<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.



                                   FORM 10-Q/A



   (MARK ONE)
      [X]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED MARCH 31, 2001
                                       OR
      [  ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE TRANSITION PERIOD FROM ____________ TO ____________


                        COMMISSION FILE NUMBER 000-23855

                            U.S. PLASTIC LUMBER CORP.
                         (Name of issuer in its charter)

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


              NEVADA                                       87-0404343
   (State or other jurisdiction of                      (I.R.S. Employer
    incorporation or organization)                     Identification No.)


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

           2300 W. GLADES ROAD, SUITE 440 W, BOCA RATON, FLORIDA 33431
                                 (561) 394-3511
    (Address and telephone number of principal executive offices and place of
                                    business)

     Check here whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
past 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 [ ]

     The number of shares outstanding of the registrant's common stock as of
April 30, 2001 is 35,099,069 shares.



                                                                          Page 1

<PAGE>

                                    FORM 10-Q

                                      INDEX


<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----

<S>                                                           <C>
             PART I. UNAUDITED FINANCIAL INFORMATION

Item 1. Financial Statements:

Condensed Consolidated Balance Sheets as of March 31, 2001
  and December 31, 2000....................................     3
Condensed Consolidated Statements of Operations for the
  Three Months Ended March 31, 2001 and 2000...............     4
Condensed Consolidated Statements of Cash Flows for the
  Three Months Ended March 31, 2001 and 2000...............     5
Notes to Condensed Consolidated Financial Statements.......     6

Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations......................    12

                    PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................    14
Item 2. Changes in Securities and Use of Proceeds..........    14
Item 6. Exhibits and Reports on Form 8-K...................    15
SIGNATURES.................................................    16
</TABLE>


                           FORWARD LOOKING STATEMENTS

         When used in this Form 10-Q, the words or phrases "will likely result",
"are expected to", "will continue", "is anticipated", "estimate", "projected",
"intends to" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties,
including but not limited to economic conditions, risks associated with our
senior credit facility and our lack of liquidity, changes in laws or
regulations, exposure on providing extended warranties on products, access to
capital, demand for products and services of the Company, dilution, expertise,
newly developing technologies, loss of permits, conflicts of interest in related
party transactions, regulatory matters, environmental liability, the occurrence
of events not covered by insurance, a substantial increase in interest rates,
protection of technology, lack of industry standards, raw material commodity
pricing, increases in energy costs, the ability to receive bid awards, the
inability to implement our growth strategy, operating hazards, seasonality,
inability to retain key employees, the effects of competition, and the ability
of the Company to obtain additional financing. Such factors, which are discussed
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the notes to condensed consolidated financial statements, could
affect the Company's financial performance and could cause the Company's actual
results for future periods to differ materially from any opinions or statements
expressed with undue reliance on any such forward-looking statements, which
speak only as of the date made. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."



                                                                          Page 2

<PAGE>


                  U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES


                     PART I. UNAUDITED FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                  U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                    AT MARCH 31, 2001 AND DECEMBER 31, 2000
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         2001               2000
                                                                    --------------     --------------

<S>                                                                 <C>                <C>
                                               ASSETS
CURRENT ASSETS
  Cash and cash equivalents ...................................     $      546,746     $    2,211,082
  Accounts receivable, net of allowance for doubtful
     accounts of $1,976,123 and $2,375,479, respectively ......         39,437,038         43,763,378
  Inventories .................................................          7,249,278          9,723,390
  Prepaid expenses and other current assets ...................          2,380,879          2,542,126
                                                                    --------------     --------------
          Total current assets ................................         49,613,941         58,239,976
  Property, plant and equipment (net) .........................         99,693,267        100,544,939
  Acquired intangibles (net) ..................................         36,689,033         37,033,919
  Other assets ................................................          6,565,122          4,592,125
                                                                    --------------     --------------
          Total assets ........................................     $  192,561,363     $  200,410,959
                                                                    ==============     ==============

                                LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable ............................................     $   27,081,899     $   27,958,413
  Notes and capital leases payable, current portion ...........         14,422,896         11,535,698
  Accrued expenses ............................................          5,183,202          4,390,344
  Restructuring accrual .......................................          1,060,193          1,149,431
  Other current liabilities ...................................          1,719,341          2,240,721
                                                                    --------------     --------------
          Total current liabilities ...........................         49,467,531         47,274,607
  Notes and capital leases payable, net of current
     portion ..................................................         48,290,212         54,613,509
  Deferred income taxes and other liabilities .................          1,369,376            571,382
  Minority interest ...........................................            196,383            196,383
  Convertible subordinated debentures, net of unamortized
     discount .................................................          7,307,281          7,255,213
  Convertible subordinated debentures -- affiliates, net of
     unamortized discount .....................................          4,823,749          4,757,657
                                                                    --------------     --------------
          Total liabilities ...................................        111,454,532        114,668,751
                                                                    --------------     --------------
STOCKHOLDERS' EQUITY
  Convertible preferred stock, par value $.001; authorized
     5,000,000 shares;
     Series "D" 15%, issued and outstanding ...................              1,187              1,187
     Series "E" 10%, issued and outstanding 1,714,286 and
      1,142,857 respectively ..................................              1,714              1,143
  Common stock par value $.0001, authorized 100,000,000
     shares; issued and outstanding 35,090,994 and
     34,836,594 shares, respectively ..........................              3,509              3,484
  Additional paid-in capital ..................................         99,014,367         97,195,416
  Retained deficit ............................................        (17,110,963)       (11,459,022)
  Accumulated other comprehensive loss:
         Fair value of interest rate swap derivative
         Designated as a cash flow hedge ......................           (802,983)                --
                                                                    --------------     --------------
          Total stockholders' equity ..........................         81,106,831         85,742,208
                                                                    --------------     --------------
          Total liabilities and stockholders' equity ..........     $  192,561,363     $  200,410,959
                                                                    ==============     ==============
</TABLE>


     See accompanying notes to condensed consolidated financial statements.



                                                                          Page 3

<PAGE>

                  U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES


                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                     2001             2000
                                                                 ------------     ------------

<S>                                                              <C>              <C>
Sales, net .................................................     $ 38,636,367     $ 30,404,061
Cost of goods sold .........................................       35,854,531       24,886,713
                                                                 ------------     ------------
          Gross profit .....................................        2,781,836        5,517,348
Selling, general and administrative expenses ...............        5,714,966        5,313,159
Restructuring charge .......................................          182,006               --
                                                                 ------------     ------------
          Operating (loss) income ..........................       (3,115,136)         204,189
Interest and other income ..................................           17,841            3,852
Interest expense ...........................................       (2,584,654)      (1,288,046)
                                                                 ------------     ------------
          Loss before income taxes .........................       (5,681,949)      (1,080,005)
Income tax benefit .........................................          710,244          410,402
                                                                 ------------     ------------
          Net loss .........................................       (4,971,705)        (669,603)
Preferred stock dividend earned ............................         (680,238)              --
                                                                 ------------     ------------
          Net loss attributable to common stockholders .....     $ (5,651,943)    $   (669,603)
                                                                 ============     ============
          Net loss per common share -- Basic and Diluted ...     $      (0.16)    $      (0.02)
                                                                 ============     ============
Weighted average common shares outstanding:
          Basic and Diluted ................................       34,918,105       33,150,849
                                                                 ============     ============
</TABLE>


     See accompanying notes to condensed consolidated financial statements.



                                                                          Page 4

<PAGE>

                   U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                        2001             2000
                                                                    ------------     ------------

<S>                                                                 <C>              <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Loss ....................................................     $ (4,971,705)    $   (669,603)
                                                                    ------------     ------------
  Adjustments to reconcile net cash provided by (used in)
    operating activities:
    Depreciation ..............................................        1,600,808        1,026,207
    Amortization ..............................................          512,676          458,414
    Deferred income tax benefit ...............................         (710,244)        (299,362)
    Amortization of deferred financing and debenture
     discount costs ...........................................          425,543          180,708
    Non cash restructuring charges and asset impairment
     charge ...................................................          182,006               --
    Beneficial conversion feature of convertible
     subordinated debenture ...................................               --          270,946
  Changes in operating assets and liabilities, net of
    acquisitions:
    Accounts receivable .......................................        4,326,340          962,934
    Inventories ...............................................        2,474,112       (2,394,555)
    Prepaid expenses and other current assets .................          476,968         (827,672)
    Other assets ..............................................       (1,676,834)          33,444
    Accounts payable ..........................................         (876,514)          72,485
    Other liabilities .........................................         (743,505)        (673,432)
    Accrued expenses ..........................................          495,498         (299,562)
                                                                    ------------     ------------
         Net cash provided by (used in) operating
           activities .........................................        1,515,149       (2,159,048)
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures for property and equipment .............         (831,636)     (14,660,012)
  Proceeds from the sale of property, plant and equipment .....           82,500               --
  Cash paid for acquisitions, net of cash received ............               --          (38,940)
                                                                    ------------     ------------
         Net cash used in investing activities ................         (749,136)     (14,698,952)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from exercise of warrants and options, net of
    costs .....................................................               --          621,730
  Proceeds from the sale of common stock, net of issuance
    costs .....................................................            5,750               --
  Proceeds from the sale of preferred stock, net of issuance
    cost ......................................................        1,000,000               --
  Proceeds from sale of convertible debentures ................               --        7,500,000
  Advances from (repayment to) affiliates, net ................               --        1,000,000
  Proceeds from notes payable .................................               --       12,476,069
  Payment of deferred financing costs .........................               --         (190,018)
  Payments of notes payable and capital leases ................       (3,436,099)      (4,672,215)
                                                                    ------------     ------------
         Net cash (used in) provided by financing
           activities .........................................       (2,430,349)      16,735,566
                                                                    ------------     ------------
Net change in cash and cash equivalents .......................       (1,664,336)        (122,434)
Cash and cash equivalents, beginning of period ................        2,211,082        1,807,588
                                                                    ------------     ------------
Cash and cash equivalents, end of period ......................     $    546,746     $  1,685,154
                                                                    ============     ============
Supplemental disclosure of cash flow information:
  Cash paid during the period for:
  Interest ....................................................     $  1,835,081     $    842,857
  income taxes ................................................     $      3,983     $      5,100
Capitalized interest ..........................................     $         --     $    476,951
Number of shares issued during the period for non-cash
  transactions:
  Acquisitions and Clean Earth merger .........................               --          839,406
  Compensation -- employees and directors .....................            4,400            4,434
  Settlement -- Royalty Agreement .............................           45,000               --
  Conversion of debentures and preferred stock ................               --          762,465
  Commitment Fee ..............................................          200,000               --
</TABLE>


     See accompanying notes to condensed consolidated financial statements.



                                                                          Page 5

<PAGE>

                   U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  NATURE OF OPERATIONS AND BASIS OF PRESENTATION

NATURE OF OPERATIONS

         U.S. Plastic Lumber Corp. and its subsidiaries (collectively the
"Company") are engaged in the manufacturing of recycled plastic lumber and other
products and environmental remediation services, including recycling of soils
that have been exposed to hydrocarbons and the beneficial reuse of dredge
materials. The Company's plastic lumber customers are located throughout the
United States, although some customers are international. The Company's
environmental remediation, dredge and soil recycling customers are located
primarily in the Northeastern United States.

BASIS OF PRESENTATION

         The Company's condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial reporting and the regulations of
the Securities and Exchange Commission (SEC) for quarterly reporting. The
interim condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K as filed with the SEC for
the year ended December 31, 2000. Management acknowledges its responsibility for
the preparation of the accompanying interim condensed consolidated financial
statements which reflect all adjustments considered necessary, in the opinion of
management, for a fair statement of the results of interim periods presented.
The results of operations for the interim periods are not necessarily indicative
of the results of operations for the entire year. Where appropriate, certain
amounts have been reclassified to conform with the 2001 presentation.

2.  LIQUIDITY AND CAPITAL RESOURCES

         The Company's liquidity and ability to meet its financial obligations
in 2001 will be dependent on, among other things, the Company's ability to
maintain compliance with its debt covenants and obtaining the proceeds from the
Fusion Capital Fund II LLC common stock purchase agreement and/or other sources
of financing. The Company is highly leveraged and during 2000 and the first
quarter of 2001, the Company suffered significant losses from operations,
primarily resulting from the significant expenses incurred in its plastic lumber
division related to the expansion of its manufacturing facilities, the
inefficiencies in the production of certain products, increases in raw material
costs and product returns from certain key customers. The Company's accumulated
deficit totaled $17,110,963 as of March 31, 2001. Since its inception, the
Company has financed its operations through a number of stock and debt issuances
and conversions. During 2000 and the first quarter of 2001, the Company's
primary sources of working capital have been the net proceeds from sales of the
Company's preferred stock, proceeds from its senior credit facility and the
issuance of convertible debentures and direct sales of the Company's products
and services to its customers. The Company was not in compliance with certain
covenant requirements of its Senior Credit Facility and its Master Credit
Facility as of December 31, 2000. The Company received waivers for these
covenant violations as of December 31, 2000 and entered into amendments to the
Senior Credit Facility and Master Credit Facility. The Company is in compliance
with the covenant requirements of the Senior Credit Facility and Master Credit
Facility as of March 31, 2001.

         The Company's material financial commitments relate principally to its
working capital requirements and obligations to make term loan payments on its
Senior Credit Facility of currently $1,250,000 per quarter and increasing to
$2,500,000 in September of 2001, monthly interest payments on the Senior Credit
Facility, lease payments pursuant to certain real property and equipment leases
of approximately $324,000 per month, installment payments for manufacturing
equipment of approximately $244,000 per month, interest payments on the
Company's Subordinated Convertible Debentures of approximately $206,000
quarterly, and dividends on the Company's Series D and Series E Convertible
Preferred Stock, approximately $230,000 quarterly.



                                                                          Page 6

<PAGE>


                   U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



         In addition, the Company will be required to refinance or repay its
Senior Credit Facility on or before April 2, 2002. As of March 31, 2001, the
outstanding balance on this Senior Credit Facility is $39,850,000. The Company
currently does not have the financial resources to retire these debt obligations
in 2002 and the Company will need to obtain new debt or equity capital or sell
certain assets to meet this requirement.


The terms of the Senior Credit Facility also require the Company to raise
$6,500,000 of equity, in increments of $500,000 per month in January and March
2001 and $500,000 per month thereafter until an aggregate of $6,500,000 has been
raised. In December 2000, the Company entered into a common stock purchase
agreement with Fusion Capital Fund II, LLC ("Fusion") pursuant to which Fusion
has agreed to purchase up to $12 million of the Company's common stock (see note
3). Pursuant to the terms of the Agreement with Fusion, the Company may not sell
shares to Fusion until such time as the SEC declares a registration statement
effective which registers for resale the shares Fusion Capital has agreed to
purchase. As of March 31, 2001, the Company had not filed a registration
statement with the SEC to register the resale of these shares. As a result,
there can be no assurance that the Company will be able to obtain such
additional funding. The Company is dependent on Fusion or other sources of
financing to meet its covenant requirements under the Senior Credit Facility. In
May 2001, the Company received a waiver from its Senior Lenders for not raising
the $500,000 of equity in April 2001.


Certain of the Company's debt instruments contain covenants establishing certain
financial covenants and operating restrictions. The Company's failure to comply
with any covenant or material obligation contained in these debt agreements or
any of the Company's other debt agreements, absent a waiver from the lenders,
would result in an event of default which could accelerate debt repayment terms
under the debt agreements. Due to various cross-default provisions contained
within certain of the Company's credit agreements, an event of default under
certain of our senior debt agreements could accelerate debt repayment terms
under certain other credit agreements, all of which would have a material
adverse affect on the Company's liquidity and capital resources.

Capital requirements relating to the implementation of the Company's business
plan have been and will continue to be significant. The Company believes that
its ability to generate cash from operations is dependent upon, among other
things, increased demand for its products and services and the successful
development of direct marketing, expanded manufacturing capabilities and product
distribution capabilities. There can be no assurance that the Company will have
sufficient capital resources to permit the Company to continue implementation of
its business plan.


While there can be no assurances, the Company believes its cash flows from
operations will satisfy its liquidity requirements in 2001. However, the Company
is seeking additional sources of financing to supplement its cash flow
requirements. Although the Company believes that it will be able to secure
additional financing in the near future, there can be no assurance that any
additional financing will be available to the Company on acceptable terms, or at
all. If the Company does not comply with its covenants contained within its debt
agreements in 2001, or if adequate cash flows from operations and funds
available from the capital markets are not available to finance its operations
and retire its debt obligations as they become due, the Company may be required
to significantly curtail its operations and the Company's ability to continue as
a going concern would be impaired.


3.       CAPITAL STOCK

SERIES E CONVERTIBLE PREFERRED STOCK

         During February 2001 and March 2001, the Company issued a total 571,429
shares of its Series "E" Preferred Stock to the Stout Partnership in exchange
for a payment to the Company of $500,000 on each of the aforesaid dates. The
stock pays a monthly cash dividend at an annual rate of 10%. Each share of
Preferred Stock is convertible into one share of the Company's common stock at
the option of the holder, subject to certain rights of the Company. The Company,
at it's sole option, can redeem the Preferred Stock at 110% of the initial
purchase price in cash prior to December 31, 2001. In addition, if the common



                                                                          Page 7



<PAGE>



                   U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




stock of the Company is trading at an average closing price of $1.75 per share
or higher for 20 consecutive trading days at any time prior to March 1, 2002 the
Company has the right to require conversion of the Preferred Stock into common
stock. Otherwise, the Preferred Stock automatically converts into common stock
on March 1, 2002.


FUSION CAPITAL FUND II


         On December 7, 2000, the Company has entered into a common stock
purchase agreement with Fusion pursuant to which Fusion agreed to purchase up to
$12.0 million of the Company's common stock in two tranches with each tranche
representing $6.0 million of common stock. The $6.0 million of common stock
purchasable under the first tranche of the common stock purchase agreement is to
be purchased over a twelve-month period, subject to a 6 month extension or
earlier termination at the Company's discretion. The selling price of the shares
will be equal to the lesser of (1) $15.00 or (2) a price based upon the future
market price of the common stock without any fixed discount to the market price.
Pursuant to the terms of the Agreement with Fusion, the Company may not sell
shares to Fusion until such time as the SEC declares a registration statement
effective which registers for resale the shares Fusion has agreed to purchase.
As of March 31, 2001, the Company had not filed a registration statement with
the SEC to register the resale of these shares.


         On March 2, 2001 under the terms of the common stock purchase
agreement, Fusion was issued 200,000 shares of the Company's common stock as a
commitment fee. Unless an event of default occurs, these shares must be held by
Fusion until the common stock purchase agreement has been terminated.

4.       NOTES AND CAPITAL LEASES PAYABLE

         On March 15, 2001, the Company entered into a Waiver and Second
Amendment to the Senior Credit Facility Agreement ("Waiver and Second
Amendment") with our senior lenders, Bank of America, LaSalle National Bank and
Union Planters Bank, in which they agreed to waive past defaults on the
Company's senior credit facility and the Waiver and First Amendment. The Waiver
and Second Amendment requires that the Company maintains certain financial
conditions and operating profit within certain defined parameters including
ratios involving earnings before interest, taxes, depreciation and amortization
and interest expense. In addition, the Waiver and Second Amendment contains a
provision which requires the Senior Credit Facility be refinanced or paid in
full by April 2002.

         On March 30, 2001, the Company entered into an Amendment of the Master
Credit Facility with GE Capital to waive the Tangible Net Worth Covenant for the
4th Quarter 2000 and amended the covenant for each quarter of 2001.
Additionally, the Company has agreed to accelerate a portion of its principal
payments.

5.       CONVERTIBLE SUBORDINATED DEBENTURES


         On February 20, 2001, the Company received a Put Notice from the
Halifax Fund, L.P. relative to the 5% Convertible Debentures issued on February
5, 2000 in the amount of $7,500,000. Pursuant to the Put Notice, the Company had
the option to either (a) repurchase the Outstanding Principal Amount plus all
accrued, unpaid interest for a cash price equal to 110% thereof, or (b) have the
Minimum Floating Conversion Price permanently re-set to zero. Prior to the Put
Notice, the Minimum Floating Conversion Price was $8.25 per share; however,
since the stock price of the Company's common stock had traded for less than
$8.25 per share for ten consecutive trading days ending February 16, 2001,
Halifax Fund L.P. had this right of re-set or buy-out. The Company did not elect
to option (a); therefore the Minimum Floating Conversion Price has permanently
re-set to zero. The effects of re-setting the Minimum Floating Conversion Price
to zero is that upon conversion of the Fiscal 2000 Debentures into common stock,
the price at which the common stock of the Company will be issued to Halifax
shall be equal to the lowest trading price of the common stock on the principal
trading market for such common stock (which is currently the NASDAQ National
Market) during the four (4) trading days prior to but not including the holder's
conversion date. The right of the debenture holder to convert the debenture to
common stock is limited in that the holder may not convert the debenture if
upon such conversion the holder will become a beneficial owner of more than
9.9% of the total issued and outstanding shares of the Company's common stock.
If the holder elects to convert and the entire debenture cannot be converted
due to this limitation, the Company must settle in cash that portion of the
debenture which cannot be converted to stock when the debenture matures in
February of 2005, at 110% of the sum of the outstanding balance of the
debenture that is in excess of the limitation and accrued but unpaid interest
and default payments.




                                                                          Page 8

<PAGE>




                   U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



6.       RESTRUCTURING CHARGE


         In the fourth quarter of 2000, the Company committed to a plan to
restructure and to consolidate some of its smaller plants within the plastic
lumber division. As a result, the Company closed one and idled two of its small
operations and plans to close a fourth facility by the end of the second quarter
of 2001. As a result, the Company recorded a charge of $3,417,000 in the fourth
quarter of 2000 for equipment impairment and lease termination costs in
connection with the restructuring. As of December 31, 2000, the Company had
accrued $1,098,000 in connection with lease termination costs and anticipates
making lease termination payments throughout 2001 as it completes its
restructuring plan. During the three months ended March 31, 2001, the Company
paid approximately $183,000 in lease termination payments and charged this
amount against the accrual. As of March 31, 2001, the Company has approximately
$915,000 remaining in its restructuring accrual for lease termination payments.


         During 2000 and early January 2001, the Company eliminated
approximately 300 employees as part of this restructuring plan. The severance
component of the restructuring plan was communicated to the employees in early
January 2001. As a result, the Company recorded a charge of approximately
$182,000 during the three months ended March 31, 2001 in connection with
severance. Approximately $145,000 of this charge remains unpaid and accrued as
of March 31, 2001.

7.       SEGMENT REPORTING

         The Company has two reportable operating segments. The Plastic Lumber
Division manufactures structural and non-structural plastic lumber and a variety
of accessory products such as park and site amenities. The Environmental
Recycling Division provides environmental recycling services including
environmental construction services, upland disposal of dredge materials,
beneficial re-use of industrial wastes and on-site recycling services. In the
first quarter of 2001 the Plastic Lumber Division recorded a $182,000
restructuring charge. The operating results of the two segments excluding the
aforementioned restructuring charge are as follows (in thousands):


<TABLE>
<CAPTION>
                                                              FOR THE THREE MONTHS
                                                                ENDED MARCH 31,
                                                              --------------------
                                                                2001        2000
                                                              --------    --------

<S>                                                           <C>         <C>
Sales, net:
  Environmental recycling...................................  $22,980     $13,763
  Plastic Lumber............................................   15,656      16,641
                                                              -------     -------
          Total.............................................  $38,636     $30,404
                                                              =======     =======
Operating (Loss) Income:
  Environmental recycling...................................  $  (279)    $  (299)
  Plastic Lumber............................................   (1,950)      1,188
  Corporate.................................................     (704)       (685)
                                                              -------     -------
          Total.............................................  $(2,933)    $   204
                                                              =======     =======
Depreciation and Amortization:
  Environmental recycling...................................  $   933     $   664
  Plastic Lumber............................................    1,072         706
  Corporate.................................................      108         114
                                                              -------     -------
          Total.............................................  $ 2,113     $ 1,484
                                                              =======     =======
Capital Expenditures:
  Environmental recycling...................................  $   667     $ 1,316
  Plastic Lumber............................................      165      13,341
  Corporate.................................................        0           3
                                                              -------     -------
          Total.............................................  $   832     $14,660
                                                              =======     =======
</TABLE>




                                                                          Page 9

<PAGE>

                   U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The identifiable assets of the respective segments is set forth below
(in thousands):


<TABLE>
<CAPTION>
                                               MARCH 31,   DECEMBER 31,
                                                 2001          2000
                                               ---------   ------------
<S>                                            <C>         <C>
Identifiable assets:
  Environmental recycling....................  $ 88,776      $ 92,784
  Plastic lumber.............................    99,642       103,222
  Corporate..................................     4,143         4,405
                                               --------      --------
          Total..............................  $192,561      $200,411
                                               ========      ========
</TABLE>



8.       DERIVATIVES



 In June 1998, the Financial Accounting Standards Board issued SFAS No. 133. In
June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an Amendment of SFAS 133". SFAS No.
133 and SFAS No. 138 standardize the accounting for derivative instruments,
including certain derivative instruments embedded in other contracts. Under the
standards, entities are required to carry all derivative instruments on the
balance sheet at fair value. The accounting for changes in the fair value (i.e.,
gains or losses) of a derivative instrument depends on whether it has been
designated and qualifies as part of a hedging relationship and, if so, on the
reason for holding it. If certain conditions are met, entities may elect to
designate a derivative instrument as a hedge of exposures to changes in fair
values, cash flows, or foreign currencies. If the hedged exposure is a fair
value exposure, the gain or loss on the derivative instrument is recognized in
earnings in the period of change, together with the offsetting loss or gain on
the hedged item attributable to the risk being hedged. If the hedged exposure is
a cash flow exposure, the effective portion of the gain or loss on the
derivative instrument is reported initially as a component of other
comprehensive income (outside earnings), and subsequently reclassified into
earnings when the forecasted transaction affects earnings. Any amounts excluded
from the assessment of hedge effectiveness, as well as the ineffective portion
of the gain or loss are reported in earnings immediately. If the derivative
instrument is not designated as a hedge, the gain or loss is recognized in
earnings in the period of change.



As part of its overall interest rate risk management activities, the Company
utilizes interest rate related derivatives to manage its exposure to various
types of interest rate risks. The Company does not speculate using derivative
instruments.



The Company's risk management policies emphasize the management of interest rate
risk within acceptable guidelines. The Company's objective in maintaining these
policies is to limit volatility arising from changes in interest rates. Risks to
be managed are primarily cash flow risks. Utilization of derivative financial
instruments provides a valuable tool to assist in the management of these risks.



The Company is potentially exposed to interest rate cash flow risk due to loans
under its Senior Credit Facility whose interest payments are based on floating
rate indices. The Company continually monitors changes in these exposures and
their impact on its risk management activities. The Company has entered into
interest rate swap agreements under which the Company pays a fixed rate of
interest and receives a floating rate of interest over the term of the interest
rate swap agreement without the exchange of the underlying notional amounts.
These agreements allow the Company to offset the variability of floating rate
loan interest with the variable interest payments due on the interest rate
swaps. The Company assesses the effectiveness of these hedges by comparing the
timing, frequency, and magnitude of changes in its interest rate to that of the
interest rate referenced in the swap agreements, and no portion of the hedging
instruments' gain or loss is excluded from the assessment of hedge
effectiveness.



Under SFAS No. 133 and SFAS No. 138, changes in the fair value of interest rate
swaps designated as hedges of the variability of cash flows associated with
floating rate debt are reported in other comprehensive income. These amounts are
subsequently reclassified into interest income as a yield adjustment of the
hedged loans.



                                                                         Page 10

<PAGE>



                   U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




The Company adopted SFAS No. 133 and SFAS No. 138 on January 1, 2001. In
accordance with the transition provisions of SFAS No. 133, the Company recorded
a net-of-tax cumulative-effect loss of $453,615 in accumulated other
comprehensive income to recognize at fair value an interest-rate swap derivative
that is designated as a cash-flow hedging instruments. As of March 31, 2001, the
net-of-tax fair value of these derivatives carried as a component of other
comprehensive income was $802,983.


During the three months ended March 31, 2001, no gain or loss was recognized as
a result of the ineffectiveness of the cash flow hedging instruments. In
addition, the cash flow hedge was assumed to be 100% effective over the next
twelve months, thus the Company does not anticipate reclassifying into earnings
any gains or losses currently within Accumulated Other Comprehensive Income.

During the three months ended March 31, 2001, no gains or losses were
recognized into earnings as a result of the discontinuance of the cash flow
hedge. However, the interest rate swap agreements expire in March of 2003, and
the Senior Credit Facility is required to be refinanced or repaid in July of
2002. At that time, the cash flow hedge will be discontinued. The Company
cannot determine at this time the amount of gains or losses that will be
recognized into earnings as a result of the discontinuance of the hedge.


9.       COMPREHENSIVE INCOME



Accumulated other comprehensive loss consists of changes in the fair value of
the Company's interest rate swap derivatives (see Note 8).



<TABLE>
<S>                                      <C>
Balance at December 31, 2000                   --
Transition adjustment for
interest rate swap derivative
designated as a cash flow hedge          (453,615)
                                         --------
Change in fair value of
interest rate swap derivative            (349,368)
                                         --------
Balance at March 31, 2001                (802,983)
</TABLE>




                                                                         Page 11

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

         Cash and cash equivalents totaled $547,000 at March 31, 2001, a
decrease of $1,664,000 from the $2,211,000 at December 31, 2000. Cash provided
by operating activities amounted to $1,515,000 for the first three months of
2001 while cash used in operating activities for the comparable period in 2000
amounted to $2,159,000. The change is primarily due to lower receivable and
inventory balances offset by increased net losses.

         Cash used in investing activities was $749,000 in the first three
months of 2001, a decrease of $13,950,000 from the prior year. The decrease is
primarily due to reduced capital expenditures in 2001.

         Cash used in financing activities totaled $2,430,000, including
$3,436,000 of principal payments on existing debt offset by $1,000,000 in net
proceeds from the issuance of convertible preferred stock (see Note 3 to the
Condensed Consolidated Financial Statements).

         At March 31, 2001, the Company had net working capital of $146,000
including cash and cash equivalents totaling $547,000, compared to net working
capital of $10,965,000 including cash and cash equivalents of $2,211,000 at
December 31, 2000. The reduction is primarily due to net losses and applying the
net cash provided by operating assets and liabilities of $4,559,000 towards
reducing the long term debt and funding capital expenditures. In addition, the
current portion of long term debt increased by $2,887,000, offset by an increase
in accrued expenses in 2001.

         Capital expenditures in the first three months of 2001 amounted to
$832,000, primarily to expand capacity at the Environmental Recycling Division.
The Environmental Recycling Division made capital expenditures in 2000 for plant
and equipment totaling $1,316,000 and incurred deferred dredging costs totaling
$420,000. In 2000, the Plastic Lumber Division made machinery and equipment
purchases totaling $13,341,000 primarily to expand capacity at the California,
Illinois and Florida manufacturing facilities. The Company also used $39,000 of
cash to acquire certain net assets of Baron Enterprises, Inc. which had plant
and equipment valued at $3,097,000 and equipment leases thereon totaling
$4,167,000.

         The Company's liquidity and ability to meet its financial obligations
in 2001 will be dependent on, among other things, the Company's ability to
maintain compliance with its debt covenants and obtaining the proceeds from the
Fusion Capital Fund II LLC common stock purchase agreement or other sources of
financing. See Notes 2 and 3 to the Condensed Consolidated Financial Statements.

         Capital requirements relating to the implementation of the Company's
business plan have been and will continue to be significant. The Company
believes that its ability to generate cash from operations is dependent upon,
among other things, increased demand for its products and services and the
successful development of direct marketing, expanded manufacturing capabilities
and product distribution capabilities. There can be no assurance that the
Company will have sufficient capital resources to permit the Company to continue
implementation of its business plan.

         The Company has suffered recurring losses from operations, primarily
resulting from the significant expenses incurred in the establishment of its
manufacturing and marketing organization. As of March 31, 2001, the Company's
accumulated deficit totaled $17,110,963. Since its inception, the Company has
financed its operations through a number of stock and debt issuances and
conversions. The Company believes its cash flows from operations will satisfy
its cash requirements in 2001, however, the Company is seeking additional
sources of financing to supplement its cash flow requirements.

         In November of 2000, the Company retained Bank of America Securities
("BAS") to explore and evaluate strategic alternatives for the Company which
could include the possible sale of the Company's Environmental Recycling
Division, Clean Earth Inc. ("CEI"). The Company has held discussions with
prospective buyers who have expressed various levels of interest in CEI,



                                                                         Page 12

<PAGE>


however, no agreement has been reached with any of the buyers and there can be
no assurances that an agreement will be reached. Proceeds from the sale of CEI,
if it occurs, would be used to first pay down the Company's Senior Credit
Facility. Any excess proceeds would be applied to certain other debt and provide
working capital.


         If the Company does not comply with its covenants contained within its
debt agreements in 2001, or if adequate funds are not available to finance its
operations and retire its debt obligations as they become due, the Company may
be required to significantly curtail its operations and the Company's ability to
continue as a going concern would be impaired.

INTERIM RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000

         Net sales for the Company in the first quarter of 2001 were
$38,636,000, an increase of $8,232,000, or 27%, over the first quarter of 2000.
Plastic Lumber Division sales decreased from $16,641,000 to $15,656,000 as
compared to same quarter last year. The decrease was a result of exiting the
lower margin resin trading business and increasing the internal use of its
recycled resin material which was previously sold to outside customers. The
Environmental Recycling Division sales increased by 67% to $22,980,000 due to
the start-up of previously awarded major contracts, the full online production
of Clean Earth of Philadelphia (formerly Soil Remediation of Philadelphia) and
improved weather conditions versus the same period in 2000.

         Gross profit in the first quarter 2001 decreased by $2,736,000, or 50%,
as compared with the first quarter of 2000. Gross Profit as a percent of sales
in the Plastic Lumber Division decreased in the first quarter from 23% in 2000
to 5% in 2001. The decrease was attributable to higher material costs due to the
increased price of petroleum products and the result of traditionally lower
quarter volumes compared to the Division's total manufacturing capacity. Further
increases in the price of oil and oil-based products, which impact raw material
costs, could adversely effect gross profits. The Environmental Recycling
Division Gross Profit increased 18% to $2,049,000 in 2001 from $1,733,000 in
2000. As a percent of sales the Gross Profit decreased from 13% in 2000 to 9% in
2001. The decrease is a result of higher energy costs experienced at the
Divisions thermal treatment facilities and increased costs due to the start-up
of certain long-term contracts.

         Selling, general and administrative expenses ("SG&A) increased by
$402,000 in the first quarter of 2001, primarily due to increases in
administrative support for the major contracts at the Environmental Recycling
Division. As a percentage of net sales, SG&A decreased to 15% in 2001 from 18%
in 2000.

         The first quarter of 2001 produced an operating loss of $2,933,000
before restructuring charges as compared to operating income of $204,000 for the
comparable period in 2000, primarily due to the decline in gross profit margins
at both divisions. Operating loss decreased by $20,000 at the Environmental
Recycling Division and increased by $3,138,000 at the Plastic Lumber Division,
excluding the restructuring charge of $182,000.

         Interest expense increased by $1,297,000 for the first quarter of 2001,
mainly due to higher debt levels in 2001 as compared to 2000 and higher mix of
interest rates on the overall debt in the first quarter 2001 as compared to
first quarter 2000.

         As a result of the losses incurred in the first quarter of 2001, income
tax benefit was $710,000 as compared to a benefit of $410,000 in 2000.

SEASONALITY

         The Company experiences a seasonal slow down during the winter months
because its environmental operations are located in the Northeast United States
where adverse weather and normal ground freezing can impact the Company's
performance. Additionally, sales of certain plastic lumber products slow
significantly in the winter months.



                                                                         Page 13

<PAGE>




RECENTLY ISSUED ACCOUNTING STANDARDS

         In June, 1998 the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS No. 133"), as amended, which establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
The Company adopted SFAS No. 133 during the fiscal quarter ending March 31, 2001
and there was no material impact to the Company's financial statements.


PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         From time to time, the Company is involved as plaintiff or defendant in
various legal proceedings arising in the normal course of its business. While
the ultimate outcome of these various legal proceedings cannot be predicted with
certainty, it is the opinion of management that the resolution of these legal
actions should not have a material effect on the Company's financial position,
results of operations or liquidity.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         Issuances of common shares during the three months ended March 31, 2001
are listed in the following paragraphs.

         200,000 shares of Common Stock were issued as a result of a commitment
fee relative to a financing of the Company.

         5,000 shares of Common Stock were issued as a result of the exercise of
stock options.


         45,000 shares of Common Stock were issued in settlement of litigation.


         4,400 shares were issued to directors as compensation for services
rendered in 2000.

         The Common Stock underlying the stock options was previously registered
with the SEC. The Common Stock issued pursuant to the conversion of debentures
has been registered through the filing of a Form S-3 that was deemed effective
by the SEC on May 14, 1999.

         All of the other transactions were not registered under the Securities
Act of 1933 in reliance on the exemption from registration in Section 4(2) of
the Act, as transactions not involving any public offering. These offerings were
completed without any general or public solicitation. In each case the offering
was made to a very limited number of officers, directors and shareholders of the
companies being acquired or to independent consultants or employees of the
Company. The independent consultants, officers, directors and shareholders who
participated in the private placements had strong knowledge and experience in
business matters as well as pre-existing business relationships with the
Company. The knowledge and experience of these individuals enabled them to
evaluate the risks and merits of the investment. The securities issued in all of
the foregoing transactions were issued as restricted securities and the
certificates were stamped with restrictive legends to prevent any resale without
registration under the Act or in compliance with an exemption from registration.

         The cash proceeds from the exercise of stock options were used for
general corporate purposes.



                                                                         Page 14

<PAGE>



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits

         (b)      Reports on Form 8-K

                  On January 10, 2001 the Company filed a Report on Form 8-K to
         report a default on its credit agreement with Bank of America.



                                                                         Page 15

<PAGE>
                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



January 17, 2002     /s/ John W. Poling
----------------     ---------------------------------------------------
    Date             John W. Poling,
                     Chief Financial Officer




                                                                         Page 16