<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 23, 1999
U.S. PLASTIC LUMBER CORPORATION
(Exact Name of Registrant as Specified in its Charter)
--------------------
<TABLE>
<S> <C> <C>
Nevada 3080 87-0404343
(State of incorporation) (Primary Standard Industrial (I.R.S. Employer /organization)
Classification Code Number) Identification No.)
</TABLE>
---------------------
2300 W. Glades Road, Suite 440 W, Boca Raton, Florida 33431
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: 561-394-3511
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On March 23, 1999, the Registrant acquired Brass Investment Co, a Delaware
corporation in a merger transaction. Brass Investment Co. ("Brass") owns two
wholly owned subsidiaries, Soil Remediation of Philadelphia, Inc. and Allied
Waste Services, Inc. The merger consideration under the Plan of Merger Agreement
was $4,450,000 in cash, 2,000,000 shares of non-registered common stock, par
value $.0001, of U.S. Plastic Lumber Corporation, and a grant of warrants to
Louis Paolino, Jr., Matthew Paolino, Joseph Paolino and Louis Paolino, Sr. in
the amount of 500,000 shares. The Company had previously entered into a
Management Contract effective January 7, 1999, at which time the Company took
over the day to day operations and financial control of Brass. The Registrant
purchased the real property, located in Philadelphia, as part of the
aforementioned merger consideration consisting of 8.3 acres, several buildings
and the soil remediation plant upon which the business operates.
The amount of consideration was determined by a number of factors, including
but not limited to, an appraisal of the business value of Brass utilizing
traditional business valuation formulas, an appraisal value of the real estate
and other assets being acquired, the vertical integration aspects the
Registrant believes will be derived from this merger, the skill and expertise
of the management team being acquired, and the goodwill of the customer base
being acquired. All negotiations relative to all transactions hereunder were
accomplished in an arms length manner.
The shareholders of Brass were Louis D. Paolino, Jr., Matthew Paolino, Joseph
Paolino and Louis D. Paolino, Sr. None of the individuals had any relationship
with the Registrant prior to this merger, other than as a competitor of the
Registrant.
The funding used by the Registrant was derived from cash on hand of the
Registrant, cash available from the Registrant's credit line facility with its
Bank, Coast Business Credit, and cash from PNC Bank of Delaware as a first
purchase money mortgage on the real estate.
(b) The business of Brass is the recycling and processing of petroleum
hydrocarbon contaminated soil and sale of materials for beneficial re-use. The
Registrant intends to continue to devote the assets for the purposes currently
used by Brass.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
U.S Plastic Lumber Corporation and Subsidiaries
Description of Pro Forma Consolidated Financial Information and Companies Included 4
Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 1998 6
Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 1998 8
Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 1997 9
Notes to Pro Forma Consolidated Statements of Operations for the years ended December 31, 1998
and 1997 11
The Brass Investment Companies (Soil Remediation of Philadelphia, Inc. and Allied Waste Services, Inc.)
Report of Independent Public Accountants 12
Audited Combined Balance Sheets as of December 31, 1998 13
Audited Combined Statements of Operations and Retained Earnings for the twelve months ended
December 31, 1998 14
Audited Combined Statements of Cash Flows for the twelve months ended December 31, 1998 15
Notes to Financial Statements for the twelve months ended December 31, 1998 16
Report of Independent Public Accountants 20
Audited Combined Balance Sheets as of June 30, 1997 21
Audited Combined Statements of Income and Retained Earnings for the twelve months ended
June 30, 1997 22
Audited Combined Statements of Cash Flows for the twelve months ended June 30, 1997 23
Notes to Financial Statements for the 12 months ended June 30, 1997 24
Exhibits. 1. Amendment to Agreement and Plan of Reorganization
2. The consolidated financial statements of U.S. Plastic Lumber
Corporation and subsidiaries included in Form 10-KSB for the year
ended December 31, 1998 are incorporated herein by reference.
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned hereunto duly authorized.
U.S. Plastic Lumber Corporation
(Registrant)
Date: May , 1999 By: /s/ Bruce C.Rosetto
--------------- ------------------------------------------
Bruce C. Rosetto, Vice President and
General Counsel/Secretary
3
<PAGE> 4
U.S. PLASTIC LUMBER CORP. AND SUBSIDIARIES
DESCRIPTION OF PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
The following unaudited pro forma consolidated financial information gives
effect to the combination for financial reporting purposes of U.S. Plastic
Lumber Corp. and the subsidiary companies owned as of December 31, 1996 (USPLC)
with the following companies acquired since December 31, 1996:
Recycled Plastics Industries, Inc. (RPI), acquired January 27, 1997
Advanced Remediation and Disposal Technologies, Inc. (ARDT), acquired
February 24, 1997
Environmental Specialty Products, Inc. (ESP), acquired March 28, 1997
Integrated Technical Services, Inc. (ITS), acquired March 31, 1997
EnviroPlastics Corporation (EPC), acquired June 30, 1997
Waste Concepts, Inc. (WCI), acquired November 18, 1997
Green Horizon Environmental, Inc. (GHE), acquired January 2, 1998
Chesapeake Plastic Lumber, Inc. (CPL), acquired March 1, 1998
Cycle-Masters, Inc. (CMI), acquired May 13, 1998
Trimax of Long Island, Inc. and Polymerix, Inc. (Trimax), acquired
June 30, 1998
Geocore, Inc. (GCI), acquired June 30, 1998
S&W Waste, Inc. (S&W), acquired December 30, 1998
Eaglebrook Plastics, Inc. and Eaglebrook Products, Inc.
(Eaglebrook or EB), acquired January 28, 1999
Brass Investment Co. (Brass), acquired March 23, 1999
The pro forma consolidated financial information is based on the historical
financial statements of USPLC, RPI, ARDT, ESP, ITS, EPC, WCI, GHE, CPL, CMI,
GCI, S&W, Eaglebrook and Brass and on estimates and assumptions set forth below
and in the notes to the pro forma consolidated financial information.
Insignificant acquisitions and companies with insignificant or no operations
(e.g. CTI) are not included in the pro forma information. Trimax is not
included because no information was available to USPLC on Trimax's operations
before and during the period it was under the protection of the Federal
bankruptcy court.
The pro forma consolidated balance sheet as of December 31, 1998 gives effect to
the combination of USPLC, Eaglebrook and Brass as if the acquisitions had
occurred on December 31, 1998. As of December 31, 1998 the balance sheets of
USPLC, RPI, ARDT, ESP, ITS, EPC, WCI, GHE, CPL, CMI, Trimax, GCI, and S&W are
included in the USPLC consolidated balance sheet.
The pro forma consolidated statements of operations present pro forma results
from operations for the years ended December 31, 1998 and 1997. For purposes of
the pro forma consolidated statements of operations, the acquisitions of RPI,
ARDT, ESP, ITS, EPC, WCI, GHE, CPL, CMI, GCI, S&W, Eaglebrook and Brass are
included as if the acquisitions had occurred on January 1, 1997.
The pro forma consolidated statement of operations for the year ended December
31, 1998 includes: (i) the audited financial information of USPLC for the year
ended December 31, 1998 (which includes USPLC and GHE for the full year and, for
the following periods ended December 31, 1998: CPL ten months, CMI eight months,
Trimax six months and GCI six months; (ii) the unaudited financial information
of CPL for the two month period ended February 28,1998; (iii) the unaudited
financial information of CMI for the four months ended April 30, 1998; (iv) the
unaudited financial information of GCI for the six months ended June 30, 1998;
(v) the unaudited financial information of S&W for the year ended December 31,
1998; and (vi) the audited financial information of Eaglebrook and Brass
Investment Companies for the year ended December 31, 1998.
4
<PAGE> 5
The pro forma consolidated statements of operations for the year ended December
31, 1997 includes: (i) the audited financial information of USPLC for the year
ended December 31, 1997 and, for the following periods ended December 31, 1997:
RPI eleven months, ARDT ten months, ESP and ITS nine months, EPC six months and
WCI one month; (ii) the unaudited financial information of GHE, CPL, GCI and
S&W for the year ended December 31, 1997; (iii) the audited financial
information of CMI for the year ended September 30, 1997; (iv) the audited
financial information of Eaglebrook for the year ended December 31, 1997; and
(v) the audited financial information of the Brass Investment Companies for
year ended June 30, 1997. Prior to fiscal year 1998, the two Brass wholly-owned
subsidiaries, Soil Remediation of Philadelphia, Inc. and Allied Waste Services,
Inc., reported consolidated results of operations on fiscal year ended June 30,
1997.
Pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deems appropriate. The
unaudited pro forma consolidated financial information presented herein is not
necessarily indicative of the results the companies would have obtained had the
acquisitions occurred on January 1, 1997, as assumed, or of the future results
of the companies. The pro forma consolidated financial information should be
read in conjunction with the other financial statements and notes thereto
included elsewhere in this document or incorporated herein by reference.
5
<PAGE> 6
US PLASTIC LUMBER CORP. AND SUBSIDIARIES
UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Proforma
Proforma Consolidated
USPLC EB Brass Adjustments Balance Sheet
----------- ---------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 901,970 $ 705,536 $ 3,984 d $ (813,221) $ 798,269
Accounts Receivables (Net) 12,334,903 1,680,827 -- 14,015,730
Inventories 4,869,006 970,881 -- 5,839,887
Prepaid expenses and other
assets 1,278,402 392,628 43,256 1,714,286
----------- ---------- ---------- ----------- -----------
TOTAL CURRENT ASSETS 19,384,281 3,749,872 47,240 (813,221) 22,368,172
PROPERTY, PLANT AND EQUIPMENT
(NET) 17,890,636 4,818,175 4,698,589 p,q,r 28,822,672 56,230,072
OTHER ASSETS
Acquired intangibles, net 9,553,642 -- -- s,t 5,006,306 14,559,948
Other assets 5,376,403 -- -- e (300,000) 5,076,403
----------- ---------- ---------- ----------- -----------
TOTAL ASSETS $52,204,962 $8,568,047 $4,745,829 $32,715,757 $98,234,595
=========== ========== ========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable and capital
leases, current portion $ 3,635,300 $2,352,520 $ -- $ 5,987,820
Accounts payable 4,229,972 1,403,888 -- 5,633,860
Accrued expenses 1,564,944 1,027,616 214,901 2,807,461
Other liabilities 1,097,762 -- 24,125 n $ 1,262,392 2,384,279
----------- ---------- ---------- ----------- -----------
TOTAL CURRENT LIABILITIES 10,527,978 4,784,024 239,026 1,262,392 16,813,420
Notes payable and capital f,j,k,
leases, net of current portion 14,669,104 1,517,357 -- m,o 9,298,933 25,485,394
Deferred income taxes 130,281 -- -- 130,281
Minority Interest 250,164 -- -- 250,164
Loans from related parties -- -- -- h,i 6,000,000 6,000,000
Convertible subordinated
debentures, net of discount 3,555,556 -- -- g,l 6,500,000 10,055,556
----------- ---------- ---------- ----------- -----------
TOTAL LIABILITIES 29,133,083 6,301,381 239,026 23,061,325 58,734,815
----------- ---------- ---------- ----------- -----------
STOCKHOLDERS' EQUITY
10% Convertible preferred stock,
par value $.001; authorized
5,000,000 shares; issued and
outstanding 382,709 shares
(aggregate liquidation
preference of $7,808,877) 383 383
Common stock par value $.0001,
authorized 50,000,000 shares;
issued and outstanding 18,230,528
shares and pro forma 21,898,553
shares 1,823 10 2,710 a,u (2,353) 2,190
Additional paid-in capital 24,669,247 875,857 2,715,057 b,c,v 11,837,074 40,097,235
Retained earnings
(accumulated deficit) (1,599,574) 1,390,799 1,789,036 w,x,y (2,180,289) (600,028)
----------- ---------- ---------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 23,071,879 2,266,666 4,506,803 9,654,432 39,499,780
----------- ---------- ---------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $52,204,962 $8,568,047 $4,745,829 $32,715,757 $98,234,595
=========== ========== ========== =========== ===========
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements
6
<PAGE> 7
US PLASTIC LUMBER CORP. AND SUBSIDIARIES
PROFORMA ADJUSTMENTS TO CONSOLIDATED PROFORMA BALANCE SHEET
AS OF DECEMBER 31, 1998
<TABLE>
<S> <C> <C>
Increase\(Decrease)
-------------------
Issuance of 3,668,025 shares of USPLC common stock to Eaglebrook and Brass shareholders
Common Stock a $ 367
Additional paid-in-capital b 14,392,909
--------------
$14,393,276
==============
Issuance of 500,000 warrants to purchase USPLC common stock to Brass shareholder c $ 1,035,079
==============
Cash and debt issued to acquire Eaglebrook and Brass:
Costs of the acquisition d $ 813,221
Downpayment for Eaglebrook included in other assets at December 31, 1998 e 300,000
Income taxes to be paid with $500,000 related party loan and revolving credit facility f 963,494
Closing payment for Eaglebrook financed by:
Issuance of convertible debentures g 2,500,000
Loan from related party-Stout Partnership h 5,000,000
Loan from related party i 1,000,000
Closing payment for Brass financed by:
Loan from Credit Facility j 3,250,000
Mortgage from PNC Bank k 1,200,000
--------------
Total cash paid $15,026,715
==============
Convertible Secured Debentures issued to Eaglebrook shareholders L $ 4,000,000
==============
Note Payable assumed for Brass acquisition m $ 724,134
==============
Liabilities assumed in EB and Brass acquisitions in January, 1999 n $ 1,262,392
==============
NPV of capital Lease to acquire the EB land and building o $ 3,161,305
Estimated fair value of EB land and building p $16,500,000
==============
Estimated fair value of EB equipment above EB net book value at January 31, 1999 q $ 2,263,996
==============
Estimated fair value of Brass property and equipment above Brass net book value at
January 31, 1999 r $10,058,676
==============
Adjustment to reflect excess of purchase price of EB over estimated fair value of assets
and liabilities acquired effective January 31, 1999 (includes net income of EB for
January less the dividend paid) s $ 4,492,851
==============
Adjustment to reflect excess of purchase price of Brass over estimated fair value of
assets and liabilities acquired effective January 7, 1999 t $ 513,455
==============
Adjustment to eliminate the stockholders equity of EB and Brass at December 31, 1998:
Eliminate the capital stock of EB and Brass u $ (2,720)
Eliminate the additional paid-in-capital of EB and Brass v (3,590,914)
Eliminate the retained earnings of EB and Brass as of December 31, 1998 w (3,179,835)
--------------
$(6,773,469)
==============
Dividends issued to EB shareholders after December 31, 1998 x $ 1,040,000
==============
Income of EB for month of January 1999 y $ (40,454)
==============
</TABLE>
7
<PAGE> 8
US PLASTIC LUMBER CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PROFORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
USPLC CPL CMI GEO S&W EB
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SALES, NET $45,704,940 $ 46,686 $1,267,459 $352,311 $6,908,998 $20,439,262
COST OF SALES 35,019,270 60,371 713,739 165,004 4,331,516 13,857,991
------------------------------------------------------------------------------
GROSS PROFIT 10,685,670 (13,685) 553,720 187,307 2,577,482 6,581,271
GENERAL, ADMINISTRATIVE AND SELLING 9,248,444 40,925 372,354 159,947 2,130,415 5,559,474
------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 1,437,226 (54,609) 181,366 27,360 447,067 1,021,797
INTEREST INCOME\OTHER INCOME 146,389 -- 612 23,946 120,659
INTEREST EXPENSE (1,225,158) (2,748) -- (98,497) (333,286)
MINORITY INTEREST (262,659) -- -- (1,632)
PROVISION FOR INCOME (TAXES) CREDITS -- -- (64,020)
------------------------------------------------------------------------------
NET INCOME (LOSS) $ 95,798 $(57,357) $ 117,958 $ 25,728 $ 372,516 $ 809,170
==============================================================
PREFERRED STOCK DIVIDEND EARNED (677,078)
--------------
NET INCOME (LOSS) ATTRIBUTABLE
TO COMMON STOCKHOLDERS $ (581,280)
==============
BASIC AND DILUTED LOSS PER SHARE $ (0.03)
==============
WEIGHTED AVERAGE SHARES OUTSTANDING 16,876,651
==============
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------- COMBINED
BRASS DR CR TOTAL
---------- ----------- --------- ------------
<S> <C> <C> <C>
SALES, NET $12,175,629 $86,895,285
COST OF SALES 9,484,587 d,b $660,344 62,972,134
----------- -----------
GROSS PROFIT 2,691,042 23,923,152
GENERAL, ADMINISTRATIVE AND SELLING 651,378 c 196,256 18,359,193
----------- -----------
OPERATING INCOME (LOSS) 2,039,054 5,563,959
INTEREST INCOME\OTHER INCOME 31,418 323,024
INTEREST EXPENSE e 2,406,720 (4,068,041)
MINORITY INTEREST (262,659)
PROVISION FOR INCOME (TAXES) CREDITS (476,811) f 540,831 --
----------- ---------- -------- -----------
NET INCOME (LOSS) 1,594,271 $3,143,807 $660,344 1,556,282
=========== ========== ========
PREFERRED STOCK DIVIDEND EARNED (677,078)
-----------
NET INCOME (LOSS) ATTRIBUTABLE
TO COMMON STOCKHOLDERS g $ 879,204
===========
BASIC AND DILUTED LOSS PER SHARE $ .04
===========
WEIGHTED AVERAGE SHARES OUTSTANDING g 21,073,511
===========
</TABLE>
See accompanying notes to unaudited pro forma consolidated
statements of operations.
8
<PAGE> 9
US PLASTIC LUMBER CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CONTINUED
USPLC RPI ARDT ESP ITS EPC WCI GHE
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales, net $24,739,381 $82,868 $ 38,276 $ 147,145 $1,785,026 $2,891,508 $4,791,242 $911,304
Cost of Sales 19,779,873 62,604 59,984 137,434 1,483,824 3,125,953 3,903,960 762,615
--------------------------------------------------------------------------------------------------
GROSS PROFIT 4,959,508 20,264 (21,708) 9,711 301,202 (234,445) 887,282 148,689
General, administrative
and selling 5,280,813 13,032 38,432 131,545 188,586 285,019 953,229 52,391
--------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (321,305) 7,232 (60,140) (121,834) 112,616 (519,464) (65,947) 96,298
Interest income\Other
Income (expense) 50,879 189 -- -- -- -- (16,665) --
Interest expense (307,635) (2,055) (1,911) (1,693) (4,638) (51,639) (24,823) (4,182)
Equity in loss of JV (131,897) -- -- -- -- -- -- --
Provision for (benefit from)
income taxes 4,329 -- -- 29,918 (18,738) 97,822 -- --
--------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (705,629) $ 5,366 $(62,051) $ (93,609) $ 89,240 $ (473,281) $(107,435) $ 92,116
===================================================================================
Preferred stock dividends
earned (409,705)
---------------
NET INCOME (LOSS)
ATTRIBUTABLE
TO COMMON STOCKHOLDERS (1,115,334)
===============
BASIC AND DILUTED LOSS
PER SHARE $ (0.08)
===============
Weighted average shares
outstanding 14,053,862
================
</TABLE>
See accompanying notes to unaudited pro forma consolidated
statements of operations.
9
<PAGE> 10
US PLASTIC LUMBER CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CONTINUED
CPL CMI GEO S&W EB Brass
--------- ---------- -------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sales, net $ 704,560 $2,610,958 $489,668 $6,601,207 $20,222,795 $12,146,375
Cost of Sales 848,240 1,570,240 125,313 3,526,012 15,099,767 15,014,147
--------- ---------- -------- ---------- ----------- -----------
GROSS PROFIT (143,680) 1,040,718 364,355 3,075,195 5,123,028 (2,867,772)
General, administrative
and selling 167,066 728,135 292,868 3,100,970 5,062,782 1,094,125
--------- ---------- -------- ---------- ----------- -----------
OPERATING INCOME (LOSS) (310,746) 312,583 71,487 (25,775) 60,246 (3,961,897)
Interest income/Other income
(expense) 9,473 3,903 82,881 290,408 --
Interest expense (23,250) (3,920) (41,300) (348,767) --
Equity in loss of JV -- -- -- -- -- --
Provision for (benefit from)
income taxes -- (122,000) -- -- -- (1,588,721)
--------- ---------- -------- ---------- ----------- -----------
NET INCOME (LOSS) $(324,523) $ 194,486 $ 67,567 $ 16,806 $ 1,887 $ 2,373,176
========= ========== ======== ========== =========== ===========
<CAPTION>
PRO FORMA ADJUSTMENTS COMBINED
DR CR TOTAL
--------- ----------- --------
<S> <C> <C> <C>
Sales, net a $1,041,433 $77,120,880
Cost of Sales a,b,d 2,464,974 63,034,991
-----------
GROSS PROFIT 14,085,889
General, administrative
and selling c 172,969 17,561,962
-----------
OPERATING INCOME (LOSS) (3,476,073)
Interest income/Other income
(expense) 421,068
Interest expense 2,585,115 (3,400,929)
Equity in loss of JV e (131,897)
Provision for (benefit from)
income taxes f 1,580,052 --
---------- ---------- -----------
NET INCOME (LOSS) $5,379,569 $2,464,974 (6,587,831)
========== ========== ===========
Preferred stock dividends
earned (409,705)
===========
NET INCOME (LOSS)
ATTRIBUTABLE TO COMMON
STOCKHOLDERS $(6,997,536)
===========
BASIC AND DILUTED LOSS
PER SHARE g $ (0.36)
===========
Weighted average shares
outstanding g 19,198,653
===========
</TABLE>
See accompanying notes to unaudited pro forma consolidated
statements of operations.
10
<PAGE> 11
US PLASTIC LUMBER CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTES:
a = Eliminate inter company sales
b = Adjustments to eliminate rent paid to former owner replaced by
imputed interest on loan and property taxes on S&W land purchased
from seller and to add additional rent to be paid to the owners
of the Eaglebrook plant.
c = Adjustment to reflect increase in amortization expense on the
goodwill recorded or to be recorded on the acquisitions of GHE,
CPL, CMI, GCI, Trimax, S&W, EB and Brass.
d = Adjustment for increased depreciation expense on equipment
recorded at the higher FMV and decreased depreciation from
using longer lives on the Eaglebrook plant and equipment.
e = Adjustment to reflect increase in interest expense for cash paid
and or notes payable issued to consummate the acquisitions, net
of debt not assumed or replaced.
f = Adjustment to eliminate income taxes provided on the separate
companies' results. No taxes are provided on the consolidated
proforma results due to valuation allowances on NOL
carryforwards.
g = The weighted average shares outstanding used to calculate pro
forma income per share is based on the historical average number
of common shares outstanding during the period adjusted for
the acquisitions as if they had occurred on January 1, 1997.
Common stock equivalents for the period ended December 31, 1997
have been excluded because they are anti-dilutive. There is no
difference between primary and fully diluted net income share
calculations for period ended December 31, 1998.
11
<PAGE> 12
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
Soil Remediation of Philadelphia, Inc.
Allied Waste Services, Inc.
3201 South 61st Street
Philadelphia, PA 19153
We have audited the accompanying Combined Balance Sheet of Soil Remediation of
Philadelphia, Inc., and Allied Waste Services, Inc. as of December 31, 1998 and
the Related Statements of Operations, Retained Earnings 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 financial position of Soil Remediation of
Philadelphia, Inc. and Allied Waste Services, Inc. as of December 31, 1998, and
the results of its operations and cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ DANIEL P. IRWIN AND ASSOCIATES P.C.
April 26, 1999
12
<PAGE> 13
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
CURRENT ASSETS:
Cash $ 3,984
Prepaid Expenses 43,256
----------
TOTAL CURRENT ASSETS 47,240
PROPERTY AND EQUIPMENT:
Property and Equipment 4,992,434
LESS: Accumulated Depreciation (293,845)
----------
NET PROPERTY AND EQUIPMENT 4,698,589
----------
TOTAL ASSETS 4,745,829
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued Real Estate Taxes $ 214,901
Other Liabilities 24,125
----------
TOTAL CURRENT LIABILITIES 239,026
STOCKHOLDERS' EQUITY:
Common Stock - Authorized 11,000 Shares Issued
and Outstanding 200 Shares, Stated Value 2,710
Additional Paid in Capital 2,715,057
Retained Earnings 1,789,036
----------
TOTAL STOCKHOLDERS' EQUITY 4,506,803
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,745,829
==========
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 14
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
SALES $12,175,629
COST OF SALES 9,484,587
GENERAL AND ADMINISTRATIVE EXPENSES 651,378
-----------
INCOME FROM OPERATIONS 2,039,664
OTHER INCOME: 31,418
-----------
Income Before Taxes 2,071,082
Income Taxes 476,811
-----------
NET INCOME 1,594,271
Retained Earnings - Beginning of Year 194,765
-----------
Retained Earnings - End of Period $ 1,789,036
===========
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,594,271
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation 77,259
Amortization (27,065)
(Increase) Decrease in:
Receivables 3,330,893
Prepaid Expenses (31,282)
Increase (Decrease) in:
Accounts Payable (1,431,761)
Other Accrued Liabilities (899,187)
------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,613,128
------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (2,886,287)
Decrease in Pennsylvania Bond 245,220
------------
NET CASH (USED) IN INVESTING ACTIVITIES (2,641,067)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in Due From Related Companies 1,055,149
Decrease in Additional Paid in Capital (1,308,483)
------------
NET CASH (USED) IN FINANCING ACTIVITIES (253,334)
-------------
DECREASE IN CASH AND CASH EQUIVALENTS (281,273)
CASH AND CASH EQUIVALENTS
Beginning 285,257
------------
Ending $ 3,984
============
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE> 16
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 NATURE OF BUSINESS:
Soil Remediation of Philadelphia, Inc. and Allied Waste Services, Inc.,
(The Company) is engaged in business of remediation services for
Petroleum Contaminated Soil through a carefully controlled process in
which soil is heated to temperatures whereby the Hydrocarbon
Contaminates are volatized and released from the soil. These vapors are
then collected and cleaned through air pollution control systems. The
resulting clean soil is collected and stored to be used for a variety
of purposes, such as backfill, road building, construction, etc. The
Company is also in the business of brokering environmental remediation
services.
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The Accompanying Financial Statements include the following
organizations:
Soil Remediation of Philadelphia, Inc.
Allied Waste Services, Inc.
Intercompany Balance Sheet Accounts and Significant Statement of
Operations, Inter-company Transactions have been eliminated.
CASH AND CASH EQUIVALENTS:
For the purposes of the Statement of Cash Flows, the Company considers
all highly liquid debt instruments purchased with maturities of less
then three months to be cash equivalents.
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS:
The Company uses the Allowance Method to account for uncollectible
accounts receivable. The Allowance is based on management's analysis of
possible bad debts. Bad debt recoveries are charged against the
allowance account as realized.
USE OF ESTIMATES:
The preparation of Financial Statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of the assets and
liabilities, income and expenses and disclosure of contingencies.
Actual results could differ from those results.
16
<PAGE> 17
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
PROPERTY AND PLANT DEPRECIATION:
Property and Equipment are capitalized and stated at cost. Depreciation
is computed using the straight-line basis over the estimated service
lives of the respective property.
REVENUE RECOGNITION:
The Company primarily derives its Revenues from construction
contractors specializing in environmental clean up of petroleum
contaminated soil. Revenue is recognized when the performance of the
remediation process is completed.
NOTE 3 PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1998 is summarized as follows:
Machinery and Equipment $2,889,478
Autos and Trucks 541,694
Buildings 300,000
Land 1,250,000
Office Equipment 11,262
----------
4,992,434
LESS: Accumulated Depreciation 293,845
----------
NET PROPERTY AND EQUIPMENT $4,698,589
==========
NOTE 4 PREPAID EXPENSES:
Prepaid Expenses consist of the following at December 31, 1998:
Insurance $ 9,256.00
Landfill Costs 34,000.00
----------
$43,256.00
==========
17
<PAGE> 18
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 5 OTHER ACCRUED LIABILITIES:
The Company's Other Accrued Liabilities at December 31, 1998 consist of
the following:
Accrued Capital Costs $24,125.00
==========
NOTE 6 FEDERAL AND STATE TAXES:
At December 31, 1998, the Company had Income of $2,071,082.00. After
applying certain net operating loss carry forwards from 1996 and 1997,
the Companies 1998 tax expense is $476,811.00.
NOTE 7 COMMON STOCK:
SOIL REMEDIATION ALLIED WASTE
COMMON STOCK OF PHILA., INC. SERV.INC. TOTAL
------------ --------------- --------- -------
Authorized Shares 1,000 10,000 11,000
Issued and Outstanding 100 100 200
Par or Stated Value $27.00 $ .10 $ 27.10
Assigned Value $2,700 $ 10.00 $ 2,710
NOTE 8 ADDITIONAL PAID IN CAPITAL:
Additional Paid in Capital - Beginning $4,023,540
LESS: Net Assets Distributed to Parent
Company (Eastern Environmental
Services, Inc.) 1,308,483
----------
Additional Paid in Capital - Ending $2,715,057
==========
18
<PAGE> 19
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 9 COMMITMENTS AND CONTINGENCIES:
The Company is subject to extensive and changing Federal, State and
Local Environmental Laws and Regulations in the Commonwealth of
Pennsylvania that have been enacted in response to technological
advances and the public concern over environmental issues. The
expenditures necessary to comply with environmental laws and
regulations are made in the normal course of business. Although the
company, to the best of its knowledge, is in compliance in all material
respects with the laws and regulations affecting its operations. There
is no assurance that the Company will not have to expend substantial
amounts for compliance in the future.
NOTE 10 SUBSEQUENT EVENT:
On December 30, 1998, Brass Investment Co., a Delaware Corporation
agreed to purchase one hundred (100%) percent of the outstanding Common
Stock of Soil Remediation of Philadelphia, Inc. and Allied Waste
Services, Inc. for approximately $1,400,000.00.
On January 7, 1999, Brass Investment Co., a Delaware Corporation,
agreed to sell one hundred (100%) percent of its outstanding shares of
stock to Clean Earth, Inc., a Delaware Corporation, for cash and stock
totaling approximately $14,000,000.00.
19
<PAGE> 20
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
Soil Remediation of Philadelphia, Inc.
Allied Waste Services, Inc.
3201 South 61st Street
Philadelphia, PA 19153
We have audited the accompanying Combined Balance Sheet of Soil Remediation of
Philadelphia, Inc., and Allied Waste Services, Inc. as of June 30, 1997 and the
Related Statements of Operations, Retained Earnings and Cash Flows for the
twelve months 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 combined financial position of Soil Remediation of
Philadelphia, Inc. and Allied Waste Services, Inc. as of June 30, 1997, and the
results of its operations and cash flows for the twelve months then ended in
conformity with generally accepted accounting principles.
/s/ DANIEL P. IRWIN AND ASSOCIATES P.C.
April 26, 1999
20
<PAGE> 21
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
BALANCE SHEETS
JUNE 30, 1997
ASSETS
CURRENT ASSETS:
Cash $ 1,249
Accounts Receivable - Trade LESS
Allowance of $934,496.00 5,274,278
Prepaid Expenses 7,876
Refundable Income Taxes 1,455,103
-----------
TOTAL CURRENT ASSETS $ 6,738,506
PROPERTY AND EQUIPMENT:
Property and Equipment 12,029,911
LESS: Accumulated Depreciation 3,626,046
-----------
NET PROPERTY AND EQUIPMENT 8,403,865
INTANGIBLE ASSETS:
Goodwill - (Net) 1,020,363
Other Intangibles (Net) 336,333
-----------
TOTAL INTANGIBLE ASSETS 1,356,696
OTHER ASSETS:
Pennsylvania Bond 245,220
-----------
TOTAL ASSETS 16,744,287
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable - Trade 1,888,620
Accrued Payroll & Payroll Taxes 41,726
Due To Related Companies 11,766,597
-----------
TOTAL LIABILITIES 13,696,943
STOCKHOLDERS' EQUITY:
Common Stock - Authorized 11,000 Shares Issued
and Outstanding 200 Shares, Stated Value 1,010
Additional Paid in Capital 693,990
Retained Earnings 2,352,344
-----------
TOTAL STOCKHOLDERS' EQUITY 3,047,344
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $16,744,287
===========
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE> 22
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1997
SALES $12,146,375
COST OF SALES 15,014,147
GENERAL AND ADMINISTRATIVE EXPENSES 1,094,125
-----------
(LOSS) FROM OPERATIONS (3,961,897)
Tax Effect on Operating Loss 1,588,721
-----------
NET LOSS (2,373,176)
Retained Earnings - Beginning of Year 4,725,520
-----------
Retained Earnings - End of Period $ 2,352,344
===========
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE> 23
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(2,373,176)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation 909,835
Amortization 89,490
(Increase) Decrease in:
Receivables (3,539,725)
Prepaid Expenses (7,876)
Refundable Income Taxes (1,455,103)
Increase (Decrease) in:
Accounts Payable 1,719,279
Accrued Payroll and Payroll Taxes 41,726
-----------
NET CASH USED BY OPERATING ACTIVITIES (4,615,550)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (12,856)
Payments For Costs Over Assets Acquired (1,044,464)
Sale of Equipment 52,000
-----------
NET CASH (USED) IN INVESTING ACTIVITIES (1,005,320)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in Due to Related Companies 4,936,119
Proceeds From Issuance of Common Stock 685,000
-----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,621,119
-----------
INCREASE IN CASH AND CASH EQUIVALENTS 249
CASH AND CASH EQUIVALENTS
Beginning 1,000
-----------
Ending $ 1,249
===========
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE> 24
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 1 NATURE OF BUSINESS:
Soil Remediation of Philadelphia, Inc. and Allied Waste Services, Inc.,
(The Company) is engaged in business of remediation services for
Petroleum Contaminated Soil through a carefully controlled process in
which soil is heated to temperatures whereby the Hydrocarbon
Contaminates are volatized and released from the soil. These vapors are
then collected and cleaned through air pollution control systems. The
resulting clean soil is collected and stored to be used for a variety
of purposes, such as backfill, road building, construction, etc. The
Company is also in the business of brokering environmental remediation
services.
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The Accompanying Financial Statements include the following
organizations:
Soil Remediation of Philadelphia, Inc.
Allied Waste Services, Inc.
Intercompany Balance Sheet Accounts and Significant Statement of
Operations, Inter-company Transactions, have been eliminated.
CASH AND CASH EQUIVALENTS:
For the purposes of the Statement of Cash Flows, the Company considers
all highly liquid debt instruments purchased with maturities of less
then three months to be cash equivalents.
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS:
The Company uses the Allowance Method to account for uncollectible
accounts receivable. The Allowance is based on management's analysis of
possible bad debts. Bad debt recoveries are charged against the
allowance account as realized.
USE OF ESTIMATES:
The preparation of Financial Statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of the assets and
liabilities, income and expenses and disclosure of contingencies.
Actual results could differ from those results.
24
<PAGE> 25
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
PROPERTY AND PLANT DEPRECIATION:
Property and Equipment are capitalized and stated at cost.
Depreciation is computed using the straight-line basis over the
estimated service lives of the respective property.
REVENUE RECOGNITION:
The Company primarily derives its Revenues from construction
contractors specializing in environmental clean up of petroleum
contaminated soil. Revenue is recognized when the performance of
the remediation process is completed.
INTANGIBLE ASSETS:
Intangible Assets consist primarily of the cost of purchasing the
Company in excess of the market value of the net assets acquired
("Goodwill") and the costs incurred in acquiring the Federal, State
and Local permits necessary to operate a soil remediation facility
within the City of Philadelphia and Commonwealth of Pennsylvania.
Goodwill is being amortized on a straight line basis over a period
of forty (40) years. All other intangible assets are being
amortized over ten (10) years on a straight line basis.
NOTE 3 PROPERTY AND EQUIPMENT:
Property and equipment at June 30, 1997 is summarized as follows:
Machinery and Equipment $ 8,334,229
Autos and Trucks 390,653
Buildings and Site Improvements 1,283,068
Land 2,000,000
Office Equipment 21,961
-----------
12,029,911
LESS: Accumulated Depreciation 3,626,046
-----------
NET PROPERTY AND EQUIPMENT $ 8,403,865
===========
NOTE 4 INTANGIBLE ASSETS:
A Summary of Intangible Assets and Accumulated Amortization at June 30,
1997, is as follows:
ACCUMULATED NET
ASSET COST AMORTIZATION BOOK VALUE
----- ---------- ------------ ----------
Goodwill $1,044,464 $ 24,101 $1,020,363
Permit Costs 658,277 321,944 336,333
---------- --------- ----------
$1,702,741 346,045 $1,356,696
========== ========= ==========
25
<PAGE> 26
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 5 PENNSYLVANIA BOND:
The Pennsylvania Department of Environmental Resources requires the
posting of a bond before issuing the necessary permit to operate a soil
remediation facility within the Commonwealth of Pennsylvania. The bond
is to insure that any environmental contamination is cleaned up when
the Company ceases operation of the soil remediation facility. In
August 1992, the Company posted a $245,220.00 bond. The Bond is
refundable when the soil remediation plant ceases operation and the
site has been cleaned up to the satisfaction of the Pennsylvania
Department of Environmental Resources.
NOTE 6 DUE TO RELATED PARTIES:
Soil Remediation of Philadelphia, Inc. is a wholly owned subsidiary of
U.S.A. Waste Services, Inc. The Company transferred funds to certain
other wholly owned subsidiaries of U.S.A. Waste Services, Inc. The net
affect of the related company transactions is as follows:
U.S.A. Waste Services, Inc. $11,766,597.00
==============
NOTE 7 PREPAID EXPENSES:
Prepaid Expenses consist of the following at June 30, 1997:
Insurance $7,876.00
=========
NOTE 8 FEDERAL AND STATE TAXES:
At June 30, 1997, the Company had a net operating loss for Federal
income tax purposes of approximately $4,125,000.00. The net operating
loss carry back and or forward results in a tax benefit of
approximately $1,455,103.00.
NOTE 9 COMMON STOCK:
SOIL REMEDIATION ALLIED WASTE
COMMON STOCK OF PHILA., INC. SERV.INC. TOTAL
------------ --------------- --------- -----
Authorized Shares 1,000 10,000 11,000
Issued and Outstanding 100 100 200
Par or Stated Value $10.00 $ .10 $ 10.10
Assigned Value $1,000 $10.00 $ 10.10
26
<PAGE> 27
SOIL REMEDIATION OF PHILADELPHIA, INC.
ALLIED WASTE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 10 COMMITMENTS AND CONTINGENCIES:
The Company is subject to extensive and changing Federal, State and
Local Environmental Laws and Regulations in the Commonwealth of
Pennsylvania that have been enacted in response to technological
advances and the public concern over environmental issues. The
expenditures necessary to comply with environmental laws and
regulations are made in the normal course of business. Although the
company, to the best of its knowledge, is in compliance in all material
respects with the laws and regulations affecting its operations. There
is no assurance that the Company will not have to expend substantial
amounts for compliance in the future.
NOTE 11 SUBSEQUENT EVENT:
On August 20, 1997, Eastern Environmental Services, Inc. a Delaware
Corporation, purchased all of the assets of Soil Remediation of
Philadelphia, Inc. in exchange for 270,000 shares of Eastern
Environmental Services, Inc. Common Stock, which had a market value of
$19.5/share and a restricted value of $15.625/share on date of
purchase.
On December 30, 1998, Brass Investment Co., a Delaware Corporation
agreed to purchase one hundred (100%) percent of the outstanding Common
Stock of Soil Remediation of Philadelphia, Inc. and Allied Waste
Services, Inc. for approximately $1,400,000.00.
On January 7, 1999, Brass Investment Co., a Delaware Corporation,
agreed to sell one hundred (100%) percent of its outstanding shares of
stock to Clean Earth, Inc., a Delaware Corporation, for cash and stock
totaling approximately $14,000,000.00.
27
<PAGE> 1
EXHIBIT 1
AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This Agreement dated April 22, 1999 by and between Clean Earth, Inc., a Delaware
corporation (hereinafter "CEI") and Louis D. Paolino, Jr., Matthew Paolino,
Joseph Paolino and Louis Paolino, Sr.(collectively the "Paolino's")
WHEREAS, on or about January 12, 1999 CEI entered into an Agreement and Plan of
Reorganization with the Paolino's ("Merger Agreement") to merge with Brass
Investment Company, and
WHEREAS, the parties Closed the above transaction on or about March 23, 1999,
and
WHEREAS, it was the clear intention of the parties that the Merger Agreement be
a tax free reorganization, and
WHEREAS, through mutual mistake the allocation of stock, cash and warrants as
existed in the Merger Agreement may, questionably, destroy the tax free nature
that was intended by the parties, and
WHEREAS, the parties desire to reallocate the amount of stock and warrants to
clearly have the Merger Agreement meet the original intent of the parties;
NOW, THEREFORE, for and in consideration of the mutual promises and covenants
made by each of the parties, the parties agree to amend the Merger Agreement as
follows:
1. Section 2.1 (b) shall be amended to two million shares to be allocated as set
forth on Exhibit A hereto.
2. Section 2.1 (d) shall be amended to provide Louis D. Paolino, Jr., Matthew
Paolino, Louis Paolino, Sr. and Joseph Paolino with warrants to purchase five
hundred thousand shares of common stock of U.S. Plastic Lumber Corp. at an
exercise price equal to $6.00 per share.
3. All other provisions of the Merger Agreement shall remain unchanged and
continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto set their hand and seal on this 22nd day
of April, 1999.
Clean Earth, Inc.:
/s/ Bruce C. Rosetto
- ---------------------- ---------------------------------
Bruce C. Rosetto, Secretary
/s/ Louis D. Paolino, Jr.
- ---------------------- ---------------------------------
Louis D. Paolino, Jr.
/s/ Matthew Paolino
- ---------------------- ---------------------------------
Matthew Paolino
/s/ Joseph Paolino
- ---------------------- ---------------------------------
Joseph Paolino
/s/ Louis Paolino, Sr.
- ---------------------- ---------------------------------
Louis Paolino, Sr.
-28-
<PAGE> 2
EXHIBIT A
ALLOCATION OF SHARES
BRASS INVESTMENT CO.
SHARES WARRANTS
------ --------
Louis D. Paolino, Jr. 1,800,000 shares 450,000
Matthew Paolino 100,000 shares 25,000
Joseph Paolino 50,000 shares 12,500
Louis Paolino, Sr. 50,000 shares 12,500
-29-
