_______________

_______________

_______________

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 ¨

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. ¨

The issuer's revenues for its most recent fiscal year was $45,704,940.

The aggregate market value of the voting common equity held by non-affiliates of the registrant on February 26, 1999 based on the average bid and asked price on such date, being $8.00 per share, was $110,467,568. The aggregate market value of the common stock underlying the preferred stock held by non-affiliates of the registrant on February 26, 1999 was $16,177,728.

The number of shares outstanding of the registrant's common stock as of February 26, 1999 is 20,299,535.

PART III: Portions of the Registrant's definitive Proxy Statement relating to its 1999 Annual Meeting of Stockholders which will be filed with the Commission within 120 days after the end of the registrant's fiscal year. Certain exhibits are incorporated by reference to the Registrants' Registration Statements on Form SB-2 and Amendments thereto filed with the Securities and Exchange Commission on February 11, 1998 and July 22, 1998.

Transitional Small Business Disclosure Format (check one): Yes ¨ No x

U.S. Plastic Lumber Corporation (the "Company"), a Nevada Corporation, is a manufacturer and marketer of recycled plastic lumber products and a provider of environmental recycling services. It was incorporated in June 1992. In March 1996, when the Company acquired Earth Care Global Holdings, Inc. ("Earth Care") as a wholly owned subsidiary, through the acquisition of all the issued and outstanding stock of Earth Care in a reverse merger stock for stock exchange (the "Acquisition") it changed its name from Educational Storybooks International, Inc. to U.S. Plastic Lumber Corporation.

The Company has two distinct business lines. One operation, U.S. Plastic Lumber Ltd., manufactures structural and non-structural plastic lumber and fabricates a variety of accessory products, such as park and site amenities, made from 100% recycled high density polyetheylene. As a result of the recent acquisition of the Eaglebrook companies, the Company now also manufactures a composite product made from plastic and wood fiber in addition to plastic sheet products for the packaging industry. The second operation, Clean Earth, Inc., provides environmental recycling services including fixed based plants providing thermal desorption and bioremediation, environmental construction services, upland disposal of dredge materials, beneficial re-use of industrial wastes, and on-site recycling services.

Within the plastic lumber division, the Company owns and operates seven manufacturing, processing and fabrication facilities in the U.S. The primary product produced in five of these plants is plastic lumber profiles made from recycled plastic waste. Recycled plastic lumber is manufactured in a variety of colors, profiles and shapes including standard lumber dimensions and many custom engineered profiles and shapes. The sixth plant is a fabrication facility which manufactures value-added products made from the Company's recycled plastic lumber. The seventh plant is a recycled plastic processing facility which includes washing, grinding and pelletizing of post consumer and post industrial plastic waste. The Eaglebrook operation also provides the Company with a plastic processing facility. Some of this material is used to supply the raw material needs of the Company's lumber manufacturing facilities. Plastic lumber's principal intended use is as an environmentally friendly and non-toxic alternative to pressure treated lumber and rain forest hardwoods, which is suitable for and provides superior performance in most outdoor applications.

Within the environmental operations, the Company operates three facilities. The first plant treats and recycles soil that has been contaminated with petroleum hydrocarbons and similar compounds through a process known as thermal desorption. The Company's second plant treats and recycles soil through a process which is bio-organic in nature. Finally, the Company has a plant that recycles oils, solvents and heavy metal contaminated waste.

U.S. Plastic Lumber Ltd. is comprised of two wholly owned subsidiaries: Eaglebrook Plastics, Inc. and Eaglebrook Products, Inc.

The Company's plastic lumber operation manufactures plastic lumber from recycled waste plastic, and in some instances plastic composite lumber with additives including fiberglass, to produce a high quality, long lasting alternative to pressure treated lumber that provides superior performance in outdoor uses and is suitable for most nonstructural and structural applications and other products with wood fiber as an additive. The Company has a license to use a patented technology and also owns two patents to manufacture structural plastic lumber. By producing a high quality recycled plastic lumber product, the Company conserves natural resources by reducing the need for lumber products made from wood and at the same time reduces the amount of plastic waste going into landfills while providing a longer lasting, useful product. The Company's plastic lumber products are intended as an excellent replacement for pressure treated lumber, which is injected with toxic chemicals to retard decay and insect infestation. Plastic lumber is not subject to decay or insect infestation and so will outlast wood, especially in applications exposed to moisture. Recycled plastic lumber is environmentally friendly in that it eliminates potential pollution from leaching of such toxic chemicals into the environment.

Clean Earth, Inc. operates plants in New Castle, Delaware, Carteret, New Jersey and Kearny, New Jersey. It also owns an environmental construction company: Integrated Technical Services, Inc. (ITS), in Winslow, New Jersey. Clean Earth, Inc. also owns Consolidated Technologies, Inc. (CTI) which provides beneficial re-use of dredge materials and is an important factor to the Company's plans to bid on major dredge disposal contracts.

The Company's Clean Earth operation, which offers environmental recycling services, operates several subsidiaries. Clean Earth of New Castle, Inc. (CENC) operates a low temperature thermal desorbtion treatment plant that ensures that contaminated soil is treated in accordance with local, state and federal regulations. This thermal treatment process removes petroleum hydrocarbons from the soil and has been recognized by federal and state agencies (including Delaware, New Jersey, New York, Maryland and Pennsylvania) as a cost effective technology. Contaminated solids, soils and construction debris are recycled and reused in construction and industrial applications. The Company's recycling center in New Castle, Delaware is in a prime location for servicing the Northeast and Mid-Atlantic regions, where extensive remodeling and rebuilding of infrastructure and abandoned industrial property is ongoing. This division also operates Carteret Biocycle Corp., (CBC) a bioremediation plant located in Carteret, NJ, which also removes petroleum hydrocarbons from soil. The plant is similar to the CENC facility except that its process involves bio-organic destruction of petroleum hydrocarbons whereas the CENC facility uses low temperature thermal desorbtion to remove petroleum hydrocarbons from the soil. The Clean Earth division also has a subsidiary, S & W Waste, Inc. which is involved in the recycling and beneficial re-use of industrial wastes. The plant is a permitted RCRA facility. The remaining environmental recycling subsidiaries, Integrated Technical Services, Inc. and Consolidated Technologies, Inc., are involved in beneficial re-use of waste products, upland re-use of dredge materials in strip mines and brownsfield properties, environmental construction services, and on-site recycling services.

When used in this Annual Report, 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, changes in laws or regulations, the Company's history of operating losses, demand for products and services of the Company, access to capital, dilution, expertise, Year 2000 risks, newly developing technologies, loss of permits, conflicts of interest and related party transactions, regulatory matters, protection of technology, environmental concerns, ability to implement Company's growth strategy, seasonality, operating hazards and insurance coverage, lack of industry standards, raw material commodity pricing, the ability to receive bid awards, the effects of competition and the ability of the Company to obtain additional financing. Such factors, which are discussed in "Risk Factors," "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the notes to 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 "Risk Factors", "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

On January 28, 1999, the Company acquired its largest competitor in the recycled plastic lumber industry, Eaglebrook Plastics, Inc. ("Plastics") and Eaglebrook Products, Inc. ("Products") with cash, a convertible debenture and the issuance 1,668,025 shares of the common stock of the Company. Plastics operates a recycled plastic processing plant including the washing, grinding and pelletizing of post-consumer and post-industrial plastic waste and providing the raw material for many of the manufacturing operations of the Company. Products is a manufacturer of recycled plastic lumber and composite plastic lumber utilizing an automated continuous flow extrusion process with vacuum calibration forming technology similar to that in the other manufacturing plants owned by the Company.

The special products and additional dimensional lumber capacity complement the Company's existing products and provides the Company with a dominant manufacturing capacity in the industry. This acquisition is important to the Company due to a number of factors: (i) it provides the Company with the status of being the largest manufacturing of recycled plastic lumber in the industry; (ii) it provides the Company with a product line that management of the Company believes will provide the Company with significant inroads into the alternative wood market, aside from 100% recycled plastic products; (iii) it provides significant vertical integration aspects relative to plant consolidation, increased purchasing power and greater efficiency in operations; (iv) it provides a top-notch management team to manage the entire plastic lumber division of the Company; (v) it increases the distribution network of the Company; and the Company believes it will generate strong cash flow and operating profits. The Eaglebrook companies had gross sales in 1998 of $22,145,000 before $1,706,000 of intercompany eliminations with operating income of $1,325,000. See "Recent Sales of Unregistered Securities for the Last Three Years" for additional information.

On January 7, 1999, the Company executed a contract to acquire the all of the stock of Brass Investment Co. ("Brass"), which owns all the stock of Soil Remediation of Philadelphia ("SRP") and Allied Waste, Inc. ("AWI"). SRP operates a soil remediation facility in Philadelphia, PA which is very similar to the Company's soil remediation facility in New Castle, DE and has been a competitor of the Company. AWI provides environmental services which are very similar to that provided by the Company environmental services division. The Company signed a Management Contract on January 7, 1999 taking over all responsibility for day to day management and financial control of SRP and AWI as of that date. Unaudited sales of SRP and AWI, prior to intercompany eliminations, for year ended December 31, 1998 were $14,922,000 with unaudited net income of $2,025,000. The Company finalized its transaction with Brass on or about March 18, 1999. The Company purchased Brass for cash plus 1,000,000 shares of the Company's common stock plus 1,500,000 warrants to purchase the Company's common stock.

In March 1996, the Company entered into an Agreement and Plan of Reorganization with Earth Care Global Holdings, Inc. ("Earth Care"), a manufacturer and marketer of recycled plastic products. Pursuant to the Agreement, the Company effected a reverse split of its common stock on a 1 for 16 basis, and then issued 4,196,316 post split shares of its authorized but previously unissued common stock to acquire all the issued and outstanding stock of Earth Care in a stock for stock exchange (the "Acquisition") which was intended to be a tax free reorganization under Section 368(a) of the Internal Revenue Code. See "Certain Transactions" for additional information.

In April 1996, the Company acquired all of the assets of DuraTech Industries, a manufacturer of recycled plastic lumber, recycled plastic shapes and value added products located in Lake Odessa, Michigan since 1986. This acquisition doubled the Company's recycled plastic lumber sales at that time.

In December 1996, the Company completed a reverse triangular merger with Clean Earth, Inc.. ("Clean Earth"). Clean Earth has been in operation since 1991, and has treated over 600,000 tons of soil and construction debris that was contaminated with petroleum hydrocarbon wastes, such as fuels, lubricating oils, tars and gasoline. Clean Earth, Inc. now operates all of environmental subsidiaries of the Company. See "Certain Transactions" for additional information.

In January 1997, the Company acquired Recycled Plastics Industries, Inc. (RPI), located in Green Bay, Wisconsin. RPI, formed in 1989, is a manufacturer of specialty profile recycled plastic lumber products. RPI's production process utilizes an automated continuous flow extrusion process with vacuum calibration forming technology.

In February 1997, the Company acquired Advanced Remediation and Disposal Technologies, Inc. (ARDT). ARDT is engaged in environmental construction and clean up of contaminated industrial sites primarily involving water and soils. On December 31, 1997, ARDT was merged into another wholly-owned subsidiary of the Company, Integrated Technical Services, Inc., due to the similarity in services and proximity of operations to one another.

In March 1997, the Company acquired Environmental Specialty Plastics, Inc. (ESP), a marketing, fabrication and distribution company of recycled plastic products in Guasti, California. ESP also manufactures custom signs out of recycled plastic lumber utilizing in house routing equipment and is able to personalize site amenities, such as benches, ash urns and picnic tables, engraving logos and designs into recycled plastic end products. This acquisition provides the Company with a market presence on the west coast.

In March 1997, the Company acquired Integrated Technical Services, Inc. (ITS) located in Winslow, New Jersey. ITS is engaged in environmental construction and clean up of contaminated industrial sites primarily involving water and soils similar to the operations of ARDT.

In June 1997, the Company acquired EnviroPlastics Corporation ("EPC"), in Auburn, Massachusetts, which operates a recycled plastic processing plant including the washing, grinding and pelletizing of post-consumer and post-industrial plastic waste. A significant portion of the sales of EPC for the year ended December 31, 1998 were from one major customer, Dupont, with which EPC has an exclusive contract to provide pelletized, post-consumer feedstock product.

In June 1997, the Company formed Carteret Biocycle Corp. ("CBC") as a wholly owned subsidiary of Clean Earth, Inc. CBC has an 80,000 square foot soil recycling facility, on a 5-acre leased parcel in Carteret, New Jersey. This facility recycles contaminated soils utilizing a bio-organic technology of removing contaminants. The plant has the capacity to process approximately 320,000 tons of contaminated soil annually. This is an estimate of the plant's potential capacity and there can be no assurances that these results may be achieved or that the plant will operate at full capacity year round. CBC has entered into a 30 year ground lease with two additional ten year options at a rental cost of $210,000 per year for the initial 30 year term. CBC simultaneously entered into a License and Operating Agreement with S D & G Aggregates, Inc. which holds a license to operate a recycling operation on the leased premises. CBC also has a right of first refusal to lease an adjacent 17 acre parcel for potential dredge transfer operations in conjunction with CTI's dredging operations.

In July 1997, the Company formed a joint venture partnership with Interstate Industrial Corp. of Clifton, New Jersey to bid on dredging and upland disposal projects. The joint venture company does business as Interstate/U.S. Plastic Lumber Corp. joint venture.

In November 1997, the Company acquired Waste Concepts, Inc. ("WCI") as a wholly owned subsidiary of Clean Earth, Inc. WCI is primarily involved in removing and recycling large volumes of waste products for beneficial reuse as well as providing construction and permitting services for reuse and disposal of dredge materials. The Company plans to expand its operations to include large volume handling of dredge material and incinerator ash.

In January 1998, the Company acquired Green Horizon Environmental, Inc. ("GHI") as a wholly owned subsidiary of Waste Concepts, Inc. GHI is primarily involved in removing and recycling large volumes of incinerator ash, paper pulp and sewer sludges for beneficial reuse in strip mines. GHI has also been actively involved with the beneficial re-use of dredge materials and incinerator ash and is a critical component of the Company's plans to expand its dredging operations. It operates in the same market area as Waste Concepts, Inc. See "Recent Sales of Unregistered Securities for the Last Three Years" for additional information.

In February and June 1998, the Company acquired an additional interest in Consolidated Technologies, Inc. ("CTI") having previously been a 25% minority stockholder as of November, 1997. The Company now owns 100% interest in CTI. CTI was a start-up company at the time of the initial investment by the Company, but it has the only permit with the Commonwealth of Pennsylvania to allow it to dispose of dredge materials mixed with municipal ash to create a grout like substance used in the reclamation of strip mines. CTI's permits will enable the Company to bid on dredge projects within reasonable transportation distance from the strip mine locations in Pennsylvania. See "Certain Transactions" and "Recent Sales of Unregistered Securities for the Last Three Years" for additional information.

In March 1998, the Company acquired substantially all of the assets of Chesapeake Recycled Lumber, Inc. The Company formed Chesapeake Plastic Lumber, Inc. ("CPL") as a wholly-owned subsidiary of U.S. Plastic Lumber, Ltd. to own and operate these assets. The assets primarily consist of plastic lumber manufacturing equipment and an existing customer base. CPL provides the Company with additional plant capacity and a regional manufacturing plant located in the Mid-Atlantic market. See "Recent Sales of Unregistered Securities for the Last Three Years" for additional information.

In May 1998, the Company acquired Cycle-Masters, Inc. ("CMI") which owns and operates a plastic lumber manufacturing facility in Sweetser, Indiana. CMI provides the Company with additional manufacturing capacity and institutional sales for our plastic lumber division. See "Recent Sales of Unregistered Securities for the Last Three Years" for additional information.

In June 1998, the Company acquired GeoCore, Inc. ("GCI") which operates an environmental services company in New Jersey. GCI provides the Company with additional remediation services to offer its customer base, including tank cleaning and remediation services. See "Recent Sales of Unregistered Securities for the Last Three Years" for additional information.

In June 1998, the Company acquired substantially all of the assets of Trimax of Long Island, Inc. and Polymerix, Inc. Trimax was a manufacturer of structural plastic lumber made from recycled plastic and operated in Ronkokoma, Long Island. Polymerix owned two patents relative to the structural lumber manufacturing process. These assets were purchased by the Company with the approval of the U.S. Bankruptcy Court for the Eastern District of New York as Trimax and Polymerix had filed a bankruptcy petition in January 1998. See "Recent Sales of Unregistered Securities for the Last Three Years" for additional information.

In December 1998, the Company acquired S & W Waste, Inc., a RCRA facility that recycles and provides beneficial re-use of industrial waste and disposes of contaminated materials. See "Recent Sales of Unregistered Securities for the Last Three Years" for additional information.

The Company implemented a corporate restructuring as of December 31, 1998 in which it merged many of the subsidiaries together. Recycled Plastic Industries, Environmental Specialty Products, EnviroPlastics, Earth Care of the Midwest, Earth Care of Tennessee, Chesapeake Plastic Lumber, and CycleMasters were merged into U.S. Plastic Lumber Ltd. Within the environmental division, Green Horizon Environmental was merged into Waste Concepts Inc, then Waste Concepts Inc and GeoCore were merged into Integrated Technical Services. Advanced Remediation & Disposal had previously been merged into Integrated Technical Services.

The Company is a holding company for the Company's wholly owned subsidiaries: (i) U.S. Plastic Lumber Ltd., a Delaware corporation, which has been formed to act as a holding company for all operating recycled plastic lumber subsidiaries, (ii) Clean Earth, Inc., a Delaware corporation, is the holding company which owns all operating environmental recycling subsidiaries, and (iii) U.S. Plastic Lumber Finance Corporation, a Delaware holding company established to provide financing to the subsidiaries of the Company. The following is a list of the Company's indirect subsidiaries:

During the past several years, the Company's recycled plastic lumber division has positioned itself to be a leading manufacturer of recycled plastic lumber, a newly emerging industry. Recycled plastic lumber is manufactured in a variety of colors, profiles and shapes including standard lumber dimensions and a variety of custom engineered profiles and shapes.

The Company's recycled plastic lumber products are primarily made from 100% recycled, post-consumer and post-industrial plastics and are used for numerous municipal, commercial and residential applications. With the acquisition of the Eaglebrook companies, the Company now also manufactures a composite lumber product consisting of plastic and wood fiber. This non-toxic material is an environmentally friendly alternative to pressure treated lumber and rare woods and provides superior performance for most nonstructural, outdoor applications where traditional wood is subject to moisture damage and rotting. The Company also produces structural plastic lumber manufactured from a patented process. Recycled plastic lumber products offer these unique advantages:

• Environmentally friendly and non-toxic

• Virtually maintenance free

• Saves trees and reduces use of exotic rain forest hardwoods

• Can be worked with conventional tools

• Aesthetically pleasing wood-like textured surface

• Splinter proof – never rots

• Not affected by termites, ants or other wood borers

• No splitting, cracking or chipping

• Holds nails and screws 40% better than wood

• No toxic leaching into soil or groundwater

• Most graffiti easily washes off

Products built with the Company's recycled plastic lumber have the appearance of freshly stained or painted wood but the longevity and maintenance-free qualities of plastic. Recycled plastic products are an ideal replacement for wood, metal and concrete in numerous applications, including most non-structural exterior functions. Some of the potential applications are:

• Decking, including supporting structures and railings, for residential and commercial projects

• Commercial, municipal and residential applications such as park benches, picnic tables, trash receptacles, stadium seats, planters, and endless other uses

• Trailer, farm equipment and railroad box car flooring

• Industrial applications such as pallets, walkways in chemical plants, catwalks on factory roofs, coil cradles and other specialized applications

• Sanitary animal pen flooring

• Railroad ties

• Sea pilings and marine bulkheads

The Trenton, Tennessee manufacturing facility currently has three closed mold forming extruders and one continuous flow extruder. The focus of the production in Tennessee is large dimensional plastic lumber, such as structural lumber, engineered products such as marine piling cores, retaining wall timbers and prototype products including the railroad crosstie, highway guardrail posts, and highway spacer blocks. This facility also produces plastic in assorted specialty shapes such as bench ends and table legs produced in a mold rather than an extruder.

The Green Bay, Wisconsin manufacturing facility (approximately 36,000 sq. ft.) operates seven extruders that utilize a vacuum calibration continuous flow forming line. This process allows for the manufacture of many special profiles, in any length, that are not able to be produced with conventional roll forming or closed mold systems. The facility will also manufacture the Company's "Carefree Decking Systems"(R), a specialty product used for decks and rail systems in commercial and residential applications.

The Chicago, Illinois manufacturing facility (approximately 260,000 sq. ft.) operates twelve extruders that utilize a vacuum calibration continuous flow forming line. This process allows for the manufacture of many special profiles, in any length, that are not able to be produced with conventional roll forming or closed mold systems. This facility also provides processing of post consumer and post industrial plastics utilized by the Company as raw material. This facility is the headquarters of all of the plastic lumber operations of the Company. One of the specialty products developed at this facility is the "Smart Deck"(R), a composite product, consisting of plastic and wood, used for decks in commercial and residential applications. The Smart Deck(R) product line was developed to compete directly with several manufacturers of composite deck product throughout the country. An addition, a 100% plastic sheet product DuraPack(R) is manufactured at this facility to service the packaging industry.

The Sweetser, Indiana manufacturing facility currently has three extruders utilizing continuous flow production. It produces lumber product primarily for industrial and commercial customers. The product in this facility is often customized to meet the specifications of an OEM manufacturer.

The Denton, Maryland manufacturing facility currently has three extruders utilizing continuous flow production. It produces lumber product similar to that of the Green Bay facility. The plant contains 80,000 square feet providing the Company with critical space suitable for production capacity expansion in the event such is needed.

During 1998, the fabrication facilities in Mulliken, Michigan and Guasti, CA housed the assembly process that fabricates most of the value added products sold by the Company such as picnic tables, park benches and trash receptacles. A regional sales office is also maintained at these locations. The Michigan facility will be closed during 1999 due to its proximity to the Chicago facility acquired by the Company in January, 1999, to streamline costs and increase efficiency. The Chicago facility also provides fabrication of value added products on behalf of the Company.

The Company's manufacturing process involves proprietary technologies and specialized manufacturing equipment that was custom built or modified to the Company's specifications. The manufacturing process utilizes granulated and/or densified recycled plastic, which in certain cases, contains additives formulated for desired end use characteristics of the product. A key advantage of the process is the ability to utilize plentiful, recycled plastic waste to create a consistent material that can be extruded into a desired shape. While the end product maintains many of the desirable properties of traditional wood materials, it also has superior characteristics such as moisture resistance which give it an advantage over wood for many applications.

The primary product of the Company's manufacturing process is plastic lumber in various sizes ranging from 3/8" x 1", to 10" diameter profiles in various lengths. The Company also markets and sells various engineered or value added products for specific applications, in which the plastic lumber is used to make the finished product.

The manufacturing process primarily uses 100% recycled plastic raw material and consists of three stages. First, the recycled plastic materials received at the plant are identified and categorized by resin type. These materials are processed through a series of grinding, densifying and other operations to a consistent particle size. The ground plastic resins are then blended with other ingredients such as colorant and UV stabilizers to prepare specific mixes for the products being produced by the plant. Second, the plastics are heated, mixed and compounded into a thick molten composite which is extruded through either closed mold, roll forming or vacuum calibration finishing lines into specified shapes or profiles using equipment specifically designed for processing recycled materials. Finally, the extruded products are cooled in a downstream process, and the resulting profiles are inspected and cut to specific lengths. The product is then ready to be shipped as plastic lumber in sizes and shapes corresponding to standard lumber dimensions. The Company utilizes only recycled polyethylenes and does not use plastics with PVC, toxic chemicals, insecticide or paint residues. The Company does use other composite material for manufacturing its structural lumber product line and its Smart Deck(R) line of products. The Company's manufacturing process produces no harmful environmental by-products or hazardous waste.

The Company obtains most of its mixed plastics feedstock through its own operations or firms who obtain such materials from a large variety of recycling facilities, including municipal recycling programs as well as plastics discarded in various industrial and manufacturing processes. The Company is not dependent on any one source to obtain its supplies. The Company believes the raw material feedstock is currently purchased from sources that are dependable and adequate for at least short term and medium term manufacturing requirements. Availability of raw material has not been a problem for the Company. Generally, the Company attempts to maintain raw materials inventory sufficient to supply its manufacturing requirements for approximately two months, and management believes that suitable alternative sources are available in the event of disruption. In the past, the Company has not experienced any significant disruptions from a lack of raw material availability or other supply problems. However, the cost of recycled plastics has been subject to cyclical market fluctuations over the past several years based on supply and demand. Therefore, no assurances can be given that raw materials will always be available at commercially reasonable prices. The Company is generally of the belief that if significant increases in demand for recycled plastics of a lasting nature were to occur, the potential supply of recycled plastics could easily be expanded to meet any lasting increase in demand. The Company believes that both supply and demand will continue to increase as public awareness of the need to recycle plastic waste increases. However, any disruption of supply arrangements or significant lasting increases in raw materials prices could have a material adverse effect on the Company's operations.

Extensive testing of recycled plastic lumber has been performed for the past several years at Rutgers University's Center for Plastics Recycling Research, Louisiana State University and other research facilities. The Company has been an active participant along with others in the research and development process, and the Company has spent in excess of $1,000,000 developing new products. Since its formation, the Company has also devoted significant efforts on its own, testing and refining its manufacturing processes, molds and recipes to improve its finished products.

In May, 1996, after a long period of research and development with the Company, Rutgers University was granted U.S. Patent Protection for its recycled plastic composite railroad cross tie and its related manufacturing technology. These patents are held by Rutgers University, with the Company being the exclusive worldwide licensee for the sale of this and related products pursuant to an agreement the Company has with Rutgers University.

The Company is also the owner of two patents purchased in June 1998 with the assets of Polymerix and Trimax providing the Company with the technology and process to manufacture a structural plastic lumber product. The Company continues to evaluate its patents to determine if improvements can be made providing the Company with additional protection from its competitors.

A group of plastic lumber manufacturers founded the Plastic Lumber Trade Association (PLTA) to promote the benefits of plastic lumber and create proper testing standards. PLTA holds committee meetings three time a year in conjunction with the American Society of Testing & Materials (ASTM). Complete ASTM standards are being established for plastic lumber and preliminary test results are now available from the following institutions:

• Rutgers University's Center for Plastics Recycling Research

• University of Massachusetts at Lowell, Dept. of Engineering

• Batelle, Engineering Mechanics Dept.

• US Army Corps of Engineers Research Laboratories

Several ASTM standards have been developed and approved for plastic lumber as of July of 1997. Many more are under consideration. This will greatly expand the potential users who are required to meet specifications and standards known to the wood industry.

The Company is generally of the belief that maintaining state of the art technology in its recipes, molds and manufacturing processes and maintaining the proprietary nature of that technology through trade secrecy is more important to maintaining a competitive position in the industry than seeking any legal protections that patents may provide. However, the Company owns two patents on its structural lumber product and has an exclusive worldwide license on the Rutgers patent. The two patents were purchased as part of the Polymerix/ Trimax asset acquisition through the bankruptcy court. The first Trimax patent expires on July 9, 2008 and the second patent expires on May 18, 2010. The Company has a patent application pending for process and composition relating to the manufacture of wood fiber and polymer composite. The Company believes these patents are important to provide it with a competitive position in the market.

The Company has several license agreements relative to patented technologies of others. The Rutgers patent expires on August 4, 2015. Our license agreement with Rutgers has a duration that extends the life of the patent depending upon the Company maintaining its contract rights thereunder. The Company has a license with Paul Adam for the manufacturing and commercial sale of contaminated or impacted dredge material from a wide variety of industrial waste streams that it uses in it environmental division. The Adam License extends for the duration of the Adam patent, December 5, 2011, unless either party seeks to terminate the agreement earlier for reasons set forth in the License Agreement. The Company also has a non-exclusive license with the Strandex Corporation to manufacture composite lumber products. The Strandex License Agreement expires on April 22, 2011. The Company believes these licenses are important to provide it with a competitive position in the market.

The Company has several registered trademarks and several more currently pending application for registration. The registered trademarks of the Company are as follows: Carefree Decking System(R), Smartdeck(R), Clean Earth(R), Recyclemaid(R), Cyclewood(R) (in Japan only), Trimax(R), Durawood(R), Durapack(R), RecycleDesign(R), Global Garden(R), SmartTrim(R). The Company has a variety of trademark applications pending including Duratie(TM) and Cyclewood(TM). The Company takes an aggressive attitude toward the protection of its proprietary technology.

The recycled plastic lumber industry is a young, highly fragmented industry with over 20 small manufacturers and many more marketers of recycled plastic lumber. Including the Company, there are approximately 22 members of the Plastic Lumber Trade Association ("PLTA"). The competition is broken down into two separate categories: plastic lumber manufacturers using strictly high density polyethylene and manufacturers that use a mixture of high density and other polymers to produce a product that is less expensive.

The Company primarily uses only high density polyethylene and additives at all of its plants. The major competitors in this segment of the market include NEW Plastics Corp., Luxemburg, Wisconsin and a variety of small "mom and pop" organizations. The Company attempts to compete with these competitors on the basis of price, quality and service. Two competitors manufacture commingled plastic are The Plastic Lumber Company, Inc., Akron, Ohio and Hammer's Plastics Recycling, Iowa Falls, Iowa.

There are several competitors which manufacture a composite product which consists of a mixture of wood and plastic. TREX(R), TimberTech and AERT are competitors of the Company using a plastic composite material made with sawdust used to manufacture primarily deckboard. TREX(R) has a strong distribution system in place, and therefore, is the most widely disseminated product of all of the competitors of the Company. The recent acquisition by the Company of the Eaglebrook companies will enable the Company to compete directly against the composite deck manufacturers through the Smart Deck(R) product developed by Eaglebrook.

The Company believes that its competitive position in the market with the acquisition of the Eaglebrook companies has increased substantially. In large part this is due to several factors, including but not limited to, wider distribution of the Company's products nationally, cross-selling of separate products to the entire distribution network, increased purchasing power which can lower the Company's cost basis, and a strong management team with a long history of success in this industry.

In most of its applications, the recycled plastic lumber manufactured by the Company will also be in direct competition with conventional wood. At present, the principal competitive disadvantage of recycled plastic lumber compared to wood is that it is generally more expensive to purchase. Recycled plastic lumber is comparable in price to high grade cedar and redwood. Composite lumber is about 20% less expensive than recycled plastic lumber. Although recycled plastic lumber and composite lumber can be more expensive to initially purchase than comparable wood, plastic lumber and composite lumber can substantially outlast wood, particularly in applications where the lumber is exposed to the elements, and can therefore be more cost effective in the long run. The Company also believes that environmental restrictions are presently impeding forestry operations in United States forests. A second factor impeding the use of pressure treated wood is the toxic leaching characteristics. Chemicals injected into pressure treated wood contain hazardous constituents which are released into the soil and create potentially toxic and hazardous conditions. Such factors may reduce if not eliminate any price advantage that pressure treated wood presently has with respect to its initial cost.

By producing a suitable recycled plastic lumber and composite lumber product, the Company conserves natural resources, reduces the plastic waste entering landfills and provides a useful, maintenance-free product that satisfies this growing market. One of the major markets for recycled plastic lumber and composite lumber is as a substitute for pressure treated lumber. There are currently a number of states that have either passed laws or have on their legislative agenda, restrictions on the use and disposal of pressure treated lumber. The pressure treating process injects copper, chromium and arsenic (all carcinogens) into the wood. Pressure treated wood has legislative restrictions in some states on its disposal methods which require disposal in toxic waste landfills. Plastic lumber is a safe alternative that is fully recyclable and maintenance-free. The Company's product consists of both structural and non-structural profiles.

In July 1994 the Company was selected to participate in a cooperative venture with Rutgers University, Norfolk & Southern Railroad, Conrail and the US Army Corps of Engineers Research Laboratories to develop a prototype railroad crosstie made from recycled commingled plastic. Rutgers University has performed extensive tests on many formulas and the Company has developed a prototype that is superior in many ways to the creosote wood crosstie. Norfolk & Southern and Conrail are currently track testing the new prototype. As of February 1999, the Company's cross ties have approximately 100 MGT (million gross tons) of service and are performing without any measured defects. In contrast, creosote wood ties installed at the same time have experienced noticeable wear.

Presently there are approximately 180,000 miles of railroad track in the United States, with approximately 3,334 crossties per mile or a total of over 600,000,000 ties in place. In 1995, 18,000,000 crossties were replaced. In certain applications, the creosote wood crosstie may have an expected useful life of less than 5 years, creating a large demand for the more durable recycled plastic crossties that have an estimated useful life in excess of 50 years. Conditions which shorten creosote wood tie life are moisture, extreme temperature fluctuations and location relative to curves and switches. Railroads know from extensive experience which locations require highest maintenance and these will be the initial target areas for the Company's longer lasting polymer crossties. Based on the replacement rate of 18 million crossties per year, the total potential market for this segment of the business is approximately $1.5 billion annually. The foreign market is estimated at 5 to 10 times as large and the Company believes wood is less available in many foreign countries because it is a dwindling natural resource in many of foreign countries.

Although the plastic railroad tie is still undergoing testing, sufficient test data exists which shows the plastic railroad tie is performing well enough to enable the Company to market its railroad tie product to the railroad industry. The primary issue in the Company's growth plans regarding the plastic railroad tie is cost. The Company's current pricing structure is approximately double the cost of a comparable wood tie. The Company markets its tie on the basis of life cycle cost savings. There can be no assurances that the Company's marketing strategy will be successful in creating demand for the Company's railroad tie product.

The Company is currently in the process of developing new products for a variety of uses. These new products include component center cores for a manufacturer of reinforced marine pilings and timbers, structural lumber, stairs for spas, flooring for farm equipment, railroad ties and many other products.

The business and operations of the Company is itself divided into three distinct divisions. These are (i) engineered products, including Carefree Decking(R), Smartdeck(R) systems, fabricated products, marine & government and OEM/industrial businesses; (ii) packaging sheet division, including DuraPack(R) plastic slipsheets, tier sheets and other related packaging products; and (iii) recycled resins division, including post consumer & industrial plastic processing and trading of engineering grade resins.

The Company employs market focused Sales Specialists and industry specific representatives to market and sell its products utilizing traditional sources of sales including but not limited to attending trade shows, select advertising, cold calling, customer referrals, and the like. The Company also markets and sells through distributor relationships. The Company is seeking to expand its distribution network nationwide in certain markets.

The focus of the Company's selling strategy is the high quality, maintenance-free aspect of its product along with superior customer service. The Company also focuses on the benefits of its products including such items as being maintenance free, 100% recycled, environmentally sensitive, aesthetically pleasing in appearance, free from rot and insect infestation, and durable. The Company's sales are not dependent upon a few customers, but rather the company is currently positioned whereby it has broad diversity in its customer base.

The Company has experienced a seasonal slow-down in the winter months during the past three years but the Company is attempting to reduce the seasonality of its sales by increasing its marketing efforts in warmer climates of the U.S. during winter months, by supplying product for custom items which are not as seasonal and by increasing its industrial sales which tend to be less seasonal in nature.

Although the recycled plastic and composite lumber operations do not generate significant quantities of waste materials or hazardous substances resulting in hazardous emissions, the Company's operations are and will in the future be subject to numerous existing and proposed laws and regulations designed to protect the environment from waste materials and particularly hazardous wastes emissions. The Company is subject to federal, state and local laws regarding the environment, occupational health and safety and other regulations applicable to the Company's business. (See Regulation under the Environmental Recycling Division section for additional discussion of environmental regulations affecting the Company's business.) The primary regulations affecting the plastic lumber divisions are air quality emissions from our manufacturing plants, disposal of solid and liquid wastes, waste water, and storm water discharge. The Company does not believe that its waste disposal practices and manufacturing processes will be in violation of any existing or presently proposed law or regulation or require special handling permits or procedures or otherwise result in significant capital expenditures that would have a material adverse effect on operations. Currently, costs of compliance with regulatory requirements for the plastic lumber division do not materially impact the financial condition of the Company, although many times the delays in approving permit modifications can slow the ability of the Company to quickly adapt to changing market conditions. However, there can be no assurance that regulatory requirements will not in the future adversely affect operations or require the introduction of costly additional manufacturing or waste disposal practices, which could adversely affect the financial condition of the Company. Additionally, as with manufacturing practices in general, in the event of a release or threat of release of any hazardous substance by the Company, such a release could have a material adverse effect upon the Company whether said release or threat of release is (i) directly or indirectly caused by the Company or (ii) from any of the properties owned or leased by the Company or (iii) any associated offsite disposal of the wastes of the Company or (iv) from prior activities on property now owned or leased by the Company.

The Company offers a wide array of services in this operation including soil treatment through either thermal desorption or bioremediation, environmental construction services, upland disposal of dredge materials, beneficial re-use of industrial wastes, and on-site recycling services. The Company is not dependent on a few large customers, but has a broad base of customers.

Clean Earth of New Castle, Inc. was founded in 1991 to provide a safe, cost effective and final solution to the environmental problem of dealing with soils and construction debris contaminated with petroleum hydrocarbons such as diesel fuel, heating fuel, kerosene, jet fuel and gasoline, by treating such soils so they can be recycled as clean fill. The treatment process heats the contaminated soils in a controlled environment to a point that the contaminants are volatized into a gas phase and then incinerated in an afterburner. In 1995, Clean Earth modified its plant to recycle products at higher temperatures (up to 1,100 degrees Fahrenheit), and is now capable of treating soils contaminated with heavier products such as number 6 oil, refinery wastes, waste oils and coal distillates such as coal tar. The facility is currently seeking two permit modifications from the Delaware Environment and Natural Resources Commission ("DENRC") to help reduce costs. One permit modification, which is still pending, is to allow the facility to burn waste oil rather than natural gas in winter months. Natural gas is at its highest cost in winter months and waste oil is at its lowest. Switching to waste oil as a fuel in the winter months will enable more efficient costs translating to improved operating margins. The second permit modification has already been approved by the DENRC for accepting sewer sludge into the process. The addition of sewer sludge will significantly reduce the volume of water consumed by the plant, increase the volume of clean soil, and generate revenue for the Company.

Carteret Biocycle Corp. was founded in 1997 and opened its facility for business in the third quarter of 1998. This facility serves a similar function as Clean Earth of New Castle, Inc., except that its remediates soil contaminated with petroleum hydrocarbons through a bio-organic process. The operational costs for this facility are substantially less than thermal desorption, yet the tipping fee (the fee charged its customers to treat wastes at the facility) for this facility is similar to its tip fee at the Clean Earth of New Castle facility. In addition, Carteret Biocycle is strategically located to receive materials by truck, rail or barge. This location is also well suited to receive dredge materials from the New York/New Jersey harbor, transferring the dredge materials to rail and shipping the material for disposition in Pennsylvania strip mines. The Company believes it has positioned itself to be one of very few companies able to take advantage of this new market.

The Company's beneficial re-use operation, known as Consolidated Technologies, Inc. ("CTI"), was acquired in early to mid 1998. CTI oversees the business of beneficial re-use of industrial wastes including the upland re-use of dredge materials. The Company believes that this area will provide one of the most important strategic growth opportunities available to the Company, and in the environmental industry in general. CTI is an environmental industry group which was formed with a mission to provide research and operations for the beneficial re-use of dredged materials from the Raritan Estuary (New York/New Jersey Harbor) as recyclable fill for the remediation and reclamation of Pennsylvania strip mines. CTI has experimented with numerous samples of dredge sediments and has identified proprietary recipes for the creation of engineered fill materials through solidification and stabilization of the dredged sediments. Essentially, these mix designs are formulated from 100 percent waste materials and industry by-products.

As of September 1997, the federal government has prohibited off-shore dumping of contaminated dredge material. The Company has positioned itself to take advantage of this new market opportunity by finding ways to re-use contaminated dredge material mixed with other products to create a pozzolonic fill which can be used for cover material and clean fill. One example of this is the Company has disposal rights granted by the Pennsylvania DEP to utilize dredge material mixed with coal ash or incinerator ash to produce a grout like substance suitable to reclaim strip mines. Strip mines represent a very significant environmental issue for Pennsylvania.

CTI has been successful in the permitting of a 550,000 cubic yard demonstration project involving the beneficial re-use of treated dredge materials for the reclamation of an abandoned strip mine known as the Bark Camp Mine Complex. The Company has entered into a No-Cost Contract with the Commonwealth of Pennsylvania Department of Environmental Protection (PADEP) to reclaim a portion of the Bark Camp site with dredge materials and other industrial by-products. The Company has marketed a turnkey concept for this demonstration which incorporates everything from the physical dredging activities in the New York Harbor to the final placement of the engineered fill product at the Bark Camp Strip Mine site.

The CTI business consists of the dredging, processing and beneficial re-use of contaminated dredge material removed from harbors as engineered structural fill material capable of being utilized for development of commercial or industrial sites, or as fill for reclamation of abandoned strip mines.

The Company believes CTI is strategically positioned to capture a major share of the New York/New Jersey Harbor dredge disposal market. CTI has obtained the first and only beneficial re-use permit for utilizing manufactured fill created from dredge material for abandoned strip mine reclamation in Pennsylvania.

In addition to its plants, the Company has a subsidiary, Integrated Technical Services, Inc. which perform services in environmental construction, on site remediation, beneficial re-use of industrial wastes, UST (underground storage tanks) removals, landfill capping, on-site stabilization and treatment of hazardous waste to non-hazardous waste materials, consulting services and other ancillary environmental services.

All of the Company's principal business activities within the environmental division are subject to extensive and evolving environmental, health, safety, and transportation laws and regulations at the federal, state and local levels. These regulations our administered by the EPA in the United States and various other federal, state, and local environmental, zoning, health, and safety agencies in the United States and elsewhere, many of which periodically examine the Company's operations to monitor compliance with such laws and regulations. Many of the facilities of the Company operate under permits granted by one or more federal, state, or local agencies. Obtaining necessary permits to operate the facilities of the Company are often times difficult, time-consuming, expensive and may be opposed by local citizens as well as environmental groups. Once obtained, operating permits are subject to modification and revocation by the issuing agency. Compliance with current and future regulatory requirements may require the Company, as well as others in our industry, from time to time, to make significant capital and operating expenditures. Federal, state, and local governments have from time to time proposed or adopted other types of laws, regulations, or initiatives with respect to the environmental services industry, including laws, regulations, and initiatives to ban or restrict the international, Interstate, or intrastate shipment of wastes, impose higher taxes on out-of-state waste shipments than upon in-state shipments, limit the type of waste that may be disposed of at existing facilities, mandate waste minimization initiatives, and re- classify certain categories of non-hazardous waste as hazardous. Such regulations, laws and initiatives can create situations which have a material adverse effect on the Company's environmental business.

The Company makes a continuing effort to anticipate regulatory, political, and legal developments that might affect operations, but is not always able to do so. The Company cannot predict the extent to which any legislation or regulation that may be enacted, amended, repealed, re-interpreted, or enforced in the future may affect its operations. Such actions could adversely affect the Company's operations for impact the Company's financial condition or earnings.

Governmental authorities have the power to enforce compliance with regulations and permit conditions and to obtain injunctions or impose fines in case of violations. During the ordinary course of its operations, the Company may from time to time receive citations or notices from such authorities that a facility is not in full compliance with applicable environmental or health and safety regulations. Upon receipt of such citations or notices, the Company will work with the authorities to address their concerns. Failure to correct the problems to the satisfaction of the authorities could lead to monetary penalties, curtailed operations, jail terms, facility closure, or an inability to obtain permits for additional sites or modifications to permits an existing sites.

As a result of changing government in the public attitudes in the area of environmental regulation and enforcement, management anticipates that continually changing apartments and health, safety, and environmental protection laws will require the Company and others engaged in the environmental industry to continually modify and upgrade various facilities including altering methods of operations and cost that may be substantial. Today, the Company has not had to expand in material amount to vanity, modify or alter any of its existing facilities resulting from changes in environmental protection laws. To his knowledge, the Company is currently in compliance in all material respects with all applicable federal, state, and local laws, permits, regulations, and orders affecting its operations or noncompliance would resulting in the material adverse effect on the Company's financial condition, results of operations or cash flows. There's no shortage of the Company will not have to expand substantial amounts for such actions the future.

The Company expects to grow in part by acquisition of additional environmental facilities. Although the Company conducts due diligence investigations of the past practices of the businesses that acquires, it can have no assurance that, through its investigation, it will identify all potential environmental problems or risks. As a result, the Company may have acquired, or in the future acquire, facilities that have unknown environmental problems and related liabilities. The Company seeks to mitigate the foregoing risks by obtaining environmental representations and indemnities from the sellers of the businesses that it acquires. However, there can be no assurances that the Company will be able to rely on any such indemnities if an environmental liability exists.

Generally, under environmental laws, the generator of the waste is financially and legally responsible for that waste forever, and is strictly liable for the costs of clean up and disposal of such wastes. Disposing of the waste in a landfill or mixing it with other materials does not eliminate that liability. Therefore, proper control and tracking of all wastes materials handled by the Company is essential for the Company to avoid any liabilities with respect to such wastes. The Company takes precaution not only to eliminate, if possible, the liability of its customers, who are the generators of the contaminated soil and debris, but also to maintain proper control and tracking of each waste stream. Once the waste has successfully been treated, the liability is significantly reduced. The product, once treated, is no longer classified as waste, but is a reusable material.

It may be necessary to expend considerable time, effort and money to keep the Company in compliance with applicable environmental, zoning, health and safety regulations. In addition, due to the possibility of unanticipated factual or regulatory developments, the amounts and timing of future environmental expenditures and compliance could vary substantially from those currently anticipated.

Federal Regulations.

The primary U.S. federal statutes affecting the business of the Company are summarized below.

State and Local Regulation.

The states in which the Company operates have their own laws and regulations that may be more strict than comparable federal laws and regulations governing hazardous and non-hazardous waste disposal, water and air pollution, releases and cleanup of hazardous substances and liability for such matters. The states also have adopted regulations governing the siting, design, operation, maintenance, closure, and post closure maintenance of disposal facilities. The Company's facilities and operations are likely to be subject to many, if not all, of these types of requirements. There can be no assurance that these laws and regulations will not have a material adverse effect on the operations or financial condition of the Company.

As indicated, the environmental recycling operation is involved in a number of markets, including but not limited to remediation of contaminated soil, coal tar, upland disposal of dredge materials and the recycling of sewer sludge and municipal incinerator ash to productive use. Each of these markets is substantial and the markets are tied together via the contracting services arm of Clean Earth. These service companies can provide on site clean-up, removal and transportation of these materials to other divisions of the Company for recycling and re-use of the products in an environmentally safe manner.

The Company has recently begun bidding on large contracts to receive dredge material. Prior to September 1997, contaminated dredge material from harbors was dumped in the oceans. New federal regulations require upland disposal of this material. The Company believes every harbor throughout the country will be faced with how to deal with this issue and abide by these new government regulations. This market is new, and the Company has the permits in place to provide for using the dredge materials to reclaim abandoned strip mines as opposed to disposing of the material in landfills.

The Company is also expanding the capabilities of its facility in Delaware to process and re-use material such as sewer sludge, for which permitting has already been obtained, and municipal incinerator ash. These products are currently landfilled. The Company will process the sewer sludge and recover the nutrients which will be mixed with the clean soil to provide an improved product for resale.

The principal sales and marketing advantage that Clean Earth has over its competitors is a broad range of services allowing customers a one stop shopping concept – not only contracting services but also the facilities to process material. One distinct advantage of the Company is its quality control system. The Company's comprehensive disclosure and testing systems ensures proper tracking of material as well as on site testing to insure that only acceptable material is permitted onto its sites. Rigorous quality control procedures are essential as they relate to the responsibility and liability in handling of material not only to the Company but also to its customers.

The Company does experience a seasonal slow down during the winter months due to the fact that its environmental operations are located in the Northeast United States, and therefore, adverse weather can impact the Company's performance.

Clean Earth has several large competitors which provide similar services within the northeast and mid-Atlantic states. These competitors include R-3 Technologies in Bristol, Pennsylvania, TPST in Baltimore, Maryland, MART in Vineland, NJ and SRP in Philadelphia, Pennsylvania. Clean Earth has obtained a permit to treat coal tar materials from Delaware Natural Resources and Environmental Commission ("DNREC") and believes that this provides a niche market as very few competitors have this capability.

There are significant barriers to entry for this line of business. First and foremost, the siting, permitting and licensing process is time consuming and costly. Second, there is a large capital investment required to build the plants and purchase the equipment necessary to operate the facility. Additionally, contracts must be awarded to obtain the incoming product as well as contracts to dispose of the material after it has been treated in order to operate an economically feasible facility. Finally, this type of operation requires technically trained individuals to operate and ensure that the facility remains in strict compliance with environmental laws. Some of our competitors are national companies with greater name recognition, greater economic resources and significantly larger business size.

The soil treatment plants and the S & W Waste RCRA facility are operated with a strict commitment to safety, health and environmental issues coupled with a rigorous system of controls, which lends credence to the "Certificate of Destruction and Recycling" issued to each generator.

The Waste Tracking System starts before the contaminated soil is accepted at the plant gate. A comprehensive disclosure testing and manifesting system ensures that the solids brought to the facility fall well within the limits of Clean Earth's permits and treatment capacities. This system mirrors the procedures of hazardous waste facilities. Furthermore, Clean Earth runs an EOX test (Extractable Organic Halogens) on every load of material before it is authorized for unloading in the storage buildings. In addition, management runs several spot checks with the comprehensive on-site laboratory with respect to:

GC (Gas Chromatographer) for PCB's (Poly Chlorinated Biphenyls)

GC for VOC identification (Volatile Organic Compounds)

These tests enable Clean Earth to determine quickly and efficiently that the materials that are received are in accordance with their characterization by the generator. This sizable investment in equipment and personnel protects both the facility and the customers against the possibility of receiving undesirable wastes.

The storage buildings at each facility are large, fully enclosed structures and are built on continuous concrete slabs. Runoffs from the buildings are collected and checked regularly. The buildings are divided into small compartments to maintain rigorous separation and tracking of each waste stream and minimizes commingling. This mitigates the potential liability to a small quantity in the case an undesirable waste is detected after it has been accepted. This also ties into the sophisticated waste tracking system that mobilizes a network of eight micro-computers so as to monitor each load of material from the time of reception, to the final treatment test results. These computers function on-line and enables operators to view and analyze, at any time, all the information relative to a given shipment.

In addition, there is a comprehensive control system with recording devices that insure compliance with the various permit requirements, Clean Earth further guarantees the facility's performance by testing the production daily. As recommended in EPA publication #SW846, Clean Earth composites a sample for every 300 tons of production and tests it for BTEX with a GC and for TPH by the EPA 418 method, using an independent State certified laboratory. For coal tars, the treated materials are also tested for PAH's (Polynuclear Aromatic Hydrocarbons) by the EPA 8270 method. It is the Company's belief that this treatment plant is the first in the industry to control its emissions with a C.E.M. (Continuous Emissions Monitoring) system. Information is collected minute by minute and stored on computers for control purposes; this information is available to both customers and regulators. The property itself is monitored through several monitoring wells, that are tested quarterly. The test results are reported to DNREC.

Clean Earth has fully bonded the costs of a closure plan approved by DNREC. In addition, Clean Earth has secured a total of $7 million of General Liability and of Environmental Impairment Liability insurance coverages. The waste generating companies recycled product is also protected with $1 million single/$2 million aggregate Products and Completed Operations coverage that includes a five year tail coverage.

The Clean Earth division has also obtained a $50,000,000 performance capability to enable the environmental remediation companies to participate in more significant projects.

The Company and its subsidiaries employ on a full time basis a total of approximately 489 persons through the United States. Of this number, approximately 307 persons are full time permanent employees of the plastic lumber operations, inclusive of the Eaglebrook companies purchased in January 1999 which has approximately 95 full time permanent employees; and 175 persons are full time permanent employees in the environmental recycling operations. There are 7 persons full time permanent employees at the corporate headquarters.

Operating Losses. The Company incurred an operation loss of $291,000 for the year ended December 31, 1996 and an operating loss of $ 321,000 for the year ended December 31, 1997. The Company was successful in reporting an operating profit for the 1998 fiscal year, equal to $1,437,226, but there can be no assurances that this will continue. The success of operations in the future will be largely dependent upon the Company's ability to substantially increase its sales revenue, as to which there is no assurance.

Access to Capital. The Company has limited access to capital. There can be no assurances that the Company will have necessary and appropriate levels of capital to operate its business. The Company will require additional capital in connection with the manufacture, marketing and sale of its products. In order to develop new products, manufacture, market, and sell its new and existing product line, consolidate existing operations, and otherwise implement its plan of operations, the Company will be required, among other things, to raise additional capital. While the Company has existing lines of credit, there can be no assurance that such debt financing will be available to the Company in the future or that such debt financing will be available in the amounts required by the Company or on terms acceptable to the Company. The failure of the Company to obtain financing in adequate amounts and on acceptable terms could have an adverse effect on the Company's business, financial condition and results of operations.

Dilution. The Company has reserved for issuance a substantial amount of shares for future issuance. See Capitalization Table in Section entitled "Other Outstanding Options". In total, on December 31, 1998, the Company had reserved for future issuance 10,475,545 shares with 18,230,528 shares currently outstanding. Of the shares reserved, 4,573,686 shares ("Earn Out Shares") are related to an earn out provision in the Agreement and Plan of Reorganization with Educational Storybooks International, Inc. dated March 29, 1996. Upon the reverse merger into the public shell, the parties had agreed to an earn out bonus in the event net sales or production of 2,000,000 pounds of plastic lumber per month for three consecutive months, subject to the limitations of the Agreement and Plan of Reorganization. Upon achieving that sales or production level as defined therein, the shareholders of Earth Care Global Holdings as of March 29,1996 and the shareholders of Clean Earth, Inc.(collectively the "Historical Shareholders") would receive the Earn Out Shares. No additional assets or cash is placed into the Company in the event such sales or production goal is achieved, therefore, the dilution from the issuance of these shares will directly impact all shareholders who purchased stock subsequent to March 29, 1996 and who still hold stock on the date the earn out shares are issued, assuming the sales or production goal is met and the shares are issued. As of December 31, 1998, the net tangible book value of the Company was $13,073,793 or $.72 per share of Common Stock. Net tangible book value per share represents total tangible assets less total liabilities, divided by the number of shares of Common Stock outstanding. After pro forma adjustments given to the effect of the issuance of the Earn Out Shares, the pro forma adjusted net tangible book value of the Company as of December 31, 1998 would have been $.57 per share. This represents an immediate dilution of $.15 per share to all stockholders of the Company who are not Historical Shareholders.

Expertise. The business of the Company requires much expertise in a wide variety of functions. There can be no assurance that the Company will be able to maintain employees with the requisite levels of expertise or that the Company will be able to attract and keep such employees in the future.

Year 2000 Risks. Many existing computer programs use only two digits to identify a year in the date field. In other words, date-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. These programs were designed and developed without considering the impact of the upcoming change in the century. If not corrected, many computer applications could fail or create erroneous results by or at the Year 2000 (the "Year 2000 Issue"). This could result in system failures or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process loan or other transactions, send statements or late notices, or engage in similar normal business activities.

Although the Company currently estimates that its Information Technology systems will be Year 2000 compliant by the end of 1999, no assurance can be given that it will meet this time frame. The Company is in the process of developing a contingency plan in the event its systems are not Year 2000 compliant on a timely basis. The Company's accounting software is Year 2000 compliant. The Company is in the process of conducting an internal audit of its non-information technology systems (e.g. manufacturing equipment embedded computer systems) and software to determine what issues, if any, exist. Upon completion of its internal audit, the Company will evaluate the full scope of issues, related costs, and available remedies to insure the Company's non-information systems and those of its major customers and vendors continue to meet its internal needs. The Company does not anticipate a material financial impact as a result of the Year 2000 Issue nor does it anticipate any material financial expenditures to remedy the Year 200 date change within its own software. Anticipated costs for system and software modifications, if any, will be expensed as incurred.

However, the Company has no control over Year 2000 compliance by the customers and vendors of the Company. The Company is currently unable to predict the extent to which Year 2000 issues will affect these third parties, or the extent to which it would be vulnerable to the failure of these parties to remediate any Year 2000 issues on a timely basis. If the Company's customers and vendors are not in Year 2000 compliance, this could provide a material adverse financial impact to the Company, however, the Company does not believe this is likely based upon the due diligence it has conducted to date with respect to the Year 2000 readiness of its major customers and vendors. The Company is in the process of developing a contingency plan in the event these vendors or customers are not Year 2000 compliant on a timely basis. See "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources."

Potential Conflicts of Interest/Agreements Not Subject to Arm's Length Negotiations. Various conflicts of interest between the Company and the Stout Partnership may arise, persons serving as directors, officers and employees of both the Company and the Stout Partnership may have conflicting duties to each. Mark Alsentzer, August C. Schultes, III and Gary J. Ziegler are all general partners in the Stout Partnership which owns 5,400,000 shares of the Company's Common Stock and options to purchase 320,000 additional shares of such stock. In addition, ownership interests of the Company's directors in the Stout Partnership could also create or appear to create potential conflicts of interest when such directors are faced with decisions that could have different implications for the Company and for the Stout Partnership. Because a majority of the Board of the Company are also Stout partners, agreements related to monies provided by the Stout Partners and Schultes, Inc. were not the result of arm's-length negotiations, although the Company has attempted to have any agreements with Stout Partners and/or Schultes, Inc. be as similar to terms negotiated by the Company are comparable contracts with third parties for which there was substantial arms length negotiations. These agreements may include terms and conditions that may be more or less favorable to the Company than terms contained in similar agreements negotiated with third parties. See "Certain Transactions."

Ability to Implement the Company's Growth Strategy. The Company's growth strategy is dependent upon its ability to continue to increase profit margins through integration of acquisitions, consolidation of plants and operations, increased consumer acceptance of alternative wood products, and increased production capacity. Implementation of this strategy will depend in large part on the Company's ability to: (i) expand through strategic acquisitions of companies in new and complementary industries; (ii) obtain adequate financing on favorable terms to fund this growth strategy; (iii) develop and expand its customer base; (iv) hire, train and retain skilled employees; (v) strengthen brand identity and successfully implement its marketing campaigns; (vi) continue to expand in the face of increasing competition; (vii) continue to negotiate the Company's supply contacts and sales agreements on terms that increase or maintain the Company's current profit margins; and (viii) create sufficient demand for plastic lumber and other products. The Company's failure with respect to any or all of these factors could impair its ability to successfully implement its growth strategy which could have a material adverse effect on its results of operations and financial condition.

Environmental Concerns. In the course of its business, the Company may acquire or lease in the future, storage facilities or other properties in connection with the operation of its business. Under various U.S. federal, state or local environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or chemical releases at such property, and may be held liable to a governmental entity or to third parties for property damage, personal injury and investigation and cleanup costs incurred by such parties in connection with the contamination. The liability under such laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility. The costs of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such property, may adversely affect the ability of the owner or operator to sell or rent such property or to borrow using such property as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances also may be liable for the costs of removal or remediation of such substances at the disposal or treatment facility, whether or not the facility is owned or operated by such person. In addition, the owner or operator of a contaminated site may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from such property.

Seasonality. The Company's business is seasonal in nature. Historically, the Company has generated a substantial portion of its revenues during the second and third quarters of its fiscal year. If for any reason the Company's revenues fall below those normally expected during the second and third quarters of its fiscal year, the Company's business, financial condition, and results of operations would be adversely affected.

Newly Developing Industry. The reclamation and recycling of plastic and the manufacture of plastic lumber for use in construction, and other composite materials containing recycled plastics, are relatively new industries. There is a general reluctance in the construction industry to use new materials before they have been extensively tested, particularly in certain segments which have exacting performance standards for component materials. In the case of the Company's recycled plastic lumber and composite materials in particular, such testing may be extensive for each prospective customer and may require substantial additional time and resources. In addition, the Company may experience resistance from prospective customers who are accustomed to more conventional, non-artificial wood materials. Moreover, the Company may not have sufficient financial and other resources to undertake extensive marketing and advertising activities or to afford the cost of the necessary marketing and sales personnel at such time as it becomes appropriate to broaden its marketing efforts.

Availability of Raw Materials. The availability of low-cost raw materials, namely post-consumer and industrial plastic waste products, is a material factor in the Company's costs of operations. Historically, suppliers have provided adequate quantities of such raw materials at favorable costs. The Company believes that its current sources of raw materials will continue to be available on commercially reasonably terms. However, unavailability, scarcity or increased cost of such raw materials would have a material adverse effect upon the Company's business. The Company purchases most of its raw materials through generators of post- consumer & industrial recycled plastic materials. Disruption of these supply sources could have a material adverse effect on the Company's business, results of operations and financial condition. The Company does not rely on contractual arrangements with its raw materials suppliers and has no long-term supply contracts. See "Business – Plastic Lumber Operation Raw Material Supply."

Competition and Marketing. The Company's recycled plastic lumber business faces competition from other producers of recycled plastic lumber as well as producers of vinyl and aluminum decking, and traditional wood, especially pressure treated wood. The Company competes against other makers of recycled plastic lumber principally on the basis of price and quality as well as the immediate availability of its product, and competes against other products such as pressure treated lumber by emphasizing the superior suitability characteristics of recycled plastic lumber for certain applications, as well as appealing to the environmental consciousness of consumers. The Company's environmental recycling operation has several large competitors which provide similar services throughout the Northeast and Mid Atlantic states. The resources of the competition, financial and otherwise, may be such that it can be very difficult for the Company to effectively compete. In some instances, the competitors of the Company have more revenues, market share, better name recognition and capital available which can make it difficult for the Company to compete. There can be no assurances that the Company will be able to effectively compete in any of its markets. See "Competition", "Plastic Lumber Operation" and "Environmental Recycling Operation"

Newly Developing Technologies. The Company's products and services involve newly developing technologies, and there is no assurance the Company will be able to compete effectively in developing and marketing such products and services or in developing or maintaining the know how, technology, and patents to compete effectively. There is a general lack of public awareness of these newly developing products and services generally, or as alternatives to more traditional and well established products. To compete effectively, the Company must increase public knowledge and acceptance of its products and services and develop and maintain certain levels of know how and technical expertise, of which there is no assurance.

Lack of Industry Standards. ASTM (American Society for Testing and Materials) and certain industry trade organizations have established general standards and methods for measuring the characteristics of specific building materials. Users of building materials (and frequently, issuers of building codes) generally specify that the building materials comply with such standards relative to the proposed applications. Since uniform, recognized standards or methods have only recently been established for measuring the characteristics of plastic lumber, potential users may not be aware of this method of judging whether or not plastic lumber may be suitable for their particular requirements, without being informed of such standards by the plastic lumber supplier or otherwise becoming aware of them. The fact that such standards are not well known for plastic lumber may limit the market potential for the Company's building materials and make potential purchasers of such building materials reluctant to use them. The Plastic Lumber Trade Association, of which the Company is a member, is pursuing increased public awareness of such standards, but no assurance can be given that public awareness will successfully be increased or that increased awareness will increase the market for the Company's products.

Extensive Regulations. The Company's businesses are subject to extensive laws and regulations designed to protect the environment from toxic wastes and hazardous substances or emissions and to provide a safe workplace for its employees. Under current federal regulations Resource Conservation & Recovery Act, ("RCRA") & Comprehensive Environmental Responsibility, Compensation & Liability Act, ("CERCLA"), the generator of toxic or hazardous waste is financially and legally responsible for that waste forever, and strictly liable for the clean up and disposal costs. In particular, the business of treating or otherwise handling toxic or hazardous waste materials is fraught with potential liability to such handlers if the handling and tracking of such wastes is not completed properly. The Company believes it is either in material compliance with all currently applicable laws and regulations or is operating in accordance with appropriate variances or similar arrangements, but there is no assurance that it will always be deemed in compliance, nor any assurance that compliance with current laws and regulations will not require significant capital expenditures that could have a material adverse effect on its operations. Such laws and regulations are always subject to change and could become more stringent in the future. Although state and federal legislation currently provide for certain procurement preferences for recycled materials, such preferences for materials containing waste plastics are dependent upon the eventual promulgation of product or performance standard guidelines by state or federal regulatory agencies. Such guidelines for recycled plastic building materials may not be released or, if released, the product performance standards required by such guidelines may be incompatible with the Company's manufacturing capabilities. It may be necessary to expend considerable time, effort and money to keep the Company's existing or acquired facilities in compliance with applicable environmental, zoning, health and safety regulations and as to which there may not be adequate insurance coverage. In addition, due to the possibility of unanticipated factual or regulatory developments, the amounts and timing of future environmental expenditures and compliance could vary substantially from those currently anticipated. See "Plastic Lumber Operation – Governmental Regulation and Environmental Matters" and "Environmental Recycling Operation – Regulatory Matters"

Loss of Permits. The Company's business, especially the environmental recycling operation, is dependent upon certain permits and licenses from many different federal, state, and local agencies. There can be no assurances that the Company will be able to maintain its permits and licenses in the future or modify its permits and licenses to be able to compete effectively. See "Plastic Lumber Operation – Governmental Regulation and Environmental Matters" and "Environmental Recycling Operation – Regulations"

Protection of Technology. The Company's business involves many proprietary trade secrets, as well as certain methods, processes and equipment designs for which the Company has not sought patent protection. Although the Company has taken measures to safeguard its trade secrets by limiting access to manufacturing and processing facilities and requiring confidentiality and nondisclosure agreements with third parties, there is no assurance that its trade secrets will not be disclosed or that others will not independently develop comparable or superior technology. Rather than rely on patent protection, the Company has generally chosen to rely on the unique and proprietary nature of its processes. The Company has obtained exclusive worldwide licensing rights with respect to patent technology related to railroad crossties and the process to manufacture them, but there is no assurance the Company will be able to maintain such rights for any specific length of time. See "Plastic Lumber Operation – Research and Development" and "Proprietary Technology"

Reliance on Bidding. The environmental recycling operation consists of certain subsidiaries which are highly reliant upon contract bidding as a significant source of revenues. There can be no assurance that the Company will be successful in obtaining bid work in the future or that if it does obtain bid work that it will be at suitable profitable margins.

Operating Hazards and Insurance Coverage. The Company's businesses involve a variety of operating risks, including risk of fire, explosions, blow outs, and environmental hazards. The Company's operations could also be disrupted by hurricanes, floods, fires and other acts of God. Additionally, within the plastic manufacturing division of the Company, the Company makes products which it sells to consumers across the country, and as a result, product liability occurrences can pose a substantial risk. Any of these occurrences could result in substantial losses to the Company due to injury, loss of life, severe damage, clean-up responsibilities, regulatory investigation and penalties and suspension of operations. The Company maintains insurance coverage against some, but not all, potential risks; however, the re can be no assurance that such insurance will be adequate to cover all losses or exposure for liability. The Company cannot predict whether insurance will continue to be available at premium levels that justify its purchase or whether insurance will continue to be available at all. The occurrence of an event not covered fully by insurance, could cause the Company to sustain a material adverse effect upon its business, operating results and financial condition.

The properties of the Company consist of administrative offices, manufacturing plants, fabrication and assembly facilities, and sales offices. All of the properties of the Company are leased with one exception, its property at the S & W Waste, Inc. facility in Kearny, New Jersey. The Company has options to purchase on several of the properties it leases.

The primary properties of the Company are as follows:

Boca Raton, Florida: This location consists of approximately 3,300 sq. ft. and serves as the Corporate Offices of the Company. There are presently approximately 15 people employed in this location. The property is in good condition and is leased. The lease expires in November 2001 and the monthly rental is $5,067.

Auburn, Massachusetts: This location consists of approximately 34,000 sq. ft. and its function consists of receiving and processing HDPE plastic for use as raw material for the Company's manufacturing plants and for re-sale to the marketplace. The process includes sorting, regrinding, washing, and pelletizing HDPE. The property is in good condition and is leased. The lease is a month to month tenancy, and the monthly rental is $18,142.

Chicago, Illinois: This location consists of approximately 260,000 sq. ft. and is the primary manufacturing facility of the Company. This location is also the headquarters of the Company's plastic division. It produces plastic and composite lumber profiles through a continuous extrusion process. It manufactures the Smart Deck(R) product line. It also processes, sorts, grinds and washes HDPE, much of it used by the Company as a raw material for its manufacturing plants. The property is in good condition and is leased with an option to purchase. The lease expires in January 2009 and the monthly rental is $39,181 per month.

Green Bay, Wisconsin: This location consists of approximately 38,000 sq. ft. This plant is one of the primary manufacturing plants of the Company. It produces plastic lumber through a continuous extrusion process and manufactures the Carefree Deck(R) product line. The property is in good condition and is leased. The lease expires in January 2008, and the monthly rental is $11,875.

Sweetser, Indiana: This location consists of approximately 15,600 sq. ft. and 7.5 acres. The facility manufactures plastic lumber primarily for industrial and commercial applications through the continuous extrusion process. The property is in good condition and is leased with an option to purchase. The lease expires on April 30, 2003 and the monthly rental is currently $2,000 per month.

Trenton, Tennessee: This location consists of approximately 90,000 sq. ft. The plant is also a manufacturer of plastic lumber. It utilizes flow mold extrusion manufacture plastic lumber and a variety of custom profiles. One line of this plant is also dedicated to the manufacture of structural lumber, and one line is dedicated to the manufacture of railroad ties. The property is in good condition and is leased with an option to purchase. The lease expires in September 2002 and the monthly rental is $13,491.

Mulliken, Michigan: This location consists of approximately 16,000 sq. ft. and is the principal location for fabricating and assembling value added products, such as but not limited to, park benches, trash receptacles, picnic tables, and many other items. The property is in good condition and is leased. The lease expires in May 1999, and the monthly rental is $3,333. The Company is not currently negotiating to renew this lease as the Company intends to consolidate its fabrication operations into its new Chicago facility.

Denton, Maryland: This location consists of approximately 80,000 sq. ft. It currently has several continuous extrusion lines manufacturing a wide variety of plastic lumber profiles. The property is in good condition and is leased. The lease expires in February 2003, and the monthly rental is $6,000.

Guasti, California: This location consists of approximately 6,000 sq. ft. This facility houses the western Regional Sales office of the Company as well as consisting of a Distribution warehouse, a fabrication facility for some specialty benches and trash receptacles made by the Company and the Company's plastic sign manufacturing facility. The property is in good condition and is leased. The lease is a month to month tenancy and the monthly rental is $1,500.

Norristown, Pennsylvania: This facility is the corporate and administrative offices for the environmental recycling services operations of the Company. The property is in good condition and is leased. The lease expires in December 1999, and the monthly rental is $4,000.

Blue Bell, Pennsylvania: This facility serves as an administrative office for the environmental division consisting of 1,570 sq. ft. The lease expires in December 1999 and the monthly rental is approximately $2,100.

New Castle, Delaware: This property consists of 7.5 acres of buildings and property consisting of the Thermal Desorption soil recycling operation. The property is in good condition and is leased. The lease expires in August 2003, and the monthly rental is based upon the volume of tonnage received at the facility.

Carteret, New Jersey: This facility became operational in the third quarter of 1998. This facility consists of approximately 80,000 sq. ft. and five acres of property. This facility may serve two functions. Currently, it recycles soil through a bio-organic process and it may be able to receive barges with dredge material which the Company will process for shipment to upland disposal facilities and strip mines for beneficial re-use reclamation. The property is in good condition and is leased with an option to purchase the leased premises and adjacent property. The lease expires in December 2027, and the monthly rental is $17,500.

Kearny, New Jersey: This facility is the administrative offices and consists of the treatment, storage and disposal facility for the S & W Waste operations of the Company. It consists of approximately 7 acres and is owned by the Company. The facility is in good condition.

Winslow, New Jersey: This facility is the administrative offices for the Company's environmental construction services company. The property is in good condition and is leased. This lease has a rental of $2,500 per month.

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.

During the fourth quarter of fiscal year end 1998, no matters were submitted to a vote of the security holders, through proxy solicitation or otherwise.

Transactions in the Company's Common Stock are reported on the NASDAQ Small Cap Market. The Common Stock of the Company is quoted under the symbol "USPL". Prior to June 1998, the Company traded sporadically on the OTC Electronic Bulletin Board under the symbol "ECPL". The following table sets forth the high and low bid price quotations for each date specified below during the last two fiscal years.

The above prices represent interdealer quotations, without retail markup, markdown or commissions, and may not represent actual transactions. As of February 26, 1999, there were approximately 516 record holders of the Company's Common Stock and approximately 2,400 beneficial owners listed with CEDE & Co.

The Company has not previously paid any cash dividends on its Common Stock and does not anticipate or contemplate paying dividends on Common Stock in the foreseeable future. It is the present intention of management of the Company to utilize all available funds for the development of the Company's business. The Company does intend to pay stock dividends on its outstanding Series A and B Preferred Stock in accordance with the terms thereof. Under Nevada corporate law, no dividends or other distributions may be made which would render the Company insolvent or reduce assets to less than the sum of its liabilities plus the amount needed to satisfy outstanding liquidation preferences.

Unless otherwise indicated, all share numbers have been adjusted for the reverse merger stock split of 1 to 16 that occurred in March 1996. Also, unless otherwise indicated, these securities were issued as restricted securities and the certificates were stamped with restrictive legends to prevent any resale without registration under the Securities Act of 1933 (The "Act") or in compliance with an exemption.

In March 1996, the Company entered into an Agreement and Plan of Reorganization with Earth Care Global Holdings, Inc. ("Earth Care"), pursuant to which the Company reverse split its common stock on a 1 for 16 basis, and then issued 4,196,316 post split shares of its authorized but previously unissued common stock to the shareholders of Earth Care to acquire all the issued and outstanding stock of Earth Care in a stock for stock exchange, which was intended to be a tax free reorganization under Section 368(a) of the Internal Revenue Code, and was accounted for, for financial reporting purposes, as an acquisition by Earth Care of the Company. This transaction was not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as an offering made to accredited investors, all of whom were officers and directors of Earth Care and/or represented that they were otherwise accredited investors.

As a condition precedent to the closing of the Earth Care acquisition, the Company raised $1,000,000 of capital through an offering of its securities. The offering was completed and the acquisition closed on or about March 28, 1996. These transactions were not registered under the Act in reliance on the exemption from registration in Section 3(b) of the Act, and Rule 504 of Regulation D promulgated thereunder, in that securities with an aggregate offering price not exceeding $1,000,000 were offered and sold by an issuer that was not subject to the reporting requirements of the Securities Exchange Act of 1934, and was not an investment company or a company that had no specified business purpose.

In April 1996, the Company acquired all of the assets of DuraTech Industries. The Company issued 24,772 post-split shares of its authorized but previously unissued common stock to the shareholders of Duratech to acquire all the issued and outstanding stock of Duratech in a stock for stock exchange which was intended to be a tax free reorganization under Section 368(a) of the Internal Revenue Code. This transaction was not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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.

In December 1996, the Company formed Clean Earth, Inc. and through it acquired a wholly owned subsidiary, Clean Earth of New Castle, Inc. The Company issued 5,400,000 post-split shares of its authorized but previously unissued common stock to the shareholders of Clean Earth to acquire all the issued and outstanding stock of Clean Earth in a stock for stock exchange which was intended to be a tax free reorganization under Section 368(a) of the Internal Revenue Code. This transaction was not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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.

In January 1997, the Company acquired Recycled Plastics Industries, Inc. (RPI), located in Green Bay, Wisconsin. The Company paid cash and issued 1,000,000 shares of its Common Stock to the shareholders of RPI in the acquisition. This transaction was not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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.

In February 1997, the Company acquired Advanced Remediation and Disposal Technologies, Inc. (ARDT). ARDT is engaged in environmental consulting and clean up of contaminated sites primarily involving water and soils. The Company issued 300,000 shares of its Common Stock to the former shareholders of ARDT. This transaction was not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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.

During the period from June 1996 through February 1997, the Company has offered and sold 208,930 shares of Class A Preferred Stock to investors at $20 per share, and raised $4,178,600 in gross proceeds. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. The securities were sold primarily to officers, directors or other acquaintances who were familiar with the business of the Company and were able to assess the risks and merits of the investment.

During 1996, the Company issued a total of 5,565 shares of Common Stock pursuant to the exercise of outstanding options held by two individuals who were officers or directors of the Company. In 1997, the Company issued 500 shares to directors for attendance at meetings. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering.

During February 1997, the Company issued 187,500 shares plus cash and royalty fees in connection with the licensing agreement with Rutgers University. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering was completed without any general or public solicitation. The offering was done to a single investor which had knowledge and experience in business matters to enable them to evaluate the risks and merits of the investment. This investor also had a pre-existing business relationship with the Company.

On March 28, 1997, the Company acquired Environmental Specialty Plastics (ESP), a marketing and distribution company of recycled plastic lumber products in Guasti, California. The shareholders of ESP received cash plus 25,150 shares of the Company's common stock (see Footnote 2 of Financial Statements for additional information). These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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.

On March 31, 1997, the Company acquired Integrated Technical Services, Inc. (ITS), an environmental consulting and construction company in Winslow, New Jersey. The stockholders of ITS received as acquisition consideration, cash plus 185,000 shares of the Company's common stock, and an additional 47,572 shares of common stock for the non-compete agreements (see Footnote 2 of Financial Statements for additional information). These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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.

On June 20, 1997, the Company issued 1,111,111 shares of Common Stock to two investment funds, a partnership, and one accredited private investor. These transactions were not registered under the Act in reliance on the exemption from registration in Rule 506 of Regulation D, promulgated under Section 4(2) of the Act, as transactions not involving any public offering, consisting of sales made solely to accredited investors. Each entity investor has assets substantially in excess of $5,000,000 and was not formed for the purpose of investing in the securities. The natural person who invested has net worth substantially in excess of $1,000,000.

On June 30, 1997, the Company acquired EnviroPlastics Corp., (EPC) a recycled plastic raw material regrind operation in Auburn, MA. The stockholders of EPC received 280,000 shares of the Company's common stock as the purchase price plus 25,000 shares as consideration for non-compete agreements (see Footnote 2 of Financial Statements for additional information). These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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.

On June 30, 1997, the Company issued 150,000 shares to the former shareholders of DuraTech Industries, Inc. as part of an earn out provision in the purchase documents of that acquisition. These earn out shares were accelerated in part in exchange for salary concessions made by the former shareholders of DuraTech Industries, Inc. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering.

On November 18, 1997, the Company acquired Waste Concepts, Inc. (WCI), an environmental recycling services company located in Norristown, PA. The stockholder of WCI received cash at Closing plus 400,000 shares of common stock of the Company (see Footnote 2 of Financial Statements for additional information). These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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.

On January 2, 1998, the Company acquired Green Horizon Environmental, Inc. (GHI), an environmental recycling services company located in Norristown, PA. The stockholders of GHI received 50,000 shares of common stock of the Company. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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.

On February 6, 1998, the Company acquired an additional twenty five percent interest in Consolidated Technologies, Inc. (CTI), an environmental recycling services company located in Norristown, PA. The stockholders of this company received 35,000 shares of Common Stock of the Company. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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.

On February 27, 1998, the Company acquired substantially all the assets of Chesapeake Recycled Lumber, Inc. (CRL), a plastic lumber manufacturing company located in Denton, MD. The stockholders of CRL received cash at closing plus 97,500 shares of common stock of the Company. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and primary shareholder 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.

On February 27, 1998, the Company acquired a five percent interest in Consolidated Technologies, Inc. (CTI), an environmental recycling services company located in Norristown, PA. The stockholder of this company received 1,500 shares of Common Stock of the Company. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders had strong knowledge and experience in business matters as well as pre-existing business relationships with the Company. The knowledge and experience of this individual enabled him to evaluate the risks and merits of the investment.

Effective April 30, 1998 the Company acquired 100% of the stock of Cycle-Masters, Inc. ("CMI"), a manufacturer of plastic lumber in Sweetser, Indiana. The stockholder of CMI received 200,000 shares of common stock of the Company. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders 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 him to evaluate the risks and merits of the investment.

During the period from April 1998 through June 1998, the Company had offered and sold 211,020 shares of Class B Preferred Stock to investors at $21 per share, and raised $4,431,420 in proceeds. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. The securities were sold primarily to accredited investors, officers, directors or other acquaintances who were familiar with the business of the Company and were able to assess the risks and merits of the investment.

Effective June 30, 1998 the Company acquired 100% of the stock of Geocore, Inc. ("GCI") a small environmental services company in northern New Jersey. The stockholder of GCI received 30,000 shares of common stock of the Company. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders had strong knowledge and experience in business matters as well as pre-existing business relationships with the Company. The knowledge and experience of this individual enabled him to evaluate the risks and merits of the investment.

On June 30, 1998, the Company acquired the remaining forty-five percent interest in Consolidated Technologies, Inc. (CTI), an environmental recycling services company located in Norristown, PA. The stockholder of this company received 40,000 shares of common stock of the Company with additional shares to be paid in the event certain performance criteria are met. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders had strong knowledge and experience in business matters as well as pre-existing business relationships with the Company. The knowledge and experience of this individual enabled him to evaluate the risks and merits of the investment.

The Company purchased substantially all of the assets of Trimax of Long Island, Inc. and Polymerix, Inc. ("Trimax") with the approval of the U.S. Bankruptcy Court. The purchase is effective June 30, 1998 and includes two patents for the manufacture of structural plastic lumber. Upon approval of the Bankruptcy Plan in December 1998, the Company issued 118,391 shares of common stock. This offering made was completed without any general or public solicitation. The Company obtained a "No Action" letter from the Securities and Exchange Commission regarding the ability of the creditors before the bankruptcy court to sell the stock being issued pursuant to the Plan without restriction.

On December 31, 1998, the Company acquired the stock of S & W Waste, Inc. (S & W), an environmental recycling services company located in Kearny, NJ. The stockholder of this company received 320,000 shares of common stock of the Company. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders had strong knowledge and experience in business matters as well as pre-existing business relationships with the Company. The knowledge and experience of this individual enabled him to evaluate the risks and merits of the investment.

On December 22, 1998 and January 26, 1999, the Company raised $6,500,000 in the form of convertible securities from Halifax Fund LP and Societe de General LP. The transaction is structured as a convertible debenture carrying a 5% coupon. See Exhibits 10.34 and 10.35. As part of the transaction, the Company has agreed to register Common Stock underlying the Debentures at which point the investment funds can elect to convert all or any portion of their Debentures into Common Stock. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation.

On January 28, 1999, the Company acquired the stock of Eaglebrook Plastics, Inc. and Eaglebrook Products, Inc., a plastic recycling and manufacturing company located in Chicago, IL. In addition to cash and a convertible debenture, the stockholders of these companies received 1,668,025 shares of common stock of the Company. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders had strong knowledge and experience in business matters as well as pre-existing business relationships with the Company. The knowledge and experience of this individual enabled him to evaluate the risks and merits of the investment.

On January 7, 1999, the Company executed a contract to acquire the all of the stock of Brass Investment Co. ("Brass"), which owns all the stock of Soil Remediation of Philadelphia ("SRP") and Allied Waste, Inc. ("AWI"). SRP operates a soil remediation facility in Philadelphia, PA which is very similar to the Company's soil remediation facility in New Castle, DE and has been a competitor of the Company. AWI provides environmental services which are very similar to that provided by the Company environmental services division. The Company signed a Management Contract on January 7, 1999 taking over all responsibility for day to day management and financial control of SRP and AWI as of that date. Unaudited sales of SRP and AWI, prior to intercompany eliminations, for year ended December 31, 1998 were $14,922,000 with unaudited operating income of $2,025,000. The Company finalized the transaction with Brass on or about March 18, 1999. The Company purchased Brass for cash plus 1,000,000 shares of common stock plus granted 1,500,000 warrants to Louis Paolino, Jr. to purchase common stock of the Company. These transactions were not registered under the Act in reliance on the exemption from registration in Section 4(2) of the Act, as transactions not involving any public offering. This offering made was completed without any general or public solicitation. In each case the offering was done to a very limited number of officers, directors and shareholders of the companies being acquired. The officers, directors and few shareholders had strong knowledge and experience in business matters as well as pre-existing business relationships with the Company. The knowledge and experience of this individual enabled him to evaluate the risks and merits of the investment.

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.

Pursuant to Section 701(f) of Regulation S-K of the Exchange Act, the Company is providing the following information with respect to the use of proceeds from the Form SB-2 Registration Statement declared effective by the SEC on February 28, 1998, File No. 333-22949. The offering terminated on May 19, 1998 at which point the Company filed a post effective amendment no. 1 to the Form SB-2 Registration Statement de-registering 33,523 shares of Common Stock, par value $.0001. The class of securities registered were Common Stock of the Company, par value $.0001. The amount of shares registered was 950,000 shares at a price of $2.50 per share for an aggregate offering price of $2,375,000. A total of 916,477 shares were registered raising the Company a total of $2,291,192.50. The Company expended $300,000 in legal, accounting, printing and other costs in connection with this registration. There was no underwriter expense or any direct or indirect payments to any officer, director or affiliate. The net offering proceeds to the Company was $1,991,192.50. The net offering proceeds were used for general working capital purposes and funding the acquisition of Cycle Masters Inc.

Pursuant to various agreements entered into between the Company and the former shareholders of acquired companies, up to a total of 4,749,186 shares of the Company's Common Stock is subject to the right of such shareholders to receive such stock under certain conditions relating to earnings, sales or production levels reached by the Company, certain subsidiaries of the Company or by the entities of which these person were formerly shareholders.

The Earth Care Historical Shareholders are entitled to receive on a pro rata basis an aggregate of 2,000,000 additional shares of the Company's common stock at any time prior to December 31, 2000, in the event production or net sales of at least 2,000,000 pounds of plastic lumber product per month for three consecutive months, subject to the limitations of the Agreement and Plan of Reorganization entered into by Earth Care and Educational Storybooks International, Inc. in December 1995. See "Risk Factors – Dilution".

The Clean Earth Historical Shareholders are entitled to receive on a pro rata basis an aggregate of 2,573,686 additional shares of the Company's common stock at any time prior to December 31, 2000, in the event the Earth Care Historical Shareholders obtain their additional shares pursuant to the terms of the above mentioned Agreement and Plan of Reorganization. See "Risk Factors – Dilution".

The stockholder of Waste Concepts, Inc. (WCI) has been provided with the right to earn additional shares of the Company's stock equal to 20,000 shares over the next four years in the event WCI meets certain operating income levels during each of those years.

The stockholder of Integrated Technical Services, Inc. (ITS) has been provided with the right to earn additional shares of the Company's stock equal to 23,000 shares over the next year in the event ITS meets certain operating income levels during the 1999 fiscal year.

The stockholders of Consolidated Technologies, Inc. (CTI), whose interest was purchased by the Company, have the right to earn additional shares based upon meeting certain performance objectives by June 1, 1999. These former stockholders of CTI have the right to earn 132,500 shares of the Company on a cumulative basis.

There are numerous members of the management of the Company and its subsidiaries who have been granted options subject to each manager meeting certain performance criteria.

The Table below sets forth the capitalization structure of the Company as of December 31, 1998.

The Company has reserved 117,895 shares of the Company's common stock for issuance upon exercise of an option held by a former creditor of Earth Care (the "Magellan Option"). The option is exercisable no later than June 30, 1999 at an exercise price of $1.77 per share. In the event the Magellan Option is not exercised in whole or in part, then those shares reserved for the Option shall be issued on a pro rata basis to the persons who are the historical shareholders of the Company at no cost, in proportion to the shares they owned.

On or about December 12, 1997, the Board of Directors granted options to Stout Partnership providing it the right to purchase 320,000 shares at an exercise price of $2.25 per share. This grant was in consideration of Stout Partnership and each of the individual members of the partnership personally guaranteeing a revolving discretionary line of credit in the amount of $4,000,000 on behalf of the Company with PNC Bank of Delaware. In addition to the personal guarantees, the individual members of the partnership pledged $2,000,000 in cash or securities to PNC Bank on behalf of the Company. August C. Schultes III and Gary J. Ziegler, both directors of the Company, are individual partners in Stout Partnership. Mark S. Alsentzer, Chairman and President of the Company is also an individual partner in Stout Partnership.

On or about September 16, 1998 the Company granted 10,000 options to a consultant at an exercise price of $3.50 per share as a result of his assisting the Company in raising money.

On or about December 22, 1998, the Company granted 50,000 warrants to each Halifax Fund LP and Societe de General LP at an exercise price of $7.21 per share as part of the consideration of a $4,000,000 investment made in the Company by convertible securities.

(As of December 31, 1998)

On or about January 26, 1999, the Company granted 37,500 warrants to Halifax Fund LP and 25,000 warrants to Societe de General LP at an exercise price of $7.21 per share as part of the consideration of a $2,500,000 investment made in the Company by convertible securities.

On or about January 10, 1999, the Company granted options to purchase 127,500 shares of its Common Stock to Columbine Financial Solutions, Inc. as consideration for assisting the Company in financial public relations and raising money. The exercise price on 85,000 of these options is $5.00 per share and the remaining 42,500 options have an exercise price of $7.50 per share.

Upon the closing of the purchase of Brass, the Company granted 1,500,000 warrants to Louis Paolino, Jr. The warrants were part of the merger consideration.

Included elsewhere in this document.

Included elsewhere in this document.

The information contained in the Proxy Statement under the caption "Changes in and Disagreements with Accountants on Accounting and Financial Disclosure" relating to the 1999 Annual Meeting is incorporated herein by reference.

The following table sets forth the directors and executive officers of the Company, their ages, terms of office and all positions. Directors are divided into classes which are elected for staggered terms of four years, and serve until the annual meeting of the year in which the terms expire, or until their successors are duly elected by the stockholders and qualify. Officers and other employees serve at the will of the Board of Directors.

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

U.S. Plastic Lumber Corporation

By: /s/ MARK S. ALSENTZER
Mark S. Alsentzer, Chairman of the Board,
Chief Executive Officer and President

Date: March 26, 1999

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.