SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                   FORM 10-KSB

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

         For the fiscal year ended September 30, 1998 or

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

         For the transition period from ________ to __________

                        COMMISSION FILE NUMBER: 000-24877

          Registrant: Environmental Products & Technologies Corporation

             State or other Jurisdiction of Incorporation: Delaware

                  I.R.S. Employer Identification No. 77-0096608

                    Address: 5380 North Sterling Center Drive

                           Westlake Village, CA 91361

                  REGISTRANT'S TELEPHONE NUMBER: (818) 865-2205


         SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACCT: NONE.

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                     COMMON STOCK, PAR VALUE $0.01 PER SHARE

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

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

         The  issuer's  revenues for the fiscal year ending  September  30, 1998
were approximately $ 0

         As of December 3, 1999, the aggregate  market value of the voting stock
held by  non-affiliates  of the issuer was approximately $ 13,618,209 based upon
the average closing bid and asked price of such stock on such date.

                       DOCUMENTS INCORPORATED BY REFERENCE

         None.

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                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                                   FORM 10-KSB
                  For the Fiscal Year Ended September 30, 1999



                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------

PART I.

Item  1.    Description of Business.......................................  3
Item  2.    Description of Property....................................... 18
Item  3.    Legal Proceedings............................................. 19
Item  4.    Submission of Matters to a Vote of Security Holders........... 19

PART II.

Item  5.    Market for Common Stock and Related Stockholder Matters....... 19
Item  6.    Management's Discussion and Analysis or Plan of Operation..... 19
Item  7.    Financial Statements.......................................F1-F29
Item  8.    Changes in and Disagreements with Accountants on
                     Accounting and Financial Disclosure.................. 23

PART III.

Item  9.    Directors, Executive Officers, Promoters and Control Persons;  24
                     Compliance with Section 16(a) of the Exchange Act....
Item 10.             Executive Compensation............................... 25
Item 11.             Security Ownership of Certain Beneficial Owners and
                     Management........................................... 26
Item 12.             Certain Relationships and Related Transactions....... 26


51601:029
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                                     PART I.

Item 1.  DESCIPTION OF BUSINESS

GENERAL

         Environmental  Products  and  Technologies  Corporation  ("EPTC" or the
"Company")  is  a  development-stage  company  that  was  established  to  solve
environmental  problems  regarding  the safe  disposal of waste created by large
livestock, hog, poultry and other similar operations.  The Company has developed
a  system  that  converts  animal  wastes  into   commercial   quantities  of  a
pathogen-free, nutrient- rich, soil-building medium.

         Over the past few years, there has been an increasing concern regarding
the potential for animal waste  pollution from  intensive  livestock and poultry
operations.  The concentration of animal waste from larger and larger operations
have lead to more  complaints  about odor,  greater  challenges for animal waste
management and a growing public opinion that more environmental  protections are
needed.

         Nationwide,  130 times more animal waste is produced than human waste -
5 tons for every  United  States  citizen  -- with some  livestock  and  poultry
operations  producing as much waste as a town or even a city! As animals  become
increasingly  concentrated  in  certain  regions  of the  country  and on larger
operations,  there is not always  enough fallow land to use all of the manure as
fertilizer.  These  increasing  concentrations  of manure  mean that the risk of
water  pollution from waste spills,  runoff from fields and leakage from storage
facilities is also increasing.

         To address these  problems the Company has  developed  its  Closed-Loop
Waste Management  System.  This system is comprised of four basic components:  a
waste  separator,  an anaerobic  digester,  a  bio-reactor  and a  co-generation
system.

         EPTC  markets,  sells,  installs  and  services a  proprietary  line of
custom-configured Closed-Loop Waste Management Systems for the processing of wet
organic waste products.  Rather than reduce the amount of material  destined for
disposal,  EPTC's  bio-conversion  process is designed to recapture and redeploy
the value contained in the waste. This completely  changes the approach to waste
management,  and defines a goal of conversion of agricultural hazardous waste to
a valuable  agricultural  resource  in as short a time as  possible  through the
production of a safe and stable end product having significant market value.

         EPTC's  business  is  focused  on three  complementary  areas;  namely,
agricultural hazardous waste management,  the production of soil amendments as a
by-product of the waste management process, and power cogeneration.

         EPTC has  identified  large  dairies  (1,000 or more head) as a primary
target for its products  and services  based upon the  potential  for  immediate
environmental impact and marketing economies of scale. EPTC intends to market an
extent-pathogen-free,  weed seed free, pasteurized, nutrient-rich by- product of
the waste  management  process.  Biolite(TM) is to be sold in bulk as an organic
soil amendment,  potting soil or  agricultural  soil where the grower desires to
restore  organic  matter to cropland.  Additionally,  EPTC's  Closed-loop  Waste
Management  System is designed to utilize  methane from the wastestream to power
an engine in a cogeneration system. Power produced from the cogeneration will be
supplied to the producer of the wastestream,  with excess power sold back to the
power company.

BACKGROUND

         In November  1994,  the Company  became  involved in odor  control from
animal factories  producing food for human  consumption.  In the hog industry in
North  Carolina,  certain farmers were involved in court  proceedings  over odor
control   threatening   closure  of  their  farms.  The  Company   succeeded  in
demonstrating  to the court,  the  plaintiffs,  and the  defendants in the court
actions, that an odor solution existed. The Company came to conclude, however,

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that farmers that were not engaged in legal  proceedings,  would not spend money
to solve their odor problems.

         The Company  then  realized  that the real problem was bigger than just
odor control.  It was the animal waste. The Company set its sights on the bigger
problem.  The resulting  focus led to the  development of the Company's  current
products and methods of waste management.

         Currently,  the Company has  developed a Closed-Loop  Waste  Management
System that addresses all areas of waste  management in a wide variety of animal
and vegetable food  production  waste  problems,  including  odor control.  This
system is  comprised of four parts,  starting  with a Separator  that  separates
solids from  liquids.  Solids are processed in an Aerobic  Bioreactor  tank that
eliminates extent pathogens and converts the waste to a non-toxic, nutrient-rich
soil  amendment.  Liquids are  processed in an Anaerobic  Digester,  a series of
tanks where  methane is drawn off and the liquids  filtered of heavy  metals and
further  processed for reuse as wash water. In the fourth part, the Cogeneration
System,  methane  combines with diesel fuel in a dual-fuel  engine that drives a
generator to provide electrical power to the facilities.

         The first full system  installation is at the Utah State  University in
Logan, to provide quantitative and qualitative data to support sales and further
research.

TYPICAL ANIMAL WASTE MANAGEMENT PRACTICES

         Animal  waste  mainly  consists  of manure and urine  from cows,  hogs,
chickens,  turkeys,  mink and other  animals  that are  raised for food or other
purposes.  These waste materials are potential  sources of crop  nutrients,  but
also can pose environmental threats.

         The  composition of animal waste depends on both the kind of animal and
the way the waste is handled. For example,  poultry operations typically produce
dry litter with about 15% to 25% moisture content,  that may be mixed with straw
or another dry material for easier  handling.  The removed  litter is stacked or
stored in metal or wooden structures or on the ground on a temporary basis.

         Hogs and cattle  generate a manure  that is more  liquid and  typically
water is used to flush the manure out of the barns and into storage  facilities.
The resulting  "slurry" is up to 97% liquid, and most commonly stored in earthen
lagoons.  An  alternative  storage  method now being  adopted more widely is the
"slurry  tank,"  which  offers a  greater  level  of  structural  stability  and
environmental protection.

         In the lagoons or tanks, many of the solids settle into a sludge at the
bottom.  A farmer who utilizes the animal waste for  nutrients  pumps the liquid
out for  nutrients or  irrigation  and may agitate the sludge at pumping time to
capture the nutrients that otherwise would remain behind.

         The problem with these methods is that as the number of animals  raised
has  increased  and the  amount  of land  utilized  has  decreased,  there is an
insufficient amount of fallow land available for the farmer to utilize the waste
produced by the  animals.  Accordingly,  the animal  waste is building up on the
farm  causing  various  health  hazards such as run-off and  leaching.  Further,
manure cannot be spread on land when a crop is growing.

THE ENVIRONMENTAL PRODUCTS & TECHNOLOGIES SOLUTION

         The Company has  developed a  Closed-Loop  Waste  Management  System to
provide for the safe disposal of waste created by large livestock,  poultry, hog
and other similar operations. In addition, the Company's waste management system
converts  animal  wastes  into  commercial   quantities  of  a  pathogen-  free,
nutrient-rich,  soil-building  medium.  Further, if the Company's  co-generation
product is utilized, the Company is able to take the methane that is produced by
the Company's system and use it for producing energy for the farmer's  property.
The Company's Closed-Loop Waste Management System consists of the following:

         The Waste Separator.  The purpose of the waste separator is to separate
the  liquids  from the solids  which then takes them up through a set of rollers


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and  basically  squeezes the moisture out of the solids.  The moisture then goes
through a belt and goes into a large tank at the bottom  where the  moisture  is
then pumped into the anaerobic digester. The solids go into the bio-reactor.

         The Anaerobic Digester and Cogeneration. The anaerobic digester is made
out of  fiberglass  and,  in its typical  configuration,  is about eight feet in
diameter  and 42 feet  long for a tank  that can hold up to  30,000  gallons  of
effluent.  In that tank, the Company has isolated a set of  proprietary  enzymes
which  excite off the methane.  The methane is then  captured and pulled off the
tank and used to run an engine  which is able to produce  electricity  which the
farmer can use in his or her operations.

         The anaerobic digester handles all of the fluids.  From that methane is
excited off which runs the  co-generation  system.  It goes  through a series of
three tanks and in the last tank the liquid is processed. Finally, the liquid is
put through a filter  system  from which  non-potable,  re-useable,  re-cyclable
water is available  for use for  irrigation  and/or for washing and flushing and
using  again to clean out the  barns and wash the  animals  and  basically  used
without having to repump or use fresh water.

         In the first  tank,  any solids  that are not  consumed  by the enzymes
basically  settle to the bottom of the tank. On a regular  interval,  the solids
that have settled at the bottom of the tank are pumped into the bio-reactor.

         In the second set of tanks,  all of the solids are settled  out. In the
third tank, the clarifier, the water is filtered and then reused.

         The Enzymes.  The Company  employs  enzymes for the purpose of exciting
the methane from the animal  waste in the  anaerobic  digester.  The Company has
tested this methane  producing  technology  with its  enzymes.  According to the
Company,  the enzymes work best in  temperatures  ranging from 90 degrees to 105
degrees F.

         The Technology.  The Company relies,  among other things, on technology
that was  designed by Lifeline  Enterprises  L.L.C.,  a Utah  limited  liability
company  ("Lifeline").  Pursuant to a restated letter of understanding dated May
18,  1998,  Lifeline  agreed to transfer  to the  Company all rights,  title and
interest in and to the anaerobic  digester,  the bio-reactor and the biologicals
used therewith.  Patents are currently pending on the  co-generation  technology
and the  bio-reactor.  There can be no assurance that a patent will be issued on
the co-generation technology, that such product does not or will not infringe on
the intellectual property rights of others or that if a patent is issued that it
will not be invalidated  later. In consideration for this transfer,  the Company
issued  100,000  shares of Common  Stock to Lifeline  and has agreed to issue an
additional  50,000 shares of Common Stock upon  assignment to the Company of all
patents to the bio-reactor.

         The Bio-reactor.  Finally, the bio-reactor takes all of the solids. The
bio-reactor  is basically a steel vessel that will be sized to the  requirements
of  the  particular   application.   The  tank  is  rotated  and  the  Company's
biologicals,  including enzymes, are introduced into the tank through a computer
controlled  process.  The  purpose  of this  process  is to  compost  the  solid
materials and at the end of the process,  the Company is left with useable soil,
which it intends to use for compost. The Company then intends to add biologicals
and fungi  based upon  established  formulae  for various  groups of  vegetable,
fruits,  and vines and sell the compost to end users. By way of comparison,  the
process that the Company is using is, basically,  an acceleration of the process
utilized by nature. For example,  windrow composting  generally takes between 90
to 100 days,  whereas  the  Company  produces a stable  product in less than one
week.

THE COMPANY'S STRATEGY

         EPTC  began  marketing  its  Closed-Loop  Waste  Management  Systems in
October  1999.  These efforts are  currently  focused on large  dairies  milking
approximately one thousand cows. These large dairies are concentrated in the

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western  states  of  Arizona,   California,   Idaho,  New  Mexico,  Oregon,  and
Washington.  Wisconsin,  based on the large  number of  dairies  located  there,
represents an additional  area of focus.  EPTC will sell directly to the largest
customers  with its own trained and managed  sales  engineers.  Sales  engineers
and/or regional managers have been selected for Central and Southern California,
Idaho, Oregon,  Washington and Wisconsin.  Additionally,  a regional manager has
been selected to address the waste  management  needs for swine farmers in North
Carolina and Utah.

         EPTC  is  committed   to  "Turning   Around   Impacted   Areas  of  Our
Environment."  The  focus is on  addressing  the  industrial  processing  of wet
organic wastes. The largest non-compliant  market, as previously  described,  is
comprised  of Animal  Feeding  Operations  (AFOs).  The Company has designed and
developed its Closed-Loop  Waste Management  System to specifically  address the
problems created by raising livestock and poultry in an  industrialized  manner.
EPTC has selected the following  states  because of the  concentration  of large
dairies: Arizona,  California,  Idaho, Illinois, Iowa, Missouri, New Mexico, New
York,  North  Carolina,  Oregon,  Pennsylvania,  Texas,  Utah,  Washington,  and
Wisconsin.  These 15 states have more than 66% of all dairy cows and provide 69%
of the milk produced. Wisconsin has the largest number of dairies and California
produces the most milk.  Iowa,  North  Carolina and Utah are major  producers of
pork.

         The United States  Environmental  Protection Agency (EPA) administers a
fund called the Clean  Water  State  Revolving  Fund  (SRF),  a program  used to
provide low-interest loans for important water quality projects.  Managed by the
individual   states,   the  SRF  program  in  each  state  can  fund   nonpoint-
source-eligible implementation projects such as animal waste storage facilities.
According to "The Unified Strategy for Animal Feeding Operations" (September 11,
1998; page 27), the SRF program is funding  approximately $3 billion in projects
each year, and since inception has funded over $650 million in the specific area
of   nonpoint-source-eligible   projects  to  clean  up  pollution   related  to
contaminated runoff.

         Animal  Feeding  Operations  (AFOs)  and  Concentrated  Animal  Feeding
Operations (CAFOs) are required to undergo and incur the expense of a permitting
process to ensure that certain  conditions  are met.  Also,  there are state and
local  regulations  that may have  additional  requirements.  The United  States
Department of Agriculture (USDA) Natural Resources  Conservation  Service (NRCS)
estimates that at least 300,000 AFOs need to  voluntarily  comply by preparing a
Comprehensive  Nutrient  Management  Plan (CNMP) and a  site-specific  Pollution
Prevention Plan (PPP). The CNMP must be site-specific  and formulated to address
the goals and needs of the individual operator, as well as the conditions on the
farm.

Plans will be subject to periodic review.

         Elements of the CNMP include the following: aerial photos or plan maps,
planned  conservation  practices and schedules for  implementation,  engineering
designs for any constructed  facilities for storing or handling manure,  records
of all soil and nutrient tests, appropriate rates of land application to prevent
the application of nutrients at rates that will exceed the capacity of the soil,
planned crops to assimilate and prevent pollution,  and records of practices and
actions.

         All of these  permits  have one  purpose  in  mind:  to keep  America's
waterways,   watersheds   and  wetlands   free  of  the  effects  of  toxic  and
nutrient-overloaded  wastestreams.  The  goal is to have  the  farmer  be a good
steward of the land he controls,  not to contaminate the water we drink, the air
we breathe, or the food we eat.

         EPTC's  Closed-Loop Waste Management System can reduce or eliminate the
costs and time associated with compliance with new regulations. "Best Management
Practices"  would require that barns would be scraped or flushed  frequently and
that the EPTC system would be operated on a continuous basis, as designed.

         EPTC has  established  a website:  I-C-A-N.COM  (Integrated  Compliance
Assistance Network) as a single source for information, resources, education and


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products  concerning  the  issues  of  compliance;   federal,  state  and  local
permitting   requirements,   sources  of  financial   assistance,   current  and
alternative practices, and step-by-step guidance.

         The ICAN  website  will  encourage  repeated  visits and assist EPTC in
generate  sales leads through  consistent  tie-ins to EPTC's main website.  EPTC
plans to add to the staff trained  engineers to assist potential  customers with
the  preparation  and  processing  of  applications  to obtain SRF  financing to
purchase and install the company's  solution -- the Closed-Loop Waste Management
System.

         Intensive livestock  production practices have created a manure storage
and  disposal  dilemma.  The most  pressing  problems  are  currently in the hog
industry.  Every large  hog-producing  region of North America currently has its
own stories to tell of angry neighbors and polluted waterways.  Perhaps the most
serious of these  situations  exists in North  Carolina,  which has seen its hog
production  increase 122 percent  over the past 5 years.  In 1996 a total of 103
million  hogs were  marketed in the United  States -- a total  waste  production
equivalent of 1 billion people.

         EPTC's  initial  target  markets  will be dairies and  large-scale  hog
production facilities.  Processed animal manure and slaughterhouse waste will be
converted to environmentally-friendly soil amendments.

         There are a number of equally-large markets available:  food processing
plants, bakery waste, fruit and vegetable wastes, dairy products including whey,
brewery and winery  wastes,  supermarket  wastes,  and  restaurant  and catering
wastes.  Disposal  companies are in a continual search for acceptable  dumpsites
for organic  materials.  EPTC  supports  100%  diversion  of wet  organics  from
landfills.

         The  handling  and  disposal  of  wet  organic  wastes  has  created  a
tremendous business opportunity worldwide.  EPTC will focus its sales efforts on
the creation of  environmentally-friendly  and  cost-effective  alternatives  to
traditional disposal methods.

         World  population  is  expected to grow from 5.5 billion now to about 8
billion in the year  2020.  By the year  2000,  approximately  44 pevcent of the
world's  population is expected to$reside mn urban areas, $up from 30 percent in
1980. These trends will have immense consequences on the volume$and  comtosition
of global food demand.  Specialists  of$the  International Food Policy$ Researgh
Instmtute  estimates that tle current demand of 1.7  billion$tons of cereals and
206  million  tons of meat,  may rmse by tle year  2020 to 2.5  billion  tons of
cereal and al leest 275 to 310 mmllion tons of meat.

         According to a 5995 General Accounting Office report, tlere are 450,000
farms with confined (not pasture)  feedlots out of 640,000 farms with livestock.
EPTC is using the  recently  released  "Unified  National  Strategy  for  Animal
Feeding  Operations,"  a document  prepared  and  jointly  released  by the USDA
(United States Department of Agriculture) and the EPA (Environmental  Protection
Agency),  as a guide to develop its marketing  strategy for the next five years.
The regulations contained in this Strategy will become effective January 1999.

         These regulations will provide the minimum guidelines for permitting of
farms and feedlots.  The Strategy will focus technical and financial  assistance
to support Animal Feeding Operations (AFOs) in meeting the national  performance
expectations  established  in this  Strategy.  While  there are other  potential
environmental impact associated with AFOs (e.g. odor, habitat loss, ground water
depletion), this Strategy focuses on addressing surface and ground water quality
problems.

         USDA and EPA believe that approximately 6,600 livestock facilities have
over 1,000 "animal units." Based on size alone,  these facilities are considered
to be Concentrated Animal Feeding Operations (CAFOs) and, therefore,  are "point
sources"  subject to National  Pollution  Discharge  Elimination  System (NPDES)
permitting  requirements.  The EPA believes that virtually all CAFOs are covered
by the NPDES permit  program and are a priority for permit  issuance.  Less than
2,000 CAFOs,  according to EPA records, have been issued NPDES permits. A recent
U.S.  Senate  Committee  report  says  CAFO's  contribute  significantly  to  an
estimated 1.37 billion tons of manure produced annually.

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         In addition,  the NPDES permit issuing agency may, after  conducting an
on-site inspection, designate any AFO of any size as a CAFO based on the finding
that the facility "is a  significant  contributor  of pollution to the waters of
the United States." The EPA estimates the number of AFOs that will be subject to
the permit program, as a result of identified watershed impairment,  could be up
to 5,000  sites.  The EPA and the USDA  expect the total  number of CAFOs in the
situation described above will be approximately 15,000.

         In addition  to systems  sales,  there is a growing  market for quality
composts  and soils.  Battelle  Institute in a research  study  conducted of the
Solid  Waste  Composting  Council,  calculated  that the demand for  compost and
compost-like  products,  including  products  ranging  from manure to  composted
wastes to manufactured  potting soils and soil  enhancers,  in selected areas of
the U.S.  alone,  is  projected  to be in excess of one billion  cubic yards per
year.

         This demand,  categorized  in nine  application  segments--landscapers,
delivered topsoil, bagged retail, nurseries,  landfill final cover, surface mine
reclamation,  sod  production,   silvaculture,  and  agriculture--  far  exceeds
projected  supply.  The initial target market for soils,  to be sold in bulk, is
large  agricultural  farmers  desiring  to add  organic  matter  back into their
croplands.

SUPPLIERS

         It is the Company's  intention not to manufacture on its own any of the
components necessary to produce its waste management system. The Company intends
to utilize third party  suppliers to provide the products  necessary to complete
its waste  management  systems.  While the  Company  believes  that  there are a
variety of suppliers  for most of the  components  that will  comprise its waste
management  system,  there are certain components of the waste management system
that will only be  available  from one or possibly  two  suppliers.  The Company
believes  that it will be able to purchase the products  that it needs from each
of these companies. There can be no assurance, however, that the Company will be
able to purchase the components from the above-mentioned  companies, or if it is
able to purchase  such  components,  that it will be able to do so on terms that
are satisfactory to the Company.

ASSEMBLY

         The Company currently  contemplates that once it has proven the utility
of its waste management  system that it will contract with the various suppliers
of the  constituent  components of the waste  management  system to deliver them
(i.e.,  dropship)  to sites  specified  by the  Company.  The Company  will then
provide for the assembly of the components into the waste management  system for
use at the specified  location.  There can be no assurance that the Company will
be successful in coordinating  the various  deliveries of the component parts of
its waste  management  system,  or that it will be successful in assembling  the
component parts in the field, as currently contemplated.

COMPETITION

         The Company will directly and indirectly compete with other businesses,
including businesses in the solid waste collection and disposal business,

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including Bion  Environmental  Technologies,  Inc. and Thermo Tech  Technologies
Inc., both of which companies engage in organic waste conversion. In many cases,
these  potential  competitors  are larger and more firmly  established  than the
Company. In addition,  many of such potential competitors have greater marketing
and  development  budgets  and  greater  capital  resources  than  the  Company.
Accordingly,  there can be no assurance that the Company will be able to achieve
and maintain a competitive position in the businesses in which it will compete.

INTELLECTUAL PROPERTY

         The Company's  success will depend, in part, on its ability to maintain
protection for its products and processes under United States and foreign patent
laws,  to preserve  its trade  secrets  and to operate  without  infringing  the
proprietary  rights of third  parties.  The Company does not possess any patents
but does have  applications  pending.  There can be no  assurance  that any such
patent applications will result in issued patents,  that any issued patents will
afford  adequate  protection to the Company or not be  challenged,  invalidated,
infringed or circumvented, or that any rights thereunder will afford competitive
advantages to the Company.  Furthermore,  there can be no assurance  that others
have not independently  developed,  or will not independently  develop,  similar
products and technologies or otherwise  duplicate any of the Company's  products
and technologies.

         There can be no assurance that the validity of any patent issued to the
Company  or any  licensor  of  technology  to the  Company  would be  upheld  if
challenged by others in litigation  or that the Company's  activities  would not
infringe patents owned by others.  The Company could incur  substantial costs in
defending  itself in suits brought  against it, or in suits in which the Company
seeks to enforce its patent and/or  license rights  against  others.  Should the
Company's  products or technologies be found to infringe patents issued to third
parties, the Company would be required to cease the manufacture, use and sale of
the  Company's  products  and the Company  could be required to pay  substantial
damages. In addition,  the Company may be required to obtain licenses to patents
or other proprietary  rights of third parties in connection with the development
and use of its products  and  technologies.  No assurance  can be given that any
such  licenses  required  would be made  available  on terms  acceptable  to the
Company, or at all.

         The Company  also relies on trade  secrets  and  proprietary  know-how,
which it seeks to  protect,  in part,  by  confidentiality  agreements  with its
employees, consultants, advisors and others. There can be no assurance that such
parties will maintain the  confidentiality  of such trade secrets or proprietary
information, or that the trade secrets or proprietary information of the Company
will not otherwise become known or be independently  developed by competitors in
a manner that would have a material  adverse  effect on the Company's  business,
financial condition and results of operations.

ENVIRONMENTAL MATTERS

         Federal,  state and local  environmental  legislation  and  regulations
mandate  stringent  waste  management  and operations  practices,  which require
substantial  capital  expenditures  and  often  impose  strict  liabilities  for
non-compliance. Environmental laws and regulations are, and will continue to be,
a principal  factor  affecting  demand for the  technology  and  services  being
developed  or offered by the Company.  The level of  enforcement  activities  by
federal,  state and local  environmental  protection and related  agencies,  and
changes in regulations  and waste  generator  compliance  activities,  will also
affect  demand.  To the extent that the burdens of complying  with such laws and
regulations may be eased as a result of, among other things,  political factors,
or that producers of industrialized  farm waste find alternative means to comply
with applicable regulatory  requirements,  demand for the Company's products and
services could be adversely affected, which could have a material adverse effect
on the Company's business, financial condition and results of operations. Any

                                        9

<PAGE>

changes in these regulations which increase compliance standards may require the
Company to change or improve its operating procedures. To the extent the Company
conducts its business overseas,  international environmental regulations will be
applicable.  Such  regulations  vary by country and are subject to changes which
may adversely affect the Company's operations.

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

         The Company's  business exposes it to the risk that harmful  substances
may be released or escape into the environment  from its processes or equipment,
resulting in potential  liability for the clean-up or remediation of the release
and/or  potential  personal injury  associated  with the release.  Liability for
investigation  and/or  clean-up  and  corrective  action  costs exists under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended  ("CERCLA"),  the Resource  Conservation  and  Recovery Act of 1976,  as
amended ("RCRA"),  and corresponding  state laws.  Additionally,  the Company is
potentially subject to regulatory liability for the generation,  transportation,
treatment,  storage  or  disposal  of  hazardous  waste  if it  does  not act in
accordance with the requirements of federal or state hazardous waste regulations
or facility specific  regulatory  determinations,  authorizations or exemptions.
The Company is also  potentially  subject to  regulatory  liability for releases
into the air or water  under  the  Clean Air Act of 1970,  as  amended,  and the
Federal Water Pollution Control Act of 1972, as amended  (hereinafter the "Clean
Water  Act"),  and  analogous  state  laws and  regulations  and  various  other
applicable  federal or state  laws and  regulations  if it does not comply  with
those requirements.

DIATOMACEOUS EARTH

         In conjunction with its waste management efforts,  the Company has also
resolved  to  develop a  non-toxic,  environmentally  friendly  insecticide  and
application  system.  In  connection  with such  effort,  the  Company  recently
acquired  four  diatomaceous  earth  ("DE")  claims  in  Eastern  Oregon  for an
aggregate of $40,000.  Each claim is comprised of 160 acres and will provide the
Company a long-term supply of DE, which is a basic insecticide ingredient. DE is
a component of the Company's waste management  system in that it will be used to
filter out hazardous  elements in the waste stream processing.  In addition,  DE
provides water  retention and  insecticide  capability  when mixed into the soil
amendment.

         Further, the Company intends to provide insect control with application
of DE-based  insecticides.  The Company intends to seek  third-party  validation
that DE will be an effective  weapon in insect control,  though no assurance can
be  given  that DE  will  be  effective  or if  effective,  that it will be cost
effective.  It  is  the  Company's  intent  to  use  DE  as  a  replacement  for
organophosphates  and chemical  agents that are considered  harmful to humans as
well as insects.

         The Company  does not have the  expertise  or  equipment to mine the DE
from the  claims.  Accordingly,  the  Company  has held  discussions  with Terra
Minerals Corporation ("Terra") of Salt Lake City to act as its mining consultant
and  operator.  However,  the Company does not intend to develop or promote this
business for the next 12 months, instead,  focusing its efforts and resources on
the development of its Closed-Loop Waste Management Systems.

                                       10

<PAGE>

         On December  12, 1998 the Company  entered into a letter of intent with
National D.E. Systems, Inc. ("National") pursuant to which the Company agreed to
sell,  convey,  transfer  and assign its DE claims to National for 80 percent of
the issued and outstanding shares of capital stock of National.  Finalization of
this  transaction is subject to, among other things,  negotiation and completion
of definitive documentation and the completion of due diligence.

         In the year 2000,  Enviornmental  Products & Technolgy,  Inc. took back
National D.E. Systems, Inc.

PERSONNEL

         As of  September  30,  1999,  the Company  employed  eight  people on a
full-time  basis.  In  addition  the  Company  utilizes  on a regular  basis the
services of 14 consultants and part-time  employees.  The Company  believes that
its future success will depend,  in part, on its ability to continue to attract,
hire and retain  qualified  personnel.  The  competition  for such  personnel is
intense and no  assurance  can be given that the Company will be  successful  in
attracting such personnel,  particularly  considering the low unemployment  rate
currently  being  experienced  across the United  States.  None of the Company's
employees is represented by a labor union and the Company has never  experienced
a work stoppage.  The Company believes that its relations with its employees are
good.

RISK FACTORS

         In addition to the other  information  contained  in this  report,  you
should carefully consider the following risk factors in evaluating the Company.

         Accumulated Deficit; History of Operating Losses; Expectation of Future
Losses.  The Company has  experienced  significant  operating  losses  since its
inception.  At September  30, 1999,  the Company had an  accumulated  deficit of
approximately   $8,637,000.   The  Company   incurred  an   operating   loss  of
approximately  $(388,000)  for the fiscal year ended  September  30,  1997,  and
incurred an operating  loss of  approximately  $(1,409,000)  for the fiscal year
ended September 30, 1998. Such losses have resulted principally from no revenues
from  operations  and costs  associated  with the  acquisition  of the Company's
technologies and general and administrative  expenses. The Company has generated
no revenues from  operations and incurred  increased  losses to date and expects
that it will continue to incur losses until such time, if ever, as revenues from
product sales are  sufficient to fund its continuing  operations.  The Company's
profitability  will depend on its ability to commercialize  its waste management
system. There can be no assurance that the Company will ever generate sufficient
revenues to achieve profitability.  See "Management's Discussion and Analysis or
Plan of Operations."

         Development Stage Company. The Company is designated by its independent
auditors as a development  stage  company in accordance  with SFAS 7 "Accounting
and  Report  by  Development  Stage  Enterprises."   Under  this  statement,   a
development stage company is an enterprise that is devoting substantially all of
its time  to$  establmshing  a new  business  and  planned  operations  have not
commenced.  At this stage there is no assurance that the Comtany will be able to
raise  sufficient  capital  and  develop a  profitable  mavket  fov its  planned
product.

    $ Capmtal Intensive Business;  Need for Additional Financing.  The Company's
business  is capital  intensive.  Developments  in the  Company's  business  and
possmble  expension  into othev markets could  mndicate that the Compan}  should
expand$its busmness at a fastev rate tlan that$currently  planned for. Moreovev,
there  can be no  aswurance  that tle  Company  will not  encounter$  unforeween
difficulties  that  may  deplete  its  catital  vesources  more  $rapidly$  than
enticipated,  whmch would require that the Company seek additional funds$through
equity,  debt or other$external  financing.  In any event, it is likely that the
Company will attempt to raise additional  capital to meet its obligations and to
accelerate its growth.  There can be no assurance  that any  additional  capital
resources  which the  Company may need will be  available  to the Company if and
when required, or on terms that will be acceptable to the Company. If additional
financing  is  required,  or  desired,  the  Company  may be required to forgo a
substantial  interest in its future  revenues or dilute the equity  interests of
existing  stockholders,  and a change in  control  of the  Company  may  result.
Further, if the Company is unable to obtain necessary financing, it may be

                                       11

<PAGE>

required  to  significantly  curtail its  activities  or cease  operations.  See
"Management's Discussion and Analysis or Plan of Operations."

         Limited Operating History; New Business;  No Product Sales. The Company
has a limited  operating  history and has not  generated  any  revenues to date.
There can be no assurance that the Company will be able to  successfully  market
its  waste  management  system,  products  and  services.  While  attempting  to
commercialize  its products,  the Company will be subject to risks inherent in a
new  business.   Such  risks   include   unanticipated   problems   relating  to
environmental  regulatory compliance,  the competitive  environment in which the
Company operates and marketing problems,  and additional costs and expenses that
may exceed current  estimates.  There can be no assurance  that,  even after the
expenditure of substantial  funds and efforts,  the Company will ever achieve or
maintain  a  substantial  level  of  sales  of  its  products.  The  failure  to
successfully  market its  products  and  services  will have a material  adverse
effect on the Company's financial condition, business and results of operations.

         Uncertain  Market  Acceptance  of  the  Company's   Products.   Through
September 30, 1999, the Company has had no sales of its waste management system.
There can be no assurance that significant, or any, sales will occur or that the
Company's waste  management  system will obtain broad,  or even limited,  market
acceptance.  The decision by a potential customer to utilize the Company's waste
management  system is, among other  things,  technical in nature,  requiring the
customer to make an evaluation as to whether changes in its capital equipment or
operating  procedures  will be  required  in order to  realize  the  performance
benefits of the Company's  products.  There can be no assurance  that  potential
customers will choose to change their equipment or established  procedures or be
willing to incur any  necessary  costs to make such changes or that the benefits
derived from utilizing the Company's waste  management  system will outweigh the
costs incurred to make such changes.

         Further,  there can be no assurance that all customers will  experience
the  performance  and cost advantages  expected by the Company.  For example,  a
by-product of the Company's  waste  management  system is the ability to convert
the methane  by-product  into  electricity.  Such ability may be of little or no
interest to consumers at a time when electricity is relatively  inexpensive.  If
the Company is not  successful in marketing  its waste  management  system,  its
ability to generate revenues will be greatly  diminished and the Company will be
dependent  on other  future  products  and  services  that may be  developed  or
otherwise obtained by the Company.  There can be no assurance that the Company's
waste  management  system will be successfully  marketed or that future products
and services will be developed or obtained.

         Development Risks. EPTC is a development stage company. The Company has
products in various stages of  development,  and no revenue has been  recognized
from the sale of its products. The Company has developed and plans to market new
products and new  applications  of technology  and,  accordingly,  is subject to
risks  associated with such ventures.  The probability of success of the Company
must be considered in light of the expenses and delays frequently encountered in
connection with the operation of a new business and the development of practical
production techniques for new products.

         Dr. Connelly Hansen, Phd., of Utah State University, who has one of our
digesters, has tested the results and has found them to be in very good shape.

         The company has three sites where  company  digesters  have been put to
work, and all have been successful . As of this date there have been no sales.

                                       12

<PAGE>

The failure of the Company to effect prompt repairs and otherwise keep its waste
management  systems  operating  at  targeted  capacities  could  have a material
adverse effect on the business, financial condition and results of operations of
the  Company.   The  Company  may  experience   problems   associated  with  the
manufacturing,   assembling  and  engineering  of  additional  waste  management
systems,  including,  without  limitation,  cost overruns,  start-up  delays and
technical or mechanical problems.

         To date,  the  Company has engaged in only  limited  manufacturing  and
there can be no assurance that the Company's efforts to expand its manufacturing
capabilities  will not exceed  estimated costs or take longer than expected,  or
that other unanticipated problems will not arise that would materially adversely
affect the Company's  business and prospects.  See "Management's  Discussion and
Analysis or Plan of Operations" and "Business."

         Dependence on Major Subcontractors and Suppliers. The Company relies on
subcontractors  and suppliers to  manufacture,  subassemble  and perform certain
testing of all of the components of the Company's waste management  system.  The
Company  plans to outsource the  manufacture  of major  components  and complete
final  assembly  and testing of its waste  management  systems at its  customers
operations.  The  inability  to  develop  relationships  with,  or the  loss of,
subcontractors or suppliers,  or the failure of its  subcontractors or suppliers
to meet the Company's price, quality, quantity and delivery requirements,  could
require  the  Company  to reduce or  eliminate  expenditures  for  research  and
development, production or marketing of its products, or otherwise to curtail or
discontinue  its operations,  which could have a material  adverse effect on the
Company's business, financial condition and results of operations.

         Product  Warranty.  The Company intends to warrant its waste management
systems to be free of  defects in  workmanship  and  materials  for 90 days from
installation at the location of the end user. There can be no assurance that the
Company will not experience  warranty claims or parts failure rates in excess of
those which it has assumed in pricing its  products  and spare  parts.  Any such
excess  warranty  claims or spare  parts  failure  rates  could  have a material
adverse  effect on the  Company's  business,  financial  condition or results of
operations.  The  Company  currently  has no  experience  with  warranty  claims
relating to its products.

         Dependence on a Single  Product Line. The Company  anticipates  that it
will  derive  substantially  all of its revenue in the  foreseeable  future from
sales of its waste management  systems,  related consumables and spare parts. If
the  Company  is unable to  generate  sufficient  sales of its waste  management
systems due to market conditions,  manufacturing  difficulties or other reasons,
it may not be able to continue its  business.  Similarly,  if  purchasers of its
waste  management  systems were to continue  utilizing  current waste management
practices, the Company's business, results of operations and financial condition
could be materially  adversely  affected.  Dependence  on a single  product line
makes the Company  particularly  vulnerable to the  successful  introduction  of
competitive products.

         No Product Liability Insurance. The Company could be subject to product
liability claims in connection with the use of the products that it sells. There
can be no assurance that the Company would have sufficient  resources to satisfy
any liability resulting from these claims or would be able to have its customers
indemnify  or insure the Company  against  such  claims.  The  Company  does not
currently carry product  liability  insurance and there can be no assurance that
such coverage,  if  obtainable,  would be adequate in terms and scope to protect
the  Company  against  material  adverse  effects  in the event of a  successful
product  liability  claim.  Accordingly,  any product  liability  claim  brought
against the Company could, and probably would, have a material adverse effect on
the Company's business, financial condition and results of operations.

         Risks  Inherent in  International  Operations.  The Company  intends to
market its products and services internationally and plans to seek opportunities
overseas,  either independently or through joint ventures or other collaborative
arrangements  with strategic  partners.  To the extent that the Company operates
its business  overseas and/or sells its products in foreign markets,  it will be
subject  to  all  of  the  risks  inherent  in   international   operations  and
transactions,  including the burdens of complying with a wide variety of foreign
laws and regulations, exposure to fluctuations in currency exchange rates and

                                       13

<PAGE>

tariff   regulations,   potential   economic   instability  and  export  license
requirements.   In  addition,   international   environmental   regulations  and
enforcement of such regulations vary by country and are subject to changes which
may adversely affect the Company's operations.

         Competition.  The Company  will  directly and  indirectly  compete with
other  businesses,  including  businesses  in the  solid  waste  collection  and
disposal  business.  In many cases,  these potential  competitors are larger and
more firmly  established than the Company.  In addition,  many of such potential
competitors have greater  marketing and development  budgets and greater capital
resources  than the Company.  Accordingly,  there can be no  assurance  that the
Company  will be able to achieve  and  maintain a  competitive  position  in the
businesses in which it will compete.

         Dependence on Patents and Proprietary Technology. The Company's success
will depend, in part, on its ability to maintain protection for its products and
processes  under United  States and foreign  patent laws,  to preserve its trade
secrets  and to  operate  without  infringing  the  proprietary  rights of third
parties.  Currently,  a  portion  of the  Company's  technology  for  its  waste
management  system is  licensed  from  third  parties  and the  Company  has not
obtained indemnification from the licensors of such technology.  Accordingly, if
the technology licensed by such licensors to the Company infringes the rights of
third parties,  the Company could be held liable for damages to such third party
and  could  not seek  reimbursement  from the  licensor.  The  Company  does not
maintain any insurance to protect  against such  occurrence and, if such a claim
were made  against  the Company it could have a material  adverse  effect on the
Company's business,  financial condition and results of operations.  The Company
does not possess any patents but does have applications pending. There can be no
assurance that any issued patents will afford adequate protection to the Company
or not be challenged,  invalidated, infringed or circumvented or that any rights
thereunder will afford competitive advantages to the Company. Furthermore, there
can be no assurance that others have not  independently  developed,  or will not
independently develop,  similar products and technologies or otherwise duplicate
any of the Company's products and technologies.

         There can be no assurance that the validity of any patent issued to the
Company  or any  licensor  of  technology  to the  Company  would be  upheld  if
challenged by others in litigation  or that the Company's  activities  would not
infringe patents owned by others.  The Company could incur  substantial costs in
defending  itself in suits brought  against it, or in suits in which the Company
seeks to enforce its patent and/or  license rights  against  others.  Should the
Company's  products or technologies be found to infringe patents issued to third
parties, the Company would be required to cease the manufacture, use and sale of
the  Company's  products  and the Company  could be required to pay  substantial
damages. In addition,  the Company may be required to obtain licenses to patents
or other proprietary  rights of third parties in connection with the development
and use of its products  and  technologies.  No assurance  can be given that any
such  licenses  required  would be made  available  on terms  acceptable  to the
Company, or at all.

         The Company  also relies on trade  secrets  and  proprietary  know-how,
which it seeks to  protect,  in part,  by  confidentiality  agreements  with its
employees, consultants, advisors and others. There can be no assurance that such
parties will maintain the  confidentiality  of such trade secrets or proprietary
information, or that the trade secrets or proprietary information of the Company
will not otherwise become known or be independently  developed by competitors in
a manner that would have a material  adverse  effect on the Company's  business,
financial condition and results of operations.

         Dependence  on  Environmental  Regulation.  Federal,  state  and  local
environmental legislation and regulations mandate stringent waste management and
operations  practices,  which require substantial capital expenditures and often
impose strict liabilities for non-compliance. Environmental laws and regulations
are,  and will  continue  to be, a  principal  factor  affecting  demand for the
technology and services being developed or offered by the Company.  The level of
enforcement activities by federal, state and local environmental  protection and
related  agencies,  and changes in regulations  and waste  generator  compliance
activities, will also affect demand. To the extent that the burdens of complying
with such laws and  regulations may be eased as a result of, among other things,
political  factors,   or  that  producers  of  industrialized  farm  waste  find
alternative means to comply with applicable regulatory requirements,  demand for
the Company's products and services could be adversely affected, which could

                                       14

<PAGE>

have a material adverse effect on the Company's  business,  financial  condition
and results of  operations.  Any  changes in these  regulations  which  increase
compliance  standards may require the Company to change or improve its operating
procedures.   To  the  extent  the  Company  conducts  its  business   overseas,
international  environmental  regulations  will be applicable.  Such regulations
vary by  country  and are  subject  to changes  which may  adversely  affect the
Company's operations.

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

         Potential Environmental Liability. The Company's business exposes it to
the risk that harmful  substances may be released or escape into the environment
from its  processes  or  equipment,  resulting in  potential  liability  for the
clean-up  or  remediation  of  the  release  and/or  potential  personal  injury
associated  with the release.  Liability for  investigation  and/or clean-up and
corrective action costs exists under the Comprehensive  Environmental  Response,
Compensation  and  Liability Act of 1980,  as amended  ("CERCLA"),  the Resource
Conservation and Recovery Act of 1976, as amended  ("RCRA"),  and  corresponding
state laws.  Additionally,  the  Company is  potentially  subject to  regulatory
liability for the generation, transportation,  treatment, storage or disposal of
hazardous  waste  if it does not act in  accordance  with  the  requirements  of
federal or state hazardous  waste  regulations or facility  specific  regulatory
determinations,  authorizations  or exemptions.  The Company is also potentially
subject to  regulatory  liability  for releases  into the air or water under the
Clean Air Act of 1970, as amended,  and the Federal Water Pollution  Control Act
of 1972, as amended  (hereinafter  the "Clean Water Act"),  and analogous  state
laws and  regulations  and various  other  applicable  federal or state laws and
regulations if it does not comply with those requirements.

         Dependence  on Key  Management  and  Personnel.  The  Company is highly
dependent upon the efforts of its senior  management  and,  effective  April 15,
1998,  entered into a four-year  employment  agreement  with Marvin  Mears,  the
Company's  President and Chief Executive  officer.  The Company does not possess
any key-man  life  insurance  on Mr. Mears but intends to apply for a $1 million
key-man life insurance policy on him. No assurance can be given that the Company
will be able to obtain such a policy or, if obtainable, that it will be on terms
favorable  to the  Company.  The  Company  is  also  dependent  upon  its  other
management  personnel,  as well as certain scientific  advisors and consultants.
The  loss of the  services  of one or more of  these  individuals  could  have a
material  adverse  effect upon the Company.  The Company's  future  success will
depend in large part upon its  ability to attract and retain  additional  highly
skilled  scientific,  managerial,  manufacturing  and marketing  personnel.  The
Company  faces  competition  for hiring  such  personnel  from other  companies,
research and academic institutions, government agencies and other organizations.
There can be no assurance  that the Company will  continue to be  successful  in
attracting and retaining such personnel.

         Prior Legal Actions  Involving  Chief  Executive  Officer and Principal
Stockholders.  On March 12,  1993,  the  United  States  District  Court for the
Central  District of  California  permanently  enjoined Mr.  Marvin  Mears,  the
President,  Chief  Executive  Officer,  Director and a major  stockholder of the
Company,  from,  among other  things,  future  violations or aiding and abetting
violations of the antifraud provisions of the Securities Act of 1933, as amended
(the "1933 Act"),  and the Securities  Exchange Act of 1934 (the "1934 Act"), as
amended.  Further, Mr. Mears was permanently restrained and enjoined from making
any untrue statement of a material fact in any registration statement,

                                       15

<PAGE>

application,  report,  account,  record or other  document  filed or transmitted
pursuant to the Investment Company Act of 1940, or omitting to state therein any
fact necessary in order to prevent the statements made therein,  in light of the
circumstances  under which they were made, from being  materially  misleading in
violation of the  Investment  Company Act of 1940.  In addition,  by order dated
February 27, 1996, Mr. Mears,  without  admitting or denying any of the findings
contained  in an  order  issued  by  the  Securities  and  Exchange  Commission,
consented  to the  entry of an Order  Making  Findings  and  Imposing  Sanctions
Pursuant to Section 9(b) of the Investment Company Act of 1940 whereby Mr. Mears
agreed to be barred from association  with any investment  advisor or investment
company.

         In February  1993,  the United  States  District  Court for the Central
District  of  California   permanently  enjoined  Mr.  Morris  Lerner,  a  major
stockholder  of the Company and formerly an officer and director of the Company,
from, among other things, future violations or aiding and abetting violations of
the  antifraud  provisions  of the 1933 Act and the 1934 Act. In  addition,  Mr.
Lerner was permanently  restrained and enjoined from making any untrue statement
of a material fact in any registration statement,  application, report, account,
record or other document filed or transmitted pursuant to the Investment Company
Act of 1940, or omitting to state therein any fact necessary in order to prevent
the statements made therein, in light of the circumstances under which they were
made, from being  materially  misleading in violation of the Investment  Company
Act of 1940.

         Control by Existing  Management.  The Company's  executive officers and
directors  currently  beneficially own  approximately  41.59% of the outstanding
shares  of  Common  Stock.  These  persons,  if  acting  in  concert,  will have
significant  voting  power with  respect to the  election of  directors  and, in
general, the outcome of any other matter submitted to a vote of stockholders.

         Potential Adverse Effects of Preferred Stock. The Company's Certificate
of  Incorporation  authorizes the issuance of shares of "blank check"  preferred
stock,  which  will have such  designations,  rights and  preferences  as may be
determined from time to time by the Board of Directors.  Accordingly,  the Board
of Directors is empowered,  without  stockholder  approval,  to issue  preferred
stock with dividend, liquidation, conversion, voting or other rights which could
adversely  affect the voting  power or other rights of the holders of the Common
Stock.  The preferred stock could be utilized to discourage,  delay or prevent a
change in control of the Company.  Although the Company has no present intention
to issue  any  shares  of  preferred  stock  other  than the  shares of Series A
Preferred  Stock  currently  outstanding,  there  can be no  assurance  that the
Company will not do so in the future.

         No Dividends. The Company has not paid any cash dividends on its Common
Stock and does not expect to declare or pay any cash or other  dividends  in the
foreseeable  future. The Company intends to retain earnings,  if any, to provide
funds for the  expansion  of the  Company's  business.  So long as any shares of
Series A  Convertible  Preferred  Stock are  outstanding,  the  Company may not,
without  first  obtaining  the  approval  of the  holders  of  67%  of the  then
outstanding shares of Series A Convertible  Preferred Stock, redeem,  declare or
pay any dividend or distribution with respect to shares of Common Stock.

         Outstanding Warrants and Options.  Exercise of Registration Rights. The
Company has  outstanding  (i) warrants to purchase an aggregate of 25,000 shares
of Common stock at an exercise price of $2.00 per share; (ii) warrants sold in a
private placement (the "Private  Placement  Warrants") to purchase 25,000 shares
of Common Stock at an exercise  price of $3.875 per share;  and (iii) options to
purchase  an  aggregate  of 330,000  shares of Common  Stock  granted  under the
Company's  1996  Stock  Option  Plan at an  exercise  price of $.1875 per share,
except that option holders representing 280,000 shares have signed agreements to
not exercise  their options prior to July 15, 1999.  The Company has reserved an
aggregate of 400,000  shares of Common Stock for issuance under its stock option
plan.  Holders of such warrants and options are likely to exercise them when, in
all  likelihood,  the  Company  could  obtain  additional  capital on terms more
favorable than those provided by such warrants and options. Further, while these
warrants and options are outstanding, the Company's ability to obtain additional
financing on favorable terms may be adversely affected.

                                       16

<PAGE>

         General  Risks of Business.  Any future  success that the Company might
enjoy will depend upon many factors,  including  factors which may be beyond the
control of the Company or which cannot be predicted at this time.  These factors
may include technological advances or product obsolescence,  increased levels of
competition, including the entry of additional competitors and increased success
by existing  competitors,  changes in general economic conditions,  increases in
operating costs including costs of supplies,  personnel, and equipment,  reduced
margins  caused by  competitive  pressures  and other  factors,  and  changes in
governmental regulation imposed under federal, state or local laws.

         Risks  Associated  with Management of Potential  Growth.  The Company's
growth is expected to place a significant  strain on its managerial,  operation,
financial and information systems resources. To accommodate its current size and
manage  growth,   the  Company  must  continue  to  implement  and  improve  its
operational, financial and information systems, and expand, train and manage its
employee base. Additionally,  expansion of the Company's information and network
systems is required to  accommodate  its growth.  There can be no assurance that
the Company will be able to effectively  manage the expansion of its operations,
or that the  Company's  facilities,  systems,  procedures  or  controls  will be
adequate to support the  Company's  operations.  The inability of the company to
manage effectively its future growth would have a material adverse effect on the
Company's business,  financial condition and results of operations. This problem
may be  exacerbated  to the extent the Company  continues to acquire  additional
technologies, as each such technology must then be integrated into the Company's
operations and systems.

         Delaware Anti-Takeover  Statute;  Issuance of Preferred Stock; Barriers
to  Takeover.  The  Company  is  a  Delaware  corporation  and  thus,  upon  the
consummation of the Offering will become subject to the prohibitions  imposed by
Section 203 of the Delaware  General  Corporation Law, which is generally viewed
as an anti-takeover statute. In general, this statute will prohibit the Company,
once public,  from  entering  into  certain  business  combinations  without the
approval of its Board of Directors and, as such, could prohibit or delay mergers
or other attempted  takeovers or changes in control with respect to the Company.
Such provisions may discourage attempts to acquire the Company. In addition, the
Company's  authorized  capital consists of 40,000,000 shares of capital stock of
which 20,000,000 shares are designated as Common Stock and 20,000,000 shares are
designated as preferred stock. The Board of Directors, without any action by the
Company's  stockholders,  is  authorized  to designate  and issue shares in such
classes or series  (including  classes or series of preferred stock) as it deems
appropriate  and to establish  the rights,  preferences  and  privileges of such
shares,  including  dividends,  liquidation  and  voting  rights.  The rights of
holders of preferred  stock and other classes of Common Stock that may be issued
may be superior to the rights granted to the holders of the existing  classes of
Common  Stock.  Further,  the ability of the Board of Directors to designate and
issue such undesignated shares could impede or deter an unsolicited tender offer
or takeover proposal regarding the Company and the issuance of additional shares
having  preferential  rights could  adversely  affect the voting power and other
rights of holders of Common  Stock.  Issuance of preferred  stock,  which may be
accomplished  through a public offering or a private  placement,  may dilute the
voting power of holders of Common Stock (such as by issuing preferred stock with
super  voting  rights)  and may render  more  difficult  the  removal of current
management, even if such removal may be in the stockholders' best interests. Any
such issuance of preferred  stock could prevent the holders of Common Stock from
realizing a premium on their shares.

         Risks  Associated  with  Forward-Looking  Statements  Included  in this
Report. This Report contains certain  forward-looking  statements  regarding the
plans and objectives of management for future  operations.  The  forward-looking
statements  included  herein  are based on  current  expectations  that  involve
numerous risks and uncertainties.  The Company's plans and objectives are based,
in  part,  on  assumptions  involving  the  Company's  ability  to  successfully
integrate the various  technologies  it has licensed,  the Company's  ability to
market  successfully  its waste  management  system  and  insecticide  products,
increased  governmental  regulation of livestock and poultry operations and that
there  will  be no  unanticipated  material  adverse  change  in  the  Company's
business. Assumptions relating to the foregoing, among others, involve judgments
with respect to, among other things,  future economic,  competitive,  regulatory
and market conditions and future business decisions,  all of which are difficult
or impossible to predict  accurately and many of which are beyond the control of
the Company. Although the Company believes that its assumptions underlying the

                                       17

<PAGE>

forward-looking  statements are reasonable,  any of the assumptions  could prove
inaccurate and,  therefore,  there can be no assurance that the  forward-looking
statements  included in this Prospectus  will prove to be accurate.  In light of
the  significant  uncertainties  inherent  in  the  forward-looking   statements
included herein,  particularly in view of the Company's early stage  operations,
the inclusion of such information  should not be regarded as a representation by
the  Company or any other  person that the  objectives  and plans of the Company
will be achieved.

         Limited  Market for the Common  Stock.  The  Company's  Common Stock is
traded on the OTC Bulletin Board,  but is not listed on any stock exchange or on
NASDAQ.  Trading volume in the Common Stock has fluctuated  considerably  in the
recent past. The Company has filed for the  registration  of the entire class of
its Common Stock under Section 12(g) of the Securities  Exchange Act of 1934, as
amended  (the  "Exchange  Act" ), in  order  to make the  Company  a  "reporting
company."  Accordingly,  it is  required  to  file  all  of the  reports,  proxy
statements  and other  information  required to be filed with the Securities and
Exchange Commission (the "Commission") under the Exchange Act.

         Possible   Volatility   of  Stock  Prices;   Penny  Stock  Rules.   The
over-the-counter  markets for  securities  such as the  Company's  Common  Stock
historically  have  experienced  extreme  price and volume  fluctuations  during
certain periods.  These broad market fluctuations and other factors, such as new
product  developments and general trends in the investment  markets,  as well as
general economic conditions and quarterly variations in the Company's results of
operations, may adversely affect the market price of the Company's Common Stock.
Moreover, unless and until it is approved for quotation on NASDAQ, the Company's
Common Stock could become subject to rules adopted by the Commission  regulating
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks  generally are equity  securities  with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
NASDAQ,  provided  that  current  price and volume  information  with respect to
transactions  in such  securities  is  provided  by the  exchange  or the NASDAQ
system).  Unless  an  exemption  from the  definition  of a "penny  stock"  were
available,  any broker  engaging in a transaction in the Company's  Common Stock
would be required  to provide  any  customer  with a risk  disclosure  document,
disclosure of market conditions,  if any,  disclosure of the compensation of the
broker-dealer  and its  salesperson  in the  transaction,  and monthly  accounts
showing the market values of the Company's  Common Stock held in the  customer's
account.  The bid and  offer  quotation  and  compensation  information  must be
provided  prior  to  effecting  the  transaction  and must be  contained  on the
customer's  confirmation.  It may be anticipated that a number of brokers may be
unwilling to engage in transactions in the Company's Common Stock because of the
need to comply with the "penny stock" rules,  thereby  making it more  difficult
for  purchasers of Common Stock offered  hereby to dispose of their shares.  The
Company's  Common Stock is covered by a Securities and Exchange  Commission rule
that imposes  additional sales practice  requirements on broker-dealers who sell
such  securities to persons  other than  established  customers  and  accredited
investors  (generally  institutions  with  assets  in excess  of  $5,000,000  or
individuals  with net worth in excess of $1,000,000  or annual income  exceeding
$200,000 or $300,000 jointly with their spouse). For transactions covered by the
rule, the broker-dealer  must make a special  suitability  determination for the
purchaser and receive the purchaser's written agreement to the transaction prior
to the sale. Consequently,  the rule may affect the ability of broker-dealers to
sell the Company's  securities  and also may affect the ability of purchasers in
this offering to sell their shares in the secondary market.

Item 2.           DESCRIPTION OF PROPERTY

FACILITIES

         The  Company's  facilities  are located at 5380 North  Sterling  Center
Drive, Westlake Village, California and presently consist of approximately 3,150
sq. ft. The  Company  believes  that these  facilities  will meet the  Company's
needs.  The Company  leases this facility under a lease that expires on December
31, 1999. The base rent for the leased premises is $2,520 per month. The Company
has the option to extend the lease for an additional two-year period on the same
terms and  conditions  except that the monthly rental payment for the first year
of any such extension would be $2,674 and $2,754 for the second year.The company
has extended the lease.

                                       18

<PAGE>

Item 3.  LEGAL PROCEEDINGS

         The Company has been served in legal  proceedings by a former employer,
John Bird.

Item 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fiscal year ended September 30, 1999.

                                    PART II.

Item 5.  MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         The  Company's  Common Stock is traded on the OTC Bulletin  Board under
the symbol EPTC.  The  following  table sets forth the range of high and low bid
quotation  per share for the Common Stock as reported by the OTC Bulletin  Board
during the calendar years indicated.  The bid price reflects inter-dealer prices
and does not  include  retail  mark-up,  markdown,  or  commission.  The Company
effected a 2 for 1 forward  stock split that became  effective  on May 12, 1998.
The  following  table  does  not give  effect  to such  stock  split  except  as
indicated.  According to records of the Company's transfer agent, as of December
3, 1999, the Company had approximately 449 stockholders of record.

                                                      HIGH          LOW
                                                    -------       -------
1997

  First Quarter.......................................4.25         1.875
  Second Quarter.................................... 2.125         0.563
  Third Quarter......................................3.188         0.625
  Fourth Quarter.....................................4.188         1.000

1998

  First Quarter.....................................10.375         2.313
  Second Quarter....................................13.000         7.625
  Second Quarter (after May 11, 1998)...........     9.125         7.250
  Third Quarter..................................... 7.563         4.375
  Fourth Quarter.................................... 5.625          3.00

1999

  First Quarter..................................... 5.750          3.00
  Second Quarter....................................10.250         3.125
  Third Quarter.....................................10.125          5.00
  Fourth Quarter.................................... 8.250          2.50


         The  Company has never  declared or paid a cash  dividend on its Common
Stock and does not expect to pay any cash dividends in the  foreseeable  future.
So long as any shares of Series A Convertible  Preferred Stock are  outstanding,
the Company may not,  without first obtaining the approval of the holders of 67%
of the then outstanding shares of Series A Convertible  Preferred Stock, redeem,
declare or pay any dividend or make any  distribution  with respect to shares of
Common Stock.

Item 6.  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         The company was  incorporated  in 1983 as CCRS,  III, Inc. In 1989, the
Company changed its name to Central  Corporate  Reports  Services,  Inc., merged
with  Information  Bureau Inc. and operated in the  financial  public  relations
business until March 1990 when the Company became inactive.  In 1990 the Company
changed its name back to Combined  Assets,  Inc. and in 1991 changed its name to
ACP  International,  Inc. and in 1994 changed its name back to Combined  Assets,
Inc. In January 1995, the Company's name was changed to Environmental Products &
Technologies Corporation.

         At the  end of  1995,  the  Company  commenced  development  of a waste
management  system  to  control  odors  and solid  stream  waste in the  farming
industry. In addition,  the company is developing organic based insecticides for
agricultural, commercial and residential use.

         The Company is currently in the development stage of operations and, to
this  time,  has  devoted  its time to  rising  capital,  product  and  supplier
development  and  marketing  future  products.  No  product  has been  assembled
manufactured  or marketed at this time,  except that the Company has assembled a
prototype  Closed- Loop Waste  Management  System or  demonstration  purpose and
three prototype systems for operation by various universities.

                                       19

<PAGE>

         The Company has projected expense of $ 850,000 through June 2000. As of
September  30,1999,  the  Company had  approximately  $ 174,000 of cash and cash
equivalents.  The  Company is in the process of raising  additional  funds which
will allow the  Company  to operate  even is the  Company  generates  no revenue
during this period.

         The Company intends to continue  product  development  with the test of
three  full-scale  systems to be operated at Utah State  University,  Cal Poly -
Pomona and the University of Wisconsin.  The portable units will be employed for
continued demonstrations and sales activity. The goal of such tests is to refine
the process from a batch load to a continuous feed system.  At the same time the
development  of an input/ feed  conveyor  system and a variable  discharge  rate
screw  mechanism to load the bioreactor  needs to be completed.  In addition,  a
solid waste process will also need to be developed.

RESULTS OF OPERATION

FISCAL YEAR ENDED SEPTEMBER 30, 1999 COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30,
1998

         The Company  generated no revenue for this Fiscal year ended  September
30,  1999  ("Fiscal  1999") and for the fiscal  year ended  September  30,  1998
("Fiscal 1998").

         Research and development expenses for Fiscal 1999 decreased by $29,782,
to  $355,580  from  $385,362 or Fiscal  1998.  This  decrease  in  research  and
development  expenses  for Fiscal 1999  reflects  expenses  associated  with the
research,  design and development of the Company's Closed -Loop Waste Management
System.

         General  and  administrative  expenses  for Fiscal  1999  increased  by
$209,642, or approximately 20%, to $1,232,906,  from $1,023,264 for Fiscal 1998.
This increase in general and administrative expenses was primarily the result of
the  increased  salaries  and  rental  expense  which  was  partially  offset by
decreased consulting and other expenses.

         Interest expense for Fiscal 1999 was $-0- compared to $5,003 for Fiscal
1998.  Interest  expense for Fiscal 1998  related to the note  payable to Ronald
Knudsen, formerly the Director of Product Development of the Company.

FISCAL YEAR ENDED  SEPTEMBER  30,1998  COMPARED  TO FISCAL YEAR ENDED  SEPTEMBER
30,1997

         The Company  recognized no revenue for the twelvemonths ended September
30,1998  ("Fiscal  1998")  and for the twelve  months  ended  September  30,1997
("Fiscal  1997").  During each of the Fiscal 1998 and Fiscal 1997, the Company's
efforts were  directed at  researching,  designing,  developing  and testing its
Closed-Loop Waste Management System.

         Research  and  development  expenses  primarily  consist of the cost of
personnel and equipment needed to conduct the Company's research and development
efforts. Research and development expense for Fiscal 1998 increased $316,124, or
approximately  457%, to $385,362 from $69,238 for Fiscal 1997.  This increase in
research and development  expenses reflects  additional expenses associated with
the  design,  development  and testing of  prototype  systems,  the  increase in
personnel  and purchase of  components  for the  Company's  currently  operating
prototype waste management systems.

         General  and  administrative  expenses  primarily  consist  of  general
administrative  costs  related to the salaries of the  Company's  administrative
personnel and associated costs, including legal and consulting fees. General and
administrative  expenses for Fiscal 1998 increased by $704,120, or approximately
221%, to $1,023,264 from $319,144 for Fiscal 1997.

                                       20

<PAGE>

LIQUIDTY AND CAPITAL RESOURCES

         The  Company's  primary  capital needs have been to fund the design and
development of its prototype  Closed-Loop Waste Management System. The Company's
primary  sources of liquidity  have been private  placements  of equity and debt
securities and loans from officers/ stockholders on an as needed basis.

         Between  October and December  1995, the Company sold 100,000 shares of
Common Stock for an aggregate of $10,000, or $.10 per share. Between January and
March1996,  the Company sold 400,000  shares of Common Stock for an aggregate of
$189,650,  or  approximately  $.47 per share.  Between April and June 1996,  the
Company sold 40,000 shares of Common Stock for an aggregate of $35,000,  or $.87
per share.  Between July and September  1996, the Company sold 480,000 shares of
Common  Stock for an aggregate of  $149,200,  or  approximately  $.31 per share.
Between June and September 1997, the Company sold 550,000 shares of Common Stock
for an aggregate of $337,925,  or approximately  $.614 per share. The figures in
the paragraph do not give effect to the two-for-one forward stock split that was
effected by the Company in May 1998.

         In April  1998,  the  Company  sold 3,000  shares of Series A preferred
Stock  together with warrants  (the  "Private  Placement  Warrants") to purchase
300,000 shares of Common Stock (the "1998 Private Placement") for gross proceeds
of $3,000,000.  The net proceeds to the Company of approximately $2,675,000 will
be used for  continue  research  and  development,  working  capital and general
corporate purpose. The Private Placement Warrants have an initial exercise price
of $3.875 per share.  Private  Placement  Warrants expire on March 31,2003.  The
Private Placement Warrants contain provisions for the adjustment of the exercise
price and the aggregate  number of shares  issuable upon exercise  under certain
circumstances,  including  without  limitation,  stock dividends,  stock splits,
reorganization,  reclassification,  consolidations,  certain  dilutive  sales of
securities for which the Private Placements Warrants are exercise able below the
then  existing  Market  Price (as  defined) and failure to maintain a sufficient
number of  authorized  shares of Common Stock for  issuance  and  delivery  upon
exercise of the Private Placement Warrants.

         The Company also has commitments under (I) an employment agreement with
Marvin  Mears,  the  Company's  President and Chief  Executive  Officer;  (ii) a
consulting agreement with Strategic Planning Consultants,  Inc., a consultant of
the Company; and (iii) an officer lease that expires December 31,1999.

         Based on its  current  operating  plan,  the Company  anticipates  that
additional  financing  will be required to finance  its  operations  and capital
expenditures.  The Company's  currently  anticipates levels of revenues and cash
flow are  subject to any  uncertainties  and  cannot be  assured.  Further,  the
Company's  business plan may change, or unforeseen  events may occur,  requiring
the  Company to raise  additional  funds.  The amount of funds  required  by the
Company will depend upon many factors, including without limitations, the extent
and timing of sales of the Company's  waste  management  system,  future product
cost, the timing and cost associated with the  establishment and / or expansion,
as appropriate,  of the Company's  manufacturing,  development,  engineering and
customer  support  capabilities,  the timing and cost of the  Company's  product
development  and  enhancement  activities and the Company's  operating  results.
Until the Company generates cash flow from operations,  which will be sufficient
to satisfy  its cash  requirements,  the Company  will need to seek  alternative
means for financing its operations and capital expenditures and / or postpone or
eliminate certain investments or expenditures.  Potential  alternative means for
financing may include leasing capital equipment,  obtaining a line of credit, or
obtaining additional,  or available on acceptable terms. The inability to obtain
additional  financing or generate  sufficient cash form operations could require
the Company to reduce or eliminate expenditures for capital equipment,  research
and development, production or marketing of its product, or otherwise curtail or
discontinue  its operations,  which could have a material  adverse effect on the
Company's business, financial condition and results of operations.  Furthermore,
if the Company  raises funds through the sale of additional  equity  securities,
the Common Stock currently outstanding may be further diluted.

                                       21

<PAGE>

INFLATION

         Although  certain  of the  Company's  expenses  increase  with  general
inflation  in the  economy,  inflation  has not  had a  material  impact  on the
Company's financial results to date.

YEAR 2000 COMPLIANCE

         We have  completed a  comprehensive  review of our computer  systems to
identify all software  applications  that could be affected by the  inability of
many existing computer systems to process  time-sensitive data accurately beyond
the year 1999 (referred to as the "Year 2000" issue).  We are also continuing to
monitor our computer systems and we are monitoring the adequacy of the processes
and progress of third-party  vendors of systems that may be affected by the Year
2000 issue.  We are  dependent on  third-party  computer  systems  applications,
particularly  with respect to such  critical  tasks as  accounting,  billing and
buying. We also rely on our own computer  systems.  EPTC expects to its complete
its Year 2000  compliance  program by mid-1999  and  anticipates  that its total
expenditures  on  such  programs  will  not  exceed  $20,000.  However,  we  may
experience  cost overturns or delays,  in the future,  which could have material
adverse effect on our business,  results of operations and financial  condition.
While we believe our procedures  are designed to be  successful,  because of the
complexity of the Year 2000 issue and the interdependence of organizations using
computer systems,  our efforts, or those of third-parties with whom we interact,
may  not  be  satisfactorily  completed  in a  timely  fashion.  If we  fail  to
satisfactorily  address  the Year 2000  issue,  then our  business,  results  of
operations and financial condition could be materially adversely affected.

                                       22

<PAGE>

Item 7.  FINANCIAL STATEMENTS





                            ENVIRONMENTAL PRODUCTS &
                            TECHNOLOGIES CORPORATION

                          (A DEVELOPMENT STAGE COMPANY)
                              FINANCIAL STATEMENTS

                               FOR THE YEARS ENDED

                           SEPTEMBER 30, 1999 AND 1998
















Environmental Products & Technologies Sep99 Aud     #2403
released
         ------------------------



<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                                        CONTENTS
                                                              September 30, 1999

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

                                                                            Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                   1

FINANCIAL STATEMENTS

     Balance Sheet                                                 2 - 3

     Statements of Operations                                        4

     Statements of Comprehensive Loss                                5

     Statements of Shareholders' Equity                            6 - 9

     Statements of Cash Flows                                     10 - 12

     Notes to Financial Statements                                13 - 29



<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
Environmental Products & Technologies Corporation

We have  audited the  accompanying  balance  sheet of  Environmental  Products &
Technologies Corporation (a development stage company) as of September 30, 1999,
and the related  statements of  operations,  comprehensive  loss,  shareholders'
equity, and cash flows for the year then ended.  These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these  financial  statements  based on our  audit.  The  financial
statements of  Environmental  Products & Technologies  Corporation  for the year
ended  September  30, 1998 were  audited by other  auditors  whose  report dated
October 30, 1998 expressed an unqualified opinion on those statements.

We conducted our audit 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 audit provides 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  Environmental  Products &
Technologies  Corporation  as of  September  30,  1999,  and the  results of its
operations  and its cash  flows  for the year  then  ended  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 2 to the
financial  statements,  the Company incurred a net loss of $2,254,653 during the
year ended September 30, 1999, and it had negative cash flows from operations of
$1,432,061. These factors, among others, as discussed in Note 2 to the financial
statements, raise substantial doubt about the Company's ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note 2. The financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.

SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, California
December 3, 1999

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                                   BALANCE SHEET
                                                              September 30, 1999

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

                                     ASSETS

Current assets

     Cash                                                       $        105,058
     Marketable securities                                                69,343
     Current portion of notes receivable,
       net of allowance of $200,000                                       14,296
     Current portion of notes receivable -
       related parties, net of allowance
       of $244,715                                                       187,401
     Interest receivable, net of allowance
       of $45,038                                                         16,575
     Prepaid and other assets                                             19,131
                                                                ----------------

              Total current assets                                       411,804

Property and equipment, net                                               43,790
Notes receivable, net of current portion                                   1,508
Notes receivable - related parties, net
   of current portion                                                     32,798
Other assets                                                               8,220
Investment in related party, net of allowance
   of $58,887                                                                  -
                                                                ----------------

                  Total assets                                  $        498,120
                                                                ================


   The accompanying notes are an integral part of these financial statements



                                       F-2

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                       BALANCE SHEET (Continued)
                                                              September 30, 1999

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

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

     Accounts payable                                          $         16,297
     Accrued salaries                                                   151,000
     Due to officers                                                      8,950
                                                               ----------------

         Total current liabilities                                      176,247
                                                               ----------------

Commitments and contingencies

Shareholders' equity

     Series A convertible preferred stock,
         $0.01 par value 20,000,000 shares
         authorized 2,000 shares issued and outstanding                      20
     Common stock, $0.01 par value
         20,000,000 shares authorized
         8,814,921 shares issued and outstanding                         88,149
     Additional paid-in capital                                       8,568,842
     Other comprehensive loss                                           (54,968)
     Deficit accumulated prior to the
         development stage                                             (695,452)
     Deficit accumulated during the
         development stage                                           (7,584,718)
                                                               ----------------

              Total shareholders' equity                                321,873
                                                               ----------------

              Total liabilities and shareholders' equity       $        498,120
                                                               ================



   The accompanying notes are an integral part of these financial statements




                                       F-3

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                        STATEMENTS OF OPERATIONS

                             For the YearsEnded  September 30, 1999 and 1998 and
           for the Period from October 1, 1995 (Inception) to September 30, 1999

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                                           For the
                                                                                                         Period from
                                                                                                         October 1,

                                                                                                            1995

                                                                       For the Years Ended             (Inception) to
                                                                             September 30,              September 30,
                                                                ---------------------------------
                                                                      1999              1998                  1999
                                                                      ----              ----                  ----
<S>                                                             <C>               <C>              <C>
Operating expenses

   Selling, general, and administrative                         $      1,232,906  $     1,023,264  $      2,850,423
   Research and development                                              355,580          385,362           810,180
   Write-down of note receivable                                         200,000                -           200,000
   Write-down of note receivable - related party                         289,753                -           289,753
   Write-down of investment                                               58,887                -            58,887
                                                                ----------------  ---------------  ----------------

     Total operating expenses                                          2,137,126        1,408,626         4,209,243
                                                                ----------------  ---------------  ----------------

Loss from operations                                                  (2,137,126)      (1,408,626)       (4,209,243)
                                                                ----------------  ---------------  ----------------

Other income (expense)
   Interest income                                                        84,234           52,438           141,001
   Interest expense                                                            -           (5,003)          (23,313)
   Loss on sale of marketable securities                                (200,961)               -          (200,961)
                                                                ----------------  ---------------  ----------------

     Total other income (expense)                                       (116,727)          47,435           (83,273)
                                                                ----------------  ---------------  ----------------

Loss before extraordinary item                                        (2,253,853)      (1,361,191)       (4,292,516)
Extraordinary item

   Gain on extinguishment of debt                                              -           64,208            64,208
                                                                ----------------  ---------------  ----------------

Net loss before provision for income taxes                            (2,253,853)      (1,296,983)       (4,228,308)
Provision for income taxes                                                   800                -               800
                                                                ----------------  ---------------  ----------------

Net loss                                                              (2,254,653)      (1,296,983)       (4,229,108)
Preferred stock dividend                                                 (60,000)      (3,295,610)       (3,355,610)
                                                                ----------------  ---------------  ----------------

Net loss attributable to common shareholders                    $     (2,314,653) $    (4,592,593) $     (7,584,718)
                                                                ================  ===============  ================

Net loss per common share                                       $          (0.27) $         (0.56)
                                                                ================  ===============

Weighted-average common shares outstanding                             8,669,543        8,238,815
                                                                ================  ===============
</TABLE>

   The accompanying notes are an integral part of these financial statements




                                       F-4

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                        STATEMENTS OF OPERATIONS

                             For the YearsEnded  September 30, 1999 and 1998 and
           for the Period from October 1, 1995 (Inception) to September 30, 1999

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                                            For the
                                                                                                         Period from
                                                                                                         October 1,

                                                                                                            1995

                                                                       For the Years Ended             (Inception) to
                                                                             September 30,              September 30,
                                                                ---------------------------------
                                                                      1999              1998                  1999
                                                                ----------------  ---------------         ----------

<S>                                                             <C>               <C>              <C>

Net loss attributable to common shareholders                    $     (2,314,653) $    (4,592,593) $     (7,584,718)

Other comprehensive loss, net of tax
   Unrealized holding loss on marketable securities                      (39,980)         (14,988)          (54,968)
                                                                ----------------  ---------------  ----------------

     Comprehensive loss                                         $     (2,354,633) $    (4,607,581) $     (7,639,686)
                                                                ================  ===============  ================

</TABLE>

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

                                       F-5

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                              STATEMENTS OF SHAREHOLDERS' EQUITY
           For the Period from October 1, 1995 (Inception) to September 30, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                      Convertible Preferred Stock                Common Stock
                        Shares            Amount           Shares            Amount
                    ----------------  ---------------  ----------------  ---------------
<S>                         <C>    <C>                <C>                 <C>
Balance,
   October 1,
   1995

   (Beginning of
   Development

   Stage)                   --     $       --         5,356,148           $   53,561
Common stock
   issued for
   cash                     --             --         3,140,000               31,400

Common stock

   cancelled                --             --          (889,000)              (8,890)
Executive
   compensation             --             --                --                   --

Stock options

   granted                  --             --                --                   --
Costs to raise
   capital                  --             --                --                   --
Net loss                    --             --                --                   --
                    ----------     ----------        ----------           ----------
</TABLE>

<TABLE>
<CAPTION>

                                                        Deficit             Deficit
                                           Other      Accumulated          Accumulated
                       Additional         Compre-     Prior to the         during the
                        Paid-In           hensive     Development          Development
                        Capital             Loss         Stage                Stage            Total
                    ----------------  ---------------  ----------------  ---------------  ------------
<S>                <C>               <C>             <C>                    <C>             <C>
Balance,
   October 1,
   1995

   (Beginning of
   Development

   Stage)          $  646,525        $     --        $ (695,452)            $     --        $    4,634
Common stock
   issued for
   cash               690,375              --                --                   --           721,775

21,775

Common stock

   cancelled            8,890              --                --                   --                --
Executive
   compensation        18,460              --                --                   --            18,460
Stock options
   granted             54,450              --                --                   --            54,450
Costs to raise
   capital            (32,223)             --                --                   --           (32,223)
Net loss                   --              --                --             (677,472)         (677,472)
                   ----------        --------        ----------           ----------        ----------

</TABLE>

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

                                       F-6

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                              STATEMENTS OF SHAREHOLDERS' EQUITY
           For the Period from October 1, 1995 (Inception) to September 30, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                      Convertible Preferred Stock                Common Stock
                        Shares            Amount           Shares            Amount
                    ----------------  ---------------  ----------------  ---------------
<S>                       <C>            <C>              <C>            <C>
Balance,
   September 30,
   1997                       -          $   -            7,607,148      $    76,071
Common stock
   issued for

   Cash                       -              -              300,000            3,000
   Research and
    development               -              -              100,000            1,000
Note payable                  -              -               10,000              100
Preferred stock
   issued for
   Cash                   3,000             30                    -                -
Costs to raise
   capital                    -              -                    -                -
Warrant
   transactions               -              -              570,000            5,700
Common stock
  redeemed                    -              -              (20,000)            (200)
Preferred stock
dividend                      -              -                    -                -
</TABLE>

<TABLE>
<CAPTION>

                                                        Deficit             Deficit
                                           Other      Accumulated          Accumulated
                       Additional         Compre-     Prior to the         during the
                        Paid-In           hensive     Development          Development
                        Capital             Loss         Stage                Stage           Total
                    ----------------  ---------------  ----------------  ---------------  ------------
<S>                <C>                   <C>            <C>              <C>            <C>
Balance,
   September 30,
   1997            $  1,386,477          $   -          $  (695,452)     $  (677,472)   $    89,624
Common stock
   issued for

   Cash                  87,625              -                    -                -         90,625
   Research and
    development         130,250              -                    -                -        131,250
Note payable              9,900              -                    -                -         10,000
Preferred stock
   issued for
   Cash               2,999,970              -                    -                -      3,000,000
Costs to raise
   capital             (324,800)             -                    -                -       (324,800)
Warrant
   transactions          (5,700)             -                    -                -              -
Common stock
  redeemed               (5,500)             -                    -                -         (5,700)
Preferred stock
dividend              3,295,610              -                    -        (3,295,610)            -

</TABLE>

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

                                       F-7

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                              STATEMENTS OF SHAREHOLDERS' EQUITY
           For the Period from October 1, 1995 (Inception) to September 30, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                      Convertible Preferred Stock                Common Stock
                        Shares            Amount           Shares            Amount
                    ----------------  ---------------  ----------------  ---------------
<S>                  <C>            <C>                  <C>              <C>
Executive

   compensation               -              -                    -                -
Warrants granted              -              -                    -                -
Unjrealized loss
   on marketable
   securities                 -              -                    -                -
Net Loss             ----------     ----------           ----------       ----------

Balance,
   September 30,
   1998                   3,000             30            8,567,148           85,671
Common stock

   issued as a
   premium
   dividend upon
   conversion of
   preferred stock            -              -               15,484              155
Warrant

   exercised                  -              -              212,224            2,122
Common stock
   cancelled                  -              -             (248,000)          (2,480)
Preferred stock
   conversion            (1,000)           (10)             258,065            2,581
</TABLE>

<TABLE>
<CAPTION>

                                                        Deficit             Deficit
                                           Other      Accumulated          Accumulated
                       Additional         Compre-        Prior to the       during the
                        Paid-In           hensive        Development       Development
                        Capital             Loss           Stage              Stage          Total
                    ----------------  ---------------  ----------------  ---------------  ------------
<S>                  <C>            <C>                  <C>              <C>            <C>
Executive

   compensation      $    5,000     $        -           $        -       $        -       $  5,000
Warrants granted        356,856              -                    -                -        356,856
Unrealized loss
   on marketable
   securities                 -        (14,988)                   -                -        (14,988)
Net Loss                      -              -                    -       (1,296,983)    (1,296,983)
                     ----------     ----------           ----------       ----------     ----------

Balance,
   September 30,
   1998               7,935,688        (14,988)            (695,452)      (5,270,065)     2,040,884
Common stock

   issued as a
   premium
   dividend upon
   conversion of
   preferred stock       59,845              -                    -          (60,000)             -
Warrant

   exercised            530,690              -                    -                -        532,812
Common stock
   cancelled              2,480              -                    -                -              -
Preferred stock
   conversion            (2,571)             -                    -                -              -

</TABLE>

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

                                       F-8

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                              STATEMENTS OF SHAREHOLDERS' EQUITY
           For the Period from October 1, 1995 (Inception) to September 30, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                      Convertible Preferred Stock                Common Stock
                        Shares            Amount           Shares            Amount
                    ----------------  ---------------  ----------------  ---------------
<S>                   <C>            <C>                  <C>              <C>
Common stock
  issued as an

   investment                 -      $       -               10,000        $     100
Unrealized
   loss on
   marketable

   securities                 -              -                    -                -
Net loss                      -              -                    -                -
                      ---------      ---------            ---------        ---------
Balance,
   September 30,
   1999                   2,000      $      20            8,814,921        $  88,149
                      =========      =========            =========        =========
</TABLE>

<TABLE>
<CAPTION>

                                                           Deficit         Deficit
                                           Other         Accumulated      Accumulated
                       Additional         Compre-        Prior to the     during the
                        Paid-In           hensive        Development      Development
                        Capital             Loss            Stage            Stage          Total
                    ----------------  ---------------  --------------  ---------------  ------------
<S>                <C>              <C>                 <C>              <C>             <C>
Common stock
  issued as an

   investment      $     42,710     $        -          $         -      $         -     $   42,810
Unrealized
   loss on
   marketable

   securities                 -        (39,980)                   -                -        (39,980)
Net loss                      -              -                    -       (2,254,653)    (2,254,653)
                    -----------     ----------          -----------      -----------     ----------
Balance,
   September 30,
   1999             $ 8,568,842     $  (54,968)         $  (695,452)     $(7,584,718)    $  321,873
                    ===========     ==========          ===========      ===========     ==========

</TABLE>

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

                                       F-9

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                        STATEMENTS OF CASH FLOWS

                                 For the Years Ended September 30, 1999 and 1998
       and for the Period from October 1, 1995 (Inception) to September 30, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                                           For the
                                                                                                         Period from

                                                                                                          October 1,
                                                                                                             1995

                                                                       For the Years Ended              (Inception) to
                                                                             September 30,              September 30,
                                                                      1999              1998                 1999
                                                                ----------------  ---------------        ----------
<S>                                                             <C>               <C>              <C>
Cash flows from operating activities
   Net loss                                                     $     (2,254,653) $    (1,296,983) $     (4,229,108)
   Adjustments to reconcile net loss to net cash
     used in operating activities
       Depreciation and amortization                                      34,776           18,457            53,233
       Loss on sale of marketable securities                             200,961                -           200,961
       Write-down of notes receivable                                    200,000                -           200,000
       Write-down of notes receivable - related party                    289,753                -           289,753
       Write-down of investment                                           58,887                -            58,887
       Loss on abandoned property and equipment                                -            1,093             1,093
       Write-down of mining rights                                             -           35,000            35,000
       Gain on extinguishment of debt                                          -          (64,208)          (64,208)
       Non-cash research and development                                       -          131,250           131,250
       Non-cash consulting fees                                                -          356,856           536,306
       Non-cash executive compensation                                         -            5,000            23,460
   (Increase) decrease in

     Interest receivable                                                 (60,167)           2,883           (61,613)
     Prepaid and other assets                                            (19,131)               -           (19,131)
     Other assets                                                         10,000          (12,520)           (3,220)
   Increase (decrease) in

     Accounts payable                                                      4,846           (5,933)           11,038
     Accrued salaries                                                    107,000           40,208           207,888
     Accrued interest                                                          -           (7,320)            7,320
     Settlement payable                                                        -          (17,005)           10,000
     Due to officers                                                      (4,333)               -            (4,333)
                                                                ----------------  ---------------  ----------------

         Net cash used in operating activities                        (1,432,061)        (813,222)       (2,615,424)
                                                                ----------------  ---------------  ----------------
</TABLE>

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

                                      F-10

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                        STATEMENTS OF CASH FLOWS

                                 For the Years Ended September 30, 1999 and 1998
       and for the Period from October 1, 1995 (Inception) to September 30, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                                            For the
                                                                                                        Period from

                                                                                                         October 1,
                                                                                                               1995

                                                                         For the Years Ended         (Inception) to
                                                                             September 30,            September 30,
                                                                         1999            1998                   1999
                                                                ----------------  ---------------        ----------
<S>                                                             <C>               <C>              <C>
Cash flows from investing activities
   Investment in related party                                  $        (16,077) $             -  $        (16,077)
   Loans to related parties                                             (285,000)        (234,781)         (554,631)
   Loans to unrelated parties                                           (216,800)               -          (216,800)
   Purchase of property and equipment                                       (985)         (96,038)          (98,116)
   Purchase of mining rights                                                   -          (40,000)          (40,000)
   Purchase of marketable securities                                    (237,772)        (400,000)         (604,785)
   Proceeds from sale of marketable securities                           312,501                -           279,514
   Proceeds from loans                                                       996                -               996
                                                                ----------------  ---------------  ----------------

         Net cash used in investing activities                          (443,137)        (770,819)       (1,249,899)
                                                                ----------------  ---------------  ----------------

Cash flows from financing activities
   Proceeds from exercise of warrants                                    532,812                -           532,812
   Proceeds from sale of preferred stock                                       -        3,000,000         3,000,000
   Proceeds from sale of common stock                                          -           90,625           820,100
   Costs to raise capital                                                      -         (324,800)         (357,023)
   Common stock redeemed                                                       -           (5,700)           (5,700)
   Loan payments                                                               -                -           (22,000)
                                                                ----------------  ---------------  ----------------

         Net cash provided by financing activities                       532,812        2,760,125         3,968,189
                                                                ----------------  ---------------  ----------------

           Net increase (decrease) in cash                            (1,342,386)       1,176,084           102,866

Cash, beginning of year                                                1,447,444          271,360         1,449,636
                                                                ----------------  ---------------  ----------------

Cash, end of year                                               $        105,058  $     1,447,444  $      1,552,502
                                                                ================  ===============  ================

</TABLE>

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

                                      F-11

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                        STATEMENTS OF CASH FLOWS

                                 For the Years Ended September 30, 1999 and 1998
       and for the Period from October 1, 1995 (Inception) to September 30, 1999
--------------------------------------------------------------------------------


Supplemental disclosures of cash flow information
During the years ended  September  30, 1999 and 1998 and the period from October
1, 1995  (inception) to September 30, 1999, the Company paid $800, $0, and $800,
respectively, in income taxes.

During the years ended  September  30, 1999 and 1998 and the period from October
1, 1995  (inception)  to September  30, 1999,  the Company paid  interest of $0,
$13,323, and $25,713, respectively.

Supplemental  schedule of non-cash investing and financing activities During the
year ended September 30, 1999, the Company completed the following transactions:

o  converted  1,000 shares of Series A convertible  preferred stock into 273,549
   shares of common stock, including 15,484 shares issued as a premium/dividend.

o in accordance with a court order, cancelled 248,000 shares of common stock.

o  in connection  with the receipt of a note  receivable  from a related  party,
   issued 10,000 shares of common stock valued at $42,810 as an investment.

During the year ended  September 30, 1998,  the Company  completed the following
transactions:

o

   issued  100,000 shares of common stock to Lifeline  Enterprises  for research
   and development services valued at $131,250.

o  as part of the terms of a settlement  of a note  payable of $103,000,  issued
   10,000 shares of common stock to the holder of the note.

o  issued  600,000  warrants  to  outside  consultants  for  services  valued at
   $356,856.

o 570,000 warrants were exercised into 570,000 shares of common stock.

o  converted  services  provided by an officer valued at $5,000 into  additional
   paid-in capital.

o  recorded a preferred  stock  dividend of  $3,295,610  to  additional  paid-in
   capital as a result of a  below-market  conversion  feature on the  preferred
   stock.

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

                                      F-12

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

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

NOTE 1 - NATURE OF BUSINESS

         Environmental  Products & Technologies  Corporation (the "Company") was
         incorporated  in 1983 in the State of  Delaware  as CCRS III,  Inc.  In
         1989,  the  Company  changed  its  name to  Central  Corporate  Reports
         Service,  Inc., merged with Information  Bureau,  Inc., and operated in
         the  financial  public  relation  business  until  March  1990 when the
         Company  became  inactive.  In 1990,  the  Company  changed its name to
         Combined Assets,  Inc., in 1991, changed its name to ACP International,
         Inc., and in 1994,  changed its name back to Combined  Assets,  Inc. In
         January 1995, the Company's name was changed to Environmental  Products
         & Technologies  Corporation.  At the end of 1995, the Company commenced
         development  of a waste  management  system to control  odors and solid
         stream  waste in the  farming  industry.  In  addition,  the Company is
         developing organic based insecticides for agricultural, commercial, and
         residential  use. The Company is currently in the development  stage of
         operations,  devoting its time to raising capital, product and supplier
         development,  and  marketing  future  products.  No products  have been
         manufactured or marketed at this time other than  prototypes  assembled
         for demonstration and testing purposes.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation

         ---------------------
         The accompanying  financial statements have been prepared in conformity
         with  generally  accepted   accounting   principles  which  contemplate
         continuation  of the Company as a going  concern.  However,  during the
         year ended  September  30,  1999,  the  Company  incurred a net loss of
         $2,254,653,   and  it  had  negative  cash  flows  from  operations  of
         $1,432,061.  These factors raise  substantial doubt about the Company's
         ability to continue as a going concern.

         Recovery of the Company's  assets is dependent upon future events,  the
         outcome  of  which  is  indeterminable.  Successful  completion  of the
         Company's  development  program and its transition to the attainment of
         profitable  operations is dependent upon the Company  achieving a level
         of sales adequate to support the Company's cost structure. In addition,
         realization  of a  major  portion  of the  assets  in the  accompanying
         balance  sheet is  dependent  upon the  Company's  ability  to meet its
         financing  requirements  and the  success  of its  plans  to  sell  its
         product.  The  financial  statements  do not  include  any  adjustments
         relating to the  recoverability  and  classification  of recorded asset
         amounts or amounts  and  classification  of  liabilities  that might be
         necessary should the Company be unable to continue in existence.

         Management  plans to achieve a level of sales  adequate  to support the
         Company's  cost  structure and also plans to raise funds to finance its
         operations until its sales become adequate.

                                      F-13

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Cash Equivalents

         ----------------
         For purposes of reporting  cash flows,  the Company  considers all cash
         accounts not subject to withdrawal  restrictions  and  certificates  of
         deposits with original maturities of 90 days or less to be cash or cash
         equivalents.

         Property and Equipment

         ----------------------
         Property  and   equipment   are  stated  at  cost.   Depreciation   and
         amortization  are  recorded  using  the  accelerated  method  over  the
         estimated useful lives of five years.  Additions,  major renewals,  and
         replacements   that   increase   the  useful   life  are   capitalized.
         Expenditures  for  maintenance  and  repairs  are charged to expense as
         incurred.

         Income Taxes

         ------------
         The Company  accounts for income taxes in accordance  with Statement of
         Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
         Taxes,"  which   requires   recognition  of  deferred  tax  assets  and
         liabilities  for the expected  future tax  consequences  of events that
         have been  included in the financial  statements or tax returns.  Under
         this method,  deferred tax liabilities and assets are determined  based
         on the  difference  between the  financial  statement  and tax basis of
         assets and  liabilities  using enacted tax rates in effect for the year
         which the differences are expected to be settled or realized.

         Research and Development Costs

         ------------------------------
         Research and development costs are charged to expense as incurred.

         Development Stage Enterprise

         ----------------------------
         The Company is a  development  stage  company as defined in SFAS No. 7,
         "Accounting  and  Reporting  by  Development  Stage  Enterprises."  The
         Company  is  devoting  substantially  all of  its  present  efforts  to
         establish a new business, and its planned principal operations have not
         yet  commenced.  All  losses  accumulated  since  inception  have  been
         considered as part of the Company's development stage activities.

         Loss per Share

         --------------
         The Company  calculates loss per share in accordance with SFAS No. 128,
         "Earnings per Share." Basic loss per share is computed by dividing loss
         available  to common  shareholders  by the  weighted-average  number of
         common shares  outstanding.  Diluted loss per share is computed similar
         to basic loss per share  except that the  denominator  is  increased to
         include  the number of  additional  common  shares that would have been
         outstanding  if the potential  common shares had been issued and if the
         additional  common  shares  were  dilutive.  Because  the  Company  has
         incurred net losses, basic and diluted loss per share are the same.

                                      F-14

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Stock Options and Warrants

         --------------------------
         SFAS No. 123, "Accounting for Stock-Based Compensation," defines a fair
         value based method of accounting for stock-based compensation. However,
         SFAS No. 123 allows an entity to continue to measure  compensation cost
         related  to stock  and stock  options  issued  to  employees  using the
         intrinsic  method of accounting  prescribed  by  Accounting  Principles
         Board  Opinion  No. 25 ("APB  25"),  "Accounting  for  Stock  Issued to
         Employees."  Entities  electing to remain with the accounting method of
         APB 25 must make pro forma  disclosures  of net income and earnings per
         share as if the fair value method of accounting defined in SFAS No. 123
         had  been  applied.   The  Company  has  elected  to  account  for  its
         stock-based compensation to employees under APB 25.

         The Company  applies SFAS No. 123 in  accounting  for  transactions  in
         which goods or services are received from non-employees in exchange for
         equity  instruments,  including stock options and warrants.  Under SFAS
         No. 123,  all  transactions  in which goods or services are received in
         exchange for equity  instruments  are recorded at the fair value of the
         goods or services  received or the fair value of the equity  instrument
         issued.

         Common Stock Split

         ------------------
         On April  20,  1998,  the Board of  Directors  declared  a  two-for-one
         forward stock split to the holders of record on May 4, 1998. The effect
         of the  stock  split has been  retroactively  applied  for all  periods
         presented.

         Comprehensive Loss

         ------------------
         For the year ended  September  30, 1998,  the Company  adopted SFAS No.
         130,  "Reporting  Comprehensive  Income."  This  statement  establishes
         standards  for  reporting  comprehensive  loss and its  components in a
         financial statement. Comprehensive loss as defined includes all changes
         in equity (net assets) during a period from non-owner sources. Examples
         of items to be included in comprehensive  loss, which are excluded from
         net  loss,  include  foreign  currency   translation   adjustments  and
         unrealized  gains and losses on  available-for-sale  securities.  Total
         comprehensive loss is presented in the statement of comprehensive loss.

         Fair Value of Financial Instruments

         -----------------------------------
         The fair market value of the notes receivable  approximates  cost based
         on current  borrowing  rates.  Equity  securities  held by the  Company
         include  available-for-sale  securities,  which  are  reported  at fair
         value.  Unrealized  holding  gains and  losses  for  available-for-sale
         securities  are excluded  from  earnings and reported net of any income
         tax  effect  as  a  separate  component  of  shareholders'  equity.  At
         September 30, 1999, the Company had an unrealized loss of $60,517,  and
         the accounts were adjusted to reflect the loss.

                                      F-15

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Reclassifications

         -----------------
         Certain amounts in the 1998 financial statements have been reclassified
         to conform to the 1999 presentation.

         Estimates

         ---------
         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions   that  affect  the  reported  amount  of  assets  and
         liabilities and disclosures of contingent assets and liabilities as the
         date of the financial  statements,  as well as the reported  amounts of
         revenue and expenses during the reporting period.  Actual results could
         differ from those estimates.

         Recently Issued Accounting Pronouncements

         -----------------------------------------
         In October 1998,  the Financial  Accounting  Standards  Board  ("FASB")
         issued  SFAS  No.  134,  "Accounting  for  Mortgage-Backed   Securities
         Retained after the  Securitization of Mortgage Loans Held for Sale by a
         Mortgage  Banking   Enterprise,"   which  is  effective  for  financial
         statements  with the first fiscal quarter  beginning after December 15,
         1998.  The Company  does not expect  adoption of SFAS No. 134 to have a
         material  effect,  if any,  on its  financial  position  or  results of
         operations.

         In February  1999,  the FASB issued SFAS No. 135,  "Rescission  of FASB
         Statement  No. 75 and  Technical  Corrections,"  which is effective for
         financial  statements with fiscal years  beginning  February 1999. This
         statement is not applicable to the Company.

         In June 1999,  the FASB issued SFAS No. 136,  "Transfer  of Assets to a
         Not-for-Profit  Organization  or Charitable  Trust that Raises or Holds
         Contributions  for Others."  This  statement is not  applicable  to the
         Company.

         In June 1999, the FASB issued SFAS No. 137,  "Accounting for Derivative
         Instruments  and  Hedging  Activities."  The  Company  does not  expect
         adoption  of SFAS No. 137 to have a  material  impact,  if any,  on its
         financial position or results of operations.


NOTE 3 - CONCENTRATION OF CREDIT RISK

         The  Company  primarily  transacts  its  business  with  two  financial
         institutions and may maintain  deposits in excess of federally  insured
         limits. At September 30, 1999,  uninsured portions of the balances held
         at these banks totaled  $67,319.  The Company has not  experienced  any
         losses  in  such  accounts  and  believes  it is  not  exposed  to  any
         significant risk on cash and cash equivalents.

                                      F-16

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 4 - MARKETABLE SECURITIES

         As of September 30, 1999,  the Company  classified  investments  with a
         cost of  $124,311  and market  value of  $69,343 as  available-for-sale
         securities.  The following  marketable  securities were included in the
         accompanying balance sheet as of September 30, 1999:

                  Equity securities

                      Aggregate cost                    $        124,311
                      Unrealized loss                            (54,968)
                                                        ----------------

                           Aggregate market value       $         69,343
                                                        ================


NOTE 5 - NOTES RECEIVABLE

         In December  1998, the Company  loaned  $200,000 to an unrelated  third
         party.  The note is unsecured and bears  interest at 10% per annum with
         principal  and  interest  due at maturity on February 7, 1999.  The due
         date of the note was initially  extended to November 25, 1999, and then
         to February 25, 2000, which was mutually agreed on by both parties. The
         note was fully reserved at September 30, 1999 since no payment has been
         received.

         The  Company  holds  notes  receivable  of $8,300 and  $8,500  from two
         employees, of which $323 and $674, respectively,  of principal has been
         paid as of  September  30,  1999,  and the notes are due on October 15,
         2000 and November 15, 2000,  respectively.  Interest is payable monthly
         on both notes at 9% per annum.

NOTE 6 - NOTES RECEIVABLE - RELATED PARTIES

         In October  1998,  the Company  loaned  $185,000 to a company that is a
         supplier  and  whose  owner  is  a  shareholder  of  the  Company.  The
         shareholder  pledged  705,873  shares  of  White  Mountain  Mining  and
         Manufacturing stock owned by three officers of the shareholder company,
         a 71% interest,  as collateral for the note. The note bears interest at
         10% per annum with  principal  and interest due at maturity on June 15,
         1999. Upon mutual  agreement by both parties,  the note was extended to
         March 15, 2000.  In  connection  with the note,  the Company  agreed to
         provide up to $20,000 as working  capital funds. At September 30, 1999,
         the Company had distributed  $16,077.  In addition,  the Company issued
         10,000  shares of common stock to the related party on January 22, 1999
         as an investment.  The shares had a market value of $42,810 on the date
         of  issuance.  The note  and the  investment  were  fully  reserved  at
         September 30, 1999 since no payment has been received.

                                      F-17

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 6 - NOTES RECEIVABLE - RELATED PARTIES (Continued)

         In October 1998, the Company loaned $100,000 to a shareholder. The note
         is  collateralized by 50,000 shares of the Company's stock owned by the
         shareholder,  which had a market  value of  $159,350 at  September  30,
         1999.  Interest accrues at 12% per year with principal and interest due
         at  maturity on  December  22,  1998.  Upon  mutual  agreement  by both
         parties, the note was initially extended to November 25, 1999, and then
         to February  25,  2000.  A reserve for  $31,575,  including  $11,250 of
         interest,  was recorded at September 30, 1999 since no payment has been
         received.

         In September  1998, the Company loaned  $135,000 to a shareholder.  The
         note  is   collateralized  by  shares  of  publicly  traded  companies,
         including   60,000  shares  of  the   Company's   stock  owned  by  the
         shareholder,  which had a market  value of  $191,220 at  September  30,
         1999.  Interest accrues at 12% per year with principal and interest due
         at  maturity  on  December  17,  1998.  The due  date of the  note  was
         initially extended to November 25, 1999, and then to February 25, 2000,
         which was mutually  agreed on by both  parties.  A reserve for $55,590,
         including $16,200 of interest, was recorded at September 30, 1999 since
         no payment has been received.

         The Company holds notes receivable from two officers/shareholders. Both
         notes bear interest at 9% per year. One note is for $12,116 and was due
         November 12, 1999,  but has been extended to July 29, 2001.  The second
         note is for $32,798 and is due July 29, 2001.

NOTE 7 - AMOUNTS DUE TO/FROM OFFICERS

         For the year ended  September 30, 1999, the Company  advanced $5,000 to
         an   officer/shareholder.   The  Company   owes   $13,950  for  expense
         reimbursements to two officers/shareholders, of which $13,283 is due to
         the same  officer/shareholder  for which the $5,000  advance  was made,
         resulting in a net liability of $8,950.

                                      F-18

<PAGE>

NOTE 8 - PROPERTY AND EQUIPMENT

         Property  and  equipment  at  September  30,  1999   consisted  of  the
         following:

         Office equipment                                      $         30,495
         Computer equipment                                              64,796
         Leasehold improvements                                           1,732
                                                               ----------------

                                                                          97,023

         Less accumulated depreciation and amortization                  53,233
                                                               ----------------

             Total                                             $         43,790
                                                               ================


NOTE 9 - COMMITMENTS AND CONTINGENCIES

         Lease

         -----
         The Company  leases its  facilities  under a two-year,  non-cancelable,
         operating  lease  agreement  entered into on January 1, 1998. The lease
         has an option to extend the term for an additional  two years to expire
         on December 31, 2001,  which was exercised by the Company  during 1998.
         Future minimum lease payments were as follows:

                   Year Ending
                  September 30,

                  -------------
                      2000 $                                              31,626
                      2001                                                32,808
                      2002                                                 8,262
                                                                ----------------

                           Total                                $         72,696
                                                                ================

         Rent expense was $37,252 and $23,633 for the years ended  September 30,
         1999 and 1998, respectively.

                                      F-19

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)

         Employment Agreement

         --------------------
         The Company has entered into an  employment  contract with an executive
         officer  which will expire in April 2002.  The  agreement  provides for
         minimum  salary levels,  plus annual bonuses at the sole  discretion of
         the Board of Directors. The aggregate commitment for future salaries at
         September 30, 1999 was as follows:

                   Year Ending
                  September 30,

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

                      2000 $                                             131,000
                      2001                                               155,000
                      2002                                                91,000
                                                                ----------------

                           Total                                $        377,000
                                                                ================

         Litigation

         ----------
         On May 13, 1999, the Company filed a lawsuit  against a former Director
         of the Company,  alleging that a third party failed to pay $210,000 for
         150,000  shares of the  Company's  common  stock issued on February 27,
         1996. A judgement was made by the United States District Court in favor
         of the  Company,  finding  that the  Company is entitled to $500,500 in
         damages  from the third  party and the  cancellation  of 124,000 of the
         issued shares. As of September 30, 1999, the shares had been cancelled,
         and no damages  had been  collected  from the third  party.  Management
         believes it is unlikely  that any damages  will be  recovered  from the
         third party in the future.

         On March 16,  1999,  the Company was named as the  defendant in a civil
         complaint  filed by certain former  employees.  The lawsuit alleges the
         existence  of two separate  stock  option  plans for the  Company,  one
         written,  approved by the  shareholders  and the Board of Directors and
         filed with the Securities and Exchange Commission,  and a second "oral"
         stock  option  plan.  Management  believes it to be  unlikely  that the
         Company will be required to pay any damages regarding the complaint.

                                      F-20

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)

         Other Commitments and Contingencies

         -----------------------------------
         Pursuant  to a revised  letter  of  understanding  dated May 18,  1998,
         Lifeline  Enterprises  ("Lifeline"),  a Utah limited liability company,
         agreed to transfer to the Company all rights,  title,  and  interest in
         and to an anaerobic digester,  a bio-reactor,  and the biologicals used
         therewith.  In  consideration  for this  transfer,  the Company  issued
         100,000  shares of common  stock to Lifeline and has agreed to issue an
         additional 50,000 shares of common stock upon assignment to the Company
         of all patents to the bio-reactor.  In addition, the Company has agreed
         to issue to Lifeline an  aggregate of 320,000  shares of common  stock,
         payable  80,000  shares on each of October 15, 1999,  2000,  2001,  and
         2002.  The value of the initial  100,000 shares on the date of issuance
         was $131,250 and was expensed as incurred as research and development.

NOTE 10 -SHAREHOLDERS' EQUITY

         Convertible Preferred Stock

         ---------------------------
         On March  31,  1998,  the  Company  issued  3,000  shares  of  Series A
         convertible  preferred stock and 300,000  warrants for $3,000,000.  The
         holders of the Series A convertible preferred stock are not entitled to
         receive  dividends and do not have voting rights.  The preferred  stock
         can be  converted  to common  stock at a fixed or  variable  conversion
         price,  whichever is more beneficial to the shareholder,  at the option
         of the holder upon issuance.  The preferred stock will automatically be
         converted to common stock two years from the issuance  date.  The fixed
         conversion price is $3.875 per share. The variable  conversion price is
         80% of the  average of the five  lowest  closing  market  prices of the
         stock in the 15 trading days  immediately  before the conversion  date.
         The number of common  shares is  determined  by dividing  $1,000 by the
         conversion  price and multiplying the resulting amount by the number of
         preferred  shares being converted.  There is also a premium  (dividend)
         that can be redeemed at the time of  conversion by the Company in cash.
         If it is not  redeemed in cash,  it will add to the stated value of the
         preferred  shares in  arriving  at the  number  of common  shares to be
         issued.  The premium is 6% (on an annualized basis) of the stated value
         of the preferred shares.

         In  accordance  with  generally  accepted  accounting  principles,  the
         difference  between the variable  conversion price of $1.70 on the date
         of issuance  and the  Company's  stock price on the date of issuance of
         the  preferred  stock of $5.031 is  considered  to be a dividend to the
         preferred  shareholders  over the minimum period in which the preferred
         shareholders can realize the return. In connection with the issuance of
         the preferred  stock,  the Company recorded a dividend of $2,948,810 in
         the  accompanying  statement of operations for the year ended September
         30, 1998. On March 31, 1999,  1,000 shares of Series A preferred  stock
         were converted into 273,549  shares of common stock,  including  15,484
         shares issued for the premium (dividend).

                                      F-21

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 10 -SHAREHOLDERS' EQUITY (Continued)

         Convertible Preferred Stock (Continued)
         ---------------------------
         The warrants  issued in conjunction  with the Series A preferred  stock
         entitle  the  holder to  purchase  an equal  number of shares of common
         stock at $3.875 per share.  The warrants  vest  immediately  and expire
         five years from the issue date.  The  difference  between the  exercise
         price of $3.875 and the  Company's  stock price on the date of grant of
         the  warrants of $5.031 is  considered  to be a  dividend.  On June 20,
         1999, 275,000 private placement warrants were exercised in exchange for
         212,224 shares of common stock and cash of $532,812.

         Warrants

         --------
         In June  1995,  the  Board of  Directors  authorized  the  issuance  of
         1,200,000  warrants.  These warrants entitled the holder to purchase an
         equal number of shares of common stock at $0.05 per share. The warrants
         authorized  were issued for the  Board-stated  price of $200.  In 1997,
         600,000 warrants were cancelled.  In April 1998, the 600,000  remaining
         warrants were exercised.  In lieu of the $30,000 cash payment required,
         the shareholder  forfeited 30,000 shares,  and the shares were canceled
         by the Company.

         In  January  1998,  the  Company  issued  300,000  warrants  to outside
         consultants for services rendered to the Company.  The warrants entitle
         the holder to purchase an equal number of common  shares at an exercise
         price of $2.00 per share. The exercise period terminates on January 21,
         2001.  The Company has  recorded  the services at the fair value of the
         warrant on the grant date using an option pricing model, which used the
         one-year  United States  Treasury  rate of 5.45%,  volatility of 225, a
         one-year  expected  life, and no expected  dividends.  At September 30,
         1999, 300,000 warrants remain outstanding.

                                      F-22

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 10 - SHAREHOLDERS' EQUITY (Continued)

         Warrants (Continued)
         --------
         The following summarizes the warrant transactions:

<TABLE>
<CAPTION>

                                                                           Weighted-
                                                                            Average

                                                           Warrants        Exercise
                                                          Outstanding        Price
                                                       ---------------    ----------

<S>                                                    <C>                <C>
            Outstanding, September 30, 1997                    600,000    $    0.05
                Granted                                        600,000    $  2.9375
                Exercised                                     (600,000)   $    0.05
                                                       ---------------

            Outstanding, September 30, 1998                    600,000    $  2.9375
                Exercised                                     (275,000)   $   3.875
                                                       ---------------

                     Outstanding, September 30, 1999           325,000    $  2.1442
                                                       ===============

                     Exercisable, September 30, 1999           325,000    $  2.1442
                                                       ===============
</TABLE>

         Stock Options

         -------------
         In December 1995, the Board of Directors and the shareholders  approved
         the 1996 Stock  Option Plan (the  "Plan").  The Plan  provides  for the
         granting of up to 800,000 non-qualified and/or incentive stock options.
         No options may be granted under the Plan after  December  2005, and the
         Plan terminates  September 30, 2006. All options granted under the Plan
         are  immediately  exercisable  and shall be  exercisable in whole or in
         part;  however,  they are not exercisable  until a written stock option
         agreement  is executed by both the  Company and the  optionee.  Options
         granted to employees  expire three months after the optionee  ceases to
         be an employee of the Company.  Incentive stock options expire 10 years
         from the grant date and are  granted  with an  exercise  price not less
         than the fair market value of the Company's stock on the date of grant.
         Incentive  stock options  granted to employees who own more that 10% of
         the Company's common stock expire five years from the date of grant and
         are  granted  with an  exercise  price  not less  than 110% of the fair
         market value of the Company's stock on the date of grant. Non-qualified
         stock options  expire 10 years from the grant date and are granted with
         an exercise  price of not less than 85% of the fair market value of the
         Company's stock on the date of grant.

                                      F-23

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 10 - SHAREHOLDERS' EQUITY (Continued)

         Stock Options (Continued)
         -------------
         On July 29,  1997,  the Company  granted  options to  purchase  330,000
         shares of the Company's common stock to certain  employees.  The option
         price was set at $0.1875  per share,  the fair value of the  underlying
         shares.  Employees  holding  280,000 of the options  resigned  from the
         Company  during  the year  ended  September  30,  1999,  and all of the
         options had expired as of  September  30, 1999.  These  options are the
         subject of current  litigation  between  the  Company  and some  former
         employees.

         The following summarizes the stock option transactions:

<TABLE>
<CAPTION>

                                                                                    Weighted-
                                                                      Stock          Average
                                                                     Options        Exercise
                                                                    Outstanding       Price

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

                  <S>                                                  <C>         <C>
                  Outstanding, September 30, 1997 and 1998              330,000    $  0.1875
                      Expired                                          (280,000)   $  0.1875
                                                                ---------------

                           Outstanding, September 30, 1999               50,000    $  0.1875
                                                                ===============

                           Exercisable, September 30, 1999               50,000    $  0.1875
                                                                ===============
</TABLE>

         The  weighted-average   remaining   contractual  life  of  the  options
         outstanding at September 30, 1999 is seven years.

NOTE 11 - EXECUTIVE COMPENSATION

         An  officer/shareholder  of the Company devoted part of his time to the
         business for which he received no compensation.  The fair value of that
         time has been  estimated to be $5,000 for the year ended  September 30,
         1998.  These  amounts  have been  charged  to income  and  recorded  as
         additional paid-in capital.

                                      F-24

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 12 - INCOME TAXES

         The  components of the Company's net deferred taxes as of September 30,
         1999 were as follows:

                  Deferred tax assets

                      Net operating loss carryforward      $      1,567,773
                      Write-down of assets                          219,456
                      Accrued salaries                               60,400
                      Mining rights                                  30,844
                                                           ----------------

                                                                       1,878,473

                  Valuation allowance                             1,878,473
                                                           ----------------

                           Net deferred taxes              $              -
                                                           ================

         The Company has established a valuation  allowance based on a number of
         factors  which  impact the  likelihood  the deferred tax assets will be
         recovered,  including the Company's history of operating losses.  Based
         upon a weighting of all available  evidence,  management  believes that
         there is no basis to project significant United States-sourced  taxable
         income.  Therefore,  it is more likely than not that the  deferred  tax
         assets will not be realized,  and a full  valuation  allowance has been
         established.  The net change in the  valuation  allowance  for the year
         ended September 30, 1999 was an increase of $898,081.  No provision for
         income taxes for the year ended September 30, 1999 is required,  except
         for minimum state taxes,  since the Company  incurred a loss during the
         year.

         As of September 30, 1999,  the Company had a  consolidated  federal net
         operating  loss  carryforward  of  $3,651,794.  This  carryforward,  if
         unused, begins to expire in 2003.

         Income tax expense  differs  from the amounts  computed by applying the
         United  States  federal  income  tax rate of 34% to  income  taxes as a
         result of the following:

<TABLE>
<CAPTION>

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

<S>                                                                     <C>             <C>
         Computed "expected" tax benefit                                34%             34.0%
         Increase in income taxes resulting from
             Change in the beginning-of-the-year balance
                  of the valuation allowance for deferred tax
                  assets allocated to income tax expense               (34.0)          (34.0)
                                                                 ------------       ----------

                               Total                                      -%                -%
                                                                 ============       ==========
</TABLE>

                                      F-25

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 12 - INCOME TAXES (Continued)

         The overall  effective tax rate differs from the federal  statutory tax
         rate of 34% due to operating  losses not  providing  benefit for income
         tax purposes.

         The  components of the income tax benefit for the year ended  September
         30, 1999 were as follows:

                  Current

                      Federal                       $              -
                      State                                      800
                                                    ----------------

                                                                             800

                  Deferred

                      Federal                                      -
                      State                                        -
                                                    ----------------

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

                           Total                    $            800
                                                    ================


NOTE 13 - RELATED PARTY TRANSACTIONS

         For the year  ended  September  30,  1998,  a  corporation  owned by an
         officer/shareholder  advanced  expenses on behalf of the Company in the
         amount of $48,132.  These  expenses were for research and  development,
         travel and other  operating  expenses and have been  reimbursed  to the
         officer/shareholder.

         An officer of Strategic Planning Consultants,  Inc. is a shareholder of
         the Company. Strategic Planning has rendered consulting services to the
         Company in the amount of $84,186 for 1998 and has a note  receivable to
         the Company for $135,000.

         In May 1998, a shareholder of Lifeline  Enterprises  became an employee
         of the Company.  Cash payments to Lifeline for research and development
         for the years ended  September  30, 1999 and 1998  amounted to $149,029
         and $168,211,  respectively.  In December 1997, $131,250 was charged to
         research and development for the fair market value of 100,000 shares of
         Company  stock  issued  to  Lifeline.  In  addition,  the  Company  has
         committed to the issuance of an  additional  370,000  shares of Company
         stock.

                                      F-26

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 13 - RELATED PARTY TRANSACTIONS (Continued)

         The  Company  entered  into an  agreement  on October  30,  1998 with a
         supplier and Company  shareholder  to purchase up to 5,000,000  tons of
         diatomaceous  earth over a five-year  period.  The Company has a right,
         but not an  obligation,  to purchase a specified  tonnage per year.  In
         exchange for this right,  the Company issued 10,000 shares of its stock
         valued at $42,810 to the supplier. In addition,  the Company has loaned
         the supplier  $185,000.  The note had an original maturity date of June
         15, 1999,  which was extended to March 15, 2000,  and bears interest at
         the rate of 10% per annum. The note is collateralized by a 71% interest
         in a mining  company.  The  Company  has also  advanced  $16,077 to the
         supplier as working capital.

NOTE 14 - EXTRAORDINARY ITEM

         The  Company  settled a note  payable and  accrued  compensation  which
         resulted  in a gain on the  extinguishment  of debt of $64,208  for the
         year ended  September 30, 1998. The gain will reduce the current year's
         net operation loss by the same amount. This extraordinary item amounted
         to a $0.007 gain per  weighted-average  common share for the year ended
         September 30, 1998.

NOTE 15 - MINING RIGHTS

         The Company  periodically  evaluates  the carrying  value of long-lived
         assets to be held and used when events and circumstances warrant such a
         review.  The Company  purchased  mining rights for mineral deposits for
         $40,000. At September 30, 1998, a mining engineer was hired to evaluate
         the claims.  His value for the rights was determined to be $5,000.  The
         asset is not, at present,  a working  mine that would allow for the use
         of estimated future cash flows for valuation purposes. The Company has,
         at this time,  accepted the  engineer's  value and has written down the
         mining rights to a carrying value of $5,000.

                                      F-27

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 16 - RELATED ENTITIES

         The  Company  incorporated  14  companies  in  July  and  August  1998:
         Environmental   Products  &   Technologies   Corporation   of  Arizona,
         incorporated in the State of Arizona; California Environmental Products
         & Technologies,  incorporated in the State of California; Environmental
         Products & Technologies  Corporation of Illinois,  incorporated  in the
         State of Illinois; Environmental Products & Technologies Corporation of
         Iowa,  incorporated  in the  State of Iowa;  Environmental  Products  &
         Technologies  Corporation  of  Missouri,  incorporated  in the State of
         Missouri;  Environmental Products & Technologies Corporation of Nevada,
         incorporated  in  the  State  of  Nevada;   Environmental   Products  &
         Technologies  Corporation of New Mexico,  incorporated  in the State of
         New Mexico;  Environmental  Products & Technologies  Corporation of New
         York,  incorporated in the State of New York;  Environmental Products &
         Technologies  Corporation of North Carolina,  incorporated in the State
         of North Carolina; Environmental Products & Technologies Corporation of
         Oregon,  incorporated in the State of Oregon;  Animal Waste  Management
         Corporation, incorporated in the State of Texas; Environmental Products
         & Technologies  Corporation of Utah, incorporated in the State of Utah;
         Environmental  Products  &  Technologies   Corporation  of  Washington,
         incorporated in the State of Washington;  and Environmental  Products &
         Technologies  Corporation  of Wisconsin,  incorporated  in the State of
         Wisconsin.

         These  corporations  have filed articles of incorporation and bylaws in
         their states of incorporation.  It is the intention of the Company that
         these entities will be wholly owned subsidiaries, but capital stock has
         not yet been issued. Neither bank accounts nor operations have been set
         up for any of the new entities. The expenses of incorporation of $8,933
         have been expensed during the year ended September 30, 1998.

NOTE 17 - YEAR 2000 ISSUE

         The  Company  is  conducting  a  comprehensive  review of its  computer
         systems to identify the systems that could be affected by the Year 2000
         Issue and is developing an implementation plan to resolve the Issue.

         The  Issue  is  whether  computer   systems  will  properly   recognize
         date-sensitive  information when the year changes to 2000. Systems that
         do not properly  recognize such  information  could generate  erroneous
         data or cause a system to fail.  The Company is  dependent  on computer
         processing in the conduct of its business activities.

         Based  on the  review  of the  computer  systems,  management  does not
         believe the cost of  implementation  will be material to the  Company's
         financial position and results of operations.

                                      F-28

<PAGE>

                                                        ENVIRONMENTAL PRODUCTS &
                                                        TECHNOLOGIES CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                              September 30, 1999

--------------------------------------------------------------------------------
NOTE 18 - SUBSEQUENT EVENT

         Subsequent  to September  30, 1999 and pursuant to a revised  letter of
         understanding  dated May 18, 1998,  the Company issued 80,000 shares of
         common stock to Lifeline.  These shares were  subsequently  returned by
         Lifeline to the Company.

                                      F-29

<PAGE>

Item 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURES.

                  None.



                                       23

<PAGE>

                                    PART III

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

EXECUTIVE OFFICERS AND DIRECTORS

The directors and executive officers of the Company are as follows:

NAME                    AGE              POSITION
----                    ---              --------
Marvin Mears..........  65       President, Chief Executive Officer and Director
Joel G. Wadman........  39       Chief Financial Officer and Secretary

         Two  directors  of the  Company  recently  resigned  and the Company is
currently  seeking  replacements.  The  Company  anticipates  that the  Board of
Directors will consist of five members and that four additional  members will be
nominated  and  appointed  by January 23,  1999,  during  which time the Company
expects to amend its  Certificate  of  Incorporation  and Bylaws to provide  for
indemnification,  to the fullest  extent  possible  under  Delaware law, for the
Company's officers, directors, employees and agents.

         Marvin  Mears has been the  President,  Chief  Executive  Officer and a
director of the Company since December  1994.  From March 1993 to November 1994,
Mr. Mears was President of Combined Assets,  Inc., a  privately-held  consulting
company.  From January  1991 to February  1993,  Mr. Mears was the  President of
Corporate  Capital  Resources,  Inc. and prior  thereto,  from  November 1986 to
January 1991,  Mr. Mears was the Vice President -- Corporate  Development  and a
member of the  Valuation  Committee  of  Corporate  Capital  Resources,  Inc., a
publicly-traded  venture  capital  company that  specialized  in early stage and
start-up companies. Mr. Mears also currently serves on the Board of Directors of
Chatsworth  Products Inc., a  privately-held  company  engaged in  manufacturing
hardware  for  computer  networks  and  Robert  T.  Dorris  and  Associates,   a
privately-held  company  that  provides  employee  assistance  programs to large
corporations.

         On March 12, 1993,  the United  States  District  Court for the Central
District of California  permanently enjoined Mr. Mears from, among other things,
future violations or aiding and abetting violations of the antifraud  provisions
of the  Securities Act of 1933, as amended,  and the Securities  Exchange Act of
1934, as amended. Furthermore, Mr. Mears was permanently restrained and enjoined
from  making  any  untrue  statement  of a  material  fact  in any  registration
statement,  application,  report,  account,  record or other  document  filed or
transmitted pursuant to the Investment Company Act of 1940, or omitting to state
therein any fact necessary in order to prevent the statements  made therein,  in
light of the  circumstances  under which they were made,  from being  materially
misleading in violation of the Investment  Company Act of 1940. In addition,  by
order dated  February 27, 1996, Mr. Mears,  without  admitting or denying any of
the  findings  contained  in an order  issued  by the  Securities  and  Exchange
Commission,  consented  to the entry of an Order  Making  Findings  and Imposing
Sanctions Pursuant to Section 9(b) of the Investment Company Act of 1940 whereby
Mr. Mears agreed to be barred from  association  with any investment  advisor or
investment  company.  See "Risk Factors -- Prior Legal Actions  Involving  Chief
Executive Officer and Principal Stockholders."

         Joel G.  Wadman has been the Chief  Financial  Officer  of the  Company
since July 1997 and became  Secretary of the Company in May 1998.  Mr. Wadman is
not employed by the Company full time and  currently  devotes  approximately  40
hours per month to the  Company's  business.  Since  January 1994 Mr. Wadman has
been a consultant  to SRS  Consulting  specializing  in system  development  and
forensic  accounting.  From February 1990 to December  1993,  Mr. Wadman was the
Vice President and Controller of WCT Communications,  Inc. Mr. Wadman received a
B.S. in Finance from Brigham Young University in 1989.



                                       24

<PAGE>

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT:

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

         Based  solely  on the  Company's  review of the  copies of those  forms
received by the Company,  or written  representations  from such persons that no
Forms 5 were  required to be filed,  it appears that all reports due were timely
filed.

Item 10.          EXECUTIVE COMPENSATION

         The following table sets forth certain  compensation paid or accrued by
the Company  during the years ended  September 30, 1996,  September 30, 1997 and
September  30, 1998 to its  President  and Chief  Executive  Officer (the "Named
Executive Officers").

                               ANNUAL COMPENSATION

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

NAME AND PRINCIPAL POSITION            YEAR    SALARY    BONUS       ALL OTHER
                                                                    COMPENSATION

---------------------------            ----    ------    -----      ------------
Marvin Mears, President and CEO        1997     -0-       -0-          -0-
                                       1998     -0-       -0-          -0-
                                       1999     -0-       -0-          -0-

EMPLOYMENT AND CONSULTING AGREEMENTS AND OTHER COMPENSATION AGREEMENTS

         The Company entered into a four-year  employment  agreement with Marvin
Mears  effective as of April 15, 1998 (the "Mears  Employment  Agreement").  The
Mears Employment Agreement provides,  among other things, that the Company shall
pay and/or  provide to Mr.  Mears:  (i) a fixed annual salary of $96,000 in year
one,  $120,000 in year two,  $144,000  in year three and  $168,000 in year four,
payable in each case in equal bi monthly installments;  (ii) all fringe benefits
which the Company or any subsidiary may make  available  from  time-to-time  for
persons with  comparable  positions  and  responsibilities;  (iii) medical group
insurance  coverage or  equivalent  coverage for Mr.  Mears and his  dependents,
which coverage  shall commence on December 31, 1998 and continue  throughout the
term of employment;  (iv)  reimbursement  for reasonable and necessary  business
expenses  incurred by Mr.  Mears in the course of his duties as Chief  Executive
Officer of the Company;  and (v) $750.00 per month as an  automobile  allowance.
The company may terminate Mr. Mears' employment "for cause" provided the Company
provides  Mr. Mears with 30 days notice and an  opportunity  to cure any alleged
breach or violation of the agreement. Further, Mr. Mears may be terminated if he
commits gross negligence in the performance of his duties under the agreement or
breaches  his  fiduciary  duties to the  Company.  If Mr. Mears is disabled to a
degree that he is unable to fulfill  his duties  then the  Company  will pay his
full  salary  for the first 12 months of his  disability,  75% of salary for the
second  twelve  months  and 50% of  salary  for  the  next  twenty-four  months;
provided,  however,  that any such  disability  payment  will cease on April 14,
2002,  regardless  of when  any  such  disability  commenced.  If Mr.  Mears  is
terminated  without  cause  upon a  change  of  control,  all of the Mr.  Mears'
converted  stock  options  will  immediately  vest and Mr.  Mears  will  also be
entitled to receive  $250,000 and an amount of money  sufficient to allow him to
exercise all unexercised options and to pay any taxes due therefor.

         Pursuant to a letter agreement (the "SPC Agreement")  dated January 22,
1998, the Company retained the services of Strategic Planning Consultants,  Inc.
("SPC")  pursuant to which SPC has agreed to provide the  Company  with  general
business consulting services,  including without limitation,  strategic planning
and analyzing the Company's capital structure. The SPC Agreement is for a period

                                       25

<PAGE>

of 360 days from January 22, 1998.  In  consideration  for entering into the SPC
Agreement,  the Company  agreed to provide to the  principals of SPC warrants to
purchase  300,000  shares of the Company's  Common Stock at an exercise price of
$2.00 per share,  the underlying  shares of which are being registered under the
Registration  Statement of which this  Prospectus  is a part.  In addition,  the
Company  has agreed to pay SPC $3,000 per month for a period of 24 months and to
reimburse SPC for pre-approved  expenses.  SPC's services include  consulting to
management  on  strategic  planning,   acquisitions,   corporate  structure  and
management compensation. This contract is expired.

Item 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

         The  following  table  sets forth  certain  information  regarding  the
beneficial  ownership of the Company's  Common Stock as of November 30, 1998, by
each  director and  executive  officer of the Company,  each person known to the
Company to be the  beneficial  owner of more than 5% of the  outstanding  Common
Stock,  and all  directors  and  executive  officers  of the Company as a group.
Except as otherwise  indicated below, each person has sole voting and investment
power with respect to the shares owned, subject to applicable community property
laws.

                                      SHARES BENEFICIALLY
                                             OWNED
                                    (INCLUDES EXERCISABLE
                                          OPTIONS)(2)
                                   -----------------------
NAME AND ADDRESS(1)                         NUMBER                     PERCENT
-------------------                       ----------                  ---------

Marvin Mears............................... 3,607,212                   40.92%
Morris L. Lerner..............................562,000                    6.38%
Joel G. Wadman.................................58,600                    0.66%
All directors and executive officers of the
Company as a group (2 persons)..............3,665,812                   41.59%


(1) The  address  of each  such  person is 5380  North  Sterling  Center  Drive,
Westlake Village, California 91361.

(2)  Beneficial  ownership is  determined  in  accordance  with the rules of the
Commission. In computing the number of shares beneficially owned by a person and
the  percentage  ownership  of that person,  shares of Common  Stock  subject to
options  held  by  that  person  that  are  currently  exercisable,   or  become
exercisable  within  60 days  from  the date  hereof,  are  deemed  outstanding.
However,  such shares are not deemed  outstanding  for purposes of computing the
percentage  ownership  of any other  person.  Percentage  ownership  is based on
8,567,162 shares of Common Stock outstanding as of December 15, 1998.

Item 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  Company  has  an  employment  agreement  with  Marvin  Mears.  See
"Management -- Employment and Consulting Agreements."

         On November 13, 1997, Morris Lerner,  formerly a director and secretary
of the Company,  borrowed  $12,115.88 from the Company (the "Lerner Note").  The
Lerner  Note bears  interest at the rate of 9% per annum and matures on July 29,
2001.

                                       26

<PAGE>

         On July 29, 1998, Mr. Mears borrowed $32,797.66 from the Company which,
when netted against  amounts owing to Mr. Mears left a note  receivable from Mr.
Mears of $19,515.  This note  matures on July 29, 2001 and bears  interest at 9%
per annum.

         In  September  1998,  the Company  loaned  $135,000 to SPC. The loan is
collateralized  by  marketable  securities.  Interest  accrues  at 12% per year.
Principal and interest are due by February 17, 1999.

                                       27

<PAGE>

<PAGE>

                                   SIGNATURES

         In  accordance  with 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,  in the
City of Los Angeles, State of California, on December __, 1999.

                       ENVIRONMENTAL PRODUCTS &
                       TECHNOLOGIES CORPORATION



                       /s/    Marvin Mears

                       -------------------
                       By:    Marvin Mears

                       Title: Chief Executive Officer and President

         In accordance with the  requirements of the Securities  Exchange Act of
1934,  this report has been signed below by the  following  persons on behalf of
the Registrant in the capacities and on the dates stated:

Signatures                                Title                      Date
----------                                -----                      ----


/s/   Marvin Mears               Chief Executive Officer,     December __, 1998
-------------------------------- President and Director


/s/   Joel Wadman                Chief Financial Officer      December __, 1998
-------------------------------- (principal accounting
                                 officer) and Secretary

                                       28