ECOMAT INC, 424B4, 1996-12-10

ECOMAT INC
424B4, 1996-12-10
PERSONAL SERVICES

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<PAGE>
PROSPECTUS

1,200,000 SHARES OF COMMON STOCK

[LOGO]

OFFERING PRICE: $5.00 PER SHARE
------------------------

Ecomat, Inc., a Delaware corporation (the 'Company') hereby offers
1,200,000 shares of common stock, $.0001 par value (the 'Common Stock' or
'Shares') for sale (the 'Offering'), at a per Share offering price of $5.00. See
'Description of Securities' and 'Underwriting.'

Prior to this Offering, there has been no public market for the Common
Stock and there are no assurances that a public market will develop. The initial
public offering price of the Common Stock has been arbitrarily determined by
agreement between the Company and Patterson Travis, Inc. (the 'Underwriter') and
is not related to the Company's earnings, assets, book value or any other
established criteria of value. See 'Risk Factors' and 'Underwriting.' The
Company's Common Stock has been approved for listing on the Nasdaq SmallCap
Market upon the effective date of this Prospectus, although no assurances can be
made that an active trading market will develop or, if any active trading market
develops, that it will be sustained.
------------------------

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK
FROM THE INITIAL PUBLIC OFFERING PRICE AND SHOULD BE CONSIDERED ONLY
BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
SEE 'PROSPECTUS SUMMARY', 'DILUTION' AND 'RISK
FACTORS' WHICH BEGIN ON PAGE 7.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share....................... $5.00 $.50 $4.50
Total(3)........................ $6,000,000 $600,000 $5,400,000
</TABLE>

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

(1) Does not include additional compensation to be received by the Underwriter

in the form of (i) a non-accountable expense allowance equal to 3% of the
gross proceeds of this offering ($180,000 or $207,000 if the Underwriters'
Over-Allotment Option (as defined below) is exercised in full) and (ii) an
option exercisable for a period of four years commencing one year after the
Effective Date entitling the Underwriter to purchase up to 120,000 Shares at
$6.00 per Share (the 'Underwriter's Purchase Option'). In addition, the
Company has agreed to indemnify the Underwriter against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended. See 'Underwriting.'

(2) Before deducting expenses of the offering payable by the Company, estimated
at $480,000, including the Underwriter's non-accountable expense allowance.

(3) The Company has granted the Underwriter an option, exercisable within 30
days from the Effective Date, to purchase up to 180,000 additional Shares
upon the same terms and conditions as set forth above solely to cover
over-allotments, if any ('Underwriter's Over-Allotment Option'). If the
Underwriter's Over-Allotment Option is exercised in full, the total Price to
Public will be $6,900,000, Underwriting Discounts and Commissions will be
$690,000 and Proceeds to Company will be $6,210,000 (before deducting
expenses payable by the Company estimated at $507,000, including the
Underwriter's non-accountable expense allowance). See 'Underwriting.'

PATTERSON TRAVIS, INC.

THE DATE OF THIS PROSPECTUS IS DECEMBER 9, 1996

<PAGE>

[THREE PHOTOS]

Upper Left Picture: Ecomat employee pressing a pair of trousers using the Ecomat
technique.

Upper Right Picture: Ecomat employee training an Ecomat trainee.

Lower Picture: The interior of a typical Ecomat full-service facility.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMPANY'S COMMON STOCK AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

<PAGE>

A SIGNIFICANT AMOUNT OF THE COMMON STOCK TO BE SOLD IN THIS OFFERING MAY BE
SOLD TO CUSTOMERS OF THE UNDERWRITER. THIS MAY AFFECT THE MARKET FOR AND
LIQUIDITY OF THE COMPANY'S COMMON STOCK IN THE EVENT THAT ADDITIONAL
BROKER-DEALERS DO NOT MAKE A MARKET IN THE COMPANY'S COMMON STOCK, OF WHICH
THERE CAN BE NO ASSURANCE. IN SUCH EVENT, THE POSSIBILITY EXISTS THAT THE MARKET
FOR THE COMPANY'S COMMON STOCK COULD BECOME ILLIQUID. THIS COULD AFFECT THE
SHAREHOLDERS ABILITY TO TRADE THE COMPANY'S COMMON STOCK.

ALTHOUGH IT HAS NO OBLIGATION TO SO DO, THE UNDERWRITER MAY FROM TIME TO
TIME ACT AS A MARKET MAKER AND OTHERWISE EFFECT TRANSACTIONS IN THE COMPANY'S
COMMON STOCK. THE UNDERWRITER, IF IT PARTICIPATES IN THE MARKET, MAY BECOME A
DOMINATING INFLUENCE IN THE MARKET FOR THE COMMON STOCK. HOWEVER, THERE IS NO
ASSURANCE THAT THE UNDERWRITER WILL OR WILL NOT CONTINUE TO BE A DOMINATING
INFLUENCE. THE PRICES AND LIQUIDITY OF THE COMMON STOCK OFFERED HEREUNDER MAY BE
SIGNIFICANTLY AFFECTED BY THE DEGREE OF THE UNDERWRITER'S PARTICIPATION IN SUCH
MARKET. SEE 'RISK FACTORS--UNDERWRITER AS MARKET MAKER'. THE UNDERWRITER MAY
DISCONTINUE SUCH ACTIVITIES AT ANY TIME OR FROM TIME TO TIME.

The Shares are being offered by the Underwriter on a firm commitment basis
when, as, and if delivered to and accepted by the Underwriter and subject to
various prior conditions, including the right to reject an order in whole or in
part. It is expected that delivery of the Shares will be made against payment
therefor on or about December 17, 1996 at the offices of the Underwriter.

SPECIAL STANDARDS FOR SHARES SOLD IN CALIFORNIA

Each California investor must have an annual gross income of at least
$65,000 and a net worth, exclusive of home, furnishings and automobiles, of at
least $250,000, or in the alternative, a net worth, exclusive of home,
furnishings and automobiles, of at least $500,000. In addition, an investor's
total purchase may not exceed 10% of such investor's net worth.

AVAILABLE INFORMATION

The Company does not presently file reports and other information with the
Securities and Exchange Commission (the 'Commission'). However, following
completion of this Offering, the Company intends to furnish its stockholders
with annual reports containing audited financial statements examined and
reported upon by its independent public accounting firm and such interim
reports, in each case as it may determine to furnish or as may be required by
law. After the effective date of this Offering, the Company will be subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the 'Exchange Act') and in accordance therewith will file reports, proxy
statements and other information with the Commission.

Reports and other information filed by the Company can be inspected and
copied at the public reference facilities maintained at the Commission at Room
1024, 450 Fifth Street, N.W., Washington, DC 20549. Copies of such material can
be obtained upon written request addressed to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission maintains a web site on the Internet (http://www.sec.gov) that
contains reports, proxy and information statements and other information

regarding issuers that file electronically with the Commission through the
Electronic Data Gathering, Analysis and Retrieval System ('EDGAR'). The Company
has filed, through EDGAR, with the Commission a registration statement on Form
SB-2 (herein together with all amendments and exhibits referred to as the
'Registration Statement') under the Act of which this Prospectus forms a part.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. For further information
reference is made to the Registration Statement.

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and financial statements and notes thereto appearing
elsewhere in this Prospectus. Each prospective purchaser is urged to read this
Prospectus in its entirety. Unless otherwise indicated, no effect is given in
this Prospectus to the Underwriter's Purchase Option or Over-Allotment Option.
All references herein to a number of shares of Common Stock of the Company gives
effect to the merger of Diaber Laundromat, Inc., a New York corporation with and
into the Company.

THE COMPANY

Ecomat, Inc., a Delaware corporation, and its subsidiaries (collectively,
the 'Company') have developed and operate a wet-cleaning process (described
below) which, in management's belief, was the first environmentally sound
solution to current dry cleaning methods and is currently the only franchisor of
this concept. Most traditional dry cleaners use the cleaning solvent,
perchloroethylene, known as 'perc' for short. Before the introduction of perc in
the 1940s, the dry cleaning industry depended on petroleum as its cleaning
solvent. Perc was immediately adapted for use by the dry cleaning industry due
to its lower flammability than petroleum. The Company was incorporated on
December 14, 1995 pursuant to the laws of the State of Delaware. The Company is
the successor to Diaber Laundromat, Inc., a New York corporation ('Diaber'),
which was incorporated pursuant to the laws of the State of New York on
September 21, 1992. The Company was organized to enable Diaber to merge with and
into the Company in order to effectuate a reincorporation in the State of
Delaware. Diaber merged with and into the Company on March 29, 1996. The
Company's executive offices are located at 147 Palmer Avenue, Mamaroneck, New
York 10543-3632. The Company's telephone number is (914) 777-3600.

The Company has been formed to develop the Ecomat concept nationally and
internationally which, management believes, provided the first environmentally
sound solution to current dry cleaning methods in the United States. Ecomat has
three subsidiaries consisting of two (2) full-service Ecomat cleaners and
laundromats (any reference to Ecomat cleaners and laundromats throughout this
Prospectus relates to such two (2) full-service facilities) and a franchisor
subsidiary which currently has signed agreements for five cluster franchises,
one each in New Jersey, Long Island, NY, Brooklyn, NY, Austin, Texas and
Westchester County, NY. In addition, there is one Ecomat self-service laundromat

and drop-off facility franchise in Manhattan, NY. Other than the Westchester
route franchise cluster which is in operation (two (2) drop sites) no other
facilities under the other cluster agreements are yet in operation. The Company
also directly operates one (1) satellite facility in Scarsdale, NY. See
'Business--Franchise Agreements'

The Ecomat system uses a combination of cleaning techniques. These include
multi-process wet cleaning methods which were studied by the Environmental
Protection Agency ('E.P.A.') and described in the E.P.A. report 'Multi-process
Wet Cleaning--Cost and Comparison of Conventional Dry Cleaning and An
Alternative Process; U.S. Environmental Protection Agency-EPA 744-R-93-004,
September 1993'. Such study concluded that the wet cleaning process was proven
to be superior to the traditional dry cleaning method in 4 of 6 areas used to
measure quality and customer satisfaction. It rated equal to traditional dry
cleaning in the other 2 areas. The Company has also developed its own techniques
of treating particular fabrics that can be problematic to both 'dry' and 'wet'
cleaners alike. 'Wet cleaning' as opposed to 'dry cleaning' is a method for deep
cleaning fabrics using water, steam, plant-based cleaning agents rather than
toxic solvents, and natural bleaching agents such as hydrogen peroxide rather
than chlorine-based bleaches. The special techniques that the Company has
developed include: the tumbling of garments to loosen soil, the choice of
water-based cleaning method (which can include steaming, steam closet,
mechanical wet cleaning, sink washing, machine washing), specialized drying with
humidity control and finishing of garments with robotic steam finishing
equipment. See 'Business--Research and Development.'

Instead of using a perc machine, Ecomat utilizes a wet cleaning system that
consists of a specialized washer and a heat and humidity-sensitive dryer. With
the introduction of special non-toxic cleaning products, the Ecomat cleaner
washes garments in water. Water is one of the best known cleaning solvents in
the world. It can remove

<PAGE>

water-based stains such as perspiration that perc cannot because perc is only a
degreaser. The grease-based stains are removed equally as well by the Ecomat
spotting products. Ecomat laundromats use state-of-the-art, energy and water
efficient front-load washers that are controlled by proprietary hardware and
software that have been developed by the Company for optimal energy,
productivity and cost efficiency. See 'Business--Research and Development.'
There are currently only four 100% wet cleaning stores in the United States that
are not Ecomat facilities, two of which are sponsored by the E.P.A. See
'Business--Competition.'

locations for each of its Company-owned full-service facilities in Manhattan and
Mamaroneck, New York. The two full-service facilities will operate as central
cleaning plants for these 22 satellite units providing for increased revenue in
such full-service facilities while minimally increasing expenses related to such
expansion. The Company intends to build name-brand recognition in these two
markets within a relatively short period of time. In addition, the five
franchise cluster developments, the Ecomat self-service laundromat and drop-off
facility franchise already sold will allow the Company to achieve broader
recognition through the entire area. The Company has been negotiating for a
full-service facility in Chicago, Illinois that will be Company-owned. The
Company has selected a site for such facility and is awaiting the completion of
this Offering prior to signing a lease for such facility. The Company will also
open three (3) satellite locations for this full-service facility. In addition,
the Company intends on expanding its operations through a program of dry cleaner
and/or laundromat conversions to the Ecomat concept. To this end, the Company
offered to waive its initial conversion fee to any existing New York dry
cleaning establishment until the earlier of December 31, 1996 or the date the
new rules regulating dry cleaners in New York take effect. In addition, the
Company intends on expanding its operations through direct expansion of the
franchise program and the Ecomat system. See 'Business--The Strategic Plan of
Operations.'

SEE 'RISK FACTORS' FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED IN EVALUATING THE COMPANY AND ITS BUSINESS.

THE OFFERING

<TABLE>
<S> <C>
Securities offered........................ 1,200,000 shares of Common Stock. See 'Description of Securities.'
Offering price per share.................. $5.00
Common Stock outstanding prior
to the Offering......................... 2,400,000 shares
Common Stock to be outstanding
after the Offering (1).................. 3,600,000 shares
Use of proceeds........................... The Company intends to apply the net proceeds of this Offering for
the establishment of Company facilities, the expansion of its
franchising program, research and development, marketing, debt
retirement, working capital and general corporate purposes. See 'Use
of Proceeds.'
Risk factors.............................. An investment in the Shares involves a high degree of risk and
immediate substantial dilution. See 'Risk Factors' and 'Dilution.'
Proposed Nasdaq SmallCap
Symbol (2).............................. ECMT
</TABLE>

(Footnotes on next page)

<PAGE>

(Footnotes from previous page)

- ------------------
(1) Excludes up to (i) 180,000 shares of Common Stock reserved for issuance upon
the exercise of the Underwriter's Over-Allotment Option, and (ii) 120,000
shares of Common Stock reserved for issuance upon the exercise of the
Underwriter's Purchase Option. See 'Description of Securities' and
'Underwriting.'

(2) Although it is expected that the Common Stock will be included on Nasdaq,
there can be no assurance that an active trading market in the Common Stock
will develop, or if such a trading market in the Common Stock does develop,
that it will be sustained. See 'Risk Factors.'

SUMMARY FINANCIAL INFORMATION AND DATA

The following summary of financial data has been summarized from the
Company's financial statements included elsewhere in this Prospectus. The
information should be read in conjunction with the financial statements and the
related notes thereto:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------ -----------------------------
1994 1995 1995 1996
--------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA(1):
Revenues............................................... $ 147,000 $ 196,000 $ 135,000 $ 327,000
Costs and expenses..................................... 976,000 1,284,000 947,000 1,233,000
Operating loss....................................... (829,000) (1,088,000) (812,000) (906,000)
Other income (expense), net............................ (6,000) (25,000) (4,000) (63,000)
--------- ----------- ----------- --------------
Loss before income taxes............................. (835,000) (1,113,000) (816,000) (969,000)
Provision for income taxes............................. 4,000 6,000 3,000 4,000
--------- ----------- ----------- --------------
NET LOSS............................................. $(839,000) $(1,119,000) $ (819,000) $ (973,000)
--------- ----------- ----------- --------------
--------- ----------- ----------- --------------
Net loss per share..................................... $ (.35) $ (.47) $ (.34) $ (.41)
--------- ----------- ----------- --------------
--------- ----------- ----------- --------------
Weighted average shares outstanding.................... 2,400,000 2,400,000 2,400,000 2,400,000
--------- ----------- ----------- --------------
--------- ----------- ----------- --------------
Supplemental pro forma loss per share(2)............... $ (.44) $ (.33) $ (.35)
Supplemental pro forma shares outstanding(2)........... 2,480,897 2,446,112 2,617,909

DECEMBER 31, SEPTEMBER 30, 1996
------------------------ -----------------------------
1994 1995 ACTUAL AS ADJUSTED(1)
--------- ----------- ----------- --------------

<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)........................... $ (14,000) $ (163,000) $ (344,000) $3,302,000
Total assets........................................... 279,000 823,000 1,181,000 4,642,000
Total liabilities...................................... 102,000 1,445,000 2,777,000 1,503,000
Stockholders' equity (deficiency)...................... 177,000 (622,000) (1,595,000) 3,325,000
</TABLE>

- ------------------
(1) As adjusted to give effect to this Offering, assuming a public offering
price of $5.00 per Share with net proceeds of $4,920,000. Also reflects
payment of notes payable in the approximate amount of $1,274,000 from the
Offering proceeds. See 'Use of Proceeds.'

(2) The supplemental pro forma loss per share is based upon (i) 2,400,000 shares
of common stock outstanding during the period and (ii) the number of shares
(80,897, 46,112 and 217,909 for the year ended December 31, 1995 and the
nine months ended September 30, 1995 and 1996) whose proceeds would be
necessary to repay certain debt of the Company (Note E).

<PAGE>

RISK FACTORS

The securities offered hereby are speculative in nature and involve a high
degree of risk and should be made only by investors who can afford the loss of
their entire investment. Accordingly, in analyzing an investment in these
securities, prospective investors should carefully consider, along with the
other matters referred to herein, the following risk factors:

1. LIMITED OPERATING HISTORY; LOSSES; DEFICIT WORKING CAPITAL; DEFICIT EQUITY

To date, the Company operates only three facilities. The Company opened its
Company owned facility at 140 West 72nd Street in New York City in October of
1993. A second Company owned store (which also houses corporate headquarters)
was opened in October of 1995. A third Company owned store (an Ecomat satellite
facility) opened in June 1996. Since the first two stores are laboratories for
new product creation and ongoing research and development, they do not achieve
the financial benchmarks of a true operating facility. From inception to
September 30, 1996, the Company's operations suffered losses of $3,205,000. For
the nine months ended September 30, 1996 the Company's operations suffered
losses of $973,000. At December 31, 1995 and September 30, 1996, the Company had
a working capital deficiency of $163,000 and $344,000, respectively, and a
deficit in equity of $622,000 and $1,595,000, respectively. The Company will be
subject to numerous risks, expenses, problems and difficulties typically
encountered in expanding a new business. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' and 'Business.'

2. MODIFIED REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS RAISES DOUBT ON
ABILITY TO CONTINUE AS A GOING CONCERN

As a result of the Company's current financial condition, the Company's

independent certified public accountants have modified their report on the
Company's consolidated financial statement for the period ended December 31,
1995. The Company's independent certified public accountants report on the
consolidated financial statement includes an explanatory paragraph stating that
the net losses, accumulated deficit and negative working capital raise
substantial doubt about the Company's ability to continue as a going concern.
See 'Management's Discussion and Analysis of Financial Condition and Results of
Operations,' 'Use of Proceeds,' 'Business', and 'Financial Statements and
Notes.'

3. LIMITED REVENUE; PROBABLE FUTURE LOSSES

The Company has generated only limited revenue from the sale of franchises
and from operating its Company owned stores. Currently, the Company has signed
franchise agreements for five cluster developments and one self-service
laundromat and drop-off facility franchise. The Company has undertaken a program
to increase the amount of franchise sales by recruiting a franchise sales
specialist. The Company anticipates that it may incur losses in its Company
owned facilities until new satellite units can be added to both facilities,
which the Company does not anticipate will occur until several months following
the consummation of this Offering. There can be no assurance that the Company
will be successful in opening the number of Ecomat satellite stores required to
generate meaningful revenue or achieve profitable operations or that new Ecomat
stores opened by the Company or its franchisees will be operated profitably.

4. NEW CONCEPT; UNCERTAINTY OF MARKET ACCEPTANCE

Ecomat cleaners and laundromats will be a new concept in the United States
and, consequently, the level of demand and market acceptance are subject to a
high degree of uncertainty. Ecomat's name and servicemarks are not widely known.
The Company has not conducted and does not intend to conduct concept feasibility
or market studies. There can be no assurance that the Company will be able to
formulate a successful marketing strategy or that there will be a significant
demand for Ecomat cleaners and laundromats. As of September 30, 1996, there were
three Ecomat cleaners and laundromat Company owned stores in operation. Ecomat
has, therefore, not achieved a significant level of consumer recognition or
demand. In addition, there are currently only four 100% wet cleaning stores in
the United States that are not Ecomat facilities, two of which are sponsored by
the E.P.A. See 'Business--Competition.'

<PAGE>

5. RELIANCE ON THIRD PARTY SUPPLIERS AND MANUFACTURERS

The Company has entered into a franchisor account agreement with Wascomat
of America, Inc. ('Wascomat'), to provide laundromat and wet cleaning equipment
at a favorable discount, to itself and its franchisees. Such agreement may be
terminated by either party upon ninety (90) days notice. The Company cannot
assure the continued operation of Wascomat or its financial status. In the event
that Wascomat shall no longer supply the Company with equipment, there are other
machine manufacturers who could supply the Company with said equipment. However,
as in the case of Wascomat, it is not possible to predict the economic health of

said companies. The Company also has verbal agreements with VeitGMBH and
Highsteam Systems, Inc., to purchase specialized finishing equipment and with
Seitz Chemicals GMBH to purchase special cleaning products and cannot likewise
assure the continued fiscal viability of said companies. See
'Business--Suppliers and Manufacturers of Material.'

6. CLEANERS AND LAUNDROMAT INDUSTRIES AND COMPETITION

The dry cleaning and coin-operated laundromat industries are highly
competitive with respect to price, service, location and garment quality and are
affected by changes in consumer tastes, as well as national, regional and local
economic conditions and demographic trends. The Company and its franchisees
compete with a broad range of cleaners and laundromats, including those that
offer valet pick-up and delivery services. These competitors include
international, national and regional chains, franchisees of other cleaners and
laundromat chains, as well as stand-alone cleaners and laundromats. There is
also a large number of small independent cleaners and laundromats that offer
pick-up and delivery services. Many competitors have been in existence longer
and have a more established market presence and substantially greater financial,
marketing and other resources than the Company and its franchisees. Therefore,
there can be no assurance that the Company will be able to compete successfully.
See 'Business Competition.'

7. DECLINE IN FRANCHISED DRY CLEANERS AND OTHER DRY CLEANERS

Although there have been franchised dry cleaners that have experienced an
increase in their number of franchise units during the last decade, there are
certain franchised dry cleaners that have experienced a decline in the number of
its franchise units. Therefore, there can be no assurance that the Company will
be able to increase the number of its franchise units. Although there has been
an increase in the number of dry cleaning establishments in the last decade,
some dry cleaning businesses have declined due to, among other things,
increasing acceptance of casual clothes in the workplace. Therefore, there can
be no assurance that the Company's operations will increase due to such change
in acceptable workplace attire. See 'Business--Competition.'

8. ABILITY TO FIND SUITABLE CLEANERS AND LAUNDROMAT LOCATIONS

The choice of site location for each Ecomat cleaner and laundromat is
extremely important to the potential success of the particular store. The
Company has adopted a cluster development approach to establishing a presence in
a chosen location. The main plant, which is a full-service facility which
includes a wet cleaning plant, a coin-operated laundromat and an entertainment
area, can be located in a free standing one level unit. Up to three satellite
locations are chosen within a specific territory and opened (under a Development
Agreement) within two years to supply work to the main plant. Specific permitted
use and zoning regulations will vary from municipality to municipality, making
the process of site selection a highly complicated one. To the extent possible,
the Company plans to retain enough characteristics to remain consistent with the
prototype of the Ecomat facility. The Company and its franchisees will have to
compete with numerous other businesses for suitable locations for its stores and
there is no assurance that the Company will find an adequate number of suitable
locations. See 'Business--Expansion of Ecomat System and New Store Locations.'

9. DEPENDENCE UPON KEY PERSONNEL

The success of the Company is highly dependent upon the continued services
of Diane Weiser, the Company's President and Chief Executive Officer. The loss
of the services of Ms. Weiser would have a material adverse effect upon the
business of the Company and its relationships with customers and franchisees.
The

<PAGE>

Company has entered into an employment agreement with Ms. Weiser. However, if
the employment by the Company of Ms. Weiser terminates, or she is unable to
perform her duties, the Company may be substantially affected. The Company
intends on obtaining prior to the offering key man insurance on the life of Ms.
Weiser in the amount of $1,000,000, to be payable to the Company. There can be
no assurances that the Company will be able to replace Ms. Weiser in the event
her services become unavailable or that the proceeds of such insurance would be
adequate to compensate the Company for the loss of her services. See
'Management.'

10. GOVERNMENT REGULATION

The Company is subject to various laws and regulations of the localities in
which the facilities are located, which will affect its business. These laws and
regulations include building, health, sanitation, water use, employment and
safety regulations. New laws or regulations could have a significant financial
impact on the operations of the Company's facilities. See
'Business--Governmental Regulation.'

11. LIABILITY IN CONNECTION WITH PROVIDING DELIVERY SERVICE

A risk to the Company, as with other companies which offer delivery
services, is the potential for claims resulting from traffic accidents involving
its delivery personnel. There exists the possibility that a court could find the
Company liable for substantial damages if one of its drivers or one of its
franchisee's drivers is involved in an accident. The Company maintains standard
insurance coverage on all of its vehicles and requires all of its franchisees to
do the same.

12. COST OF FRANCHISING AND COST OF CONVERTING TO ECOMAT CONCEPT

The Company has outlined in great depth in its Uniform Franchise Offering
Circular (a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part) the start-up costs for Ecomat
facilities. These costs (described below) are substantial and could represent a
barrier to entry to many potential franchisees, which could materially adversely
affect the operations and revenues of the Company. A full service facility can
cost between $252,103 and $330,767; a cleaners between $154,045 and $188,132; a
satellite between $50,111 and $90,775; a drop site between $11,250 and $26,750;
a route franchise between $23,300 and $53,550; and a laundromat between $156,743
and $252,677.

Part of the Company's plan of operation is to persuade existing dry
cleaners and laundromats to convert to the Ecomat cleaners and laundromat
franchise concept. However, as in the case of start-up costs, the cost of
conversion is substantial and there is no assurance that the plan of converting
existing dry cleaners and laundromats will be successful. The cost of conversion
can range between $15,000 and $105,000 depending upon the equipment, store
configuration and other factors. As of the date of this Prospectus, the Company
has no conversion franchises. See 'Business--Start-Up Costs and Conversion
Franchises.'

13. LIMITATION ON DIRECTOR LIABILITY

As permitted by Delaware law, the Company's Certificate of Incorporation
limits the liability of directors to the Company or its stockholders for
monetary damages for breach of a director's fiduciary duty except for liability
in certain instances. As a result of the Company's charter provision and
Delaware law, stockholders may have limited rights to recover against directors
for breach of fiduciary duty. See 'Description of Securities'.

14. ADDITIONAL AUTHORIZED SHARES OF COMMON AND PREFERRED STOCK AVAILABLE FOR
ISSUANCE MAY ADVERSELY AFFECT THE MARKET

The Company is authorized to issue 25,000,000 shares of its Common Stock,
$.0001 par value. If all of the 1,200,000 Shares offered hereby are sold, there
will be a total of 3,600,000 shares of Common Stock issued and outstanding.
However, the total number of shares of Common Stock issued and outstanding does
not include the exercise of up to 180,000 Shares included in the Underwriter's
Over-Allotment Option to purchase 180,000 shares of Common Stock, the option
granted to the Underwriter to purchase up to 120,000 Shares in connection with
this Offering, and up to 4,000,000 shares authorized for issuance under the
Company's stock option plans. After reserving a total of 300,000 shares of
Common Stock for issuance upon the exercise of the Underwriter's Purchase Option
and the Over-Allotment Option and up to 4,000,000 shares authorized for issuance
under the

<PAGE>

Company's stock option plans, the Company will have at least 17,100,000 shares
of authorized but unissued Common Stock available for issuance without further
shareholder approval. As a result, any issuance of additional shares of Common
Stock may cause current shareholders of the Company to suffer significant
dilution which may adversely affect the market. The Company has agreed with the
Underwriter that it will not issue any of its capital stock for a period of 24
months from the Effective Date without the prior written consent of the
Underwriter.

In addition to the above-referenced shares of Common Stock which may be
issued without shareholder approval, the Company has 1,000,000 shares of
authorized preferred stock, the terms of which may be fixed by the Board of
Directors. The Company presently has no issued and outstanding shares of
preferred stock and while it has no present plans to issue any shares of
preferred stock, the Board of Directors has the authority, without shareholder

approval, to create and issue one or more series of such preferred stock and to
determine the voting, dividend and other rights of holders of such preferred
stock. The issuance of any of such series of preferred stock could have an
adverse effect on the holders of Common Stock. See 'Description of Securities.'

15. DEPENDENCE ON PROCEEDS OF THE OFFERING; POTENTIAL NEED FOR ADDITIONAL
FINANCING

The Company is dependent on the proceeds of this offering or other
financing to continue in business and to implement its business plan. The
Company believes that the funds to be raised in this offering, together with the
projected revenues of the Company, will be sufficient to enable the Company to
pursue both its present and its proposed business activities for the ensuing
twelve (12) months. There can be no assurance that such funds will, in fact, be
sufficient or that conditions and circumstances described herein may not result
in subsequent cash requirements by the Company. In the event of such
developments, attaining additional financing under such conditions may not be
possible, or even if additional capital may be otherwise available, the terms on
which such capital may be available may not be commercially feasible or
advantageous. See 'Use of Proceeds.'

16. RISKS ATTENDANT TO EXPANSION

The Company intends to utilize a significant portion of the net proceeds of
this Offering to expand its business. In this regard, the Company intends to
allocate a significant portion of the proceeds to market and advertise the
Company's products, to expand its franchising program, to open new stores and
for general administrative costs. Many of the risks of expansion may be
unforeseeable or beyond the control of management. There can be no assurance
that the Company will successfully implement its business plan in a timely or
effective manner. See 'Use Of Proceeds' and 'Business.'

17. NO COMMON STOCK DIVIDENDS

The Company has not paid any dividends on its Common Stock since its
inception and does not anticipate paying dividends on its Common Stock in the
foreseeable future. The future payment of dividends is directly dependent upon
future earnings of the Company, its financial requirements and other factors to
be determined by the Company's Board of Directors. For the foreseeable future,
it is anticipated that any earnings which may be generated from the Company's
operations will be used to finance the growth of the Company even if the
Company's operations are profitable. See 'Dividend Policy.'

18. IMMEDIATE SUBSTANTIAL DILUTION

Purchasers in this offering will incur an immediate and substantial
dilution of $4.08 per Share (or 81.6%) in the net tangible book value of their
shares (an increase of approximately $1.66 per Share to existing shareholders).
Additional dilution may result by future financing arrangements or if the
Underwriter exercises its Underwriter's Purchase Option. See 'Dilution.'

19. CONSIDERATION PAID BY PRESENT SHAREHOLDERS

The present shareholders of the Company have acquired their equity

interests (2,400,000 shares) in the Company at a cost of approximately
$1,610,000 ($0.67 per share) substantially below the offering price.
Accordingly, the public investors will bear most of the risk of loss. The
Company's present shareholders have

<PAGE>

agreed not to sell, transfer or otherwise pledge their shares for a period of 24
months from the Effective Date unless it receives the prior written consent of
the Underwriter. See 'Underwriting.'

20. CONTROL BY MANAGEMENT

Upon completion of this offering, officers and directors and persons who
may be deemed affiliates, as a group, will beneficially own and will have the
right to vote 66.66% of the then issued and outstanding Common Stock of the
Company (63.49% if the Over-Allotment Option is exercised in full), assuming no
exercise of the Underwriter's Purchase Option. Inasmuch as the Company's
Certificate of Incorporation does not provide for cumulative voting, such
persons will be in a position to elect all of the directors and thereby control
the Company. The purchasers of shares in this offering will have only a limited
ability to elect any directors of the Company or to significantly affect
corporate decision making on material events such as mergers or acquisitions.
See 'Principal Shareholders' and 'Description of Securities.'

21. PROCEEDS TO BENEFIT PRINCIPAL SHAREHOLDER/DIRECTOR

Upon the closing of the offering, the Company intends to repay a $1,000,000
loan to Palatin, AG, a Swiss corporation who is a principal shareholder and
whose sole shareholder is a director of the Company (Astrid Hindemith). Thus,
purchasers of Shares in this offering are advised that such principal
shareholder and director personally benefits in the completion of this offering.
See 'Use of Proceeds,' 'Management' and 'Principal Shareholders' and 'Certain
Relationships and Related Transactions.'

22. ARBITRARY DETERMINATION OF OFFERING PRICE

The offering price for the Shares has been determined by negotiations
between the Company and the Underwriter and does not bear any relationship to
the assets, book value, earnings or net worth of the Company or any other
recognized criteria and should not be considered to be an indication of the
actual value of the Company. See 'Underwriting' and 'Description of Securities.'

23. BROAD DISCRETION IN APPLICATION OF PROCEEDS

Approximately $1,620,000, or 32.92%, of the estimated $4,920,000 of net
proceeds will be applied to working capital and general corporate purposes.
Accordingly, the Company will have broad discretion as to the application of
such proceeds. See 'Use of Proceeds.'

24. DELINQUENT PAYROLL TAXES

The Company was delinquent in the payment of its payroll taxes in 1995 and
continues to be delinquent in 1996 ($149,000 was past due as of November 1,
1996). Delinquent payroll taxes include both amounts withheld from employees as
well as employer's portion of payroll taxes. These liabilities place the federal
government and various state and local agencies in the position of creditors.
There can be no assurance that the government agencies will not use their
authority to collect the amounts outstanding without regard to the position of
other creditors or Company commitments. The effect of delinquent payroll taxes
is to increase the net loss to the extent of accrued estimated penalties and
interest ($25,000 for the 9 months ended September 30, 1996).

25. NO ASSURANCE OF PUBLIC MARKET; VOLATILITY OF PRICE

Prior to this Offering, there has been no public trading market for the
Common Stock. Although the Company's Common Stock has been approved for
inclusion on the Nasdaq SmallCap Market, there can be no assurance that a
regular trading market for the Common Stock will develop after this offering or
that, if developed, it will be sustained. Therefore, purchasers of the Shares
may be unable to resell the securities offered herein at or near their original
offering price or at any price. Furthermore, it is unlikely that a lending
institution will accept the Company's securities as pledged collateral for loans
even if a regular trading market develops. The trading price of the Common Stock
could be subject to wide fluctuations in response to quarterly variations in the
Company's operating results, announcements by the Company or others,
developments affecting the Company, and other events or factors. In addition,
the stock market has experienced extreme price and volume fluctuations in recent
years. These fluctuations have had a substantial effect on the market price for
many

<PAGE>

companies, often unrelated to the operating performance of such companies, and
may adversely affect the market price of the Common Stock. See 'Underwriting.'

26. POTENTIAL EFFECT OF PENNY STOCK RULES ON LIQUIDITY OF SHARES

If the Company's securities are not listed on Nasdaq or certain other
national securities exchanges and the resale price thereof falls below $5.00,
then resales of such securities will be subject to the requirements of the penny
stock rules absent the availability of another exemption. The SEC has adopted
rules that regulate broker-dealer practices in connection with transactions in
'penny stocks.' Penny stocks generally are equity securities with a price of
less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the Nasdaq system, provided by the exchange or system).
The penny stock rules require a broker-dealer to deliver a standardized risk
disclosure document prepared by the SEC, to provide the customer with current
bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, monthly account statements
showing the market value of each penny stock held in the customer's account, to
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction. These disclosure requirements may have the effect of reducing

the level of trading activity in the secondary market for a security that
becomes subject to the penny stock rules. If the Company's securities become
subject to the penny stock rules, investors in this Offering may find it more
difficult to sell their securities. If the Company's securities were subject to
the existing or proposed regulations on penny stocks, the market liquidity for
the Company's securities could be severely and adversely affected by limiting
the ability of broker-dealers to sell the Company's securities and the ability
of purchasers in this Offering to sell their securities in the secondary market.

27. NASDAQ LISTING REQUIREMENTS

Under prevailing rules of the National Association of Securities Dealers,
Inc ('NASD'), in order to qualify for initial quotation of securities on The
Nasdaq SmallCap Market, a company, among other things, must have at least
$4,000,000 in total assets, $2,000,000 in total capital and surplus, $1,000,000
in market value of public float and a minimum bid price of $3.00 per share.
Although the Company may upon the completion of this Offering qualify for
initial quotation of its securities on The Nasdaq SmallCap Market, for continued
listing on The Nasdaq SmallCap Market, a company, among other things, must have
$2,000,000 in total assets, $1,000,000 in total capital and surplus, $1,000,000
in market value of public float and a minimum bid price of $1.00 per share. If
the Company is unable to satisfy the requirements for quotation on The Nasdaq
SmallCap Market, trading, if any, in the securities offered hereby would be
conducted in the over-the-counter market in what are commonly referred to as the
'pink sheets' or on the NASD OTC Electronic Bulletin Board. As a result, an
investor may find it more difficult to dispose of, or to obtain accurate
quotations as to the price of, the securities offered hereby. The above
described rules may materially adversely effect the liquidity of the market for
the Company's securities.

28. UNDERWRITER'S OPTION

Subject to the requirements of the SEC and NASD, the Company will grant to
the Underwriter, as partial consideration for services rendered, options to
purchase up to 120,000 Shares (the 'Underwriter's Purchase Option') at an
exercise price of $6.00 per Share. The Underwriter's Purchase Option may not be
sold, transferred, assigned or hypothecated for a period of one year from the
date of this Prospectus, except to officers of the Underwriter and members of
the selling group, as well as their officers and partners. An exercise of the
Underwriter's Purchase Option, which may be effected at any time, either in
whole or in part, beginning one year after the date of this Prospectus for a
period of four years thereafter, may adversely affect the Company's ability to
obtain equity capital, and, if the Common Stock issuable upon the exercise of
the Underwriter's Purchase Option is sold in the public market, may adversely
affect the market price of the Company's Common Stock. The Underwriter's
Purchase Option and the Shares issuable upon exercise of such option have been
included in the Registration Statement of which this Prospectus is a part. The
Company has agreed to keep such Registration Statement current, which could
result in substantial expense to the Company. This obligation is in addition to
certain registration rights granted to the Underwriter. See 'Underwriting' and
'Dilution.'

<PAGE>

29. CERTAIN ANTI-TAKEOVER PROVISIONS

The ability of the Board of Directors to issue shares of preferred stock in
one or more series and to determine the designation, voting and other rights,
preferences, privileges and restrictions applicable to such shares, together
with the heightened shareholder approval requirements associated with certain
business combination transactions involving a Related Person (as defined) and
applicable provisions of Delaware law may have the effect of discouraging a
merger, tender offer, proxy contest or other transaction involving a change in
control of the Company that has not received the prior approval of a majority of
the Company's Board of Directors. See 'Description of Securities.'

30. UNDERWRITER AS MARKET MAKER

A significant amount of Shares which are sold in this Offering may be sold
to customers of the Underwriter. Such a scenario could adversely affect the
market for and liquidity of the Company's Common Stock if additional
broker-dealers do not make a market in the Company's Common Stock. Although it
has no legal obligation to do so, the Underwriter may from time to time act as a
market maker and otherwise effect transactions in the Company's Common Stock.
The Company cannot ensure that other broker-dealers besides the Underwriter will
make a market in the Company's Common Stock. In the event that other
broker-dealers fail to make a market in the Company's Common Stock, the
possibility exists that the market for the liquidity of the Company's Common
Stock could be adversely affected, which in turn could affect shareholders'
ability to trade the Company's Common Stock.

Further, unless granted an exemption by the Securities and Exchange
Commission to its Rule 10b-6, the Underwriter may be prohibited from engaging in
any market making activities with regard to the Company's Common Stock for the
period from two or nine business days prior to the exercise of the Underwriter's
Purchase Option. As a result, the Underwriter may be unable to continue to
provide a market for the Company's Common Stock during certain periods, which
may adversely affect the price and liquidity of the Common Stock. See
'Underwriting.'

31. SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET

All of the Company's currently outstanding shares of Common Stock are
'restricted securities' and, in the future, may be sold upon compliance with
Rule 144, adopted under the Securities Act of 1933, as amended. Rule 144
provides, in essence, that a person holding 'restricted securities' for a period
of two years may sell only an amount every three months equal to the greater of
(a) one percent of the Company's issued and outstanding shares, or (b) the
average weekly volume of sales during the four calendar weeks preceding the
sale. The amount of 'restricted securities' which a person who is not an
affiliate of the Company may sell is not so limited, since non-affiliates may
sell without volume limitation their shares held for three years if there is
adequate current public information available concerning the Company. Upon the
sale of the Shares, the Company will have 3,600,000 shares of its Common Stock
issued and outstanding (3,780,000 if the Over-Allotment Option is exercised in
full), of which 2,400,000 shares are 'restricted securities.' Therefore, a

holder of restricted securities who has held them for at least the two year
period may sell under Rule 144. Non-affiliated persons who hold for the
three-year period described above may sell unlimited shares once their holding
period is met.

Prospective investors should be aware that the possibility of sales may, in
the future, have a depressive effect on the price of the Company's Common Stock
in any market which may develop and therefore, the ability of any investor to
market his shares may be dependent directly upon the number of shares that are
offered and sold. Affiliates of the Company may sell their shares during a
favorable movement in the market price of the Company's Common Stock which may
have a depressive effect on its price per share. All of the current shareholders
of the Company have agreed with the Underwriter not to sell any of their shares
of capital stock without the prior written consent of the Underwriter for a
period of 24 months from the Effective Date. See 'Description of Securities.'

<PAGE>

32. PERSONAL HOLDING COMPANY TAX

Pursuant to the Internal Revenue Code, if (a) five or fewer individuals,
directly or indirectly, own more than 50 percent of the outstanding stock of a
corporation during the last half of the corporation's taxable year and (b) at
least 60 percent of the corporation's adjusted ordinary gross income, in
relevant part, is from dividends, interest, or royalties, the corporation will
be a personal holding company. A personal holding company is subject to the
personal holding company tax which is a penalty tax owed in addition to any
other taxes. The personal holding company tax is imposed at the rate of 39.6
percent on a personal holding company's personal holding company income that is
not distributed to shareholders. The current ownership of the Company would
cause the Company to be a personal holding company if it satisfies the income
test. The Company does not expect more than 60% of its income to be from
interest or dividends and therefore does not expect to be a personal holding
company. However, there can be no assurance that the Company will not be a
personal holding company.

33. UNCERTAIN PROTECTION OF PATENT, TRADEMARK, COPYRIGHT AND PROPRIETARY RIGHTS;
SERVICEMARK AND TRADEMARK PROTECTION

Other than as set forth below, the Company currently does not have any
patent, trademark or copyright applications pending. However, the Company may
file patent, trademarks and copyright applications relating to certain of the
Company's processes and products. If patents, trademarks or copyrights were to
issue, there can be no assurance as to the extent of the protection that will be
granted to the Company as a result of having such patents, trademarks or
copyrights or that the Company will be able to afford the expenses of any
complex litigation which may be necessary to enforce their proprietary rights.
Failure of the Company's proposed patents, trademark and copyright applications
may have a material adverse impact on the Company's business since the Company
may not otherwise be able to protect the proprietary or trade secret aspects of
its business and operations, thereby diluting the Company's ability to compete
in the marketplace. Except as may be required by the filing of patent, trademark

and copyright applications, the Company will attempt to keep all other
proprietary information secret and to take such actions as may be necessary to
insure the results of its development activities are not disclosed and are
protected under the common law concerning trade secrets. Such steps will include
the execution of nondisclosure agreements by key Company personnel and may also
include the imposition of restrictive agreements on purchasers of the Company's
products and services, including franchisees. There is no assurance that the
execution of such agreements will be effective to protect the Company, that the
Company will be able to enforce the provisions of such nondisclosure agreements
or that technology and other information acquired by the Company pursuant to its
development activities will be deemed to constitute trade secrets by any court
of competent jurisdiction.

The Company applied for registration of its Ecoclean Servicemark (U.S.
Servicemark Application No. 74/515,635) and has received a notice of allowance
from the U.S. Patent and Trademark Office and has filed a statement of use for
this servicemark. In addition, the Company has applied for registration of its
Ecomat Servicemark (U.S. Servicemark Application No. 74/515,480) and has
received a notice of allowance as well. In addition, the Company has applied for
registration of its Ecomat and Design Trademark (U.S. Trademark Application No.
74/656, 937). This trademark was published in August 1996 and the Company has
filed a statement of use for this trademark. The Cleaner Choice Trademark (U.S.
Trademark Application No. 74/659,966) was published in July 1996. The Company
has filed a statement of use for this trademark. No assurance can be given that
the Company will be granted such trademark protection. The Company has also
applied for its Ecomat trademark with the Office for Harmonization in the
Internal Market (European Community Trademark Office) (Application No. 164,772).
In the event such protection is granted, no assurance can be given that the
Company would be able successfully to defend its servicemarks and trademarks if
forced to litigate its enforceability. The Company believes that its
servicemarks and trademarks constitute a valuable marketing factor. If the
Company were to lose the use of such servicemarks and trademarks, its business
could be affected. See 'Business--Intellectual Property.'

<PAGE>
USE OF PROCEEDS

The estimated net proceeds from the sale of the Shares offered hereby,
after deducting the Underwriting discount of $600,000 and other expenses of the
Offering, estimated at $480,000 will be approximately $4,920,000 ($5,703,000 if
the Over-Allotment Option is exercised in full). The Company expects to use such
net proceeds as follows:

<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE
PROCEEDS OF PROCEEDS
---------- -------------
<S> <C> <C>
Debt Retirement(1)......................................................... $1,300,000 26.42%
Research and Development(2)................................................ 300,000 6.10
Establishment of Company Facilities(3)..................................... 1,000,000 20.33

Marketing(4)............................................................... 700,000 14.23
Working Capital(5)......................................................... 1,620,000 32.92
---------- -------------
Total................................................................. $4,920,000 100.00%
---------- -------------
---------- -------------
</TABLE>

- ------------------
(1) Represents partial payment of a promissory note (in the principal amount of
$1,268,000), in favor of Palatin, AG, bearing interest at 7% per annum which
is payable as follows: (a) $1,000,000 is payable on the earlier of (unless
earlier accelerated due to an event of default) (i) September 25, 2001 or
(ii) the closing of the Company's initial public offering and (b) the
balance of such indebtedness is due and payable on the earlier of (unless
earlier accelerated due to an event of default) (i) September 25, 2001 or
(ii) two (2) years after the Effective Date. The Company used the proceeds
of the note for working capital purposes. See 'Management's Documentation
and Analysis of Financial Condition and Results of Operations.' Palatin, AG,
a Swiss corporation, is a principal shareholder of the Company, wholly owned
by Astrid Hindemith, a director of the Company. See 'Management,' 'Principal
Shareholders' and 'Certain Relationships and Related Transactions.' Also
consists of $290,000 which was borrowed by the Company for operations from
Jan Wernick. $140,000 of such amount was borrowed at an interest rate of 12%
per annum with the remaining $150,000 interest free. Mrs. Wernick is not
affiliated with the Company. Mrs. Wernick's husband, Judah Wernick, is
affiliated with the Underwriter as manager of its New York office. This
amount includes approximately $10,000 in accrued interest on the note. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'

(2) This amount represents funds to be used for the further development of the
Company's water recycling system and other energy efficient systems
development such as cogeneration, passive heat exchange, solar energy for
heating hot water, and smart card research and technology. See
'Business--Research and Development.'

(3) This amount represents costs involved in opening one (1) cluster development
consisting of a total of not less than four (4) stores (one (1) full service
facility and three (3) satellite locations) and a combination of twenty two
(22) satellite, route franchises and/or drop sites (for the Company's
Manhattan and Mamaroneck facilities). See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' and
'Business--The Strategic Plan of Operations.'

(4) The Company intends to expand its marketing efforts by advertising in all
medias, participating in national and international franchise shows, and
public relations. The Company has already embarked on an advertising
campaign to establish brand recognition for Ecomat and its franchises
nationwide. This includes advertising on cable television, radio and news
print. See 'Risk Factors--New Concept; Uncertainty of Market Acceptance' and
'Business--Marketing and Public Relations.'

(5) It is anticipated that such funds will be utilized approximately, as

follows: (a) hiring of new employees (director of operations, director of
franchise support, field support, bookeeper, and additional store managers,
counter/cleaner personnel and other general personnel as Company stores are
opened. See 'Business--Employees')--20%, (b) payroll, current and delinquent
payroll taxes and rent--15% and (c) general operating expenses--65%.

The Company believes that the proceeds of this Offering will be sufficient
to meet anticipated working capital needs of the Company for 12 months. If the
Company's plans change or its assumptions or estimates prove to be inaccurate,
the Company may require additional funds to achieve anticipated increased sales
or, if such funds are unavailable, the Company will have to reduce its
operations to a level consistent with its available funding.

The allocation of the proceeds of this Offering set forth above represent
the Company's best estimate based on its present plans. If any of these plans
change, the Company's Board of Directors, in its discretion, may find it
necessary or advisable and in the best interest of the Company to reallocate
some of the proceeds within the above described categories or to other purposes.
Proceeds received on the exercise of the Underwriter's Purchase Option and the
Over-Allotment Option will be contributed to working capital of the Company.

Proceeds not immediately required for the purposes described above will be
invested by the Company in the United States principally in the United States
government securities, short-term certificates of deposit, money market funds,
or other short-term interest bearing investments.

<PAGE>

DILUTION

The difference between the initial public offering price per share of
Common Stock and the pro forma net tangible book value per share after this
offering constitutes the dilution to investors in this Offering. Net tangible
book value per share is determined by dividing the net tangible book value of
the Company (total tangible assets less total liabilities) by the number of
outstanding shares of Common Stock. At September 30, 1996, the net tangible book
value [deficit] of the Company was $(1,780,000) or $(.74) per share.

After the sale of 1,200,000 Shares (less underwriting discounts and
commissions and estimated expenses of this Offering) the pro forma net tangible
book value of the Company at September 30, 1996 would have been $3,325,000 or
$.92 per share, representing an immediate increase in net tangible book value of
$1.66 per share to the existing shareholders and an immediate dilution of $4.08
per share (or 81.6%) to new investors.

The following table illustrates the foregoing information with respect to
dilution to new investors on a per share basis:

<TABLE>
<S> <C> <C>
Public offering price per share(1).................................................... $5.00
Net tangible book value deficit per share before Offering........................... (.74)

Increase per share attributable to new investors...................................... 1.66
As adjusted net tangible book value after Offering(1)................................. .92
Dilution to new investors............................................................. 4.08
</TABLE>

- ------------------
(1) Does not include funds which may be received upon exercise of the
Underwriter's Purchase Option.

If the Over-Allotment Option is exercised in full, the dilution to
purchasers of the Shares would be $3.91 per share.

The following table sets forth, at September 30, 1996, with respect to the
Company's existing shareholders and new investors, a comparison of the number of
shares of Common Stock acquired from the Company, the percentage of total
consideration paid and the average price per share of Common Stock, based upon
an initial public offering price of $5.00 per share.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Existing shareholders................................... 2,400,000 66.67 $1,610,000 21 $ .67
New investors........................................... 1,200,000 33.33 6,000,000 79 $ 5.00
--------- ------- ---------- -------
Total................................................... 3,600,000 100% $7,610,000 100%
--------- ------- ---------- -------
--------- ------- ---------- -------
</TABLE>

<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 30, 1996 as adjusted to give effect to the issuance and sale of the
Common Stock offered hereby:

<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1996
----------------------------
AS
ACTUAL ADJUSTED(1)
----------- -------------
<S> <C> <C>
Long-Term Debt--notes payable....................................................... $ 1,614,000 $ 340,000
----------- -------------

----------- -------------
Stockholders' Equity (deficit):
Preferred stock, $.0001 par value. Authorized 1,000,000 shares; none issued and
outstanding.................................................................... -- --
Common Stock, $.0001 par value. Authorized 25,000,000 shares; issued and
out-standing 2,400,000: issued and outstanding as adjusted: 3,600,000(2)....... -- --
Additional paid in capital.......................................................... 1,610,000 6,530,000
Accumulated deficit................................................................. (3,205,000) (3,205,000)
----------- -------------
Total stockholders' equity (deficit)........................................... $(1,595,000) $ 3,325,000
----------- -------------
----------- -------------
</TABLE>

- ------------------
(1) Gives effect to the receipt of the net proceeds of the offering and payment
of notes payable. See 'Use of Proceeds.'

(2) Excludes up to 300,000 shares of authorized but unissued Common Stock
reserved for issuance pursuant to the Underwriter's Purchase Option as well
as the Common Stock included in the Over-Allotment Option. See 'Description
of Securities' and 'Underwriting.'

DIVIDEND POLICY

The Company has never paid any dividends on its Common Stock. The Board of
Directors does not anticipate paying any dividends in the foreseeable future.
The payment of any future dividends will depend on such factors as earning
levels, anticipated capital requirements, the operating and financial condition
of the Company and other factors deemed relevant by the Board of Directors.

<PAGE>
SELECTED FINANCIAL DATA

The selected consolidated financial data presented below for the years
ended December 31, 1994 and 1995 and as of December 31, 1994 and 1995 have been
derived from the audited consolidated financial statments of the Company. The
statement of operations data for the nine months ended September 30, 1995 and
1996 and the balance sheet data for September 30, 1996 have been derived from
the unaudited consolidated financial statements of the Company and, in the
opinion of management, include all adjustments (consisting of normal and
recurring adjustments) which are necessary to present fairly the results of
operations and financial position of the Company for the periods and dates
presented. The selected consolidated financial and operating data for the nine
months ended September 30, 1996 are not necessarily indicative of the results to
be expected for the full year. The information set forth below is qualified in
its entirety by, and should be read in conjunction with, 'Management's
Discussion and Analysis of Financial Condition and Results of Operations' and
the Company's Consolidated Financial Statements, the Notes thereto, and the
other financial and statistical information included elsewhere in this
Prospectus.

STATEMENTS OF OPERATIONS DATA:
<TABLE>
<CAPTION>

NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30
---------------------------- --------------------------
1994 1995 1995 1996
---- ---- ---- ----

<S> <C> <C> <C> <C>
Revenues........................... $ 147,000 $ 196,000 $ 135,000 $ 327,000
Costs and expenses................. 976,000 1,284,000 947,000 1,233,000
----------- ----------- ---------- ------------
Operating loss................... (829,000) 1,088,000) (812,000) (906,000)
Other income (expense), net........ (6,000) (25,000) (4,000) (63,000)
----------- ----------- ---------- ------------
Loss before income taxes......... (835,000) (1,113,000) (816,000) (969,000)
Provision for income taxes......... 4,000 6,000 3,000 4,000
----------- ----------- ---------- ------------
NET LOSS...................... $ (839,000) $(1,119,000) $ (819,000) $ (973,000)
----------- ----------- ---------- ------------
----------- ----------- ---------- ------------
Net loss per share................. $ (.35) $ (.47) $ (.34) $ (.41)
----------- ----------- ---------- ------------
Weighted average shares
outstanding...................... 2,400,000 2,400,000 2,400,000 2,400,000
----------- ----------- ---------- ------------
----------- ----------- ---------- ------------
Supplemental pro forma loss
per share(2)..................... $ (.44) $ (.33) $ (.35)
Supplemental pro forma shares
outstanding(2)................... 2,480,897 2,446,112 2,617,909
</TABLE>

BALANCE SHEET DATA:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 1996
---------------------- ----------------------------
1994 1995 ACTUAL AS ADJUSTED(1)
-------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
Working capital (deficiency).............................. $(14,000) $ (163,000) $ (344,000) 3,302,000
Total assets.............................................. 279,000 823,000 1,181,000 4,642,000
Total liabilities......................................... 102,000 1,445,000 2,777,000 1,503,000
Stockholders' equity (deficiency)......................... 177,000 (622,000) (1,595,000) 3,325,000
</TABLE>

<PAGE>

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

GENERAL

Ecomat, Inc., is a Delaware corporation ('Ecomat' or the 'Company') that
has been formed to develop the Ecomat concept nationally and internationally
which, management believes, provided the first environmentally sound solution to
current dry cleaning methods in the United States and is currently the only
franchisor of this concept. Ecomat currently has three Company owned facilities
in New York City, Mamaroneck, NY and Scarsdale, NY.

There are currently signed franchise agreements for five cluster
franchises, one each in New Jersey, Long Island, NY, Brooklyn, NY, Austin, TX
and Westchester County, NY. In addition, there is one Ecomat self service
laundromat and drop-off facility franchise in Manhattan, NY. Other than the
Westchester route franchise cluster which is in operation (two (2) drop sites)
no other facilities under the cluster agreements are yet in operation. In
addition, the Company has signed a master franchise agreement for various parts
of Europe and a letter of intent for a master franchise agreement for India. See
'Certain Relationships and Related Transactions.'

The anticipated use of proceeds include partial payment ($1,000,000) of a
promissory note in favor of Palatin AG as well as other debt in the amount of
$290,000 and interest of approximately $10,000 associated with such debt. See
'Use of Proceeds' and 'Certain Relationships and Related Transactions.' The
Company anticipates expending a total of $300,000 on the following items: (i)
the further development of the Company's water recycling system, (ii) other
proprietary hardware and software (including smart card technology), and (iii)
energy-conserving systems development such as cogeneration, passive heat
exchange and solar energy for heating hot water. See 'Business--Research and
Development.' The opening of twenty six (26) new company stores (which include
at least one (1) main facility, three (3) satellite sites and a combination of
twenty-two (22) route franchises, satellite and/or drop sites) is projected at a
cost of $1,000,000. Marketing and public relations efforts will be expanded and
contracts with public relations and advertising firms will be entered into. The
Company believes that the offering proceeds will be sufficient to meet
anticipated working capital needs of the Company for twelve months. See 'Use of
Proceeds.'

RESULTS OF OPERATIONS

FISCAL YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED DECEMBER 31, 1994

Revenues. The Company had revenues for the year ended December 31, 1995
consisting of income from the Company owned stores totaling approximately
$196,000 and approximately $147,000 for the year ended December 31, 1994.
Revenues generated to date have not been sufficient to cover facilities costs of
producing such revenues. The amount of revenues required to cover fixed
facilities costs varies by location. The amount is dependent on market factors
such as rental, payroll, utilities and similar operating costs. For the
Company's current facilities, management believes that the amount of revenues
required to cover the fixed facilities costs at the Mamaroneck store and 8th
Street store are approximately $175,000 and $250,000, respectively. Management
anticipates operations for Mamaroneck to reach break-even by December 31, 1996
and that 8th Street is currently breaking even. However there can be no
assurance that these expectations can be met or that current conditions will not
deteriorate.

The increase of approximately $49,000 or 33% principally was due to
increased volume associated with the ongoing business of the Company owned
facilities and to a lesser extent revenue generated from the Mamaroneck store
opened in October 1995. The revenue generated in 1995 from the Mamaroneck store
totaled approximately $20,000. At December 31, 1995 the Company has recorded
approximately $76,000 of deferred franchise revenue relating to two cluster
franchises sold by the Company in 1995. However, the stores have not yet opened
and accordingly no revenue has been recognized.

Facilities Operating Costs. Cost of cleaning/laundry facilities increased
from $206,000 in 1994 to $337,000 in 1995 or 64%. This increase is primarily due
to new costs from operating the Mamaroneck facility including supplies, rent,
utilities and payroll costs amounting to $85,000. In addition, laundry costs for
the 8th St. facility increased by $68,000 which was principally due to increased
payroll costs of $63,000. Payroll costs for this store increased due to an
increase in the number of personnel and the fact that the manager of 8th Street
devoted his full time to 8th Street beginning in 1995, whereas the manager
previously had other responsibilities (in the area of franchise sales) prior to
1995.

<PAGE>

Advertising and Promotion--Franchise Sales. Advertising and promotion
expenses increased from $52,000 to $101,000 or 94% from 1994 to 1995 due to the
Company embarking on a franchise sales campaign in 1995. In order to further the
sales process, the Company developed, at a cost of approximately $50,000, a CD-
ROM which is used for trade shows, one-on-one presentations and for marketing
analysis in each franchise store.

General and Administrative Expenses. The Company's general and
administrative expenses increased from $575,000 to $858,000 or 49% from December
31, 1994 to December 31, 1995. Rent expense (other than rent relating to
cleaning/laundry facilities described above) increased from approximately
$11,000 to $107,000 from 1994 to 1995. This increase can be attributed to the
Company's corporate relocation to Mamaroneck, NY. The Company accounts for rent

expense on a straight line basis over the respective terms of the Company's
leases. The excess of the rent expense over the required lease payment is
reflected as deferred rent payable on the Company's balance sheet at December
31, 1995 and 1994. Compensation expense increased from $162,000 to $261,000 or
61% from 1994 to 1995 principally due to the following reasons: (i) addition of
new franchise sales personnel amounting to approximately $30,000 and (ii) new
staff assisting in the development of the Company's proprietary software,
hardware and water recycling system amounting to $69,000. Compensation expense
is expected to increase by approximately $143,000 due to increases under
employment agreements and the hiring of the Company's Vice President of
Franchise Sales and Marketing. See 'Management.' Loss on the disposition of
assets decreased from approximately $140,000 to $3,000 due to the closing of a
Company owned store during 1994. As a result of the store closing, the Company
abandoned certain cleaning equipment and leasehold improvements relating to the
renovation of the property. The leasehold improvements included plumbing,
electrical, utility upgrades and improvements which had a net book value of
$89,000. The cleaning equipment that was abandoned at the property had a net
book value of approximately $51,000. During 1995, the Company purchased
approximately $579,000 of fixed assets which principally consisted of additions
of cleaning/laundry equipment and leasehold improvements at the Company's
Mamaroneck, NY store. New equipment consisting of washing machines, cleaning and
pressing equipment and other related equipment amounted to approximately
$216,000. Leasehold improvements consisting of construction costs including
plumbing, electrical and utility upgrades amounted to approximately $290,000.
Furniture and fixtures and new computer equipment amounted to approximately
$55,000 and $18,000, respectively.

Interest Expense. Interest expense increased from approximately $6,000 to
$30,000 principally due to a new promissory note payable in 1995.

Net Loss. The net loss of the Company was $1,119,000 ($0.47 per share) for
the year ended December 31, 1995 and $839,000 ($0.35 per share) for the year
ended December 31, 1994. The Company expects to incur continuing losses until it
is able to generate revenue from franchise sales and/or substantial revenues
from the Company owned stores.

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1995

Revenues. The Company had revenues from cleaning and laundry services for
the nine months ended September 30, 1996 consisting of income from the Company
owned stores totaling approximately $327,000 and approximately $135,000 for the
nine months ended September 30, 1995. Revenues generated to date have not been
sufficient to cover facilities costs of producing such revenues. The amount of
revenues required to cover fixed facilities costs varies by location. The amount
is dependent on market factors such as rental, payroll, utilities and similar
operating costs. For the Company's current facilities, management believes that
the amount of annual revenues required to cover the fixed facilities costs at
the Mamaroneck store and 8th Street store are approximately $300,000 and
$270,000, respectively. Management anticipates operations for Mamaroneck to
reach break even by December 31, 1996 and that the 8th Street facility is
currently breaking even. However, there can be no assurance that these
expectations can be met or that current conditions will not deteriorate.

The increase of approximately $192,000 or 143% principally was due to
increased revenue generated from the Mamaroneck store opened in October 1995.
The revenue generated in 1996 from the Mamaroneck store totaled approximately
$123,000. Revenues generated from the 8th Street facility totalled approximately
$204,000 for the nine months ended September 30, 1996, an increase of $69,000 or
51% from the nine months ended September 30, 1995. This increase was due to
increased volume at this facility. At September 30, 1996 the Company has
recorded approximately $367,000 of deferred franchise revenue relating to
several franchises (including a master franchise) sold by the Company. However,
the stores have not yet opened and accordingly no revenue has been recognized.

<PAGE>

Facilities Operating Costs. Cost of cleaning/laundry facilities increased
from $265,000 for the nine months ended September 30, 1995 to $418,000 or 58%
for the nine months ended September 30, 1996. This increase is due to new costs
from operating the Mamaroneck facility including supplies, rent, utilities and
payroll costs amounting to $163,000. Facility operating costs for the 8th St.
facility were similar for the nine months ended September 30, 1995 compared to
the nine months ended September 30, 1996.

Advertising and Promotion--Franchise Sales. Advertising and promotion
expenses decreased $46,000 from $77,000 to $31,000 for the nine months ended
September 30, 1995 to September 30, 1996 due to the Company embarking on a
franchise sales campaign in 1995.

General and Administrative Expenses. The Company's general and
administrative expenses increased from $560,000 to $694,000 or 24% for the nine
months ended September 30, 1995 compared to the nine months ended September 30,
1996. Rent expense (other than rent relating to cleaning/laundry facilities
described above) increased approximately $4,000 due to the Company's corporate
relocation to Mamaroneck, NY. The Company accounts for rent expense on a
straight-line basis over the respective terms of the Company's leases. The
excess of the rent expense over the required lease payment is reflected as other
long-term liabilities on the Company's balance sheet at September 30, 1996 and
1995. Compensation expense increased from $184,000 to $310,000 or 68% for the
nine months ended September 30, 1995 to the nine months ended September 30, 1996
principally due to the following reasons: increases under certain employment
agreements and the hiring of the Company's Vice President of Franchise Sales
totalling approximately $107,000.

Interest expense. Interest expense increased approximately $51,000 due to
various promissory notes payable issued in the latter part of 1995. (See
Liquidity and Capital Resources).

Net Loss. The net loss of the Company was $973,000 ($0.41 per share) for
the nine months ended September 30, 1996 and $819,000 ($0.34 per share) for the
nine months ended September 30, 1995. The Company expects to incur continuing
losses until it is able to generate significant revenues from franchise sales
and/or substantial revenues from the Company-owned stores.

LIQUIDITY AND CAPITAL RESOURCES

As a result of the Company's current financial condition, the Company's
independent certified public accountants have modified their report on the
Company's consolidated financial statement for the period ended December 31,
1995. The Company's independent certified public accountants report on the
consolidated financial statements includes an explanatory paragraph stating that
the net losses, accumulated deficit and negative working capital raise
substantial doubt about the Company's ability to continue as a going concern.

During the nine months ended September 30, 1996 and 1995 the Company used
approximately $321,000 and $516,000 of cash in operations. The Company used
approximately $743,000 and $571,000 of cash in operations during the year ended
1995 and 1994, respectively. The Company also used approximately $579,000 and
$67,000 of cash to purchase equipment and other fixed assets for the
Company-owned stores during the year ended 1995 and 1994, respectively. Those
amounts represented three stores that were constructed, one of which was closed
by the Company because of variance problems with the building in New York City.
The owner of this New York City building in which the Ecomat facility was
located, never obtained and refused to obtain, the proper certificate of
occupancy for commercial use. The Company decided that the costs and efforts to
obtain proper approvals were greater then the expected benefits of remaining at
that location. As a result of the store closing, the Company abandoned certain
cleaning equipment and leasehold improvements relating to the renovation of the
property. The leasehold improvements included plumbing, electrical, utility
upgrades and improvements which had a net book value of $89,000. The cleaning
equipment that was abandoned at the property had a net book value of
approximately $51,000. The Company has no material commitments for capital
expenditures. If the Offering is achieved, the Company intends to use the
proceeds to establish one (1) cluster development which consists of one (1) main
facility ($330,767) and three (3) satellite sites ($150,333) for a total
expenditure of $481,100 with the balance of the proceeds to be used to open a
combination of twenty-two (22) drop sites, satellites and route franchises. A
drop site can be as low as $11,250, a route franchise $23,300 and a satellite
$50,111. The following combination is contemplated:

Two (2) satellites............................................... $100,222
Four (4) route franchises........................................ $ 93,200
Sixteen (16) drop sites.......................................... $180,000
--------
Total....................................................... $373,422
--------
--------

<PAGE>

The balance will be allocated to either approximately two (2) additional
satellite units, four (4) additional route franchises, or ten (10) additional
drop sites after completion of the initial twenty two (22) units. The above
allocated prices for the initial twenty two (22) satellite facilities, route
franchises and drop sites assume the minimum costs for such facilities. The
reason for this assumption is that the Company, at its sole discretion, has

control over the size of the facilities and the amount of equipment installed as
well as the fact that the Company does not incur franchise fees for its own
stores nor does the Company incur fees for its own proprietary hardware and
software (all of which are factors which would increase start-up costs for such
facilities). For a discussion of the range of start-up costs for the various
franchises offered by the Company, see 'Business--Start-Up Costs.'

To date, the Company has financed its operations primarily through its
founders who, contributing approximately $1,610,000 in equity and $1,268,000
($1,185,000 as of September 30, 1996) in a note payable, have represented a
stable and reliable source of funds for the Company through its early
development stage. The $1,268,000 note is payable to a foreign corporation
wholly owned by a stockholder/director of the Company. The note bears interest
at 7% and is payable as follows: (a) $1,000,000 is payable on the earlier of
(unless earlier accelerated due to an event of default) (i) September 25, 2001
or (ii) the closing of the Company's initial public offering of securities and
(b) the balance of such indebtedness is due and payable on the earlier of
(unless earlier accelerated due to an event of default) (i) September 25, 2001
or (ii) two (2) years from the Effective Date. If the Offering is completed
prior to December 31, 1996, the holder shall have the right to convert, at
maturity, the balance of the indebtedness owed to it into shares of Common Stock
at a purchase price equal to the book value of the Company's Common Stock on the
date of the most recent fiscal quarter ended prior to conversion. See 'Use of
Proceeds' and 'Certain Transactions.' (see Note E to the Financial Statements).
The proceeds from the note payable were principally used to fund the Company's
purchases of fixed assets of $579,000 during the year and the remaining amounts
were used for operating expenses. The Company also borrowed $290,000 evidenced
by notes payable to Jan Wernick (the wife of Judah Wernick, the manager of the
Underwriter's New York office). $140,000 of the principal amount of such notes
bear interest at 12% and are payable on the earliest of (i) the closing of the
proposed initial public offering; or (ii) the closing of a debt or equity
financing of $3 million or more. The remaining $150,000 is due and payable on
the same terms and is interest free. See 'Use of Proceeds.'

The Company believes that the minimum proceeds of the offering, will be
sufficient to meet anticipated working capital needs of the Company for at least
the next 12 months. Management's plans for generating sufficient cash to support
its operations for the next 12 months includes:

o cash from sales of initial franchises;

o cash from royalties upon the opening of franchised stores;

o proceeds from its intended initial public offering; and

o debt or equity funding from its principal shareholders should cash from
the above sources be insufficient.

The Company believes the minimum amount necessary to support its operations
for the next 12 months is approximately $325,000. Management determined this
amount based on its assessment of the current operations of its company owned
facilities (which are either currently already at a break even stage or
anticipated to break even during the year ended December 31, 1996), cash of
$423,000 expected to be generated from initial franchise fees, $30,000 from

franchise royalties and the anticipated amount of general and administrative
expenses. Management estimated the $423,000 based on franchise agreements signed
to date and the Company's expanding marketing and sales programs through which
it anticipates selling approximately 11 cluster franchises (the standard fee is
$36,500) during the next 12 months and, to a lesser extent several single or
conversion franchises. Until the concept of wet cleaning is more widely
accepted, and the outcome of proposed state regulations becomes known, the
Company anticipates selling cluster franchises rather than conversions. See
'Business--Plan of Expansion.'

If the Company's plans change or its assumptions or estimates prove to be
inaccurate, the Company may require additional funds to achieve anticipated
increased sales or, if such funds are unavailable, the Company will have to
reduce its operations to a level consistent with its available funding. In the
event the Company requires additional working capital it will seek additional
funding from one or several of its principal shareholders. In addition, the
Company would pursue alternative private placement of equity securities. There
can be no assurance that the Company will be successful in completing such
offerings.

<PAGE>

BUSINESS

GENERAL

Ecomat, Inc. (the 'Company' or 'Ecomat') is a Delaware corporation that has
been formed to develop the Ecomat concept nationally and internationally which,
management believes, provided the first environmentally sound solution to
current dry cleaning methods in the United States and is currently the only
franchisor of this concept. Ecomat has three subsidiaries (in addition to a
company-owned satellite facility):

1. 8th Street Laundromat, Inc. ('8th Street'), a company owned store
at 140 West 72 St. New York City;

2. Ecoclean Systems International, Ltd. ('Ecoclean Systems'), a
company owned store at 147 Palmer Avenue, Mamaroneck, New York; and

3. Ecofranchising, Inc. ('Ecofranchising'), the franchisor of the
Ecomat concept.

8th Street is a full-service Ecomat cleaners and laundromat which opened on
October 24, 1993. The facility has served as the base for the Company's research
and development program since 1993. New methods of wet cleaning, water
recycling, and automated machine monitoring have been advanced by the Company at
this location. See 'Business--Research and Development.'

Ecoclean Systems is a full-service Ecomat cleaners and laundromat which
opened on October 14, 1995. The facility is the flagship store of the Company
and the prototype for all Ecomat full-service franchises. A fully operational
water recycling plant is in place as well as all proprietary hardware and

software created by the Company for its own and its franchisees' use.

Ecofranchising is the franchisor of the Ecomat concept. The Company began
offering franchises in October of 1994. There are currently signed agreements
for five cluster franchises, one each in New Jersey, Long Island, NY, Brooklyn,
NY, Austin, TX and Westchester County, NY. In addition, there is one Ecomat
self-serve laundromat and drop-off facility franchise in Manhattan, NY. Other
than the Westchester route franchise cluster which is in operation (two (2) drop
sites) no other facilities under the cluster agreements are yet in operation.
See 'Business--Franchise Agreements.'

INDUSTRY OVERVIEW

THE COMMERCIAL LAUNDRY INDUSTRY

In the first half of this century, a thriving commercial laundry industry
conveniently picked up, processed and delivered tons of laundry to millions of
households. It flourished because home-based laundering was a tedious chore that
involved boiling, scrubbing on a board, draining, refilling, and rinsing,
hanging on the line, ironing, etc. With the advent of the home washer and dryer
and the coin-operated laundromat in the early 1950s and the creation of
wash-n-wear fabric in the 1960s, consumer demand for commercial laundering
declined. There are now over 30,000 coin-operated laundromats in the United
States. The newest trend of the 1980s and 1990s has been the increase in the
wash and fold valet service offered by many laundromats that can account for as
high as forty percent (40%) of a laundromat's revenue depending upon location.

Most of these laundromats, however, do not offer pick-up and delivery
services. Measured in today's dollars, the coin-operated laundromat industry is
approximately a $2.4 billion dollar industry. Management believes that the high
cost of water in many municipalities and the exorbitant impact of 'hook-up' fees
that are charged to new laundromats based on the number of washers installed are
barriers to entry in the commercial laundry industry.

THE DRY CLEANING INDUSTRY

The dry cleaning industry is a remnant of the old commercial laundry
industry. Dry-cleaning evolved to process the dressier types of garments that
were either too difficult or too time consuming for people to wash or press
themselves. It is a very fragmented industry with over 35,000 outlets of which
95% are individually owned and operated and 98% consist of less than four (4)
stores. Hence, it is very much still a Mom and Pop industry. It

<PAGE>

is characterized by a high fixed cost structure (including labor; over 75% of
the costs are fixed) and high labor content (including management labor;
approximately 45%). Management believes that these two factors have induced
dry-cleaners to compete based on price in order to increase volume while trying
to minimize labor costs. This has led to high labor turnover rates, a lack of
differentiation in the industry and a high level of consumer dissatisfaction.

The most detrimental factor that adversely affects the dry cleaning
industry at present is its reliance on the cleaning solvent, perchloroethylene,
known as 'perc' for short. Perc has a variety of toxic effects, which have been
documented primarily in studies of dry cleaning workers and others exposed to
perc on the job. Excessive exposure to perc can cause damage to the central
nervous system, liver, kidneys, and the reproductive system. The International
Agency for Research on Cancer recently reclassified perc as a 'probable human
carcinogen' from a 'possible human carcinogen.' In New York State alone, the
Department of Health has stated that about 170,000 state residents are exposed
to high perc concentrations because they live in apartments near a dry cleaner
or work in a building with a dry cleaner. In addition, the perc cleaning process
produces contaminated wastewater that must be disposed of somewhere. Evidence
strongly suggests that some dry-cleaners are dumping this water into municipal
sewers causing Superfund issues for owners of commercial real estate and
neighboring tenants who feel the impact of contaminated sites.

Dry-cleaning is far from a 'dry' process. A traditional perc cleaner sorts
clothes by color and places them by 35 or 50 pound loads in a perc machine.
There are many types of perc machines; to a lay person they look like large
front-load washing machines. Instead of water, the clothes are soaked in perc,
which is an industrial degreaser, and go through a 'wash' process. The oldest
system then requires that a person reach into the perc machine, pull out the
clothes soaked with perc and place them in an extractor which then recaptures
some of the perc to be used again and again. The clothes are then dried in a
special drier which is vented to the outside air. The perc is therefore directly
released into the atmosphere. Newer machines known as 'fourth generation'
machines do not have this 'transfer process.' They are called 'dry-to-dry' perc
machines. The dry-cleaning industry, spurred by strong environmental regulations
in Europe, has begun to address the issue of perc exposure to workers and
consumers alike.

However, in October of 1995, the Consumers Union of United States, Inc.
released a study which determined that even with modern, unvented, dry-to-dry
perc machines, serious perc pollution in the apartments above dry-cleaners still
poses a clear danger to the health of the apartment dwellers. The study states
that the approach currently being pursued by New York State, requiring all dry
cleaners to install more modern dry cleaning equipment will improve the
situation from the older equipment, but will not guarantee acceptably low perc
levels in the apartments' air. The study recommends that dry-cleaners be
prohibited from operating in residential buildings altogether, and that people
living above a dry-cleaner get their air tested regularly. In July 1996 the
Department of Environmental Conservation of the State of New York released (for
comment to the public) revisions to the 'perc' dry cleaning regulations (6 NYCR
Part 232) which, when put into effect, will require traditional dry cleaners, at
their own expense, to upgrade outdated machinery, post notice warnings of the
dangers of 'perc', construct vapor barriers, adhere to record keeping
requirements, pay for semi-annual inspections and attend training sessions. In
addition, in May 1996 a bill that will phase out 'perc' dry cleaning from all
residential buildings in New York City was introduced. See
'Business--Governmental Regulation.'

THE ECOMAT SYSTEM

Management believes that the Ecomat system provided the first

environmentally sound solution to current dry cleaning methods.

Ecomat uses a combination of cleaning techniques. These include
multi-process wet cleaning methods which were studied by the Environmental
Protection Agency ('E.P.A.') and described in the E.P.A. report 'Multi-process
Wet-Cleaning--Cost and Comparison of Conventional Dry-Cleaning and An
Alternative Process; U.S. Environmental Protection Agency EPA 744-R-93-004,
September 1993.' Such study concluded that the wet cleaning process was proven
to be superior to the traditional dry cleaning method in the 4 of 6 areas used
to compare the two methods (customer satisfaction, cleanliness, appearance and
odor). It rated equal to traditional dry-cleaning in the other 2 areas
(shrinkage and cost). The Company has also developed its own techniques of
treating particular fabrics that can be problematic to both 'dry' and 'wet'
cleaners alike.

<PAGE>

Investors are advised that the E.P.A. is not endorsing or promoting the Company
and its business, including the Ecomat system. 'Wet cleaning' as opposed to 'dry
cleaning' is a method for deep cleaning fabrics using water, steam, plant-based
cleaning agents rather than toxic solvents, and natural bleaching agents such as
hydrogen peroxide rather than chlorine-based bleaches. The special techniques
that the Company has developed include: the tumbling of garments to loosen soil,
the choice of a water-based cleaning method (which can include steaming, steam
closet, mechanical wet cleaning, sink-washing, machine-washing), specialized
drying with humidity control and finishing of garments with robotic steam
finishing equipment. See 'Business--Research and Development.'

Ecomat has achieved a significant (if not total) reduction of hazardous
waste emissions when compared to a traditional dry-cleaner. Because of the
Company's cleaning methods, management believes an Ecomat facility can be safely
located in mixed residential and commercial housing and in close proximity to
stores that sell food. High concentrations of 'perc' contamination have been
detected especially in dairy products when a traditional dry cleaner is located
next to a food store.

Instead of using a perc machine, Ecomat utilizes a wet cleaning system that
consists of a specialized washer and a heat and humidity-sensitive dryer both of
35 or 50 pound capacity. With the introduction of special non-toxic cleaning
products, the Ecomat cleaner washes garments in water. Water is one of the best
known cleaning solvents in the world. It can remove water-based stains such as
perspiration that perc cannot because perc is only a degreaser. The grease-based
stains are removed equally well by the Ecomat spotting products.

Ecomat laundromats use and will continue to use state-of-the-art, energy
and water-efficient front-load washers that are controlled by proprietary
hardware and software that have been developed by the Company for optimal
energy, productivity and cost efficiency.

SERVICE, QUALITY AND CUSTOMER SATISFACTION

Ecomat quality service has and will include: personal attention to the

specialized care needs of each individualized garment, convenient locations,
easily accessible pick-up and delivery, hours that cater to busy schedules,
self-service and drop-off facilities, and bright attractive store designs which
meet the requirements of the Americans with Disabilities Act.

Customers are and will be helped by a trained and courteous staff. Research
shows that while there are low switching barriers for the customer, the majority
of customers are not particularly price sensitive. Management believes that
this, coupled with the consumer's perception of poor quality and service in the
traditional dry-cleaner, presents an opportunity for an Ecomat facility to
differentiate itself through superior customer retention, brand name, increased
revenue and decreased costs.

Each full-service facility has and will have a coffee bar, televisions and
a comfortable lounge. Depending on the market, Ecomat provides and will provide
recreational equipment such as healthful snack vending machines and mailboxes,
and in college markets, computers and printers tied into the Internet that can
be rented by the minute. Management believes that each location is a highly
desirable environment for families with small children, college students and
young professionals.

STORE CONFIGURATION

An Ecomat store or franchise offers several configurations for the kind of
facility best suited to the location chosen:

o AN ECOMAT FULL-SERVICE FACILITY that includes: self-service
coin-operated laundromat with wash and fold service, a cleaning plant on
premises and an entertainment area that may include televisions and lounge,
vending machines, mailboxes and computers.

o AN ECOMAT CLEANERS that includes: wash and fold service and a
cleaning plant on premises.

o AN ECOMAT SATELLITE FACILITY that functions as a convenient drop-off
site for both wash and fold laundry and cleaning where wash and fold is
also done on premises.

o AN ECOMAT SELF-SERVICE LAUNDRY FACILITY that has self-service
coin-operated laundry machines and also serves as a drop-off site for wash
and fold and cleaning.

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o AN ECOMAT ROUTE FRANCHISE that consists of a franchise operating a
vehicle that is affiliated with a Ecomat cleaners or a full service
facility.

o AN ECOMAT DROP SITE that consists of a drop-off site for wash and
fold and cleaning but where no wash and fold is done on premises.

STORE OPERATIONS

The goal of the Company in all its company owned and franchised locations
is to make it pleasurable for the customer to have clothes laundered and cleaned
in an environmentally sound way, and to become the industry leader in the
laundromat and cleaning industries.

In order to achieve this goal, all stores are and will be required to
adhere to the Company's standards of cleanliness, service and quality. The
Company believes that its operating systems, store layout and cluster program
(described below) result in lower operating cost, improved cleaning quality and
higher customer service.

TRAINING AND DEVELOPMENT

The Company has developed operations manuals that cover all areas of
technical and operational performance. The manuals guide the operator through
garment cleaning techniques, delivery services, merchandising and promotions.

The Company offers an extensive training program (which includes
pre-opening and post-opening training) for its staff and its franchisees and
their staffs, including education of management in the operation of a business.
The Company continually updates all training programs and manuals to offer the
most up to date information available.

TARGETED MARKETING

The Company's marketing programs target the delivery area of each store,
making extensive use of direct mail promotions, leaflets and local media
advertising such as radio and cable television. The local marketing efforts
include more effective involvement with community oriented activities with
sports teams, schools and other organizations. The Company has produced its own
CD Rom which runs in every company owned and franchised unit. The CD Rom is
interactive and allows the Company to track customer preferences through direct
feedback to the Company's corporate headquarters. The Company can then adjust
its marketing based on these preferences.

The CD Rom includes all of the press in the television, radio and print
media that has ever appeared about Ecomat. It also gives the viewer a 3D tour of
a full-service Ecomat facility and a demonstration of the different
configurations of Ecomat franchises available. The Company utilizes the CD ROM
at industry and franchise shows and allows the Company to bring the Ecomat
concept directly to the viewer whether it be at a meeting, large convention, or
one-on-one encounter.

The Company has received media coverage in television (CNN, TBS, and CBS
News), radio (National Public Radio, WABC and Bloomberg Report), and in the
press (Wall Street Journal, Chicago Tribune, USA Today, Consumer Reports, Crains
New York Business, Success Magazine and the New York Times). Recently, the
Company was named in the top 6 picks for 1996 by the Franchise Times (a
publication of Crain Communications, Inc.). The Company will continue to pursue
public relations by vigorously pursuing all media coverage. Investors are
advised that the above identified media are not endorsing or promoting the
Company and its business, including the Ecomat system.

The Company participates in extensive public relations and advertising
campaigns, and keeps abreast of industry trends and franchisee news. The
Company's corporate staff is available on a daily basis for support and
assistance in every aspect of store operations.

The Company has recently established a home page on the Internet
(http://www.ecomat.com) which uses many portions of its CD ROM. The home page
will be expanded to make available cleaning services to a wide market via UPS or
other carriers.

<PAGE>

THE STRATEGIC PLAN OF OPERATIONS

The Company's objective is to develop recognition of the Ecomat cleaners
and laundromat concept and to maximize the value of the Company for its
shareholders. To accomplish these objectives, the Company intends to pursue a
strategy designed to achieve high levels of customer satisfaction and repeat
business. The Company believes it will be successful in meeting its objectives
through the opening of more strategically located company owned stores and
through expansion via franchise unit sales. The Company intends to open eleven
satellite locations for each of its Company owned full-service facilities in
Manhattan and Mamaroneck, New York. The two full-service facilities will operate
as central cleaning plants for these twenty two (22) satellite units providing
for increased revenue in such full-service facilities while minimally increasing
expenses related to such expansion. The Company intends to build name brand
recognition in these two markets within a relatively short period of time. In
addition, the five franchise cluster developments and the Ecomat self-service
laundromat and drop-off facility franchise already sold will allow the Company
to achieve broader recognition through the entire area. The Company has been
negotiating for a full-service facility in Chicago, Illinois that will be
company owned. The Company has selected a site for such facility and is awaiting
the completion of this Offering prior to signing a lease for such facility. The
Company will also open three (3) satellite locations for this full-service
facility.

NEW STORE LOCATIONS

The Company believes that the location of an Ecomat facility is an
essential element of success. The Company intends to focus its development of
the franchise program and the expansion of company owned facilities on store
locations which are strategically located in areas that satisfy the Company's
demographic criteria. The Company will in the near term seek locations for
Ecomat facilities (for both company owned and franchises) in larger cities and
college towns, in particular.

CLUSTER DEVELOPMENT PROGRAM AND FRANCHISE SYSTEM

The Company has developed a 'cluster program' to maximize the market
potential of each Company and franchised location. In the 'cluster program', the
right is acquired to develop one Ecomat full-service facility or Ecomat cleaners
as a primary location. Over the first twenty four month period after the signing

of the development agreement by a franchisee, three additional satellite
facilities are opened which affords total market saturation and economies of
scale to the entire cluster. A pick-up and delivery system is put in place that
maximizes the potential of providing rapid, efficient and convenient service to
customers.

The Company is committed to developing a strong franchise system by
attracting experienced operators and ensuring that each franchisee strictly
adheres to the Company's high standards. The Company seeks to attract
franchisees with business experience. The Company devotes significant resources
to providing its franchisees with assistance in marketing, site selection, store
design and employee training. Franchisees are approved based on the applicant's
business background and financial resources.

START-UP COSTS

A full-service facility can cost between $252,103 and $330,767; a cleaners
between $154,045 and $188,132; a satellite between $50,111 and $90,775; a drop
site between $11,250 and $26,750; a route franchise between $23,300 and $53,550
and a laundromat between $156,743 and $252,677.

The differences in facility cost are primarily due to the size of the
facility and the equipment requirements. A detailed itemization of all start-up
costs is presented in the Uniform Franchise Offering Circular ('UFOC') which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part. The UFOC is prepared according to the format and presentation required
by the Federal Trade Commission ('FTC') and as such is the document of record
describing this 'business format franchise' offered in the twenty six (26)
states which have no 'state specific' requirements. The UFOC is also prepared
according to the requirements of (and the franchise is approved for sale in) the
States of New York, California, Illinois, Connecticut, North Carolina and
Washington. Abbreviated registration has been filed in Texas and Florida.

<PAGE>

FRANCHISE AGREEMENTS

Each franchisee must comply strictly with the Ecomat system and its
standards, specifications and procedures. The franchise agreement sets forth
various requirements regarding signage, equipment, service, hours of operation,
cleaning techniques and computerization.

Under the Company's current standard franchise agreement, the franchisee is
required to pay, at the time of the signing of the agreement, a non-refundable
fee of between $15,000 and $36,000 depending on whether the franchisee is a
conversion franchisee or a new franchisee of a 'cluster program.' The Company's
standard franchise agreement provides for a term of ten years (with three 5-year
renewal options) and payment to the Company of a royalty fee of 5.5% of sales.
This royalty fee can be reduced to 4.5% of sales when aggregate sales of $
40,000 per month is achieved when there are multiple satellite units within a
'cluster program.' See also 'Marketing and Public Relations' below. The
franchise agreements give the Company the right to terminate a franchisee for a

variety of reasons, including a franchisee's failure to make payments when due
or failure to adhere to the Company's policies and standards.

There are currently signed franchise agreements for five cluster
franchises, one each in New Jersey, Long Island, NY and Brooklyn, NY, Austin,
Texas and Westchester County, NY. In addition, there is one Ecomat self-service
laundromat and drop-off facility franchise in Manhattan, NY. Currently, the
Westchester route franchise cluster has opened two (2) drop sites (sites that
consist of a drop-off site for wash and fold and cleaning but where no wash and
fold is done on premises). The route franchise consists of a franchise operating
a vehicle that utilizes the Company's full service cleaner and laundromat
facility in Mamaroneck, NY. The two (2) drop site locations are at Diamond
Corporate Park, 400 Columbus Avenue, Valhalla, NY and 115 Stevens Avenue, Summit
Corporate Services, Valhalla, NY. Brooklyn, NY cluster franchise has selected
its site for its full service facility (that will include a self-service
coin-operated laundromat with wash and fold service, a cleaning plant on
premises and an entertainment area that may include televisions and lounge,
vending machines, mailboxes and computers) at 837 Union Street, Brooklyn, NY.
The Long Island, NY cluster franchise is in the process of construction for its
full service facility at 630 New York Avenue, Huntington, NY. The self-service
laundromat and drop-off facility franchise in Manhattan, NY is in the process of
construction of such facility at 60 Avenue B, New York, NY. For a discussion of
Ecomat's various store/franchise configurations, see 'Business--Store
Configuration.'

With respect to all franchise agreements, revenues for initial franchise
fees are recognized on a pro rata basis (based on the anticipated number of
facilities expected to be opened) as facilities are opened and when all material
obligations or conditions relating to the agreement have been substantially
satisfied.

In addition, the Company has signed a master franchise development
agreement for various parts of Europe and a letter of intent for a master
franchise agreement for India. The master franchisee for Europe is required to
open facilities pursuant to a 7 year development schedule (which includes
facilities in both core and non-core countries (as defined in the master
franchise agreement)) as follows: Year 1-1; Year 2-28; Year 3-44; Year 4-50;
Year 5-56; Year 6-56; and Year 7-56. The agreement provides that the first 18
facilities in the core countries must be opened within 18 months and must be
affiliated with the master franchisee. Revenue from the master franchise
agreement will be recognized on a pro rata basis as each of the anticipated
facilities subject to the agreement is opened. See 'Certain Relationships and
Related Transactions' and 'Financial Statements--Note B.'

PLAN OF EXPANSION

The Company intends on expanding its operations through a program of
dry-cleaner and/or laundromat conversions to the Ecomat concept as well as
direct expansion of the franchise program and the Ecomat system.

CONVERSION FRANCHISES

For an existing dry-cleaner or laundromat owner, conversion to an Ecomat
franchise may be the answer to the ongoing viability of their business. The

Company addresses through its franchise system the impact that environmental
issues such as perc and water and sewage usage are having on these businesses.
Management believes that through the Company's extensive research and
development, Ecomat franchisees and company-owned stores will be the leaders in
the field of energy conservation and water-saving technologies which will allow
for the stores to operate in a cost-effective manner unlike their competitors.
The Company has no existing conversion franchises and has only been addressing
this concept (through direct mailings) since January 1996

<PAGE>

upon the hiring of its Vice President of Franchise Sales and Marketing. Through
the Company's growth in the past two years, the dry cleaning community is, in
management's belief, well aware of the alternative to perc. While at first
skeptical, there has been growing acceptance of wet-cleaning as a viable
alternative to perc-based methods. The Center for Neighborhood Technology
released an Interim Report in February of 1996 on the preliminary results from
the Greener Cleaner demonstration shop funded in part by the E.P.A. See
'Competition.' Since the release of that report, many dry cleaners have
contacted the Company to receive information about the Company's franchise
program. The Company intends to launch a marketing campaign as part of its
business plan to reach this conversion market.

The cost for such a conversion ranges from $15,000 to $105,000 depending
upon the equipment, store configuration and other factors. The Company will
offer special financial consideration for conversion franchisees in terms of
franchise and royalty fees. They are required to pay a royalty fee of 2.75% of
sales for the first six months and thereafter 5.5% of sales (which is reduced to
4.5% when aggregate sales of $40,000 per month is achieved, as in the case of a
regular franchise. See 'Franchise Agreements' above). Recently, the Company
offered to waive its initial conversion fee to any existing New York dry
cleaning establishment until the earlier of December 31, 1996 or the date the
new rules regulating dry-cleaners in New York take effect. (For a description of
such rules see 'Business--Governmental Regulation').

EXPANSION OF ECOMAT SYSTEM

In addition to the three Company-owned facilities, the Company has sold to
date five cluster franchises which will consist of 17 facilities and one single
laundromat drop-off franchise. See 'Business--Franchise Agreements' above.

The Company anticipates that agreements relating to approximately eleven
cluster franchises will be reached in the next twelve months. Until the concept
of wet cleaning is more widely accepted, and the outcome of proposed state
regulations becomes known, the Company anticipates selling cluster franchises
rather than conversions. No assurances, however, can be made that the Company
will achieve such results in this time frame, or ever.

The Company believes that the location of an Ecomat facility is an
essential element of success. Therefore, the Company intends to focus its
development of the franchise program on store locations which are strategically
located within targeted areas. The site selection process involves an evaluation

of a variety of factors, including demographics (such as population density);
specific site characteristics (such as visibility, accessibility, and traffic
volume); proximity to activity centers (such as office or retail shopping
districts and apartment, hotel and office complexes); competition in the area;
construction or renovation costs, and lease terms and conditions. The Company
will inspect and approve proposed sites for each Ecomat facility prior to the
execution of a franchise agreement or lease. All sites are generally subject to
the approval of a local planning board, which approval can take approximately
three months.

The Company believes that airports, train stations and hotels would be
excellent sites for Ecomat satellite facilities. The Company has created a
program utilizing United Parcel Service ('UPS') wherein a prefabricated,
collapsible valet case is shipped to customers ('Direct Clean Customers') where
no Ecomat facility exists. An Ecomat Direct Clean Customer may then ship his/her
garments to the nearest Ecomat cleaning facility (including the Company's
franchisees) and then have it delivered to his/her home or office at no extra
charge for shipping and handling. The Company currently has 187 regular Direct
Clean Customers located throughout the United States.

SUPPLIERS AND MANUFACTURERS OF MATERIAL

The Company has entered into a franchisor account agreement with Wascomat
of America, Inc. to provide laundromat and wet cleaning equipment at a favorable
discount, to itself and its franchisees. The Company also plans to buy equipment
from Unimac, Speed Queen and Huebsch which are divisions of Raytheon, Inc. The
Company also has oral agreements with VeitGMBH and Highsteam Systems, Inc. to
purchase specialized finishing equipment and with Seitz Chemicals GMBH to
purchase special cleaning products. The Company is not dependent upon any one
single supplier and believes that, if any relationship with any such supplier
terminates, the Company will be able to purchase such materials elsewhere at the
same prices.

<PAGE>

MARKETING AND PUBLIC RELATIONS

The Company is currently in the process of expanding its franchise sales
program. A new position of Vice President of Franchise Sales and Marketing has
been created to facilitate the Company's expansion plans. See 'Management.' The
Company currently markets in local media and at franchise sales shows, and has
developed a site on the Internet which also markets the Ecomat/UPS service. The
Company intends to utilize $700,000 of the net proceeds of this Offering towards
its marketing efforts.

The franchise agreement provides that each franchisee must contribute a
monthly advertising and promotion fee of 3% of its net sales to a fund
administered by the Company to be used for advertising, sales promotion and
public relations. The Company is responsible for using the proceeds of the
advertising fund to develop and implement advertising and promotional plans,
materials and activities on behalf of the Ecomat facilities in the franchise
program. See 'Business--Targeted Marketing.'

COMPETITION

Management believes that there are currently only four (4) 100% wet
cleaning stores in the United States that are not Ecomat facilities, two (2) of
which are sponsored by the E.P.A. The first is called The Greener Cleaner in
Chicago, Illinois. It is funded by the E.P.A. and administered by the Center for
Neighborhood Technology in Chicago. It serves as a demonstration site to
disseminate information about wet-cleaning and to counter the negative publicity
that the drycleaning industry's trade associations are attempting to give its
members on alternatives to perc-cleaning. The second opened in Los Angeles this
year. An additional wet-cleaners is called the Cleaner Image which is a small
cleaners in Ridgefield, Connecticut which opened in 1995. While the Company
welcomes the assistance the U.S. government is giving to alternative methods of
dry-cleaning, the Company feels that the Ecomat system by the nature of its
being a for-profit business not dependent on government funding (although it
applied for a matching-funds grant. See 'Business--Research and Development.')
will be the driving force in changing the face of the dry cleaning industry. In
addition, the pilot stores have as their sole profit center, dry-cleaning, while
an Ecomat facility has a multitude of profit centers such as wash and fold,
self-service, etc.

Management believes that at this time there is no competition for an
environmentally friendly cleaners and laundromat franchise. There are, however,
traditional dry cleaning franchises such as Dryclean USA, Eagle Cleaners, One
Hour Martinizing and Duds n' Suds.

Despite these attempts at franchising, the dry cleaning industry remains
very fragmented. Of over 35,000 dry cleaners currently in the U.S.A., 95% are
individually owned and operated; 98% consist of less than 4 stores. Franchising
efforts have been mediocre. One Hour Martinizing, the largest dry cleaning
franchisor in the U.S., has declined from 5,000 units in 1975 to 856 units in
1995. Management believes that this decline is largely due to three factors:
poor franchisor support, an industry shake-out in the 1970's that resulted from
the popularity of synthetic fibers, and the bankruptcies of franchisees.
DryClean USA, reached 212 franchises by 1990. Unlike One Hour Martinizing, which
has no company stores, DryClean USA owned and operated 350 company stores itself
in 1995.

In general, a trend toward geographic-area dominance displayed in service
industries such as banking, drug stores and supermarkets has not yet occurred in
the dry cleaning industry. Therefore, the goal of geographic dominance by the
Ecomat franchise has been addressed via the 'cluster program.'

The Company believes that the Ecomat concept provides a competitive
advantage over traditional perc-cleaner franchises in that many of the approved
equipment vendors for the Company offer favorable financing to Ecomat
franchisees due to the Company's arrangement as a national franchise dealer of
such equipment. An additional benefit to an Ecomat franchise is that loans that
would not normally be made to a traditional dry-cleaner because of the use of
perc may be made to an Ecomat franchisee. Fannie Mae, Freddie Mac and the Small
Business Administration all have stringent disclosure requirements to businesses
requesting loans that may have negative environmental effects on the real estate
in which the business is housed. Such negative environmental issues do not arise

with an Ecomat franchise.

<PAGE>

GOVERNMENTAL REGULATION

Government agencies responsible for protecting public health at the local,
state, and federal levels have all clearly recognized that perc pollution from
dry cleaners represents an important environmental health problem. Each level of
government has the jurisdiction to address the problem.

On the Federal level, in 1993, the U.S. EPA issued a regulation covering
the dry cleaning industry. However, the regulation exempts all but the largest
dry cleaners from requirements to make equipment improvements that would reduce
perc emissions. The majority of cleaners--small operations--were required to
take only minor steps such as repairing leaks quickly and keeping better
records. By 1993, hearings about perc emissions in residential buildings were
held and the EPA promised to address the issue in future regulation but has not
yet done so. Instead, the EPA funded studies in Chicago to test a variety of
methods to provide an alternative to perc. See 'Business--Competition.'

On the State level in New York, two agencies, the Department of Health
('NYSDOH') and the Department of Environmental Conservation ('NYSDEC') have the
authority to address the perc problem. The 1991 study by NYSDOH which measured
perc levels in apartments above dry-cleaners was the first major study to
document this hazard. However, the NYSDOH has deferred to the NYSDEC which in
turn has focused on developing new regulations for the dry cleaning industry
that is being watched nationwide. In July 1996 the NYSDEC released (for comment
to the public) revisions to the 'perc' dry cleaning regulations (6 NYCR Part
232) which, when put into effect, will require traditional dry cleaners, at
their own expense, to upgrade outdated machinery, post notice warnings of the
dangers of 'perc,' construct vapor barriers, adhere to record keeping
requirements, pay for semi-annual inspections and attend training sessions.

On the local level, two agencies of the New York City government, the
Health Department (NYCDOH) and the Department of Environmental Protection
(NYCDEP) also have some authority to deal with the perc issue. All New York City
dry-cleaners must have a permit to operate from the NYCDEP, which enforces the
NYC Air Pollution Control Code. NYCDEP can also cite a cleaner for violating the
NYC Air Pollution Code if it creates an odor problem. During 1993, NYCDOH
inspected 133 dry-cleaners in response to citizen complaints and shut down 63 of
them. In May 1996, a bill that will phase out 'perc' dry cleaning from all
residential buildings in New York City was introduced. If such regulation is
passed, all dry-cleaners in New York City with 'perc' machines in residential
apartment buildings will be required to remove such equipment over a two (2)
year period.

Currently, groups such as the Consumers Union and Unite (formerly the
Amalgamated Textile Workers Union) are lobbying to change the building code in
New York City to prohibit perc-based dry cleaning equipment in residential
buildings. Other states such as California and Massachusetts have legislation
before their State Assemblies demanding the total banning of the use of perc by

dry cleaners. Management believes that the next few years will be very
significant in the future of the dry cleaning industry. Management also believes
that all interested parties will be watching the activities of the Company very
carefully as the potential to change the industry is great and appears to be
imminent.

Since the Company's operations do not include the use of perc, management
believes that its facilities are subject to no special governmental regulations
whatsoever. Normal building code procedures for filing building plans and
obtaining plumbing and electrical permits, compliance with fire and safety rules
and water usage are the extent to which Ecomat facilities must comply, all
within the bounds of appropriate zoning rules and regulations. This fact alone
gives the Company a distinct advantage over traditional perc cleaners.

RESEARCH AND DEVELOPMENT

The Company has developed a proprietary computerized control system for
monitoring the operation of all washers, dryers and extractors in an Ecomat
facility. The system consists of up to 99 microprocessor-based unit controllers,
a PC-based central site controller and software which runs them. Unit
controllers are installed in each washer and dryer, and connected (in chain) to
each other and to the site controller (central computer) with ordinary phone
wire. These controllers collect all the information about operation of their
machines, such as number of cycles run, amount of money collected, possible
error conditions (clogged valves or drains, tampering etc.) and send this
information to the central computer, where it is presented on the screen and
recorded on the disk. The computer screen will show present status of each
machine (on/off, running, available, error), indicated by color-coded entries in
the 'STATUS' window, display recent events, which a user can scroll up and down
in the 'EVENT LOG' window,

<PAGE>

and provide an area for the operator input in the 'INPUT' window. The
information entered in this window is transmitted to the appropriate unit
controller and recorded in its memory. Using this function, operators can set
various cycle options if they are allowed by the machine used (water
temperature, cycle length etc.), set the number of quarters required to run each
particular machine or a group of machines, etc. Operators also can start any
machine from their keyboard, which allows for 'coinless' operation of a
self-service laundromat; instead of changing the bills and using quarters for
every wash, customers just pay the attendant, and the attendant starts the
appropriate machines from his keyboard. Configuration with an automatic card
reader, which accepts proprietary or major credit or debit card as a payment for
self-service operations is also possible. The system provides full information
on all starts made by the attendants, so the owner can verify it against the
amount of wash-and-fold business conducted during that given period of time, to
insure efficient operation.

Franchises are and will be equipped with a custom-designed point of sale
('POS') and accounting system. The system is interconnected into a network
IBM-compatible personal computer and is expandable to accommodate as many POS

terminals (registers) and accounting computers as a store may need. The POS
system has all information required to complete the sale (items, prices, payment
types, discounts etc.) pre-programmed, so the clerks only need a minimal
training to successfully operate the register. It is flexible enough to handle
cash, credit card, pre-paid, paid on pickup and Net 30-type payments, split
sales, promotional items, pre-set price matrixes and other advanced operations,
and includes many laundromat/cleaner-specific functions, such as automatically
generated driver's log, tagging of the garments etc.

The system produces all vital reports necessary to evaluate the performance
of the business, reconcile the cash registers and insure efficient use of the
labor force. Customer information is also accumulated and can be used for
mailings, promotions and other purposes. The program has outstanding security
features, including multi-level password protection and audit trails. All
information from POS operations is automatically transferred for further
processing into the accounting part of the system. The accounting part is a
complete double entry, accrual-based modular system capable of automating all
financial operations within a store. Included are general ledger, accounts
receivable, accounts payable, purchasing, inventory control and payroll modules,
as well as system maintenance files and utilities. The information posted to the
ledgers from POS operations, as well as entered in all other modules is
processed to produce a wide variety of reports, which are pre-programmed to
assure that owners receive all the information necessary to successfully run
their business. An owner can also easily design custom reports to suit his/her
specific needs.

The entire computer network is easily accessible via modem from any remote
location, such as a central office of a multi-store business, for monitoring of
the operations and downloading any required information. The network is also
protected by a tape back-up system, to prevent loss of important data in case of
an accident or a hardware failure.

The Ecomat system began by using multi-process wet cleaning methods which
were studied by the Environmental Protection Agency ('E.P.A.') and described in
the E.P.A. report 'Multi-process Wet-Cleaning--Cost and Comparison of
Conventional Dry-Cleaning and An Alternative Process; U.S. Environmental
Protection Agency EPA 744-R-93-004, September 1993.' Such study concluded that
the wet cleaning process was proven to be superior to the traditional dry
cleaning method in the 4 of 6 areas used to compare the two methods (customer
satisfaction, cleanliness, appearance and odor). It rated equal to traditional
dry-cleaning inthe other 2 areas (shrinkage and cost). The Company has also
developed its own techniques of treating particular fabrics that can be
problematic to both 'dry' and 'wet' cleaners alike. 'Wet cleaning' as opposed to
'dry cleaning' is a method for deep cleaning fabrics using water, steam,
plant-based cleaning agents rather than toxic solvents, and natural bleaching
agents such as hydrogen perioxide rther than chlorine-based bleaches. The
special techniques that the Company has developed include: the tumbling of
garments to loosen soil, the choice of a water-based cleaning method (which can
include steaming, steam closet, mechanical wet cleaning, sink-washing,
machine-washing), specialized drying with humidity control and finishing of
garments with robotic steam finishing equipment. Instead of using a perc
machine, Ecomat utilizes a wet cleaning system that consists of a specialized
washer and a heat and humidity-sensitive dryer both of 35 or 50 pound capacity.
With the introduction of special non-toxic cleaning products, the Ecomat cleaner

washes garments in water. All of the above techniques have been developed by
Ecomat. The Company has developed computer programs and manual methods of such
techniques for training of its employees and franchisees.

As of January, 1996, the Company has applied for a matching-funds grant
from New York State Energy Research and Development Agency ('NYSERDA') in the
amount of approximately $118,000 for the continued

<PAGE>

research and development of the Company's unique water recycling system. No
assurance can be made that the Company will receive a grant.

The Company expended $40,000 in 1995 in connection with the purchase of
water recycling components. The Company expects to spend funds of approximately
$118,000 if the grant from NYSERDA is awarded for the further development of the
Ecomat water recycling system. The Company expects to spend an additional
$172,000 ($300,000 if the NYSERDA grant is not awarded) for research relating to
cogeneration, passive heat exchange, solar energy for heating hot water, all of
which contribute to energy savings and reductions and smart card technology and
as described below:

o A typical cogeneration system consists of an internal combustion
engine that drives an electric power generator which serves as a
power source for all or a part of the equipment in a facility.
Regular natural gas service is used as a fuel source for the engine.
Use of these units can result in significant savings on electric
bills in many localities, particularly because this setup eliminates
high 'demand rates' assessed by many utilities for peak usage of
power. Besides being a cost-effective alternative to conventional
power, cogenerators also benefit the environment, since clean
natural gas is used as a source of energy. In addition to providing
electric power for the equipment, it can be used as a source of hot
water for space heating in cold areas, or can run airconditioners in
the hot ones.

o Passive heat exchange is a method of heating the substance (such as
water or the air) by bringing it into contact with similar
substances that have higher initial temperature. In the Company's
application, this method could be used to preheat water needed for
laundromat and cleaning process by circulating it through the
exchanger where the heat from the used (hot) water would be
transferred to clean (cold) water. This clean water would then be
directed to the second stage, where additional heating by
conventional methods would be done in order for the water to reach
required temperature. This strategy allows significant energy
savings because it lowers the amount of energy needed to be produced
by conventional water heaters.

o Solar energy use is another alternative for lowering the energy
consumption in producing hot water for cleaning processes. It is
similar in principle to heat exchange, except the energy of the sun

is used instead of, or in addition to, recouping the energy of used
water. This kind of system is only effective in localities that have
sufficiently high temperatures and prolonged periods of sun exposure
throughout the year. If the location is hot enough (as in southern
states of the United States) solar systems can produce enough energy
to cover water heating needs of the facility completely during
summer months.

o Smart Cards is a new generation of 'stored value' cards, which are
similar in its usage to the debit cards. In 'stored value'
application, consumers can buy a card that has a certain amount of
money pre-recorded on the card and use it as cash at the locations
that accept this card. This setup eliminates time and expenses of
on-line verification needed for processing of debit card
transactions, and does not require the consumer to establish a
relationship with the banking institution in order to obtain the
card. When the value of the card is used up, the card can be
recharged by recording additional amounts at any 'add value'
machine. The enhancement provided by smart card technology is in the
fact that the amount of money stored in the card is recorded on the
microchip embedded in the card, as opposed to it being recorded on a
magnetic stripe. This technology provides dramatically higher
security and reliability compared to the magnetic card. Ecomat is
planning to outfit all of its laundromats with smart card readers,
and will use this card to enhance its pickup and delivery operations
and prepaid account program.

In November of 1995, the Company became a participant in Climate Wise, a
program administered jointly by the E.P.A., Department of Energy and Business
for Social Responsibility. The Company has undergone an environmental audit and
has agreed to participate in reducing all polluting emissions and utilizing the
highest energy-saving systems in its operations. Keith Emerson, Vice President
of Franchise Sales and Marketing of the Company, has been appointed to the
steering committee of Climate Wise.

INTELLECTUAL PROPERTY

The Company currently does not have any patent, trademark or copyright
applications pending. However, the Company may file patent, trademarks and
copyright applications relating to certain of the Company's processes and
products. Except as may be required by the filing of patent, trademark and
copyright applications,

<PAGE>

the Company will attempt to keep all other proprietary information secret and to
take such actions as may be necessary to insure the results of its development
activities are not disclosed and are protected under the common law concerning
trade secrets. Such steps will include the execution of nondisclosure agreements
by key Company personnel and may also include the imposition of restrictive
agreements on purchasers of the Company's products and services, including
franchisees.

The Company applied for registration of its Ecoclean Servicemark (U.S.
Servicemark Application No. 74/515,635) and Ecomat Servicemark (U.S. Servicemark
Application No. 74,515,480) and has received notices of allowance from the U.S.
Patent and Trademark Office and has filed a statement of use for the first of
such servicemarks. In addition, the Company has applied for registration of its
Ecomat and Design Trademark (U.S. Trademark Application No. 74/656,937). This
trademark was published in August 1996 and the Company has filed a statement of
use for this trademark. The Cleaner Choice Trademark (U.S. Trademark Application
No. 74/659,966) was published in July 1996. The Company has filed a statement of
use for this trademark. No assurance can be given that the Company will be
granted such Trademark protection. The Company has also applied for its Ecomat
trademark with the Office for Harmonization in the Internal Market (European
Community Trademark office) (Application No. 164,772). See 'Risk
Factors--Uncertain Protection of Patent, Trademark, Copyright and Proprietary
Rights; Servicemark and Trademark Protection.'

EMPLOYEES

As of September 30, 1996, the Company employed 18 persons of whom 15 were
store employees, and 3 were corporate personnel. Many store employees work
part-time and most are paid on an hourly basis. None of the Company's employees
are covered by a collective bargaining agreement.

The Company will require additional employees based upon the specific
facility being operated. In a full-service Ecomat facility, the Company will
require one store manager, one counter person and one cleaner. Depending upon
the volume, additional counter personnel, wash and fold personnel and cleaners
will be required, as well as a full-time driver. In an Ecomat cleaners, the
Company will require one store manager/cleaner and one counter person per shift.
As the store grows, additional counter personnel and cleaners will be needed as
well as a driver. In an Ecomat satellite or Ecomat drop off site, the Company
will require one counterperson/shift manager and one additional counter person.
In an Ecomat laundromat, the Company will require one store manager and
additional counter/wash and fold personnel depending upon the volume of the
store. Finally, in Ecomat route franchises, the Company will require one
driver/shift and one manager/wash and fold person.

FACILITIES

The Company (through Ecofranchising, its subsidiary) leases approximately
10,000 square feet at 147 Palmer Avenue, Mamaroneck, NY 10543-3632 which
consists of 5,000 square feet for its flagship store and prototype of all Ecomat
full-service franchises and 5,000 square feet for its executive offices. The
lease term commenced on March 15, 1995 and expires on March 14, 2005. The annual
rental increases each year from $112,500 in the first year to $146,787 in the
last year of the term. The Company has the option to extend the term for one 5
year period. Total rental expense for the year ended December 31, 1995 was
$128,031.

The Company (through 8th St., its subsidiary) leases approximately 2,500
square feet at 140 West 72nd Street, New York, NY which houses a full-service
Ecomat cleaners and laundromat. The lease term commenced on May 28, 1993 and
expires on May 31, 2003. The annual rental increases from $21,000 in the first

year to $62,700 in the third year and thereafter is increased by 4.5% each
subsequent year. Total rental expense for the years ended December 31, 1994 and
1995 were $63,930 and $63,930, respectively.

The Company (through Ecoclean Systems International, Ltd., its subsidiary)
leases approximately 1,000 square feet at 1491 Weaver Street, Scarsdale, NY
which houses an Ecomat satellite facility. Such lease is on a month-to-month
basis. The monthly rent is $1,000.

LEGAL PROCEEDINGS

The Company is not a party to any litigation or governmental proceedings
that management believes would result in judgements or fines that would have a
material adverse effect on the Company.

<PAGE>

MANAGEMENT

The following persons are the directors and the executive officers of the
Company. All Directors are elected annually by the stockholders to serve until
the next annual meeting of the stockholders and until their successors are duly
elected and qualified. Officers are elected annually by the Board of Directors
to serve at the pleasure of the Board.

<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
- ----------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Diane Weiser................. 43 President, Chief Executive Officer, Secretary, Treasurer
and Director
Astrid Hindemith............. 51 Director
R. Keith Emerson............. 53 Vice President of Franchise Sales and Marketing
Yuri Lumelskiy............... 30 Director of Management Information Systems
</TABLE>

DIANE WEISER has served as President, Chief Executive Officer, Treasurer and
Director of the Company since December 1995 and Secretary since August 1996.
From May 1993 to present, she acted in the same capacities for Diaber
Laundromat, Inc., a New York corporation ('Diaber') and predecessor to the
Company. Ms. Weiser also serves as the President of each of the Company's
subsidiaries. Since January 1990, Ms. Weiser has conducted extensive research
into the feasibility of operating environmentally friendly commercial laundromat
and garment cleaning facilities. Ms. Weiser has conducted research in laundry
and cleaning products and equipment, building materials, recycling possibilities
and over-all facility design. From January 1991 to May 1993, Ms. Weiser was the
co-owner and manager of a laundromat located in New York, New York, in which she
implemented and tested many of these principles. From 1982 to June 1988, Ms.
Weiser owned and operated two commercial real estate brokerage firms in New
York, New York. From June 1988 to January 1993, Ms. Weiser was the owner and
operator of Columbus Avenue Management Corporation, a commercial and residential
real estate management company, in New York City. Ms. Weiser holds a Masters of
Business Administration degree from Columbia University.

ASTRID HINDEMITH was elected Director of the Company in December 1995 and
served as a Director of Diaber since 1993. Ms. Hindemith is a licensed attorney
in Zurich, Switzerland and has been self-employed as a consultant since 1990.
From 1992 to present she has been President and sole shareholder of Palatin, AG,
a Swiss corporation involved in investing. She received her law degree from the
University of Zurich in 1990.

R. KEITH EMERSON joined the Company in January 1996 as the Vice President of
Franchise Sales and Marketing in order to expand the Company's franchising
program as well as supervise consumer marketing and public relations. Since 1979
Mr. Emerson has worked for various companies developing and implementing
franchise development programs including those for Bishop Graphics, Inc. (from
December 1982 to December 1985), PIP Printing, Inc. (from December 1985 to
January 1991), Baskin-Robbins (from January 1991 to June 1992), Futurekids (from

June 1992 to August 1993), J.D. Byrider (from August 1993 to May 1994) and
Linda's Flame Roasted Chicken (from May 1994 to January 1996). Mr. Emerson
received a Business Administration degree in economics from Claremont Men's
College in 1965.

YURI LUMELSKIY has served the Company and Diaber as the Director of Management
Information Systems since April 1995. Mr. Lumelskiy is an experienced electrical
and computer engineer with two Master's Degrees (Polytechnic University and
University of Kiev both in Electrical Engineering) in these areas. His primary
focus is in development and implementation of computerized control systems and
database and accounting software. This allows Ecomat to offer its franchisees
custom computer equipment that is best suited to their needs. Prior to his
current position with Ecomat, Mr. Lumelskiy spent four years (from July 1991 to
April 1995) as a Chief Engineer with Enabling Devices, Inc., a developer and
manufacturer of specialized equipment for the handicapped.

EXECUTIVE COMPENSATION

The following table sets forth the aggregate compensation paid by the
Company for the years ended December 31, 1994 and 1995 to its chief executive
officer. No employee received annual compensation exceeding $100,000 in the
aggregate. Each director of the Company is entitled to receive reasonable
out-of-

<PAGE>

pocket expenses incurred in attending meetings of the Board of Directors of the
Company but are not compensated for services provided in their capacities as
directors.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------------- ------------ SECURITIES ----------------------
NAME OF INDIVIDUAL OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
- ------------------------------- ---- ------- ------- ------------- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Diane Weiser .................. 1995 $50,000 -- $ 4,800(1) -- -- -- --
Chief Executive Officer, 1994 $50,000 -- $ 4,800(1) -- -- -- --
President and Treasurer
</TABLE>

- ------------------
(1) Represents payment for health insurance on behalf on such individual.

EMPLOYMENT AGREEMENTS

The Company has entered into 3-year employment agreement commencing October
1, 1996 and ending September 30, 1999, with Diane Weiser. Under her employment
agreement, Ms. Weiser will receive an annual base salary of $75,000 for each
year of her employment subject to annual review by the Board of Directors. In
addition, she has the right to receive under her employment agreement (i) up to
20,000 shares of Common Stock if the after-tax earnings of the Company and its
subsidiaries are at least $1,500,000 in fiscal years 1996 and 1997, and (ii) up
to an aggregate of 40,000 shares of Common Stock if the after-tax earnings of
the Company and its subsidiaries are at least $2,000,000 for fiscal years ended
December 31, 1996-1999 (only 20,000 shares if she was issued 20,000 shares after
fiscal 1997). The employment agreement also entitles her to the use of an
automobile and to employee benefit plans, such as group life, health,
hospitalization and life insurance. Under the employment agreement, employment
terminates upon death or total disability of the employee and may be terminated
by the Company for cause (such as misconduct, disregard of instructions of the
Board, commission of certain crimes or acts or a material breach of employment
agreement.) The Company intends to maintain a $1 million life insurance policy
on the life of Ms. Weiser. Reference is hereby made to the Employment Agreement
which has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.

The Company has entered into a 3-year employment agreement commencing
January 15, 1996 and ending January 14, 2000, with Keith Emerson. Under his
employment agreement, Mr. Emerson will receive an annual base salary of $93,000.
In addition, he has the right to receive (i) up to 20,000 shares of Common Stock
if the after-tax earnings of the Company and its subsidiaries are at least
$1,500,000 in fiscal years 1996 and 1997, and (ii) up to an aggregate of 40,000
shares of Common Stock if the after-tax earnings of the Company and its
subsidiaries are at least $2,000,000 for fiscal years 1996-1998 (only 20,000
shares if he was issued 20,000 shares after fiscal 1997). The employment
agreement also entitles him to the use of an automobile and to employee benefit
plans, such as group life, health, hospitalization and life insurance. Under the
employment agreement, employment terminates upon death or total disability of
the employee and may be terminated by the Company for cause (such as misconduct,
disregard of instructions of the Board, commission of certain crimes or acts or
a material breach of employment agreement).

The Company has entered into 2-year employment agreement commencing April
1, 1995 and ending March 31, 1997, with Yuri Lumelskiy. Under his employment
agreement, Mr. Lumelskiy will receive an annual base salary of $62,400. The
employment agreement also entitles him to employee benefit plans, such as group
life, health, hospitalization and life insurance. Under his employment
agreement, employment terminates upon death or total disability of the employee
and may be terminated by the Company for cause (such as misconduct, disregard of
instructions of the Board, commission of certain crimes or acts or a material
breach of employment agreement).

STOCK OPTION PLANS AND AGREEMENTS

Incentive Option and Stock Appreciation Rights Plan--In January 1996, the
Directors of the Company adopted and the stockholders of the Company approved
the adoption of the Company's 1996 Incentive Stock Option and Stock Appreciation
Rights Plan ('Incentive Option Plan'). The purpose of the Incentive Option Plan

<PAGE>

is to enable the Company to encourage key employees and Directors to contribute
to the success of the Company by granting such employees and Directors incentive
stock options ('ISOs'), as well as non-qualified options and stock appreciation
rights ('SARs').

The Incentive Option Plan will be administered by the Board of Directors or
a committee appointed by the Board of Directors (the 'Committee') which will
determine, in its discretion, among other things, the recipients of grants,
whether a grant will consist of ISOs, non-qualified options or SARs (in tandem
with an option or freestanding) or a combination thereof, and the number of
shares to be subject to such options and SARs.

The Incentive Option Plan provides for the granting of ISOs to purchase
Common Stock at an exercise price to be determined by the Board of Directors or
the Committee not less than the fair market value of the Common Stock on the
date the option is granted. Non-qualified options and freestanding SARs may be
granted with any price. SARs granted in tandem with an option have the same
exercise price as the related option.

The total number of shares with respect to which options and SARs may be
granted under the Incentive Option Plan is 2,000,000. ISOs may not be granted to
an individual to the extent that in the calendar year in which such ISOs first
become exercisable the shares subject to such ISOs have a fair market value on
the date of grant in excess of $100,000. No option or SAR may be granted under
the Incentive Option Plan after January 2006 and no option or SAR may be
outstanding for more than ten years after its grant. Additionally, no option or
SAR can be granted for more than five (5) years to a shareholder owning 10% or
more of the Company's outstanding Common Stock and such options must have an
exercise price of not less than 110% of the fair market value on the date of
grant.

Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash or in shares of Common Stock,
or in a combination of both. The Company may lend to the holder of an option
funds sufficient to pay the exercise price, subject to certain limitations.
SAR's may be settled, in the Board of Directors's discretion, in cash, Common
Stock, or in a combination of cash and Common Stock. The exercise of SAR's
cancels the corresponding number of shares subject to the related option, if
any, and the exercise of an option cancels any associated SAR's. Subject to
certain exceptions, options and SAR's may be exercised any time up to three
months after termination of the holder's employment.

The Incentive Option Plan may be terminated or amended at any time by the
Board of Directors, except that, without stockholder approval, the Incentive
Option Plan may not be amended to increase the number of shares subject to the
Incentive Option Plan, change the class of persons eligible to receive options
or SARs under the Incentive Option Plan or materially increase the benefits of
participants.

To date no options or SARs have been granted under the Incentive Option

Plan. No determinations have been made regarding the persons to whom options or
SARs will be granted in the future, the number of shares which will be subject
to such options or SARs or the exercise prices to be fixed with respect to any
option or SAR. The Company has agreed with the Underwriter that it will not
grant more than 200,000 options to purchase Common Stock under the Incentive
Option Plan during the 24 month period commencing on the Effective Date, without
the consent of the Underwriter, provided that such figure shall be reduced by
the amount of options granted under the Non-Qualified Option Plan (defined
below) during such 24 month period.

Non-Qualified Option Plan--In January 1996, the Directors and stockholders
of the Company adopted the 1996 Non-Qualified Stock Option Plan (the
'Non-Qualified Option Plan'). The purpose of the Non-Qualified Option Plan is to
enable the Company to encourage key employees, Directors, consultants,
distributors, professionals and independent contractors to contribute to the
success of the Company by granting such employees, Directors, consultants,
distributors, professionals and independent contractors non-qualified options.
The Non-Qualified Option Plan will be administered by the Board of Directors or
the Committee in the same manner as the Incentive Option Plan.

The Non-Qualified Option Plan provides for the granting of non-qualified
options at such exercise price as may be determined by the Board of Directors,
in its discretion. The total number of shares with respect to which options may
be granted under the Non-Qualified Option Plan is 2,000,000.

Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash or in shares of Common Stock
(based on the fair market value of the Common Stock on the date

<PAGE>

prior to exercise), or in a combination of both. The Company may lend to the
holder of an option funds sufficient to pay the exercise price, subject to
certain limitations. Subject to certain exceptions, options may be exercised any
time up to three months after termination of the holder's employment.

The Non-Qualified Option Plan may be terminated or amended at any time by
the Board of Directors, except that, without stockholder approval, the
Non-Qualified Option Plan may not be amended to increase the number of shares
subject to the Non-Qualified Option Plan, change the class of persons eligible
to receive options under the Non-Qualified Plan or materially increase the
benefits of participants.

To date no options have been granted under the Non-Qualified Option Plan.
No determinations have been made regarding the persons to whom non-qualified
options will be granted in the future, the number of shares which will be
subject to such options or the exercise prices to be fixed with respect to any
option. The Company has agreed with the Underwriter that it will not grant more
than 50,000 options to purchase Common Stock under the Non-Qualified Option Plan
during the 24 month period commencing on the Effective Date without the consent
of the Underwriter.

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding shares of
Common Stock beneficially owned as of the date of this Prospectus by (i) each
person, known by the Company to be the beneficial owner of five percent (5%) or
more of the outstanding shares of Common Stock, (ii) each of the Company's
directors and (iii) all of the Company's officers and directors as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF OWNERSHIP
------------------------------------
NUMBER OF PRIOR TO AFTER
NAME OF BENEFICIAL OWNER* SHARES OFFERING OFFERING(1)
- ------------------------------------------------------------------------------- --------- -------- -----------

<S> <C> <C> <C>
Diane Weiser(2)................................................................ 840,000 35 23.33

Palatin, AG(3)................................................................. 1,560,000 65 43.33

Astrid Hindemith............................................................... 1,560,000 65 43.33

All Officers and Directors as a Group (2 persons).............................. 2,400,000 100% 66.66%
</TABLE>

- ------------------
* The address of all persons listed in this section is c/o Ecomat, Inc., 147
Palmer Avenue, Mamaroneck, New York 10543-3632.

(1) Does not include up to (a) 120,000 Shares issuable upon the exercise of the
Underwriter's Purchase Option, (b) 180,000 Shares issuable upon exercise of
the Underwriter's Over-Allotment Option, and (c) 4,000,000 shares of Common
Stock authorized for issuance under the Company's stock option plans.

(2) Ms. Weiser is the President, Chief Executive Officer, Secretary, Treasurer
and Director of the Company.

(3) Palatin, AG is a Swiss corporation wholly-owned by Astrid Hindemith, a
Director of the Company.

<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company was incorporated on December 14, 1995 pursuant to the laws of
the State of Delaware. The Company is the successor to Diaber Laundromat, Inc.,
a New York corporation ('Diaber') which was incorporated on September 21, 1992.
The Company was organized to enable Diaber to merge with and into the Company in
order to effectuate a reincorporation in the State of Delaware. Diaber merged
with and into the Company on March 29, 1996. In connection with the merger, each

share of Diaber common stock (a total of 10) was converted into 240,000 shares
of the Company's Common Stock, resulting in the issuance of 2,400,000 shares of
Common Stock, which constitutes all of the issued and outstanding Common Stock
as of the date of this Prospectus. The issuance of securities in connection with
the merger did not require registration under the 1933 Act or exemption
therefrom, inasmuch as it did not involve an 'offer for sale' as defined in
Section 2(3) of the 1933 Act as provided by Rule 145(a)(2) because the merger
was done for the sole purpose of changing the Company's domicile. See 'Principal
Shareholders' and 'Financial Statements.'

The Company is currently indebted in the amount of $1,267,677 to Palatin
AG, a Swiss corporation which is wholly owned by Astrid Hindemith, a director
and principal stockholder. The debt is evidenced by a promissory note bearing
interest at 7% per annum which is payable as follows: (a) $1,000,000 is payable
on the earlier of (unless earlier accelerated due to an event of default) (i)
September 25, 2001 or (ii) the closing of the Company's initial pubic offering
of securities and (b) the balance of such indebtedness is due and payable on the
earlier of (unless earlier accelerated due to an event of default) (i) September
25, 2001 or (ii) two (2) years from the Effective Date. If the Offering is
completed prior to December 31, 1996, Palatin shall have the right to convert,
at maturity, the balance of the indebtedness owed to it into shares of Common
Stock at a purchase price equal to the book value of the Company's Common Stock
on the date of the most recent fiscal quarter ended prior to conversion. See
'Use of Proceeds,' 'Management' and 'Principal Shareholders.'

The Company is currently indebted in the amount of $71,818 to Diane Weiser,
a director and principal stockholder. The debt is evidenced by a promissory note
bearing interest at 7% per annum which is payable as follows: $71,818 is payable
on the earlier of (unless earlier accelerated due to an event of default) (i)
June 29, 2001 or (ii) two (2) years from the Effective Date. If the Offering is
completed prior to December 31, 1996, Ms. Weiser shall have the right to
convert, at maturity, the balance of the indebtedness owed to her into shares of
Common Stock at a purchase price equal to the book value of the Company's Common
Stock on the date of the most recent fiscal quarter ended prior to conversion.
See 'Management' and 'Principal Shareholders.'

The Company has entered into a master franchise agreement with Palatin, AG
(as the master franchisee), a Swiss corporation which is wholly owned by Astrid
Hindemith, a director and principal stockholder of the Company, for the
development of the Ecomat concept in certain European countries. The master
franchisee will have the right to establish, and license to other parties, the
Ecomat concept. The agreement provides provisions for training, site selection,
and assistance (all of which have been provided) and certain development
schedules in certain countries. Each franchise agreement will be for an initial
term of ten years with three renewal periods of five years each. The agreement
provides for a non-refundable master franchise agreement fee of $120,000 (all of
which has been paid), ongoing monthly royalty fees in the amount of 1.5% of
gross sales from all facilities, 25% of the development fee or franchisee fee
charged to each unaffiliated developer or franchisee and certain requirements on
advertising. The master franchise agreement was approved by all of the
disinterested directors in such transaction (Diane Weiser, a director and
officer of the Company, and Richard Becker, a former director and officer of the
Company, both of whom are not officers or directors of, or have beneficial
ownership or financial interests in, Palatin, AG). Management believes that the

terms of the master franchise agreement are fair and reasonable in all respects.
Reference is hereby made to the master franchise agreement which has been filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part.

The Company intends to indemnify its officers and directors to the full
extent permitted by Delaware law. Under Delaware law, a corporation may
indemnify its agents for expenses and amounts paid in third party actions and,
upon court approval in derivative actions, if the agents acted in good faith and
with reasonable care. A majority vote of the Board of Directors, approval of the
shareholder or court approval is required to effectuate indemnification.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company, the Company has been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed

<PAGE>

in such Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by an officer, director or controlling person of
the Company in the successful defense of any action, suit or proceeding) is
asserted by such officer, director or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in such Act and will be governed by the final
adjudication of such issue.

Transactions between the Company and its officers, directors, employees and
affiliates will be on terms no less favorable to the Company than can be
obtained from unaffiliated parties. Any such transactions will be subject to the
approval of a majority of the disinterested members (to such transaction) of the
Board of Directors (i.e, members of the Board who are not directly or indirectly
parties to such transaction, or, if such transaction involves an entity, who are
not officers or directors of, or have any beneficial ownership or financial
interests in, such other entity).

There are currently no transactions contemplated between the Company and
its officers, directors, employees and affiliates.

DESCRIPTION OF SECURITIES

GENERAL

The Company is offering 1,200,000 shares of Common Stock.

COMMON STOCK

The Company is authorized to issue up to 25,000,000 shares of Common Stock,

$.0001 par value per share, of which 2,400,000 shares were issued and
outstanding as of the date of this Prospectus. All of the issued and outstanding
shares of Common Stock are and the shares of Common Stock offered hereby when
issued against the consideration set forth in this Prospectus, will be, fully
paid, validly issued and non-assessable.

Subject to the rights of holders of Preferred Stock, if any, holders of
shares of Common Stock of the Company are entitled to share equally on a per
share basis in such dividends as may be declared by the Board of Directors out
of funds legally available therefor. There are presently no plans to pay
dividends with respect to the shares of Common Stock. See 'Dividend Policy.'
Upon liquidation, dissolution or winding up of the Company, after payment of
creditors and the holders of any senior securities of the Company, including
Preferred Stock, if any, the assets of the Company will be divided pro rata on a
per share basis among the holders of the shares of Common Stock. The Common
Stock is not subject to any liability for further assessments. There are no
conversion or redemption privileges nor any sinking fund provisions with respect
to the Common Stock and the Common Stock is not subject to call. The holders of
Common Stock do not have any pre-emptive or other subscription rights.

Holders of shares of Common Stock are entitled to cast one vote for each
share held at all stockholders' meetings including the Annual Meeting, for all
purposes, including the election of directors. The Common Stock does not have
cumulative voting rights.

PREFERRED STOCK

The Company's Certificate of Incorporation authorizes 1,000,000 shares of
'blank check' Preferred Stock, none of which are outstanding, whereby the Board
of Directors of the Company shall have the authority, without further action by
the holders of the outstanding Common Stock, to issue shares of Preferred Stock
from time to time in one or more classes or series, to fix the number of shares
constituting any class or series and the stated value thereof, if different from
the par value, and to fix the terms of any such series or class, including
dividend rights, dividend rates, conversion or exchange rights, voting rights,
rights and terms of redemption (including sinking fund provisions), the
redemption price and the liquidation preference of such class or series. The
Company has agreed with the Underwriter that it will not issue any such shares
for a period of 24 months from the Effective Date without the prior written
consent of the Underwriter.

<PAGE>

DELAWARE ANTI-TAKEOVER LAW PROVISIONS

As a Delaware corporation, the Company is subject to Section 203 of the
General Corporation Law. In general, Section 203 prevents an 'interested
stockholder' (defined generally as a person owing 15% or more of a Delaware
corporation's outstanding voting stock) from engaging in a 'business
combination' (as defined) with such Delaware corporation for three years
following the date such person became an interested stockholder unless (i)

before such person became an interested stockholder, the board of directors of
the corporation approved the transaction in which the interested stockholder
became an interested stockholder or approved the business combination, (ii) upon
consummation of the transaction that resulted in the interested stockholder's
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by the directors who are also
officers of the corporation and by certain employee stock plans), or (iii)
following the transaction in which such person became an interested stockholder,
the business combination is approved by the board of directors of the
corporation and authorized at a meeting of stockholders by the affirmative vote
of the holders of two-thirds of the outstanding voting stock of the corporation
not owned by the interested stockholder. Under section 203, the restrictions
described above also do not apply to certain business combinations proposed by
an interested stockholder following the public announcement or notification of
one of certain extraordinary transactions involving the corporation and a person
who had not been an interested stockholder during the previous three years or
who became an interested stockholder with the approval of the corporation's
board of directors and if such business combination is approved by a majority of
the board members who were directors prior to any person's becoming an
interested stockholder. The provisions of Section 203 requiring a super-majority
vote to approve certain corporate transactions could have the effect of
discouraging, delaying or preventing hostile takeovers, including those that
might result in the payment of a premium over market price or changes in control
or management of the Company.

LIMITATION ON LIABILITY OF DIRECTORS

The Company's Certificate of Incorporation provides that a director of the
Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of the fiduciary duty of care as a director,
including breaches which constitute gross negligence. By its terms and in
accordance with the Delaware General Corporation Law, however, this provision
does not eliminate or limit the liability of a director of the Company (i) for
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve international
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, (relating to unlawful payments or dividends or
unlawful stock repurchases or redemptions), (iv) for any improper benefit or (v)
for breaches of a director's responsibilities under the Federal Securities laws.

TRANSFER AGENT & REGISTRAR

The transfer agent and registrar for the Company's securities is American
Stock Transfer and Trust Company, 40 Wall Street, New York, NY 10005.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this Offering, the Company will have 3,600,000
shares of Common Stock outstanding (3,780,000 if the Over-Allotment Option is
exercised in full). Only those sold in this Offering will be freely tradeable
without restriction or further registration under the Securities Act of 1933, as
amended, except for any shares purchased by an 'affiliate' of the Company (in
general, a person who has a control relationship with the Company) which will be

subject to the limitations of Rule 144 adopted under the Securities Act of 1933,
as amended. All of the remaining 2,400,000 shares are deemed to be 'restricted
securities', as that term is defined under Rule 144 promulgated under the
Securities Act of 1933, as amended, in that such shares were issued and sold by
the Company in private transactions not involving a public offering.

In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or other persons whose shares are aggregated), who has owned
restricted shares of Common Stock beneficially for at least two years is
entitled to sell, within any three month

<PAGE>

period, a number of shares that does not exceed the greater of one percent of
the total number of outstanding shares of the same class or the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of the Company for at least the three months
immediately preceding the sale and who has beneficially owned shares of Common
Stock for at least three years is entitled to sell such shares under Rule 144
without regard to any of the limitations described above.

All of the shareholders have agreed with the Underwriter not to sell or
otherwise dispose of any of their shares of Common Stock for a period of 24
months from the Effective Date without the prior written consent of the
Underwriter. The Company has agreed with the Underwriter to refrain from issuing
any of its capital stock for a period of 24 months from the Effective Date
without the prior written consent of the Underwriter (other than shares issued
to employees under the stock plans). If any underwriter or dealer intends to
acquire restricted securities of a shareholder of the Company subsequent to the
effective date of the Registration Statement of which this Prospectus forms a
part, a post-effective amendment to such Registration Statement will be filed to
reflect an arrangement involving 10% or more of the restricted securities being
registered for resale pursuant to a new registration statement. A sticker
supplement to the Prospectus contained in the Registration Statement will be
filed if the amount of restricted securities being registered for resale
pursuant to a new registration statement falls within the range of 5% to 10%.

Prior to this Offering, there has been no market for the Common Stock and
no prediction can be made as to the effect, if any, that market sales of shares
of Common Stock or the availability of such shares for sale will have on the
market prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities.

UNDERWRITING

Patterson Travis, Inc. (the 'Underwriter') has entered into an underwriting
agreement with the Company pursuant to which, and subject to the terms and
conditions thereof, it has agreed to purchase all of the Shares offered hereby.

The Company has granted an option to the Underwriter, exercisable during
the 30-day period from the date of this Prospectus, to purchase up to a maximum
of 180,000 additional Shares at the offering price, less the underwriting
discount, to cover over-allotments, if any.

The Underwriter proposes to offer the Shares to the public at the offering
price set forth on the cover page hereof and may offer the Shares to certain
dealers at such price less a concession not in excess of $.40 per Share. The
Underwriter may allow and such dealers may reallow, a concession not in excess
of $.40 per Share to certain other dealers, including the Underwriter. The
Underwriter has informed the Company that it will not confirm sales to any
accounts over which it exercises discretionary authority.

In addition to the discounts set forth on the cover page which the Company
has agreed to pay to the Underwriter, the Company has agreed to pay from the
proceeds of the offering a non-accountable expense allowance to the Underwriter
equal to three percent (3%) of the public offering price ($180,000 or $207,000
if the Over-Allotment Option is exercised in full).

Upon the completion of this offering, the Company has also agreed to sell
to the Underwriter for $.001 per option, or an aggregate of $120, an option for
the purchase of up to 120,000 Shares (the 'Underwriter's Purchase Option'), each
exercisable to purchase one Share at a price equal to $6.00 beginning on the
first anniversary and continuing until the fifth anniversary of the date of this
Prospectus. The Underwriter's Purchase Option, and the Shares issuable upon
exercise of such option have been included in the Registration Statement of
which this Prospectus is a part. The options may be exercised as to all or any
lesser number of Shares and contain provisions which require, under certain
circumstances, the Company to register the securities underlying such options
for sale to the public. The options are nontransferable for a period of one year
except to officers of the Underwriter, members of the underwriting group and
their respective officers or partners. The option exercise price and the number
of Option Shares covered by the options are subject to adjustment to protect the
holders thereof against dilution in certain events.

<PAGE>

The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriter against certain liabilities in connection with
the Registration Statement, including liabilities under the 1933 Act. Insofar as
indemnification for liabilities arising under the 1933 Act may be provided to
the officers, directors or persons controlling the Company, the Company has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy and is therefore unenforceable.

The Company has granted to the Underwriter the right to designate a member
of the Company's Board of Directors for a period of three years or, in the
alternative, to designate a person to attend all Board of Directors meetings and
to receive all notices or communications to Directors during such three year
period, all at the expense of the Company. As of the date of this Prospectus,

the Underwriter has not exercised any of such rights.

Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price for the Shares has been determined by
negotiations between the Company and the Underwriter. Among the factors
considered in the negotiations were an analysis of the areas of activity in
which the Company is engaged, the present state of the Company's business, the
Company's financial condition, the Company's prospects, an assessment of
management and the general condition of the securities market at the time of
this offering. See 'Risk Factors--No Assurance of Public Market.' The public
offering price of the Shares does not bear any relationship to assets, earnings,
book value or other criteria of value applicable to the Company.

Prior to the date of this Prospectus, all holders of the Company's Common
Stock have agreed not to sell, assign or transfer any of their shares of the
Company's securities without the Underwriter's prior written consent for a
period of 24 months from the Effective Date. In addition, the Company has agreed
not to issue any shares of its capital stock for a period of 24 months from the
Effective Date without the consent of the Underwriter.

EXPERTS

The financial statements of the Company appearing in this Prospectus and
Registration Statement at December 31, 1995 and for the year then ended have
been audited by Grant Thornton LLP, Independent Certified Public Accountants,
and at December 31, 1994 and for the year then ended by Pustorino, Puglisi &
Co., P.C., Independent Certified Public Accountants, as set forth in their
respective reports thereon appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firms as experts in accounting and auditing.

CHANGE IN ACCOUNTANTS

Pustorino, Puglisi & Co., P.C. served as the Company's independent auditors
for the period from September 21, 1992 (inception) to December 31, 1994. On
December 8, 1995, the Company's Board of Directors replaced Pustorino, Puglisi &
Co., P.C. in favor of Grant Thornton LLP as its independent certified public
accountants. Grant Thornton LLP replaced Pustorino, Puglisi & Co., P.C. as the
Company desired the services of a national accounting firm. Pustorino, Puglisi &
Co., P.C.'s report on the Company's financial statements for the period from
September 21, 1992 (inception) to December 31, 1994, did not contain an adverse
opinion or a disclaimer of opinion, nor was it qualified or modified as to
uncertainty, audit scope or accounting principles. Through December 8, 1995, the
date of their replacement, there was no disagreement with Pustorino, Puglisi &
Co., P.C. on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreement, if not
resolved to Pustorino, Puglisi & Co., P.C.'s satisfaction, would have caused
Pustorino, Puglisi & Co., P.C. to make reference to the subject matter of the
disagreement in connection with its report.

LEGAL MATTERS

The validity of the Securities being offered hereby will be passed upon for
the Company by Bernstein & Wasserman, LLP, 950 Third Avenue, New York, NY 10022.

Bernstein & Wasserman, LLP, has served, and continues to serve, as counsel to
the Underwriter on matters unrelated to this offering. Legal matters for the
Underwriter will be passed upon by Gerald A. Kaufman, Esq., 33 Walt Whitman
Road, Suite 233, Huntington Station, NY 11746.

<PAGE>

[This page intentionally left blank]

<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Reports of independent certified public accountants
Grant Thornton LLP................................................................................. F-2
Pustorino, Puglisi & Co., P.C...................................................................... F-3

Consolidated financial statements
Consolidated balance sheets........................................................................ F-4
Consolidated statements of operations.............................................................. F-5
Consolidated statement of stockholders' equity..................................................... F-6
Consolidated statements of cash flows.............................................................. F-7
Notes to consolidated financial statements......................................................... F-8 - F-14
</TABLE>

F-1

<PAGE>
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS

Board of Directors
Ecomat, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Ecomat, Inc. and
Subsidiaries as of December 31, 1995, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Ecomat, Inc. and
Subsidiaries as of December 31, 1995, and the consolidated results of their
operations and their consolidated cash flows for the year then ended in
conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has generated
only limited revenue and has incurred net losses of approximately $1,119,000 and
$839,000 for the years ended December 31, 1995 and 1994, respectively. In
addition, the Company has to date relied on debt and equity funding from its
founders to fund its operations. These factors, among others, as discussed in
Note B to the consolidated financial statements raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note B. The 1995 consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

GRANT THORNTON LLP

New York, New York
February 5, 1996,
except for Note A,
as to which the date
is March 29, 1996

F-2

<PAGE>
INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Ecomat, Inc.:

We have audited the accompanying consolidated balance sheet of Ecomat, Inc.
(formerly, Diaber Laundromat, Inc.) and Subsidiaries as of December 31, 1994,
and the related statements of loss, retained deficit, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ecomat, Inc. (formerly, Diaber
Laundromat, Inc.) and Subsidiaries as of December 31, 1994, and the results of
its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

Pustorino, Puglisi & Co., P.C.

New York, New York
January 15, 1996

F-3

<PAGE>

ECOMAT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1995
---------- ---------- SEPTEMBER 30,
1996
-------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash................................................................. $ 12,501 $ 10,447 $ 149,567
Accounts receivable.................................................. -- 5,200 20,282
Franchise fees receivable............................................ -- -- 92,250
Prepaid expenses..................................................... -- -- 15,261
---------- ---------- -------------
Total current assets.............................................. 12,501 15,647 277,360
Property and equipment, net............................................ 254,886 775,228 687,204
Deferred offering costs................................................ -- -- 185,154
Other assets........................................................... 11,168 32,463 31,719
---------- ---------- -------------
$ 278,555 $ 823,338 $ 1,181,437
---------- ---------- -------------
---------- ---------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Accounts payable and accrued expenses................................ $ 26,702 $ 171,787 $ 621,583
Deferred revenue..................................................... -- 7,000 --
---------- ---------- -------------
Total current liabilities......................................... 26,702 178,787 621,583
Notes payable.......................................................... -- 1,029,500 1,614,632
Deferred rent payable.................................................. 75,110 161,070 173,597
Deferred revenue....................................................... -- 76,000 366,835
Commitments and contingencies
Stockholders' equity (deficiency)
Preferred stock, $.0001 par value; authorized, 1,000,000 shares; no
shares issued and outstanding..................................... -- -- --
Common stock, $.0001 par value; authorized, 25,000,000 shares; issued
and outstanding, 2,400,000 shares................................. 240 240 240
Additional paid-in capital........................................... 1,289,760 1,609,760 1,609,760
Accumulated deficit.................................................. (1,113,257) (2,232,019) (3,205,210)
---------- ---------- -------------
176,743 (622,019) (1,595,210)
---------- ---------- -------------
$ 278,555 $ 823,338 $ 1,181,437
---------- ---------- -------------
---------- ---------- -------------
</TABLE>
The accompanying notes are an integral part of these statements.

F-4

<PAGE>

ECOMAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER NINE MONTHS ENDED
31, SEPTEMBER 30,
---------------------- --------------------------
1994 1995 1995 1996
--------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Cleaning and laundry services................... $ 147,076 $ 195,709 $ 134,740 $ 326,607
---------- ---------- ----------- -----------
Costs and expenses
Facilities operating costs:
Compensation................................. 90,002 179,870 108,335 151,515
Advertising and Promotion.................... 6,393 14,627 9,683 25,794
Supplies..................................... 27,261 23,069 24,437 15,341
Rent......................................... 47,571 85,246 77,979 117,502
Utilities.................................... 29,379 29,931 27,257 66,627
Other........................................ 5,325 4,621 17,158 40,847
---------- ---------- ----------- -----------
205,931 337,364 264,849 417,626
---------- ---------- ----------- -----------
Advertising and promotion, franchise sales...... 52,062 101,128 77,310 31,321
---------- ---------- ----------- -----------
General and administrative expenses
Compensation................................. 161,938 261,369 184,447 310,624
Rent......................................... 11,001 107,131 46,166 50,559
Professional and consulting fees............. 131,761 145,680 75,164 52,811
Other........................................ 218,396 242,545 254,294 279,458
---------- ---------- ----------- -----------
523,096 756,725 560,071 693,452
---------- ---------- ----------- -----------
Depreciation and amortization................... 55,625 85,766 44,506 90,552
---------- ---------- ----------- -----------
Total costs and expenses..................... 836,714 1,280,983 946,736 1,232,951
Loss on disposition of assets..................... 139,890 3,250 -- --
---------- ---------- ----------- -----------
Operating loss............................... (829,528) (1,088,524) (811,996) (906,344)
---------- ---------- ----------- -----------
Other income (expense)
Other income.................................... -- 5,185 8,327 352
Interest expense................................ (5,631) (29,725) (12,386) (63,314)
---------- ---------- ----------- -----------
(5,631) (24,540) (4,059) (62,962)
---------- ---------- ----------- -----------
Loss before provision for income taxes....... (835,159) (1,113,064) (816,055) (969,306)
Income taxes...................................... 4,117 5,698 2,659 3,885
---------- ---------- ----------- -----------

Net loss..................................... $ (839,276) $(1,118,762) $ (818,714) $ (973,191)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net loss per share................................ $ (.35) $ (.47) $ (.34) $ (.41)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Weighted average shares outstanding............... 2,400,000 2,400,000 2,400,000 2,400,000
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these statements.

F-5

<PAGE>

ECOMAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)

<TABLE>
<CAPTION>
TOTAL
ADDITIONAL DEFICIT IN
PREFERRED COMMON PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK STOCK CAPITAL DEFICIT EQUITY
--------- ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993.................... $ -- $240 $ 649,760 $ (273,981) $ 376,019
Shareholder contributions....................... -- -- 640,000 -- 640,000
Net loss for the year........................... -- -- -- (839,276) (839,276)
--------- ------ ---------- ----------- -------------
Balance at December 31, 1994.................... -- 240 1,289,760 (1,113,257) 176,743
Shareholder contributions....................... -- -- 320,000 -- 320,000
Net loss for the year........................... -- -- -- (1,118,762) (1,118,762)
--------- ------ ---------- ----------- -------------
Balance at December 31, 1995.................... -- 240 1,609,760 (2,232,019) (622,019)
Net loss for the nine months ended September 30,
1996 (unaudited).............................. -- -- -- (973,191) (973,191)
--------- ------ ---------- ----------- -------------
Balance at September 30, 1996 (unaudited)....... $ -- $240 $1,609,760 $(3,205,210) $ (1,595,210)
--------- ------ ---------- ----------- -------------
--------- ------ ---------- ----------- -------------
</TABLE>

The accompanying notes are an integral part of this statement.

F-6

<PAGE>

ECOMAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------- ----------------------
1994 1995 1995 1996
--------- --------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss.................................................. $(839,276) $(1,118,762) $(818,714) $(973,191)
Adjustment to reconcile net loss to net cash used in
operating activities
Depreciation and amortization........................ 55,625 85,766 44,506 90,552
Loss on disposition of assets........................ 139,890 3,250 -- --
Changes in assets and liabilities
Accounts receivable and prepaid expenses............. -- (5,200) (24,459) (122,593)
Other assets......................................... (10,361) (21,295) (18,727) --
Accounts payable and accrued expenses................ 8,305 114,744 181,088 317,796
Accrued interest..................................... -- 29,500 -- 63,314
Deferred rent payable................................ 75,110 85,960 44,033 12,527
Deferred revenue..................................... -- 83,000 76,000 290,835
--------- ----------- --------- ---------
Net cash used in operating activities....................... (570,707) (743,037) (516,273) (320,760)
--------- ----------- --------- ---------
Cash flows from investing activities
Purchase of property and equipment........................ (67,106) (579,017) (560,354) (1,784)
--------- ----------- --------- ---------
Net cash used in investing activities....................... (67,106) (579,017) (560,354) (1,784)
--------- ----------- --------- ---------
Cash flows from financing activities
Proceeds from shareholder contributions................... 640,000 320,000 320,556 --
Payment of deferred offering costs........................ -- -- -- (60,154)
Payment of note payable................................... (26,526) -- -- --
Proceeds from notes payable............................... -- 1,000,000 816,423 521,818
--------- ----------- --------- ---------
Net cash provided by financing activities................... 613,474 1,320,000 1,136,979 461,664
--------- ----------- --------- ---------
Net (decrease) increase in cash and cash equivalents........ (24,339) (2,054) 60,352 139,120
Cash and cash equivalents--beginning of period.............. 36,840 12,501 12,501 10,447
--------- ----------- --------- ---------
Cash and cash equivalents--end of period.................... $ 12,501 $ 10,447 $ 72,853 $ 149,567
--------- ----------- --------- ---------
--------- ----------- --------- ---------

Supplemental disclosures of cash flow information:
Cash paid during the period for
Interest............................................... $ 5,631 $ 225 $ -- $ --
Income taxes........................................... $ 4,117 $ 5,698 $ 2,659 $ 3,885
</TABLE>

The accompanying notes are an integral part of these statements.

F-7

<PAGE>
ECOMAT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 IS UNAUDITED)

NOTE A--ORGANIZATION AND NATURE OF BUSINESS

Ecomat, Inc. (the 'Company' or 'Ecomat'), a Delaware corporation, was
formed on December 14, 1995 to serve as the successor by merger (the 'Merger')
to Diaber Laundromat, Inc. ('Diaber'). The Merger of the Company and Diaber took
place effective March 29, 1996. In connection with the Merger, each share of the
Company's common stock (a total of 10) converted into 240,000 shares of the
Company's common stock, resulting in the issuance of 2,400,000 shares of common
stock, all of which are issued and outstanding.

The Merger was accounted for at historical cost in a manner similar to a
pooling-of-interests accounting as the entities included in the Merger are under
common control. The accompanying financial statements reflect the effects of the
Merger described above.

The Company, through its wholly-owned subsidiaries, operates and intends to
franchise environmentally sound cleaning and laundromat facilities, currently in
the New York area. The Company and its franchisees are dependent upon various
third-party manufacturers and suppliers to provide laundromat and wet cleaning
equipment, as well as specialized finishing and cleaning products. Ecomat has
three subsidiaries:

1. 8th Street Laundromat, Inc. ('8th Street'), a Company-owned
full-service Ecomat cleaners and laundromat located in New York City.

2. Ecoclean Systems International, Ltd. ('Ecoclean Systems'), a
Company-owned full-service cleaners and laundromat located in Mamaroneck,
New York.

3. Ecofranchising, Inc. ('Ecofranchising') is the franchiser of the
Ecomat concept.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Presentation

The Company has generated only limited revenue and has incurred net losses
of approximately $1,119,000 and $839,000 for the years ended December 31, 1995
and 1994 and $973,000 and $819,000 for the nine months ended September 30, 1996
and 1995, respectively. The Company has an accumulated deficit of approximately
$3,205,000 and $2,232,000 and negative working capital of approximately $344,000
and $163,000 at September 30, 1996 and December 31, 1995, respectively. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. In addition, the Company has not made timely payments of payroll
taxes; approximately $149,000 are past due and accrued as of September 30, 1996.

The accompanying financial statements do not include any adjustments that might
result from the outcome of the aforementioned uncertainty. Management
anticipates that it may incur additional losses in its Company-owned facilities
until a sufficient number of new units can be added. During the period required
to successfully develop and market its Ecomat concept as well as add new
Company-owned stores, the Company will require additional funds for operations.
The Company has, to date, relied primarily on debt and equity funding from its
founders to fund its operations.

Management's plans in regard to these matters include (1) an initial public
offering ('IPO') of a 1,200,000 shares of Ecomat common stock, (2) obtaining
interim short-term financing until such time as the planned initial public
offering is completed and (3) considering additional private placements of
equity securities in the event the initial public offering is not completed.

The common stock is expected to be sold at $5.00 per share. There is no
assurance that the offering will be successful.

2. Basis of Combination

The consolidated financial statements include the Company, Diaber and its
three wholly-owned subsidiaries. All intercompany transactions have been
eliminated in consolidation.

The December 31, 1994 statements of operations and cash flows include
approximately $36,000 in revenues and $174,000 in losses relating to the
operations of Ecowash, Inc. ('Ecowash'), a wholly-owned subsidiary of

F-8

<PAGE>

ECOMAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995 AND 1994
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 IS UNAUDITED)

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
the Company until December 31, 1994, when it ceased operations and was

liquidated into Diaber. Ecowash was a Company-owned store in New York City.

3. Revenue Recognition

Revenue from Company-owned stores is recognized in the period in which
related cleaning and laundry services are sold.

The Company's standard single franchise agreement requires the franchisee
to pay an initial nonrefundable fee, as well as a royalty of 5.5% of sales for a
ten-year period. Revenue derived from initial franchise fees is recognized when
the franchise store opens and when all material services or conditions relating
to the sale have been substantially completed. Royalties are recognized in the

same period in which related franchise store revenue is generated.

A cluster franchise agreement provides for a franchise to operate multiple
locations from a central facility within a given geographic area.

A master franchise agreement is used for foreign locations and is designed
for a country or group of countries constituting a 'territory'. The master
franchisee sub-franchises Ecomat units or clusters within the territory and/or
operates stores owned by the master franchisee.

Revenues derived from initial franchise fees for cluster franchises and
master franchises are recognized on a pro-rata basis (based on the anticipated
number of facilities expected to be opened) as facilities, subject to the terms
of the agreement, are opened and when all material obligations or conditions
relating to the agreement have been substantially satisfied.

At December 31, 1995 and September 30, 1996, respectively, the Company had
approximately $76,000 and $367,000 respectively, of deferred revenue relating to
initial franchise fees (including a master franchise fee) for which the related
franchise stores have not yet opened.

4. Property and Equipment

Property and equipment are stated at cost. Depreciation is determined on
the straight-line method over the estimated useful lives of the assets (ranging
from 5 to 10 years). Maintenance and repairs are expensed as incurred.

5. Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.

6. Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
in effect for the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

7. Net Loss Per Share

Net loss per share has been computed using the weighted average number of
common shares outstanding after giving retroactive effect to the Merger. The
supplemental pro forma loss per share is based upon (i) 2,400,000 shares of
common stock outstanding during the period and (ii) the number of shares
(80,897, 46,112 and 217,909 for the year ended December 31, 1995 and the nine
months ended September 30, 1995 and 1996) whose proceeds would be necessary to
repay certain debt of the Company (Note E). The supplemental pro forma

F-9

<PAGE>

ECOMAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995 AND 1994
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 IS UNAUDITED)

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

loss per share was $.44, $.33 and $.35 for the year ended December 31, 1995 and
the nine months ended September 30, 1995 and 1996.

8. Use of Estimates

In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

9. Research and Development Costs

The Company expenses all costs related to research and development as
incurred.

10. New Accounting Standards Adopted

In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, 'Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of' ('SFAS No. 121'),
which provides guidance on when to assess and how to measure impairment of
long-lived assets, certain intangibles and goodwill related to those assets to
be held and used, and for long-lived assets and certain identifiable intangibles
to be disposed of. This statement is effective for financial statements for
fiscal years beginning after December 15, 1995. The Company's adoption of SFAS
No. 121 did not have a material effect on the Company.

11. Interim Financial Information

The financial information presented as of September 30, 1996, for the nine
months ended September 30, 1996 and 1995, and events subsequent to September 30,
1996 disclosed in the notes to the financial statements are unaudited. In the
opinion of management, this unaudited financial information contains all
adjustments (which consist of normal recurring accrual adjustments) necessary
for a fair presentation for the interim periods presented. The results for the
interim periods are not necessarily indicative of results expected for the full
year.

NOTE C--PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
<S> <C> <C> <C>
Laundry equipment............................................... $182,232 $430,848 $ 420,617
Computer equipment.............................................. 18,397 36,557 37,752
Leasehold improvements.......................................... 101,018 390,646 399,294
Furniture and fixtures.......................................... -- 46,454 48,626
Automobile...................................................... -- 3,250 3,250
-------- -------- -------------
301,647 907,755 909,539
Less accumulated depreciation and amortization.................. (46,761) (132,527) (222,335)
-------- -------- -------------
$254,886 $775,228 $ 687,204
-------- -------- -------------
-------- -------- -------------
</TABLE>

Depreciation and amortization expense aggregated approximately $86,000,
$56,000, $91,000, and $44,000 for the years ended December 31, 1995 and 1994 and
for the nine months ended September 30, 1996 and 1995, respectively.

F-10

<PAGE>

ECOMAT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 IS UNAUDITED)

NOTE C--PROPERTY AND EQUIPMENT--(CONTINUED)

During 1994, the Company had a loss on disposition of assets relating to
the closing of a facility in New York City. The owner of the building in which
the facility operated never obtained the proper certificate of occupancy for
commercial use. As a result of the store closing, the Company abandoned certain
cleaning equipment and leasehold improvements relating to the renovation of the
property. The leasehold improvements had a net book value of $89,000 and the
cleaning equipment had a net book value of $51,000 when the assets were
abandoned, resulting in a loss of approximately $140,000.

During 1995, the Company disposed of old garment presses, resulting in a
loss of $3,250.

NOTE D--ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1994 1995 1996
------- -------- -------------
<S> <C> <C> <C>
Payroll and payroll taxes......................................... $ 8,986 $ 43,983 $ 187,051
Professional fees................................................. 10,000 77,357 158,501
Rent.............................................................. 7,200 14,107 53,623
Equipment purchases............................................... -- 30,341 --
Other payables.................................................... 516 5,999 222,408
------- -------- -------------
$26,702 $171,787 $ 621,583
------- -------- -------------
------- -------- -------------
</TABLE>

The Company has not made timely payments of its payroll taxes;
approximately $37,500 and $149,000, respectively, of payroll taxes payable are
past due and accrued as of December 31, 1995 and September 30, 1996,
respectively.

NOTE E--NOTES PAYABLE

Notes payable consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Note payable--majority stockholder(a)........................... $1,000,000 $ 1,185,000
Note payable--officer/stockholder(b)............................ -- 71,818
Note payable(c)................................................. -- 265,000
Accrued interest................................................ 29,500 92,814
------------ -------------
$1,029,500 $ 1,614,632
------------ -------------
------------ -------------
</TABLE>

- ------------------
(a) As of December 31, 1995, the Company was indebted in the amount of
$1,000,000 to a foreign corporation wholly-owned by a director and stockholder
of the Company ($1,029,500) including interest. The debt was evidenced by a
promissory note bearing interest at 7% per annum, which is payable at the
earlier of (i) May 21, 2000 or (ii) the closing of the Company's IPO (see Note
I). At any time after January 1, 1997 and before May 21, 2000 (if the closing of

the anticipated IPO (Note I-1) has not occurred), the note holder may, at its
option, convert the note into 384,000 shares of the Company's common stock. The
balance at December 31, 1995 and September 30, 1996 includes $29,500 and
$83,600, respectively, of accrued interest.

F-11

<PAGE>

ECOMAT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 IS UNAUDITED)

NOTE E--NOTES PAYABLE--(CONTINUED)

The note was revised as of September 26, 1996 to reflect additional
borrowings. In addition, the note was revised to reflect the following terms:

<TABLE>
<S> <C>
Amount (including interest) $1,268,000 ($1,185,000 was outstanding as of September 30, 1996)
Interest 7% per annum
Maturity $1,000,000 on the earliest of (a) September 25, 2001, (b) the closing
date of the Company proposed IPO or (c) an event of default (as defined)
and the balance due on the earlier of September 25, 2001 or two years
after the closing of the IPO.
Conversion $268,000 of the note is convertible into common stock at a price equal to
the book value of the Company (as defined) within certain limitations as
defined in the note.
</TABLE>

(b) The Company has a note payable to an officer/principal stockholder/director
in the amount of $71,818 at September 30, 1996. The note bears interest at 7%
per annum and matures on the earlier of (a) June 27, 2001 or (b) two years after
the closing of the proposed IPO and is convertible into common stock at a price
equal to the book value of the Company (as defined) within certain limitations
as defined in the note.

(c) The Company is indebted in the amount of $265,000 at September 30, 1996 to
an individual who is affiliated with the Company's underwriter. The debt is
evidenced by promissory notes. $140,000 of such amount bears interest at 12% per
annum and the remaining $125,000 does not bear interest. The Company anticipates
that the notes will be repaid from the net proceeds of the IPO.

The notes payable are all due in the year 2001, subject to earlier payment
as described.

NOTE F--INCOME TAXES

At December 31, 1995, the Company had net operating loss carryforwards of

approximately $2,030,000 for income tax purposes expiring through 2010. The
Company's ability to utilize net operating losses may be limited due to changes
in ownership resulting from the shares issued in the proposed IPO, additional
issuances of the Company's common stock or other changes in ownership, as
defined in Internal Revenue Code Section 382 and related regulations. The
Company intends to elect to file consolidated Federal tax returns for 1996.

For financial statement purposes, a valuation allowance equal to the amount
of the net deferred tax asset at December 31, 1995 and 1994, respectively, has
been recognized, as the realization of such deferred tax assets is uncertain.

Components of the Company's deferred tax assets (liabilities) are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1994 1995 1996
--------- ----------- -------------
<S> <C> <C> <C>
Interest expense............................................. $ -- $ 12,000 $ 33,000
Lease obligation............................................. 30,000 64,000 69,000
Net operating loss carryforwards............................. 413,000 966,000 1,179,000
--------- ----------- -------------
443,000 1,042,000 1,281,000
Valuation allowance.......................................... (443,000) (1,042,000) (1,281,000)
--------- ----------- -------------
Net deferred tax asset....................................... $ -- $ -- $ --
--------- ----------- -------------
--------- ----------- -------------
</TABLE>

F-12

<PAGE>

ECOMAT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 IS UNAUDITED)

NOTE G--COMMITMENTS

1. Lease Commitments

The Company has entered into various operating leases for its executive
office and Company-owned stores, as well as certain equipment expiring at
various times through the year 2005.

Aggregate future minimum lease payments required under noncancellable

operating leases at December 31, 1995 are as follows:

<TABLE>
<S> <C>
1996........................................................ $ 184,000
1997........................................................ 190,000
1998........................................................ 196,000
1999........................................................ 201,000
2000........................................................ 203,000
Thereafter.................................................. 818,000
----------
Total future minimum lease payments required................ $1,792,000
----------
----------
</TABLE>

Total rent expense for the years ended December 31, 1994 and 1995 and for
the nine months ended September 30, 1995 and 1996 amounted to approximately
$125,000, $200,000, $124,000 and $168,000, respectively. Rent expense is charged
on a straight-line basis over the respective terms of the lease. The excess of
rent expense over the required lease payments is reflected as deferred rent
payable as of December 31, 1995 and 1994 and September 30, 1996.

2. Employment Agreements

The Company entered into five-year employment agreements commencing January
1, 1996 and ending December 31, 2000, with the Company's Chief Executive Officer
and President and its Chief Operating Officer. Subsequent to June 30, 1996, the
agreement with the Chief Operating Officer ('COO') was terminated and the
Company agreed to pay the former COO approximately $45,000 (inclusive of certain
health benefits) in severance which was expensed during the nine months ended
September 30, 1996.

The Company and the CEO have entered into a new agreement effective October
1, 1996. Under this agreement, the CEO will receive a annual base salary of
$75,000 (that may be increased from time to time by the Board of Directors). In
addition, the CEO has the right to receive for no additional consideration under
the employment agreement (i) up to 20,000 shares of common stock if the
after-tax earnings of the Company and its subsidiaries are at least $1,500,000
in fiscal years 1996 and 1997, and (ii) up to 40,000 shares of common stock if
the after-tax earnings of the Company and its subsidiaries are at least
$2,000,000 for fiscal years 1996-1998 (only
20,000 shares if the CEO was issued 20,000 shares each after fiscal 1997).
Under the employment agreement, employment terminates upon death or total
disability of the employee and may be terminated by the Company for cause.

The Company has entered into a five-year employment agreement commencing
January 15, 1996 and ending January 14, 2000, with its Vice President of
Franchise Sales and Marketing. Under this employment agreement, this individual
will receive an annual base salary of $93,000. In addition, he has the right to
receive (i) up to 20,000 shares of common stock if the after-tax earnings of the
Company and its subsidiaries are at least $1,500,000 in fiscal years 1996 and
1997, and (ii) up to 40,000 shares of common stock if the after-tax earnings of
the Company and its subsidiaries are at least $2,000,000 for fiscal years

1996-1998 (only 20,000 shares if he was issued 20,000 shares after fiscal 1997).
Under the employment agreement, employment terminates upon death or total
disability of the employee and may be terminated by the Company for cause.

The Company has entered into a two-year employment agreement commencing
April 1, 1995 and ending March 31, 1997, with its Director of Management
Information Systems. Under this employment agreement, this

F-13

<PAGE>

ECOMAT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995 AND 1994

(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 IS UNAUDITED)

NOTE G--COMMITMENTS--(CONTINUED)

individual will receive an annual base salary of $62,400. Under this employment
agreement, employment terminates upon death or total disability of the employee
and may be terminated by the Company for cause.

NOTE H--RELATED PARTY TRANSACTIONS

The Company and a director (who also controls a corporation that is the
majority shareholder of the Company) entered into a Master Franchise Agreement
dated January 27, 1996 that gives the director the right to (i) establish and
operate cleaning facilities in Europe and (ii) license other unaffiliated
parties to establish and operate cleaning facilities in Europe. At September 30,
1996, the Company has recorded the master franchise fee of $120,000 as deferred
franchise revenue and will recognize the fee on a pro-rata basis as facilities
subject to the agreement are opened.

NOTE I--SUBSEQUENT EVENTS

1. Proposed Public Offering of Securities and Deferred Offering Costs

The Company is in the process of filing a registration statement for a
proposed IPO of 1,200,000 shares of common stock. The Company intends to repay
approximately $1,299,000 ($1,274,000 of which was outstanding as of September
30, 1996) of the notes payable and accrued interest (Note E) with the net
proceeds of its proposed IPO. Offering costs, consisting of legal and accounting
fees relating to the Company's planned IPO, have been deferred and will be
charged against the proceeds of such offering or, in the event the offering is
unsuccessful, against operations in the period in which the offering is aborted.

2. Stock Option Plans

In January 1996, the directors and stockholders of the Company adopted the
1996 Incentive Stock Option and Stock Appreciation Rights Plan ('Incentive

Option Plan') and the 1996 Non-Qualified Stock Option (the 'Nonqualified Option
Plan'), collectively the 'Plans.' Pursuant to the Incentive Option Plan, key
employees and directors are eligible to receive incentive stock options, stock
appreciation rights ('SARs') and nonqualified options. Pursuant to the
Nonqualified Option Plan, key employees, directors, consultants, distributors,
professional and independent contractors are eligible to receive nonqualified
options. The Plans will be administered by the Board of Directors or an
appointed committee which will determine the recipients of such grants. The
Incentive Option Plan and the Nonqualified Option Plan each provide for options
covering 2,000,000 shares of the Company's common stock to be granted under the
Plans. As permitted by the provisions of Statement of Financial Accounting
Standards No. 123, 'Accounting for Stock-Based Compensation,' the Company has
adopted the Accounting Principles Board Opinion No. 25 or intrinsic value method
of accounting for employee stock options. Accordingly, the determined fair value
of stock options granted will be disclosed rather than recognized in the
financial statements.

F-14

<PAGE>

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

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION.

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

TABLE OF CONTENTS

PAGE
----
Prospectus Summary............................. 4
Summary Financial Information and Data......... 6
Risk Factors................................... 7
Use of Proceeds................................ 15
Dilution....................................... 16
Capitalization................................. 17
Dividend Policy................................ 17
Selected Financial Data........................ 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 19
Business....................................... 23
Management..................................... 35
Principal Shareholders......................... 38
Certain Relationships and Related
Transactions................................. 39
Description of Securities...................... 40
Underwriting................................... 42
Experts........................................ 43
Change in Accountants.......................... 43
Legal Matters.................................. 43
Financial Statements........................... F-1

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

UNTIL JANUARY 3, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

1,200,000 SHARES OF COMMON STOCK

EC[LOGO]OMAT

------------------------
PROSPECTUS
------------------------

PATTERSON TRAVIS, INC.

DECEMBER 9, 1996

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[LOGO] Cover printed on Recycled Paper with soy-based inks