SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------

                                    FORM 10-K

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

                   For the fiscal year ended December 31, 1999
                         Commission file number 0-25998

                        WASTE SYSTEMS INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

       Delaware                                             95-4203626
      (State or other jurisdiction of       (I.R.S. Employer Identification No.)
        incorporation or organization)

        420 Bedford Street, Suite 300
        Lexington, Massachusetts                                   02420
        (Address of principal executive offices)               (zip code)

                              (781) 862-3000 Phone
                               (781) 862-2929 Fax
              (Registrant's telephone number, including area code)
                            ------------------------

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

                     Common Stock, $.01 par value per share
                            ------------------------

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

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

     As of  March  24,  2000,  the  market  value  of the  voting  stock  of the
Registrant held by non-affiliates of the Registrant was $45,606,693

     The number of shares of the  Registrant's  common stock, par value $.01 per
share, outstanding as of March 24, 2000 was 20,348,297

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's Proxy Statement for the 2000 Annual Meeting of
Stockholders  are  incorporated  by  reference  into Part III of this Form 10-K.
Portions  of  the   Registration   Statement  on  Form  S-1  of  Waste   Systems
International, Inc. (No. 33-93966) are incorporated by reference into Part IV of
this Form 10-K.




<PAGE>




                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
<S>  <C>        <C>                                                                                  <C>
                                                                                                      Page
PART I
     Item 1.    Business                                                                                  2
     Item 2.    Properties                                                                               12
     Item 3.    Legal Proceedings                                                                        12
     Item 4.    Submission of Matters to a Vote of Security Holders                                      12

PART II
     Item 5.    Market For Registrant's Common Equity and Related
                  Stockholder Matters                                                                    13
     Item 6.    Selected Financial Data                                                                  14
     Item 7.    Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                                              16
     Item 8.    Financial Statements and Supplementary Data                                              27
     Item 9.    Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure                                                    49

PART III
     Item 10.   Directors and Executive Officers                                                         50
     Item 11.   Executive Compensation                                                                   53
     Item 12.   Security Ownership of Certain Beneficial Owners and Management                           56
     Item 13.   Certain Relationships and Related Transactions                                           59

PART IV
     Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K                         60

     Signatures                                                                                          62

</TABLE>




<PAGE>

Note Regarding Forward Looking Statements:

This Annual Report on Form 10-K contains  forward-looking  statements concerning
among other things,  the Company's  expected  future  revenues,  operations  and
expenditures and estimates of the potential markets for the Company's  services.
Such  statements  made by the Company  fall 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.  All such  forward-looking  statements  are
necessarily  only estimates of future results and the actual results achieved by
the  Company may differ  materially  from these  projections  due to a number of
factors as  discussed  in the  section  entitled  "Management's  Discussion  and
Analysis  of  Financial  Condition  and Results of  Operations--Certain  Factors
Affecting Future Operating Results" of this Form 10-K.

                                     PART I

Item 1.  Business

The Company

         Waste  Systems  International,  Inc.  (the  "Company"  or  "WSI") is an
integrated  non-hazardous  solid waste  management  company that provides  solid
waste  collection,  recycling,  transfer  and disposal  services to  commercial,
industrial,  residential and municipal customers within certain regional markets
in the  Northeast  and  Mid-Atlantic  States where it  operates.  The Company is
achieving  significant  growth by implementing an active  acquisition  strategy.
During 1999,  the Company  completed 13  acquisitions  of collection  companies,
transfer  stations and a landfill.  At December 31, 1999,  the Company owned and
operated  one landfill in Vermont and three  landfills in Central  Pennsylvania.
The Company's  Moretown  Landfill in Vermont is permitted to accept 120,000 tons
of municipal  solid waste ("MSW") per year. The Company's  Sandy Run Landfill in
Hopewell,  Pennsylvania is permitted to accept 86,000 tons of MSW per year. Both
of these  landfills  were in operation  for all of 1999.  On March 1, 1999,  the
Company acquired the Cumberland landfill located in Shippensberg,  Pennsylvania,
just outside of Harrisburg,  Pennsylvania.  This landfill is permitted to accept
309,000  tons of MSW per  year.  On  December  28,  1999 the  Company  completed
construction and opened the Mostoller Landfill in Somerset,  Pennsylvania.  This
landfill is permitted to accept 624,000 tons of MSW per year. As of December 31,
1999, the aggregate remaining estimated permitted capacity of the Company's four
owned landfills was  approximately  22.6 million cubic yards.  In addition,  the
Company has contracted with the Town of South Hadley,  Massachusetts  to operate
the Town's  landfill,  which has an  estimated  capacity of  approximately  1.87
million cubic yards available for future disposal.  The Company expects to begin
construction  of that landfill during the third quarter of 2000 and projects the
landfill to begin operating in the fourth quarter of 2000. The Company also owns
and operates five  transfer  stations and has acquired two  additional  transfer
stations that are permitted and are under construction. As of December 31, 1999,
the  Company's  collection  operations  served a total of  approximately  73,000
commercial,  industrial,  residential  and  municipal  customers  in the Central
Pennsylvania,  Eastern  New  England,  Upstate New York,  Vermont and  Baltimore
Maryland/Washington DC markets.

         During 1998, the Company acquired a total of 34 companies including two
landfills,  31 collection companies (2 of which included a transfer station) and
one transfer station.  These  acquisitions were located in Vermont,  Eastern New
England, Upstate New York and Central Pennsylvania.

         The Company  focuses on the  operation of an  integrated  non-hazardous
solid waste  management  business,  including  the  ownership  and  operation of
landfills,  solid waste collection services and transfer stations. The Company's
objective is to expand the current geographic scope of its operations  primarily
within the  Northeast  and  Mid-Atlantic  regions of the United  States,  and to
become one of the leading  providers  of  non-hazardous  solid waste  management
services in each local market that it serves.  The key elements of the Company's
strategy for  achieving its  objective  are: (i) to acquire and integrate  solid
waste disposal  capacity,  transfer  stations and  collection  operations in its
targeted new markets,  (ii) to generate  internal growth through increased sales
penetration and the marketing of additional  services to existing  customers and
(iii) to enhance profitability by increasing operating efficiency.

Industry Overview

        The  solid  waste   management   industry  is   generally   experiencing
significant  consolidation  and  integration.  The  Company  believes  that  the
consolidation  and  integration  is a result  of the  following  factors,  among
others: (i) increasingly stringent environmental regulations which have resulted
in an increased need for substantial capital to maintain regulatory  compliance;
(ii) the  inability of many smaller  operators to achieve the economies of scale
necessary to compete with larger  providers;  (iii) the competitive and economic
benefits of providing integrated  collection,  recycling,  transfer and disposal
services;  and (iv) the  privatization  of solid  waste  assets and  services by
municipalities. Although significant consolidation has occurred within the solid
waste  management  industry,  the Company  believes the industry  remains highly
fragmented and that a substantial number of potential acquisition  opportunities
remain,  including  within  the  Northeast  and  Mid-Atlantic  regions  where it
operates.

        Stringent  environmental  regulations  have resulted in rising costs for
owners of landfills while permits required for landfill  development,  expansion
or construction have also become increasingly difficult to obtain. These ongoing
costs are coupled with increased financial reserve  requirements for closure and
post-closure monitoring. Certain of the smaller industry participants have found
these costs and  regulations  burdensome  and have decided either to close their
operations  or to sell them to larger  operators.  As a  result,  the  number of
operating landfills has decreased while the size of landfills has increased.

        Economies  of scale,  driven by the high fixed costs of landfill  assets
and the associated  profitability of each incremental ton of waste,  have led to
the  development  of higher volume,  regional  landfills.  Integrated  operators
achieve  economies of scale in the solid waste collection and disposal  industry
through vertical integration of their operations that may generate a significant
waste stream for these high-volume landfills.  Integrated companies gain further
competitive advantage over non-integrated operators by being able to control the
waste stream.  The ability of larger  integrated  companies to  internalize  the
collected solid waste (i.e., collecting the waste at the source, transferring it
through  their own transfer  stations and  disposing of it at their own disposal
facility),  coupled  with  access  to  significant  capital  resources  to  make
acquisitions, has created an environment in which large integrated companies can
operate more cost effectively and competitively than non-integrated operators.

        The trend toward  consolidation  in the solid waste  industry is further
supported by the increasing  tendency of a number of municipalities to privatize
their  waste  disposal   operations.   Privatization   is  often  an  attractive
alternative  for  municipalities  due,  among other  reasons,  to the ability of
integrated  operators  to  leverage  their  economies  of scale to  provide  the
community with a broader range of services while  enabling the  municipality  to
reduce  its own  capital  asset  requirements.  The  Company  believes  that the
financial  condition of municipal  landfills was adversely  affected by the 1994
United States  Supreme Court  decision,  which  declared  "flow  control"  laws,
particularly  in the  Northeastern  states,  unconstitutional.  These  laws  had
required  waste  generated  in  counties or  districts  to be disposed of at the
respective county or district-owned landfills or incinerators.  The reduction in
the captive waste stream to these facilities, resulting from the invalidation of
such laws, forced the counties that owned them to increase their per ton tipping
fees to meet  municipal bond  payments.  The Company  believes that these market
dynamics are factors causing  municipalities  throughout the Northeastern states
to consider the privatization of public facilities.

Strategy

        The Company's objective is to expand the current geographic scope of its
operations primarily within the Northeast and Mid-Atlantic regions of the United
States, and to become one of the leading providers of non-hazardous  solid waste
management services in each local market that it serves. The key elements of the
Company's strategy for achieving its objective are: (i) to acquire and integrate
solid waste disposal  capacity,  transfer stations and collection  operations in
its targeted new markets,  (ii) to generate  internal  growth through  increased
sales penetration and the marketing of additional services to existing customers
and (iii) to enhance  profitability  by  increasing  operating  efficiency.  The
Company intends to implement this strategy as follows:

        Expansion through  Acquisitions.  During 1999, the Company acquired five
collection  companies  and a landfill in Central  Pennsylvania,  one  collection
company in Vermont, two collection companies,  two transfer stations and a paper
recycling plant in Eastern New England,  two collection companies and a transfer
station in Upstate New York and a collection company and transfer station in the
Baltimore,  Maryland/Washington  D.C. region. During 1998, the Company completed
34 acquisitions  within its five current operating regions.  The Company intends
to continue to expand by acquiring solid waste disposal  capacity and collection
companies in new and existing markets.  In considering new markets,  the Company
evaluates  opportunities  to acquire or otherwise  control  sufficient  landfill
capacity,  transfer stations and collection  operations which would enable it to
generate an integrated waste stream and achieve the disposal  economies of scale
necessary to meet its market  share and  financial  objectives.  The Company has
established  criteria,  which enable it to evaluate the prospective  acquisition
opportunity  and the target  market.  Historically,  the Company has entered new
markets,  which are adjacent to its existing markets;  however,  the Company may
consider  new  markets  in  non-contiguous  geographic  areas,  which  meet  its
criteria.

        Internal Growth.  In order to generate  continued  internal growth,  the
Company has focused on increasing sales  penetration in its current and adjacent
markets,  soliciting  new  commercial,  industrial  and  residential  customers,
marketing  upgraded  services  to existing  customers  and,  where  appropriate,
raising  prices.  As  customers  are added in existing  markets,  the  Company's
revenue per routed truck is improved,  which  generally  increases the Company's
collection  efficiencies and profitability.  The Company uses transfer stations,
which serve to link disparate collection  operations with Company landfills,  as
an important part of its internal growth strategy.

        Operating Enhancements for Acquired and Existing Businesses. The Company
has implemented a system that establishes  standards for each of its markets and
tracks  operating  criteria  for its  collection,  transfer,  disposal and other
services  to  facilitate   improved   profitability  in  existing  and  acquired
operations.  These measurement  criteria include collection and disposal routing
efficiency, equipment utilization, cost controls, commercial weight tracking and
employee  training  and  safety   procedures.   The  Company  believes  that  by
establishing standards and closely monitoring compliance,  it is able to improve
existing  and  acquired  operations.  Moreover,  where  the  Company  is able to
internalize  the waste  stream of  acquired  operations,  it is further  able to
increase operating efficiencies and improve capacity utilization.

Acquisition Program

        The Company is pursuing  an active  acquisition  strategy to achieve its
objective of expanding  the current  geographical  scope of its  operations  and
becoming a leading  provider of integrated  solid waste  management  services in
each  of the  markets  it  serves.  The  Company  seeks  acquisitions  that  are
consistent  with its  three-step  acquisition  program  designed  to (i) acquire
long-term   disposal  capacity  in  targeted  regional  markets,   (ii)  acquire
collection  companies and transfer stations which will serve as platforms in the
targeted  regions to secure a stable  long-term  waste  flow,  and (iii)  secure
"tuck-in  acquisitions"  of small  but  complementary  collection  companies  to
increase a regional operation's profitability.

        The  following  table sets forth  acquisitions  completed by the Company
through March 24, 2000:
<TABLE>
<CAPTION>
Acquisition                          Month Acquired          Principal Business              Location
<S>                                  <C>                     <C>                             <C>

Central Pennsylvania Region

B&J Garbage Service                  July 1999               Collection                      Berlin, PA

Pro-Disposal                         April 1999              Collection                      Bellwood, PA

Cumberland Waste Service, Inc.       March 1999              Collection                      Cumberland, PA

Cumberland                           March 1999              Landfill                        Cumberland, PA

Koontz Disposal                      January 1999            Collection                      Boswell, PA

Jim's Hauling, Inc.                  January 1999            Collection                      Duncansville, PA

Mostoller Landfill, Inc.             August 1998             Landfill                        Somerset, PA

Worthy's Refuse Service              August 1998             Collection                      McVey Town, PA

Sandy Run Landfill                   July 1998               Landfill                        Hopewell, PA

Patterson's Hauling                  May 1998                Collection                      Altoona, PA

Pleasant Valley Hauling              May 1998                Collection                      Altoona, PA

McCardle Refuse Company              May 1998                Collection                      Burham, PA

Horvath Sanitation, Inc./
Eagle Recycling, Inc.                May 1998                Collection                      Altoona, PA



Eastern New England Region

C&J Trucking, Inc. and affiliates    July 1999               Collection/Transfer Stations    Lynn, MA/Londonderry, NH

Troiano Trucking, Inc.               March 1999              Collection                      Worcester, MA

Steve Provost Rubbish Removal        December 1998           Collection                      Rochdale, MA

Sunrise Trucking                     December 1998           Collection                      Spencer, MA

Trashworks                           November 1998           Collection                      Worcester, MA

Mattei-Flynn Trucking, Inc.          August 1998             Collection                      Auburn, MA

Mass Wood Recycling, Inc.            July 1998               Transfer Station                Oxford, MA


Upstate New York Region

Palmer Resource Recovery Corp.       May 1999                Transfer Station                Syracuse, NY

Tri-Valley Sanitation, Inc.          April 1999              Collection                      Whitesboro, NY

Santaro Trucking Co., Inc.           January 1999            Collection                      Syracuse, NY

Richard A. Bristol, Sr.              November 1998           Collection                      Rome, NY

Bristol Trash and Recycling II       November 1998           Collection                      Rome, NY

Shepard Disposal Service             October 1998            Collection                      Oneida, NY

Emmons Trash Removal                 October 1998            Collection                      Sherill, NY

Wayne Wehrle                         September 1998          Collection                      Clinton, NY

Phillip Trucking                     September 1998          Collection                      Wampsville, NY

Mary Lou Mauzy                       September 1998          Collection                      Cazenovia, NY

Costello's Trash Removal             September 1998          Collection                      Cazenovia, NY

Bliss Rubbish Removal, Inc.          September 1998          Collection                      Camden, NY

Besig & Sons                         September 1998          Collection                      Westmoreland, NY

Larry Baker Disposal, Inc.           September 1998          Collection                      Oneida, NY


Vermont Region

B.B. & B. Trucking                   April 1999              Collection                      Burlington, VT

Grady Majors Rubbish Removal         September 1998          Collection                      St. Albans, VT

Cota Sanitation                      June 1998               Collection                      Newport, VT

Vincent Moss                         June 1998               Collection                      Newport, VT

Austin Rubbish Removal               June 1998               Collection                      Newport, VT

Surprenant Rubbish, Inc.             June 1998               Collection                      Newport, VT

Fortin's Trucking of Williston       May 1998                Collection                      Williston, VT

John Leo & Sons, Ltd.                March 1998              Collection                      Burlington, VT

Rapid Rubbish Removal, Inc.          February 1998           Collection/Transfer Station     St. Johnsbury, VT

Greenia Trucking                     February 1998           Collection                      St. Albans, VT

Doyle Disposal                       January 1998            Collection                      Barre, VT

Perkins Disposal                     January 1998            Collection                      St. Johnsbury, VT

CSWD Transfer Station*               October 1997            Transfer Station                Williston, VT

The Hartigan Company                 January 1997            Collection                      Stowe, VT

Waitsfield Transfer Station          November 1995           Transfer Station                Waitsfield, VT

Moretown Landfill                    July 1995               Landfill                        Moretown, VT


Baltimore, Maryland/Washington, D.C. Region

Eastern TransWaste of                July 1999               Collection/Transfer Station     Capitol Heights, MD/
       Maryland, Inc.                                                                        Washington, DC

</TABLE>


<PAGE>


Integrated Solid Waste Management Operations

        The  Company's  operations  include the  ownership  and/or  operation of
landfills,  solid waste collection  services and transfer  stations.  Revenue is
attributed  fully to the operation  where the Company first  receives the waste.
For example,  revenue  received from waste collected by the Company and disposed
in a Company landfill is entirely  attributed to collection.  As the Company has
executed its  acquisition  strategy and  integrated  the solid waste  management
assets  acquired,  the Company's rate of  internalization  of its operations has
increased.  Throughout  1999,  the Company  increased  the amount of solid waste
collected by the Company that was subsequently disposed at Company landfills and
increased the amount of the solid waste  delivered for disposal at the Company's
landfills that was collected by the Company.

        Solid Waste Collection.  The Company's solid waste collection operations
served  approximately 73,000 commercial,  industrial,  residential and municipal
customers  at  December  31,  1999.  The  Company's  commercial  and  industrial
collection  services  are  performed  on a  recurring  basis  or  under  service
agreements  with terms ranging from one to three years,  and fees are determined
by such  factors as  collection  frequency,  type of  equipment  and  containers
furnished,  the  type,  volume  and  weight of the solid  waste  collected,  the
distance to the  disposal  or  processing  facility  and the cost of disposal or
processing.  The  Company's  residential  collection  and disposal  services are
performed  either on a subscription  basis (i.e.,  with no underlying  contract)
with   individuals,   or  under   contracts  with   municipalities,   homeowners
associations,  apartment  owners or mobile home park  operators.  Revenues  from
collection  operations  accounted  for  approximately  73.7%  and  73.5%  of the
Company's revenues for the years ended December 31, 1999 and 1998, respectively.

        Transfer Station  Services.  At December 31, 1999, the Company owned and
operated  five transfer  stations.  In addition,  the Company  currently has two
other transfer  stations,  Oxford, MA and Cicero,  NY, under  construction.  The
transfer stations  receive,  compact and transfer solid waste collected from the
Company's  various  collection  operations  and from third  parties to long-haul
vehicles for transport to landfills. The Company believes that transfer stations
benefit the Company by (i) increasing the size of the "shed" which has access to
the  Company's  landfills and (ii) reducing  costs by improving  utilization  of
collection  personnel and  equipment.  Revenues from transfer  station  services
accounted for  approximately  12.3% and 6.4% of the  Company's  revenues for the
years ended December 31, 1999 and 1998, respectively.

        Landfills.  At December 31, 1999,  the Company owned four  landfills and
has an agreement to operate one landfill under a long-term operating  agreement.
The Mostoller,  Moretown,  Cumberland, and Sandy Run landfills, include leachate
collection  systems,  groundwater  monitoring  systems  and active  methane  gas
extraction  and recovery  systems.  Once the permitted  capacity of a particular
landfill  is  reached,  the  landfill  must be closed and  capped if  additional
capacity is not authorized.  The Company establishes  reserves for the estimated
costs  associated  with such closure and  post-closure  costs over the currently
permitted capacity of such landfill.  See "Management's  Discussion and Analysis
of Financial  Condition  and Results of Operations - Certain  Factors  Affecting
Future  Operating  Results - Adequacy of Accruals  for Closure and  Post-Closure
Costs." Revenues from landfills  accounted for approximately  14.0% and 20.1% of
the  Company's  revenues  for the  years  ended  December  31,  1999  and  1998,
respectively.

Internalization of Waste

        Throughout 1999, the Company  increased the amount of waste collected by
the Company that was subsequently  disposed at Company landfills,  and increased
the amount of the waste  delivered for disposal at the Company's  landfills that
was collected by the Company.  During the year ended  December 31, 1999,  nearly
100% of the waste  from the  Company's  Vermont  operations  was  delivered  for
disposal at the  Moretown  Landfill,  Inc.  and  approximately  36% of the waste
delivered for disposal at the Moretown Landfill during this period was collected
by the Company.  In addition,  approximately 65% of the waste from the Company's
Central Pennsylvania - Altoona division operations was delivered for disposal at
the Sandy Run Landfill and approximately 70% of the waste delivered for disposal
at the Sandy Run Landfill during this period was collected by the Company. Since
the acquisition of Community Refuse,  Inc., on March 1, 1999,  approximately 95%
of the waste from the  Company's  Central  Pennsylvania  -  Harrisburg  division
operations was delivered for disposal at the Community Refuse, Inc. landfill and
approximately  28% of the waste delivered for disposal at the Community  Refuse,
Inc.  landfill  during this period was collected by the Harrisburg  division and
other company regions. Since their acquisition in July 1999, Eastern Trans-Waste
of Maryland,  Inc.  disposed of approximately  56% of its waste at the Community
Refuse Services,  Inc.  landfill,  while C&J Trucking Company,  Inc. disposed of
approximately 14% of its waste at the Community Refuse Services,  Inc. landfill.
It is  management's  intention to fully  internalize  these  operations with WSI
owned landfills during 2000,  including the Mostoller Landfill,  which opened on
December 28, 1999.

Regional Operations

        The Company's  current or planned solid waste management  operations are
as follows:

        Central Pennsylvania Operations.

         Altoona.  In May 1998,  the  Company  commenced  operations  in Central
Pennsylvania,  through the  acquisition  of Horvath  Sanitation,  Inc. and Eagle
Recycling, Inc., which were based in Altoona,  Pennsylvania.  Subsequently,  the
Company completed  several tuck-in  acquisitions.  The Altoona  operations serve
residential,  commercial,  industrial and municipal customers. In July 1998, the
Company  acquired the Sandy Run  Landfill,  a 700-acre,  3.0 million  cubic yard
permitted solid waste landfill in Hopewell, Pennsylvania. The Sandy Run Landfill
is  currently  permitted to receive  approximately  86,000 tons per year and had
remaining estimated permitted capacity at December 31, 1999 of approximately 2.8
million cubic yards.  Approximately  65% of the waste from the Company's Central
Pennsylvania  - Altoona  division  operations  was delivered for disposal at the
Sandy Run Landfill and  approximately 70% of the waste delivered for disposal at
the Sandy Run Landfill during this period was collected by the Company.

         Harrisburg.  On March 11,  1999,  the Company  acquired  the  Community
Refuse  Services,  Inc.  landfill,  located in Shippensberg,  Pennsylvania,  and
Cumberland Waste Service, Inc., a collection operation. The landfill acquisition
added  approximately  6.0 million  cubic yards of capacity for the region and is
permitted to accept  309,000 tons of municipal  solid waste per year.  Since the
acquisition of Community  Refuse,  Inc,  approximately 95% of the waste from the
Company's Central  Pennsylvania - Harrisburg  division  operations was delivered
for disposal at the Community Refuse, Inc. landfill and approximately 28% of the
waste delivered for disposal at the Community Refuse,  Inc. landfill during this
period was collected by the Company.

         Somerset.  On  December  28,  1999,  the Company  opened the  Mostoller
landfill in Somerset County, Pennsylvania.  This landfill is permitted to accept
2,000 tons per day,  six days a week,  or 624,000  tons per year,  of  municipal
solid waste, construction and demolition waste, sludge and residual wastes. This
landfill  consists of 7 cells having  approximately  14.2 million cubic yards of
total permitted capacity with expected  additional room for expansion on the 513
acre permitted "greenfields" site. The opening of this landfill will improve the
Company's internalization rate beginning in the first quarter of 2000.

        Eastern  New England  Operations.  In July 1998,  the  Company  acquired
Mattei-Flynn  Trucking,  Inc. in Auburn,  Massachusetts.  This waste  collection
operation currently has an established  customer base comprising of residential,
commercial,  industrial  and  municipal  customers  and serves as a platform for
company  growth in this targeted  regional  market.  The Company  completed four
tuck-in acquisitions that have been integrated into the Mattei-Flynn operations.
In 1999,  construction  commenced  on a  permitted  transfer  station in Oxford,
Massachusetts.  This transfer station is projected to commence operations during
the summer of 2000. The Company and the Town of South Hadley, Massachusetts have
entered  into a contract  whereby the Company  will  operate the Town's  30-acre
municipal  solid  waste  landfill.  The Town of South  Hadley  will  retain full
ownership of the South Hadley Landfill while the Company  operates the facility,
which has  approximately  1.87  million  cubic yards of new  capacity for future
disposal.  The  Company is  currently  in the  permitting  process for the South
Hadley landfill.  The Company anticipates that the landfill will be available to
begin  accepting  solid waste at the first 10-acre lined cell late in 2000.  The
Company intends to integrate its collection  operations with the Oxford Transfer
Station and to internalize the waste at the South Hadley Landfill.  In addition,
the Company has a long-term  disposal  agreement  with a third party landfill in
Southbridge,  Massachusetts  at favorable  rates  through 2019. As a part of the
agreement, the Company has a "Right of First Refusal" to purchase the landfill.

        On July 1, 1999, the Company  acquired the assets of C&J Trucking,  Inc.
and certain affiliated  entities,  which included a well-established  commercial
and  industrial  collection  operation,  as well as two transfer  stations - one
located in Londonderry, New Hampshire and one located in Lynn, Massachusetts. On
a combined  basis,  the two transfer  stations accept in excess of 1,000 tons of
solid waste per day. In the fourth quarter of 1999, the Company began  disposing
of waste  collected by this operation at its Community  Refuse,  Inc landfill in
Central  Pennsylvania.  During 1999,  C&J  Trucking  Company,  Inc.  disposed of
approximately 14% of its waste at the Community Refuse,  Inc.  landfill.  During
2000,  the Company will begin  disposing  the waste  collected by these  primary
operations  at its  Mostoller  landfill  in  Somerset  County  Pennsylvania,  in
addition to Community Refuse.

        Upstate New York  Operations.  During the four months ended December 31,
1998,  the Company  entered the Upstate New York market with the  acquisition of
eleven collection  operations and a transfer station in the general area between
Syracuse  and Utica,  New York.  In January  1999,  the  Company  completed  the
acquisition  of Santaro  Trucking  Co.,  Inc., a collection  company  located in
Syracuse,  New  York  servicing  over  400  commercial  customers.  These  waste
collection  operations serve residential,  commercial,  industrial and municipal
customers.  The Company  selected  the  Upstate  New York market for  collection
operations and transfer  stations in anticipation of the privatization of nearby
landfills.  The Company is currently evaluating  opportunities for expansion and
integration of its Upstate New York operations.

        Vermont  Operations.  The Company established its first integrated solid
waste management  operations in the  geographical  area surrounding its Moretown
Landfill.  In addition to the  Moretown  Landfill,  the Company  currently  owns
and/or  operates  three  transfer  stations and  collection  operations  serving
commercial,  industrial,  residential and municipal customers in the Burlington,
St. Albans,  St.  Johnsbury,  Newport and  Barre-Montpelier,  Vermont areas. The
Vermont  operations  serves  residential,  commercial,  industrial and municipal
customers.  The Moretown Landfill is permitted to receive  approximately 120,000
tons per year.  During 1999, nearly 100% of the waste from the Company's Vermont
operations was delivered for disposal at the Moretown Landfill and approximately
36% of the solid waste  delivered for disposal at the Moretown  Landfill  during
this period was collected by the Company.


        Baltimore,  Maryland/Washington,  DC  Operations.  On July 1, 1999,  the
Company   acquired   Eastern   Trans-Waste   of   Maryland,   Inc.   ("ETW")   a
well-established  commercial and industrial  collection  operation with a 53,000
square foot transfer  station  located in Washington,  DC, which is permitted to
operate twenty-four hours per day with no capacity restrictions.  As part of its
customer  base,  ETW  serves  the White  House and  numerous  federal  agencies.
Beginning in the third quarter of 1999, the Company began disposing of the waste
collected  by  this  operation  at  its  Community  Refuse,   Inc.  landfill  in
Cumberland,  Pennsylvania.  Approximately  56% of  the  waste  collected  by the
Baltimore,  Maryland/Washington,  DC division was internalized during the second
half of 1999.

Competition

        Though  the  solid  waste  management  industry  has been  substantially
consolidated  in certain  markets,  it generally is highly  competitive and very
fragmented and requires  substantial  labor and capital  resources.  Competition
exists for collection, recycling, transfer and disposal services. The markets in
which the Company  competes or is likely to compete in are usually served by one
or more of the large national, regional or local solid waste companies, that may
have greater  financial,  marketing or technical  resources than the Company and
may be able to achieve greater economies of scale than the Company.  The Company
also  competes  with  counties,  municipalities  and  operators  of  alternative
disposal  facilities  that  operate  their own  waste  collection  and  disposal
facilities.  The  availability  of user fees,  charges or tax  revenues  and the
availability of tax-exempt financing may provide a competitive  advantage to the
public sector.  Additionally,  alternative disposal facilities such as recycling
and  incineration  may  reduce the demand  for the  disposal  of solid  waste in
landfills.

        The Company competes for waste  collection and disposal  business on the
basis of quality of service, geographical location and price. From time to time,
competitors  may  reduce the price of their  services  in an effort to expand or
maintain market share or to win  competitively  bid contracts.  Competition also
exists within the industry for acquisition targets where the Company may compete
with publicly owned national or regional solid waste management companies.

Marketing and Sales

        The Company has a  coordinated  sales and  marketing  strategy to obtain
solid waste streams which is formulated at the corporate  level and  implemented
through  regional  management.  The Company markets its services locally through
regional  managers and direct  sales  representatives  who focus on  commercial,
industrial,  municipal  and  residential  customers.  The  Company  markets  its
commercial,  industrial and municipal services through its sales representatives
who visit  customers on a regular  basis and make sales calls to  potential  new
customers.  These sales  representatives  receive a significant portion of their
compensation  based upon meeting  certain  incentive  targets.  The Company also
obtains new customers from referral sources, its general reputation,  responding
to federal,  state and local  government  bid  offerings  and local market print
advertising.  Leads  are also  developed  from new  building  permits,  business
licenses  and  other  public  records.  Additionally,  each  regional  operation
generally  advertises in the yellow pages and other local  business  print media
that cover its service area. The Company  emphasizes  customer  satisfaction and
retention,  and believes that its focus on quality  service will retain existing
and attract additional customers.

        Maintenance of a local  presence and identity is an important  aspect of
the Company's marketing plan, and many of the Company's managers are involved in
local  governmental,  civic and business  organizations.  The Company's name and
logo, or, where  appropriate,  that of the Company's  regional  operations,  are
displayed  on all  Company  containers  and  trucks.  Additionally,  the Company
attends  and  makes   presentations  at  municipal  and  state  conferences  and
advertises in governmental associations' membership publications.

     No single customer of the Company individually  accounted for more than 10%
of Company revenues in the year ended December 31, 1999.

Government Regulation

        The Company and its  customers  are subject to  extensive  and  evolving
environmental  laws and  regulations  that  have been  enacted  in  response  to
increased concern over environmental  issues and technological  advances.  These
regulations are administered by the U.S. Environmental Protection Agency ("EPA")
and various other federal,  state and local  environmental,  transportation  and
health and safety agencies.  The Company believes that such laws and regulations
have the effect of enhancing the potential  market in which the Company operates
by allowing the Company to offer economical solutions for regulatory problems to
its  customers  and  acquisition  candidates.  On the other hand,  such laws and
regulations  represent a potential constraint on, and added expense with respect
to,  the  Company's  operation  of  projects  for its  customers  or for its own
account.

        In order to develop and operate a landfill project,  the Company must go
through several governmental review processes and obtain one or more permits and
often zoning or other land use  approvals.  These permits and zoning or land use
approvals  are  difficult  and time  consuming  to obtain  and may be opposed by
various local authorities,  abutters, and ad hoc citizens' groups. In connection
with the Company's  preliminary  development of landfill  projects,  the Company
will expend  considerable  time,  effort and  resources  in  complying  with the
governmental  review and permitting process necessary to develop or increase the
capacity of these landfills. Once obtained,  operating permits generally must be
periodically  renewed  and are subject to  modification  and  revocation  by the
issuing agency. Furthermore,  landfill operations are subject to challenge under
statutory and common law regulation of  "nuisances," in addition to statutes and
regulations  with respect to permits and other  approvals.  Similar  permits and
approvals are required for the development  and operation of transfer  stations,
although the regulatory reviews of applications  pertaining to transfer stations
are generally less costly and time-consuming than the procedures  conducted with
respect to the permitting of landfills.

        The Company's  landfill  operations and transfer  stations subject it to
certain  laws  and   regulations   governing   operational,   monitoring,   site
maintenance, closure and post-closure, and financial assurance obligations which
change  from  time to time  and  which  could  give  rise to  increased  capital
expenditures and operating costs. In connection with the Company's  operation of
landfills  and transfer  stations,  the Company will expend  considerable  time,
effort and resources in complying with these laws and regulations.  Governmental
authorities have the power to enforce compliance with these laws and regulations
and to obtain  injunctions or impose civil or criminal  penalties in the case of
violations.  Failure  to  correct  the  problems  to  the  satisfaction  of  the
authorities could lead to curtailed operations, additional costs or even closure
of a landfill or transfer station.

        The  principal  federal,  state,  and  local  statutes  and  regulations
applicable to the Company's operations are as follows:

        The  Resource  Conservation  and  Recovery  Act of 1976  ("RCRA").  RCRA
regulates the  generation,  treatment,  storage,  handling,  transportation  and
disposal of solid waste and  requires  states to develop  programs to ensure the
safe  disposal  of solid  waste.  RCRA  divides  solid  waste  into two  groups,
hazardous and non-hazardous. Wastes are generally classified as hazardous wastes
if they (i) either (a) are  specifically  included on a list of hazardous wastes
or (b) exhibit certain hazardous  characteristics  and (ii) are not specifically
designated  as  non-hazardous.  Wastes  classified  as hazardous  under RCRA are
subject to much stricter regulation than wastes classified as non-hazardous, and
businesses that deal with hazardous waste are subject to regulatory  obligations
in addition to those imposed on handlers of non-hazardous waste.

        Among the wastes that are specifically designated as non-hazardous waste
are  household  waste and  "special"  waste,  including  items such as petroleum
contaminated soils, asbestos,  shredder fluff and most non-hazardous  industrial
waste products.

        The EPA  regulations  issued under  Subtitle C of RCRA (the  "Subtitle C
Regulations")  impose a comprehensive  "cradle to grave" system for tracking the
generation, transportation, treatment, storage and disposal of hazardous wastes.
The Subtitle C Regulations  impose  obligations on generators,  transporters and
disposers of hazardous  waste, and require permits that are costly to obtain and
maintain for sites where such material is treated, stored or disposed.  Subtitle
C requirements  include detailed operating,  inspection,  training and emergency
preparedness  and response  standards,  as well as requirements for manifesting,
record keeping and reporting,  corrective action, facility closure, post-closure
and financial  responsibility.  Most states have promulgated regulations modeled
on some or all of the  Subtitle  C  provisions  issued  by the EPA.  Some  state
regulations impose different, additional or more stringent obligations.

        The Company is not involved with transportation or disposal of hazardous
wastes, except for the occasional  collection,  at certain transfer stations, of
hazardous wastes generated by "conditionally  exempt small quantity  generators"
(as defined by RCRA).  These hazardous  wastes are then  transported by properly
permitted  hazardous  waste  transporters  for  disposal at  properly  permitted
hazardous waste disposal facilities that are owned by third parties.

        In October 1991, the EPA adopted new regulations  pursuant to Subtitle D
of RCRA (the "Subtitle D Regulations").  These new regulations  became generally
effective in October 1993 (except for certain  municipal  solid waste  landfills
accepting  less than 100 TPD, as to which the effective  date was April 9, 1994,
and new financial assurance requirements,  which became effective April 9, 1997)
and  include  location  restrictions,   facility  design  standards,   operating
criteria,   closure   and   post-closure   requirements,   financial   assurance
requirements,   groundwater  monitoring  requirements,  groundwater  remediation
standards and corrective  action  requirements.  In addition,  these regulations
require that new landfills meet more stringent liner design criteria (typically,
composite soil and synthetic liners or two or more synthetic liners) designed to
keep  leachate  out of  groundwater  and have  extensive  collection  systems to
control leachate for treatment prior to disposal. Groundwater wells must also be
installed  at  virtually  all  landfills  to monitor  groundwater  quality.  The
regulations also require,  where threshold test levels are present, that methane
gas generated at landfills be controlled in a manner that protects  human health
and the environment.  Each state is required to revise its landfill  regulations
to  meet  these  requirements  or  the  EPA  will   automatically   impose  such
requirements  upon it.  Each state is also  required  to adopt and  implement  a
permit program or other  appropriate  system to ensure that landfills within the
state comply with the Subtitle D criteria. Many states, including Massachusetts,
have  adopted  regulations  or  programs  more  stringent  than the  Subtitle  D
Regulations.

        The Federal Water Pollution Control Act of 1972 (the "Clean Water Act").
The Clean Water Act  establishes  rules  regulating  the discharge of pollutants
from a variety of sources,  including solid waste disposal sites, into waters of
the United States. If runoff or collected leachate from the Company's  landfills
and transfer  stations are  discharged  into  streams,  rivers or other  surface
waters of the United  States,  the Clean Water Act would  require the Company to
apply for and obtain a discharge  permit,  conduct  sampling and monitoring and,
under  certain  circumstances,   reduce  the  quantity  of  pollutants  in  such
discharge.  Also,  virtually  all  landfills are required to comply with federal
storm water  regulations,  which are designed to prevent  possibly  contaminated
storm water from flowing into  surface  waters.  The Company is working with the
appropriate  regulatory agencies to ensure that its facilities are in compliance
with Clean Water Act  requirements,  particularly as they apply to treatment and
discharge of leachate  and storm  water.  The Company has secured or has applied
for the  required  discharge  permits  under the Clean  Water Act or  comparable
state-delegated  programs.  To  ensure  compliance  with  the  Clean  Water  Act
pretreatment  and  discharge  requirements,  the  Company  has either  installed
wastewater  treatment  systems  at its  facilities  to  treat  its  effluent  to
acceptable  levels before discharge or has arranged to discharge its effluent to
municipal wastewater treatment facilities.

        The Comprehensive  Environmental Response,  Compensation,  and Liability
Act of 1980  ("Superfund"  or "CERCLA").  CERCLA  establishes  a regulatory  and
remedial  program  intended  to provide  for the  investigation  and  cleanup of
facilities  from  which  there  has been,  or is  threatened,  a release  of any
hazardous  substance  into  the  environment.  CERCLA's  primary  mechanism  for
remedying  such  problems is to impose  strict joint and several  liability  for
cleanup of facilities on current owners and operators of the site, former owners
and  operators  of  the  site  at the  time  of the  disposal  of the  hazardous
substances,  as well  as the  generators  of the  hazardous  substances  and the
transporters  who  arranged  for  disposal or  transportation  of the  hazardous
substances.   The  costs  of  CERCLA  investigation  and  cleanup  can  be  very
substantial. Liability under CERCLA does not depend solely upon the existence or
disposal of  "hazardous  waste" but can also be based upon the existence of even
very small  amounts of the numerous  "hazardous  substances"  listed by the EPA,
many of which can be found in household waste. If, for example, the Company were
to be  found  to be a  responsible  party  for a  CERCLA  cleanup  at one of the
Company's  owned or operated  facilities,  the  enforcing  agency could hold the
Company completely  responsible for all investigative and remedial costs even if
others may also be liable.  CERCLA also  authorizes  the imposition of a lien in
favor of the United  States upon all real  property  subject to or affected by a
remedial action for all costs for which a party is liable. The Company's ability
to obtain  reimbursement  from  others for their  allocable  share of such costs
would be limited by the Company's ability to find other responsible  parties and
prove the extent of their  responsibility and by the financial resources of such
other parties. In the past, legislation has been introduced in Congress to limit
the  liability  of  municipalities  and others under  CERCLA as  generators  and
transporters  of municipal solid waste.  Although such  legislation has not been
enacted,  if it were to pass it would limit the  Company's  ability to seek full
contribution from  municipalities for CERCLA cleanup costs even if the hazardous
substances  that were  released  and caused  the need for  cleanup at one of the
Company's  facilities  were  generated  by or  transported  to the facility by a
municipality.

        The Clean Air Act. The Clean Air Act provides  for  regulation,  through
state implementation of federal requirements,  of the emission of air pollutants
from  certain  landfills  based upon the date of the landfill  construction  and
volume per year of  emissions  of  regulated  pollutants.  The EPA has  recently
promulgated new source performance standards regulating air emissions of certain
regulated  pollutants  (methane and  non-methane  organic  compounds) from solid
waste landfills. The EPA may also issue regulations controlling the emissions of
particular  regulated  air  pollutants  from solid  waste  landfills.  Landfills
located  in areas  with air  pollution  problems  may be  subject  to even  more
extensive air pollution controls and emission limitations.  In addition, the EPA
has  issued  standards   regulating  the  removal,   handling  and  disposal  of
asbestos-containing materials.

        Each  of  the  federal  statutes  described  above  contains  provisions
authorizing,  under certain  circumstances,  the bringing of lawsuits by private
citizens to enforce the requirements of the statutes.

        The  Hazardous  Materials  Transportation  Act.  The  transportation  of
hazardous waste is regulated both by the EPA pursuant to RCRA and by the federal
Department  of  Transportation  ("DOT")  pursuant  to  the  Hazardous  Materials
Transportation Act ("HMTA").  Pursuant to the HMTA, DOT has enacted  regulations
governing the transport of hazardous  waste.  These  regulations  govern,  among
other things,  packaging of the hazardous waste during  transport,  labeling and
marking requirements, and reporting of and response to spills of hazardous waste
during  transport.  In addition,  under both the HMTA and RCRA,  transporters of
hazardous waste must comply with manifest and record keeping requirements, which
are designed to ensure that a shipment of hazardous waste is properly identified
and can be  tracked  from its  point of  generation  to point of  disposal  at a
permitted hazardous waste treatment, storage or disposal facility.

        The Occupational Safety and Health Act of 1970 ("OSHA"). OSHA authorizes
the Occupational  Safety and Health  Administration  to promulgate  occupational
safety and health standards.  Various of those promulgated standards,  including
standards for notices of hazards,  safety in all aspects of the  workplace,  and
specific  standards  relating to excavation,  and the handling of asbestos,  may
apply to  certain  of the  Company's  operations.  OSHA  regulations  set  forth
requirements  for the training of employees  handling,  or who may be exposed in
the workplace to,  concentrations of  asbestos-containing  materials that exceed
specified  action levels.  The OSHA  regulations also set standards for employee
protection,  including medical surveillance, the use of respirators,  protective
clothing and  decontamination  units,  during  asbestos  demolition,  removal or
encapsulation as well as its storage,  transportation and disposal. In addition,
OSHA specifies a maximum permissible exposure level for airborne asbestos in the
workplace.  Apart from receiving  asbestos waste at the Company's  landfills and
transfer stations,  the Company has no direct involvement in asbestos removal or
abatement projects.

        State and Local Regulation. Each state in which the Company now operates
or may operate in the future has laws and regulations  governing the generation,
storage, treatment, handling, transportation and disposal of solid and hazardous
waste,  water  and  air  pollution  and,  in most  cases,  the  siting,  design,
operation,  maintenance,  closure and post-closure  maintenance of landfills and
transfer stations. Certain state laws also contain provisions authorizing, under
certain  circumstances,  the bringing of lawsuits by private citizens to enforce
the  requirements  of  those  laws.  In  addition,   many  states  have  adopted
"Superfund"  statutes  comparable  to, and in some cases  more  stringent  than,
CERCLA.  These statutes impose  requirements  for  investigation  and cleanup of
contaminated  sites and  liability  for costs and damages  associated  with such
sites,  and some  provide  for the  imposition  of liens  on  property  owned by
responsible  parties.  Furthermore,  many  municipalities  also have ordinances,
local laws and regulations  affecting Company  operations.  These include zoning
and health  measures that limit solid waste  management  activities to specified
sites or activities,  flow control  provisions that direct the delivery of solid
wastes to specific facilities, laws that grant the right to establish franchises
for  collection  services  and  then put out for bid for the  right  to  provide
collection  services,  and bans or other  restrictions  on the movement of solid
wastes into a municipality.

        Certain  permits and  approvals may limit the types of waste that may be
accepted  at a  landfill  or the  quantity  of waste that may be  accepted  at a
landfill during a given time period. In addition, certain permits and approvals,
as well as  certain  state  and  local  regulations,  may  limit a  landfill  to
accepting  waste that  originates  from  specified  geographic  areas or seek to
restrict the importation of out-of-state waste or otherwise discriminate against
out-of-state waste.  Generally,  restrictions on the importation of out-of-state
waste  have  not  withstood  judicial  challenge.   However,   proposed  federal
legislation   would  allow  individual   states  to  prohibit  the  disposal  of
out-of-state  waste or to limit the amount of  out-of-state  waste that could be
imported for disposal and would require states, under certain circumstances,  to
reduce  the  amounts  of waste  exported  to other  states.  If this or  similar
legislation is enacted, states in which the Company operates landfills could act
to limit or prohibit the importation of out-of-state  waste.  Such state actions
could adversely  affect landfills within those states that receive a significant
portion of waste originating from out-of-state.

        In addition,  certain  states and  localities  may for economic or other
reasons  restrict the  exportation of waste from their  jurisdiction  or require
that a  specified  amount of waste be  disposed of at  facilities  within  their
jurisdiction.  In 1994, the United States  Supreme Court held  unconstitutional,
and therefore  invalid, a local ordinance that sought to impose flow controls on
taking waste out of the locality. However, certain state and local jurisdictions
continue to seek to enforce such restrictions and, in certain cases, the Company
may elect not to challenge such restrictions based upon various  considerations.
In addition, the aforementioned  proposed federal legislation would allow states
and localities to impose certain flow control  restrictions.  These restrictions
could result in the volume of waste going to landfills  being reduced in certain
areas, which may adversely affect the Company's ability to operate its landfills
at their full capacity and/or affect the prices that can be charged for landfill
disposal services.

        There has been an increasing trend at the federal, state and local level
to mandate and encourage  waste  reduction at the source and waste recycling and
to prohibit the disposal of certain types of solid wastes,  such as yard wastes,
in  landfills.  The  enactment of  regulations  reducing the volume and types of
wastes  available  for  transport to and disposal in landfills  could affect the
Company's ability to operate its facilities at their full capacity.

        The Company  believes  that it is in material  compliance  with federal,
state and local  regulations  based on the Company's  internal  review  process,
which has not  identified any material  non-compliance,  and the Company has not
received any verbal or written  notification from any governmental agency to the
contrary.  See "Management's  Discussion and Analysis of Financial Condition and
Results of  Operations - Certain  Factors  Affecting  Future  Operating  Results
-Potential   Environmental   Liability  and  Adverse  Effect  of   Environmental
Regulation."

Employees

        As of December 31, 1999,  the Company had 520 full time  employees.  The
Company believes its future success will depend in part on its continued ability
to recruit and retain highly qualified technical and managerial  personnel.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Certain Factors Affecting Future Operating  Results  -Dependence on
Management"  and "- Ability to Manage  Growth." The Company's  employees are not
subject to any  collective  bargaining  agreement.  The  Company  considers  its
relations with its employees to be good.


Item 2.  Properties

        The Company owns or leases and operates  landfills,  transfer  stations,
offices and other  facilities  in  connection  with its  integrated  solid waste
management  operations  as  described  under  "Business-Integrated  Solid  Waste
Management   Operations."   In  addition,   the  Company  leases  its  corporate
headquarters,   located  at  420   Bedford   Street,   Suite   300,   Lexington,
Massachusetts.  The Company currently occupies  approximately 11,000 square feet
at the  Lexington  location  under the terms of a lease  expiring in March 2003,
with annual  rent of  approximately  $200,000  subject to  escalation  in future
years.



<PAGE>


The following table provides certain information regarding the 5 landfills owned
or operated by the Company as of December 31,
1999.

                                     Total       Currently        Remaining
                                      Site       Permitted        Permitted
Landfill Name     Location           Acreage      Acreage      Capacity (cu yds)
-------------     --------           -------      --------     -----------------
Mostoller         Somerset, PA         715          278.1          14,200,000
Sandy Run         Hopewell, PA         711           39.6           2,615,000
Moretown          Moretown, VT         200           33.7           1,007,000
Cumberland        Cumberland, PA       627          104.7           4,824,000
South Hadley      South Hadley, MA      30            --                 --(1)


(1)  The South Hadley  landfill is  currently in the permitting process and will
      be operated  pursuant to an operating  agreement expiring in 2015.


Item 3.  Legal Proceedings

        Legal  Matters.  The Company is party to pending legal  proceedings  and
claims. Although the outcome of such proceedings and claims cannot be determined
with certainty, the Company's management,  after consultation with outside legal
counsel,  is of the opinion that the expected  final  outcome  should not have a
material  adverse  effect  on the  Company's  financial  condition,  results  of
operations or liquidity.


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

         Series C  Preferred  Stock.  As part of the  agreement  to acquire  the
assets of Eastern Trans-Waste, Inc. of Maryland and certain affiliated entities,
completed in July 1999, the Company  created and issued 1,000 shares of Series C
Convertible Preferred Stock. Each share was issued at $11,615 for total proceeds
of $11,615,000. On October 21, 1999, a special shareholders meeting was held and
the conversion of the Series C Preferred  Stock was approved.  As a result,  the
1,000 shares of Series C Preferred  Stock were fully  converted  into  1,763,000
shares of common stock. The detail of the vote was as follows:

         For          Against        Abstain       No Vote          Total
      9,987,329        46,290         8,000           -           10,041,619



<PAGE>


                                     PART II

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

The Company's  Common Stock is currently  quoted on the NASDAQ  National  Market
under the symbol "WSII". The following table sets forth the high and low closing
price of the common  stock for the periods  indicated  and restated to reflect a
one-for five reverse stock split effective February 13, 1998.

                                                        High              Low
Fourth quarter ended December 31, 1999               $   5.88           $  2.63
Third quarter ended September 30, 1999                   7.50              5.41
Second quarter ended June 30, 1999                       8.38              3.69
First quarter ended March 31, 1999                       6.00              4.00

Fourth quarter ended December 31, 1998               $   6.25           $  4.38
Third quarter ended September 30, 1998                   9.69              5.00
Second quarter ended June 30, 1998                       9.81              5.94
First quarter ended March 31, 1998                       7.38              3.00

On March 24,  2000,  the  reported  last sale price of the  common  stock on the
NASDAQ National Market was $3.0625 per share, and there were approximately 1,100
holders of record of common stock.

The  Company  has never paid  dividends  on its Common  Stock and has no present
intention  to  pay  dividends.  The  Company's  intention  is to  retain  future
anticipated earnings to finance the expansion of its business.

On December  28,  1999,  the Company  announced  that it had raised  $15,000,000
through a  private  placement  of  Series D  Convertible  Preferred  Stock.  The
preferred  stock carries a 10% dividend  which is payable in kind or cash at the
option of the Company.  The preferred  stock can be converted into shares of the
Company's  common  stock at a price of $6.00 per share at any time at the option
of the  holder and can be  mandatorily  converted  by the  Company if its common
stock closing  price equals or exceeds $9.00 for a period of twenty  consecutive
trading days. The preferred stock is eligible to vote on an  as-converted  basis
with the Company's common stock and is redeemable at any time by the Company.

On February 15, 2000, the Company  closed an Exchange Offer for its  $49,551,426
of Convertible Subordinated Notes due 2005 and its $100,000,000 Senior Notes due
2006.  Approximately  $15,355,000  principal  amount of, plus accrued but unpaid
interest  on,  its 11 1/2%  Series B  Senior  Notes  due 2006 and  approximately
$22,832,000  principal  amount of, plus  accrued but unpaid  interest on, its 7%
Convertible  Subordinated Notes due 2005 were tendered and exchanged into shares
of the Company's  newly  designated  Series E Convertible  Preferred Stock which
carry an 8%  dividend  which is  payable  in kind or cash at the  option  of the
Company.  The  Company  issued an  aggregate  of 38,531  shares of its  Series E
Convertible  Preferred  Stock.  The preferred stock is redeemable at any time by
the  Company  at par plus  accrued  and  unpaid  dividends  and,  subject to any
required  stockholder  approval,  can be converted  into shares of the Company's
common  stock at a price of $8.00  per  share at any time at the  option  of the
holder and can be  mandatorily  converted  by the  Company  if its common  stock
closing price equals or exceeds $8.00 for a period of twenty consecutive trading
days.


<PAGE>


Item 6.  Selected Consolidated Financial and Operating Data

                      SELECTED CONSOLIDATED FINANCIAL DATA
                 (In thousands, except share and per share data)

        The following  selected  consolidated  financial data for the five years
ended  December  31,  1999 have been  derived  from the  Company's  Consolidated
Financial  Statements,  which  have  been  audited  by KPMG  LLP.  The  selected
consolidated  financial data presented below should be read in conjunction  with
the  Company's   Consolidated   Financial   Statements  and  notes  thereto  and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  which is included  elsewhere in this Form 10-K.  During 1999,  the
Company acquired a total of 13 companies including, one landfill, 11 solid waste
collection  companies  and four  transfer  stations.  During  1998,  the Company
acquired  a  total  of 34  companies  including  two  landfills,  31  collection
companies (2 of which included a transfer station) and one transfer station. Due
to the  significance  of  the  acquired  business  operations  to the  Company's
financial  performance,  the  Company  does  not  believe  that  its  historical
financial  statements are necessarily  indicative of future performance and as a
result will  affect the  comparability  of the  financial  information  included
herein.

<TABLE>
                                                             Fiscal Year Ended December 31

<CAPTION>
                                                    1999            1998       1997         1996        1995
                                                   --------        -------    --------     --------    --------
<S><C><C>                                          <C>             <C>        <C>          <C>         <C>

Statement of Operations Data:
   Revenues........................                $  54,666   $  21,045    $   3,458    $   1,496   $   1,344
   Cost of operations:
     Operating expenses............                   37,921      12,400        1,719          921         766
     Depreciation and amortization.                   11,974       4,501          692          370          72
     Acquisition integration costs (1)                 2,853       1,864           --          --          --
     Write-off of project development costs             --           236        1,495        6,652         --
                                                       ----        -------      ---------    --------    -----
        Total cost of operations...                   52,748      19,001        3,906        7,943         838
                                                   ---------   ---------    ---------    ---------   ---------

        Gross profit (loss) .......                    1,918       2,044        (448)      (6,447)         506

   Selling, general and administrative expenses        9,237       4,483        2,138       2,443        3,286
   Amortization of prepaid consulting fees                --         --           --          834          501
   Restructuring(2)................                       --         --          596        1,741          --
                                                   ---------   ---------    ---------    ---------   ---------
     Loss from operations..........                  (7,319)     (2,439)      (3,182)     (11,465)     (3,281)

   Other income (expense):
     Royalty and other income (expense), net         (1,259)       (134)        (516)         817          761
     Interest expense and financing costs           (14,580)     (4,074)      (1,355)     ( 1,182)        (471)
     Interest income...............                     480         441          172          178          289
     Non-cash charge for debt conversion             (5,584)        --           --            --           --
     Write-off of accounts and notes receivable        --           --          (568)          --       (2,975)
                                                      ----        -----        ---------    ------     ----------
     Total other income (expense)..                 (20,943)     (3,767)      (2,267)        (187)      (2,396)
                                                   ---------   ---------    ---------    ---------     ---------

   Loss before income taxes, discontinued
      operations and extraordinary item             (28,262)     (6,206)      (5,449)     (11,652)      (5,677)
   Federal and state income tax expense
     (benefit).....................                      (6)         43            6          (23)        (110)
   Discontinued operations.........                       --          --           --      (2,261)      (2,303)
   Extraordinary item - loss on extinguishment
     of debt.......................                    (224)       (247)        (134)          --          --
                                                   ---------   --------     --------     ---------   ---------
   Net loss........................                $(28,480)   $ (6,496)    $ (5,589)    $(13,890)   $ (7,870)
   Preferred stock dividends (3)...                       --         888           --         --           10
                                                   ---------   ---------    ---------    --------    ---------
     Net loss available for common
        stockholders(3)............                $(28,480)   $  (7,384)   $ (5,589)    $(13,890)   $ (7,880)
                                                   =========   ==========   ========     ========    ========
   Basic net income (loss) per share from
     continuing operations ........                $  (1.81)   $   (0.97) $   (1.51)     $ (4.10)    $  (2.88)

   Weighted average number of shares used in
     computation of basic net loss per share      15,588,959     7,389,547    3,612,623   2,834,841    1,932,809

EBITDA (4).........................                $   4,655   $   2,130    $ (2,469)    $ (9,909)   $ (2,592)
Adjusted EBITDA (5)................                $   7,508   $   4,230    $   (378)    $ (1,516)   $ (2,592)
Capital expenditures (excluding acquisitions)      $  25,535   $   9,032    $    998     $  6,599    $  9,749
Cash flow from operating activities                $   9,792   $     592    $ (4,586)    $ (3,912)   $ (3,083)
Cash flow from investing activities                $(114,915)  $ (71,939)   $    706     $ (7,641)   $(10,267)
Cash flow from financing activities                $ 117,800   $  68,576    $  6,579     $  6,581    $ 18,416

                                                                          December 31,
                                                     1999            1998        1997         1996       1995
                                                   --------        -------     -------      -------    --------
Balance Sheet Data:
   Cash and cash equivalents..........             $  12,872   $     194    $   2,964    $     265    $ 5,237
   Working capital....................               (8,097)      (6,520)       1,532       (4,508)     2,393
   Total assets.......................               255,093      96,117       18,560       16,858     23,508
   Long-term debt, less current portion              172,716      74,861        7,201        9,450     12,266
   Total stockholders' equity (deficit)               46,852       1,739        5,972       (1,849)     3,292

</TABLE>


        (1)    The  Company  defines  Acquisition  Integration  Costs  as  costs
               incurred,  after an  acquisition  is  closed,  to  integrate  the
               acquired operation with the Company's existing  operation.  These
               costs are separate from any obligations or consideration  paid to
               the seller.  These costs include one-time,  non-recurring  costs,
               which in the opinion of Company  management  have no future value
               and  are  expensed  as  incurred.   The  majority  of  the  items
               identified as Acquisition  Integration  Costs are related to: 1).
               Health and Safety, 2). Name Change, 3). Information  Systems, 4).
               Employee  Severance and  Retention,  and 5).  Physical  Operation
               Relocation  Costs.  These  charges are  expensed as the costs are
               incurred.  While  acquisition  integration  cost  activities  are
               generally completed within one year from the date of acquisition,
               new  expenses  and  accruals  are booked each quarter as they are
               incurred.

        (2)    Prior to March 27, 1996, the Company had been actively developing
               environmental technologies with potential application in a number
               of business areas.  On March 27, 1996, the Company  announced its
               intention to take meaningful actions to conserve cash and working
               capital,  including  restructuring  the  Company's  operations to
               focus its  resources  and  activities on developing an integrated
               solid waste management operation.

        (3)    In May and July 1998 the  Company  met the  mandatory  conversion
               trading  requirements and elected to convert all of the remaining
               shares  of the  Company's  Preferred  Stock  into  shares  of the
               Company's  Common Stock and the Board of  Directors  declared and
               paid cash dividends of approximately $888,000.

        (4)    EBITDA is defined  as  operating  income or loss from  continuing
               operations   excluding   depreciation  and  amortization,   which
               includes  depreciation  and  amortization  included  in  selling,
               general and administrative  expenses.  EBITDA does not represent,
               and should not be considered as an alternative  to, net income or
               cash flows  from  operating  activities,  each as  determined  in
               accordance  with  GAAP.  Moreover,  EBITDA  does not  necessarily
               indicate  whether cash flow will be sufficient  for such items as
               working capital or capital  expenditures,  or to react to changes
               in the  Company's  industry  or to the  economy in  general.  The
               Company  believes  that  EBITDA  is a  measure  commonly  used by
               lenders and certain investors to evaluate a company's performance
               in the solid waste  industry.  The  Company  also  believes  that
               EBITDA  data may  help  investors  to  understand  the  Company's
               performance  because such data may reflect the Company's  ability
               to generate  cash flows,  which is an indicator of its ability to
               satisfy  its  debt  service,  capital  expenditures  and  working
               capital  requirements.  Because all companies and analysts do not
               calculate  EDITDA  in  the  same  fashion,  the  EBITDA  measures
               presented by the Company may not be  comparable  to the similarly
               titled  measures  reported  by  other  companies.  Therefore,  in
               evaluating  EBITDA data,  investors should consider,  among other
               factors:  the non-GAAP nature of EBITDA;  actual cash flows;  the
               actual   availability   of  funds  for  debt   service,   capital
               expenditures  and working capital;  and the  comparability of the
               Company's EBITDA data to  similarly-titled  measures  reported by
               other companies.

        (5)    Adjusted  EBITDA is EBITDA after  adjusting for one-time  charges
               for  write-off  of  landfill   development   costs,   acquisition
               integration costs and restructuring charges.



<PAGE>


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

        The  following  discussion  of the  financial  condition  and results of
operations  of the  Company  should be read in  conjunction  with the  Company's
Consolidated  Financial Statements and the notes thereto.  This Annual Report on
Form 10-K contains forward-looking statements concerning among other things, the
Company's expected future revenues, operations and expenditures and estimates of
the potential  markets for the Company's  services.  Such statements made by the
Company fall 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. All
such forward-looking statements are necessarily only estimates of future results
and the actual results achieved by the Company may differ  materially from these
projections  due to a number of factors as  discussed  in the  section  entitled
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Certain  Factors  Affecting Future  Operating  Results" of this Form
10-K.

Introduction

        The  Company  is an  integrated  non-hazardous  solid  waste  management
company that provides solid waste collection,  recycling,  transfer and disposal
services to commercial,  industrial,  residential and municipal customers within
certain  regional  markets in the Northeast and  Mid-Atlantic  states,  where it
operates.  The Company  focuses on the operation of an integrated  non-hazardous
solid waste management business,  including the ownership and operation of solid
waste  disposal  facilities  (landfills),  transfer  stations  and  solid  waste
collection  services.  The Company derives  revenue from collecting  solid waste
from its  customers,  which it delivers for disposal in its own  landfills,  and
also from unaffiliated waste collection companies who pay to dispose of waste in
the Company's  landfills.  The Company seeks through its acquisition strategy to
acquire substantial  collection  operations and transfer stations in association
with its landfills in order to enhance its overall profitability and to increase
its control over its sources of revenue. See "Business - Strategy"

        During 1999, the Company acquired a total of 13 companies  including one
landfill,  11 collection  companies (2 of which included a transfer station) and
one transfer station.  During 1998, the Company acquired a total of 34 companies
including two landfills, 31 collection companies (2 of which included a transfer
station)  and one  transfer  station.  Due to the  significance  of the acquired
business operations to the Company's financial performance, the Company does not
believe that its historical financial  statements are necessarily  indicative of
future  performance  and  as a  result  will  affect  the  comparability  of the
financial information included herein.

Revenues:

         Revenues   represent   fees  charged  to  customers   for  solid  waste
collection,  transfer,  recycling and disposal services  provided.  Arrangements
with customers include both long-term  contractual  arrangements and as-received
disposal at prices quoted by the Company.  Revenues for the periods presented in
the  consolidated  statements  of  operations  were derived  from the  following
sources:
                                            Year ended December 31,
                                     1999           1998          1997

         Collection                  73.7%          73.5%         12.8%
         Landfill                    14.0           20.1          78.1
         Transfer                    12.3            6.4           9.1
                                    ------         -------       ------

         Total Revenue              100.0%         100.0%        100.0%
                                  =========       ========       ======

         For the  purpose  of this  table,  revenue is  attributed  fully to the
operation  where the Company  first  receives the waste.  For  example,  revenue
received from waste collected by the Company and disposed in a Company  landfill
is entirely  attributed  to  collection.  During 1999 the  increased  revenue is
attributable to the transfer stations the Company acquired July 1, 1999. Both of
these acquired  companies  transfer stations derived a significant portion of
their  revenues  from third  parties  during the period of time from their
acquisition through December 31, 1999. The decrease in landfill revenue as a
percentage  of revenues  in 1999  compared  to 1998 is due  primarily  to the
acquisition  of collection  companies  that had been disposing of their waste at
the Company's  transfer stations and landfills.  These acquired revenues are now
being recorded as collection revenue.

         The increase in the  Company's  collection  revenues as a percentage of
total  revenues  during 1998  compared to 1997 is due primarily to the impact of
the 31 collection  companies  acquired during 1998. The decrease in landfill and
transfer station revenue as a percentage of revenues in 1998 compared to 1997 is
due primarily to the acquisition of collection companies that had been disposing
of their waste at the Company's transfer stations and landfills.  These acquired
revenues are now being recorded as collection revenue.

Recent Business Developments

         Medical Waste  Licensing  Agreement.  During 1996, the Company  entered
into a licensing and royalty  agreement  with  ScotSafe  Limited  (ScotSafe),  a
Glasgow,  Scotland based company,  for the exclusive rights to use the Company's
CFA medical waste processing  technology  throughout  Europe.  During the fourth
quarter of 1997 the Company  terminated its licensing  agreements  with ScotSafe
because  ScotSafe  was in default for failure to pay the Company  royalties  due
under the terms of the agreement.  Subsequent to the  termination,  ScotSafe was
placed into receivership and Eurocare  Environmental  Services,  Ltd. (Eurocare)
purchased  its assets in  December  1997.  In  February  2000,  the  Company and
Eurocare  entered an  exclusive  European  license  for the  Company's  patented
medical waste  treatment  technology.  As part of the licensing  agreement,  the
Company  acquired a  minority  interest  in,  and the right of first  refusal to
acquire Eurocare.

     The Company  experienced  no Year 2000  issues that caused  significant
operational  problems,  delays in the implementation of new information systems,
or failures  related to Year 2000  dependencies in the Company's  systems and in
the systems of suppliers and financial  institutions.  The Company  assessed the
readiness of its systems for handling  the Year 2000 and  management  determined
that all  material  systems  were  compliant  by Year  2000  and that the  costs
associated with this were not material.  The Company incurred only minimal costs
to date associated with the Year 2000 issue.

     Convertible  Subordinated  Notes.  On February 15, 2000, the Company closed
an Exchange Offer for its $49,551,426 of Convertible Subordinated Notes due 2005
and its $100,000,000 Senior Notes due 2006. Approximately  $15,355,000 principal
amount of,  plus  accrued  but unpaid  interest  on, its 11 1/2% Series B Senior
Notes due 2006 and approximately  $22,832,000  principal amount of, plus accrued
but unpaid  interest  on, its 7%  Convertible  Subordinated  Notes due 2005 were
tendered and exchanged into shares of the Company's  newly  designated  Series E
Convertible  Preferred Stock which carry an 8% dividend which is payable in kind
or cash at the option of the Company.  The Company issued an aggregate of 38,531
shares of its Series E  Convertible  Preferred  Stock.  The  preferred  stock is
redeemable  at any time by the Company at par plus accrued and unpaid  dividends
and, subject to any required stockholder approval,  can be converted into shares
of the  Company's  common stock at a price of $8.00 per share at any time at the
option of the  holder and can be  mandatorily  converted  by the  Company if its
common  stock  closing  price  equals  or  exceeds  $8.00 for a period of twenty
consecutive  trading days.  Series D. On December 28, 1999,  the Company  raised
$15,000,000  through a private  placement of convertible  preferred  stock.  The
preferred stock can be converted into shares of the Company's  common stock at a
price  of  $6.00  per  share at any time at the  option  of the  holder  and can
mandatorily converted by the Company if the Company's common stock closing price
exceeds  $9.00 for a period of twenty  consecutive  trading days.  Finally,  the
preferred stock is eligible to vote on an as-converted  basis with the Company's
common stock and is redeemable at any time by the Company.


<PAGE>



         The following table sets forth, for the periods indicated, certain data
derived from the Company's Consolidated Statements of Operations, expressed as a
percentage of revenues:
<TABLE>
<CAPTION>

                                                                   Year ended December 31,
<S>                                                           <C>            <C>            <C>
                                                              1999           1998           1997

         Revenues                                             100.0%         100.0%        100.0%

         Operating expenses                                   69.4            58.9          49.7
         Depreciation and amortization                        21.9            21.4          20.0
         Acquisition integration costs                         5.2             8.9             -
         Write-off of project development costs                  -             1.1          43.3
                                                            -------         --------     ---------
              Total cost of operations                        96.5            90.3         113.0
                                                            -------         --------     ---------

         Gross profit (loss)                                   3.5             9.7         (13.0)
         Selling, general and administrative expenses         16.9            21.3          61.8
         Restructuring                                          -                -          17.2
                                                            -------         --------     ---------
              Loss from operations                           (13.4)          (11.6)        (92.0)

         Royalty and other income (expense), net              (2.3)           (0.6)        (14.9)
         Interest income                                       0.9             2.1           5.0
         Interest expense and financing costs                (26.7)          (19.4)        (39.2)
         Non-cash charge for debt conversion                 (10.2)              -             -
         Write off of accounts receivable                       -                -         (16.4)
                                                            -------        ---------     ----------

              Total other income (expense)                   (38.3)          (17.9)        (65.5)

         Income tax expense                                     -              0.2           0.2

              Loss before extraordinary item                 (51.7)          (29.7)        (157.7)


         Extraordinary item                                   (0.4)           (1.2)          (3.9)
                                                            --------        --------      ---------

              Net loss                                       (52.1)%         (30.9)%       (161.6)%
                                                            =========       ========      ==========

         EBITDA                                                 8.5%          10.1%         (71.4)%
                                                            =========       ========      ==========

         Adjusted EBITDA                                      13.7%           20.9%         (10.9%)
                                                            =========       ========      ===========
</TABLE>


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

         Revenues.  Revenues  for 1999  increased by  approximately  $33,621,000
million to  approximately  $54,666,000  million from  approximately  $21,045,000
million in 1998. The increase of  approximately  159.8% was due primarily to the
13 acquisitions  completed in 1999. The increased  revenue from the acquisitions
was  partially  offset by  decreased  revenue from the  existing  operations  in
Upstate New York due to a decreased customer base.

         Cost of  operations.  Operating  expenses  for 1999  was  approximately
$37,921,000  compared to  $12,400,000  in 1998.  The  increase of  approximately
$25,521,000 was primarily due to the  acquisitions  indicated  above.  Operating
costs,  disposal costs and collection fees vary widely throughout the geographic
areas in which the Company  operates.  The prices  that the Company  charges are
determined  locally and  typically  vary by the volume or weight,  type of waste
collected,  frequency of collections,  distance to final disposal  sites,  labor
costs and amount and type of equipment  furnished to the customer.  The increase
in operating  expenses as a  percentage  of revenues  was  primarily  due to the
change in revenue  mix,  with  increased  revenue  coming  from  collection  and
transfer  operations,  which typically experience much higher operating expenses
than landfill operations.  The Company internalizes a significant portion of its
waste collected in Vermont and Central Pennsylvania, which significantly reduces
costs  of  operations  as  a  percentage  of  revenue.  The  Company  has  begun
internalizing waste from the Eastern New England and Baltimore, MD/Washington DC
Regions.  With the opening of the Mostoller  landfill on December 28, 1999,  the
Company  expects to increase the  percentage of waste it  internalizes  in these
regions, which will further reduce its disposal cost as a percentage of revenue.

        Depreciation and amortization. Depreciation and amortization expense was
$11,974,000 and $4,501,000 for the years-ended 1999 and 1998, respectively.  The
increase  of  approximately  $7,473,000  or 166.0% was due  primarily  to the 13
acquisitions  that  took  place  in  1999  and  the  full  year  impact  of 1998
acquisitions.

        Acquisition   integration   costs.   The  Company  defines   Acquisition
Integration  Costs as  costs  incurred,  after  an  acquisition  is  closed,  to
integrate the acquired  operation with the Company's existing  operation.  These
costs are separate from any  obligations  or  consideration  paid to the seller.
These  costs  include  one-time,  non-recurring  costs,  which in the opinion of
Company  management  have no future  value and are  expensed  as  incurred.  The
majority of the items  identified as Acquisition  Integration  Costs are related
to: 1).  Health and Safety,  2).  Name  Change,  3).  Information  Systems,  4).
Employee Severance and Retention,  and 5). Physical Operation  Relocation Costs.
These  charges  are  accrued  as  the  costs  are  incurred.  While  acquisition
integration  cost  activities are generally  completed  within one year from the
date of  acquisition,  new expenses and accruals are booked each quarter as they
are incurred. Acquisition integration costs totaled approximately $2,853,000 and
$1,864,000 for 1999 and 1998, respectively.

        Selling,  general  and  administrative  expenses.  Selling,  general and
administrative expenses consist of corporate development  activities,  marketing
and public relations costs,  administrative compensation and benefits, legal and
accounting and other professional fees as well as other administrative costs and
overhead.  Selling,  general  and  administrative  expenses  for 1999  increased
approximately  $4,755,000 to $9,237,000 from $4,482,000 in 1998. As a percentage
of revenues,  selling, general and administrative expenses decreased to 16.9% in
1999 from 21.3% in 1998. The dollar  increase was due to acquisitions as well as
ongoing  efforts  by the  Company  to build an  infrastructure  to  sustain  its
significant  growth through  acquisition  and to support  corporate  initiatives
designed to implement its strategy.  The decrease as a percentage of revenue was
primarily  due to the  expanded  revenue base and related  efficiencies,  as the
Company is able to purchase  "tuck-in"  acquisitions  that increase revenues and
improve margins without adding  significant  administrative  costs.  The Company
anticipates  that in future  periods its  selling,  general  and  administrative
expenses  should continue to decrease as a percentage of revenue as it leverages
its current corporate overhead to revenue growth primarily through acquisitions.

        Royalty and other expense.  Royalty and other expense was  approximately
$1,259,000  and  $134,000  in 1999 and  1998,  respectively.  Royalty  and other
expenses   relate  to  the  Company's   medical  waste   treatment   proprietary
technologies.

        Interest  expense and  financing  costs.  Interest  expense for 1999 was
approximately  $14,100,000  net of  interest  income of  $480,000 as compared to
approximately  $3,633,000  net of  interest  income of  $441,000  for 1998.  The
increase resulted primarily from additional  indebtedness incurred in connection
with acquisitions and capital expenditures for the Company's operations.  During
1999 and 1998,  the  Company  capitalized  interest  expense of  $1,516,000  and
$360,000, respectively related to construction costs.

        Non-cash charge for debt conversion. Non-cash charge for debt conversion
relates to the conversion of debt into equity. In connection with the conversion
of debt into  equity,  the Company  issued  1,199,252  shares of Common Stock in
excess of the shares  that would have been issued if the debt was  converted  in
accordance  with its original terms.  The Company  recorded a non-cash charge of
approximately $5,584,000 attributable to the issuance of these additional shares
of Common Stock, which has been offset in consolidated  stockholders'  equity by
the additional deemed proceeds from the issuance of the shares.


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

        Revenues.  Revenues  for  1998  increased  by  $17,587,000  or  509%  to
$21,045,000 from $3,458,000 in 1997.  Thirty-four  acquisitions completed by the
Company  in  1998  accounted  for  approximately  $15.8  million  or  90% of the
increase.  The  balance of the  increase  is the result of the  internal  growth
within the Vermont  operations during 1998. The growth in the Vermont operations
was due to the full year's  operation of the CSWD  Transfer  Station,  which was
acquired  in the  fourth  quarter  of 1997,  increased  volume and prices at the
Moretown Landfill and internal growth at the Company's collection operations.

        Cost of  operations.  Operating  expenses  for  1998  was  approximately
$12,400,000  compared to $1,719,000 for 1997.  The increase of  $10,681,000  was
primarily  due to the 34  acquisitions  completed by the Company in 1998 and the
related  increase in  revenue.  As a  percentage  of sales,  operating  expenses
increased to  approximately  59% in 1998 from  approximately  50% in 1997.  This
increase  was  primarily  due to the change in revenue  mix,  with a much larger
portion of the  revenue  coming  from  collection  operations,  which  typically
experience much higher operating expenses than landfill operations.  The Company
internalizes  a  significant  portion  of its waste  collected  in  Vermont  and
Pennsylvania, which significantly reduces costs of operations as a percentage of
revenue.  The Company's Upstate New York and Eastern New England operations were
not internalized in 1998.  Operating costs,  disposal costs, and collection fees
vary widely throughout the geographic areas in which the Company  operates.  The
prices that the Company  charges are determined  locally,  and typically vary by
the  volume  or  weight,  type of waste  collected,  frequency  of  collections,
distance to final disposal  sites,  labor costs and amount and type of equipment
furnished to the customer.

        Depreciation and amortization. Depreciation and amortization expense was
$4,501,000 and $692,000 for the  years-ended  1998 and 1997,  respectively.  The
increase of  $3,809,000  was primarily due to the  additional  depreciation  and
amortization  related to the Company's 34  acquisitions  completed  during 1998.
During  1998,  the Company  purchased  property and  equipment of  approximately
$24,298,000  related to the  acquisitions.  ($7,522,000  of this  amount was for
assets under  development  not placed into service in 1998.)  Goodwill and other
intangible  assets  totaling  approximately  $35,171,000  were also  recorded in
connection  with  the   acquisitions.   In  addition,   the  Company   purchased
approximately  $3,094,000  of property and  equipment  necessary for its ongoing
operations,  including costs to improve  efficiencies at several of the acquired
companies.  Finally,  landfill  amortization  costs in Vermont  increased due to
increased  usage of the  Moretown  landfill  in 1998.  The  Company had costs of
approximately $5,456,000 for construction of Cell 2 at the Moretown landfill and
other  development  costs related to the Mostoller and South Hadley landfill and
the Transfer Station in Oxford Massachusetts  totaling  approximately  $480,000.
These  costs did not  impact  operating  results  as they were not  placed  into
service in 1998.

        Acquisition   integration   costs.   The  Company  defines   Acquisition
Integration  Costs as  costs  incurred,  after  an  acquisition  is  closed,  to
integrate the acquired  operation with the Company's existing  operation.  These
costs are separate from any  obligations  or  consideration  paid to the seller.
These  costs  include  one-time,  non-recurring  costs,  which in the opinion of
Company  management  have no future  value and are  expensed  as  incurred.  The
majority of the items identified as Acquisition Integration Costs are related to
1). Health and Safety, 2). Name Change, 3).  Information  Systems,  4). Employee
Severance and Retention,  and 5). Physical  Operation  Relocation  Costs.  These
charges are accrued as the costs are  incurred.  While  acquisition  integration
cost  activities  are  generally  completed  within  one  year  from the date of
acquisition,  new  expenses  and  accruals  are booked each  quarter as they are
incurred. Acquisition integration costs totaled $1,864,000 for 1998.

        Write-off  of  landfill   development   costs.   Write-off  of  landfill
development costs were $236,000 and $1,495,000 for 1998 and 1997,  respectively.
The write-off of landfill development costs is related to the termination of the
Company's  contract for  remodeling  and  operation of a landfill in  Fairhaven,
Massachusetts.  See  footnote  17  "Fairhaven  Massachusetts  Operation"  in the
financial statements included in Item 8. The 1998 expense of $236,000 represents
the final  charges  related  to the  termination  of the  project.  There are no
remaining accruals at December 31, 1998.

        Selling,  general  and  administrative  expenses.  Selling,  general and
administrative   expenses  increased  $2,344,000  in  1998  to  $4,482,000  from
$2,138,000  in  1997.  As  a  percentage  of  revenue,   selling,   general  and
administrative  expenses  decreased  to 21.3% in 1998  from  61.8% in 1997.  The
dollar  increase was due to efforts by the Company to build  infrastructure,  to
sustain its  significant  growth through  acquisition  and to support  corporate
initiatives  designed to implement its strategy.  The Company  expects  spending
growth to continue  moderately  into 1999 as the Company  continues to implement
its growth through acquisition strategy. The decrease as a percentage of revenue
was primarily due to the expanded revenue base and related efficiencies,  as the
Company is able to purchase  "tuck-in"  acquisitions  that increase revenues and
improve margins without adding  significant  administrative  costs.  The Company
anticipates  that in future  periods its  selling,  general  and  administrative
expenses  should continue to decrease as a percentage of revenue as it leverages
its current corporate overhead to revenue growth primarily through acquisitions.

        Restructuring.  During  1996,  the Company  announced  its  intention to
restructure  the Company's  operations to focus its resources and  activities on
developing  an  integrated  solid waste  management  operation.  See footnote 16
"Restructuring"   in  the   financial   statements   included  in  Item  8.  The
restructuring  was  completed  in 1997.  Restructuring  charges for 1997 totaled
$596,000   which   consisted  of  costs   incurred   for   employee   severance,
non-cancelable  lease  commitments,  professional  fees and litigation costs. No
charges were recorded in 1998.

        Royalty and other expense. Royalty and other expenses were approximately
$134,000 and $516,000 in 1998 and 1997, respectively. Royalty and other expenses
relate to the Company's medical waste treatment proprietary technologies.

        Interest expense and financing costs, net. Interest expense for 1998 was
approximately  $3,633,000,  net of  interest  income of  $441,000 as compared to
approximately  $1,182,000  net of  interest  income of  $172,000  for 1997.  The
increase  resulted  primarily  from  significant  increases in debt necessary to
finance the acquisitions and capital needs of the Company. During 1998 and 1997,
the Company capitalized  interest expense of $360,000 and $24,000,  respectively
related to construction  costs for the Mostoller and South Hadley  landfills and
the Transfer Station in Oxford Massachusetts discussed above.

Liquidity and Capital Resources

        The  Company's  business is capital  intensive.  The  Company's  capital
requirements, which are substantial, include acquisitions,  property, equipment,
capital  expenditures for landfill cell construction,  landfill  development and
landfill closure activities.  Principally due to these factors,  the Company may
incur  working  capital  deficits.  The Company  plans to meet its capital needs
through various financing sources,  including internally generated funds, equity
securities and debt. On May 13, 1998, the Company closed on an offering of $60.0
million 7% Convertible  Subordinated Notes which resulted in net proceeds to the
Company of approximately  $58.3 million. On March 2, 1999, the Company completed
a private offering of 11 1/2% Senior Notes in the aggregate  principal amount of
$100 million due January 15, 2006 which  resulted in net proceeds to the Company
of  approximately  $97.3 million.  In August 1999, the Company issued  2,239,745
shares of its common stock at $7 per share in a private  placement  for proceeds
totaling  approximately  $15.7  million.  In December  1999,  the Company issued
15,000  shares of Series D Preferred  Stock in a private  placement for proceeds
totaling approximately $15 million. The Company has used the proceeds from these
debt and equity  offerings to complete  various  acquisitions  and  construction
projects  during 1998 and 1999.  The  Company  intends to use the balance of the
proceeds  for general  corporate  purposes,  construction  projects  and working
capital.  In  March  1999,  approximately  $10,390,000  of  the  7%  Convertible
Subordinated  Notes  were  exchanged  into  common  stock  through  an  exchange
offering. On February 15, 2000 approximately $22.6 million of the 7% Convertible
Subordinated  Notes and approximately  $15.4 million of the 11 1/2% Senior Notes
were  exchanged  into an aggregate of 38,531  shares of the  Company's  Series E
Convertible Preferred Stock through an exchange offering.

        The Company maintains an acquisitions department that is responsible for
the identification,  due diligence, negotiation and closure of acquisitions. The
Company believes that a combination of internally  generated  funds,  additional
debt and equity  financing will provide  adequate funds to support the Company's
cost structure,  acquisition  strategy and working capital  requirements for the
foreseeable future. The Company intends to continue its strategy to aggressively
pursue and develop an  integrated  solid  waste  management  company,  primarily
through  acquisitions.  There can be no assurance that additional debt or equity
financing  will be available,  or available on terms  acceptable to the Company.
Any failure of the Company to obtain  required  financing  would have a material
adverse effect on the Company's financial condition and results of operation.

        In connection with its growth strategy,  the Company currently is and at
any given time will be involved in  potential  acquisitions  that are in various
stages of exploration and negotiation  (ranging from initial  discussions to the
execution of letters of intent and the  preparation  of definitive  agreements),
some of which may, if  consummated,  be  material.  No  assurance  can be given,
however,  that the Company will be successful in completing further acquisitions
in accordance with its growth strategy, or that such acquisitions, if completed,
will be successful.

         During 1999, the Company  acquired a total of 13 companies,  including,
five collection companies and a landfill in Central Pennsylvania, one collection
company in Vermont, two collection companies,  two transfer stations and a paper
recycling plant in Eastern New England,  two collection companies and a transfer
station in Upstate New York and a collection company and transfer station in the
Baltimore,  Maryland/Washington  D.C  region.  The  acquisitions  have  all been
recorded using the purchase method of accounting and accordingly, the results of
operations of the acquired companies are included in the consolidated statements
of operations since the respective  dates of acquisition.  The aggregate cost of
the  acquisitions  was  approximately  $124,451,000  consisting of approximately
$84,063,000  in cash,  $19,338,000  in  common  stock,  $11,615,000  in Series C
Preferred Stock and $9,435,000 in assumed  liabilities.  The  acquisitions  have
combined annual revenues of approximately  $42.0 million.  The acquisitions have
been accounted for using the purchase method of accounting.  The purchase prices
were allocated to the assets and liabilities of the acquired  companies based on
their  respective  fair values at the dates of acquisition as follows:  property
and equipment of approximately  $110,211,000,  intangible  assets of $10,721,000
and other assets of  $3,519,000.  The excess of the purchase price over the fair
value of the net identifiable  assets acquired of  approximately  $8,512,000 has
been recorded as goodwill and is being amortized on a  straight-line  basis over
forty years.  The  acquisitions  have combined annual revenues of  approximately
$42.0  million.  Acquisition  integration  costs for the year ended December 31,
1999, related to the acquisitions in all regions were approximately $2,853,000.

        The  Company  generated  net cash  from  operating  activities  for 1999
approximately   $9,793,000.   In  1998,  the  Company   generated  net  cash  of
approximately  $592,000 from operating  activities.  The improved cash flow from
operations  in 1999 was due  primarily  to the  increased  revenues,  which were
offset  by  related  increases  in cost of  operations,  integration  costs  and
selling,  general and  administrative  expenses.  The remainder of the cash flow
increase was due to changes in the operating  assets and  liabilities  including
increases in accounts payable, accrued expenses and deferred revenue. These were
offset by an increase in accounts receivable.

        EBITDA   increased   by   approximately   $2,525,000   during   1999  to
approximately  $4,655,000 from EBITDA of approximately  $2,130,000 in 1998. As a
percentage of revenue,  EBITDA decreased to 8.5% during 1999 from 10.1% in 1998.
Adjusted  EBITDA   increased  by   approximately   $3,278,000   during  1999  to
approximately  $7,508,000  from Adjusted EBITDA of  approximately  $4,230,000 in
1998. As a percentage  of revenue,  Adjusted  EBITDA  decreased to 13.7% in 1999
compared to 20.9% in 1998. The decrease in EBITDA as a percentage of revenue was
primarily due to the change in revenue mix, with  increased  revenue coming from
collection  and transfer  operations,  which  typically  experience  much higher
operating expenses than landfill operations.

        Net cash used by  investing  activities  during  1999 was  approximately
$114,915,000  compared to cash used by  investing  activities  of  approximately
$71,939,000  in 1998.  Of the net cash  used by  investing  activities  in 1999,
approximately  $84,063,000  million was used for the  acquisition  of  landfill,
collection and transfer operations in Vermont, Central Pennsylvania, Eastern New
England and Upstate New York.  Additional capital  expenditures of approximately
$850,000 were made to increase operating  efficiencies at the Company's Vermont,
Central Pennsylvania, Eastern New England and Upstate New York operations. Other
investing  activity  included  the  acquisition  of  various  long-term  permits
necessary to operate the landfills and for long-term prepaid disposal costs. The
net  cash  used by  investing  activities  for  1998  was  primarily  due to the
acquisitions of landfill, collection and transfer operations in Vermont, Central
Pennsylvania, Eastern New England and Upstate New York. In addition, the Company
placed deposits for future acquisitions totaling $2,211,000.  Additional capital
expenditures  of  approximately  $9,032,000  were made to develop  Cell 2 at the
Company's  Moretown  landfill  and to  increase  operating  efficiencies  at the
Company's  Vermont,  Central  Pennsylvania,  Eastern New England and Upstate New
York operations.

        The Company's  capital  expenditures  and capital needs for acquisitions
have  increased   significantly,   reflecting  the  Company's  rapid  growth  by
acquisition  and  development  of revenue  producing  assets,  and will increase
further as the Company continues to complete acquisitions.

        Net cash provided by financing  activities during 1999 was approximately
$117,800,000  compared  to  $68,576,000  in 1998.  The  increase in 1999 was due
primarily to the receipt of the proceeds of  $100,000,000  related to the Senior
Notes and borrowings  under the Company's bank credit  facility of  $17,500,000.
The  proceeds  were  offset by  principal  repayments  of debt of  approximately
$23,000,000.  The Company also raised approximately $30,000,000 from two private
placements of its Common and Preferred Stock.

        On August 3,  1999,  the  Company  entered  into a $25  million  secured
revolving  credit facility with The BankNorth Group,  N.A. to fund  acquisitions
and for general working capital  purposes.  The revolving credit agreement has a
term of three years,  provides for an interest rate based on LIBOR or Prime, and
includes  other terms and  conditions  customary  for secured  revolving  credit
facilities.

        At December 31, 1999, the Company had borrowed $17.5 million against the
credit facility.

        At December 31, 1999,  the Company had  approximately  $174.1 million of
short-term and long-term debt.

        Based upon its current  operating  plan,  the Company  believes that its
cash and cash equivalents,  available borrowing capacity,  future cash flow from
operations  and the proceeds of future debt and equity  financings  will satisfy
the Company's working capital needs for the foreseeable future.  However,  there
can be no  assurances  in this  regard.  See Certain  Factors  Affecting  Future
Operating  Results-Substantial  Increased  Leverage," and "Uncertain  Ability to
Finance the Company's Growth."




<PAGE>


Certain Factors Affecting Future Operating Results

History of Losses

During the fiscal years ending  December  31, 1999,  1998 and 1997,  the Company
suffered  net  losses   (including   non-recurring   charges)  of  approximately
$28,480,000,   $6,496,000,   and  $5,589,000,   respectively,   on  revenues  of
approximately $54,660,000 $21,045,000, and $3,458,000,  respectively.  Following
its restructuring in 1996 in which the Company directed its focus on becoming an
integrated solid waste management  company,  the Company  implemented a business
strategy based on aggressive growth through acquisitions.  The Company's ability
to become  profitable,  and to maintain  such  profitability,  as it pursues its
business strategy will depend upon several factors, including its ability to (i)
execute its acquisition  strategy and expand its revenue  generating  operations
while not proportionately  increasing its administrative  overhead,  (ii) locate
sufficient  additional  financing to fund  acquisitions,  and (iii)  continually
adapt to changing  conditions  in the  competitive  market in which it operates.
Outside  factors,  such as the economic and regulatory  environments in which it
operates will also have an effect on the Company's business.

Substantial Increased Leverage

In connection with its business  strategy,  the Company has incurred and expects
to incur  substantial  indebtedness,  resulting  in a highly  leveraged  capital
structure.   The  Company's   substantial   indebtedness  could  have  important
consequences,  including  limiting the Company's  ability to fund future working
capital, capital expenditures and other general corporate requirements. This may
increase  the  Company's   vulnerability   to  adverse   economic  and  industry
conditions;  requiring the Company to dedicate a substantial portion of its cash
flow from operations to payments on the Company's indebtedness, thereby reducing
the  availability  of the Company's cash flow to fund working  capital,  capital
expenditures  and other  general  corporate  purposes;  limiting  the  Company's
flexibility in planning for, or reacting to,  changes in the Company's  business
and the  industry  in which the  Company  operates;  placing  the  Company  at a
competitive  disadvantage  compared to the Company's  competitors that have less
indebtedness and limiting the Company's ability to borrow additional funds.

Uncertain Ability to Finance the Company's Growth

The Company will require  substantial  funds to complete and bring to commercial
viability all of its currently  planned  projects.  The Company also anticipates
that future  business  acquisitions  will  require  financing  through cash from
operations,  borrowings under its bank credit  facility,  offering the Company's
stock as consideration.  Therefore,  the Company's ability to satisfy its future
capital and operating requirements is dependent on a number of pending or future
financing activities, none of which is assured successful completion.

Ability to Manage Growth

The  Company's  objective  is to continue to grow by  expanding  its services in
markets where it can be one of the largest and most profitable  fully-integrated
solid waste  management  companies.  Accordingly,  the  Company  may  experience
periods of significant  rapid growth.  Such growth,  if it were to occur,  could
place a significant  strain on the  Company's  management  and its  operational,
financial  and other  resources.  It cannot be assured  that the Company will be
able to expand its operational and financial systems and controls or recruit the
appropriate  personnel in an  efficient  manner at a pace  consistent  with such
contemplated growth.

Uncertain Ability to Attract and Retain Personnel

 The Company's  future success is highly dependent upon the ability to identify,
hire, train and motivate a sufficient  number of highly qualified  personnel for
the Company's  planned  growth.  The Company faces  competition  for  recruiting
qualified  personnel  from our  competitors,  other  companies  not in the waste
management industry,  government entities and other organizations.  It cannot be
assured  that  the  Company  will be  successful  in  attracting  and  retaining
qualified personnel as required for planned operations.

Ability to Identify, Acquire and Integrate Acquisition Targets

The  future  success  of the  Company  is highly  dependent  upon the  Company's
continued  ability to successfully  identify,  acquire and integrate  additional
solid  waste  collection,   recycling,  transfer  and  disposal  businesses.  As
competition  for  acquisition   candidates  increases  within  the  solid  waste
management industry,  the availability of suitable candidates at terms favorable
to the Company may decrease.  The Company  competes for  acquisition  candidates
with larger,  more  established  companies that may have  significantly  greater
capital resources than the Company,  which can further decrease the availability
of suitable acquisition  candidates.  There can be no assurance that the Company
will be able to  identify  suitable  acquisition  candidates,  obtain  necessary
financings on favorable terms or successfully  integrate any  acquisitions  with
current operations.

The Company  believes  that a  significant  factor in its ability to  consummate
acquisitions  will  be the  attractiveness  of the  Company's  Common  Stock  as
consideration for potential  acquisition  targets.  This  attractiveness may, in
large part, be dependent upon the relative market price and capital prospects of
the  Company's  equity  securities  as compared to the equity  securities of its
competitors.  If the market price of the Company's Common Stock were to decline,
the Company's ability to implement its acquisition  program through the issuance
of its Common Stock could be materially  adversely  affected.  Ability to Manage
Growth

The  Company's  objective  is to continue to grow by  expanding  its services in
markets where it can be one of the largest and most profitable  fully-integrated
solid waste  management  companies.  Accordingly,  the  Company  may  experience
periods of significant  rapid growth.  Such growth,  if it were to occur,  could
place a significant  strain on the  Company's  management  and its  operational,
financial  and other  resources.  Any  failure  to expand  its  operational  and
financial  systems  and  controls  or to  recruit  appropriate  personnel  in an
efficient  manner at a pace  consistent  with such growth  could have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

The  Company's  future  success is also  highly  dependent  upon its  continuing
ability to identify,  hire, train and motivate highly qualified  personnel.  The
Company  faces  competition  for hiring  such  personnel  from other  companies,
government entities and other organizations.  There can be no assurance that the
Company will be successful in attracting  and retaining  qualified  personnel as
required  for its  projected  operations.

Limitations on Landfill Permitting and Expansion

The Company's  operations  depend on its ability to expand the landfills it owns
or operates and develop or acquire new landfill sites. There can be no assurance
that the Company will be successful in obtaining new landfill sites or expanding
the  permitted  capacity of its  existing  landfills.  The process of  obtaining
required  permits and  approvals  to operate and expand  landfills  and transfer
stations has become increasingly  difficult and expensive.  The process can take
several years and involves  hearings and compliance  with zoning,  environmental
and other  requirements.  There can be no  assurance  that the  Company  will be
successful in obtaining and  maintaining  required  permits.  Even when granted,
final permits to expand are often not approved until the remaining capacity of a
landfill is very low. In the event the Company  exhausts its permitted  capacity
at one of its  landfills,  the Company's  ability to expand  internally  will be
limited and the Company  will be  required  to cap and close such  landfill.  In
addition,  the  Company  could be forced to  dispose  of its waste at  landfills
operated by its competitors.  The additional costs could have a material adverse
effect on the Company's business.

Dependence on Management

The  Company's  future  success is highly  dependent  upon the  services  of its
executive  officers,  particularly  Philip  Strauss,  Chairman,  Chief Executive
Officer  and  President  of the  Company,  and  Robert  Rivkin,  Executive  Vice
President-Acquisitions,  Treasurer and Secretary of the Company. The Company has
obtained  key  executive  insurance  policies in the amount of $1.0 million with
respect to each of Messrs.  Strauss  and  Rivkin.  Should the  Company  lose the
services of either of them for a significant  period of time,  the Company could
experience a  disruption  in its  operations  that could  potentially  cause the
Company to miss an acquisition,  fail to complete a project on a timely basis or
manage growth at a critical juncture.

Failed Acquisitions or Capital Projects

In accordance with generally accepted accounting principles, the Company records
some  expenditures and advances relating to acquisitions,  pending  acquisitions
and  landfill  projects  as  assets  on the  balance  sheet,  then  amortize  or
depreciate  these  capitalized  expenditures  and  advances  over time,  usually
matching an asset's depreciation against the revenues it generates.  The Company
also has an accounting policy to record as an expense in the current  accounting
period  all  unamortized  capital  expenditures  and  advances  relating  to any
operation  that is  permanently  shut  down,  any  acquisition  that will not be
consummated,  and any landfill project that is terminated.  As a result of these
accounting  practices,  the  Company  may have to record the entire  capitalized
expenditure of any failed  acquisition or terminated project as a charge against
earnings in the accounting period in which the failure or termination  occurs. A
large unexpected  expense against typical earnings could have a material adverse
effect on the  Company's  results of  operations,  financial  condition  and the
business.

Competition

The solid waste management industry is highly  competitive,  very fragmented and
requires  substantial  labor  and  capital  resources.  Competition  exists  for
collection,  recycling, transfer and disposal services, and acquisition targets.
The markets the Company  competes or is likely to compete in are usually  served
by one or more of the large  national,  regional or local solid waste  companies
who may have  accumulated  substantial  goodwill and/or have greater  financial,
marketing  or technical  resources  than those  available  to the  Company.  The
Company also competes with counties, municipalities and operators of alternative
disposal  facilities  that  operate  their own  waste  collection  and  disposal
facilities.  The  availability  of user fees,  charges or tax  revenues  and the
availability of tax-exempt financing may provide a competitive  advantage to the
public sector.  Additionally,  alternative disposal facilities such as recycling
and  incineration  may  reduce the demand  for the  disposal  of solid  waste in
landfills.  Competition for waste  collection and disposal  business is based on
price,  the quality of service  and  geographical  location.  From time to time,
competitors  may  reduce the price of their  services  in an effort to expand or
maintain  market share or to win  competitively  bid contracts.  There can be no
assurance  that the Company will be able to  successfully  bid such contracts or
compete with the larger and better-capitalized companies.

Geographic Concentration of Operations

The  Company  has  established  solid waste  management  operations  in Vermont,
Central  Pennsylvania,  Eastern New England,  Baltimore,  MD/Washington D.C. and
Upstate New York. Since the Company's current primary source of revenues will be
concentrated in these geographic  locations,  the Company's business,  financial
condition and results of operations  could be  materially  affected by,  without
limitation, the following: (i) downturns in these local economies, (ii) severely
harsh weather conditions and (iii) state regulations.  Additionally, the growing
competition   within  the  local   economies  for  waste  streams  may  make  it
increasingly difficult to expand within these regions. There can be no assurance
that the Company  will be able to continue to increase  the waste  stream to its
landfills or be able to expand its geographic markets to mitigate the effects of
adverse events that may occur in these regions.

Seasonality

The Company's  revenues and results of operations tend to vary  seasonally.  The
winter  months of the fourth and first  quarters  of the  calendar  year tend to
yield lower  revenues than those  experienced in the warmer months of the second
and third quarters.  The primary reasons for lower revenues in the winter months
include,  without  limitation:  (i) harsh winter  weather  conditions  which can
interfere  with  collection  and  transportation,   (ii)  the  construction  and
demolition  activities which generate landfill waste are primarily  performed in
the warmer  seasons  and (iii) the  volume of waste in the  region is  generally
lower than that which occurs in warmer  months.  The Company  believes  that the
seasonality of the revenue stream will not have a material adverse effect on the
Company's  business,  financial  condition  and  results  of  operations  on  an
annualized basis.

Environmental and Government Regulations

The Company and its customers operate in a highly regulated environment,  and in
general the Company's landfill projects will be required to have federal,  state
and/or local government permits and approvals. Any of these permits or approvals
may  be  subject  to  denial,   revocation   or   modification   under   various
circumstances.  In addition, if new environmental legislation or regulations are
adopted or existing legislation or regulations are amended or are interpreted or
enforced  differently,  the Company or its  customers  may be required to obtain
additional  operating  permits or approvals.  There can be no assurance that the
Company will meet all of the applicable  regulatory  requirements.  Any delay in
obtaining  required  permits  or  approvals  will  tend to cause  delays  in the
Company's  ability to obtain  project  financing,  resulting in increases in the
Company's  need to invest  working  capital in projects  prior to obtaining more
permanent  financing,  and will also tend to reduce project returns by deferring
the  receipt of project  revenues.  In the event that the Company is required to
cancel any  planned  project  as a result of the  inability  to obtain  required
permits or other regulatory impediments,  the Company may lose any investment it
has made in the project up to that point,  and the  cancellation of any landfill
projects  may  have a  materially  adverse  effect  on the  Company's  financial
condition and results of operations.

Potential Environmental Liability and Adverse Effect of Environmental Regulation

The  Company's  business  exposes it to the risk that it will be held  liable if
harmful  substances escape into the environment and cause damages or injuries as
a result  of its  operating  activities.  Moreover,  federal,  state  and  local
environmental  legislation and regulations require substantial  expenditures and
impose significant liabilities for non-compliance.  The Company believes that it
is currently in material compliance with all applicable environmental laws.

Potential Adverse Community Relations

The potential exists for unexpected delays,  costs and litigation resulting from
community  resistance and concerns relating to existing and acquired  operations
and proposed future development of solid waste facilities.

Performance or Surety Bonds and Letters of Credit

The Company may be required to post a performance bond, surety bond or letter of
credit to ensure proper closure and  post-closure  monitoring and maintenance at
its landfills and transfer stations.  It cannot be assured that the Company will
be able to obtain the  required  performance  bonds,  surety bonds or letters of
credit in sufficient amounts or at acceptable rates.

Environmental Impairment Liability Insurance

The Company has environmental impairment liability insurance policies at each of
its  operating  landfills,  which  cover  claims for sudden or gradual  onset of
environmental  damage at its  landfills,  in addition to a $20 million  umbrella
policy  as  excess  coverage.  If  the  Company  were  to  incur  liability  for
environmental  damage in excess of its primary insurance  limits,  its financial
condition,  results of operations and liquidity could be adversely affected. The
Company carries a $2 million  comprehensive  general liability  insurance policy
which  management  considers  adequate  at this time to  protect  its assets and
operations from other risks.

Adequacy of Accruals for Closure and Post-Closure Costs

The  Company  has  material  financial   obligations  relating  to  closure  and
post-closure costs of its existing landfills and any landfill it may purchase or
operate  in  the  future.   The  Company   estimates  and  accrues  closure  and
post-closure  costs  based  on  engineering  estimates  of  landfill  usage  and
remaining  landfill  capacity.  There  can be no  assurance  that the  Company's
financial  obligations  for closure and  post-closure  costs will not exceed the
amount accrued.

Inflation

        The  Company  does not  believe  its  operations  have  been  materially
affected by inflation.


Item 8.  Financial Statements and Supplementary Data


<PAGE>


               WASTE SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARIES

                   Index to Consolidated Financial Statements



                                                                          Page

Independent Auditors' Report                                               28

Consolidated Balance Sheets at December 31, 1999 and 1998                  29

Consolidated Statements of Operations for the years ended
  December 31, 1999, 1998, and 1997                                        30

Consolidated Statements of Cash Flows for the years ended
  December 31, 1999, 1998 and 1997                                         31

Consolidated Statements of Stockholders' Equity (Deficit)
  for the years ended December 31, 1999, 1998 and 1997                     32

Notes to Consolidated Financial Statements                              33-46



<PAGE>



                          Independent Auditors' Report




The Board of Directors
Waste Systems International, Inc.:



We have audited the  accompanying  consolidated  balance sheets of Waste Systems
International,  Inc. and  subsidiaries as of December 31, 1999 and 1998, and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for each of the years in the  three-year  period ended  December 31, 1999.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  consolidated  financial  position of Waste Systems
International,  Inc. and  subsidiaries as of December 31, 1999 and 1998, and the
consolidated  results of their  operations  and their cash flows for each of the
years in the  three-year  period ended  December 31, 1999,  in  conformity  with
generally accepted accounting principles.


KPMG LLP


Boston, Massachusetts
March 28, 2000




<PAGE>



               WASTE SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                                   December 31,        December 31,
                                                                                       1999                1998
<S>                                                                               <C>                 <C>
                                  Assets
Current assets:
      Cash and cash equivalents                                                    $  12,871,773      $     193,613
      Accounts receivable, less allowance for doubtful accounts of
        $815,219  at December 31, 1999 and $222,028 at December 31,1998                9,294,149          5,235,534
      Prepaid expenses and other current assets  (Note 4)                              2,463,005          4,769,285
                                                                                   --------------      -------------

        Total current assets                                                          24,628,927         10,198,432

Property and equipment, net (Notes 3 and 5)                                          174,957,281         44,685,735
Intangible assets, net (Notes 3 and 6)                                                47,860,406         38,059,374
Other assets                                                                           7,646,477          3,173,158
                                                                                   --------------     --------------
        Total assets                                                               $ 255,093,091      $  96,116,699
                                                                                   ==============     ==============



        Liabilities and Stockholders' Equity

Current liabilities:
      Current portion of long-term debt and notes payable (Note 7)                 $   1,383,995      $   8,259,922
      Accounts payable                                                                14,712,075          3,849,632
      Accrued expenses  (Note 8)                                                      14,734,758          2,742,539
      Deferred revenue                                                                 1,893,576          1,866,128
                                                                                   --------------     --------------
        Total current liabilities                                                     32,724,404         16,718,221

Long-term debt and notes payable (Note 7)                                            172,715,823         74,861,187
Landfill closure and post-closure costs (Note 10)                                      2,800,471          2,798,597
                                                                                   --------------     --------------
        Total liabilities                                                            208,240,698         94,378,005
                                                                                   --------------     --------------

Commitments and Contingencies (Notes 7 and 11)

Stockholders' equity (Notes 12, 13 and 14):
      Common stock, $.01 par value.  Authorized 75,000,000 shares;
        20,330,844 and 11,718,323 shares issued and outstanding
        at December 31, 1999 and December 31, 1998, respectively                         203,309            117,184
      Series D Preferred Stock $.001 par value Authorized 1,000,000 shares;
         Preferred Stock; 20,500 shares designated, 15,000 and 0 shares issued
         and outstanding at December 31, 1999 and 1998, respectively.                 15,000,000                  -
      Additional paid-in capital                                                      96,318,442         37,810,712
      Accumulated deficit                                                            (64,669,358)       (36,189,202)
                                                                                   ---------------    --------------
        Total stockholders' equity                                                    46,852,393          1,738,694
                                                                                   ---------------    --------------

        Total liabilities and stockholders' equity                                 $ 255,093,091      $  96,116,699
                                                                                   ===============    ==============

</TABLE>


          See accompanying notes to consolidated financial statements.


<PAGE>










               WASTE SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations


<TABLE>
<CAPTION>
                                                                   Years ended December 31,
                                                             1999                      1998                 1997
                                                             ----                      ----                 ----
<S>  <C> <C>                                             <C>                     <C>                   <C>


Revenues                                                 $ 54,666,320            $ 21,044,584          $ 3,457,692

Cost of operations:
     Operating expenses                                    37,921,091              12,399,529            1,718,214
     Depreciation and amortization                         11,974,460               4,501,424              692,224
     Acquisition integration costs (Note 3)                 2,852,736               1,864,535                    -
     Write-off of project development costs (Note 17)               -                 235,464            1,495,388
                                                           -----------           ------------         -------------
       Total cost of operations                            52,748,287              19,000,952            3,905,826

       Gross profit (loss)                                  1,918,033               2,043,632             (448,134)

Selling, general and administrative expenses                9,237,049               4,482,478            2,138,180
Restructuring (Note 16)                                             -                       -              596,426
                                                          -------------          -------------        --------------

         Loss from operations                              (7,319,016)             (2,438,846)          (3,182,740)

Other income (expense):
     Royalty and other income (expense), net (Note 15)     (1,259,148)               (134,455)              (515,875)
     Interest income                                          479,755                 441,069                172,363
     Interest expense and financing costs                 (14,579,571)             (4,073,693)            (1,354,614)
     Non-cash charge for debt conversion (Note 7)          (5,583,717)
     Write-off of accounts receivable  (Note 15)                    -                       -               (568,217)
                                                       ----------------          -------------        ---------------

         Total other income (expense)                     (20,942,681)             (3,767,079)            (2,266,343)

         Loss before income tax expense/(benefit),        (28,261,697)             (6,205,925)            (5,449,083)
         and extraordinary item

Income tax expense/(benefit) (Note 9)                          (5,899)                 43,174                  5,622

         Loss before extraordinary item                   (28,255,798)             (6,249,099)            (5,454,705)

Extraordinary item - loss on extinguishment of debt          (224,358)               (246,535)              (133,907)

         Net Loss                                         (28,480,156)             (6,495,634)            (5,588,612)

Preferred stock dividends                                           -                (887,869)              (133,907)
                                                        --------------            -------------          ------------

     Net loss available for common shareholders          $(28,480,156)           $ (7,383,503)          $ (5,722,519)

Basic net loss per share:
     Loss from before extraordinary item                  $    (1.81)             $    (0.97)            $    (1.51)
     Extraordinary item                                        (0.01)                  (0.03)                 (0.04)
                                                               ------                  ------                 ------
Basic net loss per share                                  $    (1.82)             $    (1.00)            $    (1.55)


Weighted average number of shares used in
     Computation of basic net loss per share                15,588,959               7,389,547              3,612,623


          See accompanying notes to consolidated financial statements.


</TABLE>

<PAGE>





               WASTE SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                            Years ended December 31,
                                                                              -----------------------------------------------------
                                                                                    1999              1998              1997
                                                                              -----------------------------------------------------
<S> <C>  <C>                                                                     <C>                <C>              <C>

Cash flows from operating activities:
     Net loss                                                                    $ (28,480,156)     $ (6,495,634)    $ (5,588,612)
     Adjustments to reconcile net loss to net cash provided (used) by
        operating activities:
        Depreciation and amortization                                                11,974,460         5,248,354          900,549
        Non-cash charge for equity conversion                                         5,583,717                 -                -
        Extraordinary loss on extinguishment of debt                                    224,358           246,535          133,907
        Accrued landfill closure and post-closure costs                                 748,486         1,154,597          124,000
        Write-off of project development costs                                                -           235,284        1,495,388
        Write-off of accounts receivable                                                      -                 -          568,217
        Issuance of common stock for services                                                 -            12,500           44,854
        Allowance for doubtful accounts                                                 415,225           176,195           23,333
        Changes in assets and liabilities:
           Accounts receivable                                                      (2,202,303)        (2,004,616)          73,503
           Prepaid expenses and other current assets                                  3,553,471          (861,529)        (242,092)
           Accounts payable                                                           7,877,446         1,372,730       (1,175,139)
           Accrued expenses                                                          10,645,929           640,869           62,463
           Deferred revenue                                                            (547,650)        1,645,124                -
           Restructuring                                                                      -          (778,609)      (1,006,488)
                                                                                   ------------       -------------    -------------
Net cash provided (used) by operating activities                                      9,792,983           591,800       (4,586,117)

Cash flows from investing activities:
     Proceeds from sale of assets                                                             -                 -          800,000
     Net assets acquired through acquisitions                                      (84,063,076)       (58,340,223)                -
     Restricted cash and securities                                                           -            214,158          956,017
     Landfills and other development projects                                      (19,362,028)        (5,472,136)        (571,420)
     Land, buildings, facilities and improvements                                     (850,050)          (664,264)                -
     Machinery and equipment                                                        (1,931,135)          (189,215)        (114,330)
     Rolling stock                                                                  (1,328,563)        (1,403,747)        (122,905)
     Containers                                                                     (1,176,606)          (617,813)        (189,109)
     Office furniture and equipment                                                   (886,585)          (684,515)                -
     Deposits for future acquisitions                                                         -        (2,210,667)                -
     Intangible assets                                                              (1,628,155)          (709,881)                -
     Landfill closure costs                                                         (1,954,771)                 -                -
                                                                                  -------------        -------------    ------------
     Other assets                                                                   (1,733,687)        (1,860,527)         (52,127)
                                                                                  -------------        -------------    ------------
           Net cash provided (used) by investing activities                       (114,914,656)       (71,938,830)          706,126
                                                                                 --------------        ------------     ------------
Cash flows from financing activities:
     Proceeds from the private placement of common stock                             15,678,216                 -                -
     Proceeds from the private placement of Series D preferred stock                 15,000,000                 -                -
     Repurchase of common stock                                                     (3,229,064)                 -                -
     Deferred financing and registration costs                                      (4,234,358)       (1,808,962)          (56,098)
     Repayments of notes payable and long-term debt                                (23,006,422)      (15,217,063)       (2,445,476)
     Borrowings from notes payable and long-term debt                               117,500,000        86,449,857        1,143,861
     Proceeds from issuance of common stock                                              91,461            40,406          686,724
     Proceeds from issuance of Series A preferred stock                                       -                 -        7,250,478
     Dividends paid                                                                           -         (887,869)                -
                                                                                ----------------   --------------       ------------
           Net cash provided by financing activities                                117,799,833        68,576,369        6,579,489
                                                                                ---------------    ---------------       -----------
Increase (decrease) in cash and cash equivalents                                     12,678,160       (2,770,661)        2,699,498
Cash and cash equivalents, beginning of period                                          193,613         2,964,274          264,776
                                                                                -----------------      ----------      -------------
Cash and cash equivalents, end of period                                          $  12,871,773        $  193,613      $ 2,964,274
                                                                                ====================================================

</TABLE>

        See accompanying notes to consolidated financial statements.



<PAGE>


               WASTE SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARIES
                 Consolidated Statements of Stockholders' Equity



<TABLE>
<CAPTION>

                                                                                                                            Total
                              Preferred     Preferred      Preferred       Preferred                   Additional           Stock-
                                 Stock         Stock          Stock          Stock                        paid    Accumu-   holders
                               Series A      Series B       Series C        Series D      Common Stock    -in      lated    equity
                            Shares  Amount Shares  Amount  Share  Amount Shares  Amount  Shares  Amount  Capital  deficit  (deficit)
<S>                         <C>     <C>    <C>     <C>     <C>    <C>    <C>     <C>     <C>     <C>     <C>      <C>      <C>

Balance,
    December 31, 1996        -        -       -      -       -      -    -     -  3,360,514 33,606 21,334,447(23,217,087)(1,849,034)

Common stock issued in
a private placement          -        -       -      -       -      -     -      -    172,000  1,720    428,280     -        430,000

Issuance of Series A
Convertible Preferred
Stock, June 1997         97,380  9,737,807    -      -       -      -     -      -                     (892,475)    -      8,845,332

Purchase minority
interest in the
Company's collection
operations in Vermont,
September 1997               -        -       -      -       -      -     -      -     18,667    187     69,813     -         70,000

Exercise of Series E
Warrants to purchase
901 shares of common
stock at $17.50 per
share, November 1997         -        -       -      -       -      -     -      -        901      9     15,785     -         15,764

Conversion of Series
A Convertible
Preferred Stock for
common stock at $1.406
per share, September
and October 1997        (4,800)  (480,000)    -      -       -      -     -      -    341,334  3,413    476,587                   -

Issuance of Series
B Convertible
Preferred Stock, 6%
cumulative annual
dividend, convertible
into common stock at
$6.26 per share,
December. 30, 1997           -       -    40,488 4,048,750  -       -     -      -         -       -        -     -      4,048,750

Net loss for year
ended December 31,
1997                         -       -        -      -      -      -      -      -         -       -        - (5,588,612)(5,588,612)

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

Balance, December 31,
 1997                  92,580  9,257,807 40,488 4,048,750   -      -      -      -  3,893,415 38,935 21,432,437(28,805,699)5,972,230

Conversion of Series B
Preferred Stock to
common stock                -        -  (40,488)(4,048,750) -      -      -      -    623,808  6,238  4,042,512         -         -

Conversion of Series A
Preferred stock to
common stock          (92,580)(9,257,807)     -      -      -      -      -      -  6,590,577 65,906  9,191,901         -         -

Expenses associates with
equity transactions         -        -        -      -      -      -      -      -         -      -    (256,101)        -  (256,101)

Common stock issued for
services                    -        -        -      -      -      -      -      -     14,766    148     12,352         -     12,500

Common stock issued ins
business combinations       -        -        -      -      -      -      -      -    567,032   5,670 3,347,494         -  3,353,164

Exercise of options to
purchase common stock       -        -        -      -      -      -      -      -     28,725     287    40,117         -     40,404

Diviends paid on preferred
stock                       -        -        -      -      -      -      -      -          -       -       -   (887,869) (887,869)

Net loss for the year
ended December 31, 1998     -        -        -      -      -      -      -      -          -       -       - (6,495,634)(6,495,634)
                           --------------------------------------------------------------------------------------------------------

Balance, December 31,
 1998                       -        -        -      -      -      -      -     - 11,718,323 117,184 37,810,712(36,189,202)1,738,694

Conversion of Convertible
Subordinated Notes into
common stock                -        -        -      -      -      -      -      - 2,244,109  22,452 10,423,133        -  10,445,585

Non cash charge from
conversion of Convertible
Subordinated Notes into
common stock                -        -        -      -      -      -      -      -        -       -   5,583,717        -   5,583,717

Repurchase of common
 stock                      -        -        -      -      -      -      -      -  (574,978) (5,750)(3,223,313)       - (3,229,063)

Common and preferred
stock issued in
private placements          -        -        -      -      -      - 15,000 15,000,000 2,239,745 22,397 15,655,819     -  30,678,216

Common and Preferred
stock issued in
business combinations       -        -        -     -  1,000 11,615,000   -      -  2,904,330  29,037 19,309,202       -  30,953,239

Exercise of options to
purchase common stock       -        -        -     -      -       -      -      -     36,315     359     91,101       -      91,460

Conversion of Series C
Preferred Stock to
common stock                -        -        -    -(1,000)(11,615,000)   -      -  1,763,000  17,630 11,597,370      -           -

Expenses associates with
equity transactions         -        -        -     -      -       -      -      -         -       -     (929,299)    -    (929,299)

Net loss for the year
ended December 31,
1999                        -        -        -     -      -       -      -      -         -       -       -(28,480,156)(28,480,156)
                       -------------------------------------------------------------------------------------------------------------
Balance, December 31,
1999                        -        -        -     -      -       -       15,000,000       203,309          (64,669,358) 46,852,393
                                                                     15,000        20,330,844     96,318,442
                       ============================================================================================================
</TABLE>


           See accompanying notes to consolidated financial statements


<PAGE>


               WASTE SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note  1.      Business and Nature of Operations

The  Company  is  an  integrated  solid  waste  management   company   providing
non-hazardous  waste  collection,  recycling,  transfer and disposal services to
approximately 73,000 commercial, industrial, residential and municipal customers
located in five regions in the Northeast and Mid-Atlantic regions of the country
as of  December  31,  1999.  The  Company  is  achieving  significant  growth by
implementing an active acquisition strategy. (See Note 3).

Note  2.      Summary of Significant Accounting Policies

Basis  of  Presentation:  The  accompanying  consolidated  financial  statements
include  the  accounts  of the Company  and its  subsidiaries.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

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
disclosures  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:  All short-term  investments,  which have an original
maturity  of 90 days or less,  and are  valued  at cost plus  accrued  interest,
which, approximates market, are considered to be cash equivalents.

Fair Value of Financial Instruments: Statement of Financial Accounting Standards
No. 107, "Disclosures About the Fair Value of Financial  Instruments",  requires
disclosure of information about the fair value of certain financial  instruments
for  which it is  practicable  to  estimate  that  value.  For  purposes  of the
following  disclosure the fair value of a financial  instrument is the amount at
which the instrument could be exchanged in a current transaction between willing
parties other than in a forced sale or  liquidation.  Management  has determined
that the carrying  value of its financial  assets and  liabilities  approximates
fair value at December 31, 1999.

Property and  Equipment:  Property and equipment are stated at cost. The cost of
all routine  maintenance  and repairs are  charged to  operations  as  incurred.
Depreciation   for   financial   reporting   purposes  is  provided   using  the
straight-line method over the estimated useful lives of the assets as follows:

            Transfer Stations, buildings and improvements          10-30 years
            Machinery and equipment                                 3-10 years
            Rolling stock                                           3-10 years
            Containers                                              5-10 years
            Office furniture and equipment                           3-5 years

Capitalization of landfill  development  costs begins upon  determination by the
Company of the economic  feasibility  or extended  useful life of each  landfill
acquired as a result of comprehensive  engineering and profitability studies and
with the signing of landfill management contracts for facilities operated by the
Company that are not owned. Capital costs include land acquisition, engineering,
legal,  and other direct costs  associated with the permitting,  development and
construction of new landfills,  expansions at existing  landfills,  and landfill
cell development. These costs are capitalized until all permits are obtained and
operations have commenced.

Interest is  capitalized  on landfill  development  costs related to permitting,
site preparation,  and facility construction during the period that these assets
are undergoing  activities  necessary for their intended use.  Interest costs of
approximately  $1,516,000,  $360,000,  and $24,000 were capitalized during 1999,
1998 and 1997, respectively.

Landfill development costs are amortized using the  unit-of-consumption  method,
which is calculated  using the total units of airspace filled during the year in
relation to total estimated  permitted airspace  capacity.  The determination of
airspace usage and remaining airspace capacity is an essential  component in the
amortization  calculation.  The  determination is performed by conducting annual
topography surveys of the Company's landfill  facilities to determine  remaining
airspace  capacity in each  landfill.  The surveys are reviewed by the Company's
consulting  engineers,  the Company's  internal operating and engineering staff,
and its financial and accounting  staff.  Current  year-end  remaining  airspace
capacity  is  compared  with  prior  year-end  remaining  airspace  capacity  to
determine  the amount of airspace  used during the current  year.  The result is
compared against the airspace  consumption  figures used during the current year
for  accounting   purposes  to  ensure  proper  recording  of  the  amortization
provision.  The  reevaluation  process  did not  materially  impact  results  of
operations for any years presented.

The Company  performs  assessments  for each landfill of the  recoverability  of
capitalized  costs  which  requires  considerable  judgment by  management  with
respect to certain external factors,  including, but not limited to, anticipated
future   revenues,   estimated   economic  life  and  changes  in  environmental
regulation.  It is the Company's policy to periodically review and evaluate that
the  benefits  associated  with these  costs are  expected  to be  realized  and
therefore  capitalization  and  amortization  is  justified.  Capitalized  costs
related  to  landfill  development  for  which no  future  economic  benefit  is
determined by the Company are expensed in the period in which such determination
is made.

Intangible Assets: The Company records the excess of the purchase price over the
fair  market  value of the net  identifiable  assets of an  acquired  company as
goodwill. Goodwill is amortized on a straight-line basis over forty years. Other
intangible assets include customer lists and covenants not to compete, which are
amortized  on a  straight-line  basis  over a period not to exceed ten years and
over the term of the agreement,  respectively. The Company evaluates the periods
of  amortization   continually  to  determine  whether   subsequent  events  and
circumstances  warrant  revised  estimates of useful  lives.  If  estimates  are
changed,  the unamortized cost shall be allocated to the remaining period in the
revised useful life.

Landfill  Closure and Post-Closure  Costs: The Company has a material  financial
obligation relating to closure and post-closure activities for landfills it owns
or  operates.  Accordingly,  the  Company  estimates  and  accrues  closure  and
post-closure costs on a unit-of-consumption basis over each landfill's estimated
remaining permitted airspace capacity.  The accrual is based on final capping of
the  site,  site  inspection,  leachate  management,  methane  gas  control  and
recovery,  groundwater  monitoring,  and operation and  maintenance  costs to be
incurred  during the period after the facility  closes.  The estimated costs are
expressed in current  dollars and are not discounted to reflect timing of future
expenditures. The Company has accrued approximately $2.8 million for closure and
post-closure  costs in both 1999 and 1998. The engineering and accounting staffs
of the  Company  periodically  review  its future  obligation  for  closure  and
post-closure  costs.  If estimates of the  permitted  air space  capacity or the
estimated costs of closure and  post-closure  have changed,  the Company revises
the rates at which it accrues the future costs.

The Company records  reserves for landfill  closure and  post-closure  costs, as
necessary,  as a component  of the purchase  price of  facilities  acquired,  in
acquisitions  accounted for under the purchase  method,  when the acquisition is
consummated.

Deferred Financing Costs:  Deferred financing costs, which are included in other
assets,  are  amortized  on a  straight-line  basis over the life of the related
notes  payable or debt.  There is not a material  difference  between  using the
straight-line method and the effective interest method.

Income Taxes:  The Company uses the asset and liability method of accounting for
deferred income taxes.

Revenue  Recognition:  The  Company's  revenues are derived  primarily  from its
collection,  recycling,  transfer and  disposal  services.  The Company  records
revenues  when the  services  are  performed.  The  Company  occasionally  bills
customers in advance of providing the services.  Advanced  billings are recorded
as deferred revenue.

Cost of operations:  Cost of operations  includes direct labor, fuel,  equipment
maintenance,  insurance, depreciation and amortization of equipment and landfill
development  costs,  accruals for ongoing  closure and  post-closure  regulatory
compliance (for landfills  owned),  and other routine  maintenance and operating
costs  directly  related  to  landfill  operations.  Also  included  in  cost of
operations  are payments  made to the towns in which each landfill is located in
the form of "Host Town Fees",  which are  negotiated  on a rate per ton basis as
part of the contract with the Town. In Towns where  landfills are operated under
management  contracts,  the Town is responsible for the closure and post-closure
costs related to the landfill.

Earnings Per Share:  In 1997, the Financial  Accounting  Standards  Board issued
Statement of Financial  Accounting  Standards No. 128,  Earnings Per Share (SFAS
128).  SFAS 128 replaced the  calculation of primary and fully diluted  earnings
per share with basic and diluted earnings per share. Unlike primary earnings per
share,  basic  earnings  per share  exclude  any  dilutive  effects of  options,
warrants and convertible securities. Diluted earnings per share are very similar
to the previously reported fully diluted earnings per share.  Earnings per share
amounts for all periods have been presented, and where appropriate,  restated to
conform  to the SFAS 128  requirements.  Weighted  average  number of common and
common  equivalent  shares  outstanding  and  earnings  per  common  and  common
equivalent  shares have been restated to give effect to a  one-for-five  reverse
stock split effective February 18, 1998.

Impairment of  Long-Lived  Assets and  Long-Lived  Assets to be Disposed Of: The
Company  adopted the provisions of SFAS No. 121,  "Accounting for the Impairment
of Long-Lived  Assets to Be Disposed Of", on January 1, 1997, for the year ended
December 31, 1996. This Statement  requires that  long-lived  assets and certain
identifiable  intangibles be reviewed for impairment  whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying  amount of an asset to future  undiscounted  net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amounts of the assets exceed the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying  amount or fair value less
cost to sell.  Adoption of this Statement did not have a material  impact on the
Company's financial position,  results of operations, or liquidity in 1999, 1998
or 1997.

Reclassifications:  Certain amounts in prior year financial statements have been
reclassified to conform to their 1999 presentation.


Note  3.  Acquisitions

During  1999,  the Company  acquired a total of 13  companies,  including,  five
collection  companies  and a landfill in Central  Pennsylvania,  one  collection
company in Vermont, two collection companies,  two transfer stations and a paper
recycling plant in Eastern New England,  two collection companies and a transfer
station in Upstate New York and a collection company and transfer station in the
Baltimore,  Maryland/Washington  D.C  region.  The  acquisitions  have  all been
recorded using the purchase method of accounting and accordingly, the results of
operations of the acquired companies are included in the consolidated statements
of operations since the respective  dates of acquisition.  The aggregate cost of
the  acquisitions  was  approximately  $124,451,000  consisting of approximately
$84,063,000  in cash,  $19,338,000  in  common  stock,  $11,615,000  in Series C
Preferred Stock and $9,435,000 in assumed  liabilities.  The  acquisitions  have
combined annual revenues of approximately  $42.0 million.  The acquisitions have
been accounted for using the purchase method of accounting.  The purchase prices
were allocated to the assets and liabilities of the acquired  companies based on
their  respective  fair values at the dates of acquisition as follows:  property
and equipment of approximately  $110,211,000,  intangible  assets of $10,721,000
and other assets of  $3,519,000.  The excess of the purchase price over the fair
value of the net identifiable  assets acquired of  approximately  $8,512,000 has
been recorded as goodwill and is being amortized on a  straight-line  basis over
forty years.

During 1998,  the Company  acquired a total of 34  companies,  including  eleven
collection companies (one of which included a transfer station) in Vermont, five
collection companies and two landfills in Central Pennsylvania, three collection
companies  and a transfer  station in Eastern New England and twelve  collection
companies  (one of which  included a transfer  station) in Upstate New York. The
aggregate cost of these acquisitions was approximately  $63.2 million consisting
of approximately  $58.3 million in cash, $3.4 million in stock and approximately
$1.5 million in assumed  liabilities.  The  acquisitions  have all been recorded
using  the  purchase  method of  accounting  and  accordingly,  the  results  of
operations of the acquired companies are included in the consolidated statements
of operations  since the respective  dates of  acquisition.  The purchase prices
were allocated to the assets and liabilities of the acquired  companies based on
their respective fair values at the dates of acquisition as follows: the Company
acquired property and equipment of $24,298,000, intangible assets of $38,524,000
and other assets of $337,000.

The Company defines  acquisition  integration costs as costs incurred,  after an
acquisition  is closed,  to integrate the acquired  operation with the Company's
existing   operation.   These  costs  are  separate  from  any   obligations  or
consideration  paid to the seller.  These costs include one-time,  non-recurring
costs,  which in the opinion of Company  management have no future value and are
expensed as  incurred.  The  majority  of the items  identified  as  acquisition
integration  costs are related to: 1). Health and Safety,  2). Name Change,  3).
Information  Systems,  4).  Employee  Severance and Retention,  and 5). Physical
Operation Relocation Costs. These charges are accrued as the costs are incurred.
While acquisition integration cost activities are generally completed within one
year from the date of  acquisition,  new  expenses  and accruals are booked each
quarter  as  they  are   incurred.   Acquisition   integration   costs   totaled
approximately $2,853,000 and $1,864,000 for 1999 and 1998, respectively.

The following  unaudited pro forma financial  information  presents the combined
results of operations of the Company and the aggregate of the acquired  entities
for the years ended  December  31,  1999 and 1998,  as if the  acquisitions  had
occurred as of January 1, 1999 and 1998,  respectively,  after giving  effect to
certain  adjustments,  including  amortization  of  intangibles  and  additional
depreciation of property and equipment. The pro forma financial information does
not  necessarily  reflect the results of operations that would have occurred had
the Company and the  aggregate of the  acquired  entities  constituted  a single
entity during such period.


<PAGE>


                       December 31,1999 December 31, 1998
                             (Unaudited) (Unaudited)

        Net revenues              $ 70,461,000            $71,311,000
                                  ============            ===========

        Net loss                  $(25,298,000)           $(9,088,000)
                                  =============           ============

        Basic loss per share      $      (1.62)           $     (1.23)
                                  ============            ============


Note  4.      Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following;
                                                        December 31,
                                                  1999                1998
  Deposits for future acquisitions           $          -         $ 2,210,667
  Prepaid disposal costs                        1,455,112           1,922,792
  Other prepaid expenses                        1,007,893             635,826
                                             ------------        ------------

  Total prepaid expenses
     and other current assets                $  2,463,005         $ 4,769,285
                                             ============         ===========


Note  5.      Property and Equipment

Property and equipment are stated at cost and consist of the following;

                                                               December 31,
                                                    1999               1998
 Landfills                                     $ 70,206,638       $ 18,631,409
 Transfer Stations, buildings and improvements   77,445,686          4,701,245
 Machinery and equipment                          9,028,635          3,038,700
 Rolling stock                                   16,175,247          8,980,626
 Containers                                       9,455,373          4,104,397
 Capital Development Projects                     4,103,697          8,778,901
 Office furniture and equipment                   1,665,320            713,235
                                                ------------          ---------
                                                188,080,596         48,948,513

Less accumulated depreciation and amortization  (13,123,315)        (4,262,778)
                                                ------------        -----------

Property and equipment, net                     $174,957,281       $ 44,685,735
                                                ============       ============


Note  6. Intangible Assets

Intangible assets consist of the following;
                                                                 December 31,
                                                      1999             1998
 Goodwill                                       $ 40,791,022       $ 30,441,948
 Non-compete agreement                             5,792,435          4,333,685
 Customer lists                                    4,817,599          3,841,599
 Other                                               722,161            713,235
                                                  ----------           --------
                                                  52,123,217         39,330,467
Less accumulated amortization                     (4,262,811)        (1,271,093)
                                                  -----------       -----------
 Total intangible assets                        $ 47,860,406       $ 38,059,374
                                                ============       ============



<PAGE>


Note 7.       Long-term Debt and Notes Payable

Long-term debt and notes payable consists of:
                                                          December 31,
                                                  1999                  1998
 11.5% Senior Notes                         $ 100,000,000  $               -
 7% Convertible Subordinated Notes             49,551,426            60,000,000
 BankNorth Group Credit Facility               17,500,000            10,000,000
 13% Short-term Notes                                  -              7,500,000
 10% Convertible Subordinated Debenture           450,000             1,850,000
 Capital Leases                                 1,104,288             1,201,516
 Equipment and Other Notes Payable              5,494,104             2,569,593
                                              -----------             ---------
                                              174,099,818            83,121,109

  Less current portion                          1,383,995             8,259,922
                                              ------------           ----------
  Long-term portion                         $ 172,715,823          $ 74,861,187
                                             =============          ============

Scheduled  maturities of long-term  debt and notes  payable,  excluding  capital
leases are as follows:

Payments due in the year ending December 31,

                  2000                                     $  1,291,582
                  2001                                        2,106,571
                  2002                                       18,346,981
                  2003                                          914,662
                  2004                                          784,308
                  Thereafter                                149,551,426

                                                         $  172,995,530

Senior  Notes  Offering  and  Debt  Repayment.  On March 2,  1999,  the  Company
completed  a private  placement  of $100.0  million of 11.5%  Senior  Notes (the
"Senior Notes") and warrants to purchase an aggregate of 1,500,000 shares of the
Company's common stock at an exercise price of $6.25 per share (the "Warrants").
The Senior  Notes  mature on January  15,  2006 and bear  interest  at 11.5% per
annum,  payable  semi-annually  in  arrears  on each  January  15 and  July  15,
commencing July 15, 1999,  subject to prepayment in certain  circumstances.  The
interest rate on the Senior Notes is subject to adjustment  upon the  occurrence
of certain  events as provided in the Indenture  for the Senior Notes  offering.
The Senior  Notes may be redeemed  at the option of the  Company  after March 2,
2003 at redemption prices set forth in the Senior Notes Indenture, together with
accrued and unpaid  interest.  The Warrants are  exercisable  from  September 2,
1999,  through March 2, 2004. The number of shares for which,  and the price per
share at which,  a Warrant is  exercisable,  are subject to adjustment  upon the
occurrence  of certain  events as  provided in the  Warrant  Agreement.  The net
proceeds to the Company,  after deducting the discount to the initial  purchaser
and related issuance costs, was approximately $97.3 million.  The Company used a
portion  of the  proceeds  from the  Senior  Notes to  repay  existing  debt and
completed  several  acquisitions.  The remainder was used for general  corporate
purposes.

Convertible  Subordinated Notes. On May 13, 1998, the Company closed an offering
of $60.0 million in 7%  Convertible  Subordinated  Notes,  which resulted in net
proceeds to the Company of approximately $58.3 million.  The Notes mature in May
2005, and bear interest at 7.0% per annum,  payable  semiannually  in arrears on
each June 30 and  December 31. The shares are  convertible  at the option of the
holder at any time and can be mandatorily converted by the Company after May 13,
2000,  if the  Company's  Common  Stock  closing  price  equals or  exceeds  the
conversion  price of $10.00 per share for a period of 20  consecutive  days.  On
March 31, 1999, the Company  exchanged  2,244,109 shares of the Company's Common
Stock for  $10,449,000 of the Notes.  The exchange price per share of $4.656 was
equal to the  closing of the Common  Stock as  reported  by NASDAQ on that date.
Interest  on the Notes  totaling  approximately  $183,000  was paid in cash.  In
connection with the conversion of debt into equity, the Company issued 1,199,252
shares of Common  Stock in excess of the shares  that would have been  issued if
the debt had been converted in accordance with its original  terms.  The Company
recorded a non-cash  charge of $5,583,717  attributable to the issuance of these
additional  shares  of Common  Stock,  which  has been  offset  in  consolidated
stockholders'  equity by the additional deemed proceeds from the issuance of the
shares.

Exchange  Offer.  On February 15, 2000, the Company closed an Exchange Offer for
its $49,551,000 of Convertible  Subordinated Notes due 2005 and its $100,000,000
Senior  Notes due 2006.  Approximately  $15,355,000  principal  amount of,  plus
accrued but unpaid  interest on, its 11 1/2% Series B Senior  Notes due 2006 and
approximately  $22,832,000 principal amount of, plus accrued but unpaid interest
on, its 7% Convertible  Subordinated  Notes due 2005 were tendered and exchanged
into shares of the Company's  newly  designated  Series E Convertible  Preferred
Stock which carry an 8% dividend  which is payable in kind or cash at the option
of the Company. The Company issued an aggregate of 38,531 shares of its Series E
Convertible  Preferred  Stock.  The preferred stock is redeemable at any time by
the  Company  at par plus  accrued  and  unpaid  dividends  and,  subject to any
required  stockholder  approval,  can be converted  into shares of the Company's
common  stock at a price of $8.00  per  share at any time at the  option  of the
holder and can be  mandatorily  converted  by the  Company  if its common  stock
closing price equals or exceeds $8.00 for a period of twenty consecutive trading
days.

BankNorth Group Credit  Facility:  On August 3, 1999, the Company entered into a
$25 million secured  revolving credit facility with The BankNorth Group, N.A. to
fund acquisitions and for general working capital purposes. The revolving credit
agreement  has a term of three  years,  provides  for an interest  rate based on
LIBOR or Prime,  and includes other terms and  conditions  customary for secured
revolving  credit  facilities.  At December 31,  1999,  the Company had borrowed
$17,500,000  against the credit  facility and the interest  rate at December 31,
1999 was 9.5%.  At December  31, 1999 the  Company was in  violation  of certain
covenants  required  under the credit  facility.  The BankNorth  Group agreed to
waive the covenants at December 31, 1999.

13% Short-term  Notes. At December 31, 1998 the Company had outstanding  debt in
the principal amount of $7,500,000 to BIII Capital Partners, L.P., a significant
shareholder of the Company.  The debt consisted of 13% Short Term Notes due June
30, 1999. The Short Term Notes were repaid in full in March 1999.

10%  Convertible   Subordinated   Notes.  During  1995,  the  Company  closed  a
"Regulation S" offering of $11,225,000  in  Convertible  Subordinated  Notes and
Warrants to overseas investors, which resulted in net proceeds to the Company of
$10,085,587.  The Notes mature on September 30, 2000,  and bear interest at 10%,
payable  quarterly.  The Notes are  convertible  into Common  Stock at $9.20 per
share and are callable at the  Company's  option at any time if the closing sale
price  of  the  Common  Stock  exceeds  $50.00  per  share  for a  period  of 20
consecutive  trading days prior to  redemption  notice.  The Notes have not been
registered  under the  Securities  Act and may not be sold in the United  States
without such  registration  or an applicable  exemption from the  requirement of
registration.

Capital Leases. The Company leases certain facilities,  equipment,  and vehicles
under agreements, which are classified as capital leases.

Leased capital assets included in property and equipment are as follows:

                                                             December 31,
                                                   1999                  1998
 Land and Buildings                            $ 1,327,161          $ 1,327,161
     Accumulated depreciation                      (69,598)             (38,667)
                                                 ----------             --------

                                               $ 1,257,563          $ 1,288,494
                                               ===========           ===========

Future  minimum  lease   payments,   by  year  and  in  the   aggregate,   under
non-cancelable  capital  leases and  operating  leases with initial or remaining
terms of one year or more at December 31, 1999 are as follows:

                                                   Capital        Operating
                                                   Leases           Leases
 Payments due in the year ending December 31,
        2000                                      $ 200,040      $   780,316
        2001                                        200,040          535,161
        2002                                        200,040          366,805
        2003                                        200,040           91,904
        2004                                        200,040                -
        Thereafter                                  566,780                -
                                                    -------        -----------
   Minimum lease payments                         1,566,980      $ 1,774,186
                                                                   ===========
   Less:  amount representing interest              462,692

   Present value of net minimum lease payments    1,104,288
       Less current portion                          92,413

       Long-term portion                        $ 1,011,875
                                                ===========

The Company's rental expense for operating leases was $809,368,  $388,630,  and
$81,757 for the years ended December 31, 1999, 1998 and 1997, respectively.

Equipment  and Other  Notes  Payable.  The  Company  has  entered  into  various
financing  agreements  for  certain  rolling,  stock  and  other  machinery  and
equipment.  These  agreements range from three to five years with interest rates
between 8% and 10%.The notes are secured by the related pieces of rolling, stock
or machinery and equipment


Note  8. Accrued Expenses

Accrued expenses consisted of the following:

                                                        December 31,
                                                 1999                1998
  Interest                                   $ 7,457,319         $  212,191
  Acquisition integration costs                  304,400            676,703
  Professional and consulting fees               420,655            125,410
  Compensation and benefits                    1,809,348            432,089
  Other taxes and fees                           871,982            449,509
  Due to sellers for acquired businesses              -             260,000
  Accrued transportation and disposal costs      893,673            210,021
  Accrued operating costs                      1,807,769            143,600
  Other                                        1,169,612            233,016
                                               ---------            -------

                                             $ 14,734,758        $ 2,742,539
                                             ============         ===========

Note  9.      Income Taxes

Income tax expense (benefit) consists of:
                                         Current        Deferred          Total
 Year ended December 31, 1999:
      Federal                         $       -         $     -       $     -
      State                               (5,899)             -         (5.899)
                                       -----------     -----------     --------

                                      $  (5,899)        $      -      $ (5,899)
                                      =============    ============    ========

 Year ended December 31, 1998:
      Federal                         $         -       $    -        $     -
      State                              43,174              -          43,174
                                      --------------   ------------   ---------

                                      $  43,174         $    -        $ 43,174
                                     ===============    ============   ========

 Year ended December 31, 1997:
     Federal                           $    -           $    -        $     -
     State                                5,622              -           5,622
                                          -----              -          ------

                                        $ 5,62           $   -        $  5,622
                                      ==============    ==========      =======


A reconciliation  between federal income tax expense  (benefit) at the statutory
rate and the Company's federal tax expense (benefit) is as follows for the years
ended December 31:
                                          1999            1998           1997
                                     ------------------------------------------
 Statutory Federal income (benefit)  $(9,685,259)  $ (2,193,836)  $ (1,898,217)
 State Taxes, net of Federal
     income tax benefit               (2,791,406)    (3,460,328)      (530,947)
 Valuation allowance                  12,327,972      5,533,239      2,432,087
 Other                                   142,794        164,100          2,699
                                    -------------       -------      -----------

                                     $     (5,899)  $    43,174    $     5,622
                                     =============   ===========    ============

The tax effects of temporary  differences  between  financial  statement and tax
accounting that gave rise to significant  portions of the Company's net deferred
tax assets and  deferred  tax  liabilities  at  December  31,  1999 and 1998 are
presented below.
                                         1999                       1998
                                   --------------          ----------------
Deferred tax assets:
  Accounts receivable allowance       $ 1,050,620             $     303,207
  Other accrued liabilities               523,354                   334,102
  Operating loss and credit
    carryforwards                      27,665,287                14,864,820
                                       ----------                ----------

  Gross deferred tax assets            29,239,261                15,502,129
  Less: valuation allowance           (26,983,155)              (14,655,182)
                                       -----------              ------------

  Net deferred tax assets               2,256,106                   846,947

Deferred tax liabilities:
 Property and equipment depreciation  (2,256,106)                  (846,947)
                                      -----------                 -----------
   Total deferred tax liabilities     (2,256,106)                  (846,947)
                                    ------------------            -----------
   Net deferred tax liability        $        -                $          -
                                    ==================         ==============

The Company has recorded a valuation  allowance  against its deferred tax assets
because  management  believes that,  after  considering all available  evidence,
historical and prospective, with greater weight given to historical evidence, it
is more likely than not that assets will not be realized.

At  December  31,  1999 the Company had net  operating  loss  carryforwards  for
Federal income tax purposes of  approximately  $64,000,000  which  generally are
available to offset  future  Federal  taxable  income,  if any, and which expire
during the years ending December 31, 2010 through 2019. The Company underwent an
ownership  change as defined in Internal  Revenue  Code  Section 382 on June 30,
1997 and as a result will be restricted in its ability to use net operating loss
carryforwards  generated prior to the ownership  change to offset future taxable
income. The Company's future use of net operating loss  carryforwards  generated
prior to the ownership change will be subject to an annual limitation  generally
equal to the product of the long-term tax exempt rate for June 1997 of 5.64% and
the value of the Company as of June 30, 1997.  As a result of this  limitation a
portion of the Company's Federal and state net operating loss  carryforwards may
expire  unused.  Additional  net  operating  loss  carryforwards  and  other tax
attributes  generated  may also be limited  in the event of  certain  changes in
ownership of significant stockholders.


Note 10.      Landfill Closure and Post-Closure Costs

Landfills  are  typically  developed  in a  series  of  cells,  each of which is
constructed,  filled,  and capped in  sequence  over the  operating  life of the
landfill.  When the final cell is filled and the operating  life of the landfill
is over,  the final  cell must be  capped,  the  entire  site must be closed and
post-closure  care and  monitoring  activities  begin.  The  Company  will  have
material  financial  obligations  relating to the final closure and post-closure
costs of each landfill the Company owns.

The Company has  estimated  at December  31, 1999 that the total costs for final
closure and  post-closure of Cells I and II at the Moretown,  Vermont  landfill,
including capping costs, cap maintenance,  groundwater  monitoring,  methane gas
monitoring,  and  leachate  treatment  and  disposal  for  up  to 30  years,  is
approximately $4.2 million. During 1999, the Company paid approximately $700,000
for closure costs at the Moretown  landfill.  Based upon the capacity of Cells I
and II,  approximately $1.3 million and $1.8 million was accrued at December 31,
1999 and 1998,  respectively,  for final  closure and post  closure  costs.  The
Company  has  estimated  at  December  31,  1999 that the total  costs for final
closure and post-closure of Cells I through IV at Sandy Run,  including  capping
costs,  cap  maintenance,  groundwater  monitoring,  methane gas  monitoring and
leachate  treatment  and  disposal  for up to 30 years,  is  approximately  $4.1
million.  Based upon the capacity of Cells I and II, approximately $1.1 and $1.0
million  was accrued at  December  31, 1999 and 1998 for final  closure and post
closure  costs.  In March 1999,  the Company  acquired the  Cumberland  landfill
located in Shippensburg, Pennsylvania. The Company has estimated at December 31,
1999 that the total costs for final closure and  post-closure of Cells V through
VII  at  Cumberland,  including  capping  costs,  cap  maintenance,  groundwater
monitoring, methane gas monitoring and leachate treatment and disposal for up to
30  years,  is  approximately  $5.7  million.  During  1999,  the  Company  paid
approximately $1.2 million for closure costs at the Cumberland  landfill.  Based
upon the capacity of Cells V through VII,  approximately $235,000 was accrued at
December 31, 1999 for final closure and post closure costs. On December 28 1999,
the Company opened its Mostoller landfill located in Somerset, Pennsylvania. The
Company  has  estimated  at  December  31,  1999 that the total  costs for final
closure and post-closure of Cells I through VII at Mostoller,  including capping
costs,  cap  maintenance,  groundwater  monitoring,  methane gas  monitoring and
leachate  treatment  and  disposal  for up to 30 years,  is  approximately  $7.7
million. At December 31, 1999, the Company had accrued  approximately $9,000 for
final closure and post closure costs at the Mostoller landfill,  which commenced
operations on December 28, 1999.

The  Company  bases  its  estimates  for  these  accruals  on  respective  State
regulatory  requirements,   including  input  from  its  internal  and  external
consulting  engineers and  interpretations of current  requirements and proposed
regulatory  changes.  The closure and post-closure  requirements are established
under the standards of the U.S.  Environmental  Protection  Agency's  Subtitle D
regulations as implemented and applied on a state-by-state basis.

The  determination  of  airspace  usage and  remaining  airspace  capacity is an
essential component in the calculation of closure and post-closure accruals. See
Note 2 - Summary of  Significant  Accounting  Policies -  Landfill  Closure  and
Post-Closure Costs.


Note 11.      Commitments and Contingencies

Landfill  related  activities.  In the normal course of its  business,  and as a
result of the extensive governmental regulation of the solid waste industry, the
Company  periodically may become subject to various judicial and  administrative
proceedings  involving federal,  state, or local agencies. In these proceedings,
the agency may seek to impose  fines on the Company or to revoke or deny renewal
of an operating permit held by the Company.  From time to time, the Company also
may be subjected to actions  brought by citizens'  groups in connection with the
permitting of its landfills or transfer stations,  or alleging violations of the
permits  pursuant  to which the  Company  operates.  Certain  federal  and state
environmental  laws impose  strict  liability on the Company for such matters as
contamination of water supplies or the improper disposal of waste. The Company's
operation  of landfills  subjects it to certain  operational,  monitoring,  site
maintenance,  closure and  post-closure  obligations,  which could give  rise to
increased costs for monitoring and corrective  measures.  See Note 10 - Landfill
Closure and Post Closure Costs.

The Company has environmental impairment liability insurance policies at each of
its  operating  landfills,  which  cover  claims for sudden or gradual  onset of
environmental  damage at its  landfills,  in addition to a $20 million  umbrella
policy  as  excess  coverage.  If  the  Company  were  to  incur  liability  for
environmental  damage in excess of its primary insurance  limits,  its financial
condition,  results of operations and liquidity could be adversely affected. The
Company carries a $2 million  comprehensive  general liability  insurance policy
which  management  considers  adequate  at this time to  protect  its assets and
operations from other risks.

None of the  Company's  landfills  are  currently  connected  with the Superfund
National Priorities List or potentially responsible party issues.

Employment  Contracts.  The Company has entered into employment  agreements with
its two senior executives, which expire on July 1, 2000 and subsequently provide
for employment  until  terminated by either party at annual salaries of $200,000
through July 1, 1999 and $225,000 through July 1, 2000.

Legal  Matters.  The Company is party to pending legal  proceedings  and claims.
Although the outcome of such  proceedings  and claims cannot be determined  with
certainty,  the  Company's  management,  after  consultation  with outside legal
counsel,  is of the opinion that the expected  final  outcome  should not have a
material  adverse  effect  on the  Company's  financial  condition,  results  of
operations or liquidity.


Note 12.      Common Stock

Stock Repurchase. During the period from March 3, 1999 through May 13, 1999, the
Company  repurchased  approximately  575,000  shares of its common  stock for an
aggregate  cost of  approximately  $3.2 million.  These shares were retired upon
purchase.

Private  Placement.  In August 1999, the Company issued  2,239,745 shares of its
common  stock at $7 per  share in a  private  placement  for  proceeds  totaling
$15,678,216, which were used for acquisitions.

Warrants.  In connection with the issuance of the Senior Notes on March 2, 1999,
the Company issued warrants to purchase an aggregate of 1,500,000  shares of the
Company's common stock at an exercise price of $6.25 per share. The Warrants are
exercisable from September 2, 1999,  through March 2, 2004. The number of shares
for  which,  and the price per share at which,  a Warrant  is  exercisable,  are
subject to adjustment  upon the  occurrence of certain events as provided in the
Warrant Agreement.

Acquisitions. On July 1, 1999, the Company issued 2,678,620 shares of its Common
Stock in connection  with the  acquisition  of Eastern  Trans-Waste of Maryland,
Inc. As a part of this  acquisition,  the Company  authorized  and issued  1,000
shares of Series C Preferred Stock at $11,615 per share or $11,615,000 total. In
accordance with the terms of the issuance, on October 21, 1999, the shareholders
approved the conversion of the Series C Preferred Stock at a special meeting and
each share of the Series C Preferred  Stock was  converted  into 1,763 shares of
common stock or 1,763,000 total.

On August 4, 1999,  the Company  issued  225,710  shares of its Common  Stock in
connection  with the  acquisition  of C&J  Trucking,  Inc.  and  Affiliates.  On

September 22, 1998,  the Company  issued  455,922  shares of its Common Stock in
connection with the acquisition of Mattei-Flynn Trucking, Inc.

On May 22,  1998,  the  Company  issued  111,110  shares of its Common  Stock in
connection with the acquisition of Eagle Recycling, Inc. and Horvath Sanitation,
Inc.

Series A Preferred  Stock.  During 1998, the Company  converted 92,580 shares or
$9,257,807 of its Series A Preferred  Stock into 6,590,577  shares of its Common
Stock.

Series B Preferred  Stock. On May 14, 1998, the Company  converted 40,488 shares
or $4,048,750 of its Series B Preferred  Stock into 623,808 shares of its Common
Stock.


Note 13.  Preferred Stock

On February 15, 2000, the Company  closed an Exchange Offer for its  $49,551,426
of Convertible Subordinated Notes due 2005 and its $100,000,000 Senior Notes due
2006.  Approximately  $15,355,000  principal  amount of, plus accrued but unpaid
interest  on, its 11 1/2%  Series B  Senior  Notes  due  2006 and  approximately
$22,832,000  principal  amount of, plus  accrued but unpaid  interest on, its 7%
Convertible  Subordinated Notes due 2005 were tendered and exchanged into shares
of the Company's  newly  designated  Series E Convertible  Preferred Stock which
carry an 8%  dividend  which is  payable  in kind or cash at the  option  of the
Company.  The  Company  issued an  aggregate  of 38,531  shares of its  Series E
Convertible  Preferred  Stock.  The preferred stock is redeemable at any time by
the  Company  at par plus  accrued  and  unpaid  dividends  and,  subject to any
required  stockholder  approval,  can be converted  into shares of the Company's
common  stock at a price of $8.00  per  share at any time at the  option  of the
holder and can be  mandatorily  converted  by the  Company  if its common  stock
closing price equals or exceeds $8.00 for a period of twenty consecutive trading
days.

On December 28, 1999, the Company raised $15 million through a private placement
of Series D Convertible  Preferred.  The Series D Preferred  Stock carries a 10%
dividend  which is  payable in kind or cash at the  option of the  Company.  The
Preferred Stock can be converted into shares of the Company's  Common Stock at a
price of $6.00 per  share at any time at the  option  of the  holder  and can be
mandatorily converted by the Company if its common stock closing price equals or
exceeds  $9.00 for a period of twenty  consecutive  trading days.  Finally,  the
Preferred Stock is eligible to vote on an as-converted  basis with the Company's
Common Stock and is redeemable at any time by the Company.

At December 31, 1997, the Company had outstanding $9,257,807 of principal amount
Series A  Convertible  Preferred  Stock,  par value $0.001 per share  ("Series A
Preferred  Stock"),  which was issued in a private  placement  on June 26, 1997,
bearing an 8.0% annual  cumulative  dividend.  The Series A Preferred  Stock was
convertible  into common  stock at a  conversion  price of $1.40625 per share of
common stock. On July 27, 1998, the Company met the mandatory conversion trading
requirements  and  elected to convert  all of the  remaining  shares of Series A
Preferred  Stock into  6,590,577  shares of the  Company's  Common Stock and the
Board of Directors declared and paid cash dividends of approximately $787,000.

At December 31, 1997, the Company also had  outstanding  $4,048,750 of principal
amount Series B Convertible Preferred Stock, par value $0.001 per share ("Series
B Preferred  Stock").  The Series B Preferred  Stock was issued on December  31,
1997  in a  private  placement  in  exchange  for  outstanding  10%  Convertible
Debentures of the Company,  bearing a 6.0% annual cumulative  dividend,  and was
convertible into common stock at a conversion price of $6.25 per share of common
stock.  On May 14,  1998,  the  Company  met the  mandatory  conversion  trading
requirements  and elected to convert all of the shares of the Series B Preferred
Stock into 623,808  shares of Common  Stock and the Board of Directors  declared
and paid cash dividends of approximately $101,000. Note 14. Stock Options

Employee  Stock Option  Plan.  Pursuant to the  Company's  1995 Stock Option and
Incentive  Plan as amended  (the  "Plan"),  options to purchase up to  3,000,000
shares of Common Stock were reserved for issuance to employees  and  consultants
of the Company.  Options  granted under the Plan may be either  Incentive  Stock
Options or  Non-Qualified  Stock Options for purposes of federal income tax law.
Options are  generally  subject to vesting  over a period of four years from the
date of grant and are  exercisable  only to the extent vested from time to time,
although  certain  options have provided for earlier  vesting.  The selection of
individuals to receive awards of options under the Plan and the amount and terms
of such awards may be  determined by the Board of Directors of the Company or an
Administering  Committee  appointed  by the Board of  Directors.  At the  Annual
Meeting of the  Stockholders  of the Company,  held June 14, 1999, the number of
shares  reserved for issuance  under the Plan was  increased  from  3,000,000 to
4,000,000.

As of December 31, 1999,  options to purchase  2,908,643  shares of Common Stock
had been granted and options to purchase up to an  additional  1,091,357  shares
remained available for grant. The per share weighted average fair value of stock
options granted during 1999, 1998 and 1997 was  approximately  $2.28,  $3.28 and
$3.73, respectively,  using the Black  Scholes  option-price  model with the
following weighted average assumptions: volatility, 50% in 1999, 50% in 1998 and
30% in 1997; expected dividend yield, 0% for all years; risk free interest rate,
5.5% in 1999, 4.75% in 1998 and 5.5% in 1997; and expected life, 5 years for all
years.

The Company  applies APB Opinion No. 25 in  accounting  for stock  options  and,
accordingly, no compensation cost has been recorded in the financial statements.
If the Company had determined  compensation costs based on the fair value of its
stock  options at their grant date under SFAS No. 123, the  Company's net losses
in 1999, 1998 and 1997 would have increased to the amounts shown below.

                                    1999             1998          1997
                                    ----             ----          ----
Net loss available
for common shareholders
  - as reported               $ (28,480,156)    $(7,383,503)    $(5,588,612)
  - pro forma                   (30,238,151)     (8,662,888)     (6,006,315)

 Basic net loss per share
  - as reported                  $ (1.82)         $ (1.00)        $(1.55)
  - pro forma                    $ (1.94)         $ (1.17)        $(1.66)

Pro forma net loss  reflects only the effects of options  granted in 1999,  1998
and 1997. Therefore, it does not reflect the full effect of calculating the cost
of stock options under SFAS No. 123 because the cost of options  issued prior to
January 1, 1997 are not considered. As a result, it may not be representative of
the pro forma  effects on  operating  results  that will be  disclosed in future
years.

Changes in options and option shares under the plan during the respective  years
were as follows:

<TABLE>
<CAPTION>
                                                    1999                      1998                         1997
                                        ----------------------------------------------------------------------------------------
                                         Weighted Avg.                 Weighted Avg.                 Weighted Avg.
                                       exercise price     Number      exercise price     Number      exercise price     Number
                                          per share      of shares       per share      of shares      per share       of shares
                                        ----------------------------------------------------------------------------------------
<S>                                         <C>          <C>               <C>          <C>                <C>         <C>

Options outstanding,beginning of year       $3.75        2,341,793         $1.42        1,327,417          $1.41         161,200
Options granted                              4.55          930,600          6.68        1,121,351           1.43       1,179,217
Options exercised                            2.19          (71,275)         1.41          (28,725)             -               -
Options canceled                             6.66         (292,475)         6.82          (78,250)          1.64         (13,000)

Options outstanding, end of year             4.59        2,908,643          3.75        2,341,793           1.42       1,327,417
Shares reserved for future grants                        1,091,357                        658,207                        372,583

Total options in the plan                                4,000,000                      3,000,000                      1,700,000


Options exercisable, end of year            $2.58          883,171         $1.42          340,573          $1.42         114,900
                                                           =======                        =======                        =======
</TABLE>

On June 30,  1997,  the Board of  Directors  repriced  to  $1.406  per share any
currently outstanding stock options with exercise prices in excess of $1.406 per
share for all employee  participants in the Stock Option Plan at that time. Each
repriced  option  retained  the vesting  schedule  associated  with the original
grant.

Options  outstanding  at December  31, 1999 and related  proceeds to the Company
were as follows:

                                        Remaining   Weighted Avg.   Number of
  Shares        Price        Exercise   Contractual   Exercise      Options
Under Option   Per Share     Proceeds      Life        Price       Exercisable

 1,245,993       $1.41      $1,830,768     7.38       $ 1.41         673,983
     3,000    1.88 - 2.19       43,438     7.73         1.89           1,500
    30,000        3.44         103,140     8.17         3.44           7,500
    10,000        3.50          35,000    10.00         3.50               -
   701,900    4.25 - 4.68    2,991,050     9.33         4.26               -
    37,500    4.93 - 5.88      237,450     8.72         5.44           6,875
   692,500        6.25       4,328,125     8.33         6.25         171,500
   132,500    6.50 - 8.88      950,488     8.49         7.17           8,125
    55,250    9.00 - 9.25      498,422     8.42         9.02          13,688
 -----------  -----------   -----------    -----       -----         --------
 2,908,643                 $11,017,881     8.51       $ 3.78          883,171
 =========                 ===========                                =======

Non-Employee  Directors Stock Option Plan.  Pursuant to the Company's 1995 Stock
Option Plan for Non-Employee  Directors as amended, each Director is entitled to
receive a grant of Non Qualified  Stock Options to purchase 10,000 shares of the
Company's  Common Stock for each  calendar  year of service as a director of the
Company  commencing January 1, 1996. Each such option is subject to vesting at a
rate of 2,500  shares  for each year that the holder  remains a Director  of the
Company. In addition,  the plan provides for the issuance of 20,000 fully vested
options upon the election of each new member of the Board of Directors initially
elected  after  December 24, 1997,  excluding  employees of the Company.  At the
Annual  Meeting of the  Stockholders  of the Company,  held August 19, 1998, the
number of shares granted to each Director under the  Non-Qualified  Stock Option
Plan for  Non-Employee  Directors as amended was  increased to 10,000 from 2,000
for each year that the holder  remains a Director of the  Company.  In addition,
the number of fully  vested  options upon the election of each new member of the
Board  of  Directors  initially  elected  after  December  24,  1997,  excluding
employees of the Company was increased to 20,000 from 4,000.

Changes in options and option shares under the plan during the respective  years
were as follows:

<TABLE>
<CAPTION>
                                    1999                        1998                        1997
                        Weighted Avg.              Weighted Avg.                Weighted Avg.
                       exercise price   Number    exercise price    Number     exercise price     Number
                         per share     of shares    per share     of shares      per share      of shares
<S>                       <C>          <C>             <C>          <C>             <C>           <C>
Options outstanding,
 beginning of year        $3.05         77,480         $1.79        27,480          $1.41         19,416
Options granted            5.75        100,000          3.75        50,000           2.28         35,480
Options exercised             -              -             -             -              -             -
Options canceled              -              -             -             -           2.15        (27,416)
                        --------       -------       ----------    --------          ----
Options outstanding,
 end of year               4.29        177,480          3.05        77,480           1.79         27,480
                                       =======                      ======                        ======
Options exercisable,
end of year               $2.99         61,740          $1.84       22,370           1.84         21,500
                                        ======                      ======                        ======


</TABLE>


<PAGE>


Options  outstanding  at December  31, 1999 and related  proceeds to the Company
were as follows:

                                        Remaining    Weighted Avg.   Number of
   Shares         Price    Exercise    Contractual    Exercise        Options
Under Option    Per Share  Proceeds       Life           Price      Exercisable
------------    ---------  --------       ----          ------      -----------
   14,000        $1.41     $ 19,684       7.67           $1.41          11,500
   13,480         2.19       29,454       7.33            2.19          12,740
   75,000         3.75      281,250       8.00            3.75          37,500
   75,000         5.75      431,250       9.00            5.75               -
-----------     --------   ---------      ----          ------         -------
  177,480        $4.29     $761,638       9.09           $4.29          61,740
  =======                  =========                                    ======



Note 15.      ScotSafe Ltd/Eurocare Environmental Services, Ltd.

During 1996,  the Company  entered into a licensing and royalty  agreement  with
ScotSafe  Limited  (ScotSafe),  a  Glasgow,  Scotland  based  company,  for  the
exclusive  rights to use the Company's CFA medical waste  processing  technology
throughout Europe.  During the fourth quarter of 1997 the Company terminated its
licensing  agreements  with  ScotSafe  and  wrote  off the  receivable  due from
ScotSafe of  approximately  $570,000 because ScotSafe was in default for failure
to pay the Company royalties due under the terms of the agreement.

Subsequent  to the  termination,  ScotSafe  was  placed  into  receivership  and
Eurocare  Environmental  Services,  Ltd.  (Eurocare)  purchased  its  assets  in
December 1997. On February 10, 2000, the Company  granted an exclusive  European
license for the Company's  worldwide-patented medical waste treatment technology
to Eurocare.  Simultaneous with the licensing  agreement,  Eurocare acquired the
United  Kingdom-based  medical waste  operation of Onyx  Environmental  Services
Limited,  a  subsidiary  of  France-based  Vivendi.  As  part  of the  licensing
agreement,  the Company acquired a minority  interest in, and the right of first
refusal  to  acquire  Eurocare.  All legal  actions  by both  parties  have been
dismissed.


Note 16.      Restructuring

In March 1996, the Company  announced its intention to restructure the Company's
operations  to  focus  its  resources  and  activities  on  developing  a  fully
integrated solid waste management  company.  During the year ended  December 31,
1997,  the  Company  recorded  restructuring  charges  of  $596,426,  for  costs
associated  with the plan to focus on the  development  of an  integrated  solid
waste management  company.  The costs included accruals for employee  severance,
non-cancelable  lease  commitments,  professional fees and litigation costs. The
restructuring  was completed in 1997; no restructuring  charges were recorded in
1998 or 1999.


Note 17.   Fairhaven, Massachusetts Operation

In 1994,  WSI entered into a contract with the Town of Fairhaven,  Massachusetts
to operate and remodel the Town's existing 26-acre  landfill.  The Company began
operations  at the landfill in 1995.  On November 8, 1995, an action was brought
against various parties including the Company relating to the remodeling permits
issued at the Fairhaven  landfill,  seeking  among other  things,  to appeal the
permits that had been issued.  On June 2, 1997, the judge ruled in the Company's
favor. However, based on the extensive delays associated with the litigation and
the engineering  impacts of the delays  associated  with the  litigation,  which
resulted in the uncertainty of the long-term  economic viability of the project,
the Company  terminated the project.  On February 24, 1998, the Company  entered
into a  termination  agreement  with the Town of  Fairhaven  that  required  the
Company to perform a certain  amount of  construction  and  closure  work at the
landfill.  Write-off  of project  development  costs in 1998 and 1997  primarily
represent  the Company's  cost to liquidate  the equipment  that was used at the
Fairhaven  landfill  and the costs to close  the  landfill  under the  Company's
Termination  Agreement  with the Town of  Fairhaven.  The Company  wrote off its
capital  investment in the project at December 31, 1996. The termination of this
project was completed in 1998. No other amounts are accrued at December 31, 1998
or 1999.


Note 18.   Segment Information

The Company adopted the provisions of SFAS No. 131,  "Disclosures about Segments
of an  Enterprise  and Related  Information,"  on January 1, 1999.  SFAS No. 131
establishes  standards  for the way  that  public  business  enterprises  report
information about operating segments in annual financial statements and requires
that those enterprises  report selected  information about operating segments in
interim financial reports issued to shareholders.  It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers.  Operating  segments are defined as components of an enterprise about
which separate financial information is available that is evaluated regularly by
the chief operating decision maker, or decision making group, in deciding how to
allocate  resources and in assessing  their  performance.  The  Company's  chief
operating decision-maker is the Chief Executive Officer.

The Company manages its business  segments  according to how they are integrated
between hauling,  transfer and landfill operations.  The Eastern New England and
Baltimore  Maryland/Washington  D.C.  operations are integrated with the Central
Pennsylvania  operations disposing of their waste in Central  Pennsylvania.  The
Vermont operation is primarily integrated within itself. The four operations are
grouped  together by management and evaluated as one unit.  While the operations
have  separate  management  teams,  their  operating  results are evaluated on a
combined  basis taking into  consideration  all  intercompany  transactions  and
eliminations.  The Upstate New York and Central Massachusetts operations are not
integrated  and  are  reviewed  together  as  non-integrated  operations.   Each
operating  segment  provides  services  as  further  described  in Note  1.  The
accounting  policies of the various  segments are the same as those described in
the  "Summary  of  Significant  Accounting  Policies"  in  Note 2.  The  Company
evaluates the  performance  of its segments  based on operating  income  (loss),
EBITDA and Adjusted  EBITDA.  Operating  income (loss) for each segment includes
all expenses directly attributable to the segment, including acquisition related
costs,  and excludes  certain  expenses that are managed  outside the reportable
segments.  Costs  excluded from segment  profit  primarily  consist of corporate
expenses.  Corporate expenses are comprised primarily of information systems and
other general and administrative  expenses separately managed. EBITDA is defined
as operating income or loss from continuing  operations  excluding  depreciation
and  amortization,  which includes  depreciation  and  amortization  included in
selling,  general and administrative  expenses.  EBITDA does not represent,  and
should not be  considered  as an  alternative  to, net income or cash flows from
operating  activities,  each as  determined in  accordance  with GAAP.  Adjusted
EBITDA represents EBITDA plus one-time charges  associated with the write-off of
landfill  development  costs,  acquisition  integration  costs and restructuring
costs.  Segment assets exclude corporate  assets.  Corporate assets include cash
and cash equivalents,  office equipment and other assets.  Capital  expenditures
for  long-lived  assets  are not  reported  to  management  by  segment  and are
excluded, as presenting such information is not practical.

<PAGE>


Summary  information by segment as of and for the years ended December 31, 1999,
1998 and 1997 is as follows:
<TABLE>
<CAPTION>


                                                      1999          %            1998         %           1997         %
                                                      ----          -            ----         -           ----         -
<S>   <C>                                          <C>            <C>         <C>           <C>        <C>           <C>

Integrated Operations
     Revenue                                       $41,049,195    100.0%      $17,074,831   100.0%     $ 3,457,692   100.0%
     Income (loss) from operations                     309,951      0.7%        1,184,378     6.9%         761,433    22.0%
     Depreciation and amortization                  10,017,528     23.0%        4,094,211    24.0%         692,224    20.0%
     Acquisition integration costs                   1,789,472      4.1%        1,094,731     6.4%               0        -
     EBITDA                                         10,327,479     23.7%        5,278,590    30.9%       1,453,657    42.0%
     Adjusted EBITDA                                12,116,951     27.8%        6,373,321    37.3%       1,453,657    42.0%
     Net interest expense                            (356,042)     (0.8%)         344,955     2.0%         177,917     5.1%
     Segment assets                                204,347,088        -        70,718,236       -       15,119,887        -


Non-Integrated Operations
     Revenue                                       $13,617,125    100.0%       $3,969,753   100.0%     $         -        -
     Income (loss) from operations                  (3,075,163)   (22.6%)       (762,374)   (19.2%)              -        -
     Depreciation and amortization                   1,840,080     13.5%          407,214    10.3%               -        -
     Acquisition integration costs                   1,063,264      7.8%          769,804    19.4%               -        -
     EBITDA                                         (1,235,084)    (9.1%)        (355,161)   (8.9%)              -        -
     Adjusted EBITDA                                 (171,818)     (1.3%)         650,107    16.4%               -        -
     Net interest expense                                   -        -               -           -               -        -
     Segment assets                                 34,509,481        -        20,818,488        -               -        -


Corporate and Other
     Revenue                                      $         -         -        $      -          -      $        -        -
     Income (loss) from operations                  (4,553,804)       -        (2,860,851)       -      (3,944,173)       -
     Depreciation and amortization                     116,852        -            67,396        -          21,516        -
     Acquisition integration costs                         -          -               -          -             -          -
     EBITDA                                         (4,436,951)       -        (2,793,455)       -      (3,922,657)       -
     Adjusted EBITDA                                (4,436,953)       -        (2,793,455)       -      (1,830,843)       -
     Net interest expense                          (13,743,781)       -          2,949,574       -       1,004,334        -
     Segment assets                                 16,236,522        -          4,579,975       -       3,440,367        -

</TABLE>

<PAGE>


Note 19.  Supplemental disclosures of cash flow information:

During the years ended December 31, 1999, 1998, and 1997, cash paid for interest
was $7,128,778, $3,715,304, and $1,493,221, respectively.

1999

On October 21, 1999, a special  shareholders meeting was held and the conversion
of the Series C Preferred Stock into common stock was approved. As a result, the
1,000 shares of Series C Preferred  Stock were fully  converted  into  1,763,000
shares of common stock.

On March 31, 1999, the Company issued  2,244,109  shares of the Company's Common
Stock in exchange for  $10,449,000  of its 7%  Subordinated  Notes.  The Company
incurred a non-cash  charge of $5,583,717 in connection  with this conversion of
debt into equity.

In connection with acquisitions  completed during the year, the Company acquired
property  and  equipment of  approximately  $110,211,000,  intangible  assets of
$10,721,000  and  other  assets  of  $3,519,000.   The  aggregate  cost  of  the
acquisitions  was   approximately   $124,451,000   consisting  of  approximately
$84,063,000 in cash,  $19,338,000  in common stock,  $11,615,000 in newly issued
Series C Preferred Stock and $9,435,000 in assumed liabilities.

 During 1999,  the Company  acquired  equipment of $3.4 million under  financing
obligations.

1998

In connection with the Company's acquisitions, during 1998, the Company acquired
property and equipment of  $24,298,000,  intangible  assets of  $38,524,000  and
other assets of $337,000.  The Company paid  $58,340,233 in cash,  $3,353,000 in
Common Stock and assumed liabilities from the acquired companies of $1,465,000.

During 1998,  the Company  acquired  assets of  $2,114,000,  under capital lease
obligations.

During 1998, the Company  converted  92,580 shares or $9,257,807 of its Series A
Preferred Stock into 6,590,577 shares of its Common Stock.

On May 14, 1998, the Company converted 40,488 shares or $4,048,750 of its Series
B Preferred Stock into 623,808 shares of its Common Stock.

1997

In December 1997, the Company converted  $3,950,000,  plus accrued interest,  of
its 10%  Convertible,  Redeemable,  Subordinated  Notes due  October 6, 2000 for
40,488 shares of its Series B Convertible Preferred Stock.

In October 1997, the Company  converted 4,800 shares valued at $480,000,  of its
Series A Preferred Stock into 341,334 shares of its Common Stock.

In June 1997, the Company issued Series A Preferred  Stock valued at $850,000 in
exchange  for the  remaining  20%  minority  interest in the  Moretown,  Vermont
landfill.  The Company also issued Series A Preferred Stock valued at $44,854 in
exchange for consulting services.

In June 1997,  the Company  wrote down assets to their net  realizable  value of
$863,428 related to the Fairhaven landfill project. This was charged against the
restructuring and current liabilities accrual.

In June 1997, the Company issued Series A Preferred Stock at a value of $700,000
and retired the FDIC loan of $511,093 and accrued  interest of $55,000.  The pay
off  resulted in a realized  loss on the early  retirement  of debt of $133,907.

Note 20. Subsequent Events

         On February  15,  2000,  the Company  closed an Exchange  Offer for its
$49,551,000  of  Convertible  Subordinated  Notes due 2005 and its  $100,000,000
Senior  Notes due 2006.  Approximately  $15,355,000  principal  amount of,  plus
accrued but unpaid  interest on, its 11 1/2% Series B Senior  Notes due 2006 and
approximately  $22,832,000 principal amount of, plus accrued but unpaid interest
on, its 7%  Convertible Subordinated  Notes due 2005 were tendered and exchanged
into shares of the Company's  newly  designated  Series E Convertible  Preferred
Stock which carry an 8% dividend  which is payable in kind or cash at the option
of the Company. The Company issued an aggregate of 38,531 shares of its Series E
Convertible  Preferred  Stock.  The preferred stock is redeemable at any time by
the  Company  at par plus  accrued  and  unpaid  dividends  and,  subject to any
required  stockholder  approval,  can be converted  into shares of the Company's
common  stock at a price of $8.00  per  share at any time at the  option  of the
holder and can be  mandatorily  converted  by the  Company  if its common  stock
closing price equals or exceeds $8.00 for a period of twenty consecutive trading
days.



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

None.



<PAGE>


                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

Information Regarding Directors

         The following  table and  biographical  descriptions  set forth certain
information as of March 24, 2000,  unless otherwise  specified,  with respect to
the seven  Directors of the Company,  all of whom are nominees for reelection at
the 2000 Annual Meeting of Stockholders,  based on information  furnished to the
Company by each Director.

                                   Directors

                                                  Director
    Name                      Age                  Since
Philip W. Strauss             51                    1996
Robert Rivkin                 41                    1997
Jay Matulich                  45                    1995
David J. Breazzano            43                    1997
Charles Johnston              65                    1997
Judy K. Mencher               43                    1997
William B. Philipbar          74                    1997
--------------

Philip  W.  Strauss.  Mr.  Strauss  has been the  Chief  Executive  Officer  and
President  since March 27, 1996 and  Chairman of the Board since June 24,  1996.
Previously Mr.  Strauss had been  Executive  Vice President and Chief  Operating
Officer of the Company  since  September 19, 1995. He has 24 years of experience
in project,  business and corporate  development.  Mr. Strauss was co-founder of
BioMedical Waste Systems,  Inc., a publicly held waste management firm, where he
served as Executive Vice President from its inception in 1987 until May 1992 and
as a Director from inception until May 1993.

Robert Rivkin.  Mr. Rivkin,  a Certified  Public  Accountant,  has been
Executive Vice President -  Acquisitions  of the Company since April 1998,  Vice
President  and Chief  Financial  Officer  from  March  1995  through  July 1999,
Secretary  since May 1995 and  Treasurer  since June 1996.  Mr. Rivkin was first
elected  to the Board of  Directors  in June  1997.  For the six years  prior to
joining the Company,  Mr. Rivkin was a principal at The Envirovision Group Inc.,
a full service  environmental  engineering,  consulting and contracting company,
where  he  was  responsible  for  finance,  marketing  and  strategic  planning.
Previously,  Mr.  Rivkin  practiced  public  accounting  in New  York,  where he
specialized  in mergers  and  acquisitions,  initial  public  offerings  and SEC
reporting.

Jay J. Matulich.  Mr. Matulich has been a member of the Board of Directors since
March 1995. Mr. Matulich is a Managing Director of International  Capital Growth
Limited ("ICG"),  formerly Capital Growth  International  L.L.C. and U.S. Sachem
Financial Consultants,  L.P. He has held this position since 1994. From May 1990
to  October  1994,  Mr.  Matulich  was  a  Vice  President  of  Gruntal  &  Co.,
Incorporated, investment bankers.

David J.  Breazzano.  Mr.  Breazzano has been a member of the Board of Directors
since June 1997.  Mr.  Breazzano  is one of the two  principals  at DDJ  Capital
Management,  LLC,  which  was  established  in  1996.  He has  over 20  years of
investment  experience and served as a Vice  President and Portfolio  Manager at
Fidelity Investments  ("Fidelity") from 1990 to 1996. Prior to joining Fidelity,
Mr.  Breazzano was President and Chief  Investment  Officer of the T. Rowe Price
Recovery Fund. Mr.  Breazzano also serves as a Director of Key Energy  Services,
Inc. and Samuel Jewelers, Inc.

Charles Johnston. Mr. Johnston has been a member of the Board of Directors since
June  1997.  During  the past 10 years he has  served  on  various  boards.  Mr.
Johnston is currently  Chairman of Ventex  Technology in Riviera Beach,  Florida
and has held that  position  since 1993.  He is also  currently  Chairman of AFD
Technologies in Jupiter,  Florida. He was previously founder,  Chairman, and CEO
of ISI Systems,  a public  company on the American Stock Exchange prior to being
sold to Teleglobe  Corporation of Montreal,  Canada. Mr. Johnston also serves as
Trustee of Worcester Polytechnic  Institute in Worcester,  Massachusetts as well
as Trustee for the Institute of Psychiatric Research, University of Pennsylvania
in  Philadelphia,  Pennsylvania.  In  addition,  he  serves as  director  of the
following  companies - Kideo  Productions and Infosafe  Systems both of New York
City,  Hydron  Technologies  Inc. of Boca Raton,  Florida  and  Spectrum  Signal
Processing of Vancouver, British Columbia.

Judy K. Mencher.  Ms. Mencher has been a member of the Board of Directors  since
August 1997. Ms. Mencher is one of the two principals at DDJ Capital Management,
LLC,  which was  established  in 1996.  From 1990 to 1996,  Ms.  Mencher  was at
Fidelity working in the Distressed Investing Group. Prior to joining Fidelity in
1990, Ms.  Mencher was a Partner at the law firm of Goodwin,  Procter & Hoar LLP
specializing in bankruptcy and creditors' rights.

William B. Philipbar.  Mr. Philipbar was first elected a Director of the Company
on May 8, 1996.  He  resigned  as a Director of the Company on June 24, 1997 and
was  reelected  to the  Board on August  20,  1997.  Since  December  1997,  Mr.
Philipbar has been a part-time consultant for the Company in connection with the
Company's  consideration of proposed  acquisitions and other strategic  matters.
Prior to becoming a Director of the Company, Mr. Philipbar served as Chairman of
the Delaware Solid Waste Authority from 1977 to 1987 and was President and Chief
Executive Officer of Rollins  Environmental Corp. from 1973 to 1984. He has been
a Director of Matlack Systems,  Inc. and Rollins Truck Leasing Corp. since 1993.
Until 1995 he was also an advisor to Charles River Ventures.


The Board of Directors and Its Committees

Board of Directors

         The Company's Board of Directors  consists of seven members, a majority
of whom is independent of the Company's  management.  Each director holds office
for a term  from  election  until  the  next  Annual  Meeting  of the  Company's
stockholders and until his or her successor is duly elected and qualified.

         The Board of Directors held 6 meetings during fiscal year 1999. Each of
the Company's directors attended at least 67% of the total number of meetings of
the Board of Directors  and of the  committees of the Company of which he or she
was a member.

The Board of  Directors  has  appointed a  Compensation  Committee  and an Audit
Committee.

Compensation Committee. The Compensation Committee currently consists of Messrs.
Johnston  and  Strauss  and  Ms.  Mencher.  The  Compensation   Committee  makes
recommendations and exercises all powers of the Board of Directors in connection
with certain compensation matters,  including incentive compensation and benefit
plans. The Compensation  Committee (excluding Mr. Strauss) administers,  and has
authority to grant awards under,  the Directors' Plan to the employee  directors
and management of the Company and its subsidiaries and other key employees.  The
Compensation Committee held 2 meetings during fiscal year 1999.

Audit Committee.  The Audit Committee  currently consists of Messrs.  Breazzano,
Matulich  and  Philipbar.  The Audit  Committee is empowered to recommend to the
Board the  appointment of the Company's  independent  public  accountants and to
periodically  meet  with such  accountants  to  discuss  their  fees,  audit and
non-audit services, and the internal controls and audit results for the Company.
The Audit  Committee  also is  empowered to meet with the  Company's  accounting
personnel to review accounting policies and reports.  The Audit Committee held 2
meetings during fiscal year 1999.


<PAGE>


Information Regarding Executive Officers

         Set forth below is certain information  regarding each of the executive
officers of the  Company,  including  their  principal  occupation  and business
experience for at least the last five years.

      Name                  Age                Position

Philip Strauss.........     51      Chief Executive Officer and President
Robert Rivkin..........     41      Executive Vice President - Acquisitions,
                                       Secretary and Treasurer
James Elitzak..........     39      Vice President and Chief Financial Officer
Joseph Motzkin.........     57      Vice President - Operations
Douglas Martin.........     52      Vice President - Engineering
Mark Popham..........       45      Vice President - Capital Project Development
Arthur Streeter........     39      Vice President and General Counsel
-----------------

        The principal  occupation and business  experience for at least the last
five years of each  executive  officer  of the  Company,  other  than  executive
officers also serving as Directors, is set forth below.

James Elitzak.  Mr. Elitzak has been Vice President and Chief Financial  Officer
of the Company since August 1999.  From 1993 to 1999, he was Director of Finance
for Waste  Management,  Inc.  From 1989 to 1993,  he was  Director of  Corporate
Accounting  at  Wheelabrator  Technologies.  Mr.  Elitzak,  a  Certified  Public
Accountant, has over ten years of solid waste industry experience.


Joseph  Motzkin.  Mr.  Motzkin has been a Vice  President  of the Company  since
August  1996.  From 1994 to 1996,  Mr.  Motzkin  was a General  Manager at Prins
Recycling  Corporation  where he established  recycling  programs,  and directed
sales  programs and customer  service  activities.  From 1989 to 1994,  he was a
General  Manager at Laidlaw Waste Systems where he was responsible for their New
England  operations.  Mr.  Motzkin has 26 years of experience in the solid waste
management business.

Douglas  Martin.  Mr. Martin has been a Vice President of the Company since June
1999. From 1997 to 1999, Mr. Martin was Vice President of Regulatory Offices for
Envirosource.  Prior to joining  Envirosource,  Mr.  Martin held the position of
Vice  President,  Environment,  Health and Safety for Chemical Waste  Management
from 1992 to 1997.

Mark Popham.  Mr. Popham has been Vice President - Capital  Project  Development
since April 1999.  Mr. Popham was Director of Engineering  and  Operations  from
1995 to April 1999. From 1988 to 1993, he was Vice  President/Director at United
Waste Systems, Inc.

Arthur Streeter.  Mr. Streeter has been Vice President and General Counsel since
February  1998.  Prior to joining the Company he was a Partner at Goldstein  and
Manello,  a 60 lawyer  firm  based in Boston,  Massachusetts  where he gained 12
years of experience representing both private and public companies.

Each of the  executive  officers  holds his or her  respective  office until the
regular annual meeting of the Board of Directors following the annual meeting of
stockholders  and until his or her  successor is elected and  qualified or until
his or her earlier resignation or removal.

Compliance with Section 16(a) of the Exchange Act

        Section  16(a) of the  Exchange Act  requires  the  Company's  executive
officers and directors,  and persons who own more than 10% of a registered class
of the Company's equity securities,  to file reports of ownership and changes in
ownership with the SEC and the Nasdaq Small-Cap Market. Officers,  directors and
greater  than 10%  stockholders  are required by SEC  regulation  to furnish the
Company  with copies of all  Section  16(a)  forms they file.  To the  Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company and written  representations  that no other reports were required during
the fiscal year ended December 31, 1999,  all Section 16(a) filing  requirements
applicable to its executive officers,  directors and greater than 10% beneficial
owners were satisfied.


Item 11.  Executive Compensation

Director Compensation

        The Company does not currently pay cash  compensation  to its directors.
Non-employee directors are entitled to stock option grants under the Amended and
Restated  Waste  Systems   International,   Inc.  1995  Stock  Option  Plan  for
Non-Employee Directors (the "Director Plan"). The Director Plan provides for the
automatic granting to Independent Directors (as defined in the Director Plan) of
options that do not qualify as incentive  stock  options  (referred to as "Stock
Options")  under Section 422 of the Code.  Under the terms of the Director Plan,
each  Independent  Director  who first  becomes a Director  of the Company on or
after June 30, 1997 shall automatically be granted on the date he or she becomes
a Director of the Company a Stock  Option to  purchase  20,000  shares of Common
Stock. In addition,  the Director Plan provides that each  Independent  Director
shall  automatically be granted, at the beginning of each calendar year in which
he or she is  serving  as an  Independent  Director,  a Stock  Option to acquire
10,000 shares of Stock.  Each  Independent  Director  entering service after the
start of any calendar year will  automatically  be granted on the effective date
of his or her Board  membership  a Stock  Option to  acquire a portion of 10,000
shares of Stock prorated to reflect the remaining portion of such calendar year.
The exercise  price per share for the Common  Stock  covered by any Stock Option
granted  under the Director  Plan shall be equal to the fair market value of the
Common Stock on the date such option is granted.

        Other than  Stock  Options to  acquire  20,000  shares of Stock  granted
automatically  to each new director joining the Board on or after June 30, 1997,
which Stock  Options vest  immediately  upon grant,  options  granted  under the
Director  Plan  shall  vest at a rate of 25% of the  total  number  of shares of
Common Stock purchasable under such option for each year that the holder remains
a Director of the Company,  such vesting to take place at the end of each of the
first four calendar years following  issuance of such options.  An option issued
under the Director  Plan shall not be  exercisable  after the  expiration of ten
years from the date of grant.

Executive Compensation

        Summary Compensation Table. The following table sets forth the aggregate
cash  compensation  paid by the Company  with  respect to the fiscal years ended
December 31, 1999, 1998 and 1997 to the Company's  Chief  Executive  Officer and
the six other  senior  executive  officers  in office on  December  31, 1999 who
earned at least $100,000 in cash compensation  during 1999 (the "Named Executive
Officers").

                           SUMMARY COMPENSATION TABLE

                                                                     Long-Term
                                                                    Compensation
                                                                       Awards
                                                         Annual        Shares
                                                     Compensation    Underlying
                                                        Salary       Options (1)
Name and Principal Position                   Year        ($)             (#)
---------------------------                   ----------------------------------

Philip Strauss                                1999       212,494         250,000
Chairman of the Board,                        1998       188,172         250,000
President and Chief                           1997       162,504         522,859
Executive Officer

Robert Rivkin                                 1999       211,717         250,000
Executive Vice President-Acquisitions,        1998       187,506         250,000
Secretary and Treasurer                       1997       162,504         522,859

Joseph Motzkin                                1999       137,386          25,000
Vice President - Acquisitions                 1998       118,060          40,000
                                              1997       110,000          19,300

Mark Popham(2)                                1999       116,639          20,000
Vice President-Capital Project Development

Arthur Streeter(3)                            1999       139,101          25,000
Vice-President and General Counsel            1998       118,428          40,000


(1) All  information  with  respect to  outstanding  options,  including  shares
issuable  or issued and  exercise  prices  payable  or paid per share,  has been
adjusted to reflect the 1-for-5 reverse stock split effective February 13, 1998.

(2) Includes  Mr.  Popham's  salary for 1999 only as Mr.  Popham was promoted in
April 1999.

(3) Includes Mr.  Streeter's  salary for 1999,  1998 only as Mr. Streeter joined
the Company in February 1998.


         Option Grants in Fiscal Year 1999.  The following  table sets forth the
options  granted  during  fiscal year 1999 and the value of the options  held on
December 31, 1999 by the Company's Named Executive Officers.


                                        OPTION GRANTS IN FISCAL YEAR 1999 (1)
<TABLE>
<CAPTION>

                                              Percent of Total
                            Number of         Options Granted       Exercise or
                        Shares Underlying     to Employees in       Base Price    Expiration       Grant Date
Name                   Options Granted(#)      Fiscal Year          ($ /share)       Date        Present Value$(2)
----                   ------------------     ---------------     --------------   -----------    ----------------
<S>                          <C>                 <C>                  <C>         <C>                <C>

Philip Strauss               250,000              27.7%               $4.25       04/12/09           $532,250
Robert Rivkin                250,000              27.7%               $4.25       04/12/09           $532,250
James Elitzak                 50,000               5.5%               $6.50       08/02/09           $162,850
Joseph Motzkin                25,000               2.8%               $4.25       04/12/09           $ 53,225
Douglas Martin                20,000               2.2%               $7.63       06/21/09           $ 76,400
Mark Popham                   20,000               2.2%               $4.25       04/12/09           $ 42,580
Arthur Streeter               25,000               2.8%               $4.25       04/12/09           $ 53,225

</TABLE>

(1)      All information with respect to outstanding  options,  including shares
         issuable or issued and exercise  prices payable or paid per share,  has
         been  adjusted  to reflect the 1-for-5  reverse  stock split  effective
         February 13, 1998.

(2)      The grant date present  value was  determined  using the Black  Scholes
         option pricing model with the following  weighted average  assumptions;
         volatility,  50%; expected dividend yield, 0%; risk free interest rate,
         5.5% and expected life, 5 years.

         Option Exercises and Year-End Holdings.  The following table sets forth
the options  exercised during fiscal year 1999 and the value of the options held
on December 31, 1999 by the Company's Named Executive Officers.


                 AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
                     AND FISCAL YEAR-END 1999 OPTION VALUES

<TABLE>
<CAPTION>
                                                               Number of
                                                          Securities Underlying          Value of Unexercised
                        Shares                             Unexercised Options           in-the-Money Options
                       Acquired On         Value           at Fiscal Year-End(#)         at Fiscal Year-End ($)
   Name                 Exercise (#)     Realized ($)    Exercisable  Unexercisable    Exercisable   Unexercisable
 --------------    ------------------   --------------   ----------- ---------------   -----------   -------------
<S>                      <C>               <C>            <C>            <C>            <C>           <C>

Philip Strauss            0                 0             373,929        698,930        $437,948      $1,430,135
Robert Rivkin             0                 0             373,929        698,930         437,948       1,430,135
James Elitzak             0                 0                   -         50,000               -              -
Joseph Motzkin            0                 0              27,150         67,150          10,547         136,906
Douglas Martin            0                 0                   -         20,000               -              -
Mark Popham               0                 0                   -         20,000          98,078          25,734
Arthur Streeter           0                 0              10,000         55,000         235,405          25,785

</TABLE>


         Employment  Agreements.  On June 30, 1998,  the Company and Mr. Strauss
entered into an employment  agreement.  The terms of the  agreement  provide (i)
that Mr.  Strauss  shall serve as the Company's  President  and Chief  Executive
Officer,  (ii) that he receive a salary of $200,000  per year  through  June 30,
1999 and  $225,000 per year through June 30, 2000 and (iii) that he agree not to
compete with the Company following termination of his employment for a period of
one year following the termination.  In the event that Mr. Strauss is terminated
for  cause,  he  shall  not be  bound  to the  non-competition  provisions.  The
Company's  agreement  with Mr.  Strauss was  effective  until June 30, 1999 and,
absent  ninety-day  notice from either party to the contrary,  shall be extended
automatically  for  subsequent   one-year  terms  upon  the  expiration  of  the
agreement.  The Company's  agreement  with Mr.  Strauss may be terminated at any
time by the mutual consent of the parties.

         On June 30, 1998, the Company and Mr. Rivkin entered into an employment
agreement.  The terms of the  agreement  provide (i) that he receive a salary of
$200,000  per year  through June 30, 1999 and $225,000 per year through June 30,
2000 per year and (ii) that he agree not to compete  with the Company  following
termination   of  his  employment  for  a  period  of  one  year  following  the
termination.  In the event that Mr. Rivkin is terminated for cause, he shall not
be bound to the  non-competition  provisions.  The Company's  agreement with Mr.
Rivkin was  effective  until June 30, 1999 and,  absent  ninety-day  notice from
either party to the contrary,  shall be extended  automatically  for  subsequent
one-year  terms upon the expiration of the  agreement.  The Company's  agreement
with Mr.  Rivkin  may be  terminated  at any time by the  mutual  consent of the
parties.


Compensation Committee Interlocks and Insider Participation

Currently,  Philip W. Strauss, Charles Johnston and Judy K. Mencher serve on the
Compensation Committee. Philip W. Strauss, in addition to serving as a member of
the Compensation  Committee,  is the Chief Executive  Officer and President.  No
other member of the Compensation  Committee in 1997 ever served as an officer of
the Company.

<PAGE>


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         The following table presents information as to all directors and senior
executive  officers  of the Company as of March 24, 2000 and persons or entities
known to the Company to be  beneficial  owners of more than 5% of the  Company's
Common  Stock  as of  March  24,  2000,  unless  otherwise  indicated,  based on
representations of officers and directors of the Company and filings received by
the Company on Schedules 13D and 13G or Form 13F under the  Securities  Exchange
Act of 1934, as amended (the "Exchange Act").

                              Beneficial Ownership

                                                        Common Stock
                                                --------------------------------
                                                    # of  Shares     % of Class
Directors, Executive Officers                       Beneficially    Beneficially
and 5% Stockholders(1)                                Owned           Owned(2)
--------------------------------------------------------------------------------

B-III Capital Partners, L.P.(3)                      10,286,622          40.5%
c/o DDJ Capital Management, LLC
141 Linden Street
Wellesley, MA 02181

The Prudential Insurance Company of America(4)        2,953,636          13.0%
100 Mulberry Street
Newark, NJ  07102

Mitchell Hutchins Asset Management, Inc.(5)           2,575,694          11.9%
285 Avenue of the Americas
New York, NY 10019

John Hancock Advisers(6)                              2,119,065           9.8%
101 Huntington Avenue
Boston, MA  02199

Chilton Investment Company, Inc.(7)                   1,759,700           8.5%
320 Park Avenue
New York, NY 10022

Baldwin, L.P.(8)                                      1,552,656           7.6%
1206 Oyster Cove Drive
Grasonville, MD 21638

David J. Breazzano(9)                                    12,250            *

Charles Johnston(10)                                     12,250            *

Jay Matulich(11)                                         13,000            *

Judy K. Mencher(12)                                      12,055            *

Joseph Motzkin(13)                                       69,128            *

William B. Philipbar(14)                                 66,055            *

Mark Popham(15)                                          43,200            *

Robert Rivkin(15)                                       647,597           3.1%

Philip W. Strauss(17)                                   647,250           3.1%

Arthur Streeter(18)                                      26,250            *

All directors and officers as a group (11 persons)    1,549,207           7.1%
*  Less than 1%

(1) The persons  named in the table have sole voting and  investment  power with
respect to all shares shown as  beneficially  owned by them subject to community
property laws where  applicable  and the  information  contained in footnotes to
this  table.

(2) Based on  20,348,497  shares of Common  Stock issued and  outstanding  as of
March 24, 2000. As of March 24, 2000 the Company had  outstanding 7% Convertible
Subordinated Notes due 2005 which are currently convertible at the option of the
holder into an aggregate  2,671,922 shares of Common Stock at a conversion price
of $10.00. The Company had outstanding 15,000 Series D Preferred Stock which are
currently  convertible at the option of the holder into an aggregate 2.5 million
shares of  Common  Stock at a  conversion  price of $6.00 as.  The  Company  had
outstanding  38,531 Series E Preferred Stock which are currently  convertible at
the option of the holder into an aggregate 4,816,375 shares of Common Stock at a
conversion price of $8.00. The Company has outstanding 1,500,000 warrants, which
are  currently  convertible  at the  option  of the  holder  into  an  aggregate
1,500,000  shares of Common Stock at a conversion  price of $6.25. In accordance
with Exchange Act rules  promulgated  by the  Commission,  the foregoing  shares
issuable upon conversion of the 7% Convertible  Subordinated  Notes are included
in this  table only for those  holders  with the right to  acquire  such  shares
within 60 days from the date of this  report,  to the extent such  holder  could
acquire additional shares.

(3)  Includes  5,450,533  shares  of  Common  Stock  currently  owned.  Includes
2,231,922 shares issuable upon conversion of 7% Convertible  Subordinated  Notes
at a conversion  price of $10.00,  2,266,667  shares issuable upon conversion of
Series D Preferred at a conversion  price of $6.00,  and 337,500 shares issuable
upon  conversion  of  Warrants  at a  conversion  price of  $6.25.  DDJ  Capital
Management,  LLC  ("DDJ")  serves as the  investment  manager  to B-III  Capital
Partners,  L.P. ("B III");  an affiliate of DDJ acts as the general partner of B
III.

(4) Includes 634,761 shares of Common Stock currently  owned.Includes  2,093,875
shares issuable upon  conversion of Series E Preferred at a conversion  price of
$8.00,  and 225,000 shares  issuable upon conversion of Warrants at a conversion
price of $6.25.  The Common  Stock and Notes are held for the benefit of certain
registered   investment  companies  over  which  Prudential  or  The  Prudential
Investment  Corporation  ("PIC")  may have  direct  or  indirect  voting  and/or
investment discretion,  with respect to which Prudential has advised the Company
that Prudential and PIC disclaim beneficial ownership.

(5)  Includes  1,231,444  shares  of  Common  Stock  currently  owned.  Includes
1,194,250  shares issuable upon conversion of Series E Preferred at a conversion
price of $8.00,  and 150,000  shares  issuable upon  conversion of Warrants at a
conversion price of $6.25.

(6) Includes 933,315 shares of Common Stock currently owned.  Includes 1,155,750
shares issuable upon  conversion of Series E Preferred at a conversion  price of
$8.00,  and 30,000 shares  issuable upon  conversion of Warrants at a conversion
price of $6.25.

(7) Includes  1,504,700  shares of Common  Stock  currently  owned,  and 255,000
shares  issuable upon  conversion of Warrants at a conversion  price of $6.25.

(8)  Includes 1,552,656  shares of Common Stock  currently  owned.

(9) Includes  12,250 shares  subject to stock options which are fully vested and
currently  exercisable  and  excludes  those  shares  owned by B III,  which Mr.
Breazzano  may be deemed  to  beneficially  own as a result  of Mr.  Breazzano's
interest in DDJ, however, such beneficial ownership is disclaimed. Mr. Breazzano
is a managing member of DDJ.

(10) Includes 12,250 shares subject to stock options, which are fully vested and
currently exercisable.

(11)  Includes  2,000 shares of Common Stock  currently  owned and 11,000 shares
subject to stock options, which are fully vested and currently exercisable.

(12) Includes  12,055 shares subject to stock options which are fully vested and
currently  exercisable  and  excludes  those  shares  owned by B III,  which Ms.
Mencher may be deemed to beneficially own as a result of Ms. Mencher's  interest
in DDJ,  however,  such  beneficial  ownership is  disclaimed.  Ms. Mencher is a
managing member of DDJ.

(13) Includes  18,403 shares of Common Stock  currently  owned and 50,725 shares
subject to stock options, which are fully vested and currently exercisable.

(14) Includes 66,055 shares subject to stock options, which are fully vested and
currently exercisable.

(15) Includes 43,200 shares subject to stock options, which are fully vested and
currently exercisable.

(16) Includes  17,953 shares of Common Stock  currently owned and 629,644 shares
subject to stock options, which are fully vested and currently exercisable.

(17) Includes  17,778 shares of Common Stock  currently owned and 629,644 shares
subject to stock options, which are fully vested and currently exercisable.

(18) Includes 26,250 shares subject to stock options, which are fully vested and
currently exercisable. <PAGE>



Item 13.  Certain Relationships and Related Transactions

On  December  15,  1997,  the Board of  Directors  voted to retain  Mr.  William
Philipbar,  a Non-Employee Director of the Company, as a part-time consultant in
connection with the Company's  consideration of proposed  acquisitions and other
strategic matters.  Mr.  Philipbar's  compensation for providing such consulting
services for up to four days per month, as requested by the Company, consists of
grants of  options  to acquire  25,000  shares of Common  Stock to be granted on
January  1 of each  year  (beginning  January1,  1998) so long as Mr.  Philipbar
continues to be so retained by the Company.  Under such consulting  arrangement,
Mr.  Philipbar  received  options on January 1, 1998 and 1999 to acquire  25,000
shares of Common Stock,  vesting  according to the terms described  below.  Such
grants are made under an amendment of the  Company's  Amended and Restated  1995
Stock Option and Incentive Plan (the "Plan") permitting the grant of options and
other benefits under the Plan to Non-Employee  Directors,  consultants and other
key persons,  which was approved by the Company's stockholders at the August 18,
1998 Annual Meeting of  Stockholders.  Each such option granted to Mr. Philipbar
under such consulting arrangement (a) shall remain outstanding for a term of ten
years,  subject to  termination 90 days following the date of termination of Mr.
Philipbar's consulting arrangement with the Company; (b) shall be exercisable at
an exercise  price per share equal to the closing  price of the Common  Stock on
its  principal  trading  market on the first trading day on or after the date of
issuance;  (c) shall  initially be unvested,  and shall vest in full on the date
one year  after  the date of  issuance,  provided  that Mr.  Philipbar  has been
retained as a consultant by the Company and has been ready,  willing and able to
perform services as such consultant  during such one year period;  and (d) shall
be a non-qualified stock option for income tax purposes.

During 1999, BIII Capital  Partners,  L.P. (BIII)  participated in the Company's
private  placements, including  the  issuance  of the 11 1/2% Senior  Notes,  an
issuance of common stock and an issuance of preferred stock. In March 1999, BIII
purchased  Senior Notes with a face value of $22.5 million.  During August 1999,
they  acquired  571,429  shares of common stock for proceeds of  $4,000,000.  On
December 28, 1999, they purchased  13,600 shares of Series D preferred stock for
proceeds of $13,600,000.

In addition, at December 31, 1999 BIII holds approximately $22,300,000 of the 7%
Convertible  Subordinated Notes due 2005 which were issued by the Company during
1998.


<PAGE>


                                     PART IV

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

(A)      1.  Financial Statements

The financial statements are listed under Part II, Item 8 of this Report.

         2.  Financial Statement Schedules

The  financial  statement  schedules  are listed  under Part II,  Item 8 of this
Report.

         3.  Exhibits

The exhibits are listed below under Part IV, Item 14(c) of this report.

(B)      Reports on Form 8-K

On December 28, 1999, the Company filed a Current Report on Form 8-K, whereby it
announced  the  completion  of a $15  million  private  placement  of  Series  D
Preferred Stock.

(C)      Exhibits

Exhibit No.                          Description

2.1 Articles of Merger of BioSafe  International,  Inc.,  a Nevada  Corporation,
with and into Waste Systems International,  Inc., a Delaware Corporation,  filed
October 24, 1997  (Incorporated by reference to Exhibit 2.1 to Form 10-Q For the
Quarterly Period Ended September 30, 1997 of Waste Systems International, Inc.)

2.2 Certificate of Merger of BioSafe International,  Inc., a Nevada Corporation,
with and into Waste Systems International,  Inc., a Delaware Corporation,  filed
October 24, 1997 and effective  October 27, 1997.  (Incorporated by reference to
Exhibit 2.2 to Form 10-Q For the  Quarterly  Period Ended  September 30, 1997 of
Waste Systems International, Inc.)

2.3 Agreement  and Plan of Merger dated October 17, 1997 by and between  BioSafe
International, Inc. a Nevada Corporation and Waste Systems International, Inc. a
Delaware Corporation. (Incorporated by reference to Exhibit 2.3 to Form 10-Q For
the Quarterly  Period Ended  September 30, 1997 of Waste Systems  International,
Inc.)

3(i).1 Second Amended and Restated Certificate of Incorporation of Waste Systems
International, Inc. filed February 13, 1998.

3(i).2  Certificate of Designations  of Series B Convertible  Preferred Stock of
Waste Systems International, Inc. filed March 5, 1998.

3(i).3 Certificate of Corrections to the Second Amended and Restated Certificate
of  Incorporation  of Waste Systems  International,  Inc. as filed  February 13,
1998),filed March 17, 1998.

3(ii).1 Bylaws of the Company, adopted and effective as of October 27, 1997.

4.4 Certificate of Designation of Series A Convertible  Preferred Stock of Waste
Systems  International,  Inc.  filed  October 20, 1997 (Refer to Exhibit  3(i).3
above).

4.5 Certificate of Designation of Series B Convertible  Preferred Stock of Waste
Systems  International,  Inc.  filed  October 20, 1997 (Refer to Exhibit  3(i).2
above).

4.7 Indenture,  dated as of March 2, 1999, between Waste Systems  International,
Inc. and IBJ  Whitehall  Bank & Trust  Company,  including a form of the 11 1/2%
Senior  Note due 2006.  (Incorporated  by  reference  to Exhibit  No. 4.1 of the
Company's Current Report on Form 8-K, dated March 2, 1999.)

4.8  Warrant  Agreement,  dated as of  March  2,  1999,  between  Waste  Systems
International,  Inc. and subsidiaries and IBJ Whitehall Bank & Trust Company,  a
New York banking  corporation  as warrant agent.  (Incorporated  by reference to
Exhibit  No. 4.2 of the  Company's  Current  Report on Form 8-K,  dated March 2,
1999.)

4.9 Note Registration Rights Agreement,  dated as of March 2, 1999, by and among
Waste  Systems  International,  Inc.  and  its  subsidiaries  and  First  Albany
Corporation.  (Incorporated  by  reference  to Exhibit No. 4.3 of the  Company's
Current Report on Form 8-K, dated March 2, 1999.)

4.10  Certificate  of  Designation  of the  Company's  Series D Preferred  Stock
(Incorporated  by reference to Exhibit No. 99.2 of the Company's  Current Report
on Form 8-K, dated March 29, 1999.)

4.11  Certificate  of  Designation  of the  Company's  Series E Preferred  Stock
(Incorporated  by reference to Exhibit No. 99.2 of the Company's  Current Report
on Form 8-K, dated March 27, 2000.)

4.12 Warrant  Registration  Rights Agreement,  dated as of March 2, 1999, by and
among Waste Systems  International,  Inc. and its  subsidiaries and First Albany
Corporation.  (Incorporated  by  reference  to Exhibit No. 4.4 of the  Company's
Current Report on Form 8-K, dated March 2, 1999.)

4.13  Purchase  Agreement,  dated  February 25, 1999,  by and among First Albany
Corporation  and  Waste  Systems  International,   Inc.  and  its  subsidiaries.
(Incorporated by reference to Exhibit No. 1.1 of the Company's Current Report on
Form 8-K, dated March 2, 1999.)

10.4 Agreement and Plan of Merger dated as of March 17, 1995, among the Company,
Zoe  Resources,  Inc.,  certain  stockholders  of the Company and BioSafe,  Inc.
(Incorporated  by Reference to Exhibit 2.1 of the  Company's  Current  Report on
Form 8-K, dated March 29, 1995.)

10.5 1995 Stock  Option Plan  (Incorporated  by Reference to Exhibit 10.1 of the
Company's Current Report on Form 8-K, dated March 29, 1995.)

10.6   Agreement   between   BioSafe,   Inc.  and  the  Town  of  South  Hadley,
Massachusetts,  dated August 22, 1995. (Incorporated by reference to Exhibit No.
10.12 to the Registration Statement on Form S-1 of BioSafe International,  Inc.,
No. 33-93966 as filed on June 26 1995.)

10.7  Form  of  10%  Convertible,   Redeemable,   Subordinated  Note  Due  2000.
(Incorporated by reference to Exhibit No. 10.15 to the Registration Statement on
Form S-1 of BioSafe International, Inc., No. 33-93966.)

10.8 Form of Exchange  Agreement between Waste Systems  International,  Inc. and
each  participating  holder in the March 31,  1999  exchange  of 7%  Convertible
Subordinated  Notes for an  aggregate  of  2,249,109  shares  of  common  stock.
(Incorporated  by  reference  to Exhibit No. 4.5 to the  Company's  Registration
Statement on Form S-4, No. 33-81341.)

10.9 Form of 11 1/2% Series B Senior Note due 2006 (Incorporated by reference to
Exhibit  No.  4.6 to the  Company's  Registration  Statement  on Form  S-4,  No.
33-81341.).

10.10 Form of Exchange Offering Memorandum dated January 18,2000.  (Incorporated
by  reference  to  Exhibit  No.  99.2 of the  Company's  Current  Report on Form
8-K,dated January 18, 2000.)

21.1     Schedule of Subsidiaries.

27.1     Financial Data Schedules


<PAGE>


SIGNATURES

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

WASTE SYSTEMS INTERNATIONAL, INC.

   Date:  March 30, 2000               By:   /s/ Philip Strauss
                                             ------------------
                                                Philip Strauss
                                 Chairman, Chief Executive Officer and President
                                          (Principal Executive Officer)

   Date: March 30, 2000                By:   /S/ James Elitzak
                                              ------------------
                                                  James Elitzak
                                  Vice President and Chief Financial Officer
                                  (Principal Financial and Accounting Officer)

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

   Date: March 30, 2000                 By: /s/ Philip Strauss
                                           --------------------
                                                Philip Strauss
                                 Chairman, Chief Executive Officer and President
                                            (Principal Executive Officer)

   Date: March 30, 2000                 By:   /S/ Robert Rivkin
                                             --------------------
                                                 Robert Rivkin
                                   Executive Vice President -Acquisitions,
                                           Treasurer and Secretary

   Date: March 30, 2000                 By:   /S/ Jay J. Matulich
                                             --------------------
                                           Jay J. Matulich - Director

   Date: March 30, 2000                 By:   /S/ David J. Breazzano
                                            -------------------------
                                           David J. Breazzano - Director

   Date: March 30, 2000                 By:   /S/ Charles Johnston
                                               ------------------------
                                              Charles Johnston - Director

   Date: March 30, 2000                 By:   /S/ Judy K. Mencher
                                             ---------------------------
                                              Judy K. Mencher - Director

   Date: March 30, 2000                 By:   /S/ William B. Philipbar
                                             ----------------------------
                                            William B. Philipbar - Director


<PAGE>


Exhibit 21.1
Schedule of Subsidiaries
As of December 31, 1999

Name and address:                                                    EIN

WSI, Inc.                                                          95-4203626
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Medical-Waste Systems, Inc.                                    04-3377563
(Formerly Biosafe Medical Waste Technology, Inc.)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Vermont Holdings, Inc.                                         03-0347845
(Formerly Waste Professionals of Vermont, Inc.)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Moretown Landfill, Inc.                                        03-0355691
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Burlington Transfer Station, Inc.                             04-33746889
 (Formerly Burlington Area Transfer Station, Inc.)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Waitsfield Transfer Station, Inc.                             04-3292469
(Formerly Waitsville Transfer Station, Inc.
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI of Vermont, Inc.                                              03-0354296
(Formerly WPV Disposal, Inc.)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI of Massachusetts Holdings, Inc.                               04-3301441
(Formerly Biosafe Buckland, Inc.)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI of Massachusetts Hauling, Inc.                                04-3301442
(Formerly Biosafe Fairhaven, Inc.)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI of South Hadley, Inc.                                         04-3086959
 (Formerly Biosafe, Inc.)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420



<PAGE>


WSI Pennsylvania Holdings, Inc.                                  04-3301448
 (Formerly Biosafe Mid-Atlantic, Inc.)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Sandy Run Landfill, Inc.                                     04-3301445
(Formerly Biosafe Pennsylvania, Inc.)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI of Pennsylvania, Inc.                                        04-3301449
(Altoona Hauling)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI of Pennsylvania Transportation, Inc.                         04-3301450
(Harrisburg Hauling)
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

Biosafe Systems, Inc.                                            34-4027808
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

Mostoller Landfill, Inc.                                         25-1622775
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI St. Johnsbury Transfer Station, Inc.                         03-3556503
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI New York Holdings, Inc.                                      04-3428760
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI of New York, Inc.                                            04-3434005
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI of Oxford Transfer Stations, Inc.                            04-3454163
Mass Wood Recycling, Inc.
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Maryland Holdings, Inc.                                      04-3428758
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

Palmer Resource Recovery Corporation                             16-1557988
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Camden Transfer Station                                       04-3457679
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Massachusetts Recycling, Inc.                                 04-3470404
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Somerset Hauling, Inc.                                        04-3460153
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

Community  Refuse Service, Inc.                                   23-1554822
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Mifflin County Landfill, Inc.                                 04-3480387
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

Eastern Trans-Waste of Maryland                                   52-1294346
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

WSI Maryland Hauling, Inc.                                        04-3480224
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

Turner Trucking & Salvage Co., Inc.                               04-2628610
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420

Spartan Consolidated                                              02-0417895
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420