BALTEK CORPORATION AND SUBSIDIARIES




       CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
                      AS OF DECEMBER 31, 2000 AND 1999 AND
        FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2000



                       PREPARED FOR FILING AS PART OF THE
                            ANNUAL REPORT (FORM 10-K)
                    TO THE SECURITIES AND EXCHANGE COMMISSION
                      FOR THE YEAR ENDED DECEMBER 31, 2000


                                   **********


<PAGE>


BALTEK CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
  FINANCIAL STATEMENT SCHEDULE
PREPARED FOR FILING AS PART OF THE ANNUAL REPORT
  (FORM 10-K) TO THE SECURITIES AND EXCHANGE COMMISSION
YEAR ENDED DECEMBER 31, 2000

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


                                                                           Page

INDEPENDENT AUDITORS' REPORT................................................1

   Consolidated Balance Sheets as of December 31, 2000 and 1999.............2

   Consolidated Statements of Income for Each of the Three Years
             in  the  Period  Ended  December 31, 2000......................3

   Consolidated Statements of Stockholders' Equity for Each of
             the Three Years in the Period Ended December 31, 2000..........4

   Consolidated Statements of Cash Flows for Each of the Three
             Years in the Period Ended December 31, 2000....................5

   Notes to Consolidated Financial Statements for Each of the
            Three Years in the Period Ended December 31, 2000..............6-19

FINANCIAL STATEMENT SCHEDULE AS OF AND FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED DECEMBER 31, 2000:

II - Valuation and Qualifying Accounts......................................20


All other schedules for which provision is made in the applicable regulations of
the Securities and Exchange  Commission have been omitted because of the absence
of the  conditions  under  which  they are  required  or  because  the  required
information called for is set forth in the consolidated  financial statements or
notes thereto.


<PAGE>


INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Baltek Corporation and Subsidiaries

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Baltek
Corporation and  Subsidiaries  (the  "Corporation")  as of December 31, 2000 and
1999, and the related consolidated  statements of income,  stockholders' equity,
and cash flows for each of the three  years in the  period  ended  December  31,
2000. Our audits also included the financial  statement  schedule  listed in the
accompanying index. These financial  statements and financial statement schedule
are the responsibility of the Corporation's management. Our responsibility is to
express an opinion on the financial  statements and financial statement schedule
based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of Baltek Corporation and Subsidiaries
as of December 31, 2000 and 1999, and the results of their  operations and their
cash flows for each of the three years in the period ended  December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America.  Also,  in  our  opinion,  such  financial  statement  schedule,   when
considered in relation to the basic consolidated financial statements taken as a
whole,  presents  fairly in all  material  respects  the  information  set forth
therein.

DELOITTE & TOUCHE LLP
Parsippany, New Jersey

March 15, 2001

<PAGE>

<TABLE>
<CAPTION>
                       BALTEK CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                  (Dollars in thousands, except per share data)
-------------------------------------------------------------------------------------------------------------------------

                                                                                                     December 31,
ASSETS                                                                                        2000                  1999

CURRENT ASSETS:
<S>                                                                                          <C>                  <C>
   Cash and cash equivalents                                                                 $  1,338            $   967
   Accounts receivable (less allowance for doubtful
        accounts - 2000, $275; 1999, $175)                                                     10,370              9,285
   Inventories                                                                                 20,421             18,478
   Prepaid expenses                                                                               539                551
   Other                                                                                        1,779              1,185
                                                                                             --------            -------
       Total current assets                                                                    34,447             30,466

PROPERTY, PLANT AND EQUIPMENT - Net                                                            13,062             13,565

TIMBER AND TIMBERLANDS                                                                          9,073              8,200

OTHER ASSETS                                                                                      949                674
                                                                                             --------            -------

TOTAL ASSETS                                                                                 $ 57,531            $52,905
                                                                                             ========            =======

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Notes payable                                                                             $ 10,605            $ 8,079
   Accounts payable                                                                             3,863              4,821
   Income taxes payable                                                                           143                211
   Accrued salaries, wages and bonuses payable                                                  1,190              1,211
   Accrued expenses and other liabilities                                                       1,494                683
   Current portion of long-term debt                                                               44                199
   Current portion of obligation under capital lease                                              465                415
                                                                                             --------            -------
         Total current liabilities                                                             17,804             15,619

OBLIGATION UNDER CAPITAL LEASE                                                                     82                547

LONG-TERM DEBT                                                                                     46                 44

UNION EMPLOYEE TERMINATION BENEFITS                                                               121                 99
                                                                                             --------            -------
           Total liabilities                                                                   18,053             16,309
                                                                                             --------            -------

STOCKHOLDERS' EQUITY:
   Preferred stock, $1.00 par; 5,000,000 shares authorized and unissued                             -                  -
   Common stock, $1.00 par; 10,000,000 shares authorized,
         2,523,261 shares issued and outstanding                                                2,523              2,523
   Additional paid-in capital                                                                   2,157              2,157
   Retained earnings                                                                           34,798             31,916
                                                                                             --------            -------

          Total stockholders' equity                                                           39,478             36,596
                                                                                             --------            -------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                   $ 57,531            $52,905
                                                                                             ========            =======
</TABLE>


See notes to consolidated financial statements.


<PAGE>

<TABLE>
<CAPTION>
                       BALTEK CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                  (Dollars in thousands, except per share data)
---------------------------------------------------------------------------------------------------------

                                                           Year Ended December 31,
                                             2000                  1999                  1998

<S>                                        <C>                    <C>                  <C>
NET SALES                                  $  89,060              $ 86,027             $  67,695

COST OF PRODUCTS SOLD                         68,364                66,337                50,607

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                     14,865                14,145                11,954
                                           ---------              --------             ---------

           Operating income                    5,831                 5,545                 5,134
                                           ---------              --------             ---------

OTHER INCOME (EXPENSES):
  Interest expense                              (937)               (1,356)               (1,554)
  Foreign exchange (loss) gain                  (328)                 (336)                  814
  Interest income                                 14                    15                     4
  Other, net                                      (6)                   --                     5
                                           ---------              --------             ---------

           Total                              (1,257)               (1,677)                 (731)
                                           ---------              --------             ---------

INCOME BEFORE TAXES                            4,574                 3,868                 4,403

INCOME TAX PROVISION                           1,692                 1,052                 1,144
                                           ---------              --------             ---------

NET INCOME                                 $   2,882              $  2,816             $   3,259
                                           =========              ========             =========

BASIC AND DILUTED EARNINGS
   PER COMMON SHARE                        $    1.14              $   1.12             $    1.29
                                           =========              ========             =========
</TABLE>

See notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>
                       BALTEK CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 (Dollars in thousands, except per share data)
-------------------------------------------------------------------------------------------------------------

                                     Common Stock,        Additional Paid-in        Retained
                                        $1 Par                 Capital              Earnings

<S>                                    <C>                     <C>                  <C>
BALANCE, JANUARY 1, 1998               $ 2,523                 $ 2,157              $ 25,841
  Net income - 1998                          -                       -                 3,259
                                    -------------           -------------       ----------------

BALANCE, DECEMBER 31, 1998               2,523                   2,157                29,100
  Net income - 1999                          -                       -                 2,816
                                    -------------           -------------       ----------------


BALANCE, DECEMBER 31, 1999               2,523                   2,157                31,916
  Net income - 2000                          -                       -                 2,882
                                    -------------           -------------       ----------------


BALANCE, DECEMBER 31, 2000             $ 2,523                $  2,157              $ 34,798
                                    =============           =============       ================
</TABLE>


See notes to consolidated financial statements.


<PAGE>

<TABLE>
<CAPTION>

                                            BALTEK CORPORATION AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------
                                                                                           Year Ended December 31,
                                                                                2000               1999               1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                          <C>                <C>                <C>
  Net income                                                                 $  2,882           $  2,816           $  3,259
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization                                               3,038              3,002              2,492
    Foreign exchange loss (gain)                                                  328                336               (814)
    Deferred taxes                                                               (384)              (180)               (93)
    Changes in assets and  liabilities,  net of the  effect
       of foreign currency translation and acquisition:
        Accounts receivable                                                    (1,086)            (2,338)            (1,829)
        Income tax payable/receivable                                             (68)               (15)               206
        Inventories                                                            (1,943)            (3,390)               (67)
        Prepaid expenses and other current assets                                (446)                36                 17
        Other assets                                                              (29)               (14)                (2)
        Accounts payable and accrued expenses                                    (174)             1,839               (405)
        Other                                                                      34               (234)               (72)
                                                                          -------------        -----------        ------------

           Net cash provided by operating activities                            2,152              1,858              2,692
                                                                          -------------        -----------        ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net acquisitions of property, plant and equipment                            (1,746)            (2,410)            (3,296)
  Increase in timber and timberlands                                           (1,615)              (943)            (1,737)
  Acquisition of seafood assets, net of cash acquired                             ---               (491)                 -
                                                                          -------------        -----------        ------------

           Net cash used in investing activities                               (3,361)            (3,844)            (5,033)
                                                                          -------------        -----------        ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase in notes payable                                                     2,526              3,398              1,529
  Borrowings of long-term debt                                                     --                 --              1,428
  Payments of long-term debt                                                     (210)            (1,357)            (1,756)
  Principal payments under capital lease                                         (415)              (382)              (337)
                                                                          -------------        -----------        ------------

           Net cash provided by financing activities                            1,901              1,659                864
                                                                          -------------        -----------        ------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                          (321)               238              1,356
                                                                          -------------        -----------        ------------

INCREASE (DECREASE) IN
  CASH AND CASH EQUIVALENTS                                                       371                (89)              (121)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                                                               967              1,056              1,177
                                                                          -------------        -----------        ------------

CASH AND CASH EQUIVALENTS,
  END OF YEAR                                                               $   1,338           $    967            $ 1,056
                                                                          =============        ===========        ============

SUPPLEMENTAL DISCLOSURES OF
  CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest                                                                $     897           $  1,281            $ 1,292
                                                                          =============        ===========        ============

    Income taxes                                                            $   2,199           $  1,509            $ 1,025
                                                                          =============        ===========        ============
</TABLE>

See notes to consolidated financial statements.


<PAGE>


BALTEK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2000
--------------------------------------------------------------------------------

1.    NATURE OF OPERATIONS

      Baltek  Corporation  and  subsidiaries  (the "Company") is a multinational
      manufacturing and marketing company.  The Company operates in two lines of
      business: supplying core materials,  principally balsa wood and balsa wood
      products,  linear and cross-linked PVC Foam and non-woven polyester mat to
      various composite  industries;  and in the seafood  business,  as a shrimp
      producer and as an importer.  Approximately  71% of Baltek's  revenues are
      derived from its core materials segment and 29% from the seafood segment.

      The  principal  market for the Company's  core  materials is in the United
      States,  while the seafood market is divided between the United States and
      Europe.

      The balsa and shrimp products are produced in Ecuador,  South America. The
      supply of raw materials has been without  interruption  for over 60 years.
      The balsa and shrimp  identifiable assets located at various facilities in
      Ecuador are included in the Company's consolidated balance sheet and total
      approximately  $25 million at December 31, 2000. Foam and mat products are
      purchased from outside vendors; the foam products are further processed by
      the Company for sale to customers.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Principles  of  Consolidation  -  The  consolidated  financial  statements
      include the accounts of the Company and its wholly-owned subsidiaries. All
      significant intercompany accounts and transactions have been eliminated in
      consolidation.

      Cash and Cash Equivalents - Cash equivalents  consist of short-term highly
      liquid investments with maturities of three months or less when purchased.

      Cash flows from Baltek's  operations in foreign  countries are  calculated
      based on their reporting currencies.  As a result of this, amounts related
      to  changes  in  assets  and  liabilities  reported  on  the  consolidated
      statement  of cash  flows  will not  necessarily  agree to  changes in the
      corresponding  balances on the consolidated  balance sheets. The effect of
      exchange  rate  changes on cash  balances  held in foreign  currencies  is
      reported on a separate line below cash flows from financing activities.

      Inventories - Inventories are valued at the lower of cost or market.  Cost
      is determined by use of the first-in, first-out (FIFO) method.

      Investments - All investments  held by the Company are recorded as trading
      securities and included in other current assets.

      Property - Property,  plant and equipment is stated at cost.  Depreciation
      is provided for depreciable assets over their estimated useful lives using
      various accepted  depreciation  methods. The asset under capital lease and
      leasehold improvements are amortized over their estimated useful lives, or
      the life of the lease, whichever is shorter.

      Income  Taxes - Taxes on current  income are  provided  by the Company and
      each  subsidiary as prescribed by local tax laws.  Deferred tax assets and
      liabilities are recognized for the future tax consequences attributable to
      differences  between the financial  statement carrying amounts of existing
      assets and liabilities and their respective tax bases.

<PAGE>

      Timber and Timberlands - Timberlands are carried at cost.  Timber-deferred
      cultivation  costs  represent the cost of preparing,  clearing and seeding
      the Company's balsa wood plantations. Amortization of deferred cultivation
      costs  is  based on units of  production.  Timber  carrying  costs,  which
      include  the  regular  maintenance  and  overseeing  of  timberlands,  are
      expensed as incurred.

      Common  Stock - Holders of the  Company's  Common  Stock have full voting,
      dividend and liquidation preferences in the Company.

      Foreign Currency  Translation - The financial  statements of the Company's
      European and Japanese  subsidiaries are remeasured into U.S. dollars,  the
      Company's functional  currency.  In accordance with local requirements the
      Ecuadorean subsidiaries are now maintained in U.S. dollars.

      Financial  Instruments - Derivative financial  instruments are used by the
      Company to manage its interest  rate and foreign  currency  exposure  (see
      Note 12).  Effective  January 1, 2001 the  Company  adopted  Statement  of
      Financial  Accounting  Standards  No.  133 (as  amended),  Accounting  for
      Derivative Instruments and Hedging Activities.

      Foreign  Currency  Risk  Management  - The Company  uses  forward  foreign
      currency exchange  contracts to reduce currency exchange rate risk on firm
      commitment  purchases  denominated in foreign currencies.  Gains or losses
      resulting  from these  contracts  are  deferred  and are  included  in the
      purchase  price of the materials.  The maximum term of these  contracts is
      less than two years.  The Company does not intend to enter into derivative
      financial instruments for speculative purposes.

      Concentrations of Credit Risk - Baltek's core material  products,  as well
      as shrimp and other  seafood  products,  are sold to a number of  markets,
      including boating,  transportation,  military,  hobby, and the retail food
      industry. Baltek's products are sold throughout the United States, Canada,
      Europe,  Japan and Australia to approximately 1,600 ultimate users. Credit
      risk  related to Baltek's  trade  receivables  is limited due to the large
      number of customers in differing industries and geographic areas.

      Fair Value of Financial  Instruments - At December 31, 2000 and 1999,  the
      carrying value of cash and cash equivalents, accounts receivable, accounts
      payable and other financial  instruments  approximated  their fair values.
      The  carrying   amount  of  notes  payable  and  other  debt   obligations
      approximates  fair  value  based on the  nature  and  terms of the  loans,
      including  borrowing  rates and other terms  available  to the Company for
      loans with similar terms and conditions.

      Research and Development - Research and  development  costs are charged to
      expense as incurred.  Research  and  development  expenditures  charged to
      operations  were  approximately  $565,000,  $597,000 and $609,000 in 2000,
      1999 and 1998, respectively.

      Basic and  Diluted  Earnings  per  Common  Share -  Earnings  per share is
      computed by dividing net income by the  weighted-average  number of common
      shares  outstanding.   The   weighted-average   number  of  common  shares
      outstanding for all periods  presented is 2,523,261.  The Company does not
      have any potentially  dilutive  instruments;  therefore,  the reporting of
      diluted earnings per share is not applicable.

      Revenue  Recognition - Product  revenues are recognized when title passes.
      For the majority of the Company's sales, this occurs when the products are
      shipped.

      Use of Estimates - The Company's  financial  statements include the use of
      estimates and assumptions which have been developed by management based on
      available  facts and  information.  Actual results could differ from those
      estimates.

      Reclassifications  - Certain  amounts in prior year  financial  statements
      have been reclassified to conform with the current year presentation.


<PAGE>


3.    INVENTORIES

      Inventories  of the core  materials and shrimp  segments are summarized as
      follows (amounts in thousands):

                                     2000               1999

       Raw materials               $ 5,314            $ 5,260
       Work-in-process               3,273              3,050
       Finished goods               11,834             10,168
                                   --------           --------
       Inventories                 $20,421            $18,478
                                   ========           =======


      Included in the above  amounts are  inventories  relating to the Company's
      seafood  operations of $5,964,000  and $4,358,000 at December 31, 2000 and
      1999, respectively.

4.    PROPERTY, PLANT AND EQUIPMENT

      Property,  plant and equipment is comprised of the  following  (amounts in
      thousands):

<TABLE>
<CAPTION>
                                           Estimated
                                          Useful Lives        2000           1999

<S>                                        <C>              <C>            <C>
      Land                                                  $   125        $   125
      Shrimp properties                    5-20 years        19,306         18,755
      Buildings and improvements            20 years          2,062          2,057
      Machinery and equipment              5-10 years        12,897         12,164
      Leasehold improvements                                  1,002          1,012
      Assets under capital lease                              2,499          2,499
      Construction-in-progress                                  330             --
                                                           ---------      ---------

      Total                                                  38,221         36,612

      Less accumulated depreciation and amortization         25,159         23,047
                                                           ---------      ---------

      Property, plant and equipment-net                     $13,062        $13,565
                                                           =========      =========

</TABLE>


       Shrimp properties  consist  principally of shrimp ponds, a hatchery and a
       packing  plant.  Accumulated  amortization  related  to the  asset  under
       capital  lease  at  December  31,  2000  and  1999  was   $2,207,000  and
       $1,957,000, respectively.

       In April 1999, the Company signed an agreement to purchase certain assets
       and inventory totaling  approximately $500,000 from the seafood importing
       subsidiary  of Nissho Iwai  Corporation.  The  acquisition  increases the
       Company's presence in the seafood industry and allows the Company to sell
       not only shrimp but many other types of seafood, including lobster, crab,
       and  salmon.  Due to the  immateriality  of  the  acquisition,  pro-forma
       information is not presented herein.

<PAGE>

5.    TIMBER AND TIMBERLANDS

      Timber  and  Timberlands  are  comprised  of  the  following  (amounts  in
      thousands):

                                                  2000         1999

       Timberlands                              $ 4,528      $ 3,906
       Timber-deferred cultivation costs          4,545        4,294
                                               ---------    ---------

       Timber and Timberlands                   $ 9,073      $ 8,200
                                               =========    =========

      Amortization of deferred  cultivation  costs was  approximately  $742,000,
      $928,000 and $572,000 at December 31, 2000, 1999 and 1998, respectively.

6.    NOTES PAYABLE

      Notes payable under various  agreements  consist of the following (amounts
      in thousands):

<TABLE>
<CAPTION>
                                                               2000       1999
<S>                                                         <C>          <C>
       U.S. bank loan                                        $ 6,825     $ 5,801

       Ecuadorian bank loans, payable in U.S.
       dollars, due within one year from the origination
       date, with interest rates between 9.87% and 18.0%       3,780       1,857

       Ecuadorian  bank loans,  payable in sucres, due
       within one year from the origination date,
       with interest rates between 46.3% and 63.0%               --         421
                                                             -------     -------

       Notes payable                                         $10,605     $ 8,079
                                                             =======     =======
</TABLE>

      The U.S. Bank loan , which by its original  terms expired on September 30,
      2000 and was extended until December 31, 2000, represents borrowings under
      a secured  $12,500,000  line of credit  with a domestic  bank.  Borrowings
      under the line are secured by the Company's  domestic accounts  receivable
      and  inventory.  At the  Company's  option all or a portion of the amounts
      outstanding  may be tied to the prime rate  (prime  less  3/4%,  8.75% and
      7.75% at  December  31,  2000 and  1999) or LIBOR  plus  1.50%  (8.28%  at
      December 31, 2000). The loan agreement contains non-financial  affirmative
      and negative  covenants and limits the amount of dividends the Company may
      declare.  The  Company is also  required  to pay a  commitment  fee on the
      unused portion of its credit line on a quarterly basis. The Company was in
      compliance with all loan covenants at December 31, 2000.

      At December 31, 2000,  the Company had a one year  interest rate swap that
      converted  $3 million of the  outstanding  borrowing  from a floating to a
      fixed rate, resulting in a fixed rate of 8.90%. The interest  differential
      to be paid or received  under the swap  agreement is  recognized  over the
      life of the swap and is included in interest income or expense.

<PAGE>

      At December 31,  2000,  the Company had a line of credit  available  under
      Ecuadorian  borrowing  arrangements of $4,000,000,  of which approximately
      $220,000 was unused.  Borrowings  under the line are secured by a mortgage
      on certain  land and  buildings  and a  negative  pledge  against  certain
      machinery.  At December 31, 1999, the Ecuadorian  line of credit  included
      dollar and sucre  denominated  short-term loans and sucre denominated term
      loans (see Note 7).

      The weighted average interest rate  on borrowings  outstanding at December
      31, 2000 and 1999 was approximately 10.1% and 12.0%, respectively.

      In  January  2001,  the  Company  signed a new $16.5  million,  three-year
      domestic loan facility which became effective January 1, 2001.  Borrowings
      under the line are secured by the Company's  domestic accounts  receivable
      and inventory.  The amount of eligible borrowings is based on a formula of
      eligible  accounts  receivable  and  eligible  inventory.   The  agreement
      contains two financial covenants (net worth and debt service requirements)
      and non-financial affirmative and negative covenants and limits the amount
      of dividends the Company may declare.  The Company is also required to pay
      a commitment  fee on the unused  portion of its credit line on a quarterly
      basis.  The new loan agreement also provides,  for a one-year period, a $1
      million line of credit to be used for equipment purchases.

   7. LONG-TERM DEBT

      Long-term debt consists of the following (amounts in thousands):

<TABLE>
<CAPTION>
                                                           2000         1999
<S>                                                        <C>         <C>
       Notes, with interest rates between
       4.4% and 6.0%, due at various dates through 2002        90          78


       Ecuadorian bank loans, payable in sucres               ---         165
                                                           -------     ------
                                                               90         243
       Less current portion                                   (44)       (199)
                                                           -------     ------

       Long-term debt                                      $   46      $  44
                                                           =======     ======
</TABLE>


      Additionally,  the  Company  has  unused  lines of credit  under  European
      borrowing arrangements amounting to approximately $582,000.

      The  aggregate  maturities  of long-term  debt at December 31, 2000 are as
      follows (amounts in thousands):

            2001                       $    44
            2002                            31
            2003                            10
            2004                             5
                                       -------
                                       $    90


<PAGE>

8.    INCOME TAXES

      Income before income taxes is comprised of (amounts in thousands):

                           2000              1999              1998

       Domestic         $  4,651          $  3,566          $  2,697
       Foreign               (77)              302             1,706
                        ---------         ---------         ---------

       Total            $  4,574          $  3,868          $  4,403
                        =========         =========         ========


      The  provision  for income  taxes  consists of the  following  (amounts in
      thousands):

                               2000                 1999              1998

       Federal:
         Current           $     1,732          $     1,049        $     966
         Deferred                 (327)                (176)             (93)
       State
         Current                   288                  154              142
         Deferred                  (57)                  (4)              --
       Foreign                      56                   29              129
                           ------------         ------------       ----------

       Total               $     1,692          $     1,052        $   1,144
                           ============         ============       ==========



      The  reconciliation  between  the  Company's  effective  tax  rate and the
      statutory Federal tax rate is as follows:

<TABLE>
<CAPTION>
                                                                2000         1999         1998
<S>                                                            <C>           <C>          <C>
       Statutory Federal tax rate ...................          35.0%         35.0%         35.0%
       Increase (decrease) in taxes resulting from:
       Foreign income - effect of rates differing
       from statutory rates, effect of nontaxable
       exchange gains and losses, and foreign losses
       producing no current benefit .................           1.8          (2.0)        (12.0)
       State taxes, net of Federal income tax benefit           3.3           2.6           2.0
       Foreign tax credits ..........................           0.0          (4.9)         (2.5)
       Other - net ..................................          (3.1)         (3.5)          3.5
                                                               ----          ----          ----

       Effective tax rate ...........................          37.0%         27.2%         26.0%
                                                               ====          ====          ====
</TABLE>


<PAGE>

      Significant   components  of  the   Company's   deferred  tax  assets  and
      liabilities are as follows (amounts in thousands):

                                                        2000             1999
       Current assets (liabilities):
         Inventory capitalization                    $     237        $     223
         Unexpired insurance                              (177)            (179)
         Reserve amounts not currently deductible          210              102
         Other - net                                        59               45
                                                    ------------     -----------
       Total current asset, net                      $     329        $     191
                                                    ============     ===========

       Noncurrent assets:
         Capital lease                               $      39        $      99
         Deferred compensation                             243               38
         Other                                             338              237
         Foreign tax loss carryforwards                    166               25
         Less valuation allowance                         (166)             (25)
                                                    ------------     -----------
       Total noncurrent asset, net                   $     620        $     374
                                                    ============     ===========

      As of  December  31,  2000 and  1999,  the  Company  had a full  valuation
      allowance recorded against its foreign tax loss  carryforwards  related to
      certain Ecuadorean and European subsidiaries.  Management believes that it
      is more  likely  than not that the  remaining  carryforwards  will  expire
      unutilized.

      The total current and noncurrent  amounts  presented above are included in
      other assets (current and noncurrent) in the consolidated balance sheet.

      The  Company  has not accrued  federal  income  taxes on the equity in the
      undistributed  earnings of its  foreign  subsidiaries,  which  amounted to
      approximately  $8,241,000 at December 31, 2000,  because such earnings are
      permanently  reinvested.  It  is  not  practicable  to  estimate  the  tax
      liability that might arise if these earnings were remitted.


<PAGE>


9.    EMPLOYEE BENEFIT PLANS

      The Company has a profit-sharing  plan under which an annual  contribution
      may be paid from  accumulated  profits at the  discretion  of the Board of
      Directors  for the benefit of eligible  employees  upon their  retirement.
      Contributions  to  this  plan by the  Company  amounted  to  approximately
      $417,000,  $329,000  and  $350,000 in 2000,  1999 and 1998,  respectively.
      Additionally,  the plan  allows for all  participants  to defer  between 1
      percent and 15 percent of their salary.  Amounts  deferred are paid to the
      trustee of the plan. The plan does not match employee contributions.

      In 1999, the Company adopted a non-qualified  deferred  compensation  plan
      for  the  benefit  of  certain   eligible   employees.   The  plan  allows
      participants to defer up to 100% of their  compensation.  The Company does
      not contribute into the plan.

      The plan is not an  employee  pension  benefit  plan as defined by Section
      3(2) of the Employment  Retirement  Income Security Act of 1974 ("ERISA"),
      and is not qualified under Section 401(a) of the Internal  Revenue Code of
      1986, as amended (the "Code"). As a result, employee contributions are not
      protected  against risk of loss to the Company.  Due to the fact that this
      is a  non-qualified  plan,  the value of the plan assets are maintained on
      the  Company's   consolidated  balance  sheet  along  with  an  offsetting
      liability to the plan participants. Fluctuations in the fair market values
      of the shares of the  optioned  securities  are  recognized  in the income
      statement as other income and expense,  net,  which is offset by a similar
      change in selling,  general,  and administrative  expense.  The assets and
      liabilities recorded on the Company's  consolidated balance sheet are also
      impacted  by changes in the fair  value of the  investments.  The value of
      plan assets and liabilities recorded in the Company's consolidated balance
      sheet at  December  31,  2000  was  $650,000.  The  value  of  assets  and
      liabilities at December 31, 1999 was not material.

      This  arrangement  does not fall under the scope of either APB Opinion No.
      25,  Accounting  for  Stock  Issued to  Employees  (APB No.  25),  or FASB
      Statement No. 123,  Accounting for Stock Based Compensation (SFAS 123), as
      both of these standards provide guidance for employers  compensating their
      employees by the employer company issuing its own equity instruments.

      Certain  employees of the Company's  Ecuadorian  subsidiary  companies are
      covered by termination and retirement plans  incorporated  under statutory
      requirements of labor laws and collective bargaining agreements.  Included
      in  the  accompanying  consolidated  balance  sheets  are  union  employee
      termination  benefits which approximate  unpaid vested benefits under such
      plans. The amount of benefits to be received by an employee is established
      by the collective  bargaining agreements and is based on length of service
      and compensation. Provisions of approximately $22,000, $27,000 and $54,000
      were charged to income during 2000, 1999 and 1998, respectively.

      The Company  participates  in a  multiemployer  pension plan for the union
      employees  at  the   Northvale,   New  Jersey   facility.   Provisions  of
      approximately  $174,000,  $200,000  and  $174,000  were  charged to income
      during 2000, 1999 and 1998, respectively.


<PAGE>


10.   LEASES

      The  Company  leases its  primary  office  space and plant  facilities  in
      Northvale,  New Jersey  under a long-term  capital  lease  agreement  that
      expires in 2002. During 2000, the Company signed a new lease agreement for
      these  premises  which will begin at the  expiration of the existing lease
      and  expire in 2010.  The  current  and new lease  both  provide  that the
      Company pay all real estate taxes,  maintenance and insurance  relating to
      the  facilities.  The new lease also contains a purchase option subject to
      certain terms and conditions and a five-year renewal option.

      The Company also has operating  lease  agreements for warehouse and office
      space in the United  States  and  Europe.  The  longest  lease  obligation
      extends to 2010.  Certain  leases  contain  renewal  options and generally
      require the  Company to pay other  facility  related  costs such as taxes,
      maintenance  and  insurance.  Rent expense  under these  operating  leases
      amounted  to  $566,000,  $502,000  and  $361,000  in 2000,  1999 and 1998,
      respectively.

      Future minimum lease payment obligations, as of December 31, 2000, for the
      capital lease described above, as well as operating leases, are as follows
      (amounts in thousands):

                                             Capital         Operating
       Year                                   Lease           Leases

       2001                                  $  487           $   786
       2002                                      83             1,098
       2003                                     ---             1,041
       2004                                     ---               940
       2005                                     ---               869
       Thereafter                               ---             3,863
                                             -------          --------

       Minimum lease payments                   570           $ 8,597
                                                              ========
       Less amounts representing interest       (23)
                                             -------

       Capital lease obligation              $  547
                                             =======


<PAGE>


11.   SEGMENT INFORMATION

      The  Company  and  its  subsidiaries   operate  in  two  segments,   as  a
      manufacturer  and  supplier of  structural  core  materials  in  composite
      applications  to various  industries,  and in the seafood  industry,  as a
      shrimp producer and as an importer.  The segments are managed and reported
      separately  because of the difference in products they produce and markets
      they serve. The accounting  policies of the segments are the same as those
      described in the summary of significant  accounting policies.  The Company
      evaluates   performance  based  on  operating  income,   i.e.  results  of
      operations  before  interest,  income taxes and foreign exchange gains and
      losses. There are no intersegment sales.

      No single  customer  provided  more than 10% of the  Company's  revenue in
      2000, 1999 or 1998.

      Information about the Company's operations by segment is as follows:

<TABLE>
<CAPTION>
                                                         (In Thousands)
                                                 2000        1999         1998
       Net sales to unaffiliated customers
<S>                                            <C>         <C>         <C>
       Core materials segment                  $ 63,175    $ 58,938    $ 53,600
       Seafood segment                           25,885      27,089      14,095
                                               ---------   ---------   ---------

       Total net sales                         $ 89,060    $ 86,027    $ 67,695
                                               =========   =========   =========
       Operating income (loss)

       Core materials segment                  $  7,758    $  4,569    $  3,721
       Seafood segment                           (1,927)        976       1,413
                                               ---------   ---------   ---------

       Total operating income                  $  5,831    $  5,545    $  5,134
                                               =========   =========   =========

       Identifiable assets

       Core materials segment                  $ 39,023    $ 35,728    $ 35,105
       Seafood segment                           18,508      17,177      10,972
                                               ---------   ---------   ---------
       Total identifiable assets               $ 57,531    $ 52,905    $ 46,077
                                               =========   =========   =========


       Capital expenditures, net, including
         timberlands and capital leases

       Core materials segment                  $  2,818    $  2,197    $  3,641
       Seafood segment                              590       1,271       1,392
                                               ---------   ---------   ---------
       Total capital expenditures              $  3,408    $  3,468    $  5,033
                                               =========   =========   =========
</TABLE>

<PAGE>


      Information pertaining to the Company's operations in different geographic
      areas is as follows:

<TABLE>
<CAPTION>
                                                                (In Thousands)
                                                    2000             1999             1998

       Net sales to unaffiliated customers
<S>                                               <C>              <C>              <C>
       United States - domestic                   $ 71,534         $ 65,293         $ 49,399
       United States - export                        7,434           11,263           11,289
       Ecuador                                          47               87              131
       Europe                                       10,045            9,384            6,876
                                                  --------         --------         --------

       Total net sales                            $ 89,060         $ 86,027         $ 67,695
                                                  ========         ========         ========


       Identifiable assets

       United States                              $ 27,540         $ 24,781         $ 16,973
       Ecuador                                      24,964           23,957           25,217
       Europe                                        4,978            4,167            3,887
       Japan                                            49              ---              ---
                                                  --------         --------         --------

       Total identifiable assets                  $ 57,531         $ 52,905         $ 46,077
                                                  ========         ========         ========
</TABLE>


<PAGE>


12.   FINANCIAL INSTRUMENTS

      Statement of Financial  Accounting  Standards ("SFAS") 133, Accounting for
      Derivative  Instruments  and Hedging  Activities,  as amended by SFAS 137,
      Accounting for Derivative Instruments and Hedging Activities - Deferral of
      the Effective Date of FASB Statement No. 133, and SFAS 138, Accounting for
      Certain Derivative Instruments and Certain Hedging Activities, was adopted
      by the  Company  on  January 1,  2001.  SFAS 133  requires  that an entity
      recognize all derivatives as either assets or liabilities measured at fair
      value.  Adoption of these new  accounting  standards  will result in a one
      time cumulative after-tax reduction in net income of approximately $35,000
      and other  comprehensive  income  of  approximately  $16,000  in the first
      quarter of fiscal 2001 for the  initial  adoption of SFAS 133, as amended.
      The  adoption  will also  impact  assets and  liabilities  recorded on the
      Company's consolidated balance sheet.

      At December 31, 2000, the Company held forward foreign  currency  exchange
      contracts  for the  purchase of French  francs  with a notional  amount of
      approximately  $900,000.  Realized  gains and losses on  foreign  currency
      instruments, that are hedges of committed transactions,  are recognized at
      the time the underlying transaction is completed. The Company did not have
      any material foreign exchange contracts outstanding at December 31, 1999.

13.      SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

      The following is a summary of quarterly financial data for the years ended
      December  31,  2000 and 1999  (dollars  in  thousands,  except  per  share
      amounts):

<TABLE>
<CAPTION>
                                                  Quarter
                                   -----------------------------------------
                                     1st       2nd       3rd        4th
                                    ----------------------------------------
                       2000
<S>                                  <C>       <C>       <C>         <C>
       Net sales                     $21,225   $23,911   $22,213     $21,711
       Operating income                1,459     1,524     1,266       1,582
       Net income                        765       808       651         658
       Basic and diluted earnings
           per common share            $0.30     $0.32     $0.26       $0.26
                                     =======================================

                       1999

       Net sales                     $18,099   $22,927   $23,724     $21,277
       Operating income                1,079     1,434     1,714       1,318
       Net income                        581       729       834         672
       Basic and diluted earnings
           per common share            $0.23     $0.29     $0.33       $0.27
                                   =========================================
</TABLE>


<PAGE>


14.   SUBSEQUENT EVENTS

      In January  2001,  the Company  signed a new $16.5  million  domestic loan
      facility. See Note 6 for additional information.

      In March 2001, the Company  entered into an agreement  with Jacques,  Jean
      and Bernard Kohn, all stockholders of the Company.  The agreement requires
      the Company to purchase, in five equal installments, the common stock held
      by Bernard Kohn.  The purchases  are subject to the  determination  by the
      Board of Directors that the Company has sufficient  available capital.  If
      the Company  cannot  consummate  the  purchase,  or cause a third party to
      consummate the purchase,  the installments are deferred.  In the event any
      installments are deferred, Bernard Kohn has the right to sell the deferred
      shares in the open market. Purchase of the stock by a third party does not
      relieve the Company from its  obligation  for future  purchases  under the
      agreement.

      The  Company   completed   the  first   purchase  of  66,439   shares  for
      approximately $505,000 in March 2001. The purchase price of the shares for
      all  installments is based on the average closing prices for the stock for
      the 20-day period prior to the purchase date specified in the agreement.

      During the term of the agreement, the Kohn individuals have agreed to vote
      their  shares as a single unit.  The  agreement  also  terminated a voting
      trust that existed among the Kohn shareholders.

                                     ******

<PAGE>

                                                                   Schedule II


                       BALTEK CORPORATION AND SUBSIDIARIES

        FINANCIAL STATEMENT SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
          EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2000
                              Dollars in thousands

<TABLE>
<CAPTION>
                                                           Additions
                                                            Charged
                                          Balance at           to                              Balance
                                          Beginning        Costs and                           at End
         Description                       of Year         Expenses         Deductions         of Year
<S>                                       <C>               <C>               <C>             <C>
YEAR ENDED DECEMBER 31, 2000:
  Allowance for doubtful
    accounts receivable                   $  175            $  129            $   29          $   275
                                          =======           =======           =======         ========

  Inventory                               $  150            $  230            $   --          $   380
                                          =======           =======           =======         ========

YEAR ENDED DECEMBER 31, 1999:
  Allowance for doubtful
    accounts receivable                   $  144            $   66            $   35          $   175
                                          =======           =======           =======         ========

  Inventory                               $  266            $    -            $  116          $   150
                                          =======           =======           =======         ========

YEAR ENDED DECEMBER 31, 1998:
  Allowance for doubtful
    accounts receivable                   $   73            $   74            $    3          $   144
                                          =======           =======           =======         ========

  Inventory                               $   90            $  176            $    -          $   266
                                          =======           =======           =======         ========
</TABLE>