EARTHCARE CO, POS AM, 1999-08-03

EARTHCARE CO
POS AM, 1999-08-03
HAZARDOUS WASTE MANAGEMENT

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 3, 1999.

REGISTRATION NO. 333-60483
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------

POST-EFFECTIVE AMENDMENT

NO. 2 TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------

EARTHCARE COMPANY
(Exact Name of Registrant as Specified in Its Charter)
-------------------------

<TABLE>
<S> <C> <C>
DELAWARE 4953 58-2335973
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
Incorporation or Organization) Classification Code Number) Number)
</TABLE>

14901 QUORUM DRIVE, SUITE 200
DALLAS, TEXAS 75240
(972) 858-6025
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)

DONALD F. MOOREHEAD, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
14901 QUORUM DRIVE, SUITE 200
DALLAS, TEXAS 75240
(972) 858-6025
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)

COPIES TO:

LYNN S. SCOTT, ESQ.
KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA 30303-1763
(404) 572-4600

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(C)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
-------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE> 2

EXPLANATORY NOTE

This Registration Statement covers the registration of up to 8,026,979
shares of Common Stock, $0.0001 par value per share (the "Common Stock"), of
EarthCare Company (the "Company") for sale by certain selling stockholders. This
Registration Statement also covers the registration of 5,000,000 shares of
Common Stock of the Company to be issued from time to time as payment for all or
some portion of the purchase price for one or more acquisitions of companies,
businesses or assets complementary to the Company's existing business, or which
may be offered for sale or other distribution by persons who will acquire such
shares in the acquisitions of such companies, business or assets or by the
donees of such persons or by other persons acquiring such shares, of which
610,526 shares have been issued (the "Shelf Registration"). The complete
Prospectus relating to the offering of 8,026,979 shares (the "Offering
Prospectus") immediately follows this Explanatory Note. Following the Offering
Prospectus are certain pages of the Prospectus relating solely to the Shelf
Registration (together with the remainder of the Prospectus as modified as
indicated below, the "Shelf Prospectus"), including an alternate front and back
cover page, a "Principal Stockholders" table in lieu of the table entitled
"Principal and Selling Stockholders", a section entitled "Selling Stockholders"
(which will be inserted immediately preceding the section entitled "Description
of Capital Stock") and a section entitled "Plan of Distribution". The Shelf
Prospectus will not include the information in the Prospectus Summary under the
heading "Securities To Be Offered", or the section of the Offering Prospectus
entitled "Use of Proceeds". All other sections of the Offering Prospectus are to
be used in the Shelf Prospectus.

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<PAGE> 3

PROSPECTUS, DATED AUGUST 3, 1999

8,026,979 Shares

EARTHCARE COMPANY

Common Stock

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

This Prospectus relates to the offer and sale from time to time of up to
8,026,979 shares of common stock, $.0001 par value per share (the "Common
Stock"), of EarthCare Company, formerly known as Santi Group, Inc. ("EarthCare"
or the "Company") by the holders thereof named herein (collectively, the
"Selling Stockholders"). The 8,026,979 shares of Common Stock being offered
hereby by the Selling Stockholders (the "Offering") were issued primarily in
connection with certain private placements, in acquisitions of assets by the
Company, or in connection with the exercise of options to acquire shares of
Common Stock (the "Shares"). The Company is registering the Shares to provide
the Selling Stockholders with freely tradeable securities, but the registration
of the Shares does not necessarily mean that any or all of such Shares will be
offered by the Selling Stockholders. See "Business -- Acquisitions" and
"Principal and Selling Stockholders." In addition, certain of the Selling
Stockholders have agreed not to sell all or some portion of their Shares before
three to six months after the date of this Prospectus. See "Plan of
Distribution" and "Principal and Selling Stockholders". The Company will not
receive any of the proceeds from the sale of shares by the Selling Stockholders.

The Common Stock is traded on the Nasdaq National Market under the symbol
"ECCO." At July 16, 1999, the Company had 10,214,365 shares of Common Stock
outstanding. On July 16, 1999, the last reported sale price of the Common Stock
(of which 15,500 shares traded) was $16.19 per share.

The Selling Stockholders from time to time may offer and sell the Shares
held by them and registered hereunder directly or through agents or broker-
dealers on terms to be determined at each Selling Stockholder's discretion at
the time of sale. To the extent required, the names of any agent or broker-
dealer and applicable commissions or discounts and any other required
information with respect to any particular offer will be set forth in an
accompanying supplement to this Prospectus (a "Prospectus Supplement"). See
"Plan of Distribution." Each of the Selling Stockholders reserves the sole right
to accept or reject, in whole or in part, any proposed purchase of the Shares to
be made directly or through agents.

The Company will not receive any of the proceeds from the sale of Shares by
the Selling Stockholders but has agreed to bear the expenses of registration of
the Shares under Federal and state securities laws. See "Use of Proceeds,"
"Principal and Selling Stockholders" and "Plan of Distribution."

The Selling Stockholders and any agents or broker-dealers that participate
with the Selling Stockholders in the distribution of Shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and any commissions received by them and any profit on the
resale of the Shares may be deemed to be underwriting commissions or discounts
under the Securities Act.

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR CERTAIN FACTORS RELATING TO AN
INVESTMENT IN THE COMMON STOCK.

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.

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission.

THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE
TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, the terms "Company"
and "EarthCare" refer to EarthCare Company, formerly known as SanTi Group, Inc.,
and all information in this Prospectus reflects the reorganization of the
Company's corporate structure effected in May 1998 and the change of its name
from SanTi Group, Inc. to EarthCare Company effective September 21, 1998.

THE COMPANY

EarthCare Company ("EarthCare" or the "Company") engages in the following
services relating to the nonhazardous liquid waste ("NLW") industry: biosolids
management, bulk liquid waste transportation, liquid waste processing and
disposal, maintenance and pumping. EarthCare's customers include restaurants,
hospitals, military bases, office buildings, apartments, schools,
municipalities, industrial businesses and single family residences. Effective
May 13, 1998, EarthCare merged with and into Microlytics, Inc., a Delaware
corporation ("Micro"), with Micro surviving the merger and changing its name to
SanTi Group, Inc. Effective September 21, 1998, SanTi Group, Inc. changed its
name to EarthCare. See "Business -- Predecessor Corporations" and "-- The Merger
and Name Changes." All references to EarthCare or the Company include its
operating subsidiaries unless the context indicates otherwise.

EarthCare intends to expand its presence in the NLW industry through
internal growth and acquisitions of local service providers throughout the
United States. The Company believes these acquisitions, by consolidating smaller
local service providers, will create synergies and improve efficiencies in the
area of NLW management.

THE NLW INDUSTRY

The Company estimates that the septic tank and grease trap business segment
of the U.S. domestic NLW industry generates approximately $20 billion in
revenues annually. There are approximately 25,000 service providers currently in
the NLW industry and, of these service providers, approximately 75% generate
less than $500,000 of annual revenues. The Company believes the NLW industry
will continue to grow based on increased waste from a growing population and
general economic conditions that are driving new building demand and the need
for NLW services.

Because the NLW industry is so highly fragmented, management believes the
industry has the potential for significant cost savings by the economies of
scale that may be realized in consolidation. These costs savings would include
efficiencies as a result of common billing, the coordination of advertising, the
elimination of duplicative professional and technical support providers, the
standardization and upgrading of equipment and the improvement of employee
training. EarthCare intends to determine lines of the NLW business in which an
acquired service provider is not currently engaged and, if appropriate, assist
the service provider in expanding into those areas. There can be no assurance,
however, that EarthCare will be able to profitability consolidate service
providers within the NLW industry.
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<PAGE> 5

THE BUSINESS

EarthCare currently engages in each of the NLW businesses described above.
EarthCare's operating subsidiaries include: Bone-Dry Enterprises, Inc.;
EarthCare Company of Florida, Inc.; EarthCare Company of Pennsylvania, Inc.;
EarthCare Company of New York, Inc.; Reifsneider Transportation, Inc., Brehm's
Cesspool, Inc. and National Plumbing and Drain. Each subsidiary of EarthCare
intends to acquire additional assets from local service providers and act as an
operating division of EarthCare in the area in which it is located. These local
operating divisions operate under various tradenames, as described below.

BONE-DRY ENTERPRISES, INC. ("GEORGIA GROUP"). The Georgia Group is engaged
in NLW collection and hauling operations in the state of Georgia. The Georgia
Group operates under the following tradenames: Andrews Environmental, Bone-Dry
Enterprises ("Bone-Dry"), Quality Plumbing and Septic and National Plumbing and
Drain.

EARTHCARE COMPANY OF FLORIDA, INC. ("FLORIDA GROUP"). The Florida Group is
engaged in NLW collection and hauling operations in the state of Florida. The
Florida Group operates under the following tradenames: Brownie Environmental
Services, Grease-Tec and A Rapid Rooter Sewer and Drain.

EARTHCARE COMPANY OF PENNSYLVANIA, INC. ("PENNSYLVANIA GROUP"). The
Pennsylvania Group is engaged in NLW collection and hauling operations in the
state of Pennsylvania. The Pennsylvania Group has one wholly owned subsidiary,
Nutrecon, Inc., which holds the operating permits and the leases for a facility
acquired from Ferrero Wastewater Management, Inc., in Ambler, Pennsylvania. The
Pennsylvania Group operates under the following tradenames: Ferrero Wastewater
Management, Eldredge Wastewater Management, Reifsneider Transportation, Inc. and
Brehm's Cesspool, Inc.

EARTHCARE COMPANY OF NEW YORK, INC. ("NEW YORK GROUP"). The New York Group
is engaged in NLW collection and hauling operations in the state of New York.
The New York Group operates under the following tradenames: RGM Liquid Waste
Removal and Devito Environmental.

The Company receives fees to collect, process and dispose of nonhazardous
liquid wastes. Collection fees charged to customers vary per gallon by waste
stream according to constituents of the waste, expenses associated with
processing the waste and competitive factors. Grease trap waste from restaurant
and other food processing and preparation facilities is transported to
EarthCare's facilities in vacuum trucks, trailers and other transportable
containers. EarthCare operates a fleet of vehicles to collect waste directly
from generators and receives waste from independent transporters servicing
additional waste generators. Using a variety of physical, chemical, thermal and
other biological techniques, the waste is broken down into constituent
components. Water extracted from the waste is pretreated and then discharged
into the municipal sanitary sewer system or applied to leased grasslands. Solid
materials are dried and disposed of in a solid waste landfill. At some locations
where the Company does not have pretreatment facilities, the waste is
transported to private pretreatment facilities, or, where permitted by local
regulations, directly to municipal or private wastewater treatment facilities.

EarthCare also engages in the business of biosolids management through the
reuse of organic materials. EarthCare provides transportation, treatment, site
monitoring, and land application to private companies. EarthCare's vehicles pick
up and transport biosolids to various sites. EarthCare also provides
professional management and consulting services for
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treatment of biosolids and the monitoring and application onto leased grasslands
of treated biosolids.

The Company benefits from federal, state and local regulations prohibiting
the disposal of grease trap waste and other waste in municipal collection and
treatment systems. Although restaurants, food processing and preparation
facilities and other industrial operations have produced such waste for many
years, regulations governing the management of NLW, and the enforcement of such
regulations, are becoming increasingly stringent. These requirements have
increased the value of EarthCare's services to its customers in recent years. As
federal, state and local regulations governing the disposal of NLW increase,
EarthCare believes the amount of NLW products delivered to third parties for
processing and disposal will continue to increase.

EarthCare intends to target the acquisition and integration of local
service providers in the NLW industry that EarthCare believes will be profitable
additions to the Company. EarthCare intends to focus on the integration of
entities acquired and to increase profits and productivity through operational
and efficiency improvements, standardization of procedures, equipment standards
and procurement procedures.

EarthCare intends to establish local operating facilities or service
centers throughout the United States, with initial service centers established
in major population centers. Acquired local service providers in these areas
will be converted to service centers. A service center manager at each location
will be responsible for the service center's overall performance. The manager
will be supported by supervisors responsible for one or more lines of business.
The manager will also be supported by maintenance managers responsible for the
maintenance and repair of all equipment. The service center managers will report
to district managers, who will typically have responsibility for eight to twelve
service center managers. The district managers will have general management
responsibility for their geographical areas.

EarthCare was incorporated in Delaware and its principal executive offices
are located at 14901 Quorum Drive, Suite 200, Dallas, Texas 75240. Its telephone
number at such offices is (972) 858-6025.

SECURITIES TO BE OFFERED

This Prospectus relates to the offer and sale from time to time of up to
8,026,979 Shares by the Selling Stockholders, some of whom may be deemed
affiliates of the Company. The Company will not receive any of the proceeds from
the sale of the Shares but has agreed to bear the expenses of registration under
federal and state securities laws, in consideration for the agreement by the
Selling Stockholders to enter into agreements with the Company not to sell all
or a portion of their Shares for a three to six month period from the date of
this Prospectus without the prior written consent of the Company (the "Lock-Up
Agreements"). The Lock-Up Agreements provide that any waiver of the terms of a
Lock-Up Agreement must be approved by the unanimous decision of the non-
employee directors of the Company. The Lock-Up Agreements, in certain cases,
extend the required holding period for Selling Stockholders who are not
affiliates of the Company. The Selling Stockholders must pay any expenses or
commissions on the sale of the Shares. The registration of the Shares does not
necessarily mean that any of the Shares not subject to the Lock-Up Agreements
will be offered or sold by the Selling Stockholders or that Shares subject to
the Lock-Up Agreements will be offered or sold upon expiration of the applicable
Lock-Up Agreement.
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<PAGE> 7

The Shares were issued primarily in connection with private placements,
upon the exercise of options to acquire shares of Common Stock, or as
consideration or partial consideration for the acquisition of assets of service
providers in the NLW industry.

RISK FACTORS

The acquisition of the Shares involves substantial risk. See "RISK
FACTORS."
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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
--------------------------- ------------------------------------------------------
PERIOD FROM
PERIOD FROM INCEPTION
JANUARY 1, (MARCH 19, THREE MONTHS ENDED
YEAR ENDED 1997 TO 1997) TO YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 21, DECEMBER 31, DECEMBER 31, ------------------------
1996 1997 1997 1998 1998 1999
------------ ------------ ------------ ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................. $1,832,043 $1,218,268 $ 737,858 $25,690,672 $2,634,722 $ 7,815,637
Operating Expenses:
Cost of Operations................... 785,996 625,892 406,638 17,907,036 1,647,530 5,093,594
General and Administrative........... 757,655 646,273 521,372 7,509,375 1,524,389 1,969,417
Depreciation and Amortization........ 122,296 121,496 127,338 1,348,357 177,900 354,884
---------- ---------- ---------- ----------- ---------- -----------
Total Operating expenses........... 1,665,947 1,393,661 1,055,348 26,764,768 3,349,819 7,417,895
---------- ---------- ---------- ----------- ---------- -----------
Income (Loss) from Operations......... 166,096 (175,393) (317,490) (1,074,096) (715,097) 397,742
Interest Expense...................... 70,868 22,077 104,494 657,455 106,713 222,309
Other Expense (Income)................ (2,500) (204,124) -- 2,101 -- --
---------- ---------- ---------- ----------- ---------- -----------
Income (Loss) Before Income Taxes..... 97,728 6,654 (421,984) (1,733,652) (821,810) 175,433
Income Tax Provision (Benefit)........ 39,094 4,334 (163,632) (304,562) (318,536) --
---------- ---------- ---------- ----------- ---------- -----------
Net Income (Loss)..................... $ 58,634 $ 2,320 $ (258,352) $(1,429,090) $ (503,274) $ 175,433
========== ========== ========== =========== ========== ===========
Net Income (Loss) per share -- Basic
and Diluted.......................... N/A N/A $ (0.13) $ (0.17) $ (0.10) $ 0.02
========== ========== ========== =========== ========== ===========
Weighted average shares outstanding --
Basic................................ N/A N/A 1,940,536 8,427,407 4,874,434 9,698,531
========== ========== ========== =========== ========== ===========
Weighted average shares outstanding --
Diluted.............................. N/A N/A 1,940,536 8,427,407 4,874,434 10,147,786
========== ========== ========== =========== ========== ===========
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------- AT MARCH 31,
1996 1997 1998 1999
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)................................... $ (130,188) $(1,153,561) $ 938,120 $ 312,940
Intangible assets, net(1)................................... -- 1,473,489 20,166,445 28,811,650
Total assets................................................ 1,102,047 2,614,143 33,290,279 47,836,546
Long-term debt, including current portion................... 539,859 303,955 9,327,940 16,527,123
Retained earnings (deficit)................................. 270,441 (258,352) (1,687,442) (1,512,009)
Total shareholders' equity.................................. 270,941 812,453 19,016,070 24,750,448
</TABLE>

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

(1) Intangibles, net, consist primarily of goodwill and noncompete agreements.
Noncompete agreements are amortized over the lives of the contracts.
Goodwill is being amortized over 40 years. See Note 2 to the Company's
Consolidated Financial Statements.
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RISK FACTORS

The following risk factors should be considered carefully in addition to
the other information in this Prospectus before purchasing the shares of Common
Stock offered hereby. Certain statements in this Prospectus are forward-looking
and are sometimes identified by the use of forward-looking words or phrases such
as "intends" or "intended," "will be positioned," "believes," "expects," is or
are "expected," "anticipates," and "anticipated." These forward-looking
statements are based on the Company's current expectations. To the extent any of
the information contained in this Prospectus constitutes a "forward-looking
statement" as defined in Section 27A(i)(1) of the Securities Act, the risk
factors set forth below are cautionary statements identifying important factors
that could cause actual results to differ materially from those in the
forward-looking statement. Section 27A(i)(1) does not apply to this offering.

OPERATING STRATEGY

EarthCare's ability to increase revenues of its existing operations and its
acquired service providers will be affected by various factors, including:
customer demand for NLW treatment and disposal services, EarthCare's ability to
expand the range of services offered to customers and EarthCare's ability to
develop national and regional accounts for its services and other marketing
programs necessary to attract new customers and attract and retain necessary
personnel. There can be no assurance that EarthCare's operating strategy will be
successful or that EarthCare will be able to generate cash flows adequate to
support its operations and internal growth.

RISK RELATED TO THE COMPANY'S ACQUISITION STRATEGY

The Company intends to grow significantly through the acquisition of
additional NLW service providers. The Company expects to face competition for
acquisition candidates, which may limit the number of acquisition opportunities
and may lead to higher acquisition prices. There can be no assurance that the
Company will be able to identify, acquire or manage additional businesses
profitably or to integrate successfully any acquired businesses into the Company
without substantial or material unanticipated costs, delays or other operational
or financial problems. Businesses acquired by the Company may have liabilities
that the Company does not discover or may be unable to discover during its pre-
acquisition investigations, including liabilities arising from environmental
contamination or non-compliance by prior owners with environmental laws or
regulatory requirements, and for which the Company, as a successor owner or
operator, may be responsible. Certain environmental liabilities, even if not
expressly assumed by the Company, may nonetheless be imposed on the Company
under certain legal principles of successor liability including those under the
Comprehensive Environmental Response Compensation and Liability Act. The Company
may be required under federal, state or local law to investigate and remediate
any contamination that may have resulted from the processing of any hazardous
substances by any of these businesses. Any indemnities or warranties, due to
their limited scope, amount, duration and the financial limitations of the
indemnitor or warrantor may not fully cover such liabilities. Further,
acquisitions involve a number of other special risks, including failure of the
acquired business to achieve expected results, diversion of management's
attention, failure to retain key personnel of the acquired business and risks
associated with unanticipated events, all of which could have a material adverse
effect on the Company's business, results of operations and earnings resulting
from increased goodwill amortization and interest cost and the costs resulting
from the issuance of

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<PAGE> 10

securities could also have a material adverse effect. In addition, if the
Company is not able to successfully integrate the operations of one or more of
its acquired businesses, the benefits expected to be derived by the Company from
consolidating certain overhead functions such as cash management, human
resources, finance and insurance will not be realized. The Company currently has
no binding agreements to make acquisitions. See "Business -- Acquisitions" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."

RISK RELATED TO ACQUISITION FINANCING

The Company's ability to acquire local NLW service providers at
economically attractive prices, integrate their operations and then grow their
operations profitably, will determine the Company's success. The Company intends
to continue to expand its market presence in its current locations and enter
other markets through acquisitions or the opening of new offices. The Company's
ability to continue its growth and attain profitability will depend on a number
of factors, including the availability of capital to fund acquisitions, existing
and emerging competition and the ability to maintain sufficient profit margins
despite cost increases and pricing pressures. The Company currently intends to
finance future acquisitions by using Common Stock, cash, or a combination of
Common Stock and cash. If Common Stock is issued in connection with future
acquisitions or earn-out provisions of completed acquisitions, purchasers of
Common Stock in this Offering may experience dilution in the earnings, cash flow
and net tangible book value of their stock. If the Common Stock does not
maintain a sufficient market value, or potential acquisition candidates are
otherwise unwilling to accept Common Stock as all or part of the consideration
for the sale of their businesses, the Company may be required to use more of its
cash resources, if available, or incur indebtedness in order to continue its
acquisition program. The Company has a $40 million credit facility under which
the Company may borrow to fund acquisition and working capital requirements;
provided, however, that under the credit facility, the banks' consent is
required in order for the Company to consummate certain acquisitions and the
Company is also constrained by the requirement to satisfy certain financial
covenants in order to incur indebtedness (including without limitation, debt
assumed in connection with acquisitions). See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources." IN ADDITION, THE COMPANY HAS PLEDGED THE STOCK OF EACH OF
ITS SUBSIDIARIES TO THE LENDER UNDER THE CREDIT FACILITY. THESE SUBSIDIARIES
REPRESENT SUBSTANTIALLY ALL OF THE COMPANY'S ASSETS, INCLUDING ACCOUNTS
RECEIVABLE. If the Company does not have sufficient cash resources to pursue
acquisitions, its growth could be limited unless it is able to obtain additional
capital through debt or equity financing. There can be no assurance that the
Company will be able to obtain the financing it will need in the near future on
terms the Company deems acceptable. The inability to acquire such financing, if
needed, could have a material adverse effect on the Company's business,
financial condition and results of operations.

LIMITED OPERATING HISTORY, ABSENCE OF COMBINED OPERATING HISTORY

The Company was organized in 1997 and began active operations at that time.
As a result, the Company has very little operating history as an integrated NLW
business to which investors may look to evaluate the Company's performance.
Since the Company began operations, it has completed thirteen acquisitions.
There can be no assurance that

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<PAGE> 11

the Company will be able to successfully integrate the operations of the
acquired businesses or any subsequently acquired businesses or to institute the
necessary systems and procedures, including accounting and financial reporting
systems, to manage the entire combined enterprise on a profitable basis. In
addition, there can be no assurance that the Company's management group will be
able to effectively manage the combined entity or to effectively implement the
Company's acquisition program and internal growth strategy. The Pro Forma
Financial Statements of the Company cover periods when the acquired businesses
were not under common control or management and may not be indicative of the
Company's future financial or operating results. The inability of the Company to
integrate these acquired businesses successfully would have a material adverse
effect on the Company's business, results of operations and financial condition,
as well as its acquisition program. See "Business -- Acquisitions" and
"Management."

MARKET IMPACT OF OFFERING

This Prospectus relates to the sale of up to 8,026,979 Shares of Common
Stock by the Selling Stockholders. The Company will not receive any proceeds
from the sale of the Shares and has prepared this Prospectus at its cost in
return for the Selling Stockholders entering into the Lock-Up Agreements. As of
December 1, 1998, prior to the registration of the Shares, approximately
2,811,349 shares of Common Stock or approximately 28% of the 10,214,365 issued
and outstanding shares of Common Stock (as of July 16, 1999) were freely
tradeable. Pursuant to the terms of the Lock-Up Agreements, on December 10,
1998, the effective date of the registration statement of which this Prospectus
is a part (the "Effective Date"), an additional 766,807 of the Shares were
eligible for sale by the Selling Stockholders, an increase of approximately 54%
in the number of shares of Common Stock eligible for sale. On June 10, 1999, six
months after the Effective Date, an additional 1,377,813 of the Shares were
eligible for sale by the Selling Stockholders, an increase of approximately 48%
in the number of shares of Common Stock eligible for sale. On September 10,
1999, nine months after the Effective Date, an additional 1,710,322 of the
Shares will be eligible for sale by the Selling Stockholders, an increase of
approximately 42% in the number of shares of Common Stock eligible for sale. On
December 10, 1999, twelve months after the Effective Date, an additional
4,133,437 of the Shares will be eligible for sale by the Selling Stockholders,
an increase of approximately 69% in the number of shares of Common Stock
eligible for sale. The sales of such significant blocks of stock, or even the
possibility of such sales, could adversely affect the prevailing market price of
and the trading market for the Common Stock and reduce the prices available in
the market. However, there can be no assurance that any or all of the Shares
will be offered for sale by the Selling Stockholders.

HISTORY OF NET LOSSES

The Company has experienced operating losses since its inception through
December 31, 1998, and, as of March 31, 1999, the Company had an accumulated
deficit of $1,512,009. Although the Company was profitable in the first quarter
of 1999, and anticipates that it will be profitable in the future, there can be
no assurance that the Company will actually achieve profitability. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

9
<PAGE> 12

COMPETITION

EarthCare competes with a significant number of other NLW service
providers. Competitors compete primarily on the basis of proximity to collection
operations, fees charged and quality of service. EarthCare must compete with
area landfills that accept grease trap waste. Future technological changes and
innovations may result in a reduction in the amount of NLW generated, or in
alternative methods of treatment and disposal being developed. EarthCare also
faces competition from customers that may seek to enhance and develop their own
methods of disposal. Increased use of internal treatment and disposal methods
and other competitive factors may have a material adverse effect on EarthCare's
business, results of operation and financial condition.

EarthCare will be at a disadvantage in competing against service providers
that are better capitalized, have greater name recognition, have more background
and experience, have greater financial, technical, marketing and other resources
and skills, have better facilities and are able to provide services or products
at a lower cost than EarthCare. As the NLW industry is currently highly
fragmented, the addition of local NLW service providers is the only strategy by
which EarthCare may be able to penetrate existing markets. Even if the Company
is successful in consolidating local service providers in a given area, there
can be no assurance that new competitors will not enter the market due to the
low barriers to entry in the NLW industry. As a result of these competitive
factors, there can be no assurance that EarthCare's growth strategy will be
successful or that EarthCare will be able to generate cash flow adequate for its
operations and to support future acquisitions and internal growth.

GOVERNMENT REGULATIONS

EarthCare is subject to rules and regulations of various federal, state and
local governmental agencies. Environmental laws and regulations are, and will
continue to be, a principal factor affecting the marketability of the services
provided by EarthCare. Any changes in these laws or regulations may adversely
affect the operations of EarthCare by imposing additional regulatory compliance
costs on EarthCare, requiring the modification of or adversely affecting the
market for EarthCare's services. To the extent that demand for these services is
based upon the need to comply with these regulations, any modification to these
regulations may decrease the demand for these services and adversely affect
EarthCare's business condition and results of operations.

Additionally, if new environmental legislation or regulations are enacted
or existing legislation or regulations are amended or enforced differently,
EarthCare may be required to obtain additional operating permits, registrations
or approvals. The process of obtaining required permits, registrations or
approvals can be lengthy and expensive and the issuance of such permits or the
obtaining of such approvals may be subject to public opposition. There can be no
assurance that EarthCare will be able to meet the applicable regulatory
requirements.

The Resource Conservation and Recovery Act ("RCRA") is the principal
federal statute governing hazardous and solid waste generation, treatment,
storage and disposal. RCRA and state hazardous waste management programs govern
the handling and disposal of "hazardous waste." The U.S. Environmental
Protection Agency ("EPA") has issued regulations pursuant to RCRA. States have
also promulgated regulations under comparable state statutes that govern
hazardous waste generators, transporters and owners and operators of hazardous
waste treatment, storage and disposal facilities. These regulations

10
<PAGE> 13

impose detailed operating, inspection, training and emergency preparedness and
response standards and requirements for the financial responsibility,
manifesting of wastes, record keeping and reporting, as well as treatment
standards for any hazardous wastes intended for land disposal.

NLW is currently exempt from the requirements of RCRA. The repeal or
modification of the RCRA exemption covering NLW, or the modification of
applicable regulations or interpretations regarding the treatment or disposal of
NLW, may require EarthCare to alter its method of treating and disposing of NLW.
EarthCare's current methods do not comply with the methods prescribed by the EPA
for treatment and/or disposal of waste as defined by RCRA. These potential
changes may result in decreased demand for EarthCare's services and could have a
material adverse effect on EarthCare's business.

The Comprehensive Environmental Response, Competition and Liability Act
("CERCLA") provides for immediate response and removal actions coordinated by
the EPA for releases of hazardous substances into the environment and authorizes
the government or private parties to respond to the release or potential release
of hazardous substances. The government may also order persons responsible for
the release to perform any necessary cleanup. Liability extends to the present
owners and operators of waste disposal facilities from which a release occurs,
persons who owned or operated the facilities at the time the substance was
released, persons who arranged for the disposal or treatment of hazardous
substances and waste transporters who selected such facilities for treatment or
disposal of hazardous substances. CERCLA creates strict, joint and several
liability for all costs of removal and remediation, other necessary response
costs and damages for injury to natural resources.

Because the Company will be engaged in businesses that involve the
treatment and removal of nonhazardous liquid waste, EarthCare does not expect to
be subject to CERCLA. However, if EarthCare were to acquire a business that in
the past has disposed of hazardous waste or treated hazardous waste that falls
within the parameters of CERCLA, EarthCare may be held jointly and severally
liable for the costs of any damage or required cleanup of the site.

POTENTIAL ENVIRONMENTAL LIABILITY; INSUFFICIENCY OF INSURANCE

During the ordinary course of its operations, the Company has from time to
time received, and expects that it may in the future receive, citations or
notices from governmental authorities that its operations are not in compliance
with its permits or certain applicable regulations, including various
transportation, environmental or land use laws and regulations. The Company
generally seeks to work with the authorities to resolve the issues raised by
such citations or notices. There can be no assurance, however, that the Company
will always be successful in this regard, and the failure to resolve a
significant issue could result in one or more adverse consequences to the
Company described above.

While the Company maintains insurance, such insurance is subject to various
deductible and coverage limits and certain policies exclude coverage for damages
resulting from environmental contamination. There can be no assurance that
insurance will continue to be available to the Company on commercially
reasonable terms, that the possible types of liabilities that may be incurred by
the Company will be covered by its insurance, that the Company's insurance
carriers will be able to meet their obligations under their policies or that the
dollar amount of such liabilities will not exceed the Company's policy limits.

11
<PAGE> 14

An uninsured claim, if successful and of significant magnitude, could have a
material adverse effect on the Company's business, results of operations and
financial condition.

RELIANCE ON MANAGEMENT AND KEY PERSONNEL

The Company is dependent on its management and key personnel and believes
that its success will depend upon the efforts and abilities of management and
such key personnel. Furthermore, the Company may be dependent on the management
and key personnel of companies that may be acquired in the future. If any of
these individuals do not continue in their positions with the Company, or if the
Company is unable to attract and retain other skilled employees, the Company's
business, financial condition and results of operations could be materially
adversely effected. Competition for qualified personnel is intense and there can
be no assurance that the Company will be able to continue to hire and retain
sufficiently qualified management and other personnel necessary to conduct its
business successfully.

EMPLOYEES

The acquisition and integration of additional NLW service providers should
result in a reduction of employees as duplicate administrative processes are
eliminated. EarthCare's ability to manage its growth effectively will require it
to continue to implement and improve its operational, financial and management
information systems and controls and to train, motivate and manage its
employees. EarthCare intends to continually review and upgrade its management
information systems and to hire additional management and other personnel in
order to maintain the adequacy of its operational, financial and management
controls. There can be no assurance, however, that EarthCare will be able to
meet these objectives.

CONTROL BY EXECUTIVE OFFICERS AND DIRECTORS

The Company's officers and directors currently beneficially own
approximately 54% of the issued and outstanding Common Stock. As a result, these
stockholders acting together would be able to control matters requiring the
approval of a majority of the stockholders, such as election of directors. The
voting power of these stockholders under certain circumstances could have the
effect of delaying or preventing a change in control of the Company. Raymond
Cash, vice chairman and a director of the Company, controls over 28% of the
issued and outstanding Common Stock. See "Management" and "Principal and Selling
Stockholders." Due to the Lock-Up Agreements, none of the Company's officers or
directors were entitled to sell Shares and potentially decrease these ownership
percentages until June 10, 1999, at which time these persons were entitled to
sell up to 25% of their Shares subject to compliance with federal and state
securities laws, although there can be no assurance that any of these persons
will sell any of their Shares. In addition, certain of the Company's officers
and directors hold options to acquire an aggregate of 1,536,704 shares of Common
Stock, subject to vesting and other requirements. See "Certain Transactions."

BENEFITS OF OFFERING TO CERTAIN STOCKHOLDERS

The officers and directors of the Company beneficially own approximately
54% of the Shares subject to this Prospectus. The terms of the Lock-Up
Agreements prohibited these officers and directors from offering for sale any of
their Shares without the prior written

12
<PAGE> 15

consent of the Company until June 10, 1999, at which time, such persons were
entitled to sell up to 25% of their Shares. After twelve months from the date of
this Prospectus, these officers and directors will be entitled to sell all of
their Shares and will not be subject to the volume limitations of Rule 144
promulgated under the Securities Act that would apply to the Shares if the
Registration Statement of which this Prospectus is a part was not effective.
There can be no assurance that any of the officers or directors will sell any of
their Shares even when entitled to do so.

POSSIBLE ADVERSE IMPACT OF FUTURE EVENTS ON SHARE PRICE OF COMMON STOCK

Future sales of the Common Stock, including issuances of shares of Common
Stock in acquisitions, or the perception that such sales could occur, could
adversely affect prevailing market prices for the Common Stock. The Company
registered an additional 5,000,000 shares of Common Stock to be used in
acquisitions of the assets of NLW service providers (of which 610,526 shares
have been issued) and intends to file a Registration Statement on Form S-8 to
register shares of Common Stock issuable upon the exercise of options pursuant
to its stock option plan. See "Plan of Distribution". The market price of the
Common Stock could be subject to significant fluctuations in response to various
factors and events, including the issuance of shares in acquisitions, the
liquidity of the market for the Common Stock, differences between the Company's
actual financial or operating results and those expected by investors and
analysts, changes in analysts' recommendations or projections, new statutes or
regulations or changes in interpretations of existing statutes and regulations
affecting the Company's business, changes in general economic conditions or
broad stock market fluctuations.

SUBSTANTIAL WARRANTS, OPTIONS AND CONTINGENT AND ACQUISITION SHARES

As of July 16, 1999, the Company has issued outstanding warrants and
options to purchase up to 262,891 and 2,925,904 shares of Common Stock,
respectively. The weighted average exercise price for the options is $15.41 and
for the warrants is $8.63. The existence of such warrants and options may hinder
future financings by the Company and the exercise of such warrants and options
may dilute the interests of all stockholders. Possible future resale of Common
Stock issuable on the exercise of such warrants and options could adversely
affect the prevailing market price of the Common Stock. The Company intends to
file a Registration Statement on Form S-8 to register the shares of Common Stock
issuable upon the exercise of options. Further, the holders of warrants and
options may exercise them at a time when the Company would otherwise be able to
obtain additional equity capital on terms more favorable to the Company. In
addition, 55,000 shares of Common Stock may be issued as additional
consideration for completed acquisitions, subject to off-sets as provided in the
agreements relating thereto, and 5,000,000 shares of Common Stock may be issued
as partial or full consideration in additional acquisitions. See
"Business -- Acquisitions."

ISSUANCE OF ADDITIONAL STOCK

The Company has authorized capital of 70,000,000 shares of Common Stock and
30,000,000 shares of Preferred Stock, $.0001 par value per share. As of July 16,
1999, 10,214,365 shares of Common Stock and no shares of Preferred Stock were
issued and outstanding, with an additional 3,243,795 shares of Common Stock
reserved for issuance on the exercise or conversion of warrants, options, and
other outstanding rights to acquire Common Stock. Subject to the Delaware
General Corporation Law, the Company's board

13
<PAGE> 16

of directors has authority, without action or vote of the stockholders, to issue
all or part of the authorized but unissued shares of Common Stock and Preferred
Stock. Any such issuance will dilute the percentage ownership of stockholders
and may dilute the book value of the Company's Common Stock.

POTENTIAL ANTI-TAKEOVER EFFECTS OF CERTIFICATE, BYLAWS, DELAWARE LAW AND THE
EMPLOYMENT AGREEMENTS

Certain provisions of Delaware law and certain provisions of the Company's
Certificate of Incorporation (the "Certificate") and the Company's Bylaws (the
"Bylaws") could delay or impede the removal of incumbent directors and could
make it more difficult for a third-party to acquire, or could discourage a
third-party from attempting to acquire, control of the Company. Such provisions
could limit the price that certain investors might be willing to pay in the
future for shares of the Company's Common Stock. The Certificate and Bylaws
impose various procedural and other requirements (including a staggered board of
directors, removal of directors only for cause and the issuance of Preferred
Stock as described below) that could make it more difficult for stockholders to
effect certain corporate actions. The Certificate gives the Company's Board of
Directors the authority to issue up to 30 million shares of Preferred Stock and
to determine the price, rights, preferences and restrictions, including the
voting rights of such shares, without any further vote or action by the
Company's stockholders. The rights of holders of Common Stock will be subject
to, and may be adversely affected by, the rights of the holders of any Preferred
Stock issued in the future. The Company has no current plans to issue such
Preferred Stock. The "business combinations" statute under Delaware law may
restrict certain business combinations by interested stockholders. See
"Description of Capital Stock -- Certain Provisions of the Articles, Bylaws and
Delaware Law." The Company's executive officers have entered into employment
agreements with the Company which contain change in control provisions. The
change in control provisions may hinder, delay, deter or prevent a tender offer,
proxy contest or other attempted takeover because the covered employees can
terminate their employment in such event and receive payments for 24 months to
60 months after termination pursuant to their respective agreements. See
"Management -- Employment Agreements and Change of Control Arrangements."

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of Shares of Common
Stock by the Selling Stockholders hereunder. The Company has agreed to pay the
expenses of this Offering as consideration for certain of the Selling
Stockholder's entering into the Lock-Up Agreements and anticipates that it will
incur costs of approximately $200,000 in connection with the Offering, including
filing fees, transfer agent costs, printing costs, listing fees and legal and
accounting fees.

DETERMINATION OF OFFERING PRICE

With respect to Shares offered by the Selling Stockholders, such Shares
shall be sold from time to time, subject to the Lock-Up Agreements, at such
prices as the Selling Stockholders shall determine may be in their best
interests and at which a willing buyer can be found. Such prices may not be
related to the assets, earnings, or book value of the

14
<PAGE> 17

Company or any other recognized criteria of valuation. There can be no assurance
that the Selling Stockholders will sell any or all of the Shares subject to this
Prospectus.

DIVIDEND POLICY

The Company has not declared or paid any cash dividends on its Common
Stock. The Company currently intends to retain future earnings to finance its
growth and development and, therefore, does not anticipate paying any cash
dividends in the foreseeable future. Payment of any future dividends will depend
upon the future earnings and capital requirements of the Company and other
factors that the Board of Directors considers appropriate. Additionally, the
terms of the Company's Credit Agreement restrict the payment of cash dividends
on any of its capital stock.

DILUTION

At March 31, 1999, the tangible book value of the Company was approximately
$(4,061,000), or $(.41) per share of Common Stock. Net tangible book value per
share represents the amount of total tangible assets of the Company reduced by
the amount of its total liabilities, divided by the number of shares of Common
Stock outstanding. Assuming an existing price per share of $16.19 (EarthCare
closing stock price on July 16, 1999), then upon the sale of the Shares to new
investors, the new investors would incur immediate dilution of $16.60. The
following table illustrates the per share dilution:

<TABLE>
<S> <C>
Existing trading price per share............................ $16.19
Net tangible book value per share........................... (.41)
------
Assumed dilution to new investors........................... $16.60
======
</TABLE>

The following table sets forth, with respect to (i) Selling Stockholders
whose Shares are being registered in this Offering (ii) stockholders who will
hold unregistered shares after this Offering and (iii) stockholders who
currently hold freely tradable shares, a comparison of the number of shares of
Common Stock acquired from the Company, the percentage of ownership of such
shares, the total cash consideration paid, the percentage of total cash
consideration paid and the average price per share.

<TABLE>
<CAPTION>
SHARES CONSIDERATION
----------------- ---------------------------
<S> <C> <C> <C> <C> <C>
Selling Shareholders............... 8,008,379 84.0% $17,926,930 88.2% $2.24
Shares that will remain
unregistered..................... 105,000 1.1% 609,000 3.0% 5.80
Freely tradeable shares............ 1,422,948 14.9% 1,781,450 8.8% 1.25
--------- ----- ----------- -----
9,536,327 100.0% $20,317,380 100.0%
========= ===== =========== =====
</TABLE>

The preceding table assumes no exercise of any stock options or warrants
outstanding as of March 31, 1999. As of March 31, 1999, there were stock options
outstanding to purchase a total of 2,423,404 shares of Common Stock with a
weighted average exercise price of $15.23 per share, of which 250,000 were
exercisable, and warrants outstanding to purchase a total of 218,077 shares of
Common Stock with a weighted average exercise price of $7.45 per share, all of
which are exercisable.

15
<PAGE> 18

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected financial data of the Company. The
selected financial data for the period from inception (March 19, 1997) to
December 31, 1997 and for the year ended December 31, 1998, are derived from the
audited financial statements of the Company. The selected financial data for the
three month periods ended March 31, 1998 and 1999 are derived from the unaudited
financial statements of the Company. The selected financial data for the years
ended December 31, 1995 and 1996 and for the period from January 1, 1997 to
December 21, 1997 are derived from the audited financial statements of the
Predecessor, Andrews Environmental Services, Inc. The selected financial data
for the year ended December 31, 1994 is derived from the unaudited financial
statements of the Predecessor. As a result of acquisitions occurring in 1997,
1998 and 1999, the Company's historical financial statements are not
representative of the financial results expected for future periods. This
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and the consolidated
financial statements of the Company and Predecessor and notes thereto included
elsewhere herein.
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------------------------- --------------------------
PERIOD PERIOD FROM
FROM INCEPTION
JAN. 1, (MARCH 19, YEAR
YEAR ENDED DECEMBER 31, 1997 TO 1997) TO ENDED
------------------------------------ DEC. 21, DEC. 31, DECEMBER 31,
1994 1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................ $1,327,348 $1,499,392 $1,832,043 $1,218,268 $ 737,858 $25,690,672
Operating Expenses:
Cost of Operations................. 573,516 615,069 785,996 625,892 406,638 17,907,036
General and Administrative......... 597,479 754,580 757,655 646,273 521,372 7,509,375
Depreciation and Amortization...... 115,397 94,948 122,296 121,496 127,338 1,348,357
---------- ---------- ---------- ---------- ---------- -----------
Total Operating expenses............ 1,286,392 1,464,597 1,665,947 1,393,661 1,055,348 26,764,768
---------- ---------- ---------- ---------- ---------- -----------
Income (Loss) from Operations....... 40,956 34,795 166,096 (175,393) (317,490) (1,074,096)
Interest Expense.................... 42,453 45,475 70,868 22,077 104,494 657,455
Other Expense (Income).............. 1,575 7,404 (2,500) (204,124) -- 2,101
---------- ---------- ---------- ---------- ---------- -----------
Income (Loss) Before Income Taxes... (3,072) (18,084) 97,728 6,654 (421,984) (1,733,652)
Income Tax Provision (Benefit)...... 3,565 (3,304) 39,094 4,334 (163,632) (304,562)
---------- ---------- ---------- ---------- ---------- -----------
Net Income (Loss)................... $ (6,637) $ (14,780) $ 58,634 $ 2,320 $ (258,352) $(1,429,090)
========== ========== ========== ========== ========== ===========
Net Income (Loss) per share -- Basic
and Diluted........................ N/A N/A N/A N/A $ (0.13) (0.17)
========== ========== ========== ========== ========== ===========
Weighted average shares
outstanding -- Basic............... N/A N/A N/A N/A 1,940,536 8,427,407
========== ========== ========== ========== ========== ===========
Weighted average shares
outstanding -- Diluted............. N/A N/A N/A N/A 1,940,536 8,427,407
========== ========== ========== ========== ========== ===========

<CAPTION>
SUCCESSOR
-----------------------

THREE MONTHS ENDED
MARCH 31,
-----------------------
1998 1999
---------- ----------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................ $2,634,722 $7,815,637
Operating Expenses:
Cost of Operations................. 1,647,530 5,093,594
General and Administrative......... 1,524,389 1,969,417
Depreciation and Amortization...... 177,900 354,884
---------- ----------
Total Operating expenses............ 3,349,819 7,417,895
---------- ----------
Income (Loss) from Operations....... (715,097) 397,742
Interest Expense.................... 106,713 222,309
Other Expense (Income).............. -- --
---------- ----------
Income (Loss) Before Income Taxes... (821,810) 175,433
Income Tax Provision (Benefit)...... (318,536) --
---------- ----------
Net Income (Loss)................... $ (503,274) $ 175,433
========== ==========
Net Income (Loss) per share -- Basic
and Diluted........................ $ (0.10) $ 0.02
========== ==========
Weighted average shares
outstanding -- Basic............... 4,874,434 9,698,531
========== ==========
Weighted average shares
outstanding -- Diluted............. 4,874,434 10,147,786
========== ==========
</TABLE>

16
<PAGE> 19

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------------------- AT MARCH 31,
1994 1995 1996 1997 1998 1999
-------- --------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).......... $ 63,686 $(104,623) $ (130,188) $(1,153,561) $ 938,120 $ 312,940
Intangible assets, net(1).......... -- -- -- 1,473,489 20,166,445 28,811,650
Total assets....................... 814,102 855,192 1,102,047 2,614,143 33,290,279 47,836,546
Long-term debt, including current
portion.......................... 457,237 437,735 539,859 303,955 9,327,940 16,527,123
Retained earnings (deficit)........ 226,587 211,807 270,441 (258,352) (1,687,442) (1,512,009)
Total shareholders' equity......... 227,087 212,307 270,941 812,453 19,016,070 24,750,448
</TABLE>

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

17
<PAGE> 20

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

The following discussion should be read in conjunction with the
Consolidated Financial Statements and the Notes thereto included elsewhere in
this Prospectus. This discussion contains forward-looking statements that
involve risks and uncertainties. The Company's actual results may vary
significantly from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Risk Factors."

OVERVIEW

EarthCare engages in businesses relating to the NLW industry. These
businesses include grease trap pumping, septic tank services (including
designing, pumping and maintenance), sewer and drain cleaning services; high
pressure jetting services, portable toilet servicing; bulk liquid waste
transportation; on-site biotreatment systems; biosolids management; and liquid
waste processing and disposal. The customers of EarthCare include restaurants,
hospitals, military bases, office buildings, apartments, schools,
municipalities, industrial businesses and single family residences.

EarthCare intends to expand its business in the NLW industry through
internal growth and the acquisition of local service providers throughout the
United States. These acquisitions will be made with cash, shares of Common Stock
or a combination of cash and Common Stock. EarthCare's strategy is to increase
the efficiency and profitability of each of the acquisition targets through
operational and marketing synergies with EarthCare's existing business
operations.

The NLW industry serves a basic need -- the collection, treatment and
disposal of food and septic waste. Demand for NLW services is driven primarily
by population and the general level of economic activity. Increasing regulation
at the federal, state and local level, as well as increased awareness of and
demand for, a safer and cleaner environment are creating the need for a more
professional and environmentally responsible NLW industry.

GENERAL

The Company derives the majority of its revenues from commercial and
residential septic services (including designing, pumping and maintenance)
(approximately 44% of current revenues) and to a lesser extent sewer and drain
services (approximately 18% of current revenues). Collection fees charged to
customers vary per gallon by waste stream according to constituents of the
waste, expenses associated with processing the waste and competitive factors.
Cost of operations consist of fixed costs such as salaries and benefits of
vehicle operators and construction labor and variable costs such as supplies,
fuel and equipment rentals. General and administrative costs consist primarily
of compensation and related benefits for executives and administrative staff,
advertising, office rent, communications and professional fees. Depreciation and
amortization expense primarily relates to the depreciation of capital assets,
the amortization of excess cost over the fair value of net assets acquired
(goodwill) and other intangible assets. The Company's policy is to amortize
goodwill over a 40 year life.

From its inception on March 19, 1997 through March 31, 1999, the Company
acquired eleven businesses, including Reifsneider and Brehm's in March 1999, all
of which

18
<PAGE> 21

were accounted for using the purchase method of accounting. In connection with
these acquisitions the Company recorded goodwill of approximately $28.7 million,
which is being amortized over 40 years. At March 31, 1999, the Company's balance
sheet includes net goodwill of $28.2 million. This amount represents
approximately 60% of total assets and 114% of stockholders' equity. Goodwill
arises when the purchase price and other related costs for a business
acquisition exceed the fair value of the net assets acquired. Generally accepted
accounting principles require that goodwill be amortized over the expected
period benefited. The Company has reviewed all of the known factors and related
anticipated future cash flows in evaluating the amount of goodwill recorded in
conjunction with each business acquisition. From this analysis, the Company has
concluded that the anticipated future cash flows associated with the recognized
goodwill will continue indefinitely, and there is no persuasive evidence that
any material portion of it will dissipate over a period shorter than 40 years.
Prior to their acquisition by the Company, the acquired businesses were managed
as independent private businesses, and their results of operations reflect
different tax structures (S corporations and C corporations), which have
influenced, among other things, their historical levels of owners' compensation.
Certain owners who continued employment with the Company agreed to reductions in
their compensation and benefits in connection with the acquisition of their
businesses by the Company.

In connection with each of its acquisitions, the Company attempts to
implement a number of cost saving measures, including possible reductions in
management levels and other personnel, the implementation of centralized
management and cost controls and the elimination of duplicate collection routes.

RESULTS OF OPERATIONS

On March 20, 1997, the Company purchased certain assets of Andrews
Environmental, Inc. ("Andrews") associated with the Andrews grease disposal
business. On December 22, 1997, the Company acquired the remaining assets and
ongoing business of Andrews. For financial reporting purposes Andrews is
considered the predecessor to the Company (the "Predecessor"). As a result of
the Company's recent acquisitions and the limited period of ownership of the
acquired businesses, the Company believes that the period-to-period comparisons
and percentage relationships within the periods set forth below are not
meaningful.

19
<PAGE> 22

The following table sets forth the percentage of certain items in relation
to net revenue:

<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------ ---------------------------------------------------
PERIOD FROM
INCEPTION THREE THREE
PERIOD FROM (MARCH 19, MONTHS MONTHS
YEAR ENDED JANUARY 1, 1997 1997) TO YEAR ENDED ENDED ENDED
DECEMBER 31, TO DECEMBER 21, DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1996 1997 1997 1998 1998 1999
------------ --------------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES........................... 100% 100% 100% 100% 100% 100%
EXPENSES
Cost of Operations................ 43 51 55 70 62 65
General and Administrative........ 41 53 71 29 58 25
Depreciation and Amortization..... 7 10 17 5 7 5
--- --- --- --- ----- ---
TOTAL EXPENSES.................. 91 114 143 104 127 95
--- --- --- --- ----- ---
INCOME (LOSS) FROM OPERATIONS...... 9 (14) (43) (4) (27) 5
--- --- --- --- ----- ---
INTEREST EXPENSE................... 4 2 14 3 4 3
OTHER (INCOME) EXPENSE............. -- (17) -- -- -- --
--- --- --- --- ----- ---
INCOME (LOSS) BEFORE INCOME
TAXES............................. 5 1 (57) (7) (31) 2
INCOME TAX PROVISION (BENEFIT)..... 2 1 (22) (1) (12) --
--- --- --- --- ----- ---
NET INCOME (LOSS).................. 3% --% (35)% (6)% (19)% 2%
=== === === === ===== ===
</TABLE>

THREE MONTHS ENDED MARCH 31, 1999

NET INCOME. For the three months ended March 31, 1999, the Company
reported net income of $175,433 on revenues of $7,815,637 versus a net loss of
$503,274 on revenues of $2,634,722 for the three months ended March 31, 1998.

REVENUES. Revenues were $7,815,637 for the three months ended March 31,
1999 compared to $2,634,722 for the comparable period in the prior year. Current
period revenues include revenues from each of the businesses acquired during
1998 plus revenues from businesses acquired during the first three months of
1999 from the date of each 1999 acquisition. Revenues from 1999 acquisitions
contributed approximately $.7 million or 9% of revenues for the three months
ended March 31, 1999. Prior period revenue includes only revenue from the dates
of those acquisitions made within that quarter. The Company's septic and pumping
operations were negatively affected by a drought in the southeastern United
States during the three months ended March 31, 1999.

COST OF OPERATIONS. Cost of operations for the three months ended March
31, 1999 was $5,093,594 compared with $1,647,530 for the comparable period in
the prior year. The increase is due to the growth of the Company through
acquisitions, but as a percentage of revenue remained relatively constant at 62%
in 1998 and 65% in 1999. Operating costs in the first quarter of 1999 were
negatively affected by seasonality of the business and severance costs
associated with combining acquisitions with current operations.

GENERAL AND ADMINISTRATIVE EXPENSE. For the three months ended March 31,
1999, general and administrative expense was $1,969,417 compared with $1,524,389
recorded in the comparable period in the prior year. Current period expense
includes additional payroll cost of the chief executive officer and the chief
operating officer who did not draw a salary prior to 1999, as well as several
other employees hired during the latter part of 1998 and early 1999 to support
the Company's growth. Prior year expense of $1,524,389 included

20
<PAGE> 23

$600,000 of expense associated with registering the Company as a reporting
company with the Securities and Exchange Commission.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization was $354,884
or 4.5% of revenues for the three months ended March 31, 1999 compared to
$177,900 or 6.7% of revenues for the comparable period of 1998. The increase is
due to the 1998 and 1999 acquisitions.

INCOME (LOSS) FROM OPERATIONS. Income (loss) from operations increased
from a loss of $715,097 in the three months ended March 31, 1998 to income of
$397,742 in 1999, for the reasons discussed above.

INTEREST EXPENSE. Interest expense for the three months ended March 31,
1999 was $222,309, compared to $106,713 in the comparable 1998 period. Interest
was incurred at an average rate of approximately 7.09% during the three months
ended March 31, 1999 and 8.1% in the compared 1998 period. The increase in
interest expense resulted primarily from the debt incurred in connection with
the 1998 and 1999 acquisitions.

INCOME TAX PROVISION (BENEFIT). The Company recorded no provision for
income taxes for the three months ended March 31, 1999, due to the effects of
the Company's loss carryforward and valuation allowance. As the Company
continues to grow, management will evaluate the realizability of the loss
carryforward and adjust the valuation allowance accordingly.

YEAR ENDED DECEMBER 31, 1998

NET INCOME (LOSS). For the year ended December 31, 1998, the Company
reported a loss of $1,429,092 on revenues of $25,690,672.

REVENUES. Revenues for the year ended December 31, 1998, consist of
revenues from each of the businesses acquired in 1997 plus revenues from
businesses acquired during 1998 from the date of each acquisition. The nine
completed acquisitions contributed approximately $24.2 million or 94% of
revenues for the year ended December 31, 1998.

COST OF OPERATIONS. Cost of operations consist of fixed costs such as
salaries and benefits of vehicle operators and construction labor and variable
costs such as supplies, fuel and equipment rentals. The operating margin for the
year ended December 31, 1998, was 30%.

GENERAL AND ADMINISTRATIVE. For the year ended December 31, 1998, general
and administrative expense totaling $7,509,375 includes non-recurring expenses
associated with the relocation of the corporate headquarters to Dallas, Texas;
expenses associated with registering the Company as a reporting company with the
Securities and Exchange Commission; and costs associated with the establishment
of the Company's management team.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization was
$1,348,357 or 5% of revenues for the year ended December 31, 1998.

LOSS FROM OPERATIONS. The loss from operations of $1,074,096 is primarily
the result of the high level of general and administrative expense.

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<PAGE> 24

INTEREST EXPENSE. Interest expense for the year ended December 31, 1998
was $657,455. Interest was incurred at an average rate of approximately 7.2%
during the year ended December 31,1998.

INCOME TAX BENEFIT. An income tax benefit of 38% of pretax loss has been
computed in accordance with SFAS No. 109 "Accounting for Income Taxes." The tax
benefit has been offset by a valuation allowance of $223,423. Realization of the
net tax asset is dependent on the Company generating sufficient taxable income
in future periods. During 1998, a determination was made by management that it
is not likely that a portion of the deferred tax asset will be realized,
accordingly, a valuation allowance has been recorded. As the Company continues
to grow through acquisitions, management will evaluate the realizability of this
asset and adjust the valuation allowance accordingly. To date, all acquisitions
have been taxable asset purchases in which the Company obtained a full basis in
acquired tangible and intangible assets. To the extent the Company makes future
nontaxable acquisitions, the Company's effective rate may differ significantly
from its statutory rate due to nondeductible goodwill amortization.

SEASONALITY AND INFLATION

The Company's operations are affected by the weather. Rainy weather
requires more frequent septic and grease trap maintenance and snow cover or
frozen conditions prevent installation and need for servicing septic systems.
Although the Company experiences a certain degree of seasonality in its
operations due to weather, this seasonality is lessened through its operations
in various geographic areas.

The Company believes that inflation and changing prices have not had, and
are not expected to have, any material adverse effect on its results of
operations in the near future.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1999, the Company had cash of approximately $168,368 and
working capital of $312,940.

On June 26, 1998 the Company entered into the $40 million revolving credit
agreement with Bank of America, which was amended as of March 31, 1999 (the
"Credit Agreement"). The Company may also obtain up to $5 million in letters of
credit, subject to availability under the Credit Agreement. Interest is payable
monthly at variable rates, depending on the Company's Funded Debt to EBITDA (as
defined in the Credit Agreement), but is capped at LIBOR plus 2.25%. The Credit
Agreement expires September 26, 2001, is secured by a first lien on
substantially all assets of the Company and requires the Company to maintain
certain financial covenants beginning September 30, 1998. As of March 31, 1999,
the Company was in compliance with the financial covenants. Availability of
funds under the Credit Agreement is limited by the requirement that the Company
comply with various loan covenants. As of March 31, 1999 the outstanding balance
under the Credit Agreement was $14,914,123.

The Company's primary requirements for capital (other than those related to
acquisitions) consists of purchasing vehicles and equipment used in the
operation of its businesses. In the first three months of 1999, the Company
acquired two businesses for an aggregate consideration of $6,050,000 in cash,
$200,000 in seller notes and 385,367 shares of Common Stock. Funding of the cash
portion of the purchase prices was provided by borrowings under the Credit
Agreement. During the three months ended March 31, 1999,

22
<PAGE> 25

the Company used $1,036,481 in other capital expenditures. The Company believes
that the funds provided by operations, together with cash on hand and funds
available under the Credit Agreement, will be adequate to meet the Company's
anticipated capital expenditures for the remainder of 1999.

On April 26, 1999, the Company entered into a financial commitment to loan
up to $3 million to Crossroads Environmental Corporation ("Crossroads").
Crossroads has permits in Texas to drill deep injection wells for the disposal
of nonhazardous liquid waste. The permitted capacity of the first well that
Crossroads plans to drill is 180 million gallons per year. Earthcare has an
equity conversion privilege that could enable it to own a majority of the equity
in this business.

The Company intends to continue to pursue internal growth and acquisition
opportunities. The timing, size or success of any acquisitions effort and the
associated potential capital commitments are unpredictable. The Company expects
to fund future acquisitions primarily through a combination of cash on hand,
borrowings under the Credit Agreement and the issuance of shares of Common
Stock.

YEAR 2000

The Company has conducted operations for less than two years and has only
recently grown large enough to require sophisticated computing systems. A
complete review of all of the Company's computing needs has recently been
undertaken and completed, including various Year 2000 compliant computer
programs. The Company has selected Year 2000 compliant hardware and software for
its computing needs and anticipates beginning implementation of these new
systems during the fourth quarter of 1999, which implementation should ensure
proper processing of transactions relating to the Year 2000 and beyond. The
Company expects the conversion of all systems to be completed in the third
quarter of 1999 and estimates the capital costs of the new Year 2000 compliant
hardware, systems and software to be under $1,000,000. As of March 31, 1999,
approximately $500,000 in hardware and software implementation costs have been
incurred and capitalized.

The Year 2000 issue is expected to affect the systems of various entities
with which the Company interacts, including the Company's vendors and customers.
There can be no assurance that the systems of other companies on which the
Company's systems rely will be timely converted or that a failure by another
company's systems to be Year 2000 compliant would not have a material adverse
effect on the Company.

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<PAGE> 26

BUSINESS

GENERAL

EarthCare engages in the following businesses relating to the industry:
biosolids management, bulk liquid waste transportation, liquid waste processing
and disposal, maintenance and pumping. EarthCare's customers include
restaurants, hospitals, military bases, office buildings, apartments, schools,
municipalities, industrial businesses and single family residences. All
references to EarthCare or the Company include its operating subsidiaries unless
the context indicates otherwise.

EarthCare intends to expand its presence in the NLW industry through
internal growth and acquisitions of local service providers throughout the
United States. The Company believes that these acquisitions, by consolidating
smaller local service providers, will create synergies and improve efficiencies
in the area of NLW management.

THE NLW INDUSTRY

THE COMPANY

EarthCare currently engages in each of the NLW businesses described above.
EarthCare's operating subsidiaries include: Bone-Dry Enterprises, Inc.;
EarthCare Company of Florida, Inc.; EarthCare Company of Pennsylvania, Inc.; and
EarthCare Company of New York, Inc. Each subsidiary of EarthCare intends to
acquire additional assets from local service providers and act as an operating
division of EarthCare in the area in which it is located. These local operating
divisions operate under various tradenames, as described below.

BONE-DRY ENTERPRISES, INC. The Georgia Group is engaged in NLW collection
and hauling operations in the state of Georgia. The Georgia Group operates under
the following tradenames: Andrews Environmental, Bone-Dry, Quality Plumbing and
Septic and National Plumbing and Drain.

24
<PAGE> 27

EARTHCARE COMPANY OF FLORIDA, INC. The Florida Group is engaged in NLW
collection and hauling operations in the state of Florida. The Florida Group
operates under the following tradenames: Brownie Environmental Services,
Grease-Tec and A Rapid Rooter Sewer and Drain.

EARTHCARE COMPANY OF PENNSYLVANIA, INC. The Pennsylvania Group is engaged
in NLW collection and hauling operations in the state of Pennsylvania. The
Pennsylvania Group has one wholly owned subsidiary, Nutrecon, Inc., which holds
the operating permits and the leases for a facility acquired from Ferrero
Wastewater Management, Inc., in Ambler, Pennsylvania. The Pennsylvania Group
operates under the following tradenames: Ferrero Wastewater Management, Eldredge
Wastewater Management, Reifsneider and Brehm's.

EARTHCARE COMPANY OF NEW YORK, INC. The New York Group is engaged in NLW
collection and hauling operations in the state of New York. The New York Group
operates under the following tradenames: RGM Liquid Waste Removal and Devito
Environmental.

The Company receives fees to collect, process and dispose of nonhazardous
liquid wastes. Collection fees charged to customers vary per gallon by waste
stream according to constituents of the waste, expenses associated with
processing the waste and competitive factors. Grease trap waste from restaurant
and other food processing and preparation facilities are transported to
EarthCare's facilities in vacuum trucks, trailers and other transportable
containers. EarthCare operates a fleet of vehicles to collect waste directly
from generators and receives waste from independent transporters servicing
additional waste generators. Using a variety of physical, chemical, thermal and
other biological techniques, the waste is broken down into constituent
components. Water extracted from the waste is pretreated and then discharged
into the municipal sanitary sewer system or applied to leased grasslands. Solid
materials are dried and disposed of in a solid waste landfill. At some locations
where the Company does not have pretreatment facilities, the waste is
transported to private pretreatment facilities, or, where permitted by local
regulations, directly to municipal or private wastewater treatment facilities.

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<PAGE> 28

and productivity through operational and efficiency improvements,
standardization of procedures, equipment standards and procurement procedures.

PREDECESSOR CORPORATIONS

SanTi Group, Inc. ("SGI"), a privately-held corporation, was incorporated
in Delaware on August 19, 1997 for the purpose of engaging, through its
operating subsidiaries, in the following businesses related to the NLW industry:
grease trap pumping, septic tank services (including designing, pumping,
installation, and maintenance); sewer and drain cleaning services; high pressure
jetting services; portable toilet servicing; bulk liquid waste transportation;
biosolids management; on-site biotreatment systems and liquid waste processing
and disposal. In December 1997, SGI acquired the assets of Bone-Dry in a share
exchange in which each share of Bone-Dry was exchanged for 1.3 shares of SGI.
Bone-Dry was formed in March 1997 to acquire businesses in the NLW industry. SGI
and Bone-Dry were primarily controlled by Mr. Raymond M. Cash, Vice Chairman of
the Board of Directors of the Company, and entities controlled by Mr. Cash.
Following a stock split effected in the form of a 0.25 per share stock dividend
effective January 30, 1998 (the "Stock Dividend"), SGI had approximately
8,088,379 shares of common stock, $.0001 par value per share (the "SGI Stock"),
issued and outstanding as of the date of the merger of SGI into Microlytics,
Inc., as described below.

Microlytics, Inc. ("Micro") was incorporated in Delaware in 1985 for the
purposes of engaging in the business of developing, manufacturing and marketing
electronic reference products, including computer software programs which
provided linguistic and information compression technology, bilingual
dictionaries and thesaurus products. In 1989, Micro operated as a wholly owned
subsidiary of Selectronics, Inc. ("Selectronics"). In 1995, Selectronics changed
its name to Microlytics, Inc. In the early 1990's, Micro began experiencing
financial difficulties as a result of the highly competitive nature of the
computer software industry. On November 27, 1996, Micro filed for protection
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the Western District of New York (the "Court"). In July of
1997, substantially all of the intangible assets of Micro and its subsidiary
were sold to Metro One Telecommunications, Inc. In August of 1997, substantially
all of the tangible assets of Micro were also sold. The proceeds of these sales
were held in a segregated trust account by the debtor's counsel prior to the
Court's confirmation of Micro's plan of reorganization.

In April of 1998, Micro filed a Plan of Reorganization (the "Plan") that
was approved by its stockholders, the creditor's committee and the Court.
Pursuant to the Plan, Micro effected a 1 for 400 reverse stock split,
distributed the proceeds from asset liquidations to its creditors, and
distributed shares and warrants to its creditors and stockholders. The Plan
provided for this reverse stock split prior to the merger of SGI and Micro, as
described below. Pursuant to the Plan, any shareholder of Micro as of April 30,
1998 who, as a result of the 1 for 400 reverse stock split, held less than 100
shares, had his or her shares rounded up to 100 shares. As of November 23, 1998,
after the 1 for 400 reverse stock split and rounding of shares, approximately
1,115,816 shares of Micro

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<PAGE> 29

common stock were issued and outstanding. Also under the Plan, Micro issued
warrants for 500,000 shares of Micro common stock, exercisable at $5.80 per
share.

THE MERGER AND NAME CHANGES

On May 13, 1998, SGI was merged with and into Micro under an agreement and
plan of merger, with Micro surviving and changing its name to SanTi Group, Inc.
("the Merger"). Effective September 21, 1998, Santi Group, Inc. changed its name
to EarthCare Company by filing an amendment to its Certificate with the Delaware
Secretary of State. The Merger was subject to the approval of the Court. On the
effective date of the Merger, each issued and outstanding share of SGI Stock was
converted into one share of common stock of Micro (now EarthCare). These
exchange ratios were determined after the 1 for 400 reverse split of Common
Stock pursuant to the Plan. This exchange resulted in the receipt by SGI
stockholders of approximately 8,088,379 shares of Common Stock, representing
approximately 86.2% of the shares of Common Stock issued and outstanding on the
effective date of the Merger. As of August 28, 1998, after the issuance of
shares pursuant to the Plan, the Merger, the reverse split, and the exercise of
warrants to acquire 304,746 shares of Common Stock, EarthCare had 9,526,599
shares of Common Stock outstanding. All options to acquire shares of SGI Stock
were also converted into options to receive shares of Common Stock. EarthCare
succeeded to all of the assets, liabilities and NLW business of SGI.

ACQUISITIONS

EarthCare intends to expand its business in the NLW industry through
internal growth and the acquisition of local NLW service providers throughout
the United States. These acquisitions will be made with cash, shares of Common
Stock, or a combination of cash and shares of Common Stock. EarthCare's
acquisition strategy has been developed with the goal of increasing the
efficiency and profitability of acquisition targets through operational and
marketing synergies with EarthCare's existing business operations. EarthCare
will provide professional management to these acquired entities to eliminate
duplicative processes and procedures among the acquired businesses. The services
that EarthCare intends to provide to the acquired entities include: sales
management, accounts receivable and accounts payable management, debt
collection, financial reporting, tax management, advertising, purchasing, legal,
health and safety, environmental, human resources and training. Customer service
representatives will also be provided. These services are intended to allow the
local managers to focus on the growth of regional business.

Between March 1997 and May 1999, EarthCare (or Bone-Dry) completed thirteen
acquisitions of NLW local service providers. These acquisitions geographically
extended EarthCare's processing operations to New York, Philadelphia and Miami,
and increased its market penetration in Georgia. The total cost of the
acquisitions, including contingent consideration, was $31,349,120 in cash,
$2,457,350 in notes to sellers and 1,175,526 shares of Common Stock. In
addition, EarthCare entered into one-year agreements with certain key managers
that include severance payments if terminated before expiration.

ANDREWS ENVIRONMENTAL, INC. ("ANDREWS"). In March 1997, Bone-Dry acquired
a portion of the assets of Andrews, operating as Andrews' grease disposal
business for $475,000 in cash and $257,350 in notes. The Company later issued
14,479 shares of Common Stock in settlement of these notes. Andrews was in the
business of commercial

27
<PAGE> 30

and governmental grease extraction, collection, and transportation services in
the state of Georgia. In December 1997, Bone-Dry acquired the remaining assets
of Andrews for $660,000 in cash and 21,400 shares of Common Stock. These assets
included customer accounts, trucks and containers to be used in the NLW and
septic waste collection, transportation, management and disposal business.
Andrews specializes in the area of NLW and disposal in Georgia.

ATLANTA GREASE TRAP ("ATLANTA GREASE"). In August 1997, Bone-Dry acquired
the assets of Atlanta Grease, for approximately $360,000 in cash. Atlanta Grease
was in the business of commercial and governmental grease extraction, collection
and transportation services in Georgia. The assets acquired included customer
accounts, software, and certain physical assets to be used in the NLW and septic
waste collection, transportation, management and disposal business.

FERRERO WASTEWATER MANAGEMENT, INC. ("FERRERO"). In January 1998, the
Pennsylvania Group acquired the assets of Ferrero for $2,240,100 in cash and
90,000 shares of Common Stock. Contingent consideration of $248,900 in cash and
10,000 shares of Common Stock was paid in the fourth quarter of 1998. These
assets included customer accounts, trucks and containers to be used in the
business of NLW and septic waste collection, transportation and management and
disposal in the Ambler, Pennsylvania area. In connection with this asset
purchase, the Pennsylvania Group agreed to assume certain liabilities of
Ferrero, excluding any liability for environmental, health and safety
requirements and any taxes arising out of the asset purchase. All third party
liabilities were paid by Ferrero prior to the closing.

A RAPID ROOTER SEWER AND DRAIN SERVICE, INC. ("A RAPID"). In February
1998, the Florida Group acquired the assets of A Rapid for $3,300,000 in cash,
payment of existing debt totaling approximately $690,120 and 100,000 shares of
Common Stock. These assets included customer accounts, trucks, containers and
other assets used in the NLW collection and disposal business. A Rapid operates
primarily in the Miami/Dade, Broward and Palm Beach, Florida areas. In
connection with this asset purchase, the Florida Group agreed to assume certain
liabilities of A Rapid, excluding any liability for environmental, health and
safety requirements and any taxes arising out of the asset purchase. All third
party liabilities were paid by A Rapid prior to the closing.

QUALITY PLUMBING & SEPTIC ("QUALITY"). In February 1998, the Georgia Group
acquired the assets of Quality for $2,000,000 in cash. Contingent consideration
of $250,000 in cash was paid in June 1998 and 10,000 shares of Common Stock were
issued in July 1998. These assets included customer accounts, trucks and
containers and other assets to be used in the NLW collection and disposal
business in the Lithia Springs, Georgia area. In connection with this asset
purchase, the Georgia Group agreed to assume certain liabilities of Quality,
excluding any liability for environmental, health and safety requirements and
any taxes arising out of the asset purchase. All third party liabilities were
paid by Quality prior to the closing.

SEAGRAVES, INC.. ("SEAGRAVES") AND GREASE-TEC, INC. ("GREASE-TEC"). The
Florida Group acquired the assets of Seagraves and Grease-Tec in March 1998 for
$3,250,000 in cash, a promissory note in the amount of $2,000,000 and 60,000
shares of Common Stock. A security interest in the assets of Seagraves and
Grease-Tec was granted to the sellers to secure the promissory note. These
assets included customer accounts, trucks, containers and other assets used in
the NLW collection and disposal business in the Orange County, Florida area.
Seagraves also operated under the names Brownie Environmental Services,

28
<PAGE> 31

Brownie Sewer & Drain Cleaning Services and Brownie Septic Tank Contractors. In
connection with this asset purchase, the Florida Group agreed to assume certain
liabilities of Seagraves, excluding any environmental, health and safety
requirements and any taxes arising out of the asset purchase. All third party
liabilities were paid by Seagraves and Grease-Tec prior to the closing.

R.G.M. LIQUID WASTE REMOVAL CORPORATION AND AFFILIATES. ("RGM"). In May
1998, the New York Group acquired certain assets of RGM and its affiliates for
$4,500,000 in cash and 105,000 shares of Common Stock. Contingent consideration
of $1,000,000 and 55,000 shares of Common Stock is payable one year after the
date of purchase, net of offsets for losses, as defined in the purchase
agreement. These assets included contract rights, customer accounts, trucks and
containers and other assets to be used in the NLW collection and disposal
business in the New York metropolitan area. In connection with this asset
purchase, the New York Group agreed to assume certain liabilities of RGM and its
affiliates, excluding any liability for environmental, health and safety
requirements and any taxes arising out of the asset purchase. RGM's affiliates
include: Devito Environmental Corporation ("Devito"), Advanced Transfer
Technology, Inc. ("ATT") and Envirotec Leasing and Rental Corporation
("Envirotec"). All third party liabilities were paid by RGM prior to the
closing.

ELDREDGE WASTEWATER MANAGEMENT, INC ("ELDREDGE"). In May 1998, the
Pennsylvania Group acquired certain assets of Eldredge for $2,040,000 in cash
and 85,000 shares of Common Stock. Contingent consideration of $360,000 in cash
and 15,000 shares of Common Stock was paid in June 1999. Eldredge was engaged in
the collection and disposal of wastewater from commercial, industrial and
residential facilities related to food processing, preparation and elimination
and municipal liquid and sludge wastes. These assets included customer accounts,
trucks and containers and other assets to be used in the NLW collection and
disposal business in the Lancaster, Montgomery, Bucks and Chester Counties of
Pennsylvania and Sussex and New Castle, Delaware. In connection with this asset
purchase, the Pennsylvania Group agreed to assume certain liabilities of
Eldredge, excluding any environmental, health and safety requirements and any
taxes arising out of the asset purchase. All third party liabilities were paid
by Eldredge prior to the closing.

REIFSNEIDER TRANSPORTATION, INC. In March 1999, the Company acquired all
of the outstanding capital stock of Reifsneider, a Pennsylvania corporation.
Reifsneider is engaged in the nonhazardous liquid waste and septic waste
collection, transportation, management, and disposal business in and around
Pennsylvania, New Jersey, New York, Maryland, and Delaware. Consideration for
the acquisition consisted of $5,050,000 in cash, 350,000 shares of EarthCare
common stock (the "Common Stock"), the delivery of a $200,000 note payable to
the former owner of Reifsneider and a working capital adjustment of
approximately $750,000, as defined in the Stock Purchase Agreement.

BREHM'S CESSPOOL, INC. In March 1999, the Company acquired all of the
outstanding capital stock of Brehm's, a Pennsylvania corporation. Brehm's is
engaged in the nonhazardous liquid waste and septic waste collection,
transportation, management, and disposal business in and around eastern
Pennsylvania. Consideration for the acquisition consisted of $1,000,000 in cash
and 35,367 shares of Common Stock.

NATIONAL PLUMBING AND DRAIN ("NATIONAL"). In April 1999, EarthCare
acquired all of the outstanding capital stock of National, a Georgia
corporation, in exchange for $1,325,000 in cash, the issuance of 125,159 shares
of Common Stock, and the assumption

29
<PAGE> 32

of up to $513,000 in liabilities. National is a residential and commercial sewer
and drain services company servicing customers in Georgia.

ROOTER PLUS ("ROOTER"). In May 1999, EarthCare acquired the assets of
Rooter, a Georgia corporation, in exchange for $2,600,000 in cash and the
issuance of 100,000 shares of Common Stock. Rooter is a residential and
commercial sewer and drain services company servicing customers in Georgia.

In connection with each acquisition, EarthCare may have assumed or
succeeded to certain liabilities of the acquired businesses, which may include
environmental liabilities except as described above. EarthCare has obtained
representations from the sellers of the acquired businesses that no undisclosed
liabilities exist and certain rights to indemnification from the sellers for any
liabilities. There can be no assurance, however, that undisclosed liabilities do
not exist or that EarthCare will receive full or partial compensation pursuant
to its rights to indemnification.

In addition to internal growth, the growth of EarthCare, to a significant
extent, will depend on its continued acquisition of NLW service providers.
EarthCare expects competition to exist in the industry to acquire these
candidates, which may limit the number of acquisition opportunities and may lead
to higher acquisition prices. Acquisitions of these entities entail various
risks, including failure of the acquired service providers to achieve expected
results, diversion of management's attention, failure to retain key personnel of
the acquired service providers and risks associated with unanticipated events
and liabilities. All of these risks may have an adverse effect on the ability of
EarthCare to acquire additional acquisition candidates and on its business
condition and results of operations. Any complementary businesses that are
acquired also may not be successfully integrated.

DEBT FINANCING

EarthCare obtained a revolving line of credit pursuant to the Credit
Agreement on June 26, 1998, which was amended as of March 31, 1999, from Bank of
America National Trust and Savings Association ("Bank of America"), acting as an
agent for various lending institutions, including Bank of America (collectively,
the "Banks"). Under this Credit Agreement, each of the lending institutions
agreed to make loans to, and to issue or participate in the issuance of letters
of credit for the account of EarthCare on a revolving basis during the term of
the agreement as requested by EarthCare. The total outstanding revolving credit
and the aggregate amount of all letters of credit outstanding are not to exceed
the commitment amount of $40,000,000. Various financial covenants in the Credit
Agreement restrict the Company's ability to draw on this line of credit. A
pledge agreement was executed concurrent with the Credit Agreement, requiring
EarthCare to pledge all shares of stock owned by EarthCare in each of its
subsidiaries (both current subsidiaries as well as any subsidiary formed in the
future), as security for the payment of all liabilities incurred under the
revolving line of credit. A security agreement provides for a continuing
security interest to the Banks in all of the subsidiaries' accounts receivable,
securities, chattel paper, computer hardware and software, contract rights,
deposit accounts, documents, general intangibles, goods, instruments,
intellectual property, money, commodities and all personal property. A stock
purchase warrants were granted to Bank of America for the right to purchase
50,000 shares of Common Stock at a price of $13.00 per share, expiring on June
26, 2003. EarthCare anticipates that it will use this line of credit, alone

30
<PAGE> 33

or in combination with shares of its Common Stock, to acquire local NLW service
providers, as well as for working capital.

COMPETITION

EarthCare competes with a significant number of other NLW service
providers. Competitors compete primarily on the basis of proximity to collection
operations, fees charged and quality of service. Future technological changes
and innovations may result in a reduction in the amount of NLW generated, or in
alternative methods of treatment and disposal being developed. EarthCare also
faces competition from customers that may seek to enhance and develop their own
methods of disposal. Increased use of internal treatment and disposal methods
and other competitive factors may have a material adverse effect on EarthCare's
business, results of operation and financial condition.

EarthCare will be at a disadvantage in competing against service providers
that are better capitalized, have greater name recognition, have more background
and experience, have greater financial, technical, marketing and other resources
and skills, have better facilities and are able to provide services or products
at a lower cost than EarthCare. Because the NLW industry is currently highly
fragmented, the acquisition of local NLW service providers is the only strategy
by which EarthCare may be able to penetrate existing markets. As a result of
these competitive factors, there can be no assurance that EarthCare's growth
strategy will be successful or that EarthCare will be able to generate cash flow
adequate for its operations and to support future acquisitions and internal
growth.

EMPLOYEES

As of July 16, 1999, EarthCare had approximately 350 employees. It is
anticipated that the acquisition and integration of additional NLW service
providers will add employees as acquisitions are made but that the number of
employees in acquired businesses may be reduced as duplicate administrative
processes are eliminated.

GOVERNMENT REGULATIONS

EarthCare is subject to rules and regulations of various federal, state and
local governmental agencies. Environmental laws and regulations are, and will
continue to be, a principal factor affecting the marketability of the services
provided by EarthCare. Any changes in these laws or regulations may affect the
operations of EarthCare by imposing additional regulatory compliance costs on
EarthCare, requiring the modification of or adversely affecting the market for
EarthCare's services. To the extent that demand for these services is based upon
the need to comply with these regulations, any modification to these regulations
may increase the cost of or decrease the demand for these services and adversely
affect EarthCare's business condition and results of operations.

Additionally, if new environmental legislation or regulations are enacted
or existing legislation or regulations are amended or enforced differently,
EarthCare may be required to obtain additional operating permits, registrations
or approvals. The process of obtaining required permits, registrations or
approvals can be lengthy and expensive and the issuance of such permit or the
obtaining of such approvals may be subject to public opposition. There can be no
assurance that EarthCare will be able to meet the applicable regulatory
requirements.

31
<PAGE> 34

RCRA is the principal federal statute governing hazardous and solid waste
generation, treatment, storage and disposal. RCRA and state hazardous waste
management programs govern the handling and disposal of "hazardous waste." The
U.S. Environmental Protection Agency ("EPA") has issued regulations pursuant to
RCRA. States have also promulgated regulations under comparable state statutes
that govern hazardous waste generators, transporters and owners and operators of
hazardous waste treatment, storage and disposal facilities. These regulations
impose detailed operating, inspection, training and emergency preparedness and
response standards and requirements for the financial responsibility,
manifesting of wastes, record keeping and reporting, as well as treatment
standards for any hazardous wastes intended for land disposal.

NLW is currently exempt from the requirements of RCRA. The repeal or
modification of the RCRA exemption covering NLW, or the modification of
applicable regulations or interpretations regarding the treatment or disposal of
NLW, may require EarthCare to alter its method of treating and disposing of NLW.
EarthCare's current methods do not comply with the methods prescribed by the EPA
for treatment and/or disposal of waste as defined by RCRA. These potential
changes may result in decreased demand for EarthCare's services or increased
costs to EarthCare and could have a material adverse effect on EarthCare's
business.

CERCLA provides for immediate response and removal actions coordinated by
the EPA for releases of hazardous substances into the environment and authorizes
the government or private parties to respond to the release or threatened
release of hazardous substances. The government may also order persons
responsible for the release to perform any necessary cleanup. Liability extends
to the present owners and operators of waste disposal facilities from which a
release occurs, persons who owned or operated the facilities at the time the
substance was released, persons who arranged for the disposal or treatment of
hazardous substances and waste transporters who selected such facilities for
treatment or disposal of hazardous substances. CERCLA creates strict, joint and
several liability for all costs of removal and remediation, other necessary
response costs and damages for injury to natural resources.

As EarthCare will be engaged in businesses that involve the treatment and
removal of nonhazardous liquid waste, EarthCare does not expect to be subject to
CERCLA. However, if EarthCare were to acquire a business that has disposed of
hazardous waste or treated hazardous waste that falls within the parameters of
CERCLA, SanTi may be held jointly and severally liable for the costs of any
damage or required cleanup of the site.

PROPERTY

Neither EarthCare nor any of its subsidiaries currently own any real
property except for 10.48 acres of land and a building in Philadelphia and 4.8
acres of undeveloped land in Orlando. EarthCare corporate offices are located in
Dallas, Texas, and are under a sublease

32
<PAGE> 35

from VHA Southwest, Inc., for a current rate of $12,953.33 per month, expiring
July 31, 2003.

The following properties are currently leased by EarthCare and its
subsidiaries:

The following properties are leased by the Florida Group: (i) property
leased from William E. and Joan C. Rice for a term of two and one-half
years, commencing on February 13, 1998 at a rate of $4,000 per month; this
lease is guaranteed by SanTi (ii) property in Orlando, Florida, leased for
$96,000 annually to be used for NLW business; the lease expires March 6,
2003 and is guaranteed by SanTi.

The following properties are leased by the Georgia Group: (i) property
in Lithia Springs, Georgia; the lease expires August 16, 1998, is for a
rate of $2,500 per month and is used for NLW business (ii) property in
Austell, Georgia used for NLW business is leased under a sublease from BFI
Services Group, Inc. for a rate of $4,680 per month, terminating January
13, 2001 (iii) property located in Gwinnett County, Georgia, formerly used
by Andrews to conduct its NLW business; the rate of the sublease is $2,200
per month for a monthly term, with automatic renewal until receipt of
tenant's written notice of termination.

The following properties are leased by the New York Group: (i)
property in Deer Park, New York, leased for $11,500 per month for NLW
business; the lease expires May 31, 1999 (ii) property in Deer Park, New
York, leased for $2,000 per month for NLW business; the lease expires May
31, 1999.

The following properties are leased by the Pennsylvania Group: (i)
property in Ambler, Pennsylvania, leased to Nutrecon, Inc. by Ambler Realty
for use by the Pennsylvania Group for NLW business, expiring on December
31, 1999; the lease is for a monthly rate of $6,000 (ii) sublease from
Eldredge Associates, Inc., for all real property formerly utilized by
Eldredge Associates in operation of its NLW business in West Chester,
Pennsylvania, at a rate of $7,600 per month, terminating on May 7, 1999.

LEGAL PROCEEDINGS

There are currently no material claims or suits against EarthCare or its
operating subsidiaries. EarthCare may become involved in litigation and claims
arising out of the ordinary course of its business.

MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Trading of the Common Stock began on the OTC Bulletin Board in June of
1998, at a closing price of $13 per share. The Common Stock was listed for
trading on the Nasdaq National Market on July 16, 1999. The closing price on
July 16, 1999 for the Common Stock subject to such trading, of which 15,500
shares traded, was $16.25 and the average closing price of shares subject to
such trading was $15.75. As of July 16, 1999, there were 1,030 record holders of
the Common Stock.

EarthCare has contractual obligations to issue up to 55,000 additional
shares not included in the shares if the conditions relating to revenue
guarantees contained in an acquisition agreement with a NLW service provider are
met. As of July 16, 1999, approximately 262,891 warrants to purchase shares of
Common Stock with an average

33
<PAGE> 36

exercise price of $8.63 were outstanding. EarthCare has also issued a warrant to
purchase 50,000 shares of Common Stock with an exercise price of $13.00 per
share to Bank of America pursuant to the Credit Agreement. In connection with
the amendment of the Credit Facility, effective March 31, 1999, Earthcare issued
Bank of America a warrant to purchase an additional 35,000 shares of Common
Stock at $14.00 a share and on June 1, 1999 issued Bank of Boston a warrant to
purchase 10,000 shares of Common Stock with an exercise price of $15.50 per
share.

34
<PAGE> 37

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information concerning the directors and
executive officers of EarthCare as of May 18, 1999. The executive officers will
serve until their successors are appointed by the Board of Directors. The terms
of the directors are as set forth below.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Donald F. Moorehead, Jr............. 48 Chief Executive Officer
Chairman of the Board
(term expires 2001)
Terry W. Patrick.................... 52 President and Chief Operating
Officer Director (term expires 2000)
James E. Farrell.................... 40 Vice President and Chief Financial
Officer
Raymond M. Cash..................... 68 Vice Chairman of the Board
(term expires 2001)
Earl E. DeFrates.................... 55 Director (term expires 2002)
William P. Hulligan................. 55 Director (term expires 2000)
Elroy "Gene" Roelke................. 69 Director (term expires 2002)
Brian Rosborough.................... 58 Director (term expires 2000)
</TABLE>

DONALD F. MOOREHEAD, JR., has served as Chairman of the Board and Chief
Executive Officer of EarthCare since June 1998. From August 1997 to June 1998,
he was a private investor. Mr. Moorehead served as Vice Chairman and Chief
Development Officer of USA Waste, Inc. ("USA Waste"), a solid waste management
company he founded, from May 1994 through August 1997. From October 1990 until
May 1994, he served as Chairman of the Board and Chief Executive Officer of USA
Waste. Mr. Moorehead has served as Director for the Environmental Research and
Education Foundation since November of 1996. Mr. Moorehead serves on the board
of FYI, Inc., a document and information outsourcing company, and United Road
Services, Inc., a towing and transport service company. Mr. Moorehead was a
member of the compensation committee for FYI, Inc.

TERRY W. PATRICK, President, Chief Operating Officer and Director of
EarthCare since June 1998 , served as Chief Operating Officer of Eastern
Environmental, a solid waste management company, from June 1996 to December
1997. From August 1994 to April 1996, he was a private investor and/or served as
President and was the founder of Chem-Mark Services, a commercial chemical
manufacturing and distributing company. From August 1993 to August 1994, he
served as President and Chief Executive Officer of EDM Corporation, a subsidiary
of USA Waste. From April 1990 to August 1993, he served as President and Chief
Operating Officer of USA Waste.

JAMES E. FARRELL, Vice President and Chief Financial Officer since October
1998. From September 1997 to August 1998, Mr. Farrell served in Vice President
of Finance and Chief Financial Officer positions for Adams Golf Inc. From June
1995 to September 1997, Mr. Farrell served as a Manager for The Pittston Company
(a diversified holding

35
<PAGE> 38

company), where he was responsible for financial review and reengineering in the
security services and air freight divisions. From May 1994 to June 1995, Mr.
Farrell was employed by ADT Security Systems, Inc. as Manager of Planning &
Marketing. Prior thereto, he served as Director of Accounting for Brinks Home
Security, Inc. from September 1986 to December 1993. Mr. Farrell has over 17
years of business experience and is a Certified Public Accountant.

RAYMOND M. CASH, Vice Chairman and Director of EarthCare since June 1998,
is a founder of two solid waste companies, Sanifill, Inc. and Southern States
Environmental Services, Inc. Mr. Cash is also a founder of EarthCare and from
August 1997 to June 1998, he served as Chairman of the Board and Chief Executive
Officer of EarthCare. From 1993 to 1997, he served as Chairman and President of
Resource, Recovery, Transfer & Transportation, Inc., a solid waste company.

EARL E. DEFRATES, has served as Chief Financial Officer of Waste
Management, Inc. (formerly USA Waste Services, Inc.), an international solid
waste company, from 1990 to the present and as Executive Vice President from May
1994 to the present. Prior thereto, Mr. DeFrates was employed by Acadiana Energy
Inc. (formerly Tatham Oil & Gas, Inc.), an energy company, serving in various
officer capacities including Chief Financial Officer, from 1980 through 1990.

WILLIAM P. HULLIGAN, has served as Director of EarthCare since June 1998.
Mr. Hulligan has been a private investor since November 1997. Mr. Hulligan was
employed by Waste Management, Inc. ("Waste Management"), an international solid
waste company, from 1979 to November 1997. The last position held by Mr.
Hulligan at Waste Management was Executive Vice President. Mr. Hulligan
currently serves on the Board of Directors for NSC Corporation, an asbestos
abatement company, and has been a board member of John Carroll University since
1994.

ELROY "GENE" ROELKE, has served as a Director of EarthCare since May 1998.
Mr. Roelke has served as the Chairman and Founder of the Knollwood Mercantile
Company, a retail convenience and liquor store company, form 1985 to the
present. From 1989 to 1996, Mr. Roelke served as Senior Vice President and
General Counsel of the Renaissance Capital Group, an investment management
company, and also served as the administrator of the Portfolio Management
Division and as a director designee to portfolio companies. Mr. Roelke served as
the President and Director of Island Marine Supply Company, a marine supply
company and was managing partner for Roelke & Jordan, a law firm located in
Dallas, Texas. From July 1997 to May 1998, Mr. Roelke also served as Chairman of
the Board of Microlytics, Inc., the predecessor corporation to EarthCare. Mr.
Roelke is a director and member of the audit committee of Tutogen Medical, Inc.,
a medical technology company.

BRIAN ROSBOROUGH, has served as a Director of EarthCare since December 16,
1998. Mr. Rosborough is the Chairman and Founder of Earthwatch Institute, a
sponsor of conservation science. Mr. Rosborough has been involved in social
venture capital since leaving the investment banking business in 1972. Mr.
Rosborough serves as a trustee of several civic and educational institutions.

36
<PAGE> 39

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain information concerning the
compensation of the chief executive officer of the Company.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------ ------------------------------
OTHER SECURITIES
NAME AND PRINCIPAL ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($)(3) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- ------------------ ---- ------------ -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Don Moorehead............ 1998 $ 0 $0(4) $0 568,352(4) 0
Chairman and Chief
Executive Officer(1)
Raymond Cash............. 1998 0 0 0 0 0
Chief Executive 1997 0 0 0 162,500(5)
Officer(2)
Terry W. Patrick......... 1998 0 0(4) 0 568,352(4) 0
President and Chief
Operating Officer
James E. Farrell......... 1998 19,958 0 0 70,000 0
Vice President and Chief
Financial Officer(6)
Kenneth R. Peak.......... 1998 33,846 0 0 0 0
Vice President and Chief
Financial Officer(7)
</TABLE>

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

(1) Mr. Moorehead was elected Chief Executive Officer on June 29, 1998.

(2) Mr. Cash served in the indicated position from August 19, 1997 and resigned
from such position effective June 29, 1998.

(3) Represents annual salary.

(4) Includes bonus grant for fiscal 1998 of options to acquire 43,352 shares of
Common Stock granted on March 1, 1999 at an exercise price of $14.50 per
share.

(5) Mr. Cash exercised these options to acquire these shares effective April 30,
1998 at an exercise price of $.65 per share.

(6) Mr. Farrell became Vice President and Chief Financial Officer effective
October 9, 1998.

(7) Mr. Peak resigned as Vice President and Chief Financial Officer effective
October 9, 1998.

37
<PAGE> 40

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information concerning option grants
to the chief executive officer during the last fiscal year.

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL-
--------------------------------------------------- RATES-OF-STOCK
NUMBER OF PERCENT OF PRICE APPRECIATION
SECURITIES TOTAL OPTIONS FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------
GRANTED FISCAL 1998 SHARE DATE 5% 10%
---------- ------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Donald F. Moorehead, Jr..... 175,000 22 $ 6.00 6/30/08 3,193,610 5,557,412
150,000 15.00 6/30/08 1,387,380 3,413,496
200,000 25.00 6/30/08 -- 2,551,327
Terry W. Patrick............ 175,000 22 6.00 6/30/08 3,193,610 5,557,412
150,000 15.00 6/30/08 1,387,380 3,413,496
200,000 25.00 6/30/08 -- 2,551,327
James E. Farrell............ 35,000 3 15.00 10/31/08 337,550 838,443
35,000 25.00 10/31/08 -- 488,443
</TABLE>

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

* Less than 1%.

(1) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the SEC. There can be no assurance provided to any
executive officer or any other holder of EarthCare's Securities that the
actual stock price appreciation over the term will be at the assumed 5% and
10% levels or at any other defined level.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AT DECEMBER
31, 1998

The following table sets forth certain information with respect to the
value of unexercised in-the-money options held by the Chief Executive Officer
and the named executive officers at December 31, 1998. During 1998, Raymond Cash
exercised options to acquire 162,500 of Common Stock.

<TABLE>
<CAPTION>
SECURITIES UNDERLYING VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN THIS MONEY
IN THIS MONEY OPTIONS
AT FY-END ($)(1) AT FY-END ($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Raymond Cash..................... 0 0 0 0
Donald F. Moorehead, Jr.......... 0 525,000 0 1,656,250
Terry W. Patrick................. 0 525,000 0 1,656,250
James E. Farrell................. 0 70,000 0 8,750
</TABLE>

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

(1) Based on a closing price of $15.25 per share of Common Stock on December 31,
1998, 1,447,950 of the options were in-the-money as of December 31, 1998.

38
<PAGE> 41

EMPLOYMENT AGREEMENTS

On June 1, 1998, Donald F. Moorehead and EarthCare entered into an
employment agreement. The agreement provides for Mr. Moorehead to serve in the
capacity of Chief Executive Officer and Chairman of the Board of EarthCare and
provides for a base salary of $175,000 annually. Mr. Moorehead has elected not
to take any salary until January 1, 1999, at the earliest. Mr. Moorehead will
also be eligible for an annual bonus, which will be a minimum 50% of his annual
salary. The agreement term is five years, with automatic renewal for twelve
month periods. Upon the merger, consolidation or other business combination of
EarthCare with another publicly traded or private entity where EarthCare is not
the surviving entity or upon the sale of substantially all of EarthCare's
assets, Mr. Moorehead is entitled to terminate the agreement and receive a
severance payment equal to the remaining salary and bonus for each of the
remaining years (or portions thereof) under the full term of the agreement. The
agreement also entitles Mr. Moorehead to participate in any stock option plan
instituted by EarthCare. The agreement contains a noncompetition and
nonsolicitation clause for the term of the agreement and for one year after
termination of Mr. Moorehead's employment.

On June 1, 1998, Terry Patrick and EarthCare entered into an employment
agreement which provides for Mr. Patrick to serve as President and Chief
Operating Officer of EarthCare and provides for a base salary of $150,000
annually. Mr. Patrick has elected not to take any salary until January 1, 1999,
at the earliest. Mr. Patrick will also be eligible for an annual bonus, which
will be a minimum of 50% of his annual salary. The agreement term is five years,
with automatic renewal for twelve month periods. Upon the merger, consolidation
or other business combination of EarthCare with another publicly traded or
private entity where EarthCare is not the surviving entity or upon the sale of
substantially all of EarthCare's assets, Mr. Patrick is entitled to terminate
the agreement and receive a severance payment equal to the remaining salary and
bonus for each of the remaining years (or portions thereof) under the full term
of the agreement. The agreement also entitles Mr. Patrick to participate in any
stock option plan instituted by EarthCare. The agreement contains a
noncompetition and nonsolicitation clause for the term of the agreement and for
one year after termination of Mr. Patrick's employment.

On October 9, 1998, James E. Farrell and EarthCare entered into an
employment agreement. The agreement provides for Mr. Farrell to serve in the
capacity of Vice President and Chief Financial Officer of EarthCare and provides
for an annual base salary of $95,000. Mr. Farrell may receive an annual bonus,
as determined in the Company's discretion. The agreement term is two years. Upon
the termination of Mr. Farrell's employment without cause, Mr. Farrell is
entitled to receive all compensation to the date of such termination plus
severance pay equal to three months salary. The agreement also entitles Mr.
Farrell to participate in any stock option plan instituted by EarthCare. The
agreement contains a noncompetition and nonsolicitation clause for the term of
the agreement and for one year after termination of Mr. Farrell's employment.

DIRECTOR COMPENSATION

Non-employee directors are compensated $1,500 for each non-telephonic
meeting attended. All directors are reimbursed for any expenses incurred in
attending board or committee meetings. EarthCare made the following grants of
options to "Non-Employee Directors" (as defined in Rule 16b-3 promulgated under
the Exchange Act) for their services as directors: 25,000 to each of Messrs.
Hulligan, Roelke and Rosborough.

39
<PAGE> 42

BOARD OF DIRECTORS

The Company's Board of Directors (the "Board") is divided into three
classes which consist, as nearly as practicable, of one-third of the total
number of directors serving on the Board. The Board may have up to fifteen
members, with the exact number set by resolution of the Board from time to time
pursuant to the Bylaws. The members of each class serve staggered three-year
terms following the initial terms. The initial terms of Class I, Class II and
Class III directors expire at the annual stockholders' meetings in 1999, 2000
and 2001, respectively, or until their successors are elected and duly
qualified. Messrs. Peak and Roelke are members of Class I; Messrs. Patrick and
Hulligan are members of Class II; and Messrs. Moorehead and Cash are members of
Class III. The Board has established three standing committees: (i) the
Compensation Committee, (ii) the Audit Committee, and (iii) the Executive
Committee.

The Audit Committee currently consists of three directors, Messrs.
DeFrates, Roelke and Hulligan (Chairman). The Audit Committee selects the
Company's auditors, reviews the audit and has other authority customary for an
audit committee.

Messrs. Cash (Chairman), Roelke and Rosborough are members of the
Compensation Committee. The Compensation Committee approves the bonus component
of the Employment Agreements and administers stock option plans.

The Executive Committee is composed of Messrs. Moorehead (Chairman), Cash
and Patrick and is authorized by the Board to take all action that may be
delegated by the Board under Delaware law.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

All of the members of the Board (Messrs. Rock Payne and Raymond Cash and
Ms. Joyce Bone) served as members of the Compensation Committee until June 29,
1998, at which time, the Board designated a Compensation Committee composed of
Messrs. Cash, Hulligan and Roelke. Mr. Cash is vice chairman of the Board and
was president and chief executive officer of the Company until June 29, 1998.
Mr. Hulligan and Roelke are not and have not been officers or employees of
EarthCare. Mr. Roelke served as chairman of the board of directors of
Microlytics, EarthCare's predecessor company. Transactions between Mr. Cash and
the Company are described below under Certain Transactions.

CERTAIN TRANSACTIONS

In 1997, Bone-Dry entered into a note payable agreement with an entity
controlled by EarthCare's majority owner and Vice Chairman of the Board of
Directors, Raymond M. Cash. The note was in the amount of $650,000, with an
interest rate of 13%. This entity received approximately $56,000 in interest
during 1997. This note was paid in full in December 1997. After the note was
paid in full, Mr. Cash purchased 990,000 shares of Bone-Dry for $650,000. After
the share exchange of Bone-Dry and SGI described previously and the Stock
Dividend, Mr. Cash received 1,608,750 shares of SGI Stock.

On June 29, 1998, the Board granted options to Messrs. Moorehead, Patrick,
and Peak in the following amounts: (i) Mr. Moorehead: 175,000 options,
exercisable at $6.00 per share, 150,000 options, exercisable at $15.00 per
share, and 200,000 options exercisable at $25.00 per share; (ii) Mr. Terry
Patrick: options in amount and exercise price identical

40
<PAGE> 43

to Mr. Moorehead; and (iii) Mr. Kenneth Peak: 50,000 options, exercisable at
$6.00 per share, 50,000 options exercisable at $15.00 per share, and 100,000
options exercisable at $25.00 per share. These options vest over a four year
period beginning on the first anniversary of the date of grant. The options will
vest automatically, however, upon any termination of employment of Mr.
Moorehead, Mr. Patrick or Mr. Peak upon the merger, consolidation or other
business combination of EarthCare with another publicly traded or private entity
where EarthCare is not the surviving entity or upon the sale of substantially
all of EarthCare's assets. Upon his resignation effective October 9, 1998, Mr.
Peak forfeited the options described above.

On October 9, 1998, the Board granted options to Mr. Farrell to acquire
70,000 shares of Common Stock, 35,000 options exercisable at $15.00 a share and
35,000 options exercisable at $25.00 a share. The options vest over a four year
period beginning on the first anniversary of the date of grant.

41
<PAGE> 44

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of July 16, 1999, by (i) each person
known by the Company to be a beneficial owner of more than 5% of the Common
Stock, (ii) each of the Company's directors and named executive officers, (iii)
all directors and executive officers as a group and (iv) each Selling
Stockholder. Unless otherwise specified, the named beneficial owner has sole
voting and investment power.

<TABLE>
<CAPTION>
COMMON COMMON STOCK
STOCK BENEFICIALLY BENEFICIALLY
OWNED BEFORE THE COMMON OWNED AFTER
OFFERING(1) STOCK THE OFFERING(3)
------------------- TO BE SOLD IN -----------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT THE OFFERING(2) NUMBER PERCENT
------------------------ --------- ------- --------------- ------- -------
<S> <C> <C> <C> <C> <C>
Raymond M. Cash(4)(10)....... 2,910,284 28% 2,910,284 -- *
Cash Family Limited
Partnership(5)(10)......... 1,658,750 16% 1,658,750 -- *
Donald F. Moorehead,
Jr.(6)(10)................. 1,431,200 13% 975,000 297,500 *
Terry W. Patrick(7)(10)...... 477,900 3% 300,000 30,000
William P.
Hulligan(10)(12)........... 100,000 1% 100,000 -- *
Elroy Roelke(8)(10).......... 50,000 * 0 50,000 *
James E. Farrell(11)......... 0 * 0 -- *
Earl E. DeFrates(12)......... 0 * 0 -- *
Brian Rosborough(12)......... 0 * 0 -- *
David Towery(9).............. 6,000 * 6,000 -- *
Terry White(10).............. 41,250 * 41,250 -- *
Founders Equity Group,
Inc........................ 153,125 2% 150,000 3,125 *
George O. Moorehead.......... 250,000 3% 250,000 -- *
Stoli, Ltd................... 175,000 2% 175,000 -- *
William R. Andrews........... 32,379 * 32,379 -- *
J.D. Dawson(9)............... 3,500 * 3,500 -- *
Thomas Ferrero(10)(11)....... 110,000 1% 110,000 -- *
A Rapid Rooter Sewer and
Drain Service, Inc.(10).... 25,000 * 25,000 -- *
Seagraves, Inc.(10).......... 47,370 * 47,370 -- *
Bernard Arkules(9)........... 10,000 * 10,000 -- *
David I. Arkules(9).......... 10,000 * 10,000 -- *
John Beardmore(9)............ 10,000 * 10,000 -- *
Boone Investors Group, LLC... 50,000 * 50,000 -- *
Thomas C. Bowen.............. 50,000 * 50,000 -- *
Edward L. Cash(9)............ 10,000 * 10,000 -- *
Eric W. Cash(9).............. 22,600 * 22,600 -- *
Karen C. Cash................ 207,425 2% 207,425 -- *
Environmental Opportunities
Fund, L.P.................. 311,395 3% 311,395 -- *
Environmental Opportunities
Fund (Cayman), L.P......... 38,605 * 38,605 -- *
Daryl R. Griswold(9)......... 31,918 * 31,918 -- *
</TABLE>

42
<PAGE> 45

<TABLE>
<CAPTION>
COMMON COMMON STOCK
STOCK BENEFICIALLY BENEFICIALLY
OWNED BEFORE THE COMMON OWNED AFTER
OFFERING(1) STOCK THE OFFERING(3)
------------------- TO BE SOLD IN -----------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT THE OFFERING(2) NUMBER PERCENT
------------------------ --------- ------- --------------- ------- -------
<S> <C> <C> <C> <C> <C>
Lola E. (Gena) and Stewart F.
Hard....................... 70,000 * 70,000 -- *
Sharon Hurlburt.............. 33,416 * 33,416 -- *
M. Beckmann Ltd.............. 20,000 * 20,000 -- *
Mantua Holdings Ltd.(9)...... 10,000 * 10,000 -- *
James McClure(9)............. 29,916 * 29,916 -- *
George O. Moorehead and Nancy
Moorehead.................. 100,000 1% 100,000 -- *
John Neely(9)................ 10,000 * 10,000 -- *
Rock Payne(10)............... 225,000 2% 225,000 -- *
RCD Investments, Ltd......... 100,000 1% 100,000 -- *
Joyce Bone(9)................ 95,144 1% 95,144 -- *
Ellis Rubenstein and Harold
Rubenstein(9).............. 10,000 * 10,000 -- *
Robert Smith................. 160,000 2% 160,000 -- *
William C. Skuba............. 50,000 * 50,000 -- *
Joseph P. Tate............... 130,000 1% 130,000 -- *
Leon J. Watkins and M. Janie
Watkins.................... 20,000 * 20,000 -- *
Howell Waldrup(9)............ 27,500 * 27,500 -- *
Clark Ullom.................. 147,662 2% 147,662 -- *
Eldredge Wastewater
Management, Inc. (10)...... 85,000 * 85,000 -- *
Curtis W. Eldredge........... 3,230 * 3,230 -- *
Robert C. Eldredge........... 6,650 * 6,650 -- *
John K. Eldredge............. 3,600 * 3,600 -- *
Jeremiah Eldredge............ 520 * 520 -- *
April Egan................... 1,000 * 1,000 -- *
Sherri Spicer(9)............. 8,000 * 8,000 -- *
Bruce Slovin................. 12,000 * 12,000 -- *
Stephen D. Scott............. 32,000 * 32,000 -- *
Susan K. Keller(9)........... 6,000 * 6,000 -- *
Laura K. Sanders(9).......... 6,000 * 6,000 -- *
Katherine U. Sanders......... 24,000 * 24,000 -- *
Christine M. Sanders(9)...... 8,000 * 8,000 -- *
Bret D. Sanders(9)........... 6,000 * 6,000 -- *
Brad D. Sanders(9)........... 6,000 * 6,000 -- *
John M. O'Quinn.............. 24,000 * 24,000 -- *
John I. Mundy................ 12,000 * 12,000 -- *
Ben T. Morris................ 16,000 * 16,000 -- *
Robert Larry Kinney(9)....... 4,000 * 4,000 -- *
Louis Del Homme.............. 16,000 * 16,000 -- *
William M. Dearman........... 12,000 * 12,000 -- *
Charles L. Davis(9).......... 2,000 * 2,000 -- *
Morton A. Cohn............... 32,000 * 32,000 -- *
</TABLE>

43
<PAGE> 46

<TABLE>
<CAPTION>
COMMON COMMON STOCK
STOCK BENEFICIALLY BENEFICIALLY
OWNED BEFORE THE COMMON OWNED AFTER
OFFERING(1) STOCK THE OFFERING(3)
------------------- TO BE SOLD IN -----------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT THE OFFERING(2) NUMBER PERCENT
------------------------ --------- ------- --------------- ------- -------
<S> <C> <C> <C> <C> <C>
Michael S. Chadwick(9)....... 4,000 * 4,000 -- *
George L. Ball............... 16,000 * 16,000 -- *
Samuel A. Jones(9)........... 4,000 * 4,000 -- *
Bruce R. McMaken(9).......... 6,000 * 6,000 -- *
John E. Drury................ 32,000 * 32,000 -- *
Don A. Sanders............... 56,000 * 56,000 -- *
Robert Gist(10).............. 20,000 * 20,000 -- *
Quality Plumbing &
Septic(10)................. 10,000 * 10,000 -- *
Thomas V. Chorey Jr.(9)...... 5,259 * 5,259 -- *
John L. Taylor, Jr.(9)....... 5,259 * 5,259 -- *
Susan Shivers Fink(9)........ 432 * 432 -- *
Fredna C. Woodall............ 17,400 * 17,400 -- *
Holli H. Cash................ 7,662 * 7,662 -- *
Alan J. Roper................ 7,662 * 7,662 -- *
Rachel C. Roper.............. 23,200 * 23,200 -- *
Larry E. Woodall............. 7,662 * 7,662 -- *
Terri D. Ullom............... 6,338 * 6,338 -- *
Elizabeth S. Page............ 1,000 * 1,000 -- *
Charlie Watkins, Jr.......... 1,000 * 1,000 -- *
Curtis R. Dixon.............. 1,000 * 1,000 -- *
Omega Good News Foundation... 11,000 * 11,000 -- *
Timothy S. Maxwell........... 7,662 * 7,662 -- *
Stacie L. Metcalfe........... 16,800 * 16,800 -- *
Steven S. Maxwell............ 7,662 * 7,662 -- *
Matthew W. Metcalfe.......... 7,662 * 7,662 -- *
Stacie L. Metcalfe........... 5,800 * 5,800 -- *
Dwight S. Cash............... 5,800 * 5,800 -- *
William D. and Angelina P.
Seagraves.................. 45,370 * 45,370 -- *
Seaburn and Carolyn F.
Seagraves.................. 12,630 * 12,630 -- *
Charles E. Feuchter.......... 54,125 * 54,125 -- *
Donald R. Dodson............. 20,000 * 20,000 -- *
Ronald Scott Dodson.......... 20,000 * 20,000 -- *
William Rice................. 19,125 * 19,125 -- *
Joan C. Rice................. 19,125 * 19,125 -- *
Alfonso J. Grunskis.......... 9,375 * 9,375 -- *
Diane Rice Grunskis.......... 9,375 * 9,375 -- *
Donald E. Rice............... 9,000 * 9,000 -- *
Ruth Ann Rice................ 9,000 * 9,000 -- *
</TABLE>

44
<PAGE> 47

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

* Less than one percent.

(1) Includes shares of Common Stock that may be acquired upon the exercise of
stock options exercisable within 60 days. Each person named above has sole
voting and dispositive power with respect to the all shares listed opposite
such person's name, unless indicated otherwise. Unless otherwise indicated,
each stockholder's address is 14901 Quorum Drive, Suite 200, Dallas, Texas
75240.

(2) Does not reflect the applicable Lock-Up Agreement that prohibits the sale
of all or a portion of certain Selling Stockholders' Shares for a six to
twelve month period. Except as indicated by footnotes (9) and (10), the
Selling Stockholders are entitled to sell 25% of their Shares upon the
Effective Date and the remainder of their Shares after nine months
following the Effective Date. There can be no assurance that any of the
Selling Stockholders will offer to sell or sell any or all of their Shares.

(3) Assumes that all Shares subject to this Prospectus are sold and does not
reflect the applicable Lock-Up Agreements.

(4) Based on information included in Form 4 filed in June 1999 by Mr. Cash.
Includes 1,251,534 shares held by Mr. Cash and 1,658,750 shares held by the
Cash Family Limited Partnership which is controlled by an entity controlled
by Mr. Cash. Does not include 207,425 shares held by Mr. Cash's wife, for
which shares Mr. Cash disclaims beneficial ownership.

(5) Does not include 1,251,534 shares held by Mr. Cash.

(6) Includes 418,000 shares held by Moorehead Property Company Ltd., a company
controlled by Mr. Moorehead. Includes options to purchase 131,250 shares of
Common Stock exercisable in 60 days.

(7) Includes 336,650 shares held by Beacon Holdings Limited, a family limited
partnership of which Mr. Patrick is a general partner and warrants to
acquire 10,000 shares. Includes options to purchase 131,250 shares of
Common Stock exercisable in 60 days.

(8) Includes warrants to acquires 25,000 shares of Common Stock that are
exercisable within 60 days. Does not include options to purchase 6,250
shares of Common Stock exercisable within 60 days or 18,750 shares of
Common Stock not exercisable within 60 days.

(9) These Selling Stockholders are not parties to the Lock-Up Agreements and
are eligible sell their Shares upon the Effective Date.

45
<PAGE> 48

(10) These Selling Stockholders are eligible to sell 25% of their Shares after
six months following the Effective Date and the remainder of their Shares
after twelve months following the Effective Date.

(11) Does not include options to purchase 70,000 shares of Common Stock not
exercisable within 60 days.

(12) Does not include options to purchase 6,250 shares of Common Stock
exercisable within 60 days or 18,750 shares of Common Stock not exercisable
within 60 days.

(13) Includes shares of Common Stock listed in the table above, except for
1,658,750 shares listed for the Cash Family Limited Partnership that are
included in the 2,910,284 listed for Raymond M. Cash as described in
footnote (4) above.

DESCRIPTION OF SECURITIES

DESCRIPTION OF CAPITAL STOCK

EarthCare is authorized to issue 100,000,000 shares of capital stock.
Seventy million of these shares are common stock, $.0001 par value (the "Common
Stock"), entitled to one vote per share on any matter on which stockholders of
SanTi are entitled to vote and are entitled to participate in dividends and to
receive the remaining net assets of EarthCare upon dissolution, subject to the
rights of any existing holders of preferred stock having a liquidation
preference. Of these shares of Common Stock, 10,241,351 shares are currently
outstanding. The shares of Common Stock have no preemptive rights and no
subscription, redemption or conversion privileges. The holders of shares of
Common Stock do not have cumulative voting rights. All of the outstanding shares
of Common Stock are fully paid and nonassessable.

Thirty million of the authorized shares of capital stock are designated as
preferred stock, $.0001 par value per share. The Board will have the full power
and authority to fix the number of shares constituting a series and to fix the
relative rights and preferences of the shares of the series to the full extent
allowable by the law, with respect to dividends, redemptions, payment on
liquidation, sinking fund provisions, conversion privileges and voting rights.

CERTAIN PROVISIONS OF THE CERTIFICATE, BYLAWS AND DELAWARE LAW

Classification of Board of Directors. The Certificate and Bylaws of the
Company divide the Board of Directors into three classes, designated as Class I,
Class II and Class III, respectively, each class to be as nearly equal in number
as possible. The term of Class I, Class II and Class III directors will expire
at the 1999, 2000 and 2001 annual meetings of stockholders, respectively, and in
all cases directors elected will serve until their respective successors are
elected and qualified. At each annual meeting of stockholders, directors will be
elected to succeed those in the class whose terms then expire, each elected
director to serve for a term expiring at the third succeeding annual meeting of
stockholders after such director's election, and until the director's successor
is elected and qualified. Thus, directors elected stand for election only once
in three years. The Certificate provides that directors may only be removed for
cause.

46
<PAGE> 49

Additional Directorships, Vacancies and Removal of Directors. The Bylaws
of the Company provide that the Board shall consist of up to fifteen members,
the exact number to be determined by resolution of the Board from time to time.
If one or more directors resigns, a majority of the directors then in office
have the power to fill the vacancy.

Anti-Takeover Effects. The foregoing provisions of the Articles and Bylaws
could discourage potential acquisition proposals and could delay or prevent a
change in control of the Company. These provisions are intended to enhance the
continuity and stability of the Board and the policies formulated by the Board
and to discourage certain types of transactions that may involve an actual or
threatened change in control of the Company. These provisions are also designed
to reduce the vulnerability of the Company to an unsolicited acquisition
proposal and to discourage certain tactics that may be used in proxy fights,
however, such provisions may discourage third parties from making tender offers
for the Company's shares. As a result, the market price of the Common Stock may
not benefit from any premium that might occur in anticipation of a threatened or
actual change in control. Such provisions also may have the effect of preventing
changes in the management of the Company.

WARRANTS

In connection with financing provided to the Company in June 1998, the
Company issued to Bank of America a warrant to purchase 50,000 shares of Common
Stock at an exercise price of $13.00 per share. In connection with the amendment
of the Credit Facility, effective March 31, 1999, EarthCare issued Bank of
America a warrant to purchase an additional 35,000 shares of Common Stock at
$14.00 a share and on June 1, 1999, issued Bank of Boston a warrant to purchase
10,000 shares of Common Stock at $15.50 a share. These warrants are exercisable
at any time until June 2003. In connection with the Merger, the Company issued
warrants to purchase 500,000 shares of Common Stock, with approximately 167,891
outstanding as of June 24, 1999.

STATUTORY BUSINESS COMBINATION PROVISION

As a Delaware corporation, the Company is subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" of a publicly held Delaware corporation (defined
generally as a person together with affiliates and associates owns (or within
the prior three years, owned) 15% or more of a Delaware corporation's
outstanding voting stock) from engaging in a "business combination" (includes
mergers, asset sales and certain other transactions resulting in a financial
benefit to an interested stockholder) with the 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) on
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 directors who are also officers
of the corporation and by employee stock plans that do not provide employees
with the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer); or (iii) following the
transaction in which such person became an interested stockholder, the business
combination was approved by the board of directors of the corporation and
authorized at a meeting of stockholders by the affirmative vote of

47
<PAGE> 50

the holders of 66 2/3% 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 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 a majority of the
corporation's directors, if such extraordinary transaction is approved or not
opposed by a majority of the directors who were directors prior to any person
becoming an interested stockholder during the previous three years or were
recommended for election or elected to succeed such directors by a majority of
such directors.

INDEMNIFICATION MATTERS

As permitted by the Delaware General Corporation Law, the Company's
Certificate provides that directors of the Company will not be personally liable
to the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any 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 intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law,
relating to prohibited dividends, distributions and repurchases or redemptions
of stock, or (iv) for any transaction from which the director derives an
improper personal benefit. The Company's Certificate of Incorporation provides
that the Company shall indemnify its directors, officers, employees and other
agents, to the fullest extent provided by Delaware law. Specifically upon
request, the Company will advance expenses to any officer or director who was or
is a party to, or is threatened to be made a party to, any threatened, pending
or completed action, suit or proceeding, including civil, criminal,
administrative, investigative or otherwise, by reason of the fact that such
person is or was a director or officer of the Company, or is or was acting at
the request of the Company as a director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise. This indemnification will not apply if the
indemnitee is adjudged liable to the Company, unless and only if the court in
which the action is brought determines the indemnitee is fairly and reasonably
entitled to indemnification by the Company. The Company may also purchase and
maintain insurance on the behalf of its directors and officers against any such
liability that may be asserted as a result of the director's or officer's
service in such a capacity.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Securities
Transfer Corporation.

PLAN OF DISTRIBUTION

This Prospectus relates to the offer and sale from time to time of the
Shares by the Selling Stockholders. The Company has registered the Shares for
sale to provide the Selling Stockholders with freely tradeable securities, but
registration of such shares does not necessarily mean that any of such shares
will be offered or sold by the Selling Stockholders. The Company will not
receive any proceeds from the offering of the Shares by the Selling
Stockholders.

48
<PAGE> 51

The Shares may be sold from time to time to purchasers directly by any of
the Selling Stockholders subject to the Lock-Up Agreements between the Company
and certain of the Selling Stockholders, which prohibit such Selling
Stockholders from offering for sale or selling certain of their Shares for a
three to six month period. See "Principal and Selling Stockholders."
Alternatively, the Selling Stockholders may from time to time offer the Shares
through dealers or agents, who may receive compensation in the form of
commissions from the Selling Stockholders and/or the purchasers of Shares for
whom they may act as agent. Without limiting the foregoing, such sales may be in
the form of secondary distributions, exchange distributions, block trades,
ordinary brokerage transactions or a combination of such methods of sale. The
Selling Stockholders and any dealers or agents that participate in the
distribution of Shares may be deemed to be "underwriters" within the meaning of
the Securities Act and any profit on the sale of Shares by them and any
commissions received by any such dealers or agents might be deemed to be
underwriting commissions under the Securities Act.

At the time a particular offering of Shares is made, a Prospectus
Supplement, if required, will be distributed that will set forth the name and
names of any dealers or agents and any commissions and other terms constituting
compensation from the Selling Stockholders and any other required information.
The Shares may be sold from time to time at varying prices determined at the
time of sale or at negotiated prices.

In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the Shares may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from such registration or qualification requirement is available and is complied
with.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by King & Spalding, Atlanta, Georgia.

INDEPENDENT PUBLIC ACCOUNTANTS

The audited financial statements included in this Prospectus have been
audited by various independent accountants. The companies and periods covered by
these audits are indicated in the individual accountants' reports. Such
financial statements have been so included in reliance on the reports of the
various independent accountants given on the authority of such firms as experts
in auditing and accounting.

With respect to the unaudited interim financial information as of and for
the three month period ended March 31, 1999, appearing elsewhere in this
Prospectus, PricewaterhouseCoopers LLP reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate report dated May 12, 1999 appearing herein,
states that they did not audit and that they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature
of the review procedures applied. PricewaterhouseCoopers LLP is not subject to
the liability provisions of Section 11 of the Securities Act of 1933 for their
report on the unaudited interim financial information because that report is not
a "report" or a "part" of

49
<PAGE> 52

the registration statement prepared or certified by PricewaterhouseCoopers LLP
within the meaning of Sections 7 and 11 of the Act.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission, (the
"Commission"), a Registration Statement on Form S-1 (together with all
Amendments, schedules and exhibits thereto, the "Registration Statement") under
the Securities Act with respect to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is made to the Registration Statement. Statements contained in
this Prospectus as to the contents of any contract, agreement, or other document
referred to are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document filed as an exhibit to the
Registration Statement. The Registration Statement may be inspected without
charge at the Commission's principal offices in Washington, D.C., and copies of
all or any part of the Registration Statement, of which this Prospectus forms a
part, each such statement being qualified in all respects by such reference. The
Registration Statement may be inspected without charge at the public reference
facilities maintained by the Securities and Exchange Commission in Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and the following regional
offices of the Commission: 13th Floor, Seven World Trade Center, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission, Washington, D.C. at prescribed rates. The
Registration Statement may also be obtained through the Commission's Internet
address at "http://www.sec.gov".

The Company's Form 10, that was filed on July 24, 1998 and amended on
September 2, 1998, September 30, 1998 and October 14, 1998, was declared
effective and the Company is subject to the informational reporting requirements
of the Securities Exchange Act of 1934, as amended, and, in accordance
therewith, is filing reports, proxy statements and other information with the
Commission. Accordingly, the Company filed its Form 10-K for the year ended
December 31, 1998 and its Form 10-Q for the three months ended March 31, 1999
with the Commission on March 31, 1999 and May 17, 1999, respectively.

50
<PAGE> 53

INDEX TO FINANCIAL INFORMATION

HISTORICAL FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
EarthCare Company and Subsidiaries:
Report of Independent Accountants........................... F-3
Report of Independent Public Accountants.................... F-4
Consolidated Balance Sheet as of December 31, 1997 and
1998...................................................... F-5
Consolidated Statement of Operations for the Period From
Inception (March 19, 1997) to December 31, 1997 and for
the Year Ended December 31, 1998.......................... F-6
Consolidated Statement of Stockholders' Equity for the
Period From Inception (March 19, 1997) to December 31,
1997 and for the Year Ended December 31, 1998............. F-7
Consolidated Statement of Cash Flows for the Period From
Inception (March 19, 1997) to December 31, 1997 and for
the Year Ended December 31, 1998.......................... F-8
Notes to Consolidated Financial Statements.................. F-9
Independent Accountant's Report............................. F-21
Unaudited Consolidated Balance Sheet as of March 31, 1999... F-22
Unaudited Consolidated Statement of Operations for the Three
Months Ended March 31, 1998 and 1999...................... F-23
Unaudited Consolidated Statement of Cash Flows for the Three
Months Ended March 31, 1998 and 1999...................... F-24
Notes to Unaudited Consolidated Financial Statements........ F-25
The historical financial statements of certain acquired
companies are included in this filing. The operating
results of these acquirees should not be considered
indicative of the Company's future operating results.
Andrews Environmental Services, Inc.
Report of Independent Public Accountants.................. F-28
Balance Sheet............................................. F-29
Statement of Operations................................... F-30
Statement of Stockholders' Equity......................... F-31
Statement of Cash Flows................................... F-32
Notes to Financial Statements............................. F-33
Ferrero Wastewater Management, Inc.
Report of Independent Accountants......................... F-37
Report of Independent Public Accountants.................. F-38
Balance Sheet............................................. F-39
Statement of Operations................................... F-40
Statement of Stockholders' Equity......................... F-41
Statement of Cash Flows................................... F-42
Notes to Financial Statements............................. F-43
A Rapid Rooter Sewer & Drain Service, Inc.
Report of Independent Accountants......................... F-47
Report of Independent Public Accountants.................. F-48
Balance Sheet............................................. F-49
</TABLE>

F-1
<PAGE> 54

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Statement of Operations................................... F-50
Statement of Stockholders' Equity......................... F-51
Statement of Cash Flows................................... F-52
Notes to Financial Statements............................. F-53
Seagraves, Inc. (d.b.a. Brownie Environmental Services) and
Grease-Tec, Inc.
Report of Independent Accountants......................... F-56
Report of Independent Public Accountants.................. F-57
Combined Balance Sheet.................................... F-58
Combined Statement of Operations.......................... F-59
Combined Statement of Stockholders' Equity................ F-60
Combined Statement of Cash Flows.......................... F-61
Notes to Combined Financial Statements.................... F-62
RGM Liquid Waste Removal Corporation and Affiliates
Report of Independent Accountants......................... F-66
Report of Independent Public Accountants.................. F-67
Combined Balance Sheet.................................... F-68
Combined Statement of Operations.......................... F-69
Combined Statement of Stockholders' Equity................ F-70
Combined Statement of Cash Flows.......................... F-71
Notes to Combined Financial Statements.................... F-72
Eldredge Wastewater Management, Inc.
Report of Independent Accountants......................... F-78
Report of Independent Public Accountants.................. F-79
Balance Sheet............................................. F-80
Statement of Operations................................... F-81
Statement of Stockholder's Equity......................... F-82
Statement of Cash Flows................................... F-83
Notes to Financial Statements............................. F-84
Reifsneider Transportation, Inc.
Report of Independent Accountants......................... F-89
Balance Sheet as of December 31, 1998 and 1997............ F-90
Statement of Operations for the Years Ended December 31,
1998 and 1997.......................................... F-91
Statement of Stockholder's Equity for the Years Ended
December 31, 1998 and 1997............................. F-92
Statement of Cash Flows for the Years Ended December 31,
1998 and 1997.......................................... F-93
Notes to Financial Statements............................. F-94
</TABLE>

PRO FORMA FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Introduction to Unaudited Pro Forma Combined Financial
Statements................................................ F-98
Unaudited Pro Forma Combined Statement of Operations For the
Year Ended December 31, 1998.............................. F-100
Unaudited Pro Forma Combined Statement of Operations For the
Three Months Ended March 31, 1999......................... F-101
Notes to Unaudited Pro Forma Combined Financial
Statements................................................ F-102
</TABLE>

F-2
<PAGE> 55

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholders of EarthCare Company

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations and stockholders' equity and cash flows
present fairly, in all material respects, the financial position of EarthCare
Company and Subsidiaries at December 31, 1998, and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
accompanying financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audit. We conducted our audit of these
financial statements in accordance with generally accepted auditing standards
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Tulsa, Oklahoma
February 13, 1999

F-3
<PAGE> 56

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To EarthCare Company:

We have audited the accompanying consolidated balance sheet of EARTHCARE
COMPANY (a Delaware corporation) AND SUBSIDIARIES as of December 31, 1997 and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the period from inception (March 19, 1997) to December 31, 1997.
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 EarthCare Company and
subsidiaries as of December 31, 1997 and the results of their operations and
their cash flows for the period from inception (March 19, 1997) to December 31,
1997 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
April 2, 1998 (except for the fourth paragraph of
Note 1 as to which the date is June 29, 1998)

F-4
<PAGE> 57

EARTHCARE COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1998
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................... $ 195,552 $ 1,039,594
Accounts receivable, net of allowance for doubtful
accounts of $17,875 and $277,985 in 1997 and
1998, respectively............................... 125,777 3,960,520
Prepaid expenses.................................... 81,089 557,669
Note receivable..................................... -- 67,959
Deferred income taxes............................... 65,471 377,147
---------- -----------
Total current assets............................. 467,889 6,002,889
---------- -----------
PROPERTY AND EQUIPMENT, NET........................... 561,542 4,910,004
---------- -----------
OTHER NONCURRENT ASSETS:
Intangibles, net.................................... 1,473,489 20,166,445
Deferred income taxes............................... 98,161 246,913
Other assets........................................ 13,062 1,964,028
---------- -----------
1,584,712 22,377,386
---------- -----------
$2,614,143 $33,290,279
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................... $ 37,774 $ 2,761,451
Accrued expenses.................................... 339,961 2,184,818
Lines of credit..................................... 1,120,000 --
Current portion of long-term debt................... 123,715 118,500
---------- -----------
Total current liabilities........................ 1,621,450 5,064,769
---------- -----------
LONG-TERM DEBT, NET OF CURRENT PORTION................ 180,240 9,209,440
COMMITMENTS (NOTES 6 AND 10)
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value; 30,000,000 shares
authorized, 0 shares issued and outstanding...... -- --
Common stock, $.0001 par value; 70,000,000 shares
authorized, 4,401,695 and 9,571,533 shares issued
and outstanding in 1997 and 1998, respectively... 441 957
Additional paid-in capital.......................... 1,070,364 20,702,555
Accumulated deficit................................. (258,352) (1,687,442)
---------- -----------
Total stockholders' equity....................... 812,453 19,016,070
---------- -----------
$2,614,143 $33,290,279
========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 58

EARTHCARE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(MARCH 19, 1997) YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1997 1998
---------------- ------------
<S> <C> <C>
REVENUES.......................................... $ 737,858 $25,690,672
---------- -----------
EXPENSES:
Cost of operations.............................. 406,638 17,907,036
General and administrative...................... 521,372 7,509,375
Depreciation and amortization................... 127,338 1,348,357
---------- -----------
Total operating expenses..................... 1,055,348 26,764,768
---------- -----------
INCOME (LOSS) FROM OPERATIONS..................... (317,490) (1,074,096)
OTHER EXPENSE (INCOME):
Interest........................................ 104,494 657,455
Other........................................... -- 2,101
---------- -----------
INCOME (LOSS) BEFORE INCOME TAXES................. (421,984) (1,733,652)
INCOME TAX PROVISION (BENEFIT).................... (163,632) (304,562)
---------- -----------
NET INCOME (LOSS)................................. $ (258,352) $(1,429,090)
========== ===========
INCOME (LOSS) PER SHARE:
Basic and diluted............................... $ (.13) $ (.17)
========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted............................... 1,940,536 8,427,407
========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 59

EARTHCARE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------ PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- ------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, MARCH 19, 1997
(INCEPTION)........... 1,115,816 $112 $ (112) $ -- $ --
Sale of common
stock.............. 3,250,000 325 789,675 -- 790,000
Issuance of common
stock in settlement
of notes payable... 14,479 2 263,683 -- 263,685
Issuance of common
stock for acquired
business........... 21,400 2 17,118 -- 17,120
Net loss.............. -- -- -- (258,352) (258,352)
--------- ---- ----------- ----------- -----------
BALANCE, DECEMBER 31,
1997.................. 4,401,695 441 1,070,364 (258,352) 812,453
Sale of common
stock.............. 3,753,397 375 15,499,625 -- 15,500,000
Issuance of common
stock for acquired
businesses......... 460,000 46 1,544,454 -- 1,544,500
Exercise of stock
options............ 627,500 63 473,062 -- 473,125
Exercise of
warrants........... 328,941 32 1,910,830 -- 1,910,862
Issuance of warrant
for debt issuance
costs.............. -- -- 100,000 -- 100,000
Issuance of options
for non-employee
compensation....... -- -- 104,220 -- 104,220
Net loss.............. -- -- -- (1,429,090) (1,429,090)
--------- ---- ----------- ----------- -----------
BALANCE, DECEMBER 31,
1998.................. 9,571,533 $957 $20,702,555 $(1,687,442) $19,016,070
========= ==== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-7
<PAGE> 60

EARTHCARE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(MARCH 19,
1997) TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ (258,352) $ (1,429,090)
----------- ------------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization........................... 127,338 1,348,357
Bad debt expense........................................ -- 280,497
Deferred income taxes................................... (163,632) (460,428)
Noncash expenses........................................ -- 36,521
Changes in assets and liabilities, excluding effects of
acquired businesses:
Accounts receivable................................... (125,777) (4,115,240)
Notes receivable...................................... -- 26,124
Other current assets.................................. (81,089) (476,580)
Other assets.......................................... (13,062) (189,358)
Accounts payable...................................... 37,774 2,723,677
Accrued expenses...................................... 339,961 784,837
----------- ------------
Total adjustments.................................. 121,513 (41,593)
----------- ------------
Net cash used in operating activities.............. (136,839) (1,470,683)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (15,432) (1,044,067)
Business acquisitions..................................... (1,531,337) (19,056,428)
Escrow deposits for business acquisitions................. -- (1,360,000)
----------- ------------
Net cash used in investing activities.............. (1,546,769) (21,460,495)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under lines of credit...................... 1,120,000 --
Proceeds from long-term debt.............................. -- 15,632,187
Payments of long-term debt................................ (30,840) (9,740,954)
Sale of common stock...................................... 790,000 15,500,000
Exercise of stock options and warrants.................... -- 2,383,987
----------- ------------
Net cash provided by financing activities.......... 1,879,160 23,775,220
----------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 195,552 844,042
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. -- 195,552
----------- ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 195,552 $ 1,039,594
=========== ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 78,763 $ 657,455
=========== ============
Cash paid for income taxes................................ $ -- $ 157,000
=========== ============
NONCASH INVESTING AND FINANCING ACTIVITIES:
Notes payable issued for business acquisitions............ $ 257,350 $ 2,000,000
=========== ============
Notes payable issued for noncompete agreements............ $ 341,130 $ --
=========== ============
Common stock issued for business acquisitions............. $ 17,120 $ 1,544,500
=========== ============
Common stock issued in settlement of notes payable........ $ 263,685 $ --
=========== ============
Fair value of warrant issued for debt issuance costs...... $ -- $ 100,000
=========== ============
Fair value of options issued to non-employees for
services................................................ $ -- $ 104,220
=========== ============
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-8
<PAGE> 61

EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION

EarthCare Company, ("EarthCare" or the "Company") was incorporated on
August 19, 1997 as a Delaware corporation under the name SanTi Group, Inc. On
September 21, 1998, the Company's certificate of incorporation was amended (the
"Amendment") to change the Company's name from SanTi Group, Inc. to EarthCare
Company. All references to the Company included in the consolidated financial
statements and notes to consolidated financial statements treat the Amendment as
if it occurred August 19, 1997.

EarthCare engages in the following services relating to the nonhazardous
liquid waste ("NLW") industry: biosolids management, bulk liquid waste
transportation, liquid waste processing and disposal, maintenance and pumping.
EarthCare's customers include restaurants, hospitals, military bases, office
buildings, apartments, schools, municipalities, industrial businesses and single
family residences.

Bone-Dry Enterprises, Inc. ("Bone-Dry") was incorporated on March 19, 1997
as a Georgia corporation. On December 1, 1997, all shares of Bone-Dry common
stock were exchanged for EarthCare common stock. Since the Company and Bone-Dry
were under common ownership since their respective dates of inception, the
accompanying financial statements are for the period from the inception of Bone
Dry (March 19, 1997) to December 31, 1997. The accompanying consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiaries, EarthCare Company of Florida, Inc., EarthCare Company of
Pennsylvania, Inc., and EarthCare Company of New York, Inc. All material
intercompany balances and transactions have been eliminated.

On May 13, 1998, SanTi Group, Inc. ("SGI") was merged with and into
Microlytics, Inc. ("Micro") under an agreement and plan of merger, with Micro
surviving and changing its name to SanTi Group, Inc. ("the Merger"). The Merger
was subject to the approval of the United States Bankruptcy Court for the
Western District of New York. On the effective date of the Merger, each issued
and outstanding share of SGI Stock was converted into one share of common stock
of Micro (now EarthCare). These exchange ratios were determined after the 1 for
400 reverse split of Common Stock pursuant to a Plan of Reorganization.
Immediately prior to the Merger, Micro had 1,115,816 shares of common stock
outstanding and warrants to purchase an additional 500,000 shares with an
exercise price of $5.80, of which 250,000 were exercised immediately following
the Merger. This exchange resulted in the receipt by SGI stockholders of
approximately 8,088,379 shares of Common Stock, representing approximately 86.2%
of the shares of Common Stock issued and outstanding on the effective date of
the Merger. The Merger was accounted for as a capital transaction accompanied by
a recapitalization of EarthCare. All costs incurred in connection with the
Merger were expensed.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of
three months or less at the date of purchase as cash equivalents. The Company
maintains its cash in bank deposit accounts, which at times may exceed the
federal insurance limits. As of

F-9
<PAGE> 62
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

December 31, 1998, the Company had cash in banks totaling $711,000 in excess of
federal depository insurance limits.

ACCOUNTS RECEIVABLE

Accounts receivable represent short-term credit granted to the Company's
customers for which collateral is generally not required. Credit risk on
receivables is considered by management to be limited due to the variety of
industries served and geographic dispersion of customers.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided on
the straight-line basis using useful lives of 5 to 7 years for machinery and
equipment and office equipment and 20 years for buildings and improvements.
Leasehold improvements are depreciated over the shorter of the term of the lease
or the useful life of the improvements. When property and equipment are retired
or otherwise disposed of, the related cost and accumulated depreciation are
removed from the accounts and any gain or loss is included in operations.

INTANGIBLES

As of December 31, 1997 and 1998, intangibles consisted of the following:

<TABLE>
<CAPTION>
1997 1998
---------- -----------
<S> <C> <C>
Goodwill..................................... $1,270,473 $19,876,923
Noncompete agreements........................ 298,480 961,279
---------- -----------
1,568,953 20,838,202
Accumulated amortization..................... (95,464) (671,757)
---------- -----------
$1,473,489 $20,166,445
========== ===========
</TABLE>

Noncompete agreements were entered into in connection with certain of the
Company's acquisitions and were valued based on the estimated benefit to be
derived from such noncompete agreements. Noncompete agreements are being
amortized over the lives of the contracts. Goodwill arises when the purchase
price and other related costs for a business acquisition exceed the fair value
of the net assets acquired. Goodwill is being amortized over 40 years.
Amortization expense associated with intangibles was $95,464 for the period from
inception (March 19, 1997) to December 31, 1997 and was $572,426 for the year
ended December 31, 1998.

LONG-LIVED ASSETS

The Company periodically reviews the values assigned to long-lived assets,
such as property and equipment and intangibles, to determine whether any
impairments are other than temporary. The Company assesses impairment by
determining whether the carrying

F-10
<PAGE> 63
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

value of such long-lived assets will be recovered through undiscounted expected
future cash flows. No impairment losses were recorded during the period from
inception (March 19, 1997) to December 31, 1997 or during the year ended
December 31, 1998.

REVENUE RECOGNITION

The Company recognizes revenues as services are provided.

ADVERTISING COSTS

The Company expenses advertising costs over the period that the benefit is
received. Advertising expense was approximately $9,000 and $974,000 during 1997
and 1998, respectively.

EARNINGS PER SHARE

Basic earnings per share are based on the weighted average number of shares
outstanding. Diluted earnings per share are based on the weighted average number
of shares outstanding and the dilutive effect of stock options and warrants
outstanding (using the treasury stock method) and contingently issuable shares.
For the period from inception (March 19, 1997) to December 31, 1997, outstanding
options of 612,500 and contingently issuable shares have been excluded from
diluted weighted average shares outstanding, as their impact was antidilutive.
Such antidilutive options and warrants of 2,304,009 and 70,000 contingently
issuable shares have been excluded from diluted weighted average shares
outstanding for the year ended December 31, 1998.

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 assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

3. ACQUISITIONS

In fiscal year 1997, the Company acquired the following businesses:

On March 20, 1997, Bone-Dry purchased certain assets of Andrews
Environmental Services, Inc. ("Andrews") associated with Andrews Grease
Disposal Business ("Andrews Grease"). Andrews Grease is in the business of
commercial and governmental grease extraction, collection, and
transportation services primarily in the state of Georgia. Consideration
associated with the purchase was $475,000 in cash and $257,350 in notes
payable.

On August 27, 1997, Bone-Dry purchased Atlanta Grease Trap Service
("Atlanta Grease"), a Georgia sole proprietorship, for $360,000 in cash.
Atlanta Grease is in the

F-11
<PAGE> 64
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

business of commercial and governmental grease extraction, collection, and
transportation services in the state of Georgia.

On December 22, 1997, Bone-Dry purchased substantially all of the
remaining assets of Andrews. Andrews is engaged in the nonhazardous liquid
waste and septic waste collection, transportation, management, and disposal
business primarily in the state of Georgia. Consideration associated with
the purchase was $660,000 in cash and 21,400 shares of EarthCare common
stock. Contingent consideration of 13,600 shares of EarthCare common stock
was paid in December 1998.

The acquisitions of Andrews Grease, Atlanta Grease, and Andrews were
accounted for using the purchase method of accounting; accordingly, the purchase
prices have been allocated to the assets acquired based on their respective fair
values at the dates of acquisition. The resulting excess of purchase prices over
fair values of assets acquired was recorded as goodwill. Goodwill recorded in
the purchases of Andrews Grease, Atlanta Grease, and Andrews was $482,350,
$360,000, and $349,136, respectively.

In fiscal year 1998, the Company acquired the following businesses:

On January 22, 1998, the Company purchased Ferrero Wastewater
Management, Inc. ("Ferrero"), a Pennsylvania corporation. Ferrero is
engaged in the nonhazardous liquid waste and septic waste collection,
transportation, management, and disposal business in and around Ambler,
Pennsylvania. Consideration was $2,240,100 in cash and 90,000 shares of
SanTi common stock. Contingent consideration of $248,900 in cash and 10,000
shares of EarthCare common stock was paid in the fourth quarter of 1998 in
accordance with the terms of the purchase agreement.

On February 13, 1998, the Company purchased A Rapid Rooter Sewer &
Drain Service, Inc. ("A Rapid"), a Florida corporation. A Rapid is engaged
in the nonhazardous liquid waste and septic waste collection,
transportation, management, and disposal business in and around Pompano
Beach, Florida. Consideration was $3,990,120 in cash and 100,000 shares of
EarthCare common stock.

On February 17, 1998, the Company purchased Quality Plumbing and
Septic, Inc. ("Quality"), a Georgia corporation. Quality is engaged in the
nonhazardous liquid waste and septic waste collection, transportation,
management, and disposal business in and around Douglasville, Georgia.
Consideration was $2,000,000 in cash. Contingent consideration of $250,000
and 10,000 shares of EarthCare common stock was paid in June 1998.

On March 6, 1998, the Company purchased Seagraves, Inc. (d/b/a Brownie
Environmental) and Grease-Tec, Inc. (collectively, "Seagraves"), two
Florida corporations. Seagraves is engaged in the nonhazardous liquid waste
and septic waste collection, transportation, management, and disposal
business in and around Orlando, Florida. Consideration was $3,250,000 in
cash, a note payable of $2,000,000, and 60,000 shares of EarthCare common
stock.

On May 1, 1998, the Company purchased RGM Liquid Waste Removal
Corporation and Affiliates ("RGM"), consisting of four New York
corporations. RGM is engaged in the nonhazardous liquid waste and septic
waste collection,
F-12
<PAGE> 65
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

transportation, management, and disposal business in and around Long
Island, New York. Consideration was $4,500,000 in cash and 105,000 shares
of EarthCare common stock. Contingent consideration of $1,000,000 and
55,000 shares of EarthCare common stock may be payable 365 days after the
date of purchase.

On May 8, 1998, the Company purchased Eldredge Wastewater Management,
Inc., a Pennsylvania corporation. Eldredge is engaged in the nonhazardous
liquid waste and septic waste collection, transportation, management, and
disposal business in and around Philadelphia, Pennsylvania. Consideration
was $2,040,000 in cash and 85,000 shares of EarthCare common stock.
Contingent consideration of $360,000 and 15,000 shares of EarthCare common
stock may be payable 13 months after the date of purchase.

The acquisitions completed in fiscal 1998 were accounted for using the
purchase method of accounting; accordingly, the purchase prices have been
allocated to the assets acquired based on their respective fair values at the
dates of acquisition. The resulting excess of purchase prices over fair values
of assets acquired was recorded as goodwill. Goodwill recorded in 1998 totalled
$18,606,450.

The Company's unaudited pro forma consolidated results of operations for
the years ended December 31, 1997 and 1998, shown below are presented assuming
that the 1997 and 1998 acquisitions had been consummated on January 1, 1997:

<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Pro forma revenue.................................... $30,922,308 $32,391,558
Pro forma net (loss)................................. (545,987) (1,532,754)
Pro forma (loss) per share........................... $ (.23) $ (.18)
</TABLE>

The Company's unaudited pro forma results of operations are presented for
informational purposes only and may not necessarily reflect the future results
of operations of the Company or what the results of operations would have been
had the Company owned and operated the acquired businesses as of the beginning
of each respective period.

4. PROPERTY AND EQUIPMENT

At December 31, 1997 and 1998, property and equipment consisted of the
following:

<TABLE>
<CAPTION>
1997 1998
-------- ----------
<S> <C> <C>
Machinery and equipment.................................. $593,416 $4,692,551
Buildings and improvements............................... -- 110,627
Office equipment......................................... -- 684,063
Leasehold improvements................................... -- 103,755
-------- ----------
593,416 5,590,996
Less accumulated depreciation............................ (31,874) (680,992)
-------- ----------
$561,542 $4,910,004
======== ==========
</TABLE>

F-13
<PAGE> 66
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Depreciation expense was $31,874 and $775,931 during 1997 and 1998,
respectively.

5. LINES OF CREDIT AND LONG-TERM DEBT

At December 31, 1997, the Company had a $6,600,000 revolving line of credit
(the "Revolver"). The Revolver had an interest rate of LIBOR plus 2.25% (8.21%
at December 31, 1997) and was collateralized by substantially all assets of the
Company. At December 31, 1997, $1,120,000 was outstanding and $5,480,000 was
available for future borrowings. The Revolver matured on August 12, 1998, was
renewable for successive one-year periods, and was personally guaranteed by
Raymond Cash, the majority owner of the Company at December 31, 1997. During
1998, the Company borrowed funds under the majority owner's personal line of
credit. These borrowings were used to finance the Company's acquisitions of
businesses discussed in Note 3. In June 1998, the two lines of credit were paid
in full in conjunction with the Company obtaining new financing from Bank of
America.

On June 26, 1998, the Company entered into the $40 million revolving credit
agreement with Bank of America, which was amended as of September 30, 1998 (the
"Credit Agreement"). The Company may obtain up to $5 million in letters of
credit, subject to availability under the Credit Agreement. Interest is payable
monthly at variable rates, depending on the Company's Funded Debt to EBITDA (as
defined in the Credit Agreement), but is capped at LIBOR plus 2.25%. The Credit
Agreement expires September 26, 2001, is collateralized by a first lien on
substantially all assets of the Company and requires the Company to maintain
certain financial covenants beginning September 30, 1998. As of December 31,
1998, the Company was in compliance with the financial covenants. In connection
with entering into the Credit Agreement, the two existing lines of credit
discussed above (the "Prior Credit Facilities") with availability of $16.6
million were repaid and canceled. As of December 31, 1998, the outstanding
balance under the Credit Agreement was $7,418,126. Availability of funds under
the Credit Agreement is limited by the requirement that the Company comply with
various loan covenants on a quarterly basis.

At December 31, long-term debt consisted of the following:

<TABLE>
<CAPTION>
1997 1998
--------- ----------
<S> <C> <C>
Line of credit with a financial institution, interest
payable monthly at a variable interest rate, due in
September 2001........................................ $ -- $7,418,126
Note payable to a stockholder, interest payable monthly
at 6%, due in March 2003.............................. -- 1,696,000
Subordinated notes payable to former owners of acquired
businesses, interest imputed at 8.1%, payable in
various installments through April 1, 2001,
unsecured............................................. 303,955 213,814
--------- ----------
303,955 9,327,940
Less current portion.................................... (123,715) (118,500)
--------- ----------
$ 180,240 $9,209,440
========= ==========
</TABLE>

F-14
<PAGE> 67
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Future aggregate annual maturities of long-term debt are as follows as of
December 31, 1998.

6. RELATED-PARTY TRANSACTIONS

In 1997, the Company entered into a note payable agreement with an entity
controlled by the Company's majority owner. The note was for $650,000, had an
interest rate of 13%, and was paid in full during 1997. In December 1997, after
the note was paid in full, the related party purchased 1,608,750 shares of
EarthCare common stock for $650,000.

In March 1997, the Company entered into a four-year consulting agreement
with a former owner of an acquired business. The Company paid its obligation of
$75,000 in full during 1997, as required by the agreement, and is recognizing
the expense over the life of the agreement. For the period from inception (March
19, 1997) to December 31, 1997, consulting expense related to the agreement was
$13,021 and is included in general and administrative expenses in the
accompanying statement of operations. For 1998 the expense was $18,750.

During 1997, the Company entered into three noncompete agreements with
former owners of acquired businesses in exchange for notes payable totaling
$341,130. In connection with the December 22, 1997 purchase of Andrews, one of
the former owners of Andrews exchanged $263,685 of outstanding notes payable,
issued in connection with the March 1997 purchase of Andrews for 14,479 shares
of EarthCare common stock.

The Company leased office space and equipment from an entity controlled by
the Company's majority owner under a lease agreement which expired January 31,
1998. The office space was leased for an additional period terminating on April
3, 1998. Rental expense under the lease was $8,262 for 1998 and $11,690 for the
period from inception (March 19, 1997) to December 31, 1997.

In connection with the 1998 acquisitions, the Company entered into
employment agreements with 8 employees. Upon termination of employment (other
than voluntarily by the employee, by the Company for cause or upon death of the
employee), the Company is committed to pay certain benefits, including specified
monthly severance of not more than $6,667 per employee per month. The benefits
are to be paid from the date of termination to dates ranging from January 22,
1999 to March 6, 2001.

The Company leases office space from various entities controlled by
stockholders and employees who are former owners of companies acquired during
1998. The leases are typically structured on a one-year term with annual renewal
options from three to nine years. Total lease expense related to such leases
totaled approximately $337,000 in 1998.

F-15
<PAGE> 68
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On June 1, 1998, the Company entered into employment agreements with three
executive officers which provide for minimum aggregate annual compensation of
$575,000. The agreements expire either June 1, 2000 or June 1, 2003, and
automatically renew for additional twelve-month periods. Upon termination of
employment related to a change in control of the Company, the Company is
committed to immediately pay the minimum compensation for each of the remaining
years or portions thereof.

7. STOCKHOLDERS' EQUITY

PREFERRED STOCK. The Company has 30,000,000 authorized shares of $0.001
par value of preferred stock. The preferred stock may, by resolution of the
board of directors, be issued in different series, and the series may vary as to
dividend rights, preferences, conversion privileges, voting rights,
participation in earnings and redemption. No shares of preferred stock were
outstanding at December 31, 1997 or 1998.

PRIVATE PLACEMENTS. On January 12, 1998, a group of investors purchased
1,250,000 shares of the Company's common stock for $0.80 per share. On January
30, 1998, the Company declared a 1.25-for-1 stock split effected in the form of
a stock dividend. All share amounts have been restated for this stock split.
During March and April, 1998, the Company sold 2,500,000 shares of its common
stock through private offerings. Proceeds from the 1998 offerings totaled
$15,500,000.

STOCK-BASED COMPENSATION. In August 1997 and December 1997, the Company
issued nonqualified stock options to purchase 125,000 and 487,500 shares of
EarthCare common stock, respectively, at $.65 per share, which represented the
fair market value as of the dates of grant, as determined by the Company's board
of directors. The options were exercisable for a period of three years beginning
on the dates of grant.

In April 1998, the Company issued stock options to purchase 131,250 shares
of EarthCare common stock at $5.00 per share. The estimated fair value as of the
date of grant was $5.80 per share. In June 1998, the Company issued stock
options to purchase 1,725,000 shares of EarthCare common stock at prices ranging
from $6.00 to $25.00 per share. The estimated fair value as of the date of grant
was $6.00 per share. In October and December 1998, the Company issued stock
options to purchase 267,200 and 277,000 shares of EarthCare common stock,
respectively, at prices ranging from $15.00 to $25.00 per share. The estimated
fair value as of the dates of grant was $15.00 per share. All of the options
granted during 1998 vest ratably over four years, except for the 131,250 options
issued in April 1998 which vest over three years, and 250,000 options issued in
December 1998 which vested immediately upon grant.

INCENTIVE STOCK OPTION PLAN. Effective September 22, 1998, the board of
directors of the Company adopted an incentive stock option plan (the "Plan"),
which provides for the issuance of options to purchase up to 1,500,000 shares of
common stock to key employees and Directors. The incentive stock options granted
under the Plan are generally exercisable for a period of ten years from the date
of the grant, except that the term of an incentive stock option granted under
the Plan to a stockholder owning more than 10% of the outstanding common stock
must not exceed five years and the exercise price of an incentive stock option
granted to such a stockholder must not be less than 110% of the fair

F-16
<PAGE> 69
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

market value of the common stock on the date of grant. As of December 31, 1998,
options to purchase 815,000 shares of common stock had been issued under the
Plan which are included in the options granted in 1998, as discussed above. No
non-qualified options have been issued under the Plan.

The following table summarizes warrant and option activity for 1998 for
both the employee options and other non-employee warrants and options:

<TABLE>
<CAPTION>
EXERCISE NUMBER
PRICE($) EXPIRATION OUTSTANDING EXPIRED/ OUTSTANDING EXERCISABLE
PER SHARE DATE 12/31/97 GRANTED EXERCISED CANCELED 12/31/98 12/31/98
--------- ---------- ----------- --------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Warrants:
Microlytics......... 5.80 Dec-01 -- 500,000 328,941 -- 171,059 171,059
Bank of America..... 13.00 Jun-03 -- 50,000 -- -- 50,000 50,000
------- --------- ------- ------- --------- -------
Total Warrants.... -- 550,000 328,941 -- 221,059 221,059
------- --------- ------- ------- --------- -------
Options:
Employee............ 5.00 Apr-08 -- 131,250 15,000 112,500 3,750 3,750
Employee............ 6.00 Jun-08 -- 50,000 -- -- 50,000 --
Employee............ 10.00 Jun-08 -- 100,000 -- -- 100,000 --
Employee............ 15.00 Oct-08 -- 65,000 -- -- 65,000 --
Employee............ 15.00 Dec-08 -- 2,000 -- -- 2,000 --
Employee............ 20.00 Jun-08 -- 100,000 -- -- 100,000 --
Employee............ 25.00 Oct-08 -- 30,000 -- -- 30,000 --
Non-Employee........ 6.00 Jun-08 -- 50,000 -- -- 50,000 --
Non-Employee........ 10.00 Jun-08 -- 25,000 -- -- 25,000 --
Non-Employee........ 15.00 Jun-08 -- 50,000 -- -- 50,000 --
Non-Employee........ 15.00 Oct-08 -- 82,200 -- -- 82,200 --
Non-Employee........ 15.00 Dec-08 -- 250,000 -- -- 250,000 250,000
Non-Employee........ 23.50 Oct-08 -- 20,000 -- -- 20,000 --
Non-Employee........ 25.00 Jun-08 -- 50,000 -- -- 50,000 --
Officer and
Director.......... 0.65 Dec-01 612,500 -- 612,500 -- -- --
Officer and
Director.......... 6.00 Jun-08 -- 400,000 -- 40,000 360,000 --
Officer and
Director.......... 10.00 Jun-08 -- 50,000 -- -- 50,000 --
Officer and
Director.......... 15.00 Jun-08 -- 350,000 -- 50,000 300,000 --
Officer and
Director.......... 15.00 Oct-08 -- 35,000 -- -- 35,000 --
Officer and
Director.......... 15.00 Dec-08 -- 25,000 -- -- 25,000 --
Officer and
Director.......... 25.00 Jun-08 -- 500,000 -- 100,000 400,000 --
Officer and
Director.......... 25.00 Oct-08 -- 35,000 -- -- 35,000 --
------- --------- ------- ------- --------- -------
Total Options..... 612,500 2,400,450 627,500 302,500 2,082,950 253,750
------- --------- ------- ------- --------- -------
Total Warrants and
Options......... 612,500 2,950,450 956,441 302,500 2,304,009 474,809
======= ========= ======= ======= ========= =======
</TABLE>

F-17
<PAGE> 70
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been recognized for the stock options granted to employees at fair market value
at the date of grant. Had compensation cost for the Company's employee stock
options been determined consistent with the provisions of SFAS No. 123, the
Company's net loss would have been increased to the pro forma amount indicated
below for the period from inception (March 19, 1997) to December 31, 1997 and
for the year ended December 31, 1998.

<TABLE>
<CAPTION>
1997 1998
--------- -----------
<S> <C> <C>
Net loss, as reported................................. $(258,352) $(1,429,090)
Net loss, pro forma................................... (322,729) (3,242,183)
Pro forma net loss per share.......................... (.35) (.38)
</TABLE>

The fair values of options granted were estimated on the date of grant
using the minimum value approach in 1997 and the Black-Scholes Model in 1998.
The Company's stock volatility was 110% in 1998, based on 1998 stock
performance. The Company's dividend yield was estimated to remain at zero, the
options granted had an expected life of three to five years, and risk-free
interest rates ranging from 4.70% to 5.88%. The weighted average estimated fair
value of employee stock options granted during 1997 and 1998 was $.0.11 and
$5.23 per share, respectively. The estimated fair value of options granted
during 1997 and 1998 totaled $64,377 and $8,184,352, respectively.

8. INCOME TAXES

The accompanying financial statements include an income tax benefit
computed in accordance with SFAS No. 109, "Accounting for Income Taxes." The
following summarizes the components of the income tax benefit:

<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Current provision........................................ $ -- $ --
Deferred taxes........................................... 163,632 304,562
-------- --------
Income tax benefit....................................... $163,632 $304,562
======== ========
</TABLE>

Reconciliation from the federal statutory rate to the actual income tax
benefit is as follows:

<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Statutory federal tax rate.................................. (34)% (34)%
State income taxes, net of federal tax benefit.............. (5) (4)
Change in valuation allowance............................... -- 20
Other....................................................... 2 --
--- ---
(37)% (18)%
=== ===
</TABLE>

F-18
<PAGE> 71
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The sources of differences between the financial accounting and tax bases
of the Company's assets and liabilities which give rise to the deferred tax
asset and liabilities and the tax effects of each are as follows as of December
31, 1998 and 1997:

<TABLE>
<CAPTION>
1997 1998
-------- ----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts............... $ 6,971 $ 105,634
Intangibles................................... 17,210 85,791
Accrued expense............................... 58,500 271,512
Net operating loss carryforward............... 107,471 862,127
Valuation allowance........................... -- (223,423)
-------- ----------
Total deferred tax assets.................. 190,152 1,101,641
Deferred tax liabilities:
Depreciation.................................. (26,520) (184,836)
Intangibles................................... -- (292,745)
-------- ----------
Total deferred tax liabilities............. (26,520) (477,581)
-------- ----------
Net deferred tax asset..................... $163,632 $ 624,060
======== ==========
</TABLE>

As of December 31, 1997 and 1998, deferred tax assets include a net
operating loss carryforward of $276,566 and $2,268,755, respectively, which is
available to offset future taxable income through 2012. Realization of the net
deferred tax asset is dependent on generating sufficient taxable income in
future periods. During 1998, the Company recorded a valuation allowance of
$223,423. As the Company continues to grow through acquisitions, management will
evaluate the realizability of these assets and adjust the valuation allowance
accordingly.

9. ENVIRONMENTAL REGULATIONS

The Company is subject to extensive and evolving federal, state, and local
environmental laws and regulations that have been enacted in response to
technological advances and the public's increased concern over environmental
issues. The majority of the expenditures necessary to comply with the
environmental laws and regulations is made in the normal course of business. The
Company, to the best of its knowledge, is in compliance, in all material
respects, with the laws and regulations affecting its operations.

10. LEASE COMMITMENTS

The Company leases certain buildings, autos and machinery and equipment
under noncancelable operating leases. Under certain of these leases, the Company
is required to pay property taxes, insurance, repairs and other costs related to
the leased property. At December 31, 1998, future minimum lease payments under
noncancelable operating leases are $622,576 in 1999; $453,126 in 2000; $365,798
in 2001; $353,344 in 2002 and $148,215 in 2003. Total rent expense for all
leases was $11,690 and $604,413 in 1997 and 1998, respectively.

F-19
<PAGE> 72
EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. SUBSEQUENT EVENT (UNAUDITED)

On March 1, 1999, EarthCare acquired all of the outstanding capital stock
of Reifsneider Transportation Inc. ("Reifsneider"), a Pennsylvania corporation,
in exchange for an aggregate consideration of $10,325,000 paid in cash, common
stock, and seller note payable to the former shareholder of Reifsneider.
Reifsneider is a commercial and industrial liquid waste transportation and
disposal services company servicing customers in eastern Pennsylvania, Delaware,
Maryland, New Jersey and New York. The Company currently intends to operate
Reifsneider in substantially the same manner as it was operated prior to the
acquisition. The Company funded the cash portion of the purchase price with
$5,250,000 in borrowings under the Credit Agreement, issued 350,000 shares of
EarthCare common stock and delivered a $200,000 note payable to the former
shareholder of Reifsneider.

F-20
<PAGE> 73

INDEPENDENT ACCOUNTANT'S REPORT

To the Board of Directors and Shareholders of EarthCare Company:

We have reviewed the accompanying consolidated balance sheet of EarthCare
Company and Subsidiaries as of March 31, 1999 and the related consolidated
statements of operations and cash flows for the three-month period ended March
31, 1999. These financial statements are the responsibility of the Company's
management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of the interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.

PricewaterhouseCoopers LLP

Tulsa, Oklahoma
May 12, 1999

F-21
<PAGE> 74

EARTHCARE COMPANY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
MARCH 31,
1999
-----------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 168,368
Accounts receivable, net of allowance for doubtful
accounts of $472,434................................... 4,982,026
Prepaid expenses.......................................... 1,129,363
Note receivable........................................... 292,658
Deferred income taxes..................................... 418,000
-----------
Total current assets................................... 6,990,415
-----------
Property and Equipment, Net................................. 9,798,390
Other Noncurrent Assets:
Intangibles, net.......................................... 28,811,650
Deferred income taxes..................................... 206,060
Other assets.............................................. 2,030,031
-----------
31,047,741
-----------
$47,836,546
===========

LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable.......................................... $ 3,165,540
Accrued Expenses.......................................... 3,202,929
Notes payable............................................. 190,506
Current portion of long-term debt......................... 118,500
-----------
Total current liabilities.............................. 6,677,475
-----------
Long-Term Debt, Net of Current Portion...................... 16,408,623
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value; 30,000,000 shares
authorized, -0- shares issued and outstanding.......... --
Common stock, $.0001 par value; 70,000,000 shares
authorized, 9,963,711 shares issued and outstanding.... 996
Additional paid-in capital................................ 26,261,461
Accumulated deficit....................................... (1,512,009)
-----------
Total stockholders' equity............................. 24,750,448
-----------
$47,836,546
===========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements

F-22
<PAGE> 75

EARTHCARE COMPANY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
-----------------------
1998 1999
---------- ----------
<S> <C> <C>
Revenues................................................ $2,634,722 $7,815,637
Expenses
Cost of Operations.................................... 1,647,530 5,093,594
General and Administrative Expense.................... 1,524,389 1,969,417
Depreciation and Amortization......................... 177,900 354,884
---------- ----------
Income (Loss) from Operations........................... (715,097) 397,742
Other Expense (Income):
Interest.............................................. 106,713 222,309
---------- ----------
Income (Loss) before Taxes.............................. (821,810) 175,433
Income Tax Provision (Benefit).......................... (318,536) --
---------- ----------
Net Income (Loss)....................................... $ (503,274) $ 175,433
========== ==========
Net Income (Loss) Per Share, Basic and Diluted.......... $ (0.10) $ 0.02
========== ==========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

F-23
<PAGE> 76

EARTHCARE COMPANY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
--------------------------
1998 1999
------------ -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss).................................. $ (503,274) $ 175,433
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization...................... 177,900 354,884
Deferred income taxes.............................. (318,536) --
Bad debt expense................................... -- (37,737)
Changes in assets and liabilities, excluding effect
of acquired businesses:
Account receivable................................. (989,724) (328,291)
Prepaid expenses................................... (76,405) (454,688)
Other current assets............................... (85,051) --
Accounts payable................................... 1,084,464 241,500
Accrued expenses................................... 798,145 (797,998)
------------ -----------
Total adjustments............................. 590,793 (1,022,330)
------------ -----------
Net cash provided by (used in) -- operating
activities................................. 87,519 (846,897)
Cash Flows from Investing Activities:
Capital expenditures............................... -- (1,036,481)
Business acquisitions.............................. (11,480,220) (6,232,085)
Other assets....................................... -- 8,997
------------ -----------
Net cash used in investing activities......... (11,480,220) (7,259,569)
Cash flows from Financing Activities:
Net borrowings under lines of credit............... 12,152,948 --
Proceeds from long-term debt....................... -- 7,199,183
Payments of long-term debt......................... (50,832) --
Sales of common stock.............................. 12,600,000 --
Exercise and issuance of stock options and
warrants........................................ -- 36,057
------------ -----------
Net cash provided by financing activities..... 24,702,116 7,235,240
Net increase (decrease) in cash and cash
equivalents........................................ 13,309,415 (871,226)
Cash and Cash Equivalents, Beginning of Period....... 195,552 1,039,594
------------ -----------
Cash and Cash Equivalents, End of Period............. $ 13,504,967 $ 168,368
============ ===========
Supplemental Noncash Investing and Financing
Activities:
Notes payable issued for business acquisitions..... $ 2,000,000 $ 200,000
============ ===========
Common stock issued for business acquisitions...... $ 232,000 $ 5,625,000
============ ===========
Fair value of warrant issued for debt issuance
costs.............................................. $ -- $ 75,000
============ ===========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

F-24
<PAGE> 77

EARTHCARE COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying financial statements of EarthCare Company ("EarthCare" or
the "Company") and subsidiaries as of March 31, 1999 and for the three month
periods ended March 31, 1998 and 1999 are unaudited. In the opinion of
management, these financial statements reflect all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of the
financial statements. Quarterly results of operations are not necessarily
indicative of the results that may be expected for the full year. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Form 10-K for the year
ended December 31, 1998 filed with the Securities and Exchange Commission ("Form
10-K").

2. INCOME PER SHARE

Income (loss) per common share is computed in accordance with Statement of
Financial Accounting Standards No. 128 ("FAS 128"). Presented below is a
reconciliation of income (loss) available to common shareholders and the
differences between actual weighted average shares outstanding, which are used
in computing basic income (loss) per share and diluted weighted average shares,
which are used in computing diluted income (loss) per share.

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1999
--------------------------------- ---------------------------------
PER SHARE PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
--------- --------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Income (loss).......... $(503,274) $175,433
Basic EPS:
Income (loss) available
to common
shareholders........... (503,274) 4,874,434 $(.10) 175,433 9,698,531 $.02
Effect of Dilutive
Securities:
Options.................. -- 341,412
Warrants................. -- 107,843
Diluted EPS:
Income available to
common shareholders.... $(503,274) 4,874,434 $(.10) $175,433 10,147,786 $.02
</TABLE>

As of March 31, 1999, there were 869,200 options outstanding at an exercise
price of $15 and 635,000 options outstanding at exercise prices ranging from $20
to $25 which were excluded from the EPS calculation due to their anti-dilutive
impact.

3. ACQUISITIONS

During the first three months of 1999, the Company acquired the following
businesses:

On March 1, 1999, the Company acquired all of the outstanding capital
stock of Reifsneider Transportation, Inc. ("Reifsneider"), a Pennsylvania
corporation. Reifsneider is engaged in the nonhazardous liquid waste and
septic waste collection, transportation, management, and disposal business
in and around Pennsylvania, New

F-25
<PAGE> 78

Jersey, New York, Maryland, and Delaware. Consideration for the acquisition
consisted of $5,050,000 in cash, 350,000 shares of EarthCare common stock
(the "Common Stock"), the delivery of a $200,000 note payable to the former
owner of Reifsneider and a working capital adjustment of approximately
$750,000, as defined in the Stock Purchase Agreement.

On March 31, 1999, the Company acquired all of the outstanding capital
stock of Brehm's Cesspool, Inc. ("Brehm's"), a Pennsylvania. corporation.
Brehm's is engaged in the nonhazardous liquid waste and septic waste
collection, transportation, management, and disposal business in and around
eastern Pennsylvania. Consideration for the acquisition consisted of
$1,000,000 in cash and 35,367 shares of Common Stock.

Subsequent to March 31, 1999, the Company acquired the following
businesses:

Effective April 1, 1999, EarthCare acquired all of the outstanding
capital stock of National Plumbing & Drain ("National"), a Georgia
corporation, in exchange for $1,325,000 in cash, the issuance of 125,159
shares of Common Stock, and the assumption of up to $513,000 in
liabilities. National is a residential and commercial sewer and drain
services company servicing customers in Georgia.

On May 1, 1999, EarthCare acquired the assets of Rooter Plus, a
Georgia corporation, in exchange for $2,600,000 in cash and the issuance of
100,000 shares of Common Stock. Rooter Plus is a residential and commercial
sewer and drain services company servicing customers in Georgia.

The acquisitions of Reifsneider and Brehm's were accounted for using the
purchase method of accounting; accordingly, the purchase prices have been
allocated to the assets acquired and liabilities assumed based on their
respective fair values on the dates of acquisition. The resulting excess of
purchase prices over fair values of assets acquired and liabilities assumed was
recorded as goodwill. Goodwill recorded in the purchases of Reifsneider and
Brehm's was $6,536,455 and $1,350,000, respectively.

The Company's unaudited pro forma consolidated results of operations for
the three month periods ended March 31, 1998 and 1999, shown below are presented
assuming that the Reifsneider and Brehm's acquisitions had been consummated on
January 1, 1998:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1998 1999
----------- ----------
<S> <C> <C>
Pro forma revenue...................................... $10,245,964 $9,447,378
Pro forma net income (loss)............................ (322,042) 252,033
Pro forma net income (loss) per share.................. $ (.05) $ .02
</TABLE>

4. SIGNIFICANT EVENTS

In addition to the acquisitions discussed in note 3, the following
significant events occurred during the three months ended March 31, 1999:

On June 26, 1998, the Company entered into a $40 million revolving
credit agreement with Bank of America, which was amended effective March
31, 1999, (the "Credit Agreement"). The Company may also obtain up to $5
million in letters of credit, subject to availability under the Credit
Agreement. Interest is payable monthly at variable rates, depending on the
Company's current debt to cash flow ratio, but is

F-26
<PAGE> 79

capped at LIBOR plus 2.25%. The Credit Agreement expires September 26,
2001, is secured by a first lien on substantially all assets of the Company
and requires the Company to maintain certain financial ratio covenants
beginning September 30, 1998. In connection with amending the Credit
Agreement, the Company issued Bank of America warrants to purchase 35,000
shares of Common Stock at $14 per share in lieu of fees associated with the
modification. These warrants have been valued at $75,000 based on the cost
of the bank fee that would have been charged. Such amount has been recorded
as debt issue costs in the March 31, 1999 financial statements.

On April 26, 1999, the Company entered into a financial commitment to
loan up to $3 million to Crossroads Environmental Corporation
("Crossroads"). Crossroads has permits in Texas to drill deep injection
wells for the disposal of nonhazardous liquid waste. The permitted capacity
of the first well that Crossroads plans to drill is 180 million gallons per
year. EarthCare has an equity conversion privilege that could enable the
Company to own a majority of the equity in the business.

F-27
<PAGE> 80

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Andrews Environmental Services, Inc.

We have audited the accompanying balance sheet of ANDREWS ENVIRONMENTAL
SERVICES, INC. (a Georgia corporation) as of December 31, 1996 and the related
statements of operations, stockholders' equity, and cash flows for the year
ended December 31, 1996 and the period from January 1, 1997 to December 21,
1997. 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 audits.

We conducted our audits 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 audits provide 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 Andrews Environmental
Services, Inc. as of December 31, 1996 and the results of its operations and its
cash flows for the year ended December 31, 1996 and the period from January 1,
1997 to December 21, 1997 in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
June 18, 1998

F-28
<PAGE> 81

ANDREWS ENVIRONMENTAL SERVICES, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 14,414
Accounts receivable, net of allowance for doubtful
accounts of $9,300..................................... 177,166
Due from related party.................................... 51,202
Prepaid expenses and other................................ 25,588
Deferred income taxes..................................... 3,575
----------
Total current assets................................... 271,945
PROPERTY AND EQUIPMENT, NET................................. 830,102
----------
$1,102,047
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 142,364
Accrued expenses.......................................... 19,983
Income taxes payable...................................... 10,148
Current portion of long-term debt......................... 229,638
----------
Total current liabilities.............................. 402,133
----------
LONG-TERM DEBT, NET OF CURRENT PORTION...................... 310,221
----------
DEFERRED INCOME TAXES....................................... 118,752
----------
COMMITMENTS (NOTE 6)
STOCKHOLDERS' EQUITY:
Common stock, no par value, $.50 stated Value; 1,000,000
shares authorized, 1,000 Shares issued and
outstanding............................................ 500
Retained earnings......................................... 270,441
----------
Total stockholders' equity............................. 270,941
----------
$1,102,047
==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-29
<PAGE> 82

ANDREWS ENVIRONMENTAL SERVICES, INC.

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1, 1997
DECEMBER 31, TO DECEMBER 21,
1996 1997
------------ ---------------
<S> <C> <C>
REVENUES........................................... $1,832,043 $1,218,268
---------- ----------
EXPENSES:
Cost of operations............................... 785,996 625,892
General and administrative....................... 757,655 646,273
Depreciation and amortization.................... 122,296 121,496
---------- ----------
Total expenses................................ 1,665,947 1,393,661
---------- ----------
INCOME FROM OPERATIONS............................. 166,096 (175,393)
---------- ----------
OTHER EXPENSE (INCOME):
Interest expense................................. 70,868 22,077
Other, net....................................... (2,500) (204,124)
---------- ----------
68,368 (182,047)
---------- ----------
INCOME BEFORE INCOME TAXES......................... 97,728 6,654
PROVISION FOR INCOME TAXES......................... 39,094 4,334
---------- ----------
NET INCOME.................................... $ 58,634 $ 2,320
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-30
<PAGE> 83

ANDREWS ENVIRONMENTAL SERVICES, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
--------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
------ ------ --------- ---------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995.............. 1,000 $ 500 $ 211,807 $ 212,307
Net income............................ -- -- 58,634 58,634
----- ----- --------- ---------
BALANCE, DECEMBER 31, 1996.............. 1,000 500 270,441 270,941
Purchase of treasury stock............ (585) (292) (136,108) (136,400)
Net income............................ -- -- 2,320 2,320
----- ----- --------- ---------
BALANCE, DECEMBER 21, 1997.............. 415 $ 208 $ 136,653 $ 136,861
===== ===== ========= =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-31
<PAGE> 84

ANDREWS ENVIRONMENTAL SERVICES, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1, 1997 TO
DECEMBER 31, DECEMBER 21,
1996 1997
------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................... $ 58,634 $ 2,320
--------- ---------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization................ 122,296 121,496
Gain on sale of fixed assets................. -- (204,124)
Changes in assets and liabilities:
Accounts receivable........................ (72,882) 68,676
Prepaid expenses and other................. 13,694 (24,555)
Due from related party..................... (51,202) (60,152)
Deferred taxes............................. 28,946 (29,905)
Accounts payable........................... 51,664 (11,633)
Accrued expenses........................... (579) 238
Income taxes payable....................... 10,148 34,239
--------- ---------
Total adjustments....................... 102,085 (105,720)
--------- ---------
Net cash provided by (used in) operating
activities........................... 160,719 (103,400)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................ (249,024) (144,745)
Proceeds from sales of fixed assets............. -- 425,000
--------- ---------
Net cash (used in) provided by investing
activities........................... (249,024) 280,255
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt.................... 321,504 194,679
Repayments of long-term debt.................... (219,380) (247,677)
Purchase of treasury stock...................... -- (136,400)
--------- ---------
Net cash provided by (used in) financing
activities........................... 102,124 (189,398)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................... 13,819 (12,543)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.... 595 14,414
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD.......... $ 14,414 $ 1,871
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest.......................... $ 43,275 $ 38,352
========= =========
Cash paid for income taxes...................... $ 1,644 $ 10
========= =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-32
<PAGE> 85

ANDREWS ENVIRONMENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Andrews Environmental Services, Inc. ("Andrews" or the "Company"), a
Georgia corporation, operates a service center that treats, processes, and
recovers nonhazardous liquid waste to serve a variety of customers from private
residences and municipalities to large industrial companies.

On March 20, 1997, certain assets of the Company associated with its grease
disposal business were sold to EarthCare Company ("EarthCare"). The grease
disposal business was primarily involved with commercial and governmental grease
extraction, collection, and transportation services. Consideration associated
with the sale was $475,000 in cash and $257,350 in notes receivable. In
conjunction with the sale, the Company recorded a gain on the sale of fixed
assets of $204,124 which is included in other income in the accompanying
statement of operations for the period from January 1, 1997 to December 21,
1997.

On December 22, 1997, substantially all of the remaining property and
equipment and the ongoing business of the Company were sold to EarthCare.
Consideration was $660,000 in cash and 21,400 shares of EarthCare common stock.
Contingent consideration of 13,600 shares of EarthCare common stock is
receivable within 90 days of the first anniversary of the date of purchase, net
of offsets for losses, as defined in the sale agreement.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of
three months or less at the date of purchase to be cash equivalents.

CONCENTRATION OF CREDIT RISK

Financial instruments which subject the Company to concentrations of credit
risk consist principally of trade receivables. The Company's customers are
concentrated in one geographic region. No single customer accounted for a
significant amount of the Company's sales, and there are no significant accounts
receivable from a single customer. The Company reviews a customer's credit
history before extending credit. The Company establishes an allowance for
doubtful accounts based on factors surrounding the credit risk of specific
customers, historical trends, and other information.

REVENUE RECOGNITION

The Company recognizes revenues as services are provided.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided over
the estimated useful lives of the assets using the straight-line method. The
estimated useful

F-33
<PAGE> 86
ANDREWS ENVIRONMENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

lives for machinery and equipment and office equipment range from 5 to 7 years.
The building is depreciated over an estimated useful life of 40 years.

At December 31, 1996, property and equipment consisted of the following:

<TABLE>
<S> <C>
Machinery and equipment.................................... $1,040,874
Office equipment........................................... 29,385
Building................................................... 162,686
Land....................................................... 2,000
----------
1,234,945
Less accumulated depreciation.............................. (404,843)
----------
$ 830,102
==========
</TABLE>

The Company periodically reviews the values assigned to property and
equipment to determine whether any impairments are other than temporary. The
Company assesses impairment by determining whether the carrying value of such
long-lived assets will be recovered through undiscounted expected future cash
flows. No impairment losses have been recorded in the accompanying results of
operations.

USE OF ESTIMATES

NEW ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 is designed to improve the reporting of changes in equity
from period to period. The Company currently has no other comprehensive income
items as defined by SFAS No. 130.

F-34
<PAGE> 87
ANDREWS ENVIRONMENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. LONG-TERM DEBT

At December 31, 1996, long-term debt consisted of the following:

<TABLE>
<S> <C>
Equipment loans, interest at varying rates between 8.5% and
16.3%, interest and principal due in monthly installments
through 2002, secured by related equipment................ $ 453,094
Line of credit.............................................. 83,789
Loan from stockholder (Note 4).............................. 2,976
---------
539,859
Less current portion........................................ (229,638)
---------
$ 310,221
=========
</TABLE>

At December 31, 1996, the Company had a $100,000 revolving line of credit
(the "Revolver"). The Revolver has an interest rate of prime plus 2% (10.25% at
December 31, 1996). At December 31, 1996, $83,789 was outstanding and $16,211
was available for future borrowings. The Revolver matures July 15, 1998, is
renewable for successive one-year periods, is personally guaranteed by the
Company's majority stockholder, and is secured by substantially all assets of
the Company.

On December 21, 1997, in conjunction with the sale of the Company's
remaining assets (Note 1), the Revolver and all equipment loans were paid in
full.

4. RELATED-PARTY TRANSACTIONS

The Company's majority stockholder advances monies to the Company from time
to time to maintain certain working capital levels, as needed. At December 31,
1996, the Company was indebted to the majority stockholder for $2,976, which is
included in current portion of long-term debt in the accompanying balance sheet.

During 1997, the Company had repairs and maintenance performed on its
trucks by an entity owned by the Company's majority stockholder. For the period
from January 1, 1997 to December 21, 1997, the Company incurred $32,371 of
expense for these services, which is included in cost of operations in the
accompanying statement of operations.

The Company advances monies from time to time to an entity owned by the
Company's majority stockholder to enable that entity to maintain certain levels
of working capital. At December 31, 1996, the related entity owed the Company
$51,202, which is included in the accompanying balance sheet as due from related
party.

The Company performs services from time to time for an entity owned by a
stockholder of the Company. Revenues from this entity totaled $7,683 and $0 for
the year ended December 31, 1996 and for the period from January 1, 1997 to
December 21, 1997, respectively.

F-35
<PAGE> 88
ANDREWS ENVIRONMENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES

The accompanying financial statements reflect the provision (benefit) for
income taxes computed in accordance with the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." The
following summarizes the components of the income tax provision (benefit) for
the years ended December 31, 1995 and 1996 and for the period from January 1,
1997 to December 21, 1997:

<TABLE>
<CAPTION>
1996 1997
------- --------
<S> <C> <C>
Current taxes...................................... $10,148 $ 28,165
Deferred taxes..................................... 28,946 (29,905)
------- --------
Provision (benefit) for income taxes............... $39,094 $ (1,740)
======= ========
</TABLE>

Reconciliation from the federal statutory rate to the actual provision
(benefit) for the year ended December 31, 1996 and for the period from January
1, 1997 to December 21, 1997 is as follows:

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Statutory federal tax rate................................ 34.0% 34.0%
State income taxes, net of federal tax benefit............ 4 4.0
Other..................................................... 2 27.1
---- ----
40% 65.1%
==== ====
</TABLE>

The components of the net deferred tax liability as of December 31, 1996
are as follows:

<TABLE>
<S> <C>
Deferred tax assets:
Allowance for doubtful accounts.......................... $ 3,530
Other.................................................... 45
---------
Total deferred tax asset.............................. 3,575
Deferred tax liability:
Depreciation............................................. (118,752)
---------
Net deferred tax liability............................ $(115,177)
=========
</TABLE>

6. ENVIRONMENTAL REGULATIONS

The Company is subject to extensive and evolving federal, state, and local
environmental laws and regulations that have been enacted in response to
technological advances and the public's increased concern over environmental
issues. The majority of the expenditures necessary to comply with the
environmental laws and regulations are made in the normal course of business.
The Company, to the best of its knowledge, is in compliance, in all material
respects, with the laws and regulations affecting its operations.

F-36
<PAGE> 89

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholders of Ferrero Wastewater Management, Inc.:

In our opinion, the accompanying statements of operations and stockholders'
equity and cash flows present fairly, in all material respects, the results of
operations and cash flows of Ferrero Wastewater Management, Inc. for the period
from January 1, 1998 to January 21, 1998, in conformity with generally accepted
accounting principles. 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 of these
financial statements in accordance with generally accepted auditing standards
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Tulsa, Oklahoma
January 15, 1999

F-37
<PAGE> 90

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Ferrero Wastewater Management, Inc.:

We have audited the accompanying balance sheets of FERRERO WASTEWATER
MANAGEMENT, INC. (a Pennsylvania corporation) as of December 31, 1996 and 1997
and the related statements of operations, stockholders' equity, and cash flows
for each of the two years in the period ended December 31, 1997. 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 audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ferrero Wastewater
Management, Inc. as of December 31, 1996 and 1997 and the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
March 20, 1998

F-38
<PAGE> 91

FERRERO WASTEWATER MANAGEMENT, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 7,383 $ 40,201
Accounts receivable, net of allowance for doubtful
accounts of $50,000 in 1996 and 1997.............. 308,187 379,852
Prepaid expenses and other........................... 68,280 22,034
---------- ----------
Total current assets.............................. 383,850 442,087
PROPERTY AND EQUIPMENT, NET............................ 698,934 903,774
OTHER ASSETS........................................... 11,740 26,477
---------- ----------
$1,094,524 $1,372,338
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................................... $ 350,879 $ 185,551
Accrued expenses..................................... 35,288 48,304
Due to stockholder................................... 43,716 81,580
Current portion of long-term debt.................... 109,802 128,454
---------- ----------
Total current liabilities......................... 539,685 443,889
---------- ----------
LONG-TERM DEBT, NET OF CURRENT PORTION................. 244,566 607,743
---------- ----------
COMMITMENTS (NOTE 6)
STOCKHOLDERS' EQUITY:
Common stock, $100 par value; 250 shares authorized,
50 shares issued and outstanding.................. 5,000 5,000
Retained earnings.................................... 305,273 315,706
---------- ----------
Total stockholders' equity........................ 310,273 320,706
---------- ----------
$1,094,524 $1,372,338
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-39
<PAGE> 92

FERRERO WASTEWATER MANAGEMENT, INC.

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
YEARS ENDED DECEMBER 31, JANUARY 1, 1998 TO
------------------------- JANUARY 21,
1996 1997 1998
----------- ----------- ------------------
<S> <C> <C> <C>
REVENUES................................. $2,866,758 $4,122,100 $257,982
---------- ---------- --------
EXPENSES:
Cost of operations..................... 1,913,700 2,797,821 175,443
General and administrative............. 773,286 1,045,315 73,399
Depreciation and amortization.......... 287,742 220,432 23,334
---------- ---------- --------
Total expenses...................... 2,974,728 4,063,568 272,176
---------- ---------- --------
INCOME (LOSS) FROM OPERATIONS............ (107,970) 58,532 (14,194)
---------- ---------- --------
OTHER EXPENSE (INCOME):
Interest expense....................... 48,024 50,920 5,913
Other, net............................. (22,404) (2,821) (33)
---------- ---------- --------
25,620 48,099 5,880
---------- ---------- --------
NET INCOME (LOSS)................... $ (133,590) $ 10,433 $(20,074)
========== ========== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-40
<PAGE> 93

FERRERO WASTEWATER MANAGEMENT, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON RETAINED
STOCK EARNINGS TOTAL
------ --------- ---------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1995..................... $5,000 $ 438,863 $ 443,863
Net loss..................................... -- (133,590) (133,590)
------ --------- ---------
BALANCE, DECEMBER 31, 1996..................... 5,000 305,273 310,273
Net income................................... -- 10,433 10,433
------ --------- ---------
BALANCE, DECEMBER 31, 1997..................... 5,000 315,706 320,706
Net loss..................................... -- (20,074) (20,074)
------ --------- ---------
BALANCE, JANUARY 21, 1998...................... $5,000 $ 295,632 $ 300,632
====== ========= =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-41
<PAGE> 94

FERRERO WASTEWATER MANAGEMENT, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
YEARS ENDED DECEMBER 31, JANUARY 1, 1998
------------------------- TO JANUARY 21,
1996 1997 1998
----------- ----------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)....................... $(133,590) $ 10,433 $(20,074)
--------- --------- --------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization........ 287,742 220,432 23,334
Loss (gain) on sale of fixed
assets............................. (17,019) -- --
Changes in assets and liabilities:
Accounts receivable................ 5,928 (71,665) (10,844)
Prepaid expenses and other......... (56,030) 46,246 --
Other assets....................... 10,553 (14,737) 12,977
Accounts payable................... 93,525 (165,328) 33,571
Accrued expenses................... (21,295) 13,016 2,670
--------- --------- --------
Total adjustments............... 303,404 27,964 61,708
--------- --------- --------
Net cash provided by operating
activities................... 169,814 38,397 41,634
--------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets...... 20,949 -- --
Capital expenditures.................... (158,843) (425,272) --
--------- --------- --------
Net cash used in investing
activities................... (137,894) (425,272) --
--------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt............ 74,830 728,568 --
Payments of long-term debt.............. (157,972) (346,739) (3,635)
Net borrowings from stockholder......... 28,216 37,864 (67,603)
Distribution to stockholder............. -- -- --
--------- --------- --------
Net cash (used in) provided by
financing activities......... (54,926) 419,693 (71,238)
--------- --------- --------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS............................. (23,006) 32,818 (29,604)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD.................................. 30,389 7,383 40,201
--------- --------- --------
CASH AND CASH EQUIVALENTS, END OF
PERIOD.................................. $ 7,383 $ 40,201 $ 10,597
========= ========= ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest.................. $ 43,389 $ 50,920 $ 3,530
========= ========= ========
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Equipment traded in for capital
expenditures......................... $ -- $ 41,464 $ --
========= ========= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-42
<PAGE> 95

FERRERO WASTEWATER MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Ferrero Wastewater Management, Inc. (the "Company") designs, constructs,
repairs, maintains, and operates on-site sewage disposal systems, primarily in
metropolitan Philadelphia, Pennsylvania.

Nutrecon, Inc. disposed of the waste collected by the Company. On January
1, 1997, the net assets of Nutrecon, Inc. were transferred to the Company. Since
the companies were under common ownership from their respective dates of
inception, the accompanying financial statements of the Company include the
accounts of Nutrecon, Inc. for all periods presented. All material intercompany
balances and transactions have been eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of
three months or less at the date of purchase as cash equivalents.

CONCENTRATION OF CREDIT RISK

Financial instruments which subject the Company to concentrations of credit
risk consist principally of trade receivables. The Company's customers are
concentrated in one geographic region and in one line of business. No single
customer accounted for a significant amount of the Company's sales, and there
are no significant accounts receivable from a single customer. The Company
reviews a customer's credit history before extending credit. The Company
establishes an allowance for doubtful accounts based on factors surrounding the
credit risk of specific customers, historical trends, and other information.

REVENUE RECOGNITION

The Company recognizes revenues as services are provided.

F-43
<PAGE> 96
FERRERO WASTEWATER MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided over
the estimated useful lives of the assets using the straight-line method. The
estimated useful lives for machinery and equipment and office equipment range
from five to seven years. Buildings are depreciated over 20 years.

At December 31, 1996 and 1997, property and equipment consisted of the
following:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Machinery and equipment............................... $ 1,803,675 $ 2,175,946
Buildings and improvements............................ 308,071 349,941
Office equipment...................................... 78,236 82,445
----------- -----------
2,189,982 2,608,332
Less accumulated depreciation......................... (1,491,048) (1,704,558)
----------- -----------
$ 698,934 $ 903,774
=========== ===========
</TABLE>

USE OF ESTIMATES

INCOME TAXES

The Company has elected, for federal and state income tax purposes, S
corporation tax status whereby income is taxed at the stockholder level.
Therefore, no deferred tax assets, liabilities, or provision for income taxes is
recorded.

F-44
<PAGE> 97
FERRERO WASTEWATER MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. LONG-TERM DEBT

At December 31, 1996 and 1997, long-term debt consisted of the following:

<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Loans from banks, interest at 9.25%, interest and
principal due in monthly payments through 2003;
secured by substantially all assets of the
Company......................................... $184,251 $348,035
Equipment loans, interest at varying rates between
7.25% and 12.5%, interest and principal due in
monthly installments through 2003, secured by
related equipment............................... 170,117 388,162
-------- --------
354,368 736,197
Less current portion.............................. 109,802 128,454
-------- --------
$244,566 $607,743
======== ========
</TABLE>

Future aggregate annual maturities of long-term debt are as follows as of
December 31, 1997:

<TABLE>
<S> <C>
1998........................................................ $128,454
1999........................................................ 122,456
2000........................................................ 115,386
2001........................................................ 103,520
2002 and thereafter......................................... 266,381
--------
$736,197
========
</TABLE>

In February 1998, in conjunction with the sale of the business (Note 7),
all related long-term debt was paid in full.

4. RELATED-PARTY TRANSACTION

The Company's majority stockholder makes advances to the Company from time
to time to better manage cash flows and maintain adequate working capital. At
December 31, 1996 and 1997, the amounts owed to the majority stockholder were
$43,716 and $81,580, respectively. In February 1998, the amount owed to the
majority stockholder was paid in full (Note 7).

5. BENEFIT PLAN

Employees of the Company are eligible to participate in a
company-maintained salary reduction simplified employee pension plan (the
"Plan"). The Company has the option to contribute a profit-sharing portion to
the Plan each year. During the years ended December 31, 1996 and 1997, and the
period from January 1, 1998 to January 21, 1998, no such contributions were
made.

F-45
<PAGE> 98
FERRERO WASTEWATER MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. LEASES

The Company leases its facility under a noncancelable operating lease.
Rental expense during 1996 and 1997, and for the period from January 1, 1998 to
January 21, 1998, was $67,734, $72,000 and $7,738, respectively. Future minimum
lease payments under the current lease agreement are $72,000 per year through
December 31, 1999.

7. SUBSEQUENT EVENT

On January 22, 1998, substantially all property and equipment and the
ongoing business of the Company were sold to EarthCare Company ("EarthCare") for
$2,240,100 in cash and 90,000 shares of EarthCare common stock. Contingent
consideration of $248,900 in cash and 10,000 shares of EarthCare common stock
are receivable 270 days after the date of purchase, net of offset for losses, as
defined in the purchase agreement. Prior to the closing, all related long-term
debt was paid in full to convey the assets to EarthCare free and clear of all
encumbrances and liens.

F-46
<PAGE> 99

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
A Rapid Rooter Sewer & Drain Service, Inc.:

In our opinion, the accompanying statements of operations and stockholders'
equity and cash flows present fairly, in all material respects, the results of
operations and cash flows of A Rooter Rapid Sewer & Drain Service, Inc. for the
period from January 1, 1998 to February 12, 1998, in conformity with generally
accepted accounting principles. 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
of these financial statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Tulsa, Oklahoma
January 22, 1999

F-47
<PAGE> 100

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To A Rapid Rooter Sewer & Drain Service, Inc.:

We have audited the accompanying balance sheets of A RAPID ROOTER SEWER &
DRAIN SERVICE, INC. (a Florida corporation) as of December 31, 1996 and 1997 and
the related statements of operations, stockholders' equity, and cash flows for
each of the two years in the period ended December 31, 1997. 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 audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of A Rapid Rooter Sewer & Drain
Service, Inc. as of December 31, 1996 and 1997 and the results of its operations
and its cash flows for each of the two years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
May 8, 1998

F-48
<PAGE> 101

A RAPID ROOTER SEWER & DRAIN SERVICE, INC.

BALANCE SHEET

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................................... $ 99,935 $ 161,337
Accrued expenses..................................... 56,783 59,759
Current portion of long-term debt.................... 251,695 269,278
---------- ----------
Total current liabilities......................... 408,413 490,374
---------- ----------
LONG-TERM DEBT, NET OF CURRENT PORTION................. 551,542 590,380
---------- ----------
COMMITMENTS (NOTES 4 AND 5) STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 7,500 shares authorized,
100 shares issued and outstanding................. 100 100
Additional paid-in capital........................... 3,249 3,249
Retained earnings.................................... 538,911 551,977
---------- ----------
Total stockholders' equity........................ 542,260 555,326
---------- ----------
$1,502,215 $1,636,080
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-49
<PAGE> 102

A RAPID ROOTER SEWER & DRAIN SERVICE, INC.

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD
FROM
JANUARY 1,
1998 TO
FEBRUARY 12,
1996 1997 1998
---------- ---------- ------------
<S> <C> <C> <C>
REVENUES................................... $4,820,398 $4,629,655 $680,870
---------- ---------- --------
EXPENSES:
Cost of operations....................... 2,270,988 2,364,794 338,971
General and administrative............... 1,702,588 1,730,394 255,847
Depreciation and amortization............ 291,293 319,001 41,476
---------- ---------- --------
Total expenses........................ 4,264,869 4,414,189 636,294
---------- ---------- --------
INCOME FROM OPERATIONS..................... 555,529 215,466 44,576
---------- ---------- --------
OTHER EXPENSE (INCOME):
Interest expense......................... 85,789 86,367 11,148
Other, net............................... (97,058) 27,413 (476)
---------- ---------- --------
(11,269) 113,780 10,672
---------- ---------- --------
NET INCOME................................. $ 566,798 $ 101,686 $ 33,904
========== ========== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-50
<PAGE> 103

A RAPID ROOTER SEWER & DRAIN SERVICE, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON ADDITIONAL RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ---------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995.......... $100 $3,249 $ 278,717 $ 282,066
Distributions to stockholders..... -- -- (306,604) (306,604)
Net income........................ -- -- 566,798 566,798
---- ------ --------- ---------
BALANCE, DECEMBER 31, 1996.......... 100 3,249 538,911 542,260
Distributions to stockholders..... -- -- (88,620) (88,620)
Net income........................ -- -- 101,686 101,686
---- ------ --------- ---------
BALANCE, DECEMBER 31, 1997.......... 100 3,249 551,977 555,326
Distributions to stockholders..... -- -- -- --
Net income........................ -- -- 33,904 33,904
---- ------ --------- ---------
BALANCE, FEBRUARY 12, 1998.......... $100 $3,249 $ 585,881 $ 589,230
==== ====== ========= =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-51
<PAGE> 104

A RAPID ROOTER SEWER & DRAIN SERVICE, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
YEARS ENDED DECEMBER 31, JANUARY 1, 1998 TO
------------------------ FEBRUARY 12,
1996 1997 1998
---------- ---------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................ $ 566,798 $ 101,686 $ 33,904
--------- --------- --------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization...... 291,293 319,001 41,476
(Gain) loss on disposal of fixed
assets........................... (74,606) (15,665) --
Changes in assets and liabilities:
Accounts receivable.............. (89,315) 53,566 8,968
Notes receivable................. (58,503) 58,503 --
Prepaid expenses and other....... 300 -- (1,573)
Accounts payable................. (7,380) 61,402 (26,693)
Accrued expenses................. 6,914 2,976 2,965
--------- --------- --------
Total adjustments............. 68,703 479,783 25,143
--------- --------- --------
Net cash provided by operating
activities.................. 635,501 581,469 59,047
--------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of fixed assets... 83,658 54,766 --
Capital expenditures.................. (184,510) (341,859) (291)
--------- --------- --------
Net cash used in investing
activities.................. (100,852) (287,093) (291)
--------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt.......... 169,407 306,333 --
Payments of long-term debt............ (288,568) (285,438) (30,160)
Net borrowings of stockholders........ (66,061) (57,470) (56,366)
Distributions to stockholders......... (306,604) (88,620) --
--------- --------- --------
Net cash provided by (used in)
financing activities........ (491,826) (125,195) (86,526)
--------- --------- --------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS........................... 42,823 169,181 (27,770)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD................................ 91,287 134,110 303,291
--------- --------- --------
CASH AND CASH EQUIVALENTS, END OF
PERIOD................................ $ 134,110 $ 303,291 $275,521
========= ========= ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest................ $ 85,789 $ 86,367 $ 11,148
========= ========= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-52
<PAGE> 105

A RAPID ROOTER SEWER & DRAIN SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

A Rapid Rooter Sewer & Drain Service, Inc. (the "Company") designs,
constructs, repairs, maintains, and operates on-site sewage disposal systems,
primarily in and around Pompano Beach, Florida.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of
three months or less at the date of purchase as cash equivalents.

CONCENTRATION OF CREDIT RISK

Financial instruments which subject the Company to concentrations of credit
risk consist principally of trade receivables. The Company's customers are
concentrated in one geographic region and in one line of business. No single
customer accounted for a significant amount of the Company's sales, and there
are no significant accounts receivable from a single customer. The Company
reviews a customer's credit history before extending credit. The Company
establishes an allowance for doubtful accounts based on factors surrounding the
credit risk of specific customers, historical trends, and other information.

REVENUE RECOGNITION

The Company recognizes revenues as services are provided.

PROPERTY AND EQUIPMENT

At December 31, 1996 and 1997, property and equipment consisted of the
following:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Machinery and equipment...................... $ 1,840,443 $ 1,984,504
Office equipment............................. 65,406 67,782
Leasehold improvements....................... 19,473 19,473
----------- -----------
1,925,322 2,071,759
Less accumulated depreciation................ (1,022,023) (1,149,177)
----------- -----------
$ 903,299 $ 922,582
=========== ===========
</TABLE>

F-53
<PAGE> 106
A RAPID ROOTER SEWER & DRAIN SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

USE OF ESTIMATES

INCOME TAXES

For federal and state income tax purposes, the Company has elected S
corporation tax status whereby income is taxed at the stockholder level.
Therefore, no deferred tax assets, liabilities, or provision for income taxes is
recorded. Amounts are distributed to stockholders for making applicable tax
payments, and are included in distributions to stockholders in the accompanying
statements of stockholders' equity.

3. LONG-TERM DEBT

At December 31, 1996 and 1997, long-term debt consisted of the following:

<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Equipment loans, interest at varying rates between
7.25% and 12.5%, interest and principal due in
monthly installments through 2003, secured by
related equipment............................... $803,237 $859,658
Less current portion.............................. 251,695 269,278
-------- --------
$551,542 $590,380
======== ========
</TABLE>

Future aggregate annual maturities of long-term debt are as follows as of
December 31, 1997:

<TABLE>
<S> <C>
1998................................................ $269,278
1999................................................ 240,547
2000................................................ 181,433
2001................................................ 89,506
2002 and thereafter................................. 78,894
--------
$859,658
========
</TABLE>

In February 1998, in conjunction with the sale of the business (Note 6),
all long-term debt was paid in full.

F-54
<PAGE> 107
A RAPID ROOTER SEWER & DRAIN SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. BENEFIT PLAN

The Company maintains a 401(k) plan for employees. The Company matches 25%
of employee contributions to the plan up to 5% of employee compensation. Company
contributions for the years ended December 31, 1996 and 1997 were $7,720 and
$9,792, respectively. Company contributions for the period January 1, 1998 to
February 12, 1998 were $939.

5. RELATED-PARTY TRANSACTIONS

The Company's stockholders borrow from the Company from time to time to
make estimated tax payments on income taxed at the stockholder level. In
addition, the Company makes advances to stockholders from time to time to cover
certain expenses. At December 31, 1996 and 1997, the amounts owed to the Company
from stockholders were $76,767 and $134,257, respectively. During the period
from January 1, 1998 to In February 12, 1998, $56,366 of the outstanding balance
was paid by the stockholders. Subsequent to February 12, 1998, the remaining
balance was paid in full by the stockholders.

The Company leases its Pompano Beach facility from a related party. Rental
expense during 1996 and 1997 was $36,000 and $39,614, respectively. Rental
expense from January 1, 1998 to February 12, 1998 was $6,000. Future minimum
lease payments under the current lease agreement are $48,000 per year through
August 31, 2000.

6. SUBSEQUENT EVENT

On February 13, 1998, substantially all property and equipment and the
ongoing business of the Company were sold to EarthCare Company ("EarthCare") for
$3,990,120 in cash and 100,000 shares of EarthCare common stock. Prior to the
closing, all related long-term debt was paid in full to convey the assets to
EarthCare free and clear of all encumbrances and liens.

F-55
<PAGE> 108

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Seagraves, Inc. and Grease-Tec, Inc.:

In our opinion, the accompanying combined statements of operations and
stockholders' equity and cash flows present fairly, in all material respects,
the results of operations and cash flows of Seagraves, Inc. and Grease-Tec, Inc.
for the period from January 1, 1998 to March 5, 1998, in conformity with
generally accepted accounting principles. 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
of these financial statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Tulsa, Oklahoma
January 27, 1999

F-56
<PAGE> 109

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Seagraves, Inc. and Grease-Tec, Inc.:

We have audited the accompanying combined balance sheets of SEAGRAVES, INC.
(a Florida corporation d.b.a. Brownie Environmental Services) AND GREASE-TEC,
INC. (a Florida corporation) as of December 31, 1997 and 1996 and the related
combined statements of operations, stockholders' equity, and cash flows for each
of the two years in the period ended December 31, 1997. 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 audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Seagraves, Inc. (d.b.a.
Brownie Environmental Services) and Grease-Tec, Inc. as of December 31, 1997 and
1996 and the results of their operations and their cash flows for each of the
two years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
May 14, 1998

F-57
<PAGE> 110

SEAGRAVES, INC.
(D.B.A. BROWNIE ENVIRONMENTAL SERVICES)
AND GREASE-TEC, INC.

COMBINED BALANCE SHEET

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................................... $ 370,683 $ 360,289
Accrued expenses..................................... 228,449 206,191
Current portion of long-term debt.................... 278,794 293,132
---------- ----------
Total current liabilities......................... 877,926 859,612
---------- ----------
LONG-TERM DEBT:
Long-term debt, net of current portion............ 219,854 183,214
Related-party notes payable, net of current
portion......................................... 15,902 94,658
---------- ----------
235,756 277,872
---------- ----------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
STOCKHOLDERS' EQUITY:
Common stock of Seagraves, Inc., $1 par value; 500
shares authorized, 100 shares issued and
outstanding....................................... 100 100
Common stock of Grease-Tec, Inc., no par value;
10,000 shares authorized, 10,000 shares issued and
outstanding....................................... -- --
Retained earnings.................................... 394,980 380,069
---------- ----------
Total stockholders' equity........................ 395,080 380,169
---------- ----------
$1,508,762 $1,517,653
========== ==========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-58
<PAGE> 111

SEAGRAVES, INC.
(D.B.A. BROWNIE ENVIRONMENTAL SERVICES)
AND GREASE-TEC, INC.

COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
YEARS ENDED DECEMBER 31, JANUARY 1, 1998
------------------------- TO MARCH 5,
1996 1997 1998
----------- ----------- ----------------
<S> <C> <C> <C>
REVENUES................................ $6,491,346 $6,924,493 $1,342,431
---------- ---------- ----------
EXPENSES:
Cost of operations.................... 4,626,757 4,868,591 942,158
Sales, general, and administrative.... 1,360,725 1,636,989 355,407
Depreciation and amortization......... 236,777 248,938 38,403
---------- ---------- ----------
Total expenses..................... 6,224,259 6,754,518 1,335,968
---------- ---------- ----------
INCOME FROM OPERATIONS.................. 267,087 169,975 6,463
---------- ---------- ----------
OTHER EXPENSE (INCOME):
Interest expense...................... 61,242 36,425 8,659
Other, net............................ (22,634) (75,529) (105,984)
---------- ---------- ----------
38,608 (39,104) (97,325)
---------- ---------- ----------
NET INCOME......................... $ 228,479 $ 209,079 $ 103,788
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-59
<PAGE> 112

SEAGRAVES, INC.
(D.B.A. BROWNIE ENVIRONMENTAL SERVICES)
AND GREASE-TEC, INC.

COMBINED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
GREASE-TEC, INC. SEAGRAVES, INC.
COMMON STOCK COMMON STOCK
----------------- --------------- RETAINED
SHARES AMOUNT SHARES AMOUNT EARNINGS TOTAL
------- ------- ------ ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31,
1995..................... 10,000 $ -- 100 $100 $ 261,177 $ 261,277
Distributions to
stockholders.......... -- -- -- -- (94,676) (94,676)
Net income............... -- -- -- -- 228,479 228,479
------ ---- --- ---- --------- ---------
BALANCE, DECEMBER 31,
1996..................... 10,000 -- 100 100 394,980 395,080
Distributions to
stockholders.......... -- -- -- -- (223,990) (223,990)
Net income............... -- -- -- -- 209,079 209,079
------ ---- --- ---- --------- ---------
BALANCE, DECEMBER 31,
1997..................... 10,000 -- 100 100 380,069 380,169
Distributions to
stockholders.......... -- -- -- -- (32,000) (32,000)
Net income............... -- -- -- -- 103,788 103,788
------ ---- --- ---- --------- ---------
BALANCE, MARCH 5, 1998..... 10,000 $ -- 100 $100 $ 451,857 $ 451,957
====== ==== === ==== ========= =========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-60
<PAGE> 113

SEAGRAVES, INC.
(D.B.A. BROWNIE ENVIRONMENTAL SERVICES)
AND GREASE-TEC, INC.

COMBINED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1998
TO MARCH 5,
1996 1997 1998
--------- --------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................. $ 228,479 $ 209,079 $ 103,788
--------- --------- ---------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 236,777 248,938 38,403
(Gain) loss on sale of fixed
assets............................. 21,805 (70,254) (97,641)
Changes in assets and liabilities:
Accounts receivable................ (97,202) (7,921) (58,166)
Prepaid expenses and other......... (4,838) (23,129) 54,520
Other assets....................... (2,010) (1,221) --
Accounts payable................... 191,375 (10,394) (50,864)
Accrued expenses................... 57,896 (22,258) 54,363
--------- --------- ---------
Total adjustments............... 403,803 113,761 (59,385)
--------- --------- ---------
Net cash provided by operating
activities................... 632,282 322,840 44,403
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets...... 66,592 100,928 100,000
Capital expenditures.................... (509,292) (290,157) (148,121)
--------- --------- ---------
Net cash used in investing
activities................... (442,700) (189,229) (48,121)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt............ 234,672 316,932 59,425
Payments of long-term debt.............. (329,545) (266,287) (33,635)
Net borrowings from related party....... 17,947 5,809 (94,658)
Distributions to stockholders........... (94,676) (223,990) (32,000)
--------- --------- ---------
Net cash used in financing
activities................... (171,602) (167,536) (100,868)
--------- --------- ---------
NET DECREASE IN CASH AND CASH
EQUIVALENTS............................. 17,980 (33,925) (104,586)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD.................................. 127,744 145,724 111,799
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF
PERIOD.................................. $ 145,724 $ 111,799 $ 7,213
========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest.................. $ 63,327 $ 37,838 $ 7,095
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-61
<PAGE> 114

SEAGRAVES, INC.
(D.B.A. BROWNIE ENVIRONMENTAL SERVICES)
AND GREASE-TEC, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Seagraves, Inc. and Grease-Tec, Inc. (collectively, the "Company") design,
construct, repair, maintain, and operate on-site sewage disposal systems,
primarily in metropolitan Orlando, Florida. Seagraves, Inc. and Grease-Tec, Inc.
are under common ownership.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF COMBINATION

The accompanying combined financial statements include the accounts of
Seagraves, Inc. and Grease-Tec, Inc. All significant intercompany accounts have
been eliminated.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of
three months or less at the date of purchase to be cash equivalents.

CONCENTRATION OF CREDIT RISK

REVENUE RECOGNITION

The Company recognizes revenues as services are provided.

PROPERTY AND EQUIPMENT

F-62
<PAGE> 115
SEAGRAVES, INC.
(D.B.A. BROWNIE ENVIRONMENTAL SERVICES)
AND GREASE-TEC, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 1996 and 1997, property and equipment consisted of the
following:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Machinery and equipment...................... $ 1,705,843 $ 1,866,519
Buildings and improvements................... 361,183 391,780
Office equipment............................. 89,153 101,715
----------- -----------
2,156,179 2,360,014
Less accumulated depreciation................ (1,238,583) (1,431,763)
----------- -----------
$ 917,596 $ 928,251
=========== ===========
</TABLE>

USE OF ESTIMATES

INCOME TAXES

The Company has elected for federal and state income tax purposes S
corporation tax status, whereby income is taxed at the stockholder level.
Therefore, no deferred tax assets, liabilities, or provisions for income taxes
are recorded. Amounts are distributed to the stockholders for making applicable
tax payments.

F-63
<PAGE> 116
SEAGRAVES, INC.
(D.B.A. BROWNIE ENVIRONMENTAL SERVICES)
AND GREASE-TEC, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

3. LONG-TERM DEBT

At December 31, 1996 and 1997, long-term debt consisted of the following:

<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Equipment loans, interest at varying rates between
8.5% and 11%, interest and principal due in
monthly installments through 2000, secured by
related equipment............................... $351,278 $401,923
Related-party notes payable, interest at varying
rates between 10% and 12%, interest and
principal due in monthly installments through
1999, unsecured................................. 163,272 169,081
-------- --------
514,550 571,004
278,794 293,132
-------- --------
Less current portion.............................. $235,756 $277,872
======== ========
</TABLE>

Future aggregate annual maturities of long-term debt are as follows as of
December 31, 1997:

<TABLE>
<S> <C>
1998........................................................ $293,132
1999........................................................ 192,387
2000........................................................ 67,548
2001........................................................ 13,418
2002 and thereafter......................................... 4,519
--------
$571,004
========
</TABLE>

In March 1998, in conjunction with the sale of the business (Note 5), all
long-term debt was paid in full.

4. RELATED-PARTY TRANSACTIONS

The Company's stockholders make loans to the Company from time to time to
purchase equipment. At December 31, 1996 and 1997, the amounts owed to
stockholders were $163,272 and $169,081, respectively. During fiscal years 1996
and 1997, the Company paid interest of $13,031 and $6,421, respectively, to
stockholders. Subsequent to December 31, 1997, the amounts owed to stockholders
were paid in full. Interest paid to stockholders from January 1, 1998 to March
5, 1998 was $68.

The Company rents land and buildings from certain stockholders. Rent paid
to stockholders was $20,000 and $15,600 in 1996 and 1997, respectively. Rent
paid to stockholders from January 1, 1998 to March 5, 1998 was $8,965.

F-64
<PAGE> 117
SEAGRAVES, INC.
(D.B.A. BROWNIE ENVIRONMENTAL SERVICES)
AND GREASE-TEC, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

5. SUBSEQUENT EVENT

On March 6, 1998, substantially all property and equipment and the ongoing
business of the Company were sold to EarthCare Company ("EarthCare") for
$3,250,000 in cash, a $2,000,000 note receivable, and 60,000 shares of EarthCare
common stock. Prior to the closing, all related long-term debt was paid in full
to convey assets to EarthCare free and clear of all encumbrances and liens.

F-65
<PAGE> 118

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of RGM Liquid Waste Removal Corporation and Affiliates

In our opinion, the accompanying combined statements of operations and
stockholders' equity and cash flows present fairly, in all material respects,
the results of operations and cash flows of RGM Liquid Waste Removal Corporation
and Affiliates for the period from November 1, 1997 to April 30, 1998, in
conformity with generally accepted accounting principles. 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 of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP

Tulsa, Oklahoma
January 14, 1999

F-66
<PAGE> 119

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To RGM Liquid Waste Removal Corporation and Affiliates:

We have audited the accompanying combined balance sheets of RGM LIQUID
WASTE REMOVAL CORPORATION AND AFFILIATES as of October 31, 1996 and 1997 and the
related combined statements of operations, stockholders' equity, and cash flows
for the years 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 audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of RGM Liquid Waste Removal
Corporation and Affiliates as of October 31, 1996 and 1997 and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
July 10, 1998

F-67
<PAGE> 120

RGM LIQUID WASTE REMOVAL CORPORATION
AND AFFILIATES

COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
OCTOBER 31,
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 581,017 $1,280,106
Marketable equity securities......................... 490,318 580,017
Accounts receivable, net of allowance for doubtful
accounts of $70,000 in 1996 and $49,000 in 1997... 2,065,540 1,179,148
Note receivable...................................... 813,462 579,481
Prepaid expenses and other........................... 37,032 41,342
---------- ----------
Total current assets.............................. 3,987,369 3,660,094
PROPERTY AND EQUIPMENT, NET.......................... 1,394,204 1,032,921
NOTE RECEIVABLE...................................... 579,482 --
OTHER ASSETS......................................... 81,585 124,579
---------- ----------
$6,042,640 $4,817,594
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................................... $1,274,689 $ 374,827
Accrued expenses..................................... 240,159 211,577
Due to related parties............................... 484,263 506,713
Income taxes payable, net............................ 324,496 281,566
Deferred income taxes................................ 132,529 16,360
Current portion of long-term debt.................... 281,264 133,741
---------- ----------
Total current liabilities.................... 2,737,400 1,524,784
---------- ----------
LONG-TERM DEBT, NET OF CURRENT PORTION................. 353,724 82,827
---------- ----------
DUE TO STOCKHOLDERS.................................... 18,688 131,637
---------- ----------
DEFERRED INCOME TAXES.................................. 100,989 59,057
---------- ----------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
STOCKHOLDERS' EQUITY:
Common stock (Note 2)................................ 11,000 11,000
Unrealized depreciation of investments............... (9,682) --
Retained earnings.................................... 2,830,521 3,008,289
---------- ----------
Total stockholders' equity........................ 2,831,839 3,019,289
---------- ----------
$6,042,640 $4,817,594
========== ==========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-68
<PAGE> 121

RGM LIQUID WASTE REMOVAL CORPORATION
AND AFFILIATES

COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
YEARS ENDED OCTOBER 31, NOVEMBER 1, 1997
------------------------ TO APRIL 30,
1996 1997 1998
----------- ---------- ----------------
<S> <C> <C> <C>
REVENUES............................... $10,104,213 $7,459,143 $4,065,091
----------- ---------- ----------
EXPENSES:
Cost of operations................... 6,929,729 4,485,210 2,627,341
General and administrative........... 2,627,519 2,407,013 1,215,957
Depreciation and amortization........ 417,476 394,420 220,143
----------- ---------- ----------
Total expenses.................... 9,974,724 7,286,643 4,063,441
----------- ---------- ----------
INCOME FROM OPERATIONS................. 129,489 172,500 1,650
----------- ---------- ----------
OTHER EXPENSE (INCOME):
Interest expense (income), net....... 65,497 (88,518) (42,154)
Other, net........................... 804,489 (73,276) 33,148
----------- ---------- ----------
869,986 (161,794) (9,006)
----------- ---------- ----------
(LOSS) INCOME BEFORE INCOME TAXES...... (740,497) 334,294 (7,356)
(BENEFIT) PROVISION FOR INCOME TAXES... (425,210) 156,526 124,303
----------- ---------- ----------
NET (LOSS) INCOME...................... $ (315,287) $ 177,768 $ (131,659)
=========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-69
<PAGE> 122

RGM LIQUID WASTE REMOVAL CORPORATION
AND AFFILIATES

COMBINED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
UNREALIZED
LOSSES ON
SECURITIES
COMMON AVAILABLE RETAINED
STOCK FOR SALE EARNINGS TOTAL
------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE, NOVEMBER 1, 1995.......... $11,000 $ -- $3,145,808 $3,156,808
Unrealized depreciation on
securities available for
sale.......................... -- (9,682) -- (9,682)
Net loss......................... -- -- (315,287) (315,287)
------- ------- ---------- ----------
BALANCE, OCTOBER 31, 1996.......... 11,000 (9,682) 2,830,521 2,831,839
Change in unrealized depreciation
on securities available for
sale.......................... -- 9,682 -- 9,682
Net income....................... -- -- 177,768 177,768
------- ------- ---------- ----------
BALANCE, OCTOBER 31, 1997.......... 11,000 -- 3,008,289 3,019,289
Net income....................... -- -- (131,659) (131,659)
------- ------- ---------- ----------
BALANCE, APRIL 30, 1998............ $11,000 $ -- $2,876,630 $2,887,630
======= ======= ========== ==========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-70
<PAGE> 123

RGM LIQUID WASTE REMOVAL CORPORATION
AND AFFILIATES

COMBINED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
YEARS ENDED OCTOBER 31, NOVEMBER 1, 1997
------------------------- TO APRIL 30,
1996 1997 1998
----------- ---------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income........................ $ (315,287) $ 177,768 $ (131,659)
----------- ---------- ----------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization.......... 417,476 394,420 220,143
Loss on sale of fixed assets........... 26,956 48 --
Changes in assets and liabilities:
Accounts receivable, net............ 508,139 886,392 (885,897)
Prepaid expenses and other.......... (1,746) (4,310) (5,823)
Other assets........................ 109,680 (42,994) --
Accounts payable.................... (965,735) (899,862) 87,841
Accrued expenses.................... 9,260 (28,582) (35,804)
Income tax payable.................. 311,670 (42,931) (212,436)
Deferred taxes...................... (893,777) (158,101) (22,297)
----------- ---------- ----------
Total adjustments................. (478,077) 104,080 (854,273)
----------- ---------- ----------
Net cash (used in) provided by
operating activities............ (793,364) 281,848 (985,932)
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Merco...................... 3,603,192 -- --
Note receivable from Merco............... (1,392,944) 813,463 447,750
Marketable securities.................... (500,000) (80,017) (33,148)
Capital expenditures..................... (114,175) (33,184) (5,798)
----------- ---------- ----------
Net cash provided by investing
activities...................... 1,596,073 700,262 408,804
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt............. 27,364 -- --
Repayments of long-term debt............. (695,504) (418,420) (24,683)
Net borrowing from related party......... 80,806 22,450 (86,713)
Net borrowing from stockholder........... 16,860 112,949 --
----------- ---------- ----------
Net cash used in financing
activities...................... (570,474) (283,021) (111,396)
----------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.............................. 232,235 699,089 (688,524)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD................................... 348,782 581,017 1,280,106
----------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD... $ 581,017 $1,280,106 $ 591,582
=========== ========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest................... $ 112,328 $ 57,140 $ 16,160
=========== ========== ==========
Cash paid for income taxes............... $ 193,421 $ 368,767 $ 305,088
=========== ========== ==========
NONCASH INVESTING ACTIVITY:
Unrealized loss (gain) on
securities available for sale... $ 9,682 $ (9,682) $ --
=========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-71
<PAGE> 124

RGM LIQUID WASTE REMOVAL CORPORATION
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

RGM Liquid Waste Removal Corporation ("RGM") and affiliates (collectively,
the "Company") is engaged in the removal of various waste materials. As part of
its normal operations, the Company enters into agreements of up to four years
with governmental, institutional, and commercial entities. These agreements
specify that the Company will remove various waste materials at per unit prices.
Billings are submitted as services are provided.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF COMBINATION

The accompanying combined financial statements include the accounts of
Devito Environmental Corporation ("Devito"), Advanced Transfer Technology, Inc.
("ATT"), and Envirotech Leasing & Rental Corporation ("Envirotech")
(collectively, the "Affiliates") since they have been under the same ownership
of RGM since their respective dates of inception. All material intercompany
accounts have been eliminated.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of
three months or less at the date of purchase to be cash equivalents.

The carrying amounts of short-term investments approximate fair value.
Short-term investments consist of marketable equity securities and money market
funds. In accordance with the criteria specified by Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," these investments were classified as available for
sale.

CONCENTRATION OF CREDIT RISK

REVENUE RECOGNITION

The Company recognizes revenues as services are provided.

F-72
<PAGE> 125
RGM LIQUID WASTE REMOVAL CORPORATION
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided using
useful lives of five to ten years for machinery and equipment and office
equipment. Leasehold improvements are depreciated over the shorter of the term
of the lease or the useful life of the improvements.

At October 31, 1996 and 1997, property and equipment consisted of the
following:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Machinery and equipment....................... $ 4,528,286 $ 4,478,562
Office equipment.............................. 25,955 42,140
Leasehold improvements........................ 105,646 129,005
----------- -----------
4,659,887 4,649,707
Less accumulated depreciation................. (3,265,683) (3,616,786)
----------- -----------
$ 1,394,204 $ 1,032,921
=========== ===========
</TABLE>

COMMON STOCK

No par value common stock of RGM and affiliates consists of the following
as of October 31, 1996 and 1997:

<TABLE>
<CAPTION>
ISSUED AND
AUTHORIZED OUTSTANDING
---------- -----------
<S> <C> <C>
RGM............................................. 200 10
Devito.......................................... 200 100
ATT............................................. 200 10
Envirotech...................................... 200 100
</TABLE>

USE OF ESTIMATES

F-73
<PAGE> 126
RGM LIQUID WASTE REMOVAL CORPORATION
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

INCOME TAXES

For federal and state income tax purposes, two of the affiliates (the "S
corporations") have elected S corporation tax status whereby income is taxed at
the shareholder level. Therefore, no deferred tax assets, liabilities, or
provisions for income taxes is recorded. See Note 7 for income tax information
for the two affiliates which are C corporations (the "C corporations").

3. NOTE RECEIVABLE

From July 1992 to June 1996, the Company participated in the Merco Joint
Venture ("Merco"), which was accounted for using the equity method of
accounting. Merco contracts with the city of New York to receive, transport, and
dispose of dewatered sewage sludge. The Company's ownership interest in Merco
was 33 1/3%. At May 31, 1996, the Company's investment in Merco was $2,439,761.
On June 1, 1996, pursuant to a settlement agreement between the Company and
Merco, the joint venture agreed to pay $1,650,000 for the Company's interest in
Merco. In 1996, the Company recognized a loss on the sale of the investment in
the amount of $789,761, which is included in other, net, in the accompanying
statements of operations. The settlement was in the form of a note receivable
which is payable in monthly installments of $74,625 through June 1998 and bears
interest at 8% per annum.

4. LONG-TERM DEBT

At October 31, 1996 and 1997, long-term debt consisted of the following:

<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Equipment loans, interest at varying rates between 7.75%
and 12.38%, interest and principal due in monthly
installments through August 2001, secured by related
equipment.............................................. $ 595,272 $ 207,665
Capital lease obligations and other...................... 39,716 8,903
--------- ---------
634,988 216,568
Less current portion..................................... (281,264) (133,741)
--------- ---------
$ 353,724 $ 82,827
========= =========
</TABLE>

Future aggregate annual maturities of long-term debt are as follows as of
October 31, 1997:

F-74
<PAGE> 127
RGM LIQUID WASTE REMOVAL CORPORATION
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

In May 1998, the Company repaid all long-term debt in full in conjunction
with the sale of the business (Note 9).

5. RELATED-PARTY TRANSACTIONS

The Company's stockholders make loans to the Company from time to time to
meet working capital needs and to purchase equipment. At December 31, 1996 and
1997, the amounts owed to stockholders were $18,688 and $131,637, respectively.
In May 1998, all amounts owed to stockholders were paid in full in conjunction
with the sale of the business (Note 9).

The Company is a guarantor of a loan entered by the stockholder in the
amount of $118,000. The loan was paid in full in May 1998 in conjunction with
the sale of the business (Note 9).

The Company leases its office facilities from related parties under
noncancelable operating leases on a month-to-month basis. Rent expense for the
years ended October 31, 1996 and 1997 was $406,558 and $396,991 and $184,617 for
the period from November 1, 1997 to April 30, 1998. Such amounts are included in
general and administrative expenses in the accompanying statement of operations.
Amounts owed to these related parties for back rents at October 31, 1996 and
1997 were $456,475 and $506,713, respectively.

The Company performs waste removal services for an entity under the control
of one of the Company's stockholders. The related party also provided waste
treatment services to the Company. During 1996 and 1997, revenue from the
related party was $55,280 and $74,016, respectively. There was no such revenue
for the period from November 1, 1997 to April 30, 1998. Charges for waste
treatment services performed by the related party for RGM during 1996 and 1997
were $7,765 and $2,600, respectively. There were no such charges for the period
from November 1, 1997 to April 30, 1998. Net amounts due to the related party at
October 31, 1996 and 1997 were $40,061 and $0 and are included in due to related
parties in the accompanying balance sheet.

6. COMMITMENTS AND CONTINGENCIES

The Company has a defined contribution 401(k) plan (the "Plan") covering
substantially all of its full-time employees. The Company has the option to
contribute a profit-sharing portion to the Plan each year. During the years
ended October 31, 1996 and 1997, and during the period from November 1, 1997 to
April 30, 1998, no such contributions were made.

Under the terms of a bargaining agreement with its union employees, one of
the affiliates is required to make contributions based on hours worked to a
union annuity fund. Contributions to this fund for the years ended October 31,
1996 and 1997 were $18,336 and $64,323, respectively, and $9,667 for the period
from November 1, 1997 to April 30, 1998. Such contributions are included in
general and administrative expenses in the accompanying statement of operations.

F-75
<PAGE> 128
RGM LIQUID WASTE REMOVAL CORPORATION
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES

The accompanying financial statements include income tax provisions related
to the C corporations computed in accordance with SFAS No. 109, "Accounting for
Income Taxes." The components of the income tax (benefit) provision for the
years ended October 31, 1996 and 1997, and for the period from November 1, 1997
to April 30, 1998, are summarized as follows:

<TABLE>
<CAPTION>
PERIOD FROM
NOVEMBER 1,
1997
TO APRIL 30,
1996 1997 1998
--------- --------- -----------------
<S> <C> <C> <C>
Current provision................ $ 468,567 $ 314,627 $146,600
Deferred taxes................... (893,777) (158,101) (22,297)
--------- --------- --------
Income tax (benefit) provision... $(425,210) $ 156,526 $124,303
========= ========= ========
</TABLE>

Reconciliation from the federal statutory rate to the actual income tax
benefit is as follows:

<TABLE>
<CAPTION>
1996 1997
----- ----
<S> <C> <C>
Statutory federal tax rate............................. (34.0)% 34.0%
State and city income taxes, net of federal tax
benefit.............................................. (8.0) 7.0
(Income) loss from the S corporations.................. (9.2) 3.8
Other.................................................. (6.2) 2.0
----- ----
(57.4)% 46.8%
===== ====
</TABLE>

The reconciliation of the federal statutory tax rate for the period from
November 1, 1997 to April 30, 1998 would not be meaningful, as the tax provision
relates to RGM which is a C-Corporation and combined taxable income reflects
total pretax losses of the S-Corporations. RGM's effective tax rate for the
period from November 1, 1997 to April 30, 1998 was 42%, which differs from the
federal statutory rate due to state and city income taxes.

F-76
<PAGE> 129
RGM LIQUID WASTE REMOVAL CORPORATION
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The sources of differences between the financial accounting and tax bases
of the Company's assets and liabilities which give rise to the deferred tax
assets and liabilities and the tax effects of each are as follows as of October
31, 1996 and 1997:

<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts............... $ 29,120 $ 20,384
Capital loss carryforward..................... 59,805 38,206
--------- ---------
Total deferred tax assets.................. 88,925 58,590
--------- ---------
Deferred tax liabilities:
Depreciation.................................. (121,027) (94,240)
Joint venture income.......................... (121,881) --
Cash to accrual............................... (79,535) (39,767)
--------- ---------
Total deferred tax liabilities............. (322,443) (134,007)
--------- ---------
Net deferred tax liability................. $(233,518) $ (75,417)
========= =========
</TABLE>

8. ENVIRONMENTAL REGULATIONS

9. SUBSEQUENT EVENT

On May 1, 1998, the Company sold substantially all property and equipment
and the ongoing business to EarthCare Company ("EarthCare") for $4,500,000 in
cash and 105,000 shares of EarthCare common stock. Contingent consideration of
$1,000,000 in cash and 55,000 shares of EarthCare common stock is receivable 365
days after the date of purchase, net of offsets for losses, as defined in the
purchase agreement. Prior to the closing, all equipment loans and related-party
payables were paid in full to convey assets to EarthCare free and clear of all
encumbrances and liens.

F-77
<PAGE> 130

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of Eldredge Wastewater Management, Inc.

In our opinion, the accompanying statements of operations and stockholders'
equity and cash flows present fairly, in all material respects, the results of
operations and cash flows of Eldredge Wastewater Management, Inc. for the period
from January 1, 1998 to May 7, 1998, in conformity with generally accepted
accounting principles. 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 of these
financial statements in accordance with generally accepted auditing standards
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Tulsa, Oklahoma
January 15, 1999

F-78
<PAGE> 131

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Eldredge Wastewater Management, Inc.:

We have audited the accompanying balance sheets of ELDREDGE WASTEWATER
MANAGEMENT, INC. (a Pennsylvania corporation) as of December 31, 1996 and 1997
and the related statements of operations, stockholder's equity, and cash flows
for each of the two years in the period ended December 31, 1997. 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 audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Eldredge Wastewater
Management, Inc. as of December 31, 1996 and 1997 and the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
June 19, 1998

F-79
<PAGE> 132

ELDREDGE WASTEWATER MANAGEMENT, INC.

BALANCE SHEET

LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable...................................... $ 324,716 $ 353,165
Accrued expenses...................................... 35,630 41,010
Current portion of long-term debt..................... 179,023 119,461
---------- ----------
Total current liabilities.......................... 539,369 513,636
---------- ----------
LONG-TERM DEBT, NET OF CURRENT PORTION.................. 115,141 322,347
---------- ----------
DEFERRED INCOME TAXES................................... 22,873 9,926
---------- ----------
COMMITMENTS AND CONTINGENCIES (NOTES 5 AND 6)
STOCKHOLDER'S EQUITY:
Common stock, no par value; 10,000 shares authorized,
4,000 shares issued and outstanding in 1996 and
1997.................................................. 1,000 1,000
Retained earnings....................................... 341,424 290,194
---------- ----------
Total stockholder's equity......................... 342,424 291,194
---------- ----------
$1,019,807 $1,137,103
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-80
<PAGE> 133

ELDREDGE WASTEWATER MANAGEMENT, INC.

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
YEARS ENDED DECEMBER 31, JANUARY 1,
------------------------- 1998
1996 1997 TO MAY 7, 1998
----------- ----------- --------------
<S> <C> <C> <C>
REVENUES................................. $4,206,779 $4,074,248 $1,514,756
---------- ---------- ----------
EXPENSES:
Cost of operations..................... 3,094,579 2,841,432 1,108,708
General and administrative............. 999,328 1,081,150 385,582
Depreciation and amortization.......... 176,250 192,534 68,311
---------- ---------- ----------
Total expenses...................... 4,270,157 4,115,116 1,562,601
---------- ---------- ----------
LOSS FROM OPERATIONS..................... (63,378) (40,868) (47,845)
---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense, net.................. (35,505) (34,828) (11,959)
Other.................................. 10,873 6,509 1,562
---------- ---------- ----------
(24,632) (28,319) (10,397)
---------- ---------- ----------
LOSS BEFORE BENEFIT FROM INCOME TAXES.... (88,010) (69,187) (58,242)
INCOME TAX BENEFIT....................... (17,968) (17,957) (13,686)
---------- ---------- ----------
NET LOSS............................ $ (70,042) $ (51,230) $ (44,556)
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-81
<PAGE> 134

ELDREDGE WASTEWATER MANAGEMENT, INC.

STATEMENT OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
COMMON RETAINED
STOCK EARNINGS TOTAL
------ -------- --------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1995....................... $1,000 $411,466 $412,466
Net loss....................................... -- (70,042) (70,042)
------ -------- --------
BALANCE, DECEMBER 31, 1996....................... 1,000 341,424 342,424
Net loss....................................... -- (51,230) (51,230)
------ -------- --------
BALANCE, DECEMBER 31, 1997....................... 1,000 290,194 291,194
Net Loss....................................... -- (44,556) (44,556)
------ -------- --------
BALANCE, MAY 7, 1998............................. $1,000 $245,638 $246,638
====== ======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-82
<PAGE> 135

ELDREDGE WASTEWATER MANAGEMENT, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED PERIOD FROM
DECEMBER 31, JANUARY 1,
------------------- 1998
1996 1997 TO MAY 7, 1998
-------- -------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................. $(70,042) $(51,230) $(44,556)
-------- -------- --------
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization.......... 176,250 192,534 68,311
Deferred income taxes.................. (17,234) (12,947) (3,333)
Changes in assets and liabilities:
Accounts receivable.................. (39,202) (3,976) (3,956)
Related-party receivable............. 227,250 (31,236) 92,847
Prepaid expenses and other........... 25,550 (411) 3,774
Accounts payable..................... (43,273) 28,449 35,601
Accrued expenses..................... 20,444 5,380 10,553
-------- -------- --------
Total adjustments................. 349,785 177,793 203,797
-------- -------- --------
Net cash provided by operating
activities..................... 279,743 126,563 159,241
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................... (72,516) (297,361) (35,297)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt................ -- 197,901 --
Repayments of long-term debt.............. (156,754) (85,257) (39,733)
-------- -------- --------
Net cash provided by (used in)
financing activities........... (156,754) 112,644 (39,733)
-------- -------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS..... 50,473 (58,154) 84,211
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD.................................... 28,656 79,129 20,975
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.... $ 79,129 $ 20,975 $105,186
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest.................... $ 33,466 $ 37,146 $ 10,212
======== ======== ========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Equipment financed under capital lease
obligation............................. $ -- $ 35,000 $ --
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-83
<PAGE> 136

ELDREDGE WASTEWATER MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Eldredge Wastewater Management, Inc. (the "Company"), a Pennsylvania
corporation, is engaged in the design, construction, repair, and maintenance of
on-site sewage disposal systems. The Company's services are sold to customers
located primarily in the Delaware Valley of Southeastern Pennsylvania. The
Company is a wholly owned subsidiary of The Eldredge Companies, Inc. ("The
Eldredge Companies").

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with purchased
maturities of three months or less at the date of purchase to be cash
equivalents.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided over
estimated useful lives of five to ten years using the straight-line method.

At December 31, 1996 and 1997, property and equipment consisted of the
following:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Property and equipment...................... $ 1,925,838 $ 2,258,199
Less accumulated depreciation............... (1,640,039) (1,832,573)
----------- -----------
$ 285,799 $ 425,626
=========== ===========
</TABLE>

REVENUE RECOGNITION

The Company recognizes revenues as services are provided.

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 assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-84
<PAGE> 137
ELDREDGE WASTEWATER MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. INCOME TAXES

The benefit from income taxes is summarized as follows for the years ended
December 31, 1996, 1997 and for the period from January 1, 1998 to May 7, 1998:

<TABLE>
<CAPTION>
JANUARY 1,
1998
1996 1997 TO MAY 7, 1998
-------- -------- --------------
<S> <C> <C> <C>
Current............................. $ (734) $ (5,010) $(10,353)
Deferred............................ (17,234) (12,947) (3,333)
-------- -------- --------
$(17,968) $(17,957) $(13,686)
======== ======== ========
</TABLE>

Significant components of the Company's deferred income tax liability as of
December 31, 1996 and 1997 are summarized as follows:

<TABLE>
<CAPTION>
1996 1997
------- ------
<S> <C> <C>
Deferred income tax liability:
Property and equipment............................. $18,361 $5,391
Other.............................................. 4,512 4,535
------- ------
$22,873 $9,926
======= ======
</TABLE>

The operations of the Company are included in the consolidated federal
income tax return of The Eldredge Companies. All tax amounts above as well as
tax amounts included in the accompanying financial statements have been
reflected as if the Company filed separate state and federal tax returns.

F-85
<PAGE> 138
ELDREDGE WASTEWATER MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM DEBT

At December 31, 1996 and 1997, long-term debt consisted of the following:

<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Note payable to bank, interest at 9.75%,
principal and interest payable in monthly
installments through September 1, 2001;
secured by substantially all property and
equipment acquired prior to April 1995........ $ 258,499 $ 235,609
Equipment loans and capital lease obligation,
interest at varying rates between 7.75% and
10.75%, interest and principal due in monthly
installments through 2000; secured by related
equipment..................................... 35,665 173,948
Note payable to officer, interest at 12.5%,
principal and interest payable in monthly
installments through March 1, 2000;
unsecured..................................... -- 32,251
--------- ---------
294,164 441,808
Less current portion............................ (179,023) (119,461)
--------- ---------
$ 115,141 $ 322,347
========= =========
</TABLE>

Future aggregate annual maturities of long-term debt are as follows as of
December 31, 1997:

In May 1998, in conjunction with the sale of the business (Note 7), all
related long-term debt was paid in full.

5. COMMITMENTS AND CONTINGENCIES

BENEFIT PLAN

The Company maintains a 401(k) plan for employees. The Company makes a
discretionary profit-sharing contribution to the plan based on estimated company
profitability. Company contributions for the years ended December 31, 1996 and
1997 were $10,000 and $6,000, respectively. There were no such contributions for
the period from January 1, 1998 to May 7, 1998.

F-86
<PAGE> 139
ELDREDGE WASTEWATER MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

ENVIRONMENTAL AND LEGAL MATTERS

The Company is subject to various claims and legal actions which arise in
the ordinary course of business. In the opinion of management, the ultimate
resolution of any such matters should not have a material adverse effect on the
Company's financial position or results of operations.

6. RELATED-PARTY TRANSACTIONS

The Company makes periodic cash transfers to (from) The Eldredge Companies
and its subsidiaries based on available cash. Additionally, the Company receives
certain administration services from its parent company, The Eldredge Companies.
Allocations of parent company direct costs related to these services, totaled
$207,727 and $158,929 for the years ended December 31, 1996 and 1997,
respectively, and $67,486 for the period from January 1, 1998 to May 7, 1998.
These allocations are included in general and administrative expense in the
accompanying statement of operations. The Company also receives certain
management services from other wholly owned subsidiaries of The Eldredge
Companies. Management fees, which are reflected in general and administrative
expense in the accompanying statement of operations, totaled $247,392 and
$220,913 for the years ended December 31, 1996 and 1997, respectively, and
$55,551 for the period from January 1, 1998 to May 7, 1998. The stockholders of
The Eldredge Companies also served as key officers of the Company during 1996
and 1997. Compensation paid to one of these officers totaled $104,067 and
$103,879 for 1996 and 1997, respectively, and $43,333 for the period from
January 1, 1998 to May 7, 1998. Such amounts are included in general and
administrative expense in the accompanying statement of operations. The Company
leases its office space and equipment storage facilities from a partnership
owned by the stockholders of The Eldredge Companies. Rental expense during the
years ended December 31, 1996 and 1997 was $22,740, and $22,320, respectively,
and $9,300 for the period from January 1, 1998 to May 7, 1998.

The Company purchases certain equipment improvements from a wholly owned
subsidiary of The Eldredge Companies. These improvements relate primarily to the
Company's fleet of septic waste tanker trucks. For the years ended December 31,
1996 1997, these equipment purchases totaled $4,174 and $123,218, respectively,
and $26,464 for the period from January 1, 1998 to May 7, 1998. In addition,
this sister company performs substantially all of the repair and maintenance
services on the company vehicles. For the years ended December 31, 1996 and
1997, these services totaled $176,247 and $192,034, respectively, and $77,800
for the period from January 1, 1998 to May 7, 1998. These amounts are reflected
in cost of operations in the accompanying statement of operations.

F-87
<PAGE> 140
ELDREDGE WASTEWATER MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. SUBSEQUENT EVENT

On May 8, 1998, substantially all property and equipment and the ongoing
business of the Company was sold to EarthCare Company ("EarthCare") for
$2,040,000 in cash and 85,000 shares of EarthCare common stock. Contingent
consideration of $360,000 in cash and 15,000 shares of EarthCare common stock is
receivable 13 months after the date of purchase, net of offsets for losses, as
defined in the purchase agreement. Prior to the closing, all outstanding
long-term debt was paid in full to convey the assets free and clear of all
encumbrances and liens.

F-88
<PAGE> 141

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholder
Reifsneider Transportation, Inc.

In our opinion, the accompanying balance sheet and the related statements
of operations, stockholder's equity and cash flows present fairly, in all
material respects, the financial position of Reifsneider Transportation, Inc.
("Reifsneider") at December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of Reifsneider's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

April 8, 1999

F-89
<PAGE> 142

REIFSNEIDER TRANSPORTATION, INC.

BALANCE SHEET
DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................. $ 31,226 $ 30,418
Accounts receivable, net of allowance for doubtful
accounts of $46,468 in 1998 and $8,801 in 1997..... 836,151 1,332,098
Advances to stockholder............................... 91,856 50,904
Advances to related parties........................... 171,298 337,156
Prepaid expenses...................................... 587,563 136,035
---------- ----------
Total current assets.......................... 1,718,094 1,886,611
---------- ----------
Property and equipment, net............................. 2,095,492 1,153,134
---------- ----------
Goodwill, net of amortization of $9,107 in 1998 and
$7,859 in 1997........................................ 40,893 42,141
Other assets............................................ -- 8,461
---------- ----------
Total other assets............................ 40,893 50,602
---------- ----------
$3,854,479 $3,090,347
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Lines of credit....................................... $1,200,000 $ 520,000
Current portion of long-term debt..................... 1,151,032 297,008
Accounts payable...................................... 123,679 331,397
Accrued expenses...................................... 217,050 173,261
Advances from related parties......................... -- 402,692
---------- ----------
Total current liabilities..................... 2,691,761 1,724,358
---------- ----------
LONG-TERM DEBT, LESS CURRENT PORTION.................... -- 374,709
---------- ----------
STOCKHOLDER'S EQUITY:
Common stock, $1 par value; authorized, 1,000 shares:
issued and outstanding, 100 shares................. 100 100
Additional paid-in capital............................ 817,639 817,639
Retained earnings..................................... 344,979 173,541
---------- ----------
Total stockholder's equity.................... 1,162,718 991,280
---------- ----------
Total liabilities and stockholder's equity.... $3,854,479 $3,090,347
========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-90
<PAGE> 143

REIFSNEIDER TRANSPORTATION, INC.

STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
REVENUES................................................ $7,523,214 $6,496,906
---------- ----------
EXPENSES:
Cost of operations.................................... 5,019,264 4,400,549
General and administrative............................ 1,899,820 1,609,768
Depreciation and amortization......................... 323,092 306,782
---------- ----------
Total operating expenses........................... 7,242,176 6,317,099
---------- ----------
281,038 179,807
OTHER EXPENSE (INCOME):
Interest.............................................. 93,928 91,510
Other................................................. 15,672 (49,134)
---------- ----------
NET INCOME............................................ $ 171,438 $ 137,431
========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-91
<PAGE> 144

REIFSNEIDER TRANSPORTATION, INC.

STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ---------- -------- ----------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996.............. $100 $817,639 $ 36,110 $ 853,849
Net income............................ -- -- 137,431 137,431
---- -------- -------- ----------
BALANCE, DECEMBER 31, 1997.............. 100 817,639 173,541 991,280
Net income............................ -- -- 171,438 171,438
---- -------- -------- ----------
BALANCE, DECEMBER 31, 1998.............. $100 $817,639 $344,979 $1,162,718
==== ======== ======== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-92
<PAGE> 145

REIFSNEIDER TRANSPORTATION, INC.

STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................... $ 171,438 $ 137,431
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................... 323,092 306,782
(Gain) loss on disposal of property.............. 46,858 (30,860)
Change in assets and liabilities:
Accounts receivable............................ 495,947 (235,943)
Prepaid expenses............................... (451,528) 8,536
Other assets................................... 8,461 (1,798)
Accounts payable............................... (207,718) 224,282
Accrued liabilities............................ 43,789 (24,029)
----------- -----------
Net cash provided by operating activities... 430,339 384,401
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash payments for the purchase of property.......... (1,526,754) (371,449)
Cash proceeds from the sale of property............. 117,760 63,691
(Advances to) payments received for advances to
related parties and stockholder.................. 139,660 (343,771)
----------- -----------
Net cash used in investing activities....... (1,269,334) (651,529)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party advances................ 370,000 400,000
Payments on related party advances.................. (772,692) (350,000)
Proceeds from lines of credit and long-term debt.... 2,800,047 1,418,460
Payments on lines of credit and long-term debt...... (1,557,552) (1,214,655)
----------- -----------
Net cash provided by financing activities... 839,803 253,805
----------- -----------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS....... 808 (13,323)
CASH AND EQUIVALENTS, BEGINNING OF YEAR............... 30,418 43,741
----------- -----------
CASH AND EQUIVALENTS, END OF YEAR..................... $ 31,226 $ 30,418
=========== ===========
SUPPLEMENTAL DATA:
Cash paid for interest during the year.............. $ 118,887 $ 79,139
=========== ===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-93
<PAGE> 146

REIFSNEIDER TRANSPORTATION, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF OPERATIONS

Reifsneider Transportation, Inc. ("Reifsneider") a Pennsylvania
corporation, is a commercial and industrial non-hazardous liquid waste
transportation and disposal services company servicing customers in eastern
Pennsylvania, Delaware, Maryland, New Jersey and New York.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements follows:

CASH AND CASH EQUIVALENTS. Reifsneider considers all highly liquid
investments with maturities of three months or less at the date of purchase
as cash equivalents.

PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost
and are depreciated using the straight-line method over the estimated
useful lives of 5 to 8 years for machinery and equipment, 4 to 10 years for
furniture and fixtures, and 4 to 6 years for transportation equipment. When
depreciable property is retired or otherwise disposed of, the related
assets and accumulated depreciation are removed from the accounts and any
resultant gain or loss is included in operations.

OTHER ASSETS. Goodwill, which represents the excess of the cost of a
purchased company over the fair value of its net assets at the date of
acquisition, is being amortized using the straight-line method over 40
years.

INCOME TAX STATUS. Reifsneider, with the consent of its shareholder,
has elected under the Internal Revenue Code to be an S corporation. A
similar election has been made for state tax purposes. In lieu of corporate
income taxes, the shareholders of an S corporation are taxed on their
proportionate share of Reifsneider's taxable income. Therefore, no
provision for federal or state income tax has been included in the
financial statements.

CONCENTRATION OF CREDIT RISK. Financial instruments which potentially
subject Reifsneider to concentrations of credit risk consist principally of
cash and receivables. However, at December 31, 1998 and 1997, Reifsneider
had deposits held in banking institutions in excess of federally insured
limits of approximately $585,000 and $230,000, respectively. Concentration
of credit risk with respect to trade receivables are limited due to the
Reifsneider's large number of customers.

REVENUE RECOGNITION. Reifsneider recognizes revenues as services are
provided.

USE OF ESTIMATES. In preparing Reifsneider's 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, the disclosure of contingent assets and
liabilities, at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

F-94
<PAGE> 147
REIFSNEIDER TRANSPORTATION, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. RELATED PARTY TRANSACTIONS

For the years ended December 31, 1998 and 1997, Reifsneider was owed
$123,679 and $337,156, respectively, from related companies. No interest is
charged, and advances, are due on demand.

For the years ended December 31, 1998 and 1997, Reifsneider was owed
$91,856 and $170,515, respectively, from the sole stockholder. No interest is
charged, and advances are due on demand.

For the years ended December 31, 1997, Reifsneider owed a former
shareholder $402,692. Interest was being charged at 10%, and advances are due on
demand.

4. PROPERTY AND EQUIPMENT

At December 31, 1998 and 1997, property and equipment consisted of the
following:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Leasehold improvements.......................... $ -- $ 65,487
Machinery and equipment......................... 178,808 161,286
Furniture and fixtures.......................... 130,911 65,451
Transportation equipment........................ 2,072,324 2,000,805
Construction-in-progress........................ 1,085,344 119,611
---------- ----------
3,467,387 2,412,640
Less accumulated depreciation and
amortization.................................. 1,371,895 1,259,506
---------- ----------
Property and equipment -- net................... $2,095,492 $1,153,134
========== ==========
</TABLE>

Depreciation expense was $321,844 and $305,534 in 1998 and 1997,
respectively.

5. LINES OF CREDIT AND LONG-TERM DEBT

The first is a $400,000 line collateralized by all assets of Reifsneider
and is due to expire on May 31, 1999. The interest rate is at the bank's prime
rate plus 1/4% (8.00% and 8.75% at December 31, 1998 and 1997, respectively).
Borrowings under the line were $200,000 and $400,000 at December 31, 1998 and
1997, respectively. The line of credit is solely intended for working capital
purposes.

The second line of credit is a $600,000 facility collateralized by all
assets of Reifsneider, and is due to expire on May 31, 1999. The interest rate
is at 3/4% over the bank's prime rate which ranged from 9.25% to 9.50% on the
dates of borrowings. Borrowings are limited to purchases of trucks or equipment.
Each draw from the line is converted to a term loan. Borrowings under this line
amounted to $253,647 and $325,077 as of December 31, 1998 and 1997, respectively
and are included in the following table as notes payable.

The third line of credit is a $250,000 facility collateralized by all
assets of Reifsneider, and expired on March 31, 1998. The interest rate was
1/4% over the bank's prime rate

F-95
<PAGE> 148
REIFSNEIDER TRANSPORTATION, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(8.75% at December 31, 1997). Borrowings under the line amounted to $120,000 at
December 31, 1997.

The fourth line of credit is a $1,000,000 facility collateralized by all
assets of Reifsneider and is due to expire on May 31, 1999. The interest rate is
7.05% and borrowings amounted to $1,000,000 at December 31, 1998.

Long-term debt consisted of the following at December 31, 1998 and 1997:

<TABLE>
<CAPTION>
1998 1997
----------- --------
<S> <C> <C>
Note payable -- bank. Monthly payment of $1,246
including interest at 10%. Note matures in
September 2003. Note is collateralized by
transportation equipment....................... $ 56,359 $ --
Note payable. Monthly payment of $1,232 including
interest at 10% Note matures in June, 1999.
Note is collateralized by transportation
equipment...................................... 48,588 58,000
Note payable -- bank. Construction loans of up to
$1,000,000. Interest payments only until the
completion of the project. Interests rates
varying from 7.05% to 8%. Note is
collateralized by building and property........ 650,392 --
Notes payable -- bank. Various monthly principal
plus interest payments, interest rates ranging
from 9 1/4% to 9 1/2%. These notes are
collateralized by transportation equipment..... 253,647 325,077
Note payable -- former shareholder. Monthly
payment of $12,324 including interest at
8 1/2%. Note was unsecured and was repaid in
December, 1998................................. -- 141,300
Note payable -- former shareholder. Monthly
payment of $2,917 including interest at 10%.
Note is unsecured and is due in April, 2000.... 43,520 72,571
Notes payable -- various parties. Total monthly
payments of approximately $4,475, interest
ranging from 8 1/2% to 10%. Notes mature from
May 1999 to November 2001. Notes are
collateralized by transportation equipment..... 98,526 74,769
----------- --------
1,151,032 671,717
Less current portion (A)....................... (1,151,032) 297,008
----------- --------
$ -- $374,709
=========== ========
</TABLE>

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

(A) In March 1999, all outstanding debt was paid in full in connection with the
sale of the business (see note 8).

F-96
<PAGE> 149
REIFSNEIDER TRANSPORTATION, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. LEASE COMMITMENTS

Reifsneider leases its facilities and certain transportation and office
equipment under operating leases. Expiration dates vary through September 2003.
In the normal course of business, operating leases are generally renewed or
replaced by other leases.

Minimum future rental payments for each of the next five years and in the
aggregate are as follows:

Rent expense under operating leases, including those with terms on a
month-to-month basis, was $112,511 and $98,413 for the years ended December 31,
1998 and 1997, respectively.

7. RETIREMENT PLAN

Reifsneider has a 401(k) retirement savings plan for all employees who have
reached the age of 21 and have one year of service. Employees may contribute a
portion of their pay, and Reifsneider will match 100% up to $500. Amounts
charged to operations were approximately $11,000 and $12,000 for the years ended
December 31, 1998 and 1997, respectively.

8. SUBSEQUENT EVENT

Effective March 1, 1999, EarthCare Company ("EarthCare") acquired all of
the outstanding capital stock of Reifsneider in exchange for $5,050,000 in cash,
350,000 shares of EarthCare common stock, the delivery of a $200,000 note
payable to the former owner of Reifsneider and a final working capital
adjustment, as defined in the Stock Purchase Agreement. This transaction was
consummated pursuant to a Stock Purchase Agreement, dated February 26, 1999. All
advances to Reifsneider's stockholder and related parties were collected and
debt of Reifsneider was repaid in connection with the acquisition.

F-97
<PAGE> 150

EARTHCARE COMPANY
UNAUDITED PRO FORMA FINANCIAL INFORMATION
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Effective March 1, 1999, EarthCare Company, ("EarthCare") acquired all of
the outstanding capital stock of Reifsneider Transportation Inc.
("Reifsneider"), a Pennsylvania corporation, in exchange for $5,050,000 in cash,
350,000 shares of EarthCare common stock, the delivery of a $200,000 note
payable to the former owner of Reifsneider and a final working capital
adjustment, as defined in the Stock Purchase Agreement. This transaction was
consummated pursuant to a Stock Purchase Agreement, dated February 26, 1999.
Reifsneider is a commercial and industrial non-hazardous liquid waste
transportation and disposal services company servicing customers in eastern
Pennsylvania, Delaware, Maryland, New Jersey and New York. EarthCare currently
intends to operate Reifsneider in substantially the same manner as it was
operated prior to this transaction. EarthCare funded the cash portion of
purchase price with borrowings under EarthCare's revolving credit facility with
Bank of America National Trust and Savings Association. The total purchase price
was determined based upon an evaluation of the business of Reifsneider and the
results of negotiations between the parties. The Reifsneider acquisition and
related financing is referred to herein as the "Transaction."

The following unaudited pro forma combined statement of operations for the
year ended December 31, 1998 and for the three months ended March 31, 1999, give
effect to the Transaction using the purchase method of accounting as well as
other pro forma adjustments as outlined in the notes to unaudited pro forma
combined financial statements. These unaudited pro forma combined financial
statements present EarthCare and give effect to the Transaction with EarthCare
and other significant purchase business combinations consummated since January
1, 1998, as if the transactions had been consummated as of the beginning of
1998. The unaudited pro forma combined financial statements also give effect to
EarthCare's merger with Microlytics, Inc. ("Microlytics") on May 13, 1998, which
has been accounted for as a capital transaction accompanied by a
recapitalization of EarthCare ("Recapitalization"). EarthCare, the other 1998
purchase business combinations and Microlytics are hereafter referred to as the
"Company." The other 1998 purchase business combinations are as follows:

<TABLE>
<CAPTION>
BUSINESS DATE ACQUIRED
- ------------------------------------------------------------ -----------------
<S> <C>
Ferrero Wastewater Management, Inc. ("Ferrero")............. January 22, 1998
A Rapid Rooter Sewer & Drain Service, Inc. ("A Rapid")...... February 13, 1998
Quality Plumbing and Septic ("Quality")..................... February 17, 1998
Seagraves, Inc. (d.b.a. Brownie Environmental Services, March 6, 1998
Inc.) and Grease-Tec, Inc. ("Seagraves")..................
RGM Liquid Waste Removal Corporation and Affiliates May 1, 1998
("RGM")...................................................
Eldredge Wastewater Management, Inc. ("Eldredge")........... May 8, 1998
</TABLE>

EarthCare has preliminarily analyzed the savings that it expects to be
realized from reductions in salaries and certain benefits to the owners. To the
extent the owners of the acquired businesses have agreed prospectively to
reductions in salary, bonuses and benefits, these reductions have been reflected
in the pro forma combined statement of operations. With respect to other
potential cost savings, EarthCare cannot fully quantify these savings at this
time. It is anticipated that these savings will be partially offset by costs
related to

F-98
<PAGE> 151

EarthCare's corporate management and by the costs associated with being a public
company. These costs cannot be quantified accurately. Accordingly, only those
anticipated savings and costs that are factually supportable have been included
in the accompanying pro forma financial information of the Company.

The pro forma adjustments are based on estimates, available information and
certain assumptions and may be revised as additional information becomes
available. The pro forma financial data do not purport to represent what
EarthCare's results of operations would actually have been if such transactions
in fact had occurred on those dates and are not necessarily representative of
the EarthCare results of operations for any future period. Since neither the
1998 businesses acquired nor Reifsneider were under common control or
management, historical combined results may not be comparable to, or indicative
of, future performance. The unaudited pro forma combined financial statements
should be read in conjunction with the historical Reifsneider financial
statements and notes thereto included elsewhere herein.

F-99
<PAGE> 152

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>

EARTHCARE FERRERO A RAPID QUALITY SEAGRAVES RGM ELDREDGE
----------- -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................................... $25,690,672 $257,982 $680,870 $194,786 $1,342,431 $2,710,061 $1,514,756
Expenses:
Cost of operations....................... 17,907,036 175,443 338,971 118,620 930,687 1,751,561 1,108,708
Selling, general and administrative
expense................................ 7,509,375 73,399 255,847 61,894 350,137 810,638 385,582
Depreciation and amortization............ 1,348,357 23,334 41,476 5,179 32,886 146,762 68,311
----------- -------- -------- -------- ---------- ---------- ----------
Income (loss) from operations............ (1,074,096) (14,194) 44,576 9,093 28,721 1,100 (47,845)
Other expense (income):
Interest................................. 657,455 5,913 11,148 1,684 8,659 28,103 11,959
Other.................................... 2,101 (33) (476) 60 (105,984) (22,099) (1,562)
----------- -------- -------- -------- ---------- ---------- ----------
Income (loss) before taxes............... (1,733,652) (20,074) 33,904 7,349 126,046 (4,904) (58,242)
Provision (benefit) for taxes.............. (304,562) -- -- -- -- 82,869 (13,686)
----------- -------- -------- -------- ---------- ---------- ----------
Net income (loss).......................... $(1,429,090) $(20,074) $33,904 $ 7,349 $ 126,046 $ (87,773) $ (44,556)
=========== ======== ======== ======== ========== ========== ==========
Pro forma net loss per share:
Basic and diluted........................ $ (0.17)
===========
Pro forma weighted average shares
outstanding:
Basic and diluted........................ 8,427,407
===========

<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
REIFSNEIDER (NOTE 3) COMBINED
----------- ----------- -----------
<S> <C> <C> <C>
Revenues................................... $7,523,214 $ -- $39,914,772
Expenses:
Cost of operations....................... 5,019,264 -- 27,350,290
Selling, general and administrative
expense................................ 1,899,820 (102,500)(a) 10,526,192
(718,000)(b)
Depreciation and amortization............ 323,092 240,079(c) 2,501,476
272,000(d)
---------- --------- -----------
Income (loss) from operations............ 281,038 308,421 (463,186)
Other expense (income):
Interest................................. 93,928 60,000(e) 1,330,797
300,000(f)
151,948(g)
Other.................................... 15,672 -- (112,321)
---------- --------- -----------
Income (loss) before taxes............... 171,438 (203,527) (1,681,662)
Provision (benefit) for taxes.............. -- 44,903(h) (190,476)
---------- --------- -----------
Net income (loss).......................... $ 171,438 $(248,430) $(1,491,186)
========== ========= ===========
Pro forma net loss per share:
Basic and diluted........................ $ (0.17)
===========
Pro forma weighted average shares
outstanding:
Basic and diluted........................ 475,824(i) 8,903,231
========= ===========
</TABLE>

The accompanying notes are an integral part of these pro forma financial
statements.

F-100
<PAGE> 153

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 1999

<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
EARTHCARE REIFSNEIDER (NOTE 3) COMBINED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES...................... $ 7,815,637 $1,226,695 $ -- $ 9,042,332
EXPENSES:
Cost of operations............ 5,093,594 904,402 -- 5,997,996
Selling, general and
administrative expenses..... 1,969,417 240,328 (119,667)(b) 2,090,078
Depreciation and
amortization................ 354,884 58,300 45,334(d) 458,518
----------- ---------- --------- -----------
Income (loss) from
operations.................. 397,742 23,665 74,333 495,740
OTHER EXPENSE (INCOME):
Interest...................... 222,309 16,391 49,276(f) 287,976
----------- ---------- --------- -----------
Income (loss) before taxes.... 175,433 7,274 25,057 207,764
Provision (benefit) for
taxes....................... -- -- 12,609(h) 12,609
----------- ---------- --------- -----------
Net income (loss)........... $ 175,433 7,274 $ 12,448 $ 195,155
=========== ========== ========= ===========
PRO FORMA NET LOSS PER SHARE:
Basic and diluted........... $ 0.02 $ 0.02
=========== ===========
PRO FORMA WEIGHTED AVERAGE
SHARES OUTSTANDING:
Basic....................... 9,698,531 350,000(i) 10,048,531
=========== ========= ===========
Diluted..................... 10,147,786 350,000(i) 10,497,786
=========== ========= ===========
</TABLE>

The accompanying notes are an integral part of these pro forma financial
statements.

F-101
<PAGE> 154

EARTHCARE COMPANY AND ACQUIRED BUSINESSES

NOTES TO UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND MARCH 31, 1999

1. BACKGROUND

EarthCare Company ("EarthCare") was formed to act as a consolidator of
nonhazardous liquid waste businesses. From its inception on March 19, 1997
through March 1, 1999, EarthCare has acquired ten businesses involved in the
nonhazardous liquid waste business.

2. HISTORICAL FINANCIAL STATEMENTS

The historical financial statements of the businesses acquired were derived
from the respective acquired businesses' financial statements. All acquired
businesses have a December 31 year-end, or their financial results have been
recast to a December 31 year-end, with the exception of RGM which has an October
31 year-end. The audited historical financial statements of Reifsneider are
included elsewhere herein and the other acquired businesses have been audited,
as required, and included elsewhere in this Registration Statement.

3. PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS

(a) Adjusts compensation to the level that the owners of the businesses
acquired in 1998 have contractually agreed to receive subsequent to the
acquisitions. The employment agreements have terms of one to three years
and include certain severance provisions in the event of termination
without cause.

(b) Reflects a decrease of $648,000 in annual salaries and other expenses of
the previous owners of Reifsneider ($108,000 for the first quarter of 1999)
that will not be incurred subsequent to the acquisition of Reifsneider and
a $70,000 annual decrease ($11,667 for the first quarter of 1999) in rent
expense that will not be incurred going forward due to the acquisition of a
building in the Reifsneider Acquisition.

(c) Reflects additional amortization of noncompete agreements related to the
businesses acquired in 1998 using a weighted average life of 2.2 years and
goodwill using a 40-year life. Also includes additional depreciation of
property and equipment related to the businesses acquired in 1998 using a
weighted average remaining life of 5 years.

(d) Reflects additional goodwill amortization of $181,000 for 1998 ($30,167 for
the first quarter of 1999) related to the Reifsneider acquisition using a
40-year life and $91,000 for 1998 ($15,167 for the first quarter of 1999)
in additional depreciation of equipment related to changes in estimated
fair values and useful lives assigned to equipment acquired from
Reifsneider.

(e) Reflects additional interest expense on the $2,300,000 in seller notes
related to the businesses acquired in 1998 at a weighted average annual
rate of 6.2%.

F-102
<PAGE> 155
EARTHCARE COMPANY AND ACQUIRED BUSINESSES

NOTES TO UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)

(f) Reflects additional interest expense on the $5,050,000 in bank debt and the
$200,000 note payable related to the Reifsneider acquisition at an annual
rate of 7.5%, net of eliminated interest expense related to Reifsneider's
historical debt.

(g) Reflects additional interest expense on $3,900,000 in line of credit
borrowings at 8.21%, net of the elimination of interest expense on
historical debt of the businesses acquired in 1998. The elimination of
interest expense of the acquired businesses is required as the Company
assumed no debt in the purchase transactions. Additional borrowings under
the Company's line of credit of $3,900,000 were required to supplement
equity proceeds from the sale of common stock to pay the cash portion of
the purchase prices.

(h) Reflects additional income tax provision (benefit) for state and federal
taxes at a combined statutory tax rate of 39% for those acquired businesses
previously reported as Subchapter S Corporations, and (benefit) for income
taxes using the Company's combined statutory tax rate of 39% for the tax
effect of the pro forma adjustments.

(i) Reflects 125,824 additional weighted average shares issued in connection
with the businesses acquired in 1998 and 350,000 shares issued in
connection with the Reifsneider acquisition in 1999.

F-103
<PAGE> 156

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. 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 WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE SUCH DATE.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................. 2
Risk Factors........................ 7
Use of Proceeds..................... 14
Determination of Offering Price..... 14
Dividend Policy..................... 15
Dilution............................ 15
Selected Consolidated Financial
Data.............................. 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations..................... 18
Business............................ 24
Market Price for Common Equity and
Related Stockholder Matters....... 33
Management.......................... 35
Executive Compensation.............. 37
Certain Transactions................ 40
Principal and Selling
Stockholders...................... 42
Description of Securities........... 46
Plan of Distribution................ 48
Legal Matters....................... 49
Independent Public Accountants...... 49
Additional Information.............. 50
</TABLE>

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

8,026,979 Shares

EARTHCARE
COMPANY

Common Stock
($.0001 Par Value)
------------------------
PROSPECTUS
------------------------
------------------------------------------------------
------------------------------------------------------
<PAGE> 157

[ALTERNATE COVER PAGE FOR SHELF PROSPECTUS]

PROSPECTUS DATED AUGUST 3, 1999

5,000,000 Shares

EARTHCARE COMPANY

Common Stock

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

The 5,000,000 shares of common stock, $.0001 par value per share (the
"Common Stock"), covered by this Prospectus (the "Shares") may be issued by
EarthCare Company, formerly known as SanTi Group, Inc. (the "Company"), from
time to time in payment (or partial payment) of the purchase price for one or
more acquisitions of companies, business or assets complementary to the
Company's existing business. As of the date of this Prospectus, the Company has
issued 610,526 shares of Common Stock for acquisitions described herein and has
not definitively identified any acquisition in which it may issue additional
shares of Common Stock covered by this Prospectus. At such time as the Company
identifies a specific acquisition in which such Shares will be issued, the
Company will amend or supplement this Prospectus and the Registration Statement
of which this Prospectus is a part to add information about the acquisition and
the company, business or assets being acquired if and to the extent required by
applicable rules and policies of the Securities and Exchange Commission (the
"Commission").

This Prospectus also relates to the offer for sale or other distribution of
the Shares by persons (the "Selling Stockholders") who will acquire such Shares
in the acquisitions of such companies, businesses or assets. Such Shares may be
sold or distributed from time to time by or for the account of the Selling
Stockholders through underwriters or dealers, through brokers or other agents,
or directly to one or more purchasers, at market prices prevailing at the time
of sale or at prices otherwise negotiated. This Prospectus also may be used,
with the Company's prior consent, by donees of the Selling Stockholders, or by
other persons acquiring Shares and who wish to offer and sell such Shares under
circumstances requiring or making desirable its use. The Company will receive no
portion of the proceeds from the sale of the Shares offered hereby and will bear
certain expenses incident to their registration. See "Selling Stockholders" and
"Plan of Distribution."

It is expected that the terms of the acquisitions involving the issuance of
securities covered by this Prospectus will be determined by direct negotiations
with the owners or controlling persons of the businesses or assets to be merged
with or acquired by the Company. No underwriting discounts or commissions will
be paid, although finder's fees may be paid from time to time with respect to
specific mergers or acquisitions. Any person receiving any such fees may be
deemed to be an underwriter within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").

The Common Stock is traded on the Nasdaq National Market Bulletin Board
under the symbol "ECCO". At July 16, 1999, the Company had 10,214,365 shares of
Common Stock outstanding. On July 16, 1999, the last reported sale price of the
Common Stock (of which 15,500 shares traded) was $16.19 per share.

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR CERTAIN FACTORS RELATING TO AN
INVESTMENT IN THE COMMON STOCK.

PRINCIPAL STOCKHOLDERS

The following table sets forth information concerning the beneficial
ownership of the Common Stock as of July 16, 1999 by (i) each named executive
officer, (ii) each of the Company's directors, (iii) all executive officers and
directors as a group, and (iv) each person who beneficially owns more than 5% of
the Common Stock:

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY OWNED(1)
----------------------
NAME NUMBER PERCENT
---- ---------- --------
<S> <C> <C>
Raymond M. Cash (2)...................................... 2,910,284 37%
Cash Family Limited Partnership (3)...................... 1,658,750 17%
Donald F. Moorehead, Jr. (4)............................. 1,431,200 13%
Terry W. Patrick (5)..................................... 477,900 3%
James E. Farrell (6)..................................... 0 *
Earl DeFrates (7)........................................ 0 *
Elroy "Gene" Roelke (8).................................. 50,000 *
William P. Hulligan (9).................................. 100,000 1%
Brian Rosborough (10).................................... 0 *
All directors and executive officers as.................. 4,706,884 54%
a group (7 persons)
</TABLE>

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

* Less than one percent.
(1) Includes shares of Common Stock that may be acquired upon the exercise of
stock options exercisable within 60 days. Each person named above has sole
voting and dispositive power with respect to the all shares listed opposite
such person's name, unless indicated otherwise. Unless otherwise indicated,
each stockholder's address is 14901 Quorum Drive, Suite 200, Dallas, Texas
75240.
(2) Based on information included in Form 4 filed in June 1999 by Mr. Cash.
Includes 1,251,534 shares held by Mr. Cash and 1,658,750 shares held by the
Cash Family Limited Partnership which is controlled by an entity controlled
by Mr. Cash. Does not include 44,925 shares held by Mr. Cash's wife, for
which shares Mr. Cash disclaims beneficial ownership.
(3) Does not include 1,251,534 shares held by Mr. Cash.
(4) Includes 418,000 shares held by Moorehead Property Company Ltd., a company
controlled by Mr. Moorehead. Includes options to purchase 131,250 shares
exercisable within 60 days.
(5) Includes 320,000 shares held by Beacon Holdings Limited, a family limited
partnership of which Mr. Patrick is a general partner and warrants to
acquire 10,000 shares. Include options to purchase 131,250 shares
exercisable within 60 days.
(6) Does not include options to purchase 70,000 shares not exercisable within
60 days.
(7) Does not include options to purchase 25,000 shares not exercisable within
60 days.
(8) Includes warrants to acquire 25,000 shares of Common Stock which are
exercisable within 60 days.
(9) Does not include options to acquire 25,000 shares of Common Stock not
exercisable within 60 days.
(10) Does not include options to acquire 25,000 shares of Common Stock not
exercisable within 60 days.

A-2
<PAGE> 159
[ALTERNATE PAGE FOR SHELF PROSPECTUS]

SELLING SHAREHOLDERS

This Prospectus relates to an aggregate of 5,000,000 shares of Common Stock
which may be offered for sale by the Company from time to time to acquire one or
more companies, businesses or assets in negotiated transactions not involving
any public offering, of which 610,526 shares have been issued to date. This
Prospectus will be supplemented to furnish the information necessary for the
particular negotiated transaction and the Registration Statement of which this
Prospectus is a part will be amended, where appropriate, to supply information
concerning an acquisition if required by Commission rules and policies. This
Prospectus also relates to the offer for sale or other distribution of Shares by
persons who will acquire such shares in connection with the acquisitions of
businesses. Such Selling Stockholders will be identified from time to time by
filing supplements to this Prospectus.

A-3
<PAGE> 160
[ALTERNATE PAGE FOR SHELF PROSPECTUS]

PLAN OF DISTRIBUTION

ISSUANCE OF SHARES BY THE COMPANY

The Shares covered by this Prospectus may be issued by the Company from
time to time in payment of all or a portion the purchase price for one or more
acquisitions of companies, businesses or assets complementary to the Company's
existing business. The Company expects that the terms of acquisitions in which
the Shares will be issued by the Company will be determined by negotiations
between the Company and the owners of the companies, businesses or assets to be
acquired. It is anticipated that the Shares issued in any such acquisition will
be valued for purposes of such acquisition at a price reasonably related to the
market value of the Common Stock either at the time of the execution of the
definitive acquisition agreement or at the time of the consummation of the
acquisition.

As of the date of this Prospectus, the Company has issued 610,526 shares of
Common Stock for acquisitions described herein and has not definitively
identified any acquisition in which it may issues Shares. At such time as the
Company identifies a specific acquisition in which Shares will be issued, the
Company will amend or supplement this Prospectus to add information about the
acquisition and the companies, businesses or assets being acquired if and to the
extent required by the applicable rules and policies of the Commission.

No underwriting discounts or commissions will be paid in connection with
any acquisition contemplated hereby, although finder's fees may be paid from
time to time with respect to specific mergers or acquisitions. Any persons
receiving such fees may be deemed to be an underwriter within the meaning of the
Securities Act.

RESALE OF SHARES BY SELLING STOCKHOLDERS

This Prospectus also relates to the offer for sale or other distribution of
Shares by the Selling Stockholders who will acquire such shares in the
acquisitions of such companies, businesses or assets. The Selling Stockholders
may sell or distribute some or all of the Shares from time to time through
underwriters or dealers or brokers or other agents or directly to one or more
purchasers in transactions on any exchange on which such Shares are listed for
trading, in privately negotiated transactions, or in the over-the-counter
market, or in brokerage transactions, or in a combination of such transactions.
Such transactions may be effected by the Selling Stockholders at market prices,
at negotiated prices, or at fixed prices, which may be changed. Brokers,
dealers, agents or underwriters participating in such transactions as agent may
receive compensation in the form of discounts, concessions from the Selling
Stockholders (and, if they act as agent for the purchaser of such shares, from
such purchaser). Such discounts, concessions or commissions as to a particular
broker, dealer, agent or underwriter might be in excess of those customary in
the type of transaction involved. This Prospectus also may be used, with the
Company's consent, by donees of the Selling Stockholder, or by other persons
acquiring Shares and who wish to offer and sell such Shares under circumstances
requiring or making desirable its use. To the extent required, the Company will
file, during any period in which offers or sales are being made, one or more
supplements to this Prospectus to set forth the names of Selling Stockholders
and any other material information with respect to the plan of distribution not
previously disclosed.

A-4
<PAGE> 161
[ALTERNATE PAGE FOR SHELF PROSPECTUS]

The Selling Stockholders and any such underwriters, brokers, dealers or
agents that participate in such distribution may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, commissions or
concessions received by any such underwriters, brokers, dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.

A-5
<PAGE> 162
[ALTERNATE PAGE FOR SHELF PROSPECTUS]

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................. 2
Risk Factors........................ 7
Use of Proceeds..................... 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operation...................... 18
Business............................ 24
Management.......................... 35
Certain Transactions................ 40
Principal and Selling
Stockholders...................... 42
Description of Securities........... 46
Plan of Distribution................ 48
Legal Matters....................... 49
Experts............................. 49
Additional Information.............. 50
</TABLE>

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

5,000,000 Shares

EARTHCARE
COMPANY

Common Stock
($.0001 Par Value)
------------------------
PROSPECTUS
------------------------
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 163

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth an itemized statement of certain estimated
expenses incurred in connection with the issuance and distribution of the
securities being registered, other than underwriting discounts and commissions:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 82,204
Printing and engraving expenses............................. 20,000
Legal fees and expenses..................................... 40,000
Accounting fees and expenses................................ 50,000
Registrar and Transfer Agent's fees and expenses............ 0
Miscellaneous............................................... 0
--------
Total..................................................... $192,204
========
</TABLE>

All amounts except the Securities and Exchange Commission registration fee
are estimated. The Company intends to pay all expenses of registration with
respect to shares being sold by the Selling Stockholders hereunder, with the
exception of underwriting discounts and commissions.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Certificate of Incorporation provides that no director of the
corporation shall be personally liable to EarthCare or its stockholders for
monetary damages for breach of fiduciary duty as a director except for
liability: (i) for any breach of the director's duty of loyalty to EarthCare or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware (or the corresponding
provision of any successor law or act), and (iv) for any transaction from which
the director derived an improper personal benefit.

EarthCare must indemnify, and upon request will advance expenses to any
officer or director who was or is a party to, or is threatened to be made a
party to, any threatened, pending or completed action, suit or proceeding,
including civil, criminal, administrative, investigative or otherwise, by reason
of the fact that such person is or was a director or officer of EarthCare, or is
or was acting at the request of EarthCare as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. This indemnification will not
apply if the indemnitee is adjudged liable to EarthCare, unless and only if the
court in which the action is brought determines the indemnitee is fairly and
reasonably entitled to indemnification by EarthCare.

EarthCare may also purchase and maintain insurance on the behalf of its
directors and officers against any such liability that may be asserted as a
result of the director's or officer's service in such a capacity.

II-1
<PAGE> 164

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On March 19, 1997, Raymond Cash and Joyce Bone purchased a total of 16,250
shares of Common Stock (reflecting the Bone-Dry exchange and the Stock Dividend)
for $10,000. The proceeds from this sale were used to fund working capital.

On August 19, 1997, Raymond Cash purchased 1,625,000 of Common Stock for
$130,000. The proceeds from this purchase were used to acquire new service
providers and fund working capital needs of the Company.

On December 1, 1997, the Cash Family Limited Partnership purchased
1,608,750 shares of Common Stock (reflecting the Bone-Dry exchange and the Stock
Dividend) for $650,000. The Cash Family Limited Partnership is controlled by an
entity controlled by Raymond Cash. The proceeds from this sale were used to
acquire new service providers.

On December 22, 1997, 14,479 shares of Common Stock were issued to Andrews
in exchange for the settlement of a note payable in the amount of $263,663.

On December 22, 1997, 21,400 shares were issued as consideration for
$17,120 of the acquisition price of Andrews.

On January 12, 1998, the Company sold 1,250,000 shares of Common Stock for
$1,000,000. The proceeds were used to acquire new service providers and fund
working capital needs of the Company.

On January 22, 1998, 90,000 shares of Common Stock were issued as
consideration for $72,000 of the acquisition price of Ferrero.

On February 13, 1998, 100,000 shares of Common Stock were issued as
consideration for $100,000 of the acquisition price of A Rapid.

On March 6, 1998, 60,000 shares of Common Stock were issued as
consideration for $60,000 of the acquisition price of Seagraves.

On April 2, 1998, the Company sold 2,000,000 shares of Common Stock for
$11,600,000. The proceeds raised by this private offering was used to acquire
new service providers and fund working capital needs of the Company.

On May 1, 1998, 105,000 shares of Common Stock were issued as consideration
for $609,000 of the acquisition price of RGM.

On May 4, 1998, the Company sold 500,000 shares of Common Stock for
$2,900,000. The proceeds raised by this private offering were used to acquire
new service providers and fund working capital needs of the Company.

On May 8, 1998, 85,000 shares of Common Stock were issued as consideration
for $493,000 of the acquisition price of Eldredge.

On May 19, 1999, 10,000 shares of Common Stock were issued to a consultant
in connection with the purchase of National Sewer and Drain for services valued
at approximately $105,000.

All of these shares of Common Stock were issued pursuant to Section 4(2) of
the Securities Act of 1933, as amended (the "Securities Act") in private
transactions not involving a public offering. These shares are subject to
restrictions on transferability and resale except as permitted under the
Securities Act and applicable state securities laws.
II-2
<PAGE> 165

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits (see Exhibit Index immediately preceding the exhibits for the
page number where each exhibit can be found):

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
2.0* -- Merger Agreement by and between Microlytics, Inc. and SanTi
Group, Inc., dated March 6, 1998 (incorporated by reference
to Exhibit 2.0 to the Company's Registration Statement on
Form 10, Registration No. 00024685, as amended)
3.1* -- Certificate of Incorporation of the Company dated May 13,
1998 (incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form 10, Registration
No. 00024685, as amended)
3.2* -- Bylaws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form 10,
Registration No. 00024685, as amended)
4.1 -- Article IV of Registrant's Certificate of Incorporation
4.2 -- Article VI of Registrant's Certificate of Incorporation
9.1* -- Voting Trust Agreement (incorporated by reference to Exhibit
9.1 to the Company's Registration Statement on Form 10,
Registration No. 00024685, as amended)
10.1* -- Credit Agreement dated June 26, 1998 between SanTi Group,
Inc., various financial institutions and Bank of America
National Trust Association as Agent (incorporated by
reference to Exhibit 10.1 to the Company's Registration
Statement on Form 10, Registration No. 00024685, as amended)
10.2* -- Company Pledge Agreement dated as of June 26, 1998, between
SanTi Group, Inc., and Bank of America National Trust
Association as Agent (incorporated by reference to Exhibit
10.2 to the Company's Registration Statement on Form 10,
Registration No. 00024685, as amended)
10.3* -- Security Agreement dated as of June 26, 1998, among SanTi,
Inc., each subsidiary of SanTi Group, Inc. and Bank of
America National Trust Association as Agent (incorporated by
reference to Exhibit 10.3 to the Company's Registration
Statement on Form 10, Registration No. 00024685, as amended)
10.4* -- Asset Purchase Agreement dated as of January 22, 1998 by and
between SanTi Group of Pennsylvania, Ferrero Wastewater
Management, Inc., A. Thomas Ferrero, Jr. and A. Thomas
Ferrero, III (incorporated by reference to Exhibit 10.4 to
the Company's Registration Statement on Form 10,
Registration No. 00024685, as amended)
10.5* -- Asset Purchase Agreement dated as of December 22, 1997 by
and between Bone-Dry Enterprises, Inc. Andrews Environmental
Services, Inc. and W. Ronald Andrews (incorporated by
reference to Exhibit 10.5 to the Company's Registration
Statement on Form 10, Registration No. 00024685, as amended)
</TABLE>

II-3
<PAGE> 166

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
10.6* -- Asset Purchase Agreement dated as of February 13, 1998 by
and between SanTi Group of Florida, Inc., A Rapid Rooter
Sewer & Drain Service, Inc., William E. Rice, Joan E. Rice,
Alfonse J. Grunskis, Diane Rice Grunskis, Donald E. Rice and
Ruth Ann Rice (incorporated by reference to Exhibit 10.6 to
the Company's Registration Statement on Form 10,
Registration No. 00024685, as amended)
10.7* -- Asset Purchase Agreement dated as of February 17, 1998 by
and between Bone-Dry Enterprises, Inc., Quality Plumbing &
Septic, Ronda R. McMichael and Forney L. McMichael
(incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement on Form 10, Registration No.
00024685, as amended)
10.8* -- Asset Purchase Agreement dated as of March 6, 1998 by and
between SanTi Group of Florida, Inc. Seagraves, Inc.,
William D. Seagraves, Seaburn Seagraves and Angelina
Seagraves (incorporated by reference to Exhibit 10.8 to the
Company's Registration Statement on Form 10, Registration
No. 00024685, as amended)
10.9* -- Asset Purchase Agreement dated as of March 6, 1998 by and
between SanTi Group of Florida, Inc., Grease-Tec, Inc.,
William D. Seagraves, Seaburn Seagraves and Angelina
Seagraves (incorporated by reference to Exhibit 10.9 to the
Company's Registration Statement on Form 10, Registration
No. 00024685, as amended)
10.10* -- Asset Purchase Agreement dated as of April 30, 1998 by and
between SanTi Group of New York, Inc., RGM Liquid Waste
Removal Corporation, and Ralph G. Macchio (incorporated by
reference to Exhibit 10.10 to the Company's Registration
Statement on Form 10, Registration No. 00024685, as amended)
10.11* -- Asset Purchase Agreement dated as of April 30, 1998 by and
between SanTi Group of New York, Inc., Devito Environmental
Corporation, and Rosalie Macchio (incorporated by reference
to Exhibit 10.11 to the Company's Registration Statement on
Form 10, Registration No. 00024685, as amended)
10.12* -- Asset Purchase Agreement dated as of April 30, 1998 by and
between SanTi Group of New York, Inc., Advanced Transfer
Technology, Inc., and Steve Macchio (incorporated by
reference to Exhibit 10.12 to the Company's Registration
Statement on Form 10, Registration No. 00024685, as amended)
10.13* -- Asset Purchase Agreement dated as of April 30, 1998 by and
between SanTi Group of New York, Inc., Envirotec Leasing and
Rental Corporation, and Steve Macchio (incorporated by
reference to Exhibit 10.13 to the Company's Registration
Statement on Form 10, Registration No. 00024685, as amended)
10.14* -- Asset Purchase Agreement dated as of May 8, 1998 by and
between SanTi Group of Pennsylvania, Inc., Eldredge
Wastewater Management, Inc., Robert Eldredge, Curtis
Eldredge, and John Eldredge. (incorporated by reference to
Exhibit 10.14 to the Company's Registration Statement on
Form 10, Registration No. 00024685, as amended)
</TABLE>

II-4
<PAGE> 167

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
10.15* -- Contract for Purchase and Sale of Certain Assets of Andrews
Environmental Services, Inc. dated March 20, 1997 among and
between Bone-Dry Enterprises, Inc. and Andrews Environmental
Services, Inc. (incorporated by reference to Exhibit 10.15
to the Company's Registration Statement on Form 10,
Registration No. 00024685, as amended)
10.16* -- Employment Agreement between EarthCare Company and Terry
Patrick dated June 1, 1998. (incorporated by reference to
Exhibit 10.16 to the Company's Registration Statement on
Form 10, Registration No. 00024685, as amended)
10.17* -- Form of Lock-Up Agreement (incorporated by reference to
Exhibit 10.17 to the Company's Registration Statement on
Form 10, Registration No. 00024685, as amended)
10.18* -- Employment Agreement between EarthCare Company and James E.
Farrell dated October 9, 1998. (incorporated by reference to
Exhibit 10.18 to the Company's Registration Statement on
Form 10, Registration No. 00024685, as amended)
10.19* -- Reifsneider Transportation, Inc. Stock Purchase Agreement
dated February 26, 1999 (incorporated by reference to
Exhibit 2.1 to the Company's Form 8-K dated March 1, 1999)
15.1 -- Letter regarding Unaudited Interim Financial Information
21.0* -- Subsidiaries of EarthCare Company. (incorporated by
reference to Exhibit 21.0 to the Company's Registration
Statement on Form 10, Registration No. 00024685, as amended)
23.1 -- Consent of PricewaterhouseCoopers LLP
23.2 -- Consent of Arthur Andersen LLP
27.1* -- Financial Data Schedule (for SEC use only)
</TABLE>

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

* Previously filed.

(b) Financial Statement Schedules follow the signature page and are as
follows:

Schedule II -- Valuation and Qualifying Accounts for EarthCare Company

ITEM 17. UNDERTAKINGS

Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered hereunder, the Registrant 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

II-5
<PAGE> 168

such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-6
<PAGE> 169

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on July 29, 1999.

EARTHCARE COMPANY

By: /s/ Terry W. Patrick
-----------------------------------
Terry W. Patrick
President and Chief Operating
Officer

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ Donald F. Moorehead, Jr. Chairman, Chief Executive July 29, 1999
- --------------------------------------------------- Officer (Principal
Donald F. Moorehead, Jr. Executive Officer) and
Director

/s/ Raymond M. Cash Vice Chairman and Director July 30, 1999
- ---------------------------------------------------
Raymond M. Cash

/s/ Terry W. Patrick President, Chief Operating July 29, 1999
- --------------------------------------------------- Officer and Director
Terry W. Patrick

/s/ James E. Farrell Vice President and Chief July 29, 1999
- --------------------------------------------------- Financial Officer
James E. Farrell (Principal Financial and
Principal Accounting
Officer)

/s/ William P. Hulligan Director July 29, 1999
- ---------------------------------------------------
William P. Hulligan

/s/ Elroy Roelke Director July 29, 1999
- ---------------------------------------------------
Elroy Roelke

/s/ Brian Rosborough Director July 31, 1999
- ---------------------------------------------------
Brian Rosborough

/s/ Earl E. DeFrates Director July 29, 1999
- ---------------------------------------------------
Earl E. DeFrates
</TABLE>

II-7
<PAGE> 170

ANDREWS ENVIRONMENTAL SERVICES, INC.

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR
THE PERIOD FROM JANUARY 1, 1997 TO DECEMBER 21, 1997

<TABLE>
<CAPTION>
BALANCE
BALANCE AT CHARGED TO CHARGED TO AT END
BEGINNING COSTS AND OTHER OF
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS* PERIOD
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Allowance for doubtful
accounts..................... 20,168 5,630 0 (16,498) 9,300
PERIOD FROM JANUARY 1, 1997 TO
DECEMBER 21, 1997:
Allowance for doubtful
accounts..................... 9,300 26,828 0 (25,023) 11,105
</TABLE>

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

* Deductions represent the write-off of uncollectible receivables, net of
recoveries.

S-1
<PAGE> 171

EARTHCARE COMPANY

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE PERIOD FROM INCEPTION (MARCH 19, 1997) TO DECEMBER 31, 1998

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS* PERIOD
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Period ending December 31, 1997
Allowance for doubtful
accounts.................. $ -- $ 17,875 $-- $ -- $ 17,875
Year ending December 31, 1998
Allowance for doubtful
accounts.................. $17,875 $280,497 $-- $20,387 $277,985
</TABLE>

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

* Deductions represent the write-off of uncollectible receivables, net of
recoveries.

S-2
<PAGE> 172

INDEX TO EXHIBITS

S-3
<PAGE> 173

S-4
<PAGE> 174

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
10.15* -- Contract for Purchase and Sale of Certain Assets of Andrews
Environmental Services, Inc. dated March 20, 1997 among and
between Bone-Dry Enterprises, Inc. and Andrews Environmental
Services, Inc. (incorporated by reference to Exhibit 10.15
to the Company's Registration Statement on Form 10,
Registration No. 00024685, as amended)
10.16* -- Employment Agreement between EarthCare Company and Terry
Patrick dated June 1, 1998. (incorporated by reference to
Exhibit 10.16 to the Company's Registration Statement on
Form 10, Registration No. 00024685, as amended)
10.17* -- Form of Lock-Up Agreement (incorporated by reference to
Exhibit 10.17 to the Company's Registration Statement on
Form 10, Registration No. 00024685, as amended)
10.18* -- Employment Agreement between EarthCare Company and James E.
Farrell dated October 9, 1998. (incorporated by reference to
Exhibit 10.18 to the Company's Registration Statement on
Form 10, Registration No. 00024685, as amended)
10.19* -- Reifsneider Transportation, Inc. Stock Purchase Agreement
dated February 26, 1999 (incorporated by reference to
Exhibit 2.1 to the Company's Form 8-K dated March 1, 1999)
15.1 -- Letter Regarding Unaudited Interim Financial Information
21.0* -- Subsidiaries of EarthCare Company. (incorporated by
reference to Exhibit 21.0 to the Company's Registration
Statement on Form 10, Registration No. 00024685, as amended)
23.1 -- Consent of PricewaterhouseCoopers LLP
23.2 -- Consent of Arthur Andersen LLP
27.1* -- Financial Data Schedule (for SEC use only)
</TABLE>

* Previously Filed

S-5

<PAGE> 1
EXHIBIT 15.1

EARTHCARE COMPANY
LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: EarthCare Company
Registration on Form S-1

We are aware that our report dated May 12, 1999, on our review of the interim
financial information of EarthCare Company for the period ended March 31, 1999,
is included in this Registration Statement on Form S-1 (Post-Effective
Amendment No. 2).

/s/ PricewaterhouseCoopers LLP

Tulsa, Oklahoma
August 2, 1999

<PAGE> 1

Exhibit - 23.1

Consent of PricewaterhouseCoopers LLP

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1
(Post-Effective Amendment No. 2) of our report dated February 13, 1999,
relating to the financial statements and financial statement schedule of
EarthCare Company, which appear in such Registration Statement.

We hereby consent to the use in this Registration Statement on Form S-1
(Post-Effective Amendment No. 2) of our report dated January 15, 1999, relating
to the financial statements of Ferrero Wastewater Management, Inc., which appear
in such Registration Statement.

We hereby consent to the use in this Registration Statement on Form S-1
(Post-Effective Amendment No. 2) of our report dated January 22, 1999, relating
to the financial statements of A Rapid Rooter Sewer & Drain Service, Inc., which
appear in such Registration Statement.

We hereby consent to the use in this Registration Statement on Form S-1
(Post-Effective Amendment No. 2) of our report dated January 27, 1999, relating
to the financial statements of Seagraves, Inc. and Grease-Tec, Inc., which
appear in such Registration Statement.

We hereby consent to the use in this Registration Statement on Form S-1
(Post-Effective Amendment No. 2) of our report dated January 14, 1999, relating
to the financial statements of RGM Liquid Waste Removal Corporation and
Affiliates, which appear in such Registration Statement.

We hereby consent to the use in this Registration Statement on Form S-1
(Post-Effective Amendment No. 2) of our report dated January 15, 1999, relating
to the financial statements of Eldredge Wastewater Management, Inc., which
appear in such Registration Statement.

We hereby consent to the use in this Registration Statement on Form S-1
(Post-Effective Amendment No. 2) of our report dated April 8, 1999, relating to
the financial statements of Reifsneider Transportation Inc., which appear in
such Registration Statement.

We also consent to the reference to us under the heading "Independent Public
Accountants" in this Registration Statement on Form S-1 (Post-Effective
Amendment No. 2).

/s/ PricewaterhouseCoopers LLP

Tulsa, Oklahoma
August 2, 1999

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of the
following reports;

EarthCare Company dated April 2, 1998 (except for the fourth paragraph
of Note 1 as to which the date is June 29, 1998)

Andrews Environmental Services, Inc. dated June 18, 1998

Ferrero Wastewater Management, Inc. dated March 20, 1998

A Rapid Rooter Sewer & Drain Service, Inc. dated May 8, 1998

Seagraves, Inc. (d.b.a. Brownie Environmental Services) and
Grease-Tec, Inc. dated May 14, 1998

RGM Waste Removal Corporation and Affiliates dated July 10, 1998

Eldredge Wastewater Management, Inc. dated June 19, 1998

and to all references made to our Firm included in or made a part of this
registration statement.

Arthur Andersen

Atlanta, Georgia

August 2, 1999