SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10-KSB
         
                   ANNUAL  REPORT PURSUANT  TO SECTION  13 OF 15(d)
                      OF THE SECURITIES EXCHANGE ACT OF 1934

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

      For the transition period from February 1, 1996 to September 30, 1996

Commission File No. 33-76200

                                 ERD WASTE CORP.
             (Exact name of registrant as specified in its charter)

           Delaware                            11-3121813    
------------------------              ------------------------------     
(State of Incorporation)            (I.R.S. Employer Identification No.)

                 937 E. Hazelwood Ave., Bldg. 2, Rahway, NJ 07065     
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 908-381-9229

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

Securities registered  pursuant to Section 12(g) of the Act: Common Stock, $.001
par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding  12 months  (or for  such shorter period that  the registrant  was
required  to  file  such reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                  Yes   [X]                        No      

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

The aggregate market value as of February 7, 1997 the common  stock held by non-
affiliates of the registrant was approximately $6,751,270

As of February 7, 1997 there  were  6,494,669 shares of the  registrant's common
stock, $.001 par value, outstanding.

Documents Incorporated by Reference: None


                                 ERD WASTE CORP.
                                   Form 10-KSB

                         Period Ended September 30, 1996

                                TABLE OF CONTENTS

                                                                          PAGE

PART I
Item 1     Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1
Item 2     Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .   18
Item 3     Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . .   20
Item 4     Submission of Matters to a Vote of
               Security Holders . . . . . . . . . . . . . . . . . . . . . .   22


PART II
Item 5     Market for Registrant's Common Equity
               and Related Stockholder Matters  . . . . . . . . . . . . . .   23
Item 6   Management's Discussion and Analysis of
               Financial Condition and Results of Operations  . . . . . . .   24
Item 7     Financial Statements and Supplementary Data  . . . . . . . . . .   32
Item 8     Changes in and Disagreements With Accountants 
               on Accounting and Financial Disclosure . . . . . . . . . . .   32


PART III
Item 9    Directors and Executive Officers of the Registrant  . . . . . . .   33
Item 10   Executive Compensation  . . . . . . . . . . . . . . . . . . . . .   35
Item 11    Security Ownership of Certain Beneficial
               Owners and Management  . . . . . . . . . . . . . . . . . . .   39
Item 12    Certain Relationships and Related Transactions . . . . . . . . .   40



PART IV
Item 13    Exhibits, Financial Statement Schedules,
               and Reports on Form 8-K  . . . . . . . . . . . . . . . . . . . 42

PART I

ITEM 1 - DESCRIPTION OF BUSINESS

      ERD Waste Corp. (the "Company  or "ERD") is a diversified waste management
company  specializing in the  management and disposal of  municipal solid waste,
industrial  and commercial non-hazardous  solid waste  and hazardous  waste, and
provides brokerage, advisory, consulting and technical services to generators of
waste.   The  Company owns  and operates  three strategically  located hazardous
waste  treatment,   storage  and  disposal   ("TSD")  facilities,  and  provides
environmental  services  including:  consulting  ,  technical contracting,  tank
management,  site remediation,  indoor  and  outdoor  air  quality  testing  and
monitoring services and equipment, and technical support services related to all
of the  foregoing.  In addition, the Company incinerated  municipal solid wastes
and  industrial and commercial non-hazardous solid wastes at its Long Beach, New
York facility.   As a result of a complaint filed against the Company by the New
York  Department of Environmental Conservation, the  Company agreed, among other
things  to cease the incineration operation of  the facility by  March 31, 1997.
The Company anticipates that the facility  at Long Beach  will be converted to a
solid waste  transfer station.   The Company also  manufactures various  sorbent
products  for use  in  various  industrial  marine,  automotive  and  janitorial
applications at  its plant  in East Stroudsburg, Pennsylvania  and recycles  oil
filters at its facility in Waco, Texas. 

      The  Company  has  been  in  control of  the  operations  of Environmental
Services of  America,  Inc. ("ENSA")  since May  6,  1996.   During  this  time,
management of the two  entities has been  integrated and certain steps have been
taken to achieve operating efficiencies.  

(A)  BUSINESS DEVELOPMENT

Background

      The Company  was formed  in  May 1992  and initially  provided  brokerage,
consolidation, and other services  to generators,  transporters, and brokers  of
non-hazardous industrial and commercial solid waste.  At such time the Company's
ability  to provide  such services  was dependent  primarily upon  the Company's
ability to arrange  for the incineration of waste at  a facility located in Long
Beach,  New York  (the "Long Beach Facility")  pursuant to  a long-term contract
with Long Beach  Recycling and Recovery Corp. ("LBRR"),  which was then owned by
third  parties  unaffiliated  with  the Company.    In  February  1993,  present
management assumed control  of the Company and  proceeded to reduce overhead and
increase marketing efforts.

Acquisitions

      On April 1, 1994,  the Company acquired Environmental Controls Technology,
Inc., an Illinois  corporation ("ECT"), and changed ECT's name  to Environmental
Resources and Disposal of Illinois, Inc. ("ERD-IL").  ERD-IL provides brokerage,
advisory,  consulting  and technical  services  to  generators  of non-hazardous
industrial and commercial solid waste and hazardous waste.  

      On July  1, 1994,  the Company  assumed the management of  the Long  Beach
Facility pursuant  to a management agreement  with LBRR and  in August  1994 the
Company acquired the Long Beach Facility through the  acquisition of the capital
stock  of C&J Enterprises, Inc. ("C&J"), the  parent of LBRR.  Shortly after the
consummation of  the IPO,  $7,000,000  of the  proceeds were  used to  purchase,
through   the  Company's   wholly   owned  subsidiary,      Environmental  Waste
Incineration,  Inc. ("EWII"),    $12,335,000 of  Industrial Revenue  Bonds  (the
"Bonds") issued by the Nassau County  Industrial Development Agency in  favor of
LBRR.   All of LBRR's assets were pledged as collateral security for the payment
of the Bonds.  As the purchaser of the Bonds, EWII  acquired a security interest
in all of  LBRR's assets.   In  August, 1995,  all of  the assets  of LBRR  were
transferred to EWII  pursuant to a non-judicial  foreclosure.  EWII accepted the
transfer of those assets pursuant to the  foreclosure in lieu of payment on  the
Bonds  and extinguished LBRR's obligation on  the Bonds, which was  in excess of
$12,335,000.     Since the  foreclosure, all  the operations  at the  Long Beach
Facility have been conducted by EWII.
      In     January,  1995,  the  Company   acquired  secured  indebtedness  of
Envirovision, Inc. and subsequently foreclosed upon the collateral securing such
indebtedness  primarily   accounts   receivable  and contracts  in process.   To
complete certain  contracts in  process,  ERD-ENV employed  a number  of  former
employees  of    Envirovision  and  began storage  tank management  (removal and
installation)  consulting, remediation, and ancillary operations in Congers, New
York and Baltimore, Maryland.

      In   October,  1995   the  Company,   through  its   subsidiary  Absorbent
Manufacturing &  Technology, Inc.  ("AMTI"), purchased substantially  all of the
assets  of Environmental  Absorbent  Technologies, Inc.  ("EATI"),  an absorbent
materials manufacturer, in consideration of an aggregate of 45,282 shares of the
Company's  Common Stock, the  assumption of certain of  EATI's accounts payable,
the assumption  of EATI's payroll  expenses and taxes of EATI's  employees up to
$18,000 and up to an additional 6,250 shares of the Company's Common Stock based
on the earnings of the Company in 1997, 1998 and 1999.  

      In  April, 1996,  the Company  and its  subsidiary, ENSA  Acquisition Corp
("EAC") entered into  an Amended and  Restated Agreement and Plan of Merger (the
"Merger Agreement") with ENSA.  In  order to facilitate the acquisition  of ENSA
and pursuant to the terms of the Merger Agreement, the Company and  EAC launched
a  tender offer (the "Tender  Offer") on April 4, 1996 for  the purchase of ENSA
Common Stock at  a purchase price  of $1.66  per share.   On May 1,  1996, after
receiving tenders of  in excess of 90%  of the issued and  outstanding shares of
ENSA Common Stock, the  Company successfully closed the Tender Offer and  on May
6, 1996 the Company purchased the tendered shares at an aggregate purchase price
of $5,865,967 as well as more than 90% of each class of  preferred stock of ENSA
(the "ENSA Preferred Stock")  for a purchase price of $1,253,614.   The Company
expects  to acquire the remaining Common  and Preferred Stock of  ENSA through a
merger of EAC into ENSA in 1997.

      ENSA  was incorporated  in  1981,  and   had conducted  substantially  all
operations through  the following subsidiary  corporations organized or acquired
since 1987 which ERD required pursuant to the Merger Agreement:

      ERD ENVIRONMENTAL,  INC. ("ERD-ENV")   (formerly ENSA Environmental, Inc.)
functions as the Company's consulting, environmental engineering, air monitoring
and testing  and technical  contracting division.  ERD-ENV  was incorporated  in
August  1994 coincident  with the  Company's acquisition  of certain  assets and
liabilities  of  Earth  Science  Technologies,  Inc.  ("EST"), an  environmental
consulting  and remediation firm  with offices in Kentucky,  West Virginia, Ohio
and Illinois.   The assets  acquired from  EST were transferred  to ERD-ENV and,
effective  January 1,  1995, the  following subsidiaries  and operations  of the
Company were  merged into  ERD-ENV completing a consolidation  of the  Company's
environmental engineering, consulting,  air monitoring and testing and technical
contracting operations:
  
      ENSI,  INC.  ("ENSI"),  acquired  in  July  1987,  provides  environmental
management, transportation and cleanup  services to  generators and handlers  of
hazardous waste materials, primarily in New Jersey and adjacent states.

         TRI-S, INCORPORATED ("TRI-S"), acquired in March  1992,is a  hazardous
waste management, transportation and disposal company with offices in Ellington,
Connecticut. 
         NORTHEAST  ENVIRONMENTAL SERVICES,  INC.  ("NES"), acquired in November
1988,  owns and operates  a Part-B permitted hazardous  waste storage, treatment
and  transfer facility located in  Canastota, New York pursuant  to the Resource
Conservation  and Recovery Act  of 1976 ("RCRA").   NES's treatment capabilities
include  fuel blending,  bulking,  acid base  neutralization  and consolidation,
aqueous liquid pretreatment and lab pack processing.  The NES facility is one of
a limited  number in the northeast  which specializes  in serving generators  of
small to  medium sized quantities  (less than  a truckload) of  drummed and bulk
waste. 

         ENVIRONMENTAL  SERVICES  OF  AMERICA-IN, INC.  ("ENSA-IN") acquired in
April 1994, owns and operates a  RCRA Part-B permitted hazardous  waste storage,
treatment and  transfer facility  located  in South  Bend, Indiana.    ENSA-IN's
treatment  capabilities include  fuel  blending especially  in  conjunction with
liquification  of  drummed  solids  and  sludges,  consolidation, transfer,  and
shredding of  consumer goods.   The site  has an above  ground tank  farm with a
capacity of 178,000  gallons giving the site excellent capabilities  in blending
and bulk receiving.  The  site has a mechanized drum processing system which, in
conjunction  with  the  tank  farm,  allows drummed  solids  and  sludges to  be
liquified and maintained in the tank farm.

            ENVIRONMENTAL SERVICES OF AMERICA-MO, INC. ("ENSA-MO"),  acquired in
April 1994, owns and operates a  RCRA Part-B permitted hazardous  waste storage,
treatment  and transfer  facility located  in Scott  City, Missouri.   ENSA-MO's
treatment  capabilities include  fuel blending,  bulking and  consolidation, and
extensive  solid  fuel  processing  capabilities.   The  site  was  originally a
reclamation  facility  turning hazardous  wastes into  beneficial fuels  used to
power  cement  kilns.    Although  these resource  recovery  operations  are now
governed by  the Resource Conservation and  Recovery Act  of 1976 ("RCRA"),  the
site's  primary  focus  remains  the  same.   ENSA-MO's  permit  allows for  the
liquification  of sludge and  solids into  a liquid fuel, the  conventional form
accepted by cement kilns. Sludge and solids not amenable to liquification can be

processed  through a  series  of  drying operations,  followed by  grinding  and
shredding to create a solid fuel used at a limited number of  cement kilns as an
alternate  fuel.  One of  the site's buildings was  destroyed by a fire in 1991,
prior to ENSA's acquisition, and will require rebuilding.

      INTERNATIONAL  EXPLORATION,  INC.,  since  its inception  in  1973, is  an
environmental consulting firm  specializing in environmental  engineering,
remedial design and construction, geophysics and hydrogeology, primarily in the
states of New  York, New Jersey and Pennsylvania.

      ENSI  OF DELAWARE, INC., since  its inception in  1992, specializes in air
quality testing, sampling measurement and  monitoring, primarily in  New
York, New  Jersey, Pennsylvania,  Delaware,  and Maryland  from its  offices  in
Plumsteadville, PA.
      THE ALMEGA CORPORATION,  an Illinois-based consulting firm specializing in
air quality   testing,  sampling, measurement and monitoring,  primarily in  the
Midwest  and California.   This company's California office  and operations were
sold to  a former  employee in  December 1994,  prior to  the consolidation with
ENSA-ENV.

      TRI-S VT, since its  inception  in 1980, has been  providing environmental
consulting and remediation in the New England region.

(B) BUSINESS OF ISSUER

Industry Background

      The  waste  disposal   market  has two  basic  segments:  municipal waste,
generated   primarily    by   residences,    institutions   and   non-industrial
commercial business activity, and industrial waste. The industrial waste segment
is further  divided into  hazardous  and  non-hazardous  waste.  These terms are
defined by various federal,  state, county, and municipal environmental laws and
the regulations issued by the agencies in response to technological advances and
increased concerns over environmental issues. The proper management and disposal
of waste has become a major issue of national  public  concern in recent  years.
Over the last several years,  relatively few new disposal  facilities  have been
opened,  because,  among other  things,  of  substantial  capital  requirements,
increased  federal,   state,  county  and  municipal  regulatory   requirements,
increased  governmental  monitoring,  requirements  of financial  assurance from
owners of waste  treatment  facilities  and other barriers to entering the waste
disposal business. See "Competition" and "Environmental Regulation."

General

      The  services provided by  the Company fit generally  within the following
categories:  (1)   hazardous  waste   management  services;   (2)  environmental
remediation   services;  (3)   environmental  engineering,   air  testing,   air
monitoring, and consulting  services;  (4) sorbent  products manufacturing,  and
(5) oil filter recycling.

(1)  Hazardous Waste Management Services 

      The Company's hazardous  waste management services include waste treatment
and  resource  recovery,  transportation,  and  transfer,  storage and  disposal
coordination.  These services are provided through NES, ENSA-IN and ENSA-MO and,
to  a   lesser  extent,   by  ENSI  and  TRI-S   (transportation  and   disposal
coordination).   The wastes handled by the Company include  substances which are
classified  as "hazardous"  by  RCRA  and/or exhibit  the characteristics  of  a
hazardous substance,  i.e., corrosive, ignitable,  reactive or toxic properties,
as  well  as  other  substances  subject  to  federal  and  state  environmental
regulations, other  than radioactive wastes,  explosive materials and infectious
wastes.

      The Company provides the following hazardous waste management services:

      TREATMENT AND RESOURCE RECOVERY

      The Company uses  physical methods such as  decanting,  blending and acid-
base  neutralization in  its treatment  and resource  recovery operations.   The
nonrecoverable residual materials produced by the Company's treatment operations
are disposed  off-site by  either incineration  or stabilization  for subsequent
burial  in secure disposal cells in licensed chemical secure landfills owned and
operated  by unrelated  businesses. The recoverable  organic liquids  from these
treatment operations which have sufficient heat value are blended by the Company
to  meet strict specifications for  use as supplemental  fuels for cement kilns,
blast furnaces and  other high-efficiency boilers.  The Company  has established
relationships with  a number  of supplemental  fuel users that  are licensed  to
accept the blended fuel material.  Although the Company  pays a fee to the users
who accept this product  from the Company, this disposal method is substantially
less  costly  than  incineration  at  a  commercial  hazardous  waste  treatment
facility.

      TRANSPORTATION  

      Transportation  and disposal is  offered as an adjunct  to the remediation
activities and on-going removal and disposal  of industrial process waste.   The
Company, through its subsidiaries, is presently licensed to transport  hazardous
waste in approximately  45 states, including the New England states,  New Jersey
and New York, as well as the Canadian provinces of Quebec and Ontario.

      DISPOSAL COORDINATION  

      The  Company does not own or operate any landfills or incinerators for the
disposal  of  hazardous  waste.    The  Company arranges  for  disposal  of  its
customers' hazardous waste  primarily at incinerators, chemical secure landfills
or  other disposal  facilities for  treatment or  reclamation operated  by other
businesses.

      DRUMMED WASTE HANDLING AND REPACKAGING  

      Drummed  waste handling and  repackaging projects involve the  handling of
bulk drums and the handling and repackaging of laboratory packaged chemicals.  

      Drummed waste  handling and  repackaging services  typically are performed
under  service agreements or purchase orders that obligate the Company to accept
waste  material  from  the  customer  conforming to  the  specifications  in the
agreement.  Before  signing a  service agreement  with a  customer, the  Company
arranges to have a representative sample of the waste analyzed by the one of the
Company's three  treatment, storage and disposal  ("TSD") facilities  or another
certified  laboratory  which  has  been  pre-qualified  by the  Company.     The
analytical profile  of the waste  material enables  the Company to recommend  an
appropriate method of transportation, treatment and disposal and to designate  a
treatment and disposal facility licensed to accept the waste. 

      TREATMENT STORAGE AND DISPOSAL FACILITIES 

      At  the  present time,  the  Company owns  three TSD  facilities.   NES is
located in  Canastota, New York.   ENSA-IN is  located in  South Bend,  Indiana.
ENSA-MO  is located in Scott City, Missouri.   When   one of the Company's TSD's
is designated as the treatment and disposal facility, prior to acceptance of the
waste  by  the Company's  facility,  a  representative sample  of  the waste  is
analyzed in  order to insure  that it  conforms to the  customer's waste profile
sheet.  Once the  waste materials have been characterized, compatible groups are
consolidated  to  achieve economies  in  storage,  handling,  transportation and
ultimate treatment and disposal.

      The  Company uses its  TSD facilities to conduct  treatment operations and
temporarily  store   waste  material  for   later  off-site  resource  recovery,
incineration  and disposal.    Facilities engaged in  the treatment, storage and
disposal of hazardous waste are subject to the licensing procedures  established
under  RCRA and the regulations promulgated thereunder.  On November 1, 1991 the
state and federal permits required by RCRA for the operation of the NES facility
became effective.   On  January 22,  1993 ENSA-IN  was issued  its  Part B  RCRA
permit, and  on January 10, 1994 ENSA-MO was issued its Part B RCRA Permit.  See
"Environmental Regulation" below,  for additional information regarding the TSDs
and their  state and  federal permits.   Currently,  NES is  processing a permit
renewal application.

(2)  Environmental Remediation Services

      Environmental remediation involves  activities such as site assessment and
development  of  a  management  plan  including  clean-up,  materials  handling,
draining, flushing, decommissioning, packaging, loading, unloading, pumping  and
preparing waste for  storage, shipment and disposal.  The  Company's remediation
services  are  provided  primarily  to  companies  in  the chemical,  petroleum,
transportation and utility industries and to governmental agencies.  The Company
provides  environmental  remediation   services  to  industrial  customers  with
operations throughout New England and the Midwestern and Mid-Atlantic states.

      The Company  provides the following environmental remediation services:

      SURFACE REMEDIATION  

      The Company's surface remediation  projects generally involve  the planned
clean-up  of hazardous  waste sites  or the  clean-up  of accidental  spills and
discharges  of hazardous materials, such as  those resulting from transportation
and industrial accidents.   Some surface remediation projects involve  recurring
maintenance  and  clean-up   activities  at   industrial  wastewater   treatment
facilities.  The Company  also provides 24 hour emergency response services  for
industrial entities, federal, state and local agencies in connection with  land-
related and waterway incidents that require clean-up.

      FACILITIES DECONTAMINATION  

      Facilities  decontamination  involves  the  clean-up  and  restoration  of
buildings and other  property and related equipment that have  been contaminated
by exposure to hazardous materials  during a manufacturing process,  or by fire,
process malfunction,  spills or  other accidents.  The  Company's projects  have
included decontamination of  chemical, metallurgical, industrial, manufacturing,
commercial, educational, and utility facilities.

      UNDERGROUND STORAGE TANK MANAGEMENT

      In regulations promulgated under RCRA which took effect during 1988, leaks
from   underground  commercial  storage  tanks  were  identified  as  a  serious
environmental hazard and  specific timetables for the testing and  monitoring of
such tanks were established.   The Company provides a wide range  of services to
facilitate  compliance with  such  regulations, including  services  designed to
locate and  evaluate the  condition  of underground  tanks, detect  and  correct
underground  leaks, evaluate  groundwater  and soil  contamination  and prevent,
minimize, and/or remediate impacted groundwater and soil and replace and upgrade
tanks.    In  addition,  the  Company   provides  assistance  with  governmental
recordkeeping requirements.

(3)   Environmental  Engineering,  Air  Testing, Air  Monitoring  and Consulting
Services 

      The  Company's  environmental  consulting   services  include:     problem
definition, strategy  development and investigation;  remedial investigation and
feasibility  studies; remedial  design,  project  management  and  construction,
implementation, operations  and maintenance  of in-situ  systems; monitoring and
recovery well design and installation; site closure planning and implementation;
waste  minimization and  alternative disposal  assessments; hazardous  waste and
discharge   permit  preparation;   air  discharge   permit  applications;   site
assessments, geophysical  investigations, regulatory  planning and coordination;
groundwater restoration and resource development, underground and  above- ground
storage  tank design,  upgrade and  management, asbestos  and lead  sampling and
analysis.    The   Company's  subsidiary,  ERD-ENV,  employs  approximately  170
professional  and  technical personnel  whose  expertise includes  hydrogeology,
engineering  geology,  geophysics,   chemistry,  biology,  remedial  design  and
computer modeling. 

      In addition,  the consulting  group also provides indoor  and outdoor  air
management:  field services,  consulting,  and continuous  emissions  monitoring
system  ("CEMS") design  and  monitoring.   The  field services  include  source
emissions testing and ambient air quality monitoring.   Source emissions testing
involves the collection and analysis of samples of exhaust gases obtained from a
wide variety  of industrial  processes, including  hazardous waste incinerators,
municipal   waste    incinerators,   boilers,   surface   coating    operations,
microelectronic manufacturing operations and various chemical plant and refinery
operations.  Most  often these services are performed to  demonstrate compliance
of the  process with  applicable regulatory requirements.   Ambient air  quality
monitoring involves the  evaluation of concentrations of various  pollutants and
may be done  for a number of  reasons, including, without limitation, permitting
purposes and odor assessments, health and safety purposes, and asbestos and lead
monitoring. Additionally, each air office operates its own analytical laboratory
to support its field service activities.  

      CONSULTING SERVICES AND BROKERAGE OF WASTE

      The  Company,  provides  brokerage,  advisory,   consulting, and technical
services  to generators of  non-hazardous industrial and commercial  solid waste
and hazardous  waste. The focus of the Company's  service business is to provide
cost-effective waste  management solutions  to  its clients  by   (i)   training
clients   to   implement     non-hazardous   and   hazardous   waste preparation
techniques   designed  to  lower waste  disposal  costs,    (ii)  utilizing  the
Company's   proprietary   computer database to determine  the optimal  hazardous
waste disposal solution,  and (iii) coordinating all aspects of the preparation,
removal,  and  disposal of the  client's  waste and  arranging  with one or more
qualified waste transporters for delivery from the point of generation,  through
other jurisdictions,   if necessary, to disposal  facilities  for  incineration,
recycling,  or other  disposal.  

      The  Company's  proprietary computer  database  contains  profiles  of the
hazardous   waste  of each   customer,  the   location of such  waste,  licensed
transporters,  and the authorized  recycling and  incineration  facilities  best
suited for the specific  waste products in question.  The Company  believes that
this  database  provides  it and  its  clients  with  increased  flexibility  in
determining the optimal hazardous waste disposal solution.

(4)  Absorbent Products

      The  Company, through  its subsidiary  AMTI, manufactures  and distributes
products  designed  for  the  absorption  and  containment  of  commercial   and
industrial liquid waste.  These products include  booms, socks, pads and   bilge
balls.   Examples  of  the  use of  these  products include  the  containment of
chemical  spills and  the  clean up  of  oil and  chemicals in  connection  with
automobiles,  boats and manufacturing operations.   After the absorbent products
are used, the  Company offers disposal services for the removal of the waste and
the  used absorbent  products.   The  Company  in January,  1997 took  steps  to
consolidate operations formerly conducted at its Bedford Park, Illinois facility
with its  operations at its East Stroudsburg, Pennsylvania facility and to close
the Bedford Park facility.

(5) Oil Filter Recycling 

    The  Company  commenced operation  of its  oil  filter recycling facility in
Waco, Texas in September 1996.    The plant's processing line has been  designed
to  separate the individual components  (metal, oil  and filter media)  from the
used filters  and spent sorbents.   The metals and oil  are able to  be recycled
back  into  usable  materials  while  the  oily  filter media  is  reused  as an
alternative energy  source by local  power utility.   This process provides  the
generator of used  oil filters and spent sorbents  with a reasonable solution to
potential environmental liabilities.  With a 60,000 square foot building located
on five acres,  the facility is able to accept  and process a substantial volume
of  waste product.

MARKETING

      The Company's  primary marketing areas   include   New  England, the  Mid-
Atlantic and the Mid-West States.  In  addition to "Fortune 500" companies  with
facilities in the  Company's marketing area, the Company has targeted  small and
medium size  businesses which  typically do not  possess internal  environmental
departments and recognize  the value of hiring  a full service environmental and
hazardous waste management company.  The Company has regionalized its  marketing
program with offices in  the East  and Midwest, and  uses its   20 person  sales
force, trained  in  cross-selling of  various services,  to promote  all of  the
Company's services.  The Company's  officers also devote a portion of their time
to sales activities on behalf of the Company.

      The  Company  recognizes the  market's need  for  "one-stop  shopping" for
integrated services ranging  from consulting and planning  to actual  "hands-on"
clean-up,  treatment, transportation   and  disposal.   The Company  markets and
provides its  services  on  an integrated  basis  and,  in many  instances,  the
performance  of  services in  one  discipline  has lead  to  the  performance of
additional  work  in  other  disciplines.    For  example,  the  results  of  an
environmental  consulting  and  sampling  program could  dictate  the  need  for
excavation, transportation  and disposal of  contaminated material identified in
the site assessment.  In addition, the Company provides turnkey services for Lab
Packs to hospitals, colleges and universities. 
       The Company, as well as other companies,  have access through the Freedom
of Information  Act and  the right  to know  to access  hazardous waste activity
reports in all states in order to concentrate marketing efforts.  

      As part  of its  marketing  efforts, the  Company identifies  projects  by
accessing hazardous waste activity reports which are available under the Freedom
of  Information Act.  The Company  advertises on local radio,  in trade journals
and participates in regional trade and industry shows.  The company  also relies
upon  the  recommendations  of  clients,  subcontractors,  affiliates,  and  the
Company's position  on the "recommended  contractors list" or "approved  vendors
list" of various governmental agencies and "Fortune 500" companies.  

SEASONALITY

      The  Company's revenues are  impacted by severe winter  weather conditions
which  affect  the ability  to  1) perform  site  remediation and  field service
activities, and  2) transport waste  to its TSD facilities  for treatment, i.e.,
equeous waste which can  not be  processed due to  ambient freezing  conditions.
This has  resulted in  the postponement  of projects and a  decline in  revenues
primarily during the months of January and  February.  Other than severe  winter
weather, management does not believe the Company has experienced any significant
seasonality  in its business in the past, and does not anticipate seasonality to
have a significant impact on its operations in the future.

CUSTOMERS  

      On a  consolidated basis,  the  majority of  the Company's  revenues  have
arisen out  of competitive bid  contracts awarded by  customers  involved in the
chemical industry and by customers in  a wide range of manufacturing industries.
During 1995, a significant portion of the  Company's revenues were derived  from
customers who repeatedly utilize the Company's services.  

      The  Waco, Texas facility,  opened in September 1996,  markets oil filter,
recycling services to national accounts.   Although only currently servicing the
Southeast, the Company will continue its efforts to develop national contracts. 
 

      The  customers  of  the  Company's  TSDs who  require  waste  handling and
transportation  services are  a diverse  mix of  several hundred  industrial and
manufacturing entities  and a  number of  waste brokers.   Since  the Company is
Superfund and  DRMO approved, a  large portion of the Company's  TSD business is
derived from  government contracts.    A substantial portion  of the  revenue is
originated from services performed by other subsidiaries of the Company. 

      TRI-S and  ENSI together  service  customers  in need  of  transportation,
clean-up,   consulting   or  remediation   services   throughout   New  England,
Metropolitan New York  City and  New Jersey.   Typical   customers are  chemical
processing companies, industrial manufacturers,  petroleum services, real estate
and  lending institutions,  and governmental  agencies.   The  services provided
range from non-recurring projects to repeat service work requiring environmental
expertise such as technical in-plant services.
   
      ERD-ENV performs  environmental engineering,  air testing,  air monitoring
and consulting  services for  a  diverse range  of industrial  and  governmental
customers  located primarily in  New England, Mid Atlantic  and Mid-West states.
In addition, ERD-ENV has worked for numerous civil engineering firms involved in
a wide variety  of industries,  as well as corporations  in the  pharmaceutical,
petrochemical, microelectronic and printing industries.

   ERD-IL provides marketing services  for the Waco,  Texas facility as  well as
the TSD  facilities located in Scott  City, Mo.  and South Bend,  Ind.  It  also
provides  remediaton  services  and  brokerage  services  for  the  disposal  of
industrial and  hazardous waste.

COMPETITION

      The hazardous  and non-hazardous waste management  industry involves a few
large companies which provide integrated services and numerous smaller companies
which provide some or all of the same services.  Large companies  with extensive
resources are able to directly provide field services, waste transportation  and
disposal  through  their  own  secure  landfills  and  incineration  facilities.
Examples  of  some  of  the  Company's largest  competitors  are  Chemical Waste
Management;  Clean  Harbors,  Inc.;  International  Technology   Corp.;  Laidlaw
Environmental  Services,  Inc.;  and  Rollins  Environmental  Services.    Other
competitors either provide one aspect of waste management, or, like the Company,
provide  integrated services  by subcontracting  portions  of their  services to
other companies.  Examples of some of the Company's comparably sized competitors
are   Cycle  Chem,  Inc.;  Philip  Environmental;   S&W  Waste,  Inc.;  Advanced
Environmental   Technology    Corp.;   Franklin    Environmental;      Northland
Environmental; Essex  Waste Management,  Inc.; PCIA,  Inc.; EWR;  Petrochem; and
Safety  Kleen.        The  waste  management  and disposal  industry  is  highly
competitive  and  requires  substantial  capital.    Competition  in  the  waste
management  industry  is  based,  primarily  on  price,  technical  performance,
services, and reliability.

      The waste management consulting  and remediation  industry is also  highly
competitive.   Competition  is based   on  the basis  of price,  experience, and
custom service and to a lesser extent, expertise.

ENVIRONMENTAL REGULATION

      The activities  of the Company  are regulated by federal,  state and local
environmental   laws.  The following  is a summary  of the  regulatory framework
under which the Company operates.  It is not possible to predict all the effects
of governmental   regulation on  the Company and its subsidiaries.   The Company
believes  that  the  environmental  laws  and  acts  described  below  and   the
regulations promulgated  under them,  as well as state  and local  environmental
laws and regulations, will be materially  significant in the development  of the
Company's business.  Environmental laws and regulations could expose the Company
or  one  or more  of  its subsidiaries  to strict  joint and  several liability,
because it  transports, treats and  disposes of hazardous substances, wastes and
chemicals.   The  Company could  be held  liable for  the costs  of governmental
removal  and remediation actions,  costs to the government  in assessing damages
and he cost  of damages in connection  with the destruction   or loss of natural
resources.    Liability  under  certain  environmental  laws  can arise  without
reference to traditional notions of "fault".    
 
Environmental Laws
      The  Toxic  Substances Control  Act of  1976 ("TSCA").   TSCA  gives broad
authority  to the EPA  to regulate the manufacture,  processing, distribution in
commerce, use and disposal of various chemical substances and mixtures.  The EPA
can require testing of chemical substances that may present an unreasonable risk
to health or  the environment.  If testing reveals an unreasonable risk, the EPA
must take  steps to  reduce the  risk.   Options available  to  the EPA  include
requiring  appropriate  labeling,  prohibition  of  manufacture  of the  harmful
chemical, and mandating the manner in which the chemical must be disposed.

   The Comprehensive  Environmental Response, Compensation  and Liability Act of
1980 ("CERCLA," also referred to  as the "Superfund Act").  CERCLA established a
comprehensive  scheme  of environmental  liability without  regard to  fault for
abandoned waste sites,  leaking active sites, and spills which have  released or
may release  hazardous substances into the environment.  The class of "hazardous
substances" includes numerous materials  which are commonly used  by industrial,
manufacturing and commercial operations and includes, but is much broader  than,
the class of "hazardous waste" regulated by RCRA.

   1986  Superfund  Amendment and  Reauthorization  Act ("SARA").  SARA amended
CERCLA by, among other  things, authorizing another tax on the chemical industry
to  refinance the  Superfund to enable  the EPA to undertake  clean-ups of sites
where  hazardous substances have been  or may  be released into  the environment
when private  parties are either  unknown or unable  or unwilling to do  so.  In
addition, SARA includes  the Emergency Planning and Community Right to  Know Act
which mandates extensive reporting requirements for use or storage of  hazardous
substances and releases of hazardous substances, either accidental or permitted,
into the environment.

   Hundreds of  sites across  the country have been targeted  for clean-up in  a
list  known as the  National Priorities  List propounded under CERCLA  and SARA.
The EPA  may order  a private  party to  conduct clean-up  activities or it  may
conduct a  clean-up itself using the  Superfund monies and  then seek to recover
those  funds  from  parties  liable under  the  statute.    Further  regulations
establish a National Contingency Plan, which was substantially revised in March,
1990, for dealing with the release of hazardous substances into the environment.
This Plan  governs the  conduct  of remediation  undertaken by  the  government.
Private parties must  also substantially comply with  the provisions of the Plan
as a  prerequisite to  a contribution claim against  another potentially  liable
person.   Present and past  owners and/or operators of sites  on which hazardous
substances  have   been  released,   generators  of   hazardous  substances  and
transporters who  select the  site for  disposal may  all be  liable jointly and
severally  for clean-up  costs  and for  remedying  any harmful  effects  to the
environment or public  health, such as pollution of groundwater,  without regard
to fault.

   CERCLA is up for Reauthorization before Congress this year and it can not be
anticipated at this time what changes may be made to the current statute or what
effect such reauthorization may have on the Company.

   The Clean Air Act Amendments of 1990 ("CAA").  These amendments substantially
revise and expand  the Clean Air Act  originally enacted in 1967.   The CAA will
have  significant and  far reaching  effects on  small and large  businesses and
industrial operations, public  utilities and transportation systems, both public
and  private.   EPA  and  the  states are  presently  developing  the  extensive
regulations  necessary to  implement the  CAA.   The  effects  and costs  to the
regulated community will be felt and incurred over a lengthy phase-in period.

   The  Hazardous  Materials  Transportation Act  ("HMTA").  The  HMTA and  the
extensive  regulations  promulgated thereunder  regulate  the transportation  of
"hazardous materials."  This very broad category  of substances includes but  is
not limited  to CERCLA "hazardous substances" and RCRA "hazardous  wastes."  The
HMTA  and  the  regulations    thereunder  are enforced  by  the  Department  of
Transportation  and  specify labeling,  placarding, shipping  papers, packaging,
spill reporting and employee training requirements which vary with the nature of
the material being shipped.

    The  Clean Water  Act (Federal  Water Pollution  Control  Act).  Through the
1950's  and 1960's  emphasis was  on  the states  setting ambient  water quality
standards and developing plans to achieve these standards.  In 1972, the Federal
Water Pollution Control Act was significantly amended.  These changes emphasized
a  new approach,  combining water  quality  standards  and effluent  limitations
(i.e., technology-based standards).  The amendments called for compliance by all
point-source  dischargers with  technology-based  standards.   A  strong Federal
enforcement program was  created and substantial monies were made  available for
construction  of sewage treatment  plants.  The Federal  Water Pollution Control
Act was amended in 1977 to address toxic water pollutants and in 1987  to refine
and  strengthen priorities  under the Act as  well as  enhance EPA's enforcement
authority.  Since the 1977 amendments, the Federal Water  Pollution Act has been
commonly referred to as the Clean Water Act ("CWA").

   OSHA Hazard  Communication Standard  ("HCS").   The HCS  was developed by the
Occupational  Safety  and  Health  Administration ("OSHA").    It  requires  the
identification  and dissemination  of information  about hazardous  chemicals to
employees  in the workplace.  The category of "hazardous chemicals" is extremely
broad.   Employers are obligated  to make available to  their employees Material
Safety  Data  Sheets  for  each  hazardous  chemical  used  in  the   workplace.
Containers  must also  be properly  labeled and  employees trained  in workplace
safety.

   The Company also provides consulting services with respect to the remediation
and removal of asbestos and lead based paint from buildings.  Federal regulation
of asbestos removal consists of  the Asbestos Hazard Emergency  Response Act, 15
U.S.C. section 2641 et seq. which deals  with asbestos in school buildings,  and
regulations promulgated by both  OSHA and the EPA.   OSHA administers  workplace
and employee protection rules and EPA administers demolition and removal  rules.
In addition, many states have enacted more stringent rules including  contractor
certification and accreditation requirements.

Remediation

   The Company's three TSD facilities   are on sites that have been contaminated
as a result of prior uses  of the site or by prior uses at an adjacent property.
The Company  has cooperated  with the government regulatory  agencies that  have
jurisdiction  over   its  facilities  to   investigate,  assess,  and  implement
appropriate remediation measures  to address these conditions.  The  Company has
projected  potential  expenditures  that  may  be  required  to conduct  further
investigations or  studies and  to  remediate the  sites to  satisfy  regulatory
requirements.   In  developing  these  projections, ERD  has relied  on  studies
prepared by its subsidiary, ERD Environmental, Inc. and by EMCON, an independent
environmental  engineering firm.  Below is a summary  of environmental issues at
each applicable facility.

Canastota, New  York.  This  TSD facility has on-site soil  and groundwater that
have been impacted by volatile organic chemicals.   The extent of this  impacted
soil and groundwater  has been delineated and reported  to the NYSDEC and United
States Environmental Protection  Agency ("USEPA") in RCRA Facility Investigation
("RFI") Reports,  as required  by  the RCRA  Part B  Hazardous Waste  Management
("Part B")  permit.  The RFI  reports for  both soil and  groundwater have  been
accepted  by  the  NYSDEC/USEPA.    Corrective action  will  continue  until the
NYSDEC/USEPA confirms completion of such corrective action.

   Groundwater corrective action  was begun in  May of  1993, when a remediation
system  was  installed in  accordance with  a  NYSDEC/USEPA  approved Corrective
Measures Implementation  ("CMI") Plan.   Operation of this  system continues  at
present and  reporting  is made  to the  NYSDEC/USEPA  on  a periodic  basis  in
accordance with the schedule in the CMI plan.  

   A CMI plan for soil remediation  was submitted to the NYSDEC/USEPA in June of
1996 and  was appoved.   Installation and  startup of the  remediation system is
expected to commence during the 1997 construction season.

Scott  City, Missouri.   As  required by  the RCRA  part B  permit for  this TSD
facility, an  RFI is  to be  performed.   This  requirement was  based upon  the
findings of  a RCRA Facility Assessment  performed at  the facility  by a  USEPA
contractor in  September of 1989.   An RFI  Work Plan  has been approved by  the
Missouri Department  of National Resources  ("MDNR")/USEPA for investigation and
sampling of soil and groundwater in Areas of Concern  outlined by the regulatory
agencies.    Results  of  the  investigation  and  sampling  are  pending   and,
accordingly,  subsurface  conditions are  presently  unknown.    The possibility
exists that impacted soil and/or groundwater will be detected, requiring further
investigation and/or corrective action.

South Bend,  Indiana.   This  TSD  facility contains  soils which  are  impacted
principally with  volatile organic chemicals and  petroleum hydrocarbons.  These
occur primarily in the area known as the Old Tank Farm.

   In December  of 1994,  a Revised  Partial Closure  Plan was  submitted to the
Indiana Department of Environmental Management ("IDEM") for approval.  This plan
included  a conceptual  design for  remediation of  these soils.    To date,  no
approval  or  disapproval  of   this  plan  has  been  received  from  IDEM  and
consequently no related remediation of these soils has taken place.

   This  facility has  four on-site  groundwater monitoring  wells.  Groundwater
samples collected from  these wells have indicated that the  groundwater beneath
the site has been impacted principally by volatile organic chemicals.   There is
evidence to suggest that  some of these volatile organic chemicals have migrated
from off-site sources.  To date, there has been no directive from IDEM requiring
any action on the groundwater other than periodic sampling and monitoring.

   Because impacted soil and groundwater is present, the possibility exists that
IDEM or  USEPA may  at some  future date  require an  RFI and investigation  and
corrective action  additional to  that outlined in the  Revised Partial  Closure
Plan.

   Table 1  presents a summary of  the projected expenditures in connection with
existing  contamination at  the  TSD  facilities.    However,  there is  no  set
timetable  for incurring any of the  projected expenses and no  assurance can be
given that such projected  expenses will not  increase or decrease depending  on
the circumstances.

                                     Table 1
                            Projected Remedial Costs

                        South Bend, Indiana      $  942,000
                        Canastota, New York       1,427,000
                        Scott City, Missouri        100,000
                                                 $2,469,000

      In addition to expenditures associated with above referenced existing site
contamination, ERD will  also be required to upgrade  its TSD facilities to meet
new regulatory and permit  requirements, including the installation  of emission
controls  for volatile organic compounds on  the storage tanks at  each of these
facilities to  meet requirements with  respect to air emissions.   The projected
costs of meeting new regulatory and  permit requirements are presented  in Table
2, and  as with  Table 1, there is  no set  timetable for  incurring any of  the
projected  expenses and  no assurance can  be given that such  expenses will not
increase or decrease depending on the circumstances.


                                    Table 2
                      Projected Compliance and Other Costs
                   
                       South Bend, Indiana      $  430,000
                       Canastota, New York         330,000
                       Scott City, Missouri        496,000
                              Total             $1,256,000

      In addition, as  a result of  new regulations and/or  operating needs, the
Company may  be required to expend funds for capital  improvements at any or all
of its facilities.   No reserves  have been established  for these  improvements
because  management expects  that any  capital improvements  would  increase the
value  of the  facilities.   However, there  can be  no assurance  that required
expenditures would result in an increase in the property/facility value.

      In addition to the TSD  facilities, the Company may be  liable for some or
all of the cost of potential remediation and closure of the Long Beach, New York
facility.   The real property  on which that facility  operates is owned  by the
City of Long  Beach.  The only sampling that  has been conducted concerning site
conditions at  Long Beach, other  than limited  sampling of stained soils  dates
from 1990 -- prior to the Company's involvement with the site.
Permitting

      The  Company operates  three TSD  facilities  and  an oil filter recycling
facility,  which are subject to permitting, licenses and authorization  required
for the operation of the facilities.  
South Bend, Indiana.  This TSD facility is required to obtain federal, state and
local licenses,  permits, and/or approvals  including a RCRA Part B  permit.  On
January 22, 1993, the IDEM, in conjunction with the USEPA, granted this facility
its Part B  permit for a term of five  years.  Further, there  are two permitted
process air pollution control units in operation at the facility, a wet scrubber
and a bag house.

      Recent changes to  the Clean Air Act may  require upgrades to the emission
controls at the site.  The facility has begun  evaluating its requirements under
Title V  of the  Clean Air  Act Amendments  of 1990  ("CAAA")  and an  emissions
inventory has  been performed.   Assuming the significant  air emission  sources
(the  tank  farm  and drum  storage  and  processing area)  continue  to  be  in
compliance with existing state regulations and RCRA regulations found at 40  CFR
Part  264 Subpart BB, the regulations that likely will have the most significant
impact on this facility  in the near future  will be requirements under  Title V
(40 CFR Part 70 and related state regulations) and RCRA 40 CFR 264 Subpart CC.

Scott  City, Missouri.  This TSD  facility is required to  obtain federal, state
and local license, permits and  approvals, including a RCRA Part B permit.   The
MDNR, in conjunction with the USEPA, granted the facility its RCRA Part B permit
on January 10, 1994, for a term of ten years.

      Recent changes to  the Clean Air Act may  require upgrades to the emission
controls at the site.  The facility has begun  evaluating its requirements under
Title V of the CAAA and an emissions inventory has been performed.  Assuming the
significant  air  emission  sources  are  in  compliance  with  existing   state
regulations  and RCRA  regulations found  at 40  CFR Part  264  Subpart BB,  the
regulations that likely will have the most  significant impact on this  facility
in the  near future will be Title V permitting (40 CFR Part 70 and related state
regulations) and RCRA 40 CFR 264 Subpart CC.

      On April  1,  1994,  the MDNR  issued an  operating  permit for stormwater
discharges from the facility.  This permit expires on March 31, 1999, and covers
three outfalls.  The three outfalls are basically the two ditches on either side
of  the  facility  and  stormwater  which  may  be  pumped  from  the  secondary
containment unit on the Above  Ground Storage Tank Farm.   The facility has,  on
occasion, exceeded its discharge limits for total suspended solids and  chemical
oxygen demand.   There has been no historical enforcement  action as a result of
these occasions.

      Canastota, New York.  This TSD facility is required to obtain federal,
state and local licenses approvals  and permits, including a NYSDEC  RCRA Part B
permit, a State  Pollution  Discharge Elimination System ("SPDES") permit,
certain transporter permits, and an air permit.  The Company's draft air permit
with the NYSDEC is currently awaiting final  approval.  The Company is in the
process of renewing the RCRA Part B permit and the SPDES  permit, which were
both issued to the facility on November  1, 1991 and have  a term of five years.
The facility filed applications for renewal of these permits prior to November
1, 1996, and a decision with respect to such renewal application is
currently pending.

      This facility  is responsible for complying  with all Federal air emission
regulations and  for determining  if the  facility is  a potential  major source
under the State and Federal Title V program.   The Title V program requires that
a major source of Volatile Organic Compound or Hazardous Air Pollutants submit a
Title  V permit  for the facility.   The anticipated deadline  for submission of
this facility's Title V permit application is the latter part of 1997.  Further,
the air emission  standards for equipment leaks  and air emission standards  for
tanks, surface impoundments and  containers (40 CFR Part 264 Subpart BB  and CC)
may have  a significant impact on  the facility  as may  the requirements  under
Title V.
East Chicago, Indiana.  On August 18, 1996, the  Company's East Chicago, Indiana
non-hazardous  waste transfer station  was destroyed by fire.   Authorities have
indicated the origin of the fire was electrical in nature.   In addition to loss
of  equipment, the Company incurred  certain cleanup  expenses.  The  Company is
currently in negotiation  with the owner of the  property from whom the property
was leased, regarding compensation for its losses.   It is expected that most of
the customers serviced at the East Chicago facility can  continue to be serviced
at the Company's South Bend facility.

Waco,  Texas.  The  present operations at the  Waco, Texas  facility are exempt
from air quality permitting requirements.  

TRANSPORTATION PERMITS

      Any entity  engaging in the transportation  of hazardous wastes is subject
to regulation under various state and federal  laws.  Duties of hazardous  waste
transporters  include, but are  not necessarily limited to,  obtaining hazardous
waste and solid waste transporter licenses and the use and operation of approved
equipment.   The Company, through NES  and TRI-S, is a  permitted transporter of
hazardous waste in  forty-five (45) states and two provinces of  Canada.  All of
the  transportation permits held by NES and TRI-S are subject to annual renewal.
Factors considered in evaluating a renewal application vary from state to state,
but include, among  other things, the permitted entity's compliance  status, its
record  of traffic incidents,  and the qualifications of  the personnel managing
transportation operations.  To the  knowledge of the Company's  management, none
of the  Company's subsidiaries  have ever  been denied  renewal of  any of their
respective transportation permits.  However, each such permit is also subject to
revocation in the event of a failure to comply with the state's applicable rules
and  regulations.   Of the  transportation  permits held  by the  Company, those
granted by the  states of New York,  Connecticut, New Jersey, Indiana, Missouri,
and Pennsylvania are most critical to operations.

INSURANCE

      ERD,  ERD-ENV,  TRI-S, NES,  ENSA-IN,    ENSA-MO,  ERD-IL, and ERD-RR  are
included  under  one general  liability insurance  policy in  the amount  of $10
million  per  occurrence/$10  million  dollars  aggregate  liability arising  in
connection  with their  activities. Five  million dollars  of such  insurance is
required by the  State of New York in order  to maintain NES' permit  as a waste
transporter.  Higher  amounts of general liability insurance have  been obtained
for  specific   customers/projects,  where   necessary.     Additionally,  these
subsidiaries  have  obtained pollution  impairment  liability  and  professional
liability insurance   in  the  amount of  $1 million  per occurrence/$2  million
aggregate covering  liability resulting  from the  sudden and  non-sudden
discharge  or release of  hazardous substances related to  their contracting and
professional service operations. 

      ERD   and    its   subsidiaries    are   protected    by   a   Contractors
Pollution/Professional   Liability   Policy   better  know   as   a  Consultants
Environmental Liability Policy (CEL)  with Limits of Liability of $5 million per
occurrence/$5  million aggregate.   This  policy would  cover certain  claims by
reason of any act,  error or omission in professional services rendered  or that
should have been rendered by the Company.

      In  addition  to  the  above,  NES,  ENSA-IN,  and  ENSA-MO  have obtained
pollution liability  insurance for  their TSD  facilities in  the  amount of  $1
million per  occurrence/$2 million aggregate,  covering liability resulting from
the sudden and non-sudden discharge or release of hazardous  substances from the
facilities'  premises.  The  facilities maintain all insurance  required for the
maintenance of  their permits, however, no assurance can be give that difficulty
will  not be encountered in maintaining such insurance in the future.  Moreover,
if the facilities fail  to maintain  such insurance, permits  could be  revoked,
which could result in the closure of a facility and the cessation of substantial
operations.

       All of  the Company's vehicles are  insured under a $5,000,000 commercial
automobile policy covering transportation of hazardous waste and other  services
performed in  Company vehicles.    In addition,  the Company  maintains  workers
compensation insurance as required from state to state.

EMPLOYEES 

      As of January 31, 1997, the Company and its subsidiaries had approximately
375  employees  of  which  approximately  25  are  employed  at  the   Company's
discontinued operations.

ITEM 2 - PROPERTIES.

      The Company  has offices at various  owned and leased locations throughout
the United States.   Each branch office is generally  identified with one of the
Company's  subsidiaries; however, most locations perform multiple services.  The
table below summarizes the premises from which the Company operates.


Location            Own/    Building
                    Rent    Square      Lease      Annual       Description/    


                            Footage     Expires    Rental       Primary Service

937 E. Hazelwood   Rent     10,000      Sep. '97  $50,000  Company headquarters
Rahway, NJ                                                 office space for
                                                           executive and adm
                                                           staff, warehouse
                                                           operations and
                                                           parking space for
                                                           remediation
                                                           operations.

356 Veteran's Hwy Rent       1,500      Feb. '97   22,500  Office space,
Commack, NY                                                formerly Company
                                                           headquarters, vacated
                                                           1996.

70 Water Street   Rent     173,644      Dec. '07  173,644  Incinerator opers.
Long Beach, NY                                             discontinued
                                                           as of March 31, 1997.

Canal Road        Own       30,000        -   -     - -    TSD facility located
Wampsville, NY                                             on three acres  of
                                                           land used for the 
                                                           handling  and storage
                                                           of waste 
                                                           materials; a  small
                                                           portion of the
                                                           building  is  devoted
                                                           to  offices.
 
Marguerite        Own        4,000        - -      - -     Administrative office
Drive West                                                 space on approx.
Casastota, NY                                              three acres near TSD 
                                                           facility.

604 Scott St.     Own       40,015        - -      - -     TSD facility used for
South Bend, IN                                             handling and storage
                                                           of waste materials;
                                                           a portion of the
                                                           building is devoted
                                                           to offices.
                                                           The facility is Part
                                                           B permitted, and has
                                                           a Tank Farm with the
                                                           capacity to hold 
                                                           approximately 176,000
                                                           gallons.
        
3100 Industrial Own         21,600       - -       - -     Part B equivalent
Fuels Drive                                                permitted facility on
Scott City, MO                                             5 acres of land.
  
6205 Route 611  Rent        10,500     May '02             Offices and warehouse
Pippersville, PA                                           consulting operations
                                                           and air testing,
                                                           consulting, and
                                                           monitoring.

331 Route  9W   Rent        12,600     Mar. '98   102,600  Office and warehouse
Congers, NY                                                space for consulting
                                                           and remediation
                                                           operations.

601A County Club Rent        4,200     Jun. '97    27,500  Office and warehouse
Drive                                                      for consulting and
Bensenville, IL                                            air testing
                                                           operations.

205 Main Street  Rent        3,082     Dec. '98    23,000  Office and warehouse
Brattleboro, VT                                            space for consulting
                                                           services.

410 W. Chestnut  Rent        7,000     Aug. '97    48,000  Office and warehouse
Street                                                     space for consulting
Louisville, KY                                             services.

826 North Road   Rent        9,000     Oct. '98    60,000  In January, 1997, the
Lewis Road                                                 Company terminated
Royersford, PA.                                            this lease for a lump
                                                           sum payment of
                                                           $30,000.  Personnel
                                                           will be relocated
                                                           to a nearby office.


465 East 170th   Rent        2,145     Oct. '97    28,956  Sales and adm offices
South Holland, IL          


6840 West 66th PlRent                  Oct '00    136,324  The Company will
Bedford Park ,IL                                           consolidate this 
                                                           manufacturibg
                                                           facility into its
                                                           Pa. office. The
                                                           landlord agreed
                                                           to a mutual
                                                           termination of the
                                                           lease.

1 Foundry StreetRent        13,200    Oct. '99     52,800  Manufacturing and
East Srroudsburg, PA                                       warehouse site for 
                                                           the company's sorbent
                                                           products operation.

615 Forrest     Rent       12,000     May '97      21,600  Recycling facil. and
Waco, TX                                                   storage of used oil
                                                           filters.

2480 Creekway   Rent        8,000    Dec. '98      28,000  Office and warehouse
Drive                                                      space for consulting
Columbus, OH                                               services.
Madison Ave. &  Rent        4,420    Apr. '98      27,200  Office and warehouse
Eight Street W.                                            space for consulting
Huntington, WV                                             services. 

25 and 34 Pinney Rent       8,400    Dec. '98      23,000  The company is
Street                                                     is currently in
Ellington, CT                                              litigation and has
                                                           not made payments
                                                           during 1996.
                                                           It is expected 
                                                           that 25 Pinney St.
                                                           will be terminated in
                                                           1997.

 3 - LEGAL PROCEEDINGS.

      On September  4,  1996, the  New  York  State Department  of Environmental
Conservation ("NYSDEC")  filed  an  administrative complaint  alleging  multiple
violations of the  Long Beach facility's permits and various  environmental laws
and regulations.  The  complaint seeks revocation of  the facility's permits and
penalties of  $500,000.   On  November 6,  1996,  the  Company entered  into  an
agreement with  the New  York State  Attorney General,  acting on  behalf of the
NYSDEC,  pursuant  to  which  the  Company agreed  to    (i)  voluntarily  cease
incineration at such facility by March 31, 1997, (ii)  continue operations on an
interim basis as  a solid waste transfer station  after March 31, 1997, pursuant
to a consent order and to  apply to the NYSDEC for a formal modification of  the
facility's permit to operate as a transfer  station and (iii) to disconnect  the
incinerator  apparatus  by  March  31,  1998.    Pursuant  to  such   agreement,
Environmental Waste  Incineration, Inc., the  Company's subsidiary operating the
facility, agreed to plead guilty to a single violation  of Section 71-2703(2) of
the Environmental  Conservation Law, and  the State  of New York  agreed that it
would not further prosecute the Company or any of its affiliates or subsidiaries
in any civil or criminal  proceedings in connection with any acts related to the
operation  and/or management  of the facility as  of November  6, 1996.   As the
Company  is in  the  process  of  negotiating  with  the  State of  New  York  a
comprehensive consent order,  there can be no assurances regarding  the ultimate
impact of the Consent Order  on the Company's financial condition and results of
operations, or that  the Company will reach a final  agreement with the State of
New York on  terms favorable  to the  Company.  As  the City  of Long  Beach has
indicated that it  presently intends to oppose the Company's  permit application
for  a transfer  station, there  also can  be no  assurances that  the Company's
application for such a permit will be granted.  

      The City of  Long Beach represents the largest  customer at the Long Beach
facility.    The  City of  Long Beach delivers its  solid waste  to the facility
pursuant to  a contract  it entered  into with  Long Beach  Recycling & Recovery
Corp. dated May 13, 1992.   There can be no assurances that the  Company will be
successful in  enforcing the contract  with the City  of Long Beach or  that the
City will continue its  delivery of solid  waste to the  facility.  The  Company
believes that  upon cessation  of incineration  on March 31, 1997,  at the  Long
Beach  facility, it is  unlikely for  the foreseeable future that  such facility
could operate profitably as a transfer station without the revenue from the City
of Long Beach.  

      On January 2, 1997, the City of Long Beach served Notices of Default under
the  disposal  contract  with the City of  Long Beach   dated May  13, 1992 (the
"Long Beach Agreement") as well as leases of the facility premises dated May 13,
1992 and November  16, 1984.  The  Notices of Default seek  to terminate each of
these agreements.  Counsel for the Company and the City of  Long Beach agreed on
January 14, 1997  to three week "standstill"  during which the time for  cure of
the alleged defaults and  the initiation of litigation will be suspended pending
settlement discussions between the parties.  Settlement discussions are expected
to continue until at least the middle of February, 1997.   There is no assurance
that  the parties  can  achieve a  mutually acceptable  settlement  or that  the
Company  can successfully prevent the  termination of the Long  Beach  Agreement
and the leases of the facility premises by the City of  Long Beach.

      In   November 1994,  P.J.V. Transport,  Inc. ("PJV")  and Concord Trucking
Inc.  ("Concord") commenced  an action  in the  New York  Supreme Court,  Nassau
County, against LBRR, ERD Management Corp. ("EMC")  and the City of Long  Beach,
New York.   PJV has alleged non-payment in  the amount of approximately $185,000
for services rendered in connection with the disposal by PJV  of solid waste ash
generated at the LBRR facility pursuant  to a contract among PJV, LBRR, and  the
City of  Long Beach (the "PJV  Contract") and has  alleged additional damages of
approximately $200,000  in lost  profits under the  PJV Contract.   Concord  has
alleged non-payment for services rendered in the amount of approximately $51,000
in  connection  with  the  leasing  by  LBRR  of  trailers  for  the storage  of
incineration ash pursuant to  a contract between Concord and LBRR.   Upon motion
by PJV, summary  judgment was  entered against  LBRR and  EMC in  the amount  of
$214,000.  The decision against LBRR was upheld on appeal, but was reversed with
respect to EMC and judgment dismissing the claims against EMC was granted by the
appeals court.

      In March 1996, PJV commenced a separate lawsuit against LBRR, EMC and EWII
in Supreme Court, Nassau County.  PJV has alleged that the transfer of assets by
EMC (as successor  in interest to LBRR)  to EWII was a fraudulent  conveyance in
order to frustrate the collection of the $214,000 judgment in favor of PJV.  The
complaint also  seeks punitive  damages.   The Company  has denied all  material
allegations of  the complaint  and  intends to  vigorously defend  against  this
lawsuit.

      On    February 16,  1989,      5200 Enterprises,  Ltd  .("Enterprises")
commenced  an action  in the  Supreme Court  of Kings  County, New  York against
Hasnas, Empire  Electric Co., Wastex Industries, Inc., ENSI, Inc., Environmental
Services,  Inc.,  Enviropact,  Inc.,  Enviropact  Northeast,  Inc., Professional
Engineering  Associates,  Inc. and  Elias.    Enterprises, as  the  owner  of  a
building, sued the prior owner  and all persons and companies hired by the prior
owner to clean-up  contaminated spills  existing on the property  prior to  sale
and,  in connection therewith, to conduct certain tests.  The suit contends that
the  clean-up and/or the testing, some  of which was done  by ENSA subsidiaries,
was  conducted negligently, and  that misrepresentations were made  by the prior
owner concerning the true level of remaining contamination.  The suit seeks $3.5
million  in  damages.   The  Company  is defending  the  suit  and also  seeking
indemnity  from co-defendants for any liability.  A trial is currently scheduled
for March 1997.

      On June 24, 1996, Mr. Jon Colin, a former officer of ENSA, served a Demand
for  Arbitration  on  the  Company,  alleging  that  the  Company  breached  its
obligation to  enter into an employment  agreement with him  and to  issue stock
options to him.   Mr. Colin has demanded damages  of $675,000, plus interest, an
award directing  the Company  to issue  the stock options to  him, and  punitive
damages in an  unspecified amount.  The  Company has filed an action  in Supreme
Court,  New York  County, seeking  a  permanent stay  of  the arbitration  and a
decision on that matter is pending.   

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

      None.

                                     PART II


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

(A)  MARKET INFORMATION:

      Since  May 17, 1995,  the Company's  Common Stock has been included in the
National  Association of  Securities  Dealers, Inc.  Automated  Quotation System
("NASDAQ") under  the symbol "ERDI".   In May, 1995, the  Company's Common Stock
became a  part of NASDAQ's National  Market System.   The  following sets  forth
certain information with respect to the high and low "bid" prices quoted for the
Common Stock during the periods shown.
                                    HIGH              LOW

1995
Second Quarter                $   8 3/4               $    6 1/2
 (trading started on
  May 7, 1995)
Third Quarter                 $  10 1/8               $    7 
Fourth Quarter                $   8 7/8               $    6 3/4

1996
First Quarter                 $   9 3/4               $    7 3/8
Second Quarter                $  10 1/2               $    7 5/8
Third Quarter                 $   9 1/4               $    3 3/8
Fourth Quarter                $   4 7/8               $    1 5/8

1997
First Quarter (through
  January 31, 1997            $   2 3/8               $    1 13/16

(B) HOLDERS:

     As of January 31, 1997,  there were approximately 54 record holders  of the
Company's Common Stock, including brokerage firms and/or clearing houses holding
shares of
the  Company's Common Stock for  their clientele (with each such brokerage house
and/or clearing house being considered as one holder).


(C) DIVIDENDS

         The Company  has never paid  or declared any dividends  upon its Common
Stock  and does  not contemplate  or anticipate  paying any  dividends  upon its
Common  Stock  in  the foreseeble  future.   The  Company  currently  intends to
reinvest earnings,  if any,  in the development and  expansion of  its business.
The declaration  of dividends  in the future  will be  at the  discretion of the
Board of Directors  and will depend upon  the earnings, capital requirements and
financial  position  of  the Company,  general  economic conditions,  and  other
pertinent factors.   Pursuant to the loan agreement with the Bank,  the Company
may not declare  or pay any  dividends during the life  of the loan without  the
written consent of the Bank.

ITEM 6            MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

(A)  GENERAL

        The  Company is a  diversified waste management company  specializing in
the management and disposal of municipal solid waste, industrial and  commercial
non-hazardous  solid  waste,   and  hazardous  waste,  and  provides  brokerage,
advisory,   consulting  and technical  services to  generators of  waste.    The
Company  owns and  operates three  strategically located  RCRA part  B permitted
Treatment, Storage  and Disposal Facilities  and provides environmental services
including: consulting, technical contracting, tank management, site remediation,
indoor  and outdoor air  quality testing and monitoring  services and equipment,
and technical  support services related to  all of the  foregoing.   The Company
also  manufactures  various  sorbent  products  for use  in  various industrial,
marine, automotive  and janitorial  applications and, in  September, 1996, began
recycling used oil filters. 

        The Company has  grown primarily through acquisitions.   Its  operations
are  conducted through  the parent  corporation and  its subsidiaries  which are
summarized below:

        The  Company acquired  ERD-IL in  April 1994,  C&J Enterprises,  Inc. in
August  1994,  the  business  of  Environmental Absorbent  Technologies,  Inc in
October, 1995  and  began a  transfer station  operation in  Indiana through  an
entity  named ERD Waste  Corp. (Indiana) ("ERD-IN"). Each  of the aforementioned
acquisitions has been  treated as a purchase for financial  accounting purposes.
Accordingly, the Company's results of operations include the operations of  each
acquired entity from the respective dates of each acquisition. 


     Listed below are the active operating subsidiaries of the Company:

                                                                                
                                                                   Acquired
ERD Waste Corp. ("ERD")         Parent Corporation and
                                Operations for Specialty Waste       - -

ERD  of Illinois,  Inc.         Brokerage and waste management   August, 1994
  ("ERD-IL")                    consulting 

Absorbent  Manufacturing  &     Manufactures absorbent materials October, 1995
  Technologies, Inc. ("AMTI") 

ERD Resource Recovery, Inc.     Recycles oil filters             Start-up in
  ("ERD-RR")                                                     September 1996

     On May 5, 1996, the Company acquired more than  90% of the capital stock of
Environmental Services  of America,  Inc., ("ENSA").  The  Company conducts  its
operations described  below through  the following  wholly owned  subsidiares of
ENSA:

Northeast Environmental Services, Inc.         Part-B permitted treatment, 
                                               storage and disposal facility

Environmental Services of America-IN, Inc.     Part-B permitted treatment,
                                               storage and disposal facility

Environmental Services of America-MO, Inc.     Part-B permitted treatment,
                                               storage and disposal facility

ERD Environmental, Inc.                        Environmental consulting and 
(formerly ENSA Environmental, Inc.)            technical engineering,
                                               remediation, and contracting

     All  of the above  mentioned acquisitions were accounted  for as purchases.
Accordingly, the company's results of operations include the operations of  each
acquired  entity  from the  respective  dates of  each  acquisition.   The  ENSA
acquisition dramatically impacted  the results of operation  due to the  size of
the  operating entity acquired.    ERD reported net revenues  of $15,217,000 for
the  fiscal year  ended  January  31, 1996  and  ENSA reported  net  revenues of
$36,559,000 for the fiscal year ended December 31, 1995.

     The Company  changed its fiscal  year end from  January 31  to September 30
effective  with the  eight months  ended September 30,  1996.   Accordingly, the
Company's financial statements present the operating results for the eight month
period ended September  30, 1996, the twelve months  ended January 31, 1996, and
the twelve months ended January 31, 1995.


RESULTS OF OPERATION:

       The  following  table  sets  forth  the operating  data  of  the Company,
excluding  the  operations of  ENSA  prior  to  the date  of  acquisition, as  a
percentage of revenues for the periods indicated:



                               EIGHT MONTHS                    YEAR ENDED    
                                 Ended              Jan 31, 1996  Jan 31, 1995
                             September 30, 1996

Revenues                            100.0%              100.0%        100.0%

Cost of sales                        63.5                64.9          57.2

  Gross profit                       36.5                35.1          42.8
  Operating expenses                 33.2                31.3          19.3

Income from operations                3.3                 3.8          23.5
 Other income and (expenses)         (2.4)               ( .9)         (1.7)
Income from continuing  operations  
    before income taxes                .9                 4.7          21.8
Provison for income taxes              .3                 1.9           8.7
Income from continuing operations      .6                 2.8          13.1
Discontinued operations             (35.6)               41.6          14.6
     Net income (loss)              (35.0)%              44.4%         27.7%    



EIGHT MONTHS ENDED SEPTEMBER 30, 1996 VS. YEAR ENDED JANUARY 31, 1996

Revenues

     During  the eight months ended September 30, 1996, revenues from continuing
operations  were $20,130,375, an  increase of $15,119,410 over  revenues for the
year ended January 31, 1996.   The increase in revenues occurred  primarily as a
result of the acquisition  of ENSA in May, 1996.

     Revenues from  the Company's incinerator  operations of $4,312,224  for the
eight  months ended September 30, 1996 and $3,847,707 for the year ended January
31, 1996  are not included in  revenues.   Those revenues,  along with  relevant
operating  expenses are  classified as  part of  discontinued operations  in the
company's consolidated statements of operations.


A summary of consolidated revenues by business segment is as follows:

                                                                           
                                       EIGHT MONTHS             TWELVE MONTHS 
                                          ENDED                     ENDED     
                                    SEPTEMBER 30, 1996        JANUARY 31, 1996

                                                                              
                                     $            %             $          %    

ERD-IL                               $2,287,360  11.4         $3,626,732   72.4

AMTI                                  1,940,072   9.6          1,053,122   21.0

ERD-IN                                  501,580   2.5            331,111    6.6

TSD Facilities                        4,981,522  24.7                 --

Consulting                            8,339,345  41.4                 --

Remediation                           2,080,496  10.4                 --

                                    =================           ===============
                                    $20,130,375 100.0           5,010,965 100.0
                                                      
Cost of Sales 

    For the eight months ended September 30, 1996, cost of sales was $12,778,257
or 63.5% of revenues which compares to  cost of sales of $3,253,046 or  64.9% of
revenues  for  the  twelve months  ended  January 31,  1996.    The increase  of
$9,525,211 is primarily attributed  to  costs associated with the ENSA companies
acquired.

    Cost of sales includes direct labor,  transporation, as well as the costs of
disposal of waste and subcontractor's costs.  Cost of sales does not include any
expenditures  related  to   incineration  which  are  included  in  discontinued
operations. 

Operating Expenses

    During the eight   months ended September 30,  1996, operating expenses were
$6,681,725.   The primary  reason for  the increase  in operating  expenses over
prior periods is the acquisition of ENSA.  For the period May through September,
1996, ENSA's operating expenses   totalled $ 3,863,670.   In addition,  goodwill
generated from the acquisition is currently recorded at $9,097,051 which will be
expensed over 30 years beginning in May, 1996.  Amortization of goodwill expense
included in the eight month statement of operations was $127,141.

    Operating expenses also  include two transactions of  a nonrecurring nature.
In August, 1996, the Company's transfer station for non-hazardous waste  located
in  Indiana was  destroyed in  a  fire.   The Company  has  made claims  seeking
recovery  of its losses.  The resolution  of these claims is still unclear.  The
Company has  transferred its  non-hazardous waste operation to  its facility  in
South  Bend, Indiana.    The Company  wrote off  all assets  and start  up costs
associated with the transfer  station,  amounting to  $423,352 during the  eight
months ended September 30, 1996.

    Also  included in  operating  expenses are  $437,241  of operating  expenses
related  to the Company's start up of ERD Resource Recovery, Inc., the Company's
oil recycling facility in Waco, Texas which began in September, 1996.

Income from Operations

    Income from operations was $670,393 or 3.3 percent of revenues for the eight
months  ended September  30, 1996,  as compared  to $189,507  or 3.8  percent of
revenues for the twelve months ended January 31, 1996.  

    Income from continuing operations for the eight month period ended September
30,  1996 was  $194,583 ($0.02  per share)  as compared  to $238,712  ($0.03 per
share) for  the  fiscal year  ended January  31, 1996.     As  a result  of  the
Company's substantial growth in sales, it has incurred additional borrowings  as
discussed above.   Such borrowings  have significantly  increased the  Company's
interest expense, which has impacted income from continuing operations.

Interest Expense

    Interest expense was $602,407 for the eight month period ended September 30,
1996, as compared to $62,765 for the twelve months  ended January 31, 1996.  The
Company's  indebtedness  to  its  commercial bank  (the  "Bank")  was  initially
$7,500,000.  The $7,500,000 was used to  finance the  acquisition of ENSA.   The
$7,500,000 indebtedness  was subsequently increased  through additional loans to
$11,900,000.   There are  no current  plans to reduce the  amount of  borrowings
outstanding.   The  Company currently  pays approximately  $90,000 per  month in
interest to the Bank. 

Discontinued Operations

    As  described  in  legal  proceedings,  the  Company  agreed to  voluntarily
shutdown  its Long Beach,  New York incinerator on or before March 31, 1997.  As
a  result of  the shutdown,  the  Company has  recorded  a $7,167,998  loss from
discontinued operations.

    The  Company  has also  recorded  a  loss on  disposal  of  the facility  of
$7,500,000 calculated as follows:

    Net book value of Long Beach Facility          $       11,500,000

    Costs to dismantle and professional fees                2,000,000

    Estimated salvage value of equipment                     (500,000)

    Operating profits through termination date               (500,000)
                                                           12,500,000
    Estimated income taxes                                  5,000,000
      Net income (loss)                                     7,500,000


    For  the eight months  ended September 30,  1996 the Company's  net loss was
$7,051,081 ($1.20  per share) as compared to net income of $2,227,631 ($0.41 per
share) for the fiscal year ended January 31, 1996.

    The largest factor influencing the  Company's results in the  current period
was the loss from discontinued operations of the Long Beach Facility.

FISCAL YEAR ENDED JANUARY 31, 1996 VS. FISCAL YEAR ENDED JANUARY 31, 1995:


Revenues

     During  the fiscal ended January 31, 1996, the Company's revenues increased
by approximately  $2,150,463 or approximately  175%, to $5,010,965, compared  to
$2,860,502  for the  fiscal year  ended  January 31,  1995.   Of  such increase,
approximately $765,338, or approximately  36%,   was attributable to  additional
revenues  of  ERD-IL  and  the   remaining  64%  increase  of  $1,384,233    was
attributable to the  acquisiton of AMTI and ERD-IN  during the fiscal year ended
January 31, 1996.

      A  summary of  consolidated  revenues by  line  of business/division/other
classification is as follows:


                               Year Ended                Year Ended
                               January 31,               January 31, 
                            1996         %              1995         %   
                  
ERD-IL                      $ 3,626,732  72           $ 2,860,502   100  

AMTI                          1,053,122  21                   -      -    

ERD-IN                          331,111   7                   -      -    
                            $ 5,010,965 100%          $ 2,860,502   100% 

     Revenues of $10,205,133  and $3,847,707 for fiscal years ended  January 31,
1996 and 1995 from discontinued operations of the incinerator  at the Long Beach
Facility are not reflected in the above. 

Cost of Sales

     Cost  of  sales for  each such  period includes  costs associated  with the
handling of  municipal solid waste  and industrial and commercial  non-hazardous
solid waste.   Additionally, cost of  sales includes, for  the fiscal year ended
Janaury 31, 1995, the cost  of sales of ERD-IL during the period from  April 16,
1994 through January 31, 1995.

      During  the fiscal year ended January 31, 1996, cost of sales increased by
$1,615,851  or 99% to $3,253,046 as  compared to $1,637,195 for  the fiscal year
ended  January 31,  1995.   Such increase  was  attributable to  the substantial
increase in sales  of AMTI and ERD-IN during fiscal  year ended January 31, 1996
and the aforementioned inclusion of the operations of ERD-IL  for an entire year
in the fiscal year ended  January 31, 1996.  Notwithstanding the foregoing, cost
of sales increased as  a percentage of revenues  from 57.2% for the  fiscal year
ended Janaury 31, 1995 to 64.9% for the fiscal year ended January 31, 1996.

Selling, General and Administrative Expenses

     During  the fiscal  year  ended January  31,  1996, selling,  general,  and
administrative  expense  increased  by  approximately  $1,016,096  or  284%,  to
$1,568,412 for the  fiscal year ended  January 31, 1996  from  $552,312 for  the
fiscal year ended January 31, 1995.  Notwithstanding the foregoing, such expense
as a percentage of net revenues  increased during the fiscal year ended  January
31, 1996 to 31.3% from 19.3% for the fiscal year ended January 31, 1995.

Operating Income and Net Income

     During the fiscal  year ended January 31, 1996, operating  income decreased
$481,484, or  87.2%  from $670,991  for the fiscal year  ended January 31, 1995.
This  decrease  is   attributable  to  the  costs  of  expantion   offering  and
acquisition.

     Net income increased by  $1,436,338, or 182%, to $2,227,631  for the fiscal
year ended January  31, 1996 from $791,293 for the fiscal year ended January 31,
1995.  Of such increase, approximately $1,769,000, or 123%,  was attributable to
the net income of EWII which is included in discontinued operations and $136,000
was attributable to  the operation of ERD-IN.    Brokerage operations reported a
decrease  in   net income  of approximately  $469,000 in  the fiscal  year ended
January 31, 1995.

LIQUIDITY AND CAPITAL RESOURCES:

     On  May 1, 1996 the Company completed  its Tender Offer for all outstanding
shares of ENSA  Common Stock, and on May  6, 1996 it purchased  over 90% of  the
outstanding  shares of    ENSA Common  Stock  and ENSA  Preferred Stock  for  an
aggregate purchase price of $7,166,577.    Funds for the purchase were  obtained
from  a  $7.5 million  revolving credit  loan  from the  Bank.     An additional
$520,000 will be required to purchase the remaining outstanding capital stock of
ENSA.  On June 6,  1996, the Company received an additional $4,000,000 loan from
the  Bank and on August 20, 1996,  the Bank loaned an  additional $400,000.  The
proceeds were used to fully pay and discharge all principal, interest, fees, and
other financial obligations owed by ENSA to United Jersey Bank.  

     At  September 30,  1996,  the Company's  working  capital was  $318,676  as
compared to working capital of $32,132 at January 31, 1996.  Included in working
capital is a deferred tax benefit of $750,000 and $542,000 representing  refunds
expected  in the  fiscal year  ending September  30, 1997  for carryback  of net
operating losses and refunds of estimated payments made.

     The  Company's unrestricted cash  declined $1,360,489  to $61,725  over the
eight month  period ending September 30,  1996.   During the  eight months,  the
largest  uses of  cash  were   the  May  1996  acquisition of  ENSA  and capital
expenditures  of $2,149,472,  of  which  $935,242 was  for improvements  at  the
Company's now discontinued incinerator.
     Throughout  the  eight  month period,  the  Company  has sought  additional
sources of funding.  

     In order  to provide  working capital  to the  Company during  1996 Messrs.
Rubin and Wisneski, officers and directors of the Company,   made various loans,
secured by  interest bearing  notes.   The outstanding  loans from  Mr. Rubin at
September 30,  1996 and  December 31, 1996 are  zero and  $300,000 respectively.
The outstanding loans from Mr. Wisneski are  $500,000 at September 30, 1996  and
$400,000 at December 31, 1996.   Mr. Rubin's note was due  on January, 17, 1997,
but has been  extended.    Mr. Wisneski's notes are due  in 1998.  See item  12,
Certain Relationships and Related Transactions.

     In  addition, Messrs. Rubin,  Wisneski, and  Marc McMenamin  (the Company's
chief operations  manager)  deferred the  payment of  certain  compensation  and
related  expense payments  to which  they were  contractually entitled.   During
1996, these amounts  totalled $107,692, $80,769, and $13,462 for  Messrs. Rubin,
Wisneski  and McMenamin,  respectively.    Such amounts  remain unpaid  and  are
accrued in the Company's financial statements.  

     On December 20, 1996, the Company, through M.S. Farrell and Co. and Network
One  Securities Corp.,  issued  a  private placement  memorandum  offering Units
consisting  of shares of  the Company's Common Stock  and accompanying warrants.
The offering  provides for  shares to  be priced  at 90  percent of  the average
closing price of  the Company's Common Stock for  the ten day period immediately
prior to  the closing  and warrants  to purchase a  like number of  shares at  a
warrant exercise price of $3.50 per share,  subject to certain adjustments. The
minimum offering will provide $385,000   and the maximum will provide $3,212,500
in cash proceeds.  The Company sold $500,000 of such Units on December 31, 1996,
and an  additional  $260,000 of  such Units  on January 29,  1997 providing  net
proceeds of   $644,926.   The  Company continues  to offer  the remaining Units,
however  no assurance  can  be given  that  the Company  will be  successful  in
endeavor.

     As  a result of  its loss  from discontinued operations, the  Company is in
violation of certain loan agreement covenants with the Bank.   The  Bank and the
Company are currently  working on a restatement of  the covenants to provide for
financial assurances  for the remaining term of  the loan.  As  of September 30,
1996, and  currently, the  Company's outstanding  indebtedness on its  revolving
loans totals  $11,900,000, the maximum available  credit.   As discussed in  the
notes to the financial  statements, $7,500,000 matures on   April 1, 1998.   The
remaining  $4,400,000 is due  June 6,  1997, however, the Company  has requested
that the Bank extend the  maturity date to 1998 in consideration of continuation
of the Company's  ability to  continue to  provide collateral in the  form of  a
letter of credit. 

ITEM 7 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     Financial information required in response  to this Item of Form  10-KSB is
set forth at pages F-1 through F-21 of this Report.

ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE.

           None.


                                    PART III

ITEM 9 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


     The  names and  ages, along  with  certain biographical  information (based
solely on information supplied by them), of the directors and executive officers
of the Company are as  follows:

NAME                          AGE                     POSITION
Joseph J. Wisneski                  43         Director,  President,and Chief
                                                            
                                               Operating Officer
Robert M. Rubin                     56         Chairman of the Board and Chief
                                                              
                                               Executive Officer
Joseph T. Jacobsen                  38         Director,  Executive 
                                               Vice President
Carl Frischling                     61         Director
Marc P. McMenamin                   35         Director, Chief
                                               Operations Manager 


     Each director is elected for  a period of one year at the  Company's annual
meeting  of  stockholders  and serves  until  the  next  meeting  and  until his
successor is duly elected and qualified.  Officers are elected by,  and serve at
the  discretion of, the Board of Directors.   In consideration for serving as an
independent director,  Mr. Frischling receives compensation  of $5,000 per annum
and,  subject to stockholder  approval, will receive options  to purchase 30,000
shares of common  stock at an exercise price of $7.125 per share.  These options
vest at the rate of 10,000 shares per annum.

     The Company has compensation and audit committees consisting of Carl
Frischling and Robert Rubin. 

The  following  is a  brief summary  of  the background  of  each director,
executive   officer, and key employee of the Company:

Joseph  J.  Wisneski has  been  President, Chief  Operating Officer,  and a
Director of  the Company  since February  1993, was  Vice President  of the
Company from  November  1992 through  January  1993,  and was  one  of  the
Company's founding  stockholders.  From  April 1990 to  November 1992,  Mr.
Wisneski  served as a senior manager for Superior Contractors Network, Inc.
("Superior"), a private service broker  in the general construction  field.
From  January 1987  to  April  1990, he  served  as  President of  Asbestos
Services of America,  a private  marketing company, and  from July 1986  to
January  1987,  he  served   as  President  of  National  Asbestos  Removal
Corporation, a private  asbestos removal company.   From 1979 to 1986,  Mr.
Wisneski  was a  Vice President  in the  lending divisions  of a  number of
commercial banks,  including European American Bank,  Chase Manhattan Bank,
and National  Westminster Bank.   Mr. Wisneski  holds a B.B.A.  degree from
Pace  University  and a  Masters  of  Business  Administration degree  from
Fordham University.
 
Robert M. Rubin has served as the Chairman of the Board and Chief Executive
Officer of the Company since February 1993.  Mr. Rubin has served since May
1991 as the Chairman  of the Board and  a director of Universal Self  Care,
Inc.,  a  public company  engaged  in the  distribution of  diabetic health
products.   Mr.  Rubin has  served since  October 1990  as Chairman  of the
Board,  Chief Executive  Officer and  President of  AUGI, a  public company
engaged in  the manufacture  and distribution  of high  tech communications
software.   Mr. Rubin  was the founder, President, Chief Executive Officer,
and a director of  Superior from its inception  in 1976 until May  1986 and
continued as a director of SCI (now known as Olsten Corporation ("Olsten"))
until  the latter part of  1987.  Olsten, a  New York Stock Exchange listed
company, is  engaged in  providing  home care  and  institutional  staffing
services  and health  care  management services.    Mr. Rubin  is  a former
director  and  Vice-Chairman,  and  currently  a  minority  stockholder  of
American Complex Care, Incorporated  ("ACC") (formerly Legend Foods, Inc.),
a public  company formerly engaged in the provision  of on-site health care
services, including intra-dermal infusion therapies.  In April, 1995, ACC's
operating  subsidiaries made assignments of their assets for the benefit of
creditors without resorting  to bankruptcy proceedings.  Mr. Rubin  is also
the Chairman  of the Board  of Western  Power & Equipment  Corp., a  public
company engaged in the  distribution of construction equipment, principally
manufactured by  Case  Corporation.   Mr.  Rubin  is also  a  director  and
minority stockholder of Response USA, Inc., a public company engaged in the
sale  and distribution  of  personal emergency  response  systems; Diplomat
Corporation, a public  company engaged in the  manufacture and distribution
of  baby products; Help at Home, Inc., a public company which provides home
health care personnel;  Arzan International (1991)  Ltd., a public  company
engaged  in the food distribution business; Med Emerg International Inc., a
company involved in  managing emergency rooms in Ontario, Canada;  and Kaye
Kotts  Associates  Inc.,  a   public  company  engaged  in   providing  tax
preparation and assistance services.  

JOSEPH T. JACOBSEN has served as a Director of the Company since November
1996, and as an Executive Vice President of the Company and as
President of ERD Environmental  Inc., the Company's
wholly-owned subsidiary which specializes in air and environmental
consulting, since May 1996.  Prior to that, Mr. Jacobsen served as 
Executive Vice President from November 1989, and as Secretary from June
1990, of ENSA.  Since August 1994, Mr. Jacobsen has been President of ENSA 
Environmental, Inc., a wholly-owned subsidiary of
ENSA which owns and operates all consulting assets and activities of
ENSA.  Mr. Jacobsen holds a Masters of Science degree from the School
of Engineering of the University of Pittsburgh, a B.S. degree in
Business from LaSalle University and a B.A. degree in Geology from 
Temple University.  

MARC P. MCMENAMIN has served as Chief Operations Manager of the Company
since June 1992.  From February 1991 until June 1992, Mr. McMenamin served
as construction manager of, and was a partner in, Superior.  From March
1987 until February 1991, Mr. McMenamin served as general manager of Romark
Environmental Services, a private asbestos abatement company.  Mr.
McMenamin holds a B.B.A. degree from Hofstra University.

CARL FRISCHLING has served as a director of ERD since September 1995.  Mr.
Frischling is a partner at the New York law firm of Kramer, Levin, Naftalis
& Frankel, which he joined in September 1994.  From September 1992 to
Agust 1994, he was a partner at the law firm of Reid & Priest.  Prior to
that, Mr. Frischling had been a partner at the law firm of Spengler Carlson
Gubar Brodsky & Frischling  from November 1979.  Mr. Frischling holds B.A,
Juris Doctorate, and Masters of Business Administration degrees from
Columbia University.

ITEM 10 - EXECUTIVE COMPENSATION

     The following table set forth the annual and long-term compensation for
services in all capacities to the Company for the eight months ended September
30, 1996 and the fiscal years ended January 31, 1996 and 1995 of the Chief
Executive Officer of the Company and the other executive officers of the Company
(together, the "Named Executive Officers") who received over $100,000 in
annualized compensation in the form of salary and bonus for the eight months
ended September 30, 1996.

                            SUMMARY COMPENSATON TABLE

                      Annual Compensation             Long Term Compensation
<TABLE>
<S>              <C>       <C>           <C>     <C>         <C>       <C>        <C>             <C>        
Name                                             Other                              Long           
and                                              Annual                Restricted   Term             All Other
Principal        Period                          Compen-      Stock     Options/    Incentative      Compen-
Position         Ended     Salary(1)      Bonus  sation(1)    Awards     SARs       Plan Payouts     sation   

</TABLE>
<TABLE>
<S>               <C>      <C>        <C>        <C>        <C>      <C>          <C>             <C>
Robert M. Rubin   9-30-96  $30,769(2)      - -     - -         - -        - -          - -             - -
Chaiman of  the 
Board             1-31-96  103,000         - -     - -         - -        - -          - -             - -
Chief Executive 
Officer           1-31-95   56,250         - -     - -         - -        - -          - -             - -

Joseph J. Wisneski9-30-96 $132,692(3)  $55,000(3) $40,000(5)   - -        - -          - -             - -
President & Chief 1-31-96  150,273         - -     - -         - -        - -        125,000(4)        - -
Operating Officer 1-31-95   58,750         - -     - -         - -        - -          - -             - -
                           
Marc McMenamin    9-30-96  $67,692(6)  $25,000(4)   4,000(5)   - -        - -          - -             - -
Chief Operations  1-31-96   93,320      15,000(4)  - -         - -      100,000(6)     - -             - -
Officer           1-31-95   44,596         - -     - -         - -        - -          - -             - -
                              
Joseph T. Jacobsen9-30-96         (7)      - -     - -       2,600        - -          - -             - - 
Executive Vice
President

(1)   Data shown is for the eight months ended September 30, 1996, twelve months
      ended  January 31, 1996, and twelve months ended January 31, 1995. 

(2)  Effective January 1, 1997, Mr. Rubin is compensated at $160,000 per annum
     (see Employment Agreements).   During 1996 Mr. Rubin voluntarily deferred 
     compensation payments totalling $ 107,692.

(3)  Effective January 1, 1997, Mr. Wisneski is compensated at $275,000 per
     annum. (see Employment Agreements).  During 1996 Mr. Wisneski voluntarily
     defferred compensation payments of $ 80,769.

(4)  Bonus relates to services rendered in the prior year fiscal period.

(5)  Messrs. Wisneski, McMenamin and Jacobsen receive travel and entertainment 
     allowances of $5,000, $500, and $650 per month.

(6)  Effective January, 1997, Mr. McMenamin is compensated at $130,000 per annum
     (see Employment Agreements).  During 1996, Mr. McMenamin deferred
     compensation payments of $ 13,462.

(7)  Effective June 1996, Mr. Jacobsen is compensated at $125,000 per annum
     (See Employment Agreements).
 
(B)  OPTIONS/SAR GRANTS

     There were no SAR grants in 1996.

     The following table provides information regarding option grants during
1996 to the Named Executive Officers.

                        OPTION GRANTS IN LAST FISCAL YEAR

                 Number of Securities    Percent of Total Options     Exercise or
                  Underlying Options      Granted to Employees in     Base Price per
Name                   Granted                  Fiscal Year               Share          Expiration Date  
Joseph T. Jacobsen (1)   60,000                     40%                 $ 2.00                2002  

(1)  Options granted under Employee Stock Option Plan.  See Item 10 -- "Stock
Option Plan".

            The following table provides information regarding option exercises
during fiscal 1996 by the Named Executive Officers and values of such officers'
unexercised options. 

</TABLE>
<TABLE>
           AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
                           YEAR-END OPTION VALUES (1)

<S>               <C>          <C>            <C>                          <C>
                    Number of                 Number of Securities             Value of Unexpected
                     Shares                   Underlying Unexercised        In-the-Money Options at
                   Acquired on                Options at September 30, 1996     September 30, 1996 
Names               Exercise   Value Realized Exercisable/Unexercisable(1)   Exercisable/Unexercisable(1)

Robert M. Rubin
Chairman of the
Board and Chief
Executive Officer..      0          $ 0                  0                                N/A

Joseph J. Wisneski
President and Chief
Operating Officer...     0          $ 0                  0                                N/A 


Marc McMenamin           0          $ 0                  0                                N/A 

Joseph T.  Jacobsen      0          $ 0                  0                                N/A

     (1)    All options were granted at an exercise price equal to the fair
market value of the Common Stock on the date of the grant.

Compensation of Directors

     Outside Directors are entitled to a $1,500 quarterly fee.  No fees  were 
paid as of  September  30, 1996.  During 1996,  no Director of the Company
received any compensation for his services in such capacity. Outside directors
are reimbursed for expenses incurred by them in connection with their
activities on behalf of the Company.

Employment Agreements

     The Company has entered into an employment agreement with Joseph J.
Wisneski pursuant to which Mr. Wisneski has agreed to serve as President and
Chief Operating Officer of the Company, through December 31, 1997.  The
agreement provides for a base salary of $175,000 per annum from January 1
through December 31, 1995 with annual increases of $25,000 per annum in each
year thereafter, subject to additional increase by the Board of Directors in its
discretion.  The agreement requires Mr. Wisneski to devote substantially all of
his business time to the performance of his duties and responsibilities to the
Company.  In May, 1996 Mr. Wisneski and the Company agreed to a one-year
extension of the employment agreement with a salary of $230,000 per annum in
1996 and $275,000 per annum in 1997.

     The Company has entered into an employment agreement with Robert M. Rubin,
pursuant to which Mr. Rubin has agreed to serve as Chairman of the Board and
Chief Executive Officer of the Company from January 1, 1995 through December 31,
1998.  The employment agreement, as amended,  provides for a salary of $100,000
per annum for 1995, $150,000 per annum for 1996, $160,000 per annum for 1997 and
$170,000 per annum for 1998.  Mr. Rubin has interests in a number of other
businesses which are not competitive with the Company.  Under his employment
agreement, he is not required to spend any specific amount of time on the
Company's affairs.  Mr. Rubin has not stated whether he intends to devote a
specific amount of time to the Company.

     The Company has entered into an employment agreement with Joseph T.
Jacobsen pursuant to which Mr. Jacobsen will serve as Executive Vice President
of the Company and as President of ERD Environmental, Inc. through May 1999, at
a salary of $125,000 per annum.  Under his employment agreement Mr. Jacobsen has
use of an automobile and has received options to purchase 60,000 shares of
Common Stock.

     The Company has entered into an employment agreement with Marc McMenamin,
pursuant to which Mr. McMenamin will serve as President of Environmental Waste
Incineration, Inc., the Company's discontinued operation, and Chief of
Operations of the Company.  In 1995, Mr. McMenamin received $100,000 in  salary
and options to purchase 100,000 shares of Common Stock.  Mr. McMenamin's salary
was increased to $110,000 for 1996 and $130,000 for 1997.

Stock Option Plan

     On March 2, 1994, the Board of Directors of the Company and stockholders of
the Company adopted the Plan.  The Plan provides for the grant of options to
purchase up to 500,000 shares of Common Stock to employees of the Company. 
Options granted under the Plan are "incentive stock options" within the meaning
of Section 422 of the United States Internal Revenue Code of 1986, as amended
(the "Code").  Incentive stock options may be granted only to employees of the
Company.

     The Plan will be administered by "disinterested members" of the Board of
Directors (as defined by Rule 16b-3 under the Exchange Act), who determine,
among other things, those individuals who shall receive options, the time period
during which the options may be partially or fully exercised, the number of
shares of Common Stock issuable upon the exercise of each option, and the option
exercise price.

     The exercise price per share of Common Stock subject to an incentive option
may not be less than the fair market value per share of Common Stock on the date
the option is granted.  The aggregate fair market value (determined as of the
date the option is granted) of Common Stock for which any person may be granted
incentive stock options which first become exercisable in any calendar year may
not exceed $100,000.  No person who owns, directly or indirectly, at the time of
the granting of an incentive stock option to such person, 10% or more of the
total combined voting power of all classes of stock of the Company (a "10%
Stockholder") shall be eligible to receive any incentive stock options under the
Plan unless the exercise price is at least 110% of the fair market value of the
shares of Common Stock subject to the option, determined on the date of grant.

     No stock option may be transferred by an optionee other than by will or the
laws of descent and distribution, and, during the lifetime of an optionee, the
option will be exercisable only by the optionee.  In the event of termination of
employment other than by death or disability, the optionee will have no more
than three months after such termination during which the optionee shall be
entitled to exercise the option, unless otherwise determined by the Board of
Directors.  Upon termination of employment of an optionee by reason of death or
permanent and total disability, such optionee's options remain exercisable for
one year thereafter to the extent such options were exercisable on the date of
such termination.

     Options under the Plan must be issued within ten years from the effective
date of the Plan.  The effective date of the Plan is March 2, 1994.  Incentive
stock options granted under the Plan cannot be exercised more than ten years
from the date of grant.  Incentive stock options issued to a 10% Stockholder are
limited to five-year terms.  Options granted under the Plan generally provide
for the payment of the exercise price in cash and may provide for the payment of
the exercise price by delivery to the Company of shares of Common Stock already
owned by the optionee having a fair market value equal to the exercise price of
the options being exercised, or by a combination of such methods.  Therefore, if
so provided in an optionee's options, such optionee may be able to tender shares
of Common Stock to purchase additional shares of Common Stock and may
theoretically exercise all of his stock options with no additional investment
other than the purchase of his original shares.

     Shares subject to unexercised options that expire or that terminate upon an
employee's ceasing to be employed by the Company become available again for
issuance under the Plan.

     The board of directors  has  authorized, and will recommend that the
stockholders of ERD approve, an amendment to the Plan to (i) increase the number
of authorized options thereunder from 500,000 shares to 1,000,000 shares and
(ii) permit the grant of non-qualified stock options. 
  
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND   MANAGEMENT.

Principal Stockholders

     The following table sets forth, as of the date hereof, the ownership of the
Common Stock by (i) each person who is known by the Company to own of record or
beneficially more than 5% of the outstanding Common Stock, based on reports
filed with the SEC, (ii) each of the Company's directors and executive officers,
and (iii) all directors and executive officers of the Company as a group. 
Except as otherwise indicated, the stockholders listed in the table have sole
voting and investment powers with respect to the shares indicated.  

Name and Address               Number of Shares        
of Beneficial Owner            Beneficially Owned        Percentage of Class
 
Robert M. Rubin(1)                  1,397,225                 21.43%

Joseph J. Wisneski(1)                 961,675(2)              14.75%

Marc McMenamin(1)                     137,475(3)               2.11%

Carl Frischling                        15,500(4)                 * 
170 East  83rd Street    
New York, New York 10028

Joseph T. Jacobsen (1)(5)              16,500                    * 

All directors and                   2,528,375                 38.79%
executive officers of the 
Company as a group 
(five persons)(2)
(3)(4)(5)

Hampshire Securities, Inc.
and affiliates
(including one related 
person)(7)
640 Fifth Avenue
New York, New York 10019              397,620                  6.1%  

        * Indicates beneficial ownership of less than one (1%) percent.

     (1) The address of each of the referenced individuals is c/o ERD Waste
         Corp., 937 East Hazelwood Avenue, Building 2, Rahway, New Jersey 07065

     (2) Does not include options to purchase 125,000 shares under the 1994
         Plan, of which 93,750 are exercisable within 60 days of the date
         hereof.

     (3) Does not include options to purchase 190,000 shares, in the aggregate,
         granted under the 1994 Plan, of which 142,000 are exercisable within
         60 days of the date hereof.

     (4) Includes 7,500 shares presently exercisable out of 30,000 shares
         granted pursuant to the Option Agreement between the Company and Mr.
         Frischling.

     (5) Includes 16,500 shares presently exerisable out of 60,000 shares
         granted under the 1994 Plan.

     (6) Outstanding shares do not include 200,000 shares and warrants to
         purchase an additional 200,000 shares issued to Kramer Levin.

     (7) Does not include warrants to purchase 120,000 shares of Common Stock. 
         Each of Hampshire's affiliates disclaims beneficial ownership of the
         others' shares of Common Stock.

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. 

     On May 30, 1996, the Company entered into a Financial Accommodations
Agreement with AUGI, an affiliate of Robert Rubin, in connection with the Letter
of Credit issued on behalf of the Company by AUGI in favor of the Bank to secure
a $4.4 million loan from the Bank to the Company.  


     The Company borrowed $4,400,000 from the Bank which is secured by certain
assets of the Company and its subsidiaries, including ENSA and its subsidiaries,
as well as by a stand-by letter of credit issued in favor of the Bank (the
"Letter of Credit").  The Letter of Credit was obtained by American United
Global, Inc. ("AUGI"), an affiliate of Robert Rubin, on behalf of the Company. 
In consideration of AUGI obtaining the Letter of Credit, the Company entered
into an agreement with AUGI, dated May 30, 1996, as amended and restated by
letter agreement dated October 8, 1996 (the "Financial Accommodations
Agreement").  Pursuant to the terms of the Financial Accommodations Agreement,
the Company agreed to (i) pay interest and other charges to AUGI, for so long as
the Letter of Credit remains outstanding, in amounts equal to amounts of
interest or other charges paid by AUGI to Citibank, N.A. in connection with the
Letter of Credit or any payments made by Citibank, N.A. thereunder; (ii) pay all
fees and disbursements of AUGI, including $10,000 of legal fees to AUGI's
counsel; and (iii) if and to the extent the Letter of Credit is called for
payment; the Company will issue to AUGI a convertible note in the aggregate
principal amount of the note payable at 12% interest due on the earliest of (a) 
May 31, 1999, (b) receipt of proceeds by ERD from any public or private
placement of debt or equity securities subsequent to the calling of the Letter
of Credit, or (c) completion of any bank financing by ERD to the extent of all
proceeds available after payment of all other secured indebtedness, provided
that any of the Company's notes issued to AUGI will be convertible, at any time
and at the option of AUGI, into shares of common stock of the Company at a
conversion price equal to $4.40 per share.  As security for the obligations of
the Company under the Financial Accommodations Agreement, ENSA and certain of
its subsidiaries have agreed to grant to AUGI a security interest, subordinate
to the first priority security interest granted to the Bank, in all of their
machinery and equipment.

     During the  quarter ended July 31, 1996,  the Company's President and Chief
Operating Officer loaned the Company $600,000.  The advances are evidenced by
notes in the amount of $500,000 and $100,000 from the Company bearing an
interest rate equal to the interest rate charged by the Bank on its loan to the
Company.  Interest and principal are due in full at maturity on July 12, 1998 
for the $500,000 note and on June 10, 1998 for the $100,000 note.  At December
31, 1996, $400,000 remains outstanding.

     On December 17, 1996, Robert Rubin, the Company's Chairman of the Board and
Chief Executive Officer loaned the Company $300,000.  The advance is secured by
a short term note bearing interest at 2% above the prime lending rate of the
Bank.  On February 5, 1997, AUGI, an affiliate of Robert Rubin, loaned $500,000
to the Company which is also secured by a short term note bearing interest at 2%
above the prime lending rate of the Bank.  

     The Company has issued 200,000 Units, consisting of shares of Common Stock
and warrants to purchase an additional 200,000 shares of Common Stock to Kramer
Levin, counsel to the Company.  Additionally, 30,000 shares of Common Stock are 
issuable upon exercise of options granted to each of Carl Frischling, an outside 
director and a member of Kramer Levin, and Peter Reuter, a former director, 
pursuant to certain option agreements.

                                    PART IV 

ITEM 13 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(A)  (1)  AND  (2)  FINANCIAL STATEMENTS AND SCHEDULES:

Independent Auditors' Report                                                 F-2

Consolidated Balance Sheets -
     September 30, 1996 and January 31, 1996 and 1995                        F-3

Consolidated Statements of Operations - for the eight months ended September
     30, 1996 and the years ended January 31, 1996  and 1995                 F-4

Consolidated Statements of Stockholders' Equity -
     for the eight months ended September 30, 1996, and the years ended 
        January 31, 1996 and 1995.                                           F-5

Consolidated Statements of Cash Flows - for the eight months ended September
        30, 1996 and the years ended January 31, 1996 and 1995.              F-6

Notes to Consolidated Financial Statements                           F-7 to F-17

(A) (3) Exhibits:

EXHIBIT                DESCRIPTION

2.1                    Amended and Restated Agreement and Plan of Merger between
                       the Company, EAC and ENSA, incorporated by reference to
                       Exhibit (C)(1) to the Schedule 14d-1 filed by the Company 
                       on April 4, 1996.

2.2                    Loan Agreement with Chemical Bank, incorporated by
                       reference to Exhibit 1 the Form 8-K filed by the Company
                       on April 17, 1996.

3.1                    Certificate of Incorporation as amended, of the Company,
                       incorporated by reference to Exhibit 3.1 to the
                       Company's Registration Statement on Form SB-2
                       (Registration No. 33-76200).

3.2                    By-laws of the Company incorporated by reference to
                       Exhibit 3.2 to the Company's Registration Statement
                       on Form SB-2 (Registration No. 33-76200).

3.3                    Certificate of Amendment of Certificate of Incorporation
                       of the Company, incorporated by reference to Exhibit 3.3
                       to Amendment No.3 to the Company's Registration Statement
                        on Form SB-2 (Registration No. 33-76200).

4.1                    Form of Underwriters Warrant, incorporated by reference
                       to Exhibit 4.1 to Amendment No. 2 to the Company's
                       Registration Statement on Form SB-2 (Registration No. 33-
                       76200).

4.2                    1994 Stock Option Plan, incorporated by reference to
                       Exhibit 4.2 to the Company's Registration Statement on
                       Form SB-2 (Registration No. 33-76200).

4.3                    Form of Stock Certificate, incorporated by reference to
                       Exhibit 4.3 to Amendment No. 3 to the Company's
                       Registration Statement on Form SB-2 (Registration No. 33-
                       76200).

10.1                   Indenture of trust, dated as of December 1, 1984, as
                       amended and supplemented by a First Supplemental
                       Indenture of trust, dated as of September 1, 1986, a 
                       Second Supplemental Indenture of trust, dated as of 
                       August 1, 1987, a Third Supplemental Indenture of Trust,
                       dated as of September 1, 1986,a Fourth Supplemental
                       Indenture of Trust, dated as of October 1, 1990, between
                       United States Trust Company of New York and Nassau County
                       Industrial Development Agency, incorporated by reference
                       to Exhibit 10.1 to the Amendment No. 1 to the Company's
                       Registration Statement on Form SB-2 (Registration No. 33-
                       76200).

10.2                   Solid Waste Disposal Agreement, dated as of April 15,
                       1986, between the City of Long Beach and S&S Incinerator
                       Joint Venture, incorporated by reference to Exhibit 10.1 
                       to the Amendment No. 1 to the Company's Registration
                       Statement on Form SB-2 (Registration No. 33-76200).

10.3                   Power Purchase Agreement, dated as of September 25, 1987,
                       between Long Island Lighting Company and Catalyst
                       Waste-to-Energy Corporation of Long Beach, incorporated
                       by reference to Exhibit 10.3 to the Amendment No. 1 to
                       the Company's Registration Statement on Form SB-2
                       (Registration No. 33-76200).

10.4                   Installment Sale Agreement, dated as of December 1, 1984,
                       as amended by an Amendatory Sale Agreement, dated as of
                       September 1,1987, and a Second Amendatory Sale Agreement,
                       dated as of October 1, 1990, between Nassau County
                       Industrial Development Agency and Catalyst
                       Waste-to-Energy Corporation of Long Beach, incorporated
                       by reference to Exhibit 10.4 to the Amendment No. 1
                       to the Company's Registration Statement on Form SB-2
                       (Registration No. 33-76200).

10.5                   Lease Agreement, dated as of November 16, 1984, between
                       the City of Long Beach and S&S Incinerator Joint Venture,
                       together with the Assignment thereof to the Nassau
                       County Industrial Development Agency, incorporated by 
                       reference to Exhibit 10.5 to the Amendment No. 1
                       to the Company's Registration Statement on Form SB-2
                       (Registration No. 33-76200).

10.6                   Employment Agreement with Robert M. Rubin, incorporated
                       by reference to Exhibit 10.2 to the Amendment No. 1 to
                       the Company's Registration Statement on Form SB-2
                       (Registration No. 33-76200).

10.7                   Employment Agreement with Joseph J. Wisneski,
                       incorporated by reference to Exhibit 10.7 to the
                       Amendment No. 1 to the Company's Registration Statement
                       on Form SB-2 (Registration No. 33-76200).

10.8                   Letter Agreement, dated January 3, 1995, between Catalyst
                       Energy Corporation and the Company, incorporated by
                       reference to Exhibit 10.8 to the Amendment No. 1
                       to the Company's Registration Statement on Form SB-2
                       (Registration No. 33-76200).

10.9                   Form of Forbearance Agreement, among the Company and the
                       other parties named therein, incorporated by reference to
                       Exhibit 10.9 to the Amendment No. 1 to the Company's
                       Registration Statement on Form SB-2
                       (Registration No. 33-76200).

10.10                  Solid Waste Disposal Agreement, dated as of May 13, 1992,
                       between the City of Long Beach and Long Beach Recycling
                       and Recovery Corp., incorporated by reference to Exhibit
                       10.10 to the Amendment No. 1 to the Company's
                       Registration Statement on Form SB-2 
                       (Registration No. 33-76200).

10.11                  Promissory Note, dated March 1, 1995, from the Company to
                       American Medical Waste, incorporated by reference to
                       Exhibit 10.11 to the Amendment No. 3 to the Company's
                       Registration Statement on Form SB-2
                       (Registration No. 33-76200).

10.12                  Form of Settlement Agreement, between LBRR and the Union,
                       incorporated by reference to Exhibit 10.12 to the
                       Amendment No. 3 to the Company's Registration Statement
                       on Form SB-2 (Registration No. 33-76200).


10.13                  Lease Agreement, dated as of May 13, 1992, between the
                       City of Long Beach, New York, Nd LBRR, incorporated by
                       reference to Exhibit 10.13 to the Amendment No. 3 to
                       the Company's Registration Statement on Form SB-2
                       (Registration No. 33-76200).



10.14                  Special Waste Disposal Agreement, dated April 5, 1995,
                       between American Ref-Fuel Company of Hempstead and ERD
                       Waste Corp., incorporated by reference to Exhibit 10.14
                       to the Amendment No. 3 to the Company's Registration 
                       Statement on Form SB-2 (Registration No. 33-76200)

10.15                  Letter from Philip L. Pascale, on change in certifying
                       accountant, incorporated by reference to Exhibit 16.1 to
                       the Amendment No. 1 to the Company's Registration
                       Statement on Form SB-2 (Registration No. 33-76200).

21.1                   Subsidiaries of the Registrant.

24.1                   Power of Attorney, incorporated by reference to Exhibit
                       24.1 to the Amendment No. 1 to the Company's Registration
                       Statement on Form SB-2 (Registration No. 33-76200).

27                     Financial Data Schedule

REPORTS ON FORM 8-K.

        No reports on Form 8-K were filed by the Company in two months ended
September 30, 1996.


                                   SIGNATURES

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

                                 ERD WASTE CORP.
                                                                                 
                                                           
(Registrant)


By                           /s/ Joseph J. Wisneski                                                   
              Joseph J. Wisneski, President and Chief Operating Officer

                                February 12, 1997     
                                      Date

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


                            /s/ Joseph J. Wisneski                                                     
              Joseph J. Wisnski, President and Chief Operating Officer

                                February 12, 1997       
                                      Date

                                                                                 
                            /s/ Robert Rubin                            
                 Robert Rubin, Director and Chief Executive Officer

                                February 12, 1997     
                                      Date


                            /s/ Joseph T. Jacobsen                                                     
                          Joseph T. Jacobsen, Director

                                February 12, 1997     
                                      Date


                            /s/ Carl Frischling                                                     
                            Carl Frischling, Director

                                February 12, 1997      
                                      Date




                                  EXHIBIT 21.1
                         SUBSIDIARIES OF ERD WASTE CORP.

                                                  ADDITIONAL NAMES
                                STATE OF          UNDER WHICH
NAME OF SUBSIDIARY            INCORPORATION       SUBSIDIARY DOES BUSINESS

 ENSA/Government Services,             DE
 Inc.

 ENSI of Pennsylvania, Inc.            PA                  NES-PA

 ENSI, Inc.                            NJ                  ENSI

 Environmental Services of             MO                  ENSA-MO
    America-MO, Inc.

 Environmental Services of             IN                  ENSA-IN
    America-IN, Inc.

 Northeast Environmental               NY                  NES
        Services, Inc.

 Tri-S, Incorporated                   CT                  TRI-S

 ERD Environmental, Inc.               DE                  ERD-ENV

 Environmental Services of America, 
     Inc.                              DE                  ENSA

 ERD Waste Incineration, Inc.          DE

 ERD Waste Corp. of Illinois           IL                  "ECT"

 ERD Waste Corp.
  Indiana                              IN  

 ENSA Acquisition Corp.                DE

 Absorbent Manufacturing 
  & Technology, Inc.                   IL

 C & J Enterprises, Inc.               DE
 Long Beach Recycling 
  & Recovery Corp.                     NY

 ERD Management Corp.                  NY

 ERD Resource Recovery, Inc.           DE


INDEPENDENT AUDITOR'S REPORT


To the Board of Directors
and Shareholders of
ERD Waste Corp.

     We have audited the accompanying balance sheet of ERD Waste Corp. and
Subsidiaries as of September 30, 1996 and January 31, 1996 and the related
statement of operations, stockholders' equity and cash flows for the eight
months ended September 30, 1996 and the years ended January 31, 1996
and 1995.  These  financial  statements  are  the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ERD Waste Corp. and
Subsidiaries as of September 30, 1996 and January 31, 1996 and the results of
its operations and cash flows for the eight months ended September 30, 1996 and
the years ended January 31, 1996 and 1995 in conformity with generally accepted
accounting principles.




                                        Feldman Radin & Co., P.C.
                                        Certified  Public Accountants
                                        New York, New York
January 22, 1997 (February 12, 1997 as to the eighth paragraph of Note 10)


                                       F-2
ERD WASTE CORP. AND SUBSIDIARIES                                                    
               

CONSOLIDATED BALANCE SHEETS                                                          
          

                                            September 30,       January 31,
                                                1996               1996
                                            ------------        -----------
ASSETS                                                                     

CURRENT ASSETS:                                                          
     Cash and cash equivalents             $      61,725  $     1,422,214
     
     Restricted certificates of deposit        1,655,363          800,000
     Accounts receivable, less allowance
         for doubtful accounts of
         $1,042,833 and $90,000, respectively 11,631,456        2,491,731
     Prepaid expenses and
         other current assets                  1,991,860          168,393
     Inventory                                   335,595          160,636
     Deferred income taxes                       750,000             -
                                              ----------       ----------
          TOTAL CURRENT ASSETS                16,425,999        5,042,974
                                              ----------       ----------

PROPERTY, PLANT and EQUIPMENT, less accumulated 
     depreciation of $1,547,016 and
        $617,547, respectively                 8,315,235       11,687,575
                                              ----------       ----------

OTHER ASSETS:                                               
     Restricted certificates of deposit             -             950,000
     Goodwill, less accumulated amortization   9,800,045        1,031,628
     Covenants not to compete,
            less accumulated amortization        214,665          316,938
     Loan receivable -
            Environmental Services
            of America, Inc.                         -            500,000
     Deferred permit costs and other                 -            315,638
     Deferred tax benefit,
            less current portion               7,052,069              -
          TOTAL OTHER ASSETS                  17,066,779        3,114,204
                                              ----------       ----------
                                          $   41,808,013   $   19,844,753
                                              ==========       ==========

LIABILITIES AND STOCKHOLDERS' EQUITY        

CURRENT LIABILITIES:                                                  
     Accounts payable                     $    8,863,276   $    1,868,743
     Accrued expenses and taxes payable        5,197,162        1,870,432
     Current portion- notes payable            2,046,885        1,271,667
                                              ----------       ----------
          TOTAL CURRENT LIABILITIES           16,107,323        5,010,842
                                              ----------       ----------
LONG-TERM DEBT, less current portion          14,255,499        1,244,488
                                              ----------       ----------
OTHER LONG TERM PAYABLES                       5,088,000              -
                                              ----------       ----------
DEFERRED INCOME TAXES                               -             250,000
                                              ----------       ----------
COMMITMENTS and CONTINGENCIES

STOCKHOLDERS' EQUITY:                                                 
     Preferred stock, authorized 2,000,000
            shares, $.001 par value; none issued
            and outstanding                         -                  -
     Common stock, authorized 15,000,000
            shares, $.001 par value;                                            
         5,882,782 and 5,832,782 shares issued
            and outstanding, respectively          5,883            5,833
     Additional paid in capital               10,556,550       10,487,751
     Retained earnings (deficit)              (4,205,242)       2,845,839
                                              ----------       ----------
          TOTAL STOCKHOLDERS' EQUITY           6,357,191       13,339,423
                                              ----------       ----------
                                           $  41,808,013    $  19,844,753
                                              ==========       ==========

See notes to financial statements.                                              

                                          F-3

ERD WASTE CORP. AND SUBSIDIARIES                                 

CONSOLIDATED STATEMENTS OF OPERATIONS                                 


                                   Eight months                  
                                      ended                    
                                   September 30,       Year ended January 31,        
                                   -------------       ----------------------
                                      1996               1996         1995
                                      ----               ----         ----
REVENUES:                               
     Net sales                     $ 20,130,375    $  5,010,965   $  2,860,502

COST OF SALES                        12,778,257       3,253,046      1,637,195

                                     ----------      ----------     ---------- 
     GROSS PROFIT                     7,352,118       1,757,919      1,223,307
                                     ----------      ----------     ----------
OPERATING EXPENSES:                               
     Selling, general and
         administrative expenses      5,821,132       1,568,412        552,316
     Fire loss                          423,352               0              0
     Start-up costs                     437,241               0              0
                                     ----------      ----------     ----------
     TOTAL OTHER OPERATING EXPENSES   6,681,725       1,568,412        552,316
                                     ----------      ----------     ----------

INCOME FROM OPERATIONS                  670,393         189,507        670,991
                                     ----------      ----------     ----------

OTHER INCOME AND EXPENSES:                                  
     Interest and dividend income        72,091          99,652              0
     Interest expense                  (602,407)        (62,765)       (46,588)
     Other, net                          54,506          12,318              0
                                     ----------      ----------     ----------
     TOTAL OTHER INCOME AND EXPENSES   (475,810)         49,205        (46,588)
                                     ----------      ----------     ----------

INCOME FROM CONTINUING OPERATIONS
 BEFORE INCOME TAXES                    194,583         238,712        624,403

PROVISION FOR INCOME TAXES               77,666          95,500        250,000
                                     ----------       ---------     ----------
INCOME FROM CONTINUING OPERATIONS       116,917         143,212        374,403
                                     ----------       ---------     ----------
DISCONTINUED OPERATIONS:                               
     Income from operations,
        net of income taxes  of
        approximately $221,000,
        $1,385,000 and $277,000
        respectively                    332,002       2,084,419        416,890
     Loss on disposal, net of
        income tax benefit
        of $5,000,000                (7,500,000)              0              0
                                      ---------       ---------     ----------
     INCOME (LOSS) FROM
        DISCONTINUED OPERATIONS      (7,167,998)      2,084,419        416,890
                                      ---------       ---------     ----------
NET INCOME (LOSS)              $     (7,051,081)   $  2,227,631   $    791,293
                                      =========       =========     ==========

INCOME (LOSS) PER SHARE:                               


     INCOME FROM 
       CONTINUING OPERATIONS   $           0.02    $       0.03   $       0.09 
                                           ====            ====           ==== 
     INCOME (LOSS) FROM
       DISCONTINUED OPERATIONS $          (1.22)   $       0.38   $       0.11 
                                           ====            ====           ====
     NET INCOME (LOSS)
       PER COMMON SHARE        $          (1.20)   $       0.41   $       0.20 
                                           ====            ====           ====
     WEIGHTED AVERAGE
       NUMBER OF SHARES                5,857,782      5,490,487      3,963,000
                                       =========      =========      =========

See notes to financial statements.

                                       F-4

ERD WASTE CORP. AND SUBSIDIARIES                                                     
     

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                                      
                    


                                               Retained       
                      Common Stock   Paid in   Earnings       
                        Shares       Amount    Capital   (Deficit)    Total
                      ------------   -------   --------  ---------    ---------
Balance-
 January 31, 1994         3,525,000  $  3,500  $   -   $   (41,985) $  (38,485)
                                                            
  Common shares
   issued in connection
   with acquisition         312,500       338    169,266     -         169,604
                                                            
  Net income                 -             -      -         791,293    791,293
                          ---------   -------   --------  ---------   --------
Balance-
  January 31, 1995        3,837,500     3,838    169,266    749,308    922,412
                                                            
  Common shares
   issued in connection                                                    
   with public offering   2,250,000     2,250 12,110,720      -      12,112,970
  Reacquisition of
   common shares           (300,000)     (300)(2,018,600)  (131,100)(2,150,000)
  Issuance of common
   shares in connection                                                    
   with the acquisition
   of EATS, Inc.             45,282        45     226,365      -       226,410
  Net income                     -          -       -     2,227,631  2,227,631
                          ---------    -------  --------- ---------  --------- 
Balance-
  January 31, 1996        5,832,782     5,833  10,487,75 12,845,839 13,339,423
                                                            
  Issuance of
    common stock             50,000        50     68,799     68,849
  Net income                     -        -         -    (7,051,081)(7,051,081)
                          ---------    -------  --------  ---------  ---------
Balance-
  September 30, 1996      5,882,782     5,883 10,556,550 (4,205,242) 6,357,191
                          =========    ====== ==========  =========  =========


See notes to financial statements.

                                          F-5


ERD WASTE CORP. AND SUBSIDIARIES                                                          

CONSOLIDATED STATEMENTS OF CASH FLOWS                                                          


                                   Eight months   
                                      ended                 
                                   September 30,  Year ended January 31,        
                                   -------------  ----------------------
                                       1996          1996        1995
                                       ----          ----        ----

CASH FLOWS FROM OPERATING ACTIVITIES:                                                          
     Net income (loss)         $  (7,051,081)    $  2,227,631  $  791,293
                                  -----------      -----------  ---------
     Adjustments to reconcile net
          income (loss) to net cash
          provided by operating
          activities:                                                 
        Depreciation                  930,604         441,719     160,000
        Amortization                  245,677          93,322           0
        Provision for loss on
             discontinued operations,
             net of tax benefit     7,500,000               0           0
        Provision for deferred
             income tax            (2,670,782)        (44,906)    527,000
        Issuance for common stock
             for services              68,849     
                                                            
     Changes in assets and liabilities
           (net of effects
           from purchase of ENSA): 
       (Increase) decrease in
             accounts receivable   (1,870,836)    (1,407,332)     191,200
       (Increase) in inventory        367,908       (160,636)       -
       (Increase) decrease in
             prepaid expenses and
             other current assets  (1,607,893)      (123,870)     323,615
       (Increase) in other assets  (1,798,548)      (442,325)     (11,474)
       Increase (decrease) in
             accounts payable and
             accrued expenses       1,749,255        777,942     (282,532)
       Increase in income
             taxes payable               -           507,918         -
                                   -----------    -----------   ---------
                                    2,914,234       (358,168)     907,809
                                   -----------    -----------   ---------
NET CASH  PROVIDED BY (USED IN)
     OPERATING ACTIVITIES          (4,136,847)     1,869,463    1,699,102
                                   -----------    -----------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES: 
     Acquistion of ENSA            (8,085,181)                 
     Capital expenditures          (2,149,472)      (904,718)  (1,642,230)
                                  ------------    -----------  -----------
                                  (10,234,653)      (904,718)  (1,642,230)
                                  ------------    -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES:                                                          
     Notes payable                 12,916,275     (8,876,929)     (48,906)
     Borrowings                         -            859,750      181,350
     Issuance of common stock           -         10,444,190       31,807
     Advances to Environmental
          Services of America, Inc.     -           (500,000)       -
     Decrease (increase) in
          restricted certificates
          of deposit                   94,736     (1,750,000)       -
                                   -----------    -----------  -----------
NET CASH PROVIDED BY
     FINANCING ACTIVITIES          13,011,011        177,011      164,251
                                   -----------    -----------  -----------
NET INCREASE (DECREASE) IN CASH    (1,360,489)     1,141,756      221,123

CASH, at beginning of period        1,422,214        280,458       59,335
                                   -----------    ----------   -----------
CASH, at end of period           $     61,725   $  1,422,214   $  280,458
                                   ===========    ==========   ===========

SUPPLEMENTAL CASH FLOW INFORMATION:                     
     Cash paid during the period for:                                                     
          Interest               $    602,000   $     51,030   $   46,588
                                   ===========    ==========   ===========
          Income taxes paid      $        -     $    975,633   $      -
                                   ===========    ==========   ===========

See notes to financial statements.                                                        

                                          F-6


ERD WASTE CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EIGHT MONTHS ENDED SEPTEMBER 30, 1996 AND YEAR ENDED JANUARY 31, 1996


1.   ORGANIZATION AND INITIAL PUBLIC OFFERING OF COMMON SHARES

          On March 1, 1994, ERD Waste Corp., formerly Environmental Resources
     and Disposal, Inc. ("ERD") merged with a Delaware corporation organized for
     the purpose of changing the Company's situs to Delaware and effecting a
     recapitalization of stock. In the merger and recapitalization, each share
     of common stock was exchanged for 1,762.5 shares of common. All share
     amounts have been restated to give effect to this recapitalization. ERD has
     adopted a fiscal year ended September 30. 

          The Company has authorized 2,000,000 shares of preferred stock $.001
     par value per share.

          In May 1995, the Company completed an Initial Public Offering (the
     Offering) of 2,250,000 shares of its Common Stock.  Net proceeds to the
     Company from the "Offering", after deduction of associated expenses, were
     approximately $12,113,000.

2.   LINE OF BUSINESS 

          As a result of the acquisition of Environmental Services of America,
     Inc. ("ENSA") the Company operates as a diversified environmental services
     company specializing in the identification, management, treatment,
     transportation and disposal of hazardous and non-hazardous waste,
     remediation of hazardous waste sites, air quality testing and monitoring
     services and equipment, and consulting and technical support services
     related to all of the foregoing.
 
3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

          a. Principles of Consolidation- The consolidated financial statements
     include the accounts of the Company and its wholly-owned subsidiaries. All
     significant intercompany transactions have been eliminated. 
          b. Accounting Estimates- The preparation of financial statements in
     conformity with generally accepted accounting principles (GAAP) 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 reported period. Actual results
     could differ from those estimates.

          c. Revenue Recognition- Revenue is recognized at the date the related
     service is rendered. Income is charged with an allowance for doubtful
     receivables based on prior collection experience and a review of the
     collectibility of specific accounts.

          d. Cash and Cash Equivalents- Cash and cash equivalents consist of
     cash and temporary investments with maturities of three months or less when
     purchased.

          e. Property, Plant and Equipment and Depreciation- Property, plant and
     equipment are stated at cost. Depreciation is computed using the straight-
     line method over the useful lives of the asset. Assets range in useful
     lives from 7 years for equipment to 30 years for building and waste
     facility.

          f. Earnings per share- Earnings per share is based upon the average
     shares outstanding during the period increased by the effect, if dilutive,
     of common stock equivalents. The options to purchase common stock referred
     to in Note 11 are also included in the computation of outstanding shares
     and common stock equivalents.

          g. Stock options - In October 1995 the Financial Accounting Standards
     Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS")
     No. 123, "Accounting for Stock-Based Compensation", which is effective for
     the Company beginning with the fiscal year ending January 31, 1996. SFAS
     No. 123 requires expanded disclosures of stock-based compensation
     arrangements with employees and encourages compensation cost to be measured
     based on the fair value for the equity instrument awarded. Companies are
     permitted, however, to continue to apply APB Opinion No. 25, which
     recognizes compensation cost based on the intrinsic value of the instrument
     awarded. The Company continues to apply APB Opinion No. 25 to its stock
     based compensation awards to employees.

                                     F-7

          h. Recent pronouncements - In March 1995 the FASB issued SFAS
     No.121,"Accounting for the Impairment of Long Lived Assets and For Long-
     Lived Assets to be Disposed Of", which is effective for fiscal years
     beginning after December 15, 1995. This statement requires that long-lived
     assets and certain identifiable intangible assets to be held and used by an
     entity be reviewed for impairment whenever events or changes in
     circumstances indicate that the carrying amount may not be recoverable. The
     adoption by the Company of this statement in the period ended September 30,
     1996 did not have a material impact on the consolidated financial
     statements of the Company.

          i. Fair value of financial instruments - The amounts reported in the
     balance sheet for cash, trade receivables, accounts payable and accrued 
     expenses approximate fair value based on the short-term maturities of 
     these instruments.

 4.  BUSINESS COMBINATIONS

          a.  Effective May 1, 1996 the Company, ENSA Acquisition Corp. ("EAC"),
     and ENSA entered into an agreement and plan of merger (the "Original Merger
     Agreement") whereby EAC would be merged with and into ENSA, the result of
     which would be that ENSA would become a subsidiary of the Company.

          In January, 1996, simultaneously with the execution of the Original
     Merger Agreement and in contemplation of the acquisition of ENSA by the
     Company, the Company executed a securities purchase agreement (the
     "Securities Purchase Agreement") providing for the loan by the Company to
     ENSA (the "Bridge Loan") of $500,000 for working capital purposes.  The
     Securities Purchase Agreement also provided for the issuance to the Company
     of 500,000 shares of common stock of ENSA.

          In April 1996, the Company entered into an Amended and Restated
     Agreement and Plan of Merger (the "Merger Agreement") with ENSA.  Pursuant
     to the terms of the Merger Agreement, the Company, through its subsidiary
     ENSA Acquisition Corp. ("EAC"), acquired ENSA and its subsidiaries through
     the merger of EAC with and into ENSA.  In order to facilitate the
     acquisition of ENSA, the Company, through EAC, initiated a tender offer
     (the "Offer") on April 4, 1996 for the purchase of shares of common stock
     of ENSA at a purchase price of $1.66 per share.  The aggregate purchase
     price for all outstanding shares of common stock of ENSA, other than shares
     currently owned by the Company is $6,358,718.  The Offer is conditioned
     upon, among other things, there being validly tendered and not withdrawn
     prior to the expiration of the Offer, a number of shares of common stock of
     ENSA representing at least a majority of the total number of outstanding
     shares of ENSA, other than those shares held by the Company, on a fully
     diluted basis as of the date such shares of common stock are accepted for
     payment pursuant to the Offer.

          Simultaneously with its entry into the Merger Agreement, the Company
     entered into a stock purchase agreement with in excess of 90% of the
     holders of each class of preferred stock of ENSA (the "Stock Purchase
     Agreement").  The aggregate purchase price for the shares of preferred
     stock of ENSA to be purchased pursuant to the Stock Purchase Agreement is
     $1,253,614.  The closing of the Stock Purchase Agreement was conditioned
     upon, and closed simultaneously with, the consummation of the tender offer.

          On May 1, 1996, over 90% of ENSA's outstanding shares were tendered to
     the Company. On May 6, 1996, the formal closing was held and the Company
     made payment for the purchase of the tendered preferred and common stock.
          b. On April 16, 1994, ERD acquired ECT in a transaction accounted for
     as a purchase. Results of ECT's operations subsequent to the date are
     included in these consolidated financial statements. In the transaction,
     ERD issued 312,500 of its common shares in exchange for all of ECT's issued
     and outstanding common shares. The acquisition was recorded at the
     historical cost of ECT's net assets acquired (approximately $170,000).

          c. In October, 1995, a newly fomed wholly owned subsidiary, Absorption
     Manufacturing and Technologies, Inc. ("AMT"), acquired certain assets and
     assumed certain liabilities of Environmental Absorbent Technologies, Inc.
     in exchange for 45,282 shares of the Company's common stock.  These
     acquisition shares have not been registered under the Securities Act of
     1933 and may not be sold or transferred by the seller otherwise than in
     compliance with the registration requirements of the Securities Act of 1933
     or pursuant to an exemption from such requirements.

                                     F-8

          The following summarizes the amounts allocated to the assets acquired
and liabilities assumed in this transaction:

 Current assets              $        313,115

 Property and equipment               165,156

 Value of goodwill                  1,044,000
 acquired

 Current liabilities                 (529,287)

 Other liabilities                   (766,574)

 Value of ERD common                  
 shares issued to EATS
 shareholders                $        226,410

          The aforementioned transactions have been accounted for as purchases,
     and accordingly, the Company's results of operations includes the results
     of the acquired entities from their respective dates of acquisition. Pro-
     forma results of operations for the Company as if the aforementioned
     acquisitions took place on February 1, 1994 are as follows:
  
                        Eight                    
                        months        Years
                        ended         Ended 
                        September     January      January
                        30, 1996      31, 1996     31, 1995

 Revenues              $27,422,306  $46,538,810    $39,848,267
 Net income            $(8,621,533) $  (483,211)   $   753,469

 Net income per share  $     (1.47) $     (0.09)   $      0.19

 Number of shares used
 in calculation          5,882,782    5,490,487      3,963,000




5.   STOCK REPURCHASE

          On August 31, 1995 the Company entered into to an agreement to
     reacquire the stock of two former officers of ECT.  The Company purchased
     300,000 common shares from these officers for $2,150,000. In connection
     with the repurchase of such shares, the Company issued promissory notes to
     the two former stockholders, each in the original amount of $1,075,000. The
     promissory notes are collateralized by certificates of deposit owned by the
     Company in the amount of $1,150,000 at September 30, 1996. The notes, which
     bear interest at 6% per annum, are repayable in quarterly installments of
     $200,000 in the aggregate, with a final installment of $150,000 due
     February 1998.  As the Company makes the required quarterly installments,
     an equal amount of collateral is released and becomes available for the
     Company's general use. The repurchased shares were not retired, and are
     available for future issuance by the Company.

          In connection with the stock repurchase the employees right to
     exercise certain qualified options relative to 150,000 additional common
     shares of the Company were canceled, except with respect to 10,000 shares
     which remain available to each shareholder for exercise to and until
     February 17, 1997, provided that the former stockholder is still serving as
     a consultant to the Company, as provided in the settlement agreement. 
 
6.   DISCONTINUED OPERATIONS

          On September 4, 1996, the Company received a complaint from the New
     York State Department of Environmental Conservation ("DEC") citing a number
     of alleged violations at the Company's Long Beach, New York incinerator
     ("Facility"). The DEC's complaint also indicated its intent to have the
     Facility closed. On November 7, 1996 the Company announced that it had
     reached an agreement with the New York State Attorney General acting on

                                     F-9

     behalf of the DEC concerning the resolution of a complaint filed by the DEC
     on September 4, 1996 regarding the Company's operation of its incinerator
     in Long Beach, New York ("Facility"). The agreement reached on November 7,
     1996 includes a voluntary discontinuance of incineration at the Facility.
     In addition, the agreement includes modification of the Facility's permit
     to allow it to continue to operate as a solid waste transfer station for
     the waste streams it has previously processed as a waste to energy
     incinerator. In return for the resolution of all legal issues, the Company
     agreed to voluntarily cease incineration activities by March 31, 1997.  

          The plan to convert the facility to a solid waste transfer station
     will involve the dismantling of a significant portion of the existing
     structure, and the remediation of the soil on and around the Facility. In
     addition, the Company estimates that significant legal and other consulting
     fees will be incurred in the management of the project. The estimated loss
     on the abandonment of the waste to energy facility includes the net book
     value of the Facility, the estimated costs to dismantle the facility, the
     legal and other fees associated with the project, partially offset by the
     estimated salvage value of the Facility's equipment and projected operating
     profits through the termination date of March 31, 1997. The following table
     is a calculation of the estimated loss on abandonment:


 Net book value of Facility      $11,500,000


 Costs to dismantle and            2,000,000
 professional fees

 Estimated salvage value of         (500,000)
 equipment

 Operating profits through          (500,000)
 termination date

 Loss on disposal                $12,500,000



     The following table sets forth, for the periods indicated, the revenues and
results of operations of the Facility.

                Eight                  
                months                   Years
                ended                    Ended
                September         January     January
                30, 1996          31, 1996    31, 1995

 Revenues     $ 4,651,085        $10,205,133  $ 3,847,707

 Net income   $(7,167,998)(a)    $ 2,084,419  $   416,890
 (loss)      

(a) Includes estimated loss on disposal, net of tax benefit, of $7,500,000


          ERD acquired the facilities prior owner,C&J Enterprises, Inc. in a
     transaction accounted for as a purchase. ERD paid and agreed to assume
     specified liabilities of C&J Enterprises, Inc. and its wholly owned
     subsidiary (Long Beach Recycling and Recovery Corp., (LBRR)), subject to
     certain adjustments. Among the liabilities assumed were certain Industrial
     Revenue Bonds.  Cost of the acquisition was determined by totaling the
     amount of the liabilities assumed.  The following summarizes the amounts
     allocated to the assets acquired and liabilities assumed in the
     transaction:

 Industrial revenue bonds                 $7,000,000

 Note payable                              1,500,000

 Other liabilities assumed, net            1,109,029

 Costs of the transaction                    105,375

 Cost of property, plant and equipment   
 acquired                                 $9,714,404

                                     F-10

          Incineration of solid waste has taken place at the Facility Site since
     1951. Various past practices, although they may have been fully lawful and
     within standard engineering practices at the time, have resulted in ash
     constituents being present in the soils and upper level groundwater beneath
     the Facility. LBRR has had conducted a phase I and phase II environmental
     assessment of the level of constituents present and the remedial actions
     which may be needed at the Facility Site. The Company is currently
     examining this issue to determine a possible plan for such remediation and
     is in the process of contracting the City of Long Beach, New York, the
     owner of the Facility Site, as well as predecessor operators of the
     Facility regarding such plan and the funding thereof.

          On July 25, 1995, the Company had a major fire at the Long Beach
     Facility.  The fire significantly damaged the incinerator and reduced or
     prevented its operation for approximately two months.  After the fire, the
     Company devoted a major effort to repairing the incinerator, upgrading it
     where appropriate and servicing its customers when the incinerator could
     not properly function.  Other disposers had to be utilized for waste which
     otherwise would have been incinerated by the Company.  In addition to the
     loss of incineration income, the Company lost significant sales of
     electricity.

          The Company was covered by insurance for both damage and business
     interruption.  In November 1995, the Company settled its claim with the
     insurance company, collecting a total of $3,200,000, which was previously
     included in revenues.  Because of the inability to determine exactly what
     costs it expended during the year for the incinerator and the appropriate
     portion of the recovery representing reimbursement for business
     interruption, the financial statements reflect the insurance recovery as
     revenues.  All expenditures relating to the fire, the repair of the
     incinerator, and management's effort to both repair the incinerator and
     service customers have been included in expenses.

          Management believes that the incinerator has been brought back to its
     operating capability prior to the fire.  Accordingly, the incinerator has
     been recorded at its cost through July 24, 1996 less appropriate
     depreciation.

7.   OTHER LONG TERM LIABILITIES

     Other long term liabilities consist of the following at September 30, 1996:

 Environmental Costs                            $2,833,000
                    
 Severance costs                                   650,000
 
 Costs related to discontinued operations          850,000

 Accrued acquisition costs                         345,000

 Accrued professional fees and salaries            410,000

                                                 5,088,000

                                   

                                   
          (a) The three transfer stations operated by ENSA are on sites that
     have been contaminated as a result of prior useof the site or by prior use
     at an adjacent site. The Company is cooperating with the government
     regulatory agencies that have jurisdiction over its facilities to
     investigate, assess, and implement appropriate remediation measures to
     address these conditions. The Company has projected potential expenditures
     that may be required to conduct further investigations or studies and to
     remediate the sites to satisfy regulatory requirements. In developing these
     projections of potential remediation and compliance costs, the Company has
     relied, in part, on studies prepared by itself and an independent
     environmental engineering and consulting firm. 

          The Company will also be required to upgrade its transfer stations to
     meet new regulatory and permit requirements, including the installation of
     emission controls for volatile organic compounds on the storage tanks at
     each facility to meet requirements with respect to air emissions. 
                                     F-11

          Estimates of potential costs related to these environmental matters is
     subject to significant inherent uncertainty. Estimates of costs of
     compliance and remediation are subject to a number of factors beyond the
     Company's control; therefore, actual costs could differ from these
     estimates and the differences could be material. 

          (b) The former CEO of ENSA has alleged that the Company breached its
     obligations pursuant to an unsigned employment agreement providing for
     $225,000 per year for three years. In addition, the Company has agreed to
     pay the former CEO $200,000 per year for the nest two years. 

          (c) Costs related to the discontinuance of the Company's incinerator
     in Long Beach, New York consist of estimated costs to dismantle the
     Facility, as well as estimated legal and other professional fees to be
     incurred in the process. The costs are stated net of estimated income from
     incineration operations through the date that the Company must cease
     incineration activities at the site, March 31, 1997.

8.   COMMITMENTS AND CONTINGENCIES

          The Company leases office facilities under the terms of operating
     leases with varying maturities through 2007. Minimum lease commitments
     under all operating leases for each of the next five years and thereafter
     are as follows:

 1997      $  1,490,000

 1998           478,000

 1999           344,000

 2000           290,000

 2001           300,000

 Thereafter   1,593,000

          Certain of the leases contain renewal options ranging from five to ten
     years. Additionally, two leases provide the Company with an option to
     purchase the related property.  Rent expense aggregated approximately
     $594,000, $256,000 and $175,000 for the eight months ended September 30,
     1996 and the years ended January 31, 1996 and 1995, respectively.


          The Company is subject to a number of lawsuits arising from the
     conduct of the prior owners of the waste facility. While the ultimate
     results of the litigation commenced and potential litigation cannot be
     determined, management does not expect that any of the matters will have a
     material adverse effect on the consolidated financial position of the
     Company. 


9.   PROPERTY, PLANT AND EQUIPMENT

          The following is a summary for property, plant and equipment:

  
                              September    January
                              30, 1996     31, 1996

 Vehicles and equipment     $ 4,221,326  $   637,898


 Waste facility               -            9,341,645

 Building and building       
 improvements                 4,959,040    2,220,440 

 Other                          681,885      102,139


                              9,862,251   12,302,122

 Accumulated depreciation    (1,547,016)    (614,547)

                            $ 8,315,235  $11,687,575


                                     F-12



10.  LONG TERM DEBT

     The long term debt is summarized as follows: 

                                       September    January
                                       30, 1996     31, 1996

 Revolving credit note payable,                   
 bank, due April 1, 1998, (a)       $ 7,500,000    $ -      
 1998, (a)


 Note payable, bank (a)               4,400,000      -      

                                                 
 Note Payable- Catalyst, payable in               
 equal annual installments through     
 1999                                   400,000     400,000        
                                                
 Note payable - officer, due on       
 demand, with interest at prime        
 plus 1%                               642,949       -
                                      

 Notes Payable - Former                1,150,000  1,750,000
 Stockholders payable in quarterly
 installments of $200,000 with a
 final installment of $150,000 in                    
 February, 1998 at 6% per annum

                                                
 Various equipment and other           2,209,435    296,415
 installment notes payable in
 varying monthly amounts including      
 interest ranging from 8% to 18.3%,    
 with varying maturities through        
 November 2001

 Other                                    -          69,740

                                      16,302,384  2,516,155

 Less current portion                  2,046,885  1,271,667

                                     $14,255,499 $1,244,488

     (a)  In order to partially finance the purchase of the common stock and
     preferred stock of ENSA, in April 1996, the Company obtained and utilized
     the availability of a  $7.5 million revolving credit facility (the
     "Revolving Facility") from Chemical Bank (the "Bank"and/or "lender")
     pursuant to a loan agreement (the "Loan Agreement"), dated March 29, 1996. 
     The funds were actually borrowed on May 2, 1996. The Loan Agreement
     provides, among other things, for the payment by ERD of a commitment fee,
     payable monthly, computed at the rate of one quarter of one percent (1/4%)
     per annum (computed on the actual number of days elapsed over 360 days) on
     the average daily unused amount of the Bank's $7.5 million commitment. 
     Revolving loans in respect of the Revolving Facility ("Revolving Loans")
     shall be, at the Company's request, either (i) Alternative Base Rate Loans
     (as defined) which bear interest calculated at the Alternative Base Rate
     (as defined) plus one half of one percent (1/2%) or (ii) Eurodollar Loans
     (as defined) which bear interest calculated at the adjusted LIBOR Rate (as
     defined) plus three and one half percent (3 1/2%)(or a combination
     thereof).

                                     F-13

          Subject to the terms of the Loan Agreement, the Revolving Facility
     will be available until April 1, 1998, at which time, all outstanding
     principal and accrued interest under the Revolving Facility shall be due
     and payable.
          The Loan Agreement provides for the granting by the Company and each
     of the Guarantors listed above of a first priority security interest in all
     present and future accounts, contract rights, chattel paper, general
     intangibles, instruments and documents of the Company and such Guarantors
     then owned or thereafter acquired, and in all machinery and equipment
     acquired by the Company and such Guarantors after the date of the Loan
     Agreement.

          The obligations of the Bank to make each Revolving Loan under the
     Revolving Facility are conditioned on certain conditions, including the
     following: (i) delivery of a certificate from the Company and each of the
     Guarantors stating the representations and warranties contained in the Loan
     Agreement are true and correct; (ii) no default or material adverse change
     in the Company or any Guarantor has occurred; and (iii) the purpose for
     which the proceeds of such Revolving Loan is being made.

          The Loan Agreement contains traditional and customary representations,
     warranties and events of default.

          The Company has agreed to indemnify Chemical against any loss or
     expense which Chemical may sustain or incur as a consequence of any default
     in payment or prepayment of the principal amount of any Loan (as defined)
     or any part thereof or interest accrued thereon, as and when due and
     payable on the occurrence of any Event of Default (as defined).

          Subject to the terms of the Loan Agreement, the Company has the right
     at any time and from time to time to prepay any Alternate Base Rate Loan,
     in whole or in part, without premium or penalty, on the same day that
     telephonic notice is given to Chemical advising it of prepayment.  In
     addition, the Company has the right to prepay any Eurodollar Loan, in whole
     or in part, on three Business Days' prior irrevocable notice, provided,
     however, that such prepayment may only be made on an Interest Determination
     Date (as defined).


          At September 30, 1996 the Company was in technical violation of a
     number of the covenants contained in the agreement. As of February 12,
     1997, these violations were waived. Concurrently, the lender and the
     Company agreed on revised financial covenants for the remainder of the year
     ending September 30, 1997. The Company expects to be in compliance with the
     revised covenants at each measurement date.

          On June 6, 1996 and in August 1996, the Company borrowed an additional
     $4,400,000 (in the aggregate) from this lender pursuant to a demand
     promissory note (the "Note"). The Note bears interest at 1% above the
     lender's prime rate, as that term is defined in the agreement. The proceeds
     of the loan were utilized to repay existing credit facilities of ENSA
     (those in existence at the time of the acquisition of ENSA by ERD). The
     Note is collateralized by certain assets of the Company and its
     subsidiaries, as well as by a stand by letter of credit issued in favor of
     the mlender by American United Global, Inc. ("AUGI"), an affiliate of one
     of the Comapny's directors. In consideration for the letter of credit, the
     Company entered into an agreement with AUGI, dated May 30, 1996, as amended
     and restated by letter agreement dated October 8, 1996. Pursuant to the
     agreement, the Company agreed to pay interest and other charges incurred by
     AUGI with respect to the letter of credit. It was also agreed that should
     the letter of credit be called for payment, the Company would issue to AUGI
     its 12% note payable due the earlier of May 31, 1999, or the receipt of
     proceeds by the Company from any public or private placement of debt or
     equity securities subsequent to the calling of the letter of credit, or the
     completion of any bank financing by the Company to the extent of proceeds
     available after the repayment of previously oustanding collateralized
     indebtedness. Any of such notes issued pursuant to this agreement will be
     convertible by AUGI into shares of the Company's common stock at $4.40 per
     share.

                                     F-14

11.  INCOME TAXES

          The provision for income taxes consists of the following:

 
                                 Eight       
                                 months        Year
                                 ended         ended
                                 September     January
                                 30, 1996      31, 1996

 Current tax expense:


   U.S. Federal                $ 66,000      $ 935,000

   State and local               11,666        296,000

                                 77,666      1,231,000

                                             
 Deferred tax expense:


   U.S. Federal                  0             200,000

   State and local               0              50,000

                                 0             250,000

                                             

 Total provision              $ 77,666      $1,481,000

          Temporary differences and carryforwards which give rise to deferred
     tax  assets and liabilities at September 30, 1996 and January 31, 1996 are
     as follows:

                                 September     January
                                 30, 1996      31, 1996

 Deferred tax asset:                         

      Net operating loss       $ 1,592,000   $
 carryfowards

      Environmental              2,200,000   
 liabilities

      Write-off of               5,000,000   
 incinerator

                                 8,792,000   


      Less:Valuation               740,000     
 allowance

           Deferred tax asset    8,052,000   

 Deferred tax liability:                     

      Insurance proceeds                     
 received treated as a             250,000      250,000
 basis reduction for tax
 purposes.

 Net deferred tax asset        $ 7,802,000   $ (250,000)
 (liability)                                  


          Realization of deferred tax assets is dependent upon generating
     sufficient taxable income prior to the expiration of net operating loss
     carryforwards. Management believes that there is a risk that certain
     amounts may not be realized, and accordingly, has established a reserve
     against a portion of the deferred tax asset. Management believes that it is
     more likely than not that the net deferred tax asset will be realized
     through future pre-tax earnings or alternative tax strategies. However, the
     net deferred tax assets could be reduced in the future if management's
     estimates of near term pre-tax earnings are significantly reduced or
     alternative tax strategies are no longer viable.

                                     F-15

          The difference between the actual income tax provision and the tax
     provision computed by applying the statutory Federal income tax rate to
     earnings before taxes is attributable to the following:

 
                                 Eight       
                                 months        Year
                                 ended         ended
                                 September     January
                                 30, 1996      31, 1996


 Income tax provision at 34%   $ 66,000      $ 1,261,000


 State and local income          11,666      
 taxes, net of Federal income                    220,000 
 effect

                                 77,666        1,481,000


12.  EMPLOYMENT AGREEMENTS

          The Company has entered into an employment agreement with its
     President and Chief Operating Officer of the Company, through December 31,
     1998. The agreement provides for a salary of $175,000 per annum commencing
     January 1, 1995, with annual increase of $25,000 per annum through the term
     of the agreement.

          The Company has also entered into an employment agreement with its
     Chairman of the Board and Chief Executive Officer of the Company, through
     December 31, 1998. The employment agreement provides for a salary of
     $100,000 per annum commencing January 1, 1994.

          The Company has also entered into an agreement with the President of
     ECT which extends through March 3, 1996.  The employment agreement
     provides for an annual salary of $60,000 plus additional compensation based
     on the pre-tax earnings of ECT through the relevant period. In addition,
     the Company is obligated to pay such shareholders certain amounts pursuant
     to a non compete agreement signed in connection with the common stock
     repurchase described in Note 6.

13.  EMPLOYEE STOCK OPTIONS

          The Company has established the 1994 Stock Option Plan under which
     employees of the Company may receive incentive stock options for up to
     500,000 shares of common stock. During May, 1994, 445,000 options were
     granted pursuant to the plan, exercisable at $4.00 per share for two years.



14.  MAJOR CUSTOMERS

          During the eight months ended September 30, 1996, one customer
     accounted for approximately  17.4% of consolidated revenues.

15.  SUBSEQUENT EVENT


          In December 1996 the Company commenced a private offering of its
     common shares in the form of units. The private placement calls for the
     sale of up to 150 units (but not less than 20 units) at a price of $25,000
     per unit. The units will consist of a number of common shares and an equal
     number of warrants to purchase common shares. The number of shares (and
     warrants) is to be dtermined by dividing the purchase price per unit by 90%
     of the average closing bid price for the Company's common stock for the ten
     trading days immediately preceding the date of the closing of the offering.


16.  EIGHT MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)


     The following table sets forth the Company's unaudited summarized results
of operations for the eight months ended September 30, 1995:

                                     F-16

 Revenues                          $7,929,036

 Gross profit                       5,252,879

 Selling, general and
 administrative                     2,405,375

 Income from operations             2,847,504

 Income taxes                       1,090,953

 Net income                        $1,781,763


                                          F-17

                                                            


</TABLE>