SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                                   (Mark One)

            [X]   Annual Report under Section 13 or 15(d) of the Securities
                  Exchange Act of 1934

                  For the fiscal year ended December 31, 1999

                  or

            [ ]   Transition Report under Section 13 or 15(d) of the Securities
                  Exchange Act of 1934

                  For the transition period from _____________ to ______________

                                     0-21946
--------------------------------------------------------------------------------
                              (Commission File No.)

                         HI-RISE RECYCLING SYSTEMS, INC.
--------------------------------------------------------------------------------
                 (Name of Small Business Issuer in Its Charter)


                FLORIDA                                       65-0222933
    -------------------------------                   ------------------------
    (State or other jurisdiction of                      (I.R.S. Employer
    incorporation or organization)                      Identification No.)


      8505 N.W. 74TH AVENUE, MIAMI, FLORIDA                  33166
--------------------------------------------------------------------------------
    (Address of principal executive offices)               (Zip Code)


         Issuer's Telephone Number, including area code: (305) 597-0243


Securities registered under Section 12(b) of the Securities Exchange Act of
1934: None

Securities registered under Section 12(g) of the Securities Exchange Act of
1934:

                          COMMON STOCK, $0.01 PAR VALUE
--------------------------------------------------------------------------------
                                (Title of Class)
<PAGE>

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

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

State issuer's revenues for its most recent fiscal year:  $ 59,582,000.

The aggregate market value of the registrant's Common Stock held by
non-affiliates as of April 11, 2000 was $15,977,478, computed by reference to
the closing bid price of the Common Stock on such date.

As of March 28, 2000, there were 15,668,412 shares of the registrant's Common
Stock outstanding.

Transitional Small Business Disclosure Format:     Yes [ ]   No [X]

                       DOCUMENTS INCORPORATED BY REFERENCE

 None.


<PAGE>


ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         Hi-Rise Recycling Systems, Inc. (the "Company" or "Hi-Rise") is
primarily engaged in manufacturing, distributing, marketing and selling
recycling and other solid waste handling equipment. Until February 1997, the
Company was primarily engaged in distributing, marketing and selling a
proprietary automated system known as the hi-rise system (the "Hi-Rise System")
designed to collect source-separated recyclables and other solid waste in
multi-story residential buildings and designed in response to perceived market
opportunities arising out of increasing state and local environmental regulation
mandating or encouraging recycling. Beginning in February 1997 and continuing
through December 1999, the Company consummated a succession of acquisitions to
expanded its product lines to include sheet metal fabrication products,
consisting primarily of rubbish and laundry chutes, and solid waste handling
equipment products, consisting primarily of waste containers and trash
compaction systems. In particular, during this period of time the Company
consummated the following significant acquisitions:

         /bullet/ In February 1998, the Company acquired Hesco Sales, Inc.
                  ("Hesco"), a Florida corporation engaged in the business of
                  manufacturing, marketing and selling solid waste handling
                  equipment products. Hesco's product lines include waste
                  containers and trash compaction systems.

         /bullet/ In October 1998, the Company acquired Bes-Pac, Inc.
                  ("Bes-Pac"), a South Carolina corporation engaged in the
                  business of manufacturing, marketing and selling solid waste
                  handling equipment products. Bes-Pac's product lines include
                  waste containers and trash compaction systems.

         /bullet/ In November 1998 the Company acquired Acme Chute Company
                  ("Acme"), a Florida corporation engaged in the business of
                  manufacturing, installing and servicing trash and linen chutes
                  primarily in the South Florida high-rise market.

         /bullet/ In February 1999, the Company acquired DeVivo Industries, Inc.
                  ("DeVivo"), a Connecticut corporation engaged in the business
                  of manufacturing, marketing and selling solid waste handling
                  equipment products. DeVivo's product lines include waste
                  containers and trash compaction systems.

         /bullet/ In September 1999, the Company acquired certain of the assets
                  of Kohlman Engineering Corp. ("Kohlman"), an Illinois
                  corporation that manufactured, marketed, sold and serviced
                  waste compactors and trash chutes.

         /bullet/ In December 1999, the Company acquired American Gooseneck,
                  Inc. ("American Gooseneck"), an Arizona corporation engaged in
                  the business of manufacturing and distributing solid waste
                  handling equipment. American Gooseneck's product lines include
                  large industrial compacting systems; small and roll-off waste
                  containers, hoists and tarps for truck hauling vehicles and a
                  full line of recycling equipment.

         Hi-Rise has two primary Divisions, the Solid Waste Equipment Division
and the Architecturally Specified Division ("Architectural Division"). The Solid
Waste Equipment Division designs, manufactures and markets a

<PAGE>

wide variety of waste containers, compactors, balers, container hoists, waste
container tarps and other related products. The Architectural Division designs,
manufactures and sells proprietary recycling systems and architecturally
specified products such as trash and laundry chutes, as well as products such as
corner guards, kick and push plates, hold rails and bumper rail systems, which
are commonly used in waste handling environments.

         The Company anticipates that in the future the solid waste division
consisting of Hesco's, Bes-Pac's, DeVivo's and American Gooseneck's product
lines will be the Company's single largest source of revenue. In addition, the
Company expects that its other principal sources of revenue will be sales of
rubbish and linen chutes, trash compaction systems and the sales of the Hi-Rise
System.

         Through recent acquisitions, Hi-Rise has assembled a group of companies
with strong customer relationships and proven performance within the industry.
In the waste handling equipment sector, the Company's customer lists include top
waste hauling companies and retail names. In the architecturally specified
industry, the Company has strong relationships with developers, general
contractors and architects throughout all of the major cities in which the
Company conducts business. In a highly fragmented industry, Hi-Rise has achieved
a leadership position through its acquisition strategy, positioning the Company
to become one of the few waste handling equipment suppliers with true national
scope. By continuously working with its customers to develop customized systems
and equipment, Hi-Rise is able to increase the depth of its relationships and
display its expertise in the industry. To expand the full-service aspect of its
Company's business, Hi-Rise has built out its distribution and sales force to
ensure that both local and national coverage are available.

         Hi-Rise has been successful in expanding the revenues of its acquired
companies by introducing the Company's entire product line into the newly
acquired companies. In addition to increasing revenues, Hi-Rise has been
successful in increasing operating margins of the acquired companies by
emphasizing the sale of higher margin products, improving manufacturing
processes and reducing manufacturing costs through lower raw material costs
obtained from volume purchasing.

         Hi-Rise offers a comprehensive range of products and services to the
waste handling and recycling communities. With such a wide array of products and
services, significant cross-selling opportunities exist within the Company.
Hi-Rise is able to provide its Solid Waste Equipment Division customers a
complete range of waste and specialty containers, as well as other higher margin
products such as compactors and roll-off hoists. Hi-Rise is also able to offer
its entire customer base after-market services, such as repair and maintenance.
Hi-Rise expects the service aspect of the business to become increasingly
important. Accordingly, Hi-Rise has focused on recruiting experienced, capable
sales people who can recognize customer needs and identify which Hi-Rise
capabilities would benefit their customers most. In both the Solid Waste
Equipment and Architecturally Specified divisions, Hi-Rise is also positioned as
a "one-stop" shop, which can provide design, installation, equipment and
after-market service capabilities. The Company's goal is to be the leader in
providing the equipment for waste stream management. Hi-Rise recognizes that
providing the necessary components and services throughout this process will
assist the Company in reaching this goal.

         The Hi-Rise System, which is marketed under the Hi-Rise Recycling
System(TM) name, is easily adapted to and takes advantage of the efficiency and
convenience of a multi-story building's existing waste disposal chute or
designed into newly constructed buildings, permitting residents to conveniently
dispose of, without commingling, a variety of recyclable waste, including glass,
metal, newspapers and plastic, plus garbage. By providing for source separation
and collection from each floor, the Hi-Rise System eliminates the cost,
inconvenience and potential

                                       2
<PAGE>

health and fire hazards associated with manually transporting solid waste in
elevators and stairwells to a central storage area on the ground floor or
basement. The Hi-Rise System is intended to promote recycling and enable
multi-story building owners and residents to efficiently source-separate and
divert recyclable waste from landfills, while reducing the time, labor and
hauling expenses normally associated with solid waste disposal. The Company
designed the Hi-Rise System in response to perceived market opportunities
arising out of increasing state and local environmental regulation mandating or
encouraging recycling.

         To date, the Company has installed 194 Hi-Rise Systems, of which 75
were sold and 119 were leased or rented. In connection with sales-type leases of
the Hi-Rise System, the Company previously entered into shared savings
agreements with building owners, pursuant to which the Company managed a
building's solid waste disposal and received a percentage of the building
owner's shared savings realized as a result of reduced waste disposal costs.
These agreements were sold on a non-recourse basis in February 1998 and the
Company has ceased offering shared savings arrangements.

         Through IDC Systems, Inc., a New York corporation wholly owned by the
Company ("IDC Systems"), the Company is engaged in the business of assembling,
selling, installing and servicing trash compaction systems in New York, New
Jersey and Connecticut. As of December 31, 1999, the Company serviced on an
annual basis approximately 1700 compaction customers, through IDC Systems, many
of which are multi-story residential buildings that are potential customers for
the Hi-Rise System.

         The Company was incorporated in Florida in May 1990 as Recycling
Systems, Inc. and in March 1992, changed its name to Hi-Rise Recycling Systems,
Inc. The Company's executive offices are located at 8505 N.W. 74th Avenue,
Miami, Florida 33166, and its telephone number is (305) 597-0243. Unless the
context requires otherwise, all references herein to the Company include its
wholly owned subsidiaries, IDC Systems, Inc., Wilkinson Company, Inc., Atlantic
Maintenance of Miami, Inc., Recycltech Enterprises Ltd., Acme Chutes, Inc.,
Bes-Pac, Inc., Hesco Sales, Inc., DeVivo Industries, Inc. and American
Gooseneck, Inc.


     RECENT EVENTS

         DEVIVO AND ECOLOGICAL TECHNOLOGIES ACQUISITION. On February 22, 1999,
DII Acquisition Corp., a newly-formed wholly owned subsidiary of the Company,
purchased all of the outstanding common stock of DeVivo and an affiliated
company, Ecological Technologies, Inc. which owns certain patent rights relating
to DeVivo's business ("ETI," and with DeVivo, the "DeVivo Companies"). The
aggregate purchase price paid by the Company for the DeVivo Companies was
$16,920,000 and consisted of $11,707,200, in cash, and an aggregate of 1,463,400
shares of the Company's common stock having a fair market value of $5,213,000 at
the time of issuance. The cash portion of the purchase price was funded through
borrowings under the Company's credit facility with General Electric Capital
Corporation and the other participating lenders. DeVivo is in the business of
manufacturing and supplying waste handling and recycling equipment to the
greater New York City and New England markets.

         KOHLMAN ACQUISITION. In September 1999, the Company acquired
substantially all of the assets of Kohlman. Kohlman is engaged in the business
of manufacturing, selling and servicing waste compactors and trash chutes. In
consideration for the purchase of the Kohlman assets, the Company issued an
aggregate of 200,000 shares of common stock having a fair market value of
$537,500 at the time of issuance and repaid certain of the sellers' expenses.

         GENERAL ELECTRIC CAPITAL CORPORATION CREDIT FACILITIES. In October
1999, the Company increased the amounts available under its existing credit
facilities with General Electric Capital Corporation ("GECC") by an

                                       3
<PAGE>

aggregate of $21.0 million. In particular, the Company's working capital
revolving line of credit was increased by $9.0 million, from $8.0 million to
$17.0 million, and its acquisition line of credit was increased by $12.0
million, from $8.0 million to $20.0 million. As a result of these increases, the
aggregate amount available under the credit facilities increased to $61.0
million.

         AMERICAN GOOSENECK ACQUISITION. On December 16, 1999, the Company
acquired all of the issued and outstanding common stock of American Gooseneck,
Inc., a privately held Arizona corporation ("American Gooseneck"). The purchase
was consummated pursuant to the terms of a Stock Purchase Agreement, dated as of
December 13, 1999 (the "Stock Purchase Agreement"), by and among the Company,
American Gooseneck and all of the shareholders of American Gooseneck. The
aggregate purchase price paid by the Company was approximately $11,200,000 and
consisted of the following: (i) $8,160,883 in cash to the shareholders, (ii)
$799,116 in cash to Merrill Lynch Business Financial Services to satisfy amounts
owed by American Gooseneck in full, and (iii) an aggregate of 689,393 shares of
Common Stock. The cash portion of the purchase price was funded through
borrowings made under the Company's existing $61.0 million credit facility with
GECC and the other lenders to that credit facility. Pursuant to the Stock
Purchase Agreement, the Company withheld the delivery to the shareholders of a
number of shares of Common Stock having a fair market value of $900,000 (the
"Holdback Shares"). All or a portion of the Holdback Shares will be released to
the shareholders on or prior to the first anniversary of the closing of the
acquisition if American Gooseneck meets or exceeds certain agreed upon sales
targets under specified distribution agreements. Holdback Shares not released to
the shareholders will be retained by the Company and the effective purchase
price will be appropriately reduced. The Stock Purchase Agreement further
provides for the issuance of additional shares of common stock if American
Gooseneck meets or exceeds certain agreed upon earnings targets during the
two-year period following the consummation of the acquisition.

SOLID WASTE DIVISION

         The Solid Waste Equipment Division offers a diversified line of
products and systems including: 1) a variety of metal containers used for the
collection of waste material and recyclables; 2) balers and compactors used for
the processing of waste materials; and 3) intermodal and roll-off containers,
transfer trailers, roll-off hoists, tarps, vacuum units and other specialized
equipment used for the collection and transportation of solid, liquid and low
risk hazardous waste materials.

         Waste containers are available in a number of sizes and are primarily
constructed from heavy duty steel. Certain models of the waste containers are
also available in aluminum. The Solid Waste Equipment Division also manufactures
plastic molded lids with heavy duty double wall construction for front load and
rear load waste containers. Plastic molded lids are made of high-density
polyethylene resin, which is resistant to stress, cracking, chemicals and
temperature extremes.

                                       4
<PAGE>

         In addition to waste containers, the Solid Waste Equipment Division
also sells trash compaction systems, balers and hoppers, and specialized
equipment for use with waste handling trucks. The Division also manufactures
trash compaction systems that are available in a number of models designed
primarily for use in multi-story buildings and commercial establishments.

ARCHITECTURAL PRODUCTS

         Wilkinson sells, manufactures, markets and installs sheet metal
fabrication products, consisting primarily of laundry and rubbish chutes, as
well as construction products such as corner guards, kick and push plates,
handrails and bumper rail systems. Wilkinson also offers a line of recycling
bins. Wilkinson's laundry and rubbish chutes are available with various types of
doors, including a door integrated with the Hi-Rise System control panel, and
are custom designed to meet a building's specifications. Construction products
and recycling bins are generally available either custom designed or from stock.
In addition, Wilkinson provides other sheet metal fabrication products
consisting of components custom designed to its customers' specifications, which
are utilized by its customers in the manufacture of their products. Wilkinson
also sells replacement parts for its principal products.

         During the years ended December 31, 1998 and 1999, sales of Wilkinson's
products accounted for approximately 16% and 9%, respectively, of the Company's
revenues.

         IDC Systems offers a line of trash compaction systems designed
primarily for use in multi-story buildings. IDC Systems' product line includes
six principal models. During the years ended December 31, 1998 and 1999, sales
of trash compaction systems accounted for approximately 7% and 5%, respectively,
of the Company's revenues.

         Acme manufactures, markets, sells and installs sheet metal fabrication
products in Florida consisting primarily of trash and laundry chutes and storage
lockers.

THE HI-RISE RECYCLING SYSTEM(TM)

         The Company's Hi-Rise System, which is marketed under the Hi-Rise
Recycling System TM name, is easily adapted to a multi-story building's existing
waste disposal chute or designed into newly constructed buildings, permitting
residents to conveniently dispose of, without commingling, a variety of
recyclable waste including glass, metal, newspaper and plastic, plus garbage.
The Hi-Rise System consists of six waste collection and storage bins, one for
each recyclable and one for garbage, which rest on a carousel located at the
bottom of the building's waste disposal chute, and electronic panels installed
near the disposal chute's door on each floor. When activated by a resident, the
control panel electronically rotates the carousel to position the selected
collection bin under the

                                       5
<PAGE>

disposal chute, in turn, to receive up to five categories of recyclables and
garbage for storage and collection. Presently, there are two models of the
carousel system, the "roll-away bin" model and the bagger model. The rollaway
bin model collects the garbage and recyclables in rollaway bin containers that
rest on the carousel and can be rolled off the carousel when full and replaced
by an empty one. For those buildings where rollaway containers are not
practical, the Company has designed the bagger model. The bagger model collects
the garbage and recyclables in disposable bags that are located in round
collection bins that rest on the carousel. The bags can be removed from the bins
to be placed at curbside for collection. Both models are equipped with an
automatic garbage compactor.

         The price of the Hi-Rise System currently ranges from $50,000 to
$120,000 depending upon the number of floors in a multi-story building. The
number of systems installed in a building depends on the number of garbage
chutes in the building. During the years ended December 31, 1998 and 1999, sales
and sales-type leases of Hi-Rise Systems accounted for approximately 23% and 9%,
respectively, of the Company's revenues. The Company anticipates that in the
future sales and sales-type leases of the Hi-Rise System will constitute a
decreasing percentage of its revenues.

MARKETING AND SALES

         The Solid Waste Equipment Division currently has 16 regional sales
people located throughout the east coast, southeast and southwest. In addition,
four national sales people focus on training, the end user market and sales
management. The Division also currently employs seven sales support staff who
process phone orders and repair and maintenance requests. Sales people are paid
a base salary and also earn a commission based on sales margins of the products
they sell. The Solid Waste Equipment Division's goal is to utilize its marketing
and sales force to market on both a national and local basis, while retaining
flexibility to meet local delivery needs.

         Hesco, Bes-Pac, DeVivo and American Gooseneck market their products to
waste haulers, municipalities and residential customers throughout the [east and
west coasts] of the United States. Hesco solicits a significant portion of its
sales through participation in municipal bids and is listed on the Florida
Statewide Vendor List. Hesco's, Bes-Pac's and DeVivo's marketing efforts include
monitoring trade journals and other industry sources for bid solicitations by
various entities including government authorities and related instrumentalities,
and responding to such bid solicitations. Typically, a bidder submits a proposal
detailing its qualifications, the products to be provided and the cost of the
products to the soliciting entity which then, based upon its evaluation of the
proposals submitted, awards the order to the successful bidder. One national
sales manager and ten regional sales managers distribute products manufactured
by Hesco, Bes-Pac and DeVivo, for which they receive salaries and sales
commissions.

         While many of the Division's customers have a national presence, the
requisition for waste handling equipment is often handled on a regional basis.
The Company believes that retaining both national and local sales personnel
provides a competitive advantage in marketing and meeting the needs of national
customers who have large waste handling equipment requirements.

         Through a series of recent acquisitions, the Architectural Division has
assembled a core group of companies that offers a complete array of products and
services for recycling systems. The Division's goal is to design, manufacture
and install waste management systems and provide after-market services, such as
maintenance and repair. The Division has the capability to design waste
management systems and equipment for specific needs and custom applications for
a wide variety of industries. This is illustrated by the Division's range of
projects, which include residential buildings, sports arenas/forums and hotels.
Recent projects include designing the waste systems at the new American Airlines
Arena and the National Car Rental Center, both in South Florida; the Banc One
Ballpark in Phoenix, Arizona; and the Bellagio Hotel in Las Vegas. The Division
works with each of its customers to design waste management systems which meet
specific requirements, tailoring standard products to

                                       6
<PAGE>

produce a customized result. Once the system is designed, Hi-Rise provides
installation, education and after-market service, which is essential to
maintaining market leadership.

         New products such as the American Disability Act ("ADA") Doors (a chute
door which opens automatically) and the Recycling Ready Compactor (built to
easily accommodate recycling capabilities at a later date) were developed by the
Company to target certain markets and requirements. Using a fairly standard
model, engineers can change specifications to meet customer needs, yielding a
cost-efficient, customized product. Installation and education are also provided
to the customer, as well as follow-on repair and maintenance as needed. The
Division's service staff is cross-trained for a number of tasks such as
installation, service and general product knowledge. Using this experience,
these representatives can recommend waste management solutions to customers on a
quick, responsive basis.

         The Architectural Division has focused on increasing the sale of higher
margin products such as ADA Doors, apartment style compactors and parts, as well
as after-market services. Many of these higher margin products were designed by
the Company in response to the requirements of a specific customer. Once
developed, the Division is able to offer these enhanced products to the
Company's entire customer base. By providing customers with after-market
services such as maintenance and repair, the Company is able to secure revenues
from both the sale of these services, as well as the sale of replacement parts
and equipment.

         The Company also emphasizes the sale of other complementary
architecturally specified products, such as metal fabrications commonly used in
waste handling and other building environments.

         The Architectural Division will focus on increasing direct sales,
rather than relying on re-sellers and distributors, thereby increasing both
revenues and operating margins. Direct salespeople have a close relationship
with customers and have a genuine interest in ensuring customers are satisfied.
Currently, the Company maintains direct sales representatives in South Florida,
New York, Toronto, Chicago and Cleveland. In the future, the Company will focus
on expanding the direct sales force in Southern California and Washington D.C.
Direct sales allows the Division to concentrate on increasing service revenues,
such as the after-market repair, maintenance and parts business. Service and
replacement part sales generate higher margins and provide an important
competitive advantage in the industry.

         The Architectural Division will continue to focus on markets with high
population densities and a high concentration of multi-story buildings that have
strong new construction and renovation activity. The Division will continue to
build on established relationships with developers, general contractors and
architects. The Division has aggressively sought out the retrofit market in
select markets such as the New York City metropolitan area, and in other markets
such as Miami, Toronto and Chicago for the sale of recycling systems. The return
on investment for retrofit multi-story dwelling with a Hi-Rise recycling system
can be as little as one year, making it a profitable investment for Hi-Rise's
customers. Additionally, many cities offer tax credits for retrofits, which
increases the attractiveness of retrofitting to building owners.

         To further penetrate existing markets, the Architectural Division plans
to increase recycling awareness through an education program disseminated
through current relationships with contractors and developers, participation in
trade shows and architectural seminars. The Company's extensive product line and
expanding service capabilities has increased the Division's ability to increase
revenues for its current markets.

         The Company's marketing efforts with respect to the Hi-Rise System are
focused in geographic markets in which the Hi-Rise System is believed to have
potential for significant market penetration. The Company believes that certain
geographic markets are likely to achieve greater system penetration based on a
number of factors, principal among which is the existence of mandatory recycling
legislation with penalties for non-compliance. The Company has identified
potential geographic markets by evaluating among other things, the existence of
proposed legislation mandating recycling; high or increasing landfill and
incinerator disposal fees which result in high monthly hauling fees to building
owners; and high concentrations of mid-rise and high-rise buildings in
serviceable geographic areas. Based on this evaluation, the Company is currently
focusing its efforts primarily in South Florida

                                       7
<PAGE>

and West Florida and metropolitan areas such as New York City and Toronto,
Canada. In addition, the Company has expanded its operations into new geographic
markets beginning in markets in which the Hi-Rise System is likely to achieve
market penetration, such as Boston, Massachusetts and Washington, D.C., as well
as Chicago, Illinois. Of the 194 systems installed to date, 182 have been
installed in multi-story residential buildings (including 155 in new residential
construction and one in a mixed-use historic rehabilitation) and 12 have been
sold to private waste hauling companies, which have remarketed the system to
residential building owners.

         The Company engages an independent sales force and independent
distributors in various regions throughout the United States, for marketing the
Hi-Rise System, Wilkinson's sheet metal fabrication products and IDC System's
trash compaction systems to multi-story building owners, architects, building
contractors and waste hauling companies. Although the Company continues to sell
Hi-Rise Systems through independent distributors, the Company has increased its
emphasis on sales of Hi-Rise Systems through its direct sales force. The Company
has a network of approximately 55 domestic and five international distributors.
The Company generally has contractual arrangements with its distributors
pursuant to which the distributor is granted the exclusive right to market the
Company's products in the specified territory. The distributor typically is not
required to meet sales quotas to maintain its relationship with the Company.
Most of the Company's distributors purchase the Company's products for resale to
their customers. Since the consummation of the Wilkinson Acquisition, the
Company has commenced marketing the Company's IDC Systems' trash compaction
systems under the "Wilkinson" name. In addition, as a result of the Wilkinson
Acquisition, the Company is able to offer a fully integrated wasted disposal
system for multi-story buildings consisting of the Hi-Rise System, waste
disposal chute and trash compaction system. The Company believes that by
utilizing its distributor network to offer a fully integrated waste disposal
system, it will be able to penetrate further the new construction market.

LEASE PROGRAMS

         In addition to sales of Hi-Rise Systems, the Company seeks to enter
into favorable long-term sales-type lease agreements with building owners
providing for a fixed monthly rental, renewal options and a fair market value
purchase option at the end of the lease term. The Company also seeks to enter
into capital leases, for a term of seven years, with building owners providing
for monthly principal and interest payments to be applied towards the cost of
the Hi-Rise System. At the end of the lease, the building owner may purchase the
system for nominal consideration. Of the 194 Hi-Rise Systems installed to date,
119 have been installed pursuant to lease agreements.

MANUFACTURING AND SUPPLY

                                        8
<PAGE>

         Containers are manufactured in the Easley, Miami, Phoenix and Newtown
facilities. Due to the large size and heavy weight of containers, transportation
costs are significant. The Company considers the maximum economical shipping
radius for containers to be approximately 300 to 500 miles. Accordingly,
containers are manufactured regionally. All of the Company's container
manufacturing facilities are located near heavily populated areas.

         From the Company's Miami, Florida facility, Hi-Rise can effectively
market containers in Florida and the South region of the United States. The
Newtown, Connecticut facility allows the Company to effectively reach the
Northeast region. The Easley, South Carolina and Conover, North Carolina
locations allow the Company to effectively reach the South and Mid Atlantic
regions. The recently acquired Phoenix, Arizona facility of AG allows the
Company to market containers throughout the South West region of the United
States from El Paso, Texas to San Diego, California

         The manufacturing process for containers consists primarily of
de-coiling and cutting the metal to length, forming, welding and assembly. The
containers are then washed with an acid bath, painted with red oxide primer to
inhibit rust and finished with two coats of high gloss finish paint. The
majority of paint used is water based, which minimizes environmental issues.
Management believes that the Company is the only waste container manufacturer
that can also manufacture plastic lids internally. Hi-Rise is able to
manufacture these components centrally and ship them cost-effectively to its
regional container manufacturing facilities. Management estimates that the cost
savings are approximately $500,000 per year over purchasing plastic lids from
third party vendors. To a limited extent, the Company also purchases lids from
third parties. Plastic lids for front and rear load containers are molded from
high-density polyethylene resin at a facility in Hialeah, Florida, near Miami.

         The Company has centralized the manufacture and assembly of waste
handling equipment components, such as power packs and hydraulic assemblies used
in compactors, at the Miami and South Carolina facilities. These higher value
assemblies are then shipped to the Company's other regional manufacturing
facilities for final installation into waste handling equipment. The housings
for compactors and balers are typically manufactured regionally due to
transportation costs. Aside from the assembly of power and hydraulic components,
the manufacture of compactors and balers is similar to that of containers.

         The Company manufactures hoists and tarp systems at its facilities in
Miami. These systems require more engineering and are produced in lower volumes
to warrant a more centralized approach to manufacturing.

                                       9
<PAGE>

         A significant portion of the Solid Waste Equipment Division's container
manufacturing employees is paid on a production basis. This cost structure
allows the Company to more accurately determine the cost of its products, as
well as maintain margins as production volume varies.

         The principal materials used in the manufacture of the Solid Waste
Equipment Division's products are steel, paint and plastic. Steel represents
approximately 43% of the Division's direct costs, paint 7% and plastic 6%.
Hi-Rise currently has several sources for its raw material requirements and
believes that other sources are available. Management believes that by
purchasing in larger volumes, the Company is able to exercise buying power in
the steel market and purchase steel on more favorable terms than many of its
competitors. Hi-Rise is proactive at monitoring steel prices and entering into
favorable purchasing agreements. In the future, the Company will reduce the
number of suppliers used and centrally coordinate more of its purchases to
obtain the most competitive terms. Currently, Hi-Rise has a purchasing
coordinator who monitors the steel market and oversees purchasing decisions. The
Company currently has alternative sources for these components and the Company
believes that additional sources are available. Hesco, Bes-Pac, DeVivo and
American Gooseneck do not maintain supply contracts with any of their material
suppliers or component manufacturers and purchase materials and components
pursuant to purchase orders placed from time to time in the ordinary course of
business. Failure or delay by their suppliers (or manufacturers) in supplying
necessary materials or components would adversely affect the Company's ability
to manufacture, obtain and deliver products on a timely basis.

         In addition, the Company obtains mechanical and electrical components,
such as sprockets, hydraulic cylinders, motors, gear boxes, and electrical
relays and contacts from third party manufacturers. The Company currently has
alternative sources for components and believes that additional sources are
available. The Division does not maintain supply contracts with any material
suppliers or component manufacturers and purchases materials and components
pursuant to purchase orders placed from time to time in the ordinary course of
business.

         Purchase orders for Hesco's, Bes-Pac's, DeVivo's and American
Gooseneck's waste containers, lids, roll-off hoists and tarps are generally
filled promptly from inventory. Trash compaction systems are manufactured to the
customer's order. The minimum period of time required by Hesco and Bes-Pac to
fill an order for a trash compaction system ranges from four to six weeks. As a
result, the sales cycle for the Company's Hesco products may range from one day
to two months depending on the type of product and available inventory.

         The Company manufactures the Hi-Rise Trisorter System, its sheet metal
fabrication products, including trash and linen chutes, and trash compaction
systems at its facility in Stow, Ohio. The Company engages in limited assembly
operations of the Hi-Rise System at its Miami, Florida facilities. The Company
obtains certain of its component parts, including carousels, roll-away waste
collection bins and most of the components of the electronic control panel and
"controller" incorporated into the Hi-Rise System, and to a lesser extent
certain components of its trash compaction systems, from third-party
manufacturers. For the years ended December 31, 1998 and 1999, substantially all
of the Company's carousel requirements were purchased from one manufacturer,
Accudyne Corporation. The Company currently has alternative sources for these
components and believes that additional alternative sources are readily
available. The Company is substantially dependent on the ability of its
manufacturers, among other things, to satisfy performance and quality
specifications and dedicate sufficient production capacity for components within
scheduled delivery times. The Company does not maintain supply contracts with
any of its manufacturers and purchases components pursuant to purchase orders
placed from time to time in the ordinary course of business. Failure or delay by
the Company's manufacturers in supplying necessary components to the Company
would adversely affect the Company's ability to obtain and deliver products on a
timely and competitive basis.

                                       10
<PAGE>

         The Company's manufacturing process for chutes consists primarily of
decoiling and cutting the steel to length, forming, welding, assembly and then
packaging for shipment. Quality control is performed during the welding process.
The principal materials used in manufacturing are stainless steel and aluminized
steel rolls. Through Wilkinson, the Company generally purchases its steel
requirements pursuant to blanket-type purchase arrangements pursuant to which
prices are established for a specified period. Wilkinson currently has several
sources for its steel requirements and the Company believes that other sources
are available. However, failure or delay by Wilkinson's suppliers in supplying
materials for its products would adversely affect the Company's ability to
obtain and deliver products on a timely and competitive basis. The Company has
begun configuring the facility to allocate space for new manufacturing. Certain
of the Company's existing equipment may be used for manufacturing of the
Company's other products and the Company intends to purchase additional
equipment for this purpose.

         The Company's Hi-Rise System assembly operations involve the
certification of each system component, assembly of the system's electronic
control panels, a series of quality specification measurements, and various
other physical and visual tests to certify final performance specifications. The
Company's sales cycle, which in the case of direct sales, leases and rentals
commences at the time a prospective customer demonstrates to the Company an
interest in purchasing or leasing or renting a Hi-Rise System and ends upon
completion of installation of such system, at which time the Company recognizes
revenue, typically ranges from two to six months. The period from the execution
of a purchase order or lease or rental agreement until delivery of system
components to the Company, assembly, shipment and completion of installation of
such system typically ranges from one to two months in the case of existing
buildings and from six to eighteen months in the case of new building
construction. In the case of sales to distributors, the Company's sales cycle
commences at the time a prospective customer expresses an interest in purchasing
a Hi-Rise System and ends upon shipment of the system to the distributor, at
which time the Company recognizes revenue, and typically ranges from two to four
months. By contrast, the Company may fill purchase orders within seven days of
receipt when delivered out of inventory. These orders are primarily orders for
spare parts. The Company generally fills orders shortly after receipt, except in
the case of new building construction where delays in installation may occur at
the building owner's request as a result of its construction schedule. At
December 31, 1998 and 1999, the Company had a backlog of approximately $10.1 and
$9.2, respectively, relating primarily to installations of Hi-Rise Systems in
new buildings and contracted compactor orders. The Company believes that its
present inventory level, together with readily available components and
supplies, is sufficient to satisfy the current backlog.

         The minimum period of time required by the Company to fill an order for
its custom-designed Wilkinson products generally ranges from four to six weeks
from its receipt of approved drawings. However, its sales cycle typically
depends on the building's construction schedule. As a result, the sales cycle
for the Company's Wilkinson products may range from six months to 18 months.

CUSTOMERS

         The customers for Hesco's, Bes-Pac's, DeVivo's and American Gooseneck's
waste containers consist principally of waste haulers and municipalities
throughout the east and west coasts of the United States. The Company markets
Hesco's, Bes-Pac's, DeVivo's and American Gooseneck's trash compaction systems
primarily to multi-story buildings and commercial establishments. Rebuilt
garbage trucks are marketed by Hesco primarily to municipalities in South
America and the Caribbean. Hesco typically enters into blanket sales orders with
its municipal customers and certain waste haulers pursuant to which it agrees to
sell its products to the customer at prices, which are fixed for a specified
period of time.

         The Company has historically marketed the Hi-Rise System for use in
existing and newly-constructed residential buildings. Hi-Rise believes that
other potential customers include waste recycling companies, municipal waste
haulers, hospitals, universities, hotels and government buildings. Specific
markets such as the retrofit sector have been a recent focus for the
Architectural Division, as most cities offer tax credits for retrofit recycling
projects. In addition, the cost savings associated with the installation of a
recycling system can result in a pay back period of one year. According to
Construction Management Data Corporation, the new construction market is
projected to be $150 million. Additionally, management estimates the retrofit
market to potentially be a $6 billion market over the next 10 years.

                                       11
<PAGE>

         A substantial portion of customers for the Architectural Division's
products consists of developers, architects and general contractors who require
the Company's products in building construction. These customers generally
utilize these products in construction of residential buildings, hotels,
hospitals and other commercial buildings. Recent projects in which the Company
has been involved in the design, installation and supply of waste handling
systems include the American Airlines Stadium in Miami, Florida; the Banc One
Ballpark in Phoenix, Arizona; and the refurbishment of the 42nd street area in
New York City in co-operation with the Millennium Development Company. The
Architectural Division has increasingly focused on providing additional service
and maintenance to its customers, from specific design capabilities to
after-market support, such as repair and maintenance.

         The Architectural Division's customers include Trump Development, The
Marriott Companies, The Ritz Carlton and Turner Construction. For fiscal year
1999, no one customer accounted for more than 2% of the Architectural Division's
revenues.

         A substantial portion of customers for Wilkinson's products consists of
architects and building contractors who specify its products in building
construction. These customers generally utilize these products in construction
of residential buildings, hotels and hospitals. The Company believes that the
Wilkinson Acquisition has enhanced its ability to penetrate the new construction
market.

         To date, the Company has marketed the Hi-Rise System primarily to
existing and newly constructed residential buildings. Since 1995, the Company
has focused on the new construction residential building market. The new
construction market in South Florida was a large source of orders for the
Hi-Rise System during the years ended December 31, 1998 and 1999. The Company
plans to market the Hi-Rise System beyond the residential building market to
owners of existing commercial buildings with waste disposal chutes and newly
constructed or renovated commercial multi-story buildings. The Company believes
that other potential customers include waste recycling companies, municipal
waste haulers, hospitals, universities, hotels and government buildings.

         In fiscal year 1999, no one customer accounted for more than 13% of the
Company's total revenues, and the top ten customers represented less than 35% of
total revenues. In addition, no one equipment provider or geographic sector
accounted for more than 37% of total revenues.

INSTALLATION, SERVICE AND MONITORING OF THE HI-RISE SYSTEM

         The Hi-Rise System can be easily installed with virtually no structural
changes to buildings or to disposal chutes in existing buildings, and can be
easily designed into new buildings. Installation generally takes one to four
days and consists of installing the carousel, collection bins and "controller"
in the basement and installing and wiring electronic control panels near
disposal chute doors on each floor. The Company performs diagnostic tests and
procedures to determine whether the installed system meets system
specifications. The Company currently has five employees providing installation
services, not including the eight service and installation personnel available
in New York.

         The Company's personnel provide on-site training to building staff in
the use of the Hi-Rise System. The Company provides training for both the
operation and use of the hardware components of the system and execution of all
applications of the software. Purchase of the system includes provision by the
Company of a complete installation, operation, service and safety manual in
addition to technical training, which is tailored to the needs of the building
management and other personnel. Education is made available to the building
manager, maintenance

                                       12
<PAGE>

staff and waste hauler, typically during a two to four week curriculum. In
addition, prior to the installation of the Hi-Rise System in a building, the
Company institutes an educational program for residents and provides educational
materials, including instructional videos, to building residents in order to
encourage source-separation and proper use of the system. Building management
and residents are encouraged to maintain a high level of recycling and conduct
on-going source-separation surveys. When the Hi-Rise System is activated by a
resident, the control panel automatically "locks-out" all other chute doors to
prevent other residents from disposing of a different recyclable or garbage.
Nevertheless, there are no safeguards to prevent improper disposal by the
resident utilizing the system. Accordingly, the success of the Hi-Rise System is
dependent upon the cooperation of the building's residents. However, based on
its experience, the Company believes that it is unlikely that a resident will
misuse the system, inasmuch as the control panel must be activated for disposal.
Moreover, a resident not inclined to participate in the building's recycling
program may simply push the garbage button for disposal of all his trash. The
Company currently has three employees providing training and educational
services.

         In connection with Hi-Rise System sales, the Company offers a limited
warranty period of six months in the case of retrofit buildings, or one year in
the case of new buildings, covering workmanship and materials, during which
period the Company or its authorized service representative will make repairs
and replace parts which become defective due to normal use. Pursuant to
maintenance and service contracts, the Company will make repairs during business
hours according to a specified period commencing upon the expiration of the
warranty for a monthly fee. The Company employs five persons who are engaged in
system maintenance and service (including installation), excluding twelve
service representatives employed by IDC Systems. These twelve are trained to
install and service both compactors and the Hi-Rise System. Other than
buildings, which have entered into lease agreements with the Company, to date,
21 buildings (containing 29 systems) have entered into service contracts with
the Company. Revenues from these service contracts are not material.

         As with the Hi-Rise System, IDC Systems' trash compaction systems can
be easily installed into existing buildings or new buildings. Installation
normally takes one to two days and consists of installing the compaction unit in
the basement or first floor of the building. IDC Systems currently has twelve
employees providing service and installation services.

         In connection with sales of Hesco, Bes-Pac, DeVivo and American
Gooseneck products, each of Hesco, Bes-Pac, DeVivo and American Gooseneck
typically offers a one-year limited warranty covering workmanship and materials,
during which time it will repair or replace products or parts which become
defective due to normal use.

         In connection with sales of trash compaction units, IDC Systems offers
a one-year limited warranty covering workmanship and materials, during which
time IDC Systems will make repairs and replace parts, which become defective due
to normal use. In addition, IDC Systems attempts to enter into a maintenance and
service contract with the building regarding the compaction system. Pursuant to
such service contracts, for a monthly fee, IDC Systems will make repairs and
generally maintain the compaction system for a one-year period, commencing upon
the expiration of the warranty period. In the event a building determines not to
enter into a maintenance and service agreement with IDC Systems regarding a
compaction system, IDC Systems will service the system as requested by the
building for a maintenance fee related to time and material costs of IDC
Systems.

         Wilkinson performs installation services if requested by the customer.
In connection with sales of sheet metal fabrication products, Wilkinson
typically offers a one-year limited warranty covering workmanship and materials,
during which time Wilkinson will make repairs and replace parts, which become
defective due to normal use.

PRODUCT DEVELOPMENT

         Hi-Rise's product development efforts are focused on enhancing and
refining its products to satisfy individual and industry requirements. Product
development expenditures are expensed as incurred. Hi-Rise plans to continue its
refinement and enhancement efforts, including development of a diverter model
that enables the system to accommodate larger buildings with the Hi-Rise System
and a separate compactor.

                                       13
<PAGE>


         The Company's product development efforts are focused on enhancing and
refining the Hi-Rise System and on adapting the system to satisfy individual and
industry requirements. For the years ended December 31, 1998 and 1999, product
development expenditures by the Company were approximately $56,000, and $61,000
respectively, and were expensed as incurred. The Company intends to continue to
engage in ongoing system refinement and enhancement efforts, including
development of a diverter model that enables the system to accommodate larger
buildings with the Hi-Rise System and a separate compactor. The system also has
modem capabilities to interface via telephone communication lines with waste
hauling companies and other industry participants. The Company believes that the
potential ability of the system to alert waste hauling and recycling companies
when collection bins reach capacity will facilitate community recycling programs
and improve the efficiency of recyclable solid waste collection and disposal.

COMPETITION

         The Company faces intense competition in the solid waste handling
equipment industry. Certain of the Company's competitors offer as wide a range
of products, have greater market share and financial, marketing, manufacturing
and other resources than the Company. Hesco, Bes-Pac, DeVivo and American
Gooseneck compete with a number of national and regional manufacturers and
distributors of solid waste handling equipment, including Marathon, McClain/EZ
Pack and Waste Quip. At present, the Company's order backlogs are approximately
four to five weeks. In addition, the Company believes that several of its
competitors have added or are in the process of adding additional manufacturing
capacity, which could reduce order backlogs and price levels, and consequently
adversely affect the Company. Moreover, the absence of highly sophisticated
technology results in a number of small regional companies entering the
container product business periodically and competing with the Company.

         Although the Company believes that its products are superior to those
of most of its competitors because of the quality of these products, consumers
generally find the products relatively interchangeable. Consequently, price,
product availability and delivery, design and manufacturing quality and service
are the principal means of competition. The Company believes that it can
continue to compete and further strengthen its competitive position through
proper pricing, marketing and cost-effective distribution of the Company's
products.

         The Company is aware of a number of companies that offer trash
compaction systems substantially similar to those sold by the Company. Through
Wilkinson and Acme, the Company competes with certain regional manufacturers of
chutes and other sheet metal fabrication products. In addition, there are
numerous companies involved in the waste management industry, including waste
hauling companies and other companies engaged in waste separation, recovery and
recycling, which may have the expertise and resources that would encourage them
to attempt to develop and market products which would compete with the Hi-Rise
System or render the system obsolete or less marketable. The Company's Hi-Rise
System currently competes with other methods for separating and collecting
recyclables and waste disposal. The Company believes that the alternatives
offered by its competitors are less desirable than the Hi-Rise System because
they are more expensive and may result in risks such as fire and vermin from the
storage of recyclables on each floor of the building until collection and in
health hazards to the building's maintenance personnel associated with
floor-to-floor collection and transportation of recyclables.

                                       14
<PAGE>

PATENTS AND PROPRIETARY INFORMATION

         Through Hesco, the Company holds a United States patent covering its
hydraulic tarp mechanism, which expires in 2008. Additionally, through Atlantic
Maintenance, the Company has a United States patent pending covering a compactor
assembly for use with recycling bins, which if issued, would expire in 2017.
Through DeVivo, the Company holds two patents relating to the locking mechanisms
on DeVivo's front and side loading waste containers. Both of these patents
expire in 2014. Additionally, DeVivo has a patent pending relating to a
specialized waste container for certain liquid wastes. Through Wilkinson, the
Company holds United States patents covering certain recycling bins, which
expire at various dates from 2009 through 2010, and has applications pending for
additional patents. The Company holds United States, Canadian and European
Community patents, which cover a system of separating waste in multi-story
buildings with a chute system. The Company's United States, Canadian and
European Community patents expire in 2008, 2013 and 2016, respectively.
Functionally equivalent waste collection and source-separation systems, which
may not be covered by the Company's patents, may be currently in commercial
distribution by the Company's competitors. The Company has applied for patents
in Japan and Korea, similar or identical to its United States and Canadian
patents.

         The Company believes that patent protection is important to its
business. There can be no assurance, however, as to the breadth or degree of
protection which existing or future patents, if any, may afford the Company,
that any unissued patent applications will result in issued patents or that
patents will not be circumvented or invalidated. Although the Company believes
that its patents and products do not and will not infringe patents or violate
proprietary rights of others, it is possible that its existing patent rights may
not be valid or that infringement of existing or future patents or proprietary
rights may occur. In the event the Company's products infringe patents or
proprietary rights of others, the Company may be required to modify the design
of its products or obtain a license. Moreover, if one or more of the Company's
products infringes patents or proprietary rights of others, the Company could,
under certain circumstances, become liable for damages, which could have a
material adverse effect on the Company.

         The Company also relies on trade secrets and proprietary know-how and
employs various methods to protect the concepts, ideas and documentation of its
proprietary information. However, such methods may not afford complete
protection and there can be no assurance that others will not independently
develop such know-how or obtain access to the Company's know-how, concepts,
ideas and documentation. Although the Company has and expects to have
confidentiality agreements with its employees and appropriate vendors, there can
be no assurance that such arrangements will adequately protect the Company's
trade secrets. As the Company believes that its proprietary information is
important to its business, failure to protect such information could have a
material adverse effect on the Company.

EMPLOYEES

         At December 31, 1999, Hi-Rise employed approximately 575 persons, of
which 12 are in executive positions, 39 are in sales, 470 are in production, two
are in marketing, 24 are in service and installation, 25 are in administration,
one is in education and two are in engineering.

         IDC Systems is a party to a collective bargaining agreement with the
Building Service Employees International Union, Local 32-E, Service Trade
Division, AFL-CIO (the "IDC Union") with respect to nine of its service
employees. The current collective bargaining agreement expires in March 2000.
Wilkinson is a party to a collective bargaining agreement with the Building
Sheet Metal Workers International Union, Local 33, (the "Wilkinson Union") with
respect to 48 of its service employees. The current collective bargaining
agreement with Wilkinson Union will expire on March 29, 2000. Hi-Rise and the
Wilkinson Union are currently negotiating terms of a new contract. Acme is a
party to a collective bargaining agreement with the Building Sheet Metal Workers
International Union, Local 32, (the "Acme Union") with respect to 12 of its
service employees. The current collective bargaining agreement with the Acme
Union will expire in April 2000.

                                       15
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY FACILITIES

         The Company's principal executive offices are located at Hesco's office
and manufacturing facilities in an approximately 110,000 square foot building
situated on approximately six acres of land in Miami, Florida. Hesco also
maintains a manufacturing facility in an approximately 70,000 square foot
building in Okahumpka, Florida and an approximately 3,000 square foot shop in
Hialeah, Miami, Florida used for molding its plastic container lids. Rent for
these facilities are approximately $27,000 per month for the Miami facility and
$1,000 per month for the Hialeah facility. The Okahumpka facility is month to
month at a monthly rental of $8,000 per month. The leases for these Hesco
facilities were entered into between Hesco and Evelio Acosta, the former owner
of Hesco and Atlantic Maintenance, and/or affiliate of Mr. Acosta in connection
with the acquisitions of Hesco and Atlantic Maintenance and are subject to
unconditional guaranties between the Company and the respective landlords. The
Company also leases office space in New York City on a month-to-month basis at a
monthly rental of $3,000.

         Bes-Pac maintains its corporate headquarters and manufacturing
facilities in an approximately 50,000 square foot building situated on
approximately four acres of land in Easley, South Carolina. Bes-Pac also
maintains a manufacturing facility in an approximately 100,000 square foot
building in Easley, South Carolina and a 70,000 square foot facility in Conover,
North Carolina. All these facilities are leased from Ronald McCracken, the
former owner of Bes-Pac, for an aggregate rental of approximately $25,250 per
month pursuant to leases expiring on December 31, 2012.

         DeVivo maintains its corporate headquarters and manufacturing
facilities in an approximately 90,000 square foot building situated on
approximately seven acres of land in Newtown, Connecticut. This facility is
leased from Mario DeVivo, the former owner of DeVivo, for a rental of
approximately $30,000 per month pursuant to a lease expiring February 28, 2011.

         American Gooseneck maintains its corporate headquarters and
manufacturing facilities in an approximately 44,000 square foot building
situated on approximately five acres of land in Phoenix, Arizona. This facility
is leased from Hambicki Investment Partnership, an affiliate of the former
owners of American Gooseneck, for a rental of approximately $12,000 per month
pursuant to a lease expiring December 17, 2004. American Gooseneck has an option
to renew the lease for an additional 60 months.

         IDC Systems' executive offices, warehouse and assembly operations are
located in approximately 10,600 square feet of leased space in Mount Vernon, New
York. The lease provides for a rental of approximately $7,600 per month, with
increases in year three through five at 4% each, and a five-year term expiring
October 1, 2000. The Company believes that IDC Systems' facilities are adequate
for its present needs.

         Wilkinson's executive offices, warehouse, manufacturing and assembly
operations are located in approximately 50,000 square feet of leased space in
Stow, Ohio. The lease provides for an initial three-year term expiring February
2, 2000 at an initial rental of approximately $13,000 per month, with increases
in the second and third year based on increases in the consumer price index.
Wilkinson has an option to renew the lease for an additional two years.

         Recycltech's offices are located in approximately 3,472 square feet of
leased space in the City of North York, Ontario, Canada. The lease provides for
a rental of $868 per month and expires on May 31, 1999. The Company believes
that Recycltech's facilities are adequate for its present needs.

         Acme maintains its corporate headquarters and manufacturing facilities
in an approximately 10,000 square foot building situated on approximately two
acres of land in Fort Lauderdale, Florida. These facilities are leased for a
rental of approximately $3,000 per month pursuant to a lease expiring April 30,
1999.

                                       16
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

         As a result of operations conducted in the ordinary course of business,
from time to time the Company may be, and currently is, subject to product
liability and/or warranty claims and litigation. The Company believes, though no
absolute assurance can be given to that effect, that the current levels of
coverage provided by the Company's product liability insurance policy are
adequate and that any such claims will not have a material adverse effect on the
Company's financial condition or results of operations.

         On March 10, 1998, World Business Brokers, Inc., a Florida corporation
("World Business Brokers"), filed a lawsuit in the Circuit Court of the Eleventh
Judicial Circuit for Dade County, Florida against the Company. In general, the
lawsuit alleges that the Company entered into an Information Agreement with
World Business Brokers pursuant to which the Company agreed to pay a commission
based upon industry standards to World Business Brokers in connection with the
Company's acquisitions of Hesco and Atlantic Maintenance. World Business Brokers
is seeking damages in excess of $15,000 and attorneys' fees. The Company does
not believe that the outcome of this action will have a material adverse effect
on the Company's financial condition or results of operations.

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

         None.

                                       17
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock has traded in the over-the-counter market on
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") Small-Cap Market under the symbol "HIRI" since July 22, 1993, the
date of the Company's initial public offering (the "IPO"). The following table
sets forth, for the periods indicated, the high and low closing bid quotations
for the common stock, as reported by NASDAQ. The NASDAQ quotations represent
quotations between dealers without adjustment for retail markups, markdowns or
commissions and may not necessarily represent actual transactions.

                       PERIOD                            HIGH           LOW
--------------------------------------------------  ------------- -------------
Year ended December 31, 1998
1st Quarter.......................................       $3-9/16       $2-1/2
2nd Quarter.......................................        3-5/16        2-1/2
3rd Quarter.......................................        3-6/32        1-3/4
4th Quarter.......................................        2-9/16        1-13/32

Year ended December 31, 1999
1st Quarter.......................................       $3-11/16      $1-5/16
2nd Quarter.......................................        4-3/4         3
3rd Quarter.......................................        3-1/7         2-1/8
4th Quarter.......................................        2-3/8         1-3/4

         As of April 11, 2000, there were 66 holders of record of the Company's
common stock. The Company believes that there are in excess of 2,000 beneficial
owners of the Company's common stock. On April 11, 2000, the closing bid price
of the common stock was $1.6825 per share.

         In late June and early July 1997, the Company sold an aggregate of 200
shares of its Series B Convertible Preferred Stock, $.01 par value (the "Series
B Preferred Stock"), and warrants (the "1997 Warrants") to purchase an aggregate
of 888,887 shares of the common stock, in a private placement to accredited
investors for an aggregate purchase price of $2,000,000 pursuant to Rule 506 of
Regulation D under the Securities Act of 1933, as amended (the "Securities
Act"). The Series B Preferred Stock is convertible, at the option of the holder
thereof, into common stock at a conversion price of $2.25. The Series B
Preferred Stock accrues common stock dividends at a rate of approximately 72,000
shares per annum, which dividends are payable upon conversion of the Series B
Preferred Stock in additional shares of common stock. The Series B Preferred
Stock has no voting rights. The 1997 Warrants entitle the holders thereof to
purchase shares of common stock at an exercise price of $2.25 per share. In
connection with the Company's acquisition of Atlantic Maintenance, on February
20, 1998, the Company issued an aggregate of 1,276,094 shares of common stock to
Evelio Acosta, which shares had a market value of approximately $3,500,000 on
such date.

         On February 20, 1998, the Company sold an aggregate of 1,299,098 shares
of common stock at a price of $2.70 per share pursuant to Rule 506 of Regulation
D under the Securities Act. The net proceeds from this transaction were used in
connection with the Company's acquisition of Hesco.

         In connection with the Bes-Pac Merger, on October 30, 1998, the Company
issued an aggregate of 1,890,500 shares of common stock to Ronald J. McCracken,
the former owner of Bes-Pac, which shares had a market value of approximately
$3,781,000 on such date.

         In January 2000, the Company issued an aggregate of 1,310,705 shares of
common stock to Ronald J. McCracken, the former owner of Bes-Pac. Of such
shares, 644,038 shares were issued in connection with the conversion of a
subordinated convertible promissory note issued to Mr. McCracken in connection
with the Company's acquisition of Bes-Pac and 666,667 shares were issued as
earn-out consideration pursuant to the terms of the merger agreement related to
the Bes-Pac acquisition.

         In connection with the Company's acquisition of Acme, on November 20,
1998, the Company issued an aggregate of 27,778 shares of common stock, valued
at approximately $50,000, to the former shareholders of Acme.

                                       18
<PAGE>

         In connection with the Company's acquisition of the DeVivo Companies,
on February 22, 1999, the Company issued an aggregate of 1,463,400 shares of
common stock to the former owners of the DeVivo Companies, which shares had a
market value of approximately $5,213,000 on such date.

         In connection with the Company's acquisition of Kohlman, in September
1999, the Company issued an aggregate of 200,000 shares of common stock, valued
at approximately $537,500 on such date, to the former owners of the Kohlman
assets.

         In connection with the Company's acquisition of American Gooseneck, on
December 16, 1999, the Company issued an aggregate of 689,393 shares of common
stock, valued at approximately $1,250,000 on such date, to the former
shareholders of American Gooseneck.

         To date, the Company has not declared or paid any dividends on its
common stock. The payment of dividends, if any, is within the discretion of the
Board of Directors and will depend upon the Company's earnings, its capital
requirements and financial condition and other relevant factors. The Board does
not intend to declare any dividends in the foreseeable future, but instead
intends to retain future earnings for use in the Company's business operations.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

         The Company was incorporated in May 1990 and was engaged principally in
product development until January 1991, when it installed the first Hi-Rise
System on a shared savings basis. The Company only began to generate significant
revenues in 1998, the first year in which the Company has been profitable.

         The Company is primarily engaged in manufacturing, distributing,
marketing and selling solid waste handling equipment. Until February 1997, the
Company was primarily engaged in distributing, marketing and selling the Hi-Rise
System, a proprietary automated system designed to collect source-separated
recyclables and other solid waste in multi-story residential buildings. In
February 1997, the Company expanded its product lines to include sheet metal
fabrication products, consisting primarily of rubbish and laundry chutes. In
1998, the Company acquired Hesco and Bes-Pac, companies engaged in the business
of manufacturing, marketing and selling solid waste handling equipment products
consisting primarily of waste containers and trash compaction systems. In 1999,
the Company acquired DeVivo and American Gooseneck. During the year ended
December 31, 1999, sales of Hesco, Bes-Pac AG and DeVivo products accounted for
76% of the Company's revenues. The Company anticipates that in the future the
Hesco, Bes-Pac, DeVivo and American Gooseneck product lines will be the
Company's single largest source of revenue. In addition, the Company expects
that its other principal sources of revenue will be sales of rubbish and linen
chutes, trash compaction systems and the Hi-Rise System and sales-types leases
of the Hi-Rise System.

         The Company's results of operations for the year ended December 31,
1998 include the results of Hesco from February 20, 1998, Bes-Pac from October
30, 1998 and Acme from November 20, 1998. Additionally, the Company's results of
operations for the year ended December 31, 1999 include the results of DeVivo
from February 1999, Kohlman from September 1999 and American Gooseneck from
December 1999. Accordingly, the Company's results of operations for the years
ended December 31, 1998 and 1999 are not comparable in certain material
respects.

                                       19
<PAGE>

         On February 20, 1998, the Company consummated the Hesco Merger. As a
result of the Hesco Merger, Hesco became a wholly owned subsidiary of the
Company. The consideration for the Hesco Merger paid by the Company was
$8,300,000 in cash, including $2,236,281 in repayment of a shareholder loan. The
consideration for the Hesco Merger was partially funded by the net proceeds of
the 1998 Private Placement. Approximately $500,000 of the Hesco Merger
consideration was funded from the proceeds of a $500,000 five-year term loan
from Donald Engel, Chairman of the Board of Directors and Chief Executive
Officer of the Company. The remaining portion of the Hesco Merger consideration
was funded through the proceeds of a line of credit and a term loan from Ocean
Bank.

         On February 20, 1998, the Company also consummated the Atlantic
Maintenance Merger. As a result of the Atlantic Maintenance Merger, Atlantic
Maintenance became a wholly owned subsidiary of the Company. The consideration
for the Atlantic Maintenance Merger consisted of 1,276,094 shares of Common
Stock. The Company also entered into a seven-year agreement with an affiliate of
Acosta to lease Hesco's primary manufacturing facility. Goodwill that resulted
from the business combinations described above is being amortized over forty
years. On February 20, 1998, the Company sold an aggregate of 1,299,098 shares
of its Common Stock for $2.70 per share in the 1998 Private Placement to
accredited investors in which it received aggregate gross proceeds of
approximately $3,507,560. After payment of fees, expenses and commissions, the
net proceeds to the Company from the 1998 Private Placement were approximately
$3,200,000. The 1998 Private Placement was consummated in order to partially
fund the cash portion of the Hesco Merger.

         On October 30, 1998, the Company acquired all of the issued and
outstanding shares of common stock of Bes-Pac pursuant to the merger of Bes-Pac
with and into a wholly owned subsidiary of the Company. Pursuant to the Bes-Pac
Merger, the Bes-Pac shares were converted into the right to receive (i)
$3,000,000 in cash, (ii) an aggregate of 1,890,500 shares of Common Stock, (iii)
a Note in the principal amount of $1,219,000, and (iv) the contingent right to
receive additional cash and additional shares of Common Stock (collectively, the
"Merger Consideration"). The Company funded the cash portion of the Merger
Consideration through borrowings available under the Company's revolving and
term credit facilities of up to $40.0 million from GECC and other participating
lenders. During February 2000, the principal amount of the Note converted into
609,500 shares of common stock.

                                       20
<PAGE>

         Bes-Pac is engaged in the business of manufacturing and distributing
solid waste handling equipment. Bes-Pac's product lines include large industrial
compaction systems, roll-off waste containers and a full line of recycling
equipment.

         On February 22, 1999, the Company consummated the acquisition of the
DeVivo Companies. The purchase was consummated pursuant to a Stock Purchase
Agreement by and among the Company, the DeVivo Companies, Mario DeVivo and two
other selling stockholders owning 10% each of ETI with Mario DeVivo owning the
remaining 80%. The aggregate purchase price paid by the Company to the sellers
consisted of $11,707,200, in cash, and 1,463,400 shares of the Common Stock. The
cash portion of the purchase price was funded through borrowings under the
Company's $40 million credit facility with GECC and the other participating
lenders. The Company also entered into five-year employment agreements with each
of the sellers and entered into a long-term lease with Mario DeVivo for DeVivo's
Newtown, Connecticut plant and office facility.

         DeVivo is engaged in the business of manufacturing and supplying waste
handling and recycling equipment to the greater New York City and New England
markets. ETI owns certain patent rights relating to DeVivo's business.

         On December 16, 1999, the Company consummated the acquisition of
American Gooseneck, Inc. The purchase was consummated pursuant to the terms of a
Stock Purchase Agreement by and among the Company, American Gooseneck and all of
the shareholders of American Gooseneck (collectively, the "Shareholders"). The
aggregate purchase price paid by the Company to the Shareholders was
approximately $11,200,000 and consisted of the following: (i) $8,160,883 in cash
to the Shareholders, (ii) $799,116 in cash to Merrill Lynch Business Financial
Services to satisfy amounts owed by American Gooseneck to such entity in full,
and (iii) 689,393 shares of Common Stock. The cash portion of the purchase price
was funded through borrowings made under the Company's existing $61.0 million
credit facility with General Electric Capital Corporation and the other lenders
to that credit facility. Pursuant to the Stock Purchase Agreement, the Company
withheld the delivery to the Shareholders of a number of shares of Common Stock
having a fair market value of $900,000 (the "Holdback Shares"). All or a portion
of the Holdback Shares will be released to the Shareholders on or prior to the
first anniversary of the closing of the acquisition depending upon whether
American Gooseneck meets or exceeds certain agreed upon sales targets under
specified distribution agreements. The Company will retain holdback Shares not
released to the Shareholders and the effective purchase price will be
appropriately reduced. The Stock Purchase Agreement further provides that the
Shareholders shall receive additional shares of Common Stock if American
Gooseneck meets or exceeds certain agreed upon earnings targets during the
two-year period following the consummation of the acquisition.

         In connection with the acquisition, American Gooseneck entered into a
long-term lease with an affiliate of the Shareholders respecting American
Gooseneck's principal manufacturing plant and office facility located in
Phoenix, Arizona. The Company agreed to guaranty American Gooseneck's
obligations under the lease.

         American Gooseneck is engaged in the business of manufacturing and
distributing solid waste handling equipment. American Gooseneck's product lines
include large industrial compaction systems; small and roll-off waste
containers, hoists and tarps for truck hauling vehicles and a full line of
recycling equipment.

RESULTS OF OPERATIONS

     YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998.

         Total revenue during the twelve months ended December 31, 1999 was
$59,734,000, an increase of $28,554,000 compared to total revenue of $31,180,000
during the comparable twelve-month period of 1998. One of the primary sources of
the increase is the inclusion of ten months of sales for DeVivo and twelve
months of sales for Bes-Pac, Hesco and Acme in this year compared to only two
months, ten months and one month, respectively in 1998. Devivo realized
additional sales of $9,950,000 and BesPac had added sales of $16,153,000 and
Hesco had $2,943,000. The remaining increase is a result of revenues from Acme
for the twelve months of $1,896,000. The increases were partially offset by a
reduction in Hi-Rise sales in 1999 of approximately $2,000,000 related to
products purchased and subsequently resold in 1998 from Acme prior to
acquisition as well as other vendors.


                                       21
<PAGE>

During the twelve months ended December 31, 1999, the Company recognized
interest income of approximately $667,000, a decrease of $109,000 compared to
$776,000 during the comparable twelve-month period of 1998. The decrease in
interest income is primarily attributable to leases sold to third parties at a
loss of approximately $150,000.

Total cost and expenses during the twelve months ended December 31, 1999 were
$53,066,000, an increase of approximately $25,189,000 compared to total
operating expenses of $27,877,000 during the comparable twelve-month period of
1998. One of the primary sources of the increase is the inclusion of ten months
of costs for DeVivo and twelve months of costs for Bes-Pac and Hesco in this
year compared to only two months and ten months respectively in 1998. Devivo
realized additional costs of $8,675,000 and BesPac had added costs of
$13,449,000 and Hesco had $4,247,000. The increase was offset by a reduction in
costs at Hi-Rise due to the acquisition of Acme which previously sold to
Hi-Rise.

As a percentage of revenue, cost of equipment sold increased to 70% during the
twelve months ended December 31, 1999 from 68% during the prior comparable
twelve-month period. The primary reason for this increase is a corresponding
increase in sales of waste equipment which has a higher cost of sales on a
percentage basis. Waste equipment products cost of sales is approximately 75%.

Selling and marketing expenses during the twelve months ended December 31, 1999
were $2,460,000, an increase of $1,159,000 compared to selling and marketing
expenses of $1,301,000 during the comparable twelve-month period of 1998.
Selling and marketing expenses for the twelve months ended December 31, 1999
include approximately $35,000 for DeVivo and an aggregate of an additional
$1,120,000 of expenses for Hesco and Bes-Pac for additional months of 1999.

General and administrative expenses during the twelve months ended December 31,
1999 were $8,610,000 an increase of approximately $3,179,000 compared to general
and administrative expenses of $5,431,000 during the comparable twelve-month
period of 1998. General and administrative expenses for the twelve months ended
December 31, 1999 include approximately $1,408,000 for DeVivo. The remaining
increase is related to increased personnel and professional fees. In addition
there was approximately $500,000 of one time expenses related to closing of a
facility and costs associated with acquisitions not consumated.

Interest expense increased to $3,729,000 as compared to $1,001,000 for the
comparable twelve-month period of 1998, as a result of increased borrowings
under the Company's credit facilities. Advances under such credit facilities
were used to finance the acquisitions of the company. In addition the company's
loss carryforwards were fully used in 1999 and the company realized a net tax
rate of 31%. This resulted in a increase of taxes to $1,124,000 compared to
$75,000 last year. In the future years the company expects to be fully taxed at
a rate of 40%.

As a result of the foregoing, the Company realized net income of $2,482,000
during the twelve months ended December 31, 1999, compared to a net income of
$3,003,000 during the twelve months ended December 31, 1998.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1999, the Company had working capital of $2,612,000 and cash and
cash equivalents aggregating $194,000, compared to working capital of $5,194,000
and cash and cash equivalents of $324,000 at December 31, 1998. The decrease is
a result of additional borrowing under the company's revolving lines of credit
and principle payments due in year 2000 not due in 1999 due to grace periods on
principle payments.

During 1998, the Company obtained a $40.0 million credit facility from GECC and
other participating lenders. In September 1999, the aggregate amounts available
under this facility were increased to $61.0 million. In particular, the
Company's revolving line of credit was increased by $9.0 million, from $8.0
million to $17.0 million, and its acquisition line of credit was increased by
$12.0 million, from $8.0 million to $20.0 million. This facility consists of two
revolving lines of credit totaling $26.0 million, a $9.0 million term loan, a
$6.0 million term loan and a $20.0 million acquisition line. Accounts receivable
and inventory of the Company and its subsidiaries collateralize one revolving
line of credit in the amount of up to $8.0 million. The borrowing base is
calculated by taking 80% of the

                                       22
<PAGE>

value of eligible receivables and 50% of the value of eligible inventory.
Approximately $10,583,000 was outstanding under this line of credit as of
December 31, 1999. The other revolving line of credit in the amount of up to
$9.0 million is collateralized by leases entered into by the Company for Hi-Rise
systems and other products manufactured by the Company and its subsidiaries. The
borrowing base is calculated by taking 90% of the value of eligible leases
issued by the Company for its equipment. Approximately $8,100,000 was
outstanding under this line of credit as of December 31, 1999. Both lines of
credit bear interest at a rate per annum equal to the prime rate as announced by
THE WALL STREET JOURNAL plus .5% and are due in October 2003. The term loan is
for $9.0 million and bears interest at a fixed rate of 11% for five years.
Interest only on the term loan is payable quarterly for four and one-half years
with principal payable for two quarters in the amount of $1.5 million and a $6.0
million payment due at October 30, 2003. The $6.0 million term loan has a
twelve-month period of interest only and principal payments to be paid on a
quarterly basis until October 30, 2003. The acquisition facility also has a
twelve-month interest only period and quarterly principal payments due five
years from the funding of the loan. Both the $6.0 million term loan and the
acquisition facility bear interest at a rate of prime, as announced by THE WALL
STREET JOURNAL, plus 1%.

         As part of the credit facility provided by GECC and other lenders, the
Company issued warrants to the lenders to purchase an aggregate of 1,476,259
shares of the Company's Common Stock. Proceeds available under the credit
facility were used to (i) satisfy all amounts owed to Ocean Bank totaling $12.8
million, (ii) satisfy debt owed to Donald Engel, Chairman of the Board and Chief
Executive Officer of the Company, in the amount of $500,000, (iii) satisfy debt
owed to NationsBank by Bes-Pac totaling $2.3 million, (iv) pay the $3.0 million
cash portion of the consideration for the Bes-Pac Merger and (iv) pay fees of
$562,824 to GECC.

         In June 1998 and December 1999, the Company had entered into a lease
sale arrangement with Western Finance and Lease, Inc., formerly known as First
Sierra, Inc. ("Western Finance"), pursuant to which Western Finance has agreed
to purchase, from time to time, eligible leases of Hi-Rise Systems from the
Company for a purchase price equal to the discounted present value of the leases
purchased. During 1999, the Company sold the anticipated cash flow relating to
twenty two (22) Hi-Rise System leases to Western Finance for an aggregate of
$1,706,566.

During the twelve months ended December 31, 1999, net cash used by operating
activities was $3,720,000, compared to net cash used by operating activities of
$1,340,000 during the twelve months ended December 31, 1998. Accounts receivable
increased by $2,583,000 as a result of increased sales by Wilkinson, DeVivo and
Bes-Pac during the twelve months ended December 31, 1999. The Company
anticipates that sales by Bes-Pac and DeVivo of waste equipment will decrease
during the next two quarters as a result of the seasonality of such companies'
historical operations. In addition, inventory increased by $2,245,000 primarily
as a result of purchases of inventory for equipment and materials to support the
Company's $8 million backlog. Additionally, net investment in sales type leases
increased by $2,040,000 as a result of 35 leases added to the lease portfolio.

Net cash used by investing activities was $23,914,000 during the twelve months
ended December 31, 1999. This is primarily the result of cash used for payment
of expenses as part of the DeVivo acquisition and purchase of capital equipment.
Net cash provided by financing activities was $27,504,000 during 1999. This
increase was primarily the

                                       23
<PAGE>

result of increased borrowings under the Company's lines of credit in connection
with acquisitions and lease financing.

         The Company currently has no outstanding material commitments for
capital expenditures. The Company's primary requirements for capital will be the
cost of equipment sold, leased and rented, strategic acquisitions, marketing and
sales costs associated with the Company's national and international expansion
into new target markets, efforts to establish a nationwide distribution network
and general and administrative expenses associated with the Company's business
plan. The Company anticipates, based on currently proposed plans and assumptions
relating to operations (including the anticipated costs associated with, and
timetable for, its proposed expansion), that cash flow from operations and funds
available under the Company's existing credit facilities will be sufficient to
satisfy the Company's contemplated cash requirements for at least 12 months. In
the event that the Company's plans change, its assumptions change or prove to
be inaccurate or if its existing capital and cash flow otherwise prove to be
insufficient (due to unanticipated expenses, delays, problems, difficulties or
otherwise), the Company could be required to seek additional financing or may be
required to curtail its expansion or other activities. In the event that the
Company requires additional financing, the Company may seek to raise capital
through the sale of its equity securities, including at prices, which may
represent significant discounts from the market price of the Common Stock.


<PAGE>

YEAR 2000

         As of March 31, 2000, the Company has not experienced any immediate
adverse impact on its operations from the transition to the Year 2000. The
Company cannot grant any assurances, however, that its operations have not been
affected in a manner that is not yet apparent or in a manner that will arise in
the future. In addition, certain computer programs that were date sensitive to
the Year 2000 may not have been programmed to process the Year 2000 as a leap
year, and negative effects from this remain unknown. As a result, the Company
will continue to monitor its Year 2000 compliance and the Year 2000 compliance
of its suppliers and customers. However, the Company does not anticipate any
Year 2000 problems that are reasonably likely to have a material adverse effect
on its operations.

CAUTIONARY STATEMENTS RELATING TO FORWARD-LOOKING STATEMENTS

         The foregoing Management's Discussion and Analysis or Plan of Operation
contains various "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which represent the Company's expectations and
beliefs concerning future events. The Company cautions that these statements are
further qualified by important factors that could cause actual results to differ
materially from those in the forward-looking statements, including, without
limitation, the following: decline in demand for the Company's products; and the
effect of general economic conditions generally and factors affecting the waste
hauling and construction industries. These statements by their nature involve
substantial risks and uncertainties and actual events or results may differ as a
result of these and other factors.

ITEM 7.  FINANCIAL STATEMENTS

         The Consolidated Financial Statements of the Company required by Form
10-KSB are attached following Part III of this report commencing on page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

                                       25
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
                  NAME                    AGE                         POSITION
-------------------------------------- -------  ---------------------------------------------------------
<S>                                       <C>   <C>
Donald Engel..........................    66    Chairman of the Board and Chief Executive Officer

J. Gary McAlpin.......................    47    President and Chief Operating Officer

Bradley Hacker........................    40    Chief Financial Officer and Corporate Secretary

Michael F. Bracken....................    41    Executive Vice President - New Construction Sales

Ronald J. McCracken...................    49    Executive Vice President - Business Development and Sales

Ira S. Merritt........................    62    Director

Joel M. Pashcow.......................    55    Director

Warren Adelson........................    57    Director

Leonard Toboroff......................    67    Director
</TABLE>

         DONALD ENGEL has been the Company's Chief Executive Officer since March
1996 and Chairman of the Board since May 1997. From March 1996 to May 1997, Mr.
Engel served as Co-Chairman of the Board. Prior to joining the Company, Mr.
Engel was a private investor. From June 1991 to June 1993, Mr. Engel served as a
consultant to Bear Stearns & Co., Inc. From March 1985 to June 1991, Mr. Engel
served as a consultant to Drexel Burnham Lambert where he had been managing
director since 1978. Mr. Engel has served as a director of multi-national
companies such as Revlon Group, Inc., Triangle Industries, Inc., and Uniroyal
Chemical, Inc.

         J. GARY MCALPIN has been the Company's President since January 12, 1998
and its Chief Operating Officer since March 1997. Mr. McAlpin joined the Company
in October 1996 initially serving as Vice President. From January 1996 to
October 1996, Mr. McAlpin served as a construction/project manager of
Birwelco-Montenay, a power generator. For the eight years prior to joining
Birwelco-Montenay, Mr. McAlpin served as the Vice President and General Manager
of IDAB Incorporated, a materials handling company.

         BRADLEY HACKER has been the Company's Chief Financial Officer since
July 1997. Mr. Hacker joined the Company in July 1993 as its controller. For the
seven years prior to joining the Company, various divisions of Campbell Taggert,
a subsidiary of Anheuser-Busch, employed Mr. Hacker.

         MICHAEL F. BRACKEN has been the Company's Executive Vice President -
New Construction Sales since July 1996. Mr. Bracken joined the Company in
September 1993 as a salesman of the hi-rise system. From August 1992

                                       26
<PAGE>

to August 1993, Mr. Bracken was the General Manager and Construction Project
Manager of Brick ell Biscayne Condominium in Miami, Florida. Prior to 1992, Mr.
Bracken served as a field manager of Schlumberger Overseas Ltd., a petroleum
engineering company in South East Asia.

         RONALD J. MCCRACKEN has been the Company's Executive Vice President -
Business Development and Sales since October 1998. Prior to joining the Company,
from February 1986 to October 1998, Mr. McCracken served as the President and
Chief Executive Officer of Bes-Pac, Inc., a South Carolina corporation wholly
owned by Mr. McCracken ("Bes-Pac"), a company engaged in the business of
manufacturing and distributing solid waste handling equipment. The Company
acquired Bes-Pac in October 1998.

         IRA S. MERRITT has been a director of the Company since March 1996.
Since his semi-retirement in 1990, Mr. Merritt, a licensed certified public
accountant, has been engaged in selling residential real estate in Boca Raton,
Florida. From 1988 to 1990, Mr. Merritt was employed by the Sidney Kohl Company,
a Florida real estate company, where he established the firm's property
management division. From 1982 to 1988, Mr. Merritt was the Executive Vice
President and Chief Financial Officer of Hanover Companies, Inc. From 1975 to
1982, Mr. Merritt was the senior partner of Merritt, Levy and Cohen, an
accounting firm specializing in the real estate industry.

         JOEL M. PASHCOW has been a director of the Company since March 1996.
Mr. Pashcow is now the Chairman of the Executive Committee of the Board of
Trustees of Ramco-Gershenson Property Trust (NYSE) and Chairman and President of
Atlantic Realty Trust. Mr. Pashcow served as the Chairman of the Board of
Directors of RPS Realty Trust, a New York Stock Exchange commercial property
REIT, from February 1988 to April 1996. Mr. Pashcow has served as a member of
the Board of Governors of the Real Estate Securities and Syndication Institute
and as a director and member of the executive committee of the National Realty
Committee.

         WARREN ADELSON has been a director of the Company since May 1993. Mr.
Adelson has been President of Adelson Galleries, a New York art gallery, since
January 1990. From 1974 to January 1990, Mr. Adelson was Vice President of Coe
Kerr Gallery, a New York City art gallery.

         LEONARD TOBOROFF has been a director of the Company since January 1999.
Mr. Toberoff has served as a Vice President of Riddell Sports, Inc. since April
1998. Since May 1989, Mr. Toberoff has been a Vice Chairman of the Board of
Allis-Chalmers Corp. Additionally, Mr. Toberoff has served as a director of
Ameriscribe Corp. since August 1987 and served as its Chairman and Chief
Executive Officer from December 1987 to May 1988. From May through July 1982,
Mr. Toberoff served as Chairman and Chief Executive Officer of American Bakeries
Company. Mr. Toberoff has served as a director of Banner Aerospace, Inc., a
supplier of aircraft parts since September 1992. He has also been a director of
Engex, Inc. and Saratoga Springs Beverage Corp. since 1993. Mr. Toberoff has
been a practicing attorney since 1961.

COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

         During 1999, the Board of Directors held four meetings and took action
three additional times by unanimous written consent. No Director attended fewer
than 75% of the meetings of the Board of Directors held during 1998 during the
period of such Director's service.

         The only committees of the Board of Directors are the Audit Committee
and the Compensation Committee. The Board does not have a nominating or similar
committee. The Company's Board of Directors performs the functions of a
nominating or similar committee.

                                       27
<PAGE>

         Messrs. Merritt and Adelson are the current members of the Company's
Audit Committee. The Audit Committee held two meetings during 1999. The duties
and responsibilities of the Audit Committee include (a) recommending to the
Board the appointment of the Company's auditors and any termination of
engagement, (b) reviewing the plan and scope of audits, (c) reviewing the
Company's significant accounting policies and internal controls and (d) having
general responsibility for all related auditing matters.

         Messrs. Pashcow and Merritt are the current members of the Company's
Compensation Committee, which committee held three meetings during 1999. The
Compensation Committee reviews and approves the compensation of the Company's
executive officers and administers the Company's stock option plans.

ADDITIONAL INFORMATION CONCERNING DIRECTORS

         COMPENSATION. Each non-employee director of the Company receives an
annual fee of $15,000 and is reimbursed for expenses incurred in connection with
activities as a director of the Company. Directors who are also employees do not
receive additional compensation for their services as directors. Non-employee
directors serving on the Company's Compensation Committee and/or Audit Committee
also receive $1,000 per meeting.

         OPTIONS. Each non-employee director receives an automatic grant of
options to purchase 20,000 shares of common stock, par value $.01 per share (the
"Common Stock"), under the Company's 1996 Directors' Stock Option Plan on his or
her initial election to the Board of Directors. Thereafter, each director
receives an automatic grant of options to purchase 1,000 shares of Common Stock
upon such director's reelection as a member of the Board. For 1998, each of
Messrs. Merritt, Pashcow and Adelson received grants under this plan. Each
option grant, vesting in equal installments over five years and having a
ten-year term, permits the holder to purchase shares at their fair market value
on the date of grant, which was $2.50 in the case of options granted in 1999.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of the Company's outstanding Common Stock, to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock. Such persons are required
by SEC regulation to furnish the Company with copies of all such reports they
file.

         To the Company's knowledge, based solely on a review of the copies of
filings furnished to the Company and written or oral representations that no
other reports were required, the Company believes that all of its directors and
executive officers complied during 1999 with the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934, with the exception of (i)
the grant of options to purchase an aggregate of 1,000 shares of common stock
and the grant of warrants to purchase an aggregate of 20,000 shares of commons
tock to Ira S. Merritt, a Director of the Company during the period July 1999
to July 1998, (ii) the grant of options to purchase an aggregate of 80,000
shares of common stock to Bradley Hacker, the Company's Chief Financial Officer
and Secretary, during the period July 1993 to December 1998, which transactions
were reported in February 2000. Each of these late filings resulted from
administrative oversights.

ITEM 10. EXECUTIVE COMPENSATION

         The following table sets forth, for the fiscal years ended December 31,
1999, 1998 and 1997, the aggregate compensation awarded to, earned by or paid to
Donald Engel, the Company's Chairman and Chief Executive Officer, J. Gary
McAlpin, the Company's President and Chief Operating Officer, Bradley Hacker,
the Company's Chief Financial Officer and Secretary, and Michael F. Bracken, the
Company's Executive Vice President - New Construction Sales (collectively, the
"Named Executive Officers"). No other executive officers of the Company earned
compensation in excess of $100,000 during 1999. The Company did not grant any
restricted stock awards or stock appreciation rights or makes any long-term
incentive plan payouts during such fiscal years.

                                       28
<PAGE>
                           SUMMARY COMPENSATION TABLE

                                               ANNUAL                 LONG-TERM
                                            COMPENSATION            COMPENSATION
                                  -------------------------------   ------------
  NAME AND PRINCIPAL POSITION       YEAR     SALARY      BONUS         OPTIONS
--------------------------------  -------- ----------  ----------   ------------
Donald Engel ...................    1999    $180,000    $100,000     200,000(3)
     Chairman of the Board and      1998    $180,000          --     200,000(3)
     Chief Executive Officer (1)    1997    $180,000          --     200,000(2)

J. Gary McAlpin ................    1999    $120,635    $100,000      50,000(3)
     President and Chief            1998    $118,008    $100,000     200,000(3)
     Operating Officer              1997    $ 96,875          --     107,500(2)

Bradley Hacker .................    1999    $ 85,768    $ 40,000      20,000(3)
     Chief Financial Officer and    1998    $ 82,840    $ 50,000      10,000(3)
     Secretary                      1997    $ 75,355    $ 20,000      35,000(2)

Ronald J. McCracken ............    1999    $118,024          --          --
     Executive Vice President -     1998    $ 20,000          --          --
     Business Development and       1997          --          --          --
     Sales

Michael F. Bracken .............    1999    $125,874          --          --
     Vice President - New           1998    $117,580          --      15,000(3)
     Construction Sales             1997          --          --          --
-------------------------
(1)      Mr. Engel has served as the Chief Executive Officer since March 1996,
         served as Co-Chairman of the Board from March 1996 to May 1997 and has
         served Chairman of the Board since May 1997.
(2)      Represents options granted under the Company's 1996 Stock Option Plan.
(3)      Represents options granted under the Company's 1998 Executive Incentive
         Compensation Plan.


EMPLOYMENT AGREEMENTS

         The Company entered into an employment agreement with Donald Engel,
effective as of March 25, 1996, which provides for the employment of Mr. Engel
as the Company's Chairman of the Board and Chief Executive Officer. This
employment agreement provides for an annual base salary of $180,000, subject to
annual increases in accordance with the Consumer Price Index. The employment
agreement requires Mr. Engel to devote his full time, energies and efforts to
the Company's affairs. Mr. Engel has agreed that during the term of his
employment agreement and for a period of five years thereafter, he will not
compete or engage in a business competitive with any recycling or solid-waste
disposal business in which the Company or any of its affiliates then engages and
which operates within any state in which the Company conducts business. The
employment agreement provides that it may be terminated either by Mr. Engel or
the Company upon ten days notice. Upon the termination of the employment
agreement, Mr. Engel will be entitled to receive any unpaid salary and accrued
bonus through the date of termination.

         The Company also entered into five-year employment agreements with each
of J. Gary McAlpin and Bradley Hacker, effective as of March 10, 1998, which
provide for the employment of Mr. McAlpin as the Company's President and Chief
Operating Officer and Mr. Hacker as the Company's Chief Financial Officer. The
initial term of each of these agreements will be automatically extended for a
five-year term upon a change of control of the Company, and for successive
one-year terms unless either party gives notice of its intent not to extend the

                                       29
<PAGE>

term at least six months prior to its expiration date (three months in the case
of any extension period after the initial term). Mr. McAlpin's employment
agreement provides for an annual base salary of $120,000 subject to annual
increases in accordance with the Consumer Price Index and an annual incentive
bonus of not less than $50,000. Mr. Hacker's employment agreement provides for
an annual base salary of $85,000 subject to annual increases in accordance with
the Consumer Price Index and an annual incentive bonus of not less than $25,000.
Pursuant to their respective employment agreements, Mr. McAlpin and Mr. Hacker
have each agreed that during the term of his employment agreement and for a
period of one year thereafter, he will not consult with or engage in or own in
excess of 5% of any entity which engages in the business of providing mechanical
multi-story recycling and which operates within any state in which we conduct
business. Upon the termination of Mr. McAlpin's or Mr. Hacker's employment due
to our non-renewal of the employment agreement, the terminated executive will be
entitled to receive any unpaid salary and bonus accrued through the date of
termination plus one-year's base salary. Upon the termination of Mr. McAlpin's
or Mr. Hacker's employment by the Company for cause or by the executive without
cause, the terminated executive will be entitled to receive any unpaid salary
and bonus accrued through the date of termination. Upon the termination of Mr.
McAlpin's or Mr. Hacker's employment by the Company without cause, the
terminated executive will be entitled to receive any unpaid salary accrued
through the date of termination, any bonus that would have been payable to the
executive for the fiscal year, a lump sum severance payment in the amount of the
base salary, and benefits that would have been paid by the Company to such
executive through the scheduled end of the employment agreement.

         In connection with the Company's acquisition of Bes-Pac, the Company
entered into a five-year employment agreement with Ronald J. McCracken,
effective as of October 29, 1998, which provides for the employment of Mr.
McCracken as the Company's Executive Vice President - Business Development and
Sales. The initial term of this agreement will be automatically extended for
successive one-year terms unless either party gives notice of its intent not to
extend the term. Mr. McCracken's employment agreement provides for an annual
base salary of $120,000 subject to annual increases in accordance with the
Consumer Price Index. Pursuant to this employment agreement, Mr. McCracken has
agreed that during the term of his employment agreement and for a period of two
years thereafter, he will not, directly or indirectly, engage in or have any
interest in any business (whether as an employee, officer, director, partner,
agent, creditor, consultant or otherwise) which engages in the business of
providing manufacturing, marketing, distributing and selling non-mobile solid
waste handling equipment; provided, however, that such restriction shall not
apply to the ownership or acquisition by Mr. McCracken of securities of any
issuer that is registered under the Securities Exchange Act of 1934, as amended,
and that are listed for trading on any national securities exchange or are
quoted on NASDAQ. Upon the termination of Mr. McCracken's employment with the
Company for cause or by the executive without cause, Mr. McCracken will be
entitled to receive any unpaid salary through the date of termination. Upon the
termination of Mr. McCracken's employment by the Company without cause, Mr.
McCracken will be entitled to receive (i) any unpaid salary accrued through the
date of termination, (ii) base salary through the expiration date of the
agreement and (iii) benefits that would have been paid by the Company through
the expiration date of the employment agreement.

STOCK OPTION PLANS

         In July 1993, the Company adopted the 1993 Stock Option Plan pursuant
to which 350,000 shares of Common Stock were reserved for issuance to officers
and other key employees and to certain other persons who are employed or engaged
by the Company. In 1995, the number of shares of Common Stock reserved for
issuance under this plan was increased by 150,000 shares to 500,000 shares.
Under the 1993 Stock Option Plan, options have been designated as "incentive
stock options" or "non-qualified options" within the meaning of the Internal
Revenue Code of 1986, as amended. As of December 31, 1998, options to purchase
an aggregate of 353,350 shares of Common Stock had been granted and were
outstanding under the 1993 Stock Option Plan at an average exercise price of
$2.55 per share. No additional options are being granted under this option plan.

         In July 1993, the Company also adopted a director's stock option plan
pursuant to which 50,000 shares of Common Stock had been reserved for issuance
for grants of options to non-employee directors. As of December 31, 1998,
options to purchase an aggregate of 10,000 shares of Common Stock had been
granted and

                                       30
<PAGE>

were outstanding under this director's stock option plan. The Board of Directors
terminated this director's stock option plan in 1996.

         In March 1996, the Company adopted the 1996 Stock Option Plan pursuant
to which 1,000,000 shares of Common Stock have been reserved for issuance to
officers and other key employees and to certain other persons who are employed
or engaged by us. In connection with the adoption of the 1996 Stock Option Plan,
the Company's Compensation Committee granted Donald Engel, the Company's
Chairman of the Board and Chief Executive Officer, options to purchase an
aggregate of 500,000 shares of Common Stock. Such options were to vest over a
five-year period with vesting to accelerate in the event that the price of the
common stock increased to $6.00 per share, which acceleration occurred in July
1996. As of December 31, 1998, options to purchase an aggregate of 934,500
shares of Common Stock had been granted and were outstanding under the 1996
Stock Option Plan at an average exercise price of $2.50 per share. No additional
options are being granted by us under the 1996 Stock Option Plan.

         In March 1996, the Company adopted a new directors stock option plan
pursuant to which 150,000 shares of Common Stock have been reserved for
issuance. Only non-employee directors of the Company are eligible to receive
options under this plan. The plan provides for an automatic grant of an option
to purchase 20,000 shares of Common Stock upon a person's election as a director
and an automatic grant of an option to purchase 1,000 shares of Common Stock
upon such person's re-election as a director. As of December 31, 1998, options
to purchase an aggregate of 49,000 shares of Common Stock had been granted under
the new directors stock option plan at an average exercise price of $2.50 per
share.

         In March 1998, the Company adopted the 1998 Executive Incentive
Compensation Plan (the "1998 Plan"). The 1998 Plan provides for grants of stock
options, stock appreciation rights ("SARs"), restricted stock, deferred stock,
other stock-related awards and performance or annual incentive awards that may
be settled in cash, stock or other property. The 1998 Plan was approved by
shareholders in June 1998 as part of the Company's 1998 Annual Meeting of
Shareholders. The 1998 Plan is intended to supplement the Company's existing
stock option plans. Pursuant to the 1998 Plan, an aggregate of 2,000,000 shares
have been reserved for issuance to our officers, directors, employees and
independent contractors. As of December 31, 1999, options to purchase an
aggregate of approximately 1,017,525 shares of Common Stock were issued and
outstanding under the 1998 Plan at an average exercise price of $2.4169 per
share.

OPTION/SAE GRANT TABLE

         The following table sets forth information concerning grants of stock
options made during the year ended December 31, 1999 to the Named Executive
Officers. No stock appreciation rights were granted in 1999.

                          OPTION GRANTS FIR FISCAL 1999
                               (INDIVIDUAL GRANTS)

                                            PERCENT OF
                                          TOTAL OPTIONS
                                            GRANTED TO   EXERCISE
                             NUMBER OF     EMPLOYEES IN    PRICE    EXPIRATION
             NAME         OPTIONS GRANTED  FISCAL YEAR   ($/SHARE)     DATE
------------------------- ---------------  ------------  ---------- ----------

Donald Engel ............     200,000         53.3%        $2.50       2/2/09
J. Gary McAlpin .........      50,000         13.3%        $2.50       2/2/09
Bradley Hacker ..........      20,000          5.3%        $2.50       2/2/09
Michael F. Bracken ......          --           --            --           --
Ronald J. McCracken .....          --           --            --           --


                                       31
<PAGE>

AGGREGATED FISCAL YEAR-END OPTION VALUE TABLE

         The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officers at December 31,
1999. No stock options were exercised by the Named Executive Officers during
the year ended December 31, 1999. No stock appreciation rights were granted or
are outstanding.
<TABLE>
<CAPTION>
                                                                                          VALUE OF UNEXERCISED
                             SHARES                NUMBER OF SECURITIES UNDERLYING       IN-THE-MONEY OPTIONS AT
                            ACQUIRED               UNEXCERSICED OPTIONS AT 12/31/99              12/31/99
                              UPON        VALUE    --------------------------------   ----------------------------
          NAME            EXERCISE (#)  REALIZED   EXERCISABLE        UNEXERCISABLE   EXERCISABLE    UNEXERCISABLE
------------------------- ------------  --------   -----------        -------------   -----------    -------------
<S>                           <C>          <C>      <C>                  <C>              <C>           <C>
Donald Engel ............     --           --       1,350,000                --           (2)
J. Gary McAlpin .........     --           --         325,000            10,000           (2)
Bradley Hacker ..........     --           --          80,000             9,000           (2)
Michael F. Bracken ......     --           --         115,000            39,000           (2)
Ronald J. McCracken .....     --           --              --                --           --
-------------------------
<FN>
(1)  Values are calculated by subtracting the exercise price from the fair market value of the underlying common
     stock. For purposes of this table, fair market value is deemed to be $2.094, the average of the high and low
     common stock price reported for Nasdaq transactions on December 31, 1999.
(2)  The option exercise price exceeded the fair market value of the Common Stock on such date, and accordingly, such
     options were "underwater."
</FN>
</TABLE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of April 11, 2000, the number of
shares of Common Stock that were owned beneficially by (i) each person who is
known by the Company to beneficially own more than 5% of the Common Stock, (ii)
each director, (iii) the Named Executive Officers (as defined in "Executive
Compensation") and (iv) all directors and executive officers of the Company as a
group:
<TABLE>
<CAPTION>
                                             AGGREGATE NUMBER OF
                                             SHARES BENEFICIALLY     ACQUIRABLE           TOTAL NUMBER OF
                                                    OWNED          WITHIN 60 DAYS       SHARES BENEFICIALLY   PERCENTAGE OF
                  NAME                               (A)               (1) (B)        OWNER (COLUMNS (A)+(B))  OWNERSHIP
-------------------------------------------  -------------------   ---------------    ----------------------- -------------
<S>                                             <C>                     <C>                <C>                   <C>
Donald Engel...............................        60,000               1,350,000          1,410,000               8
J. Gary McAlpin............................            --                 325,000            325,000               2
Bradley Hacker.............................            --                  80,000             80,000               1
Ronald J. McCracken........................     2,961,805                      --                 --              19
Michael F. Bracken.........................            --                 115,000            115,000               1
Maria DeVivo...............................     1,278,882                      --          1,278,882               7
Evelio Acosta..............................     1,194,094                      --          1,194,094               8
Warren Adelson.............................       704,496                 293,000            997,496               6
Ira S. Merritt.............................         1,000                  33,000             34,000               *
Joel M. Pashcow............................            --                  49,000             49,000               *
Leonard Toberoff...........................            --                  46,000             46,000               *
General Electric Capital Corporation.......            --               1,024,155          1,024,155               7
All directors and executive officers as
a group (11 persons).......................     6,200,277               2,291,000          7,433,995              41
-------------------------
<FN>
 *   Represents less than 1% of the outstanding common stock.
(1)  Reflects the number of shares that could be purchased by the holder by exercise of options granted under our stock
     option plans or warrants at April 13, 2000 or within 60 days thereafter.
</FN>
</TABLE>

                                       32
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

COMMON STOCK OWNERSHIP

         In February 1995, the Company acquired all of the outstanding capital
stock of IDC Systems, Inc., a New York corporation organized in November 1987.
Harriet Oestreicher, the wife of Seymour Oestreicher, the Company's Vice
President - Distribution Development, owned 47.5% of the outstanding capital
stock of IDC Systems. In connection with this acquisition, the Company paid
$500,000 in cash and issued 26,667 shares of Common Stock to the former
shareholders of IDC Systems and agreed to issue additional shares of Common
Stock in three equal amounts annually, commencing in February 1996. In April
1996, 1997 and 1998, the Company issued an aggregate of 25,083 additional shares
of Common Stock to the former shareholders of IDC Systems, of which Harriet
Oestreicher received 15,885 shares.

         In February 1997, the Company acquired all of the issued and
outstanding capital stock of Hesco and Atlantic Maintenance from Evelio Acosta.
In connection with these transactions, Hesco entered into a lease with Acosta
Family Limited Partnership, an affiliate of Evelio Acosta, for Hesco's corporate
headquarters and manufacturing facilities in an approximately 110,000 square
foot building situated in Miami, Florida at a monthly rental of approximately
$27,000 per month, plus applicable sales tax. The Company entered into an
agreement with the partnership unconditionally guaranteeing Hesco's obligations
under this lease. Also in connection with the acquisition of Hesco and Atlantic
Maintenance, Hesco entered into a lease with Evelio Acosta and his spouse,
Gladys Acosta, for an approximately 3,000 square foot shop in Hialeah, Miami,
Florida, at a monthly rent of approximately $1,000 per month. The Company also
guaranteed the obligations of Hesco under this lease. During 1999, an aggregate
of approximately $442,000 was paid to Evelio Acosta under these leases.

         In connection with the Company's acquisition of Hesco and Atlantic
Maintenance of Miami, Donald Engel, the Company's Chairman of the Board and
Chief Executive Officer, loaned the Company $500,000, which loan accrued
interest at an annual rate of 10% per annum. The Company repaid the principal
amount of the loan, together with $33,333 of accrued interest, in October 1998
with amounts available under the Company's financing arrangements with General
Electric Capital Corporation and participating lenders. In connection with this
loan, the Company granted Mr. Engel warrants to purchase an aggregate of 250,000
shares of Common Stock at a price of $2.75 per share, which purchase price was
slightly greater than the market price of the Common Stock on the date of grant
of such warrants.

         In connection with the Company's acquisition of Bes-Pac, the Company
entered into a five-year employment agreement with Ronald McCracken, the former
sole shareholder of Bes-Pac, pursuant to which Mr. McCracken is serving as the
Company's Executive Vice President of Business Development and Sales.
Additionally, in connection with this acquisition, amendments to certain real
property leases respecting three facilities owned by Mr. McCracken at which
Bes-Pac conducts business operations were executed, which, among other things,
shorted the term of two of such leases to a period of seven years. The Company
agreed to guaranty Bes-Pac's obligations under all of these leases. During 1999,
an aggregate of approximately $312,000 was paid to Mr. McCracken under these
leases.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

         (a)   Exhibits

   EXHIBITS    DESCRIPTION
------------   ---------

     3.1       Company's Amended and Restated Articles of Incorporation. (1)

     3.2       Company's Bylaws. (1)

     4.1       Form of Common Stock Certificate. (1)

                                       33
<PAGE>

     4.2       Form of Underwriter's Warrant. (1)

     10.1      Stock Option Plan. (1)(2)

     10.2      Directors Stock Option Plan. (1)(2)

     10.3      Form of Employment Agreement between the Company and Mark D.
               Shantzis. (1)(2)

     10.4      Letter agreement dated October 4, 1992 between the Company,
               QRSZBN Corp. and Warren Adelson. (1)

     10.5      Agreement for Purchase and Sale of Assets dated as of March 26,
               1992 between the Company and Events, Etc., Inc. (1)

     10.6      Form of Indemnification Agreement between the Company and each of
               its executive officers and directors. (1)(2)

     10.7      Forms of Monitoring and Service Agreements. (1)

     10.8      United States Patent No. 5,031,829 dated July 16, 1991. (1)

     10.9      Assignment of Patent dated June 15, 1993, by Mark Shantzis in
               favor of the Company. (1)

     10.10     International Application under the Patent Cooperation Treaty.
               (1)

     10.11     Request for Entry into National Phase under Article 22 or 39 of
               the Patent Cooperation Treaty dated January 24, 1992 filed in
               Canada. (1)

     10.12     Request for Entry into Regional Phase under the Patent
               Cooperation Treaty dated January 20, 1993 filed in the European
               Community. (1)

     10.13     Application under the Patent Cooperation Treaty filed in Japan.
               (1)

     10.14     Application under the Patent Cooperation Treaty filed in Korea.
               (1)

     10.15     Form of Reimbursement Agreement between the Company, Mark D.
               Shantzis and Warren Adelson. (1)

     10.16     Business lease between the Company and Drake Enterprises dated
               September 21, 1993. (3)

     10.17     Line of Credit Agreement between the Company and Ocean Bank. (4)

     10.18     Lease Financing Agreement between the Company and First Sierra.
               (5)

     10.19     Merger Agreement between the Company, IDC Acquisition Sub, Inc.,
               IDC Systems and the stockholders of IDC Systems. (5)

     10.20     Employment Agreement between the Company and Seymour Oestreicher.
               (2)(5)

     10.21     Subscription Agreement between the Company and Norton Herrick
               dated June 27, 1995. (6)

     10.22     Registration Rights Agreement dated June 27, 1995, between the
               Company and Norton Herrick. (7)

     10.23     Asset Purchase Agreement dated February 3, 1997 among the
               Company, WC Acquisition Corp. and Wilkinson Company, Inc.,
               including Form of Lease. (8)

     10.24     Credit Agreement dated September 1996 between the Company and
               Ocean Bank. (9)

     10.25     Lease dated October 9, 1996 between Recycltech, Ltd. and Pianosi
               Bros. Construction Ltd. (10)

     10.26     Compromise Agreement dated July 1996 between the Company and
               Jeffrey Daniels. (11)

     10.27     Compromise Agreement dated July 1996 between the Company and
               Thomas Witter. (12)

                                       34
<PAGE>

     10.28     1996 Stock Option Plan (2)(13)

     10.29     1996 Directors Stock Option Plan. (2)(14)

     10.30     Employment Agreement dated March 25, 1996 between the Company and
               Donald Engel. (2)

     10.31     Employment and Consulting Agreement dated March 25, 1996 between
               the Company and Mark D. Shantzis. (2)

     10.32     Promissory Note, Commercial Security Agreements and Agreements to
               Furnish Insurance dated February 3, 1997 by the Company and WC
               Acquisition Corp. (now known as Wilkinson Company, Inc.) in favor
               of Ocean Bank. (15)

     10.33     Credit Agreement dated September 17, 1997 between the Company and
               Ocean Bank. (15)

     10.34     Variable Rate Commercial Promissory Note, Commercial/Agricultural
               Revolving or Draw Note-Variable Rate, Commercial Security
               Agreements and Commercial Continuing Guaranties dated December
               19, 1998 by the Company and Hesco Sales, Inc. in favor of Ocean
               Bank. (16)

     10.35     Agreement and Plan of Merger dated as of February 11, 1998 by and
               among the Company, AM Acquisition Corp., Atlantic Maintenance of
               Miami, Inc. and Evelio Acosta. (17)

     10.36     Agreement and Plan of Merger dated as of February 11, 1998 by and
               among the Company, HS Acquisition Corp., Hesco Sales, Inc. and
               Evelio Acosta. (18)

     10.37     Business Lease dated February 20, 1998 between Evelio and Gladys
               Acosta and Hesco Sales, Inc. (19)


     10.38     Business Lease dated February 20, 1998 between Acosta Family
               Limited Partnership and Hesco Sales, Inc. (20)

     10.39     Unconditional Continuing Guaranty of Leases dated February 20,
               1998 by and between the Company and Evelio and Gladys Acosta.
               (21)

     10.40     Unconditional Continuing Guaranty of Leases dated February 20,
               1998 by and between the Company and Acosta Family Limited
               Partnership. (22)

     10.41     Indemnification Agreement dated February 20, 1998 by and among
               the Company, HS Acquisition Corp., AM Acquisition Corp., Hesco
               Sales, Inc., Atlantic Maintenance of Miami, Inc. and Evelio
               Acosta. (23)

     10.42     Employment Agreement dated February 20, 1998 between Hesco Sales,
               Inc. and Evelio Acosta. (24)

     10.43     Employment Agreement dated March 10, 1998 between the Company and
               J. Gary McAlpin. (25)

     10.44     Employment Agreement dated March 10, 1998 between the Company and
               Bradley Hacker. (26)

     10.45     Settlement Agreement and Mutual General Release between Milton
               Payton and the Company dated March 2, 1998. (27)

     10.46     Credit Agreement (the "Credit Agreement"), dated as of October
               28, 1998, by and among Hi-Rise Recycling Systems, Inc., IDC
               Acquisition Sub, Inc., Wilkinson Company, Inc., Recycletech
               Enterprises Inc., Hesco Sales, Inc., United Truck and Body
               Corporation, Hesco Export Corporation, BPI Acquisition Corp., and
               DII Corporation, as Borrowers, General Electric Capital
               Corporation, NationsBank, N.A., Key Corporate Capital, Inc. and
               the other lenders signatory thereto, as Lenders, General Electric
               Capital Corporation, as Administrative Agent for the Lenders, and
               NationsBank, N.A., as Revolver Agent for the Lenders. (28)

     10.47     Revolving Note (Revolver A), dated as of October 28, 1998, in the
               aggregate principal amount of $2,250,000 issued by the Lenders to
               General Electric Capital Corporation ("GECC"). (29)

                                       35
<PAGE>

     10.48     Revolving Note (Revolver A), dated as of October 28, 1998, in the
               aggregate principal amount of $3,350,000 issued by the Lenders to
               NationsBank, N.A. ("NationsBank"). (30)

     10.49     Revolving Note (Revolver B), dated as of October 28, 1998, in the
               aggregate principal amount of $3,150,000 issued by the Lenders to
               GECC. (31)

     10.50     Revolving Note (Revolver A), dated as of October 28, 1998, in the
               aggregate principal amount of $3,150,000 issued by the Lenders to
               NationsBank. (32)

     10.51     Revolving Note (Revolver A), dated as of October 28, 1998, in the
               aggregate principal amount of $2,400,000 issued by the Lenders to
               Key Corporate Capital, Inc., ("Key Corporate"). (34)

     10.52     Revolving Note (Revolver B), dated as of October 28, 1998, in the
               aggregate principal amount of $2,700,000 issued by the Lenders to
               Key Corporate. (35)

     10.53     Term Note (Term Loan A), dated as of October 28, 1998, in the
               aggregate principal amount of $1,050,000 issued by the Lenders to
               GECC. (36)

     10.54     Term Note (Term Loan A), dated as of October 28, 1998, in the
               aggregate principal amount of $3,150,000 issued by the Lenders to
               NationsBank. (37)

     10.55     Term Note (Term Loan A), dated as of October 28, 1998, in the
               aggregate principal amount of $1,800,000 issued by the Lenders to
               Key Corporate. (38)

     10.56     Term Note (Term Loan BA), dated as of October 28, 1998, in the
               aggregate principal amount of $6,300,000 issued by the Lenders to
               GECC. (39)

     10.57     Term Note (Term Loan B), dated as of October 28, 1998, in the
               aggregate principal amount of $2,700,000 issued by the Lenders to
               NationsBank. (40)

     10.58     Acquisition Loan Note, dated as of October 28, 1998, in the
               aggregate principal amount of $2,250,000 issued by the Lenders to
               GECC. (41)

     10.59     Acquisition Loan Note, dated as of October 28, 1998, in the
               aggregate principal amount of $3,350,000 issued by the Lenders to
               NationsBank. (42)

     10.60     Acquisition Loan Note, dated as of October 28, 1998, in the
               aggregate principal amount of $2,400,000 issued by the Lenders to
               Key Corporate. (43)

     10.61     Swing Line Loan (Revolver A), dated as of October 28, 1998, in
               the aggregate principal amount of $1,000,000 issued by the
               Lenders to NationsBank. (44)

     10.62     Swing Line Loan (Revolver B), dated as of October 28, 1998, in
               the aggregate principal amount of $1,000,000 issued by the
               Lenders to NationsBank. (45)

     10.62     Security Agreement, dated as of October 28, 1998, between the
               Lenders and GECC, in its capacity as Administrative Agent for the
               Lenders under the Credit Agreement. (46)

     19.64     Pledge Agreement, dated as of October 28, 1998, between Hi-Rise
               Recycling Systems, Inc. ("Hi-Rise') and GECC, in its capacity as
               Administrative Agent for the Lenders under the Credit Agreement.
               (47)

     10.65     Pledge Agreement, dated as of October 28, 1998, between Hesco
               Sales, Inc. and GECC, in its capacity as Administrative Agent for
               the Lenders under the Credit Agreement. (48)

     10.66     Registration Rights Agreement, dated as of October 28, 1998,
               between Hi-Rise and GECC, NationsBank and Key Corporate. (49)

     10.67     Securities Purchase Agreement, dated as of October 28, 1998, by
               and among HI-Rise, GECC, NationsBank and Key Corporate. (50)

                                       36
<PAGE>

     10.68     Stock Purchase Warrant, dated as of October 28, 1998, issued by
               Hi-Rise to GECC. (51)

     10.69     Stock Purchase Warrant, dated as of October 28, 1998, issued by
               Hi-Rise to Key Corporate. (52)

     10.70     Agreement and Plan of Merger, dated as of October 9, 1998,
               between the Company, BPI Acquisition Corp. Bes-Pac, Inc. and
               Ronald J. McCracken (53)

     10.71     Stock Purchase Agreement, dated as of February 23, 1999 among the
               Company, DII Acquisition Corp., DeVivo Industries, Inc.,
               Ecological Technologies, Inc., Mario DeVivo, Mariano Tucciarone
               and Anthony Rosati (54)

     10.72     Stock Purchase Agreement, dated as of December 13, 1999, by and
               among the Company, American Gooseneck, Inc. and the shareholders
               of American Gooseneck, Inc. (55)

     21.2      Subsidiaries of the Company.

     23.1      Consent of Independent Accountants-PricewaterhouseCoopers L.L.P.,
               dated April 14, 2000.

     27.1      Financial Data Schedule.

-------------------------
(1)  Incorporated by reference to the exhibit of the same number filed with the
     Company's Registration Statement on Form SB-2 (No. 33-63778-A).
(2)  Management contract or compensation plan.
(3)  Incorporated by reference to Exhibit 10.16 filed with the Company's Form
     10-KSB for the year ended December 31, 1993.
(4)  Incorporated by reference to Exhibit 10.17 filed with the Company's Form
     10-QSB for the quarter ended December 31, 1994.
(5)  Incorporated by reference to Exhibit 10.18 and 10.19 filed with the
     Company's Form 10-KSB for the year ended December 31, 1994.
(6)  Incorporated by reference to Exhibit 10.1 filed with the Company's Current
     Report on Form 8-K dated June 27, 1995.
(7)  Incorporated by reference to Exhibit 10.2 filed with the Company's Current
     Report on Form 8-K dated June 27, 1995.
(8)  Incorporated by reference to Exhibit 2 filed with the Company's Current
     Report on Form 8-K dated February 3, 1977.
(9)  Incorporated by reference to Exhibit 10.24 filed with the Company's Form
     10-KSB for the year ended December 31, 1996.
(10) Incorporated by reference to Exhibit 10.25 filed with the Company's Form
     10-KSB for the year ended December 31, 1996.
(11) Incorporated by reference to Exhibit 10.1 filed with the Company's
     Quarterly Report on Form 10-QSB for the quarter ended June 30, 1996.
(12) Incorporated by reference to Exhibit 10.2 filed with the Company's
     Quarterly Report on Form 10-QSB for the quarter ended June 30, 1996.
(13) Incorporated by reference to Exhibit A filed with the Company's Definitive
     Proxy Statement with respect to its 1996 Annual Meeting of Shareholders
     held on July 16, 1996 (the "1996 Proxy Statement").
(14) Incorporated by reference to Exhibit 10.24 filed with the Company's Form
     10-KSB for the year ended December 31, 1996.
(15) Incorporated by reference to Exhibit 10.25 filed with the Company's Form
     10-KSB for the year ended December 31, 1996.
(16) Incorporated by reference to Exhibit 10.32 filed with the Company's Form
     10-KSB for the year ended December 31, 1996.
(17) Incorporated by reference to Exhibit 2.1 filed with the Company's Current
     Report on Form 8-K dated March 9, 1998.

                                       37
<PAGE>

(18) Incorporated by reference to Exhibit 2.2 filed with the Company's Current
     Report on Form 8-K dated March 9, 1998.
(19) Incorporated by reference to Exhibit 10.37 filed with the Company's Form
     10-KSB for the year ended December 31, 1997.
(20) Incorporated by reference to Exhibit 10.38 filed with the Company's Form
     10-KSB for the year ended December 31, 1997.
(21) Incorporated by reference to Exhibit 10.39 filed with the Company's Form
     10-KSB for the year ended December 31, 1997.
(22) Incorporated by reference to Exhibit 10.40 filed with the Company's Form
     10-KSB for the year ended December 31, 1997.
(23) Incorporated by reference to Exhibit 10.41 filed with the Company's Form
     10-KSB for the year ended December 31, 1997.
(24) Incorporated by reference to Exhibit 10.42 filed with the Company's Form
     10-KSB for the year ended December 31, 1997.
(25) Incorporated by reference to Exhibit 10.43 filed with the Company's Form
     10-KSB for the year ended December 31, 1997.
(26) Incorporated by reference to Exhibit 10.44 filed with the Company's Form
     10-KSB for the year ended December 31, 1997.
(27) Incorporated by reference to Exhibit 10.45 filed with the Company's Form
     10-KSB for the year ended December 31, 1997.
(28) Incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report
     on Form 10-QSB for the quarter ended December 31, 1998.
(29) Incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report
     on Form 10-QSB for the quarter ended December 31, 1998.
(30) Incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report
     on Form 10-QSB for the quarter ended December 31, 1998.
(31) Incorporated by reference to Exhibit 10.4 of the Company's Quarterly Report
     on Form 10-QSB for the quarter ended December 31, 1998.
(32) Incorporated by reference to Exhibit 10.5 of the Company's Quarterly Report
     on Form 10-QSB for the quarter ended December 31, 1998.
(33) Incorporated by reference to Exhibit 10.6 of the Company's Quarterly Report
     on Form 10-QSB for the quarter ended December 31, 1998.
(34) Incorporated by reference to Exhibit 10.7 of the Company's Quarterly Report
     on Form 10-QSB for the quarter ended December 31, 1998.
(35) Incorporated by reference to Exhibit 10.8 of the Company's Quarterly Report
     on Form 10-QSB for the quarter ended December 31, 1998.
(36) Incorporated by reference to Exhibit 10.9 of the Company's Quarterly Report
     on Form 10-QSB for the quarter ended December 31, 1998.
(37) Incorporated by reference to Exhibit 10.10 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(38) Incorporated by reference to Exhibit 10.11 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(39) Incorporated by reference to Exhibit 10.12 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(40) Incorporated by reference to Exhibit 10.13 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(41) Incorporated by reference to Exhibit 10.14 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(42) Incorporated by reference to Exhibit 10.15 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(43) Incorporated by reference to Exhibit 10.16 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(44) Incorporated by reference to Exhibit 10.17 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.

                                       38
<PAGE>

(45) Incorporated by reference to Exhibit 10.18 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(46) Incorporated by reference to Exhibit 10.19 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(47) Incorporated by reference to Exhibit 10.20 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(48) Incorporated by reference to Exhibit 10.21 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(49) Incorporated by reference to Exhibit 10.22 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(50) Incorporated by reference to Exhibit 10.23 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(51) Incorporated by reference to Exhibit 10.24 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(52) Incorporated by reference to Exhibit 10.25 of the Company's Quarterly
     Report on Form 10-QSB for the quarter ended December 31, 1998.
(53) Incorporated by reference to Exhibit 10.1 to the Company's Current Report
     on Form 8-K, dated October 9, 1998.
(54) Incorporated by reference to Exhibit 21 to the Company's Current Report on
     Form 8-K, dated February 23, 1999.
(55) Incorporated by reference to Exhibit 2.1 to the Company's Current Report on
     Form 8-K, dated December 16, 1999.

         (b)      Reports on Form 8-K:

                  (1) The Company filed a Current Report on Form 8-K on March 8,
1999 in connection with the Company's acquisition of DeVivo.

                  (2) The Company filed a Current Report on Form 8-K on December
29, 1999 in connection with the Company's acquisition of American Gooseneck.

                                       39
<PAGE>

                                   SIGNATURES

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

                                  HI-RISE RECYCLING SYSTEMS, INC.



Date:  April 11, 2000             BY: /S/ DONALD ENGEL
                                     -----------------
                                      Donald Engel, Chairman of the Board and
                                      Chief Executive Officer

         In accordance with the Exchange Act, 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 11, 2000             BY: /S/ DONALD ENGEL
                                     -----------------
                                      Donald Engel, Chairman of the Board and
                                      Chief Executive Officer (principal
                                      executive officer)


Date:  April 11, 2000             BY: /S/ BRADLEY HACKER
                                     -------------------
                                      Bradley Hacker, Chief Financial Officer
                                      (Principal Financial and Accounting
                                      Officer)


Date:  April 11, 2000             BY: /S/ IRA S. MERRITT
                                     -------------------
                                      Ira S. Merritt, Director


Date:  April 11, 2000             BY: /S/ JOEL M. PASHCOW
                                     --------------------
                                      Joel M. Pashcow, Director


Date:  April 11, 2000             BY: /S/ WARREN ADELSON
                                     --------------------
                                      Warren Adelson, Director


Date:  April 11, 2000             BY: /S/ LEONARD TOBEROFF
                                     --------------------
                                      Leonard Toberoff, Director


<PAGE>

TABLE OF CONTENTS

                                                                     PAGES

Report of Independent Certified Public Accountants                    F-2

Consolidated Financial Statements:
     Balance Sheets                                                   F-3
     Statements of Operations                                         F-4
     Statements of Changes in Shareholders' Equity                    F-5
     Statements of Cash Flows                                         F-6
     Notes to Consolidated Financial Statements                    F-7 - F-23


                                      F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders of
Hi-Rise Recycling Systems, Inc.


In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, changes in shareholder's equity and cash
flows present fairly, in all material respects, the financial position of
Hi-Rise Recycling Systems, Inc. and its subsidiaries at December 31, 1999 and
1998, and the results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States. 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 of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.


PriceWaterhouseCoopers LLP

March 15, 2000

                                      F-2
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                      ASSETS                                        1999       1998
                                                                                 --------   --------
<S>                                                                              <C>        <C>
Current assets:
    Cash and cash equivalents                                                    $    194   $    324
    Investments                                                                       170        170
    Accounts receivable, net of allowance for doubtful accounts
      of $293 and $212 in 1999 and 1998, respectively                              14,620     10,191
    Inventories                                                                    10,519      6,345
    Deferred tax asset                                                                189          -
    Other assets, net                                                               1,955        542
                                                                                 --------   --------

        Total current assets                                                       27,647     17,572

    Property and equipment, net                                                     5,779      3,430
    Net investment in sales type leases                                            10,108      8,068
    Prepaid financing costs                                                         2,340      2,152
    Deferred acquisition costs                                                        380        151
    Deferred tax asset                                                                326         --
    Other assets                                                                      451        295
    Goodwill                                                                       47,683     22,146
                                                                                 --------   --------

        Total assets                                                             $ 94,714   $ 53,814
                                                                                 ========   ========
                          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable and accrued liabilities                                     $  5,671   $  3,865
    Cash overdrafts                                                                   739        743
    Income taxes payable                                                              461         --
    Current portion of long-term debt                                              17,975      7,890
                                                                                 --------   --------

        Total current liabilities                                                  24,846     12,498

    Long-term debt                                                                 33,401     15,777
                                                                                 --------   --------

        Total liabilities                                                          58,247     28,275

Commitments and contingencies

Shareholders' equity:
    Preferred stock, $.01 par value per share; 1,000,000 shares authorized;
        200 shares issued and outstanding, liquidation preference of $2,000                       --
    Common stock, $.01 par value per share; 50,000,000 shares authorized;
       13,757,472 and 11,413,352 shares issued and outstanding at
       December 31, 1999 and 1998, respectively                                       137        114
    Additional paid-in capital                                                     37,482     28,870
    Accumulated deficit                                                            (1,152)    (3,445)
                                                                                 --------   --------

        Total shareholders' equity                                                 36,467     25,539
                                                                                 --------   --------

Total liabilities and shareholders' equity                                       $ 94,714   $ 53,814
                                                                                 ========   ========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-3
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                             1999           1998
                                                     ------------   ------------
<S>                                                  <C>            <C>
Revenues:
    Equipment sales                                  $     57,052   $     29,673
    Service and parts revenue                               2,682          1,507
                                                     ------------   ------------

        Total revenues                                     59,734         31,180
                                                     ------------   ------------

Costs and expenses:
    Cost of equipment and parts sold                       41,996         21,145
    Selling and marketing                                   2,460          1,301
    General and administrative                              8,610          5,431
                                                     ------------   ------------

        Total costs and expenses                           53,066         27,877
                                                     ------------   ------------

        Operating income                                    6,668          3,303
                                                     ------------   ------------

Other income (expense):
    Interest income                                           667            776
    Interest expense                                       (3,729)        (1,001)
                                                     ------------   ------------

                                                           (3,062)          (225)
                                                     ------------   ------------

        Income before income taxes                          3,606          3,078

Provision for income taxes                                  1,124             75
                                                     ------------   ------------

        Net income                                   $      2,482   $      3,003
                                                     ============   ============

        Net income per common share:

           Basic                                     $        .18   $       0.30
                                                     ============   ============

           Diluted                                   $        .17   $       0.27
                                                     ============   ============

        Weighted average common shares outstanding:

           Basic                                       12,564,909      9,095,563
                                                     ============   ============

           Diluted                                     15,026,858     10,560,775
                                                     ============   ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-4
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                Shares of                                   Additional                         Total
                                  Common       Preferred       Common         Paid-in        Accumulated    Shareholders'
                                  Stock          Stock         Stock          Capital         Deficit         Equity
                               -------------   -----------   -----------   --------------   -------------  --------------

<S>                               <C>              <C>           <C>          <C>              <C>            <C>
Balance at December 31, 1997      6,468,532        $    -        $   65       $   16,728       $  (6,157)     $   10,636

Issuance of warrants in
   connection with  financing             -             -             -              943               -             943

Issuance of common stock          4,944,820             -            49           10,891               -          10,940

Dividend requirement on
   preferred stock                        -             -             -              291            (291)              -

Vesting of stock options
    issued to non-employees               -             -             -               17               -              17

Net income                                -             -             -                -           3,003           3,003
                               -------------   -----------   -----------   --------------   -------------  --------------

Balance at December 31, 1998     11,413,352             -           114           28,870          (3,445)         25,539

Issuance of common stock          2,344,120                          23            8,406               -           8,429

Dividend requirement on
   preferred stock                                                                   189            (189)              -

Vesting of stock options
    issued to non-employees               -             -             -               17               -              17

Net income                                                                                         2,482           2,482
                               -------------   -----------   -----------   --------------   -------------  --------------

Balance at December 31, 1999     13,757,472        $    -       $   137       $   37,482       $  (1,152)     $   36,467
                               =============   ===========   ===========   ==============   =============  ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-5
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                        1999        1998
                                                                                    --------    --------
<S>                                                                                 <C>         <C>
Cash flows from operating activities:
    Net income                                                                      $  2,482    $  3,003
    Adjustments to reconcile net income to net cash used in operating activities:
      Depreciation and amortization                                                    1,942         973
      Bad debt expense                                                                    11         205
      Compensation expense for stock options                                              17          17
      Changes in assets and liabilities, net of acquisitions:
        Accounts receivable                                                           (2,583)       (965)
        Inventories                                                                   (2,245)     (1,476)
        Other assets                                                                  (1,037)        140
        Net investment in sales type leases                                           (2,040)     (3,180)
        Deferred taxes                                                                  (515)         --
        Accounts payable and accrued liabilities                                        (213)        (43)
        Income taxes payable                                                             461         (11)
        Unearned service agreement revenue                                                --          (3)
                                                                                    --------    --------
           Net cash used in operating activities                                      (3,720)     (1,340)
                                                                                    --------    --------

Cash flows from investing activities:
    Decrease in restricted cash                                                           --       3,022
    (Increase) decrease in deferred acquisition costs                                   (229)         90
    Purchase of businesses, net of cash acquired                                     (22,116)    (13,587)
    Purchase of property and equipment                                                (1,381)       (449)
    Prepaid financing costs                                                             (188)     (1,209)
                                                                                    --------    --------
           Net cash used in investing activities                                     (23,914)    (12,133)
                                                                                    --------    --------

Cash flows from financing activities:
    Payment on long-term debt                                                         (3,486)    (17,822)
    Proceeds from long-term debt                                                      30,994      29,742
    Cash overdrafts                                                                       (4)        743
                                                                                    --------    --------
           Net cash provided by financing activities                                  27,504      12,663
                                                                                    --------    --------

Net decrease in cash and cash equivalents                                               (130)       (810)

Cash and cash equivalents, beginning of year                                             324       1,134
                                                                                    --------    --------

Cash and cash equivalents, end of year                                              $    194    $    324
                                                                                    ========    ========

Supplemental disclosure of cash flow information:
    Cash paid during the year for interest                                          $  3,431    $  1,001
                                                                                    ========    ========
    Cash paid during the year for taxes                                             $    673    $     --
                                                                                    ========    ========

Purchase of businesses, net of cash acquired:
    Working capital, other than cash                                                $ (2,299)   $ (6,730)
    Property and equipment                                                            (1,935)     (1,219)
    Cost in excess of net assets acquired, net                                       (26,512)    (20,647)
    Revolving line of credit                                                              --         750
    Debt                                                                                 201       3,319
    Issuance of common stock                                                           8,429      10,940
                                                                                    --------    --------
      Net cash used to acquire businesses                                           $(22,116)   $(13,587)
                                                                                    ========    ========
</TABLE>
Non-cash activities:
    During 1999 and 1998, the Company acquired businesses as described in Note
    2. The Company issued stock and notes payable in conjunction with these
    acquisitions

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-6


<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS ORGANIZATION:

Hi-Rise Recycling Systems, Inc. (the "Company") is primarily engaged in
manufacturing, distributing, marketing and selling recycling and solid waste
handling equipment. Until February 1997, the Company was primarily engaged in
distributing, marketing and selling of proprietary automated system designed to
collect and source-separate recyclable and other solid waste in multi-story
residential buildings. The Company has expanded the business through a variety
of acquisitions as discussed in Note 2.

2. BUSINESS COMBINATIONS:

On December 16, 1999, the Company acquired all of the outstanding common stock
of American Gooseneck, Inc. ("AG"). The purchase was consummated pursuant to the
terms of a Stock Purchase Agreement, dated as of December 13, 1999 (the "Stock
Purchase Agreement"), by and among the Company, AG and all of the shareholders
of AG. The aggregate purchase price paid by the Company was approximately
$10,210,000 and consisted of $8,960,000 in cash and 689,393 shares of common
stock with an aggregate fair market value at the time of closing of $1,250,000.
The cash portion of the purchase price was funded through borrowings made under
the Company's existing $61.0 million credit facility with GECC and the other
lenders to that credit facility. Pursuant to the Stock Purchase Agreement, the
Company has entered into contractual arrangements whereby shares of Company
common stock may be issued to the former owner of AG upon attainment of
specified financial criteria over the twelve month period following the closing
as set forth in the agreement. The amount of shares to be issued cannot be fully
determined until the period expires and the attainment of the criteria is
established. The Company will account for any additional amounts when the
specified financial criteria are achieved and it is probable that such amounts
will be paid, as additional purchase price for the related acquisition.

In September 1999, the Company acquired substantially all of the assets of
Kohlman Engineering Corp. ("Kohlman") for 200,000 shares of Common Stock having
a fair market value of $538,000 at the time of issuance and repaid certain of
the seller's expenses. Kohlman is engaged in the business of manufacturing,
selling and servicing waste compactors and trash chutes.

On February 22, 1999, the Company purchased all the outstanding capital stock of
DeVivo Industries, Inc. ("DeVivo") and an affiliated company, Ecological
Technologies, Inc. (with DeVivo, the "DeVivo Companies") which owns certain
patent rights relating to DeVivo's business. The aggregate purchase price paid
by the Company for the DeVivo Companies was $16,920,000 which consisted of
approximately $11,707,000 in cash and 1,463,400 shares of the Company's common
stock valued at approximately $5,213,000 at the time of the issuance. The cash
portion of the purchase price was funded through borrowings available under the
Company's revolving and term credit facilities with GECC.


<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

2. BUSINESS COMBINATIONS, CONTINUED:

In November 1998, the Company acquired all the outstanding stock of Acme Chute
Co. ("Acme"). The aggregate purchase price of approximately $600,000 consisted
of approximately $550,000 in cash, and 27,778 shares of common stock valued at
approximately $50,000.

In October 1998, the Company acquired all the outstanding capital stock of
Bes-Pac, Inc. ("Bes-Pac"). The aggregate purchase price of approximately
$8,000,000 consisted of $3,000,000 in cash, a convertible promissory note in the
principal amount of $1,219,000, 1,890,500 shares of common stock valued at
approximately $3,781,000 of the Company's common stock and the contingent right
to receive between $1,000,000 and $2,000,000 payable in cash and shares of the
Company's common stock as described below.

The Company has entered into contractual arrangements whereby shares of Company
common stock and cash may be issued to the former owner of Bes-Pac upon
attainment of specified financial criteria over the twelve month period
following the closing as set forth in the agreement. The amount of shares and
cash to be issued cannot be fully determined until the period expires and the
attainment of the criteria is established. The Company was obligated to pay at
least $1,000,000 of this contingent consideration, which amount was presented in
the purchase price in 1998. The amount was settled through a cash payment of
$667,000 in October 1999 and the issuance of 166,500 shares common stock with a
fair market value of approximately $375,000 in February 2000. In October 1999,
all necessary financial criteria was achieved and the Company was obligated to
pay an additional $1,000,000 which was settled through the issuance of 500,000
shares of common stock in February 2000 and was recorded as additional purchase
price for the related acquisition.

In February 1998, the Company acquired all the outstanding capital stock of
Hesco Sales, Inc. and Subsidiaries and Atlantic Maintenance, Inc. (collectively
"Hesco"). The aggregate purchase price of approximately $11,800,000 consisted of
$8,300,000 in cash and 1,276,094 shares of the Company's common stock valued at
approximately $3,500,000.

Additional financing was obtained by the Company to repay Hesco's outstanding
shareholder loans of approximately $1,800,000. Approximately $500,000 of the
purchase price was funded from the proceeds of a $500,000 five-year term loan
from the Company's Chairman of the Board of Directors and Chief Executive
Officer.

All business combinations have been accounted for as purchases, and the results
of operations are included in the consolidated financial statements from their
respective dates of acquisition.

                                      F-7
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

2. BUSINESS COMBINATIONS, CONTINUED:

The unaudited results of operations on a pro forma basis using an effective tax
rate of 38% and 0% in 1999 and 1998, respectively as if each of the acquisitions
had been made as of January 1, 1998 is as follows:

                                               YEARS ENDED  DECEMBER 31,
                                                   1999         1998
                                               -----------  -----------
                                               (UNAUDITED)  (UNAUDITED)

Revenues                                        $   72,117   $   71,341
Income from operations                               8,573        5,418
Net income                                           2,755        1,659
Earnings per share of common stock
   Basic                                              0.19         0.11
   Diluted                                            0.17         0.10

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

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

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

For the purposes of the statements of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less when purchased
to be cash equivalents.

Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist principally of cash and cash equivalents. The Company
places its cash and cash equivalents with high credit quality financial
institutions and limits the amount of credit exposure to any one financial
institution.

                                      F-8
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

INVESTMENTS

Investments in marketable equity securities are classified by the Company as
available-for-sale securities, whereby gains and losses, net of deferred income
taxes are recorded as a separate component of shareholders' equity. The cost of
investments sold is determined by specific identification. At December 31, 1999
and 1998, investments consisting of marketable equity securities are recorded at
cost, which approximates fair value.

INVENTORIES

Inventories consist primarily of systems and equipment held for sale and spare
parts, which are stated at the lower of cost (first-in, first-out method) or
market.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided
principally on the straight-line basis over the estimated useful lives of the
assets. When the assets are sold, replaced or otherwise retired, the costs and
related accumulated depreciation are removed from the accounts and any related
gains or losses are included in operations.

GOODWILL

Goodwill relating to business combinations is stated at acquisition cost less
accumulated amortization. Goodwill is amortized on a straight-line basis over 20
to 40 years. The Company continually evaluates the existence of goodwill
impairment on the basis of whether the goodwill is fully recoverable from
projected, undiscounted cash flows of the related business unit. Accumulated
amortization as of December 31, 1999 and 1998 totaled approximately $1,847,000
and $872,000, respectively.

INCOME TAXES

The Company uses the asset and liability method of accounting for income taxes
whereby deferred income taxes are recognized for the tax consequences in future
years for differences between the tax basis of assets and liabilities and their
financial reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the time periods in which the differences are
expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized.

REVENUE RECOGNITION

Revenues from solid waste handling containers and parts are recognized upon
shipment of product to the customers. Revenues from waste handling systems are
generally recognized upon installation of the equipment into the buildings and
the related service revenues are recognized as the systems are serviced.

                                      F-9
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

REVENUE RECOGNITION, CONTINUED

The Company enters into sales-type leases primarily for hi-rise systems, which
expire in various years through 2008. Revenue from these sales-type leases
represents the present value of all minimum lease payments, net of executory
costs. The net investment in sales type leases are discounted at the interest
rates implicit in the leases. The related cost of the system is charged to cost
of equipment and parts sold. Associated interest, using the interest method, is
recorded over the terms of the lease agreements.

Equipment sales for the hi-rise systems are recognized at the time the systems
are installed and the customers' acceptance of the systems. Service and parts
revenue relates to services provided subsequent to installation of the system
for which the Company is paid either a fixed monthly or quarterly fee. Such
revenue is recognized over the terms of the respective agreements. When the
Company sells its hi-rise system to new buildings, the period of time between
the execution of a sales contract and installation of the system typically
ranges from six to eighteen months.

PER SHARE DATA

Basic earnings per share is calculated by dividing net income available to
common shareholders by the weighted average common shares outstanding during the
years presented. Diluted earnings per share is calculated by dividing net income
available to common shareholders by weighted average common shares and assumed
dilutive shares outstanding.

Shares used in the diluted calculation include the weighted average effect of
shares assumed to be issued under options and warrants under the treasury stock
method. In addition, the calculation includes the dilutive effect of the assumed
conversion into common shares of the Company's preferred stock and the resulting
elimination of the stated dividend requirements, which are payable in common
stock upon conversion of the preferred stock.

The effects of 628,440 common shares in 1999, representing primarily employee
stock options whose exercise prices were in excess of the average market price
during 1999, and 1,282,500 common shares issuable under options, warrants and
upon the conversion of preferred stock in 1998 are excluded in the computation
of diluted earnings per share as the effects of the respective shares would have
been anti-dilutive.

RECLASSIFICATIONS

Certain reclassifications have been made to the December 31, 1998 financial
statements to conform to the December 31, 1999 presentation.

                                      F-10
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


4. INVENTORY

Inventories as of December 31 consisted of the following (amounts in thousands):

                                                1999        1998
                                              ---------   ---------
Raw materials                                 $   6,126   $   3,636
Work in progress                                    583         326
Finished goods                                    3,810       2,383
                                              ---------   ---------
                                              $  10,519   $   6,345
                                              =========   =========

5. PROPERTY AND EQUIPMENT:

Property and equipment at December 31 consisted of the following (amounts in
thousands):

                                          USEFUL
                                           LIVES       1999        1998
                                        ----------   ---------   ---------

Equipment                               7 years     $    5,249   $   4,103
Furniture and fixtures                  5 years            571         443
Automobiles                             5 years            947       1,062
Computers and software                  3 years            819         576
Leasehold Improvements                  5-15 years       1,897         597
                                                     ---------   ---------

                                                         9,483       6,781
Less accumulated depreciation                            3,704       3,351
                                                     ---------   ---------
                                                     $   5,779   $   3,430
                                                     =========   =========

Depreciation expense was $967,000 and $290,000 for the years ended December 31,
1999 and 1998, respectively.

                                      F-11
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

6. NET INVESTMENT IN SALES TYPE LEASES:

The net investment in sales type leases at December 31 consisted of the
following (amounts in thousands):

                                                   1999        1998
                                                ----------   ---------
Minimum lease payments                          $   11,206   $   8,886
Unearned income                                     (2,142)     (1,317)
Estimated residual value of leased systems           1,044         499
                                                ----------   ---------
                                                $   10,108   $   8,068
                                                ==========   =========

Future minimum lease payments due from customers under sales-type leases as of
December 31, 1999 are as follows (amounts in thousands):

2000                                               1,474
2001                                               1,736
2002                                               1,383
2003                                               1,674
2004                                               1,528
Thereafter                                         3,411
                                              ----------
                                              $   11,206
                                              ==========

During 1999 and 1998, the Company sold receivables, with recourse, with balances
of $2,060,000 and $740,000, respectively. The balance of the receivables sold
that remain uncollected at December 31, 1999 was approximately $2,234,000. In
connection with the receivables sold during 1999, the Company recorded a loss in
the amount of $150,000, which is included in general and administrative costs in
the accompanying statement of operations.

                                      F-12
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


7. LONG-TERM DEBT:

Long-term debt at December 31 consisted of the following (amounts in thousands):
<TABLE>
<CAPTION>
                                                                                 1999        1998
                                                                               -------    --------
<S>                                                                            <C>         <C>
Primary lender financing:

Revolving working capital facility with a maximum borrowing of
   $17,000, collateralized by inventory and accounts receivable                $10,583    $  6,684

Revolving working capital facility with a maximum borrowing of
   $9,000, collateralized by lease receivables                                   8,100       4,500

Promissory note, collateralized by equipment                                     9,000       9,000

Promissory note,  bears interest payable at the prime rate plus
      1%, maturing October 2003, collateralized by equipment                     5,333         -

Promissory note, bears interest payable at the prime rate plus
      1%, maturing October 2003, collateralized by equipment                    15,464         -

Other obligations:

Promissory notes to related party, interest payable monthly
  at the prime rate plus 1/4%, principle due October 2005;                       1,100       1,100

Guaranteed payment under acquisition agreement, payable
  in stock and cash, $666 paid in October 1999 and $333
   settled in February 2000                                                        333       1,000

Promissory note to related party, bears interest payable at the prime
  rate plus 1/4%. Principle due in quarterly payments of $68
  beginning April 1999, note converted to 609,500 shares of common
  stock upon shareholder approval during February 2000                           1,219       1,219

Notes payable in monthly installments through 2003                                 244         164
                                                                               -------    --------
                                                                                51,376      23,667

Less current portion                                                            17,975       7,890
                                                                               -------    --------
Long-term debt, net of current portion                                         $33,401    $ 15,777
                                                                               =======    ========
</TABLE>

                                      F-13
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


7. LONG-TERM DEBT, CONTINUED:

Primary lender financing:

In October 1998, the Company obtained a $40,000,000 credit facility which was
increased to $61,000,000 during 1999. The facility, which was provided by
General Electric Capital Corporation ("GECC") and other participating lenders
includes two revolving lines of credit totaling $26,000,000, two term loans
totaling $15,000,000 and a $20,000,000 acquisition line of credit. A portion of
the proceeds was used to pay off amounts outstanding under previous credit
facilities. The financing is collateralized by all of the Company's existing and
after acquired tangible and intangible assets and any future insurance proceeds.
In addition the Company and all its subsidiaries cross-guaranteed the financing.
The financing also contains limitations on and/or prohibition of mergers and
acquisitions and various commercial and equity transactions.

The $26,000,000 lines of credit include a $17,000,000 line of credit that is
collateralized by accounts receivable and inventory held by the Company and all
its subsidiaries and a $9,000,000 line of credit that is collateralized by
leases issued by the Company for systems and products manufactured by the
Company and its subsidiaries. The revolving lines of credit are due in October
2003 and bear interest at the prime rate plus 1/2% (9.00% and 8.25% at December
31, 1999 and 1998, respectively).

The term loans consist of a $9,000,000 loan funded in connection with the
Bes-Pac acquisition in October 1998 and a $6,000,000 loan made subsequent to
December 31, 1998 in connection with the acquisition. The Bes-Pac term loan
bears interest at 11%, is payable interest only for four and half years at which
time two consecutive quarterly payments of $1,500,000 are due with the balance
of $6,000,000 due in October 2003. The $6,000,000 term loan which was funded in
February 1999 is payable in quarterly installments, bears interest at prime plus
1/2% with the balance of the loan due in October 2003.

In connection with the GECC financing, the Company issued to the financing agent
and other lenders warrants to purchase an aggregate of 1,476,259 shares of its
common stock, which warrants are exercisable at $1.50. The estimated aggregate
fair value of the warrants of $943,298 was recorded as prepaid financing costs
and are being amortized over the five year life of the financing facility.

                                      F-14
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


7. LONG-TERM DEBT, CONTINUED:

The minimum annual maturities of long-term debt after December 31, 1999 are as
follows (amounts in thousands):

2000                                                    $    17,975
2001                                                          7,368
2002                                                          7,130
2003                                                         18,043
2004                                                            120
Thereafter                                                      740
                                                        -----------
                                                        $    51,376
                                                        ===========

The current portion of long-term debt presented above consists of amounts due
under the accounts receivable and inventory revolving credit facility and
current amounts due under term notes. Amounts due under the credit facility
collateralized by lease receivables have been determined according to repayment
requirements based on scheduled annual lease receivable collections.

8. OPERATING LEASES:

The Company leases office facilities and equipment. Approximate future minimum
payments under noncancelable operating leases as of December 31, 1999, are as
follows (amounts in thousands):

2000                                                    $     1,478
2001                                                          1,422
2002                                                          1,413
2003                                                          1,414
2004                                                          1,392
Thereafter                                                    3,635
                                                        -----------
                                                        $    10,754
                                                        ===========

Rental expense for the years ended December 31, 1999 and 1998 was approximately
$1,488,000 and $625,000, respectively.

Included in the above amounts are operating leases for property with the former
owners of Hesco, Bes-Pac and DeVivo totaling approximately $86,000 per month
payable through 2005.

                                      F-15
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

9. INCOME TAXES:

The provision for income taxes consists of the following:

                                                 1999        1998
                                               -------     ---------
Current provision:                             $1,233      $      75
Deferred provision:                              (109)           -
                                               -------     ---------
Total provision                                $1,124      $      75
                                               =======     =========

The Company and its U.S. subsidiaries join in the filing of a U.S. consolidated
income tax return. The Company's foreign subsidiaries file separate returns in
Canada.

At December 31, 1999 and 1998, the components of the net deferred tax asset were
as follows:

                                                1999        1998
                                              --------    ---------
DEFERRED TAX ASSETS
Fixed Assets                                   $ 48          $ 280
Reserves and Allowances                        $189          $ -
Accrued Compensation                           $ 40          $ -
Net Operating Loss                             $136          $ -
Other                                          $102          $  76
Valuation allowance                               -           (356)
                                               ----          -----
Net deferred tax asset                         $515          $ -
                                               ====          =====

The Company records a valuation allowance against deferred tax assets if, based
on the weight of available evidence, it is more likely than not that some or all
of the deferred tax assets will not be realized. In 1999, the Company reversed
the valuation allowance because it expects to realize the benefits of the
deferred tax assets. In 1998, the Company recorded a valuation allowance of
$356,000.

As of December 31, 1999, the Company had federal and state net operating loss
carryforwards of approximately $360,000, which expire in the year 2019.

During 1999, the Company consummated certain acquisitions that included changes
in the ownership of the target company's stock. The Internal Revenue Code
restricts the amount of future income that may be offset by losses and credits
incurred prior to an ownership change.

                                      F-16
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


9. INCOME TAXES, CONTINUED:

The reconciliation between the statutory income tax provision and the actual tax
provision for the years ended December 31 is shown as follows:

                                                    1999         1998
                                                 --------     ----------

Income tax at federal statutory rate               $1,262     $    1,077
State taxes net of federal benefit                    133            108
Non-deductible expenses                               281            287
Alternative minimum tax                                 -             65
Change in valuation allowance                        (356)           -
Other                                                (196)           (60)
Utilization of net operating loss carryforward          -         (1,402)
                                                   ------     ----------
Income tax provision                               $1,124     $       75
                                                   ======     ==========

10. EQUITY TRANSACTIONS:

ISSUANCE OF PREFERRED STOCK

In June and July 1997, the Company sold 200 shares of newly created Series B
non-voting convertible preferred stock, par value of $.01 per share, and
warrants to purchase an aggregate of 888,887 shares of common stock at $2.25 per
share, in a private placement for an aggregate purchase price of $2,000,000. The
Series B preferred stock is convertible, at the option of the holder thereof,
into common stock at a conversion price of $2.25 at any time subsequent to July
1, 1998. The preferred stock entitles the holder to common stock dividends of
approximately 72,000 shares per annum, accrued from the date of issuance through
the date of conversion.

The stated dividend requirement and the amount representing the discount from
fair value of the conversion feature of the preferred stock amortized over the
one year period ended July 1, 1998 has been presented as dividends in the
accompanying statement of changes in shareholders' equity.

PRIVATE PLACEMENT

In February 1998, the Company sold an aggregate of 1,299,098 shares of its
common stock for $2.70 per share in a private placement in which it received net
proceeds of approximately $3,200,000. In connection with this placement, the
Company issued the placement agent five-year warrants to purchase 129,910 shares
of the Company's common stock, which warrants are exercisable at $2.70, the
sales price per share of common stock in the placement.

                                      F-17
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

10. EQUITY TRANSACTIONS, CONTINUED:

STOCK OPTIONS

During 1998, the Company's Board of Directors and shareholders adopted the 1998
Stock Option Plan (the "1998 Plan"), which authorizes the grant of options and
stock awards to purchase 1,000,000 shares of common stock and was increased to
2,000,000 shares during 1999. The Company's Stock Option Plans and Directors
Stock Option Plans authorize the issuance of an aggregate of 2,000,000 and
150,000 shares of common stock options, respectively. During 1998, the Board of
Directors authorized the termination of the 1996 Stock Option Plan, although
options granted thereunder may still be exercisable by the holders.

During 1996, the Company's Board of Directors and shareholders adopted the 1996
Stock Option Plan (the "1996 Plan") and the 1996 Directors Stock Option Plan
(the "1996 Directors Plan") (collectively the "1996 Plans"), which authorize the
grant of options to purchase 1,000,000 and 150,000 shares of common stock,
respectively. The Company's Stock Option Plan (the "1993 Plan") and Directors
Stock Option Plan (the "1993 Directors Plan") (collectively, with the 1996
Plans, the "Plans"), authorize the issuance of 500,000 and 50,000 shares of
common stock options, respectively. The Plans are designed to serve as
incentives for retaining qualified and competent employees and directors. During
1996, the Board of Directors authorized the termination of the 1993 Directors
Plan, although options granted thereunder may still be exercisable by the
holders.

The Company's Board of Directors administers and interprets the 1998 Plan, the
1996 Plan and the 1993 Plan and is authorized to grant options thereunder to all
eligible employees of the Company, including officers and directors of the
Company. Options may be granted under the 1998 Plan, the 1996 Plan and the 1993
Plan on such terms and at such prices as determined by the Board, except that
the per share exercise price of options will not be less than the fair market
value of the common stock on the date of grant, and in the case of an incentive
stock option granted to a 10% shareholder, the per share exercise price will not
be less than 110% of such fair market value. Employees' stock options typically
vest twenty percent annually over a five year period and the majority of
directors' stock options vest immediately.

The 1996 Directors Plan provides for an automatic grant of an option to purchase
20,000 shares of common stock upon a person's election as a director of the
Company and an automatic grant of an option to purchase 1,000 shares of common
stock upon such person's re-election as a director of the Company.

On November 12, 1998, the Board of Directors approved the repricing of all stock
options issued under the 1996 Plan to $2.50 per share. The following table
reflects the Plans' option activity for the years ended December 31:

                                      F-18
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

10. EQUITY TRANSACTIONS, CONTINUED:
<TABLE>
<CAPTION>
                                                                   WEIGHTED AVG.               WEIGHTED AVG.
                                                                     EXERCISE                    EXERCISE
                                                          1999         PRICE         1998         PRICE
                                                        ---------  -------------   ---------   -------------
<S>                                                   <C>              <C>       <C>               <C>
Options outstanding at beginning of year                1,497,606      $2.78       1,452,106       $4.06
Granted (exercise price = FMV at date of grant)           960,525       2.41          98,500        2.57
Exercised                                                       -          -               -           -
Cancelled                                                   6,000       2.50          53,000           -
                                                      -----------      -----     -----------       -----

Options outstanding at end of year                      2,452,131      $2.76       1,497,606       $2.78
                                                      ===========      =====     ===========       =====

Options exercisable at end of year                      1,871,464      $2.84         648,364       $4.44
                                                      ===========      =====     ===========       =====

Price range of options outstanding at end of year     $2.00-$9.75                $2.50-$9.75           -

Options available for future grants at end of year        982,475                    449,394           -
                                                      ===========      =====     ===========       =====

Weighted avg. fair value of options granted               960,525      $1.16          98,500       $2.50
                                                      ===========      =====     ===========       =====
</TABLE>

The Company has determined not to recognize compensation expense for grants of
stock options issued to employees with exercise prices at or above the market
price at the time of grant. The compensation expense, if recognized, would have
resulted in the pro forma amounts indicated below for the years ended December
31 (amounts in thousands):

                                                       1999        1998
                                                   ----------   ---------
Net income - as reported                           $    2,482   $   3,003
Net income (loss) - pro forma                           1,332       2,139
Net income (loss) per common share - as reported:
 Basic                                                   0.18        0.30
 Diluted                                                 0.17        0.27
Net loss per common share - pro forma:
 Basic                                                   0.09        0.20
 Diluted                                                 0.09        0.19

The fair value of each option grant was estimated as of the date of grant using
the Black Sholes Option Pricing Model with the following weighted average
assumptions: no expected dividends; expected volatility of 25%; risk-free
interest rate ranging from 4.66% to 6.24%; and expected life of ten years.

                                      F-19
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

11. DEFINED CONTRIBUTION PLANS:

The Company sponsors section 401(k) defined contribution plans which permit
employees to invest up to 15% of their compensation (subject to limitation by
Internal Revenue Service regulations) on a pretax basis in certain self-directed
investments programs. The Company may, at the discretion of the Board of
Directors, make contributions to the plans. The Company did not make any
contributions to the plans in 1999 and 1998, respectively.

12. EMPLOYMENT AGREEMENTS:

The Company is obligated for compensation and bonus arrangements aggregating
approximately $3,097,000 paid over a period ranging from 3 to 5 years.

13.FINANCIAL INSTRUMENTS:

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of cash and accounts receivable. The Company
maintains its cash in bank deposit accounts, which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts. Concentrations of credit risk with respect to accounts receivable are
limited due to the large number of customers comprising the Company's customer
base.

Although the Company has expanded its operations into other states and Canada,
approximately 37% of equipment sales to date have been to customers located in
Florida.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash, cash equivalents, accounts receivable, accounts
payable and accrued liabilities approximate fair value because of the short
maturity of these items. The carrying amounts of long-term debt approximate fair
value because the interest rates on these instruments change with market
interest rates, except for the $9,000,000 promissory note, which is recorded at
cost on the balance sheet. The fair value approximates $9,719,000 at December
31, 1999 and was estimated using the present value of cash flows at the current
market rates.

                                      F-20
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

14. SEGMENTS OF THE BUSINESS:

The Company operates in the United States and Canada in two primary industry
segments: (1) Architectural Specified Services which involves complete handling
of hi-rise systems, compactors and chutes primarily in high-rise buildings and
(2) Solid Waste Equipment Division which involves the construction, repair and
maintenance of waste handling equipment, trucks and transfer station. The
following is a summary of selected data for these business segments (amounts in
thousands):

                                Architectural  Solid Waste
                                 Specified      Equipment      Consolidated
                                  Services       Division          Total
                                -------------  ------------    -------------
1999
   Revenues                      $ 14,192        $ 45,542        $ 59,734
   Income before income taxes      (1,424)          5,030           3,606
   Total assets                    30,096          64,618          94,714

1998
   Revenues                      $ 12,709        $ 18,471        $ 31,180
   Income before income taxes         989           2,089           3,078
   Total assets                    36,493          17,321          53,814

15. OTHER EVENTS:

General and administrative expenses for the year ended December 31, 1999 include
approximately $278,000 primarily consisting of severance and shutdown costs
related to the closing of a plant facility, $240,000 consisting of professional
fees and travel expenses related to an acquisition that was not consummated and
$155,000 in bonuses related to acquisitions that were completed.

16. LEGAL MATTERS:

During February 1998, an employee of the New York City Housing Authority filed a
lawsuit against several parties which included the Company and IDC for injuries
allegedly sustained by the employee on July 30, 1996 when the casters on a trash
container installed by the defendants in a New York Housing Authority building
broke off, causing the trash container to fall on the employee. The case was
dismissed during 1999 with no liability incurred by the Company.

                                      F-21
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

16. LEGAL MATTERS, CONTINUED:

During March 1998, a corporation filed a lawsuit against the Company. In
general, the lawsuit alleges that the Company entered into an agreement with the
corporation pursuant to which the Company agreed to pay a commission based upon
industry standards to the corporation in connection with the business
combination. The corporation is seeking damages in excess of $15,000 and
attorneys' fees. The Company intends to contest vigorously the claims in the
lawsuit.

                                      F-22

<PAGE>


                                  EXHIBIT INDEX

     EXHIBITS                      DESCRIPTION

       21.1          Subsidiaries of the Company.
       23.1          Consent of Independent Accounts PricewaterhouseCoopers
                     L.L.P.,  dated March 31, 1999.
       27.1          Financial Data Schedule