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 17, 1998, the aggregate market value of the voting stock
held by  non-affiliates  of the issuer was approximately $ 13,790,000 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, 1998



                                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.........................................23-40
Item  8.    Changes in and Disagreements with Accountants on
                     Accounting and Financial Disclosure.................. 41

PART III.

Item  9.    Directors, Executive Officers, Promoters and Control Persons;  42
                     Compliance with Section 16(a) of the Exchange Act.... 
Item 10.             Executive Compensation............................... 43
Item 11.             Security Ownership of Certain Beneficial Owners and
                     Management........................................... 44
Item 12.             Certain Relationships and Related Transactions....... 44
Item 13.             Exhibits and Reports on Form 8-K....................46-47


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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
Biolite(TM), 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
either the  co-generation  technology or the bio-reactor,  that such products do
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.  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.
Gary Roberts,  Linda Roberts and Bob Crouch are  principals of Lifeline and Gary
Roberts and Bob Crouch are employees of the Company.

         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  1998.  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.

         EPTC will  continue to open offices in areas with a high  concentration
of dairies and sell and service each of the  installations.  EPTC  currently has
offices in California,  Utah, Wisconsin,  Pennsylvania,  and North Carolina, and
will open offices in Arizona and New Mexico in the second quarter of 1999.

         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,   municipal   sludge  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.

         At the end of fiscal 1999, EPTC expects to have sixty-three Bioreactors
installed and operating with a production capacity on excess of 400,000 yards of
soil amendment.  This production capacity will be spread through eight different
states;  therefore, not enough product will be produced to warrant a significant
marketing program until the fourth or fifth year of operation. At the end of the
fifth year of  operation,  the  Bioreactor  systems  will have the  capacity  to
produce approximately five-million yards of material.

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.  In this regard,
the  Company  will be  reliant on  Lifeline  for the  co-generation  technology,
Vinyard Engines Systems, Inc. for the dual fuel engine, and RBR Technologies and
Fan  Systems,  Inc.  for the  waste  separator.  The  Company  does not have any
agreements or arrangements with any of the above-mentioned  companies to provide
the Company  with the  products  that the  Company  will need to assemble a full
waste management system.  However,  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,


51601:029
                                        8

<PAGE>


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.  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  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


51601:029
                                        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 from Applied
Earth Technologies,  Inc. ("Applied") 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.


51601:029
                                       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.

         There are no affiliations between the Company or Applied and Terra.

PERSONNEL

         As of  September  30,  1998,  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, 1998,  the Company had an  accumulated  deficit of
approximately   $6,323,000.   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

51601:029
                                       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, 1998, 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.

         No Independent  Certification as to the  Effectiveness of the Company's
Products. The Company has only recently completed development of its Closed-Loop
Waste  Management  System.  The Company has not yet tested its waste  management
system  under  commercial  circumstances.  No  assurance  can be given  that the
Company's waste management  system will perform as anticipated  under commercial
conditions or that substantial reengineering, redesign and/or redevelopment work
will not be required for the  Company's  waste  management  system to operate as
anticipated.  Further, the Company has not submitted its waste management system
to an independent laboratory for testing to ensure that its system is effective.

         Equipment  Failure;   Limited  Engineering,   Design  and  Construction
Experience; Limited Manufacturing Experience. The Company has completed assembly
of and operated  since March 1, 1998 one waste  management  system.  The Company
commenced  demonstrations  to dairies on April 24, 1998.  From time to time, the
Company has  experienced  mechanical or technical  difficulties  with such waste
management  system  which  has  required  repairs  and  maintenance.   Any  such
mechanical or technical difficulties with its systems in the future could result
in an  interruption  in the  Company's  ability  to  manufacture  and sell  such
systems. 

51601:029
                                       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


51601:029
                                       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;  Reliance on Licensed
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  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.

         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

51601:029
                                       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,

51601:029
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<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  45.74% 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 300,000 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 300,000 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.

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<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

51601:029
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<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.

51601:029
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<PAGE>



Item 3.  LEGAL PROCEEDINGS

         The Company is not a party to any legal  proceedings,  and is not aware
of any pending or threatened litigation against the Company.

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, 1998.


                                    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
17, 1998, the Company had approximately 414 stockholders of record.

                                                      HIGH          LOW
                                                    -------       -------
1996
  Third Quarter.....................................$ 5.50        $ 2.00
  Fourth Quarter....................................  5.00         1.125
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

         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.  MANAGEMENT'S 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 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.


51601:029
                                       19

<PAGE>



         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 raising  capital,  product  and  supplier
development  and marketing  future  products.  No products have been  assembled,
manufactured or marketed at this time, except that the Company has assembled one
prototype  Closed-Loop Waste Management  System for  demonstration  purposes and
three prototype systems for operation by various universities.

         The Company has projected  expenses of $1,800,000 through June 1999. As
of September 30, 1998, the Company had approximately $1,832,000 of cash and cash
equivalents  and  accordingly,  even if the Company were to generate no revenues
through June 1999,  the Company would not need to seek  additional  financing to
satisfy its cash requirements.  The Company intends to continue its research and
development activities during the next twelve months.

         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 and unload the bioreactor needs to be completed. In
addition, a solids waste process will also need to be developed.

RESULTS OF OPERATIONS

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

         The Company recognized no revenue for the twelve months 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  expenses 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 and
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.

FISCAL YEAR ENDED SEPTEMBER 30, 1997 COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30,
1996

         The Company  generated  no revenue for the fiscal year ended  September
30,  1997  ("Fiscal  1997") and for the fiscal  year ended  September  30,  1996
("Fiscal 1996").

         Research and development expenses for Fiscal 1997 increased by $69,238,
to $69,238 from -0- for Fiscal 1996.  This increase in research and  development
expenses for Fiscal 1997 reflects expenses associated with the research,  design
and development of the Company's Closed-Loop Waste Management System.


51601:029
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<PAGE>



         General  and  administrative  expenses  for Fiscal  1997  increased  by
$44,035,  or approximately  16%, to $319,144 from $275,109 for Fiscal 1996. This
increase in general and  administrative  expenses  was  primarily  the result of
increased  salaries and rental  expense which was partially  offset by decreased
consulting and other expenses.

         Interest expense for Fiscal 1997 was $18,310 compared to -0- for Fiscal
1996.  Interest  expense for Fiscal 1997  related to the note  payable to Ronald
Knudsen, formerly the Director of Product Development of the Company.

LIQUIDITY 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
March 1996,  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
this  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  continued  research and  development,  working  capital and general
corporate  purposes.  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,  reorganizations,  reclassifications,  consolidations,  certain dilutive
sales of securities  for which the Private  Placement  Warrants are  exercisable
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 to
the Company; and (iii) an office 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  anticipated levels of revenues and cash
flow are  subject to many  uncertainties  and cannot be  assured.  Further,  the
Company's business plan may change, or unforseen 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  limitation,  the extent and
timing of sales of the Company's waste management system,  future product costs,
the timing and costs  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

51601:029
                                       21

<PAGE>


obtaining  additional debt or equity financing.  There can be no assurance that,
if and when needed,  additional  financing  will be  available,  or available on
acceptable  terms.  The  inability  to obtain  additional  financing or generate
sufficient cash from 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.

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 complete its
Year  2000  compliance  program  by  mid-1999  and  anticipates  that its  total
expenditures on such program will not exceed $20,000. However, we may experience
cost  overruns  or delays in the  future,  which  could have a 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.

51601:029

                                       22
<PAGE>


Item 7.  FINANCIAL STATEMENTS


                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                                FINANCIAL REPORT

                           September 30, 1998 and 1997


                                TABLE OF CONTENTS

                                                                  Page
                                                                  ----

Independent Auditors' Report                                        24

Financial Statements
         Balance Sheets                                             25
         Statements of Stockholders' Equity                       26-27
         Statements of Operations                                   28
         Statements of Cash Flow                                  29-30
         Notes to Financial Statements                            31-40


                       See Notes to Financial Statements

                                        23


<PAGE>


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



To the Board of Directors
Environmental Products & Technologies Corporation
Westlake Village, California


We have  audited the balance  sheets of  Environmental  Products &  Technologies
Corporation (a development stage company), as of September 30, 1998 and 1997 and
the related  statements of stockholders'  equity,  operations and cash flows for
the years  then ended and for the  period  October 1, 1995 (date of  development
stage) to September 30, 1998. These financial  statements are the responsibility
of the  company's  management.  Our  responsibility  is to express an opinion on
these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of  Environmental  Products &
Technologies  Corporation  as of September  30, 1998 and 1997 and the results of
its  operations  and its cash flow for the years  then  ended and for the period
October 1, 1995 (date of development stage) to September 30, 1998, in conformity
with generally accepted accounting principles.





                     CLUMECK, STERN, PHILLIPS & SCHENKELBERG
                          Certified Public Accountants

Encino, California
October 30, 1998, except for Note 20 as to
which the date is December 1, 1998

                        See Notes to Financial Statements

                                       24
<PAGE>

<TABLE>
<CAPTION>

                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                                 BALANCE SHEETS

                           SEPTEMBER 30, 1998 AND 1997

                                     ASSETS
                                     ------
                                                                                       1998             1997    
                                                                                      ------           ------
<S>                                                                                <C>            <C>        
CURRENT ASSETS
         Cash                                                                      $ 1,447,444    $   271,360
         Marketable securities                                                         385,012           --
         Note receivable - related party                                               135,000           --
         Interest receivable                                                             1,446          4,329
                                                                                   -----------    -----------
                                            Total Current Assets                     1,968,902        275,689
                                                                                   -----------    -----------

EQUIPMENT                                                                               77,581          1,093
                                                                                   -----------    -----------
OTHER ASSETS
         Notes receivable - related parties                                             31,631         34,850
         Deposits                                                                       13,220            700
         Mining rights                                                                   5,000           --
                                                                                   -----------    -----------
                  Total Other Assets                                                    49,851         35,550
                                                                                   -----------    -----------
TOTAL ASSETS                                                                       $ 2,096,334    $   312,332
                                                                                   -----------    -----------

                                     LIABILITIES AND STOCKHOLDERS' EQUITY
                                     ------------------------------------

CURRENT LIABILITIES
         Accounts payable                                                          $    11,450    $    17,383
         Accrued salaries                                                               44,000         68,000
         Accrued interest                                                                 --            7,320
         Settlement payable                                                               --           27,005
         Note payable - related party                                                     --          103,000
                                                                                   -----------    -----------
                  Total Current Liabilities                                             55,450        222,708
                                                                                   -----------    -----------

STOCKHOLDERS' EQUITY
         Common stock, $.01 par value,  authorized 20,000,000 shares; issued and
           outstanding 8,567,148 shares (1998)
           and 7,607,148 shares (1997)                                                  42,735         38,035
         Preferred stock, $.01 par value, authorized 20,000,000
           shares; issued and outstanding 3,000 shares (1998)                               30           --
         Additional paid in capital                                                  8,335,647      1,456,736
         Deficit accumulated during development stage                               (5,627,088)      (709,695)
         Retained (deficit) prior to development stage                                (695,452)      (695,452)
         Unrealized loss on marketable securities                                      (14,988)          --
                                                                                   -----------    -----------
                                                                                     2,040,884         89,624
                                                                                   -----------    -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                         $ 2,096,334    $   312,332
                                                                                   -----------    -----------
</TABLE>

                       See Notes to Financial Statements

                                       25
<PAGE>


                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                        STATEMENT OF STOCKHOLDERS' EQUITY

                  YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                    Common Stock                      Preferred Stock         Additional  
                                    # of                              # of                    paid-in     
                                    Shares        Amount              Shares  Amount           capital    
                                    ------        ------              ------  ------           -------    

<S>                                 <C>          <C>                          <C>               <C>    
Balance, September 30, 1995         5,356,148    $    26,780           --     $      --         673,306
Common stock issued for cash
         Oct. - Dec., 1995            200,000          1,000           --            --           9,000
         Jan. - Mar., 1996            800,000          4,000           --            --         185,650
         Apr. - Jun., 1996             80,000            400           --            --          34,600
         July - Sept., 1996           960,000          4,800           --            --         144,400  
Executive compensation                   --             --             --            --           9,230
Net loss, September 30, 1996             --             --             --            --            --   
                                  -----------    -----------    -----------   -----------   -----------
Balance, September 30, 1996         7,396,148         36,980           --            --       1,056,186
Common stock cancelled               (889,000)        (4,445)          --            --           4,445
Common stock issued for cash
         Jun. - Sep., 1997          1,100,000          5,500           --            --         332,425
Executive compensation                   --             --             --            --           9,230
Stock options granted                    --             --             --            --          54,450
Cost to raise capital                    --             --             --            --            --   
Net loss, September 30, 1997             --             --             --            --            --   
                                  -----------    -----------    -----------   -----------   -----------
Balance, September 30, 1997         7,607,148         38,035           --            --       1,456,736
Common stock issued for cash          300,000          1,500           --            --          89,125
Common stock issued for R&D           100,000            500           --            --          130,75
Common stock issued for note           10,000             50           --            --           9,950
Preferred stock issued for cash          --             --            3,000            30     2,999,970
Costs to raise capital                   --             --             --            --            --   
Warrant transactions                  570,000          2,850           --            --          (2,850)
Common stock redeemed                 (20,000)          (200)          --            --          (5,500)
Preferred stock dividend                 --             --             --            --       3,295,610
Executive compensation                   --             --             --            --           5,000
Warrants granted                         --             --             --            --         356,856
Net loss, September 30, 1998             --             --             --            --            --   
Unrealized loss on marketable
         securities                      --             --             --            --            --   
                                  -----------    -----------    -----------   -----------   -----------
Balance, September 30, 1998       $ 8,567,148    $    42,735    $     3,000   $        30   $ 8,335,647
                                  -----------    -----------    -----------   -----------   -----------
</TABLE>

                      See Notes to Financial Statements


                                       26
<PAGE>


<TABLE>
<CAPTION>
                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                        STATEMENT OF STOCKHOLDERS' EQUITY

                  YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996


                                  Deficit        Retained                                
                                  accumulated    deficit        Unrealized               
                                  during         prior to       loss on         Total    
                                  development    development    marketable   stockholder 
                                  stage          stage          securities     equity    
                                  -----          -----          ----------     ------    
                                                        
<S>                               <C>            <C>            <C>            <C>        
Balance, September 30, 1995       $      --      $  (695,452)   $      --      $     4,634
Common stock issued for cash
         Oct. - Dec., 1995               --             --             --           10,000
         Jan. - Mar., 1996               --             --             --          189,650
         Apr. - Jun., 1996             34,600           --             --           35,000
         July - Sept., 1996    
                                         --             --             --          149,200
Executive compensation                   --             --             --            9,230
Net loss, September 30, 1996         (273,737)          --             --         (273,737)
                                  -----------    -----------    -----------    -----------
Balance, September 30, 1996          (273,737)      (695,452)          --          123,977
Common stock cancelled                   --             --             --             --
Common stock issued for cash
         Jun. - Sep., 1997               --             --             --          337,925
Executive compensation                   --             --             --            9,230
Stock options granted                    --             --             --           54,450
Cost to raise capital                 (32,223)          --             --          (32,223)
Net loss, September 30, 1997         (403,735)          --             --         (403,735)
                                  -----------    -----------    -----------    -----------
Balance, September 30, 1997          (709,695)      (695,452)          --           89,624
Common stock issued for cash             --             --             --           90,625
Common stock issued for R&D              --             --             --          131,250
Common stock issued for note             --             --             --           10,000
Preferred stock issued for cash          --             --             --        3,000,000
Costs to raise capital               (324,800)          --             --         (324,800)
Warrant transactions                     --             --             --             --
Common stock redeemed                    --             --             --           (5,700)
Preferred stock dividend           (3,295,610)          --             --             --
Executive compensation                   --             --             --            5,000
Warrants granted                         --             --             --          356,856
Net loss, September 30, 1998       (1,296,983)          --             --       (1,296,983)
Unrealized loss on marketable
         securities                      --             --          (14,988)       (14,988)
                                  -----------    -----------    -----------    -----------
Balance, September 30, 1998       $(5,627,088)   $  (695,452)   $   (14,988)   $ 2,040,884
                                  -----------    -----------    -----------    -----------
</TABLE>


                       See Notes to Financial Statements

                                      27
<PAGE>


<TABLE>
<CAPTION>
                                        
                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS

             YEARS ENDED SEPTEMBER 30, 1998 AND 1997 AND THE PERIOD
        OCTOBER 1, 1995 (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998

                                                                        October 1, 1995
                                                                              to
                                               1998           1997      September 30, 1998
                                              -------       -------     ------------------    

SALES                                     $      --     $      --      $       --
                                         -------------  -------------  ------------- 

<S>                                           <C>           <C>            <C>    
EXPENSES
         Consulting                           453,979       104,171        717,755
         Depreciation                          18,457          --
                                                                            18,457
         Legal and professional               214,898        33,346        255,730
         Liability insurance                    2,494        11,007
                                                                            13,501
         Miscellaneous                         13,794        24,236
                                                                            52,230
         Office supplies and expenses          27,746         8,138         38,376
         Other expenses                           366           216         44,224
         Rent                                  23,633        52,155         95,563
         Repairs and maintenance                3,180          --            4,680
         Research and development             385,362        69,238        454,600
         Salaries and payroll taxes           153,154        77,230        239,614
         Telephone and utilities               11,538         3,186         16,080
         Travel                                65,025         5,459         86,307
         Write down of mining rights           35,000          --           35,000
                  Total Expenses            1,408,626       388,382      2,072,117

LOSS FROM OPERATIONS                       (1,408,626)     (388,382)    (2,072,117)

OTHER INCOME (EXPENSE)
         Interest income                       52,438         2,957         56,767
         Interest expense                      (5,003)      (18,310)       (23,313)
                                               47,435       (15,353)        33,454

LOSS BEFORE EXTRAORDINARY
  ITEM                                     (1,361,191)     (403,735)    (2,038,663)

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

NET LOSS                                   (1,296,983)     (403,735)    (1,974,455)

                                           (3,295,610)         --       (3,295,610)

NET LOSS ATTRIBUTABLE TO
  COMMON STOCKHOLDERS                     $(4,592,593)  $  (403,735)   $(5,270,065)

NET LOSS PER COMMON SHARE                 $      (.56)  $      (.06)   $      (.73)
</TABLE>


                      (See Notes to Financial Statements)

                                       28
<PAGE>

<TABLE>
<CAPTION>

                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS

             YEARS ENDED SEPTEMBER 30, 1998 and 1997 AND THE PERIOD
        OCTOBER 1, 1995 (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998

                                                                                           October 1, 1995
                                                                                                  to
                                                                1998           1997        September 30, 1998
                                                                ----           ----        ------------------

<S>                                                         <C>            <C>            <C>         
CASH FLOWS FROM OPERATING
 ACTIVITIES
         Net loss                                           $(1,296,983)   $  (403,735)   $(1,974,455)
                                                            -----------    -----------    -----------
         Adjustments to reconcile net loss
           to net cash used in operating
           activities
                  Depreciation and amortization                  18,457           --
                                                                                               18,457
                  Loss on abandoned 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         54,450        536,306
                  Non-cash executive compensation                 5,000          9,230         23,460
                  (Increase) decrease in operating assets
                           Prepaid expenses                        --            9,500           --
                           Interest receivable                    2,883         (2,957)        (1,446)
                           Deposits                             (12,520)         9,500        (13,220)
                  Increase (decrease) in operating
                    liabilities
                           Accounts payable                      (5,933)       (18,633)         6,192
                           Accrued salaries                      40,208         68,000        100,888
                           Accrued interest                      (7,320)         7,320          7,320
                           Settlement payable                   (17,005)        27,005         10,000
                                                            -----------    -----------    -----------
                                    total Adjustments           483,761        163,415        791,092
                                                            -----------    -----------    -----------
NET CASH USED IN OPERATING
  ACTIVITIES                                                   (813,222)      (240,320)    (1,183,363)
                                                            -----------    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
         Loans to related parties                              (234,781)        (4,000)      (269,631)
         Purchase of equipment                                  (96,038)        (1,093)       (97,131)
         Purchase of mining rights                              (40,000)          --          (40,000)
         Purchase of marketable securities                     (400,000)          --         (400,000)
                                                            -----------    -----------    -----------
NET CASH USED IN INVESTING ACTIVITIES                          (770,819)        (5,093)      (806,762)
                                                            -----------    -----------    -----------
</TABLE>

                      (See Notes to Financial Statements)

                                       29

<PAGE>


<TABLE>
<CAPTION>
                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                      STATEMENTS OF CASH FLOWS (continued)

             YEARS ENDED SEPTEMBER 30, 1998 and 1997 AND THE PERIOD
        OCTOBER 1, 1995 (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998

                                                                 October 1, 1995
                                                                       to
                                            1998         1997    September 30, 1998
                                            ----         ----    ------------------


<S>                                       <C>           <C>            <C>    
CASH FLOWS FROM FINANCING ACTIVITIES
         Sale of common stock             90,625        547,125        820,100
         Sale of preferred stock       3,000,000           --        3,000,000
         Costs to raise capital         (324,800)       (32,223)      (357,023)
         Loan payments                      --          (10,000)       (22,000)
         Common stock redeemed            (5,700)          --           (5,700)
                                     -----------    -----------    -----------
NET CASH PROVIDED BY FINANCING
  ACTIVITIES                           2,760,125        504,902      3,435,377
                                     -----------    -----------    -----------

NET INCREASE IN CASH                   1,176,084        259,489      1,445,252

CASH, October 1                          271,360         11,871          2,192
                                     -----------    -----------    -----------

CASH, September 30                   $ 1,447,444    $   271,360    $ 1,447,444
                                     -----------    -----------    -----------
</TABLE>

                      (See Notes to Financial Statements)

                                       30

<PAGE>


                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

     YEARS ENDED SEPTEMBER 30, 1998 AND 1997 AND THE PERIOD OCTOBER 1, 1995
                (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Nature of Business

                  The Company was  incorporated  in 1983 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., 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  devoting its time to raising capital,  product and
                  supplier  development,   and  marketing  future  products.  No
                  products  have been  manufactured  or  marketed  at this time,
                  except  that  the  Company  has   assembled   prototypes   for
                  demonstration and testing purposes.

         Cash and 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 ninety
                  days or less to be cash or cash equivalents.

         Income Taxes

                  The  Company  accounts  for income  taxes in  accordance  with
                  Financial  Accounting  Standards Statement No. 109, Accounting
                  for Income Taxes,  which requires  recognition of deferred tax
                  liabilities   and   assets   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.
 
                                      31
<PAGE>



                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     YEARS ENDED SEPTEMBER 30, 1998 AND 1997 AND THE PERIOD OCTOBER 1, 1995
                (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998


NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Stock-based Compensation

                  The Company  applies  Financial  Accounting  Standards  Boards
                  (FASB)   Statement  No.  123   "Accounting   for   Stock-Based
                  Compensation" 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  FASB  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.

         Loss per Share

                  The  computations  of loss per share of common stock are based
                  on the  weighted  average  number  of  shares  outstanding  of
                  8,238,815  shares  (1998)  and  7,182,690  shares  (1997)  and
                  7,192,546 shares (cumulative period).

         Use of Estimates

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


NOTE 2 - 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, 1998,  the Company has not  experienced  any
         losses  in  such  accounts  and  believes  it is  not  exposed  to  any
         significant credit risk on cash and cash equivalents.
 
                                      32
<PAGE>



                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     YEARS ENDED SEPTEMBER 30, 1998 AND 1997 AND THE PERIOD OCTOBER 1, 1995
                (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998

NOTE 3 - FAIR MARKET 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 &  losses  for  available  for  sale
         securities  are excluded from earnings and reported,  net of any income
         tax  effect  as  a  separate  component  of  stockholders'  equity.  At
         September,  1998, the company had an unrealized loss of $14,988 and the
         accounts were adjusted to reflect the loss.


NOTE 4 - NOTES RECEIVABLE - RELATED PARTY

         In September 1998, the Company loaned $135,000 to a related party.  The
         loan is  collateralized by shares of publicly traded companies having a
         market  value  of  $415,000  at  September  30,  1998.  A  part  of the
         collateral is 60,000 shares of  Environmental  Products &  Technologies
         Corporation stock. Interest accrues at 12% per year.
         Principal and interest are due by December 17, 1998.

         The long-term notes  receivable are due from two  officer-stockholders.
         Both notes bear  interest at 9% per year.  One note is due November 12,
         1999 and the other one is due July 29, 2001.


NOTE 5 - EQUIPMENT

         Equipment and leasehold  improvements are stated at cost.  Depreciation
         is recorded  using the  accelerated  method over the  estimated  useful
         lives of five years.  Additions,  major renewals and replacements  that
         increase the property's useful life are capitalized.

                                                       1998           1997
                                                       ----           ----

                  Office equipment                 $ 30,335         $ 1,093
                  Computer equipment                 63,971             --
                  Leasehold improvements              1,732             --    
                                                   ----------       ----------
                                                     96,038           1,093
                  Accumulated depreciation           18,457             --
                                                   ----------       ----------
                                                   $ 77,581         $ 1,093

                                       33
<PAGE>


                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     YEARS ENDED SEPTEMBER 30, 1998 AND 1997 AND THE PERIOD OCTOBER 1, 1995
                (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998


NOTE 6 - COMMITMENTS

         Pursuant  to a revised  letter  of  understanding  dated May 18,  1998,
         Lifeline  Enterprises,  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 the  Utah  company  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 the Utah company 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 at the market price
         on the date of the  issuance of the shares was recorded as research and
         development and expensed as incurred.

         The Company has 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, 1998 was $520,000.

         The Company  entered into a lease for facilities  beginning  January 1,
         1998.  The lease  calls for a term of two years,  plus an option for an
         additional two years. The minimum annual commitment is as follows:

                                    September 30, 1999                 $30,924
                                    September 30, 2000                   7,788
                                                                       ---------
                                                                       $38,712

         Rent expense was $23,633 for the year, representing minimum rents.

         The Company  entered  into an  agreement  on October 30,  1998,  with a
         supplier to purchase  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 will issue
         10,000  shares of its stock to the supplier.  In addition,  the Company
         has loaned the  supplier  $185,000.  The note calls for interest at the
         rate  of  10%  per  annum  and  is due  June  15,  1999.  The  note  is
         collaterlized by a 71% interest in a mining company.

                                       34
<PAGE>

                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     YEARS ENDED SEPTEMBER 30, 1998 AND 1997 AND THE PERIOD OCTOBER 1, 1995
                (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998

NOTE 7 - STOCK OPTIONS

         In December 1995, the Board of Directors and the shareholders  approved
         the 1996 Stock Option Plan.  The Plan  provides for  non-qualified  and
         incentive  stock options.  The Board has designated  800,000 shares for
         the Plan.  No  options  may be granted  under this plan after  December
         2005, and the Plan terminates September 30, 2006. The exercise price of
         the non-qualified stock option shall not be less than 85 percent of the
         fair market value at the date of grant. The Board of Directors  granted
         330,000  options on July 29, 1997 to outside  consultants  for services
         rendered  to the  Company.  The  option  price,  which was equal to the
         trading  price on the grant date is $.1875 per share.  The  options are
         immediately   exercisable  under  the  plan;  however,  option  holders
         representing  280,000 shares have signed agreements to not exercise the
         option prior to July 15,  1999.  Options of 50,000  remain  immediately
         exercisable.  As of  September  30,  1998 none of the  options had been
         exercised. Under Financial Accounting Standards No. 123, Accounting for
         Stock-Based   Compensation,   options  granted  to  non-employees   are
         recognized  at the fair value of the goods or services  received or the
         fair value of the equity  instrument  issued.  The Company has recorded
         the  service at the fair value of the option on the grant date using an
         option  pricing  model which used the one-year  U.S.  Treasury  rate of
         5.54%,  volatility  of 300, a one year expected  life,  and no expected
         dividends.


NOTE 8 - WARRANTS

         The Board of  Directors  at their  June  1995  meeting  authorized  the
         issuance of 1,200,000  warrants.  These warrants entitled the holder to
         purchase  an equal  number of  capital  stocks at $.05 per  share.  The
         warrants  authorized were purchased 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 Company took back and canceled 30,000 shares.

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

                                       35
<PAGE>

                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     YEARS ENDED SEPTEMBER 30, 1998 AND 1997 AND THE PERIOD OCTOBER 1, 1995
                (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998

NOTE 9 - CONVERTIBLE PREFERRED STOCK

         In March 1998, the Board of Directors  authorized the issuance of 3,000
         Series A  convertible  preferred  stock and  300,000  warrants  and the
         reserving of shares of common stock for issuance upon the conversion of
         the preferred  stock and exercise of the  warrants.  The holders of the
         Series A  convertible  preferred  stock  are not  entitled  to  receive
         dividends.  The preferred stock can be converted to common stock at the
         fixed or variable conversion price, whichever is more beneficial to the
         stockholder.  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  fifteen  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 that can be redeemed 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 six percent  (on an  annualized  basis) of the
         stated value of the  preferred  shares.  The  securities  issued have a
         below-market  conversion  feature  which  the  Company  recorded  as  a
         preferred  stock dividend in April 1998. At September 30, 1998, none of
         the holders of the  preferred  stock had  converted  their  shares into
         shares of common stock.


NOTE 10 - STOCK OPTIONS AND WARRANTS OUTSTANDING

                                Options/  Exercise
                                Warrants    Price      Exercise Date
                                --------    -----      -------------

         Options granted      280,000    $ .1875       July 16, 1999 to
                                                       September 30, 2006
         Options granted       50,000      .1875       Up to September 30, 2006
         Warrants issued      300,000     2.0000       Up to January 21, 2001
         Warrants issued      300,000     3.8750       Up to April, 2003
                              -------

         Options/warrants outstanding
                  at September 30, 1998     930,000
                                            -------
         Options/Warrants exercisable
                  at September 30, 1998     650,000
                                            -------

                                      36
<PAGE>



                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

       YEARS ENDED SEPTEMBER 30, 1998 AND 1997 AND THE PERIOD OCTOBER 1,
             1995 (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998


NOTE 11 - COMMON STOCK SPLIT

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


NOTE 12 - EXECUTIVE COMPENSATION

         An officer - stockholder 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 1998 and  $9,230  for 1997.
         These  amounts have been  charged to income and recorded as  additional
         paid-in capital.


NOTE 13 - INCOME TAXES

         The Company has available at September 30, 1998,  unused operating loss
         carryforwards  that may be applied  against  future  taxable income and
         that expire as follows:

                         September 30, 2018                  $ 1,257,000
                         September 30, 2012                      340,055
                         September 30, 2011                      264,507
                         September 30, 2010                       23,133
                         September 30, 2003                      530,859
                         September 30, 2004                       15,507
                         September 30, 2005                        1,061
                                                             --------------
                         Total                               $ 2,432,122
                                                             --------------

         No deferred  tax asset has been  recorded,  as there is a more than 50%
         chance that the loss carryovers will expire unused.

                                       37
<PAGE>


                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     YEARS ENDED SEPTEMBER 30, 1998 AND 1997 AND THE PERIOD OCTOBER 1, 1995
                (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998


NOTE 14 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
                                                                    October 1, 1995
                                                                          to
                                                1998        1997    September 30, 1998
                                                -----     --------  ------------------


<S>                                         <C>          <C>         <C>     
         Cash paid during the year for
                  Interest                  $  12,323    $ 10,990    $ 25,713
</TABLE>


NOTE 15 - RELATED PARTY TRANSACTIONS

         A  corporation  owned by an  officer-stockholder  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-stockholder.

         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.

         In May 1998, a stockholder of Lifeline  Enterprises  became an employee
         of the Company.  Cash payments to Lifeline for research and development
         for 1998 amounted to $168,211. 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 (see Note 6).


NOTE 16 - EXTRAORDINARY ITEM

         The  Company  settled a note  payable and  accrued  compensation  which
         resulted in a gain on the  extinguishment of debt of $64,208.  The gain
         will reduce the current  year's net operation  loss by the same amount.
         This  extraordinary  item amounted to a $.007 gain per weighted average
         common share.
 
                                      38
<PAGE>


                ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

       YEARS ENDED SEPTEMBER 30, 1998 AND 1997 AND THE PERIOD OCTOBER 1,
             1995 (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998


NOTE 17 - 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 an 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.


NOTE 18 - RELATED ENTITIES

         The Company  incorporated  fourteen  companies in July and August 1998.
         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.


NOTE 19 - NEW ACCOUNTING PRONOUNCEMENTS

         In June, 1997, the FASB issued Financial Accounting Standards Statement
         No. 130, Reporting  Comprehensive Income and No. 131, Disclosures about
         Segments  of an  Enterprise  Related  Information.  Statement  No.  130
         established standards for reporting and display of comprehensive income
         and  its  components  in  a  full  set  of  general-purpose   financial
         statements.   The   Company   will  be  required  to  comply  with  the
         requirements  of statement  No. 130 for the year ending  September  30,
         1999.  Statement No. 131 establishes revised guidelines for determining
         an  entity's  operating  segments  and the type and level of  finencial
         information  to$be  disclosed.  The Company  will be required to comply
         with the requmrements$of Statement No. 131 in the yeav ending$September
         30,$ 1999.  The  Company  believes  that  the  implementation  of tlese
  $      statements  will $not  have  a  smgnificant  impagt  on tle  nature  of
$       $information disglosed in the Company's financial statements.

       $               $               79
<PAGE>


$       $       ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
     $       $            (A Development Stage Company)

  $       $         NOTES TO FINANGIAL STATEMENTS ,CONTINUED)

     YEARS ENDED WEPTEMBER 30, 1998 AND 1997 AND THE PERIOD OCTOBER 1, 1995
            $   (DATE OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 1998


NOTE 60 - SUBSEQUENT EVENT

       $ There has been a  decline  in the  value of the  marketable  securities
         subsequent to the  year-end.  As of the close of trading on December 1,
         1998, the value of the marketable securities was $253,000.

                                       40
<PAGE>


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

                  None.



51601:029
                                       41

<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..........  64       President, Chief Executive Officer and Director
Joel G. Wadman........  38       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.



51601:029
                                       42

<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        1996     -0-       -0-          -0-
                                       1997     -0-       -0-          -0-
                                       1998     -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


51601:029
                                       43

<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.

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............................... 3,868,412                   45.15%
Morris L. Lerner..............................562,000                    6.56%
Joel G. Wadman.................................50,000                    0.58%
All directors and executive officers of the
Company as a group (2 persons)..............3,918,412                   45.74%

(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 November
12, 1999.

         On November 1, 1995, a company  controlled by Marvin  Mears,  the Chief
Executive Officer, President and a Director of the Company, issued a note to the
Company in the  original  principal  amount of $35,000 (the "Mears  Note").  The
Mears Note bears interest at the rate of 9% per annum and matures on November 1,
1998. Interest has not been paid on the Mears Note and as of September 30, 1997,

51601:029
                                       44

<PAGE>

accrued interest on the Mears Note totaled $4,329. The Mears Note was repaid and
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 August 1996, in satisfaction for acquiring odor control  application
technology from Ronald Knudsen, formerly a Manager of Product Development of the
Company,  the Company  issued to Mr.  Knudsen a promissory  note in the original
principal  amount of $125,000  (the  "Knudsen  Note").  The  Knudsen  Note bears
interest at the rate of 12% per annum and matures on August 1, 1998. The Knudsen
Note contains an  acceleration  clause that requires full principal and interest
payments  within ten business days of the completion of a secondary  offering to
the public of at least  $3,000,000.  The  Knudsen  Note has been  repaid in full
resulting in an extraordinary gain on the extinguishment of debt.

         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.

         An  officer  of  SPC is a  shareholder  of the  Company.  SPC  rendered
consulting services to the Company in the amount of $84,186 for 1998.

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


51601:029 26

                                       45
<PAGE>



Item 13.          EXHIBITS AND REPORTS ON FORM 8-K

                  (a)      The  following  exhibits  are  filed  as part of this
                           report as required by Item 601 of Regulation S-B:
<TABLE>
<CAPTION>

         Exhibit Number             Description of Exhibit
         --------------             ----------------------

         <S>                        <C>                                       
         3.1                        Certificate of Incorporation of the Registrant (2)
         3.2                        Bylaws of the Registrant (2)
         3.3                        Certificate of Designation, Preferences and Rights (1)
         4.1                        Articles of Incorporation of the Registrant (incorporated by reference to
                                    Exhibit 3.1)
         4.2                        Form of Common Stock Certificate (2)
         10.1                       Securities Purchase Agreement dated as of March 31, 1998 by and
                                    between  the Registrant and each of Diversified Strategies fund, L.P. and
                                    JNC Opportunity Fund, Ltd. (1)
         10.2                       Warrant to purchase 137,500 shares of Common Stock of the Registrant
                                    issued to JNC Opportunity Fund, Ltd. (1)
         10.3                       Warrant to purchase 12,500 shares of Common Stock of the Registrant
                                    issued to Diversified Strategies Fund, L.P. (1)
         10.4                       Registration Rights Agreement dated as of March 31, 1998 by and between
                                    the Registrant and each of Diversified Strategies Fund, L.P. and JNC
                                    Opportunity Fund, Ltd. (1)
         10.5                       Consulting Agreement dated January 22, 1998 by and between the
                                    Registrant and Strategic Planning Consultants, Inc. (2)
         10.6                       Warrant to purchase 200,000 shares of Common Stock of the Registrant
                                    issued to Jonathan Fink (the "Fink Warrant") at an exercise price of $.10 per
                                    share (2)
         10.7                       Letter agreement from Jonathan Fink to the Registrant agreeing to exercise
                                    the Fink Warrant (2)
         10.8                       Warrant to purchase 100,000 shares of Common Stock of the Registrant
                                    issued to Brad Billik (the "Billik Warrant") at an exercise price of $.10 per
                                    share (2)
         10.9                       Letter agreement from Brad Billik to the Registrant agreeing to exercise the
                                    Billik Warrant (2)
         10.10                      Warrant to purchase 100,000 shares of Common
                                    Stock of the  Registrant  issued to Jonathan
                                    Fink at an exercise price of $4.00 per share
                                    (2)
         10.11                      Warrant to purchase  50,000 shares of Common
                                    Stock  of  the  Registrant  issued  to  Brad
                                    Billik  at an  exercise  price of $4.00  per
                                    share (2)
         10.12                      Lease Agreement dated December 3, 1997 by and between the Registrant
                                    and Westlake Industrial Complex (2)
         10.13                      1996 Stock Option Plan and related agreements (2) +
         10.14                      Employment Agreement dated as of April 15, 1998 by and between the
                                    Registrant and Marvin Mears (2) +
         10.15                      [Intentionally Omitted]
         10.16                      Promissory Note issued to Registrant by Morris Lerner (2)
         10.17                      Promissory Note issued to the Registrant by Combined Assets, Inc. (2)
         10.18                      Promissory Note issued by the Registrant to Ronald Knudsen (2)
         10.19                      Agreement with Lifeline Enterprises L.L.C. (2)
         10.20                      Promissory Note issued to Registrant by Marvin Mears (3)
         10.21                      Letter of Intent dated December 12, 1998 by and between the Registrant
                                    and National D.E. Systems, Inc. (3)
         27.1                       Financial Data Schedule (3)
</TABLE>

51601:029
                                       46

<PAGE>

<TABLE>
<CAPTION>
[FOOTNOTES TO DESCRIPTION OF EXHIBITS]

<S>      <C>            
(1)      Incorporated by reference to the Company's Registration Statement on Form SB-2 (Registration
         No. 333-53397) filed on May 22, 1998 (the "Registration Statement")
(2)      Incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed
         August 18, 1998.
(3)      Filed herewith
 +       Management Contract or Compensation Plan


                  (b)      Reports on Form 8-K

                  None.
</TABLE>

51601:029
                                       47

<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 __, 1998.

                       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

51601:029
                                       48