FORM 10-KSB
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
          OF 1934

         For the fiscal year ended: December 31, 1998

[ ]      TRANSITION  REPORT  UNDER  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period from  _______________ to ________________

         Commission file number 0-23779

                     TECHNICAL ENVIRONMENT SOLUTIONS, INC.
                     -------------------------------------
                 (Name of small business issuer in its charter)

            Colorado                                         98-014935
-------------------------------                         -------------------
  (State or other jurisdiction                          (I.R.S. Employer
of incorporation or organization)                       Identification No.)

             C/O TES GmbH, 25 Impler Strasse, Munich, 81371, Germany
             -------------------------------------------------------
                    (Address of principal executive offices)

Issuer's telephone number:   011 49 89 720 15 100
                            ----------------------
Securities registered under Section 12(b) of the Exchange Act:       None
                                                                     -----
Securities registered under Section 12(g) of the Exchange Act: 

                           Common Stock, no par value
                          -----------------------------
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period  that the issuer was  required  to file such  reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes   X    No
                                                              -----     -----

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of issuer's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year:   $453,620

As of March 31, 1999,  the aggregate  market value for the 773,330 shares of the
Common Stock, no par value per share, held by  non-affiliates  was approximately
$2,078,324.

The  number  of  shares  of Common  Stock of the  registrant  outstanding  as of
December 31, 1998, were 5,223,330.
                                      

                       Documents incorporated by reference
                                      None



<PAGE>




                                TABLE OF CONTENTS

PART I                                                                  PAGE

 Item 1.    Description of Business .................................     3
 Item 2.    Description of Property .................................    16  
 Item 3.    Legal Proceedings .......................................    16
 Item 4.    Submission of Matters to a Vote of Security Holders .....    16
                                                          

PART II

 Item 5.    Market for Common Equity and Related
            Stockholder Matters ......................................   17
 Item 6.    Management's Discussion and Analysis or
            Results of Operations ....................................   18
 Item 7.    Financial Statements .....................................   20
 Item 8.    Changes in and Disagreements With Accountants on
            Accounting and Financial Disclosure ......................   20
                                                    


PART III

 Item 9.    Directors, Executive Officers, Promoter
            and Control Persons; Compliance with Section 16(a)
            of the Exchange Act .......................................   21
 Item 10.   Executive Compensation ....................................   24
 Item 11.   Security Ownership of Certain Beneficial Owners
            and Management ............................................   27
 Item 12.   Certain Relationships and Related Transactions ............   29
 Item 13.   Exhibits and Reports on Form 8-K ..........................   30


SIGNATURES ............................................................   31





                                      -2-

<PAGE>


                                     PART I

Item 1 - Description of Business
--------------------------------

     Except  for  historical   information   contained  herein,   the  following
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties.  Such forward-looking statements include, but are not limited to,
statements regarding future events and the Company's plans and expectations. The
Company's  actual results could differ  materially from those discussed  herein.
Factors that could cause or contribute to such differences  include, but are not
limited  to,  those  discussed  below  under  "Factors  That May  Affect  Future
Results," as well as those discussed elsewhere in this Form 10-KSB.

Introduction

     Technical  Environment  Solutions,  Inc.  (the  "Company"  and  "TES")  was
incorporated  under the laws of  Colorado in June 1994,  and is a  non-operating
holding company. The Company's operations are conducted entirely in Germany, and
the Company has two wholly owned  subsidiaries  that have been established under
the laws of  Germany.  Operations  are  conducted  through  these  subsidiaries:
namely,  Technical  Environment  Solutions  GmbH  ("TES  GmbH") and TES Oecon AG
("Oecon").  Unless the context otherwise  requires,  references to the "Company"
include its subsidiaries.

     The board of directors of the Company has agreed to a merger of the Company
with  Environmental  Technologies and Software  Solutions,  Inc.("ENTECS").  The
Company has filed a  registration  statement  with the  Securities  and Exchange
Commission in connection with the anticipated  merger.  Upon consummation of the
merger, ENTECS will become a wholly owned subsidiary of the Company. As a result
of the merger, the Company expects to issue approximately  8,300,237  additional
shares of its common stock to stockholders of ENTECS.

     The Merger is expected to result in administrative efficiencies,  increased
financial  strength,  and increased market potential,  including global markets,
for the added products that TES shall acquire from ENTECS.  The Company  expects
that it will be able to better  position  itself  as a result  of the  Merger to
combine  innovative  technologies  with the offering of certified  environmental
services and thereby achieve synergies in the market for its products.

     ENTECS is a non-operating holding company.  ENTECS operations are currently
conducted  entirely in Germany by two wholly owned German  subsidiaries,  ENTECS
Umwelttechnik  GmbH, and ENTECS Software und  Umweltmanagement  GmbH.  ENTECS is
involved in the  environmental  protection  industry,  which is expected to grow
rapidly due to  increasing  investments  being made in the area by both  private
enterprises and public  institutions.  The environmental  protection industry is
also expected to  continually  create new jobs because of the dynamic  growth in
the  area.  ENTECS  currently  holds  the  exclusive  licensing  rights to a new
recycling  system for the capture an re-use of cement waste and waste water that
is generated by cement mixing plants.  The system known as the  "BRS-Compact" is
in the process of being patented both as a technology and as a process.  ENTECS'
subsidiary, ENTECS Umwelttechnik GmbH, owns an artificial peat production system

                                      -3-

<PAGE>

and produces three grades of high-quality  all-natural artificial peat products.
The Company believes the products, which ENTECS possesses,  will be key benefits
to the Company's business strategies discussed below.

     Since 1994,  the Company has been  engaged in the  marketing  of  recycling
services on a contract basis  primarily for electronic  scrap and other valuable
waste  materials  in  cooperation  with  specialist  waste  disposal  companies.
Recently,  the Company  commenced  recycling  activities  at its own facility in
Landsberg  a.  Lech,  Germany,  which is  southwest  of Munich,  and  intends to
significantly  expand this operation in the future.  The Company also intends to
develop a job training  school,  the Oecon  Institute,  to provide  training and
education for positions in the recycling industry.  The Company intends to focus
its job training  programs  upon  providing  job  education and training for the
long-term unemployed and disadvantaged.

Recycling
---------

     The Company offers a single source solution for the  disassembly,  removal,
reutilization,  reprocessing  and marketing of recyclable  materials.  Its waste
disposal services also include archiving the recycled  materials and documenting
of the movement of that material. This has the additional function of serving as
verification for government  agencies and environmental  protection  groups. The
Company's strategies mainly emphasize the technologically feasible reutilization
of  scrap  electrical  and  electronic  equipment  in a  manner  that  not  only
demonstrates  economic and ecological  responsibility  but also achieves maximum
conservation of resources through optimum recovery of recyclable materials.  The
special  equipment and expertise of TES' associates  ensures that the materials,
once  disposed  of,  will enter the  reprocessing  cycle and  satisfy  all legal
regulations.

     Germany  has strict  laws  relating  to the  disposal  of all  manufactured
products.  Unlike the United States where land is plentiful,  Germany is a small
country with a large population. Landfill space is extremely limited. Therefore,
the  government  requires  that  electronic  scrap  as well as an array of other
manufactured  product  waste  be  disposed  of  either  by  incineration  or  by
depositing it in abandoned  underground  coal or salt mines.  Hence  disposal of
most waste in Germany is more expensive than it is in the United States.

     Even  stricter  laws  regarding  recycling of  electronic  products such as
televisions,  computers,  computer  monitors,  radios,  telephones and virtually
every  other type of  electronic  product  are  anticipated  by the  electronics
industry.  These laws will  require  that the old  products  be broken down into
smaller components,  and to the extent possible that these components be re-used
or recycled rather than simply being  incinerated.  In order to prepare for what
the industry views as inevitable recycling  requirements,  many larger companies
have already begun to voluntarily comply with proposed  recycling  standards and
are shipping all used and obsolete electronic products to recycling centers such
as that operated by TES.

     The Company also utilizes its  manufacturing  equipment to convert  certain
types of glass from cathode ray tubes ("CRTs"), computer components, and certain
other  manufacturing  by-products and industrial  wastes into  manufacturing raw
materials that may be resold.

                                      -4-

<PAGE>


     The Company employs a two-tier strategy:

                  decentralized disassembly
                  centralized processing and re-use.

The Company  intends to use a wide variety of  collection  points as it grows in
the future in order to provide  full  geographic  coverage  of  Germany's  waste
disposal needs.

     One  important  aspect  of the  Company's  service  strategy  is  that  all
recycling and disposal  paths are fully  documented.  Each customer who recycles
electronic  scrap through TES then receives a printout  documenting the disposal
pursuant  to the  recycling  laws.  To  accomplish  this,  the  Company  and its
associates  offer a fully  comprehensive  program  to  register  and sort  spent
electronic  equipment  using the Company's own "RNP" data processing  system,  a
software  program  that  supports  the  exchange of data  between  the  Company,
manufacturers and waste reprocessing companies.

     The RNP database also contains:

         -model and order number of electronic products
         -size and weight of electronic products
         -analysis of materials in electronic products

     Another  module  in  the  RNP  database  is a  logistics  program  likewise
developed by the Company. This program covers:

         -collection and disposal
         -transportation and warehousing
         -disposal and recycling
         -documentation of each piece of equipment
              -for fixed assets bookkeeping
              -for the tax authorities
              -for environmental groups

     According to figures  from the German  Federal  Office of the  Environment,
approximately  two million tons of spent electronic  equipment is generated each
year in Germany alone.  Of these,  some 50 to 60 percent comes from the field of
entertainment electronics and another 25 percent from household appliances.  The
remainder  comes  from the area of data  processing  technologies  or from other
technologies  primarily used by industry,  research  facilities and the business
sector.  Some 300,000 tons are made up of spent  computers and  television  sets
alone,  of which it is  estimated  that only 25 percent  are  disposed  of in an
ecologically sound manner.

     This  electronic  scrap contains not only valuable raw materials but also a
wide range of toxic  substances  harmful to the  environment.  TES  collects and
disassembles  this spent equipment and then reprocesses and markets the valuable
waste  materials  salvaged from it. TES also separates and properly  disposes of
the toxic substances.

                                      -5-

<PAGE>


     The  Company  views the  recycling  of used  television  sets and  computer
monitors  including  CRT  glass as a  growth  area  and has  recently  purchased
machinery  designed  to  dismantle  the CRTs.  In the  Company's  CRT  recycling
operation,  its customers will ship used CRTs to the Company. Under the terms of
the agreements with the clients,  TES is paid a fee for recycling the used CRTs.
The CRTs include both funnel  glass (the back of a television  screen,  which is
relatively  thin and tubular in shape) and panel  glass.  After the funnel glass
has been cut from the front portion of the tube and cleaned, it can be sold back
to the  original  manufacturers  and  other  companies  to be  "upcycled",  i.e.
reincorporated into a CRT.

     At this time the panel glass can not be recycled  and must be  incinerated.
TES must pay a small charge to dispose of the panel glass.  Management  expects,
however,  to be able eventually to either sell the panel glass to companies that
recycle  glass or, at a minimum,  to have these  companies  haul the panel glass
away at no cost to TES. Even if TES must pay to have the panel glass taken away,
the CRT recycling is a profitable  business for the company  because of the fees
TES is paid by its customers to recycle the CRTs.  The ability to sell the panel
glass will only increase TES' profits from this operation.

     The Company  believes  that the  recycling of CRT glass will provide a less
costly and more  environmentally  responsible  means of  disposing  of waste CRT
glass compared to currently available alternative methods of CRT glass disposal.
Further,  management  believes  that  manufacturers  will be able to  repurchase
recycled CRT glass from the Company at a savings compared to virgin ingredients.
In addition,  the Company believes that the electronics industry may be a source
of other waste streams that may be recycled.  The Company  believes that its CRT
glass  recycling and  materials  reuse  capability  will position the Company to
process large volume  end-of-life  television  and computer  waste since current
regulations in Germany exclude them from landfills.

     TES also recycles  computer  systems.  The Company resells many of the used
computer  parts  that are  generated  from this  recycling  activity,  including
plastic,  gold,  copper,  aluminum,  steel and other raw  materials.  Management
believes that this is possible because the most cost-effective  source for spare
parts is  generally  recycled  parts,  and for  out-of-production  parts,  it is
frequently  the only source.  Conversely,  the best use for recycled parts is to
resell them for use in the installed base as either spares or low-cost additions
to  existing  systems.  Similarly,  recycled  parts  are also  often  both  less
expensive and more readily available than repaired parts.

Recycling Process
-----------------

     The  first  step  in the  processing  of  recycled  material  involves  the
inspection  of the  material  received by the Company to assure that it complies
with requirements set forth in the Company's agreements.  Company personnel will
conduct  this  process  on a visual  basis.  Assuming  that the  material  is in
compliance  with the  Company's  agreements,  the  material  will be sorted  for
processing on the Company's  recycling  line.  Nonconforming  shipments  will be

                                      -6-

<PAGE>

rejected  and returned to the  supplier.  This  process  will be  undertaken  to
protect the Company from  receiving  materials that it is not equipped to handle
either on the basis of the  economics or safety  involved  with  handling of the
material.

     After the  material  has been  sorted,  it will then be stored  until it is
delivered  to the  recycling  line.  Material  on the  recycling  line  will  be
disassembled,  and spare computer parts,  integrated  circuit boards,  and other
parts of the electronic  products that can be resold will be sorted and cleaned.
Other  material  will be  sorted  for sale  (if  appropriate),  cleaned  and (if
appropriate) ground and crushed. As the final result of the process,  all of the
residual  materials  are  reused  in an  environmentally  sound  way.  They  are
recovered,  sorted,  and returned to the cycle of raw materials.  To prevent the
processing  techniques  from emitting  toxic  by-products,  the Company  employs
mechanical  processes  exclusively  (i.e.,  no chemicals  are used by TES in the
disassembly process).

     The  Company  disassembles  the  following  kinds of  electronic  scrap for
recycling:

         -cathode ray tubes
         -computers and peripherals of any kind
         -PCs and monitors  
         -other office equipment  
         -household appliances of all sizes
         -television sets, radios, VCRs etc. 
         -telecommunication equipment (e.g., telephones)   
         -electrical tools  
         -standby power generation units
         -industrial control units 
         -measurement and control devices 
         -laboratory and medical equipment  
         -visual recording and reproduction equipment
         -composite plastics and metals  
         -circuit boards  
         -magnetic and video tapes

     To obtain fully sorted raw materials  from worn-out  electronic  equipment,
the first thing that must be done is to  disassemble  the scrap by hand.  During
this process  components  with toxic  substances  such as  condensers or lithium
batteries are removed and sent to separate disposal plants.

     At this  preliminary  disassembly  stage the scrap is broken  down into the
following categories:

         -plastics
         -ferrous metals
         -nonferrous metals
         -cathode ray tubes
         -cables
         -circuit boards
         -toxic substances

                                      -7-

<PAGE>


     If the preliminary disassembly stage fails to yield fully sorted materials,
further  processing  is  required.  In the next  stages the  material is further
broken down  through  non-chemical  and  non-thermal  processes.  The mixture of
materials thus obtained is completely sorted by means of magnets, eddy currents,
wind, sifting or similar techniques.

     These  processes  yield,   among  other  things,  the  following  types  of
materials:

         -iron
         -aluminum
         -copper
         -glass
         -plastics
         -ceramics
         -composite metal granulates

     The fully separated metals and glass are sent to various smelting plants as
secondary raw materials.  Similarly,  those fully sorted  plastics that have not
been treated with flameproofing are sent away for reuse.  Plastics which are not
fully  separated  or  which  contain  bromine   flameproofing  are  disposed  in
accordance with legal regulations,  as are all other toxic substances.  Precious
metal granulates are sent to separation plants for further processing.

     All the methods TES employs  represent  state-of-the-art  technologies  and
have been streamlined for a smooth  interaction of their ecological and economic
aspects.  Further, TES' methods are designed to assure compliance with all legal
and  government  regulations,  with  the  paths  of  reprocessing  and  disposal
completely documented.

     CRTs are removed from the  television  sets,  and then processed by the CRT
recycling  line.  The Company  employs a specially  designed saw to separate the
panel glass from the funnel  glass.  After the pieces of CRT glass are sorted by
type of glass and by size,  the glass is cleaned  and  coatings on the glass are
removed prior to sale or other disposition of the glass.

Competition
-----------

     Management  believes that the  electronic  recycling  services  industry is
fragmented  with  widespread  competition  from a variety  of small  independent
suppliers  and several  major  suppliers in Germany.  Management  believes  that
competition for recycling and waste disposal customers is based on price and the
ability  to offer  convenient  locations  for  shipping  of waste and  recycling
products.  Among TES' major  competitors in Germany are RWE, VEBA and VIAG, each
operating through wholly owned subsidiaries.

                                      -8-

<PAGE>


Government Regulation
---------------------

     Germany has adopted some of the strictest laws in the world relating to the
recycling and disposal of chemicals,  waste, appliances,  computers,  television
sets,  and other  electronic  products.  The  business  of  recycling  and waste
disposal  is subject to various  governmental  laws on both a federal  and state
basis in Germany. Further, the regulations are becoming increasingly complex and
recycling  and disposal  more  strictly  regulated.  These laws and  regulations
include landfill disposal restrictions,  hazardous waste management requirements
and air quality standards,  as well as special permit and license conditions for
recycling and disposal of waste and outdated or used products.

     The Company's  recycling  center is subject to various  federal,  state and
local  laws  and  regulations  and  licensing   requirements   relating  to  the
collection, processing and recycling of chemicals, waste, appliances, computers,
television sets, and other electronic products.  Requirements for registrations,
permits and licenses vary depending upon the locale in which a recycling  center
is located.  The Company's center is registered with the German  Government as a
hazardous  waste  generator  and is  licensed  by  appropriate  state  and local
authorities.  The  Company  also  has  agreements  with  approved  and  licensed
hazardous waste companies for  transportation  and disposal of the environmental
toxin polychlorinated biphenyl ("PCB's") from its recycling center.

     Management  believes  that further  government  regulation of the recycling
industry could have a positive effect on the Company's business;  however, there
can  be no  assurance  what  course  future  regulation  may  take.  Under  some
circumstances,  further  regulation could  materially  increase the costs of the
Company's  operations and have an adverse effect on the Company's  business.  In
addition, as is the case with all companies handling hazardous materials,  under
some circumstances, the Company may be subject to contingent liability.

Job Training
------------

     In Germany all trades are governed by strict  educational  standards.  This
means that anyone who wants to work as a plumber,  carpenter,  baker, cook, etc.
must  complete a training  program for that trade and work for a number of years
under  the  supervision  of a  "Meister"  in order to gain  practical  training.
Without this training and experience, one cannot be employed in a trade.

     Germany currently has the highest  unemployment  rates it has had since the
end of World War II.  The  unification  of the  former  East  Germany  with West
Germany has created especially high unemployment rates among young people in the
former  East  German  states.  The  German  federal  and state  governments  are
therefore  anxious to create job  opportunities  for these long-term  unemployed
youths and is providing subsidies for companies that create jobs.

     TES Oecon  Institute is  developing a job  training  center.  The center is
intended to provide training for long-term  unemployed  youths and disadvantaged
people. It will offer various new technical job classifications in environmental
protection  areas, such as the position,  Electronic  Recyling  Technician,  for

                                      -9-

<PAGE>

example. TES Oecon Institute will offer courses required by certain governmental
agencies for environmental managers of other companies,  as well as seminars and
workshops  covering  special  environmental  issues  such as  environmental  law
issues, certification and audits, management systems, software program training,
and ecological input-output analysis.

     With its job training program the Oecon Institute will support the creation
of new job possibilities in future-oriented  industry areas and will provide the
opportunity for the long-term  unemployed and other disadvantaged groups to find
an entrance into the work force.  Through the training offered by TES, the newly
trained employees will be prepared for new challenges.

     The job title  "Electronic  Recycling  Technician"  is  timely  for the new
market structures  because the need for qualified  personnel for proper disposal
technologies  will  significantly  increase in the coming  years.  The practical
training for electronic  recycling technician will take place in the Institute's
own workshop and in partner companies throughout Germany.

     The new profession,  Electronic Recycling  Technician,  has been defined by
the rules and  regulations  of the Federal  Ministry  for Youth and Research and
students who successfully  complete the training will receive certification from
the responsible  industry  chambers of commerce.  The job training facility will
receive daily subsidies for each student as required by law.

     Management anticipates that the job training center will be very successful
because there is an increasing  demand for qualified  technicians.  In addition,
the  government  must  make  even  greater  efforts  to  reduce  Germany's  high
unemployment.  There are a number of state  subsidies and job creation  programs
which offer job training schools a sure and long-term financial basis. Potential
sources for subsidies include,  among others, the Social Welfare Offices,  Youth
and Social Service Agencies,  and Unemployment  Agencies. The Company expects it
will be dependent to some extent upon various  government  subsidies for the new
job training program.  Further,  along with the job training, the Institute will
offer a number of seminars and workshops covering special  environmental issues,
environmental  law issues,  and the  certification and auditing of environmental
operations and locations. A close working relationship with  TUEV-Suddeutschland
will allow the Company access to qualified teaching and training personnel.

Employees

     The  Company  has 14 full  time  employees,  including  Gerd  Behrens,  two
management/administrative persons, and 11 line workers employed in its recycling
business.  Further, the Company employs one person as a secretary/administrative
assistant on a part-time  basis.  In addition,  the Company has contracted  with
three independent  contractors who are engaged in the marketing of the Company's
recycling services.

Factors That May Affect Future Results

     TES's  Business Has Changed.  Although TES has been in business since 1994,
until  recently its  operations  consisted  mainly of the  marketing and sale of
recycling  services  to  larger  companies.  TES did not have its own  recycling
facility  but  contracted  as a  "middle-man"  to deliver  material  from larger

                                      -10-

<PAGE>

companies to certain recyclers. Although TES recently commenced operation of its
own  recycling  facility,  there  can be no  assurance  that  it will be able to
successfully  market and conduct its recycling services.  Further,  although TES
has developed plans to open a job training  program for the recycling  industry,
there  can be no  assurance  that it will be able to  successfully  open its job
training  facility or that, if opened,  TES will be able to operate the facility
on a  profitable  basis.  There  can  be  no  assurance  that,  even  after  the
expenditure of substantial funds and efforts,  TES will ever achieve or maintain
an  adequate  level of business or  profitability.  The failure to  successfully
market,  sell, and conduct  recycling  operations  would have a material adverse
effect on TES's  financial  condition and results of operations.  The failure to
successfully  open its job  training  facility  and operate  that  facility on a
profitable  basis could also have a material  adverse effect on TES's  financial
condition and results of operations.

     TES Needs Additional Financing. TES's business is capital intensive. TES is
currently  experiencing  a  liquidity  crisis and must raise  additional  funds.
Further,  TES has not generated  sufficient cash-flow to fund its operations and
activities.  TES has no commitments for any future financing and there can be no
assurance  that TES will be able to obtain  additional  financing  in the future
from  either  debt or  equity  financings,  bank  loans,  or  other  sources  on
acceptable terms or at all. If available,  any additional  equity financings may
be  dilutive  to  TES's   stockholders  and  any  debt  financings  may  contain
restrictive  covenants and  additional  debt service  requirements,  which could
adversely affect TES's operating  results.  If TES is unable to obtain necessary
financing,  it will be required to significantly curtail its activities or cease
operations.

     TES Is  Dependent  on Certain Key  Employees.  TES's  success  depends to a
significant extent upon a number of key management and technical personnel,  the
loss of one or more of whom  could  have a  material  adverse  effect  on  TES's
results of  operations.  Further,  TES believes  that its success will depend in
large part upon its  ability to attract  and retain  highly  skilled  technical,
managerial,  sales, and marketing personnel.  There can be no assurance that TES
will be  successful  in  attracting  and  retaining the personnel it requires to
develop  and market its  recycling  business  or its job  training  program in a
successful manner. Presently, the Company's wholly  owned subsidiary,  TES GmbH,
has  entered  into an  employment  agreement  with Gerd  Behrens  to ensure  the
availaility of his servies to the  subsidiary.  The employment  agreement may be
terminated by either party only upon six months notice.

     TES Derives a  Significant  Portion of its Revenues  from One  Customer.  A
significant portion of TES's revenues have been derived from a limited number of
customers.  In fiscal 1998, revenues from TES's largest customer amounted to 10%
of its total  revenues,  and in fiscal 1997,  four  customers each accounted for
10%, or 40% total, of TES's total revenues.  TES's  management  expects that TES
will continue to be dependent upon a limited number of customers for significant
portions  of its  revenues in future  periods.  There can be no  assurance  that
revenues from customers that accounted for significant revenues in past periods,
individually or as a group, will continue,  or if continued will reach or exceed
historical  levels in any future  period.  TES's  operating  results  may in the
future be subject to substantial period-to-period  fluctuations as a consequence
of such customer concentration.

     TES's Business is Dependent on  Environmental  Regulation.  German federal,
state, and local  environmental  legislation and regulations  mandate  stringent
waste management and operations  practices,  which require  substantial  capital

                                      -11-

<PAGE>

expenditures   and  often  impose   strict   liabilities   for   non-compliance.
Environmental  laws and  regulations  are, and will  continue to be, a principal
factor  affecting  demand for the  technology  and services  being  developed or
offered by TES. The level of enforcement activities by federal, state, and local
environmental  protection and related  agencies,  and changes in regulations and
waste generator  compliance  activities,  will also affect demand. To the extent
that the burdens of complying with such laws and  regulations  may be eased as a
result  of,  among  other  things,  political  factors,  or  that  suppliers  of
manufacturing  by-products and other industrial wastes find alternative means to
comply with applicable regulatory requirements,  TES's ability to procure such b
products and wastes and the demand for its services could be adversely affected,
which  could  have a  material  adverse  effect  on  TES's  business,  financial
condition,  and results of operations.  Any changes in these  regulations  which
increase  compliance  standards  may  require  TES  to  change  or  improve  its
processes.

     TES and its  Customers  are Subject to  Regulation.  TES and its  customers
operate in a highly  regulated  environment,  and any future  facilities  may be
required to have various federal,  state,  and/or local  government  permits and
authorizations,  registrations,  and/or  exemptions.  Any of  these  permits  or
approvals may be subject to denial,  revocation,  or modification  under various
circumstances. Failure to comply with the conditions of such permits, approvals,
registrations,  authorizations, or exemptions may adversely affect the operation
of TES's  business  and may subject TES to federal,  state,  or  locally-imposed
penalties. TES's ability to satisfy the permitting requirements for a particular
facility does not assure that permitting  requirements for other facilities will
be  satisfied.  In  addition,  if new  environmental  legislation  is enacted or
current regulations are amended or are interpreted or enforced differently,  TES
or its  customers  may be  required  to  obtain  additional  operating  permits,
registrations,  certifications,  exemptions,  or  approvals.  There  can  be  no
assurance that TES or its customers  will meet all of the applicable  regulatory
requirements.

     TES is Exposed to Potential Environmental Liability. TES's business exposes
it to the risk that  harmful  substances  may be  released  or  escape  into the
environment from its facilities, processes, or equipment, resulting in potential
liability  for the  clean-up or  re-mediation  of the release  and/or  potential
personal injury  associated with the release.  Additionally,  TES is potentially
subject to regulatory liability for the generation,  transportation,  treatment,
storage, or disposal of waste, both hazardous and non-hazardous,  if it does not
act in accordance  with the  requirements  of federal or state  hazardous  waste
regulations or facility specific regulatory determinations,  authorizations,  or
exemptions.

     TES also may be exposed to certain  environmental  risks resulting from the
actions of the suppliers of the products that it recycles and other suppliers of
industrial  waste.  Although TES maintains  general  liability  insurance,  this
insurance  is subject to coverage  limits and  generally  excludes  coverage for
losses or liabilities related to environmental damage or pollution. Although TES
conducts  and  plans  to  conduct  its  operations  prudently  with  respect  to
environmental  regulations and management plans to structure TES's relationships
with  customers and  contractors in a manner so as to minimize TES's exposure to
environmental liabilities,  TES's business,  financial condition, and results of
operations could be materially adversely affected by an environmental claim that
is not covered or is only  partially  covered by  insurance  or other  available
remedy.

                                      -12-

<PAGE>


     Trading  of  TES's   Securities  on  the  Electronic   Bulletin  Board  and
Classification  as Penny  Stock May  Negatively  Impact the  Liquidity  of TES's
Securities.

     o Electronic Bulletin Board. Trading in TES's securities is being conducted
in the over-the-counter market in the NASD's "Electronic Bulletin Board" because
TES does not presently meet the  requirements for inclusion in either the NASDAQ
SmallCap  Market  or  the  NASDAQ  National  Market.  TES  may  never  meet  the
requirements  for  inclusion  in  either of those  two  markets.  As a result of
trading on the Bulletin Board, it may be more difficult to obtain  quotations of
the market  price of TES's  securities.  Consequently,  the  liquidity  of TES's
securities  could be impaired,  not only in the number of securities which could
be bought  and sold,  but also  through  delays in the  timing of  transactions,
reduction in security  analysts and the news media's  coverage of TES, and lower
prices for TES's securities than might otherwise be attained.

     o Penny Stock. TES's securities come within the definition of "penny stock"
contained   in  Rule  3A51-1  under  the   Securities   Exchange  Act  of  1934.
Classification   as  a  penny  stock  may   adversely   affect  the  ability  of
broker-dealers  to sell TES's securities and may adversely affect the ability of
TES's  shareholders  to sell any of their  securities  in the  secondary  market
because of the following requirements which are unique to penny stock:
         
     o    Rule  15g-9  imposes   additional   sales  practice   requirements  on
          broker-dealers that sell penny stock to persons other than established
          customers and "accredited  investors"  which are generally  defined as
          individuals with a net worth in excess of $1,000,000 or annual incomes
          exceeding  $200,000  or  $300,000  together  with their  spouses.  For
          transactions covered by such rule, a broker-dealer must make a special
          suitability  determination  for the  purchaser  and have  received the
          purchaser's written consent to the transaction prior to sale.

     o    Prior to any  transaction in a penny stock,  unless exempt,  the rules
          require delivery of a disclosure  schedule  prepared by the Securities
          and Exchange Commission relating to the penny stock market. Disclosure
          is also  required  to be made  about  commissions  payable to both the
          broker-dealer and the registered representative and current quotations
          for the securities.

     o    Rule 15g-6 requires  broker dealers to send customers with penny stock
          held  in  an  account  with  the  broker-dealer,   monthly  statements
          disclosing  recent price  information for penny stocks and information
          on the limited market in penny stocks.

     TES Must Respond to Technological  Change. TES's future success will depend
significantly  on its ability to enhance its recycling  capabilities in a manner
which  keeps  pace  with   technological   developments  and  evolving  industry
standards.  There can be no assurance  that TES will be  successful in enhancing
its recycling  capabilities or meeting customer requirements  adequately.  TES's

                                      -13-

<PAGE>

delay or failure to develop or acquire technological improvements or to adapt to
technological  change would have a material  adverse  effect on TES's  business,
results of operations, and financial condition.

     TES Faces  Competition  From  Other  Recyclers  and From New  Products  and
Materials.  The market for TES's  services and recycled  products is competitive
and  subject  to  rapid  change.   TES's  competitors  may  develop  alternative
methodologies  that are superior to TES's  methodologies or that achieve greater
market acceptance. Further, the market for recycled products and raw material is
dependent  to some  extent  upon  prices  for new  products  and  material,  and
perceptions  as to the quality of recycled  products or material.  To the extent
that the prices of new  products or  material  are  competitive  with the prices
offered by TES,  sales of TES's  recycled  products may be  adversely  affected.
Accordingly,  there  can be no  assurance  that  TES  will be  able  to  compete
successfully with its present or potential competition, or that competition will
not have a material  adverse effect on TES's results of operations and financial
condition.

     There is a Limited  Public Market for TES's Common Stock.  Until  recently,
there was no public market for TES's common stock.  At the present time there is
only a limited market for TES's common stock.  There can be no assurance that an
active  trading  market  will  develop or be  sustained  in the future for TES's
securities.

     TES's Stock Price May Fluctuate Based on Internal and External Factors. The
market price of TES's common stock could be subject to significant  fluctuations
in response to variations in actual and anticipated quarterly operating results,
changes in earnings  estimates  by  analysts,  announcements  of new products or
technological  innovations  by TES or  its  competitors,  and  other  events  or
factors.  In addition,  the stocks of many  companies have  experienced  extreme
price and volume  fluctuations  that have often been unrelated to the companies'
operating performance.

     Dividends and Dividend  Policy.  TES has not paid any cash dividends on its
common  stock and does not expect to declare or pay any cash or other  dividends
in the foreseeable future. Further, TES had negative working capital of $101,060
and a net deficit of $98,677 at December  31,  1998 and is  therefore  currently
prohibited from paying dividends to its shareholders under Colorado law.

     Current Management Will Continue to Control TES After the Merger.  Prior to
the merger between TES Acquisition and ENTECS, the officers and directors of TES
own approximately  64.3% of the outstanding  shares of TES's common stock. After
the merger,  TES's  officers and directors will own  approximately  54.3% of the
outstanding  shares of TES's common  stock.  Due to their stock  ownership,  the
officers  and  directors  will be in a position to elect the board of  directors
and,  therefore,  to control the business and affairs of TES,  including certain
significant  corporate  actions  such as  acquisitions,  the sale or purchase of
assets, and the issuance and sale of TES's securities.

     The Trading  Price of TES's Stock  Could be  Negatively  Affected by Future
Sales of the  Shares to be Issued in the  Merger  and Upon  Exercise  of Options
Which Could be Granted in the Future.  Management  expects that 8,300,237 shares

                                      -14-

<PAGE>

of TES common stock will be issued to the ENTECS stockholders as a result of the
merger.  In addition,  TES's board of directors  has adopted a stock option plan
under which it could issue up to 500,000  shares of common stock.  Although,  to
date, no options have been granted under the stock option plan, sales of the TES
shares  being  issued in the  merger  and of shares  issued on  exercise  of any
options  which might be issued in the future  under the stock  option plan could
have a  depressive  effect  upon the  trading  price  of the  common  stock.  In
addition,  the existence of options may adversely  affect the terms on which TES
may obtain additional equity capital in the future.

     Important  Factors  Related to  Forward-Looking  Statements  and Associated
Risks.  This  proxy   statement/prospectus   contains  certain   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.  TES  intends  that these
forward-looking  statements  be  subject  to the safe  harbors  created by those
sections.

     The  forward-looking   statements  include  the  plans  and  objectives  of
management for future operations, including plans and objectives relating to the
development and conduct of the recycling business and the job training business,
and  the  future  economic  performance  of  TES.  They  are  based  on  current
expectations  that involve a number of risks and  uncertainties,  including  the
following assumptions:

     o    that TES will be able to develop its  recycling  business  and develop
          and establish its job training programs

     o    that  competitive  conditions  within the recycling  industry will not
          change materially or adversely

     o    that demand for TES's  recycling  services and recycled  materials and
          products will remain strong

     o    that TES will retain key management personnel

     o    that TES's forecasts will accurately anticipate market demand

     o    that there will be no material  adverse change in TES's  operations or
          business.

     These  assumptions  involve  judgments with respect to, among other things,
future  economic,   competitive,  and  market  conditions  and  future  business
decisions,  all of which are difficult or impossible to predict  accurately  and
many of which are beyond the  control of TES.  Although  TES  believes  that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions  could prove  inaccurate and,  therefore,  there can be no assurance
that the results  contemplated in forward- looking information will be realized.
In addition,  as disclosed elsewhere under other risk factors,  the business and
operation of TES are subject to substantial risks which increase the uncertainty
inherent  in  such  forward-looking  statements.  In  light  of the  significant

                                      -15-

<PAGE>

uncertainties inherent in the forward-looking information included in this proxy
statement/prospectus,  the inclusion of such information  should not be regarded
as a  representation  by TES or any other person that the objectives or plans of
TES will be achieved.

Item 2 - Description of Property
--------------------------------

     The Company  currently leases office space for the Company's main corporate
offices at 25 Impler Strasse, 81371, Munich at a monthly rental of approximately
5,552.75 DM. The lease  expires on December 31, 2004.  Management of the Company
believes  that  the  existing  facilities  are  adequate  at this  time  for the
Company's  operations.  In addition,  the Company  leases two  buildings for its
recycling  operations  at  Landsberg  a. Lech,  Germany  at a monthly  rental of
approximately  18,700 DM. The leases on these  buildings  expire on December 31,
2001.  Under the terms of this lease, the Company also has an option to purchase
the buildings for 2,200,000 DM if the option is exercised  prior to December 31,
2000. Thereafter the price shall increase by 77,000 DM per year. The facility in
Landsberg is  sufficiently  large that the Company  expects that it will also be
able to conduct its job training at that same facility.

Item 3 - Legal Proceedings
--------------------------

     The Company is not a party to any legal  proceedings,  nor does  management
believe that any such proceedings are contemplated.

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

     No  matters  were  submitted  by the  Company  to a vote  of the  Company's
shareholders through the solicitation of proxies or otherwise, during the fourth
quarter of the fiscal year covered by this report.



                                      -16-


<PAGE>
                                     PART II

Item 5 - Market For Common Equity and Related Stockholder Matters
-----------------------------------------------------------------

     Until recently,  there was no public market for the Company's common stock.
The Company does not presently meet the requirements for inclusion in either the
NASDAQ SmallCap Market or the NASDAQ National  Market.  Trading in the Company's
securities  is being  conducted  in the  over-the-counter  market in the  NASD's
"Electronic Bulletin Board."

     The table set forth below presents the range, on a quarterly basis, of high
and low bid  prices  per  share of  Common  Stock as  reported  by the  National
Quotation  Bureau,  Inc. The quotations  represent prices between dealers and do
not include  retail  markup,  markdown or  commissions  and may not  necessarily
represent actual  transactions.  The Company's common stock began trading in the
over-the-counter  market during the Company's  fourth quarter ended December 31,
1998. The first  quotation for the Company's  common stock was first reported in
the NASD's Electronic  Bulletin Board on October 23, 1998.  Therefore,  the high
and low bid reported below do not represent a full quarter of activity.

          Quarter Ended                           High              Low
          -------------                           ----              ---

         December 31, 1998                        $3.50             $0.75

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

     The Company had approximately 137 shareholders of record as of December 31,
1998,  which does not include  shareholders  whose  shares are held in street or
nominee names.

     Holders  of Common  Stock  are  entitled  to  receive  dividends  as may be
declared by the Board of Directors out of funds legally available  therefor.  No
dividends  have  been  declared  to date by the  Company,  nor does the  Company
anticipate declaring and paying cash dividends in the foreseeable future.

                                      -17-



<PAGE>

Item 6 - Management's Discussion and Analysis or Plan of Operation
------------------------------------------------------------------

Results of Operations

     The following table sets forth, for the periods  indicated,  the percentage
of net sales  represented by certain items included in the Company's  Statements
of Operations:

                                               Fiscal year ended
                                                   December 31
                                               ------------------
                                        1996            1997            1998
                                         DM              DM              DM
--------------------------------------------------------------------------------
Sales                                   100.0%          100.0%          100.0%
Cost of Operations                       60.4            39.6            33.1
Gross Profit                             39.6            60.4            66.9
General and administrative               95.8           195.3           230.2
Income (loss) from operations           (56.2)         (134.9)         (163.3)
Interest income                           .4              4.2             3.2
Losses of Unconsolidated Subsidiary        -               -             (8.0)
Interest expense                        (14.8)          (10.3)           (6.7)
                                        ------
Net income                              (70.6)         (140.9)         (174.8)



Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

     Sales for the year ended December 31, 1998, were 610,056 DM, an increase of
156,147 DM, or 25.6%,  as compared to the year ended  December  31,  1997.  This
increase in sales resulted  principally from increased  production volume in the
Companies recylcing business,  including increased  production volume at its new
Landsberg facility during its first operational year.

     Cost of operations for the year ended December 31, 1998 were 202,174 DM, an
increase  of 22,484 DM, or 12.5%,  as compared  to the year ended  December  31,
1997. This increase in cost of operations  resulted  principally  from increased
operating cost directly  attributable to the increase in Sales.  Operating costs
are comprised of principally  disposal  costs and  transportation  costs.  These
categories  of cost  increased  proportionately  with the  increased  production
volume contributing to the increase in Sales.  However,  the Company was able to
achieve reduced unit costs in these categories as a result of the increased unit
volume.

General and  administrative  expenses for the year ended  December 31, 1998 were
1,404,368 DM, an increase of 517,672 DM, or 58.4%, as compared to the year ended
December 31, 1997. This increase in general and administrative  expenses was due
to increased lease costs resulting from the leasing and opening of the Landsberg

                                      -18-

<PAGE>

facility and to staffing and labor expenses related to the increased  production
volume in the Company's recycling business.  The Company also incurred increased
general  and  administrative   expenses  as  a  result  of  increased  marketing
activities and  additional  professional  services  resulting from the Company's
merger plans with ENTECS.

     As a result of the above  factors,  the  operating  loss for the year ended
December 31, 1998 was 996,486 DM, an increase in the  operating  loss of 384,009
DM, or 62.7%, as compared to the year ended December 31, 1997.

     Interest income increased minimally for the year ended December 31, 1998 as
compared to the previous year.  Interest income was 19,668 DM for the year ended
December  31,  1998 and was  19,190 DM for the year  ended  December  31,  1997.
Interest  expenses  for the year  ended  December  31,  1998 were  40,995  DM, a
decrease of 5,723 DM, or 12.3%, compared to the previous year. This decrease was
a result of the Company paying off a loan of 180,000 DM in early 1998.

     The Company incurred a loss of its  unconsolidated  subsidiary for the year
ended  December 31, 1998 of 49,000 DM. No such loss was incurred in the previous
year. The loss of 49,000 DM of its unconsolidated  subsidiary is a result of the
Company reporting its share of losses of its investment in a subsidiary, T-Cycle
Computer  Service,  a German company engaged in the dismantling and disposing of
surplus electronic  equipment in Germany. The Company had paid 49,000 DM for its
investment in T-Cycle and accounted for this investment  under the equity method
of accounting. T-Cycle has filed for bankruptcy under German law.

     As a result of the above factors,  the net loss for the year ended December
31, 1998 was 1,066,813,  an increase of 426,808 DM, or 66.7%, as compared to the
year ended December 31, 1997.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

     Sales for the year ended December 31, 1997, were 423,300 DM, an increase of
129,486 DM, or 44.1%,  as compared to the year ended December 31, 1996.  Cost of
operations  for the year ended December 31, 1997, was 179,690 DM, an increase of
2,347 DM, or 1.3%, as compared to the year ended December 31, 1996. Gross Profit
for the year ended December 31, 1997, was 274,219 DM, an increase of 157,748 DM,
or 135.4%, as compared to the year ended December 31, 1996. These increases were
primarily  due to an  increase  in the number of sales  persons  employed by the
Company  from  one  manager/sales   person  to  four  full-time  sales  persons.
Management believes that the increase in sales and the corresponding increase in
gross profit is directly  attributable  to the increase in the number of persons
engaged in marketing.

     General and  administrative  expenses for the year ended December 31, 1997,
were  886,696 DM, an increase of 605,082 DM, or 214.9%,  as compared to the year
ended  December 31, 1996.  This  increase was  principally  due to the increased
costs both direct and  indirect  associated  with the  increase in the number of

                                      -19-

<PAGE>

sales  persons,  and  increased  costs for staffing and  equipping the Landsberg
facility and bringing that facility into operation.

     As a result of these factors the operating loss for the year ended December
31, 1997, was (612,477) DM, an increase in the loss of 447,334 DM, or 270.9%, as
compared  to the year ended  December  31,  1996.  In  addition,  these  factors
resulted  in a loss for the year  ended  December  31,  1997,  of  (640,005  DM)
compared to a loss of (207,420  DM) for the year ended  December  31,  1996,  an
increase in the loss of (432,585 DM).

Liquidity and Capital Resources

     The Company is  currently  experiencing  a liquidity  crisis and must raise
additional funds. Further, the Company has not generated sufficient cash-flow to
fund its operations and activities. The Company traditionally relied principally
upon internally generated funds and loans from its principal shareholder and his
wife to finance its operations and growth.  During the six months ended June 30,
1997,  the Company  received  2,208,550  DM from an offering of its Common Stock
conducted solely in Germany to German  citizens.  At March 31, 1998, the Company
had working  capital of 179,215 DM and cash of 386,775 DM. At December  31, 1998
the Company had negative working capital of 168,467 DM and cash had decreased to
166,970 DM. Further, the Company has a net deficit of 164,494 DM at December 31,
1998. Currently,  the Company is borrowing funds from ENTECS to meet its working
capital needs.

YEAR 2000 COMPLIANCE

     The Company does not anticipate any  difficulties in year 2000  compliance.
Management  has been  advised that all  software  programs  that is is using are
already  programmed for Year 2000. In addition,  the Company's  software is also
programmed to accept the New European currency - the EURO.

Item 7 - Financial Statements
-----------------------------

     The response to this item is submitted as a separate section of this report
beginning on page F-1.

Item 8 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
--------------------------------------------------------------------------------

     The Company has not had any  reported  or  material  disagreement  with its
accountants  on any matter of  accounting  principles,  practices  or  financial
statement disclosure.


                                      -20-


<PAGE>
                                    PART III

Item 9 - Directors, Executive Officers, Promoters and Control Persons; 
Compliance with Section 16(a) of the Exchange Act
--------------------------------------------------------------------------------

     The officers and directors of Technical  Environment  Solutions,  Inc. (the
"Company") and key consultants are as follows:

Officers and Directors
----------------------
                                                           Tenure as Officer
    Name             Age           Position(s)               or Director
    ----             ---           -----------               -----------

Gerd Behrens          61          Chairman of the            June 21, 1994
                                  Board and President        to Present

Frank Behrens         32          Secretary                  March 3, 1995
                                  and a Director             to Present

Jutta Behrens         60          Treasurer                  March 3, 1995
                                  and a Director             to Present

Key Consultants
---------------

Karsten Behrens       31          Consultant                 October 1, 1996
                                                             to Present

Yvonne Marquard       29          Consultant                 February 1, 1997
                                                             to Present

     Gerd Behrens,  Jutta  Behrens,  Frank Behrens,  Karsten  Behrens and Yvonne
Marquard may be deemed to be "promoters" and "parents" of the Company within the
meaning of the Rules and Regulations promulgated under the Securities Act.

     The  directors  of the Company  are  elected to hold office  until the next
annual meeting of shareholders and until their  respective  successors have been
elected and qualified. Officers of the Company are elected annually by the Board
of  Directors  and hold  office  until  their  successors  are duly  elected and
qualified.  Gerd Behrens and Jutta  Behrens are married to each other,  and they
are the parents of Frank Behrens and Karsten Behrens.  Frank Behrens and Karsten
Behrens  are  brothers.  There are no other  family  relationships  between  any
director or executive officer and any other director or executive  officer.  Set
forth below is biographical  information with respect to the Company's  founders
and promoters and each officer and director.

     Gerd  Behrens,  founder and  promoter,  has been  Chairman of the Board and
President  of the Company  since  inception.  Mr.  Behrens  holds a Diploma as a
Businessman (Dipl. Kaufmann),  which is roughly equivalent to a Bachelors Degree


                                      -21-

<PAGE>

in Business  Administration in the United States.  Mr. Behrens has over 35 years
of  experience in business with a variety of firms and has served in a number of
positions,  including senior management  positions,  since 1989. From 1989 until
the  founding of the  Company,  Mr.  Behrens was the  managing  director of Data
Consult,  a firm  located  in  Munich,  Germany,  that  purchased  and sold used
computers.   Since  the  founding  of  the  Company,  Mr.  Behrens  has  devoted
substantially all of his time to the business and affairs of the Company.

     Frank Behrens has been  Secretary and a director of the Company since March
3, 1995. Mr. Behrens is a graduate of  Ludwig-Maximillians  University in Munich
in Geography and  Economics.  Mr.  Behrens has served as a consultant to various
firms,  including the Company, since graduating from the University of Munich in
1995. Mr. Behrens'  consulting services have related primarily to urban planning
and  development  and the development of  environmental  management  systems and
organization  structures  and  certain  software  tools for these  systems.  Mr.
Behrens  provided the Company with assistance in the writing and drafting of its
business plan and offering  materials  that were used to raise funds from German
investors  and with the  development  of  environmental  management  systems and
organization structures and certain software tools for these systems.

     Jutta Behrens has been  Treasurer and a director of the Company since March
3, 1995. Mrs.  Behrens is a qualified  industrial  accountant and has since 1970
owned and operated her own firm which provides accounting services to businesses
and individuals in Germany.

     Karsten  Behrens has been a consultant  to the Company and has acted as its
legal   counsel  since   October  1,  1996.   Mr.   Behrens  is  a  graduate  of
Ludwig-Maximillians  University in Munich in law. Mr.  Behrens has completed the
necessary  post-graduate   employment  requirements  and  passed  the  necessary
examinations to be licensed as a lawyer in Germany.  He has provided the Company
with legal  services and with other  management  and  consulting  services.  His
principal  consulting  activities  were focused upon  providing the Company with
assistance  in the  writing  and  drafting  of its  business  plan and  offering
materials  that were used to raise funds from German  investors and in assisting
the Company with various legal matters.

     Yvonne  Marquard has been a  consultant  to the Company  since  February 1,
1997. Ms.  Marquard  assisted the Company with the placement of its Common Stock
in   Germany.    Ms.   Marquard   founded   her   own   firm--Yvonne    Marquard
Unternehmensberatung in 1997 to provide financial consulting services to various
businesses.  Prior to founding  her own firm Ms.  Marquard was employed by AURUM
Vermoegensanlagen GmbH, a German financial services firm.

Compliance with Section 16(a) of the Exchange Act

     Section  16(a) of the  Securities  and  Exchange  Act of 1934,  as amended,
generally  requires the Company's  directors and executive  officers and persons
who own more than 10% of a registered class of the Company's  equity  securities
("10%  owners") to file with the  Securities  and  Exchange  Commission  initial
reports of  ownership  and reports of changes in  ownership  of Common Stock and
other equity securities of the Company. Directors and executive officers and 10%


                                      -22-

<PAGE>

owners are required by Securities and Exchange Commission  regulation to furnish
the Company with copies of all Section  16(a) forms they file.  To the Company's
knowledge,  based  solely on review of copies of such  reports  furnished to the
Company and verbal  representations  that no other  reports were  required to be
filed during the fiscal year ended  December 31, 1998,  all Section 16(a) filing
requirements applicable to its directors, executive officers and 10% owners were
met.






                                      -23-
<PAGE>

Item 10 - Executive Compensation
--------------------------------

     Summary  Compensation  Table. The following table sets forth the annual and
long-term  compensation  for  services in all  capacities  to the Company in the
three fiscal years ended December 31, 1998, of the Company's executive officers,
and to Karsten Behrens a consultant to the Company.
<TABLE>
<CAPTION>
                                                                                    Long Term
                                                 Annual Compensation              Compensation
                                                 -------------------              ------------
                                                                  Other             Number of  
    Name and              Fiscal            Salary/              Annual               Options
Principal Position         Year          Consulting Fees      Compensation            Awarded
------------------         ----          ---------------      ------------            -------
<S>                        <C>             <C>                     <C>                  <C>  <C>
Gerd Behrens,              1998            15,500 DM              -0-                  -0-   (1)
President                  1997            57,600 DM              -0-                  -0-
and Director               1996            10,000 DM              -0-                  -0-

Jutta Behrens,             1998               -0-                 -0-                  -0-   (1)
Treasurer                  1997               -0-                 -0-                  -0-
and Director               1996               -0-                 -0-                  -0-

Frank Behrens,             1998               -0-                 -0-                  -0-   (1)
Secretary                  1997            40,250 DM              -0-                  -0-
and Director               1996               -0-                 -0-                  -0-

Karsten Behrens,           1998            12,255 DM              -0-                  -0-   (1)
Consultant                 1997            98,650 DM              -0-                  -0-
                           1996            3,150 DM               -0-                  -0-
</TABLE>


-----------------------------
(1)  No advances have been made or are contemplated by the Company to any of its
     officers or directors.

Employment and Consulting Agreements

     The Company has entered  into an  employment  agreement  with Gerd  Behrens
under which Mr. Behrens will be paid approximately 6,500 DM per month.  Further,
the Company has a consulting agreement with Jutta Behrens' accounting firm under
which Mrs.  Behrens' firm is paid 500 DM per month in exchange for providing the
services of Jutta  Behrens to the  Company.  Also,  the Company has a consulting
agreement with Frank Behrens'  personal  consulting  firm,  under which the firm
will be paid 30 DM per hour for  providing  the services of Frank Behrens to the
Company.  Karsten  Behrens serves on the board of directors of TES Oecon AG, and
as  such  there  is  a  consulting  agreement  with  Karsten  Behrens'  personal
consulting firm under which his firm is paid an hourly fee of 50 DM per hour for
services as needed.  Gerd  Behrens  devotes his full time and  attention  to the
business  and  affairs  of the  Company.  Frank  Behrens is  expected  to devote


                                      -24-

<PAGE>

approximately  30 hours per month on average to the  business and affairs of the
Company,  with the expectation that as the Company requires more of Mr. Behrens'
time and efforts he will devote  more time to the  Company  with an  appropriate
increase in his compensation  arrangements.  Jutta Behrens is expected to devote
such time as is  necessary  to maintain the  Company's  accounting  records on a
current basis. It is not anticipated  that Mrs.  Behrens will devote  additional
time to the Company,  and as the Company's  needs for accounting and bookkeeping
increase,  management  believes  that  the  Company  will  hire  accounting  and
bookkeeping  personnel directly to meet those needs. It is also anticipated that
Mrs.  Behrens  will  remain as the  Treasurer  until such time as the  Company's
business  requires a full-time  person,  at which time it is  expected  that the
Company will replace Mrs.  Behrens with a qualified  person.  Karsten Behrens is
expected to devote  approximately  10 hours per month on average to the business
and affairs of the Company,  with the expectation  that as the Company  requires
more of Mr.  Behrens'  time and  efforts he will devote more time to the Company
with an appropriate increase in his compensation arrangements.

     The  employment  and  consulting  agreements  between  the Company and Gerd
Behrens,  Jutta  Behrens,  Frank  Behrens and Karsten  Behrens  also  contain an
agreement to maintain confidentiality of trade secrets and other materials.

Compensation Pursuant to Plans

     Except as described below, the Company has no retirement,  pension,  profit
sharing,  stock option or insurance or medical  reimbursement  plans or programs
covering its officers and directors,  and does not contemplate  implementing any
such plans at this time.

     The Board of  Directors of the Company has adopted a Stock Option Plan (the
"Plan") which  provides for the grant of options to purchase an aggregate of not
more than 500,000 shares of the Company's  Common Stock. The purpose of the Plan
is  to  make  options  available  to  directors,   management,   key  employees,
consultants, and technical advisers of the Company in order to provide them with
a more  direct  stake in the  future of the  Company  and to  provide  them with
additional  rewards  and  incentives  for  contributing  to the  success  of the
Company.

     The Plan will be administered by a committee (the "Committee") appointed by
the Board of Directors which  determines the persons to be granted options under
the Plan, the number of shares  subject to each option,  the term of the option,
the manner in which the option may be exercised  and the exercise  price of each
option,  subject to the requirement  that no option may be exercisable more than
10 years after the date of grant. The Committee will have the power to establish
such other  terms and  conditions  for  options  granted  under the Plan as they
determine are necessary and appropriate.  No option granted under the Plan shall
be transferable  otherwise than by will or the laws of descent and distribution.
The exercise  price of stock options  granted under the Plan will be established
by the Board of Directors in their sole discretion and may be less than the fair
market value of the underlying  shares on the date of grant as determined by the
Committee.  The  exercise  price  may be paid in cash or in  Common  Stock  or a
combination of cash and Common Stock.

                                      -25-

<PAGE>


     As of the date of this Report, no options have been granted under the Plan.

     Except  as  described  below  under  "Certain   Relationships  and  Related
Transactions," the Company paid no cash or non-cash  compensation to any officer
or director during the fiscal years ended December 31, 1995 and 1996.







                                      -26-


<PAGE>

Item 11 - Security Ownership of Certain Beneficial Owners and Management

         The  following  table  sets  forth  information  with  respect  to  the
ownership  of  the  Company's  Common  Stock  by  all  officers  and  directors,
individually,  all officers and directors as a group,  all beneficial  owners of
more than ten percent of the Common Stock as of December 31, 1998, and by one of
the  Company's  consultants.   Except  as  otherwise  indicated,  the  following
shareholders have sole voting and investment power with respect to the shares.

                                                                 Percent
Name and address                      Number of                     of
   of owner                            shares                      Class
   --------                            ------                      -----

Gerd Behrens                        1,500,000(1)                   28.7%
C/O TES GmbH
25 Impler Strasse,
Munich, 81371,
Germany

Frank Behrens                         600,000(2)                   11.5%
C/O TES GmbH
25 Impler Strasse,
Munich, 81371,
Germany

Jutta Behrens                       1,260,000(1)                   24.1%
C/O TES GmbH
25 Impler Strasse,
Munich, 81371,
Germany

Karsten Behrens                       850,000(2)                   16.3%
C/O TES GmbH
25 Impler Strasse,
Munich, 81371,
Germany

Yvonne Marquard                       240,000(3)                    4.6%
C/O TES GmbH
25 Impler Strasse,
Munich, 81371,
Germany

All officers and directors            3,360,000                    64.3%
as a group (3 persons)(4)

                                      -27-

<PAGE>


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

(1)  Gerd  and  Jutta  Behrens  are  husband  and  wife,  and own  these  shares
     separately.  As  husband  and  wife  each of  them  may be  considered  the
     beneficial owner of the shares held by the other.

(2)  Frank Behrens and Karsten Behrens are brothers and are the sons of Gerd and
     Jutta Behrens.  Gerd and Jutta Behrens disclaim beneficial ownership of the
     shares held by their sons.

(3)  Yvonne Marquard has served as a consultant to the Company and has been paid
     consulting  or finder's  fees for her efforts in assisting the Company with
     its financing efforts. Ms. Marquard is the wife of Michael Marquard, who is
     an  employee  of the  Company.  Michael  Marquard  may be  deemed to be the
     beneficial owner of these shares.

(4)  Does not  include  850,000  shares held by Karsten  Behrens,  because he is
     neither an officer or director of the Company.

     There  are  no  outstanding  options,   warrants,  or  rights  to  purchase
securities from the Company.




                                      -28-



<PAGE>

Item 12 - Certain Relationships and Related Transactions
--------------------------------------------------------

     In  connection  with the  founding of the Company,  Gerd  Behrens  acquired
4,500,000 shares of Common Stock of Technical Environment  Solutions,  Inc. (the
"Company").  Subsequent  to the  founding and prior to the time that the Company
raised  any funds from  outside  directors,  Mr.  Behrens  sold his wife,  Jutta
Behrens, and his sons, Karsten and Frank Behrens,  2,760,000 of these shares and
sold Yvonne  Marquard  240,000 of these shares.  Mr. Behrens paid  approximately
90,870 DM for his  original  4,500,000  shares.  The  shares  discussed  in this
paragraph  have been  adjusted to reflect a stock  dividend  issued in December,
1998.

     In addition, Jutta Behrens has loaned the Company approximately 141,250 DM.
The initial  loan was made on March 20,  1996,  in the amount of 80,000 DM for a
five-year term and bears interest at 9.25% per year. The second loan was made on
September  10, 1996,  in the amount of  approximately  50,000 DM for a four year
term and bears  interest at 8% per year. The third loan was made on December 31,
1996,  in the amount of  approximately  11,200 DM for a four year term and bears
interest at 8% per year. Further,  Gerd Behrens loaned the Company approximately
100,000 DM in  connection  with the  capitalization  of TES Oecon AG,  which was
interest  free until January 1, 1998.  Subsequent  to January 1, 1998,  the loan
bears interest at a rate of 6% per annum.  The loan is due on December 31, 2001,
subject to a right for the Company to extend the loan for an  additional 5 years
if necessary for economic reasons.

     In connection with the Company's financing efforts in Germany,  the Company
entered into an agreement  with Yvonne  Marquard  under which Mrs.  Marquard was
paid a consulting or finder's fee based upon the  difference  between 20% of the
gross  proceeds  raised and the amount of  commission  or fees  actually paid to
brokers or finders for the sale of the Company's  securities.  Ms.  Marquard was
paid approximately 86,533 DM under the terms of this agreement.  Ms. Marquard is
the wife of Michael Marquard, who is an employee of the Company.

     The Company also paid Frank Behrens  consulting  fees equal to 40,250 DM in
connection  with the writing and  drafting of the  Company's  business  plan and
offering  materials that were used to raise funds from German investors and with
the development of environmental  management systems and organization structures
and certain software tools for these systems.

     The Company paid Karsten  Behrens  consulting  fees equal to  approximately
98,650 DM in connection  with his  performance of legal services for the Company
and the  writing  and  drafting  of the  Company's  business  plan and  offering
materials that were used to raise funds from German investors.

     Except as  otherwise  disclosed  herein,  there have been no related  party
transactions or any other transactions or relationships required to be disclosed
pursuant to Item 404 of Regulation S-B

                                       29

<PAGE>


Item 13 - Exhibits and Reports on Form 8-K
------------------------------------------

(a)      Exhibits

     There are no exhibits filed with this Annual Report

(b)      Reports on Form 8-K

     The Company filed a report on Form 8-K with the  Commission on December 30,
1998 disclosing that the Company had entered into a Letter of Intent to effect a
merger with Environmental Technologies and Software Solutions, Inc. in which the
Company would be the surviving entity.  The merger is expected to consummated no
later than June 30, 1999. No other reports on Form 8-K were filed by the Company
during its fourth quarter ended December 31, 1998.





                                      -30-
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT



Board of Directors and Stockholders
Technical Environment Solutions, Inc.


We  have  audited  the  consolidated  balance  sheet  of  Technical  Environment
Solutions,  Inc. as of December 31, 1998 and the related consolidated statements
of operations,  changes in stockholders'  equity, and cash flows for each of the
two years then ended.  These financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above, present
fairly,  in  all  material   respects,   the  financial  position  of  Technical
Environment  Solutions,  Inc. as of December  31,  1998,  and the results of its
operations  and cash flows for each of the two years then ended,  in  conformity
with generally accepted accounting principles.


                                           James E. Scheifley & Associates, P.C.
                                           Certified Public Accountants

Denver, Colorado
March 26, 1999



<PAGE>

                      Technical Environment Solutions, Inc.
                           Consolidated Balance Sheet
                                December 31, 1998


                                      ASSETS
                                      ------
                                                          DM            US $
Current assets:
  Cash and cash equivalents                              166,970       100,162
  Accounts receivable, trade                              68,662        41,189
  Accounts receivable - other                             34,699        20,815
  Prepaid expenses                                        22,004        13,200
                                                      ----------    ----------
      Total current assets                               292,335       175,366

Property and equipment, at cost, net of
  accumulated depreciation of DM 102,469                 162,642        97,566

Investments                                               10,000         5,999
Note receivable - related party                           50,000        29,994
Other assets                                             300,000       179,964
                                                      ----------    ----------
                                                         814,977       488,888
                                                      ==========    ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current liabilities:
  Notes payable - banks                                   29,541        17,722
  Notes payable - others                                  80,000        47,990
  Accounts payable                                       102,536        61,508
  Accounts payable and accrued
   expenses - related parties                            115,928        69,543
  Accrued expenses                                       132,797        79,662
                                                      ----------    ----------
      Total current liabilities                          460,802       276,426

  Loans from shareholders                                230,000       137,972
  Advances from affiliated company                       288,669       173,167

Stockholders' equity:
 Common stock, no par value,
  20,000,000 shares authorized,
  5,244,830 shares issued and outstanding              2,260,155     1,355,822
 Accumulated deficit                                  (2,424,649)   (1,454,499)
                                                      ----------    ----------
                                                        (164,494)      (98,677)
                                                      ----------    ----------
                                                         814,977       488,888
                                                      ==========    ==========




          See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>

                                  Technical Environment Solutions, Inc.
                                  Consolidated Statements of Operations


                                                                    Years Ended December 31,
                                                        1997                  1998                  1998
                                                         DM                    DM                   US $
                                                    ----------            ----------            ----------

<S>                                                    <C>                   <C>                   <C>    
Sales                                                  347,213               610,056               365,960
Sales to related party                                  80,609                  --                    --
                                                    ----------            ----------            ----------
                                                       427,822               610,056               365,960

Cost of operations                                     179,690               202,174               121,280
                                                    ----------            ----------            ----------
Gross profit                                           248,132               407,882               244,680

Other costs and expenses:
  General and administrative                           652,519             1,305,774               783,308
  General and administrative - related parties         234,177                98,594                59,145
                                                    ----------            ----------            ----------
(Loss) from operations                                (638,564)             (996,486)             (597,772)

Other income and (expense):
  Interest income                                       19,190                19,668                11,798
  Losses of unconsolidates Subsidiary                     --                 (49,000)              (29,394)
  Interest expense - related party                     (18,100)              (24,418)              (14,648)
  Interest expense                                     (28,618)              (16,577)               (9,944)
                                                    ----------            ----------            ----------
                                                       (27,528)              (70,327)              (42,188)

(Loss) before income taxes                            (666,092)           (1,066,813)             (639,960)
Provision for income taxes                                --                    --                    --
                                                    ----------            ----------            ----------

Net (loss)                                            (666,092)           (1,066,813)             (639,960)
                                                    ==========            ==========            ==========


Earnings (loss) per share:
 Basic and diluted (loss) per share                      (0.40)                (0.61)                (0.37)
                                                    ==========            ==========            ==========

 Weighted average shares outstanding                 5,028,813             5,224,830             5,224,830
                                                    ==========            ==========            ==========



                          See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                      Technical Environment Solutions, Inc.
                                    Consolidated Statement of Stockholders' Equity
                                       Years Ended December 31, 1998 and 1997


                                                     Common Stock                    Accumulated
                                              Shares              Amount                Deficit              Total
                                                                   DM                    DM                   DM

<S>                                        <C>                    <C>                 <C>                  <C>      
 Balance, December 31, 1996                 4,524,402              121,360             (691,744)            (570,384)

  Sale of stock for cash                      700,428            2,675,310            2,675,310
    less expenses of offering                    --               (536,515)            (536,515)

Net loss for the year                            --                   --               (666,092)            (666,092)
                                           ----------           ----------           ----------           ----------

 Balance, December 31, 1997                 5,224,830            2,260,155           (1,357,836)             902,319

Net loss for the year                            --                   --             (1,066,813)          (1,066,813)
                                           ----------           ----------           ----------           ----------

 Balance, December 31, 1998                 5,224,830            2,260,155           (2,424,649)            (164,494)
                                           ==========           ==========           ==========           ==========



                               See accompanying notes to consolidated financial statements.


</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                                Technical Environment Solutions, Inc.
                                Consolidated Statements of Cash Flows


                                                                            Years Ended December 31,
                                                                  1997              1998                1998
                                                                   DM                DM                  US $
                                                               --------          ----------            --------
<S>                                                            <C>               <C>                   <C>      
Net (loss)                                                     (666,092)         (1,066,813)           (639,960)
  Adjustments to reconcile net income (loss) to net
   cash (used in) operating activities:
   Depreciation                                                  12,521              44,047              26,423
Changes in assets and liabilities:
    (Increase) decrease in accounts receivable                   56,190             (68,662)            (41,189)
    (Increase) decrease in prepaid expenses                     (32,269)             14,350               8,608
    (Increase) decrease in other assets                         (37,935)             40,344              24,202
    Increase (decrease) in accounts payable and
        accrued expenses including related parties               91,045             142,817              85,673
                                                             ----------          ----------          ----------
       Total adjustments                                         89,552             172,896             103,717
                                                             ----------          ----------          ----------
  Net cash (used in) operating activities                      (576,540)           (893,917)           (536,243)
                                                             ----------          ----------          ----------

Cash flows from investing activities:
   Advance to affiliate                                        (363,250)               --                  --
   Repayment of affiliate advance                                  --               250,000             149,970
   Long-term lease deposit                                     (300,000)               --                  --
   Increase in note receivable                                  (50,000)               --                  --
   Purchase of fixed assets                                    (109,624)            (88,323)            (52,983)
                                                                                 ----------          ----------
Net cash provided by (used in) investing activities            (822,874)            161,677              96,987
                                                             ----------          ----------          ----------

Cash flows from financing activities:
   Advances from affiliated company                                --               370,200             222,076
   Proceeds from sale of common stock                         2,138,795                --                  --
   Decrease in deferred financing fees                           19,145                --                  --
   Repayment of notes payable - bank                            (22,766)           (168,257)           (100,934)
   Repayment of stockholder advances                             (6,900)             (4,300)             (2,579)
   Repayment of convertible notes                               (20,000)            (10,000)             (5,999)
                                                             ----------          ----------          ----------
  Net cash provided by
   financing activities                                       2,108,274             187,643             112,563
                                                             ----------          ----------          ----------

Increase (decrease) in cash                                     708,860            (544,597)           (326,693)
Cash and cash equivalents,
 beginning of period                                              2,707             711,567             426,855
                                                                                 ----------          ----------
Cash and cash equivalents,
 end of period                                                  711,567             166,970             100,162
                                                             ==========          ==========          ==========





                             See accompanying notes to consolidated financial statements.

</TABLE>



<PAGE>
                      Technical Environment Solutions, Inc.
                      Consolidated Statements of Cash Flows


                                                      Years Ended December 31,
                                                    1997      1998     1998
                                                     DM        DM       US $

Supplemental cash flow information:
   Cash paid for interest                             --      33,219    19,927
   Cash paid for income taxes                         --        --        --


          See accompanying notes to consolidated financial statements.
<PAGE>

                      Technical Environment Solutions, Inc.
                   Notes to Consolidated Financial Statements
                                December 31, 1998


Note 1.  Summary of significant accounting policies.

Technical Environment Solutions,  Inc. and subsidiaries (the "Company) is in the
business of recycling surplus and obsolete electronic  equipment.  The Company's
operations  to date have been  carried out solely  within  Germany by its wholly
owned subsidiaries Technical Environment Solutions GmbH, (TES GmbH)and TES Oecon
AG,  formed in 1997 These  operations  consist of  dismantling  and disposing of
electronic  equipment  secured from customers.  The Company has used independent
recycling companies to complete the disposal process,  however, during 1997, the
Company secured plant facilities necessary to begin certain processing functions
on its own.  TES Oecon  AG, a wholly  owned  subsidiary,  plans to  establish  a
technical  school  for  training  electronic  recycling  workers  for itself and
others.  During February 1998, the Company acquired a 49% ownership  interest in
T-Cycle  Computer  Service and  Verwertungs  GmbH, a German  company  engaged in
dismantling and disposing of surplus electronic equipment in Germany.

The Company was incorporated in Colorado on June 21, 1994.

The  accompanying  financial  statements  have been prepared in accordance  with
United States  generally  accepted  accounting  principles  ("U.S.  GAAP").  The
Company maintains its financial records in accordance with the German Commercial
Code,  which  represents  generally  accepted  accounting  principles in Germany
("German GAAP").  Generally,  accepted accounting  principles in Germany vary in
certain  significant  respects  from U.S.  GAAP.  Accordingly,  the  Company has
recorded  certain  adjustments  in order that these  financial  statements be in
accordance with U.S. GAAP.

Solely  for  the  convenience  of  the  reader,  the  accompanying  consolidated
financial  statements  as of and for the year ended  December 31, 1998 have been
translated  into United States dollars.  ("U.S.  $") at the rate of DM 1.667 per
U.S.  $1.00 the Noon  Buying  Rate of the  Federal  Reserve  Bank of New York on
December 31, 1998. The translations  should not be construed as a representation
that the amounts shown could have been, or could be, converted into U.S. dollars
at that or any other rate.



<PAGE>

     Principles of consolidation
The  consolidated  statements  include  the  accounts  of the  Company  and  its
wholly-owned   subsidiaries.   All   significant   inter-company   accounts  and
transactions have been eliminated in consolidation.

     Cash and cash equivalents
The Company considers all highly-liquid investments purchased with a maturity of
three months or less to be cash equivalents.

     Fair value of financial instruments
The Company's  financial  instruments  consist of cash and cash  equivalents and
accounts  receivable  and  payable.  The  carrying  amounts  of  such  financial
instruments  approximate  fair  value  because  of the short  maturity  of these
instruments.

     Property and equipment
Property and  equipment are stated at cost.  Depreciation  is provided for using
the straight line method over estimated  useful lives of five to seven years for
equipment and the remaining lease term for leasehold improvements.  Depreciation
expense  amounted  to DM 44,047 and DM 12,521 for the years ended  December  31,
1998 and 1997, respectively.

     Revenue recognition
Revenue is recorded when services are performed.  Sales amounts  included in the
foregoing Consolidated Statement of Operations consist of gross contract amounts
paid to the Company by its customers for the removal of recyclable materials.

     Advertising
Advertising  expenses  are charged to expense  upon first  showing.  The Company
incurred  advertising  expense of DM 9,000 and DM 109,865 during the years ended
December 31, 1998 and 1997 respectively.

     Net loss per share
Basic Earnings per Share ("EPS") is computed by dividing net income available to
common  stockholders  by the  weighted  average  number of common  stock  shares
outstanding  during the year.  Diluted EPS is  computed  by dividing  net income
available to common stockholders by the weighted-average  number of common stock
shares outstanding  during the year plus potential dilutive  instruments such as
stock  options  and  warrants.  The effect of stock  options  on diluted  EPS is
determined  through  the  application  of the  treasury  stock  method,  whereby
proceeds received by the Company based on assumed  exercises are  hypothetically
used to repurchase the Company's common stock at the average market price during
the period.


<PAGE>


The basic loss per share is computed by dividing  the net loss for the period by
the weighted  average number of common shares  outstanding for the period.  Loss
per share is unchanged on a diluted  basis since the assumed  exercise of common
stock  equivalents  would have an  anti-dilutive  effect due to the existence of
operating losses.

     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 the reported  amounts
of revenue and  expenses  during the periods  presented.  Actual  results  could
differ from those estimates making it reasonably possible that a change in these
estimates could occur in the near term.

     Stock-based Compensation
The Company  adopted  Statement  of Financial  Accounting  Standard No. 123 (FAS
123), Accounting for Stock-Based Compensation beginning with the Company's first
quarter of 1996.

Upon  adoption of FAS 123, the Company when  required  will  continue to measure
compensation expense for any stock-based  employee  compensation plans using the
intrinsic value method  prescribed by APB No. 25, Accounting for Stock Issued to
Employees,  and will provide pro forma  disclosures  of the effect on net income
and earnings per share as if the fair value-based  method  prescribed by FAS 123
had been applied in measuring compensation expense.

     Recent Pronouncements
SFAS No. 130, "Reporting  Comprehensive Income",  establishes guidelines for all
items that are to be  recognized  under  accounting  standards as  components of
comprehensive income to be reported in the financial  statements.  The statement
is  effective   for  all  periods   beginning   after   December  15,  1997  and
reclassification  financial  statements for earlier periods will be required for
comparative purposes. To date, the Company has not engaged in transactions which
would  result in any  significant  difference  between its reported net loss and
comprehensive net loss as defined in the statement.

In March 1998, the American  Institute of Certified  Public  Accountants  issued
Statement  of  Position  98-1,  Accounting  for the Costs of  Computer  Software
Developed  or  Obtained  for  Internal  Use  ("SOP  98-1").  SOP  98-1  provides
authoritative guidance on when internal-use software costs should be capitalized
and when these costs should be expensed as incurred.

Effective  January 1, 1998, the Company adopted SOP 98-1.  Costs  capitalized by
the Company  during the year ended  December 31, 1998 in  accordance  with these
guidelines were not significant.



<PAGE>


Effective December 31, 1998, the Company adopted SFAS No. 131, Disclosures about
Segments  of an  Enterprise  and  Related  Information  ("SFAS  131").  SFAS 131
superseded  SFAS  No.  14,  Financial  Reporting  for  Segments  of  a  Business
Enterprise.  SFAS 131  establishes  standards  for the way that public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating  segments  in interim  financial  reports.  SFAS 131 also  establishes
standards for related disclosures about products and services, geographic areas,
and  major  customers.  The  adoption  of SFAS  131 did not  affect  results  of
operations  or  financial  position.  To date,  the Company has  operated in one
business segment only.

Effective December 31, 1998, the Company adopted the provisions of SFAS No. 132,
Employers' Disclosures about Pensions and Other Post-retirement  Benefits ("SFAS
132").  SFAS  132  supersedes  the  disclosure  requirements  in  SFAS  No.  87,
Employers' Accounting for Pensions,  and SFAS No. 106, Employers' Accounting for
Post-retirement  Benefits Other Than Pensions. The overall objective of SFAS 132
is  to  improve  and   standardize   disclosures   about   pensions   and  other
post-retirement   benefits   and  to  make   the   required   information   more
understandable. The adoption of SFAS 132 did not affect results of operations or
financial  position.  The Company has not initiated  benefit plans to date which
would require disclosure under the statement.

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"), which
is required to be adopted in years  beginning after June 15, 1999. SFAS 133 will
require the Company to recognize  all  derivatives  on the balance sheet at fair
value.  Derivatives  that are not hedges must be adjusted to fair value  through
income.  If the  derivative  is a hedge,  depending  on the nature of the hedge,
changes in the fair  value of  derivatives  will  either be offset  against  the
change in fair value of hedged assets,  liabilities, or firm commitments through
earnings or  recognized in other  comprehensive  income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in fair
value will be  immediately  recognized  in  earnings.  The  Company  has not yet
determined  what the effect of SFAS 133 will be on  earnings  and the  financial
position of the Company,  however it believes that it has not to date engaged in
significant transactions encompassed by the statement.


Note 2. Investments

During  July 1995,  the  Company  invested  DM 10,000 in  Okologik  AG, a German
company  engaged in the  production  and  conservation  of energy by alternative
means.  The  Company's  1,334  shares  represent  less  than 2% of total  shares
outstanding.  As yet,  no  market  exists  for the  stock  and the  Company  has
accounted for its investment at cost.



<PAGE>






Note 3. Notes payable and long-term debt

Notes  payable - banks at December  31,  1998  consists of a bank line of credit
having a balance at  December  31, 1998 of DM 29,541.  The line of credit  bears
interest at 10.75% per annum and had DM 20,459  additional  credit  available at
that date.  The  Company  also had a term loan with the bank  having a remaining
principal balance due at December 31, 1997 of DM 180,050. The term loan was paid
in full on February 28, 1998.

During 1995, the Company sold DM 210,000 of  convertible  debentures to thirteen
individual  investors in Germany.  The  debentures  bear  interest at 10.75% per
annum and are due in March 1999.  The  debentures  were to be  convertible  into
shares of the Company's common stock, however, none were converted. During 1996,
DM 100,000 plus  accrued  interest  was repaid to certain of the  investors.  An
additional DM 20,000 plus accrued  interest was repaid in 1997.  During  January
1998, an additional DM 10,000 was repaid.

Note 4.  Income taxes.

At December  31, 1997 the Company had  approximately  DM 2,396,000 of unused net
operating loss deductions in Germany that may be carried forward indefinitely.

A valuation  allowance of DM 1,198,000 was provided at December 31, 1998 for net
operating loss carryforwards  which more likely than not will not be utilized in
the foreseeable  future.  The valuation  reserve  increased by  approximately DM
533,000  and DM  320,000  during the years  ended  December  31,  1998 and 1997,
respectively.

Note 5. Commitments and contingencies

The Company is  obligated  for  non-cancelable  operating  lease  payments  with
initial terms  exceeding one year relating to office space and warehouse  space.
The lease agreements require future minimum lease payments as follows:

                Year Ending December 31,         Amount
                1999                            268,260
                2000                            272,220
                2001                            287,820
                2002                            147,420
                2003                             90,840
                                               --------
                                              1,066,560

In connection with the lease, the Company paid a DM 300,000  refundable  deposit
to guarantee  performance  of the lease and to secure a purchase  option for the
building.  The lease contract includes a purchase option whereby the Company may
acquire the property for DM 2,200,000 if the option is exercised before December
31, 2000.  The deposit is included in other assets in the  accompanying  balance
sheet.  The  deposit  may be fully  offset  against  the  purchase  price of the
building,  however should the purchase  option expire  unexercised,  the deposit
will be reduced by DM 90,000.


<PAGE>






The  Company  has  accrued DM 22,500 of  additional  rent  during the year ended
December 31, 1998 and will continue  making annual  accruals  through the end of
the option period to provide for the possible impairment of the deposit amount.

Rent expense in 1998 and 1997 was DM 270,420 and DM 49,020, respectively.

The  Company has entered  into  employment  contract  with its  president  which
provides for an annual salary of DM 96,000 per year through June 1999.


Note 6. Related party transactions

A shareholder  of the Company who is also wife of the Company's  president  made
loans  aggregating  DM 130,000 to the Company during the year ended December 31,
1996.  The loans bear  interest at between 8% and 9.25% per annum and are due DM
80,000 in 2000 and DM 50,000 in 2001 plus accrued interest.

Additionally,  during 1993, the shareholder advanced DM 25,000 to the Company of
which DM 6,900  was  repaid  in each of the  years  1995  through  1997 with the
balance of DM 4,300 repaid during 1998.

Additionally,  during  1996,  the  Company's  president  and  major  shareholder
advanced  DM 100,000  to the  Company's  German  subsidiary.  The  amount  bears
interest at 6% per annum  beginning  January 1, 1998 and the  interest is due at
the end of each calendar year. The loan principle is due in full on December 31,
2001.

The Company's  president and major shareholder is president and a shareholder of
ENTECS, Inc. a Colorado  corporation formed in May 1997 to exploit patent rights
to a concrete recycling system and related equipment. The Company paid a deposit
of DM  250,000  for the  rights  to use the  concrete  system  and  subsequently
transferred  the rights to ENTECS in exchange for a short term note. The advance
was paid in full during 1998. Additionally,  ENTECS made advances to the Company
aggregating  DM 370,200  during the year ended  December 31, 1998.  The advances
bear interest at 6% per annum and are due after ten years.

Additionally,  during 1997, the Company made working capital  advances to ENTECS
of DM 50,000  and paid DM  86,250 of costs  associated  with the  operations  of
ENTECS.  The  working  capital  advance  bears  interest at 8% per annum and was
repaid  DM  23,000  in 1997 and DM 27,000  plus  accrued  interest  of $1,682 in
January 1998.

The balance of the long term notes due ENTECS net of the amounts due from ENTECS
amounted  to DM  288,669 at  December  31,  1998 and  comprises  the  balance of
advances from affiliated company included in the accompanying balance sheet.


<PAGE>


During the year ended  December  31, 1997,  the Company  advanced DM 50,000 to a
German entity called Arbeit fur Alle e.V.  (AFA).  The note bears interest at 8%
per annum and was originally due in installments of DM 10,000 at the end of each
calendar  year  beginning in 1998.  The payments  have been extended to begin in
1999.  Certain  officer/shareholders  of the  Company  have a  direct  ownership
interest in AFA.  Interest  accrued as of December  31, 1998 with respect to the
loan amounted to DM 6,600.

During the year ended  December  31, 1998 the Company  paid an  aggregate  of DM
98,594 to two  officer/shareholders  for  consulting  services  provided  to the
Company.


Note 7. Stockholders' equity

During the periods  covered by these  financial  statements  the Company  issued
securities in reliance upon an exemption from  registration  with the Securities
and Exchange  Commission.  Although the Company  believes that the sales did not
involve  a public  offering  and that it did  comply  with the  exemptions  from
registration,  it could be liable for rescission of said sales if such exemption
was found not to apply. The Company has not received a request for rescission of
shares nor does it  believe  that it is  probable  that its  shareholders  would
pursue rescission nor prevail if such action were undertaken

On December 31, 1998 the Company  effected a stock dividend  whereby each holder
of the Company's  outstanding common stock received an additional two shares for
each share held. The Company has accounted for the dividend as a three share for
one share forward stock split and consequently,  all share and per share data in
the  foregoing  financial  statements  and notes  thereto have been  restated to
reflect the dividend.

During  1997,  the  Company  commenced a private  sale of its common  stock to a
limited  group of investors in Germany.  The Company sold 700,428  shares of its
common stock for gross proceeds of DM 2,675,310 and incurred  direct expenses of
the offering amounting to DM 536,515.

The Company has established a stock option plan for directors,  management,  key
employees,  consultants and technical  advisers  whereby an aggregate of 500,000
options to purchase common stock of the Company may be granted.  The grant price
of the options will be equal to the market price for the Company's  common stock
at the date the options are granted. No options have been granted under the plan
through the date of these financial statements.


Note. 8. Concentrations and information about major customers

During 1998 and 1997, all of the Company's revenue from recycling operations was
derived  from sales  within  Germany.  During  1998,  the  Company had one major
customer, Nutzel/Logosys GmbH which accounted for 10% of its sales. During 1997,
the Company  had four major  customers,  Allianz  Versicherungs  AG,  Bayerische
Landesbank,  Hewlett  Packard  GmbH and Philips  GmbH whose  purchases  from the
Company each accounted for greater than 10% of the Company's sales.

No amounts were due from these customers at December 31, 1998.

<PAGE>



Note 9. Operations of unconsolidated subsidiary

During February 1998, the Company  acquired a 49% ownership  interest in T-Cycle
Computer  Service and Verwertungs  GmbH, a German company engaged in dismantling
and  disposing  of surplus  electronic  equipment  in Germany.  The Company paid
DM49,000 for its  investment  in T-Cycle and has  accounted  for the  investment
using the equity method of accounting.  Accordingly,  the Company has recognized
its share of the losses of T-Cycle for the period ended December 31, 1998, which
amounted to DM 49,000, as a reduction of its investment in the company.  T-Cycle
has filed for  protection  under German  bankruptcy  laws.  The Company does not
believe that it is contingently liable for any outstanding debts of T-Cycle.


Note 10. Correction of prior year financial statement

The  financial  statements  for the year  ended  December  31,  1997  have  been
corrected to reflect an  adjustment to the  commission  earned by the Company on
the sale of the BRS  license  technology  to  ENTECS.  The  commission  has been
reduced  by DM 26,087  of German  value  added  tax  (VAT)  associated  with the
transaction.  The adjustment  increased the net loss for 1997 by DM 26,087 or DM
 .0 per share.


Note 11. Proposed merger.

On October 30, 1998 TES and ENTECS entered into a definitive  agreement and plan
of merger  (the  "Agreement")  providing  for the merger of ENTECS with and into
TES.  Under  the terms of the  Agreement,  which  was  approved  by the Board of
Directors of both TES and ENTECS, the holder of ENTECS Common Stock will receive
5.7 shares of TES Common Stock for each of its outstanding  shares.  The Company
plans to account for the merger as a  reorganization  of companies  under common
control.  The  accounting  for the merger is expected to be similar to that of a
pooling of interests.

<PAGE>



                          INDEPENDENT AUDITOR'S REPORT



Board of Directors and Stockholders
Environmental Technologies and Software Solutions, Inc.

We have audited the consolidated balance sheet of Environmental Technologies and
Software  Solutions,  Inc. as of December 31, 1998 and the related  consolidated
statements of operations,  changes in stockholders'  equity,  and cash flows for
each of the years in the two year period then ended. These financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above, present
fairly,  in all  material  respects,  the  financial  position of  Environmental
Technologies  and Software  Solutions,  Inc. as of December  31,  1998,  and the
results of its  operations  and cash flows for each of the years in the two year
period then ended, in conformity with generally accepted accounting principles.


                                         James E. Scheifley & Associates, P.C.
                                         Certified Public Accountants

Denver, Colorado
April 2, 1999


<PAGE>
 
             Enviornmental Technologies and Software Solutions, Inc.
                           A Development Stage Company
                           Consolidated Balance Sheet
                                December 31, 1998


                                     ASSETS
                                     ------

                                                          DM              US $
Current assets:
  Cash and cash equivalents                              393,080        235,801
  Accounts receivable                                      2,230          1,338
  Inventory                                              120,000         71,986
  Prepaid expenses                                        56,152         33,684
                                                      ----------     ----------
      Total current assets                               571,462        342,809

Property and equipment, at cost, net of
  accumulated depreciation of DM 24,758                  544,442        326,600

Due from affiliated company                              288,669        173,166
License rights                                         1,123,126        673,741
                                                      ----------     ----------
                                                       2,527,699      1,516,315
                                                      ==========     ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current liabilities:
  Accounts payable                                       135,552         81,314
  Due to related parties                                 225,000        134,974
  Accrued expenses                                        76,884         46,120
  Accrued expenses - related parties                     212,769        127,636
                                                      ----------     ----------

      Total current liabilities                          650,205        390,044


Stockholders' equity:
 Common stock, no par value,
  50,000,000 shares authorized,
 1,465,182 shares issued and outstanding               3,600,826      2,160,064
 Deficit accumulated during development stage         (1,723,332)    (1,033,793)
                                                      ----------     ----------
                                                       1,877,494      1,126,271
                                                      ----------     ----------
                                                       2,527,699      1,516,315
                                                      ==========     ==========




          See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>

                            Enviornmental Technologies and Software Solutions, Inc.
                                        A Development Stage Company
                                    Consolidated Statements of Operations
                                    Years Ended December 31, 1997 and 1998

                                                                                                                   Inception
                                                                                                                       to
                                                                                                                  September 30,
                                                        1997                  1998                  1998             1998
                                                         DM                    DM                   US $              DM
                                                     ----------            ----------            ----------       ------------
<S>                                                  <C>                   <C>                   <C>             <C>
Revenues                                                   --                  69,369                41,613           69,369

Other costs and expenses:
  Cost of goods and services                               --                  14,004                  --             14,004
  General and administrative                            256,114             1,231,359               738,668        1,487,473
  General and administrative - related parties           87,500               217,656               130,567          305,156
                                                     ----------            ----------            ----------        ---------
(Loss) from operations                                 (343,614)           (1,393,650)             (827,622)      (1,737,264)

Other income and (expense):
  Interest income                                           783                11,066                 6,638           11,849
  Interest income - related parties                                             7,515                 4,508            7,515
  Interest expense - related parties                                           (1,682)               (1,009)          (1,682)
  Interest expense                                       (1,794)                 (484)                 (290)          (2,278)
                                                     ----------            ----------            ----------        ---------
                                                         (1,011)               16,415                 9,847           15,404

(Loss) before income taxes                             (344,625)           (1,377,235)             (817,775)      (1,721,860)
Provision for income taxes                                 --                  (1,472)                 --             (1,472)
                                                     ----------            ----------            ----------       ----------
 
Net (loss)                                             (344,625)           (1,378,707)             (817,775)      (1,723,332)
                                                     ==========            ==========            ==========       ==========

Earnings (loss) per share:
 Basic and diluted (loss) per share                       (0.33)                (0.99)                (0.59)           (1.33)
                                                     ==========            ==========            ==========       ==========

 Weighted average shares outstanding                  1,033,751             1,387,134             1,387,134        1,298,376
                                                     ==========            ==========            ==========       ==========





                             See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                   Enviornmental Technologies and Software Solutions, Inc.
                                                   A Development Stage Company
                                        Consolidated Statement of Stockholders' Equity
                                             Year Ended December 31, 1998 and 1997


                                                         Common Stock                   Accumulated
                                                   Shares               Amount            Deficit             Total
                                                                          DM                DM                 DM
<S>                                                <C>                   <C>             <C>                <C>   
 Balance at inception                                  --                 --                 --                 --

 Shares issued at inception for service
  in May 1997 at $.003 per share                  1,090,000              3,685              3,685

 Shares issued for services:
    July 1997 at DM12.54 per share                      800             10,035             10,035
    August 1997 at DM12.54 per share                  8,200            102,861            102,861

 Sale of stock for cash:
    June 1997 at DM12.07 per share                    1,750             21,131             21,131
    July 1997 at DM11.62 per share                   43,290            503,164            503,164
    August 1997 at DM12.00 per share                 24,264            291,059            291,059
    September 1997 at DM12.50 per share              25,100            313,719            313,719
    October 1997 at DM12.09 per share                14,750            178,375            178,375

    Less expenses of offering                      (422,759)          (422,759)

Net loss for the year                                  --                 --             (344,625)          (344,625)
                                                 ----------         ----------         ----------         ----------

 Balance, December 31, 1997                       1,208,154          1,001,269           (344,625)           656,644

 Sale of stock for cash:
    January 1998 at DM12.31 per share                19,465            239,684            239,684
    February 1998 at DM12.22 per share               40,170            490,851            490,851
    March 1998 at DM12.18 per share                  15,400            187,588            187,588
    April 1998 at DM12.43 per share                  13,970            173,668            173,668
    May 1998 at DM12.23 per share                    38,650            472,683            472,683
    June 1998 at DM11.50 per share                  107,143          1,231,242          1,231,242
    July 1998 at DM12.72 per share                   22,230            282,630            282,630

    Less expenses of offering                      (478,789)          (478,789)

Net loss for the year                                  --                 --           (1,378,707)        (1,378,707)
                                                 ----------         ----------         ----------         ----------

 Balance, December 31, 1998                       1,465,182          3,600,826         (1,723,332)         1,877,494
                                                 ==========         ==========         ==========         ==========

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                   Enviornmental Technologies and Software Solutions, Inc.
                                                 A Development Stage Company
                                            Consolidated Statement of Cash Flows
                                           Years Ended December 31, 1997 and 1998
                                                                                                                 Inception
                                                                                                                    to
                                                                                                                September 30,
                                                               1997              1998              1998            1998
                                                                DM                DM                US $             DM
                                                            ---------        ----------         ---------       -------------

<S>                                                          <C>             <C>                 <C>             <C>        
Net (loss)                                                   (344,625)       (1,378,707)         (827,059)       (1,723,332)
  Adjustments to reconcile net income (loss) to net
   cash (used in) operating activities:
Depreciation and amortization                                  72,916           183,716           110,208           256,632
   Interest added to affiliate loan                             1,682            81,531            48,909            83,213
   Loss on transfer of machinery                                 --              16,556             9,932            16,556
   Expenses incurred by affiliate                              53,763              --                --              53,763
   Expenses added to related party loans                       87,500              --                --              87,500
   Common stock issued for services                           116,581              --                --             116,581
Changes in assets and liabilities:
    (Increase) decrease in accounts receivable               (101,134)           98,904            59,331            (2,230)
    (Increase) decrease in prepaid expenses                      --             (56,152)          (33,684)          (56,152)
    (Increase) decrease in deposits                            (5,400)            5,400             3,239              --
    Increase (decrease) in accounts payable and                  --
        accrued expenses                                      555,041          (129,836)          (77,886)          425,205
                                                           ----------        ----------        ----------        ----------
       Total adjustments                                      780,949           200,119           120,047           981,068
                                                           ----------        ----------        ----------        ----------
  Net cash (used in) operating activities                     436,324        (1,178,588)         (707,011)         (742,264)
                                                           ----------        ----------        ----------        ----------

Cash flows from investing activities:
   Purchase of license rights                                (568,750)          (25,000)          (14,997)         (593,750)
   Advance to affiliated company                                 --            (370,200)         (222,076)         (370,200)
   Purchase of fixed assets                                  (553,042)         (152,714)          (91,610)         (705,756)
                                                           ----------        ----------        ----------        ----------
Net cash provided by (used in)
 investing activities                                      (1,121,792)         (547,914)         (328,683)       (1,669,706)
                                                           ----------        ----------        ----------        ----------

Cash flows from financing activities:
   Proceeds from loan from affiliate                           27,000              --                --              27,000
   Repayments to affiliated companies                            --            (418,695)         (251,167)         (418,695)
   Repayments to related parties                                 --            (287,500)         (172,466)         (287,500)
   Proceeds from sale of common stock                         884,688         2,599,557         1,559,422         3,484,245
                                                           ----------        ----------        ----------        ----------
  Net cash provided by
   financing activities                                       911,688         1,893,362         1,135,790         2,805,050
                                                           ----------        ----------        ----------        ----------

Increase (decrease) in cash                                   226,220           166,860           100,096           393,080
Cash and cash equivalents,
 beginning of period                                             --             226,220           135,705              --
                                                           ----------        ----------        ----------        ----------
Cash and cash equivalents,
 end of period                                                226,220           393,080           235,801           393,080
                                                           ==========        ==========        ==========        ==========

                              See accompanying notes to consolidated financial statements.

</TABLE>



<PAGE>
             Enviornmental Technologies and Software Solutions, Inc.
                      Consolidated Statements of Cash Flows
                     Years Ended December 31, 1997 and 1998


                                                  1997         1998      1997
                                                   DM           DM        US $
                                                 -------     --------   -------

Supplemental cash flow information:
   Cash paid for interest                             --        --        --
   Cash paid for income taxes                         --        --        --

Non-cash investing and financing activities:
   License rights acquired for debt              761,250        --        --
                                                               




          See accompanying notes to consolidated financial statements


<PAGE>


             Environmental Technologies and Software Solutions, Inc.
                   Notes to Consolidated Financial Statements
                                December 31, 1998


Note 1.  Summary of significant accounting policies.

Environmental  Technologies  and Software  Solutions,  Inc. and subsidiariy (the
"Company)  is in the  business of  recycling  and  disposal of waste  materials,
development and  construction of new technologies in the  environmental  area as
well as development,  production and sale of software programs for environmental
and recycling solutions and to engage in any other lawful purpose and business.

The Company's  operations to date have been carried out solely within Germany by
its wholly owned  subsidiaries,  ENTECS  Umwelttechnik  GmbH,  (ENTECS GmbH) and
ENTECS Software and Umwelttechnik GmbH, (Software GmbH) formed in March 1998.

The  Company  was  incorporated  in  Colorado  on May 9, 1997.  The  Company has
recorded  limited sales during the periods  presented and is considered to be in
its development stage.

The  accompanying  financial  statements  have been prepared in accordance  with
United States  generally  accepted  accounting  principles  ("U.S.  GAAP").  The
Company maintains its financial records in accordance with the German Commercial
Code,  which  represents  generally  accepted  accounting  principles in Germany
("German GAAP").  Generally,  accepted accounting  principles in Germany vary in
certain  significant  respects  from U.S.  GAAP.  Accordingly,  the  Company has
recorded  certain  adjustments  in order that these  financial  statements be in
accordance with U.S. GAAP.

Solely  for  the  convenience  of  the  reader,  the  accompanying  consolidated
financial  statements  as of and for the year ended  December 31, 1998 have been
translated  into United States dollars.  ("U.S.  $") at the rate of DM 1.667 per
U.S.  $1.00 the Noon  Buying  Rate of the  Federal  Reserve  Bank of New York on
December 31, 1998. The translations  should not be construed as a representation
that the amounts shown could have been, or could be, converted into U.S. dollars
at that or any other rate.


     Principles of consolidation
The  consolidated  statements  include  the  accounts  of the  Company  and  its
wholly-owned   subsidiaries.   All   significant   inter-company   accounts  and
transactions have been eliminated in consolidation.


<PAGE>






     Cash and cash equivalents
The Company considers all highly-liquid investments purchased with a maturity of
three months or less to be cash equivalents.

     Fair value of financial instruments
The Company's  financial  instruments  consist of cash and cash  equivalents and
accounts  receivable  and  payable.  The  carrying  amounts  of  such  financial
instruments  approximate  fair  value  because  of the short  maturity  of these
instruments.

     Property and equipment
Property and  equipment are stated at cost.  Depreciation  is provided for using
the straight line method over estimated  useful lives of five to seven years for
equipment  and  the  remaining  lease  term  for  leasehold   improvements.   No
depreciation  expense has been recorded for the year ended  December 31, 1997 on
the  Company's   machinery  and  equipment  had  not  been  placed  in  service.
Depreciation expense for the year ended December 31, 1998 amounted to DM 24,758.

     Intangible assets
The Company has purchased  certain licenses for the use of technology to be used
in its planned  business  activities  (see Note 2). The licenses  are  amortized
using the straight  line method over the term of the license  beginning in 1997.
Amortization  for the years  ended  December  31,  1998 and 1997  amounted to DM
158,958 and DM 72,916, respectively.

The Company  makes reviews for the  impairment of long-lived  assets and certain
identifiable  intangibles  whenever events or changes in circumstances  indicate
that the carrying amount of an asset may not be recoverable. Under SFAS No. 121,
an impairment loss would be recognized when estimated future cash flows expected
to result from the use of the asset and its  eventual  disposition  is less than
its carrying  amount.  No such  impairment  losses have been  identified  by the
Company for the 1998 and 1997 fiscal years.

     Revenue recognition
Revenue is  recorded  when goods are shipped or services  are  performed.  Sales
returns and  allowances  are  recorded  after  returned  goods are  received and
inspected.  The Company expects to begin sales of its products in 1998 and plans
to provide currently for estimated product returns arising therefrom.

     Advertising
Advertising  expenses  are charged to expense  upon first  showing.  The Company
incurred  DM  75,815  DM 1,173 of  advertising  expense  during  1998 and  1997,
respectively.


<PAGE>


     Net loss per share
Basic Earnings per Share ("EPS") is computed by dividing net income available to
common  stockholders  by the  weighted  average  number of common  stock  shares
outstanding  during the year.  Diluted EPS is  computed  by dividing  net income
available to common stockholders by the weighted-average  number of common stock
shares outstanding  during the year plus potential dilutive  instruments such as
stock  options  and  warrants.  The effect of stock  options  on diluted  EPS is
determined  through  the  application  of the  treasury  stock  method,  whereby
proceeds received by the Company based on assumed  exercises are  hypothetically
used to repurchase the Company's common stock at the average market price during
the period.

The basic loss per share is computed by dividing  the net loss for the period by
the weighted  average number of common shares  outstanding for the period.  Loss
per share is unchanged on a diluted  basis since the assumed  exercise of common
stock  equivalents  would have an  anti-dilutive  effect due to the existence of
operating losses.

     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 the reported  amounts
of revenue and  expenses  during the periods  presented.  Actual  results  could
differ from those estimates making it reasonably possible that a change in these
estimates could occur in the near term.

     Stock-based Compensation
The Company  adopted  Statement  of Financial  Accounting  Standard No. 123 (FAS
123), Accounting for Stock-Based Compensation beginning with the Company's first
quarter of operations.

Upon  adoption of FAS 123, the Company when  required  will  continue to measure
compensation expense for any stock-based  employee  compensation plans using the
intrinsic value method  prescribed by APB No. 25, Accounting for Stock Issued to
Employees,  and will provide pro forma  disclosures  of the effect on net income
and earnings per share as if the fair value-based  method  prescribed by FAS 123
had been applied in measuring compensation expense.


<PAGE>


     Recent Pronouncements
SFAS No. 130, "Reporting  Comprehensive Income",  establishes guidelines for all
items that are to be  recognized  under  accounting  standards as  components of
comprehensive income to be reported in the financial  statements.  The statement
is  effective   for  all  periods   beginning   after   December  15,  1997  and
reclassification  of financial  statements of financial  statements  for earlier
periods will be required for comparative purposes.

To date, the Company has not engaged in  transactions  which would result in any
significant  difference between its reported net loss and comprehensive net loss
as defined in the statement.

In March 1998, the American  Institute of Certified  Public  Accountants  issued
Statement  of  Position  98-1,  Accounting  for the Costs of  Computer  Software
Developed  or  Obtained  for  Internal  Use  ("SOP  98-1").  SOP  98-1  provides
authoritative guidance on when internal-use software costs should be capitalized
and when these costs should be expensed as incurred.

Effective  January 1, 1998, the Company adopted SOP 98-1.  Costs  capitalized by
the Company  during the year ended  December 31, 1998 in  accordance  with these
guidelines were not significant.

Effective December 31, 1998, the Company adopted SFAS No. 131, Disclosures about
Segments  of an  Enterprise  and  Related  Information  ("SFAS  131").  SFAS 131
superseded  SFAS  No.  14,  Financial  Reporting  for  Segments  of  a  Business
Enterprise.  SFAS 131  establishes  standards  for the way that public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating  segments  in interim  financial  reports.  SFAS 131 also  establishes
standards for related disclosures about products and services, geographic areas,
and  major  customers.  The  adoption  of SFAS  131 did not  affect  results  of
operations  or  financial  position.  To date,  the Company has  operated in one
business segment only.

Effective December 31, 1998, the Company adopted the provisions of SFAS No. 132,
Employers' Disclosures about Pensions and Other Post-retirement  Benefits ("SFAS
132").  SFAS  132  supersedes  the  disclosure  requirements  in  SFAS  No.  87,
Employers' Accounting for Pensions,  and SFAS No. 106, Employers' Accounting for
Post-retirement  Benefits Other Than Pensions. The overall objective of SFAS 132
is  to  improve  and   standardize   disclosures   about   pensions   and  other
post-retirement   benefits   and  to  make   the   required   information   more
understandable. The adoption of SFAS 132 did not affect results of operations or
financial  position.  The Company has not initiated  benefit plans to date which
would require disclosure under the statement.


<PAGE>


In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"), which
is required to be adopted in years  beginning after June 15, 1999. SFAS 133 will
require the Company to recognize  all  derivatives  on the balance sheet at fair
value.  Derivatives  that are not hedges must be adjusted to fair value  through
income.  If the  derivative  is a hedge,  depending  on the nature of the hedge,
changes in the fair  value of  derivatives  will  either be offset  against  the
change in fair value of hedged assets,  liabilities, or firm commitments through
earnings or  recognized in other  comprehensive  income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in fair
value will be immediately recognized in earnings.

The  Company  has not yet  determined  what  the  effect  of SFAS 133 will be on
earnings and the financial position of the Company,  however it believes that it
has  not  to  date  engaged  in  significant  transactions  encompassed  by  the
statement.


Note 2. Intangible assets

Intangible  assets  consist of two licenses for the use of recycling  technology
and a software license.  One of the licenses (Benton Recycling System (BRS)) has
been purchased from an affiliated company which had purchased the license during
March 1997 from an individual who, concurrently with the purchase by the Company
in  September  1997,  became a director of the Company.  The license  grants the
Company the right to use patented technology for the recycling of waste concrete
for a fifteen year  period.  The Company paid an aggregate of DM 625,000 for the
license of which DM 250,000 was due to the  affiliated  company at December  31,
1997. This amount was paid to the affiliated  company during 1998.  During 1998,
the Company accrued DM 155,168 for continuing  consulting  services  provided by
the director.  This amount is included in accrued  expenses - related parties at
December 31, 1998.

Additionally,  a royalty of 6% of net sales derived from the licensed technology
is specified in the purchase contract.  The BRS patents consists of a registered
process and a patent for the  construction of the  corresponding  machines which
are based on the BRS  technology.  This patent has been filed for  European  and
international rights however, it has not yet been registered.

The license  excludes  Asia and the United  States of America,  however in these
areas the Company has a first right of refusal for purchase of the technology.


<PAGE>






During the year ended December 31, 1998, due to operational problems experienced
with the  machine,  the  Company  suspended  payment of  consulting  fees to the
director and the director has threatened litigation to enforce performance under
the  contract.  Should  the  litigation  begin,  the  Company  intends to file a
counterclaim  for breach of the license  agreement.  At December 31,  1998,  the
Company has accrued the full amount due under the license agreement. The Company
believes that its rights under the license  agreement have not been impaired and
that  modifications  to the equipment  design will not be significant and may be
effected by a qualified design engineer other than the director.

The second  license (UWAS  license,  which covers two patents no. EPO 383227 and
EPO 383229  which  relate to an  artificial  peat  production  system)  has been
purchased from an affiliated company which had purchased the license during 1997
from an  unaffiliated  German  corporation.  A  significant  shareholder  of the
unaffiliated  corporation,  concurrently  with the  purchase  by the  Company in
September 1997, became a director of the Company.  The Company paid an aggregate
of  DM650,000  for the  license  of which DM 250,000  was due to the  affiliated
company at December  31,  1998.  The  process  patents  for an  artificial  peat
production  system  have  been  registered  during  May 1993 and May  1992.  The
contract  expires with the  expiration of the patent which,  according to German
law normally expires 20 years after registration.

The  amortization  for the licenses has been calculated on basis of useful lives
of 10 years for the process  licenses and 2 years for the software license which
the  Company  has  determined  to be  appropriate  amortization  periods for the
licenses using the straight line method.  The total  amortization  for the years
ended  December  31,  1998  and  1997  amounted  to  DM  158,958  and  DM72,916,
respectively.


Note 3.  Income taxes.

At December  31, 1998 the Company had  approximately  DM 1,700,000 of unused net
operating loss deductions in Germany that may be carried forward indefinitely.

A valuation  allowance  of DM 500,000 was  provided at December 31, 1998 for net
operating loss carryforwards  which more likely than not will not be utilized in
the foreseeable future.



<PAGE>



Note 4. Commitments and contingencies

The Company occupies its  administrative  offices pursuant to a short term lease
with TES, an affiliated company. Rent expense in 1998 and 1997 was DM 62,488 and
DM 7,200, respectively.

The Company has entered into  employment  contract  with its general  manager of
ENTECS GmbH which  provides  for an annual  salary of DM 51,000 per year through
June 1999 and provides  for a  management  bonus of 5% of pre tax profits of the
subsidiary.


Note 5. Related party transactions

The Company's  president and major shareholder is president and a shareholder of
TES, Inc., a Colorado  corporation formed in June 1994. TES, Inc. paid a deposit
of DM 250,000  and  additional  payments  of DM 86,250 for the rights to use the
concrete recycling system and subsequently transferred the rights to the Company
in  exchange  for a short  term  note.  During  1998  the note was paid in full.
Additionally, the Company made advances to TES aggregating DM 370,200 during the
year ended December 31, 1998. The advances bear interest at 6% per annum and are
due after ten years.

Additionally,  during 1997, the Company  received  working capital advances from
TES of DM 50,000 and TES paid DM 53,763 of costs  associated  with the Company's
capital raising activities. The working capital advance bears interest at 8% per
annum and was repaid DM 23,000 in 1997 and DM 27,000 was repaid in January 1998.

The net balance of working capital advances, accrued interest and payment of the
Company's  costs amounted less payments by TES of costs  associated with the BRS
license in 1997 comprises the balance of amounts due affiliated company included
in the accompanying balance sheet of DM 288,669.

During the year ended December 31, 1997, the Company  incurred costs  associated
with its organization and financing activities amounting to DM 87,500. The costs
are for services  provided by two of the  Company's  directors  and  significant
shareholders  pursuant to contractual  arrangements.  This amount in included in
general and  administrative  costs - related  parties and amounts due to related
parties in the foregoing financial statements.

Additionally,  in 1998 and 1997, a significant shareholder and director received
DM 146,525 and DM 48,486, respectively in commissions related to the sale of the
Company's securities.  This amount has been included in offering expenses in the
accompanying statement of stockholders' equity.


<PAGE>





The Company's president who is a director and significant shareholder receives a
monthly  salary of DM 8,000 of which DM 57,600  was  unpaid as of  December  31,
1998.  This  amount is  included  in accrued  expenses - related  parties in the
accompanying balance sheet.


Note 6. Stockholders' equity

During the periods  covered by these  financial  statements  the Company  issued
securities in reliance upon an exemption from  registration  with the Securities
and Exchange  Commission.  Although the Company  believes that the sales did not
involve  a public  offering  and that it did  comply  with the  exemptions  from
registration,  it could be liable for rescission of said sales if such exemption
was found not to apply. The Company has not received a request for rescission of
shares nor does it  believe  that it is  probable  that its  shareholders  would
pursue rescission nor prevail if such action were undertaken

At inception,  the Company issued an aggregate of 1,090,000 shares of its common
stock to five German  citizens  for  services  provided in  connection  with the
formation of the Company valued at DM 3,685.

During July and August 1997,  the Company issued an aggregate of 9,000 shares of
its common stock to two German  citizens  for services  provided to the Company.
The shares  were issued at DM 12.54 per share  which is  considered  to be their
fair value based on the contemporaneous sale of the Company's shares for cash.

During June 1997, the Company  commenced a private sale of its common stock to a
limited  group of investors in Germany.  The Company sold 109,154  shares of its
common stock for gross proceeds of DM 1,307,448 and incurred  direct expenses of
the  offering  amounting  to DM 422,759.  The shares were  offered at a price of
$7.00 US per share.  During 1998 the Company  continued  the private sale of its
common  stock and sold an  additional  257,028  shares for gross  proceeds of DM
3,078,346.  Certain  shares of the private  offering were  purchased by a German
stock  brokerage  firm at a discounted  price net of the brokers agreed upon 17%
sales commission.  The discount amounted to DM 91,813 and has been accounted for
as an additional  expense of the offering.  Direct expenses  related to the 1998
stock sales amounted to DM 570,601 including the discount described above.



<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

     The  following   unaudited  pro  forma  condensed  combined  statements  of
operations of Technical Environment Solutions, Inc. gives effect to the proposed
merger of TES and ENTECS as if such  transaction  occurred at the  beginning  of
each period presented.  The unaudited pro forma condensed  combined statement of
operations  for the year ended  December  31,  1998 is derived  from the audited
statements of operations of TES and ENTECS.

     The unaudited pro forma  condensed  combined  balance sheet at December 31,
1998  gives  effect  to  the  proposed  Merger  of TES  and  ENTECS  as if  such
transaction  occurred on December 31, 1998.  The unaudited  pro forma  condensed
combined  balance sheet is derived from the historical  balance sheet of TES and
ENTECS as of December 31, 1998.

     The unaudited pro forma  condensed  combined  financial data do not reflect
the effects of any anticipated  changes to be made by TES in its operations from
the historical  operations,  are presented for  informational  purposes only and
should not be construed to be  indicating  (i) the results of  operations or the
financial  position of TES that  actually  would have  occurred had the proposed
merger  been  consummated  as of the  dates  indicated  or (ii) the  results  of
operation or the financial position of TES in the future.

     The following pro forma  condensed  combined  financial  data and notes are
qualified in their  entirety by reference to, and should be read in  conjunction
with,  "Management's  Discussion and Analysis of Financial Condition and Results
of Operation," the  consolidated  financial  statements and notes thereto of TES
and ENTECS and other historical information included elsewhere in this filing.




<PAGE>
<TABLE>
<CAPTION>

                       Technical Environment Solutions, Inc. / Environmental Technologies and Software Solutions, Inc.
                                     Pro Forma Combined Condensed Balance Sheet
                                              As of December 31, 1998
                                                    (Unaudited)

                                                                       Pro Forma     Pro Forma
                                               TES         ENTECS     Adjustments    Combined
                                               DM            DM           DM            DM
<S>                                         <C>            <C>         <C>           <C>   
Assets
Current Assets:
 Cash                                        166,970       393,080          --         560,050
 Accounts receivable                         103,361         2,230          --         105,591
 Inventory                                         0       120,000          --         120,000
 Prepaid expenses                             22,004        56,152          --          78,156
                                          ----------    ----------    ----------    ----------
Total current assets                         292,335       571,462          --         863,797

Property and equipment, net                  162,642       544,442          --         707,084

Investments                                   10,000          --            --          10,000
Note receivable - non current                 50,000          --          50,000
Intangible assets                               --       1,123,126     1,123,126
Due from affiliated company                     --         288,669      (288,669)(3)       --
Other assets                                 300,000          --         300,000
                                          ----------    ----------    ----------    ----------
                                             814,977     2,527,699      (288,669)    3,054,007
                                          ==========    ==========    ==========    ==========
Liabilities and stockholders'
 equity Current liabilities:
Notes payable - banks                         29,541          --          29,541
Notes payable - others                        80,000          --          80,000
Accounts payable                             102,536       135,552          --         238,088
Accounts payable - related party              35,928       225,000          --         260,928    
Other current liabilities                    212,797       289,653          --         502,450
                                          ----------    ----------    ----------    ----------
Total current liabilities                    460,802       650,205          --       1,111,007

Loans from shareholders                      230,000          --         230,000
Loans from affiliated companies              288,669          --        (288,669)(3)      --

Common stock                               2,260,155     3,600,826     5,860,981
Accumulated deficit                       (2,424,649)   (1,723,332)         --      (4,147,981)
                                          ----------    ----------    ----------    ----------
Total stockholders' equity                  (164,494)    1,877,494          --       1,713,000
                                          ----------    ----------    ----------    ----------
                                             814,977     2,527,699      (288,669)    3,054,007
                                          ==========    ==========    ==========    ==========




<PAGE>

                      Technical Environment Solutions, Inc. / Environmental Technologies and Software Solutions, Inc.
                                  Pro Forma Combined Condensed Statement of Operations
                                             Year Ended December 31, 1998
                                                     (Unaudited)

                                                                                                          Pro Forma    
                                                        TES             ENTECS           Adjustments       Combined
                                                         DM               DM                DM                DM

Net sales                                              610,056           69,369               --             679,425
Cost of sales                                          202,174           14,004               --             216,178
                                                    ----------       ----------          ----------       ----------
Gross profit                                           407,882           55,365               --             463,247


General and administrative                           1,404,368        1,449,015               --           2,853,383
Losses of unconsolidated subsidiary                     49,000           49,000
Interest income                                        (19,668)         (18,581)           7,515(3)          (30,734)
Interest expense                                        40,995            2,166           (7,515(3)           35,646
                                                    ----------       ----------          ----------       ----------
Net income before taxes                             (1,066,813)      (1,377,235)              --          (2,444,048)

Taxes on income                                           --              1,472               --               1,472
                                                    ----------       ----------          ----------       ----------
 Net income (loss)                                  (1,066,813)      (1,378,707)              --          (2,445,520)
                                                    ==========       ==========          ==========       ==========

 Basic income per share                                  (0.20)           (1.00)              --               (0.19)
                                                    ==========       ==========          ==========       ==========

Weighted average shares                              5,224,830        1,378,707           6,479,923(4)    13,083,460
                                                    ==========       ==========          ==========       ==========




</TABLE>

<PAGE>




(1)  On October 30, 1998 TES and ENTECS entered into a definitive  agreement and
     plan of merger (the  "Agreement")  providing  for the merger of ENTECS with
     and into TES. Under the terms of the  Agreement,  which was approved by the
     Board of  Directors  of both TES and  ENTECS,  the holder of ENTECS  Common
     Stock  will  receive  5.7  shares  of TES  Common  Stock  for  each  of its
     outstanding shares.  Accordingly,  the pro forma condensed combined balance
     sheet as of  September  30, 1998 gives  effect to the issuance of 8,300,237
     TES common  shares and assumes the Merger with ENTECS will be accounted for
     as a reorganization  of companies under common control.  The accounting for
     the merger is expected to be similar to that of a pooling of interests.


(2)  The pro forma condensed  combined  statements of operations gives effect to
     the Merger of TES with ENTECS as if the merger occurred on January 1 of the
     period indicated.

(3)  Inter-company  advances,  accrued  interest thereon and amounts of interest
     income and expense have been eliminated.

(4)  The pro forma weighted average shares outstanding for basic earnings (loss)
     per  share  gives  effect  to the  issuance  of 5.7  shares of TES stock in
     exchange  for each  share  of  ENTECS  stock  outstanding  for all  periods
     presented, weighted for the period such shares were actually outstanding.




<PAGE>


Signatures

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


                                       TECHNICAL ENVIRONMENT SOLUTIONS, INC.



Date:  April 15, 1999                  By:  /s/ Gerd Behrens
                                            ------------------------------------
                                            Gerd Behrens, President


     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.

Date:  April 15, 1999                 /s/ Frank Behrens
       --------------                 ------------------------------------------
                                      Frank Behrens, Secretary and Director


Date:  April 15, 1999                /s/ Jutta Behrens
       --------------                -------------------------------------------
                                     Jutta Behrens, Treasurer and Director


                                      -31-