $119.5 million in fiscal 1996 from $46.6
        million in fiscal 1995, primarily as a result of such acquisitions.

             On January 1, 1996, the Company acquired all of the outstanding
        capital stock of Environmental Evolutions in exchange for 400,000
        shares of the Company's Common Shares, which had a fair market value
        of approximately $2.4 million.  Environmental Evolutions is based in
        Corpus Christi, Texas and provides hazardous spill response services
        to the pipeline and power generation industries located primarily
        along the Gulf Coast of Texas.

             On January 31, 1996, the Company acquired certain assets of
        Petrocon Construction Resources, Inc., Petrocon Plant Services, Inc.
        and Petrocon Instrumentation and Electrical Inc., which provided
        industrial support services to the petroleum and petrochemical
        refining and forest products industries from facilities located in
        Beaumont, Texas.  The Company transferred these operations to the
        Turner Group.

                                         -4-


   <PAGE> 


             Effective May 31, 1996, the Company acquired United Eco, a
        construction company which is headquartered in High Point, North
        Carolina and provides environmental contracting, remediation, waste
        water, ground contamination treatment and recycling services to
        clients in the eastern and southeastern regions of the United States. 
        United Eco operates two thermal desorption treatment facilities.  The
        consideration for United Eco consisted of 315,000 shares of the
        Company's Common Shares, which had a fair market value of
        approximately $2.5 million.

             Effective July 1, 1996, the Company acquired all of the issued
        and outstanding shares of capital stock of SRS, which is based in
        Irvine, California.  SRS manufactures and distributes a proprietary
        line of Sarex oil filtration and separation systems.  There are
        approximately 30,000 such systems currently installed in one-half of
        the world's oil and petrochemical tankers as well as in major oil
        refineries.  The Company hopes that the addition of SRS's proprietary
        technology and waste treatment expertise will enhance its ability to
        win contract bids for turnkey projects as aging petroleum refineries
        are replaced or upgraded.  The Company acquired the capital stock of
        SRS by exchanging 736,667 shares of the Company's Common Shares, which
        had a fair market value of $5.6 million.

             Effective July 22, 1996, the Company acquired Industra Service,
        which is based in Vancouver, British Columbia, Canada.  Industra
        Service is an industrial engineering and environmental services
        company which provides industrial support services to the power
        generation, petroleum and petrochemical refining and forest products
        industries principally in western Canada and the northwestern United
        States.  The Company effected a take-over bid for Industra Service by
        exchanging 1,486,997 shares of the Company's Common Shares, which had
        a fair market value of $10.7 million, for 94% of the outstanding
        shares of Industra common stock.  In December 1996, the Company
        received authorization to acquire the remaining 6% shares of Industra
        Service capital stock, pursuant to an Arrangement Agreement.

             On September 3, 1996, the Company acquired certain assets of M &
        M Manufacturing Limited Partnership of Dartmouth, Nova Scotia, which
        provided pipefitting, assembling, machining and fabrication services
        to the petroleum and petrochemical refining, power generation, forest
        products and offshore oil exploration industries.  The Company
        transferred the operations of M & M Manufacturing Limited Partnership
        to MM Industra, a newly formed, wholly-owned subsidiary of the
        Company.  Prior to their acquisition by the Company, the operations of
        M & M Manufacturing Limited Partnership had been idle and in
        receivership.  The Province of Nova Scotia awarded the Company its bid
        to purchase and operate the assets of the bankrupt company, and MM
        Industra commenced operations in October 1996.

             On March 4, 1997, the Company completed its acquisition of
        Chempower, a manufacturing, construction and environmental services
        company for the power generation and chemical processing industries,
        headquartered in Akron, Ohio.  A newly formed, wholly-owned subsidiary
        of the Company merged with and into Chempower, and Chempower became a
        wholly-owned subsidiary of the Company.  As a result of the merger,
        all of the shareholders of Chempower, other than two principal
        shareholders (the "Principal Shareholders"), received $6.20 in cash
        for each of their Chempower shares, and all Chempower optionholders
        received, in cash, the difference between $6.20 and the exercise price
        per share for their outstanding options.  The Principal Shareholders
        received a portion of the merger consideration in cash and the balance
        in the form of a $15.9 million promissory note of Chempower (the
        "Shareholder Note"), payable on February 28, 1998.  The Shareholder
        Note was secured by all of Chempower's assets, subject to the prior
        security interest of Chempower's bank, and guaranteed by the Company,
        which guaranty was secured by a pledge of its Chempower shares.  See
        "Item 7.  Management's Discussion and Analysis of Financial Condition
        and Results of Operations."  The acquisition was financed through an
        increase in the $15.0 million Chempower bank line of credit and
        borrowings of approximately $6 million plus the sale by the Company of
        $15.0 million in 9.5% convertible debentures due 2007.  Pending
        repayment of the Shareholder Note, certain restrictions were imposed
        upon Chempower's business.  See "Item 5.  Market for Registrant's
        Common Equity and Related Stockholder matters -- Private Placements of
        Common Shares."  Based on the total 7,565,113 Chempower shares
        outstanding on the effective date of the merger and the amounts due to
        Chempower optionholders, the total acquisition cost was approximately
        $50.0 million.

                                         -5-

   <PAGE> 

             The following table sets forth the years in which the Company
        acquired its principal operating subsidiaries and the market segments
        served by such subsidiaries.

                       INDUSTRIAL     ENVIRONMENTAL      SPECIALTY
                      MAINTENANCE       REMEDIATION    FABRICATION
            YEAR         SERVICES         SERVICES       SERVICES
            -----     -----------     --------------   -----------

            1992                      Eco
                                      Environmental

            1993      Turner Group                     Turner Group


            1994                      Cambridge


            1995      Lake Charles                     Lake Charles
                      Group                            Group

            1996      Industra        Industra         Industra
                      Service         Service          Service
                      SRS             SRS              MM Industra
                                      Environmental
                                      Evolution
                                      United Eco


            1997      Chempower       Chempower        Chempower

             The Company has made a strategic investment in EIF Holdings, Inc.
        ("EIF"), an asbestos and lead removal company based in California
        whose common stock is traded over the counter through The Nasdaq
        Bulletin Board under the trading symbol "EIFH."  On November 20, 1996,
        the Company completed its purchase of 4,000,000 shares of EIF common
        stock from Julbin International Ltd. for $70,000 in cash and 300,000
        Common Shares of the Company pursuant to a Purchase Agreement, dated
        March 7, 1996.  The Company purchased an additional 4,600,000 shares
        of EIF common stock in open market transactions effected in June 1996
        and 200,000 shares of EIF common stock in November 1996 in connection
        with the settlement of a legal dispute with a subsidiary of EIF.  At
        March 31, 1997, the Company owned 8,800,000 shares of EIF common
        stock, representing approximately 36% of the outstanding shares.  The
        Company also entered into a stock purchase agreement with EIF pursuant
        to which the Company will purchase an additional 10,000,000 shares of
        EIF common stock for $1,000,000, which purchase is conditioned upon
        the shareholders of EIF authorizing an increase in EIF's authorized
        capital stock.  When completed the purchase would result in the
        Company owning approximately 53% of the outstanding shares of EIF
        common stock.  It is anticipated that the shareholders of EIF will
        vote upon the increase in authorized capital stock at a shareholders
        meeting to be held sometime in fiscal 1997.  There can be no assurance
        that the shareholders of EIF will approve the increase in the number
        of shares of EIF's authorized capital stock.  The Company also has 
        provided a $5,250,000 line of credit to EIF, of which approximately
        $4,908,000 was outstanding at November 30, 1996, and has guaranteed
        certain indebtedness and leases of EIF and its subsidiaries.

             EIF and the Company have agreed that during the interim period
        between the execution and the closing of its purchase of an additional
        10,000,000 shares of EIF common stock, a management team, primarily
        comprised of the Company's managers, will assist in the management of
        EIF's operations.

             In February 1997, the Company signed a letter of intent to form a
        joint venture with CVG International America to provide industrial,
        environmental, engineering and health and safety services to
        Corporacion Venezolana de Guyana.

        CHANGE IN REPORTING STATUS

             Until the filing of this Annual Report on Form 10-K, the Company
        had filed periodic reports with the Securities and Exchange Commission
        (the "SEC") pursuant to the United States securities regulations
        governing foreign private 

					-6-

   <PAGE> 



	issuers.  Foreign issuers are required to file an annual report on 
        Form 20F with the SEC within 180 days after the end of each fiscal 
        year.  In addition, foreign private issuers are not subject to the
        SEC quarterly reporting requirements or proxy rules, but are required
        to file reports on Form 6K whenever a significant public announcement
        is made or a report is filed in accordance with the laws of the 
        issuer's home jurisdiction.  The Company filed quarterly reports 
        that complied with the securities laws of the Province of Ontario 
        under cover of Form 6-K.  As a domestic issuer, the Company will 
        begin to file annual, quarterly and current reports and distribute 
        proxy materials in compliance with United States securities 
        regulations governing domestic issuers.

        OVERVIEW OF BUSINESS AND GEOGRAPHICAL SEGMENTS

             The Company is pursuing a strategy of becoming a single-source,
        industrial support services provider for the petroleum and
        petrochemical refining, power generation and forest products
        industries in the United States and Canada.  Within this general line
        of business, the Company provides industrial maintenance,
        environmental remediation and specialty fabrication services.

             The following table provides information with respect to the
        Company's three principal business segments.

                                     ENVIRONMENTAL   INDUSTRIAL   SPECIALTY
                                      REMEDIATION   MAINTENANCE  FABRICATION
                                        SERVICES      SERVICES     SERVICES
                                       ---------     ----------   ----------
                                                  (In thousands)

     FISCAL 1996
        Contract income from
        customers . . . . . . . . .      $31,897     $86,975          $657
        Operating income  . . . . .        2,118       5,617           218
        Depreciation and
        amortization  . . . . . . .        1,132       1,100             -
        Capital expenditures during
        the year  . . . . . . . . .          516       1,336         6,155
        Identifiable assets . . . .       38,488      28,425         4,865

    FISCAL 1995
        Contract income from customers. . .$   5,362    $41,322      -
        Operating income  . . . . . . . . .      505     2,555       -
       Depreciation and amortization . . .       214       893       -
       Capital expenditures 
        during the year . . . . . . . . . .       54     1,675       -
        Identifiable assets . . . . . . . .    4,636    17,163       -

     FISCAL 1994
         Contract income from customers  . .  $ 8,040   $26,951       -
        Operating income  . . . . . . . . .      451       615       -
        Depreciation and amortization . . .      196       848       -
        Capital expenditures during 
          the year  . . . . . . . . . . . . .       47       686       -
          Identifiable assets . . . . . . . .    5,246    11,447       -

             The acquisition of Industra Service, based in Vancouver, British
        Columbia, and MM Industra, based in Dartmouth, Nova Scotia, increased
        the amount of revenues generated from Canadian operations in fiscal
        1996.  At November 30, 1996, approximately 30% of the Company's
        tangible assets were located in Canada.

                                         -7-

   <PAGE>

             The following table provides information with respect to the
        geographic segmentation of the Company's business.

                                               CANADA    UNITED STATES
                                              --------   --------------
                                                   (IN THOUSANDS)
         FISCAL 1996
  
             Contract income . . . . . . .   $6,509        $113,020
              Operating income  . . . . . .       89           7,864
              Depreciation and 
              amortization  . . . . . . . .      166           2,066
              Capital expenditures during
              the year  . . . . . . . . . .    6,151           1,856
              Identifiable assets . . . . .   20,988          50,789

         FISCAL 1995
              Contract income . . . . . . .        -         $46,684
              Operating income  . . . . . .        -           3,060
              Depreciation and 
              amortization  . . . . . . . .        -           1,107
              Capital expenditures during
              the year  . . . . . . . . . .        -           1,729
              Identifiable assets . . . . .        -          21,799

         FISCAL 1994
              Contract income . . . . . . .        -         $34,991
              Operating income  . . . . . .        -           1,066
              Depreciation and                     -           1,044
              amortization  . . . . . . . .
              Capital expenditures during          -             733
              the year  . . . . . . . . . .
              Identifiable assets . . . . .        -          16,693

             The Company is attempting to cross market its services so that it
        may win single-source, turnkey projects to repair, clean and refurbish
        clients' facilities in the petroleum and petrochemical refining, power
        generation and forest products industries.  Such cross-selling efforts
        have included training the staff and, in particular, the business
        development personnel from each of the Company's acquired subsidiaries
        so that they understand the capabilities of all of the Company's other
        subsidiaries.  During fiscal 1996, SRS, Industra Service and United
        Eco were awarded a contract to construct a facility in New Jersey that
        will treat soils contaminated by hydrocarbons, heavy coal tars and
        polychlorinated biphenyls.  The facility, which is expected to serve
        utilities, environmental contractors and heavy manufacturing
        industries throughout the region, will incorporate remediation
        technologies provided by United Eco and SRS to treat contaminated
        soil.

                                         -8-

   <PAGE> 


        INDUSTRIAL MAINTENANCE SERVICES

             The Company provides industrial maintenance services to clients
        in the petroleum and petrochemical refining, power generation and
        forest products industries through the Turner Group, the Lake Charles
        Group, Industra Service, Chempower and SRS.  The industrial
        maintenance service business segment generated approximately 73% of
        the Company's revenues during fiscal 1996.

        INDUSTRIAL MAINTENANCE SERVICES MARKET
        --------------------------------------

             Petroleum refiners must replace and repair process equipment and
        piping systems on an on-going basis in order to maintain the
        operability and efficiency of their facilities and to ensure that such
        facilities comply with safety and environmental regulations.  Refinery
        maintenance projects vary in scope from routine repairs to major
        capital improvements.  Petroleum refiners must continually make
        routine repairs to equipment and piping systems.  Other repair and
        maintenance projects require the shutdown of operating units or the
        entire refinery.  In addition to routine maintenance, refiners
        undertake capital improvement projects to refurbish their refining
        facilities.  Such projects take from between six months to three years
        to complete depending upon the type, utilization rate and operating
        efficiency of the particular refinery.

             There are approximately 175 operating refineries in the United
        States.  Texas and Louisiana have an aggregate of 50 operating
        refineries and management believes that the Gulf Coastal region of the
        United States accounts for approximately 43% of the United States'
        petrochemical and petroleum refining capacity.  The Company believes
        that the typical refinery in the United States is an aging facility
        that must process petroleum at high utilization rates while complying
        with stringent environmental regulations.  High utilization rates
        accelerate a facility's rate of deterioration and increase the need
        for repair and maintenance work.  The Company also believes that any
        increase in utilization capacity is likely to involve primarily the
        refurbishing and expanding existing facilities due to the high cost
        and environmental opposition associated with the construction of new
        facilities.  In addition, refiners have reduced internal maintenance
        personnel.

             These trends have encouraged refiners to increase their reliance
        on outside contractors which can perform specialized maintenance
        services within strict time constraints, minimizing the downtime
        associated with routine maintenance and major capital expenditure
        programs.  According to HYDROCARBON PROCESSING MAGAZINE, a trade
        publication, refineries in the United States spent $5.7 billion on
        maintenance out of an aggregate of $23.1 billion for operating budgets
        in 1994.  Management estimates that independent contractors currently
        perform approximately half of the maintenance work in the petroleum
        refining industry.

             The power generation industry in the United States has become
        more competitive as the Federal Energy Regulatory Commission begins to
        implement the provisions of the Energy Policy Act of 1992, which
        deregulates the electric power generation industry by allowing
        independent power producers and other companies access to its
        transmission and distribution systems.  The anticipation of such
        deregulation has forced utilities to reduce their operating costs in
        order to produce power at more competitive rates.  Utilities have
        attempted to accomplish this in part by deferring repairs and
        refurbishing existing power plants.  In the near term, such deferred
        maintenance could reduce the amount of contract business available. 
        However, management believes that in the longer term power generation
        companies will be forced to make needed repairs, and they may
        increasingly outsource such services.

             The forest products industry experienced a recession between 1992
        and 1995, resulting in deferred plant maintenance and the cancellation
        of major capital improvement projects.  Management believes than an
        upturn in this industry may result in an increase in plant maintenance
        projects.  In addition, the EPA has instituted new environmental
        standards which will require pulp and paper manufacturers to make
        capital improvements.  

					-9-

   <PAGE> 



        MARKETING
        ---------

             The Company provides industrial maintenance services to clients
        in the petrochemical and petroleum refining industries located in the
        Gulf Coastal and midwestern regions of the United States and in Nova
        Scotia, British Columbia and Alberta, Canada.  Many of the Company's
        customers operate multiple refineries, and, in general, decisions to
        award work are made at each operating facility.  In most cases, bids
        are prepared by the Company on a job-by-job basis.  Fee arrangements
        for their services are bid either fixed-price or based on detailed
        time and material billing schedules.  Bids generally are awarded based
        on price considerations, although scheduling, efficiency, quality and
        safety are also factors in the customer's determination.  Although the
        Company performed a significant amount of work for certain refining
        facilities, performance on any given project does not ensure
        subsequent work at that facility or other facilities of that customer. 
        Conversely, the loss of a bid for any one project does not affect the
        Company's ability to obtain additional work from that customer.

             Historically, the Turner Group has derived much of its revenues
        from long-term contracts with major petroleum and petrochemical
        refining facilities in and around the Beaumont/Port Arthur, Texas
        area.  The Turner Group has also provided services to companies in the
        chemical, gas processing pipeline and liquid terminal industries. 
        Since its acquisition by the Company in 1993, the Turner Group's
        marketing efforts have been expanded geographically to include the
        entire Gulf Coastal region from Pascagoula, Mississippi to Corpus
        Christi, Texas.

             The Lake Charles Group typically bids for its construction and
        industrial maintenance projects on a project-by-project basis and, in
        the past, it has not won long-term industrial maintenance contracts. 
        Management will attempt to win long-term industrial maintenance
        contracts from petrochemical and petroleum refineries located in the
        Baton Rouge and Lake Charles, Louisiana areas.  Because the management
        of each refinery typically selects its own maintenance contractors,
        management believes that it is important to be perceived as a local
        contractor.  Based upon the Company's existing contacts, it is hoped
        that the Lake Charles Group will give the Company a local presence in
        the Baton Rouge and Lake Charles areas, which have a high
        concentration of petrochemical and petroleum refining facilities.

             Industra Service markets to the pulp and paper industry in
        western Canada and the northwestern United States.  It offers turnkey
        services for projects from the engineering through the construction
        and manufacturing phases.  These services include insulation, asbestos
        removal and fireproofing, and normally are obtained through
        competitive bidding.  Industra Service also offers these services, as
        well as oil sands extraction services to the oil/gas and petrochemical
        industry, in Alberta, Canada.

             The major customers of Chempower are in the electric power
        generation and chemical industries located in Ohio and other
        midwestern states.  To service its customers, Chempower has
        established a network of facilities in Ohio, Pennsylvania, Tennessee
        and West Virginia.  In anticipation of the deregulation in the
        electric power generation industry, some utilities are  outsourcing
        some of the repairs and refurbishments of their power plants. 
        Chempower is seeking these outsourced projects.

        SERVICES
        --------

             TOTAL UNIT TURNAROUNDS.  The Company performs turnaround services
             -----------------------
        involving maintenance of crude distillation units, catalytic reformer
        units, delayed coker units, alkylation units, platformers, fluid
        catalytic cracking units and butamer units as part of one project. 
        These services also involve the maintenance and modification of heat
        exchangers, heaters, vessels, and piping.

             PLANNING AND MANAGEMENT SERVICES.  The Company has developed the
             ---------------------------------
        planning capabilities, operation skills and field supervision
        techniques necessary to manage all aspects of turnaround projects and
        other maintenance services.  When managing a turnaround project, the
        Company is responsible for cost control procedures, resource planning
        and scheduling, safety control, hazardous material handling, hiring
        and training of personnel, procuring 

					-10-

     <PAGE> 

        equipment and tools, performing field inspections and coordinating
        the entire project.  Certain aspects of the turnaround project and 
        certain specialized types of welding often are provided directly by 
        the Company.  Other aspects of a turnaround project are performed by
        subcontractors under the supervision of the Turner Group.  In 
        addition, the Company develops  suggested maintenance programs that 
        incorporate its experience from prior projects.

             PROCESS HEATER MAINTENANCE.  The Company repairs process heaters.
             ---------------------------
        The installation and maintenance of process heaters requires skilled
        craftsmen and supervisors and specialized construction techniques.

             FLUID CATALYTIC CRACKING UNIT TURNAROUNDS.  Fluid Catalytic
             -----------------------------------------
        Cracking Units ("FCCU") require a high level of maintenance because of
        extremely high temperatures inside the unit in excess of 1000 degrees
        F and due to their many internal parts, which consist generally of
        stainless steel components and refractory lining systems.  Refractory
        is a heat resistant lining that insulates the inner shell of the
        cracking unit vessels.  The main pieces of equipment in a FCCU are 
        the reactor, the regenerator and the flue gas exhaust system.  Most 
        of the repair and revamp work required during a turnaround project is
        performed on this equipment.  Major revamp work is required to 
        increase efficiencies of the FCCU and to reduce air pollution from 
        the unit.  In most cases, the mechanical work involving the
        disassembly and repair of the unit components and the refractory work
        involving the "spraying" of the refractory material onto the inside
        of the units' vessels is performed by different contractors.  The  
        Company provides all of these services.

             EMERGENCY RESPONSE SERVICES.  The Company provides temporary
             ----------------------------
        workers for fast response situations such as repair and revamp
        services in connection with refinery fires, explosions and other
        accidents.  Management believes that the Turner Group has enhanced its
        relationships with customers by responding quickly to these types of
        emergencies and by providing timely repair services.

             DISMANTLING AND DEMOLITION SERVICES.  The Company provides
             ------------------------------------
        dismantling and demolition services when a client has decommissioned
        an entire facility or unit within its plant.  A typical dismantling
        project begins by identifying potential safety hazards and preparing a
        work plan, including an estimate of the number and type of personnel
        and equipment necessary to complete the project.  Personnel then
        examine and, if necessary, drain refinery pipelines or remove asbestos
        or other hazardous materials.  Dismantling services are often
        performed using cranes which are equipped with torches or hydraulic
        guillotine shears.  In addition, the Company may use explosives in
        performing demolition work.  Dismantled equipment is cut into scrap
        pieces and sold in the scrap market.  Sometimes dismantled equipment
        can be salvaged and sold.

             ABOVEGROUND STORAGE TANK SERVICES.  The Company provides its
             ----------------------------------
        customers with maintenance and modification services for aboveground
        storage tanks ("AST").  Maintenance and modification services involve
        the design, construction, and installation of pollution control
        devices such as floating roof and seal assemblies,secondary
        containment systems (double bottoms), and a variety of underground and
        aboveground piping systems in existing AST's.  The Company also
        installs, maintains and modifies tank appurtenances, including spiral
        stairways, platforms, gauging systems, fire protection systems,
        rolling ladders, and structural supports.

             ASME CODE STAMP SERVICES.  The Turner Group is qualified to
             -------------------------
        perform services on equipment that contain American Society of
        Mechanical Engineer Code Stamps ("ASME Codes").  Many state agencies
        and insurance companies require that qualified ASME code installers
        perform services on ASME coded equipment.  Many of the Turner Group's
        competitors are not ASME code qualified, which requires them to
        subcontract portions of a project involving work with coded equipment.

             INSTRUMENTATION AND ELECTRICAL.  The Company provides lighting,
             ------------------------------
        power and instrumentation wiring for electrical systems of up to 5,000
        volts.  It also installs, terminates, troubleshoots and commissions
        switches, transformers and associated control and monitoring equipment
        and is qualified to calibrate and commission both electrical and
        pneumatic instrument systems.  The Turner Group has had extensive
        experience with the conversion and physical design of distribution
        control systems.

					-11-

   <PAGE> 



             OIL SEPARATION AND REMOVAL SYSTEMS.  The Company installs SRS's
             ----------------------------------
        proprietary Sarex oil separation and removal systems which extract
        reusable oils from sludges and oily water.  Approximately 30,000 of
        SRS's Sarex oil separation and removal systems have been installed in
        oil tankers and petroleum refineries around the world.

        COMPETITION
        -----------

             The market for industrial maintenance services is highly
        competitive.  Many competitors have greater financial and other
        resources than the Company.  Additionally, the Company competes with
        numerous small, independent contractors which, collectively, have a
        significant share of the market for these services.  Competitive
        factors for these services include price considerations, performance
        record, quality, and safety.  Construction orders are customarily
        awarded after competitive bids have been submitted as proposals based
        on the estimated cost of each job.

        ENVIRONMENTAL SERVICES

             The Company provides environmental remediation and waste services
        through United Eco, Industra Service, Chempower, Cambridge, Eco
        Environmental, Environmental Evolutions and SRS.  Remediation includes
        the on-site clean-up and treatment of hazardous and non-hazardous
        organic and inorganic contaminants utilizing a number of technologies. 
        Waste services include removal, encapsulation, stabilization,
        treatment and disposal services.  The environmental remediation
        services business segment (excluding Chempower which was acquired
        subsequent to year end) generated approximately 27% of the Company's
        revenues during fiscal 1996.

        THE ENVIRONMENTAL REMEDIATION MARKET
        ------------------------------------

             Growth in the environmental remediation industry has been
        influenced by the following legislation:

             CERCLA-The Comprehensive Environmental Response, Compensation and
             Liability Act of 1990 ("CERCLA" or the "Superfund Act").  The
             Superfund Act authorizes the Environmental Protection Agency (the
             "EPA") to coordinate responses to environmental emergencies and
             establishes liability for cleanup costs and environmental damages
             on present and/or previous owners and operators of treatment
             facilities and disposal sites, and persons who generated,
             transported or arranged for the disposal or transportation of
             wastes to such facilities.  These provisions are enforceable by
             lawsuits initiated by either the EPA or private citizens.
             RCRA-The Resource Conservation and Recovery Act of 1976 ("RCRA")
             established a comprehensive set of regulations for the treatment,
             storage and disposal of hazardous wastes.  RCRA mandated
             "cradletograve" tracking systems for the transportation and
             disposal of hazardous wastes and instituted pretreatment
             requirements for a list of 500 hazardous wastes prior to land
             disposal.  More important, RCRA imposed restrictions on and
             established required treatment standards for land disposal of
             certain wastes in order to minimize or eliminate reliance on
             offsite disposal.  RCRA has served to enhance the attractiveness
             of onsite remediation techniques such as those provided by Eco
             Environmental.

             FFCA-The Federal Facilities Compliance Act of 1992 allows states
             and the EPA to enforce solid and hazardous waste violations
             against federal facilities, including those operated by the
             Department of Defense ("DOD") and the Department of Energy
             ("DOE"), the primary federal hazardous waste generators, which
             the Company believes should encourage remediation at these
             facilities.

             Demand for hazardous waste remediation work is increasing as the
        nature and extent of certain waste problems become known.  According
        to an EPA study, the Superfund Act program has been progressing from
        the evaluation of sites into the design and cleanup phases.  The study
        stated that as of September 1992, the EPA had conducted preliminary
        assessments of over 95% of the 36,814 potentially hazardous sites
        listed on the EPA database, of which 

					-12-

    <PAGE> 



         approximately 1,200 have been placed on the National Priorities List
         ("NPL").  The EPA study also reported that the 123 remedial actions  
         started at NPL sites during the year ended September 30, 1992 was a
         20% increase over 1991, and a 60% increase over 1990.  Increasing 
         demand for remediation services is also expected from the DOD and 
         DOE.  The EPA study stated that as of September 30, 1991, the DOD
         had identified 17,660 sites located at 1,877 DOD installations and 
         6,786 "Formerly Used Defense Sites" with  potential hazardous 
         waste contamination involving soil or groundwater,  and that
        the DOD estimates that 7,313 sites will require cleanup.
        Cleanup and restoration work at most DOE installations is in the very
        early stages, but according to the EPA study, the DOE estimates that
        about 4,000 contaminated sites, covering more than 26,000 acres at DOE
        and nonDOE locations, require some remediation.

             Management recognizes that the environmental remediation
        industry, which is largely the creation of federal legislation, is
        sensitive to shifts in public opinion and legislation.  While there is
        growing anti-regulatory sentiment in the United States, management
        does not believe that this political trend will have a substantial
        impact on the Company's environmental services business.  The Company
        has targeted projects involving soil remediation, ground water
        cleanup, and lead and asbestos abatement.  The cleanup projects on
        which the Company  typically works have already been designed and
        planned and, management believes, are unlikely to be delayed or
        canceled in the near term as a result of deregulation, if any.

        MARKETING
        ---------

             The Company derives revenues in its environmental remediation
        segment from a variety of customers, including owners and tenants of
        commercial and industrial property, insurance companies, real estate
        development companies, and state and municipal entities.  The Company
        typically contracts directly with owners, operators, or tenants of
        properties and works closely with the client's environmental
        consultants in performing its services.  Fee arrangements for its
        services are bid either fixed-price or based on detailed time and
        material billing schedules.  Bids are typically awarded based on
        price, scheduling, experience, efficiency, quality, and safety
        considerations.  The Company markets its services directly to
        companies that are in need of remediation, abatement, or renovation
        services as well as consulting firms.  During the year ended November
        30, 1996, the Company provided environmental remediation services to
        clients in Texas, Louisiana, Wyoming, North Carolina, South Carolina,
        Virginia, Georgia and Tennessee.  The Company provides emergency spill
        response services to utility, petrochemical and petroleum refining
        clients located in Texas.  Environmental Evolutions services this
        market through business development personnel and by field
        representatives at project sites located throughout the Gulf Coastal
        region.  The SRS Sarex System is offered worldwide for on-site
        treatment of refinery, petrochemical, marine and other industrial
        waste materials.

             In February 1997, the Company signed a letter of intent to form a
        strategic alliance with CVG International America, Inc. in part to
        provide environmental services to Corporacion Venezolana de Guayana.


        SERVICES
        --------

             The environmental services segment provides the following
        specialized environmental remediation services:

             SOIL REMEDIATION.  The Company employs bioremediation, vapor
             -----------------
        extraction, thermal desorption and other techniques to degrade
        hazardous and non-hazardous contaminates in soil.  Areas of
        application include soils, sludges, slurries, and liquids contaminated
        with hydrocarbons, creosote, pentachlorophenol, pentachloroethylene,
        PCB's, digester sulfides, phenols, benzene, toluene, chlorinated
        aliphatic solvents and raw sewage.

             UNDERGROUND STORAGE TANK REMOVAL.  The Company provides tank
             ---------------------------------
        management, subsurface investigation, tank and line integrity testing,
        tank removal and replacement, removal and treatment of contaminated
        soils and site closure services.

					-13-

 <PAGE> 


             ASBESTOS ABATEMENT AND LEAD ABATEMENT.  The Company's licensed
             --------------------------------------
        supervisors and workers remove or encapsulate materials which contain
        asbestos and materials contaminated with lead.

             SPILL RESPONSE.  The Company's Spill Response Division provides
             ---------------
        incident-specific, on-site services for the release or spill of PCB's
        or other chemicals which may pose health or environmental risks such
        as fuels, oils, acids, caustics and solvents.

             TRAINING.  The Company's Incident Response Preparation School
             ----------
        provides safety and response training to organizations and individuals
        on spill prevention and control.  Training is administered at clients'
        locations.

             EQUIPMENT RENTAL.  The Company rents to third parties certain
             ----------------
        equipment used in the environmental and remediation industry,
        including air filtration devices, vacuums and sprayers.

        PROPRIETARY TECHNOLOGIES
        ------------------------

             The Company has developed and licenses certain proprietary
        technologies that it uses in its environmental remediation business. 
        United Eco has entered into an agreement to deploy a technology for
        the chemical stabilization of materials contaminated with heavy
        metals.  The Molecular Bonding System ("MBS") is a patented technology
        of Solucorp Industries Ltd.  The MBS technology uses a mobile facility
        to process large quantities of soils, ash, sediments and sludges.  The
        agreement permits United Eco to use this technology throughout North
        America.

        COMPETITION
        -----------

             The environmental services industry is highly competitive with
        numerous companies of various sizes, geographic presence and
        capabilities participating.  The principal competitive factors for
        these services are operational experience, technical proficiency,
        scope of services offered, local presence and price.  To offer certain
        of Eco Environmental's and Environmental Evolutions' services,
        significant capital investment is required for equipment.  Certain
        competitors have greater financial resources or offer specialized
        techniques or services not provided by the Company.  Additionally, the
        relatively recent entry of aerospace and defense contractors, as well
        as large construction and engineering firms into the environmental
        services industry has increased competition.  Management believes that
        the demand for environmental services is still developing and
        expanding and, as a result, many small and large firms will continue
        to be attracted to the industry.

        SPECIALTY FABRICATION SERVICES
        ------------------------------

             The Company provides specialty fabrication services to clients in
        the petroleum and petrochemical refining, forest products and offshore
        oil exploration industries through the Turner Group, the Lake Charles
        Group, Industra Service, Chempower and MM Industra.  The Company's
        specialty fabrication service business segment generated approximately
        $657,000 during fiscal 1996, or less than one percent of the Company's
        total revenues for that period.  However, the Company's results of
        operations for fiscal 1996 only reflect four months of operations for
        Industra Service and one month of operations for MM Industra, and do
        not include the operations of Chempower which was acquired in March
        1997.

       SPECIALTY FABRICATION SERVICES MARKET
        -------------------------------------
             The specialty fabrication services market includes general
        industrial and offshore construction projects, ranging greatly in size
        and complexity of the project.  The market in which the Company
        participates is affected by the state of the economy in general as
        well as the levels of capital expenditures in the chemical,
        petrochemical and refining industries.


					-14- 

   <PAGE> 


        MARKETING
        ---------

             The Company typically obtains specialty fabrication business by
        submitting proposals to local plant managers on a project-by-project
        basis.  If the Company is engaged by a customer for a specialty
        fabrication project, the services usually are provided pursuant to a
        fixed-price contract.  The Company also will negotiate fee
        arrangements and cost reimbursements, although such arrangements are
        less frequently obtained than fixed-price contracts.  The Company has
        found that plant managers award contracts based primarily upon price,
        but scheduling, product and service quality and safety also contribute
        to a customer's determination.  Each of the Company's subsidiaries
        prepares and submits its own contract proposals.  The Company directs
        broader marketing efforts such as placing advertisements in trade
        publications.  In addition to these efforts, the Company encourages
        each subsidiary to generate cross-selling opportunities for the
        Company's other subsidiaries.

        SERVICES
        --------

             The Company owns and operates approximately 687,000 square feet
        of specialty fabrication facilities in the United States and Canada
        where it constructs piping, power boiler assemblies, pressure vessels,
        reactors, drums, towers, precipitators, tanks, exchanger retubing,
        heater coils, and components, and various equipment used in connection
        with process industries.  The Company also performs emergency
        fabrication at facilities when necessary to assist their customers. 
        In many instances, the facilities are operated 24 hours per day to
        assist a turnaround project.  The Company also provides machining
        services used to rework pumps, turbines, compressors, tail shafts,
        rudder shafts, couplings, hydraulic cylinders and other refinery
        components.  The Company erects structural steel support systems such
        as pipe racks and scaffolding, components which the Company sometimes
        fabricates according to customized specifications.  The Chempower
        manufacturing services include design and fabrication of pre-insulated
        panels for industrial equipment applications, of metal casings for
        machines used in the gaming industry and of electrical switch gear,
        power distribution systems and bus duct systems for mass transit
        authorities, utilities, chemical and other industrial facilities.

        COMPETITION
        -----------

             The companies competing in the specialty fabrication services
        market are widely segmented, with few large participants.  Many of the
        competitors are local entities.  The Company seeks to offer a full
        range of services to potential customers, and, where necessary, to
        enter into strategic alliances and joint ventures with competitors
        that provide complementary services in bidding on projects. 
        Competitive factors include price, quality, product availability and
        delivery.

        RESEARCH AND DEVELOPMENT

             The Company does not have a research and development program.

        CUSTOMERS

             During fiscal 1996, the Company generated 73% of its revenues
        from industrial customers in general and 20% of its revenues from
        customers in the petroleum and petrochemical refining business in
        particular.  Huntsman Corporation, Star Enterprises, Goodyear Tire and
        Rubber and BioLab together accounted for approximately 18% of the
        Company's total revenues in fiscal 1996, compared to 75% of total
        revenues in fiscal 1995.  No single customer accounted for more than
        5% of the Company's revenues during fiscal 1996.  Nevertheless, the
        loss of any one of these key customers could have a material adverse
        impact on the Company's results of operations and financial condition. 
        Management believes that the Company's continued efforts to expand and
        diversify its customer base in addition to the effects of a full year
      of operations from its newly acquired operating subsidiaries will further

					-15-

   <PAGE> 


         reduce the Company's dependence on certain key customers.  See
        "Item 7. Management's Discussion and Analysis of Financial Condition
        and Resutls of Operations."

        BACKLOG

             At November 30, 1996, the Company's backlog was approximately
        $125 million, which included backlog of approximately $70 million at
        November 30, 1996 of entities acquired by the Company in fiscal 1996. 
        This compares to approximately $47 million of backlog for such
        contract work at November 30, 1995.  Between December 1, 1996 and
        January 31, 1997 the Company entered into additional contracts with an
        estimated value of $67.0 million.  Backlog represents the amount of
        revenue that the Company expects to realize from work to be performed
        on uncompleted contracts in progress and from contractual agreements
        upon which work has not commenced.  Contracts included in backlog may
        have provisions which permit cancellation or delay in their
        performance and there can be no assurance that any work orders
        included in backlog will not be canceled or delayed.

        EMPLOYEES

             At March 31, 1997, the Company employed 365 full-time employees
        and 1,700 hourly workers, some of whom were represented by labor
        unions under agreements expiring at various dates.  Total employment
        levels ranged from 1,300 to 3,300 workers per week during fiscal 1996. 
        Management believes that it maintains good relations with its
        employees.

             It has been the Company's experience that hourly-rate employees
        are generally available in the quantity required for its projects over
        an extended period of time.  The Company has not experienced a
        significant work stoppage and considers its employee relations to be
        good.

        RAW MATERIALS

             The Company has not experienced any difficulties obtaining the
        raw materials needed by its operating segments.

        GOVERNMENT REGULATION AND RISK MANAGEMENT

             Certain of the Company's services involve contact with crude oil,
        refined petroleum products, asbestos and other substances classified
        as hazardous material under the various federal, state and local
        environmental laws.  Under these laws, hazardous material is regulated
        from the point of generation to the point of disposal.  In addition,
        the United States Environmental Protection Agency has issued
        regulations for hazardous waste remediation contractors.  To
        management's knowledge, the operating segments have obtained all
        required permits and licenses in the states in which they operate.

             All of the Company's operations are subject to regulations issued
        by the United States Department of Labor under the Occupational Safety
        and Health Act ("OSHA").  These regulations set forth strict
        requirements for protecting personnel involved with any materials that
        are classified as hazardous, which includes materials encountered when
        performing many of the Company's services.  Violations of these rules
        can result in fines and suspension of licenses.  To management's
        knowledge, the Company and all of its subsidiaries are in material
        compliance with OSHA.

             The Company's safety and training efforts are directed through
        its subsidiaries.  In addition to training designed to advance the
        skill level of individual employees, the Company uses entry level
        screening and broad-based skills development programs to improve the
        overall quality and technical competence of its work force.  The
        Company has a designated safety officer at each of its subsidiaries
        who is responsible for compliance with applicable governmental
        procedures and the Company's internal policies and practices.  All of
        the Company's technicians are 

					-16-

   <PAGE> 

        subject to pre-employment, scheduled and random drug testing.  The
        Company's operations and personnel are subject to significant 
        regulations and certification requirements imposed by federal, 
        state and other authorities.

             The Company maintains worker's compensation insurance in
        accordance with statutory requirements and contractors' general
        liability insurance with an annual aggregate coverage limit that
        varies with each subsidiary.  The Company's general liability
        insurance specifically excludes all pollution related claims and fines
        levied against the Company as a result of any violations by the
        Company of the regulations issued by the Department of Labor under
        OSHA.  To date, the Company has not incurred any significant fines or
        penalties or any liability for pollution, environmental damage, toxic
        torts or personal injury from exposure to hazardous wastes.  However,
        a successful liability claim for which the Company is only partially
        insured or completely uninsured could have a material adverse effect
        on the Company.  In addition, if the Company experiences a significant
        amount of such claims, increases in the Company's insurance premiums
        could materially and adversely affect the Company.  Any difficulty in
        obtaining insurance coverage consistent with industry practice may
        also impair the Company's ability to obtain future contracts, which in
        most cases are conditioned upon the availability of specified
        insurance coverage.  The Company has not experienced any difficulty in
        obtaining adequate insurance coverage for its businesses.  Management
        has been advised by its insurance carriers that access to such
        insurance coverage is not likely to change in the near future.

             Asbestos abatement projects, and to a lesser extent, industrial
        cleaning and maintenance projects generally require the Company to
        maintain appropriate levels and types of insurance and, in certain
        instances, require the Company to post surety bonds or letters of
        credit in lieu thereof.  Building owners require insurance to protect
        against third party, asbestos related liabilities arising from the
        work performed at an asbestos abatement site and may require
        performance and payment bonds, or letters of credit in lieu thereof,
        to assure completion of the project and payment of all subcontractors. 
        To date, the Company has not had any significant difficulty in
        obtaining such bonds or letters of credit.

        SEASONALITY

             The Company's revenues from its industrial and environmental
        segments may  be affected by the timing and planned outages at its
        industrial customers' facilities and by weather with respect to
        outside projects.  The effects of this seasonality may be offset by
        the timing of large individual contracts, particularly if all or a
        substantial portion of the contracts fall within one or two quarters. 
        Accordingly, the Company's quarterly results may fluctuate and the
        results of one quarter should not be deemed to be representative of
        the results of any other quarter or for the year.  The Company
        believes revenues derived from its industrial segment long-term
        maintenance contracts provide a more consistent revenue base.

                                         -17-



   <PAGE> 



        ITEM 2.  PROPERTIES

             The location, ownership, primary use and approximate square
        footage of the facilities of the Company are set forth in the
        following table.  The Company believes that its existing facilities
        are adequate to meet current requirements and that suitable additional
        or substitute space would be available as needed to accommodate any
        expansion of operations.

                                                                  
                                                                 APPROXIMATE
                                                       Primary      SQUARE
        BUSINESS UNIT AND               OWNERSHIP      USE (1)       FEET
        SITE LOCATION                                             OF FLOOR
                                                                    SPACE
        ------------------------------ ------------   ------------   --------

        AMERICAN ECO
             Toronto, Ontario . . . . .   Leased        Adm.        2,000
             Houston, Texas . . . . . .   Leased        Adm.       14,000

        CHEMPOWER
             Akron, Ohio  . . . . . . .   Owned(2)   Adm./Const. 36,000(3)
            Canton, Ohio . . . . . . .   Owned(2)    Adm./Mfg.   205,000
             Cincinnati, Ohio . . . . .   Owned(2)   Adm./Const.   25,000
             Las Vegas, Nevada  . . . .   Leased      Adm./Mfg.    47,000
           Washington, Pennsylvania .   Owned(2) Adm./Const./Mfg. 112,000(3)
           Knoxville, Tennessee . . .   Leased        Adm.        1,000
           Waverly, Tennessee . . . .   Owned(2) Adm./Const./Mfg  95,000(3)
          Hurricane, West Virginia .   Leased        Adm.        2,000
          Winfield, West Virginia  .   Owned(2)   Adm./Const.   90,000

        ECO ENVIRONMENTAL
             Houston, Texas . . . . . .   Leased     Adm./Const.   26,000


        ENVIRONMENTAL EVOLUTIONS
             Corpus Christi, Texas  . .   Leased     Adm./Const.    2,000
             San Antonio, Texas . . . .   Leased     Adm./Const.    1,000

        INDUSTRA SERVICE
             Edmonton, Alberta  . . . .   Owned         Adm.       14,000
             New Westminster, British     Owned    Adm./Const./Mfg.  74,000
             Columbia . . . . . . . . .                 
             Portland, Oregon . . . . .   Leased        Adm.        6,000
             Seattle, Washington  . . .   Leased        Adm.       11,000

        LAKE CHARLES GROUP

             Lake Charles, Louisiana  .   Owned(2) Adm./Const./Mfg.  10,000
                                                        

					-18-

   <PAGE> 

                                                                  
                                                                 APPROXIMATE
                                                       Primary      SQUARE
        BUSINESS UNIT AND               OWNERSHIP      USE (1)       FEET
        SITE LOCATION                                             OF FLOOR
                                                                    SPACE
        ------------------------------ ------------   ------------   --------


        MM INDUSTRA
             Dartmouth, Nova Scotia . .   Owned       Adm./Mfg.    60,000

             Dartmouth, Nova Scotia . .   Leased     Mfg./Const.  180,000

        SRS

             Irvine, California . . . .   Leased      Adm./Mfg.    24,000


        TURNER GROUP

            Bridge City, Texas . . . .   Owned(2)    Adm./Mfg.     2,750
            Bridge City, Texas . . . .   Owned(2)   Adm./Const.    4,293
            Port Arthur, Texas(4)  . .   Owned    Adm./Const./Mfg.  29,000
 
        UNITED ECO


             Highpoint, North Carolina    Owned      Adm./Const.   75,000
             Apex, North Carolina . . .   Leased        Adm.        5,000
             Blacksburg, Virginia . . .   Leased        Lab.        5,000

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

        (1)  Adm. = Administration; Const. = Construction warehouse; Mfg. =
             Manufacturing facility.
        (2)  Subject to mortgage.
        (3)  Amount includes approximately 9,000, 30,000 and 10,000 square
             feet of floor space leased to unaffiliated tenants at the Akron,
             Washington and Waverly facilities, respectively,
        (4)  This facility is situated on 6.5 acres and contains 15,000 square
             feet of office and warehouse space and 14,000 square feet of
             covered fabrication area.  The facility is in close proximity to
             the Intercoastal Waterway where piping and other fabricated
             components can be shipped.


        ITEM 3.  LEGAL PROCEEDINGS

             SRS is engaged in a dispute with a customer which was submitted
        to arbitration in May 1996 before the American Arbitration Association
        in Cincinnati, Ohio.  The customer claimed that certain equipment did
        not perform as represented after it had been delivered to a waste
        cleanup site by SRS.  The customer seeks $19.3 million in compensatory
        damages for delays and the cost of completing the project.  SRS has
        responded to the customer's charges by claiming that the equipment
        could not work as represented because of conditions at the cleanup
        site and the customer's interference with SRS's operation of such
        equipment.  SRS has submitted counterclaims to the arbitrator against
        the customer seeking $4.9 million in compensatory damages and an
        additional $5 million in punitive damages.  The hearing has concluded,
        and post-hearing briefs were filed in April 1997.  The decision is
        expected to be rendered in June.  Although the outcome of this dispute
        cannot be determined, the Company does not believe that the financial
        condition or results of operation of the Company will be materially
        affected by the final outcome of this arbitration.

             The Company's operating subsidiaries are each currently involved
        in various claims and disputes in the normal course of business. 
        Management believes that the disposition of all such claims,
        individually or in the aggregate, will not have a material adverse
        effect on the Company's financial condition or results of operation.


					-19-


    <PAGE> 



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

             The Company did not submit any matter to a vote of shareholders
        during the last quarter of fiscal 1996 through the solicitation of
        proxies or otherwise.


					-20-



   <PAGE> 
                                       PART II

        ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS.

        PUBLIC MARKET FOR COMMON SHARES

             The Company's Common Shares are traded on The Toronto Stock
        Exchange and The Nasdaq National Market under the trading symbols ECX
        and ECGOF, respectively.  The Company's Common Shares were traded on
        the American Stock Exchange under the symbol ECG until November 16,
        1995 when the Company delisted from such exchange and listed its
        Common Shares on The Nasdaq National Market.  As of March 17, 1997,
        there were 586 shareholders of record.  The Company believes that the
        number of beneficial holders is significantly greater than the number
        of record holders as a large number of shares are held of record in
        nominee or broker names.

             The following table provides the quarterly high-ask and low-bid
        prices for the Company's Common Shares on The American Stock Exchange,
        The Nasdaq National Market and The Toronto Stock Exchange for the two
        years ended November 30, 1996.

         
                                     AMERICAN            THE NASDAQ
                                  STOCK EXCHANGE      NATIONAL MARKET
                                   -------------       --------------
                                       (US$)               (US$)
                                   HIGH      LOW    HIGH ASK    LOW BID
                                 -------     ---    --------    -------
        Fiscal year ended
        November 30, 1995 
             First quarter  . .     $2.62    $1.62     $-         $-
             Second quarter . .      4.75     1.94      -          -
             Third quarter  . .      4.44     3.12      -          -

             Fourth quarter . .      4.12     2.87      -          -
        Fiscal year ended
        November 30, 1996
             First quarter  . .      -        -         6.25       3.25
             Second quarter . .      -        -         9.19       5.50
             Third quarter  . .      -        -        11.50       7.25
             Fourth quarter . .      -        -        11.25       6.38


                                      TORONTO
                                  STOCK EXCHANGE
                                    ----------
                                      (CDN$)
                                     --------
                                   HIGH      LOW
                                 -------     ---
        Fiscal year ended
        November 30, 1995 

             First quarter  . .     $3.50    $2.39
             Second quarter . .      6.50     2.39
             Third quarter  . .      6.00     4.25
             Fourth quarter . .      5.37     4.00

        Fiscal year ended
        November 30, 1996
             First quarter  . .      8.37     4.44
             Second quarter . .     12.45     7.25

             Third quarter  . .     15.50    10.00
             Fourth quarter . .     15.10     8.75



             The Company is subject to covenants in loan agreements which
        restrict or limit the payment of cash dividends on its Common Shares. 
        Notwithstanding such restrictions and limitations, it is the Company's
        present policy to retain future earnings for use in its business.

        PRIVATE PLACEMENTS OF COMMON SHARES

             The Company effected a number of its acquisitions and strategic
        investments during fiscal 1996 by exchanging shares of Common Shares
        for shares of capital stock of the respective target companies.  The
        Company issued an aggregate of 2,938,204 shares of Common Shares with
        a market value of $21.2 million in exchange for all of the issued and
        outstanding shares of capital stock of Environmental Evolutions,
        United Eco and for 94% of the outstanding shares of Industra Service. 
        The exchanges of Common Shares for shares of capital stock of each of
        Environmental Evolutions, United Eco and Industra Service were exempt
        from registration under the Securities Act by virtue of Section 4(2)
        therein and Regulation D promulgated thereunder.  The exchange of
        Common Shares for the capital stock of SRS was exempt from
        registration under the Securities Act by virtue of Section 3(a)(10) of
        the Securities Act.  See "Item 1. Description of Business Development
        of Business."

					-21-


   <PAGE> 


             Effective January 24, 1997, the Company closed the sale of $15
        million aggregate principal amount of 9.5% convertible debentures due
        January 24, 2007 (the "Debentures") and 1,125,000 share purchase
        warrants (the "Warrants") to a group of institutional investors.  The
        Debentures are convertible into shares of Common Shares at the
        conversion rate of 85% of the average closing price of the Common
        Shares on the Nasdaq National Market for the five trading days
        immediately preceding the respective conversion dates, subject to a
        floor conversion price of $6.30 per share.  The floor conversion price
        would be eliminated if shareholders ratify the placement at the May 7,
        1997 shareholders meeting.  Each Warrant is exercisable for one Common
        Share, subject to customary anti-dilution provisions, at an exercise
        price of $9.56 per share (110% of the closing market price for the
        Common Shares on January 23, 1997) for a period of five years.  The
        purchasers have certain rights for the registration under the
        Securities Act of the Common Shares underlying the Debentures and the
        Warrants.  An aggregate of 300,000 Warrants also were issued to the
        placement agents for the transaction, which Warrants are exercisable
        for five years at $8.00 per share.  The sale of the Debentures and the
        Warrants was exempt from registration under the Securities Act by
        virtue of Section 4(2) therein and Regulation D promulgated
        thereunder.

             Effective March 3, 1997, the Company closed the sale of $3
        million aggregate principal amount of Debentures and 225,000 Warrants
        to a group of institutional investors, which included entities which
        had participated in the January 1997 placement.  Each Warrant is
        exercisable for one Common Share, subject to customary anti-dilution
        provisions, at an exercise price of $9.21 per share (110% of the
        closing market price for the Common Shares on February 28, 1997) for a
        period of five years.  The purchasers have certain rights for the
        registration under the Securities Act of the Common Shares underlying
        the Debentures and the Warrants.  The sale of the Debentures and the
        Warrants was exempt from registration under the Securities Act by
        virtue of Section 4(2) therein and Regulation D promulgated
        thereunder.

					-22-

   <PAGE>



        ITEM 6.  SELECTED FINANCIAL DATA.

             The results of operations prior to fiscal 1993 do not reflect the
        Company's current or planned business activities with the exception of
        the licensing and consulting services provided by the Company.  Eco
        Environmental was acquired by the Company in November 1992, the Turner
        Group was acquired in October 1993, Cambridge was acquired in June
        1994, the Lake Charles Group was acquired in July 1995, Environmental
        Evolutions was acquired in January 1996, the assets of Petrocon
        Construction Resources, Inc. were acquired in May 1996, both SRS and
        Industra Service were acquired in July 1996 and MM Industra was
        acquired in September 1996.  Accordingly, the statement of operations
        for the year ended November 30, 1993 reflects twelve months of
        operations for Eco Environmental and only one month of operations for
        the Turner Group.  The statement of operations for the year ended
        November 30, 1994 reflects six months of operations for Cambridge. 
        The statement of operations for the year ended November 30, 1995
        reflects five months of operations for the Lake Charles Group.  The
        statement of operations for the year ended November 30, 1996 reflects
        eleven months of operations for Environmental Evolutions, six months
        of operations for United Eco, four months of operations for SRS and
        Industra Service and one month of operations for MM Industra.  The
        following information should be read in conjunction with the
        Consolidated Financial Statements and the notes thereto and "Item 7.
        Management's Discussion and Analysis of Financial Condition and
        Results of Operations," included elsewhere herein.

                                         FISCAL YEAR ENDED
                                            NOVEMBER 30
                                              --------

                                 1996          1995           1994
                               -------         ----           ----
                                               (IN THOUSANDS EXCEPT 
                                               PER SHARE INFORMATION)
        STATEMENT OF
        OPERATIONS DATA:

        Total revenue . .     $119,529        $46,684       $ 34,991
        Operating income
        (loss)  . . . . .        9,701          3,773          1,747
        Interest expense         1,747            713            681
        Pretax income
        (loss)  . . . . .        7,954          3,060          1,066
        Net income (loss)       $8,763         $2,852           $903
                              ========        =======       ========
        Net income (loss)
        per share . . . .        $0.81          $0.40          $0.15
                               =======        =======       ========
        Weighted average
        shares
        outstanding(3)  .       10,846          7,217          6,191

        BALANCE SHEET
        DATA:

        Working capital .       $3,280         $6,639         $6,441
        Total assets  . .      104,484         31,061         22,947
        Current debt  . .       40,975         10,054          6,350
        Long-term debt  .        6,720          2,100          4,977
        Shareholders'           55,043         18,736         11,299
        equity  . . . . .



                                            1993     1992(1)     1992(2)
                                            ----      -----       ------
                                                   (unaudited)  (audited)
                                                 (IN THOUSANDS EXCEPT
                                                PER SHARE INFORMATION)
        STATEMENT OF OPERATIONS DATA:

        Total revenue . . . . . . . . . . .
                                         $7,565      $650    CDN$875
        Operating income 
        (loss)  . . . . . . . . . . . . . . 604      (901)    (1,218)
        Interest expense  . . . . . . . . . 229        29         39
        Pretax income (loss)  . . . . . . . 375      (934)    (1,257)
        Net income (loss) . . . . . . . . .$322     $(934)CDN$(1,257)
                                         ======   ========= ========

        Net income (loss) per share . . . .
                                          $0.07   $ (0.11) CDN$(0.15)
                                     ===========  ========= ========
        Weighted average shares
        outstanding(3)  . . . . . . . . . .
                                          4,680       612        824

        BALANCE SHEET DATA:

        Working capital . . . . . . . . . .
                                         $3,639      $253    CDN$345
        Total assets  . . . . . . . . . . .
                                         15,007       753      1,014
        Current debt  . . . . . . . . . . .
                                          2,634       403        543
        Long-term debt  . . . . . . . . . .
                                          9,031         0          0
        Shareholders' equity  . . . . . . .
                                          3,288       350        471
        -------------------
         (1) Dollar amounts have been converted from Canadian dollars into
             United States dollars using the exchange rate at November 30,
             1992 of one United States dollar to 1.3461 Canadian dollars.
        (2)  Prior to fiscal 1993, the Company recorded amounts in Canadian
             dollars.
        (3)  Reflects 1-for-10 reverse stock split in November 1993.


					-23-

   <PAGE>



        ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

        OVERVIEW

             The Company entered into its current lines of business in
        November 1992 when it acquired Eco Environmental, and it has continued
        to expand its service capabilities, geographic presence and customer
        base primarily by acquiring other companies.  The Company acquired
        eight businesses between fiscal 1993 and fiscal 1996, and its revenues
        grew from $7.6 million in fiscal 1993 to $119.5 million in fiscal 1996
        primarily as a result of such acquisitions.  The Company accelerated
        its acquisition program in fiscal 1996 by adding the following
        operating subsidiaries: Industra Service, SRS, Environmental
        Evolutions, United Eco and MM Industra.  In March 1997, the Company 
        completed its $50 million acquisition of Chempower.

             The Company  intends to continue to expand its business through
        the acquisition of companies in the industrial maintenance,
        environmental remediation and specialty fabrication businesses. The
        Company's acquisition strategy entails the potential risks inherent in
        assessing the value, strengths, weaknesses, contingent liabilities and
        potential profitability of acquisition candidates and in integrating
        the operations of acquired companies.  There can be no assurance that
        acquisition opportunities will continue to be available, that the
        Company will have access to the capital required to finance potential
        acquisitions or that any business acquired will be integrated
        successfully or prove profitable.

             The Company's acquisition strategy has led to rapid growth in the
        Company's operations over the past four fiscal years.  The Company's
        operations generally are managed at each of its subsidiaries, but core
        administrative, financing and strategic planning functions are
        performed at the holding company level.  This rapid growth has
        increased, and may continue to increase, the operating complexity of
        the Company  as well as the level and responsibility for both existing
        and new management personnel at the holding company level.  The
        Company's ability to manage its expansion effectively will require it
        to hire and retain new management personnel at the holding company
        level and to continue to implement and improve its operational and
        financial systems.  The Company's inability to effectively manage its
        expansion could have a materially adverse effect on its results of
        operations and financial results.

        SEASONALITY AND QUARTERLY FLUCTUATIONS

             The Company's revenues from its industrial and environmental
        segments may be affected by the timing of scheduled outages at its
        industrial customers' facilities and by weather conditions with
        respect to projects conducted outdoors.  The effects of seasonality
        may be offset by the timing of large individual contracts,
        particularly if all or a substantial portion of the contracts fall
        within a oneto two-quarter period.  Accordingly, the Company's
        quarterly results may fluctuate and the results of one fiscal quarter
        should not be deemed to be representative of the results of any other
        quarter or for the full fiscal year.

        RECOGNITION OF REVENUES

             The Company recognizes revenues and profits on contracts using
        the percentage-of-completion method of accounting.  Under the
        percentage-of-completion method, contract revenues are accrued based
        upon the percentage that accrued costs to date bear to total estimated
        costs.  As contacts can extend over more than one accounting period,
        revisions in estimated total costs and profits during the course of
        work are reflected during the period in which the facts requiring the
        revisions become know.  Losses on contracts are charged to income in
        the period in which such losses are first determined.  The percentage-
        of-completion method of accounting can result in the recognition of
        either costs and estimated profits in excess of billings or billings
        in excess of costs and estimated profits on uncompleted contracts,
        which are classified as current assets and liabilities, respectively,
        in the Company's balance sheet.  See Note A to Consolidated Financial
        Statements.

					-24-

   <PAGE> 


        RESULTS OF OPERATIONS

        FISCAL 1996 COMPARED TO FISCAL 1995

             REVENUES
             --------

             The Company's revenues grew 156% to $119.5 million in fiscal 1996
        from $46.6 million in fiscal 1995, primarily as a result of acquiring
        five new subsidiaries during fiscal 1996.  Because these acquisitions
        were completed at different times during fiscal 1996, the Company's
        results of operations do not reflect the full effect of such
        acquisitions.  The Company's results of operations for fiscal 1996
        reflect eleven months of operations for Environmental Evolutions, six
        months of operations for United Eco, four months of operations of each
        of SRS and Industra Service and one month of operations for MM
        Industra.

             Prior to fiscal 1996, the Company had generated relatively
        insignificant revenues in Canada at the holding company level from the
        licensing of certain environmental technologies and the provision of
        consulting services.  The Company  acquired Industra Service and MM
        Industra, two Canadian businesses, in fiscal 1996.  As a result of
        these acquisitions, the Company's Canadian operations generated $6.5
        million, or 5% of the Company's total revenues, in fiscal 1996. 
        Management anticipates that the Company will generate a larger
        percentage of its total revenues from its Canadian operations as it
        benefits from a full fiscal year of operations of Industra Service and
        MM Industra.  The Company  may expand its operations in Canada through
        future acquisitions, although the Company  has no immediate plans to
        do so.  Management anticipates that the increase in revenues generated
        by the Company's Canadian operating subsidiaries will increase the
        Company's exposure to potential foreign currency exchange gains or
        losses.

             During fiscal 1996, the Company  generated approximately 73% of
        its revenues from the provision of industrial maintenance services and
        20% of its revenues from the provisions of such services to petroleum
        and petrochemical refining customers.  Huntsman Corporation, Star
        Enterprising, Goodyear Tire and Rubber and BioLab together accounted
        for approximately 18% of the Company's total revenues in fiscal 1996,
        compared to 75% of total revenue in fiscal 1995.  No single customer
        accounted for more than 5% of the Company's total revenues during
        fiscal 1996.  Nevertheless, the loss of any one or more key customers
        could have a material adverse effect on the Company's results of
        operation and financial condition.  Management believes that the
        Company's continued efforts to expand and diversify its customer base
        in addition to the effects of a full year of operations from its newly
        acquired operating subsidiaries will further reduce the Company's
        dependence on certain key customers.

             The Company's industrial maintenance segment generated $87.0
        million, or 73%, of the Company's total revenues in fiscal 1996
        compared to $41.3 million, or 88%, in fiscal 1995.  This 110% increase
        in revenues reflects, in part, the addition of four months of
        operations of Industra Service and SRS.  The revenues generated by the
        Company's industrial maintenance operations that were in place at
        November 30, 1995 grew 105% in fiscal 1996.  This internal growth was
        due, in part, to revenues generated on a single project that concluded
        in fiscal 1996.  Management anticipates that the revenues generated by
        its industrial maintenance service segment will represent a smaller
        percentage of its total revenues in fiscal 1997 as the Company
        benefits form a full year of operations form MM Industra, SRS, United
        Eco and Environmental Evolutions.

             The revenues generated from the Company's environmental services
        segment increased 491% to $31.9 million in fiscal 1996 from $5.4
        million in fiscal 1995.  This growth primarily reflects the effects of
        four months of operations of each of Industra Service and SRS and six 
        months of operations of United Eco.  Prior to fiscal 1996, only Eco
        Environmental provided environmental remediation services.  As a
        percentage of total revenues, the Company's environmental remediation
        service segment contributed approximately 26.7% to total revenues in
        fiscal 1996 as compared to 11.5% of total revenues in fiscal 1995. 
        Management believes that this trend may continue in fiscal 1997 as
        such new subsidiaries are included in the Company's results of
        operations for a full fiscal year.

					-25-

   <PAGE>


             The Company significantly expanded its specialty fabrication
        service business in fiscal 1996 through the acquisition of Industra
        Service and MM Industra, and this business segment generated $657,000,
        or less than 1%, of the Company's total revenues in fiscal 1996. 
        Management anticipates that the Company's specialty fabrication
        services segment will generate more revenues and will contribute a
        greater percentage of the Company's total revenues in fiscal 1997. 
        Prior to fiscal 1996, the Company  had provided specialty fabrication
        services through the Turner Group and the Lake Charles Group as part
        of those subsidiaries' industrial maintenance services, and the
        Company did not separately report revenues for specialty fabrication
        services.  The Company  will report revenues generated from the
        provision of such services by the Turner Group and the Lake Charles
        Group in the specialty fabrication service segment.  The Company  will
        benefit from a full fiscal year of operations of Industra Service and
        MM Industra as well as nine months of operations of Chempower.  M & M
        Manufacturing Limited Partnership, the predecessor to MM Industra, had
        been idle and in receivership, but MM Industra commenced operations in
        October 1996, and, at April 29, 1997, it had been awarded CDN$35.0
        million ($25.5 million) in contracts to perform specialty fabrication
        services.

             OPERATING EXPENSES.
             ------------------

             The Company's total operating expenses increased approximately
        156% to $111.6 million in fiscal 1996 from $43.6 million in fiscal
        1995 primarily as a result of adding the operations of five new
        subsidiaries during fiscal 1996.  Expressed as a percentage of total
        revenues, operating expenses were approximately 93.3% in fiscal 1996
        compared to 93.4% in fiscal 1995.  The Company's interest expense on
        long-term debt increased to $1.7 million from $713,000 but, as a
        percentage of total revenue, interest expense remained unchanged at
        1.5%.  Depreciation and amortization increased to $2.2 million in
        fiscal 1996 from $1.1 million in fiscal 1995.  As a percentage of
        total revenues, depreciation and amortization decreased slightly to
        1.7% in fiscal 1996 from 2.4% in fiscal 1995.  Management believes
        that the Company has been able to contain operating expenses through a
        program instituted in fiscal 1994 pursuant to which project managers
        are required to track such cost control indicators as labor
        productivity and potential project cost overruns.  Management believes
        that the Company will continue to be able to control operating
        expenses, but there can be no assurance that the Company's cost
        control policies will be as effective in the future as they have been
        in the past.

             PROVISION FOR INCOME TAX.
             ------------------------

             The Company has net loss carry forwards in Canada with which it
        is able to reduce its tax liabilities.  In fiscal 1996, the
        application of $786,000 in such net loss carry forwards contributed to
        a tax recovery of $809,000 in fiscal 1996.  The Company paid $208,000
        in taxes in fiscal 1995.  At November 30, 1996, the Company had a
        total of $3.2 million in net loss carry forwards that expire
        incrementally between 1999 and 2003.

             NET INCOME.
             ----------

             Net income from continuing operations increased approximately
        207% to $8.8 million, or $0.81 per share, in fiscal 1996 from $2.9
        million, or $0.40 per share, in fiscal 1996 from $2.9 million, or
        $0.40 per share, in fiscal 1995.  A tax recovery of $809,000
        contributed approximately 9.2% of the Company's net income, or $0.07
        per share, in fiscal 1996.

        FISCAL 1995 COMPARED TO FISCAL 1994

             REVENUES
             --------

             Revenues increased to $46,684,000 in fiscal 1995 from $34,991,000
        in fiscal 1994.  The growth in revenues is attributable to the
        Company's industrial maintenance segment, primarily from the benefits
        of the July 1995 acquisition of the Lake Charles Group.  Revenues
        generated from the Company's industrial maintenance segment increased
        to $41,322,000 in fiscal 1995 from $26,951,000 in fiscal 1994.  The
        53% growth in revenues in this 


					-26-

   <PAGE> 


        segment reflects the addition of the Lake Charles Group, which
        contributed five months of operating income, or $10,554,000.  The
        construction project for Players International, Inc. accounted for
        much of the operating income generated by the Lake Charles Group in
        fiscal 1995.  Revenues generated from the Company's environmental
        service segment decreased to $5,171,000 in fiscal 1995 from $8,040,000
        in fiscal 1994.  The decrease in revenues from the Company's
        environmental service segment reflected a temporary softening of the
        market for environmental remediation services coupled with a delay in
        the start of a major project until late in fiscal 1995.


             OPERATING EXPENSES
             ------------------

             The Company realized a gross margin of $3,060,000 in fiscal 1995. 
        Operating expenses, which included interest expense on long-term debt
        and depreciation and amortization, were $43,624,000 in fiscal 1995
        compared to $33,925,000 in the prior fiscal year.  Management believes
        that this increase in operating expense was modest relative to the
        increase in the Company's revenues.  As a percentage of revenues,
        operating expenses decreased to 93% in fiscal 1995 from 97% in fiscal
        1994.  In December 1994, the Company instituted new project cost
        reporting guidelines and management has continued to follow these
        guidelines.  The Company's project managers track such cost control
        indicators as labor productivity and potential project cost overruns. 
        Management believes that the Company will continue to be able to
        control selling, general and administrative expenses and other
        operating expenses during fiscal 1996 and that the Company's favorable
        results of operations in fiscal 1995 will be achievable in fiscal
        1996.

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

             The Company incurred substantial net operating losses between
        fiscal 1989 and 1992, and the Company has used such net operating
        losses to reduce its tax liabilities.  The use of Canadian tax loss
        carry forwards is limited to earnings generated from the same or
        similar products or services from businesses without any break in
        service to which these loss carry forwards are attributable.  The
        Company uses these loss carry forwards to offset income generated from
        its consulting business.  The Company paid taxes of $208,000 in fiscal
        1995 compared to $58,000 in fiscal 1994 after the application of
        $104,000 and $285,000, respectively.

             NET INCOME.
             ----------

             Net income was $2.9 million, or $0.40 per share, for fiscal 1995
        as compared to $903,000, or $0.15 per share, for fiscal 1994.  These
        numbers reflect a 82% increase in net income on a 133% increase in
        revenues from fiscal 1994 to fiscal 1995.  Net income in fiscal 1994
        reflects the writeoff of $105,000 from discontinued operations.

        LIQUIDITY AND CAPITAL RESOURCES

             The Company's cash and shortterm investments decreased to
        $497,000 at November 30, 1996 from $1.1 million at November 30, 1995,
        as a result of the increased cash requirements of the Company's
        expanded operations.  Typically the Company maintains cash levels of
        between $1.0 million and $2.0 million for general corporate needs,
        with any excess cash used to reduce borrowings under the Company's
        lines of credit.  The Company's existing capital resources consist of
        cash, cash provided by its operating subsidiaries and funds available
        under its lines of credit. In fiscal 1996, the Company's operating
        activities provided net cash of $3.8 million compared to $2.6 million
        in fiscal 1995.  The Company's financing activities in fiscal 1996
        provided $7.1 million of net cash compared to the use of $663,000 in
        cash during fiscal 1995.  The major factors contributing to the
        Company's improved cash flow during fiscal 1996 were a $6.0 million
        dollar increase in income from continuing operations over the prior
        fiscal year and the Company's ability to incur an additional
        $15.0 million in debt.

             At November 30, 1996, the Company and its operating subsidiaries
        had an aggregate of $19.4 million in lines of credit, $5.6 million of
        which remained available to certain operating subsidiaries.  The
        Company has a $10.0 million line of credit with Merrill Lynch Business
        Financial Services, Inc. which bears interest at a floating

					-27-

   <PAGE> 



        interest rate equal to 2.75% per year above the interest rate for
        30day commercial paper and is secured by all of the Company's assets. 
        The Company had no availability under this line of credit at
        November 30, 1996.  Industra Service has a $5.9 million line of credit
        with Hongkong Bank of Canada, $3.2 million of which remained available
        at November 30, 1996.  Industra Service also has a $2.3 million line
        of credit with SeaFirst Bank, $2.0 million of which remained available
        at November 30, 1996.  United Eco has a $1 million line of credit with
        Branch Banking and Trust, $300,000 of which remained available at
        November 30, 1996.  Hubbard Electric Company, a subsidiary of the
        Turner Group, has a $250,000 line of credit with Bridge City Bank,
        $25,000 of which remained available at November 30, 1996.

             The Company incurred additional debt in fiscal 1997 in connection
        with the acquisition of Chempower.  The Company issued $15.0 million
        aggregate principal amount of 9.5% convertible subordinated debentures
        due January 24, 2007 and guaranteed two Chempower promissory notes in
        the aggregate principal amount of $15.9 million, which notes mature in
        1998.  The Company pledged all of its shares of Chempower capital
        stock to secure its guaranty of each promissory note.  Chempower
        issued the promissory notes to two principal shareholders of Chempower
        as partial payment for such shareholders' equity interest in
        Chempower. In addition, Chempower borrowed $6.0 million under an
        unsecured Chempower line of credit.

             The Company's cash requirements consist of working capital needs,
        obligations under its leases and promissory notes and the funding of
        potential acquisitions.  Management believes that the Company's cash
        and funds available under its credit facilities, together with cash
        generated from its operations, are sufficient to meet its anticipated
        cash requirements, with the exception of the Company's obligations
        under the notes guaranteed by the Company in connection with the
        Chempower acquisition.  The Company may fund its capital requirements
        by increasing its current lines of credit or restructuring such lines
        of credit to enable all operating subsidiaries to draw upon them.  The
        Company also may seek to raise additional capital by issuing debt or
        equity securities in private or public offerings.  There can be no
        assurance that the Company will be able to increase or restructure its
        lines of credit or that the Company will be able to issue its
        securities to coincide with the funding of certain capital
        requirements.

             Accounts receivable at November 30, 1996 increased to $20.9
        million from $5.5 million at November 30, 1995, after deducting
        allowances of $346,000 and $60,000 for doubtful accounts at year-end
        fiscal 1996 and fiscal 1995, respectively.  This increase in accounts
        receivables reflects the addition of five new operating subsidiaries
        during fiscal 1996, which had, in the aggregate, accounts receivables
        of $12.1 million at November 30, 1996.  The current portion of notes
        receivable increased to $6.8 million at November 30, 1996 from $1.8
        million at November 30, 1995 largely as a result of a loan made by the
        Company to EIF, an asbestos and lead removal company in which the
        Company holds a 36% equity interest.  Inventory increased to $6.8
        million at November 30, 1996 from $1.9 million at November 30, 1995. 
        This increase in inventory reflects that addition of five new
        subsidiaries during fiscal 1996, which had, in the aggregate,
        inventory of $3.6 million at November 30, 1996.

             Property, plant and equipment increased significantly to $33.2
        million at November 30, 1996 from $5.8 million at November 30, 1995 as
        a result of the Company's acquisition effected during fiscal 1996.

             The Company's investments increased to $7.6 million at November
        30, 1996 from $1.4 million at November 30, 1995 as a result of the
        Company's additional strategic investments made in EIF during fiscal
        1996.  At November 30, 1996, the Company's recorded investment in EIF
        was $5.2 million.

             Accounts payable and other accrued liabilities increased to $18.4
        million at November 30, 1996 from $5.1 million from November 30, 1995
        primarily due to the addition of new operations.

					-28-

   <PAGE> 




        INFORMATION REGARDING FORWARD LOOKING STATEMENTS

             This Annual Report on Form 10-K includes forward looking
        statements within the meaning of Section 27A of the Securities Act of
        1933 and Section 21E of the Securities Exchange Act of 1934.  Although
        the Company believes that its expectations are based on reasonable
        assumptions, it can give no assurance that such expectations will be
        achieved.  Important factors that could cause actual results to differ
        materially from those in the forward looking statements made herein
        include the ability of the Company to continue to expand through
        acquisitions, the availability of capital to fund the Company's
        expansion program, the ability of the Company to manage its expansion
        effectively, economic conditions that could affect demand for the
        Company's services, the ability of the Company to complete projects
        profitably and severe weather conditions that could delay projects.


					-29-



   <PAGE> 


        ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                               AMERICAN ECO CORPORATION

                          CONSOLIDATED FINANCIAL STATEMENTS

                                  NOVEMBER 30, 1996




					-30-


   <PAGE> 




                [Letterhead of Karlins Fuller Arnold & Klodosky, P.C.]





        To the Shareholders and Directors of
        AMERICAN ECO CORPORATION


                             INDEPENDENT AUDITOR'S REPORT

        We have audited the accompanying consolidated balance sheet of
        AMERICAN ECO CORPORATION as of November 30, 1996 and 1995 and the
        related consolidated statements of income, retained earnings and
        changes in financial position for each of the three years in the
        period ended November 30, 1996, which, as described in Note O, have
        been prepared on the basis of accounting principles generally accepted
        in Canada.  These consolidated financial statements are the
        responsibility of the Company's management.  Our responsibility is to
        express an opinion on these consolidated  financial statements based
        on our audit. 

        We conducted our audit in accordance with auditing standards generally
        accepted in the United States (and in Canada).  U.S. standards require
        that we plan and perform the audit to obtain reasonable assurance
        about whether the consolidated financial statements are free of
        material misstatement.  An audit includes examining, on a test basis,
        evidence supporting the amounts and disclosures in the consolidated
        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 audit provides a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to
        above present fairly, in all material respects, the financial position
        of AMERICAN ECO CORPORATION as of November 30, 1996 and 1995, and the
        results of its operations and its changes in financial position for
        each of the three years in the period ended November 30, 1996, in
        conformity with accounting principles  generally accepted in Canada.


        /s/  Karlins Fuller Arnold & Klodosky, P.C.

        Houston, Texas
        January 31, 1997


					-31-


   <PAGE> 



                               AMERICAN ECO CORPORATION
                              CONSOLIDATED BALANCE SHEET
                             NOVEMBER 30, 1996 AND 1995 
                         (United States Dollars in thousands)


                                                           1996     1995
                                                           ----     ----
                    ASSETS
                    -----

        CURRENT ASSETS

          Cash                                             $317     $898

          Certificate of Deposit, 
             restricted                                     180      172

          Accounts receivable, trade, 
             less allowance for doubtful 
             accounts of $346 and $60
             at November 30, 1996 and 1995, 
             respectively                                20,918    5,535

          Current portion of notes 
             receivable (Note B)                          6,695    1,870

          Costs and estimated earnings 
              in excess of billings on 
             jobs in progress  (Note I)                   3,446    2,996


          Inventory                                       6,807    1,923

          Deferred income tax (Note L)                    1,393      442

          Prepaid expenses, other                        $4,499   $2,857
                                                       --------  -------

             TOTAL CURRENT ASSETS                       $44,255  $16,693
                                                       --------  -------

        PROPERTY, PLANT AND EQUIPMENT,
            net (Note C)                                $33,238   $5,844


        OTHER ASSETS

          Goodwill (Note D), net 
            of accumulated amortization 
            of $762 and $225 at 
            November 30, 1996 and 1995, 
            respectively                                 18,969    7,123

          Debenture issue costs                              97        7

          Notes receivable (Note B)                         280       --

          Investments (Note E)                           $7,645   $1,394
                                                       --------  -------
             TOTAL OTHER ASSETS                         $26,991   $8,524
                                                       --------  -------

             TOTAL ASSETS                              $104,484  $31,061
                                                       ========  =======






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

					-32-



<PAGE> 

                               AMERICAN ECO CORPORATION
                              CONSOLIDATED BALANCE SHEET
                             NOVEMBER 30, 1996 AND 1995 
                         (United States Dollars in thousands)

                                                      1996          1995


          LIABILITIES AND SHAREHOLDERS' EQUITY
          -------------------------------------

        CURRENT LIABILITIES


          Accounts payable and
             accrued liabilities                      $  18,449 $  5,144

          Notes payable (Note F)                         20,399    3,971

          Current portion of long-term debt (Note G)      1,595      451

          Current portion of obligations under 
             capital leases (Note H)                        113       75

          Deferred income taxes                              --      219

          Billings in excess of costs and 
             estimated earnings on jobs 
             in progress (Note I)                           419      194
                                                       --------  -------

             TOTAL CURRENT LIABILITIES                   40,975   10,054
                                                       --------  -------

        LONG-TERM LIABILITIES 

          Long-term debt (Note G)                         6,618    1,931

          Obligations under capital 
             leases (Note H)                                102      169

          Deferred income tax 
             liability (Note L)                           1,373      171
                                                       --------  -------
                                                          8,093    2,271
                                                       --------  -------

             TOTAL LIABILITIES                           49,068   12,325
                                                       --------  -------

        MINORITY INTEREST                                   373
                                                                      --
                                                       --------  -------


        COMMITMENTS AND CONTINGENCIES (Note R)

        SHAREHOLDERS' EQUITY 

          Share capital (Note M)                         39,411   11,803

          Share capital subscribed                           34       98

          Contributed surplus                             2,845    2,845

          Retained earnings                              12,753    3,990
                                                       --------  -------
                                                         55,043   18,736
                                                       --------  -------

          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $104,484  $31,061
                                                       ========  =======


        On behalf on the Board

        Michael E. McGinnis                      Barry Cracower
        Director                                 Director      

        January 31, 1997

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


					-33-

<PAGE> 



                               AMERICAN ECO CORPORATION
                     CONSOLIDATED STATEMENT OF  RETAINED EARNINGS
                FOR THE YEARS ENDED  NOVEMBER 30, 1996, 1995 AND 1994
                         (United States Dollars in thousands)



        Balance, November 30, 1993                    $     235

        Net income, for the year ended 
           November 30, 1994                                903
                                                         ------

        Balance, November 30, 1994                        1,138

        Net income, for the year ended 
           November 30, 1995                              2,852
                                                         ------

        Balance, November 30, 1995                        3,990

        Net income, for the year ended 
           November 30, 1996                              8,763
                                                         ------

        Balance, November 30, 1996                      $12,753
                                                        =======




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


					-34-

<PAGE> 

                               AMERICAN ECO CORPORATION
                          CONSOLIDATED STATEMENT OF  INCOME 
                FOR THE YEARS ENDED  NOVEMBER 30, 1996, 1995 AND 1994
                         (United States Dollars in thousands)


                                         1996        1995        1994   
                                        --------     -------     -------

        REVENUE                         $119,529     $46,684     $34,991
                                        --------     -------     -------


        COSTS AND EXPENSES

          Costs of contracts, sales 
            and other operating 
            expenses                     107,819      42,270      32,318

          Interest expense on 
            long-term debt                 1,747         713         681

          Depreciation and amortization    2,232       1,107       1,044

          Gain on sale of equipment          (2)       (370)          --

          Foreign exchange (income)        (221)        (96)       (118)
                                        --------     -------     --------
                                         111,575      43,624      33,925
                                        --------     -------     -------


        INCOME FROM CONTINUING OPERATIONS
          BEFORE RECOVERY OF (PROVISION
          FOR) INCOME TAX                  7,954       3,060       1,066

        RECOVERY OF (PROVISION FOR) 
          INCOME TAX (Note L)                809       (208)        (58)
                                        --------     -------     -------

        INCOME FROM CONTINUING 
          OPERATIONS                       8,763       2,852       1,008
                                        --------     -------     -------
        DISCONTINUED  OPERATIONS (Note Q)

          Loss from operations of 
            discontinued division 
            (less applicable tax 
             benefit of $49)                  --          --        (95)

          Loss on equipment held for 
            sale (less applicable 
            tax benefit of $5)                --          --        (10)
                                        --------     -------     -------

                                              --          --       (105)
                                        --------     -------     -------

        NET INCOME                      $  8,763      $2,852     $   903
                                        ========     =======     =======

        Earnings per common share:

          Income from continuing 
            operations                      $.81        $.40        $.16
                                             ===         ===         ===
          Net income                        $.81        $.40        $.15
                                             ===         ===         ===

        Weighted average number of shares
            used in computing
            income per common 
            share (Note M)            10,846,516   7,217,005   6,191,296
                                      ==========   =========   =========




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

					-35-

<PAGE>

 



                               AMERICAN ECO CORPORATION
               CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
                 FOR THE YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
                         (United States Dollars in thousands)



                                            1996        1995        1994
                                      ---------- -----------------------
        CASH FLOWS FROM OPERATING ACTIVITIES:

          Income from continuing 
            operations                $    8,763    $  2,852    $  1,008

          Adjustments to reconcile net 
          income to net cash provided by 
          operating activities:   

          Loss from discontinued operations   --          --       (105)

          Gain on sale of equipment           (2)      (370)          --

          Depreciation and amortization    2,232       1,107       1,044

          Change in deferred income taxes    490        (64)           4

          Change in certificate of deposit, 
          restricted                          (8)        (6)       (166)

          Change in accounts receivable   (1,823)    (1,356)     (1,553)

          Change in costs and estimated 
            earnings in excess of billings 
            on jobs in progress             (363)    (1,059)       (981)

          Change in inventory             (2,511)        189           2


          Change in prepaid expenses        (748)        256          72

          Change in accounts payable      (2,312)        981         683

          Change in billings in excess 
            of costs and estimated 
            earnings on jobs in progress
                                              34          75         (13)
                                         -------     -------     -------
        Net cash provided by (used in) 
          operating activities             3,752       2,605
                                                                     (5)
                                         -------     -------     -------
        CASH FLOWS FROM INVESTING ACTIVITIES:

          Capital expenditures            (4,803)       (386)       (121)

          Proceeds from sale of equipment     53          --          --

          Increase in goodwill              (586)       (219)       (640)

          Acquisition of business, net of
          cash acquired                       18        (586)         --

          Increase in investment          (6,156)       (727)       (633)
                                         -------     -------     -------

        Net cash used in investing activities
                                         (11,474)     (1,918)     (1,394)
                                         -------     -------     -------

        CASH FLOWS FROM FINANCING ACTIVITIES:

          Proceeds from notes receivable   3,257         288         582

          Disbursements for notes receivable
                                          (8,350)       (625)     (1,051)

          Proceeds from notes payable     14,920         800       3,182

          Proceeds from long-term debt       428          --          --

          Principal payments on notes payable
                                          (7,412)       (739)       (321)

          Principal payments on long-term debt
                                            (927)       (325)       (438)

          Principal payments on obligations 
          under capital leases              (88)       (139)       (135)

          Deferred foreign exchange           --         (27)        (18)

          Debenture issuance costs          (193)         --          --

          Stock issuance costs                          (125)         --

          Issuance of common stock         5,506         229         118
                                         -------     -------     -------
        Net cash provided by (used in) 
        financing activities               7,141       (663)       1,919
                                         -------     -------     -------
        NET INCREASE (DECREASE) IN CASH     (581)         24         520

        CASH AT BEGINNING OF YEAR            898         874         354
                                         -------     -------     -------
        CASH AT END OF YEAR          $       317   $     898    $    874
                                         =======     =======     =======


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


					-36-

<PAGE> 

                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        American Eco Corporation and its wholly-owned subsidiaries ( the
        Company" or "AEC") provide industrial services, environmental services
        and specialty manufacturing to the petrochemical, refining, forest
        products and offshore fabrication industries.

        NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
               POLICIES

        The accompanying consolidated financial statements include the Company
        and its wholly-owned subsidiaries.   All significant intercompany
        balances and transactions have been eliminated.

        The consolidated financial statements have been prepared in accordance
        with accounting principles generally accepted in Canada.  There are no
        material differences, except as described in Note O, between the
        accounting principles applied by the Company and those that would be
        applied under accounting principles generally accepted in the United
        States.

        REVENUE RECOGNITION - The Company recognizes revenues and profits on
        -------------------
        contracts using the percentage-of-completion method.  Under the
        percentage-of-completion method, contract revenues are accrued based
        upon the percentage that accrued costs to date bear to total estimated
        costs.  As contracts can extend over more than one accounting period,
        revisions in estimated total costs and profits during the course of
        work are reflected during the period in which the facts requiring the
        revisions become known.  Losses on contracts are charged to income in
        the period in which such losses are first determined.

        The percentage-of-completion method of accounting can result in the
        recognition of either costs and estimated profits in excess of
        billings or billings in excess of costs and estimated profits on
        uncompleted contracts, which are classified as current assets and
        liabilities, respectively, in the accompanying balance sheet.  The
        current asset account represents costs incurred and profits earned
        that have not been billed to the customer on uncompleted construction
        contracts.  The current liability account represents deferred income
        on uncompleted construction contracts.  Generally accepted accounting
        principles for percentage-of-completion accounting require the
        classifications as current assets and liabilities.

        INVENTORY - Inventory of raw material is valued at the lower of cost
        ---------
        or market method, with cost determined on the first-in, first-out
        method.  Inventory consists primarily of supplies and consumables used
        in conjunction with construction projects.

        PROPERTY, PLANT AND EQUIPMENT - Property and equipment are stated at
        ------------------------------
        cost.  Depreciation of plant and equipment is provided over the
        estimated useful lives of the respective assets using the straight-
        line method over the following periods based on their estimated useful
        lives:

        Buildings                                               40 years
        Fabrication machinery, mobile and other equipment     3-10 years

        Expenditures for additions, major renewals and betterments are
        capitalized and expenditures for maintenance and repairs are charged
        to earnings as incurred.  When property and equipment are retired or
        otherwise disposed of, the cost thereof and the applicable accumulated
        depreciation are removed from the respective accounts and the
        resulting gain or loss is reflected in earnings.

        AMORTIZATION - The cost in excess of net assets of businesses acquired
        ------------
        at their respective acquisition dates are amortized on a straight-line
        basis over 40 years.  On an annual basis, the Company assesses the
        carrying value in order to determine whether an impairment has
        occurred, taking into account both historical and forecasted results
        of operations.

        DEBENTURE FINANCING COSTS - The costs of debenture financing are
        -------------------------
        deferred and are amortized over the life of the related debt. 

        PREPAID EXPENSES - Included in prepaid expenses is deferred financing
        ----------------
        costs in the amount of $1,145,000 and $805,000 at November 30, 1996
        and 1995, respectively.  This represents costs incurred with brokerage
        investment houses and other expenses in the Company s quest to raise
        capital.  These costs have been deferred and will serve as an offset
        to  the funds raised subsequent to November 30, 1996 (Refer to Note 
        S).

					-37-

<PAGE> 
                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
               POLICIES (continued)


        INCOME TAXES - The Company reflects income taxes based on the tax

        -------------
        allocation method.  Under this method, timing differences between
        reported and taxable income result in provisions for taxes not
        currently payable.  Such timing differences arise principally as a
        result of claiming depreciation and amortization for tax purposes at
        amounts differing from those charged to income.

        EARNINGS PER SHARE - Per share data is calculated using the weighted
        -------------------
        average number of shares outstanding for the year.  Warrants and other
        stock options have not been included in earnings per share data as
        they are anti-dilutive.

        SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -
        -------------------------------------------------
                                          1996        1995        1994  
                                        --------    --------    --------
        Cash paid during the 
           years for:

          Interest                    $1,614,000    $713,000    $712,000
          Income taxes                $ --         $  66,000  $    5,000

        TRANSLATION OF FINANCIAL STATEMENTS INTO UNITED STATES DOLLARS - The
        --------------------------------------------------------------
        consolidated financial statements are expressed in United States
        dollars using foreign currency translation procedures established by
        the Canadian Institute of Chartered Accountants.  All of the Company's
        operations are classified as integrated operations for purposes of
        applying the translation procedures, and the functional currency is
        United States dollars.

        For integrated purposes, cash, accounts and notes receivable, costs
        and estimated earnings in excess of billings, current liabilities and
        long term debt are translated into United States dollars using year
        end rates of exchange; all other assets and liabilities are translated
        at applicable historical rates of exchange.  Revenues, expenses and
        certain costs are translated at annual average exchange rates except
        for inventory, depreciation and amortization which are translated at
        historical rates.  Realized exchange gains and losses and currency
        translation adjustments relative to long-term monetary items with a
        fixed and ascertainable life are deferred and amortized on a straight-
        line basis over the life of the item.

        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.


        NOTE B NOTES RECEIVABLE
                                                    1996            1995
                                        	  --------	  -------

        (United States Dollars in thousands)

        EIF Holdings, Inc., receivable on July 31, 1997, 
          maximum borrowings with under this 
          agreement are $5,250,000, interest 
          at the rate of prime plus 2%,  unsecured.   $4,908        $ --

        Impala Development, Ltd., interest at 12% 
          secured by 144,500 shares AEC of stock, 

          this note was repaid in February, 1997.        775          --

        Michael McGinnis, President of AEC, receivable 
          March through April, 1997, with 
          interest at 10%, secured by 268,000 
          shares of AEC stock and 140,000 
          share options of AEC stock.                    490          --

        Frank Fradella, Chief Operating Officer of 
          AEC, receivable $70,000 per annum, 
          non-interest bearing, unsecured.               350          --



					-38-

    <PAGE> 

                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	NOTE B	NOTES RECEIVABLE (continued) 


        Kam Biotechnology International, LLC, 
          receivable on December 31, 1997, 
          with interest at the rate of 6%,
          unsecured.                                     200         200

        Network Capital Management Group, Inc., 
          ("Network") due on September 15, 
          1996, with interest at the rate of 7%.,
          secured by fees and commissions 
          to be earned by Network from the Company.       --         675

        Turner Holdings, Inc., with interest at  
          the rate  of 8%, unsecured.                     20          20

        Longview Industries, Inc., non-interest 
          bearing, secured by equipment.                  --         675

        Miscellaneous notes receivable                   232         300
                                                     -------     -------
                                                       6,975       1,870
        Current portion                                6,695       1,870
        Long-term portion                            $   280    $     --
                                                     =======     =======


        NOTE C PROPERTY , PLANT AND EQUIPMENT

        Property, plant and equipment consists of the following:

                                                     1996        1995   
                                                  ----------  ----------
                                                            
                                    (United States Dollars in thousands)

        Land                                        $  1,965    $     56
        Buildings                                      7,345         861
        Fabrication machinery, mobile 
           and other equipment                        28,940       6,142
        Furniture and fixtures                         1,645         257
        Equipment under capital leases                   626         580
        Leasehold improvements                           908          69
                                                    --------    --------
                                                      41,429       7,965
        Accumulated depreciation 
           and amortization                            8,191       2,121
                                                    --------    --------
                                                     $33,238      $5,844
                                                    ========    ========

        NOTE D GOODWILL

        1996
        ----

        Effective January 1, 1996, the Company acquired all of the outstanding
        common stock of Environmental Evolutions, Inc., a Corpus Christi,
        Texas, company, in exchange for 400,000 shares of Company common stock
        with a fair market value of $2.4 million.  The purchase price and
        expenses associated with the acquisition exceeded the fair value of
        net assets acquired by approximately $3.3 million and has been 
        included in intangible assets.  Pro forma results were not material
        to the Company's financial position or results of operations.

        Effective May 31, 1996, the Company acquired substantially all the
        assets and assumed certain liabilities of United Eco Systems
        ("United"), a construction company located in High Point, North
        Carolina.  The purchase price consisted of 

					-39-

     <PAGE> 



                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	NOTE D	GOODWILL (continued) 

	315,000 shares of Company common stock with a fair market value of 
	$2.5 million.  The purchase price and expenses associated with the
        acquisition exceeded the fair market value of net assets acquired 
	by approximately $2.8 million and has been included in intangible 
        assets.  Pro forma results were not material to the Company's
	financial position or results of operations.

        Effective July 1, 1996, the Company acquired all of the outstanding
        common stock of Separation and Recovery Systems, Inc. ("SRS"), a
        California company.  The purchase price consisted primarily of 736,667
        shares of Company common stock with a fair market value of $5.6
        million, which approximated the  book value of SRS.

        Effective July 22, 1996, the Company acquired all of the outstanding
        common stock of Industra Service Corporation ("Industra"), a British
        Columbia, Canada company.  AEC exchanged 0.425 common shares for each
        common share of Industra, or 1,486,997 shares of AEC common shares. 
        The purchase price and expenses associated with the acquisition
        exceeded the fair value of net assets of the business acquired by
        approximately $4.4 million and has been included in intangible assets.


        All acquisitions have been accounted for using the purchase method;
        accordingly, the assets and liabilities have been recorded at their
        estimated fair values at the date of acquisition.  The excess purchase
        price and related expenses over the fair value of net assets acquired
        is included in "Goodwill".  Under the purchase method of accounting,
        the results of operations are included in the consolidated financial
        statements from their acquisition dates.

        The unaudited pro forma results, assuming the SRS and Industra
        acquisitions had occurred at December 1, 1993, are as follows:

                                        1995         1994   
                                        ----         ----   
        United States Dollars 
        in thousands, except 
        per share data:
	--------------
        Revenues                        $112,000     $94,033
        Net income                      $  3,069     $    12
        Earnings per share              $    .33     $   .00

        The unaudited pro forma summary is not necessarily indicative either
        of results of operations that would have occurred had the acquisitions
        been made at the beginning of the periods presented, or of future
        results of operations of the combined companies.

        1995
        ----

        In July, 1995, the Company acquired all of the outstanding capital
        stock of Lake Charles Construction Corporation, in exchange for
        issuance of 520,000 shares of the Company's common stock valued at $2
        million.  The purchase price and expenses associated with the
        acquisition exceeded the fair value of net assets acquired by
        approximately $2.8 million.

				-40-

    <PAGE> 


                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



        NOTE E INVESTMENT IN EIF HOLDINGS, INC.

        For the period, August 9, 1996 through November 7, 1996, the Company
        owned approximately 18% of EIF Holdings, Inc. ("EIF").  On November 7,
        1996, the Company completed a transaction to acquire approximately
        another 20% of EIF.  Since November 7, 1996, the Company accounts for
        its 38% ownership interest in EIF using the equity method of
        accounting.  As of November 30, 1996, the Company's recorded
        investment in EIF was $5.2 million.   No other investment made during
        fiscal 1996 exceeded $500,000.


        NOTE F NOTES PAYABLE
                                  		      1996        1995    
                                   		  ----------   -----------
                                                  (United States Dollars in 
							thousands)

          Note payable to Merrill Lynch Business 
          Financial Services, Inc., revolving 
          line of credit, maximum borrowing of 
          $10,000,000, interest at 30-day 
          Commercial paper rate plus 2.75%, 
          secured by all accounts, chattel 
          paper, contract rights, inventory, 
          equipment, fixtures, general 
          intangibles, deposit accounts, 

          documents and instruments of 
          the Company.                               $10,000       $     --

        Note payable to Hongkong Bank of 
          Canada, revolving line of 
          credit, maximum borrowings 
          of $5,900,000, interest at 
          prime plus 3/8%; secured 
          by general assignment of
          accounts receivable and
          inventory and a floating 
          charge debenture on all 
          the assets of Industra 
          Service Corporation,
          Canada, a subsidiary of
          the Company.                                 2,688          --

        Note payable to Branch Banking & Trust, 
          payable $48,000 per month, including
          interest at prime plus 1.50%, maturing 
          May, 1997, secured by deed of trust 
          on real property and all personal 
          property of United Eco Systems, 
          Inc. a subsidiary of the Company.            2,200          --

        8% convertible callable secured debentures, 
          maturing May, 1997, convertible
          into common shares of the Company 
          at a price of 85% of the greater
          of (a) the 20-day weighted average
          trading price of the common shares
          on NASDAQ, immediately prior to
          conversion and (b) the 1-day 
          weighted average trading price
          of the common shares on NASDAQ 
          immediately prior to conversion,
          unsecured. Refer to Note M.                  1,850          --

        Note payable to Bank of America, payable 
          $100,000 per month, including
          interest at the bank's reference
          rate plus .75%, maturing August, 
          1997, secured by accounts receivable,
          inventory and machinery and equipment
          of SRS.                                        998          --

        Note payable to Bank of America, due August, 
          1997, including interest at the 
          bank's reference rate plus 
          .75%, maturing August, 1997, 
          secured by accounts receivable, 
          inventory, and machinery and 
          equipment of SRS.                              900          --



					-41-

   <PAGE> 


                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        NOTE F NOTES PAYABLE (continued) 


        Note payable to Branch Banking & Trust, 
          revolving line of credit, interest
          at prime plus 1.5%, maturing May, 
          1997, secured by a deed of trust
          on real property and a lien on 
          all personal property of United
          Eco Systems.                                   700          --

        Note payable to AICCO for insurance premiums,
          payable $61,400 (1996) and $82,000
          (1995) per month, including interest
          at 6.19% (1996) and 7.8% (1995),  
          secured by insurance premiums.                 480         356

        Note payable to SeaFirst Bank,  revolving 
          line of credit, maximum borrowings
          of $2,250,000, interest at prime
          plus .75%, secured by accounts 
          receivable and equipment of
          Industra, Inc.                                 250          --

        Note payable to Bridge City Bank, revolving
          line of credit, maximum borrowings
          of $250,000, interest at prime plus
          2.50%, maturing June, 1997; secured
          by accounts receivable, equipment 
          and inventory of Hubbard Electric
          Company, a subsidiary of 
          the Company.                                   225          --

        Note payable to Pacific Southwest Bank, payable 
          $8,500 monthly, including interest 
          at 11.25%, maturing March, 1998, 
          secured by transportation and 
          other equipment.                                85          --

        Note payable to First Interstate Bank, 
          revolving line of credit, maximum 
          borrowings of $4,000,000, interest 
          at prime  plus 1.50%. Aggregate 
          amounts available under the line 
          of credit were limited to 75%
          of total eligible accounts receivable 
          from completed contracts and
          maintenance billings plus 60% 
          of accounts receivable from 
          progress billings, collateralized 
          by accounts receivable and 
          inventory of the Company. The
          line of credit expired in 
          October, 1996.                                  --       3,450

        Note payable to individual, payable on 
          February 24, 1996, non-interest 
          bearing, secured by real estate.                --         165

        Other miscellaneous                               23            
                                                    --------    --------

                                                     $20,399     $ 3,971
                                                    ========    ========


        NOTE G LONG-TERM DEBT
                                                    1996        1995    
                                                    ----        ----    
                                                            
                                    (United States Dollars in thousands)

        Note payable to Bank of America, payable 
          $83,000 per month beginning
          January, 1997, plus interest at 
          bank's reference rate plus .75%, 
          secured by receivables, inventory, 
          machinery and equipment of SRS.             $3,000   $      --

        Note payable to Hongkong Bank of Canada, 
          payable $23,000 per month, including
          interest at 9.00%, secured by real 
          estate of Industra.                          2,062          --



					-42-

    <PAGE> 

                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        NOTE G LONG-TERM DEBT (continued) 


        Note payable to The C.A. Turner Construction 
          Company, Texas, payable $92,000 
          quarterly including interest at 
          8.00%, secured by substantially 
          all of the fixed assets of C.A.
          Turner Construction, Inc. and 
          Action Contract Services, Inc., 
          two subsidiaries of the Company, 
          maturing December, 2000.                     1,240       1,495

        Note payable to Hongkong Bank of Canada, 
          payable $4,000 per month, 
          including interest at 9.00%, 
          secured by real estate of 
          Industra.                                      368          --

        Notes payable to four individuals, interest 
          only through May, 1999, then 
          quarterly payments of $38,000 
          including interest at 8%, unsecured.         398          --

        Note payable to Metlife Capital Corporation, 
          payable $8,000 monthly including 
          interest at 8.50%, secured by equipment 
          of C.A. Turner Construction, Inc.              262         337

        Note payable to Bridge City Bank, payable 
          $4,000 per month including interest
          at prime plus 1.00%, maturing July, 
          2110, secured by real estate of 
          Hubbard Electric, a subsidiary
          of the Company.                                242          --

        Note payable to Cameron State Bank, payable 
          $2,700 per month including interest
          at 9.125%, secured by real estate.             153          --

        Note payable to Bridge City Bank, payable 
          $1,000 per month including 
          interest at prime plus 1.00%, 
          maturing June, 2001, secured 
          by real estate.                                 87          --

        8.00% convertible callable secured 
          debentures Series A, maturing 
          October 14, 1998, convertible
          into common shares of the 
          Company at a conversion price
          of $4.50 per share in Canadian 
          dollars, secured by the assets 
          of Eco Environmental, Inc., a 
          subsidiary of the Company.                      --         134

        Note payable to Madison Trading International 
          Ltd., payable $80,000 on 
          February 28, 1996 and the 
          remaining balance on February 28, 
          1997, Interest is at 7.00%, 
          payable annually, unsecured.                    --         297


        Notes payable, other                             401         119
                                                    --------    --------
                                                       8,213       2,382
        Current portion                                1,595         451
						     -------     --------
        Long-term portion                             $6,618      $1,931
                                                    ========    ========


        The aggregate principal payments on long-term debt during the years
        subsequent to November 30, 1996 are:  1997 - $1,595,000; 1998 -
        $1,726,000; 1999 - $1,779,000; 2000 - $785,000; 2001 -$467,000;
        thereafter - $1,861,000.


					-43-

    <PAGE> 
                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        NOTE H LEASE AGREEMENTS 

        The Company leases equipment and office and warehouse space under
        capital and operating leases that  expire at various times through
        September 1999 and September 2001, respectively.  Imputed interest on
        the capital leases range from 9.00% to 17.50%.

        Future minimum payments, by year and in the aggregate, under these
        capital and operating leases, consisted of the following at November
        30, 1996.
                                                    Capital    Operating
                                                    Leases     Leases   
                                                  ----------   ---------
                                                 (United States Dollars
						     in thousands)

        1997                                            $139      $1,319
        1998                                              94       1,043
        1999                                              14         767
        2000                                              --         562
        2001                                              --         406
                                                     -------     -------
        Total minimum lease payment                      247      $4,097
                                                     =======     =======

        Amounts representing interest 
	  and executory costs       		         32
                                                     -------
        Present value of net minimum 
	   lease payments   		                 215
        Current portion                                  113
                                                     -------
        Long-term portion                               $102
                                                     =======

        Rent expense for the years ended November 30, 1996 and 1995 amounted
        to $538,000 and $181,000,  respectively.



        NOTE I COSTS AND ESTIMATED EARNINGS ON JOBS IN PROGRESS
                                                
                                                  1996        1995
                                               ---------     -------
                                                            
                                    (United States Dollars in thousands)

        Costs, estimated earnings and billings are summarized as follows:

        Costs incurred on uncompleted jobs           $66,476     $44,971
        Estimated earnings                             8,417       6,720
                                                     -------     -------
                                                      74,893      51,691
        Billings to date                              71,866      48,889
                                                     -------     -------
                                                     $ 3,027    $  2,802
                                                     =======     =======

        Included in the accompanying 
        balance sheet under the 
        following captions:

        Costs and estimated earnings in excess 
            of billings on jobs in progress         $  3,446      $2,996

        Billings in excess of costs and estimated 
            earnings on jobs in progress               (419)       (194)
                                                     -------     -------
                                                     $ 3,027    $  2,802
                                                     =======     =======

					-44-


   <PAGE> 


                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        NOTE J BACKLOG (unaudited) 

        The following schedule summarizes changes in backlog on contracts
        during the year ended November 30, 1996.  Backlog represents the
        amount of revenue the Company expects to realize from work to be
        performed on uncompleted contracts in progress at November 30, 1996
        and from contractual agreements on which work has not yet begun.

                                                            
                                    (United States Dollars in thousands)


        Backlog balance at November 30, 1995                     $46,951
        Contracts entered into during the period                 197,578
        Less revenue earned during the year                    (119,529)
                                                                --------

        Backlog balance at November 30, 1996                    $125,000
                                                                ========

        The Company also entered into additional contracts with estimated
        revenues of $67,000 between December 1, 1996 and January 31, 1997.


        NOTE K RELATED PARTY TRANSACTIONS

        For the years ended November 30, 1996 and 1995, the Company had
        business transactions with related parties.  The details of these
        transactions and balances owing from and to these parties are as
        follows:

        Green Cone Limited (U.K.) ("Green Cone")  
        ----------------------------------------

        1996 - During 1996, the Company converted it's receivable in Green
        Cone to equity and assigned the Company's Green Cone Patent to Green
        Cone.  The Company recognized income of $130,000 on this transaction.

        1995 - During 1995, the Company had sales to Green Cone in the amount
        of $8,000.  At November 30, 1995, $11,000 is included in accounts
        receivable and $136,000 in notes receivable.

        Legal Fees
        ----------

        During the years ended November 30, 1996 and 1995, the Company
        incurred legal fees in the amount of $13,000 and $2,000, respectively, 
        with a firm in which a director of the Company is a partner.

        Consulting Fees
        ---------------

        1996 - During the year ended November 30, 1996, fees aggregating
        $120,000 were paid to a director, in his capacity as an officer of the
        Company.  Of this amount, $80,000 is included in deferred financing
        costs, $30,000 is included in share issue costs, as a reduction to
        common stock, and $10,000 is included in administrative expenses. 
        Additionally, another director was paid $109,000 for services rendered
        during the year, of which $27,000 is included in deferred financing
        costs, $18,000 is included in share issue costs, as a reduction to
        common stock, and $64,000 is included in administrative expenses.

        1995 - During the year ended November 30, 1995, fees aggregating
        $84,000  were paid to a Director, in his capacity as an officer of the
        Company.  Of this amount, $75,000 is included in share issue costs, as
        a reduction to common stock, and $9,000 is included in administrative
        expenses.  Additionally, another Director was paid $140,000 for
        services rendered during the year, of which $110,000 is included in
        deferred bid costs and $30,000 is included in deferred financing
        costs.

					-45-

    <PAGE> 


                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        NOTE K RELATED PARTY TRANSACTIONS (continued) 


        Turner Holdings, Inc. ("THI") 
        -----------------------------

        At November 30, 1996 and 1995, a note receivable in the amount of
        $20,000 was due from THI.

        Sandhills Industries, Inc.
        --------------------------

        During 1996, the Company earned gross revenues of  $537,000 from a 
        construction agreement with a company in which an  employee of the
        Company has an equity interest.

        EIF Holdings, Inc.
        ------------------

        1996 - The Company has a note receivable from EIF as of November 30,
        1996, with accrued interest of $248,000. Refer to Notes B and E.

        In conjunction with the above investment, the Company has entered into
        the following guarantees:

          Employment agreements with the new President and Chief Operating
        Officer of EIF, through December 31, 2000.

          The Company has guaranteed $800,000 of EIF bank debt with Farmers
          and Merchants Bank.

          On December 13, 1996 EIF borrowed $300,000 from Truman Harty, Inc.,
          which is guaranteed by the Company.

          The Company has also guaranteed $22,481 to a vendor of EIF and  the
          payment of  November and December rent due to EIF's landlord.


        OTHER ITEMS - At November 30, 1995, accounts payable include $88,000,
        -----------
        which was advanced to Cambridge Construction Service Company ("CCSC"),
        a subsidiary of the Company, by a former officer of CCSC.  Also CCSC
        leased office space from a company owned by an officer of CCSC.  For
        the year ended November 30, 1995, rent expense amounted to $31,000 for
        such office space.




        NOTE L                      INCOME TAXES

        Canada - Income tax expense varies from the amount that would be
        --------
        computed by applying the basic combined Canadian federal and
        provincial rate of 44.34%, as follows:

                                                 1996     1995    1994
                                                ------   ------ --------  
                           (United States Dollars in thousands)           

        Basic rate applied to pre-tax income     $3,526   $   419  $   473
        Reduction due to timing differences        (137)     (315)    (164)
        Reduction due to income taxed 
          in other jurisdictions                 (2,603)       --     (24)
        Reduction of income taxes due to 
           application of loss 
           carryforwards                           (786)     (104)    (285)
                                             -------------  -------  --------
        Effective Canadian tax expense      $        --  $      --  $    --
                                             ==========      ======     ====


					-46-

    <PAGE> 


                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        NOTE L INCOME TAXES (continued) 


        The Company has Canadian tax operating loss carryforwards expiring in:
        Year ended November 30, 
        1999                                                       $   555
        2000                                                           111
        2001                                                         1,521
        2002                                                           144
        2003                                                           884
                                                                   -------
                                                                    $3,215
                                                                   =======

        UNITED STATES - The components of the recovery of (provision for)
        -------------
        income taxes are as follows:

                                                1996      1995     1994
                                                -------   -----   --------
                                                              
                            (United States Dollars in thousands)          

        Federal                                    $865    $  (16)    $(54)
        State                                       (50)     (128)      --
                                               --------  -------- --------
                                                    815      (144)     (54)

        Deferred                                     (6)     ( 64)      (4)
                                                -------  -------- --------
        Recovery of (provision for) income tax     $809     $(208)    $(58)
                                                =======  ======== ========

        The significant components of the net deferred tax asset (liability)
        are as follows:

                                                1996      1995    1994
                                             -------     ------  -----
        Depreciation of plant and 
          equipment                             $(1,204)    $(400)   $(291)

        Reduction of income taxes due 
          to application of loss 
          carryforwards                           1,415       565      281

        Gain on sale of equipment, 
          recognized on the installment 
          method for income tax purposes             --      (125)      --

        Other                                       (30)       12       (3)
        Valuation allowance                       (161)        --       --
                                               --------  -------- --------
        Net deferred tax asset (liability)     $     20  $     52  $   (13)
                                               ========  ======== ========
        The liability method of accounting for deferred income taxes requires
        a valuation allowance against deferred income taxes against the net
        income tax losses available to be carried forward.  The Company
        established a valuation allowance against deferred tax assets of
        $161,000 at November 30, 1996.


        NOTE M   SHARE CAPITAL

        AUTHORIZED SHARE CAPITAL - The authorized share capital consists of
        ------------------------
        unlimited Class A Preference shares and unlimited, no par value Common
        shares.

        ISSUED SHARE CAPITAL - 
        --------------------
                                                  
                                                      Number of   Total
                                                         Common   Consider-
                                                         Shares   ation    
                                                        --------- ---------

        (Total Consideration in United States 
        Dollars in thousands)

        Outstanding, November 30, 1993                  4,789,510  $   208

        Conversion of debentures                          950,430    3,130

        Purchase of insurance deposits                    369,849    1,187


					-47-

    <PAGE> 


                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        NOTE M SHARE CAPITAL (continued) 

                                                  
                                                      Number of   Total
                                                         Common   Consider-
                                                         Shares   ation    
							-------- ---------
        (Total Consideration in United States 
        Dollars in thousands)

        Purchase of Cambridge Construction 
           Service Corporation                            400,000    1,200

        Issued for debenture costs                         20,000       64


        Issued in settlement of debt                       30,000       92

        Issued for cash                                   262,552      862

        Share issue cost                                              (232)

        Outstanding, November 30, 1994                  6,822,341    6,511
                                                                 

        Conversion of debentures                        1,147,250    3,454

        Purchase of Lake Charles 
          Construction Corporation                        520,000    2,080

        Purchase of Reclamation Management, Inc.            9,000       33


        Issued for cash                                    78,500      145

        Issued for services                               130,000      460

        Issued for real estate acquisition                152,381      400

        Share issue cost                                        -   (1,280)
                                                         --------- ---------
        Outstanding, November 30, 1995                   8,859,472    11,803

        Conversion of debentures                          198,820    1,284

        Issued for acquisitions                         4,283,204   27,269

        Issued for cash                                   594,940    1,743

        Issued for services                               281,000    1,753

        Share issue cost                               
                                                          --         (4,441)
                                                          --------- ---------
        Outstanding, November 30, 1996                   14,217,436   $39,411
                                                          ========== =========

        SHARE WARRANTS - As of November 30, 1996, the Company had 876,000
        ---------------
        outstanding share warrants, which call for the issuance of one common
        share upon presentation of the warrant at issue prices of  $4.50
        (Canadian dollars) to $6.00 (United States dollars) .  These warrants
        expire at various times through November, 2001.

        STOCK OPTIONS - The Company has options outstanding to certain
        -------------
        officers, consultants, directors and employees of the Company and its
        subsidiaries, to issue a total of 615,163 common shares at prices
        ranging from $2.50 to $8.30 (Canadian dollars).  These options expire
        through March, 2001.

        CONVERTIBLE SECURED DEBENTURES - 265,107 common shares are reserved
        ------------------------------
        for issue on the conversion of convertible secured debentures of
        $1,850,000, maturing May, 1997.

        WEIGHTED AVERAGE - The weighted average number of shares outstanding
        -----------------
        used in the calculation of earnings per share was 10,846,516, 
        7,217,005 and 6,191,296, for the years ended November 30, 1996, 1995
        and 1994, respectively. See
        Note O.


        NOTE N   ECONOMIC DEPENDENCE

        The Company had revenues from ten, four and four customers that
        represented 68%, 75% and 48% of total revenue for the years ended
        November 30, 1996, 1995 and 1994, respectively.


					-48-

    <PAGE> 


                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        NOTE O   DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
                 ACCEPTED ACCOUNTING PRINCIPLES AND PRACTICES

        United States accounting practices relating to foreign currency
        translation are not entirely compatible with Canadian accounting
        practices which the Company follows, and which are described in Note
        A.  Under United States practices, where the functional currency is
        United States dollars, all currency translation adjustments related to
        assets and liabilities are included in earnings currently, whereas
        Canadian practices for integrated operations require that currency
        translation adjustments related to long term monetary items with a
        fixed and ascertainable life be deferred and amortized over the life
        of the item.

        Deferred income taxes are translated at year-end rates of exchange
        under United States practices rather than historical rates of exchange
        which are required by Canadian practices.  

        Under the United States basis, income tax losses available to be
        carried forward are recognized when it is more likely than not that
        they will be realized.  Under the Canadian basis, income tax losses
        available to be carried forward are recognized only when there is
        virtual certainty that they will be realized.  For the years ended
        November 30, 1996, 1995 and 1994, there were no significant
        differences between these two methods.

        Under accounting principles generally accepted in the United States,
        earnings per share would be calculated based upon the weighted average
        number of shares outstanding during the year plus common stock
        equivalents, such as common stock purchase options, unless they are
        antidilutive.  Earnings per share would be computed as if common share
        purchase options and warrants were exercised at the beginning of the
        year, as if funds obtained thereby were used to purchase common shares
        of the Company at the average market price during the year.  Fully
        diluted earnings per share would be calculated as if the proceeds from
        the exercise of common share purchase options and warrants were used
        to purchase the company's common shares at its average market price
        during the year or its market value at the end of the year, whichever
        is higher.

        NOTE P   RETIREMENT PLANS

        The Company has a profit-sharing plan (defined contribution)
        retirement plan covering substantially all employees, except employees
        who are members of a union who bargained separately for retirement
        benefits.  Employees are eligible upon attaining the age of  twenty-
        one (21) and completing one (1) year of service.  The amount of
        contribution to the plan is determined annually by the Board of
        Directors and may vary from zero to fifteen percent of covered
        compensation.

        The Company, through it's collective bargaining agreements with
        various unions, contributes to the unions' retirement plans.  For the
        years ended November 30, 1996, 1995 and 1994, an expense of
        $1,454,000, $560,000 and $1,029,000, respectively, was incurred for
        these retirement plans.

        NOTE Q   DISCONTINUED OPERATIONS

        During 1994, the Company's management made a decision to cease
        operations of Action Machine Shop, a division of Action.  At November
        30, 1994 the net assets held for sale consisted of plant and
        equipment, with a cost of $374,000 and accumulated depreciation of
        $66,000.  In August, 1995, these assets were sold for $675,000 to
        Longview Industries, Inc. and is included in notes receivable at
        November 30, 1995.  The Company  collected the receivables and
        liquidated the liabilities.  Discontinued operations of Action Machine
        Shop for the year ended November 30, 1994 were as follows:

        Revenues                                                  $441,000
        Cost of sales and general expenses                        (600,000)
                                                                  --------
        Loss from operations                                      (159,000)
        Income tax benefit                                          54,000
                                                                  --------
        Net loss                                                 $(105,000)
                                                                  ========

					-49-

    <PAGE> 


                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




        NOTE R   CONTINGENCIES AND COMMITMENTS 

        EMPLOYMENT AGREEMENT - The Company has an employment agreement with
        the chief executive officer through November 30, 2000 with annual base
        compensation of $250,000.  The chief executive officer is entitled to 
        an annual bonus equal to five percent of net income and stock options
        have been granted that allow for the purchase of up to 20,000 shares
        of Company common stock per year pursuant to the currently effective
        Employee Stock Option Plan.

        LITIGATION - The Company is involved in arbitration with a customer. 
        The Company claims that equipment supplied to a clean-up site would
        not perform properly, due to conditions at the site and the customer's
        actions interfering with the Company's ability to work efficiently. 
        The customer has claimed the equipment did not perform as represented. 
        This matter is currently in arbitration.  The customer claims damages
        from the Company totalling $19.3 million, consisting of delay damages
        and costs of completion.  The Company counter-claims damages totalling
        $2.4 million for breach of subcontract and $10 million for the
        customers bad faith and intentional misconduct.  Although the outcome
        is not determinable, it is the best judgement of management that
        neither the financial position nor results of operations of the
        Company will be materially affected by the final outcome of this
        arbitration.

        At November 30, 1996, there were various claims and disputes
        incidental to its business.  The Company believes that the disposition
        of all such claims and disputes, individually or in the aggregate,
        should not have a material adverse affect upon the Company's financial
        position, results of operations or cash flows.

        NOTE S   SUBSEQUENT EVENTS

        The Company has entered into an agreement pursuant to which AEC would
        acquire Chempower, Inc.  The transaction is anticipated to take the
        form of a merger, with an estimated purchase price of $48.36 million
        in a combination of cash and debt.  In conjunction with this merger,
        the Company has consummated a private placement for $15 million of
        convertible debentures.  The acquisition is subject to various
        conditions including negotiation and execution of a definitive
        agreement and completion of due diligence.  

        In February, 1997, the Company signed a letter of intent to form a
        joint venture with CVG International America ("CVG").  The joint
        venture is to provide industrial, environmental, engineering, and
        health and safety services to Corporacion Venezolana de Guyana.

        NOTE T   SEGMENTED INFORMATION

        The Company operates in Canada and the United States in three primary
        industry segments: (1)  Environmental Services which involves asbestos
        removal, insulation and other environmental services, (2) Industrial
        Services which involves the repair, maintenance and modification of
        boilers, pressure vessels and tubing used in industrial facilities and
        the provision of engineering services and (3) Manufacturing Services
        which involves  construction of high-quality custom steel and alloy
        products.  It is the Company's policy to price intersegment contracts
        on an equivalent basis to that used for pricing external contracts. 
        The following is a summary of selected data for these business
        segments:

        Industry 
        Segmentation                         
                                          Environmental         Industrial
                                           Services               Services
                                         --------------         ---------- 
         (United States Dollars in thousands)

        1996
        Contract income from customers          $31,897   $86,975
        Operating income                          2,118     5,617
        Depreciation and amortization             1,132     1,100
        Capital expenditures during the year        516     1,336
         Identifiable assets                      38,488    28,425

					-50-

    <PAGE> 


                               AMERICAN ECO CORPORATION
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	NOTE T	SEGMENTED INFORMATION (continued) 

                                          Environmental         Industrial
                                           Services               Services
                                         --------------         ---------- 
         (United States Dollars in thousands)



        1995
        Contract income from customers           $5,362   $41,322
        Operating income                            505     2,555
        Depreciation and amortization               214       893
        Capital expenditures during the year         54     1,675
        Identifiable assets                       4,636    17,163

        1994
        Contract income from customers           $8,040   $26,951
        Operating income                            451       615
        Depreciation and amortization               196       848
        Capital expenditures during the year         47       686
        Identifiable assets                       5,246    11,447


        Industry 
        Segmentation                         
                                          Manufacturing
                                           Services        Consolidated
                                         --------------   -----------------
                             (United States Dollars in thousands)

        1996
        Contract income from customers             $657  $119,529
        Operating income                            218     7,953
        Depreciation and amortization                --     2,232
        Capital expenditures during the year      6,155     8,007
        Identifiable assets                       4,864    71,777


        1995
        Contract income from customers        $      --   $46,684
        Operating income                             --     3,060
        Depreciation and amortization                --     1,107
        Capital expenditures during the year        --     1,729
        Identifiable assets                          --    21,799

        1994
        Contract income from customers        $      --   $34,991
        Operating income                             --     1,066
        Depreciation and amortization                --     1,044
        Capital expenditures 
          during the year                            --       733
        Identifiable assets                          --    16,693


        Geographic Segmentation                       
                                                      
                                                 United           Consoli-
		                                 States  Canada   dated
					       -------- -------- ---------
        1996
        Contract income                        $  6,509  $113,020 $119,529
        Operating income                             89     7,864    7,953
        Depreciation and amortization               166     2,066    2,232
        Capital expenditures during the year      6,151     1,856    8,007
        Identifiable assets                      20,988    50,789   71,777

        1995
        Contract income                      
                                          $          --   $46,684  $46,684
        Operating income                             --     3,060    3,060
        Depreciation and amortization                --     1,107    1,107
        Capital expenditures during the year         --     1,729    1,729
        Identifiable assets                          --    21,799   21,799

        1994
        Contract income                      
                                          $          --   $34,991  $34,991
        Operating income                             --     1,066    1,066
        Depreciation and amortization                --     1,044    1,044
        Capital expenditures during the year         --       733      733
        Identifiable assets                          --    16,693   16,693

					-51-

    <PAGE> 


        Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                 AND FINANCIAL DISCLOSURE.

                 The Company has had no disagreements with Karlins Fuller
        Arnold & Klodosky PC., the Company's independent accountants, or such
        firm's predecessor during the prior three fiscal years.  In March
        1997, the Board of Directors selected Coopers & Lybrand, L.L.P. as
        auditors of the Company effective May 7, 1997, subject to the
        ratification of the shareholders at the Annual Shareholders Meeting
        scheduled to be held on May 7, 1997.  Accordingly, Karlins Fuller
        Arnold & Klodosky P.C. has resigned effective May 7, 1997.

					-52-

    <PAGE>

				      PART III

        ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

                 The names of the executive officers, directors and certain
        significant employees are set forth below, together with the positions
        held by each such person in the Company and their ages as of March 31,
        1997.  All directors are elected annually by the shareholders of the
        Company and serve until their successors are duly elected and
        qualified.  Officers are elected by the Board of Directors and serve
        at the will of the Board of Directors.

                NAME                    AGE                  POSITIONS
                ----                    ---                   --------

           Mark White                    57               Chairman
           Michael E.                    47               President, Chief
           McGinnis                                       Executive
                                                          Officer and 
                                                          Director
           John C. Pennie                58               Vice-Chairman of
                                                          the Board of
                                                          Directors

           Frank Fradella                42               Executive Vice
                                                          President and
                                                          Chief Operating
                                                          Officer
           David L.                      47               Vice President
           Norris                                         and Chief
                                                          Financial
                                                          Officer
           John H. Craig                 49               Secretary

           Barry Cracower                59               Director

           William A.                    69               Director
           Dimma
           Tyrrell Garth                 48               Director

           Donald Getty                  63               Director
           Joseph D.                     75               Division
           DeFranco                                       President, SRS

           Besim Halef                   41               Division
                                                          President, MM
                                                          Industra

           John Hoyle                    50               Division
                                                          President,
                                                          United Eco
           Toomas Kukk                   56               Division
                                                          President, 
                                                          Chempower

           Donald Scott                  38               Division
                                                          Manager, Eco
                                                          Environmental 

           James Wright                  35               Division
                                                          President,
                                                          Environmental
                                                          Evolutions

        EXECUTIVE OFFICERS

          MARK WHITE has been a director of the Company since July 1993 and
        was elected Chairman of the Board in July 1994.  Since 1986, Mr. White
        has practiced law and has acted as an independent consultant.  From
        1983 to 1986, he served as the Governor of the State of Texas.  His
        career in public service also included serving as the Attorney General
        of Texas, Secretary of State and Assistant Attorney General.  He
        serves on the board of 

					-53-

    <PAGE> 

        directors of the John Gray Foundation at Lamar University, and the
        boards of regents of Hardin Simmons University, the Houston
        Educational Excellence Foundation, and the Houston Read Foundation. 
        Mr. White is a member of the National Association of Attorneys'
        General and the National Governors' Association.  

          MICHAEL E. MCGINNIS has been the President and Chief Executive
        Officer of the Company since 1993 and a director since 1994.  He was
        the President and Chief Executive Officer of Eco Environmental, Inc.,
        a provider of environmental remediation services to industrial
        clients, when it was acquired by the Company in 1993.  Prior to
        joining Eco Environmental, Inc. in 1992, Mr. McGinnis was employed
        with The Brand Companies, Inc., one of the largest asbestos abatement
        contractors in the United States.  Mr. McGinnis joined The Brand
        Companies in 1965 and served in various operational and administrative
        capacities for over 27 years.  Mr. McGinnis serves as the Chairman of
        the Board of EIF Holdings, Inc., an asbestos abatement and lead
        removal contractor based in California in which the Company holds a
        minority interest, and he has held that position since June 1996,
        having been President of EIF from March 1996 until August 1996.

          JOHN C. PENNIE has been a director of the Company since February
        1992 and the Vice-Chairman of the Board of Directors since October
        1993.  Mr. Pennie served as the Company's President and Chief
        Executive Officer in 1992 in order to execute the downsizing and
        reorganization of the Company.  Prior to joining the Company, Mr.
        Pennie was a business consultant with over 25 years of experience in
        assisting turnaround and start-up companies.  He also serves as a
        director of Innovadent Technologies, Inc., a manufacturing company.

          FRANK FREDELLA has been Executive Vice President and Chief
        Operating Officer since October 1996.  For more than five years prior
        thereto he was an executive of NSC Corporation, with his last position
        as President. NSC Corporation provides asbestos abatement and other
        specialty contracting services.

          DAVID L. NORRIS has been Vice President and Chief Financial Officer
        of the Company since March 1997.  He also has been President and Chief 
        Executive Officer and a director of EIF since August 1996.  Prior 
        thereto, Mr. Norris was the President of Tonopah Resources 
        International, Inc. and Citadel Environmental Group, Inc., which 
         owned and operated several abatement and remediation companies in 
        the environmental industry.  From 1994 to 1996, Mr. Norris was the 
         President and Managing Member of WNH Investments, L.L.C., which is a 
         private investment banking company investing principally in companies
         in the environmental and energy industries. From 1992 to 1994, Mr. 
         Norris was the President and Chief Operating Officer of North
         American Recycling Systems, Inc.  Prior thereto, from 1972 to 1992, 
         Mr. Norris was employed by Evergren Bankcorp, Inc., most recently as 
         Executive Vice President in charge of corporate banking.

          JOHN CRAIG has been as Secretary of the Company for more than five
        years.  He has been a partner in Cassels, Brock & Blackwell, a
        Toronto, Ontario law firm since 1994, and for at least three years
        prior thereto, he was a partner in Holden, Day & Wilson.  His law
        firms have performed legal services for the Company.


        OUTSIDE DIRECTORS

          BARRY CRACOWER has been a director of the Company since December
        1996.  Mr. Cracower has been the President of Pharmx Rexall Drug
        Stores Ltd., a drug store chain based in Concord, Ontario, since 1990. 
        Prior to 1990, he held senior executive positions at several major
        Canadian corporations.  Mr. Cracower served on the Board of Directors
        of the predecessor corporation to the Company, ECO Corp., in 1992
        during its restructuring.  He also is as a director of Algonquin
        Mercantile Corporation, a Canadian company.  

          WILLIAM A. DIMMA has been a director of the Company since January
        1997.  Mr. Dimma has served as the Chairman of the Board of Canadian
        Business Media Ltd since 1992, and York University since 1991.  For
        more than five years through 1993, Mr. Dimma served as the Deputy
        Chairman and also as the President and Chief 


					-54-

   <PAGE> 



        Executive Officer of  Royal LePage Limited, a Canadian real estate 
	company.  In addition to the companies mentioned above, Mr. Dimma 
        is a director of the Greater Toronto Airport Authority, Magellan 
        Aerospace Corporation, IPL Energy Inc., a pipeline and gas 
        distribution company, London Life Insurance  Company, Sears 
        Canada Inc. and Trilon Financial Corporation, a financial services     
        company.

          TYRRELL L. GARTH has been a director of the Company since December
        1996 and previously was as a director from 1993 to 1995.  Mr. Garth
        has been the President of Cheyenne Capital Inc., a provider of
        merchant banking services located in Beaumont, Texas, since 1996. 
        Prior to joining Cheyenne Capital, Mr. Garth was a partner of Moore
        Landrey Garth Jones Burmeister & Hulett, L.L.P., a law firm in
        Beaumont, Texas, for more than five years.  In addition to serving as
        a director of the Company, Mr. Garth is a director of Unison
        HealthCare Corp., a long-term healthcare provider (Nasdaq National
        Market).

          HON. DONALD R. GETTY has been a director of the Company since
        January 1997.  Mr. Getty has been the President and Chief Executive
        Officer of Sunnybank Investments Ltd., an investment and consulting
        company located in Edmonton, Alberta, since December 1992.  Mr. Getty
        has held elected and appointive offices in Canadian government, most
        recently as the Premier of the Province of Alberta from 1985 to 1992
        and as the Minister of Energy and Natural Resources for the federal
        government of Canada between 1971 and 1979.  Mr. Getty currently
        serves on the boards of directors of Mera Petroleum, an oil and gas
        company, Cen Pro Technologies, an engineering company, Farm Energy
        Corporation, an ethanol production company, and Guyanor Resources, a
        mining company, all located in Canada.


        SIGNIFICANT EMPLOYEES

          JOSEPH D. DEFRANCO has been as the Division President of SRS since
        July 1996 when SRS was acquired by the Company.  Mr. DeFranco had
        served as the President, Chief Executive Officer, Treasurer and a
        director of SRS since 1973.

          DESIM HALEF has been the Division President of MM Industra since
        June 1996.  Between April 1994 and May 1996, Mr. Halef served as a
        project general manager for National Heavy Industries Limited, Saudi
        Arabia in connection with a project to build specialty fabrication
        facilities in the Kingdom of Saudi Arabia.  Mr. Halef had served in
        various capacities at M&M Manufacturing Limited Partnership, the
        predecessor of MM Industra, between 1994 and 1985, most recently as
        the Executive Vice President and General Manager of that company from
        March 1991 to April 1994.

          JOHN HOYLE has been as the Division President of United Eco since
        November 1996.  Mr. Hoyle had been the President of Four Seasons
        Environmental, Inc., an environmental services company, between July
        1996 and August 1993, and served as the Vice President of that
        corporation between August 1993 and September 1990.

          TOOMAS KUKK has served as the Division President of Chempower since
        its acquisition in March 1997.  Mr. Kukk founded Chempower and
        Powerhouse Equipment, Inc., the predecessor to Chempower, and he
        served as the Chief Executive Officer and Chairman of the Board of
        Directors of Chempower since its organization in 1985.

          DONALD SCOTT has served as the Division Manager of Eco
        Environmental since April 1996.  Mr. Scott served as Project Manager
        for Eco Environmental since January 1993.  He previously worked as a
        project manager for T.G.I Stephens, a provider of environmental
        services.

					-55-

   <PAGE> 


          JAMES WRIGHT has served as the Division President of Environmental
        Evolutions since January 1996.  Prior to the acquisition of
        Environmental Evolutions, Mr. Wright had served as the President of
        that corporation since April 1992.

        BOARD OF DIRECTORS MATTERS

          The Board of Directors has an Audit Committee and a Compensation
        Committee.  The Audit Committee reviews the annual and quarterly
        financial statements, and material investments and transactions, and
        meets with the outside accountants and senior management regarding,
        among other items, internal control procedures established by the
        Company.  The Compensation Committee sets the level of compensation of
        the Company's executive officers.

          During the 1996 fiscal year, the Board of Directors met in person
        or telephonically four times, and each director attended at least 75%
        of the meetings.  The Board of Directors also authorized corporate
        actions through written consents.

        COMPLIANCE WITH CERTAIN REPORTING REQUIREMENTS

          Section 16(a) of the Securities Exchange Act of 1934 requires that
        the officers, directors and 10% shareholders of a domestic issuer
        report the ownership and purchase or sale of the equity securities of
        such issuer to the SEC.  Officers, directors and 10% shareholders of
        foreign private issuers are not required to report such ownership or
        transactions.  The Company has become a "domestic issuer" for the
        purposes of United States securities regulations.  The officers and
        directors of the Company will file Initial Statements of Beneficial
        Interest with the SEC.  See Item 1. "Description of Business   Change
        in Reporting Status."


					-56-

    <PAGE> 

        ITEM 11.  EXECUTIVE COMPENSATION.

          The following table discloses the compensation awarded to or earned
        by the Chief Executive Officer and the other most highly compensated
        executive officers of the Company as of the end of fiscal 1996 whose
        annual salary plus other forms of compensation exceeded $100,000 (the
        "Named Executive Officers").

                            SUMMARY COMPENSATION TABLE



                                             Annual Compensation
                                             -------------------

                Name                                          Other Annual
                and                                  Bonus    Compensation
              Position       Year    Salary ($)       ($)         ($)
              --------       ----     ---------      -----      -------
        Michael E. McGinnis
        President and        1996   252,276 (1)        0     6,439 (2)
        Chief Executive      1995   102,201 (1)        0     6,440 (2)
        Officer              1994       90,012         0            0


        Mark White           1996            0         0   120,000 (3)
        Chairman of          1995            0         0   140,000 (3)
        the Board            1994            0         0       87,500

        John C. Pennie       1996            0         0   109,140 (4)
        Vice-Chairman        1995            0         0   119,100 (4)
        of the Board         1994            0         0    80,785 (4)
        ---------------------

                      SUMMARY COMPENSATION TABLE

                                      Long-Term     All Other
                                     Compensation  Compensation
                                       --------    ------------

                Name
                and                   Securities
              Position        Year    Underlying
              --------        ----   Options (#)
        Michael E. McGinnis
        President and         1996     20,000           0
        Chief Executive       1995     50,000           0
        Officer               1994     50,000           0


        Mark White            1996          0           0
        Chairman of           1995     65,000           0
        the Board             1994     10,000           0


        John C. Pennie        1996          0           0
        Vice-Chairman         1995     50,000           0
        of the Board          1994          0           0
        ---------------------
        (1)  Includes $1,138 and $1,158 of deferred compensation
             contributed by the Company to Mr. McGinnis' 401K Plan in
             fiscal 1996 and fiscal 1995, respectively.
        (2)  Represents automobile lease payments paid by the Company.
        (3)  Represents amounts paid as a retainer to Mr. White for
             services rendered to the Company.
        (4)  Represents fees paid to Windrush Corporation, a company
             50% of which is owned by Mr. Pennie, for executive
             services including rent and secretarial services for the
             Company's Toronto office.

        EMPLOYMENT CONTRACTS

          The Company and Michael E. McGinnis have entered into an employment
        agreement pursuant to which Mr. McGinnis receives an annual base
        salary of $250,000 and is entitled to participate in an annual bonus
        pool equal to 5% of the Company's net income and to receive annual
        grants of stock options for the purchase of 20,000 Common Shares.  The
        agreement provides for up to two years compensation if he is
        terminated without cause, or upon his death or disability, subject to
        certain limitations.  The employment agreement terminates on November
        30, 2000.

          The Company and Frank Fradella have entered into an employment
        agreement, effective October 1, 1996, pursuant to which Mr. Fradella
        will be paid an annual base salary of $250,000 and an automobile
        allowance of $750 per month plus any operating and maintenance
        expenses associated with such vehicle.  The agreement also provides
        that Mr. Fradella is entitled to receive a non-discretionary bonus of
        $70,000 per year, to participate in an annual bonus pool equal to 5%
        of the Company's net income, to receive 50,000 stock options to
        purchase Common Shares, and to receive an additional $250,000 as a
        signing bonus.  In addition, the Company has agreed to reimburse Mr.
        Fradella for certain costs associated with his relocating to Houston,
        Texas. The agreement provides that the Company will pay up to six
        months salary to Mr. Fradella or his estate if he dies, is permanently
        disabled or is 

					-57-


   <PAGE> 




        terminated by the Company without cause, subject to certain 
        limitations.  Mr. Fradella's employment agreement with the
        Company terminates on September 30, 2001.  See "Item 13. Certain
        Relationships and Related Transactions  Indebtedness of Management or
        Affiliates of Management."

          The Company and David L. Norris entered into an employment
        agreement effective August 1, 1996 pursuant to which Mr. Norris will
        be paid an annual base salary of $175,000, an automobile allowance of
        $700 per month plus any operating and maintenance expenses associated
        with such vehicle, and he is entitled to participate in an annual
        bonus pool equal to 5% of the Company's income and to receive up to
        25,000 options to purchase Common Shares per year based upon his
        performance.  The agreement provides for up to two years compensation
        if Mr. Norris is terminated by the Company without cause subject to
        certain limitations.  Mr. Norris' employment agreement with the
        Company terminates on December 31, 2000.


        COMPENSATION OF DIRECTORS

          The directors of the Company who are not otherwise employees or
        consultants of the Company receive CDN$20,000 per year.  In addition,
        all reasonable expenses incurred by the directors in respect of their
        duties are reimbursed by the Company.  None of the directors of the
        Company receives compensation in his capacity as a director pursuant
        to any other arrangement or in lieu of any standard arrangement except
        through the granting of stock options.

          The following table provides information with respect to stock
        options granted to the Named Executive Officers during fiscal 1996.

                                Stock Options Granted
                        in Fiscal Year Ended November 30, 1996
                        --------------------------------------
                                               % of Total
                                                Options
                               Securities      Granted to
                                 Under         Employees       Exercise
                                Options       in Financial       Price
        Name                  Granted (#)         Year          (CDN$)
        ----                  ------------    -----------      ---------
        Michael E. McGinnis      20,000            4%            $4.60

        Mark White                 0               --             --

        John C. Pennie             0               --             --




                                   Market Value
                                  of Securities
                                    Underlying
                                    Options on
                                   the Date of
                                      Grant           Expiration
        Name                          (CDN$)             Date
        ----                       ------------       ----------
        Michael E. McGinnis           $4.60           12/1/2000

        Mark White                      --                --

        John C. Pennie                  --                --


          The following table provides information with respect to stock
        options exercised by the Named Executive Officers during the fiscal
        year ended November 30, 1996 and the balance of stock options
        remaining after such exercises.  All stock options described below
        were presently exercisable at November 30, 1996.


					-58-



   <PAGE> 



                          Aggregated Stock Options Exercised
                        in Fiscal Year Ended November 30, 1996
                              and Fiscal Year-End Values
                        --------------------------------------


                        Securities
                         Acquired
                           Upon
            Name       Exercise(#)   Value Realized (US$)
            ----       -----------   --------------------
        Michael E.
        McGinnis            0                 --

        Mark White          0                 --

        John C.          50,000            214,925
        Pennie

                              Number of Securities
                                   Underlying       Value of Unexercised
                              Unexercised Options    In-the-Money Stock
                                   at Fiscal          Options at Fiscal
                                    Year-End              Year-End
                                      (#)                 (CDN$)(1)
                              --------------------   -------------------
                                  Exercisable/          Exercisable/
                Name             Unexercisable          Unexercisable
                ----          -------------------   --------------------
        Michael E. McGinnis      108,000/12,000        707,200/55,800
        Mark White                  75,000/0              502,500/0
        John C. Pennie                 0                     --


        (1)  Based on the closing price of the Common Shares on The Toronto
             Stock Exchange on November 30, 1996 of CDN$9.25.


        REPORT OF COMPENSATION COMMITTEE

          During fiscal 1996, the Compensation Committee of the Board of
        Directors of the Company was comprised of Henry Knowles, Ronald Mann
        and A. Murray Sinclair, all of whom were independent directors.  All
        three directors resigned as a member of the Board of Directors during
        fiscal 1996.

          It is the responsibility of the Compensation Committee to determine
        the level of compensation in respect of the Company's executives
        officers with a view to providing such executives with a competitive
        compensation package having regard to performance.  Performance is
        defined to include achievement of the Company's strategic objective of
        growth and the enhancement of shareholder value through increases in
        the stock price resulting from a stronger balance sheet and increased
        earnings.

          Compensation for executive officers is composed primarily of three
        components; namely, base salary, performance bonuses and the granting
        of stock options.  Performance bonuses are considered from time to
        time having regard to the above referenced objectives.

          In establishing the levels of base salary, the award of stock
        options and performance bonuses, the Compensation Committee takes into
        consideration individual performance, responsibilities, length of
        service and levels of compensation provided by industry competitors. 
        In the case of Mr. McGinnis, the Chief Executive Officer, he will be
        entitled to participate in an annual bonus pool equal to 5% of the net
        income under his employment contract entered into on December 1, 1995
        and as subsequently amended.  In determining the Chairman's retainer,
        the Committee considered that the Chairman was devoting over 50% of
        his time to the affairs of the Company and had made a significant
        contribution to the success of the Company.

          The Compensation Committee is also responsible for reviewing the
        Company's manpower and succession plans to ensure that adequate plans
        are in place.

          This report was furnished by the Compensation Committee.

					-59-

   <PAGE> 

        STOCK PERFORMANCE CHART

          The following graph compares the yearly percentage change at
        November 30 of the indicated year in the Company's cumulative total
        shareholder return on its Common Shares with the cumulative total
        shareholder return on (i) securities traded on the Toronto Stock
        Exchange, and (ii) publicly traded companies which are part of the
        Pollution Control Index.  Although the Company believes this graph
        reflects favorably on the Company, it does not believe that the
        comparison is necessarily useful in determining the quality of the
        Company's performance or in establishing executive compensation.

                         [performance graph depicting information
			 contained in the following chart]


                             1991    1992  1993    1994    1995    1996
                             ----    ----  ----    ----    ----    ----
        Pollution Control
        Industry Index        100   100     80       60     145    130

        TSE 300 Total
        Return Index          100    98    129      129     151    199

        American Eco          100   123    164       92     137    264
        Corporation

        Share Price 
        (Canadian)        $3.50     $4.30 $5.75  $3.25    $4.80   $9.25

					-60-

   <PAGE> 





        ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
        MANAGEMENT.

          The following table sets forth as of May 2, 1997 the number of
        Common Shares beneficially owned by (i) each person known to be the
        beneficial owner of more than five percent of the outstanding Common
        Shares, (ii) each director of the Company, (iii) each Named Executive
        Officer and (iv) all officers and directors of the Company as a group
        as known by the Company or as reflected on the records of the transfer
        agent.

           Name and Address of      Amount and Nature of
            Beneficial Owner       Beneficial Ownership(1)
           -------------------     -----------------------

                                     Number     Percentage
                                     ------     ----------
        Vision Holdings, Inc. . .
                                3,052,611         21%
           14 Parlaville Road
           P.O. Box HM 2257
           Hamilton, Bermuda HMJX

        Barry Cracower  . . . . .20,000(2)          *


        William Dimma   . . . . .20,000(2)          *
        Tyrrell Garth . . . . . .
                                102,300(3)          *

        Donald Getty  . . . . . .20,000(2)          *

        Michael E. McGinnis . . .
                                435,000(4)         3%

        John C. Pennie  . . . . .22,500(5)          *


        Mark White  . . . . . . .
                                112,000(6)          *
        Directors and executive
        officers as a group (7    731,800          5%
        persons)  . . . . . . . .

        ----------------------------
        * Represents less than one percent of the issued and outstanding
          Common Shares.

        (1)  Unless otherwise indicated, all persons have sole voting and
             investment power over the Common Shares.

        (2)  Represents Common Shares underlying presently exercisable stock
             options.

        (3)  Includes 20,000 Common Shares underlying presently exercisable
             stock options.

        (4)  Includes (i) 142,000 Common Shares underlying presently
             exercisable stock options and (ii) 90,500 shares owned by his
             wife.

        (5)  Includes 20,000 Common Shares underlying presently exercisable
             stock options.

        (6)  Includes 75,000 Common Shares underlying presently exercisable
             stock options.

        (7)  Includes Common Shares disclosed in notes (2), (3), (4), (5), (6)
             above.


					-61-

   <PAGE> 


        ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

        TRANSACTIONS WITH MANAGEMENT OR AFFILIATES OF MANAGEMENT

          Pursuant to an agreement between the Company and Windrush
        Corporation ("Windrush"), dated October 5, 1994, Windrush receives a
        fee of $5,000 per month in consideration for executive services for
        administration, strategic and marketing planning and public investor
        relations provided to the Company plus fees which are negotiated on a
        project-by-project basis for other specific services rendered.  This
        agreement may be terminated by the Company on 30 days' prior written
        notice.  Mr. Pennie, the Vice-Chairman of the Board of Directors,
        holds a 50% interest in Windrush.


        INDEBTEDNESS OF MANAGEMENT OR AFFILIATES OF MANAGEMENT

          During fiscal 1996, the Company loaned $490,355 to Michael E.
        McGinnis for the purpose of purchasing Common Shares of the Company in
        the open market.  The loan matures on May 7, 1997, bears interest at
        the rate of 10% per annum and is secured by the purchased shares.  On
        September 6, 1996, the Company loaned $475,000 to Mark White, who was
        then Chairman of the Board, which loan was non-interest bearing and
        unsecured.  Mr. White repaid the loan on October 16, 1996.  The
        Company also loaned $350,000 to Frank J. Fradella, Executive Vice
        President and Chief Operating Officer, for the purpose of purchasing a
        home upon his joining the Company, repayable, without interest, at the
        rate of $70,000 per year while Mr. Fradella is employed by the
        Company.  This loan becomes due upon the termination of Mr. Fradella's
        employment with the Company.

					-62-



   <PAGE> 

                                       PART IV

        ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
        8-K.

        (a)  Financial Statements:
             --------------------

             The following audited consolidated financial statements of
             American Eco Corporation and subsidiaries are included in Item 8:

             Index to Consolidated Financial Statements

             Report of Independent Auditors

             Consolidated Balance Sheet as of November 30, 1996 and 1995

             Consolidated Statement of Retained Earnings for the years ended
             November 30, 1996, 1995 and 1994

             Consolidated Statement of Income for the years ended November 30,
             1996, 1995 and 1994

             Consolidated Statement of Cash Flows for the years ended November
             30, 1996, 1995 and 1994

             Notes to Consolidated Financial Statements

             The following consolidated financial statement schedules of
             American Eco Corporation and subsidiaries are included in
             Item 14(d):

             All schedules to the consolidated financial statements required
             by Article 7 of Regulation S-X are not required under related
             instructions or are not applicable and, therefore, have been
             omitted.


        (b)  REPORTS ON FORM 8-K

             Not applicable

        (c)  EXHIBITS 
                                  INDEX TO EXHIBITS
        Exhibit Number                 Document

        3.1.1  Letters Patent (Certificate of Incorporation) filed February
               6, 1969, incorporated by reference to Exhibit 3.1.1 to the
               Company registration statement on Form 10, dated September 19,
               1990.

        3.1.2  Supplementary Letters Patent, dated June 26, 1970
               (incorporated by reference to Exhibit 3.1.2 to the Company's
               Form 10).

        3.1.3  Articles of Amendment, filed June 16, 1975 (incorporated by
               reference to Exhibit 3.1.3 to the Company's Form 10).

        3.1.4  Articles of Amendment, filed June 23, 1978 (incorporated by
               reference to Exhibit 3.1.4 to the Company's Form 10).

        3.1.5  Articles of Amendment, filed June 20, 1986 (incorporated by
               reference to Exhibit 3.1.5 to the Company's Form 10).


					-63-

   <PAGE> 


        3.1.6  Articles of Amendment, filed June 17, 1987 (incorporated by
               reference to Exhibit 3.1.6 to the Company's Form 10).

        *3.1.7 Articles of Amendment, certified on November 19, 1993

        3.2.1  By-Laws (incorporated by reference to Exhibit 3.2 to the
               Company's Form 10.).

        *3.2.2 By-Law Number 10.

        4.1    Share Option Plan (incorporated by reference to Exhibit to
               Management Information Circular to the Company's Form 6-K,
               dated September 27, 1995).

        4.2    Form of 9.5% Cumulative Convertible Debenture due January 24,
               2007 (incorporated by reference to Exhibit 2 to the Company's
               Form 6-K, dated February 7, 1997).

        4.3    Form of 9.5% Cumulative Convertible Debenture due March 3,
               2007 (incorporated by reference to Exhibit 2 to the Company's
               Form 6-K, dated March 14, 1997).

        4.4    Form of Stock Purchase Warrant (incorporated by reference to
               Exhibit 3 to the Company's Form 6-K, dated February 7, 1997).

        10.1   Memorandum, dated October 5, 1995, between the Company and
               Windrush Corporation (incorporated by reference to Exhibit
               10.6 to the 1994 Form 20-F).

        10.2   Share Exchange Agreement, dated June 1, 1994, among Westlake
               Interests, Ltd., Cambridge, the Company and Marc A. Sparks
               (incorporated by reference to Exhibit 10.7.1 to the 1994 Form
               20-F).

        10.3   Acquisition Agreement, dated July 31, 1995, between the
               Company and Kenneth Hagan and Janet Hagan.  (incorporated by
               reference to Exhibit 2.7.1 to the 1995 Form 20-F).

      *10.4.1  Agreement and Plan of Merger dated as of April 26, 1996, among
               the Company SRS Acquisition Corporation and Separation and
               Recovery Systems, Inc. ("SRS").

      *10.4.2  Business Loan Agreement, dated as of February 7, 1996, between
               Bank of America National Trust and Savings Association ("BA")
               and SRS.

        *10.4.3
               Amendment No. 1 to Business Loan Agreement, dated as of July
               3, 1996, between SRS and BA.

      *10.4.4  Continuing Guarantee, dated as of July 3, 1996 from the
               Company to BA.

      *10.4.5  Subordination Agreement, dated July 3, 1996, among American
               Eco, SRS and BA. 

      *10.5    Acquisition Agreement, dated as of May 31, 1996, between the
               Company and United Eco Systems, Inc.

      *10.6.1  WCMA Note, Loan and Security Agreement, dated as of August 23,
               1996 between American Eco/SP Corporation and Merrill Lynch
               Business Financial Services, Inc. ("MLBFS")

      *10.6.2  Security Agreement, dated as of August 26, 1996 between C.A.
               Turner Maintenance, Inc. ("Turner") and  MLBFS. 

      *10.6.3  Unconditional Guaranty, dated as of August 26, 1996 of Turner
               in favor of MLBFS.

					-64-


   <PAGE> 


      *10.6.4  Unconditional Guaranty, dated as of August 26, 1996 of
               American Eco/SP Corporation in favor of MLBFS.

      *10.7    Acquisition Agreement and Plan of Reorganization, dated as of
               January 1, 1996 between Jim Wright, Mark L. Crawford and Aaron
               Fine (as shareholders of Environmental Evolutions, Inc.) and
               the Company, as amended March 15, 1996.

      10.8.1   Agreement, dated April 9, 1996 between the Company and Wayne
               E. Shaw, and as amended on April 17, 1996, April 18, 1996, May
               23, 1996 and June 12, 1996 (incorporated by reference to
               Exhibit 1 to the Company's Registration Statement on Form F-
               8).

      *10.8.2  Arrangement Agreement, dated November 13, 1996, among Industra
               Service Corporation, 519742 B.C. Ltd. and the Company.

      *10.9.1  Agreement and Plan of Merger, dated as of September 10, 1996,
               among the Company, Sub Acquisition Corp. and Chempower, Inc.
               ("Chempower").

      *10.9.2  Financing Agreement, dated February 28, 1997, among the
               Company, Chempower, Toomas J. Kukk and
               Mark L. Rochester.

      *10.9.3  Letter Agreement, dated February 28, 1997, between the Company
               and Toomas J. Kukk, as agent (the
               "Agent").

      *10.9.4  Guaranty, dated February 28, 1997, by the Company in favor of
               the Agent.

      *10.9.5  Pledge Agreement, dated February 28, 1997, between the Company
               and the Agent.

      *10.9.6  Security Agreement, dated February 28, 1997, between the
               Company and the Agent.

      *10.9.7  Loan Agreement, dated as of February 28, 1997, by and between
               Chempower, Inc. and First National Bank of Ohio ("FNBO").

      *10.9.8  Promissory Note, dated February 28, 1997, of Chempower in
               favor of the Agent.  

      *10.9.9  Purchase Agreement, dated as of February 28, 1997, between
               Chempower and Holiday Properties ("Holiday"). 

      *10.9.10 Commercial Guaranty, dated February 28, 1997, by the Company
               in favor of FNBO.

      *10.9.11 Promissory Note, dated February 28, 1997, of Chempower in
               favor of FNBO.

      *10.9.12 Subordination Agreement, dated as od February 28, 1997, among
               Chempower, FNBO, Thomas J. Kukk, Mark L. Rochester and the
               Agent. 

      *10.9.13 Commercial Security Agreement, dated as of February 28, 1997,
               between Chempower and FNBO.

      *10.10   Lease, dated as of August 15, 1996, between 1011 Jones Road
               Joint Venture Group and the Company.

					-65-

   <PAGE> 


      *10.11.1 Employment Agreement, dated December 1, 1995, between the
               Company and Michael E. McGinnis, as amended May 1, 1996.

    *10.11.2   Employment Agreement, effective as of October 1, 1996, between
               the Company and Frank Fradella.

    *10.11.3   Employment Agreement, effective as of August 1, 1996, between
               the Company and David L. Norris.

      *16      Letter of Karlins Fuller Arnold & Klodosky regarding such
               account firm's resignation as independent auditors of the
               Company.

      *21.     Subsidiaries of the Company.

      *24.     Power of Attorney

      *27.     Financial Data Schedule


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

        *Filed herewith


        (d)  FINANCIAL STATEMENT SCHEDULES

             The financial statement schedules required by Regulation S-K are
             incorporated by reference to Item 14(a).

					-66-



      <PAGE> 

                                      SIGNATURES

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




        AMERICAN ECO CORPORATION


        Dated:  May 2, 1997           By: /s/ Michael E. McGinnis  
					---------------------------
                                      Michael E. McGinnis, President and
                                      Chief Executive Officer

             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/Michael E. McGinnis  President and Chief 
        ----------------------  Executive Officer and 
        Michael E. McGinnis     Director (Principal            May 2, 1997
			        Executive Officer)


        /s/John C. Pennie       Vice-Chairman of the 
        ----------------------  Board of Directors              May 2, 1997
         John C. Pennie


        /s/David L. Norris      Chief Financial Officer
        ----------------------  (Principal Financial           May 2, 1997
          David L. Norris	and Accounting Officer)


        /s/Barry Cracower
        ----------------------  Director                       May 2, 1997
	  Barry Cracower



        ----------------------  Director                       May 2, 1997
	  William Dimma



        /s/Tyrrell Garth
        ----------------------  Director                       May 2, 1997
	 Tyrrell Garth



        ----------------------
        Donald Getty            Director                       May 2, 1997


        ----------------------
        Mark White              Director                       May 2, 1997


					-67-



   <PAGE> 
					INDEX TO EXHIBITS

     Exhibit 
     Number	  		Document
     -------	  		---------
        3.1.1  Letters Patent (Certificate of Incorporation) filed February
               6, 1969, incorporated by reference to Exhibit 3.1.1 to the
               Company registration statement on Form 10, dated September 19,
               1990.

        3.1.2  Supplementary Letters Patent, dated June 26, 1970
               (incorporated by reference to Exhibit 3.1.2 to the Company's
               Form 10).

        3.1.3  Articles of Amendment, filed June 16, 1975 (incorporated by
               reference to Exhibit 3.1.3 to the Company's Form 10).

        3.1.4  Articles of Amendment, filed June 23, 1978 (incorporated by
               reference to Exhibit 3.1.4 to the Company's Form 10).

        3.1.5  Articles of Amendment, filed June 20, 1986 (incorporated by
               reference to Exhibit 3.1.5 to the Company's Form 10).

        3.1.6  Articles of Amendment, filed June 17, 1987 (incorporated by
               reference to Exhibit 3.1.6 to the Company's Form 10).

        *3.1.7 Articles of Amendment, certified on November 19, 1993

        3.2.1  By-Laws (incorporated by reference to Exhibit 3.2 to the
               Company's Form 10.).

        *3.2.2 By-Law Number 10.

        4.1    Share Option Plan (incorporated by reference to Exhibit to
               Management Information Circular to the Company's Form 6-K,
               dated September 27, 1995).

        4.2    Form of 9.5% Cumulative Convertible Debenture due January 24,
               2007 (incorporated by reference to Exhibit 2 to the Company's
               Form 6-K, dated February 7, 1997).

        4.3    Form of 9.5% Cumulative Convertible Debenture due March 3,
               2007 (incorporated by reference to Exhibit 2 to the Company's
               Form 6-K, dated March 14, 1997).

        4.4    Form of Stock Purchase Warrant (incorporated by reference to
               Exhibit 3 to the Company's Form 6-K, dated February 7, 1997).

        10.1   Memorandum, dated October 5, 1995, between the Company and
               Windrush Corporation (incorporated by reference to Exhibit
               10.6 to the 1994 Form 20-F).

        10.2   Share Exchange Agreement, dated June 1, 1994, among Westlake
               Interests, Ltd., Cambridge, the Company and Marc A. Sparks
               (incorporated by reference to Exhibit 10.7.1 to the 1994 Form
               20-F).

        10.3   Acquisition Agreement, dated July 31, 1995, between the
               Company and Kenneth Hagan and Janet Hagan.  (incorporated by
               reference to Exhibit 2.7.1 to the 1995 Form 20-F).

      *10.4.1  Agreement and Plan of Merger dated as of April 26, 1996, among
               the Company SRS Acquisition Corporation and Separation and
               Recovery Systems, Inc. ("SRS").


					-68-

   <PAGE> 


					INDEX TO EXHIBITS 


	EXHIBIT 
	NUMBER				DOCUMENT
	-------				---------
	
     *10.4.2   Business Loan Agreement, dated as of February 7, 1996, between
               Bank of America National Trust and Savings Association ("BA")
               and SRS.

     *10.4.3   Amendment No. 1 to Business Loan Agreement, dated as of July
               3, 1996, between SRS and BA.

     *10.4.4   Continuing Guarantee, dated as of July 3, 1996 from the
               Company to BA.

     *10.4.5  Subordination Agreement, dated July 3, 1996, among American
               Eco, SRS and BA. 

        *10.5  Acquisition Agreement, dated as of May 31, 1996, between the
               Company and United Eco Systems, Inc.

     *10.6.1   WCMA Note, Loan and Security Agreement, dated as of August 23,
               1996 between American Eco/SP Corporation and Merrill Lynch
               Business Financial Services, Inc. ("MLBFS")

     *10.6.2   Security Agreement, dated as of August 26, 1996 between C.A.
               Turner Maintenance, Inc. ("Turner") and  MLBFS. 

     *10.6.3   Unconditional Guaranty, dated as of August 26, 1996 of Turner
               in favor of MLBFS.

     *10.6.4   Unconditional Guaranty, dated as of August 26, 1996 of
               American Eco/SP Corporation in favor of MLBFS.

        *10.7  Acquisition Agreement and Plan of Reorganization, dated as of
               January 1, 1996 between Jim Wright, Mark L. Crawford and Aaron
               Fine (as shareholders of Environmental Evolutions, Inc.) and
               the Company, as amended March 15, 1996.

        10.8.1 Agreement, dated April 9, 1996 between the Company and Wayne
               E. Shaw, and as amended on April 17, 1996, April 18, 1996, May
               23, 1996 and June 12, 1996 (incorporated by reference to
               Exhibit 1 to the Company's Registration Statement on Form F-
               8).

     *10.8.2   Arrangement Agreement, dated November 13, 1996, among Industra
               Service Corporation, 519742 B.C. Ltd. and the Company.

     *10.9.1   Agreement and Plan of Merger, dated as of September 10, 1996,
               among the Company, Sub Acquisition Corp. and Chempower, Inc.
               ("Chempower").

     *10.9.2   Financing Agreement, dated February 28, 1997, among the
               Company, Chempower, Toomas J. Kukk and Mark L. Rochester.

     *10.9.3   Letter Agreement, dated February 28, 1997, between the Company
               and Toomas J. Kukk, as agent (the "Agent").

    *10.9.4    Guaranty, dated February 28, 1997, by the Company in favor of
               the Agent.


					-68-

   <PAGE> 


					INDEX TO EXHIBITS 


	EXHIBIT 
	NUMBER				DOCUMENT
	-------				---------

    *10.9.5    Pledge Agreement, dated February 28, 1997, between the Company
               and the Agent.

     *10.9.6   Security Agreement, dated February 28, 1997, between the
               Company and the Agent.

     *10.9.7   Loan Agreement, dated as of February 28, 1997, by and between
               Chempower, Inc. and First National Bank of Ohio ("FNBO").

     *10.9.8   Promissory Note, dated February 28, 1997, of Chempower in
               favor of the Agent.  

     *10.9.9   Purchase Agreement, dated as of February 28, 1997, between
               Chempower and Holiday Properties ("Holiday"). 

     *10.9.10  Commercial Guaranty, dated February 28, 1997, by the Company
               in favor of FNBO.

    *10.9.11   Promissory Note, dated February 28, 1997, of Chempower in
               favor of FNBO.

    *10.9.12   Subordination Agreement, dated as od February 28, 1997, among
               Chempower, FNBO, Thomas J. Kukk, Mark L. Rochester and the
               Agent. 

     *10.9.13  Commercial Security Agreement, dated as of February 28, 1997,
               between Chempower and FNBO.

      *10.10   Lease, dated as of August 15, 1996, between 1011 Jones Road
               Joint Venture Group and the Company.

    *10.11.1   Employment Agreement, dated December 1, 1995, between the
               Company and Michael E. McGinnis, as amended May 1, 1996.

     *10.11.2  Employment Agreement, effective as of October 1, 1996, between
               the Company and Frank Fradella.

     *10.11.3  Employment Agreement, effective as of August 1, 1996, between
               the Company and David L. Norris.

        *16    Letter of Karlins Fuller Arnold & Klodosky regarding such
               account firm's resignation as independent auditors of the
               Company.

        *21.   Subsidiaries of the Company.

        *24.   Power of Attorney

        *27.   Financial Data Schedule


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

        *Filed herewith