SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C.  20549

                      --------------------------------
                                FORM 10-K/A

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

                                    OR

(   ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                   For the year ended December 31, 2000

                      Commission File Number 0-2000

                          METALCLAD CORPORATION
          (Exact name of registrant as specified in its charter)

          Delaware                                       95-2368719
(State or other jurisdiction of                   (I.R.S. Employer ID No.)
 incorporation or organization)

    2 Corporate Plaza, Suite 125
     Newport Beach, California                             92660
(Address of Principal Executive Office)                  (Zip Code)

    Registrant's telephone number, including area code (949) 719-1234

                     --------------------------------
       Securities registered pursuant to Section 12(b) of the Act:

                                                    Name of each exchange
Title of each class                                  on which registered
-------------------                                 ---------------------
       None                                                 None

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

                      Common Stock -- $.10 Par Value
                             (Title of Class)

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

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

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of 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 )

     The aggregate market value of the Common Stock held by non-affiliates
of the registrant on March 15, 2000 was approximately $7,000,000, based
upon the average of the bid and asked prices of the Common Stock, as
reported on The Nasdaq Stock Market .

     The number of shares of the Common Stock of the registrant
outstanding as of March 15, 2001 was 6,581,114.

     Documents incorporated by reference:

     Portions of the Company's Proxy Statement to be filed with the
Securities and Exchange Commission in connection with the Company's 2000
Annual Meeting of Stockholders are incorporated by reference into Part III
hereof.


                                  PART I

     All statements, other than statements of historical fact, included in
this Form 10-K, including without limitation the statements under
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Business", are, or may be deemed to be, "forward-looking
statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934 (the "Exchange Act").  Such forward-looking
statements involve assumptions, known and unknown risks, uncertainties, and
other factors which may cause the actual results, performance or achievements
of Metalclad Corporation (the "Company") to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements contained in this Form 10-K.  Such potential
risks and uncertainties include, without limitation, the ability to recover
the consideration for the sale of the Company's businesses in Mexico, the
outcome of the Company's NAFTA claim for damages against Mexico, competitive
pricing and other pressures from other businesses in the Company's markets,
economic conditions generally and in the Company's primary markets,
availability of capital, cost of labor, and other risk factors detailed
herein and in other of the Company's filings with the Securities and Exchange
Commission.  The forward-looking statements are made as of the date of this
Form 10-K and the Company assumes no obligation to update the forward-looking
statements or to update the reasons actual results could differ from those
projected in such forward-looking statements.  Therefore, readers are
cautioned not to place undue reliance on these forward-looking statements.

     This Form 10-K Amendment No. 1 to Form 10-K which amends the 2000
Annual Report includes the following primary changes:  the original Form 10-K
filing had a typographical oversight with respect to the implementation date of
Staff Accounting Bulletin (SAB) 101, Revenue REcognition in Financial
Statements.  The Company has adopted the new guidelines in the quarter
ended December 31, 2000 retroactive to the beginning of the year.  The
adoption of SAB 101 has not had a material effect on the Company's
consolidated financial position or results of operations.  The Company had
also adopted the provisions of the Financial Accounting Standards Board
(FASB) issued Interpretation No. 44, Accounting for Certain Transactions
Involving Stock Compensation, in the third quarter ended September 30,
2000.  The Company does not believe that the adoption of Interpretation
No. 44 has had or will have a material effect on its consolidated
financial position or results of operations.  In November 2000, Mexico
sought to overturn the $16,875,000 NAFTA tribunal award in the Supreme
Court of British Columbia.  A hearing on the case was completed on
March 2, 2001.  On May 2, 2001 the court substantially upheld the position
of the Company.  On May 31, 2001, Mexico filed papers with the British
Columbia Court of Appeals to try to overturn the ruling of the Supreme
Court of British Columbia.  The Company intends to exercise its right of
cross appeal and to pursue its right of remitter to the International Center
for the Settlement of Investment Disputes ("ICSID") tribunal, which right
was granted by the Supreme Court of British Columbia.  In its remitter,
the Company will seek restoration of certain interest not allowed by the
Supreme Court of British Columbia as well as its costs for  the
 remitter procedure.

ITEM 1.  BUSINESS

(a)  General Development of Business

     Corporate Structure.  The Company, incorporated originally in 1947 as
an Arizona corporation, was reincorporated in Delaware on November 24,
1993.  The Company has wholly owned subsidiaries in both the United States
and Mexico.  The Company's United States subsidiaries include Eco-Metalclad
("Eco-MTLC"), a Utah corporation, Metalclad Insulation Corporation ("MIC"),
a California corporation and Metalclad Environmental Contractors ("MEC"),
a California corporation.  The Company's Mexican subsidiaries include Eco
Administracion, S.A. de C.V. ("ECOPSA"), Consultoria Ambiental Total, S.A.
de CV. ("CATSA") and Confinamiento Tecnico de Residues Industriales, S.A.
de C.V. ("COTERIN").  Each of the Mexican subsidiaries is a corporation of
variable capital.

     Unless otherwise indicated, the term "Company" refers to Metalclad
Corporation and its United States and Mexican subsidiaries.

     The Company's principal executive offices are located at 2 Corporate
Plaza Drive, Suite 125, Newport Beach, California 92660 and its telephone
number is (949) 719-1234.  MIC and MEC serve their clients from their
headquarters in Anaheim, California.  Eco-MTLC maintains its offices in
Newport Beach, California and the Company's Mexican subsidiaries' offices
are located in the city of San Luis Potosi, Mexico.

     Business in the United States.  For over 30 years, the Company has
been providing insulation and asbestos abatement services, primarily on
the West Coast.  Through MIC and MEC, the Company provides these services
to a wide range of industrial, commercial and public agency clients.
Insulation services include the installation of high- and low-temperature
insulation on pipe, ducts, furnaces, boilers, and other types of
industrial equipment and commercial applications.  Asbestos abatement
services include removal and disposal of asbestos-containing products in
similar applications.  The Company fabricates specialty items for the
insulation industry and sells insulation material and accessories incident
to its services business to its customers as well as to other contractors.
A diverse list of clientele includes refineries, utilities, chemical/
petrochemical plants, manufacturing facilities, commercial properties,
office buildings, and various governmental facilities.

     Business in Mexico.  In 1991, the Company embarked on a strategy to
develop an integrated industrial waste management business in Mexico.
Through acquisitions and development of projects, it was the Company's
intent to provide a full-service network of locations, including treatment
and disposal facilities, to provide professional, environmentally safe,
handling and disposal of industrial waste streams.

     After eight years of developing this business, the Company determined
that its efforts would not be successful due to political opposition in
Mexico.  In 1997, the Company filed a $90 million claim under the North
American Free Trade Agreement ("NAFTA") to recover the value of its
investment in a completed, but unopened, treatment, storage and disposal
("TSD") facility in San Luis Potosi.  This facility is held by ECOPSA and
COTERIN.  See Item 3--Legal Proceedings and Note B of the Financial
Statements.   Because of political interference with a second project that
was under construction and approximately 90 percent complete in
Aguascalientes, the Company is considering the filing of a second NAFTA
claim.  In 1999, the Company sold its operating and project development
subsidiaries in Mexico and withdrew from the Mexican market.  See Note B
of the Financial Statements.

(b)  Financial Information About Industry Segments

     The Company, through MIC and MEC, is engaged in insulation services,
asbestos abatement services, and insulation material sales, such
activities constituting one industry segment.  The development and
operation of the industrial waste treatment business, commenced in
November 1991 through ECO-MTLC and conducted by the Company's Mexican
subsidiaries, had previously been reported as a separate industry segment
for 1996 and 1997 and is now being reported as discontinued operations.

(c)  Narrative Description of Business

Introduction

     Industrial Waste Management Business.  Since the Company has sold its
operations and withdrawn from Mexico and this market segment, its only
activity in this segment is the ongoing NAFTA arbitration and the
receivable associated with the sale of businesses in Mexico.

Insulation Contracting Services

     Background.  The Company's insulation contracting services include
the installation of high- and low-temperature insulation on pipe, ducts,
furnaces, boilers, and various other types of equipment.  Insulation
services are provided for new construction and maintenance of existing
facilities.  The Company is a licensed general contractor and typically
provides project management, labor, tools, equipment and materials
necessary to complete the installation.

     The Company usually performs substantially all of the work required
to complete its contracts, generally subcontracting to others the
scaffolding and painting.  In a typical insulation contract, the Company
obtains plans and specifications prepared by the owner of a facility or
its agent.  In projects where the customer is the owner of the facility,
the Company acts as the general contractor.  The Company also works as a
subcontractor for other general contractors.  Insulation contracts for new
construction may require one or more years to complete.  Maintenance
contracts typically extend over a period of one or more years.

     The Company's insulation contracting business has historically
included, among other things, maintenance, removal, repair, and
re-installation of insulation on existing facilities and equipment.  These
activities included asbestos removal services in most cases in which the
insulation at such facilities has included asbestos-containing material
("ACM").

     The Company removes all forms of ACM after first treating the
asbestos with water and a wetting agent to minimize fiber release.  Dry
removal is conducted in special cases where wetting is not feasible,
provided Environmental Protection Agency ("EPA") approval is obtained.
The Company's workers also remove pipe insulation by cutting the wrapping
into sections in an enclosed containment area or utilizing special
"glovebags" which provide containment around the section of pipe
insulation being removed.  In some instances, the Company performs
asbestos removal and provides related re-insulation contracting services,
including insulation material sales; in other cases, the Company performs
only asbestos removal services.  The Company believes that the removal of
ACM provides the best and most cost-effective solution for most asbestos
abatement projects.

     Insulation Contracts.  The Company obtains contracts, which
ordinarily fall within one of the types set forth below, on the basis of
either competitive bids or direct negotiations:

     Cost-plus.  These contracts, sometimes referred to as "time and
materials" contracts, generally provide for reimbursement of costs
incurred by the Company and the payment of a fee equal to a percentage of
the cost of construction.  They generally provide for monthly payments
covering both reimbursement for costs incurred to date and a portion of
the fee based upon the amount of work performed and are customarily not
subject to retention of fees or costs.

     Fixed-price.  These contracts generally require the Company to
perform all work for an agreed upon price, often by a specified date.
Such contracts usually provide for increases in the contract price if the
Company's construction costs increase due to changes in or delays of the
project initiated or caused by the customer or owner or by escalating
project labor rates.  However, absent causes resulting in increases in
contract prices, the Company takes certain risks associated with its fixed
prices.  Under these types of contracts the Company receives periodic
payments based on the work performed to date, less certain retentions.
The amounts retained are held by the customer pending either satisfactory
completion of the Company's work or in some cases, satisfactory completion
of the entire project.

     In accordance with industry practice, most of the Company's contracts
are subject to termination or modification by the customer, with provision
for the recovery of costs incurred and the payment to the Company of a
proportionate part of its fees, in the case of a cost-plus contract, and
overhead and profit, in the case of a fixed price contract.  At various
times, contracts that the Company has with its customers have been
terminated or modified.  However, such termination or modification occurs
in the regular course of the Company's business due to changes in the work
to be performed as determined by the customer.  No single termination or
modification has had or is expected to have a material adverse impact on
the Company's business.

     Operations and Employee Safety.  All contract work is performed by
trained Company personnel and supervised by project managers trained and
experienced in construction and asbestos abatement.  Each employee
involved in asbestos abatement must complete a general training and safety
program conducted by the Company.  Training topics include approved work
procedures, instruction on protective equipment and personal safety,
dangers of asbestos, methods for controlling friable asbestos and asbestos
transportation and handling procedures.  In addition, all full-time
employees engaged in asbestos abatement activities are required to attend
a minimum four-day course approved by EPA and the Occupational Safety and
Health Administration ("OSHA") and all supervisors of abatement projects
are required to attend a nine-hour first aid/CPR/safety course and an
eight-hour EPA/AHERA refresher course annually.  One of the Company's
full-time employees and 54 hourly employees have been trained and
certified as "competent individuals" under EPA regulations relating to the
training of asbestos abatement workers.  All employees are issued detailed
training materials and the Company typically conducts a job safety
analysis in the job bidding stage.

     The Company requires the use of protective equipment and sponsors
periodic medical examination of all field employees.  During removal
procedures, ACM is generally wetted to minimize fiber release and
filtration devices are used to reduce contamination levels.  Air
monitoring to determine asbestos fiber contamination levels is conducted
on all abatement projects involving the removal of friable asbestos.  The
Company has a comprehensive policy and procedure manual that covers all
activities of an asbestos abatement project and the specific
responsibilities and implementation of Company procedures and policies to
be followed on each project.  The manual is reviewed periodically by
management and updated to insure compliance with federal, state, and local
regulations, to include information from in-house project reviews
findings, and to include updated information regarding industry practices.
To separate its responsibilities and to limit liability, the Company
utilizes third party, unaffiliated laboratories for asbestos sampling
analysis and licensed independent waste haulers for the transportation and
disposal of asbestos waste from its projects.

     Materials and Supplies.  The Company purchases its insulating and
asbestos abatement materials and supplies from a number of national
manufacturers and the Company is not dependent on any one source for these
materials and accessories used in its insulation services and asbestos
abatement business.

Marketing and Sales

     Insulation Contracting Services.  The Company currently obtains most
of its insulation contracting business from existing customers and
referrals by customers, engineers, architects, and construction firms.
Additional business is obtained by referrals obtained through labor,
industry, and trade association affiliations.

     Projects are also awarded through competitive bidding although major
companies frequently rely on selected bidders chosen by them based on a
variety of criteria such as adequate capitalization, bonding capability,
insurance carried, and experience.  The Company is frequently invited in
this manner to bid on projects and obtains a significant amount of its
contracts through the competitive bidding process.  The Company believes
that its bids are competitively priced and anticipates that in the future
its bids will continue to be competitively priced with bids submitted by
others.

     The Company's marketing and sales effort emphasizes its experience,
reputation for timely performance, and knowledge of the insulation and
asbestos abatement industry.  The Company is a member of the Western
Insulation Contractors Association, the National Insulation Contractors
Association, and various local business associations.

     Curtom-Metalclad Joint Venture.  In 1989, the Company entered into a
joint venture with a minority service firm, which qualifies for
preferential contract bidding because of minority status, with the Company
owning a 49% interest in the joint venture.  The joint venture, known as
"Curtom-Metalclad," submits bids for insulation and asbestos abatement
services.  When contracts are obtained by the joint venture, the Company
performs the work specified in the contract as a subcontractor to the
joint venture.  The Company also receives an interest in 49% of the
profits or losses of the joint venture.

     Insulation Material Sales.  The current emphasis in this area is to
primarily warehouse and supply material for projects where other Company
services are provided.  The warehoused material is based on economics of
bulk purchases of the most commonly used products or projected needs on
future known projects, to handle emergencies, and to supply material sales
direct to other users as available and when solicited.

     Customers.  The Company's insulation customers are categorized as
Industrial or Commercial.  The industrial customers are predominately
public utilities (power, natural gas and water/water treatment), major oil
companies for oil refineries and petrochemical plants, chemical and food
processors, other heavy manufacturers, and engineering/construction
companies.  The Commercial customers are primarily government
installations, schools, hospitals, institutions, an array of
manufacturing/commercial facilities, and the general or mechanical
construction contractors.  The Company anticipates that a significant
portion of its revenues in 2001 will continue to be from work performed
for Southern California Edison, ARCO, and Equilon.

     Competition.  Competition in the insulation contracting services
business is intense and is expected to remain intense in the foreseeable
future.  Competition includes a few national and regional companies that
provide integrated services and many regional and local companies that
provide insulation and asbestos abatement specialty contracting services.
Most of the national and regional competitors providing integrated
services are well established and have substantially greater marketing,
financial, and technological resources than the Company.  The regional and
local specialty contracting companies which compete with the Company
either provide one service or they provide integrated services by
subcontracting part of their services to other companies.  The Company
believes that the primary competitive factors in these areas are price,
technical performance, and reliability.  The Company obtains a significant
number of its insulation service contracts through the competitive bidding
process.  The Company believes that its bids are competitively priced and
anticipates that in the future its bids will continue to be competitively
priced with bids submitted by others.

     Insurance and Bonding.  The Company's combined general liability and
contractor pollution insurance policy provides base coverage of $1,000,000
per occurrence and excess liability coverage of $10,000,000.  The
Company's current insulation and asbestos abatement services customers do
not generally require performance bonds.  The Company believes, however,
that its current bonding arrangements are adequate for the Company's
anticipated future needs.  The Company has historically carried insurance
for liability associated with the sale of asbestos bearing materials.
Because of the age of the Company there have been several different
insurance carriers. As claims are made for liability associated with
asbestos those claims are managed by counsel for the Company and submitted
to the appropriate insurance carrier for defense depending upon the date
the claim originated.  It has been more than 25 years since the Company
sold any asbestos bearing material.  The Company believes that there is
adequate insurance coverage remaining and believes it has no material
exposure to any future claims.

Government Regulation

     Insulation Services and Material Sales Regulation.  The Company, as a
general contractor and insulation specialty contractor, is subject to
regulation requiring it to obtain licenses from several state and
municipal agencies.  Other than licensing, the Company's industrial
insulation services and material sales business is not subject to material
or significant regulation.

     Asbestos Abatement Regulation.  Asbestos abatement operations are
subject to regulation by federal, state, and local governmental
authorities, including OSHA and the EPA.  In general, OSHA regulations set
maximum asbestos fiber exposure levels applicable to employees and the EPA
regulations provide asbestos fiber emission control standards.  The EPA
requires use of accredited persons for both inspection and abatement.  In
addition, a number of states have promulgated regulations setting forth
such requirements as registration or licensing of asbestos abatement
contractors, training courses for workers, notification of intent to
undertake abatement projects and various types of approvals from
designated entities.  Transportation and disposal activities are also
regulated.  The Company believes that similar legislation may be adopted
in other states and in local building codes.

     OSHA has promulgated regulations specifying airborne asbestos fiber
exposure standards for asbestos workers, engineering and administrative
controls, workplace practices, and medical surveillance and worker
protection requirements.  OSHA's construction standards require companies
removing asbestos on construction sites to utilize specified control
methods to limit employee exposure to airborne asbestos fibers, to conduct
air monitoring, to provide decontamination units and to appropriately
supervise operations.  EPA regulations restrict the use of spray applied
ACM and asbestos insulation, establish procedures for handling ACM during
demolition and renovations, and prohibit visible emissions during removal,
transportation and disposal of ACM.

     The Company believes that it is substantially in compliance with all
regulations relating to its asbestos abatement operations, and currently
has all material government permits, licenses, qualifications and
approvals required for its operations.

     Backlog.  The Company's backlog for insulation services at December
31, 2000 and December 31, 1999 was $20,500,000 and $21,700,000,
respectively.  Backlog is calculated in terms of estimated revenues on
fixed-price and cost-plus projects in progress or for which contracts have
been executed.  The Company believes that backlog as of any date is not
necessarily indicative of future revenues.  The Company estimates that its
entire backlog as of December 31, 2000 will be completed during the next
eighteen months.  The majority of the Company's present business is on
cost-plus contracts for which backlog is estimated.  The Company fulfills
product and supply orders promptly, and there is no backlog in the
material sales business.

     Employees.  As of December 31, 2000, the Company had four full-time
employees in its executive offices and 14 full-time employees in its
insulation business, for a total of 18 employees.  These include three
executive officers, project managers/estimators, purchasing, accounting,
and office staff.

     As of December 31, 2000, the Company employed approximately 142
hourly employees for insulation contracting services, nearly all of whom
are members of the International Association of Heat and Frost Insulators
and Asbestos Workers ("AFL-CIO").  The Company is a party to agreements
with various local chapters of various trade unions.  The number of hourly
employees employed by the Company fluctuates depending upon the number and
size of projects that the Company has under construction at any particular
time.  It has been the Company's experience that hourly employees are
generally available for its projects, and the Company has continuously
employed a number of them on various projects over an extended period of
time.  The Company considers its relations with its hourly employees and
the unions representing them to be good and has experienced no recent work
stoppages due to strikes by such employees.  Additionally, the trade union
agreements the Company is a party to include no strike, no work stoppage
provisions.

Directors and Executive Officers of the Company

     The names, ages, and positions of the Company's directors and
executive officers (including certain significant executive officers of
the Company's principal subsidiaries) are listed below:

<TABLE><S>            <C>     <C>          <C>
                                Director
                               or Officer
Name                   Age        Since     Current Position with the Company
------------------     ---     ----------   ------------------------------------
Anthony C. Dabbene      49        1996      Chief Financial Officer, Director
Bruce H. Haglund        49        1983      Secretary, General Counsel, Director
Grant S. Kesler         57        1991      President, Chief Executive Officer,
                                                Director
Raymond J. Pacini       45        1999      Director
Robert D. Rizzo         55        1999      President, MIC/MEC
J. Thomas Talbot        65        1999      Director
</TABLE>

     Anthony C. Dabbene has been the Chief Financial Officer for the
Company since January 1996 and a Director since May 1997.  Prior to his
employment with the Company, Mr. Dabbene was employed by LG & E Energy
Corp. for 10 years, including service as Vice President and Controller to
the Energy Services Group.  From 1973 to 1985, he was employed by EBASCO
Services Incorporated, where he was Manager - Finance and Administration
for the Western region from 1981 to 1985.

     Bruce H. Haglund has served as Secretary-General Counsel of the
Company since 1983 and served as a Director of the Company from 1983 to
July 1991 and again in 1999.  Mr. Haglund is a principal in the law firm
of Gibson, Haglund & Paulsen in Orange County, California where he has
been engaged in the private practice of law since 1980.  He is also a
member of the Boards of Directors of Aviation Distributors, Inc.,
HydroMaid International, Inc., Renaissance Golf Products, Inc., and
VitriSeal, Inc.

     Grant S. Kesler has served as a Director of the Company since
February 1991 and has been Chief Executive Officer since May 1991.  From
1982 to May 1991, he was employed by Paradigm Securities, Inc., a company
he formed in 1982.  In 1975, he was General Counsel to Development
Associates, a real estate development firm.  Earlier, he was engaged in
the private practice of law, served as an assistant attorney general for
the State of Utah, and served as an intern to the chief justice of the
Utah Supreme Court.

     Raymond J. Pacini is the President, Chief Executive Officer, and a
Director of California Coastal Communities, Inc. (formerly Koll Real
Estate Group, Inc.), where he has been since 1990.  Prior to 1998, he was
the Executive Vice President and Chief Financial Officer of Koll Real
Estate Group, Inc.

     Robert D. Rizzo joined the Company as President of Metalclad
Insulation in November 1999.  Prior to joining Metalclad, Mr. Rizzo was
project manager for major projects at PDG Environmental, Inc..  He has
over 25 years experience in finance, engineering and construction.  Mr.
Rizzo has a B.S. in Civil Engineering and an MBA.

     J. Thomas Talbot is the owner of The Talbot company, an investment
and asset management company.  Mr. Talbot has been the Chief Executive
Officer of HAL, Inc., the parent company of Hawaiian Airlines and was a
founder or co-founder of Jet American Airlines (sold to Alaska Airlines),
Air California, and Southwest Airlines.  He currently serves on the boards
of directors of The Hallwood Group, Inc., Fidelity National Financial,
Inc., California Coastal Communities, Inc., Competisys LLC and The Pacific
Club.  Mr. Talbot holds a B.A. in Economics from Stanford University and a
J.D. from Hastings College of Law, University of California, Berkeley.


ITEM 2.  PROPERTIES

     The Company leases space for its offices and warehouse facilities
under leases of varying terms at rentals aggregating approximately $21,775
per month.  The Company's executive offices are located in Newport Beach,
California, which consists of approximately 3,000 square feet leased at a
current rate of $6,675 per month.  The Newport Beach lease expires in
September 2002.  Facilities in Anaheim, California house the Southern
California industrial insulation services and the insulation material
sales operations.  The Anaheim facility consists of 26,000 square feet of
office and warehouse space that is leased at the current rate of $15,100
per month.  The Anaheim lease expires in April 2002.

     ECOPSA owns an approximately 92-hectare parcel (approximately 227
acres) of land in Santa Maria del Rio near San Luis Potosi, Mexico.

     COTERIN owns approximately 2,200 acres of land near La Pedrera in the
Mexican State of San Luis Potosi on which El Confin is located.


ITEM 3.  LEGAL PROCEEDINGS

     Given the Company's long history in the insulation business and in
the sale of insulation materials, it is subject to various claims related
to  prior asbestos-related business as well as its current business.
While the number of these claims is over 300, the Company believes it has
adequate insurance in place, had adequate insurance in prior years, and is
vigorously defending all claims.  The Company does not believe that these
claims, individually or in the aggregate, will have a material adverse
effect on its financial condition.

     On October 2, 1996, following a long period of negotiation with the
Mexican government in an effort to open its hazardous waste TSD facility
in San Luis Potosi, Mexico, the Company filed a Notice of Claim under the
provisions of the North American Free Trade Agreement ("NAFTA").  The
notice was filed with the International Center for the Settlement of
Investment Disputes (ICSID) in Washington, D.C. pursuant to the provisions
of the NAFTA.  On January 2, 1997, the Company filed its actual claim with
ICSID, after which a three-member tribunal was impaneled which includes
one arbitrator from Mexico, one from the United States and a third, chosen
jointly by the parties, from Great Britain.  The first hearing was held in
Washington, D.C. on July 15, 1997.

     On October 13, 1997, the Company filed its Memorial, which included
the claim and all of the evidence supporting the claim, including expert
witness studies and the like.  The basis of the Company's claim against
Mexico was  one likened to expropriation.  The Company's position is since
it was not being allowed to operate a legally authorized project, it had
in essence been taken by the Mexican government and they should,
therefore, be responsible for paying fair compensation under the provision
of the NAFTA.  A fair market valuation was done on behalf of the Company,
which indicated the fair market value of this business was $90,000,000.

     On February 17, 1998, the United Mexican States ("Mexico") responded
to the Company's claim to the Tribunal by filing a "counter-memorial".  On
August 21, 1998 the Company filed its "reply" to Mexico's counter-memorial,
and on April 19, 1999 Mexico filed its "rejoinder".  A pre-hearing conference
took place July 6, 1999 and the final hearing took place in Washington, D.C.
from August 30 to September 9, 1999.  Post-hearing briefs were filed by
Metalclad, Mexico and the United States government on November 8, 1999.

     On August 30, 2000, the tribunal issued its decision.  It ruled that
Mexico had indirectly expropriated the Company's investment in its
completed landfill facility.  The tribunal awarded $16,685,000 in damages,
with interest accruing at 6% per annum compounded monthly, beginning
October 15, 2000.

     On October 27, 2000, the United Mexican States filed a petition with
the Supreme Court of British Columbia, Canada, seeking to have the award
set aside by the court under the Commercial Arbitration Act of Canada.  On
November 14, 2000, the filing was amended to also seek a setting aside of
the award under the International Commercial Arbitration Act.  A hearing
on the case was completed on March 2, 2001.  On May 2, 2001 the court
substantially upheld the position of the Company.  On May 31, 2001, Mexico
filed papers with the British Columbia Court of Appeals to try to overturn
the ruling of the Supreme Court of British Columbia.  The Company intends
to exercise its right of cross appeal and to pursue its right of remitter
to the ICSID tribunal, which right was granted by the Supreme Court of
British Columbia.  In its remitter, the Company will seek restoration of
certain interest not allowed by the Supreme Court of British Columbia as
well as its costs associated with this procedure.  There is no definitive
timetable for completion of this process.  Estimates range from several
months to over a year.  Interest continues to accrue until paid.

     If the favorable decision were upheld by the Canadian courts, all
damages awarded to the Company would be due and payable by the United
Mexican States as an obligation of the government of Mexico.  Both NAFTA
and other international treaties provide mechanisms for ensuring
collection and it is anticipated that all damages awarded could be
collected or collateralized; however, there can be no assurance that the
Company will not encounter additional collection delays.

     The Company has devoted substantial resources in the pursuit of its
claim under the NAFTA.  It has given counsel broad authority in the
employment of experts and others it feels necessary to properly pursue the
Company's claim.  The officers of the Company have spent substantial
amounts of time and resources in assisting the Company's NAFTA counsel and
will continue to do so until completion.  There is no assurance, however,
that the Company will remain successful.  If the Award is ultimately
reversed, the impact will be material and adverse (see Note B to the
financial statements).

     On July 7, 1999, Morton Associates, a Virgin Islands Corporation,
filed suit in federal court in Los Angeles against the Company requesting
a declaratory judgment interpreting certain anti-dilution provisions of a
warrant agreement owned by Morton.  The Company defended the case on
several grounds.  Other holders of similar warrant agreements have reached
a settlement with the Company.  In August 2000, Morton and the Company
reached an agreement whereby Morton received its additional ratchet
adjustment of 318,400 shares.  This adjustment fixed Morton's total
warrants at 398,000 shares exercisable at $2.50 per share, expiring on
February 28, 2001.  In September 2000, Morton exercised 210,000 warrants
in exchange for common shares of the Company, for which the Company
received $425,000 net after deducting $100,000 in settlement costs.

     On November 13, 2000, the Company filed a complaint in the Superior
Court of California against a former employee, the U.S. parent of the
buyer and its representative for breach of contract, fraud, collusion and
other causes of action in connection with the Company's sale of its
Mexican businesses.  This case is one where the Company has suffered
damages and continues to accrue damages and a monetary award is sought as
the remedy.  No trial date has yet been set.  No assurances can be given
on the outcome. (See Note C to the financial statements.)


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

     On November 20, 2000, the Company held its Annual Meeting of
Shareholders in Newport Beach, California.  The following matters were
presented for the approval of the shareholders with the results presented:

     A.  The election of five members to the Board of Directors of the
Company, to serve until the next annual meeting.  The results of the
shareholders' votes are as follows:

                                         For           Against
                                     ----------      ----------

            Grant S. Kesler           5,078,671        349,956
            Anthony C. Dabbene        5,080,271        348,356
            Bruce H. Haglund          5,080,271        348,356
            Raymond Pacini            5,080,271        348,356
            J. Thomas Talbot          5,080,271        348,356

     B.  To ratify the adoption of the Metalclad Corporation 2000 Omnibus
Stock Option and Incentive Plan.  The results were as follows:

            For:                      2,175,336
            Against:                    835,090
            Abstain:                     23,235

      C.  To ratify the appointment of Moss Adams LLP as the independent
public accountants of the Company for the year ended December 31, 2000.
The results were as follows:

            For:                      5,130,992
            Against:                    248,564
            Abstain:                     49,071



                                 PART II

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

     The Company's Common Stock is traded on The Nasdaq Small Cap Stock
Market  under the symbol "MTLC." Effective July 2, 1999 the Company
implemented a 1 for 10 reverse stock split.  The following table sets
forth, for the fiscal periods indicated, the high and low sales prices for
the Common Stock, adjusted for the stock split, as reported by Nasdaq:

                                                         Sales Price
                                                    ----------------------
                                                      High           Low
                                                    --------      --------

     Fiscal Year Ended December 31, 1998
     1st Fiscal Quarter Ended March 31, 1998        11  7/8       11  1/4
     2nd Fiscal Quarter Ended June 30, 1998         10  5/8       13  1/3
     3rd Fiscal Quarter Ended September 30, 1998     6  7/8        6  1/4
     4th Fiscal Quarter Ended December 31, 1998      4  1/16       3  3/4

     Fiscal Year Ended December 31, 1999
     1st Fiscal Quarter Ended March 31, 1999         6  5/8        2  3/16
     2nd Fiscal Quarter Ended June 30, 1999          4 11/16       1  1/4
     3rd Fiscal Quarter Ended September 30, 1999     4 15/16       1  9/16
     4th Fiscal Quarter Ended December 31, 1999      6  5/8        3 15/16

     Fiscal Year Ended December 31, 2000
     1st Fiscal Quarter Ended March 31, 2000         5  9/16       3  1/4
     2nd Fiscal Quarter Ended June 30, 2000          3  7/8        3
     3rd Fiscal Quarter Ended September 30, 2000     4  5/8        2  7/32
     4th Fiscal Quarter Ended December 31, 2000      2 29/32       1  1/4

     The Company has not paid any cash dividends on its Common Stock since
its incorporation and anticipates that, for the foreseeable future,
earnings, if any, will continue to be retained for use in its business.
As of March 15, 2001, the approximate number of record holders of the
Company's Common Stock was 1,621.


ITEM 6.  SELECTED FINANCIAL DATA

     The following selected financial data is derived from the
consolidated financial statements of the Company and should be read in
conjunction with the consolidated financial statements, related notes and
other financial information included herein.

<TABLE><S>            <C>

                                                                  7 Months     Year
                                Year Ended December 31,            Ended       Ended
                      ----------------------------------------    Dec. 31,(4)  May 31,
                        2000      1999       1998       1997        1996       1996
                       -------   -------    -------   -------    ----------   --------
                                   (in thousands, except per share amounts)
Statement of
Operations Data (1)
-------------------
Revenues from
  continuing
  operations           $17,769   $13.422    $10,009    $8,971      $5,519     $11,445
Loss from continuing
  operations            (1,702)   (1,971)    (1,775)   (2,000)     (1,706)     (5,630)
Loss from discontinued
  operations (2)           (63)   (2,228)    (3,003)   (2,610)     (1,574)     (1,150)
Net loss                (1,765)   (4,199)    (4,778)   (4,610)     (3,280)     (6,780)

Earnings per share:(3)
Net loss per common
  share, continuing
  operations - basic
  and diluted           $(0.31)   $(0.50)    $(0.58)   $(0.68)     $(0.60)     $(2.50)
Net loss per common
  share, discontinued
  operations - basic
  and diluted           $(0.01)   $(0.57)    $(0.99)   $(0.89)     $(0.50)     $(0.50)
                         -----     -----      -----     -----       -----       -----
Net loss per common
  share - basic
  and diluted           $(0.32)   $(1.07)    $(1.57)   $(1.57)     $(1.10)     $(3.00)
                         =====     =====      =====     =====       =====      ======

Weighted average shares
  outstanding(3)      5,470,002 3,918,912  3,036,277 2,943,806   2,891,045   2,277,052

Balance Sheet Data
------------------
Total assets(5)         $10,898     8,974     11,356    11,598      14,250      16,695
Convertible notes         1,029     2,071      1,640     1,500           -           -
Convertible
  debentures (2)            310       360      1,202        20         229         239
Shareholders' equity
  (deficit)(2)(5)         6,367     4,657      3,936     8,244      11,259      14,207

Common shares
  outstanding(3)      6,581,114 4,859,498  3,056,912 3,006,387   2,912,324   2,873,323

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

(1)  In the fourth quarter of 1998, the Company committed to a plan to discontinue its
operations in Mexico and to seek a buyer.  Consequently, the Statement of Operations
Data has been restated to reflect this decision.

(2) During the year ended May 31, 1996 a substantial portion of the convertible
subordinated debentures were converted into shares of common stock.  Additionally,
$2,100,000 of the Company's long term debt was converted into equity.

(3) Effective July 2, 1999, the Company implemented a 1 for 10 reverse stock split.  All
prior periods have been restated.

(4)  Effective June 1, 1996, the Company changed its fiscal year end to December 31.

(5) Restated to reflect reclassification of certain related party receivables.
</TABLE>

     No dividends were paid or declared during the years ended December
31, 2000, 1999, 1998, 1997 or the seven months ended December 31, 1996, or
the fiscal year ended May 31, 1996.


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

     This discussion and analysis contains forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act, which are subject to the "safe harbor" created by those
sections.  The Company's actual future results could differ materially
from those projected in the forward-looking statements.  The Company
assumes no obligation to update the forward-looking statements or such
factors.  Presentation of Financial Statements

     The financial statements of the Company reflect the Company's ongoing
business in the insulation contracting segment and the discontinuance of
its waste management segment in Mexico.  The net assets of the Company's
business in Mexico are now classified as discontinued operations.
Financial statements of prior periods have been restated to reflect the
Company's decision to discontinue operations in Mexico.

     With the Company having significant financial transactions in Mexico,
it has been affected by the continued decline of the Mexico peso.  In
November 1994, the value of the peso was 3.4 to the U.S. dollar.  As of
December 31, 2000, the value of the peso was 9.65 to the U.S. dollar.  As
of December 31, 2000, the Company has a foreign currency translation
adjustment of $(1,555,423) in the equity section of its balance sheet.

Results of Operations

     General.  Historically, the Company's revenues were generated
primarily by (i) revenues in the United States from insulation services
and sales of insulation products and related materials; and (ii) revenues
in Mexico from the collection of waste oils and solvents for recycling,
rental of parts washing machines, brokering the disposal of waste and
remediation services.

     As discussed in Note B to the consolidated financial statements,
during the fourth quarter of 1998 the Company committed to a plan to
discontinue its Mexican operations and to seek to identify potential
buyers for its Mexican business.  Consequently, the Company's Mexican
operations are classified as discontinued operations.  In October 1999,
the Company completed the sale of its ownership interests in certain
Mexican assets previously classified as discontinued operations.  The sale
specifically excluded those Mexican assets involved in the NAFTA claim.
The terms of this sale stipulate payment of the purchase price in stages
as various benchmarks are achieved in the operation of the business, as
well as the buyer's assumption of all liabilities.  The Company received
an initial cash payment of $125,000 and recorded a receivable of $779,000
representing the Company's basis in the assets sold; however, no gain or
loss will be recorded on the payments until 100% of the Company's net
investment is recovered.

     Under the terms of the sale, the Company can receive up to $5,000,000
in payments as certain specific milestones are met.  The most significant
milestone payments are associated with the buyer's ability to complete and
open the Aguascalientes landfill project.  If the buyer can obtain all
necessary authorizations, complete construction and open the facility,
payments totaling $1,125,000 will be due the Company under the milestone
payment schedule.   To date, the Company believes that the buyer has not
achieved any of the milestones necessary to trigger additional payments.
Moreover, the Company believes that the buyer is in default of its
agreement with the Company under the indemnity provisions and may have
committed fraud in attempting to assign its interest in the companies
purchased to a former employee of Metalclad.  The Company has engaged
counsel and believes it has a cause of action against the buyer and the
former Company employee and the Orange County, California based parent of
the buyer as a result of representations said parent made relative to
giving the buyer financial support in its acquisition of the companies
purchased.  On November 13, 2000, a complaint was filed in Orange County
with the Superior Court of California.  The Company cannot assure the
outcome of such a case.  If the Company is not successful in this
litigation, it could result in writing off the $779,000 note receivable.
(See Note C to the financial statements.)

     Net assets totaling $4,816,000 are related to the NAFTA claim, are
not a part of the sale described above, and the ultimate disposition of
which is dependent on the final decision.  Relative to the NAFTA assets on
August 30, 2000, the tribunal awarded the Company $16,685,000 in damages,
with interest accruing at 6% per annum compounded monthly, beginning
October 15, 2000.  On October 27, 2000, the United Mexican States filed a
petition with the Supreme Court of British Columbia, Canada, seeking to
have the award set aside by the court under the Commercial Arbitration Act
of Canada.  On November 14, 2000, the filing was amended to also seek a
setting aside of the award under the International Commercial Arbitration
Act.  A hearing on the case was completed on March 2, 2001 and a decision
is not anticipated until May 2001.  However, regardless of the decision
rendered, the Company anticipates an appeal to the British Columbia Court
of Appeals.  There is no definitive timetable for completion of this
process.  Estimates range from several months to over a year.  Interest
continues to accrue until paid. (See Notes B and M to the financial
statements.)

            Twelve Months Ended December 31, 2000 Compared to
                  Twelve Months Ended December 31, 1999.

     Insulation Business.  Total revenues were $17,769,000 in 2000 as
compared to $13,422,000 for 1999, an increase of 32%.  This increase is
attributed to work performed under the Company's various maintenance
agreements, particularly with ARCO, and the Company's continuing efforts
in the commercial insulation market.

     Contract Revenues.  Contract revenues for the twelve months ended
December 31, 2000 were $17,674,000 as compared to $13,135,000 for the
twelve months ended December 31, 1999, an increase of 35%.  This increase
is attributed to the Company's efforts to diversify its client base,
including its entry into the commercial insulation market.  The Company's
accounts receivable have also increased due to the increased contract
revenues and the timing of cash receipts.

     Contract and Material Costs.  Contract and material costs and
expenses for the twelve months ended December 31, 2000 were $15,753,000 as
compared to $11,606,000 for the twelve months ended December 31, 1999, an
increase of 36% which is attributed to the increased level of direct costs
associated with higher revenues.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses were $1,553,000 for the twelve months ended
December 31, 2000 as compared to $1,297,000 for the twelve months ended
December 31, 1999, an increase of 20%.  This increase reflects a one-time
retention bonus paid to employees and increased legal costs associated
with asbestos claims.

     Gross Operating Profit.  Gross Operating Profit for the year ended
December 31, 2000 was $463,000 as compared to $520,000 for the twelve
months ended December 31, 1999, a decrease of 11%.  This decrease is
primarily due to an increase in the operations, selling, general and
administrative expenses, as discussed above, partially offset by higher
gross profit margins.

     Discontinued Operations.  Loss from discontinued operations for the
twelve months ended December 31, 2000 was $63,000 compared to a loss of
$2,228,000 for the twelve months ended December 31, 1999.  The 2000 loss
primarily represents legal fees paid to the International Centre for
Settlement of Investment Disputes ("ICSID") as the Company's share of the
final NAFTA arbitration costs.  These expenses were not anticipated in the
1999 year end accrual of costs for discontinued operations.  Management
cannot reasonably estimate future losses going forward as the schedule on
completion of this claim is beyond the Company's control.  However, the
Company is currently not aware of any other requirements or filings
necessary while it awaits the court's decision.  It is believed that
future costs, if any, will not be material, pending the final disposition.
Future costs, if any, will be charged to operations as incurred.

     Corporate Expense.  Corporate expenses were $1,948,000 for the twelve
months ended December 31, 2000 as compared to $2,140,000 for the twelve
months ended December 31, 1999, a decrease of 9%.   The decline was
achieved by reductions in staffing and costs.

     Interest Expense.  Interest expense was $257,000 for the twelve
months ended December 31, 2000 compared to interest expense of $392,000
for the twelve months ended December 31, 1999.  This reduction in interest
expense was primarily due to the conversions of debt to equity during the
year.

     Consolidated Results.  The net loss for the year ended December 31,
2000 was $1,765,000 as compared to $4,199,000 for 1999, a decrease of 58%.
This decreased loss is attributable to completion of the NAFTA claim
arbitration and the discontinuance of business in Mexico.  Losses from
continuing operations were $1,702,000 versus $1,971,000, a decline of 14%.

            Twelve Months Ended December 31, 1999 Compared to
                  Twelve Months Ended December 31, 1998.

     Insulation Business.  Total revenues from the insulation business for
the twelve months ended December 31, 1999 were $13,422,000 as compared to
$10,009,000 for the twelve months ended December 31, 1998, an increase of
34%.

     Contract Revenues.  Contract revenues for the twelve months ended
December 31, 1999 were $13,135,000 as compared to $9,912,000 for the
twelve months ended December 31, 1998, an increase of 33%.  This increase
is attributed to the Company's efforts to diversify its client base,
including its entry into the commercial insulation market.  The Company's
accounts receivable have also increased due to the increased contract
revenues and the timing of cash receipts.

     Contract and Material Costs.  Contract and material costs and
expenses for the twelve months ended December 31, 1999 were $11,606,000 as
compared to $8,620,000 for the twelve months ended December 31, 1998, an
increase of 35%.  This increase is consistent with the Company's increase
in revenues.

     Selling, General and Administrative Costs.  Selling, general and
administrative costs for the twelve months ended December 31, 1999 were
$1,297,000 as compared to $993,000 for the twelve months ended December
31, 1998, an increase of 31% due to the increased volume of work for the
year.

     Gross Operating Profit.  Gross operating profit for the year ended
December 31, 1999 was $520,000 as compared to $395,000 for the twelve
months ended 1998, an increase of 32%.  This increase is attributed to the
Company's efforts to diversify its client base, including its entry into
the commercial insulation market.

     Discontinued Operations.  Effective October 8, 1999, the Company sold
its interests in Administracion Residuos Industriales, S.A. de C.V.,
Ecosistemas Nacionales, S.A. de C.V. and Ecosistemas El Llano, S.A. de
C.V.  The Company also intends to dispose of its interests in Ecosistemas
del Potosi, S.A. de C.V. and Confinamiento Tecnico de Residuos
Industriales, S.A. de C.V., pending resolution of the NAFTA claim.  Due to
losses incurred in excess of Company estimates at the measurement date,
the Company recorded additional losses from discontinued operations of
$2,228,000 for the twelve months ended December 31, 1999, net of
previously accrued losses of $450,000 at December 31, 1998.  Such
additional losses are a result of the following changes in facts from the
December 31, 1998 measurement date:  A)  The Company's Mexican operating
losses exceeded management's original estimate by $780,000.  These
additional losses were a direct result of a delay in the closing of the
sale of the non-NAFTA related assets due to unforeseen additional legal
document requirements in Mexico as well as impacts on the businesses'
operations after the sale was made known.  B) The $450,000 accrual did not
contain any provisions for the Company's direct costs of pursuing its
NAFTA claim.  The full extent of the NAFTA hearing process was unknown
until the middle of the third quarter, as witness lists, court fees,
procedures, etc. could not have been anticipated earlier.  As a result of
the hearing process, the Company incurred additional costs of $868,000,
which it could not have reasonably foreseen at December 31, 1998.
Additionally, the Company wrote off $585,000 of foreign currency losses
previously included in the equity section of its balance sheet and
associated with the assets sold.

     The Company concluded its NAFTA arbitration hearing September 9,
1999.  The Tribunal issued its decision on August 30, 2000 in favor of the
Company.  In October 2000, Mexico filed an action in the Supreme Court of
British Columbia, Canada, seeking to have the Tribunal's decision set
aside or annulled.  On March 2, 2001, the hearing on the matter was
completed.  A decision on the case is pending.  The Company is, therefore,
awaiting the finality of this case to determine the disposition of the
NAFTA assets.  Management cannot reasonably estimate future losses going
forward as the schedule on completion of this claim is beyond the
Company's control.  However, the Company is currently not aware of any
other requirements or filings necessary while it awaits the court's
decision.  It is believed that future costs, if any, will not be material,
pending the final disposition.  Future costs, if any, will be charged to
operations as incurred.

     Corporate Expense.  Corporate expenses were $2,140,000 for the twelve
months ended December 31, 1999 as compared to $1,984,000 for the twelve
months ended December 31, 1998, an increase of 8%.  The net increase was
primarily due to an increase in outside services for accounting,
consulting and shareholder expenses related to various statutory filings.

     Interest Expense.  Interest expense for the twelve months ended
December 31, 1999 was $392,000 as compared to interest expense of $193,000
for the twelve months ended December 31, 1998.  This is due to the
addition of interest-bearing debt during the second half of 1998 and
amendments to the zero coupon notes increasing the interest rate during
1999, as well as new interest bearing debt in 1999.

     Income Taxes.  Due to the losses incurred during the twelve months
ended December 31, 1999 and 1998,  the Company did not record a provision
for income taxes.  At December 31, 1999, the Company has approximately
$22,000,000 and $8,000,000 in net operating loss carryforwards available
for U.S. federal and California taxes, respectively.  See Note I to the
consolidated financial statements.

     Consolidated Results.  The net loss for the twelve months ended
December 31, 1999 was $4,199,000 as compared to a net loss of $4,778,000
for the twelve months ended December 31, 1998.  This loss is attributed to
the increased interest cost associated with new capital to complete the
NAFTA claim as well as the write off of foreign currency losses associated
with the sold Mexican assets.  The 1999 loss is less than 1998 primarily
due to the discontinuance of the Mexican operations.

Liquidity and Capital Resources

     In November 1991, the Company completed the acquisition of Eco-Metalclad,
Inc. ("ECO-MTLC"), commenced the development of the hazardous industrial
waste treatment business in Mexico and began advancing cash to its Mexican
subsidiaries for use in the Mexican business.  Funding the development of
the Company's Mexican business required substantial capital.  To obtain
capital for the development of the business of the Company in Mexico, the
Company made private placements of its common stock and convertible
subordinated debentures and obtained loans from financial institutions.

     In the fourth quarter of 1998, the Company committed to a plan to
discontinue its Mexican operations and to seek potential buyers for its
Mexican business.  Although no further investments are being made in
Mexico, the Company continues to rely upon additional capital to maintain
its NAFTA related assets, complete its NAFTA arbitration and support its
remaining operations.

     In July 1998, the Company issued $1,000,000 in 7% Convertible
Debentures due in July 2001, netting the Company $875,000.  In February,
1999 the Company redeemed $150,000 of these debentures.  During 1999, the
holder of these debentures converted all of the remaining principal and
interest due into common stock of the Company.

     In August 1998, the Company issued $350,000 in 10% Convertible
Subordinated Debentures due in August 2001, netting the Company $308,000.
During July 1999, the holder of these debentures converted the entire
principal amount into common stock of the Company.

     On July 30, 1999 the Company entered into an amendment of the terms
of its Five-Year Zero Coupon Notes with the holder.  The amendment
included the conversion of accrued interest through July 30, 1999 into
principal notes, the interest rate was adjusted from 9.3% to 12% effective
July 31, 1999, the convertibility of the notes and the holder's redemption
option on the notes was extended until the earlier of March 31, 2000 or
completion of the NAFTA proceedings and the conversion rate per share will
be at the lesser of 70% of the average market price per share or $2.50 per
share.  In no event, however, can the holder convert its principal into
common shares such that it would result in the holder obtaining shares
that would exceed 19.99% of the outstanding common stock of the Company.
Should the holder exercise its right to convert the notes, all accrued
interest would be forfeited.  As part of this amendment, the note holder
agreed to exercise certain of its warrants and to purchase $250,000 in
additional notes.  During the twelve months ended December 31, 2000 the
note holder exercised its rights and converted $1,092,000 of note
principal into 795,910 shares at an average price of $1.37.  As a result
of these conversions the note holder forfeited accrued interest in the
amount of $161,000.  As of December 31, 2000 the note holder reached the
maximum allowable conversion option of the notes and presently cannot
convert the notes into additional shares of the Company.

     During August and September 1999, the Company issued $360,000 in
three-year 10% Convertible Subordinated Debentures on terms similar to the
previously issued debentures, with the conversion price being the lower of
$2.50 or 75% of market.  In the fourth quarter of 2000, $52,035 of
debenture principal and interest was converted into 47,752 shares at an
average price of $1.09 per share.

     During the twelve months ended December 31, 1999, the Company
received approximately $2,783,000 from the exercise of warrants.
Additionally, the Company issued 38,500 shares of its common stock to
certain employees of the Company in exchange for $108,000 in payroll
obligations.

     The Company had positive working capital at December 31, 2000 of
$753,000 compared to negative working capital of $854,000 at December 31,
1999.  The Company had cash and cash equivalents at December 31, 2000 of
$354,000 and $769,000 at December 31, 1999.  Cash used in continuing
operations for the twelve months ended December 31, 2000 was $2,331,000
compared to $1,177,000 for 1999.  Cash used by discontinued operations for
the twelve months ended December 31, 2000 was $403,000 compared to cash
used of $2,008,000 for 1999.  Cash used in operating activities for the
twelve months ended December 31, 2000 was funded primarily by cash and
cash equivalents on hand at the beginning of the year as well as the
warrant exercises completed during the twelve months.

     For the twelve months ended December 31, 2000 the Company generated
negative cash flow from continuing operations of $2,331,000, of which
$170,000 in negative cash flow related to the insulation business due
primarily to larger than usual accounts receivable for work performed in
December 2000.  Given the Company's client base, the energy market
problems in California could adversely affect the Company's ability to
collect the receivable from one of its major clients, should they
experience financial problems.  The remaining negative cash flow is
related to corporate activities; including corporate overheads, expenses
associated with public companies, interest expense and on-going legal
costs associated with pursuit of the Company's NAFTA claim.  The Company
will require substantial additional financing to continue pursuit of its
NAFTA claim, along with general and administrative expenses without
revenues to offset such expenses.  The Company is aware of its ongoing
cash needs and continues to work with its investment bankers and other
sources to meet its ongoing needs through December 31, 2001.  Given the
Company's decision to discontinue operations in Mexico, and sell its
businesses, the cash requirements in Mexico have greatly diminished.  The
Company is pursuing additional financing alternatives to maintain its
operations, including equity financing, potential insider transactions,
and accounts receivable financing.  The Company believes it will obtain
the necessary funds to continue its planned operations throughout 2001;
however, no assurances can be given that such funds will be available to
the Company as required.

Reverse Stock Split

     On June 2, 1999 the shareholders of the Company approved a reverse
stock split of the Company's common stock in a ratio of one share for up
to ten shares of its outstanding common stock.

     Pursuant to this approval, the Board of Directors of the Company
approved a reverse split of the common shares in a ratio of one share for
every ten shares.  This reverse split was effective on July 2, 1999.

Foreign Currency Translation

     Effective January 1, 1999, Mexico is no longer considered to be
"highly inflationary".  However, the Company has discontinued its Mexican
operations, therefore, the impact of this change had no effect on the
Company's financial statements.

Impact of Inflation

     The Company reflects price escalations in its quotations to its
insulation customers and in its estimation of costs for materials and
labor.  For construction contracts based on a cost-plus or time-and-materials
basis, the effect of inflation on the Company is negligible. For projects
on a fixed-price basis, the effect of inflation may result in reduced profit
margin or a loss as a result of higher costs to the Company as the contracts
are completed; however, the majority of the Company's contracts are completed
within 12 months of their commencement and the Company believes that the
impact of inflation on such contracts is insignificant.

     Although inflation has been a significant factor in the Mexican
economy in general since the devaluation, the Company does not anticipate
that it will have a material impact on its current or remaining
operations.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements and schedules listed in the
accompanying Index to Consolidated Financial Statements are attached
hereto and filed as a part of this Report under Item 14.


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

     NONE.


                                 PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by Item 401 of Regulation S-K is set forth
in the Company's 2001 Annual Meeting Proxy Statement which will be filed
with the Securities and Exchange Commission not later than 120 days after
December 31, 2000.  The Company's 2001 Annual Meeting Proxy Statement,
exclusive of the information set forth under the captions "Report of the
Compensation Committee" and "Company Performance," are incorporated herein
by this reference.


ITEM 11.  EXECUTIVE COMPENSATION

     The information required by Item 402 of Regulation S-K is set forth
in the Company's 2000 Annual Meeting Proxy Statement which will be filed
with the Securities and Exchange Commission not later than 120 days after
December 31, 2000.  The Company's 2001 Annual Meeting Proxy Statement,
exclusive of the information set forth under the captions "Report of the
Compensation Committee" and "Company Performance," are incorporated herein
by this reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by Item 403 of Regulation S-K is set forth
in the Company's 2001 Annual Meeting Proxy Statement which will be filed
with the Securities and Exchange Commission not later than 120 days after
December 31, 2000.  The Company's 2001 Annual Meeting Proxy Statement,
exclusive of the information set forth under the captions "Report of the
Compensation Committee" and "Company Performance," are incorporated herein
by this reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In October 1994, in consideration of extraordinary contributions to
the Company, including but not limited to the pledge of 75,500 shares of
common stock of the Company owned by them to facilitate necessary
financings for the Company, the board of Directors approved  a loan of
$370,000 to each of Mr. Kesler and Mr. Neveau.  Such borrowings are due 30
days after demand and bear annual interest at the prime rate of interest
plus 7%.  In February 1996 Messrs. Kesler and Neveau each repaid $150,000
to the Company.  In March 1996, the notes were amended to modify the loan
principal between Messrs. Kesler and Neveau as well as to adjust the
interest rates, effective March 1, 1996 to a variable rate based upon the
Company's quarterly investment rate.  Repayment of these notes has been
extended until completion of the NAFTA related proceedings.    Mr.
Kesler's note is secured by his employment agreement.

     In June 1996, Mr. Neveau, Chairman of the Board of Directors, Senior
Vice President, and a Director of the Company, resigned his position
effective the next shareholders' meeting.  As a result, the Company and
Mr. Neveau renegotiated the terms of his employment agreement relative to
compensation, benefits and stock options.  Since May 1997, the Company has
been offsetting payments due Mr. Neveau against his outstanding loan
balance to the Company.  There are no remaining payments due Mr. Neveau
and his indebtedness to the Company as of December 31, 2000 was $74,000.

     In November, 2000 the Board of Directors approved advances against
legal costs on behalf of Mr. Kesler, in his pursuit of certain personal
legal matters related to his position in the Company.  As of December 31,
2000, Mr. Kesler owes the Company $57,000 related to these advances, which
may be recoverable from pending litigation.

     During the twelve months ended December 31, 2000, the Company
incurred legal fees of $28,000 from the law firm of Gibson, Haglund &
Paulsen, of which Bruce H. Haglund, general counsel, Director, and
Secretary of the Company, is a principal; however, none of such fees have
yet been paid.  As of December 31, 2000, fees totaling $167,000 remain
unpaid.




                                 PART IV

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

(a)  The following documents are filed as part of this report on Form 10-K:

  1. Financial Statements
     Reports of Independent Public Accountants
     Consolidated Balance Sheets
     Consolidated Statements of Operations
     Consolidated Statements of Shareholders' Equity
     Consolidated Statements of Cash Flows
     Notes to Consolidated Financial Statements

  2. Schedules to Financial Statements
     Schedule II - Valuation and Qualifying Accounts

    All schedules, other than those listed above, are omitted, as the
information is not required, is not material or is otherwise furnished.

  3. Exhibits

     The following exhibits are being filed with this Annual Report on
Form 10-K and/or are incorporated by reference therein in accordance with
the designated footnote references:

        3.   Restated and Amended Certificate of Incorporation and Bylaws
of the Company, and all amendments thereto. (1)

        3.1  Form of Certificate for Common Stock (2)

       10.1  Form of 1993 Omnibus Stock Option and Incentive Plan (3)

       10.2  Form of 1996 Omnibus Stock Option and Incentive Plan (4)

       10.3  Employment Agreement between the Company and Grant S. Kesler
             dated January 1, 1998(5)

       10.4  Employment Agreement between the Company and Anthony C.
             Dabbene dated January 1, 1998(5)

       10.5  Form of 7% Convertible Debenture Due July 31, 2001 between
             the Company and The Shaar Fund Ltd. dated July 30, 1998 (6)

       10.6  Form of 2000 Omnibus Stock Option and Incentive Plan (7)

       10.7  Employment Agreement between MIC and Robert D. Rizzo dated
             September 1, 2000.

       10.8  Decision of NAFTA Tribunal dated August 30, 2000(8)

22.  List of Subsidiaries of the Registrant

23.  Consents of Experts and Counsel

(b)  Reports on Form 8-K

The Company filed Form 8-K/A on February 9, 2000, reporting the sale of
Mexican assets.

The Company filed Form 8-K on September 5, 2000, reporting the pro forma
results of the NAFTA arbitration.


---------------------
(1)  Filed with the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 and incorporated herein by this reference.
(2)  Filed with the Company's Registration Statement on Form S-1 dated
December 15, 1987 and incorporated herein by this reference.
(3)Filed with the Company's Transition Report on Form 10-K for the five
months ended May 31, 1993 and incorporated herein by this reference.
(4)  Filed with the Company's Proxy Statement dated September 10, 1996 and
incorporated herein by this reference.
(5)  Filed with the Company's Annual Report on Form 10-K for the year
ended December 31, 1998 and incorporated herein by this reference.
(6)  Filed with the Company's Form S-3/A dated July 2, 1999 and
incorporated herein by this reference.
(7)  Filed with the Company's Preliminary Proxy Statement dated October
20, 2000 and incorporated herein by this reference.
(8)  Filed with the Company's Annual Report on Form 8-K dated September 5,
2000 and incorporated herein by this reference.


                         SUPPLEMENTAL INFORMATION

     An annual report and a proxy statement shall be furnished to the
security holders of the Company subsequent to the filing of this Form 10-K.
The Company shall furnish copies of the annual report to security
holders and the proxy statement to the Securities and Exchange Commission
when it is sent to the security holder.

                                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.

                                   METALCLAD CORPORATION

                                   By: /s/Anthony C. Dabbene
                                      -----------------------------------
                                       Anthony C. Dabbene
                                       Chief Financial Officer
                                       Date:  June 11, 2001

     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.

Signatures                  Title                                 Date

/s/Grant S. Kesler    Chief Executive Officer and Director  June 11, 2001
--------------------- (Principal Executive Officer)
Grant S. Kesler


/s/Anthony C. Dabbene Chief Financial Officer & Director    June 11, 2001
--------------------- (Principal Financial and
Anthony C. Dabbene    Accounting Officer)


/s/Bruce H. Haglund   Secretary & Director                  June 11, 2001
---------------------
Bruce H. Haglund


/s/J. Thomas Talbot   Director                              June 11, 2001
---------------------
J. Thomas Talbot


/s/Raymond J. Pacini  Director                              June 11, 2001
---------------------
Raymond J. Pacini













                    CONSOLIDATED FINANCIAL STATEMENTS

                                   and

                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



                           For the year ended
                            December 31, 2000




                          METALCLAD CORPORATION


























                          ITEM 14(A)(1) and (2)

                  METALCLAD CORPORATION AND SUBSIDIARIES

                INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


The following Consolidated Financial Statements of Metalclad Corporation
and subsidiaries are included in Item 8:


Reports of Independent Public Accountants on Consolidated Financial
Statements:

     Report of Moss Adams  LLP.......................................F-1



Financial Statements:

     Consolidated Balance Sheets - December 31, 2000, 1999 and
     1998............................................................F-2

     Consolidated Statements of Operations - the Years Ended
     December 31, 2000, 1999 and 1998................................F-3

     Consolidated Statements of Shareholders' Equity - the Years
     Ended December 31,2000, 1999 and 1998...........................F-4

     Consolidated Statements of Cash Flows - the Years Ended
     December 31, 2000, 1999 and 1998................................F-5

     Notes to Consolidated Financial Statements......................F-6


Supplementary Financial Statement Schedules:

     Schedule II - Valuation and Qualifying Accounts................F-24




                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors and Shareholders of Metalclad Corporation:

     We have audited the accompanying consolidated balance sheets of
Metalclad Corporation (a Delaware Corporation) and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three
years in the period ended December 31, 2000.  These financial statements
are the responsibility of the Company's management.  Our responsibility is
to express an opinion on these financial statements based on our audits.

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

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Metalclad
Corporation and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 2000 in conformity with generally
accepted accounting principles.

     The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note A
to the financial statements, the Company has suffered recurring losses
from operations and has a large accumulated deficit that raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note
A.  The financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts or the
amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.

     Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole.  The schedule listed in the
index of financial statements is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not part of the
basic financial statements.  The data for the years ended December 31,
1999 and 1998 has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly state
in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
MOSS ADAMS LLP


Irvine, California
February 23, 2001



                 Metalclad Corporation and Subsidiaries
                       CONSOLIDATED BALANCE SHEETS
<TABLE><S>                                             <C>                <C>
                                                                December 31,
                                                        ------------------------------
                                                            2000               1999
ASSETS                                                  -----------        -----------
Current assets:
   Cash and cash equivalents                            $   354,345       $   769,176
   Accounts receivable, less allowance for doubtful
     accounts of $50,000 and $20,000 at December 2000
     and 1999, respectively                               3,965,975         1,644,991
   Costs and estimated earnings in excess of billings
     on uncompleted contracts                                82,920           147,991
   Inventories                                              114,129           161,832
   Prepaid expenses and other current assets                137,486           125,630
   Receivables from related parties, net                    195,814           148,285
                                                         ----------        ----------
                    Total current assets                  4,850,669         2,997,905
Property, plant and equipment, net                          336,497           357,769
Net assets of discontinued operations                     4,905,754         4,815,811
Note receivable--sale of Mexican assets                     779,402           779,402
Other assets                                                 25,765            23,086
                                                         ----------        ----------
                                                        $10,898,087       $ 8,973,973
                                                         ==========        ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                     $ 2,166,727       $   898,745
   Current liabilities, net--discontinued operations         90,139           339,936
   Accrued expenses                                         722,369           499,076
   Billings in excess of costs and estimated
     earnings on uncompleted contracts                       26,724                 -
   Current portion of long-term debt                         62,451            42,798
   Convertible zero coupon notes                          1,029,194         2,071,003
                                                         ----------        ----------
                    Total current liabilities             4,097,604         3,851,558
Long-term debt, less current portion                        123,489           105,915
Convertible subordinated debentures                         310,000           360,000
                                                         ----------        ----------
                    Total liabilities                     4,531,093         4,317,473
                                                         ----------        ----------
Commitments and Contingencies (Note M)
Shareholders' equity :
   Preferred stock, par value $10; 1,500,000 shares
     authorized; none issued                                      -                 -
   Common stock, par value $.10; 80,000,000 shares
     authorized; 6,581,114, and 4,859,498 issued and
     outstanding at December 2000 and 1999, respectively    658,111           485,950
   Additional paid-in capital                            67,659,747        64,330,947
   Accumulated deficit                                  (59,871,257)      (58,106,460)
   Officer's receivable                                    (524,184)         (498,514)
   Accumulated other comprehensive income                (1,555,423)       (1,555,423)
                                                         ----------        ----------
                                                          6,366,994         4,656,500
                                                         ----------        ----------
                                                        $10,898,087       $ 8,973,973
                                                         ==========        ==========
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
                  Metalclad Corporation and Subsidiaries

                  CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE><S>                                     <C>           <C>          <C>

                                                         Year ended December 31,
                                                --------------------------------------
                                                    2000         1999         1998
                                                -----------   -----------  -----------
Revenues
   Contract revenues                            $17,673,680   $13,134,928  $ 9,912,194
   Material sales                                    79,627       224,850       92,227
   Other                                             15,545        62,136        4,250
                                                 ----------    ----------   ----------
                                                 17,768,852    13,421,914   10,008,671
                                                 ----------    ----------   ----------
Operating costs and expenses
   Contract costs and expenses                   15,703,563    11,404,866    8,548,872
   Cost of material sales                            49,263       200,623       71,316
   Selling, general and administrative            1,552,696     1,296,615      993,369
                                                 ----------    ----------   ----------
                                                 17,305,522    12,901,104    9,613,557
                                                 ----------    ----------   ----------
Gross operating profit                              463,330       519,810      395,114
Corporate expense                                (1,947,939)   (2,140,338)  (1,983,578)
                                                 ----------    ----------   ----------
Operating loss                                   (1,484,609)   (1,620,528)  (1,588,464)

Interest expense                                   (257,363)     (391,847)    (192,547)
Other income, net                                    40,362        41,215        5,536
                                                 ----------    ----------   ----------
Loss from continuing operations                  (1,701,610)   (1,971,160)  (1,775,475)

Loss from discontinued operations                   (63,187)   (2,227,534)  (3,002,914)
                                                 ----------    ----------   ----------
Net loss                                        $(1,764,797)  $(4,198,694) $(4,778,389)
                                                 ==========    ==========   ==========
Weighted average number of common  shares         5,470,002     3,918,912    3,036,277
                                                 ==========    ==========   ==========
Loss per share of common stock, continuing
  operations--basic and diluted                     $(.31)       $ (.50)       $ (.58)
                                                    =====         =====         =====
Loss per share of common stock, discontinued
  operations--  basic and diluted                   $(.01)       $ (.57)       $ (.99)
                                                    =====         =====         =====
Loss per share of common stock--basic and
  diluted                                          $(.32)        $(1.07)       $(1.57)
                                                    =====         =====         =====

The accompanying notes are an integral part of these consolidated statements.
</TABLE>






                  Metalclad Corporation and Subsidiaries

             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
             The Years Ended December 31, 2000, 1999 and 1998

  <TABLE><S>                    <C>

                                                                                                      Accumulated      Total
                                                           Additional                                     Other        Share-
                                       Common Stock          Paid-in     Accumulated     Officer's   Comprehensive    holders'
                                   Shares       Amounts      Capital       Deficit      Receivable       Income        Equity
                                 ----------   ----------  -----------   -------------   -----------  -------------  -----------
  Balance at December 31, 1997   30,063,870   $3,006,387  $56,962,689   $(49,129,377)   $ (455,461)   $(2,140,110)   $8,244,128
  Issuance of common stock            6,752          675        7,765              -             -              -         8,440
  Common stock issued under
    stock option and warrants       498,500       49,850      434,426              -             -              -       484,276
  Officer's loan; interest                -            -            -              -       (22,275)             -       (22,275)
  Net loss                                -            -            -     (4,778,389)            -              -    (4,778,389)
                                 ----------    ---------   ----------    -----------     ---------     ----------    ----------

  Balance at December 31, 1998   30,569,122    3,056,912   57,404,880    (53,907,766)     (477,736)    (2,140,110)    3,936,180
  Reverse stock split 1 for 10  (27,512,210)  (2,751,221)   2,751,221              -             -              -             -
  Issuance of common stock
    for services                     38,500        3,850      103,950              -             -              -       107,800
  Debt conversions and interest     612,750       61,275    1,403,058              -             -              -     1,464,333
  Common stock issued under
    warrants                      1,151,336      115,134    2,667,838              -             -              -     2,782,972
  Officer's loan; interest                -            -            -              -       (20,778)             -       (20,778)
  Foreign currency translation
    adjustment                            -            -            -              -             -        584,687       584,687
  Net loss                                -            -            -     (4,198,694)            -              -    (4,198,694)
                                 ----------    ---------   ----------    -----------     ---------     ----------    ----------

  Balance at December 31, 1999    4,859,498      485,950   64,330,947    (58,106,460)     (498,514)    (1,555,423)    4,656,500
  Debt conversions and interest     843,662       84,366    1,220,706              -             -              -     1,305,072
  Common stock issued under
    warrants                        877,954       87,795    2,108,094              -             -              -     2,195,889
  Officer's loan; interest                -            -            -              -       (25,670)             -       (25,670)
  Net loss                                -            -            -     (1,764,797)            -              -    (1,764,797)
                                 ----------    ---------   ----------    -----------     ---------     ----------    ----------

  Balance at December 31, 2000    6,581,114   $  658,111  $67,659,747   $(59,876,257)   $ (524,184)   $(1,555,423)  $ 6,366,994
                                 ==========    =========   ==========    ===========     =========     ==========    ==========

  </TABLE>



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

















                  Metalclad Corporation and Subsidiaries

                  CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE><S>                                                        <C>

                                                                               Year Ended December 31,
                                                                   -------------------------------------------------
                                                                       2000               1999               1998
                                                                   ------------      ------------      -------------
Cash flows from operating activities:
Net loss                                                           $(1,764,797)      $(4,198,694)      $(4,778,389)
  Adjustments to reconcile net loss to net cash used in
  operating activities:
    Loss from discontinued operations                                   63,187         2,227,534         3,002,914
    Depreciation and amortization                                      106,657           229,327           128,921
    Provision for losses on accounts receivable                              -                 -            (8,907)
    Issuance of stock for services and interest                              -           107,800             8,441
    Issuance of stock for debt conversions                               2,035         1,464,333                 -
    Loss on disposal of fixed assets                                    13,878                 -                 -
    Changes in operating assets and liabilities:
      Decrease (increase) in accounts receivable                    (2,320,984)         (816,305)          595,205
      Decrease (increase) in unbilled receivables                       65,071            (4,319)           88,401
      Decrease (increase) in inventories                                47,703            14,865           (15,456)
      Decrease (increase) in prepaid expenses and other assets         (11,856)          (69,138)           84,833
      Decrease (increase) in receivables from related parties          (47,529)           70,650           (57,767)
      Increase (decrease) in accounts payable and accrued expenses   1,491,275          (152,047)          236,394
      Increase (decrease) in billings over cost                         26,724           (71,280)           50,553
      (Increase) decrease in other assets                               (2,679)           20,076                 -
                                                                     ---------         ---------         ---------
             Net cash used in continuing operations                 (2,331,315)       (1,177,198)         (664,857)
             Net cash used in discontinued operations                 (402,927)       (2,008,131)       (1,566,810)
                                                                     ---------         ---------         ---------
             Net cash used in operating activities                  (2,734,242)       (3,185,329)       (2,231,667)
                                                                     ---------         ---------         ---------

Cash flows from investing activities:
  Capital expenditures - continuing operations                         (99,263)         (171,809)         (274,104)
  Proceeds (expenditures) - discontinued operations                          -           125,000          (388,940)
                                                                     ---------         ---------         ---------
             Net cash used in investing activities                     (99,263)          (46,809)         (663,044)
                                                                     ---------         ---------         ---------

Cash flows from financing activities:
  Proceeds from long-term borrowings                                   300,877           901,472         1,392,548
  Payments on long-term borrowings - continued operations              (52,422)         (182,292)                -
  Borrowing by an officer                                              (25,670)          (20,778)          (22,275)
  Proceeds from exercise of stock options                                    -                 -           111,527
  Proceeds from exercise of warrants                                 2,195,889         2,782,972           372,750
                                                                     ---------         ---------         ---------
             Net cash provided by continuing operations              2,418,674         3,481,374         1,854,550
             Net cash provided (used) in discontinued operations             -                 -           120,391
                                                                     ---------         ---------         ---------
             Net cash provided by financing activities               2,418,674         3,481,374         1,974,941

Effects of exchange rates on cash                                            -                 -           139,969
Loss on foreign currency translations                                        -                 -          (210,926)
                                                                     ---------         ---------         ---------
Increase (decrease) in cash and cash equivalents                      (414,831)          249,236          (990,727)

Cash and cash equivalents at beginning of period                       769,176           519,940         1,510,667
                                                                     ---------         ---------         ---------
Cash and cash equivalents at end of period                          $  354,345        $  769,176        $  519,940
                                                                     =========         =========         =========
Supplemental disclosures of cash flow information:
  Cash paid for interest                                            $   92,393        $   71,060        $    1,603
                                                                     =========         =========         =========
Disclosure of noncash investing and financing activities:
  During the twelve months ended December 31, 2000, the Company converted approximately $1,305,000 of zero coupon
  notes payable into 844,000 shares of common stock.

  During the twelve months ended December 31, 1999, the Company sold certain Mexican assets, previously included
  in net assets of discontinued operations, in exchange for a note receivable in the amount of $779,402.

The accompanying notes are an integral part of these consolidated statements.
</TABLE>



               METALCLAD CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Metalclad Corporation (the "Company") is engaged in insulation services,
including asbestos abatement and material sales, to customers primarily in
California (the "Insulation Business").  The Company has also been engaged
in the development of hazardous and non-hazardous industrial waste
treatment and storage facilities, as well as the collection and recycling
of industrial waste for disposition to landfills or as alternative fuels
for cement kilns in Mexico (the "Mexican Business").

After several years of developing the Mexican Business, the Company
determined that its efforts would not be successful due to political
opposition in Mexico.  On January 2, 1997, the Company filed its actual
claim with ICSID, after which a three-member tribunal was impaneled which
includes one arbitrator from Mexico, one from the United States and a
third, chosen jointly by the parties, from Great Britain.  On October 13,
1997, the Company filed a "memorial" with the NAFTA tribunal for its claim
to recover the value of its landfill investment in Mexico.  On February
17, 1998, the United Mexican States ("Mexico") responded to the Company's
claim to the tribunal by filing a "counter-memorial".  On August 21, 1998
the Company filed its "reply" to Mexico and on April 19, 1999 Mexico filed
its "rejoinder".  A pre-hearing conference took place July 6, 1999 and the
final hearing took place in Washington, D.C. from August 30 to September
9, 1999.  Post-hearing briefs were filed by the Company, the Mexican
government and the United States government on November 8, 1999.  On
August 30, 2000, the tribunal issued its decision.  It ruled that Mexico
had indirectly expropriated the Company's investment in its completed
landfill facility.  The tribunal awarded compensation be paid to the
Company totaling $16,685,000 plus interest accruing at 6% per annum
compounded monthly, beginning October 15, 2000, until paid.  As of
December 31, 2000, and pending collection, the financial statements do not
include any amounts that have been awarded as a result of the NAFTA
litigation.

On October 27, 2000, the United Mexican States filed a petition with the
Supreme Court of British Columbia, Canada, seeking leave to appeal the
award under the Commercial Arbitration Act of Canada.  The Company was
formally notified on November 27, 2000 that on November 14, 2000, the
filing was amended to also seek a setting aside of the award under the
International Commercial Arbitration Act.  A hearing on the case was
completed March 2, 2001 and a decision is not anticipated until May 2001.
However, regardless of the decision rendered, the Company anticipates an
appeal to the British Columbia Court of Appeals.  There is no definitive
timetable for completion of this process.  Estimates range from several
months to over a year.  Interest continues to accrue until paid.  (See
Note O.)

Because of this arbitration, the Company's other businesses in Mexico,
including its development of a second landfill facility in the State of
Aguascalientes, have been impacted dramatically.  Consequently, the
Company has discontinued its businesses in Mexico, sold its operating and
development businesses and is maintaining the NAFTA assets until
completion of its arbitration.  (See Notes B and M.)

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern.  As shown in the financial
statements, the Company has incurred recurring losses from operations and
has a large accumulated deficit.  Additionally, the Company may require
substantial additional financing to complete its NAFTA claim and to fund
general and administrative expenses without sufficient revenues to offset.
These matters raise substantial doubt about the Company's ability to
continue as a going concern.  The Company is continuing its efforts to
reduce costs and increase its revenues.  The Company is pursuing
additional financing alternatives to maintain its operations including
equity financings, potential transactions with insiders and potential
accounts receivable financings.  The financial statements to do not
include any adjustments relating to the recoverability of asset carrying
amounts or the amount and classification of liabilities that might result
should the Company be unable to continue as a going concern.

Principles of Consolidation/Investments

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries.  Investments in other companies and
joint venture corporations which are 20-50% owned are reported on the
equity method. Significant intercompany accounts and transactions have
been eliminated in consolidation.  Direct costs incurred relating to the
acquisition or formation of an equity method investment are capitalized
and are amortized over five years.

Cash Equivalents

The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.  The carrying
amount approximates fair value because of the short maturity of those
instruments.

Inventories

Inventories, which consist principally of insulation products and related
materials, are stated at the lower of cost (determined on the first-in,
first-out method) or market.

Depreciation and Amortization

Property, plant and equipment is stated at cost.  Depreciation and
amortization is computed using the straight-line method over the estimated
useful lives of related assets which range from between five to seven
years for machinery, equipment and leasehold improvements.  Assets related
to the Company's hazardous waste treatment facility located in Mexico are
included in discontinued operations and will be disposed of upon
resolution of the NAFTA claim.  (See Note B.)

Revenue Recognition

Fixed price insulation installation and asbestos abatement contracts are
accounted for by the percentage-of-completion method wherein costs and
estimated earnings are included in revenues as the work is performed.  If
a loss on a fixed price contract is indicated, the entire amount of the
estimated loss is accrued when known.  Time and material contracts are
accounted for under a cost plus fee basis.  Retentions by customers under
contract terms are due at contract completion.

Loss Per Share

The Company computes loss per share in accordance with Statement of
Financial Accounting Standards ("SFAS") 128, "Earnings Per Share".  This
statement requires the presentation of both basic and diluted net loss per
share for financial statement purposes.  Basic net loss per share is
computed by dividing loss available to common shareholders by the weighted
average number of common shares outstanding.  Diluted net loss per share
includes the effect of the potential shares outstanding, including
dilutive stock options and warrants using the treasury stock method.
Because the impact of options, warrants and convertible debt are
antidilutive, there is no difference between the loss per share amounts
computed for basic and diluted purposes.  Weighted average share
calculations for all periods presented have been adjusted to reflect the 1
for 10 reverse stock split.  (See Note J.)

Stock-Based Compensation

The Company accounts for stock-based compensation for employees under the
provisions of APB 25.  As required, the Company complies with the
disclosure provisions of SFAS 123, "Accounting for Stock-Based
Compensation".  SFAS 123 requires the Company to disclose pro forma net
income and earnings per share as if the fair value based accounting method
of SFAS 123 had been used to account for stock based compensation.  These
disclosures are included in Note J.

Income Taxes

The Company accounts for income taxes using the liability method as
prescribed by SFAS 109, "Accounting for Income Taxes".

Comprehensive Income - Foreign Currency Translation

In 1998, the Company adopted SFAS 130, "Reporting Comprehensive Income".
This statement establishes rules for the reporting of comprehensive income
and its components.  Comprehensive income consists of net income and
foreign currency translation adjustments and is presented in the
Consolidated Statement of Shareholders' Equity.  The adoption of SFAS 130
had no impact on total shareholders' equity.  Prior year financial
statements have been reclassified to conform to the SFAS 130 requirements.

As of January 1, 1997, Mexico has been deemed a highly inflationary
economy.  This results in the U.S. dollar being the functional currency
of the Company's Mexican entities and the net exchange gain or losses
resulting from the translation of assets and liabilities of the Mexican
entities now being included in income, except for the effects of exchange
rate changes on intercompany transactions of a long-term investment nature
which are still recorded as a separate component of shareholders' equity.

Beginning January 1, 1999, Mexico is no longer deemed highly inflationary.
However, the Company has discontinued its Mexican operations and therefore
this will not impact future reported results of operations.  (See Note B.)

Reclassifications

Certain reclassifications have been made to prior period consolidated
financial statements to conform with the current year presentation.

Use of Estimates

New Accounting Pronouncements

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in
Financial Statements.  SAB No. 101 establishes guidelines in applying
generally accepted accounting principles to the recognition of revenue in
financial statements based on the following four criteria: (1) persuasive
evidence of an arrangement exists, (2) delivery has occurred or services
have been rendered, (3) the seller's price to the buyer is fixed or
determinable and (4) collectability is reasonably assured.  SAB No. 101,
as amended by SAB 101B, is effective no later than the fourth fiscal
quarter of fiscal years beginning after December 15, 1999.  Accordingly,
the Company has adopted the new guidance in the quarter ended December 31,
2000 retroactive to the beginning of the year.  The adoption of SAB 101
has not had a material effect on its consolidated financial position or
results of operations.

In March 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation.  Interpretation No. 44 clarifies the application of APB
Opinion No. 25 and is effective July 1, 2000.  Interpretation No. 44
clarifies the definition of "employee" for purposes of applying APB
Opinion No. 25, the criteria for determining whether a plan qualifies as
a noncompensatory plan, the accounting consequence of various
modifications to the terms of a previously fixed stock option or award,
and the accounting for an exchange of stock compensation awards in a
business combination.  The Company adopted the provisions of FASB
Interpretation No. 44 in the third quarter ended September 30, 2000.  The
Company does not believe that the adoption of Interpretation No. 44 has
had or will have a material effect on its consolidated financial position
or results of operations.

In June 1998, the FASB issued SFAS No. 133, as amended, Accounting for
Derivative Instruments and Hedging Activities.  SFAS No. 133 requires the
recognition of all derivatives in the consolidated balance sheet as
either assets or liabilities measured at fair value.  The Company will
adopt the provision of SFAS No. 133 in the first quarter of fiscal year
2002.  The Company has not determined the impact the adoption of SFAS
No. 133 will have on our consolidated financial statements.

Use of Estimates

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

Accounting for the Impairment of Long-Lived Assets

The Company addresses the realization of its assets as required by SFAS
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of".  This statement requires that long-lived assets
and certain identifiable intangibles to be held and used be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable.  The Company has
conducted this review and believes that no impairment currently exists and
no material adjustments are necessary to the valuation of its assets.

NOTE B - DISCONTINUED OPERATIONS

In 1991, the Company embarked on a strategy to develop an integrated
industrial waste management business in Mexico.  After seven years of
developing this business, the Company determined that its efforts would
not be successful due to political opposition in Mexico.  Consequently, in
the fourth quarter of 1998, Management committed to a plan to sell its
Mexican operations to a third party.

The Company's discontinued operations contain two components:  1) ongoing
operations and development and 2) the landfill assets associated with its
NAFTA claim.  In the fourth quarter of 1999, the Company completed a sale
of its ongoing businesses (see Note C).  The Company's NAFTA assets will
be retained until a final, enforceable decision is rendered in the claim.

The loss from discontinued operations during fiscal 1999 includes a
provision of $107,000 for anticipated costs to complete the ongoing NAFTA
claim.  For the twelve months ended December 31, 2000, the Company
incurred additional costs of $91,000 which have been charged against the
December 31, 1999 accrual.  Additionally, $63,000 in fees for continuing
costs of the NAFTA proceedings have been charged to discontinued
operations, in 2000.  Additionally, accumulated foreign currency losses of
$1,555,000, currently a component of shareholders' equity, will be written
off upon disposition of the NAFTA assets.

The consolidated financial statements for prior periods have been restated
to reflect the accounting for discontinued operations.

Net sales and loss from discontinued operations are as follows:

                                           Year Ended December 31,
                                   --------------------------------------
                                      2000          1999          1998
                                   ----------    ----------    ----------

Net sales                         $         -   $ 4,140,571   $ 5,232,554
Operating loss                              -    (2,116,496)   (2,587,300)
Interest expense                            -      (111,038)     (415,614)
Loss from discontinued operations     (63,187)   (2,227,534)   (3,002,914)


The net assets of discontinued operations are as follows:

                                               December 31,
                                        --------------------------
                                            2000          1999
                                        ------------  ------------
Current assets                          $    19,029   $    14,554
Current liabilities                        (109,168)     (354,490)
                                         ----------    ----------
     Net current liabilities                (90,139)     (339,936)
                                         ----------    ----------

Property, plant and equipment, net        4,466,890     4,377,369
Other assets                                438,864       438,442
                                         ----------    ----------
     Net non-current assets               4,905,754     4,815,811
                                         ----------    ----------

Net assets of discontinued operations    $4,815,615    $4,475,875
                                          =========     =========

Included in net assets of discontinued operations, at December 31, 2000 is
approximately $4,816,000 representing the Company's investment in its
completed hazardous waste treatment facility in the State of San Luis
Potosi, Mexico, known as "El Confin". The Company has been granted all
necessary federal governmental authorizations to open and operate the
facility but, as yet, has not received the support of the state and local
governments.  Consequently, on October 2, 1996, the Company filed a Notice
of Intent to File Claim Under the North American Free Trade Agreement
("NAFTA").  The claim was filed with the International Centre for
Settlement of Investment Disputes ("ICSID") in Washington, D.C.  On
January 13, 1997, the Secretary General of ICSID registered the Company's
claim and notified both the United States and Mexican governments of the
registration.   A final hearing on the claim was completed on September 9,
1999.  On October 27, 2000, the United Mexican States filed a petition
with the Supreme Court of British Columbia, Canada, seeking to have the
award set aside by the court under the Commercial Arbitration Act of
Canada.  On November 14, 2000, the filing was amended to also seek a
setting aside of the award under the International Commercial Arbitration
Act.  A hearing on the case was completed on March 2, 2001 and a
decision is not anticipated until May 2001.  However, regardless of the decision
rendered, the Company anticipates an appeal to the British Columbia Court
of Appeals.  There is no definitive timetable for completion of this process.
Estimates range from several months to over a year.  Interest continues to
accrue until paid.  Furthermore, should a decision be rendered against the
Company, assets totaling $4,906,000 may be impaired and could potentially
 result in a write down should the Company be unable to sell or
otherwise recover its investment.  (See Note O.)

NOTE C - NOTE RECEIVABLE - SALE OF MEXICAN ASSETS

In October 1999, the Company completed a sale of its operating businesses
and development project located in Aguascalientes.  The sale specifically
excluded those Mexican assets involved in the NAFTA claim.  The terms of
this sale stipulate payment of the purchase price in stages as various
benchmarks are achieved in the operation of the business as well as the
buyer's assumption of all liabilities.  The Company received an initial
cash payment of $125,000 and recorded a receivable of $779,402
representing the Company's basis in the assets sold; however, no gain will
be recorded on the payments until 100% of the Company's net investment is
recovered.

Under the terms of the sale, the Company can receive up to $5,000,000 in
payments as certain specific milestones are met.  The most significant
milestone payments are associated with the buyer's ability to complete and
open the Aguascalientes landfill project.  If the buyer can obtain all
necessary authorizations, complete construction and open the facility,
payments totaling $1,125,000 will be due the Company under the milestone
payment schedule.   Presently, the buyer has not completed any of the
milestones associated with the Aguascalientes project.  It is at least
reasonably possible that the buyer may not complete any of the milestones.
In the event that the buyer is not successful in its efforts to open the
project or continue the businesses, the Company will be required to write
down its receivable in the transaction.

On November 13, 2000, the Company filed a complaint in the Superior Court
of California against a former employee, the U.S. parent of the buyer and
its representative for breach of contract, fraud, collusion and other
causes of action associated with this transaction.  A trial
date has not yet been set and no assurances can be given on the outcome.

The Company addresses the realization of its assets as required by SFAS
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of".  This statement requires that long-lived assets
and certain identifiable intangibles to be held and used be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable.  The Company has
conducted this review and believes that no impairment currently exists and
no material adjustments are necessary to the valuation of its assets.

NOTE D - INVESTMENTS IN UNCONSOLIDATED AFFILIATES

In 1989, the Company entered into a joint venture with a minority service
firm ("Curtom-Metalclad") to perform industrial insulation and industrial
asbestos abatement services similar to those performed by the Company.
When contracts are obtained by the joint venture, the Company performs the
work specified in the contract as a subcontractor to the joint venture.
Curtom-Metalclad's operations and financial position are not material to
the Company taken as a whole.

NOTE E - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

                                               December 31,
                                        -------------------------
                                            2000          1999
                                        ------------  -----------

Machinery and equipment                  $ 546,649     $ 570,105
Automotive equipment                       386,964       308,557
Leasehold improvements                       3,039         3,039
                                          --------      --------
                                           936,652       881,701

Less accumulated depreciation
   and amortization                       (600,155)     (523,932)
                                          --------      --------
                                         $ 336,497     $ 357,769
                                          ========      ========

NOTE F - ACCRUED EXPENSES

Accrued expenses consist of the following:

                                               December 31,
                                        -------------------------
                                            2000          1999
                                        -----------   -----------

Accrued interest                         $  15,500     $ 124,947
Wages, bonuses and taxes                   244,316        46,893
Union dues                                 154,155             -
Accounting fees and legal fees              88,000       205,000
Insurance                                  179,803        58,345
Other                                       40,595        63,891
                                          --------      --------
                                         $ 722,369     $ 499,076
                                          ========      ========


NOTE G - CONVERTIBLE DEBT

Convertible Zero Coupon Notes

In December 1997, the Company issued $2,200,000 of Five Year Zero Coupon
Secured Notes, due December 31, 2002, netting the Company $1,500,000.  The
effective interest rate of these notes is 9.33%.  The Company is
amortizing the difference between the value at maturity and the purchase
price over five years.  Upon the market price of the Company's common
stock closing at or above $1.50 for ten consecutive trading days, the
notes become convertible into common stock of the Company at $1.50 per
share and the Company is to issue warrants to purchase 1,500,000 common
shares of stock with an exercise price of $1.50 per share.  Both the
conversion price and warrant exercise price also contain anti-dilution
provisions.   Additionally, the notes are redeemable at the option of the
holder, or the Company, any time after March 31, 2000.  These notes are
secured by 100% of the stock of Metalclad Insulation Corporation ("MIC").
The net equity value of MIC is $2,030,000 as of December 31, 2000.  In
February 1998, the conditions triggering convertibility of the notes and
the issuance of warrants were met.

In June 1998, the Company negotiated a bridge loan with the holder of
these notes in the amount of $250,000.  As additional consideration for
the bridge loan, the Company issued 250,000 warrants exercisable at $1.25.
In connection with this financing, certain amendments were made to the
original Five Year Zero Coupon Notes which granted the holder an
additional 400,000 warrants exercisable at $1.50 as part of the anti-dilution
provision of the original warrants and clarifying the anti-dilution language
contained in the original notes.  The bridge loan was paid in its entirety
from the proceeds of the Company's July 1998 financing.  Due to the
anti-dilution provisions contained in both the notes and the warrants, the
holder of these notes had rights similar to those of the Company's existing
warrant holders.  As part of the Company's negotiations with the warrant
holders to solve the issue of the ongoing anti-dilution effects on the
number of shares underlying the warrants, the holder of these notes also
had to be addressed to solve the anti-dilution provisions contained in the
notes.  In February 1999, the Company and the holder reached agreement on
the conversion price of the notes, originally priced to convert at $15.00
per share, and are now convertible into shares of the Company's common stock
at $2.50 per share.

On July 30, 1999 the Company entered into an amendment of the terms of its
Five-Year Zero Coupon Notes with the holder.  The amendment included the
conversion of accrued interest through July 30, 1999 into principal notes,
the interest rate was adjusted from 9.3% to 12% effective July 31, 1999,
the convertibility of the notes and the holder's redemption option on the
notes was extended until the earlier of March 31, 2000 or completion of
the NAFTA proceedings and the conversion rate per share will be at the
lesser of 70% of the average market price per share or $2.50 per share.
In no event, however, can the holder convert its principal into common
shares such that it would result in the holder obtaining shares that would
exceed 19.99% of the outstanding stock of the Company.  Should the holder
exercise its right to convert the notes, all accrued interest would be
forfeited.  As part of this amendment, the months ended December 31, 2000
the note holder exercised its rights and converted $1,092,000 of note
principal into 795,910 shares at an average price of $1.37.  As a result
of these conversions the note holder forfeited accrued interest in the
amount of $161,000.  As of December 31, 2000 the note holder reached the
maximum allowable conversion option of the notes and presently cannot
convert the notes into additional shares of the Company.

Convertible Subordinated Debentures

In July 1998, the Company issued $1,000,000 in 7% Convertible Debentures
due in July 2001.  The debentures are convertible into shares of the
Company's common stock at $1.25 or 75% of current market price, whichever
is lower.  The Company has the option to redeem all or portions of this
debenture at 125% of the principal amount of the redemption.  The
debenture also allows for a mandatory redemption in the event of an award
in the NAFTA arbitration or, in certain cases, if the Company obtains
additional equity investment.  The mandatory redemption is also at 125% of
the then-outstanding principal balance.  In February 1999, the Company
redeemed $150,000 of the principal amount of the debentures.  As of
December 31, 1999, all of these remaining debentures were converted into
common stock of the Company.

In August 1998, the Company issued $350,000 in 10% Convertible
Subordinated Debentures due in August 2001 on terms similar to the
previously issued debentures.  The debentures were convertible into shares
of the Company's common stock at $1.25 per share through June 30, 1999.
After June 30, the debentures are convertible at 75% of current market
price or $1.25 whichever is lower.  As of December 31, 1999 all of these
debentures were converted into common stock of the Company.

During the third quarter of 1999, the Company issued $360,000 in three-year 10%
convertible subordinated debentures on terms similar to the previously issued
debentures, with the conversion price being the lower of $2.50 per share or
75% of the market price per share.  These debentures are due in August and
September, 2002.  In the fourth quarter of 2000, $52,035 of debenture
principal and interest was converted into 47,752 shares at an average
price of $1.09 per share.

NOTE H - LONG-TERM DEBT

Long-term debt consists of various notes payable to a finance company for
vehicles used in the ordinary course of the Company's insulation business.
The notes are secured by automotive equipment and bear interest at rates
ranging from .9% to 8.65% for periods of 48 to 60 months with the last
payment due in 2005.  Principal maturities over the next five years
average $37,200.

NOTE I - INCOME TAXES

There was no provision for income taxes for the periods presented due to
losses incurred and the Company's inability to recognize certain loss
carry forwards.  The major deferred tax items are as follows:

                                                      December 31,
                                               -------------------------
                                                   2000          1999
                                               -----------   -----------
   Assets:
     Allowances established against
       realization of certain assets          $     48,000   $    43,000
     Net operating loss carryforwards            8,754,000     8,887,000
     Capital loss carryforwards                  3,433,000     2,680,000
     Accrued liabilities and other                  66,000        94,000
                                                 ---------     ---------
                                                12,301,000    11,704,000
   Valuation allowance                         (12,301,000)  (11,704,000)
                                                ----------    ----------
                                               $         -   $         -
                                                ==========    ==========

The difference between the actual income tax benefit and the tax benefit
computed by applying the statutory Federal income tax rate to the net loss
before income taxes is attributable to the inability to recognize
currently the future benefit of net operating loss carryforwards.

At December 31, 2000, the Company has available for U.S. federal and
California state income tax purposes net operating loss carryforwards of
approximately $22,000,000 and $6,500,000, respectively.  These
carryforward amounts expire in the years 2006 through 2020 and 2001
through 2010, respectively.  The ultimate utilization of the net operating
loss carryforwards may be limited in the future due to changes in the
ownership of the Company.  This limitation, if applicable, has not been
determined by the Company.  The Company also has Mexican net operating
loss carryforwards of approximately $2,000,000 which may be available to
offset future taxable income.  The Mexican losses are subject to a ten-year
tax carryforward period and expire in the years 2004 through 2010.
Capital loss carryforwards of approximately $8,500,000 are available to
offset any future capital gains recognized by the Company for both U.S.
federal and California purposes.

The realization of the Company's deferred tax assets is dependent upon the
Company's ability to generate taxable income in the future.  The Company
has recorded a 100% valuation allowance against all of the deferred tax
assets due to the uncertainty regarding their realizability.

NOTE J - SHAREHOLDERS' EQUITY

Reverse Stock Split

On June 2, 1999, the shareholders of the Company approved a reverse stock
split of the Company's common stock in a ratio of one share for up to ten
shares of its outstanding common stock.  Pursuant to this approval, the
Board of Directors of the Company approved a reverse split of the common
shares in a ratio of one share for every ten shares.  This reverse split
was effective on July 2, 1999.  All reference to shares and per share
amounts in the accompanying footnotes have been restated to reflect this
action.

Stock Options

On August 18, 1992, the Company adopted an omnibus stock option plan (the
"1992 Plan") which authorized the issuance of 160,000 options to acquire
the Company's common stock.   At December 31, 2000, there were options
outstanding under the 1992 Plan for 39,500 shares, and 37,500 available
for grant.  These options will expire 10 years from the date of grant.

On March 24, 1993, the Company adopted an omnibus stock option plan (the
"1993 Plan") which authorized the issuance of 100,000 options to acquire
the Company's common stock.  The terms of the 1993 Plan are the same as
the 1992 Plan.  At December 31, 2000, there were options outstanding under
the 1993 Plan for 33,100 shares, and 34,400 options available for grant.
These options expire 10 years from the date of the grant.

On May 15, 1997, the Company adopted an omnibus stock option plan (the
"1997 Plan") which authorized the issuance of 600,000 options to acquire
the Company's common stock.  At December 31, 2000 there were 390,000
options outstanding under this plan and 210,000 options available for
grant.

On November 20, 2000, the Company adopted an omnibus stock option plan
(the "2000 Plan") which authorized the issuance of 1,000,000 options to
acquire the Company's stock.  The terms of the 2000 Plan are the same as
the 1997 Plan.

During the year ended December 31, 2000, the Board of Directors and its
Compensation Committee approved the grant to various officers, directors
and employees of the Company of options to purchase an aggregate of
540,000 shares of common stock.  The options were granted at exercise
prices equal to or exceeding the fair market value of the Company's common
stock on the measurement date, expire 10 years from the date of grant and
have various vesting schedules.

The following is a summary of options granted:

<TABLE><S>             <C>

                                                   Year ended December 31,
                        ------------------------------------------------------------------
                               2000                      1999                   1998
                        -------------------      ------------------      -----------------
                        Weighted                 Weighted                Weighted
                        Average                  Average                 Average
                        Exercise                 Exercise                Exercise
                         Shares       Price       Shares      Price      Shares      Price
                        ---------     -----      --------     -----     --------     -----
Options outstanding at
beginning of the year    954,800     $12.49       607,650    $19.30      392,300    $22.28
   Granted               540,000       3.00       390,000      2.99      246,300     13.79
   Exercised                   -          -             -         -      (17,850)     7.50
   Canceled              (42,000)     13.84       (42,850)    22.69      (13,100)    20.88
                       ---------                 --------               --------
Options outstanding at
end of the year        1,452,800     $ 8.92       954,800    $12.49      607,650    $19.30
                       ---------                 --------               --------
Options Exercisable      874,312     $12.49       886,430    $12.76      572,100    $19.45
                       =========                 ========               ========
</TABLE>


The following significant assumptions were utilized to calculate the fair
value information presented utilizing the Black-Scholes Multiple Option
Approach:

                                           Year Ended December 31,
                                   --------------------------------------
                                      2000          1999          1998
                                   ----------    ----------    ----------

Risk free interest rate               5.95%         6.00%         6.00%
Expected life                       5.0 years    1.82 years    1.5 years
Expected volatility                   1.32          1.247         1.07
Expected dividends                     -             -             -
Weighted average fair value of
  options granted                    $1.49         $1.6691       $0.608


<TABLE><S>                 <C>

                                  OPTIONS OUTSTANDING                                     OPTIONS EXERCISABLE
        -----------------------------------------------------------------           ----------------------------
                                                Weighted
                                                average          Weighted                              Weighted
                               Number           remaining        average                Number         average
            Range of         outstanding     contractual life    exercise             exercisable      exercise
        exercise prices    as of 12/31/00       in years          price             as of 12/31/00      price
        ---------------    --------------    ----------------    --------           --------------     --------
         $2.50 -  $3.00        920,000            9.36            $ 2.98                370,002         $ 2.99
         $4.09 - $12.50         38,800            7.21            $ 7.70                 27,350         $ 8.46
        $15.00 - $16.25        242,300            6.83            $15.26                235,260         $15.27
        $22.50 - $45.00        251,700            4.14            $24.71                241,700         $24.80
                             ---------                                                  -------
         $2.50 - $45.00      1,452,800            7.98            $ 8.92                874,312         $12.49
                             =========                                                  =======
</TABLE>

As the Company has adopted the disclosure requirements of SFAS 123, the
following table shows pro forma net loss and loss per share as if the fair
value based accounting method had been used to account for stock-based
compensation cost.

                                        Year Ended December 31,
                            ----------------------------------------------
                                2000             1999             1998
                            ------------     ------------     ------------
Net loss as reported        $(1,765,000)     $(4,199,000)     $(4,778,000)
Pro forma compensation
  expense                      (806,000)        (651,000)      (1,497,000)
                             ----------       ----------       ----------
Pro forma net loss          $(2,571,000)     $(4,850,000)     $(6,275,000)
                             ==========       ==========       ==========

Pro forma loss per share      $(0.47)          $(1.24)          $(2.07)
                               =====            =====            =====

The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts.

Stock Purchase Warrants

In connection with various debt offerings, stock placements and services
provided, the Company has issued various stock purchase warrants.  All
such warrants were issued at prices which approximated or exceeded fair
market value of the Company's common stock at the date of grant and are
exercisable at dates varying from one to five years.

Summarized information for stock purchase warrants is as follows:

                                                Number        Price
                                             of Warrants    Per Share
                                             -----------   -----------

Warrants outstanding at December 31, 1998      868,929   $12.50 $22.50
  Issued                                       596,433        3.50
  Exercised                                 (1,151,336)    2.50   3.50
  Expired                                      (15,885)    3.50  22.50
  Ratchet Adjustment                         1,840,372     2.50   3.50
                                             ---------

Warrants outstanding at December 31, 1999    2,138,513    $2.50 $12.50
  Issued                                             -         -
  Exercised                                   (877,954)    1.69- 3.50
  Expired                                     (311,464)       3.50
  Ratchet adjustment                           318,400        2.50
                                             ---------
Warrants outstanding at December 31, 2000    1,267,495    $2.50-$12.50
                                             =========

On February 28, 2001 an additional 734,606 warrants are scheduled to
expire.

Common Stock

During the year ended December 31, 1998, the Company issued 50,525 shares,
with 32,000 being the result of warrant exercises, 17,850 being from the
exercise of options and 675 being for services.  The Company realized net
proceeds of $484,000 from these transactions.

During the year ended December 31, 1999, the Company issued 1,802,586
shares, with 1,151,336 being the result of warrant exercises, 38,500 to
certain employees in exchange for payroll obligations and 612,336 being
the result of debt conversions.

During the year ended December 31, 2000, the Company issued 1,721,616
shares, with 877,954 being the result of warrant exercises and 843,662
being the result of debt conversion.

NOTE K - EMPLOYEE BENEFIT PLANS

Effective January 1, 1990, the Company established a contributory profit
sharing and thrift plan for all salaried employees.  Discretionary
matching contributions are made by the Company based upon participant
contributions, within limits provided for in the plan.  No contributions
were made in the years ended December 31, 2000, 1999 and 1998.

Additionally, the Company participates in several multi-employer plans,
which provide defined benefits to union employees of its participating
companies.  The Company makes contributions determined in accordance with
the provisions of negotiated labor contracts. The contributions were
$372,606, $334,670 and $222,443 for the years ended December 31, 2000,
1999 and 1998, respectively.

NOTE L - SIGNIFICANT CUSTOMERS

Sales for the year ended December 31, 2000 to Curtom-Metalclad were
approximately $8,470,000, primarily representing work performed at
Southern California Edison ("SCE") plants under the strategic alliance
program.  The Company had trade accounts receivable of $2,294,000 from
Curtom-Metalclad/SCE as of December 31, 2000.  Additionally, the Company
had sales of $1,049,000 and $2,323,000 to Equilon and ARCO, respectively,
during 2000.  Accounts receivable from these two customers were $84,000
and $312,000, respectively, as of December 31, 2000.  Concentration of the
Company's receivables in a few customers increase the credit risk exposure
of the Company to upsets in the customers' businesses.  Given the
Company's client base, the energy market problems in California could
adversely affect the Company's ability to collect the receivable from one
of its major clients, should they experience financial problems.

Sales for the year ended December 31, 1999 to Curtom-Metalclad were
approximately $4,287,000 representing work at SCE plants.  Additionally,
the Company had sales of $3,093,000 to ARCO and $2,930,000 to Equilon. As
of December 31, 1999 the Company had accounts receivables of $609,000 from
Curtom-Metalclad, $124,000 from ARCO and $78,000 from Equilon.

Sales for the year ended December 31, 1998 to Curtom-Metalclad were
approximately $3,136,000 representing work performed at SCE plants under
the strategic alliance program.  Additionally, the Company had sales of
$3,776,000 to ARCO and $1,357,000 to Equilon (formerly Texaco).  As of
December 31, 1998, the Company had accounts receivable from Curtom-Metalclad
of $150,000, ARCO of $110,000, Edison of $177,000 and Equilon of $118,000.
Concentration of the Company's receivables in a few customers increase the
credit risk exposure of the Company to upsets in the customers' businesses.

NOTE M - COMMITMENTS AND CONTINGENCIES

Employment Agreements

The Company has employment agreements with its executive officers.  These
agreements continue until terminated by the executive or the Company and
provide for minimum salary levels, as adjusted for cost of living changes.
These agreements include incentive bonuses based upon specified management
goals, and a covenant against competition with the Company extending for a
period of time after termination.

Collective Bargaining Agreements

Approximately 89% of the Company's employees are covered under collective
bargaining arrangements.  Certain of these agreements expire in October
and December 2001.  The Company anticipates a timely renewal of these
agreements.

Leases

The Company leases its facilities under non-cancelable operating lease
agreements which expire at various dates through 2002.  Total rent expense
under operating leases was $248,677, $209,042 and $178,245 for the years
ended December 31, 2000, 1999 and 1998, respectively.  Future minimum
non-cancelable lease commitments are as follows:

               Year ending December 31,

                        2001              $262,265
                        2002               123,376
                        2003                     -
                                           -------
                                          $385,641
                                           =======
Litigation

In the ordinary course of its insulation business, certain parties have
filed a substantial number of claims against the Company for actual and
punitive damages.  Presently, the number of these claims exceed 300.  The
potential aggregate value of the claims is in the range of $1,000,000 to
$5,500,000.  The Company continues to have adequate insurance coverage
with financially sound carriers responding to these claims and does not
foresee any significant financial exposure resulting from these claims.
Throughout its history, the Company has maintained insurance policies that
typically respond to these claims.  Based on the advice of counsel, it is
management's opinion that these actions, individually and in the
aggregate, will not have a significant adverse impact on the Company's
financial position or results of operations.

On January 2, 1997, the Company filed a claim against the United Mexican
States under the provisions of the North American Free Trade Agreement.
The Company alleged that it was not being allowed to operate its legally
authorized and completed landfill facility in San Luis Potosi, Mexico.

On August 30, 2000, the tribunal issued its decision.  It ruled that
Mexico had indirectly expropriated the Company's investment in its
completed landfill facility.  The tribunal awarded $16,685,000 with
interest, accruing at 6% per annum compounded monthly, beginning October
15, 2000.

On October 27, 2000, the United Mexican States filed a petition with the
Supreme Court of British Columbia, Canada, seeking to have the award set
aside by the court under the Commercial Arbitration Act of Canada.  On
November 14, 2000, the filing was amended to also seek a setting aside of
the award under the International Commercial Arbitration Act.  A hearing
on the case was completed on March 2, 2001 and a decision is not
anticipated until May 2001.  However, regardless of the decision rendered, the
Company anticipates and appeal to the British Columbia Court of Appeals.
There is no definitive timetable for completion of this process.  Estimates
range from several months to over a year.  Interest continues to accrue
until paid.  (See Note O.)

If the favorable decision were upheld by the Canadian courts, all damages
awarded to the Company would be due and payable by the United Mexican
States as an obligation of the government of Mexico.  Both NAFTA and other
international treaties provide mechanisms for ensuring collection and it
is anticipated that all damages could be collected or collateralized;
however, there can be no assurance that the Company will not encounter
collection difficulties or delays.

NOTE N - RELATED PARTY TRANSACTIONS

Receivables from related parties are comprised of the following :

                                              December 31,
                                        --------------------------
                                            2000          1999
                                        ------------  ------------
Loans to executive officers, directors
  and employees                         $145,814       $101,444
Other                                     50,000         46,841
                                         -------        -------
                                        $195,814       $148,285
                                         =======        =======

Loans to executive officers, directors and employees are represented by
promissory notes, due on demand and bear interest at 6%.

An officer and director of the Company is a partner in a law firm which
has received payments for legal fees of approximately $36,000, $37,000 and
$0 for the years ended December 31, 2000, 1999 and 1998, respectively.  As
of December 31, 2000, fees totaling $167,000 remain unpaid.

During fiscal 1995 the Company loaned $740,000 to two officers of the
Company.  In February 1996, the officers each repaid $150,000 to the
Company.  In March 1996, the notes were amended to modify the loan
principal and to adjust the interest rates, effective March 1, to a
variable rate based upon the Company's quarterly investment rate.  The
repayment of these notes has been extended until completion of the NAFTA
proceedings.

In November, 2000, the Board of Directors approved advances against legal
costs on behalf of Mr. Kesler, Metalclad CEO, in his pursuit of certain
personal legal matters related to his position in the Company.  As of
December 31, 2000, Mr. Kesler owes the Company $57,000 related to these
advances, which may be recoverable from pending litigation.

NOTE O - SUBSEQUENT EVENT (Unaudited)

On May 2, 2001, the court substantially upheld the position of the
Company.  On May 31, 2001, Mexico filed papers with the British Columbia
Court of Appeals to try to overturn the ruling of the Supreme Court
of British Columbia.  The Company intends to exercise its right of
cross appeal and to pursue its right of remitter to the ICSID tribunal,
which right was granted by the Supreme Court of British Columbia.
In its remitter, the Company will seek restoration of certain interest
not allowed by the Supreme Court of British Columbia as well as
its costs associated with this procedure.  There is no definitive
timetable for completion of this process.  Estimates range from
several months to over a year.  Interest continues to accrue until
paid.  If the favorable decision were upheld by the Canadian
courts, all damages awarded to the Company would be due and
payable by the United Mexican States as an obligation of the
government of Mexico.  Both NAFTA and other international
treaties provide mechanisms for ensuring collection and it is
anticipated that all damages could be collected or collateralized;
however, there can be no assurance that the Company will not
encounter collection difficulties or delays.

               SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE><S>                               <C>

                                                                      Additions
                                          Balance at   Charged to     Charged to                Balance at
                                          Beginning    Costs and         Other                    End of
         Description                      of Period     Expenses       Accounts   Deductions      Period
---------------------------------         ---------    ----------     ----------  ----------    ----------

Year ended December 31, 2000
----------------------------
Deducted from asset accounts:
  Allowance for doubtful accounts         $20,000        $30,000              -           -       $50,000
                                           ======                                                  ======
  Allowance for excess and
   obsolete inventory                     $ 5,000              -              -           -       $ 5,000
                                           ======                                                  ======


Year ended December 31, 1999
----------------------------
Deducted from asset accounts:
  Allowance for doubtful accounts         $20,000              -               -                  $20,000
                                           ======                                                  ======
  Allowance for excess and
   obsolete inventory                     $ 5,000              -               -                  $ 5,000
                                           ======                                                  ======


Year ended December 31, 1997
----------------------------
Deducted from asset accounts :
  Allowance for doubtful accounts         $28,907              -               -    $ 8,907       $20,000
                                           ======                                                  ======
  Allowance for excess and
   obsolete inventory                     $16,009              -               -     11,009       $ 5,000
                                           ======                                                  ======
</TABLE>