SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    Form 10-K

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

                   For the fiscal year ended October 31, 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 0-17430

                                  DANZER CORP.

             (Exact name of registrant as specified in its charter)

          New York                                    13-3431486
(State of other jurisdiction of                      (IRS Employer
incorporation or organization)                      Identification No.)

17500 York Road                                       21740
Hagerstown, Maryland                                 (Zip Code)
(Address of principal executive offices)

                                 (301) 582-2000
              (Registrant's telephone number, including area code)

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

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

                        Common Stock ($0.0001 par value)
                                (Title of Class)

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

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

As of October 31, 1998, the aggregate market value of the Company's common stock
held by non-affiliates of the registrant, based on the average bid and ask
price, was approximately $1,340,849.

As of November 19, 1999, the registrant had 17,589,348 shares of common stock
outstanding.



                                     PAGE 1

<PAGE>


                                     PART I
ITEM 1.  BUSINESS.

In addition to historical information, this annual report on Form 10-K contains
forward-looking statements that involve risks and uncertainties that could cause
actual results to differ materially. Factors that might cause or contribute to
such differences include, but are not limited to, those discussed in the section
entitled "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations." Readers should carefully review the risks described
in this and other documents that the Company files from time to time with the
Securities and Exchange Commission, including the quarterly reports on Form 10-Q
to be filed by the Company in 1999. Readers are cautioned not to place undue
reliance on the forward-looking statements, which speak only to the date of this
Annual Report on Form 10-K. The Company undertakes no obligation to publicly
release any revisions to the forward-looking statements or reflect events or
circumstances after the date of this document.

General:

In fiscal 1998, the shareholders of Global Environmental Corp. ("Global")
authorized Global to change its name to Danzer Corporation ("Danzer" or the
"Company"). The name change was effected in fiscal 1999.

Danzer, through its wholly owned subsidiary, Danzer Industries, Inc. ("DII"),
fabricates metal parts and truck bodies for the service and utility markets. In
fiscal year 1998, the Company sold off its Airline business unit and stopped
servicing another major customer, Schindler Elevator, consistent with the
Company's strategic decision in fiscal year 1997 to focus only on producing
steel truck bodies and other accessories for the service and utility markets. By
the end of fiscal year 1998, the Company achieved this goal.

History and Development of Business:

Danzer, formerly named Affiliated National, Inc., was incorporated in New York
in 1987 under the name Global Environmental Corp. In January 1988, Danzer
completed an initial underwritten public offering of 400,000 units for an
offering price of $1.00 per unit. Each unit consisted of one share of common
stock, three Class A Warrants and three Class B Warrants.

In August 1988, Danzer acquired all of the outstanding capital stock of Global
Holdings. In June 1988, Global Holdings purchased all of the outstanding capital
stock of DII from its sole shareholder. DII is located in Hagerstown, Maryland
and has the ability to produce and install a wide range of custom designed and
engineered fabricated metal products.

In November 1988, Global Holdings' newly incorporated subsidiary, Texcon,
purchased certain assets from a manufacturing concern (Texcon Inc., a South
Carolina corporation), located in Greenville, SC. The assets acquired consisted
of contracts to produce engineering and design services for pollution control
systems as well as assets used in air monitoring and testing.

In December 1988, Global Holdings' newly incorporated subsidiary, Rage, acquired
substantially all of the assets of Rage Engineering, Inc., located in
Plumsteadville, PA. Rage designed and assembled pneumatic handling systems used
in the processing of bulk materials in manufacturing and pollution control
processes.

In August 1993, the Company acquired the assets of Morrison Industries L.P., a
manufacturer of specialized utility truck bodies and moved these assets to its
manufacturing facilities. The Company began production of the Morrison bodies in
December 1993. Prior to this date, the Company produced its own proprietary
truck bodies.

In October 1994, the Company's Texcon subsidiary was closed. All Texcon products
and systems were then marketed under Rage and/or Global Environmental Corp.



                                     PAGE 2
<PAGE>

In June 1996, the Company sold Rage Inc. to William V. Rice in exchange for
517,000 shares of Danzer and cancellation of his employment agreement and a cash
payment by the Company.

In August 1997, the Company decided that the future of Danzer was in the metal
fabrication business as it related to the manufacture and distribution of truck
bodies for the service and utility market. A strategic direction was established
that called for the phase out of all business that was not associated with truck
bodies by the end of the first quarter of fiscal year 1998.

In November 1997, the Company sold the Airline division, which produced all of
the air movement and pollution control products and systems, to Rage, Inc. for
$413,000, with $150,000 paid at closing and the remaining $263,000 taken in the
form of a 6% promissory note secured by the Airline assets and maturing May 19,
2001. At October 31, 1998, Rage had made $70,000 in payments pursuant to the
Note, and was current on its obligations.

In the fiscal second quarter of 1998, Danzer shipped the last orders for
Schindler Elevator, an elevator manufacturer, and has collected the related
receivables. For the year ended October 31, 1998, the Company booked
approximately $304,000, or 4% of sales, to Schindler, and further recorded sales
of approximately $1.1 million, or 13% of sales, in fiscal year 1997. Despite
this loss of revenue, the Company believes the benefits of eliminating this
relationship will far outweigh the costs, as it will allow the Company to focus
on its core business, thereby allowing it to better compete through a higher
level of service and increased manufacturing efficiencies.

Substantial business developments:

     During the first quarter of fiscal 1994, the Company entered into a joint
     venture agreement with Cadema Corporation. During the term of the joint
     venture terminating December 31, 1998 (unless otherwise extended), the
     joint venture has the right to contract for the design and installation of
     air pollution control equipment in the Company's name in all areas of the
     world outside the United States and its territories. The joint venture has
     expired and no future operations are expected.

     In September 1994, Danzer completed a private offering of 7,550 shares of
     10% Cumulative Convertible Senior Preferred Stock (the `10% Preferred') at
     $100 per share. Each share of the 10% Preferred was converted into 200
     shares of common stock.

     On December 31, 1994, Renaissance Capital Partners, Ltd. (`Renaissance')
     exchanged $1,600,000 principal amount of the Company's 12.5% Convertible
     Debentures for 16,000 shares of the Company's Series B Cumulative
     Convertible Senior Preferred Stock ("Series B Preferred") at $100 per
     share. The Company also issued Renaissance a 10% Term Note in the principal
     amount of $211,635 due December 31, 1997 representing interest accrued on
     the Convertible Debentures through September 30, 1994. Each Series B
     Preferred share was convertible into 200 shares of common stock.

     In August 1995, the Company issued 1,200,000 shares through a private
     placement for $300,000. 1,000,000 shares were issued to R. W. Snyder and
     200,000 shares were issued to Renaissance.

     During fiscal 1996 and 1997, the holders of the 10% Preferred and the
     Series B Preferred converted their shares and accrued dividends to common
     stock at a conversion rate of $0.25 per share.

     In March 1997, Renaissance loaned the Company $150,000 in the form of a 10%
     Convertible Promissory Note ("Note"), convertible into common stock at
     $0.25 per share. The note provided that Renaissance would convert the
     entire principal into 600,000 shares of common stock upon the Company
     obtaining a loan secured by a lien on the land and improvements owned by
     Danzer under terms acceptable to Renaissance.


                                     PAGE 3

<PAGE>

     Effective August 1997, Duncan-Smith Co. ("DSC") loaned DII $650,000
     pursuant to an 11% Promissory Note ("DSC Note") secured by a lien on all
     real property and improvements owned by DII, including the manufacturing
     facility in Hagerstown, MD. To effectuate the DSC Note, Fremont Financial
     Corporation ("Fremont"), the Company's working capital lender, agreed to
     subordinate its previously senior position in the Company's real property
     and improvements, including the manufacturing facility in Hagerstown,
     Maryland, to the DSC Note.

     Contemporaneous with the closing of the DSC Note, Renaissance, in
     accordance with the provisions of its Note, converted the entire note into
     600,000 shares of common stock.

     In August 1997, the Company made a strategic decision to focus solely on
     the manufacturing of truck bodies and accessories for the service and
     utility markets. Management believes this renewed focus will allow the
     Company to maximize shareholder value by eliminating non-synergistic
     operations, increasing manufacturing efficiencies, streamlining capital
     resources, reducing overall cost structure and enabling the Company to
     better compete in its core business.

     In November 1997, the Airline division was sold to William Rice. By the end
     of the 1998 fiscal second quarter, the Company had ceased fulfilling the
     Schindler account. Schindler made up approximately 13% of the Company's
     sales in fiscal 1997, or about $1.1 million, and approximately 4% of the
     Company's sales in fiscal 1998, or about $304,000. The Company believes the
     loss of revenue from Airline and Schindler will be more than offset by the
     Company's ability to compete better by providing a higher level of service,
     and from production efficiencies gained by concentrating on a single
     product line.

     At the annual Shareholder's meeting held December 1997, the Company elected
     a new Board of Directors consisting of Goodhue W. Smith, III, Chairman of
     the Board, Stephen C. Davis, Russell G. Cleveland and William L. Pryor,
     III.

     In December 1997, R.W. Schuster retired as President and CEO of the
     Company. Stephen C. Davis, a member of the Company's Board of Directors,
     took over as interim CEO and agreed to lead the search for a new President
     and CEO.

     In December 1997, Renaissance agreed to loan the Company $150,000 pursuant
     to a 10% promissory note secured by substantially all of the assets of the
     Company. All interest and principal due under the note was payable on or
     before September 30, 1998. At October 31, 1998, the Company was in default
     on the obligation, which default was satisfied subsequent to October 31,
     1998 when Renaissance converted the entire Note, plus accrued interest
     through the date of conversion, into shares of the Company's common stock
     at a rate of $0.10 per share.

     In March 1998, the Company hired Mr. M.E. Williams as President and CEO.
     Mr. Williams has over 30 years of experience in manufacturing and 7 years
     of truck body manufacturing experience. Mr. Williams became a director of
     the Company during the 1999 fiscal year.

Description of the Business:

Danzer is a holding company and through DII, its sole operating subsidiary, it
engages in the manufacturing and marketing of specialized truck bodies for the
service and utility markets. The truck body market is large and growing. The
National Truck and Equipment Association believes 400,000 commercial truck
bodies were manufactured in 1996, while the truck equipment market had 4%
industry growth in 1996 and 1997, which growth is expected to continue through
the year 2000.

Management believes the service and utility portion of the commercial truck body
market may be growing at a faster rate based on information from the American
Institute of Service Body Manufacturers. In addition, we believe downstream
users such as cable, utility and media service providers are and will continue
to make large capital investments in their own infrastructures to ensure their
ability to compete in newly deregulated markets. These factors are the primary
reasons why the Company shifted its strategy in 1997 to focus solely on the
service and utility truck body market.


                                     PAGE 4
<PAGE>

Manufacturing Capabilities:

The Company's manufacturing activities are located at DII's operating facility
in Hagerstown, Maryland where the Company produces truck bodies for sale under
the Morrison trademark as well as bodies built to order for other original
equipment truck manufacturers. The standard body sizes are 96, 108 and 132
inches in length and are painted with a finish paint or primer depending on
customer requirements. The Company outsources certain small parts such as door
cables, door gaskets, hinges and locks. The equipment used at the DII facility
enables the Company to fabricate certain metal products up to 1/2 inches thick.
Materials used include aluminum, stainless steel, and mild steel in both sheet
and plate. The finished bodies are shipped to customers for installation on
truck body chassis. DII offers heliarc and MIG welding, brazing, forming,
assembly, and painting services to its customers, and also maintains in-house
design and engineering capabilities.

Government Regulation:

The Company is subject to regulation by federal, state, and local agencies that
have jurisdiction over areas such as environmental and fire hazard control
issues and regulate the work place to insure safe working conditions for the
Company's employees. These regulatory bodies could take actions that would have
a material adverse affect upon the Company's ability to do business. The
business of the Company does not subject it to any special regulatory authority.

Competition:

There are a significant number of companies engaged in the manufacture of
service truck bodies in the United States. While many of these companies are
relatively small and do not possess the Company's technical capacity, a number
of its competitors are much larger and possess equal or greater technical and
financial resources. Four such competitors are: Knapheide Manufacturing Co.,
Omaha Standard, Inc., Reading Body Works, Inc., and Stahl, a Scott Fetzer Co.,
which is a wholly owned subsidiary of Berkshire Hathaway, Inc. The Company
competes with others in its industry through price and service, with price being
the most important factor.

Marketing:

The Company's manufacturing operation generally markets to customers within the
Eastern United States. DII markets its Morrison product through an internal
sales force with its members having exclusive territories and paid commissions
on all sales from a specific territory based upon payments made by the customer.
Commission is calculated based upon sales achieved. The Company also has
representatives attend regional and national trade shows. The Company offers
truck bodies made to individually specified requirements of its customers.

Principal Customers:

During the fiscal year ended October 31, 1998, the Company had one customer that
represented 10% or more of total net sales: Mobile Tool International, a truck
body supplier. In the year ended October 31, 1998, the Company had sales of
$4.18 million to Mobile Tool, or approximately 55% of total revenue booked for
the year.

Manufacturing and Facilities:

The Company purchases its raw materials from numerous suppliers and has not had
any difficulty in obtaining components or raw materials. DII purchases
domestically produced and imported sheet metal from a number of distributors and
is not dependent upon any particular source of supply. The Company bears the
risks of its products and systems not conforming to customer specifications, but
in most cases, defects and deficiencies are correctable. Management believes
that the Company's existing manufacturing and office facilities are adequate to
meet its present needs and anticipated growth.




                                     PAGE 5
<PAGE>

In July 1998, the Company entered into a purchase agreement with US Amada and
Amada Credit (a subsidiary of US Amada) (together referred to as "Amada") for
two CNC punch presses and a new CNC brake press valued at $826,000. In exchange
for the new equipment, the Company traded in an older CNC punch press having a
trade-in value of $235,000, resulting in a net obligation to Amada of
approximately $590,000. The result of the transaction was to add a new punch
press and a new brake press to the Company's equipment line with no cash down
and without increasing the monthly payment due to Amada. Although the term of
the equipment financing has been extended from September 1999 to January 2005,
the benefits of the transaction to the Company are significant as it has
increased manufacturing capacity while reducing production risks associated with
having only a single punch press to produce all units.

Employees:

As of October 31, 1998, Danzer had approximately 75 employees. Of these
employees, 20 are involved in sales, administration and engineering, and 55 are
in manufacturing, installation and servicing of Danzer's products. The 55
employees are represented by a labor union. Danzer believes its employee
relations are satisfactory.

Patents and Proprietary Technology:

The Company does not rely on any patents, registered trademarks, or special
licenses to give it a competitive advantage. The Company's position in its
industry depends mainly on its ability to offer competitive pricing. The Company
did not incur, during any of its last three fiscal years, and does not
contemplate incurring, any material research and development expenses.

Insurance:

The Company carries a broad range of insurance coverage which management
considers sufficient to provide acceptable levels of financial resources to
protect the employees, assets, and operations of the Company that may be
negatively affected in the event of a loss. The Company does not currently
maintain, and in the future may not choose to or may not be able to obtain,
coverage for liabilities arising from environmental damage, professional design
deficiencies or other circumstances which could arise as a result of the type of
business in which the Company engages. To date, the Company has not had
difficulty in obtaining insurance. However, if the Company should be unable to
obtain adequate insurance or should decide to operate without insurance, a
partially or completely uninsured claim against the Company, if successful and
of sufficient magnitude, could have a material adverse affect upon the Company's
business or its financial condition.

Seasonality:

The Company's business has not generally been seasonal in the past. However, the
Company has historically experienced a reduced flow of orders during late
November, December and early January. No seasonal modification of the Company's
production schedule or staffing is required under normal business circumstances.

Warranties:

In connection with most contracts for manufacture the Company warrants its
product to be free from defects in material and workmanship and performance
under normal use and service for a period of twelve months after shipment. The
obligation of the Company is generally limited to the repair or replacement of
the defective product.


                                     PAGE 6
<PAGE>

Backlog:

At October 31, 1998, the Company's backlog was approximately $1,453,000, which
is expected to be filled within the 1999 fiscal year.

Export Sales:

No sales of goods were exported to foreign countries during the fiscal years
ended October 31, 1998 or 1997.

ITEM 2.  PROPERTIES

DII owns its principal manufacturing facility that is located in an 80,000
square foot plant on an eleven acre site in Hagerstown, Maryland, near the
intersection of two major interstate highways. Approximately 75,000 square feet
are used in manufacturing and 5,000 square feet are used as office space. This
property secures the DSC Note and the Company's revolving credit facility with
Fremont.

The Company believes that all of its properties, plants and equipment are well
maintained and adequate for its requirements. The Company also believes that all
of its properties are adequately covered by insurance.

ITEM 3.  LEGAL PROCEEDINGS

None

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

None.


                                     PART II

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

Danzer's common stock was listed on the National Association of Security Dealers
Automated Quotations System (NASDAQ) under the symbol "GLEN" until September 29,
1993 at which time the Company was "delisted". Danzer's common stock is
currently traded on the Over-the-Counter Electronic Bulletin Board. The
following table sets forth the high and low bid quotations for the common stock
for the fiscal quarters indicated.

Fiscal 1997
                                       High                      Low

First Quarter                       $ 0.4063                  $ 0.1875
Second Quarter                      $ 0.2813                  $ 0.2188
Third Quarter                       $ 0.3125                  $ 0.2188
Fourth Quarter                      $ 0.2188                  $ 0.1250

Fiscal 1998
                                       High                      Low
First Quarter                       $ 0.1875                  $ 0.0625
Second Quarter                      $ 0.1600                  $ 0.0850
Third Quarter                       $ 0.1563                  $ 0.0950
Fourth Quarter                      $ 0.1200                  $ 0.0850



                                     PAGE 7
<PAGE>

The above quotations reflect inter-dealer prices, and may not include retail
mark-up, mark down or commissions and may not necessarily represent actual
transactions.

At October 31, 1998, there were approximately 814 holders of record of Danzer's
common stock. Most of the shares of the common stock are held in street name for
a larger number of beneficial owners. To date Danzer has not paid a cash
dividend on its common stock The payment and amount of any future cash dividends
would be restricted by the Company's lender and will necessarily depend upon
conditions such as the Company's earnings, financial condition, working capital
requirements and other factors.

ITEM 6.  SELECTED FINANCIAL DATA.

The following table sets forth certain selected consolidated financial
information concerning the Company. This information is not covered by the
independent auditor's report. For further information, see the accompanying
Consolidated Financial Statements of Global Environmental Corp. and subsidiary
for the years ended October 31, 1998, 1997, and 1996, and the information set
forth in Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations", and in Item 8, "Financial Statements and
Supplementary data" below.

Selected Consolidated Financial Information

The following information is a summary of the consolidated financial statements
of the Company included elsewhere and should be read in connection with such
consolidated financial statements.



                                     PAGE 8
<PAGE>


<TABLE>
<CAPTION>
Operating Data:                                         Year Ended October 31,
                                            (Amounts in thousands, except per share data)


                                            1998     1997     1996     1995     1994
                                            ----     ----     ----     ----     ----
<S>                                         <C>      <C>       <C>     <C>      <C>
Net sales                                   $7,605   $8,762    $8,154  $7,580   $6,648

Income (loss) from operations                  391  (   226) (    283) (   90)  (  730)

Income (loss) from continuing operations       175  (   323)  (   366) (  228) (   975)

Income (loss) from discontinued operations       -        -   (   347) (  161) (     4)

Income (loss) from sale of  Rage Inc.            -        -  (    215)      -        -

Net Income (loss)                              175   (  323)  (   928) (  389) (   979)

Net income (loss) per share and fully-diluted
net income (loss) per share attributable to common
shareholders;

Continuing Operations                         0.01    (0.02)    (0.32)  (0.32)   (0.52)
Discontinued Operations                          -        -     (0.09)   0.06     0.10
Loss to Disposal                                 -        -     (0.09)      -        -
Total                                         0.01    (0.02)    (0.50)  (0.26)   (0.42)

Weighted average number of shares
 outstanding                                15,775   13,601     2,340   2,370    2,361
</TABLE>

<TABLE>
<CAPTION>
Balance Sheet Data:                                           As of October 31______________

                                            1998           1997          1996             1995            1994
                                            ----           ----          ----             ----            ----
<S>                                      <C>              <C>        <C>               <C>              <C>
Working capital (deficiency)             (263,665)        132,578    (401,536)         360,594          (541,111)

Total assets                            3,558,497       3,723,463   4,306,496        3,891,158         4,777,233

Long-term debt, including
    current portion                     2,065,149       2,177,145   1,888,907        1,786,628         3,910,253

Stockholders' equity (deficiency)         247,055          71,815     207,056          560,487        (  353,062)
</TABLE>



                                     PAGE 9
<PAGE>


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

Results of Operations

Fiscal 1998 Compared to Fiscal 1997

Revenues are down $1.2 million in comparison to fiscal year 1997. Revenues
declined $3 million in fiscal 1998 due to the sale of the Airline division in
November 1997 and the decision to stop servicing the Schindler Elevator account.
These decisions were made according to management's strategic plan to focus the
business entirely on the service and utility truck body market. The loss of
revenues was partially offset by a $1.8 million increase in new and replacement
truck sales to the Company's primary customer, Mobile Tool International. The
sales for the Company's branded line, Morrison, remained unchanged from fiscal
year 1997 at $1.6 million in revenue.

Management implemented a plan to increase the brand awareness of Morrison during
fiscal year 1998. The objective of the plan was to generate an additional $1
million in revenue during fiscal 1999. This plan included the hiring of a Chief
Executive Officer with truck industry experience, and providing additional sales
coverage and product awareness. A national sales manager was hired in February
1998 and M.E. Williams was named the CEO in March 1998.

Due to the sale of Airline and the discontinuance of the Schindler Elevator
account, the Company freed up additional manufacturing capacity at its Danzer
facility allowing it to produce additional truck bodies for Mobile Tool
International. This increased volume on the Mobile Tool account also helped
increase gross margins on the Morrison account, which rose to approximately 34%.
As a whole, the Company experienced an additional $436,000 in gross profit over
fiscal 1997 that more than offset the margins lost due to the sale of the
Airline division and the discontinuance of the Schindler Elevator account.

Selling, general and administrative expenses were $182,000 lower for the year
ended October 31, 1998 in comparison to the 1997 fiscal year, of which
approximately $100,000 in cost savings were realized due to the elimination of
support salaries and benefits associated with the sale of the Airline division.
The Company's provision for bad debt expense was also reduced from $305,000 to
$44,000 because of aggressive efforts to collect Airline accounts receivable
together with the implementation of a new credit policy for new accounts. Legal
expenses were $25,000 lower due to the Company's decision to change law firms,
and consulting fees were lower by $40,000 due to the Company's decision to stop
a Total Quality Manufacturing ("TQM") program. Management felt that any benefits
from the TQM program were far outweighed by the associated costs of continuing
it. Partially offsetting these lower costs was $60,000 in recruitment and
relocation expenses incurred during the fiscal year to hire a new Chief
Executive Officer and a new Chief Financial Officer.

Interest expense for fiscal 1998 was $200,526, which was relatively unchanged
from interest expense of $201,627 for fiscal 1997.

Fiscal 1997 Compared to Fiscal 1996

Sales volume increased approximately $600,000 from its fiscal 1996 level due to
increased sales of both truck bodies and air movement product lines. The Company
believes that the truck body market is firm and expects expansion in 1998. The
air movement segment of the business did not appear to be growing, and was sold
in 1998.

The Company's gross profit margin increased from 14.2% to 17.2% during fiscal
1997. The increase was due to the decrease in inefficiencies of the Morrison
product line and an increase in manufacturing operations which decreased the
effect of fixed manufacturing costs on gross profit.


                                    PAGE 10
<PAGE>

Consolidated backlog at October 31, 1997 was approximately $1.4 million versus
approximately $2.3 million at October 31, 1996.

The selling, general and administrative costs increased from the fiscal 1996
level by approximately $150,000 as a result of higher sales and marketing costs.
Selling, general and administrative costs also increased as a percentage of net
sales from 19.4% to 19.8%.

The Company's net loss before discontinued operations during fiscal 1997 was
$323,000, a decrease of $179,000 over the fiscal 1996 loss. The decrease in the
Company's loss was primarily due to increases in production efficiencies
associated with manufacturing operations and an increase in net sales offset by
higher selling, general and administrative costs.

Liquidity and Capital Resources

The cash flow statement showed a $68,933 decrease in cash for fiscal year 1998.
Net cash provided by operations was $630,794, which was generated primarily from
$175,240 in net income, a $418,502 reduction in accounts receivable, and a
$181,127 decrease in inventory. These cash increases from operations were
partially offset by an increase in other assets of $160,000, which represents a
buyout of the Morrison royalty that closed in fiscal 1999, and a decrease in
accounts payable of $201,007. Accounts receivable was lower due to a decrease in
sales volume resulting from the sale of Airline and the discontinuance of the
Schindler Elevator account, together with improvements in the collection of
outstanding receivables. The drop in inventory was also due to the sale of the
Airline inventory and the elimination of inventory for the Schindler Elevator
account.

In December 1997, the Company was in a weakened cash position due to the loss of
revenue from the sale of the Airline division and the discontinuance of the
Schindler Elevator account. As a result, the Company agreed to borrow $150,000
from Renaissance pursuant to a 10% Secured Promissory Note (the "Note") secured
by all of the assets of Danzer and DII and subordinate to the DSC Mortgage and
the Company's revolving credit facility with Fremont Financial Corporation. On
December 23, 1997, Renaissance advanced $71,000 to the Company pursuant to the
Note and on March 4, 1998, Renaissance advanced the final $79,000 to the Company
pursuant to the Note. All principal and interest under the Note came due on
September 30, 1998. At October 31, 1998, the Company was in default on the Note,
which default was satisfied subsequent to October 31, 1998 when Renaissance
converted the entire Note, plus accrued interest through the date of conversion,
into shares of the Company's common stock at a rate of $0.10 per share.

Including the $150,000 advance from Renaissance, the Company had a net use of
cash of $689,165 for financing activities. This was primarily caused from the
Company's repayment of $614,388 under its revolving loan with Fremont Financial
Corporation and from repayments of other long-term debt of $224,777.

In July 1998, the Company entered into a purchase agreement with US Amada and
Amada Credit (a subsidiary of US Amada) (together referred to as "Amada") for
two CNC punch presses and a new CNC brake press valued at $826,000. In exchange
for the new equipment, the Company traded in an older CNC punch press having a
trade-in value of $235,562, resulting in a net obligation to Amada of $590,437.
The result of the transaction was to add a new punch press and a new brake press
to the Company's equipment line with no cash down and without increasing the
monthly payment due to Amada. Although the term of the equipment financing has
been extended from December 1999 to December 2004, the benefits of the
transaction to the Company are significant as it has increased manufacturing
capacity while reducing production risks associated with having a single punch
press available to service all units produced.

The Company's DII subsidiary currently has a revolving credit facility with
Fremont Financial Corporation. The revolving credit facility is for a maximum of
$1,400,000 at an interest rate of prime plus 3 1/2 % (11.5% at October 31, 1998)
maturing on January 31, 1999 and from year to year thereafter. The loans are
collateralized by DII accounts receivable, inventory and equipment and the
amount that can be borrowed under the credit facility is limited by eligible
accounts receivable and inventory of DII as defined. At October 31, 1998,
$391,000 was outstanding on the facility in comparison to $1,006,000 at October
31, 1997. DII had available borrowings under its agreement of approximately
$122,000 at October 31, 1998.


                                    PAGE 11
<PAGE>

The Company had a working capital deficiency of $264,000 at October 31, 1998. In
the past, the Company has used its revolving credit facility to fund its
operation when necessary. It has also used advances from its principal
shareholder and others as necessary. It is anticipated that additional working
capital may be required to efficiently execute the Company's work in progress
and backlog. Although the Company has made good strides, the Company could still
be viewed as having a weakened financial condition due to the presence of debt
in relation to shareholders' equity, which could force the Company to again turn
to its working capital lender or others for additional capital. This could lead
to tighter credit terms with Fremont Financial and other vendors that could
further strain the Company's working capital.

In light of the Company's backlog at October 31, 1998, its projected cash flow
from operations, the market for the Company's products, its reliance on a single
customer for over 50% of its sales, and the amount of debt on the balance sheet,
it is anticipated that the Company may need increased sales, an increase in its
profit margin and/or an infusion of capital in order to sustain its operations.
The Company's ability to meet certain interest and principal payments, as well
as its working capital needs to execute its backlog and generate sales volume
during fiscal 1999, will be dependent upon the success of the Company's efforts
to increase sales volume, as well as the profitability of new business.

Year 2000 Compliance

Many computer software systems in use today cannot process date-related
information from and after January 1, 2000. The Company has taken steps to
review and modify their computer systems as necessary and be prepared for the
Year 2000. In addition, the Company has inquired of its major service providers
if they are in the process of reviewing their systems with the same goals. The
majority of all providers have represented that they are either taking the
necessary steps to be prepared or are currently prepared for the Year 2000.
Should any of the computer systems employed by the major service providers fail
to process this type of information properly, that could have a negative impact
on the Company's operations. Management has not yet determined the cost related
to achieving Year 2000 compliance but believes that it will be able to manage
the total Year 2000 transition without material adverse effects on its business
operations or financial condition.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See "Index to Consolidated Financial Statements on page F- below.


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

Not Applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth information with respect to all of the incumbent
directors of the Company.



                                    PAGE 12
<PAGE>

                                    Position with             Director
Name                       Age      Company                   Since

Goodhue W. Smith, III      50       Director                  1997

Russell Cleveland          61       Director                  1991

M.E. Williams              59       Director                  1999

Stephen C. Davis           51       Director                  1997


Russell Cleveland, a chartered financial analyst, became director of the Company
on April 26, 1991. Mr. Cleveland has for the past eight years been a director,
officer and shareholder of Renaissance Capital Group, Inc., which is the
managing general partner of Renaissance, a business development company pursuant
to the Investment Company Act of 1940. Mr. Cleveland currently serves on the
Board of Directors of Feminique Corporation, Bentley Pharmaceuticals, Inc., Benz
Energy Group, Ltd. and Tutogen Medical, Inc. Mr. Cleveland is the Renaissance
designee to the Board of Directors. See "Item 13- Certain Relationships and
Related Transactions" herein.

M.E. Williams is the President and Chief Executive Officer of Danzer. Mr.
Williams has over 30 years of experience in manufacturing and 7 years of truck
body manufacturing experience. He was hired as President and Chief Executive
Officer in March 1998 and replaced Mr. William L. Pryor, III as a member of the
Company's Board of Directors in 1999.

Goodhue W. Smith III founded Duncan-Smith Co., an investment banking firm in San
Antonio, Texas, in 1978 and has since such time served as its Secretary and
Treasurer. Mr. Smith is also Director of Citizens National Bank of Milam County,
and Ray Ellison Mortgage Acceptance Co.

Stephen C. Davis spent more than 28 years with Snyder General Corporation and
one of its predecessor companies, The Singer Company. Mr. Davis holds a BS
degree from Tarkio College and an MBA from Lindewood College. Mr. Davis is
currently an independent consultant.


Executive Officers

The Company's executive officers are appointed by the Board of Directors and
hold office at the pleasure of the Board until successors are appointed and have
qualified.

Compliance with Section 16 (a) of the Securities Exchange Act of 1934 Section 16
(a) of the Securities Exchange Act of 1934 requires the Company's directors,
executive officers, and persons who own more than ten percent of the Company's
Common Stock ("10% Shareholders") to file reports of Ownership and reports of
changes in ownership of the Company's Common Stock with the Securities Exchange
Commission ("SEC"). Officers, Directors and Shareholders are required by SEC
regulation to furnish the Company with copies of all forms they file under
Section 16 (a). Based solely on its review of the copies of such forms received
by it with respect to its fiscal year ended October 31, 1998 and written
representations from certain reporting persons that no other reports were
required to those persons, the Company believes that all Section 16 (a) filing
requirements applicable to its officers, directors and 10% Shareholders were
complied.

ITEM 11.     EXECUTIVE COMPENSATION

Summary and Compensation Table

         The following table sets forth certain information concerning the
compensation paid or accrued by the Company for services rendered during the
Company's fiscal year ended October 31, 1998 and 1997 by the named officers.

                                    PAGE 13
<PAGE>

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                                     Annual Compensation
                                    ---------------------------------------------------------------------
Name and Principal         Fiscal   Salary         Common                 Other Annual         All Other
       Position            Year       ($)        Stock Options            Compensation        Compensation
         (a)                 (b)      (c)            (d)                      (e)                 (f)
------------------         -----    --------    ---------------       --------------------     ----------
<S>                        <C>      <C>                     <C>               <C>                   <C>
Rudolph W. Schuster (1)    1997     $  90,000               0                 0                     0
Former President           1998     $  14,000               0                 0                     0

Steven C. Davis (2)        1997     $       0               0                 0                     0
Interim CEO                1998     $       0               0                 0                     0

M.E. (Mel) Williams (3)    1998     $ 105,000         757,500                 0                     0
CEO

Terry Moore (4)            1997     $  64,000               0                 0                     0
CFO                        1998     $  64,000         192,000                 0                     0

Kirby McLaughlin (5)       1997     $  60,000               0                 0                     0
Vice President of          1998     $  60,000         180,000                 0                     0
Engineering
</TABLE>


(1)  In addition to his salary for 1997, Mr. Schuster received a severance
     payment of $14,000 and also obtained warrants on 100,000 shares of the
     Company's common stock upon resignation. The warrants are exercisable at
     $0.25 per share on or before March 2001.

(2)  Mr. Davis received no individual compensation while acting as the Company's
     interim CEO. Mr. Davis' employer, Snyder Capital Corporation ("Snyder"),
     did receive $3,000 monthly for consulting services provided by Mr. Davis to
     the Company from April 1998 through October 1998. In addition, the Company
     paid Snyder an additional $500 per day during the period Mr. Davis served
     as Interim CEO. The total compensation paid to Snyder for Interim CEO
     services in 1998 was approximately $20,000. In March 1998, Mr. Davis
     stepped down as Interim CEO in favor of Mr. Williams. In the 1999 fiscal
     year, the Company discontinued its consulting arrangement with Snyder and
     Mr. Davis. Mr. Davis is no longer employed by Snyder, but remains on the
     Company's Board of Directors.

(3)  157,000 of Mr. William's options are exercisable at $0.10 per share at any
     time on or before November 2001. 600,000 of Mr. William's options are
     exercisable at $0.10 per share on or before April 2004, but are not
     exercisable until April 2000. In the event Mr. Williams is not CEO in April
     2000, the options will not vest.

(4)  Mr. Moore's options are exercisable at $0.10 per share. 96,000 options
     expire October 2001 and 96,000 options expire November 2001.

(5)  Mr. McLaughlin's options are exercisable at $0.10 per share. 90,000 options
     expire October 2001 and 90,000 options expire November 2001.

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal year end
Option/SR Values

The Company had 969,500 options outstanding at October 31, 1998. 230,000 options
expire June 2000 and are exercisable at $1.27 per share, 210,000 expire March
2001 and are exercisable at $0.48 per share or greater, and 529,500 options are
exercisable at $0.10 per share and expire in October and November 2001.

The Company maintains a Stock Option Plan (the "Plan") under which options of
purchase 800,000 shares of the Company's Common Stock, par value $.0001 per
share, have been reserved. Pursuant to the Plan, the Company is permitted to
issue incentive stock options ("Incentive Stock Options") and non-qualified
stock options ("Non-Qualified Stock Options") to employees or directors of the
Company; provided, however, that no incentive Stock Options shall be granted to
a non-employee director. Incentive Stock Options under the Plan are intended to
qualify for the tax treatment accord under Section 422A of the Internal Code of
1986, as amended (the "Code). Non-Qualified Options under the plan are intended
to be options which do not qualify for the tax treatment accorded under Section
422A of the Code.

                                    PAGE 14
<PAGE>

All directors and key employees of the Company and its subsidiaries are eligible
to participate in the Plan. The Plan is administered by the Board of Directors
of the Company which, to the extent it determine, may delegate its power with
respect to the administration of the Plan to a compensation advisory committee
consisting of not less than three members, at least of whom two shall be
directors for the Company.

Under the Plan, Incentive Stock Options to purchase shares of the Company's
Common Stock may not be granted for less than 100 percent of fair market value
of the Common Stock on the date the Incentive Stock Option is granted; provided,
however, that in the case of an Incentive Stock Option granted to any person
then owning 10 percent of the voting power of all classes of the Company's
stock, the Purchase Price per share of all classes of the Company's stock, the
Purchase Price per share subject to the Incentive Stock Option may not be less
than 110 percent of the fair market value of the stock on the date of the grant
of the option. The option price per share with respect to each Non-Qualified
Stock Option granted under the Plan is to be determined by the Board of
Directors, but may not be less than 85% of the fair market value of the Common
Stock on the date the Non-Qualified Stock Option is granted.

Options under the Plan may not have a term of more than 10 years; provided,
however, that an Incentive Stock Option granted to a person then owing more than
10 percent of the voting power of all classes of the Company's stock may not be
exercised more than 5 years after the date such option is granted. In addition,
the aggregate fair market value, determined at the time the options granted, of
the stock with respect to which Incentive Stock Options are exercised for the
first time by an employee in any calendar year under the Plan may not exceed
$100,00.

Compensation of Directors

Directors who are not employees of the Company are entitled to a board meeting
attendance fee of $750 plus reimbursement of expenses. The directors waived all
of these fees for the year ending October 31, 1998.

Goodhue W. Smith, III who was elected as Chairman of the Board at the Company's
December 15, 1997 Board meeting as a requirement under financing provided by
Duncan-Smith Co., of which Mr. Smith is an officer and director, is to be paid
$1,500 per month as compensation. Mr. Smith did not receive any fees in the year
ended October 31, 1998.

Stephen C. Davis was elected to the Board of Directors at the Company's December
15, 1997 annual meeting of Shareholders. Mr. Davis was a director of Snyder at
October 31, 1998. Mr. Davis provided certain consulting services for Danzer and
DII from November 1997 through March 1998. Neither Mr. Davis nor Snyder received
any compensation during the year ended October 31, 1998 for director services.

Employment Agreements

None.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


The following table sets forth, as of October 27, 1998 information concerning
the shares of the Company's Common Stock beneficially owned by (a) each person
or group known to the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Common Stock, (b) each director and nominee, and (c)
all directors and officers as a group. The outstanding voting securities of the
Company as of the record date consisted of 15,774,693 shares of common stock.
Except as otherwise indicated, each person named or included in a group has sole
voting and investment power with respect to his or its shares of Common Stock.

                                    PAGE 15
<PAGE>

Name and Address of Beneficial         Amount and Nature of            Percent
Owner or Identity of Group             Beneficial Ownership         of Class (1)
--------------------------             --------------------         ------------


Renaissance Capital Partners, Ltd.               10,043,792               63.67
8080 N. Central Expressway,
Suite 210, LB 59
Dallas, TX  75206-1857

Richard W. Snyder                                 2,046,667 (2)           12.97
c/o Snyder Capital Corporation
3219 McKinney Ave.
Dallas, TX 75204

Russell G. Cleveland                             10,131,792 (3)           64.23
c/o Renaissance Capital Group, Inc.
8080 N. Central Expressway,
Suite 210, LB 59
Dallas, TX  75206-1857

Goodhue W. Smith, III                               650,000 (4)            3.96
c/o Duncan-Smith Co.
311 Third
San Antonio, Texas  78205

(1)  Common Stock which is not outstanding but which a person has a right to
acquire with 60 days of the record date are considered as Common stock
outstanding for purposes of computing the percentage of Common Stock owned by
such person, but such Common stock is not deemed outstanding for purposes of
computing the percentage of Common Stock owned by any other person. The number
of shares used to compute percentage ownership were the shares outstanding at
December 31, 1998, which shares equaled 15,774,693.

(2) Includes 100,000 shares of common stock issuable upon exercise of warrants
granted to Mr. Snyder. The warrants are exercisable at $0.50 per share on or
before November 1999.

(3) Mr. Cleveland owns 88,000 shares individually. Mr. Cleveland is a director,
officer and principal shareholder of Renaissance Capital Group Inc., the
managing general partner of Renaissance Capital Partners, Ltd., and may be
deemed to share voting and investment control over such shares.

(4) Duncan-Smith Co. owns warrants to purchase 650,000 shares of the Company's
common stock at $0.25 per share on or before August 2002. Mr. Smith is a
principal of Duncan-Smith Co. and may be deemed to share voting and investment
control over such shares.

Changes in Control

Renaissance Capital Partners, Ltd. acquired control of the company on December
31, 1994, pursuant to a Purchase Agreement with the Company (the "Purchase
Agreement") under which Renaissance exchanged $1,600,000 principal amount of the
Company's 12.5% Convertible Debentures (the "Debentures") for 16,000 shares of
the Company's Series B Preferred Stock. The Company also issued Renaissance a
10% Term Note originally due December 31, 1997 in the principal amount of
$211,635.40 (representing interest on the Debentures accrued through September
30, 1994) and paid Renaissance $50,000 (representing interest on the Debentures
from October 1, 1994 through December 31, 1994). At October 31, 1996,
Renaissance converted all of its Preferred Stock, accumulated dividends,
accumulated interest and note payable to common stock at a conversion rate of
$0.25 per share.


                                    PAGE 16
<PAGE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On December 31, 1994, Renaissance exchanged its Convertible Debenture for 16,000
shares of the Company's Series B Preferred Stock. The Company also issued
Renaissance a 10% Term Note due December 31, 1996 in the principal amount of
approximately $211,635 for unpaid accrued interest on the Debentures and paid
Renaissance $50,000 (representing interest on the Debentures from October 1,
1994 through December 31, 1994). See Item 12 - "PRINCIPAL SHAREHOLDERS - Changes
in Control".

On October 31, 1996, Renaissance converted all of its Preferred Stock,
accumulated dividends, accumulated interest and note payable to common stock at
a conversion rate of $0.25 per share.

On August 1, 1997, the Company entered into a loan agreement with Duncan-Smith
Co., trustee. Terms of the $650,000 loan include an interest rate of 11% with
payments due quarterly and a final notoriety on June 15, 2002. Duncan-Smith Co.
received a cash fee of $32,500 and a warrant to purchase 650,000 shares of
common stock at $0.25 per share with an expiration date of August 2002.
Subsequently, Goodhue W. Smith, III, a director and officer of Duncan-Smith Co.,
was elected Chairman of the Board.

In December 1997, Renaissance agreed to loan the Company $150,000 pursuant to a
10% promissory note secured by substantially all of the assets of the Company.
All interest and principal due under the note was payable on or before September
30, 1998. At October 31, 1998, the Company was in default on the obligation,
which default was satisfied subsequent to October 31, 1998 when Renaissance
converted the entire Note, plus accrued interest through the date of conversion,
into shares of the Company's common stock at a rate of $0.10 per share.


                                     PART IV

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

(a) Documents filed as part of this Annual Report on Form
     10-K:

         (1) Financial Statements.

         See "Index to Consolidated Financial Statements and Financial Statement
         Schedules" on page F-1 herein.

         (2)  Financial  Statement  Schedules  Required to be Filed by Item 8 on
               this Form.

                  None

         (3) Exhibits.

                                    PAGE 17
<PAGE>

<TABLE>
<CAPTION>
                                                                       Incorporated by Reference
         Exhibit No.       Description                                 or Filed Herewith
         -----------       -------------------------------             -------------------------
<S>      <C>               <C>                                         <C>
         3(i)(a)           Certificate of Incorporation as             Incorporated by reference to
                           amended through   August 18, 1994           Exhibit 3(i) to Registrant's Form
                                                                       10-Q for the period ended July 31, 1994

         3(i)(b)           Certificate of Amendment to Certificate     Incorporated by reference to
                           of Incorporation filed December 30, 1994    Exhibit 4.1 to Registrant's Form 8-
                                                                       K dated December 31, 1994

         3(ii)             By Laws                                     Incorporated by reference to
                                                                       Exhibit 3.3 to the Registration
                                                                       Statement on Form S-18 (No. 33-
                                                                       18636-NY) (the "Registration Statement").

         4(a)              Stock Certificate                           Incorporated by reference to
                                                                       Exhibit 4.1 to the Registration Statement.

         4(b)              Certificate of                              Incorporated by reference to
                           Amendment to Certificate                    Exhibit 4 of Registrant's Form
                           of Incorporation filed                      10-Q for the period ended
                           August 18, 1994 (with terms of              July 31, 1994.
                           10% Senior Preferred Stock)

         4(c)              Certificate of                              Incorporated by reference to
                           Amendment to Certificate                    Exhibit 4.1 to Registrant's
                           Form of  Incorporation filed                8-K dated  December 31,
                           1994.  December  30,  1994 (with  terms
                           of Series B Senior Preferred Stock)

         10(a)             Employment                                  Incorporated by reference to
                           Agreement dated                             Exhibit 10(c) to Form 10-K
                           April 16, 1991, between                     Report dated January 28, 1993.
                           Global Environmental Corp.
                           and William V. Rice

         10(b)             Global                                      Incorporated by reference to
                           Environmental Corp.                         Exhibit 10(j) to the October
                           Stock Option Plan                           31, 1990 Form 10-K.

         10(c)             Mortgage Note and                           Incorporated by reference to
                           Mortgage Agreement                          Exhibit 10(k) to the October
                           dated April 3, 1990 of Global               31, 1990 Form 10-K.
                           Environmental Corp.
                           with Continental Bank

         10(d)             Convertible                                 Incorporated by reference to
                           Debenture Agreement                         Exhibit 10(c) to Form 10-K
                           in the amount of                            Report dated January 28, 1993.
                           $1,250,000 dated April 25, 1991
                           between Global Environmental
                           Corp. and Renaissance Capital
                           Partners, Ltd.


                                    PAGE 18
<PAGE>

         10(e)             First Amendment                             Incorporated by reference to
                           dated December 30,                          Exhibit (10j) to Form 10-K
                           1992 to Convertible                         Report dated January 28, 1993.
                           Debenture Agreement in the amount of
                           $1,250,000 dated April 25, 1991
                           between Gobal Environmental Corp.
                           and Renaissance Capital Partners, Ltd.

         10(f)             Convertible                                 Incorporated by reference to
                           Debenture Agreement                         Exhibit (10k) to Form 10-K
                           in the amount of                            Report dated January 28, 1993.
                           $350,000 dated December 30, 1992
                           between Global Environmental Corp.
                           and Renaissance Capital Partners, Ltd. II

         10(g)             Loan and Security                           Incorporated by reference to
                           Agreement dated                             Exhibit 10(h) to Form 10-K Report
                           May 28, 1993 between                        dated January 28, 1994.
                           Danzer Metal Works Co.
                           and Fremont Financial Corporation

         10(h)             Asset purchase                              Incorporated by reference to
                           agreement dated                             Exhibit 10() to Form 10-K Report
                           August 25, 1993 between                     dated January 28, 1994.
                           Morrison Industries L.P.
                           and Global Environmental Corp.

         10(I)             Joint Venture                               Incorporated by reference to
                           Agreement dated                             Exhibit 10(j) to Form 10-K Report
                           December 31, 1993                           dated January 28, 1994.
                           between Global Environmental
                           Corp. and Cadema Corporation.

         10(j)             Equipment Purchase and                      Incorporated by reference to
                           Security Agreement dated                    Exhibit 10(k) to Form 10-K Report
                           September 17, 1993                          dated January 28, 1994.
                           between U.S. Amada, Ltd.
                           and The Danzer Metal Works Co.

         10(k)             Equipment Purchase and                      Incorporated by reference to
                           Security Agreement dated                    Exhibit 10(l) to Form 10-K Report
                           September 17, 1993                          dated January 28, 1994.
                           between U.S. Amada, Ltd.
                           and The Danzer Metal Works Co.

         10(l)             Equipment Purchase and                      Incorporated by reference to
                           Security Agreement dated                    Exhibit 10(m) to Form 10-K
                           September 17, 1993                          Report dated January 28, 1994
                           between U.S. Amada, Ltd.
                           and The Danzer Metal Works Co.

         10(m)             Purchase Agreement                          Incorporated by reference to
                           dated December 31,                          Exhibit 99.1 to Registrant's Form
                           1994 between Global                         8-K dated December 31, 1994.
                           Environmental Corp. and
                           Renaissance Capital
                           Partners, Ltd. to exchange
                           $1,600,000 of Convertible
                           Debentures for 16,000 Series B
                           Cumulative Convertible Senior
                           Preferred Stock.


                                    PAGE 19
<PAGE>

         10(n)             10% Term Note in                            Incorporated by reference to
                           principal amount of                         Exhibit 10(n) to Registrant's Form
                           $211,635 due December 31, 1997.             8-K dated December 31, 1994

         10(o)             Loan and Security Agreement                 Incorporated by reference to
                           dated June 23, 1995 between                 Exhibit 10(o) to Form 10-K
                           Danzer Metal Works Co.                      dated April 1, 1996
                           and Fremont Financial Corporation

         10(p)             Mortgage Note and                           Incorporated by reference to
                           Mortgage Agreement                          Exhibit 10(p) to Form 10-K
                           dated January 25, 1996 of Global            dated April 1, 1996
                           Environmental Corp.
                           with Midlantic Bank

         10(q)             Loan and Security Agreement                 Incorporated by reference to
                           dated May 1, 1996,  between                 Exhibit 10(q) to Form 10-K dated
                           Danzer Industries, Inc                      July 7, 1997
                           and Fremont Financial Corporation

         10( r)            Common Stock Purchase Agreement             Incorporated by reference to
                           between William V. Rice and the             Exhibit 10(r) Form 10-K dated
                           Company dated May 21, 1996                  dated July 7, 1997

         10(s)             Asset Purchase Agreement dated              Filed here herewith as Exhibit
                           November 14, 1997                           10(s)

         21                List of Subsidiaries                        Incorporated by reference to
                                                                       Exhibit 22 to the October
                                                                       31, 1989 Form 10-K.

         (b)               Reports on Form 8-K
                           No reports on Form 8-K were filed during the last
                           quarter of the fiscal year ended October 31, 1998
</TABLE>




                                    PAGE 20
<PAGE>
                           GLOBAL ENVIRONMENTAL CORP.
                                 AND SUBSIDIARY

                                   YEARS ENDED
                         OCTOBER 31, 1998, 1997 AND 1996


<PAGE>

                    GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                   YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996


                                                                         PAGE(s)


CONSOLIDATED FINANCIAL STATEMENTS:

     Independent Auditors' Report                                         F-1

     Consolidated Balance Sheets - October 31, 1998 and 1997              F-2

     Consolidated Statements of Operations -
       Years Ended October 31, 1998, 1997 and 1996                        F-3

     Consolidated Statements of Changes in Stockholders' Equity -
       Years Ended October 31, 1998, 1997 and 1996                        F-4

     Consolidated Statements of Cash Flows -
       Years Ended October 31, 1998, 1997 and 1996                   F-5 to F-6

     Notes to Consolidated Financial Statements                      F-7 to F-24









<PAGE>



                          INDEPENDENT AUDITORS' REPORT


Board of Directors
Global Environmental Corp.
Hagerstown, Maryland


        We have audited the accompanying consolidated balance sheets of Global
Environmental Corp. and Subsidiary as of October 31, 1998 and 1997, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the three years in the period ended October 31, 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 consolidated financial position of Global
Environmental Corp. and Subsidiary as of October 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended October 31, 1998, in conformity with generally
accepted accounting principles.






/s/ Rudolph Palitz LLP
May 28, 1999
Blue Bell, Pennsylvania



                                      F-1
<PAGE>




                    GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY


                           CONSOLIDATED BALANCE SHEETS

                            OCTOBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
                                     ASSETS

                                                           1998           1997
                                                           ----           ----

CURRENT ASSETS
<S>                                                   <C>          <C>
Cash                                                  $       -    $     68,933
Accounts receivable, net of allowance for doubtful
 accounts of $168,266, 1998 and $346,000, 1997          957,208       1,419,870
Inventories                                             481,862         662,989
Prepaid expenses and other                               75,404          37,165
                                                      ---------    ------------
Total current assets                                  1,514,474       2,188,957
                                                      ---------    ------------

PROPERTY, PLANT AND EQUIPMENT

Land                                                     25,797          25,797
Building and improvements                             1,440,527       1,440,527
Equipment                                             2,398,063       2,286,085
                                                      ---------    ------------
                                                      3,864,387       3,752,409
Less - accumulated depreciation and amortization     (2,022,874)     (2,271,753)
                                                      ---------    ------------

Total property, plant and equipment, net              1,841,513       1,480,656

OTHER ASSETS                                            202,510          53,850
                                                      ---------    ------------
Total assets                                         $3,558,497     $ 3,723,463
</TABLE>


                 See Notes to Consolidated Financial Statements
<PAGE>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                           1998           1997
                                                                           ----           ----
CURRENT LIABILITIES
<S>                                                                   <C>            <C>
Current portion of long-term debt                                     $ 531,846      $  581,876
Accounts payable                                                        658,757         859,764
Accrued salaries and wages                                              167,292         173,603
Accrued expenses, other                                                 420,244         441,136
                                                                      ---------      ----------

Total current liabilities                                             1,778,139       2,056,379
                                                                      ---------      ----------

LONG-TERM DEBT, net of current portion                                1,533,303       1,595,269
                                                                      ---------      ----------

COMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

Common stock, par value $.0001 per share;
 20,000,000 shares authorized, 15,870,272
 shares outstanding in 1998 and 1997                                      1,587           1,587
Preferred stock, $.001 par value, 5,000,000 shares authorized;
 Class of 10% Cumulative Convertible Senior Preferred Stock,
 10,500 shares authorized, no shares issued and
 outstanding in 1998 or 1997
 Series B Cumulative Convertible Senior Preferred Stock,
 16,000 shares authorized, no shares issued and outstanding
 in 1998 or 1997                                                              -               -
Additional pain-in capital                                            5,047,803       5,047,803
Accumulated deficit                                                  (4,802,335)     (4,977,575)
Less: Treasury stock, at cost
 95,579 shares, 1998 and 1997                                                 -               -
                                                                      ---------      ----------

     Total stockholders' equity                                         247,055          71,815
                                                                      ---------      ----------

     Total liabilites and stockholders' equity                       $3,558,497     $ 3,723,463
                                                                     ==========     ===========
</TABLE>

                                      F - 2

<PAGE>


                    GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                   YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                   1998           1997          1996
                                                                   ----           ----          ----
<S>                                                         <C>            <C>            <C>
NET SALES                                                   $ 7,605,129    $ 8,762,518    $8,153,689

COST OF GOODS SOLD                                            5,664,109      7,257,056     6,993,068
                                                            -----------    -----------    ----------
Gross Profit                                                  1,941,020      1,505,462     1,160,621

SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES                                      1,550,205      1,731,530     1,580,394
                                                            -----------    -----------    ----------
  Income (loss) from operations                                 390,815       (226,068)     (419,773)

INTEREST EXPENSE                                               (200,526)      (201,627)     (239,310)
INTEREST INCOME                                                   2,922              -           931
OTHER INCOME (EXPENSES)                                         (17,971)       104,532       155,858
                                                            -----------    -----------    ----------

INCOME (LOSS) FROM CONTINUING OPERATIONS                        175,240       (323,163)     (502,294)

DISCONTINUED OPERATIONS
Income (loss) from operations of discontinued segment                 -              -      (210,195)
Loss on disposal of segment                                           -              -      (215,406)
                                                            -----------    -----------    ----------
 Loss from discontinued operations                                    -              -      (425,601)
                                                            -----------    -----------    ----------
NET INCOME (LOSS)                                           $   175,240    $  (323,163)   $ (927,895)
                                                            ===========    ===========    ==========

NET INCOME (LOSS) PER COMMON SHARE

Income (loss) from continuing operations                    $      0.01    $     (0.02)   $    (0.32)

Income (loss) from operations of discontinued segment                 -              -         (0.09)

Loss on displosal of segment                                          -              -         (0.09)
                                                            -----------    -----------    ----------
Net income (loss)                                           $      0.01    $     (0.02)   $    (0.50)
                                                            ===========    ===========    ==========
SHARES USED IN NET INCOME (LOSS)
 PER SHARE CALCULATION                                       15,774,693     13,601,270     2,339,756
                                                            ===========    ===========    ==========
</TABLE>

                 See Notes to Consolidated Financial Statements.
                                      F - 3

<PAGE>

                    GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CHANGES IN
                              STOCKHOLDERS' EQUITY

                   YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
                                                                                    10% AND SERIES B
                                                                                       CUMULATIVE
                                                                                   CONVERTIBLE SENIOR
                                                       COMMON STOCK                  PREFERRED STOCK
                                                  ----------------------        -------------------------
                                                    SHARES        AMOUNT         SHARES          AMOUNT
                                                  ---------      -------        -------        ----------
<S>                                              <C>             <C>             <C>           <C>
Balance, October 31, 1995                         2,465,144      $   247         23,550        $2,173,469

Acquisition of treasury stock in
 connection with disposal of segment                      -            -              -                 -

Issuance of 1,200,000 common shares               1,200,000          120              -                 -

Conversion of 10% (3,000) and
 Series B (16,000) preferred shares
 and Renaissance term note and related
 accrued interest and dividends                  10,150,459        1,015        (19,000)       (1,774,425)

Net loss                                                  -            -              -                 -

Dividends on preferred stock                              -            -              -                 -
                                                 _________________________________________________________
Balance, October 31, 1996                        13,815,603        1,382          4,550           399,044

Conversion of 10% preferred shares
 and related accrued dividends                    1,971,669          197         (4,550)         (399,044)

Conversion of Renaissance
 loan to common stock                               600,000           60              -                 -

Cancellation of treasury shares                    (517,000)         (52)             -                 -

Net loss                                                  -            -              -                 -
                                                 _________________________________________________________
Balance, October 31, 1997                        15,870,272        1,587              -                 -

Net income                                                -            -              -                 -
                                                 _________________________________________________________
Balance, October 31, 1998                        15,870,272      $ 1,587              -                 -
                                                 ==========      =======        =======        ==========
</TABLE>

<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN        ACCUMULATED         TREASURY STOCK
CAPITAL        DEFICIT             SHARES     AMOUNT          TOTAL
----------     -----------         ------     ------        --------
<C>            <C>                 <C>       <C>            <C>
$ 1,877,784    $ (3,491,013)       95,579    $     -        $560,487
          -               -       517,000    (93,060)        (93,060)
    299,880               -             -          -         300,000


  2,376,438               -             -          -         603,028
          -        (927,895)            -          -        (927,895)
          -        (235,504)            -          -        (235,504)
____________________________________________________________________

  4,554,102      (4,654,412)      612,579    (93,060)        207,056

    436,769               -             -          -          37,922


    149,940               -             -          -         150,000

    (93,008)              -      (517,000)    93,060               -

          -        (323,163)            -          -        (323,163)
____________________________________________________________________

  5,047,803      (4,977,575)       95,579          -          71,815

          -         175,240             -          -         175,240
____________________________________________________________________
$ 5,047,803     $(4,802,335)       95,579   $      -       $ 247,055
===========     ===========      ========   ========       =========
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                      F - 4


<PAGE>

                    GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                    1998           1997           1996
                                                                    ----           ----           ----
<S>                                                              <C>            <C>            <C>
OPERATING ACTIVITIES
Net Income (loss)                                                $ 175,240      $(323,163)     $(927,895)
Adjustments to reconsile net income (loss) to net cash
 provided by (used in) operating activities:
   Depreciation and amortization                                   255,792        194,988        183,623
   Provision for bad debts                                          44,160        305,387         38,500
   Net loss on disposition of items
    included in discontinued segment                                     -              -         21,843
   Gain on disposition of equipment                                (17,578)             -              -
 Changes in operating assets and liabilities:
   (Increase) decrease in:
     Accounts receivable                                           418,502       (288,918)      (567,942)
     Inventories                                                   181,127        128,769           (855)
     Prepaid expenses and other                                    (38,239)        38,552        (22,798)
     Other assets, net                                            (160,000)       (53,757)        40,745
   Increase (decrease) in:
     Accounts payable                                             (201,007)      (477,353)       292,958
     Net liabilities from discontinued operations                        -              -       (167,580)
     Accrued salaries and wages                                     (6,311)        25,796         23,020
     Accrued expenses, other                                       (20,892)        97,576        226,326
                                                                 ----------     ---------      ---------
      Net cash provided by (used in) operating activities          630,794       (352,123)      (860,055)
                                                                 ----------     ---------      ---------

INVESTING ACTIVITIES
 Purchase of property, plant and equipment                        (104,562)      (67,190)        (65,199)
 Proceeds from sale of equipment                                    94,000             -          36,744
                                                                 ----------     ---------      ---------
   Net cash used in investing activities                           (10,562)      (67,190)        (28,455)
                                                                 ----------     ---------      ---------

FINANCING ACTIVITIES
 Net borrowings (repayments) under revolving load agreement       (614,388)       63,624         497,111
 Proceeds from the issuance of long-term debt                      150,000       800,000               -
 Payments of long-term debt                                       (224,777)     (425,386)       (183,197)
 Net proceeds from the issuance of common stock                          -             -         300,000
 Payment of dividends on preferred stock                                 -             -         (11,375)
                                                                 ----------     ---------      ---------
   Net cash provided by (used in) financiang activities           (689,165)      438,238         602,539
                                                                 ----------     ---------      ---------

NET INCREASE (DECREASE) IN CASH                                    (68,933)       18,925        (285,971)
CASH, BEGINNING                                                     68,933        50,008         335,979
                                                                 ----------     ---------      ---------

CASH, ENDING                                                     $       -      $ 68,933       $  50,008
                                                                 ==========     =========      =========
</TABLE>



                 See Notes to Consolidated Financial Statements.

                                      F - 5

<PAGE>


                    GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)

                   YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                                            1998           1997           1996
                                                            ----           ----           ----
<S>                                                    <C>             <C>             <C>
SUPPLEMENTAL DISCLOSURES OF
 CASH FLOWS INFORMATION:

   Cash paid for interest                              $ 187,906       $ 179,988       $ 239,310
                                                       =========       =========       =========

NON-CASH FINANCING ACTIVITIES:

 Conversion of convertible debt to common stock                -       $ 150,000               -

 Cancellation of treasury shares                               -       $  93,060               -

 Conversion of 10% and Series B
  Preferred Shares and related accrued dividends
  and Renaissance term note and related accrued
  interest to common stock                                     -       $ 436,966       $ 603,028

 Accrual of dividends on Senior Preferred Stock:
  10% Cumulative Convertible                                   -               -       $  75,504
  Series B Cumulative Convertible                              -               -       $ 160,000

 Long-term debt incurred for the purchase of
  property, plant and equipment                        $(577,169)              -               -

NON-CASH INVESTING ACTIVITIES

 Reclass of property to property under
  agreement of sale in connection with
  disposal of Rage and reclass of related
  mortgage payable                                             -               -       $ 344,127

 Satisfaction of mortgage payable and
  culmination of previous sale of related
  property held under agreement of sale                        -       $(344,127)              -

 Purchase of property, plant and equipment
  via financing arrangements                           $ 577,169               -               -
</TABLE>



                 See Notes to Consolidated Financial Statements

                                     F - 6
<PAGE>

                    GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996


NOTE 1.   BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF
           SIGNIFICANT ACCOUNTING POLICIES


          Basis of Presentation and Description of Business

                 Global Environmental Corp. (the "Company") was incorporated on
          October 6, 1987. Effective August 1, 1988, the Company acquired all of
          the issued and outstanding common shares of Global Environmental
          Holdings, Inc. ("Global Holdings").

                 Danzer Industries, Inc. ("Danzer"), a wholly-owned subsidiary
          of Global Holdings, is currently principally engaged in the
          manufacture of utility truck bodies. In 1996, 1997 and early 1998
          Danzer also designed, manufactured and installed other types of
          fabricated metal products. Danzer's revenues (subsequent to the sale
          of the Company's Rage subsidiary as described below) represent
          virtually 100% of the Company's revenues and are generated throughout
          the Eastern and Midwestern United States.

                 Rage Inc. ("Rage") was a wholly-owned subsidiary of Global
          Holdings through April 30, 1996 and was engaged in the business of
          engineering and supplying pneumatic material handling systems
          throughout the United States. Effective April 30, 1996, Rage was sold
          to a former officer (Note 3). Accordingly, the results of Rage's
          operations for the fiscal year ended October 31, 1996 are presented as
          "discontinued operations" in the respective consolidated Statement of
          Operations.


          SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

                 The accompanying consolidated financial statements present the
          accounts of Global Environmental Corp. and its wholly-owned
          subsidiary. The entities are collectively referred to herein as the
          "Company." All significant intercompany transactions and balances have
          been eliminated in consolidation.

                 The Company uses the equity method of accounting for a 49%
          owned interest in a joint venture. The original investment is recorded
          at cost, adjusted for the Company's share of undistributed earnings or
          losses. The operations of the joint venture are presently immaterial.


          Revenue Recognition

                 Revenues from the manufacture of utility truck bodies and sheet
          metal products and fabrications are generally recognized when products
          are shipped to the customer.




                                     F - 7
<PAGE>


NOTE 1.   BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF
           SIGNIFICANT ACCOUNTING POLICIES (Continued)


          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


          Inventories

                 Inventories are stated at the lower of cost (first-in,
          first-out) or market and, at October 31, 1998 and 1997 are comprised
          of the following components:

<TABLE>
<CAPTION>
                                                                       1998              1997
                                                                       ----              ----
<S>                                                                <C>               <C>
                Raw materials, supplies and component parts        $411,288          $297,125
                Work-in-process                                      18,060           301,277
                Finished goods                                       52,514            64,587
                                                                   --------          --------

                                                                   $481,862          $662,989
                                                                   ========          ========
</TABLE>

                 Work-in-process and finished goods include purchased materials,
          direct labor and allocated overhead.


          Property, Plant and Equipment

                 Property, plant and equipment are stated at cost and are
          depreciated on the straight-line method over the following estimated
          useful lives:

                Building and improvements                        10 to 30 years
                Equipment                                         5 to 20 years

                 Depreciation expense of property, plant and equipment for the
          years ended October 31, 1998, 1997 and 1996 included in continuing
          operations was $244,452, $194,988 and $183,623, respectively.

          Concentration of Credit Risk

                 The Company maintains cash balances at a bank, which at various
          times throughout the year, exceeded the Federal Deposit Insurance
          Corporation (FDIC) limit. Included in accounts payable at October 31,
          1998 was approximately $82,000 of bank overdrafts.

          Fair Value of Financial Investments

                 The Company believes that the carrying value of its financial
          instruments, such as long-term debt (all of which are held for
          purposes other than trading) are approximately equal to their fair
          values.


                                     F - 8
<PAGE>


NOTE 1.   BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF
           SIGNIFICANT ACCOUNTING POLICIES (Continued)



          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Major Customers

                 The following is a list of the Company's customers which
          represent 10% or more of consolidated net sales (from continuing
          operations):

                                                TOTAL PERCENTAGE OF NET SALES
                                                    YEARS ENDED OCTOBER 31,

                                             1998           1997            1996
                                             ----           ----            ----

                Elevator Manufacturer          4%            13%             10%
                Truck Body Manufacturer       55%            41%             29%

                 As of October 31, 1998 and 1997, the amounts due from the truck
          body manufacturer, which were collected subsequent to October 31, 1998
          and 1997, were approximately $607,000 and $484,000, respectively.


          Use of Estimates

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


                                     F - 9
<PAGE>


NOTE 1.   BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF
           SIGNIFICANT ACCOUNTING POLICIES (Continued)


          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


          Accounts Receivable

                 Accounts receivable are earned in the normal course of business
          and are unsecured.

                 The allowance for doubtful accounts is established through
          charges to earnings in the form of a charge to bad debt expense.
          Accounts which are determined to be uncollectible are charged against
          the allowance account. Management makes periodic assessments of the
          adequacy of the allowance which requires the Company to recognize
          additions or reductions to the allowance. It is reasonably possible
          that factors may change significantly and, therefore, affect
          management's determination of the allowance for doubtful accounts in
          the near term. Charge-offs amounted to $222,000 in 1998, $12,000 in
          1997 and $25,000 in 1996.


          Earnings Per Share

                 The Company adopted Statement of Financial Accounting Standards
          No. 128 ("SFAS 128"), "Earnings Per Share", beginning the fourth
          quarter of 1998. All prior period earnings per common share were
          recomputed to conform to the provisions of SFAS 128. The
          recomputations did not result in any restatements of earnings per
          share previously reported.

                 Basic earnings per share amounts are computed based on net
          income (loss), reduced by dividends earned on preferred stock
          outstanding ($236,600 in 1996) and divided by the weighted average
          number of shares actually outstanding. The number of shares used in
          the computation were approximately 15,775,000 in 1998, 13,601,000 in
          1997 and 2,340,000 in 1996.

                 Diluted earnings per share amounts for 1998, 1997 and 1996 are
          based on the weighted average number of shares calculated for basic
          earnings per share purposes increased by the number of shares that
          would be outstanding assuming exercise of outstanding stock options
          and warrants (Note 7). The number of shares used in the computation
          were the same as in the basic earnings per share calculation. The
          assumed conversion of the 10% and Series B Cumulative Convertible
          Senior Preferred Stock at October 31, 1996 and the assumed exercise of
          stock options and warrants to purchase common stock were not included
          in the computation of diluted earnings per share in 1998, 1997 and
          1996 because such exercise would be anti-dilutive.




                                     F - 10
<PAGE>



NOTE 1.   BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF
           SIGNIFICANT ACCOUNTING POLICIES (Continued)

          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


          Recently Issued Accounting Standards

                 In June 1997, the FASB issued SFAS No. 130, "Reporting
          Comprehensive Income." This Statement establishes standards for
          reporting and displaying comprehensive income and its components
          (revenues, expenses, gains and losses) in a full set of
          general-purpose financial statements. Such items may include foreign
          currency translation adjustments, unrealized gains/losses from
          investing activities, and other transactions. This Statement requires
          that all items that are required to be recognized under accounting
          standards as components of comprehensive income be reported in a
          financial statement that is displayed with the same prominence as
          other financial statements. This Statement is required to be adopted
          for fiscal years beginning after December 15, 1997. The adoption of
          this Statement is not expected to have a material effect on the
          Company.

                 In June 1997, the FASB issued SFAS No. 131, "Disclosures about
          Segments of an Enterprise and Related Information." This Statement
          establishes standards for the way that public business enterprises
          report information about operating segments in annual financial
          statements and requires that those enterprises report selected
          information about operating segments in interim financial reports
          issued to shareholders. It also establishes standards for related
          disclosures about products and services, geographic areas and major
          customers. This Statement is required to be adopted for fiscal years
          beginning after December 15, 1997. The Company does not believe that
          this Statement will have a material effect on the disclosures in the
          Company's financial statements.

                 In February 1998, the FASB issued SFAS No. 132, "Employer's
          Disclosures about Pensions and Other Postretirement Benefits." This
          Statement revises employer's disclosures about pension plans; the
          Statement does not change the measurement or recognition of those
          plans. The Statement is effective for financial statements issued for
          years beginning after December 15, 1997. The Company does not believe
          that this Statement will have a material effect on the disclosures in
          the Company's financial statements.


NOTE 2.   FINANCING ARRANGEMENTS, OPERATIONS AND MANAGEMENT'S PLANS


                 The Company had net sales of $7,605,129 for the year ended
          October 31, 1998 (a 13% decrease from the prior year) and income from
          continuing operations of $175,240. Working capital decreased from 1997
          to 1998 to negative working capital of $263,665 at October 31, 1998.
          This was due primarily to the use of cash to repay certain long-term
          debt. Stockholders' equity increased by $175,240 to $247,055 at
          October 31, 1998 due to net income for the year.


                                     F - 11
<PAGE>
NOTE 2.   FINANCING ARRANGEMENTS, OPERATIONS AND MANAGEMENT'S PLANS (Continued)

                 During the first quarter of fiscal 1994, the Company entered
          into a Joint Venture agreement (the "Agreement") with Cadema
          Corporation ("Cadema"). The Agreement was capitalized by Cadema with
          $350,000 in cash and by the Company with $1,000 in cash. The
          Agreement's principal objective is to provide the partners with
          current income by contracting for the design and installation of air
          pollution control equipment in its name in all areas of the world
          outside the United States and its territories. The term of the
          Agreement expired December 31, 1998. Income or loss from the Agreement
          is allocated 51% to Cadema and 49% to the Company. The Agreement
          allows the Company, subject to certain conditions, to acquire Cadema's
          interest in the joint venture for 875,000 shares of the Company's
          common stock or $350,000 in cash or an amount equal to Cadema's
          capital account, whichever is greater, subject to certain antidilution
          provisions. The Agreement also allows for quarterly distributions of
          income and capital to the joint venture partners. The Company had
          borrowed approximately $350,000 from the joint venture as of October
          31, 1998 (Note 5). Because of the sale of the Company's Rage
          Subsidiary in 1996 (Note 3), it is not anticipated that the Agreement
          will provide significant revenue or earnings for the Company in the
          future. In addition, Management is presently negotiating with the
          other party to the Agreement with respect to payment by the Company of
          the loan due to the other party.

                 In September 1994, the Company completed a 10% Cumulative
          Convertible Senior Preferred Stock offering whereby 7,550 shares were
          issued. The Company realized $662,150 of net proceeds, after placement
          fees and expenses of approximately $93,000. The funds were used to
          expand the Company's new Morrison product line and provide working
          capital for overall business activity. During 1996 and 1997, these
          shares and related accrued dividends were converted to common stock
          (Note 7).

                 Effective December 31, 1994, Renaissance exchanged the
          $1,600,000 aggregate amount of 1991 and 1992 convertible debentures
          for an aggregate of 16,000 shares of the Company's Series B Cumulative
          Convertible Senior Preferred Stock. During 1996, such preferred
          shares, related accrued dividends, a related term note and accrued
          interest were converted to common stock (Note 7).

                 In February 1996, the Company's revolving loan payable to
          Fremont Financial Corporation ("Fremont") was increased by $200,000.
          The increase enabled the Company to borrow $200,000 in excess of their
          previously allowed borrowings under the revolving loan agreement and
          provided additional working capital for overall business activity.
          During fiscal 1996, this increase in the revolving loan was
          reclassified as a term loan (Note 5).

                                     F - 12
<PAGE>





NOTE 2.   FINANCING ARRANGEMENTS, OPERATIONS AND MANAGEMENT'S PLANS (Continued)

                 In March 1997, the Company received $150,000 from Renaissance
          Capital Group, Inc. in the form of convertible debt. During 1997, this
          debt was converted into 600,000 shares of common stock.

                 On August 1, 1997, Danzer borrowed $650,000 from a private
          company. A portion of the net proceeds of $603,000 was used to pay-off
          certain term debt ($174,000) owed to Fremont, with the remainder
          ($429,000) available for working capital purposes (Note 5). The
          Company also entered into an agreement with Fremont redefining the
          method of determining the Company's borrowings from Fremont and
          extending the term of its agreement with Fremont (Notes 4 and 5).

                 In November 1997, the Company completed the sale of an
          operating division and its associated assets (inventory, property and
          equipment and customer lists) for proceeds of $413,000. The Company
          did not realize a significant gain or loss on this transaction. In
          addition, sales attributed to this division in fiscal 1997
          approximated $2.6 million.

                 In December 1997, the Company received $150,000 from
          Renaissance in the form of a promissory note (the "Note") (Note 5).
          The Note bears interest at 10% per annum and was payable at maturity
          (September 30, 1998) along with the principal balance. Subsequent to
          October 31, 1998, this Note and related accrued interest was converted
          to approximately 1,675,000 shares of Company common stock.

                 The Company's ability to meet certain interest and principal
          payments and its working capital needs in order to execute its backlog
          and generate sales volume during fiscal 1999, will be dependent upon
          the success of the Company's efforts to increase sales volume, the
          profitability of new business generated, and the ability to maintain
          or reduce overhead and general and administrative expenses and the
          ability to secure additional financing.


                                     F - 13
<PAGE>


NOTE 3.   DISCONTINUED OPERATIONS


                 On April 30, 1996, the Company adopted a formal plan to sell
          its Rage subsidiary to the past President and Chief Executive Officer
          of the Company ("Buyer"). On May 22, 1996, the Company completed the
          sale of all of the outstanding stock of Rage. The net assets of Rage
          consisted primarily of accounts receivable, inventories, and property,
          plant and equipment less accounts payable and accrued expenses. The
          transaction required the Company to pay $104,600 in cash, and transfer
          certain real property and improvements with a net book value of
          approximately $464,000 in exchange for 517,000 shares of the common
          stock of the Company owned by the Buyer, cancellation of an employment
          agreement with the Buyer and assumption by the Buyer of the Company's
          mortgage amounting to approximately $350,000 related to the real
          property transferred. The common stock previously owned by the Buyer
          was recorded as treasury stock in the amount of $93,060 based upon the
          fair value of the Company's common stock at the date of the
          transaction.

                 Operating results of Rage for the year ended October 31, 1996
          are shown separately in the accompanying Consolidated Statement of
          Operations as discontinued operations for the period November 1, 1995
          through April 30, 1996. Net sales of Rage were approximately
          $1,118,000 for the six months ended April 30, 1996. These amounts are
          not included in net sales in the accompanying Consolidated Statements
          of Operations. The loss from operations of Rage totaled $210,195 for
          the six months ended April 30, 1996. The loss on the sale of Rage was
          $215,406.

                 Assets and liabilities of Rage sold effective April 30, 1996
          consisted of:

                                                                  April 30, 1996

                 Accounts receivable, net                            $  364,000
                 Inventories                                            134,000
                 Property, plant and equipment, net                     521,000
                 Other assets                                           209,000
                                                                        -------
                                                                      1,228,000
                 Accounts payable and accrued expenses                 (749,000)
                 Mortgage payable                                      (350,000)

                 Net assets                                          $  129,000
                                                                     ==========

                 In accordance with the terms of the Common Stock Purchase
          Agreement (the "Agreement"), the Buyer assumed certain mortgage debt
          on real property and improvements sold by the Company to the Buyer and
          has been making the required monthly payments. As of October 31, 1996,
          the Company had not been released by the mortgagor from this
          obligation. During fiscal 1997, the Company was released by the
          mortgagor from this obligation.




                                     F - 14
<PAGE>

NOTE 4.   NOTE PAYABLE


                 Effective May 28, 1993, Danzer entered into a loan and security
          agreement (the "Agreement") with Fremont, comprised of a revolving
          credit facility (the "Facility") and an equipment term loan (the "Term
          Loan"). The Agreement was most recently amended on May 1, 1997,
          extending the term of the loan to January 31, 1999 and from year to
          year thereafter. Subsequent to year-end, the due date of the loan was
          extended to January 31, 2000. The amount available under the Facility
          is based on a defined percentage of eligible accounts receivable and
          inventory. The Company had drawn $391,401 at October 31, 1998 and
          $1,005,789 at October 31, 1997 (Note 5). The maximum amount available
          under the Facility is $1,400,000. At October 31, 1998, the Company had
          available borrowings under its Agreement of approximately $122,000.
          The Term Loan was repaid in full in 1997. Borrowings under the
          Agreement accrue interest at prime plus 3.5% (11.5% at October 31,
          1998).

                 Under the terms of the Agreement, borrowings are collateralized
          by Danzer's accounts receivable, inventory and equipment and a junior
          lien on Danzer's real estate. The Agreement provides for certain
          restrictions including, but not limited to, the Company's ability to:
          a) sell, lease, transfer, exchange or otherwise dispose of any assets
          except in the ordinary course of business; b) enter into any merger,
          consolidation, or acquisition of any other business organization; c)
          guaranty or otherwise become in any way liable with respect to the
          obligations of any third party; or d) change its ownership by greater
          than 10%. The Agreement also restricts: payment of compensation and
          loans and advances to executives, officers, directors and certain
          others; capital expenditures to a specified level; and distributions
          to Danzer's Parent. For the year ended October 31, 1998, Danzer was in
          violation of certain covenants and received a waiver through November
          1, 1999 for such non-compliance.


NOTE 5.   LONG-TERM DEBT

                 At October 31, 1998 and 1997, consolidated long-term debt
          consists of the following:

<TABLE>
<CAPTION>
                                                                            1998             1997
                                                                            ----             ----
<S>                                                                   <C>              <C>
          Revolving note payable to Fremont Financial,
           due January 2000 (Notes 2 and 4)                           $  391,401       $1,005,789
          Note payable to joint venture;
           interest-free, principal was due December 31, 1996            345,000          345,000
          Equipment loans payable;
           monthly payments currently aggregating $1,939,
           through March 2004, including interest at 9.9%
           to 11.25%; colleralized by certain equipment.                  82,335                -
</TABLE>



                                     F - 15
<PAGE>


NOTE 5.           LONG-TERM DEBT (Continued)

<TABLE>
<CAPTION>
                                                                            1998             1997
                                                                            ----             ----
<S>                                                                 <C>             <C>
          Term loans  payable  to US  Amada,  Ltd.;
           monthly  payments currently  aggregating
           $12,668 including interest at 10%;
           final balance due January 2005; collateralized
           by equipment.                                            $    589,034    $     215,440

          Promissory note payable to Duncan-Smith  Co.,
           Trustee in the original amount of $650,000;
           quarterly payments of $41,903 including interest rates
           at  11%-13%  through  May 2002; collateralized by
           Danzer's property and equipment and accounts
           receivable (Note 7); a principal in Duncan-Smith
           Co. is also a shareholder in and a
           Director of the Company.                                      507,379          610,916

          Promissory note payable to Renaissance,
           due September 30, 1998, with interest at 10%;
           subsequent to October 31, 1998, the note and
           related accrued interest were converted to
           Company common stock.                                         150,000                -
                                                                       ---------        ---------

                                                                       2,065,149        2,177,145

          Less  - current portion                                       (531,846)        (581,876)
                                                                       ---------        ---------

          Total long-term debt                                        $1,533,303       $1,595,269
                                                                      ==========       ==========
</TABLE>

       Maturities on long-term debt as of October 31, 1998 are as follows:

                    YEARS ENDING
                     OCTOBER 31,                             AMOUNT

                        1999                               $   531,846
                        2000                                   820,589
                        2001                                   278,984
                        2002                                   267,206
                        2003                                   149,565
                        Thereafter                              16,959
                                                             ---------

                                                            $2,065,149


                                     F - 16
<PAGE>



NOTE 5.   LONG-TERM DEBT (Continued)

                 The President of the managing General Partner of Renaissance is
          also a Director of the Company. Interest expense incurred with respect
          to certain Renaissance convertible debt (Note 2) was approximately
          $12,000, $6,000 and $21,000 in 1998, 1997 and 1996, respectively.

                 A principal of Duncan-Smith Co. is also a shareholder in and
          Director of the Company. Interest expense incurred with respect to the
          $650,000 promissory note was approximately $61,000 in 1998 and $20,000
          in 1997.


NOTE 6.   INCOME TAXES

                 The Company files a consolidated income tax return for Federal
          tax purposes. The Company, Global Holdings and Danzer each file
          separate state income tax returns. The Company accounts for income
          taxes in compliance with SFAS No. 109, "Accounting for Income Taxes."
          Under SFAS No. 109, deferred tax assets and liabilities are recorded
          for any temporary differences between the financial statement and tax
          bases of assets and liabilities, using the enacted tax rates and laws
          expected to be in effect when the taxes are actually paid or
          recovered.

                 Total income tax expense (benefit) from continuing operations
          amounted to $ - 0 - in each of 1998, 1997 and 1996 (effective tax
          rates of 0%, in each of the three years) compared to an income tax
          expense (benefit) of $60,000, ($110,000), and ($171,000),
          respectively, computed by applying the statutory rate of 34.0% to
          income (loss) from continuing operations. These differences are
          accounted for as follows:

<TABLE>
<CAPTION>
                                                                            1998
                                                                                   Percent of
                                                                   Amount        Pretax Income

<S>                                                             <C>                 <C>
                 Computed "expected" tax                        $  60,000           34.0%
                 Decrease in tax due to valuation allowance
                  provided for deferred tax assets                (60,000)         (34.0%)
                                                                  -------          ------

                                                                $       -              0%
                                                                 ========         =======
</TABLE>




                                     F - 17
<PAGE>


NOTE 6.           INCOME TAXES (Continued)

<TABLE>
<CAPTION>
                                                                            1997
                                                                                Percent of
                                                                   Amount       Pretax Loss
<S>                                                             <C>                <C>
                 Computed "expected" tax benefit                ($110,000)         (34.0%)
                 Decrease in benefit due to valuation allowance
                  provided for deferred tax assets                110,000           34.0%
                                                                ---------          ------

                                                                $       -              0%
                                                            =============          ======
</TABLE>

<TABLE>
<CAPTION>
                                                                            1996
                                                                                Percent of
                                                                   Amount       Pretax Loss
<S>                                                             <C>                <C>
                 Computed "expected" tax benefit                ($171,000)         (34.0%)
                 Decrease in benefit due to valuation allowance
                  provided for deferred tax assets                171,000           34.0%
                                                                ---------           -----

                                                                $       -              0%
                                                                =========           =====
</TABLE>

                 Deferred income tax assets (liabilities) result from
          differences in the recognition of revenues and expenses for income tax
          and financial reporting purposes.

                 The net deferred tax assets at October 31, 1998 and 1997
          include the following:

<TABLE>
<CAPTION>
                                                                     1998                 1997
                                                                     ----                 ----
<S>                                                             <C>                  <C>
                 Deferred tax assets                            $  1,624,000         $  1,737,000
                 Deferred tax liability                             (214,000)            (175,000)
                 Valuation allowance for deferred tax assets      (1,410,000)          (1,562,000)
                                                                ------------         ------------

                                                                $          -         $          -
</TABLE>


                 The Company has recorded a valuation allowance for its entire
          net deferred tax asset at October 31, 1998 and 1997 since Management
          believes that it is more likely than not that the deferred tax asset
          will not be realized.




                                     F - 18
<PAGE>


NOTE 6.           INCOME TAXES (Continued)

                 The tax effect of major temporary differences that gave rise to
          the Company's net deferred tax assets at October 31, 1998 and 1997 are
          as follows:

<TABLE>
<CAPTION>
                                                                     1998                1997
                                                                     ----                ----
<S>                                                              <C>                <C>
                  Net operating loss carryforwards               $1,534,000         $ 1,521,000
                  Allowance for doubtful accounts                    67,000             138,000
                  Accrued expenses                                   23,000              78,000
                  Depreciation                                     (214,000)           (175,000)
                                                                 ----------          ----------

                                                                 $1,410,000          $1,562,000
                                                                 ==========          ==========
</TABLE>

                 As of October 31, 1998, the Company has available Federal net
          operating loss carryforwards of approximately $3,835,000 that may be
          applied against future Federal taxable income. These carryforwards
          expire at various dates through fiscal 2018.


NOTE 7.   STOCKHOLDERS' EQUITY

                 On May 7, 1990, the Company's stockholders approved a stock
          option plan to issue both "qualified" and "non-qualified" stock
          options. Under the Plan, 800,000 options to purchase shares of the
          Company's common stock may be issued at the discretion of the
          Company's Board of Directors. The option price per share is determined
          by the Company's Board of Directors, but in no case will the price be
          less than 85% of the fair value of the common stock on the date of
          grant. Options under the Plan will have a term of not more than ten
          years with accelerated termination upon the occurrence of certain
          events. As of October 31, 1998, there were no options outstanding.
          During the year ended October 31, 1998, no options were granted and
          25,000 options were terminated. As of October 31, 1997, 25,000 options
          were outstanding. During the year ended October 31, 1997, no options
          were granted and no options were terminated. During the year ended
          October 31, 1996, no options were granted and 350,000 options were
          terminated. No options were exercised during 1998, 1997 or 1996.

                 In connection with a consulting agreement effective November 2,
          1994, the Company issued warrants to purchase 100,000 shares of common
          stock through November 1, 1999 at $.50 per share, subject to
          adjustment as defined. No warrants have been exercised through October
          31, 1998.

                 In connection with the resignation of the Company's President
          and Chief Executive Officer in 1996, the Company issued warrants to
          purchase 200,000 shares of common stock through August 1999 at $.50
          per share, subject to adjustment as defined. No compensation was
          recorded in connection with the issuance of such warrants. No warrants
          have been exercised through October 31, 1998.




                                     F - 19
<PAGE>

NOTE 7.           STOCKHOLDERS' EQUITY (Continued)

                 In connection with a financing agreement effective August 1997,
          the Company issued warrants to purchase 650,000 shares of common stock
          through August 2002 at $.25 per share, subject to adjustment as
          defined. No warrants have been exercised through October 31, 1998.

                 In connection with the resignation of the Company's President
          and Chief Executive Officer in 1998, the Company issued in March 1998,
          warrants to purchase 100,000 shares of common stock through March 2001
          at $.25 per share, subject to adjustment as defined. No warrants have
          been exercised through October 31, 1998.

                 In April 1998, the Company granted 600,000 stock options,
          exercisable at $.10 per share, to its new President. The options vest
          over two years and expire in April 2004. No options have been
          exercised as of October 31, 1998.

                 In September 1998, the Company adopted a qualified incentive
          stock option plan under Section 422 of the Internal Revenue Code.
          Options granted under the Plan will be granted at prices not less than
          fair value of the Company's stock at the date of grant, have a term
          not more than ten years and have other restrictions as determined by
          statute.

                 In September 1998, the Company granted a total of 604,500 stock
          options, exercisable at $.10 per share, to certain employees. The
          options expire November 2001. No options were exercised as of October
          31, 1998.

                 Compensation expense that would have been recorded with respect
          to stock options and warrants issued in accordance with the basis of
          fair value pursuant to SFAS No. 123, if the Company had so elected,
          would have been approximately $45,000 (less than $.01 per share) in
          1998 and immaterial for 1997.

                 During 1994, the Company completed a private placement offering
          by selling 7,550 shares of its 10,500 authorized shares of 10%
          Cumulative Convertible Senior Preferred Stock (the "10% Senior
          Preferred Stock") at a stated value of $100 per share. The Company
          raised $662,150, net of placement fees of $92,850 as a result of the
          offering. Commencing September 30, 1994, dividends were cumulative,
          payable quarterly in arrears at an annual rate of $10 per share. Total
          dividends declared and/or accrued were $75,504 in 1996. The 10% Senior
          Preferred Stock was voting and convertible into the Company's Common
          Stock. Effective April 30, 1995, the Company registered the shares of
          common stock issuable upon conversion of the Senior Preferred Stock
          under the Securities Act of 1933. During 1997 and 1996, all such
          preferred shares and related accrued dividends were converted to
          common stock at a conversion rate of $.25 per share.




                                     F - 20
<PAGE>

NOTE 7.   STOCKHOLDERS' EQUITY (Continued)

                 Effective December 31, 1994, Renaissance exchanged the
          $1,600,000 aggregate amount of the 12 1/2% convertible debentures for
          an aggregate of 16,000 shares of the Company's Series B Cumulative
          Convertible Senior Preferred Stock (the "Series B Stock"), par value
          $.001 per share, stated value $100 per share. The Company raised
          $1,511,319, net of legal and other costs of $88,681 incurred in
          connection with the offering. Commencing December 31, 1994, dividends
          were cumulative, payable quarterly in arrears at an annual rate of $10
          per share. Total dividends declared and/or accrued during 1996 were
          $160,000. On October 31, 1996, Renaissance converted 16,000 shares of
          Series B Stock, a $211,635 term note (Note 5), accrued interest and
          accrued dividends to common stock at the conversion rate of $.25 per
          share.

                 The 10% Cumulative Convertible Preferred Stock and the Series B
          Stock required the Company to comply with certain affirmative and
          negative covenants including, but not limited to, the timely filing of
          financial statements. In addition, the covenants limited the Company's
          ability to issue new indebtedness, issue other classes of preferred
          stock, pay dividends on the Company's common stock, purchase equity
          securities, increase executive compensation, enter into liens and
          acquire new businesses, among other items. The Company was also
          subject to registration requirements under certain circumstances. As
          of October 31, 1996, the Company was in violation of certain of the
          above covenants. As previously disclosed, the Company converted all
          outstanding preferred stock to common stock in 1997 and 1996.

                 In August 1996, the Company issued 1,200,000 common shares for
          $300,000, through a private placement offering. 1,000,000 shares were
          issued to a private investor and 200,000 shares were issued to
          Renaissance.

                 In 1997, the Company converted $150,000 of convertible debt
          issued in 1997 and payable to Renaissance into 600,000 shares of
          common stock.

                 Subsequent to October 31, 1998, the Company converted a
          $150,000 Renaissance note payable (Notes 2 and 5) and related accrued
          interest into approximately 1,675,000 shares of Company common stock.





                                     F - 21
<PAGE>

NOTE 8.   COMMITMENTS AND CONTINGENCIES


                 The Company leases certain equipment under operating leases
          expiring at various times through July 2001. Rent expense was
          approximately $85,000, $86,000 and $16,000 for the years ended October
          31, 1998, 1997 and 1996, respectively. The following is a schedule of
          future minimum rental payments under operating leases as of October
          31, 1998:

                      YEARS ENDING
                       OCTOBER 31,                     AMOUNT

                           1999                        $65,000
                           2000                         21,000
                           2001                         13,000
                                                        ------

                                                       $99,000

                 Certain of the Company's employees are currently represented by
          a labor union, the United Brotherhood of Carpenters and Joiners of
          America, Local Union No. 340 whose contract is in effect to February
          2003. The contract contains provisions which affect compensation to be
          paid to employees included in the Union.

                 During 1998, the Company implemented an incentive bonus plan
          (the "plan") for certain members of management. The plan provides for
          annual incentives calculated as a percentage of the individual
          employee's salary. The expense for 1998 amounted to approximately
          $28,000.

                 Danzer has a contributory defined benefit pension plan covering
          all eligible employees who have elected to participate in the Plan. It
          is the Company's policy to fund pension costs as determined by the
          Plan's actuary. The weighted average discount rate and expected rate
          of return on long-term assets used in determining the actuarial
          present value of the projected benefit obligation were 7% each for the
          Plan's year ended December 31, 1998. The actuarial information
          included below, which is as of January 1, 1999, is for the Plan's
          fiscal year ended December 31, 1998, and is the most recent available
          information.

                 Pension expense for the year ended December 31, 1998, was as
          follows:

            Benefits earned (service cost)                             $  4,186
            Interest expense on projected  benefit obligation            25,706
            Actual return on Plan assets                                 (7,802)
            Other items                                                 (16,860)
                                                                        -------

                                                                       $  5,230



                                     F - 22
<PAGE>


NOTE 8.   COMMITMENTS AND CONTINGENCIES (Continued)

                 A summary of the status of the Plan as of December 31, 1998 is
          as follows:

            Pension benefit obligation:
             Projected benefit obligation:
              Vested                                        ($397,127)
              Non-vested                                            -
                                                              -------
                                                             (397,127)
            Plan assets at fair value                         359,816
                                                              -------
            Funded status                                     (37,311)
            Unrecognized gain(loss)                           (36,587)
            Deferred transition gain(loss)                     55,396
                                                              -------
            Accrued pension  expense                        ($ 18,502)

                 The Company also has a defined contribution 401(k) plan which
          permits voluntary employee contributions up to 15% of compensation and
          which provides Company matching contributions up to 3% of employee
          compensation. 401(k) plan expense for each of the years ended October
          31, 1998, 1997 and 1996 was approximately $6,000, $8,000 and $9,000,
          respectively.

                 On August 25, 1993, the Company entered into a royalty
          agreement structured as an asset sale and purchase agreement (the
          "Agreement") with Morrison Industries, L.P., DIP, a Delaware Limited
          Partnership, (the "Seller"), to buy certain "Intangible" and
          "Tangible" assets of the Seller, as defined. In consideration of the
          sale, the Company was required to pay monthly to the Seller, 5% of
          "Qualified Revenues" as defined, during years 1 through 5 of the
          Agreement and 2 1/2% of Qualified Revenues, up to $2,000,000 and 5% of
          Qualified Revenues in excess of $2,000,000 during years 6 through 10
          of the Agreement. In addition, the Agreement stipulated certain annual
          and quarterly minimum sales levels and requires the Seller to enter
          into a non-compete agreement indefinitely. During 1998, the Company
          entered into an agreement to buyout the remaining obligations of the
          original agreement. This buyout agreement releases the Company from
          the payment of any future royalties and other requirements. The
          Company is required to pay $200,000 in consideration for the buyout,
          to be paid $50,000 in March 1999, monthly installments of $11,111 from
          April 1999 through November 1999 and the remaining unpaid balance in
          December 1999. The $200,000 payable at October 31, 1998 is included in
          "accrued expenses, other" in the accompanying consolidated balance
          sheet. The $200,000 will be amortized over the remaining five years of
          the original agreement through 2003. At October 31, 1998, the $160,000
          unamortized portion is included in "other assets" in the accompanying
          balance sheets. Royalty expense for 1998, 1997 and 1996 was $54,000,
          $100,000 and $100,000, respectively.



                                     F - 23
<PAGE>

NOTE 8.           COMMITMENTS AND CONTINGENCIES (Continued)

                 The Company is aware of the issues associated with the
          programming code in existing computer systems as the year 2000
          approaches. The "Year 2000" problem is pervasive and complex, as many
          computer systems will be affected in some way by the rollover of the
          two-digit year value to 00. Systems that do not properly recognize
          such information could generate erroneous data or cause a system to
          fail. The "Year 2000" issue creates risk for the Company from
          unforeseen problems in its own computer systems and from third parties
          with whom the Company conducts business.

                 The Company is currently in the process of updating its
          accounting software and operating system with software and systems
          that are represented to be "Year 2000" compliant. The Company is
          analyzing its remaining computer systems to identify any potential
          "Year 2000" issues and will take appropriate corrective action based
          on the results of such analysis. Management has not yet determined the
          cost related to achieving "Year 2000" compliance. Management believes,
          based on its available information, that it will be able to manage its
          total "Year 2000" transition without any material adverse effects on
          its business operations or financial condition.


NOTE 9.   RELATED PARTY TRANSACTIONS

                 During 1998, the Company paid a total of $54,000 in management
          fees to two companies, principals of which are Directors of the
          Company.


NOTE 10.  PARENT COMPANY FINANCIAL STATEMENTS

                 The financial statements of the Parent Company (Global
          Environmental Corp. or "Corp.") include assets comprised of
          investments in and advances to subsidiaries. All of the Company's
          common and preferred stock and certain amounts of long-term debt and
          accrued expenses are also recorded on Corp.'s balance sheet.
          Substantially all of Corp.'s equity relates to its investment in its
          subsidiary.

                 Corp.'s only significant source of revenue and cash available
          to pay interest and principal on debt and corporate overhead results
          from management fees charged to its subsidiary. Such management fees
          are limited due to the lack of profitability and positive cash flow of
          its subsidiary as well as certain restrictions on the ability of its
          subsidiary to pay distributions or dividends to Corp. Therefore,
          available cash to pay interest and principal on debt and/or dividends
          on common stock is severely constrained.


                                     F - 24
<PAGE>


                                   SIGNATURES


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


                                 DANZER CORP.


                         By:     /s/ M. E. Williams
                                 M. E. Williams
                                 President, Chief Executive Officer and Director


November 19, 1999



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


November 19, 1999
                                    By:     /s/ Terry Moore
                                            Terry Moore
                                            Chief Financial Officer

November 19, 1999
                                    By:     /s/ Goodhue Smith
                                            Goodhue Smith, Director

November 19, 1999
                                    By:     /s/ Russell G. Cleveland
                                            Russell G. Cleveland, Director

November 19, 1999
                                    By:     /s/  Stephen C. Davis
                                            Stephen C. Davis, Director



                                    PAGE 21