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

                                   FORM 10-K/A
                                 Amendment No. 2

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

                   For the fiscal year ended December 31, 1998

                         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
  incorporation or organization)                             Identification No.)

    420 Bedford Street, Suite 300
    Lexington, Massachusetts                                         02173
    (Address of principal executive offices)                       (Zip Code)

                                 (781) 862-3000
              (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. ___

        As of March  24,  1999,  the  market  value of the  voting  stock of the
Registrant held by non-affiliates of the Registrant was $50,492,453.

        The number of shares of the  Registrant's  common stock,  par value $.01
per share, outstanding as of March 24, 1999 was 11,220,545.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's Proxy Statement for the 1999 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>

                                                        17

        This report on Form 10-K/A,  Amendment  No. 2, amends the Report on Form
10-K of Waste  Systems  International,  Inc.  ("Waste  Systems")  filed with the
Securities  and Exchange  Commission on March 31, 1999, as amended by the report
on Form  10-K/A  of  Waste  Systems  filed  with  the  Securities  and  Exchange
Commission  on April 9, 1999  (such  Report on Form  10-K,  as so  amended,  the
"Amended Form 10-K").

        The  Amended  Form 10-K is hereby  amended  by  deleting  Part I, Item 7
thereof in its entirety and replacing it as follows:

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 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:


<PAGE>



                                             Year ended December 31,
                                       1998        1997          1996

          Collection                  73.5%       12.8%            - %
          Landfill                    20.1        78.1          100.0
          Transfer                     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.  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 s 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

              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 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 Senior Notes  Indenture.  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 $20.0  million of the  Company's  13% short term notes due
June 30, 1999,  (the  outstanding  balance of the 13% short-term  notes was $7.5
million at December 31, 1998) $10.0 million of the BankNorth Group,  N.A. credit
facility  and  approximately  $1.7  million  of capital  leases and other  notes
payable. In addition, the Company redeemed approximately $1.45 million principal
amount of the Company's 10% Convertible  Subordinated  Debentures due October 6,
2000 and completed several  acquisitions as described below. The Company intends
to use the balance of the proceeds  for general  corporate  purposes,  including
possible future acquisitions and working capital.

              Conversion  of Debt into Equity.  On March 31,  1999,  the Company
closed a private  exchange offer in which it exchanged  2,244,109  shares of the
Company's Common Stock for a portion of the Company's 7% Subordinated  Notes due
May 13, 2005.  The  exchange  price per share of $4.656 was equal to the closing
price of the Common Stock on the Nasdaq SmallCap Market on that date as reported
by NASDAQ.  Accrued  but  unpaid  interest  on the Notes was paid in cash.  As a
result of the private exchange offer, the Company retired  $10,449,000 of its 7%
Convertible  Subordinated Notes. The remaining 7% Convertible Subordinated Notes
are convertible by holders into Common Shares at $10.00 per share.

              Stock  Repurchase.  With the  proceeds  of the Senior  Notes,  the
Company  repurchased  497,778  shares of the  Company's  common  stock  from the
Federal Deposit Insurance  Corporation (FDIC) for an aggregate purchase price of
approximately $2.8 million.

              Acquisitions.  Since December 31, 1998 through March 24, 1999, the
Company has completed six  acquisitions,  consisting of 5 collection  operations
and one  landfill.  The  aggregate  purchase  price for these  acquisitions  was
approximately  $38  million  which  was  paid in  cash  and  the  assumption  of
approximately  $3 million  of debt.  These  acquisitions  have  combined  annual
revenue of approximately  $12 million.  The acquisitions  have all been recorded
using the purchase method of accounting.

              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:

                                                    Year ended December 31,
                                                  1998        1997        1996

    Revenues                                     100.0%       100.0%      100.0%

    Operating expenses                             58.9        49.7         61.6
    Depreciation and amortization                  21.4        20.0         24.7
    Acquisition integration costs                   8.9         -            -
    Write-off of project development costs          1.1        43.3        444.7
                                                 ------      ------      -------

       Total cost of operations                    90.3       113.0        531.0
                                                 ------      ------        -----

    Gross profit (loss)                             9.7      (13.0)      (431.0)
    Selling, general and administrative expenses   21.3        61.8        163.3
    Restructuring                                   -          17.2        116.5
    Amortization of prepaid consulting fees         -           -           55.8
                                                 ----        ----        -------

       Loss from operations                      (11.6)      (92.0)      (766.6)

    Royalty and other income (expense), net       (0.6)      (14.9)         62.5
    Interest income                                 2.1         5.0         11.9
    Interest expense and financing costs         (19.4)      (39.2)       (79.0)
    Equity in loss of affiliate                     -           -          (6.4)
    Write off of assets                             -           -          (1.5)
    Write off of accounts receivable                -           -         (16.4)
                                                 ----        ----        -------

       Total other income (expense)              (17.9)      (65.5)       (12.5)

    Income tax expense                              0.2         0.2        (1.6)

       Loss from continuing operations           (29.7)      (157.7)     (777.5)

    Discontinued operations                         -           -        (151.2)
                                                 ----        ----        -------

       Loss before extraordinary item            (29.7)      (157.7)     (928.7)

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

       Net loss                                  (30.9)%     (161.6)%   (928.7)%
                                                 =======     ========   ========

    EBITDA                                        10.1%      (71.4%)    (662.0)%
                                                 ======      =======    ========

    Adjusted EBITDA                               21.9%      (10.9%)    (101.3)%
                                                 ======      =======    ========



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 998 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 New York and  Massachusetts  operations do not yet have
landfills where waste can be internalized.

         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. Acquisition integration costs consist of
one-time, non-recurring costs, which in the opinion of management have no future
value and, therefore, are expensed. Such costs include termination and retention
of employees,  lease  termination  costs,  costs related to the  integration  of
information  systems  and costs  related to the  change of name of the  acquired
company or business.  These  charges are  estimated  and accrued at the time the
acquisition  is  closed.  The  estimates  are  reviewed  frequently  by  Company
management and the related  operation teams integrating the new acquisitions and
adjusted as required. 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 the several
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 and Discontinued Operations" 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 income (expense).  Royalty and other income (expense)
was  approximately  ($134,000)  and  ($516,000) in 1998 and 1997,  respectively.
Royalty and other income (expense)  primarily  relates 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.

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

         Revenues.  Revenues for 1997 increased by $1,962,000 to $3,458,000 from
$1,496,000  in 1996.  The increase of 131% was due  primarily  to the  increased
waste  volume  accepted  at the  Moretown  Landfill,  in its first  full year of
operation,  the acquisition  through a lease/purchase  arrangement on October 6,
1997 of the Chittenden Solid Waste District ("CSWD") transfer station located in
Williston,   Vermont  and  the  internal  growth  of  the  Company's  collection
operations.  All  1997  revenues  were  generated  from  the  Company's  Vermont
operations  as  compared  to 1996,  where  approximately  $1,157,000  or 77% was
generated from the Company's operations at the Fairhaven Landfill.

         Cost of  operations.  Operating  expenses  for 1997  was  approximately
$1,718,000  compared to $921,000 in 1996. The increase of $797,000 was primarily
due  to the  growth  of the  Company's  Vermont  operations.  During  1997,  the
Company's Vermont operations expanded as a result of the Company's purchase of a
collection company and its acquisition  through a lease/purchase  arrangement of
the CSWD transfer station.

         Depreciation and  amortization.  Depreciation and amortization  expense
was $692,000 and $370,000 for the years ended 1997 and 1996,  respectively.  The
increase of $322,000 or 87% was due  primarily to the growth in the operation at
the Moretown  Landfill which resulted in increased  amortization  of capitalized
landfill  costs and to a substantial  increase in capital  equipment used in the
Company's other Vermont operations.

         Write-off  of  landfill   development  costs.   Write-off  of  landfill
development  costs were  $1,495,000  and $6,652,000 for the years ended 1997 and
1996,  respectively.  The write-off of landfill  development costs is related to
the Fairhaven Landfill.

         Selling,  general and  administrative  expenses.  Selling,  general and
administrative  expenses for 1997 were approximately  $2,138,000,  a decrease of
12.5% from 1996. The decrease was due to the  restructuring  undertaken in March
of 1996 and to the  cessation  of  operations  at the  Fairhaven  Landfill.  The
decrease  was   partially   offset  by   increases   in  selling,   general  and
administrative   expenses  at  the  Company's  Vermont  operations  and  general
corporate expenses due to the building of an infrastructure necessary to support
increases in acquisition, operating and administrative activities.

         Restructuring.  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.  As part of the restructuring,  the
Company ceased operations at its technology center in Woburn, Massachusetts, and
discharged  all  employees  and  consultants  previously  engaged in  developing
technologies  with  potential   application  in  certain  environmental  related
activities,  including the manufacture of useful  materials from tires and other
recycled materials,  contaminated soil cleanup and recycling,  industrial sludge
disposal,  size  reduction  equipment  design and  manufacture  (the  "Ancillary
Technologies"),  and Major Sports Fantasies,  Inc. ("MSF"), a business unrelated
to the environmental  industry.  No substantial  revenues were received from the
technology center operations or MSF activities.  Restructuring  charges for 1997
and 1996 were $596,000 and  $1,742,000,  respectively,  which consisted of costs
incurred for employee severance, non-cancelable lease commitments,  professional
fees and litigation costs.

         Royalty and other income (expense).  Royalty and other income (expense)
decreased approximately  $1,451,000 in 1997 to ($516,000) from $935,000 in 1996.
The  decrease  in  1997  was  due to  the  termination  of one of the  Company's
licensing agreements with ScotSafe Limited ("ScotSafe").

         Interest  expense and financing  costs.  Interest  expense for 1997 was
approximately  $1,182,000  net of  interest  income of  $172,000  as compared to
approximately  $1,004,000  net of  interest  income of  $178,000  for 1996.  The
increase resulted primarily from additional  indebtedness incurred in connection
with acquisitions and capital expenditures for the Company's Vermont operations.
During 1997 and 1996, the Company  capitalized  interest  expense of $24,000 and
$42,000, respectively related to construction costs.

         Write-off of accounts  receivable.  During the fourth  quarter of 1997,
the  Company  wrote-off  an  uncollectible   receivable  due  from  ScotSafe  of
approximately $568,000.


Liquidity and Capital Resources

         The Company's  business is capital  intensive.  The  Company's  capital
requirements,  which  are  substantial,   include  acquisitions,   property  and
equipment  purchases and 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.  As discussed in
"Recent  Business  Developments",  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.  The Company has used the proceeds from these
Debt  offerings  to  complete  various  acquisitions  during  1998 and 1999.  In
addition, the Company has repaid other outstanding debt obligations, repurchased
497,778 shares of the Company's common stock from the Federal Deposit  Insurance
Corporation  (FDIC)  for an  aggregate  purchase  price  of  approximately  $2.8
million, and fund the Company's growth,  including  infrastructure.  The Company
intends to use the  balance of the  proceeds  for  general  corporate  purposes,
including  possible  future  acquisitions  and  working  capital.  In  addition,
approximately   $10,449,000  of  the  7%  Convertible  Subordinated  Notes  were
exchanged into common stock during March 1999 through an exchange offering.  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 operations.

         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  and the  proceeds  from the Notes  will
provide  adequate  funds to support the Company's  cost  structure,  acquisition
strategy and working capital requirements for the foreseeable future.

         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 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 Central  Massachusetts and twelve collection
companies  (one of which  included a transfer  station)  in Central  Upstate New
York. The aggregate cost of these  acquisitions was approximately  $61.4 million
consisting of approximately  $58.3 million in cash, $3.4 million in common stock
and approximately $1.5 million in assumed liabilities.  Acquisition  integration
costs for the year ended  December  31,  1998,  related to the  acquisitions  in
Vermont,  Central  Pennsylvania,  Central  Massachusetts and Central Upstate New
York, were approximately $1,865,000.

         The  Company  generated  net cash from  operating  activities  for 1998
approximately $592,000. In 1997, the Company used approximately ($4,586,000) for
operating  activities.  The improved  cash flow from  operations in 1998 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   $4,599,000   during  1998  to
approximately  $2,130,000 from negative EBITDA of approximately  ($2,469,000) in
1997.  As a percentage  of revenue,  EBITDA  increased to 10.1% during 1998 from
(71.4%) in 1997.  Adjusted EBITDA increased by approximately  $4,608,000  during
1998 to approximately  $4,230,000 from negative Adjusted EBITDA of approximately
($378,000)  in 1997. As a percentage of revenue,  Adjusted  EBITDA  increased to
21.9% in 1998 compared to (10.9%) in 1997.

         Net cash used by  investing  activities  during 1998 was  approximately
$71,939,000 compared to cash generated of approximately $706,000 in 1997. Of the
net cash used by investing activities in 1998, approximately $58,340,000 million
was used for the acquisition of landfill,  collection and transfer operations in
Vermont,  Central  Pennsylvania,  Central  Massachusetts and Central 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,  Central
Massachusetts and Central 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 generated by
investing  activities  for 1997 was primarily due to the reduction in collateral
requirements on the Vermont Landfill  closure and post-closure  performance bond
of  approximately  $1,000,000  and the proceeds  from the sale of the  Fairhaven
equipment for approximately $800,000.  These were offset by capital expenditures
at the Company's Vermont operation.

         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.  Total  capital
expenditures  are expected to further  increase during 1999 due to acquisitions,
ongoing  construction  of Cell 2 at the Moretown  Landfill,  the development and
construction of the Mostoller and South Hadley Landfills and construction of the
transfer station in Central Massachusetts.

         Net cash provided by financing activities during 1998 was approximately
$68,576,000  compared  to  $6,579,000  in  1997.  The  increase  in 1998 was due
primarily to the receipt of the net proceeds of $58.3 million  related to the 7%
Convertible  Subordinated  Notes,  borrowings  under the  Company's  bank credit
facility of $10 million,  $7.5 million in additional short-term financing from a
related  party   stockholder   and   borrowings   for  equipment   purchases  of
approximately $9.0 million.  The proceeds were offset by principal repayments of
debt of approximately $15.2 million and dividend payments on the Preferred Stock
of approximately $888,000.

         The  Company  has a $10  million  line  of  credit  facility  with  The
BankNorth  Group,  N.A.  which was fully  drawn as of  December  31.  The entire
balance was repaid on March 2, 1999 with the proceeds from the Senior Notes. The
Company is currently  negotiating  an expansion or  replacement  of the facility
with The BankNorth Group, N.A.

         At December 31, 1998,  the Company had  approximately  $83.1 million of
short-term and long-term debt.

         Based upon its current  operating  plan, the Company  believes that its
cash  and  cash  equivalents,   available  borrowings,  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."

Certain Factors Affecting Future Operating Results

         Our  history  of  losses  makes  investment  in  Waste  Systems  highly
speculative.

         During the fiscal years ending  December  31, 1998,  1997 and 1996,  we
suffered  net  losses   (including   non-recurring   charges)  of  approximately
($6,496,000),  ($5,589,000)  and  ($13,890,000),  respectively  on  revenues  of
approximately $21,045,000,  $3,458,000 and $1,496,000,  respectively.  Following
Waste  Systems'  restructuring  in 1996,  we  directed  our focus on becoming an
integrated  solid waste management  company by implementing a business  strategy
based  on  aggressive  growth  through  acquisitions.   Our  ability  to  become
profitable and to maintain profitability as we pursue our business strategy will
depend upon several factors, including our ability to:

   o execute our acquisition strategy and expand our revenue generating
     operations while maintaining or reducing our proportionate administrative
     expenses;

   o locate sufficient financing to fund acquisitions; and

   o adapt to changing conditions in the competitive market in which we operate.

External factors,  such as the economic and regulatory  environments in which we
operate will also have an effect on our business and its profitability. However,
continued  losses and negative cash flow may not only prevent us from  achieving
our  strategic  objectives,  it may also  limit our  ability  to meet  financial
obligations, including our obligations under the Senior Notes.

  Substantial Increased Leverage.

         We   currently   have  a  high  level  of   indebtedness   relative  to
stockholders' equity. The following table illustrates our level of indebtedness:

                                                   As of December 31, 1998  (*)
                                                      (dollars in thousands)
Long-term Indebtedness............................             $172,672
Stockholders' Equity..............................              $12,188
Debt to Equity ratio..............................                 14.2

(*) pro forma to include the issuance of $100 million principal amount of Senior
Notes and the exchange of  $10,449,000  principal  amount of the 7%  Convertible
Notes into 2,244,109 shares of our common stock.

   Our high level of indebtedness could:

    o        limit our flexibility in planning for, or reacting to, changes
             in business, industry and economic conditions;

    o        require us to dedicate a substantial  portion of our cash flow
             from operations to repaying indebtedness, thereby reducing the
             availability of our cash flow to fund working capital, capital
             expenditures and other general corporate purposes;

    o        place us at a competitive disadvantage compared to our competitors
             with lower levels of indebtedness; and

    o        limit our ability to borrow additional  funds,  either because
             of  restrictive  covenants  in the Senior  Notes  Indenture or
             because   of  a   potential   lender's   limits  on   borrower
             indebtedness.


         Our high level of indebtedness may have a direct negative impact on our
operations. It may also result in an event of default under our debt instruments
which,  if not cured or  waived,  could have a  material  adverse  effect on our
finances.

                                                    For the Years Ended
                                                        December 31,
                                                   1998            1997
                                                   ----            ----

Ratio of earnings to Fixed Charges......           N/A              N/A

         For the year ended  December 31, 1998,  we incurred net losses that did
not cover fixed charges by  approximately  $6.6 million;  and for the year ended
December  31, 1997,  we incurred net losses that did not cover fixed  charges by
approximately   $5.5  million.   For  purposes  of  computing   this   financial
relationship  of earnings to fixed  charges,  earnings  consist of pretax income
(loss) from continuing  operations plus fixed charges.  Fixed charges consist of
interest  expense  and  financing  costs,  including  capitalized  interest  and
amortization of deferred  financing costs,  and an estimated  portion of rentals
representing interest costs.

         Incurring  more debt  could  further  exacerbate  the risks of our high
level of indebtedness.

         Despite our current high level of indebtedness,  the indenture does not
fully  prohibit us or our  subsidiaries  from incurring  substantial  additional
indebtedness  in the future.  We may increase the amount of available  borrowing
under our bank credit facility or obtain  additional bank financing.  Borrowings
and other  indebtedness which Waste Systems or our subsidiaries may incur may be
secured and therefore  would rank senior to the Senior Notes and the  subsidiary
guarantees  thereof.  If new  debt is added to our  current  level of debt,  the
related risks of indebtedness could intensify both for us and for the holders of
the Senior Notes.

         We may not  generate  enough  cash to service our  indebtedness  or our
other liquidity needs.

         Our ability to make payments on and to refinance our indebtedness,  and
to fund planned capital expenditures will depend on our ability to generate cash
in the future. This ability depends in part on our operating performance and the
execution of our business  strategy.  It is also subject to influence by general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control.

         We cannot assure you that our business will  generate  sufficient  cash
flow  from  operations,  that we will  realize  anticipated  cost  savings  from
operating  efficiency  improvements,  or that we will be able to  obtain  future
financing in amounts  sufficient to enable us to pay our indebtedness or to fund
our other liquidity needs.

         The  following  table  outlines  the  schedule  of  our  required  debt
amortization  payments  proforma to include the Senior Notes and the exchange of
$10,449,000  of the 7%  Convertible  Notes into  2,244,109  shares of our common
stock.:
<TABLE>
<S>                    <C>         <C>     <C>      <C>     <C>     <C>       <C>     <C>     <C>   <C>         <C>

                        Balance at
                        December 31,
                          1998     1999    2000     2001    2002     2003     2004    2005    2006  Remainder   Total
                          ----     ----    ----     ----    ----     ----     ----    ----    ----  ---------   -----
                                  Principal Payments Due During
                                     (Dollars in thousands)

Long-Term Debt
Bank Credit Facility   $ 10,000  10,000       -        -      -        -        -        -       -        -     10,000
13% Short-tern notes      7,500   7,500       -        -      -        -        -        -       -        -      7,500
Capital Leases,
 Equipment and
 Other Notes
 Payable........          3,771     676      687      531    427      440      462      153      169     226     3,771

Senior Notes....        100,000      -        -        -      -        -        -        -   100,000      -    100,000
10% Convertible
 Subordinated
 Debentures.....          1,850      -     1,850       -      -        -        -        -       -        -      1,850
7% Convertible
 Subordinated
 Notes..........         49,551      -       -         -      -        -        -    49,551      -        -          -
                    ------------  ------  -----     ------  -----    -----   ------  ------  -------  ------   -------

    Total.......       $172,672  18,176   2,537       531     427     440      462   49,704  100,169     226   172,672
                    ============ ======   =====     ======  =====    =====   ======  ======  =======  ======   =======
</TABLE>



         We may  need  to  refinance  all  or a  portion  of  our  indebtedness,
including our Senior Notes, on or before maturity.  We cannot assure you that we
will be able to refinance  any of our  indebtedness,  including  our bank credit
facilities, if any, and the Senior Notes, on commercially reasonable terms or at
all.

         Uncertain Ability to Finance the Company's Growth.

         We  require  substantial  funds to  complete  and  bring to  commercial
viability all of our currently planned projects.  We also anticipate that future
business acquisitions will be financed not only through cash from operations and
the proceeds from the Senior Notes offering, but also by future borrowings under
bank credit  facilities  not currently  established,  offerings of Waste Systems
stock as  consideration  for  acquisitions,  or from the proceeds of  additional
equity or debt financings.  Therefore, our ability to satisfy our future capital
and  operating  requirements  for  planned  growth is  dependent  on a number of
pending or future  financing  activities,  and we cannot  assure you that any of
these financing activities will be successfully completed.

         Ability to manage growth.

         Our  objective  is to continue  to grow by  expanding  our  services in
selected  markets  where  we  can be one of  the  largest  and  most  profitable
fully-integrated   solid  waste  management  companies.   Accordingly,   we  may
experience  periods of  substantial  rapid  growth.  This  growth  could place a
significant  strain  on our  operational,  financial  and other  resources.  Any
failure to expand our  operational  and  financial  systems  and  controls in an
efficient  manner at a pace  consistent  with our  growth  could have a material
adverse effect on our business, financial condition and results of operations.

         Our future success is also highly dependent upon our continuing ability
to identify,  hire,  train and motivate a sufficient  number of highly qualified
personnel for our planned growth.  We face competition for recruiting  qualified
personnel  from our  competitors,  other  companies not in the waste  management
industry, government entities and other organizations. We cannot assure you that
we will be  successful  in  attracting  and  retaining  qualified  personnel  as
required for our present and future planned operations. Our inability to attract
and retain a  sufficient  number of  qualified  personnel  could have a material
negative impact on our business, financial condition and results of operations.

         Our future  success  depends upon our ability to identify,  acquire and
integrate acquisition targets.

         Our future success is highly  dependent  upon our continued  ability to
successfully identify,  acquire and integrate additional solid waste collection,
recycling,  transfer  and  disposal  businesses.  As the solid waste  management
industry continues to consolidate, competition for acquisition candidates within
the industry  increases  and the  availability  of suitable  candidates on terms
favorable to us may decrease. We compete for acquisition candidates with larger,
more established companies that may have significantly greater capital resources
than we do, which can further decrease the availability of suitable  acquisition
candidates at prices affordable to us. We cannot assure you that we will be able
to  identify  suitable  acquisition   candidates,   to  successfully   negotiate
acquisitions on terms reasonable to us given our resources,  to obtain financing
for those targets on favorable terms, or to successfully  integrate any acquired
targets with our current operations.

         We believe  that a  significant  factor in our  ability  to  consummate
acquisitions will be the attractiveness of our common stock as consideration for
potential  acquisition  targets.  This  attractiveness  may be,  in large  part,
dependent  upon the relative  market  price and capital  prospects of our equity
securities as compared to the equity securities of our competitors. Our stock is
traded on the Nasdaq Stock Market,  Inc.'s  SmallCap  Market,  while some of our
competitors' stock is traded on larger,  more recognized  markets.  In addition,
some of our competitors have a significantly  larger  capitalization than we do,
which  generally  results  in a more  liquid  market for their  publicly  traded
securities. If the market price of our common stock were to decline, we might be
unable to use our common stock as consideration for future acquisitions.

         Dependence on Management.

         We depend to a high degree on the services of Philip Strauss, Chairman,
Chief  Executive  Officer  and  President,  and Robert  Rivkin,  Executive  Vice
President_Acquisitions,  Chief Financial  Officer,  Secretary and Treasurer,  in
planning to achieve our  business  objectives.  We have  obtained $1 million key
executive insurance policies for each of Messrs. Strauss and Rivkin. However, if
we lost the  services of either of these  executives,  our  business,  financial
condition and results of operations could suffer material adverse effects.

         Failed  acquisitions  or projects may  adversely  affect our results of
operations and financial condition.

         In accordance with generally accepted accounting principles,  we record
some  expenditures and advances relating to acquisitions,  pending  acquisitions
and  landfill  projects  as  assets  on our  balance  sheet,  then  amortize  or
depreciate  these  capitalized  expenditures  and  advances  over time,  usually
matching an asset's depreciation against the revenues it generates. We also have
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,
we 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 our results of
operations, financial condition and our business.

         Our  business may not succeed due to the highly  competitive  nature of
the solid waste management industry.

         The solid  waste  management  industry is highly  competitive  and very
fragmented,  and requires  substantial labor and capital resources.  Competition
exists for collection,  recycling,  transfer and disposal service customers,  as
well as for  acquisition  targets.  The  markets  we compete in or are likely to
compete in usually are served by one or more  national,  regional or local solid
waste  companies  who may have a  respected  market  presence,  and who may have
greater financial,  marketing or technical resources than those available to us.
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.

         We  also  compete  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
public sector competitors in solid waste management.  Additionally,  alternative
disposal facilities such as recycling and incineration may reduce the demand for
the  landfill-based  solid waste disposal  services that we provide and on which
our  strategy  is  based.  We cannot  assure  you that we will be able to remain
competitive with our larger and better capitalized  private  competitors or with
tax-advantaged public sector operators.

         Seasonal revenue fluctuations may negatively impact our operations.

         Our revenues and results of operations tend to vary seasonally. We tend
to have lower  revenues in the winter months of the fourth and first quarters of
the calendar  year than in the warmer  months of the second and third  quarters.
The primary reasons for lower revenues in the winter months include:

   o  harsh winter weather conditions may interfere with collection and
      transportation activities;

   o  the volume of winter month waste in our operating regions is generally
      lower than that which occurs in warmer months; and

   o  the construction and demolition activities which generate landfill waste
      are primarily performed in the warmer seasons.

We believe that the  seasonality  of the revenue stream will not have a material
adverse effect on our business, financial condition and results of operations on
an annualized  basis.  Still,  higher warm weather revenues may not offset lower
cold  season  revenues,  and  seasonal  revenue  fluctuations  may  make it more
difficult to manage and finance our business successfully.

         The geographic  concentration of our operations  magnifies the risks to
our success.

         Waste  Systems has  established  solid waste  management  operations in
central Pennsylvania, Vermont, upstate New York and central Massachusetts. Since
our current primary source of revenues will be concentrated in these  geographic
locations, our business,  financial condition and results of operations could be
materially  affected by  downturns  in these  local  economies,  severe  weather
conditions  in  these  regions,   and  Pennsylvania,   Vermont,   New  York  and
Massachusetts state and local regulations. Factors that have a greater impact on
our  selected  markets  than on other  regions of the country are more likely to
have a negative  effect on our business than on our larger regional and national
competitors in the waste management industry.

         Industry  consolidation in our operating regions has also increased the
competition  for  customers  who  generate  waste  streams.  This  may  make  it
increasingly  difficult to expand  operations  within our selected  markets.  We
cannot  assure you that we will be able to continue to increase  the local waste
streams to our operating  landfills or be able to expand our geographic  markets
to  mitigate  the  effects of adverse  economic  events  that may occur in these
regions. As a result of our geographic concentration, we are exposed to a higher
degree of risks than our geographically more diverse competitors.

         Potential  difficulties in acquiring  landfill  capacity could increase
our costs.

         Our operations  depend on our ability to expand the landfills we own or
operate and to develop or acquire new landfill  sites. We cannot assure you that
we will be successful in obtaining new landfill sites or expanding the permitted
capacity of our existing  landfills.  The process of obtaining  required permits
and  approvals  to open  new  landfills,  and to  operate  and  expand  existing
landfills has become increasingly difficult and expensive.  The process can take
several years and involves  hearings and compliance  with zoning,  environmental
and other  requirements.  We cannot  assure  you that we will be  successful  in
obtaining and maintaining  required  permits to open new landfills or expand the
existing landfills we own or operate.

         Even when  granted,  final  permits to expand  landfills  are often not
approved until the remaining capacity of a landfill is very low. In the event we
exhaust our permitted  capacity at one of our  landfills,  our ability to expand
internally  will be  limited  and we  will be  required  to cap and  close  that
landfill.  Furthermore,  as the solid waste  management  industry  continues  to
consolidate,   there  will  be  greater   competition  for  potential   landfill
acquisitions.  As a result of insufficient landfill capacity, we could be forced
to transport waste greater distances to our own landfills that have capacity, or
to dispose of waste locally at landfills operated by our competitors.  In either
case, the additional  costs we would incur could have a material  adverse effect
on our business.

         Failure to obtain  landfill  closure  performance  bonds and letters of
credit may adversely affect our business.

         We 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
some of our landfills and transfer  stations.  Our failure to obtain performance
bonds,  surety bonds or letters of credit in sufficient amounts or at acceptable
rates may have a material  adverse effect on our business,  financial  condition
and results of operations.

         Adequacy of Accruals for Closure and Post-Closure Costs.

         The closure and  post-closure  costs of our existing  landfills and any
landfill  we may own or  operate  in the  future  represent  material  financial
obligations.  To meet these future  obligations,  we estimate and accrue closure
and  post-closure  costs based on  engineering  estimates of landfill  usage and
remaining  landfill  capacity.  We cannot  assure  you that the  amount of funds
estimated and accrued for landfill closure and post-closure costs will be enough
to  meet  these  future  financial  obligations.   Any  failure  to  meet  these
obligations when they become due, or any use of significant funds to cover a gap
between  such  accruals  and actual  landfill  closure  and  post-closure  costs
incurred,  may  have  a  material  adverse  effect  on our  business,  financial
condition and results of operations.

         Potential Environmental Liability and Adverse Effect of Environmental
         Regulation.

         We are  engaged  in the  collection,  transfer  and  disposal  of waste
described as  non-hazardous,  and we believe  that we are  currently in material
compliance with all applicable  environmental laws. Despite these circumstances,
if harmful  substances escape into the environment and cause damages or injuries
as a result of our operating activities, we are exposed to the risk that we will
be held liable for any damages and injuries,  as well as for  significant  fines
for regulatory noncompliance.

         We and our customers operate in a highly regulated environment, and our
landfill  projects in particular  usually will require federal,  state and local
government  permits and environmental  approvals.  Maintaining  awareness of and
attempting to comply with applicable  environmental  legislation and regulations
require substantial expenditures of our personnel and financial resources. These
efforts,  however,  do not  guarantee  that we will  meet all of the  applicable
regulatory criteria necessary to obtain required permits and approvals.

         Government  regulators generally have broad discretion to deny, revoke,
or modify regulatory permits or approvals under a wide variety of circumstances.
In addition,  government  regulators may adopt new environmental  legislation or
regulations or amend existing legislation, and may interpret or enforce existing
legislation  in new  ways.  All of these  circumstances  may  require  us or our
customers to obtain additional permits or approvals.

         Any delay in obtaining  required  regulatory  permits or approvals  may
delay our ability to obtain project  financing,  thereby  increasing our need to
invest working  capital in projects before  obtaining more permanent  financing.
These  delays may also reduce our project  returns by  deferring  the receipt of
project  revenues to a later  project  completion  date.  If we are  required to
cancel any planned project because we were unable to obtain required  permits or
as a result of any other regulatory  impediments,  we may lose any investment we
have made in the project up to that point. The cancellation,  or any substantial
delay in completion,  of any project may have a significant  negative  effect on
our financial condition and results of operations.

         Our environmental liability insurance may not cover all risks of loss.

         We  maintain  environmental  impairment  liability  insurance  covering
particular claims for the sudden or gradual onset of environmental damage to the
extent  of  $5  million  per  landfill.  If  we  were  to  incur  liability  for
environmental  damage in excess of our insurance limits, our financial condition
could be adversely  affected.  We also carry a comprehensive  general  liability
insurance policy,  which management  considers  adequate at this time to protect
our assets and operations from other risks.

         Addressing local community  concerns about our operations may adversely
affect our business.

         Members of the public in the  communities  where we do  business  could
raise concerns with government  regulators and others about the effects on their
communities  of our  existing or planned  operations  and,  in some  areas,  the
proposed development of solid waste facilities.  These concerns cannot always be
anticipated,  and our attempts to address these concerns may result in unforseen
delays,  costs and litigation that could adversely affect our ability to achieve
our business objectives.

         Year 2000 problems could have an adverse impact on our business.

         We   utilize   and  are   dependent   upon   general   accounting   and
industry-specific  customer  information  and  billing  software  to conduct our
business  that are likely to be  affected  by the date  change in the year 2000.
This  purchased  software is run on in-house  computer  networks.  In  addition,
embedded  technology  that is contained in a substantial  number of our items of
hauling,  disposal  and  communications  equipment  may be  affected by the date
change in the year  2000.  We have  initiated  a review  and  assessment  of all
hardware,  software  and  related  technologies  to  determine  whether  it will
function  properly in the year 2000. We currently  believe that costs associated
with the  compliance  efforts will not have a significant  impact on our ongoing
results of  operations,  although we cannot assure you in this regard.  Computer
software and related  technologies  used by our  customers,  service  providers,
vendors  and  suppliers  are also  likely to be  affected  by the year 2000 date
change.  To date,  those vendors which have been  contacted  have indicated that
their hardware or software is or will be year 2000 compliant in time frames that
meet  our  requirements.   We  have  also  initiated   communications  with  our
significant  suppliers regarding the year 2000 issue.  However, we cannot assure
you that the  systems  of such  suppliers,  or of  customers,  will be year 2000
compliant.  Failure by us or any of the  parties  mentioned  above,  to properly
process  dates for the year 2000 and  thereafter  could result in  unanticipated
expenses and delays to us,  including delays in the payment by our customers for
services provided and our ability to make payments on the Senior Notes.


Year 2000 Compliance

     The  statements in the following  section  include the "Year 2000 readiness
disclosure"  within  the  meaning  of the Year 2000  Information  and  Readiness
Disclosure Act. Please refer to the information located at the beginning of this
Item 7 regarding  forward-looking  statements  contained  in this  section.  The
Company is  assessing  the  readiness of its systems for handling the Year 2000.
Although the assessment is still underway,  management  currently  believes that
all  material  systems  will be  compliant  by Year  2000  and  that  the  costs
associated  with this are not  material.  The Company has incurred  only minimal
costs to date associated with the Year 2000 issue.

     The Company is in the process of  identifying  key  third-party  vendors to
understand their ability to continue  providing  services through Year 2000. The
Company  uses  well-regarded  nationally  known  software  vendors  for both its
general accounting  applications and industry-specific  customer information and
billing systems.  The Company is implementing a new general  accounting  package
which will be fully Year 2000  compatible,  and the  provider of the solid waste
industry  customer  information and billing system is Year 2000 compatible.  The
Company's banking arrangements are with national banking institutions, which are
taking  all  necessary  steps to insure  its  customers'  uninterrupted  service
throughout  applicable Year 2000 time frames. The Company's payroll is performed
out-of-house  by the largest  provider of third  party  payroll  services in the
country, which has made a commitment of uninterrupted service to their customers
throughout applicable Year 2000 time frames.

     While the Company currently expects that the Year 2000 issue will not cause
significant   operational   problems,   delays  in  the  implementation  of  new
information  systems, or failure to fully identify all Year 2000 dependencies in
the Company's systems and in the systems of suppliers and financial institutions
could have material adverse consequences.  Therefore,  the Company is developing
contingency plans for continuous operations in the event such problems arise.

Inflation

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


[END OF AMENDMENT]


<PAGE>


                                                SIGNATURES

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

                                   WASTE SYSTEMS INTERNATIONAL, INC.


Date: August  5, 1999            By:     /s/ Robert Rivkin
                                    -------------------------------------------
                                     Robert Rivkin
                                     Executive Vice President- Acquisitions,
                                     Chief Financial Officer, Treasurer and
                                     Secretary
                                    (Principal Financial and Accounting Officer)