STAR SERVICES GROUP INC, 424B3, 2000-02-10

STAR SERVICES GROUP INC
424B3, 2000-02-10
REFUSE SYSTEMS

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<PAGE> 1
Filed pursuant to Rule 424(b)(3)
Registration No. 333-83155

PROSPECTUS

12,000,000 Shares

Common Stock

STAR SERVICES GROUP, INC.
(A FLORIDA CORPORATION)

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

We may offer and issue the 12,000,000 shares from time to time in
connection with future acquisitions of other businesses or properties. See "Plan
of Distribution." We will describe in an amendment to this prospectus all
material information about our issuance of shares in connection with future
acquisitions. The shares may be sold at the market price or at negotiated
prices.

Our stock trades on Nasdaq's OTC Bulletin Board(R) under the symbol "SSVC."
On December 15, 1999, the closing bid price of the stock was $8.25.

INVESTING IN THE COMMON STOCK INVOLVES RISKS. YOU SHOULD PURCHASE SHARES
ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 5.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

Prospectus dated December 15, 1999
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
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PAGE
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<S> <C>
Prospectus Summary.................. 1
The Company......................... 1
Risk Factors........................ 5
Use of Proceeds..................... 13
Dividend Policy..................... 13
Dilution............................ 13
Principal Shareholders.............. 14
Selected Financial Data............. 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations..................... 17
Results of Operations............... 22
Disclosure Regarding Pro Forma
Information....................... 22
</TABLE>

<TABLE>
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PAGE
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<S> <C>
Business............................ 28
Management.......................... 41
Certain Relationships and Related
Transactions...................... 45
Description of Capital Stock........ 46
Shares Eligible for Future Sale..... 48
Plan of Distribution................ 49
Legal Matters....................... 50
Experts............................. 50
Available Information............... 50
Information Not Required in the
Prospectus........................ II-1
</TABLE>
<PAGE> 3

PROSPECTUS SUMMARY

This summary highlights the material information from this prospectus other
than the risk factors section. It may not contain all of the information that is
important to you. To understand this offering fully, you should read the entire
prospectus carefully, including the risk factors and the financial statements.
Unless otherwise specified, all references to Star Services mean Star Services
and our subsidiaries, and all references to solid waste mean non-hazardous solid
waste.

STAR SERVICES GROUP, INC.

Star Services Group, Inc. is an integrated solid waste services company
that provides solid waste collection, transfer, disposal and recycling services
in the greater Miami, Fort Lauderdale and Palm Beach areas of Florida. We intend
to expand our operations into other areas of the eastern United States. We
currently own and operate one company that collects solid waste and three
material recovery facilities ("MRFs"). We also operate one construction and
demolition debris landfill (a "C&D Landfill"). As of September 30, 1999, we were
providing service to more than 700 commercial and industrial customers in
Florida.

Star Services intends to become a leading solid waste service company in
Florida and in additional selected markets, particularly along the eastern
seaboard and in the southeastern United States. We have targeted these markets
because we believe that they have strong projected economic or population growth
rates. Additionally, our senior management team has extensive experience in
acquiring, integrating and operating solid waste services businesses in a number
of markets in these areas.

STRATEGY

Our growth strategy is as follows:

- Initially, we plan to acquire solid waste companies in selected markets;
we intend to establish a market presence in certain target markets and
expand our existing markets.

- In target markets where suitable acquisition candidates are not
available, we plan to start new operating companies; these new companies
will seek to capitalize on existing relationships with our customers in
existing markets and a sales force dedicated to building new client
relationships.

- Once we are established in a market, we will implement our operating
strategy, which focuses on generating internal growth through exceptional
service.

- We will attempt to obtain contracts and exclusive arrangements with local
or regional governmental entities.

- We plan to be involved in many levels of solid waste disposal in each of
our markets. For example, we may seek to acquire or operate a transfer
station, landfill, MRF or lakefill operation in order to become involved
in many different aspects of the solid waste services industry in those
markets.
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COMPANY HISTORY

Bailey & Baron was incorporated under the laws of the State of Florida in
April 1989 for the purpose of seeking viable businesses or enterprises with
which to enter into a business combination. Bailey & Baron had no material
operations until June 1999, when Star Services Group, Inc., was merged into
Bailey & Baron and Bailey & Baron changed its name to Star Services Group, Inc.
Bailey & Baron, now renamed Star Services Group, Inc., was the surviving
corporation in the merger. The Board of Directors and management of Star
Services became the Board of Directors and management of the surviving
corporation.

Star Services was formed in February 1999 as a holding company to
facilitate the consolidation of the operations of six companies which were under
common control, but which had operated independently. These companies specialize
in the collection, recycling and disposal of construction and demolition
materials and also provide other solid waste collection, recycling and waste
industry services. Star Services acquired these predecessor companies in
exchange for 5,000,000 shares of Star Services' common stock.

These predecessor corporations had revenues for the year ended December 31,
1998 and the nine months ended September 30, 1999 of approximately $3.5 million
and $8.1 million, respectively.

The six predecessor companies are:

- Delta Recycling Corp.

- Delta Transfer Corp.

- Eastern Recycling, Inc.

- Delta Resources Corp.

- Delrock Management Corp.

- Delta Waste Corp.

In April 1999, Star Services formed an additional wholly-owned subsidiary,
Delta Tall Pines Corp., to operate a MRF in Palm Beach County. See "Certain
Transactions."

RECENT DEVELOPMENTS

In June 1999, Delta Waste entered into an agreement to purchase seven solid
waste collection routes and associated equipment from Waste Management, Inc. for
$5.2 million. We are currently seeking to negotiate a $10 million credit
facility in order to pay the purchase price. If we are unable to obtain the
credit facility, we will borrow the amount necessary from certain of the
Company's executive officers and cash on hand. Consummation of the transaction
is subject to regulatory approval. The Department of Justice has informed us
that it will not approve the purchase unless four of our shareholders, who are
also employees of Waste Management, Inc., sell their shares of Star Services
Common Stock within 90 days after the purchase is completed.

Star Services acquired all of the assets and liabilities of Mario's
Equipment Sales, Inc., on October 1, 1999. Mario's is in the business of
clearing land prior to construction. Star Services believes that this new area
of business will generate additional waste hauling
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work from developers. The purchase price is expected to be paid by delivery of
100,000 shares of Star Services' common stock and a three-year, $100,000
promissory note.

Star Services Group, Inc.'s executive offices are located at 2075 N.
Powerline Road, Pompano Beach, Florida 33069, telephone number (954) 974-3800.

CONVENTIONS WHICH APPLY TO THIS PROSPECTUS

Unless otherwise indicated, pro forma condensed consolidated financial
information gives effect to the prospective acquisition of Mario's Equipment
Rental, Inc. as if the acquisition had taken place at September 30, 1999 for the
pro forma condensed consolidated balance sheet, and at January 1, 1998 for the
pro forma condensed consolidated statements of operations for the year ended
December 31, 1998 and the nine month period ended September 30, 1999.

The pro forma information is based on historical financial statements
giving effect to the proposed transaction using the purchase method of
accounting and the assumptions and adjustments in the accompanying notes to the
pro forma financial statements.

PRICE RANGE OF COMMON STOCK

Star Services' Common Stock began trading on the Nasdaq OTC bulletin board
under the symbol "SSVC" effective July 7, 1999. Prior to that date, Bailey &
Baron's Common Stock had traded on the Nasdaq OTC bulletin board under the
symbol "BYAB". As Bailey & Baron had no operations, assets or liabilities prior
to its merger with Star Services, information regarding trading information
prior to July 7, 1999 is not presented. The following table presents quarterly
information on the price range of the Company's Common Stock. This information
indicates the high and low bid quotations reported by the Nasdaq OTC bulletin
board.

<TABLE>
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HIGH BID PRICE LOW BID PRICE
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<S> <C> <C>
1999
Third Quarter (July 7, 1999 through September
30, 1999).................................... $10.00 $3.25
Fourth Quarter (October 1, 1999 through
December 15, 1999)........................... $ 8.25 $5.00
</TABLE>

On December 15, 1999, the last sale price reported on the Nasdaq over the
counter bulletin board for the Common Stock was $8.25.
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SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA

The following tables present summary historical and pro forma financial
data derived from the consolidated financial statements of Star Services and
from the unaudited pro forma condensed consolidated financial statements
included elsewhere in this prospectus. The consolidated balance sheet data for
September 30, 1999 and the consolidated statement of operations data for the
nine-month periods ended September 30, 1999 and 1998 have not been audited by
independent auditors, but in the opinion of management of Star Services, all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation have been included.

The following unaudited pro forma data gives effect to the prospective
acquisition of Mario's Equipment Rental, Inc., as if the transaction had
occurred at the beginning of the period in the case of the statement of
operations data and at the end of the period in the case of the balance sheet
data.

The following data should be read in conjunction with the consolidated
financial statements of Star Services and related notes thereto and the
unaudited pro forma condensed consolidated financial statements and related
notes thereto included elsewhere in this prospectus. The unaudited pro forma
financial information is not necessarily indicative of the actual results of
operations or the financial position which would have been attained had the
acquisition been consummated at either of the foregoing dates or which may be
attained in the future.

<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED(1)
----------------
SEPTEMBER 30, SEPTEMBER 30,
1999 1999
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and equivalents....... $1,989,579 $2,005,049
Current assets............. 3,500,332 3,743,084
Current liabilities........ 2,115,308 2,670,883
Working capital............ 1,385,024 1,072,201
Total assets............... 8,843,965 10,120,300
Long-term debt, net of
current portion.......... 2,666,812 2,899,072
Shareholders' equity....... 4,061,845 4,550,345
</TABLE>

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

(1) See Pro Forma Condensed Consolidated Financial Statements and related Notes
at pages F-18 through F-22.
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RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected. In such case, the trading price of our common stock could decline, and
you may lose all or part of your investment.

STAR SERVICES HAS A SHORT HISTORY AND IT IS DIFFICULT FOR US TO PREDICT FUTURE
LEVELS OF GROWTH

Star Services was formed in February 1999. The operating companies that
Star Services acquired commenced operations in August 1997. Accordingly, we have
only a limited operating history on which you may evaluate our business and
prospects. A limited operating history makes it more difficult to predict or
count upon future levels of growth. You should consider the disclosures about
Star Services in this prospectus in light of the risks, expenses and
difficulties that companies frequently encounter in their early stages of
development.

WE MAY NOT BE ABLE TO LOCATE SUITABLE ACQUISITION CANDIDATES, WHICH COULD LIMIT
OUR GROWTH

Although we have identified several acquisition candidates that we believe
are suitable, we may not be able to acquire them at prices or on terms and
conditions favorable to us. As a result, our growth could be limited.

Acquisitions constitute an important element of growth in the solid waste
services industry and a number of our competitors are actively engaged in
seeking acquisitions. Most of them have greater financial resources than we do.
Increased competition for acquisition candidates may make fewer acquisition
opportunities available to us, and may cause us to pay more for acquisitions.
Acquisition costs may increase to levels beyond our financial capability or that
would adversely affect our operating results and financial condition. Our
ability to make acquisitions may depend in part on the relative attractiveness
of our common stock as consideration for potential acquisition candidates. This
attractiveness may depend largely on the relative market price and capital
appreciation prospects of our common stock compared to the stock of our
competitors. If the market price of our common stock is not maintained at
attractive levels, it may be difficult to make acquisitions on terms that would
not create too much dilution for our existing shareholders.

WE MAY HAVE DIFFICULTY FINANCING OUR FUTURE ACQUISITIONS, WHICH COULD LIMIT OUR
GROWTH

We expect to finance future acquisitions through cash from operations,
borrowings, issuance of equity or debt securities and/or seller financing. If
the issuance of common stock cannot be used to fund an acquisition in whole or
in part or if our common stock does not maintain a sufficient market value, we
may have to use more of our cash or borrowings under credit facilities that Star
Services may establish in the future. Using cash for acquisitions limits our
financial flexibility and makes us more likely to seek additional capital
through future debt or equity financings. If available cash from operations and
borrowings under credit facilities that Star Services may establish in the
future are not sufficient to fund acquisitions, we will need additional equity
and/or debt financing. If we

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seek more debt, we will incur the risks involved in leverage, and may have to
agree to financial covenants that limit our operational and financial
flexibility. If we seek more equity, we may dilute the ownership interests of
our then-existing shareholders. We will also need to make substantial capital
expenditures to develop or acquire and to maintain new landfills, transfer
stations and other facilities. We may not have enough capital or be able to
raise or borrow enough additional capital on satisfactory terms to meet our
capital requirements.

Credit facilities often require a borrower to obtain the consent of the
lending banks before acquiring any other business. If we are not able to obtain
the lender's consent, we may be unable to complete certain acquisitions, and our
growth could be inhibited. Credit facilities frequently also contain financial
covenants based on current and projected financial condition after completing an
acquisition. If we cannot satisfy these financial covenants on a pro forma basis
after completing an acquisition, we would not be able to complete the
acquisition without a waiver from the lending banks. Whether or not a waiver is
needed, if the results of our future operations differ materially from what we
expect, we may no longer be able to comply with the covenants in that type of
credit facility. Our failure to comply with such covenants may result in a
default under the credit facility, which would allow our lending banks to
accelerate the date for repayment of debt incurred under the credit facility and
limit our growth by reducing our cash flow.

WE MAY BE UNABLE TO FIND OR INTEGRATE ACQUISITIONS, WHICH COULD DECREASE OUR
EARNINGS

Our growth and future financial performance depend on our ability to
acquire businesses and integrate them with our organization and operations. A
significant part of our strategy is to achieve economies of scale and operating
efficiencies by growing through acquisitions. We may not achieve these goals
unless we are able to acquire businesses and effectively combine their
operations with our existing operations. We may not be able to acquire
attractive candidates or integrate our future acquisitions successfully. This
could cause a decrease in earnings, which could cause a decline in the market
price of our common stock.

SHARES OF STAR SERVICES' COMMON STOCK ISSUED IN CONNECTION WITH THE PURCHASE OF
MARIO'S EQUIPMENT SALES, INC. MAY BE SUBJECT TO RESCISSION RIGHTS

Star Services has purchased the assets and liabilities of Mario's Equipment
Sales, Inc. The purchase price included 100,000 shares of Star Services' common
stock and could be subject to rescission rights by Mario's. Rescission of the
Mario's purchase would decrease our earnings which could result in a decline of
the market price of our common stock. The purchase occurred while the
registration statement of which this prospectus is a part was on file with the
Securities and Exchange Commission but had not yet been declared effective. As a
result, the purchase may have violated Section 5 of the Securities Act and might
be required to be integrated into this registration. If the issuance of the
shares to Mario's was required to be registered under the Securities Act, for a
period of one year following the sale Mario's would be entitled to rescind the
sale as a result of the inclusion of these shares in the purchase price prior to
the effectiveness of the registration statement. If Mario's were to rescind the
sale, Star Services might be required to pay Mario's the purchase price,
aggregating approximately $587,500, in cash, or, alternatively, might be
required to return to the former owner of Mario's the assets it purchased.
Mario's has signed an agreement waiving any rescission rights in connection with
the sale, but its waiver might not be enforceable. We believe that the
likelihood that Mario's will seek to enforce its possible rescission rights is
remote.

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WE MAY FIND IT DIFFICULT TO MANAGE RAPID GROWTH, WHICH COULD STRAIN OUR
MANAGEMENT, OPERATIONAL AND FINANCIAL SERVICES

Star Services may grow rapidly at times, which could significantly strain
our management, operational, financial and other resources. Our recently
assembled senior management team may not be able to manage Star Services
successfully or to implement our operating and growth strategies. To maintain
and manage our growth, we will need to expand our management information systems
capabilities and our operational and financial systems and controls. We will
also need to attract, train, motivate, retain and manage additional senior
managers, technical professionals and other employees. Failure to expand our
operational and financial systems and controls, or to recruit and integrate
appropriate personnel at a pace consistent with any rapid growth we experience,
would reduce our earnings, which could cause a decline in the market price of
our common stock.

THE COMPETITION WE FACE FROM BOTH LARGE AND SMALL SOLID WASTE SERVICES COMPANIES
MAY RESULT IN LOST REVENUES

Our industry is highly competitive and fragmented and requires substantial
labor and capital resources. Some of the markets in which we compete or expect
to compete are served by one or more large, national solid waste companies, as
well as by numerous regional and local solid waste companies of varying sizes
and resources. Many of these companies have developed positive name recognition
and good customer relationships. A number of our competitors are better
capitalized, have greater name recognition and may be able to provide services
at a lower cost than Star Services. We also compete with counties,
municipalities and solid waste districts that maintain their own waste
collection and disposal operations. These governmental operators typically have
financial advantages over Star Services because of their access to user fees and
similar charges, tax revenues and tax-exempt financing. Our inability to compete
with governmental service providers and larger and better capitalized companies
could limit our growth.

We derive a portion of our revenue from services provided under exclusive
municipal contracts and franchise agreements. Many of these will be subject to
competitive bidding at some time in the future. We also intend to bid on
additional municipal contracts and franchise agreements. We may not be the
successful bidder. If we are not able to replace revenues from contracts lost
through competitive bidding with other revenues within a reasonable time period,
the lost revenues could reduce our earnings and result in a decline in the
market price of our common stock. Our inability to obtain new contracts would
limit our potential for growth.

WE DEPEND HIGHLY ON A FEW KEY EXECUTIVE OFFICERS

Star Services depends significantly on the services of Jack R. Casagrande,
our Chairman and Chief Executive Officer, Patrick F. Marzano, our President,
Richard Loss, our Chief Financial Officer, Phillip Foreman, our Chief Operating
Officer, and Thomas Roberts, our Vice President. The departure of any of those
persons and the loss of their managerial strengths might materially and
adversely affect our business and financial results if we were unable to hire
and retain other executives with similar skills. Thomas Roberts, the Company's
Vice President, has entered into a two-year employment agreement with the
Company. This agreement contains a covenant not to compete. We may not be able
to enforce this agreement.

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FUTURE ADVERSE FINANCIAL CONDITIONS IN THE LIMITED GEOGRAPHIC MARKET IN WHICH WE
OPERATE COULD NEGATIVELY IMPACT OUR FUTURE GROWTH

We currently operate only in the state of Florida, and we expect to focus
our operations in Florida and certain markets on the eastern seaboard and in the
southeastern United States for at least the foreseeable future. Therefore, our
business and financial results would be harmed by downturns in the local economy
in these areasparticularly in Florida. Other factors affecting the region, such
as state regulations affecting the solid waste services industry and severe
weather conditions may also affect our business and financial results. In
addition, the costs and time involved in the permitting and scarcity of
available landfills in the Eastern United States could make it difficult for us
to carry out our business strategy of acquiring landfills and other disposal
facilities in markets in which we haul local waste. We may not be able to
complete any acquisitions in markets other than south or central Florida to
lessen our geographic concentration.

WE ARE SUBJECT TO CHANGING AND SOMETIMES UNPREDICTABLE ENVIRONMENTAL REGULATION,
AND WE MAY NOT BE ABLE TO OBTAIN OR MAINTAIN THE PERMITS AND APPROVALS WE NEED
TO OPERATE

Star Services is subject to extensive and evolving environmental laws and
regulations. These laws and regulations impose substantial costs on Star
Services and affect our business in many ways, and have been enforced more and
more stringently in recent years because of greater public interest in
protecting the environment. In addition, federal, state and local governments
may change the rights they grant to, and the restrictions they impose on,
companies in the solid waste industry, and such changes could make it more
difficult and expensive to operate, which could reduce our earnings.

To own and operate landfills, we must obtain and maintain licenses or
permits and zoning, environmental and/or other land use approvals. These
licenses or permits and approvals are difficult and time-consuming to obtain and
renew. Elected officials and citizens' groups frequently oppose them. We may not
be able to obtain and maintain the permits and approvals we need to own or
operate landfills or to increase their capacity, and failure to do so could make
it more difficult to compete, which could reduce our earnings.

Extensive regulations govern the design, operation and closure of
landfills. These regulations include the regulations that establish minimum
federal requirements adopted by the U.S. Environmental Protection Agency in
October 1991 under Subtitle D of the Resource Conservation and Recovery Act of
1976. If Star Services fails to comply with these regulations, we could be
required to undertake investigatory or remedial activities, curtail operations
or close a landfill and/or MRF temporarily or permanently. Future changes to
these regulations may require us to modify, supplement or replace equipment or
facilities at substantial costs. If regulatory agencies fail to enforce these
regulations vigorously or consistently, our competitors whose facilities do not
comply with the Subtitle D Regulations or their state counterparts may obtain an
advantage over us. Our financial obligations arising from any failure to comply
with these regulations could materially decrease our available working capital.

Companies in the solid waste services business are frequently subject to
judicial and administrative proceedings involving federal, state or local
agencies or citizens' groups. Governmental agencies may impose fines or
penalties on us. They may also attempt to revoke or deny renewal of our
operating permits, franchises or licenses for violations or alleged violations
of environmental laws or regulations. They might also require us to

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remediate potential environmental problems relating to waste that we or our
predecessors collected, transported, disposed of or stored. Individuals or
community groups might also bring legal actions against us in connection with
our operations. Any adverse outcome in a proceeding of this type could reduce
our earnings, which could result in a decline in the market price of our common
stock and create adverse publicity about Star Services.

WE MAY HAVE POTENTIAL ENVIRONMENTAL LIABILITY, WHICH MAY RESULT IN SUBSTANTIAL
COSTS TO US

Star Services is liable for any environmental damage that our solid waste
facilities cause, including damage to neighboring landowners or residents,
particularly as a result of the contamination of soil, groundwater or surface
water, and especially drinking water. We may be liable for damage resulting from
conditions existing before we acquired these facilities. We may also be liable
for any off-site environmental contamination caused by pollutants or hazardous
substances whose transportation, treatment or disposal that we or our
predecessors arranged. Any substantial liability for environmental damage could
reduce our earnings which could result in a decline in the market price of our
common stock.

Each business that we acquire or have acquired may have liabilities that we
fail to discover, including liabilities that arise from prior owners' failure to
comply with environmental laws. As a successor owner, we may be legally
responsible for these liabilities. Even if we obtain legally enforceable
representations, warranties and indemnities from the sellers of such businesses,
they may not cover fully the liabilities. Some environmental liabilities, even
if we do not expressly assume them, may be imposed on Star Services under
various legal theories. Our insurance program does not cover liabilities
associated with any environmental cleanup or remediation of our own sites. A
successful uninsured claim against Star Services would decrease our earnings
which could result in a decline in the market price of our common stock.

WE MAY BE SUBJECT TO LIMITATIONS ON LANDFILL AND LAKEFILL PERMITTING AND
EXPANSION

We may not be able to obtain new landfill or lakefill sites or expand the
permitted capacity of our facilities when necessary.

We currently own and operate two lakefill operations and operate a lakefill
and a C&D Landfill. Our ability to meet our growth objectives may depend in part
on our ability to acquire, lease and expand landfills and lakefills and develop
new landfill and lakefill sites. In some areas in which we intend to operate,
suitable land for new sites or expansion of existing landfill sites may be
unavailable. Operating permits for landfills in the states in which we operate
or intend to operate must generally be renewed at least every five years. It has
become increasingly difficult and expensive to obtain required permits and
approvals to build, operate and expand solid waste management facilities,
including landfills and transfer stations. The process often takes several
years, requires numerous hearings and compliance with zoning, environmental and
other requirements, and is resisted by citizen, public interest or other groups.
We may not be able to obtain or maintain the permits we require to expand, and
such permits may contain burdensome terms and conditions. Even when granted,
final permits to expand are often not approved until the remaining permitted
disposal capacity of a landfill is very low. Local laws and ordinances also may
affect our ability to obtain permits to expand landfills. If we were to exhaust
our permitted capacity at a landfill or lakefill, our ability to expand
internally would be limited, and we could be required to cap and close a
landfill and forced to dispose of collected waste at more distant

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landfills or at landfills operated by our competitors. The resulting increased
costs would decrease our earnings which could result in a decline in the market
price of our common stock.

WE MAY BE UNABLE TO OBTAIN SOME CONTRACTS AND PERMITS IF WE CANNOT OBTAIN
PERFORMANCE BONDS, LETTERS OF CREDIT AND INSURANCE

Municipal solid waste services contracts and landfill and MRF closure
obligations may require Star Services to obtain performance or surety bonds,
letters of credit, or other means of financial assurance to secure our
performance. In the future, if we are not able to obtain performance or surety
bonds or letters of credit in sufficient amounts or at acceptable rates, we may
not be able to enter into additional municipal solid waste services contracts or
obtain or retain landfill, MRF and lakefill operating permits. Some of our
existing operations require us to maintain performance bonds. In addition, some
of our existing solid waste collection and recycling contracts may require us to
obtain performance bonds. Any future difficulty we encounter in obtaining
insurance could also make it more difficult for us to secure future contracts
conditioned on our having adequate insurance coverage. Our failure to obtain
means of financial assurance or adequate insurance coverage could materially and
adversely affect our business and financial results.

ALTERNATIVES TO LANDFILL DISPOSAL COULD REDUCE THE VOLUME OF WASTE AVAILABLE FOR
COLLECTION

Some areas in which we operate offer alternatives to landfill disposal,
such as recycling, composting and incineration. Customers may use those
alternatives to landfill disposal. This would reduce our earnings, which could
result in a decline in the market price of our common stock. In addition, state
and local authorities increasingly require recycling and waste reduction at the
source and prohibit the disposal of certain types of wastes, such as yard
wastes, at landfills. For example, several states have adopted plans that set
goals for percentages of certain solid waste items to be recycled. These
developments may reduce the volume of waste in certain areas.

OUR ACCRUALS FOR CLOSURE AND POST-CLOSURE COSTS IN CONNECTION WITH ITS LANDFILLS
MAY BE INADEQUATE

We are required to pay closure and post-closure costs of landfills and any
disposal facilities that we own or operate. Our obligations to pay closure or
post-closure costs may exceed the amount we accrued and reserved and other
amounts available from funds or reserves established to pay such costs. We will
accrue for future closure and post-closure costs of our owned landfills, which
generally will be for a term of 30 years after final closure of a landfill,
based on engineering estimates of consumption of permitted landfill airspace
over the useful life of any such landfill. If we have expenses beyond those
projected, it would decrease our earnings, which could result in a decline in
the price of our common stock.

WE HAVE RECENTLY EXPERIENCED WORKING CAPITAL DEFICITS AND MAY CONTINUE TO
EXPERIENCE SUCH DEFICITS IN THE FUTURE

At December 31, 1998, Star Services had a working capital deficit of
$473,090. If we continue to experience working capital shortfalls, our growth
would be limited. We currently finance our working capital requirements from
internally generated funds. In

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addition, we raised net proceeds of approximately $3,950,000 in a private
placement of our common stock in June 1999. We have utilized the net proceeds in
part to fund our operations. We may not be able to continue to raise funds from
the sale of our securities if we have operating deficits.

WE MAY BECOME SUBJECT TO CHARGES RELATED TO CAPITALIZED EXPENDITURES

In accordance with generally accepted accounting principles, we expect to
capitalize some expenditures and advances relating to acquisitions, pending
acquisitions and landfill development projects. We expect to expense indirect
acquisition costs such as executive salaries, general corporate overhead, public
affairs and other corporate services as we incur those costs. We expect to
charge against earnings any unamortized capitalized expenditures and advances,
net of any portion thereof that we estimate we will recover, through sale or
otherwise, that relate to any operation that is permanently shut down, any
pending acquisition that is not consummated and any landfill development project
that we do not expect to complete. Therefore, Star Services may incur charges
against earnings in future periods, which could result in a decrease in the
market price of our common stock.

WE MAY RECEIVE LESS REVENUE THAN ANTICIPATED UPON RESALE OF RECYCLABLES

We provide recycling services. The sale prices of and demand for recyclable
waste products, particularly wastepaper, are frequently volatile. If prices
decline our operating results will suffer.

OUR CHARTER AND BY-LAWS CONTAIN CERTAIN PROVISIONS THAT MAY MAKE IT DIFFICULT TO
EFFECT A CHANGE IN OUR MANAGEMENT

Certain provisions in our Articles of Incorporation and By-Laws, and in the
Florida Business Corporation Law may deter tender offers and hostile takeovers
and delay or prevent changes in control or management of Star Services,
including transactions in which shareholders might be paid more than current
market prices for their shares. These provisions may also limit shareholders'
ability to approve transactions that they believe are in their best interests.

FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE

Shareholders may experience dilution if we issue common stock upon the
exercise of outstanding stock options and warrants or as consideration for
acquisitions. We may also make additional public offerings of our common stock
in the future.

THERE IS A LIMITED MARKET FOR OUR SHARES

While our common stock now trades on Nasdaq's OTC Bulletin Board(R), we
cannot ensure that the market for our common stock will be as liquid as if it
traded on a national exchange or on Nasdaq's National Market or Small Cap
markets.

11
<PAGE> 14

WE MAY FACE YEAR 2000 RISKS, WHICH MAY RESULT IN UNEXPECTED EXPENSES AND DELAYS
IN PAYMENT FOR OUR SERVICES AND IN OUR ABILITY TO CONDUCT NORMAL BANKING
OPERATIONS

We will need to modify or replace portions of our software so that our
computer systems will function properly with respect to dates in the year 2000
and afterwards. We expect to complete those modifications and upgrades during
1999 at a total cost of approximately $10,000. Our customers may need to make
Year 2000 modifications to software and hardware that they use to generate
records, bills and payments relating to Star Services. We do not rely on vendors
on a routine basis except for providers of disposal services. We take waste to a
site and are normally billed based on tonnage disposed. We believe that if our
disposal vendors encounter Year 2000 problems, they will convert to manual
billing based on scale recordings until they resolve those issues.

In assessing our exposure to Year 2000 issues, we believe our biggest
challenges lie in the following areas: Year 2000 issues at our banks, large,
typically municipal, customers and acquired businesses between the time we
acquire them and the time we implement our own systems. If Star Services and our
vendors, banks and customers do not complete required Year 2000 modifications on
time, the Year 2000 issue could materially affect our operations. We believe,
however, that in the most reasonably likely worst case, the effects of Year 2000
issues on our operations would be brief and small relative to our overall
operations. We have not made a contingency plan to minimize operational problems
if Star Services and our vendors, banks and customers do not timely complete all
required Year 2000 modifications.

THE RELEASE AND SALE OF CERTAIN SHARES SUBJECT TO "LOCK-UP" AGREEMENTS COULD
DECREASE THE MARKET PRICE OF OUR COMMON STOCK.

The release of a significant number of shares of our common stock and the
sale of such shares could have a negative impact on the market price of our
common stock. Approximately 7,000,000 of the shares being registered on behalf
of selling shareholders are subject to lock-up agreements with terms ranging
between one and two years. Star Services may release any or all of such shares
from these agreements, and, if it does so, those shares could be immediately
sold in the public market. The sale of a significant number of such shares could
reduce the market price of the common stock.

In June 1999, Delta Waste entered into an agreement to purchase certain
solid waste collection routes and related equipment from Waste Management, Inc.
The Department of Justice has informed us that it will not approve the purchase
unless four of our shareholders, who are also employees of Waste Management,
Inc., sell their shares (approximately 300,000 shares in the aggregate) of Star
Services Common Stock within 90 days after the purchase is completed. The sale
of these shares in the public market this in a short time period could have the
effect of depressing the price of our common stock.

In addition, 5,000,000 of the shares we are registering in this prospectus
are owned by officers, directors and significant shareholders of Star Services.
Although management does not presently intend to release any of these shares
prior to the stated expirations of the "lock-up" agreements, the sale of a
significant number of these shares could lead to the perception by the
investment community that management is attempting to liquidate their
investments in Star Services which could have the effect of further depressing
the price of our common stock.

12
<PAGE> 15

NOTE REGARDING FORWARD LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and
uncertainties. Discussions containing such forward-looking statements are found
in the material set forth under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," as well as in the prospectus generally. Our actual
results could differ materially from those anticipated in the forward-looking
statements as a result of certain factors, including the risks described below
and elsewhere in this prospectus.

USE OF PROCEEDS

Of the 12,000,000 shares that may be offered and issued by Star Services
from time to time in connection with future acquisitions of other solid waste
related businesses or properties, the net proceeds of the offering or offerings
cannot be determined because the shares are being offered on a delayed or
continuous basis.

DIVIDEND POLICY

We have never paid cash dividends on our common stock. We do not currently
anticipate paying any cash dividends on the common stock. In addition, any
credit facility that we enter into in the future may prohibit us from paying
cash dividends without the consent of our lenders. We intend to retain all
earnings to fund the operation and expansion of our business.

DILUTION

The 12,000,000 shares offered hereby may be offered from time to time by
Star Services in connection with future acquisitions of other solid waste
related businesses or properties. Because the terms and times of future
acquisitions are unknown at this time, we are unable to determine the dilutive
effect, including any effect on the net tangible book value of the shares, that
the sales of those 12,000,000 shares will have on current equity positions or
any dilution of the purchaser's equity interest that will occur due to
additional offerings of shares by Star Services. An acquisition or series of
acquisitions in which any of the 12,000,000 shares offered by Star Services as
part of the purchase price would require us to file an amendment to the
Registration Statement of which this prospectus forms a part discussing or
disclosing the acquisition or acquisitions.

13
<PAGE> 16

PRINCIPAL SHAREHOLDERS

The following table and footnotes set forth certain information regarding
the ownership of Star Services' common stock as of August 30, 1999, and as
adjusted to reflect the sale of the shares offered by Star Services and the
selling shareholders of the shares being registered hereunder by:

- persons known by Star Services to beneficially own 5% or more of the
outstanding shares of common stock,

- each of Star Services' executive officers,

- each director of Star Services and

- all current officers and directors as a group.

<TABLE>
<CAPTION>
PERCENT OF SHARES
NUMBER OF OF COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED STOCK OWNED
------------------------------------ ------------ -----------------
<S> <C> <C>
Casagrande, Jack R....................... 700,000 8.8%
16224 NW 82nd Place
Miami, FL 33016
Casagrande, Rocco........................ 531,250 6.7
62 E. Mall Drive
Melville, NY 11747
Foreman, Phillip......................... 0 0
c/o Star Services Group, Inc.
2075 North Powerline Road
Pompano Beach, FL 33069
Greene, Charles.......................... 1,100,000 13.8
910 NW 116th Terrace
Plantation, FL 33325
Loss, Richard............................ 0 0
c/o Star Services Group, Inc.
2075 N. Powerline Road
Pompano Beach, FL 33069
Marzano, Angelo.......................... 287,500 3.6
10476 SW 52nd Street
Cooper City, FL 33328
Marzano, Frank........................... 1,100,000 13.8
30 Blueberry Court
Melville, NY 11747
Marzano, Patrick......................... 1,100,000 13.8
Sea Ranch Club C
4900 N. Ocean Blvd., #821
Ft. Lauderdale, FL 33306
Roberts, Thomas.......................... 10,000 *
5386 NW 108th Way
Coral Springs, FL 33076
Weiss, Samuel............................ 16,000 *
1197 E. Broadway
Hewlett, NY 11557
All current executive officers and
directors as a group (10 persons)...... 4,844,750 61.0
</TABLE>

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

* Less than 1%.

14
<PAGE> 17

SELECTED FINANCIAL DATA

The following selected financial data as of and for the periods ended
December 31, 1997 and 1998 are derived from Star Services' audited financial
statements. The selected financial data for the nine-month periods ended
September 30, 1999 and 1998 are derived from Star Services' unaudited financial
statements. In the opinion of management, such unaudited financial statements
contain all adjustments, consisting of only normal recurring accruals, necessary
for a fair presentation of the consolidated financial condition and results of
operations as of and for the periods presented. Operating results for the nine
months ended September 30, 1999 are not necessarily indicative of the results
that may be expected for the entire fiscal year ending December 31, 1999.

The following pro forma condensed consolidated financial statements have
been prepared to give effect to the prospective acquisition of Mario's Equipment
Rental, Inc. as if the transaction had taken place at September 30, 1999 for the
pro forma condensed consolidated balance sheet, and at January 1, 1998 for the
pro forma condensed consolidated statements of operations for the year ended
December 31, 1998 and the nine-month period ended September 30, 1999. The
unaudited pro forma financial information is not necessarily indicative of the
actual results of operations or the financial position which would have been
attained had the acquisition been consummated at either of the foregoing dates
or which may be attained in the future.

The selected financial data below should be read in conjunction with Star
Services' financial statements and related notes and the unaudited pro forma
condensed consolidated financial statements and related notes thereto contained
elsewhere in this prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED(1)
AUGUST 26, 1997 ----------------------------
(INCEPTION) NINE MONTHS ENDED NINE
THROUGH YEAR ENDED SEPTEMBER 30, YEAR ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31, ----------------------- DECEMBER 31, SEPTEMBER 30,
1997 1998 1998 1999 1998 1999
--------------- ------------ ---------- ---------- ------------ -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $ 235,596 $3,542,851 $1,879,979 $8,126,509 $4,587,275 $9,049,183
---------- ---------- ---------- ---------- ---------- ----------
Expenses:
Direct costs............... 129,029 2,449,085 1,284,899 6,494,178 3,079,156 6,996,765
Selling and
administrative........... 63,181 935,723 382,947 1,944,063 1,228,679 2,233,163
Stock-based compensation... -- -- -- 215,050 -- 215,050
Depreciation............... 12,081 177,362 103,148 266,273 330,375 416,342
---------- ---------- ---------- ---------- ---------- ----------
204,291 3,562,170 1,770,994 8,919,564 4,638,210 9,861,320
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from
operations................. 31,305 (19,319) 108,985 (793,055) (50,935) (812,137)
Interest income.............. -- -- -- 52,777 -- 52,777
Interest expense............. (1,613) (70,423) (35,382) (167,960) (87,083) (198,068)
Miscellaneous income......... -- -- -- -- 4,443 36,885
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income
taxes...................... 29,692 (89,742) 73,603 (908,238) (133,575) (920,543)
Income taxes................. -- -- -- 317,883 46,751 322,190
---------- ---------- ---------- ---------- ---------- ----------
Net income (loss).......... $ 29,692 $ (89,742) $ 73,603 $ (590,355) $ (86,824) $ (598,353)
========== ========== ========== ========== ========== ==========
Earnings (loss) per
share.................... $ 0.01 $ (0.02) $ 0.01 $ (0.09) $ (0.02) $ (0.09)
========== ========== ========== ========== ========== ==========
Weighted average shares
outstanding.............. 5,000,000 5,000,000 5,000,000 6,646,016 5,100,000 6,746,016
========== ========== ========== ========== ========== ==========
</TABLE>

15
<PAGE> 18

Unaudited pro forma income tax, net income (loss) and earnings (loss) per
share information (information for the nine-month period ended September 30,
1999 is actual):

<TABLE>
<CAPTION>
AUGUST 26, 1997 PRO FORMA CONSOLIDATED(1)
(INCEPTION) NINE MONTHS ENDED --------------------------------
THROUGH YEAR ENDED SEPTEMBER 30, YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31, ----------------------- DECEMBER 31, SEPTEMBER 30,
1997 1998 1998 1999 1998 1999
--------------- ------------ ---------- ---------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Historical income
(loss) before
income taxes....... $ 29,692 $ (89,742) $ 73,603 $ (908,238) $ (133,575) $ (920,543)
Pro forma income tax
(expense)
benefit............ (9,000) 27,000 (25,761) 317,883 46,751 322,190
---------- ---------- ---------- ---------- ---------- ----------
Pro forma net income
(loss)............. $ 20,692 $ (62,742) $ 47,842 $ (590,355) $ (86,824) $ (598,353)
========== ========== ========== ========== ========== ==========
Pro forma earnings
(loss) per share... $ 0.00 $ (0.01) $ 0.01 $ (0.09) $ (0.02) $ (0.09)
========== ========== ========== ========== ========== ==========
Historical weighted
average shares
outstanding........ 5,000,000 5,000,000 5,000,000 6,646,016 5,100,000 6,746,016
========== ========== ========== ========== ========== ==========
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED(1)
DECEMBER 31, SEPTEMBER 30, ---------------
--------------------- ----------------------- SEPTEMBER 30,
1997 1998 1998 1999 1999
-------- ---------- ---------- ---------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and equivalents...................... $115,033 $ 49,149 $ 16,195 $1,989,579 $2,005,049
Current assets............................ 198,133 751,525 632,849 3,500,332 3,743,084
Current liabilities....................... 47,834 1,224,615 813,477 2,115,308 2,670,883
Working capital (deficit)................. 150,299 (473,090) (180,628) 1,385,024 1,072,201
Total assets.............................. 588,755 2,979,664 2,246,010 8,843,965 10,120,300
Long-term debt, net of current portion.... 220,229 1,316,899 856,799 2,666,812 2,899,072
Shareholders' equity...................... 320,692 438,150 575,734 4,061,845 4,550,345
</TABLE>

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

(1) See Pro Forma Condensed Consolidated Financial Statements and related Notes
at pages F-18 through F-22.

16
<PAGE> 19

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

You should read this discussion together with the audited and unaudited
financial statements and other financial information contained elsewhere in this
prospectus. This prospectus contains forward-looking statements that involve
risks and uncertainties. Star Services' actual results may differ materially
from those discussed in the forward-looking statements because of various
factors, including, but not limited to, those listed in "Risk Factors" and the
matters discussed in this prospectus generally.

OVERVIEW

Star Services Group, Inc. is a regional, integrated solid waste services
company that presently provides solid waste collection, transfer, disposal and
recycling services in south and central Florida.

Star Services' primary objective is to become one of the leading companies
in the environmental service industry in the eastern United States. Star
Services intends to implement an aggressive program of internal growth and
acquisitions aimed at expanding Star Services' existing market share and
acquiring a number of additional, established operating entities.

Star Services intends to grow through both acquisitions and internal
growth. We expect a substantial part of our future growth to come from acquiring
additional solid waste collection, transfer and disposal businesses. Additional
acquisitions could continue to affect period-to-period comparisons of our
operating results. We also expect to invest in collection vehicles and
equipment, maintenance of existing equipment, and management information
systems, which should supply the infrastructure to support our growth. We expect
to fund future acquisitions through cash from operations, borrowings, the
issuance of debt or equity and/or seller financing. We do not presently have any
credit facility for acquisitions or any commitment for one.

Star Services operates in several segments of the environmental services
industry: collection, recycling and disposal of construction and demolition
debris, land clearing, yard waste debris, and source separated recyclable
materials. Star Services' operations are carried out by:

- Delta Recycling Corp., which was incorporated in Florida on August 26,
1997,

- Delrock Management Corp., which was incorporated in Florida on May 29,
1998,

- Delta Transfer Corp., which was incorporated in Florida on August 26,
1998,

- Eastern Recycling, Inc., which was incorporated in Florida on June 11,
1997,

- Delta Resources Corp., which was incorporated in Florida on January 29,
1999,

- Delta Waste Corp., which was incorporated in Florida in January 1999 and

- Delta Tall Pines Corp., which was incorporated in Florida in April 1999.

Star Services operates MRFs which are licensed and regulated by the State
of Florida Department of Environmental Protection and various county agencies.
As MRFs, these facilities accept assorted loads of debris consisting of
construction and demolition debris,

17
<PAGE> 20

land clearing, yard waste and source separated materials primarily from
customers in the construction and demolition industry. The incoming loads are
processed using an semi-automated sorting system to separate recyclables from
the waste stream. Additional loads are also supplied directly by Star Services
through its hauling operations. The reclaimed recyclables are shipped to end
user markets for re-use. Star Services owns real estate used in conjunction with
certain of its operations and also maintains a dredge and fill permit and
operates a C&D debris landfill in Titusville, Florida. Each of the
above-described operations is performed by one or more of Star Services'
subsidiaries.

C&D debris enters Star Services' facilities from its own roll-off
collection operation, consisting of over 500 containers in Palm Beach,
Miami-Dade and Broward Counties, and from other waste haulers. After the
material is inspected at the entrance inspection station and gate house, as
required by regulations of the Florida Department of Environmental Protection
and operational safety plans, the material is unloaded on the tipping floor. The
material is then sorted to remove appropriately designated recycling materials,
which are then placed in containers for storage or shipment to markets. The
remaining material is then processed or disposed of in landfills or other
facilities.

Land clearing, yard waste and wood are processed in tub grinders or impact
grinders to produce wood chips or mulch which is marketed as boiler fuel or
cover material. Large concrete, rocks and other inert material are sent to
designated tipping areas for future processing and/or disposed of in our
adjoining permitted lakefill operations. The remaining material, consisting of
dirt, fines, paper, plastics, metals, glass, drywall, broken concrete blocks,
bricks, lumber, wood and the like, is stockpiled for removal or processed
through additional screening and picking. The system first screens out fines
which are stockpiled for landfill cover material, with the remaining material
manually sorted to segregate recyclable material such as wood, plastic, glass,
ferrous and non-ferrous metals, corrugated cardboard, paper, roofing and
aggregate. The MRFs currently recycle approximately 70% to 90% of all waste that
they receive.

EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 131, "Disclosure about Segments
of an Enterprise and Related Information", which is effective for financial
statements with fiscal years beginning after December 15, 1997. Statement 131
requires that public business enterprises report certain information about
operating segments in complete sets of financial statements of the enterprise
and in condensed financial statements of interim periods issued to shareholders.
Statement 131 also requires that public business enterprises report certain
information about their products and services, the geographic areas in which
they operate and their major customers. The statement has not had any impact on
Star Services' reporting.

In February 1998, the FASB issued Statement No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits", which revises
employers' disclosures about pension and other postretirement benefit plans.
Statement 132 does not change the measurement or recognition of those plans, but
requires additional information on changes in benefit obligations and fair
values of plan assets, and eliminates certain disclosures previously required by
SFAS Nos. 87, 88 and 106. Statement 132 is effective for financial statements
with fiscal years beginning after December 15, 1997. The statement has not had
applicability to Star Services' reporting.

18
<PAGE> 21

In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives), and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. Statement 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. The statement is not
expected to have any applicability to Star Services' operations.

In October 1998, the FASB issued Statement No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise", which amends the accounting and
reporting standards for certain activities of mortgage banking enterprises and
other enterprises that conduct operations that are substantially similar to the
primary operations of a mortgage banking enterprise. Statement 134 is effective
for the first fiscal quarter beginning after December 15, 1998. The statement is
not expected to have any applicability to Star Services' operations.

In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities", which requires costs of start-up activities and organization costs
to be expenses as incurred. The SOP is effective for financial statements with
fiscal years beginning after December 15, 1998, although earlier application is
encouraged. The adoption of the SOP is not expected to have a material adverse
effect on Star Services.

CONTRACTS

Our revenues consist mainly of fees we charge customers for construction
and demolition debris transfer, disposal and recycling services. A large part of
our collection revenue comes from providing service to industrial, residential
and commercial customers. These services are provided under contracts that
generally last from one month to five years. The contracts provide a relatively
stable source of revenue for Star Services.

We typically determine the prices for our solid waste services by:

- the collection frequency and level of service,

- route density, volume, weight and type of waste collected,

- type of equipment and containers furnished,

- the distance to the disposal or processing facility,

- the cost of disposal or processing, and

- prices charged by competitors for similar services.

EXPENSES

Direct costs include:

- labor, fuel,

- equipment maintenance and tipping fees paid to third party disposal
facilities,

19
<PAGE> 22

- workers' compensation and vehicle insurance,

- the cost of materials we purchase for recycling,

- third party transportation expense,

- district and state taxes and permits,

- engineering and

- legal services.

Selling and administrative ("S&A") expense includes management, clerical
and administrative compensation and overhead costs associated with our marketing
and sales force, professional services and community relations expenses.

Depreciation expense includes depreciation of fixed assets over their
estimated useful life using the straight line and accelerated methods and
amortization of goodwill and other intangible assets using the straight line
method.

Star Services intends to capitalize some expenditures related to pending
acquisitions or development projects, such as legal and engineering expenses. We
intend to expense indirect acquisition costs, such as executive and corporate
overhead, public relations and other corporate services. We charge against net
income any unamortized capitalized expenditures and advances, net of any portion
that we believe we may recover, through sale or otherwise that relate to any
operation that is permanently shut down and any pending acquisition or landfill
development project that is not completed. We routinely evaluate all capitalized
costs, and expense those related to projects that we believe are not likely to
succeed.

We will have material financial obligations relating to closure costs of
any disposal facilities we may own or operate in the future. In such case, Star
Services will accrue for those obligations, based on engineering estimates of
consumption of permitted landfill airspace over the useful life of any such
landfill.

INFLATION

Inflation has not significantly affected our operations. Consistent with
industry practice, many of our contracts allow us to pass through certain costs
to our customers, including increases in landfill tipping fees and, in some
cases, fuel costs. Therefore, we believe that we should be able to increase
prices to offset many cost increases that result from inflation. However,
competitive pressures may require us to absorb at least part of these cost
increases, particularly during periods of high inflation.

SEASONALITY

Seasonality has not had a material effect on our operations and is not
expected to have a material effect in the future.

YEAR 2000 ISSUES

20
<PAGE> 23

by Year 2000 issues. Our customers may need to make Year 2000 modifications to
software and hardware that they use to generate records, bills and payments
relating to Star Services. We do not rely on vendors on a routine basis except
for providers of disposal services. We bring waste to a site and are normally
billed based on tonnage received. We believe that if our disposal vendors
encounter Year 2000 problems, they will convert to manual billing based on scale
recordings until they resolve those issues.

In assessing our exposure to Year 2000 issues, management believes our
biggest challenges lie in the following areas: Year 2000 issues at Star
Services' banks, large, typically municipal, customers, and acquired businesses
between the time Star Services acquires them and the time we implement our own
systems. If Star Services and our vendors, banks and customers do not complete
the required Year 2000 modifications on time, the Year 2000 issue could affect
our operations. We believe, however, that in the most reasonably likely worst
case, the effects of Year 2000 issues on our operations would be brief and small
relative to our overall operations. We have not made a contingency plan to
minimize operational problems if we and our vendors, banks and customers do not
timely complete all required Year 2000 modifications.

21
<PAGE> 24

RESULTS OF OPERATIONS

The financial information for Star Services included in Management's
Discussion and Analysis of Financial Condition and Results of Operations and in
the audited financial statements included elsewhere in this prospectus relates
to the following entities for the periods indicated:

PERIOD ENDED DECEMBER 31, 1997

Eastern Recycling, Inc........ Period June 11, 1997 (date of incorporation)
through December 31, 1997

Delta Recycling Corp. ........ Period August 26, 1997 (date of incorporation)
through December 31, 1997

YEAR ENDED DECEMBER 31, 1998

Eastern Recycling, Inc. ...... Year ended December 31, 1998

Delta Recycling Corp. ........ Year ended December 31, 1998

Delta Transfer Corp. ......... Period August 26, 1998 (date of incorporation)
through December 31, 1998

Delrock Management Corp. ..... Period May 29, 1998 (date of incorporation)
through December 31, 1998

DISCLOSURE REGARDING PRO FORMA INFORMATION

Pro forma results of operations (assuming the business combination had been
effected in January 1997) are not presented because Bailey & Baron, Inc. was
inactive for the periods presented. As a result, pro forma results of operations
for the years ended December 31, 1998 and 1997, would be no different than the
historical statements of operations presented herewith.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1998 VS. YEAR ENDED DECEMBER 31, 1997

REVENUES

For the year ended December 31, 1998, Star Services' revenues were
$3,542,851, compared to revenues of $235,596 for 1997, an increase of
$3,307,255. Because operations commenced on August 26, 1997, revenues
represented only four months of operations, compared to a full year of
operations in 1998. In addition, 1997 revenues were derived solely from the
recycling and disposal operations of Delta Recycling. During 1998,

22
<PAGE> 25

significant revenue was generated from the transfer station operations of Delta
Transfer, which commenced operations in August of 1998. The principal activities
which accounted for the increase in revenues were disposal operations, which
increased by $1,166,446 and transfer station operations which increased by
$2,085,519.

DIRECT COSTS

During the year ended December 31, 1998, Star Services' direct costs were
$2,449,085, compared to $129,029 for the year ended December 31, 1997, an
increase of $2,320,056. The principal reason for the increase was the expansion
of operating activities. The expansion was due in part to a full year of
operations in 1998 compared to only four months of operations in 1997. The
increase was also attributable to the increase in disposal operations and
transfer station activities, including the operations of Delta Transfer, which
was incorporated during 1998. The expense categories which showed the largest
increases included labor and related costs (an increase of $710,052), disposal
costs (an increase of $806,154), truck operating expenses (an increase of
$163,186), transfer station facilities rent (an increase of $168,056) and
repairs and maintenance (an increase of $261,779).

SELLING AND ADMINISTRATIVE EXPENSES

For 1998, selling and administrative costs totalled $935,723, compared to
$63,181 for 1997, and increase of $872,542. The increase was reflective of the
administrative support costs required to support the expansion in operations.
The principal expense categories that increased were office salaries and related
costs (an increase of $328,903), professional fees (an increase of $197,402) and
office occupancy costs (an increase of $155,163).

DEPRECIATION

Depreciation expense increased to $177,362 in 1998 from $12,081 in 1997.
Based on annualized 1997 depreciation of $36,243, this represented an increase
of $141,119 or 389%. The increase in depreciation expense was the result of the
purchase of approximately $2,000,000 of property and equipment during 1998.

INTEREST EXPENSE

Interest expense increased to $70,423 in 1998 from $1,613 in 1997. Based on
annualized 1997 interest expense of $4,839, this represented an increase of
$65,584 or 1,355%. The increased interest expense was a result of higher debt
levels resulting from the purchase of additional property and equipment and from
debt incurred in connection with the subsidiary companies' acquisition of
treasury stock.

NINE MONTHS ENDED SEPTEMBER 30, 1999 VS. NINE MONTHS ENDED SEPTEMBER 30, 1998

REVENUES

Revenues for the nine months ended September 30, 1999 were $8,126,509,
compared to $1,879,979 for the nine months ended September 30, 1998, an increase
of $6,246,530 or 432%. During this period in 1998, all revenues were derived
from the operations of Delta Recycling, principally disposal operations and
transfer station operations. In contrast, 1999 revenues were derived from the
operations of Delta Recycling, Delta Transfer, Delta Resources and Delta Tall
Pines. The principal activities which accounted for the increase

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consisted of disposal operations, which increased by $3,028,802, transfer
station operations, which increased by $2,960,595 and landfill operations, which
increased by $314,058.

DIRECT COSTS

During the nine months ended September 30, 1999, Star Services' direct
costs were $6,494,178, compared to $1,284,899 for the nine months ended
September 30, 1998, an increase of $5,209,279 or 505%. The principal reason for
the increase was the continued expansion of operating activities. The increase
was principally attributable to the increase in disposal operations and transfer
station activities, including the operations of Delta Transfer, which commenced
in August 1998 and of Delta Tall Pines which commenced in June 1999. The expense
categories which showed the largest increases were labor and related costs (an
increase of $1,498,570), disposal costs (an increase of $2,259,017), truck
operating expenses (an increase of $277,926), and transfer station facilities
rent (an increase of $344,248).

SELLING AND ADMINISTRATIVE EXPENSES

For the period ended September 30, 1999, selling and administrative costs
totalled $1,944,063, compared to $382,947 for the same period in 1998, an
increase of $1,561,116 or 509%. The increase was largely reflective of the
administrative support costs required to support the expansion in Star Services'
operations. The principal expense categories that increased were office salaries
and related costs (an increase of $704,379). In addition, Star Services
experienced increases in professional fees (an increase of $346,095) and travel
costs (an increase of $164,441). The increase in professional fees arose largely
as a result of preparing a registration statement to register Star Services'
common stock. Travel costs were incurred in connection with investigating
potential acquisitions.

STOCK-BASED COMPENSATION

During February 1999, the Company issued 759,000 options to employees of
the Company. The options vest over a four-year period. Stock-based compensation
represents the portion of the total compensation expense to be recognized over
the vesting period, which is attributable to the nine-month period ended
September 30, 1999. There was no stock-based compensation for the nine-month
period ended September 30, 1998.

DEPRECIATION

Depreciation expense increased to $266,273 for the first nine months of
1999 from $103,148 for the first nine months of 1998, an increase of $163,125.
The increase was principally due to depreciation on purchases of new equipment
required in connection with development of Star Services' waste collection and
transfer station operations.

INTEREST EXPENSE

Interest expense increased to $167,960 for the first nine months of 1999
from $35,382 for the same period in 1998, an increase of $132,578. The increase
was attributable to the increased debt incurred to finance the acquisition of
property and equipment in connection with Star Services' expansion of facilities
and services.

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INCOME TAX BENEFIT

During the nine-month period ended September 30, 1999, Star Services
sustained a loss before income taxes of $908,238. For income tax purposes, such
operating loss may be carried forward for up to twenty years to offset future
operating income. Because management believes that Star Services will achieve
sufficient operating profits to utilize the net operating loss, Star Services
has recorded a deferred tax asset and income tax benefit of $317,883.
Management's belief that Star Services will achieve sufficient operating profits
to utilize the net operating loss is based on several factors. First, during the
nine-month period ended September 30, 1999, Star Services incurred a significant
amount of non-recurring costs. Such costs included approximately $200,000 of
fees incurred in connection with the preparation of a registration statement to
register Star Services' common stock. Star Services also incurred approximately
$70,000 of costs in connection with the investigation of potential acquisitions
that either will not be, or are unlikely to be, consummated. In addition, Star
Services incurred approximately $100,000 of one-time costs to grind and dispose
of trees at a landfill site it operates. Second, Star Services has incurred
selling and administrative costs in order to build the infrastructure needed to
support its growth. While such costs are of a recurring nature, many were
incurred during the nine-month period ended September 30, 1999, prior to the
full realization of the growth in revenues that necessitated such cost
structure. Third, Star Services continues to achieve significant revenue growth.
As a result, historical revenue for the nine-month period ended September 30,
1999, which averaged approximately $900,000 per month, is not representative of
current revenue generation rate of approximately $1,200,000 per month. As a
consequence of such growth, direct costs have decreased as a percentage of
revenues, resulting in an increase in operating profits. Lastly, management
expects the growth that has been experienced to continue and believes that such
increase in revenues and operating profits can be achieved without any
significant increase in the administrative cost structure that has been
established.

LIQUIDITY AND CAPITAL RESOURCES

Our business is capital intensive. Our capital requirements include
acquisitions and equipment purchases. We expect that we also will make capital
expenditures for equipment purchases, landfill cell construction, landfill
development and landfill closure activities in the future. We plan to meet our
capital needs through various financing sources, including internally generated
funds, credit facilities that we may establish in the future and debt and equity
financings.

At inception in February 1999, Star Services issued 5,000,000 shares of its
$.01 par value common stock to acquire all of the outstanding shares of its
predecessors, Delta Recycling Corp., Delta Transfer Corp., Delrock Management
Corp., Eastern Recycling, Inc. and Delta Resources Corp. In March, April and May
1999, we received approximately $3,950,000 in net proceeds from the sale of
2,000,000 shares of common stock in a private placement (the "Private
Placement").

As of December 31, 1998, Star Services had a working capital deficit of
$473,090. In managing our working capital, we generally apply the cash generated
from our operations that remains after satisfying our working capital and
capital expenditure requirements. We currently finance our working capital
requirements from internally generated funds and the net proceeds of the Private
Placement.

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We made approximately $2,000,000 in capital expenditures during the year
ended December 31, 1998. We expect to make capital expenditures of approximately
$3.5 million in 1999 in connection with our existing business. We intend to fund
our planned 1999 capital expenditures principally through internally generated
funds, proceeds from the Private Placement and the establishment of a credit
facility. In addition, we may make substantial additional capital expenditures
in acquiring solid waste collection and disposal businesses. If we acquire
additional landfill disposal facilities, we may also have to make significant
expenditures to bring them into compliance with applicable regulatory
requirements, obtain permits or expand our available disposal capacity. We
cannot currently determine the amount of these expenditures because they will
depend on the number, nature, condition and permitted status of any acquired
landfill disposal facilities. We believe that the net proceeds of the Private
Placement and the funds we expect to generate from operations will provide
adequate cash to fund our working capital and other cash needs for the
foreseeable future.

Effective June 22, 1999, Bailey and Baron, Inc. a publicly-held shell
corporation, issued 7,000,000 shares of its common stock to acquire all
7,000,000 shares of the common stock of Star Services. After the transaction,
Bailey and Baron had 8,000,000 shares of its common stock outstanding. As a
result of the transaction, the shareholders of Star Services received
approximately 88% of the public shell corporation, thereby effecting a change in
control of the public entity. The Bailey and Baron transaction had no effect on
liquidity and capital resources since Bailey and Baron had no assets or
liabilities. Star Services entered into the Bailey & Baron transaction because
management believed that a merger of this type, which avoids many of the costs
involved in an underwritten initial public offering, would be the most
economical way of creating a vehicle to establish a liquid market for the common
stock.

Star Services acquired all of the assets and liabilities of Mario's
Equipment Sales, Inc., effective October 1, 1999. Mario's is in the business of
site grading for the building of residential communities. Site grading consists
of all the work necessary to prepare a site for residential construction. Site
grading complements our core business of hauling and providing recycling
services with respect to construction and demolition debris. We believe that the
Mario's acquisition will benefit the operations of Star Services by generating
additional waste hauling work from the developers of the properties to be
site-graded by Mario's. Consideration paid for the acquisition consisted of
100,000 shares of Star Services' Common Stock and a promissory note in the
amount of $100,000, bearing seven (7%) percent interest and payable over thirty
six (36) consecutive monthly installments of principal and interest. The value
of the acquisition is estimated to be approximately $719,000 based on the market
value of Star Services' common stock as of September 21, 1999, the date the
agreement was entered into, and the amount of the note payable. Management
believes that the transaction will have no significant impact on the liquidity
or the capital resources of Star Services because we believe all the payments
will be made out of cash flow.

We derive a substantial portion of our revenues from services provided
under exclusive municipal contracts. Our single largest contract, with the City
of Deerfield Beach, accounted for approximately 7% of our revenues during the
year ended December 31, 1998. No single contract or customer accounted for more
than 5% of our revenues during the period from inception (August 26, 1997)
through December 31, 1997 or for the nine months ended September 30, 1999.

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As of September 30, 1999, Star Services had incurred approximately $3.1
million of indebtedness in connection with equipment purchases. Such
indebtedness matures between April 2001 and November 2007 and bears interest at
rates between 5.9% and 11.4% per annum.

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BUSINESS

INDUSTRY OVERVIEW

The solid waste services industry has undergone significant consolidation
and integration since 1990. We believe that the following factors are primarily
responsible for the consolidation and integration of the waste services
industry:

- INCREASED IMPACT OF REGULATIONS. Stringent industry regulations, such as
the Subtitle D regulations, have caused operating and capital costs to
rise and have accelerated consolidation and acquisition activities in the
solid waste collection and disposal industry. Many smaller industry
participants have found these costs difficult to bear and have decided to
either close their operations or sell them to larger operators. In
addition, Subtitle D requires more stringent engineering of solid waste
landfills, and mandates liner systems, leachate collection, treatment and
monitoring systems and gas collection and monitoring systems. These
ongoing costs are combined with increased financial reserve requirements
for solid waste landfill operators relating to closure and post-closure
monitoring. As a result, the number of solid waste landfills is declining
while the average size is increasing.

- INCREASED INTEGRATION OF COLLECTION AND DISPOSAL OPERATIONS. In certain
markets, competitive pressures are forcing operators to become more
efficient by establishing an integrated network of solid waste collection
operations and transfer stations through which they secure solid waste
streams for disposal. Operators have adopted a variety of disposal
strategies, including owning landfills, establishing strategic
relationships to secure access to landfills and capturing significant
waste stream volumes to gain leverage in negotiating lower landfill fees
and securing long-term, most-favored-pricing contracts with high capacity
landfills.

- PURSUIT OF ECONOMIES OF SCALE. Larger operators achieve economies of
scale by vertically integrating their operations or by spreading their
facility, asset and management infrastructure over larger volumes. Larger
solid waste collection and disposal companies have become more
cost-effective and competitive through control of a larger waste stream
and by gaining access to significant financial resources to make
acquisitions.

Despite the ongoing consolidation, the solid waste services industry
remains primarily regional in nature and highly fragmented. Based on published
industry sources, approximately 27% of the total revenues of the U.S. solid
waste industry is accounted for by more than 5,000 private, predominantly small
collection and disposal businesses, approximately 41% by publicly traded solid
waste companies and approximately 32% by municipal governments that provide
collection and disposal services. We expect the current consolidation trends in
the solid waste industry to continue, because many independent landfill and
collection operators lack the capital resources, management skills and technical
expertise necessary to comply with stringent environmental and other
governmental regulations and to compete with larger, more efficient integrated
operators. In addition, many independent operators may wish to sell their
businesses to achieve liquidity in their personal finances or as part of their
estate planning. We believe that the fragmented nature of the industry offers
significant consolidation and growth opportunities, including Florida and the
Eastern United States, for companies with disciplined acquisition programs,
decentralized operating strategies and access to financial resources.

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STRATEGY

Our objective is to build a leading integrated solid waste services company
in Florida and other areas of the Eastern United States with high population
growth due to rapid residential and commercial development. We plan to
accomplish this using a combination of strategic acquisitions and the opening of
new operating centers in selected markets.

GROWTH STRATEGY

- EXPANSION THROUGH ACQUISITIONS. We intend to expand the scope of our
operations by acquiring solid waste operations in new markets and in
existing or adjacent markets that are combined with or "tuck in" to
existing operations.

We intend to expand into some new geographic regions by entering these
markets through acquisitions. We intend to use an initial acquisition in a
new market as an operating base. Then we intend to seek to strengthen the
acquired operation's presence in that market by providing additional
services, adding new customers and making "tuck-in" acquisitions. We next
intend to seek to broaden our regional presence by adding additional
operations in markets adjacent to the new location. We are currently
examining opportunities in central and western Florida.

- NEW OPERATING CENTERS. In selected markets where we cannot find a
suitable acquisition candidate, we intend to start a new operating company
by using relationships developed with customers in our existing markets
and a sales force focusing on building new client relationships. In these
markets we will start with roll-off trucks servicing construction and
demolition sites and will seek to permit transfer stations to recycle
material received from these sites and ship any residue to landfills we
intend to acquire in the future.

- INTERNAL GROWTH. To generate continued internal growth, we will focus on
increasing market penetration in our current and adjacent markets,
soliciting new commercial, industrial, and residential customers in
markets where customers may elect whether or not to receive waste
collection services, marketing upgraded or additional services to
existing customers and, where appropriate, raising prices. As customers
are added in existing markets, our revenue per truck increases, which
generally increases our collection efficiencies and profitability.

OPERATING STRATEGY

- DECENTRALIZED OPERATIONS. We intend to manage our operations on a
decentralized basis. This places decision-making authority close to the
customer, enabling us to identify customers' needs quickly and to address
those needs in a cost-effective manner. We believe that decentralization
provides a low-overhead, highly efficient operational structure that
allows us to expand into geographically contiguous markets. We believe
that this structure will give us a strategic competitive advantage, and
make us an attractive buyer to many potential acquisition candidates.
Star Services' management believes that the owners of the types of
businesses it will seek to acquire often will desire to work for Star
Services after the acquisition. The Company foresees hiring many of these
local managers. Star Services believes that this policy will benefit Star
Services by providing a source of managers knowledgeable in the solid
waste industry to assist with the integration of

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the acquired business. Star Services also believes that granting an
immediate equity interest to these managers will maximize their efforts
on Star Services' behalf.

We currently deliver our services from four operating locations serving
Dade, Palm Beach, Broward and Brevard Counties, Florida. Each operating location
has a location manager, with autonomous service and decision-making authority
for that location and is responsible for maintaining service quality, promoting
safety in the operations, implementing marketing programs, and overseeing
day-to-day operations, including contract administration. Location managers also
help identify acquisition candidates and are responsible for integrating them
into our operations and obtaining the permits and other governmental approvals
required for us to operate the acquired business.

ACQUISITION PROGRAM

Star Services currently services the greater Miami, Fort Lauderdale and
Palm Beach markets from its locations in Pompano Beach and Palm Beach Counties
and operates a construction and demolition landfill in Brevard County, Florida.
We will focus our acquisition program on markets in Florida and the Eastern
parts of the U.S. that generally exhibit the characteristics listed below:

- A potential revenue base of at least $15 million, usually in areas with a
population of 100,000 or more;

- A fragmented market with additional available acquisition candidates;

- The opportunity to acquire a significant market share;

- Strong projected economic or population growth rates;

- The availability of adequate disposal capacity through acquisition or
agreements with third parties; and

- A relatively predictable regulatory environment.

We believe that our experienced management and decentralized operating
strategy make us an attractive buyer to certain solid waste collection and
disposal acquisition candidates. We have developed a set of financial,
geographic and management criteria which we will use to evaluate specific
acquisition candidates. The factors that we will consider in evaluating an
acquisition candidate include:

- The candidate's historical and projected financial performance;

- The return on capital invested in a candidate, its margins and capital
requirements and its impact on our earnings;

- The experience and reputation of the candidate's management and customer
service providers, their relationships with local communities and their
willingness to continue as employees of Star Services;

- Whether the geographic location of the candidate will enhance or expand
our market area or ability to attract other acquisition candidates;

- Whether the acquisition will increase our market share or help protect
our existing customer base;

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- Any potential synergies that may be gained by combining the candidate
with our existing operations; and

- The liabilities of the candidate.

Before completing an acquisition, we plan to perform extensive
environmental, operational, engineering, legal, human resources and financial
due diligence. Our management evaluates and approves all acquisitions. We will
seek to integrate each acquired business promptly in order to minimize
disruption to the ongoing operations of both Star Services and the acquired
business.

SERVICES

COMMERCIAL, INDUSTRIAL AND RESIDENTIAL WASTE SERVICES

Star Services currently serves more than 700 commercial, industrial and
residential customers.

We provide commercial and industrial services under service agreements with
terms ranging from one month to five years. We determine fees under these
agreements based upon factors such as collection frequency, level of service,
route density, the type, volume and weight of the waste collected, type of
equipment and containers furnished, the distance to the disposal or processing
facility, the cost of disposal or processing and prices charged by competitors
in our markets for similar service. Collection of larger volumes associated with
commercial and industrial waste streams generally helps improve our operating
efficiencies, and consolidation of these volumes allows us to negotiate more
favorable disposal prices. Our commercial and industrial customers use portable
containers for storage, enabling us to service many customers with fewer
collection vehicles. Commercial and industrial collection vehicles normally
require one operator. We provide containers of between one and fifty cubic yards
to our customers.

In May of 1999, Delta Resources Corp., a subsidiary of Star Services,
entered into an Agreement to acquire a construction and demolition debris
landfill from William Holmes, Judith Holmes and Holmes Dirt Service, Inc. On
July 12, 1999, the parties agreed to extend the Agreement for a period of the
sooner of October 12, 1999 or fifteen (15) days after certain conditions were
satisfied. On or about August 1, 1999, the sellers informed Delta that they
would not be able to satisfy the conditions within the time period agreed upon.
We are in the process of attempting to renegotiate the transaction but we are
not certain if we can reach a new agreement.

We intend to provide residential waste services under contracts with
homeowners' associations, apartment owners or mobile home park operators, or on
a subscription basis with individual households. We base residential contract
fees primarily on route density, the frequency and level of service, the
distance to the disposal or processing facility, the cost of disposal or
processing and prices charged by our competitors in that market for similar
services.

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TRANSFER STATION SERVICES AND MRFS

Star Services has an active program to acquire, develop, own and operate
transfer stations in markets sufficiently close to our existing operations to
afford operating efficiencies. Star Services believes it can achieve operating
efficiencies by:

- owning the landfills to which solid wastes, including C&D debris, are
delivered;

- hauling such wastes to Company-owned C&D MRFs;

- separating the materials delivered to the MRFs into usable components;
and

- shipping these components to end-users.

Because Star Services is involved in each phase of operations, it believes that
efficiencies in management and infrastructure are achieved.

We operate two C&D MRFs in Broward County, Florida and one C&D MRF in Palm
Beach County, Florida where we receive, separate and transfer material received
from our own vehicles and other contractors. Both of these facilities have
permits which allow us to separate the material received and sell any useful
products such as wood, paper, metal and plastic. We believe that the MRFs
benefit Star Services by:

- concentrating the waste stream from a wider area, increasing the volume
of disposal at landfills that we operate and giving us greater leverage
in negotiating more favorable disposal rates at other landfills;

- improving utilization of collection personnel and equipment; and

- building relationships with municipalities and private operators that
deliver waste, which can lead to additional growth opportunities.

LANDFILLS

Star Services seeks to identify solid waste and C&D landfill acquisition
candidates to achieve vertical integration in markets where the economic and
regulatory environment makes such acquisitions attractive. Purchase of any C&D
landfill is subject to regulatory approval and transfer of permits. We believe
that in some markets acquiring landfills provides opportunities to vertically
integrate our collection, transfer and disposal operations while improving
operating margins. We evaluate landfill candidates by determining, among other
things, the amount of waste that could be diverted to the landfill in question,
whether access to the landfill is economically feasible from Star Services'
existing market areas either directly or through transfer stations, the expected
life of the landfill, the potential for expanding the landfill and current
disposal costs compared to the cost of acquiring the landfill. Where the
acquisition of a landfill is not attractive, we pursue disposal contracts with
facilities which are typically municipally controlled.

In June 1999, Delta Waste Corp., a subsidiary of Star Services entered into
an agreement to purchase certain solid waste collection routes and related
equipment. The Department of Justice has informed Star Services that approval is
the purchase is subject to divestiture by four of Star Services' shareholders
who are also employees of Waste Management, Inc., of their shares (approximately
300,000 shares in the aggregate) of Star Services Common Stock within 90 days of
the closing date of the transaction. The sale of these shares in the public
market in this short time period could have the effect of depressing the price
of our common stock.

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ROYAL OAK RANCH CONSTRUCTION AND DEMOLITION DEBRIS LANDFILL

We operate the Royal Oak Ranch Construction and Demolition Debris Landfill
in Brevard County, Florida under an operating agreement with a remaining term of
17 months. As of March 1, 1999, the Royal Oak Landfill consisted of 42 total
acres of which 36.4 acres were permitted for disposal of C&D material. As of
that date, the Royal Oak Landfill had approximately 2.4 million cubic yards of
unused permitted capacity remaining, with approximately 1.5 million cubic yards
available for expansion. By the terms of the operating contract, the Royal Oak
Landfill is allowed to accept up to 106,425 cubic yards per calendar quarter. We
have an option to purchase this landfill for $0.6 million.

DREDGE AND FILL PERMITS

All of our current facilities are located next to areas which have dredge
and fill permits. These permits allow us to extract sand and fill the area
created with certain specified inert materials including concrete and ceramic
and clay tiles. Customers are charged a fee for the material they dispose of in
these areas. When the land is completely filled to grade it then can be sold for
development. To date, no such sales have occurred and none are expected to occur
in the near future.

SALES AND MARKETING

We have four sales and marketing personnel operating from our executive
offices in Pompano Beach, Florida. These personnel solicit customers in our
market area with emphasis on contractors and developers. We concentrate on
providing services to these customers during the construction phase of their
construction projects and then providing solid waste collection services to them
once the project is completed. We also use our sales force to expand our
presence into areas adjacent to our existing market areas.

COMPETITION

The solid waste services industry is highly competitive and fragmented and
requires substantial labor and capital resources. The industry presently
includes four large national waste companies: Allied Waste Industries, Inc.,
Browning-Ferris Industries, Inc., Republic Services, Inc., and Waste Management,
Inc. In addition, Star Services may compete with regional companies. Casella
Waste Systems, Inc., Superior Services, Inc., Waste Connections Inc. and Waste
Industries, Inc. are public regional companies with annual revenues in excess of
$100 million. Certain of the markets in which Star Services competes or intends
to compete are served by one or more large, national solid waste companies, as
well as by numerous privately-held regional and local solid waste companies of
varying sizes and resources, some of which have accumulated substantial goodwill
in their markets. We also compete with operators of alternative disposal
facilities, including incinerators, and with counties, municipalities, and solid
waste districts that maintain their own waste collection and disposal
operations. Public sector operations may have financial advantages over Star
Services because of their access to user fees and similar charges, tax revenues
and tax-exempt financing.

We compete for collection, transfer and disposal volume based primarily on
the price and quality of our services. From time to time, competitors may reduce
the price of their services in an effort to expand their market shares or
service areas or to win competitively

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bid municipal contracts. These practices may cause Star Services to reduce the
price of our services or, if we elect not to do so, to lose business. We provide
our services under service contracts with terms ranging from one month to five
years with commercial, residential and industrial customers.

Intense competition exists not only for collection, transfer and disposal
volume, but also for acquisition candidates. We generally compete for
acquisition candidates with publicly owned regional and large national waste
management companies.

REGULATION

INTRODUCTION

Star Services' landfill and non-landfill operations, including waste
transportation, transfer stations, vehicle maintenance shops and fueling
facilities, are all subject to extensive and evolving federal, state and local
environmental laws and regulations, the enforcement of which has become
increasingly stringent in recent years. The environmental regulations affecting
Star Services are administered by the EPA and other federal, state and local
environmental, zoning, health and safety agencies. Star Services is currently in
substantial compliance with applicable federal, state and local environmental
laws, permits, orders and regulations. We do not currently anticipate any
material environmental costs necessary to bring our operations into compliance,
although there can be no assurance in this regard. We anticipate that
regulation, legislation and regulatory enforcement actions related to the solid
waste services industry will continue to increase. We attempt to anticipate
future regulatory requirements and to plan in advance as necessary to comply
with them.

The principal federal, state and local statutes and regulations that apply
to our operations are described below. All of the federal statutes described
below contain provisions that authorize, under certain circumstances, lawsuits
by private citizens to enforce the provisions of the statutes. In addition to a
penalty award by the United States, some of those statutes authorize an award of
attorneys' fees to parties that successfully bring such an action. Enforcement
actions under these statutes may include both civil and criminal penalties, as
well as injunctive relief in some instances.

THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976 ("RCRA")

RCRA regulates the generation, treatment, storage, handling, transportation
and disposal of solid waste and requires states to develop programs to ensure
the safe disposal of solid waste. RCRA divides solid waste into two groups,
hazardous and nonhazardous. Wastes are generally classified as hazardous if they
either (i) are specifically included on a list of hazardous wastes, or (ii)
exhibit certain characteristics defined as hazardous. Household wastes are
specifically designated as nonhazardous. Wastes classified as hazardous under
RCRA are subject to much stricter regulation than wastes classified as
nonhazardous, and businesses that deal with hazardous waste are subject to
regulatory obligations in addition to those imposed on handlers of nonhazardous
waste.

The EPA regulations issued under Subtitle C of RCRA impose a comprehensive
"cradle to grave" system for tracking the generation, transportation, treatment,
storage and disposal of hazardous wastes. The Subtitle C Regulations impose
obligations on generators, transporters and disposers of hazardous wastes and
require permits that are costly to obtain and maintain for sites where such
material is treated, stored or disposed of. Subtitle C

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requirements include detailed operating, inspection, training and emergency
preparedness and response standards, as well as requirements for manifesting,
record keeping and reporting, corrective action, facility closure, post-closure
and financial responsibility. Most states have promulgated regulations modeled
on some or all of the Subtitle C provisions issued by the EPA. Some state
regulations impose different, additional and more stringent obligations, and may
regulate certain materials as hazardous wastes that are not so regulated under
the federal Subtitle C Regulations. From the date of inception through March 31,
1999, Star Services did not, to our knowledge, transport hazardous wastes under
circumstances that would subject Star Services to hazardous waste regulations
under RCRA. Some of our ancillary operations, for example vehicle maintenance
operations, may generate hazardous wastes. Star Services manages these wastes in
substantial compliance with applicable laws.

In October 1991, the EPA adopted the Subtitle D Regulations governing solid
waste landfills. The Subtitle D Regulations, which generally became effective in
October 1993, include location restrictions, facility design standards,
operating criteria, closure and post-closure requirements, financial assurance
requirements, groundwater monitoring requirements, groundwater remediation
standards and corrective action requirements. In addition, the Subtitle D
Regulations require that new landfill sites meet more stringent liner design
criteria, typically, composite soil and synthetic liners or two or more
synthetic liners, intended to keep leachate out of groundwater and have
extensive collection systems to carry away leachate for treatment prior to
disposal. Groundwater monitoring wells must also be installed at virtually all
landfills to monitor groundwater quality and, indirectly, the effectiveness of
the leachate collection system. The Subtitle D Regulations also require, where
certain regulatory thresholds are exceeded, that facility owners or operators
control emissions of methane gas generated at landfills in a manner intended to
protect human health and the environment. Each state is required to revise its
landfill regulations to meet these requirements or such requirements will be
automatically imposed by the EPA on landfill owners and operators in that state.
Each state is also required to adopt and implement a permit program or other
appropriate system to ensure that landfills in the state comply with the
Subtitle D Regulations. Florida and other states in which we may operate in the
future have adopted regulations or programs as stringent as, or more stringent
than, the Subtitle D Regulations.

RCRA also regulates underground storage of petroleum and other regulated
materials. RCRA requires registration, compliance with technical standards for
tanks, release detection and reporting, and corrective action, among other
things. Certain of Star Services' facilities and operations are subject to these
requirements.

THE FEDERAL WATER POLLUTION CONTROL ACT OF 1972, AS AMENDED (THE "CLEAN WATER
ACT")

The Clean Water Act regulates the discharge of pollutants from a variety of
sources, including solid waste disposal sites and transfer stations, into waters
of the United States. If run-off from our transfer stations or run-off or
collected leachate from Star Services' owned or operated landfills is discharged
into streams, rivers or other surface waters, the Clean Water Act would require
Star Services to apply for and obtain a discharge permit, conduct sampling and
monitoring and, under certain circumstances, reduce the quantity of pollutants
in such discharge. Also, virtually all landfills are required to comply with the
EPA's storm water regulations issued in November 1990, which are designed to
prevent contaminated landfill storm water runoff from flowing into surface
waters. We believe that

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<PAGE> 38

our facilities comply in all material respects with the Clean Water Act
requirements. Florida and other states in which we may operate in the future
have been delegated authority to implement the Clean Water Act permitting
requirements, and some of these states have adopted regulations that are more
stringent than the federal requirements. For example, states often require
permits for discharges to ground water as well as surface water.

THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION,
AND LIABILITY ACT OF 1980 ("CERCLA")

CERCLA established a regulatory and remedial program intended to provide
for the investigation and cleanup of facilities where or from which a release of
any hazardous substance into the environment has occurred or is threatened.
CERCLA's primary mechanism for remedying such problems is to impose strict joint
and several liability for cleanup of facilities on current owners and operators
of the site, former owners and operators of the site at the time of the disposal
of the hazardous substances, any person who arranges for the transportation,
disposal or treatment of the hazardous substances, and the transporters who
select the disposal and treatment facilities. CERCLA also imposes liability for
the cost of evaluating and remedying any damage to natural resources. The costs
of CERCLA investigation and cleanup can be very substantial. Liability under
CERCLA does not depend on the existence or disposal of "hazardous waste" as
defined by RCRA; it can also be based on the existence of even very small
amounts of the more than 700 "hazardous substances" listed by the EPA, many of
which can be found in household waste. In addition, the definition of "hazardous
substances" in CERCLA incorporates substances designated as hazardous or toxic
under the federal Clean Water Act, Clear Air Act and Toxic Substances Control
Act. If Star Services were found to be a responsible party for a CERCLA cleanup,
the enforcing agency could hold Star Services, or any other generator,
transporter or the owner or operator of the contaminated facility, responsible
for all investigative and remedial costs, even if others were also liable.
CERCLA also authorizes the imposition of a lien in favor of the United States on
all real property subject to, or affected by, a remedial action for all costs
for which a party is liable. CERCLA gives a responsible party the right to bring
a contribution action against other responsible parties for their allocable
shares of investigative and remedial costs. Star Services' ability to obtain
reimbursement from others for their allocable shares of such costs would be
limited by our ability to find other responsible parties and prove the extent of
their responsibility and by the financial resources of such other parties.
Various state laws also impose liability for investigation, cleanup and other
damages associated with hazardous substance releases.

THE CLEAN AIR ACT

The Clean Air Act generally, through state implementation of federal
requirements, regulates emissions of air pollutants from certain landfills based
on factors such as the date of the landfill construction and tons per year of
emissions of regulated pollutants. Larger landfills and landfills located in
areas where the ambient air does not meet certain requirements of the Clean Air
Act may be subject to even more extensive air pollution controls and emission
limitations. In addition, the EPA has issued standards regulating the disposal
of asbestos-containing materials. Air permits to construct may be required for
gas collection and flaring systems, and operating permits may be required,
depending on the potential air emissions. State air regulatory programs may
implement the federal

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<PAGE> 39

requirements but may impose additional restrictions. For example, some state air
programs uniquely regulate odor and the emission of toxic air pollutants.

THE OCCUPATIONAL SAFETY AND HEALTH ACT OF 1970 (THE "OSH ACT")

The OSH Act is administered by the Occupational Safety and Health
Administration ("OSHA"), and in many states by state agencies whose programs
have been approved by OSHA. The OSH Act establishes employer responsibilities
for worker health and safety, including the obligation to maintain a workplace
free of recognized hazards likely to cause death or serious injury, to comply
with adopted worker protection standards, to maintain certain records, to
provide workers with required disclosures and to implement certain health and
safety training programs. Various OSHA standards may apply to Star Services'
operations, including standards concerning notices of hazards, safety in
excavation and demolition work, the handling of asbestos and asbestos-containing
materials, and worker training and emergency response programs.

FLOW CONTROL/INTERSTATE WASTE RESTRICTIONS

Certain permits and approvals, as well as certain state and local
regulations, may limit a landfill or transfer station to accepting waste that
originates from specified geographic areas, restrict the importation of
out-of-state waste or wastes originating outside the local jurisdiction or
otherwise discriminate against non-local waste. These restrictions, generally
known as flow control restrictions, are controversial, and some courts have held
that some flow control schemes violate constitutional limits on state or local
regulation of interstate commerce. From time to time, federal legislation is
proposed that would allow some local flow control restrictions. Although no such
federal legislation has been enacted to date, if such federal legislation should
be enacted in the future, Florida and other states in which Star Services may
operate landfills in the future could limit or prohibit the importation of
out-of-state waste or direct that wastes be handled at specified facilities.
Such state actions could adversely affect Star Services' landfills. These
restrictions could also result in higher disposal costs for our collection
operations. If we were unable to pass such higher costs through to our
customers, our business, financial condition and operating results could be
adversely affected.

Certain state and local jurisdictions may also seek to enforce flow control
restrictions through local legislation or contractually. In certain cases, we
may elect not to challenge such restrictions. These restrictions could reduce
the volume of waste going to landfills in certain areas, which may adversely
affect our ability to operate our landfills at their full capacity and/or reduce
the prices that we can charge for landfill disposal services. These restrictions
may also result in higher disposal costs for our collection operations. If we
were unable to pass such higher costs through to our customers, Star Services'
business, financial condition and operating results could be adversely affected.

STATE AND LOCAL REGULATION

Florida and states in which Star Services may operate in the future have
laws and regulations governing the generation, storage, treatment, handling,
transportation and disposal of solid waste, occupational safety and health,
water and air pollution and, in most cases, the siting, design, operation,
maintenance, closure and post-closure maintenance of landfills and transfer
stations. State and local permits and approval for these operations may be
required and may be subject to periodic renewal, modification or revocation by
the

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<PAGE> 40

issuing agencies. In addition, many states have adopted statutes comparable to,
and in some cases more stringent than, CERCLA. These statutes impose
requirements for investigation and cleanup of contaminated sites and liability
for costs and damages associated with such sites, and some provide for the
imposition of liens on property owned by responsible parties. Furthermore, many
municipalities also have ordinances, local laws and regulations affecting Star
Services' operations. These include zoning and health measures that limit solid
waste management activities to specified sites or activities, flow control
provisions that direct or restrict the delivery of solid wastes to specific
facilities, laws that grant the right to establish franchises for collection
services and then put such franchises out for bid, and bans or other
restrictions on the movement of solid wastes into a municipality.

Permits or other land use approvals with respect to a landfill, as well as
state or local laws and regulations, may specify the quantity of waste that may
be accepted at the landfill during a given time period, and/or specify the types
of waste that may be accepted at the landfill. Once an operating permit for a
landfill is obtained, it must generally be renewed periodically.

There has been an increasing trend at the state and local level to mandate
and encourage waste reduction at the source, waste recycling, and to prohibit or
restrict the disposal of certain types of solid wastes, such as yard wastes,
leaves and tires, in landfills. The enactment of regulations reducing the volume
and types of wastes available for transport to and disposal in landfills could
prevent Star Services from operating our current and future facilities at their
full capacity.

Some state and local authorities enforce certain federal laws in addition
to state and local laws and regulations. For example, in some states, RCRA, the
OSH Act, parts of the Clean Air Act and parts of the Clean Water Act are
enforced by local or state authorities instead of by the EPA, and in some states
those laws are enforced jointly by state or local and federal authorities.

PUBLIC UTILITY REGULATION

In many states, public authorities regulate the rates that landfill
operators may charge. The adoption of rate regulation or the reduction of
current rates in states in which Star Services may own or operate landfills
could adversely affect our business, financial condition and operating results.

RISK MANAGEMENT, INSURANCE AND PERFORMANCE BONDS

Star Services maintains environmental and other risk management programs
appropriate for our business. Our environmental risk management program includes
evaluating existing facilities and potential acquisitions for environmental law
compliance. We do not presently expect environmental compliance costs to
increase above current levels, but we cannot predict whether future acquisitions
will cause such costs to increase. Operating practices at all Star Services'
operations emphasize minimizing the possibility of environmental contamination
and litigation. We believe that our facilities comply in all material respects
with applicable federal and state regulations.

We carry a broad range of insurance, which our management considers
adequate to protect our assets and operations. The coverage includes general
liability, comprehensive property damage, workers' compensation and other
coverage customary in the industry.

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<PAGE> 41

These policies exclude coverage for damages associated with environmental
conditions except for certain specified types of environmental damage, such as
that caused by release of hazardous materials resulting from explosions. Because
of the limited availability and high cost of environmental impairment liability
insurance, and in light of our limited landfill operations, we have not obtained
such coverage. If Star Services were to incur liability for environmental
cleanups, corrective action or damage, our financial condition could be
materially and adversely affected. We will continue to investigate the
possibility of obtaining environmental impairment liability insurance,
particularly if we acquire or operate landfills other than the Royal Oak
landfill. We believe that most other landfill operators do not carry such
insurance.

Municipal solid waste collection contracts may require performance bonds or
other means of financial assurance to secure contractual performance. Certain
environmental regulations also require demonstrated financial assurance to meet
closure and post-closure requirements for landfills. We have not experienced
difficulty in obtaining performance bonds or letters of credit for our current
operations. At September 30, 1999, we had provided customers and various
regulatory authorities with surety bonds and letters of credit in the aggregate
amount of approximately $0.5 million to secure our obligations. If we were
unable to obtain surety bonds or letters of credit in sufficient amounts or at
acceptable rates, we could be precluded from entering into additional municipal
solid waste collection contracts or obtaining additional landfill operating
permits.

PROPERTY AND EQUIPMENT

As of September 30, 1999,

- we owned and operated one collection operation located in Broward county

- we owned and operated three MRFs, two of which are located in Broward
county and one of which is located in Palm Beach county and

- we operated one C&D landfill in Brevard county.

We lease various offices and facilities, including our corporate offices in
Pompano Beach, Florida. The real estate owned by Star Services is not subject to
material encumbrances. We own various equipment, including waste collection and
transportation vehicles, related support vehicles, containers, and heavy
equipment used in our operations. We believe that our existing facilities and
equipment are generally adequate for our current operations. However, we expect
to make additional investments in property and equipment for expansion and
replacement of assets and in connection with future acquisitions.

EMPLOYEES

At September 30, 1999, we employed approximately 100 full-time employees,
including approximately 12 persons classified as professionals or managers,
approximately 80 employees involved in collection, transfer, disposal and
recycling operations, and approximately 8 sales, clerical, data processing or
other administrative employees.

We are not aware of any organizational efforts among our employees and
believe that our relations with our employees are good.

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<PAGE> 42

LEGAL PROCEEDINGS

Star Services is a party to various legal proceedings in the ordinary
course of business and as a result of the extensive governmental regulation of
the solid waste industry. Management does not believe that these proceedings,
either individually or in the aggregate, are likely to have a material adverse
effect on our business, financial condition, operating results or cash flows.

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<PAGE> 43

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning Star
Services' executive officers and directors as of June 30, 1999:

<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
Jack R. Casagrande................. 54 Chairman of the Board, Chief
Executive Officer and Director
Patrick F. Marzano................. 51 President and Director
Richard Loss....................... 36 Chief Financial Officer
Phillip Foreman.................... 38 Chief Operating Officer and
Director
Thomas R. Roberts.................. 49 Vice President, Environmental
Compliance and Director
Charles D. Green................... 63 Secretary
Angelo Marzano..................... 24 Treasurer and Assistant Secretary
Frank P. Marzano................... 26 Director
Rick Casagrande.................... 49 Director
Samuel G. Weiss.................... 50 Director
</TABLE>

JACK R. CASAGRANDE has been the Chairman, Chief Executive Officer and a
director of Star Services since inception. In 1971, Mr. Casagrande founded
Industrial Waste Services, Inc. ("IWS") in Miami-Dade County, Florida and, by
1984, the company had grown to be the largest waste hauling operation in the
county and the second largest in the State of Florida. In 1984, IWS was
purchased by Attwoods, plc and Mr. Casagrande became head of U.S. operations.
During his tenure its revenues grew from $24,000,000 in 1984 to over
$300,000,000 by the end of 1993. Attwoods had become the fourth largest waste
services company in the United States prior to its acquisition by
Browning-Ferris Industries ("BFI") in December 1994. Since that time, Mr.
Casagrande has served as a business consultant to, and a director of, several
private companies. Jack R. Casagrande is the brother of Rick Casagrande.

PATRICK F. MARZANO is the founder, President and a director of Star
Services. Mr. Marzano graduated from St. John's University in Queens, New York
in 1969 with a Bachelors of Science degree in Accounting. From 1969 to 1971, Mr.
Marzano worked as a staff accountant at Price Waterhouse in New York City. In
1971, Mr. Marzano left Price Waterhouse and started his own accounting firm. Mr.
Marzano has been a certified public accountant and a partner in Geller, Marzano
& Company CPA's PC for the last twenty seven (27) years. He also has been
involved as a CEO and partner/shareholder for over twenty (20) years in several
waste companies in New York and Florida. Patrick F. Marzano is the uncle of
Angelo Marzano and the father of Frank P. Marzano.

RICH LOSS became the Chief Financial Officer of Star Services in July 1999.
From 1996 until May of 1999, Mr. Loss served as the CFO of Atlas Environmental,
Inc. From 1991 to 1996 Mr. Loss was the Controller of Opus Media Group Inc. Mr.
Loss is a certified public accountant in the state of Florida and began his
career as a CPA with Ernst & Young.

PHILLIP FOREMAN has been the Chief Operating Officer and a Director of Star
Services since July 1999. From 1988 until 1993 Mr. Foreman served as the
Regional Manager for

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<PAGE> 44

Attwoods Florida operations and then became the CEO for Attwoods U.S. solid
waste operations. As a result of the acquisition by BFI, Mr. Foreman became the
Divisional Vice President for BFI's Florida Gulf Atlantic Division, where he
oversaw operations generating $230,000,000 in annual revenues. In 1996 Mr.
Foreman left BFI and has since acted as a consultant to a number of entities in
the waste industry including a consolidation group in New Jersey, and most
recently he served as the Director of Operations for Atlas Environmental, Inc.

THOMAS R. ROBERTS has been Vice President, Acquisitions, Compliance and
Governmental Affairs and a director of Star Services since 1998. From 1995 to
1998, Mr. Roberts served as Vice President of Atlas Environmental, Inc.,
including the company's 11 solely owned facilities. Mr. Roberts is the President
of the Florida Recyclers Coalition, Inc. and serves as an instructor for the
University of Florida Center for Training, Research and Education for
Environmental Occupations (TREEO Center), co-sponsored by State of Florida
Department of Environmental Protection and the Florida Sunshine Chapter of the
Solid Waste Association of North America (SWANA). Mr. Roberts received the
"Distinguished Service Award 1998" from SWANA for his coordination of Florida's
C&D Operators Training Course. Mr. Roberts has served and serves on several
Florida Department of Environmental Protection and local counties' C&D-related
Task Forces and Technical Advisory Councils. Mr. Roberts has appeared as speaker
on C&D topics at the International WasteExpo, Florida Environmental Expo,
Recycle Florida Today, FDEP's Future of Recycling Advisory Group, Florida's
Organic Recyclers Association, and FDEP's C&D Landfill Task Force.

CHARLES D. GREEN, Secretary of Star Services since inception, graduated
from Fort Lauderdale High School in 1956. He served two years in the United
States Army as a maintenance specialist for heavy equipment. In 1997, he formed
American Refuse, Inc., a waste hauling company, and in 1986 he and a partner
started Southeastern Reclamation, Inc., a recycling and hauling company. Mr.
Green is currently a Vice President of Delta Recycling Corp. and Eastern
Recycling.

ANGELO MARZANO, Treasurer and Assistant Secretary of Star Services since
inception, graduated from Pennsylvania State University in 1997, with a Bachelor
of Science Degree in Business Logistics. Throughout his college education, he
maintained a position in several waste companies. Upon graduation, Mr. Marzano
began working at Delta Recycling Corp. Mr. Marzano is responsible for developing
the internal controls and procedures for Delta Recycling Corp. Mr. Marzano is
certified as a construction and demolition landfill and materials recovery
facility operator. Angelo Marzano is the nephew of Patrick Marzano and the
cousin of Frank P. Marzano.

FRANK P. MARZANO, a director of Star Services since inception, graduated
from Pennsylvania State University in 1994 with a Bachelor of Science degree in
Accounting. Mr. Marzano is a Certified Public Accountant and worked at KPMG Peat
Marwick in New York City until 1996. In 1996, Mr. Marzano joined Geller, Marzano
& Company CPAs PC in Port Washington, New York. While working at Geller Marzano,
Mr. Marzano received his Masters in Taxation from Long Island University in
January 1998. Mr. Marzano is managing partner of Geller Marzano. Frank P.
Marzano is the son of Patrick Marzano and the cousin of Angelo Marzano.

RICK CASAGRANDE, a director of Star Services since inception, graduated
from Christ The King High School in Middle Village, New York in 1967. In 1971 he
was one of the co-founders of Industrial Waste Services in Miami-Dade County,
Florida. He has held

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<PAGE> 45

various executive positions in several solid waste management companies
including American Transfer Services, Inc. He is currently President of Total
Care of Long Island. Rick Casagrande is the brother of Jack R. Casagrande.

SAMUEL G. WEISS, a director of Star Services since its inception, is an
attorney admitted to practice in the State of New York since 1974. He is
currently a member of the firm of Weiss & Federici, LLP., which has an office
located at 30 Main Street, Port Washington, New York 11050. Prior to becoming a
member of Weiss & Federici, LLP in 1999, Mr. Weiss was a private practitioner in
Port Washington, New York, since 1988. Mr. Weiss received his BA Degree from New
York University in 1971. Mr. Weiss received his Juris Doctor from New York
University in 1974 and his LLM in taxation from New York University in 1977. Mr.
Weiss is General Counsel and a Director of Strategic Capital Resources, Inc.

COMMITTEES OF THE BOARD

The Board of Directors has established an Executive Committee, an Audit
Committee and a Compensation Committee. A majority of the members of the
Executive Committee are, and both members of each of the Audit and Compensation
Committees are, independent directors who are not employees of Star Services or
one of our subsidiaries.

COMPENSATION OF DIRECTORS

Directors who are officers or employees of Star Services do not currently
receive any compensation for attending meetings of the Board of Directors. Each
independent director receives a fee of $1,500 for attending each Board meeting
and each committee meeting (unless held on the same day as the full Board
meeting), in addition to reimbursement of reasonable expenses.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION INFORMATION

Star Services was incorporated in February 1999. The following table
contains information about the annual and long-term compensation earned in 1997
and 1998 by the Chief Executive Officer (the "Named Executive Officer"). No
officer was paid or earned more than $100,000 in 1998.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
SHARES
UNDERLYING
ANNUAL COMPENSATION OPTIONS/ ALL
------------------------------ RESTRICTED WARRANTS OTHER
YEAR SALARY BONUS OTHER STOCK GRANTED COMPENSATION
---- -------- -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Patrick F. Marzano*.... 1998 $ 15,000 -- -- -- -- --
Patrick F. Marzano*.... 1997 -- -- -- -- -- --
</TABLE>

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

* During the four months of operations in 1997, Mr. Marzano did not receive a
salary.

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<PAGE> 46

EMPLOYMENT AGREEMENTS

We have entered into an employment agreement with Thomas Roberts. The
agreement has a two-year term expiring on March 2001, and provides for a salary
of approximately $104,000 and $115,000, respectively, for the first and second
years of the term. The agreement contains standard confidentiality and
non-solicitation provision.

1999 STOCK OPTION PLAN

The 1999 Stock Option Plan was adopted by the Board of Directors effective
as of February 3, 1999, and was approved by the shareholders in February 1999.
The Stock Option Plan is intended to provide employees, consultants and
directors with additional incentives by increasing their proprietary interests
in Star Services. Under the Stock Option Plan, Star Services may grant options
with respect to 5,000,000 shares of Star Services common stock. As of September
30, 1999, we had options to purchase 759,000 shares of common stock outstanding
at a weighted average exercise price of $.30 per share.

The Board of Directors currently administers the Stock Option Plan. The
administrator of the Stock Option Plan determines the employees, consultants and
directors to whom options are granted (the "Optionees"), the type, size and term
of the options, the grant date, the expiration date, the vesting schedule and
other terms and conditions of the options.

The Stock Option Plan provides for the grant of incentive stock options
("ISOs") as defined in section 422 of the Internal Revenue Code, as amended, and
nonqualified stock options. Only Star Services' employees may receive ISOs. The
aggregate fair market value, as of the grant date, of the common stock subject
to ISOs that become exercisable by any employee during any calendar year may not
exceed $100,000. Options generally become exercisable in installments pursuant
to a vesting schedule set forth in the option agreement. No option may be
granted after February 3, 2009. No option will remain exercisable later than 10
years after the grant date (or five years in the case of ISOs granted to
Optionees owning more than 10% of the total combined voting power of all classes
of Star Services' outstanding capital stock (a "Ten Percent Shareholder")). The
exercise price of ISOs granted under the Stock Option Plan must be at least the
fair market value of a share of common stock on the grant date or 110% of such
fair market value in the case of ISOs granted to Ten Percent Shareholders.

If an Optionee with outstanding options retires or becomes disabled and
does not die within the three months after retirement or disability, the
Optionee may exercise his or her options, but generally only within the period
ending on the earlier of: (i) six months after retirement or disability; or (ii)
the expiration of the option set forth in the option agreement. If the Optionee
does not exercise his or her options within that time period, the options
terminate, and the shares of common stock subject to the options become
available for issuance under the Stock Option Plan. If the Optionee ceases to be
an employee, consultant or director of Star Services other than because of
retirement, death or disability, his or her options generally terminate on the
date such relationship terminates, and the shares of common stock subject to the
options become available for issuance under the Stock Option Plan. Each option
agreement may give Star Services the right to repurchase shares acquired by an
Optionee under the Stock Option Plan upon termination of the Optionee.

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<PAGE> 47

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Delta Tall Pines Corp., a wholly-owned subsidiary of Star Services, has
entered into a lease with Tidal Wave Investment Corporation, Inc. ("TWI") for a
MRF in Palm Beach County. The lease has a term of four years commencing June 1,
1999. Payments under the lease are appropriately $20,000 per month. Messrs.
Patrick F. Marzano and Jack R. Casagrande have a minority interest in TWI. Star
Services believes that the terms of the lease are no less favorable than would
be agreed to by an independent third party.

Jack R. Casagrande and Patrick F. Marzano are majority owners in J.R.
Capital Corp., which has recently purchased substantially all the assets of
Atlas Environmental, Inc. J.R. Capital Corp., through its various subsidiaries,
will be engaged in a similar business to that of Star Services. Star Services
intends to enter into a management agreement with J.R. Capital which will
provide for Star Services to operate the Atlas facilities. Star Services expects
the term of the agreement to be approximately five years and to provide for fees
of approximately $800,000 per annum. Management believes that such terms are no
less favorable than would be agreed to by an independent third party.

Between October 31, 1998 and March 31, 1999, certain of Star Services'
predecessors made non-interest bearing loans to Patrick F. Marzano and Jack R.
Casagrande in the aggregate amount of $729,969. All of such loans were repaid in
their entirety on April 1, 1999.

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<PAGE> 48

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of Star Services consists of 50,000,000 shares
of common stock, par value $0.001 per share. As of September 30, 1999, there
were 8,000,000 shares of common stock outstanding.

COMMON STOCK

The holders of shares of common stock are entitled to one vote per share
held on all matters submitted to a vote at a meeting of shareholders. Cumulative
voting for the election of directors is not permitted. Subject to any
preferences to which holders of Preferred Stock are entitled, the holders of
outstanding shares of common stock are entitled to receive ratably any dividends
that the Board of Directors declares. If Star Services liquidates, dissolves or
winds up, the holders of shares of common stock are entitled to receive pro rata
all assets of Star Services that are available for distribution to shareholders.
The holders of shares of common stock do not have any preemptive, subscription,
redemption, conversion or sinking fund rights. The outstanding shares of common
stock, and the shares of common stock to be issued pursuant to this prospectus,
when issued, will be fully paid and nonassessable.

CERTAIN STATUTORY, CHARTER AND BY-LAW PROVISIONS

NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES. Star Services' Articles
of Incorporation provide that the number of directors will be fixed from time to
time by a majority of the directors then in office. In addition, the Articles of
Incorporation provide that newly created directorships resulting from an
increase in the authorized number of directors, vacancies on the Board resulting
from death, resignation, retirement, disqualification or removal of directors or
any other cause may be filled only by the Board (and not by the shareholders
unless there are no directors in office), if a quorum is then in office and
present, or by a majority of the directors then in office, if less than a quorum
is then in office, or by the sole remaining director. Accordingly, the Board
could prevent any shareholder from enlarging the Board and filling the new
directorships with such shareholder's own nominees.

ADVANCE NOTICE PROVISIONS FOR SHAREHOLDER NOMINATIONS AND SHAREHOLDER
PROPOSALS. The By-laws establish an advance notice procedure for shareholders to
make nominations of candidates for election as director, or to bring other
business before an annual meeting of shareholders of Star Services (the
"Shareholder Notice Procedure"). In general, only persons who are nominated by
or at the direction of the Board, any committee appointed by the Board, or by a
shareholder who has given timely written notice to the Secretary of Star
Services, may be elected as directors. At an annual meeting, only business that
has been brought before the meeting by, or at the direction of, the Board, any
committee appointed by the Board, or by a shareholder who has given timely
written notice to the Secretary of Star Services, may be conducted. To be
timely, notice of shareholder nominations or proposals to be made at an annual
or special meeting must be received by Star Services not less than 60 days nor
more than 90 days before the scheduled date of the meeting (or, if less than 70
days' notice or prior public disclosure of the date of the meeting is given,
then the 15th day following the earlier of the day such notice was mailed or the
day such public disclosure was made).

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<PAGE> 49

By requiring advance notice of nominations by shareholders, the Shareholder
Notice Procedure gives the Board an opportunity to consider the qualifications
of the proposed nominees and inform shareholders about such qualifications. By
requiring advance notice of other proposed business, the Shareholder Notice
Procedure provides a more orderly procedure for conducting annual meetings of
shareholders. It also gives the Board an opportunity to inform shareholders in
advance of any business proposed to be conducted at such meetings, together with
the Board's recommendations regarding action to be taken with respect to such
business, so that shareholders can better decide whether to attend such a
meeting or to grant a proxy regarding the disposition of any such business.

Although the By-laws do not give the Board any power to approve or
disapprove shareholder nominations for the election of directors or proposals
for action, the Shareholder Notice Procedure may preclude a contest for the
election of directors or the consideration of shareholder proposals. It may also
discourage or deter a third party from soliciting proxies to elect its own slate
of directors or to approve its own proposal, even though consideration of such
nominees or proposals might benefit Star Services and our shareholders.

LIMITATION OF LIABILITY OF DIRECTORS

Star Services' Articles of Incorporation provide that Star Services may
indemnify its executive officers and directors to the fullest extent permitted
by law whether now or hereafter. Star Services has entered or will enter into an
agreement with each of its directors and certain of its officers wherein it has
agreed to indemnify each of them to the fullest extent permitted by law.

The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of nonmonetary relief will remain available under Florida law. In addition, each
director will continue to be subject to liability for (a) violations of the
criminal law, unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful; (b)
deriving an improper personal benefit from a transaction; (c) voting for or
assenting to an unlawful distribution; and (d) willful misconduct or a conscious
disregard for the best interests of Star Services in a proceeding by or in the
right of Star Services to procure a judgment in its favor or in a proceeding by
or in the right of a shareholder. The statute does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.

FLORIDA ANTI-TAKEOVER LAW. Florida has enacted legislation that may deter
or frustrate takeovers of Florida corporations. The Florida Control Share Act
generally provides that shares acquired in excess of certain specified
thresholds will not possess any voting rights unless such voting rights are
approved by a majority vote of a corporation's disinterested shareholders. The
Florida Affiliated Transactions Act generally requires supermajority approval by
disinterested directors or shareholders of certain specified transactions
between a corporation and holders of more than 10% of the outstanding voting
shares of the corporation or their affiliates.

Star Services' Articles of Incorporation provide that Star Services shall
not be subject to the Florida Control Share Act.

47
<PAGE> 50

TRANSFER AGENT AND REGISTRAR

Interwest Transfer & Trust Company serves as transfer agent and registrar
for the common stock.

SHARES ELIGIBLE FOR FUTURE SALE

On the sale or other disposition of the shares being registered in this
registration statement, we will have 20,000,000 shares of common stock
outstanding. All of the shares registered hereunder will be freely saleable in
the public market after the sale or other disposition of the shares being
registered in this registration statement is completed, unless acquired by
affiliates of Star Services. The shares outstanding before completion of this
offering are saleable in the public market as follows:

<TABLE>
<S> <C>
2,956,000 shares*..................... Eligible for resale in the public
market in May 2000
5,000,000 shares*..................... Will be eligible for resale in the
public market after February 2001
</TABLE>

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

* Subject to the restrictions of Rule 144. Shares of common stock held by Star
Services' affiliates are subject to certain volume and other limitations
discussed below under Rule 144. In addition, certain shareholders have entered
into "lock-up" agreements pursuant to which they have agreed with Star
Services not to sell for a certain period certain of the Shares being
registered pursuant to the registration statement of which this Prospectus is
a part.

As a result of these agreements, 3,500,000 Shares may not be sold until one
year from the effective date of this registration statement and 3,500,000 shares
may not be sold until two years from the effective date of this registration
statement. Star Services has the discretion to release none, some or all of the
Shares subject to these lock-up agreements.

In determining whether to release from the lock-up agreements any shares
held by non-affiliates, Star Services will consider:

- The number of shares requested to be released

- The reason for the requested release; and

- The anticipated effect that the sale of the released shares would have on
the market for Star Services' common stock.

Star Services does not currently anticipate releasing any shares held by
affiliates prior to the stated terms of the lock-up agreements.

In general, under Rule 144, a person (or persons whose shares are
aggregated), including persons who may be deemed affiliates of Star Services,
who has beneficially owned his or her shares for at least one year may sell in
any three-month period a number of shares equal to the greater of 1% of the
outstanding shares of the common stock (80,000 shares as of September 30, 1999)
or the average weekly trading volume during the four calendar weeks preceding
each such sale. Sales under Rule 144 also are subject to certain manner of sale
provisions, notice requirements and the availability of current public
information about Star Services. Under Rule 144(k), a person (or persons whose
shares are aggregated) who is not or has not been deemed an "affiliate" of Star
Services for at

48
<PAGE> 51

least three months and who has beneficially owned his or her shares for at least
two years may sell such shares under Rule 144 without regard to the limitations
discussed above.

It is possible that no active public market for the common stock will
develop or be sustained. Sales of substantial amounts of the common stock, or
the perception that such sales could occur, could cause the market price of the
common stock to decline and impair our ability to raise capital or fund
acquisitions by issuing common stock.

We plan to file a registration statement on Form S-8 under the Securities
Act to register 5,000,000 shares issuable on exercise of stock options or other
awards granted or to be granted under our Stock Option Plan. Subject to certain
restrictions under Rule 144, those shares will be freely saleable in the public
market immediately following exercise of such options.

PLAN OF DISTRIBUTION

The 12,000,000 shares offered hereby may be offered and issued by Star
Services from time to time in connection with future acquisitions of other
businesses or properties. It is anticipated that future acquisitions by Star
Services will consist principally of additional solid waste related businesses.
The consideration for acquisitions may include cash, including installment
payments, shares of common stock, guarantees, assumptions of liabilities or any
two or more of the foregoing, as determined from time to time by negotiations
between Star Services and the owners or controlling persons of the businesses or
properties to be acquired. In addition, Star Services may enter into employment
contracts and non-competition agreements with former owners and key executive
personnel of these acquired businesses. Star Services at this time is engaged in
preliminary discussions with candidates for possible future acquisitions. Star
Services reasonably expects the 12,000,000 shares to be offered and sold within
two years from the initial effective date of the registration.

The terms of a future acquisition will be determined by negotiations
between Star Services' representatives and the owners or controlling persons of
the businesses or properties to be acquired, and the factors taken into account
in an acquisition may include among others the established quality and
reputation of the business and its management, gross revenues, earning power,
cash flow, growth potential, location of the business and properties to be
acquired and geographical diversification resulting from the acquisition. It is
anticipated that shares offered in connection with future acquisitions will be
valued at a price reasonably related to the current market value of the common
stock either at the time the terms of the acquisition are tentatively agreed
upon or at or about the time or times of delivery of Star Services' shares. Star
Services does not expect to receive any cash proceeds, other than cash balances
of acquired companies, in connection with any such issuances.

It is not expected that underwriting discounts or commissions will be paid
by Star Services except that finder's fees, which may be in the form of shares
registered under this prospectus for the purpose of offering and issuance in
connection with future acquisitions, may be paid to persons from time to time in
connection with specific acquisitions. Any person receiving any such fees may be
deemed to be an underwriter within the meaning of the Securities Act.

49
<PAGE> 52

A material acquisition, or a series of acquisitions constituting in the
aggregate a material transaction, would require Star Services to file an
amendment to the Registration Statement, of which this prospectus forms a part,
discussing or disclosing the acquisition or acquisitions and the effects on Star
Services. That amendment must become effective under the Securities Act before
any further shares may be sold hereunder.

Any shares covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold pursuant to Rule 144 rather than
pursuant to this prospectus.

In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdictions 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 any exemption from registration or qualification is available and
complied with.

LEGAL MATTERS

The validity of the issuance of the shares of common stock offered hereby
will be passed upon for Star Services by Greenberg Traurig, P.A., Miami,
Florida.

EXPERTS

The financial statements of Star Services Group, Inc. and Predecessors as
of December 31, 1997 and 1998, and for the year ended December 31, 1998 and the
period from August 26, 1997 (inception) through December 31, 1997 appearing in
this prospectus and registration statement have been audited by Horton &
Company, LLC, independent auditors, as set forth in their report thereon
appearing elsewhere in this prospectus and registration statement.

The financial statements of Mario's Equipment Rental, Inc. as of December
31, 1998 and for the year then ended appearing in this prospectus and
registration statement have been audited by Goldstein Lewin & Co., independent
auditors, as set forth in their report thereon appearing elsewhere in this
prospectus and registration statement.

Such financial statements have been included in this prospectus and
Registration Statement in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

Star Services has filed with the Securities and Exchange Commission a
Registration Statement under the Securities Act with respect to the securities
offered hereby. This Prospectus 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 Star Services and this offering, reference is made
to the Registration Statement, including the exhibits and schedules filed
therewith, copies of which may be obtained at prescribed rates from the
Commission at its principal office at 450 Fifth Street N.W., Washington, D.C.
20549, and at the following

50
<PAGE> 53

regional offices of the Commission: 75 Park Place, New York 10007, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400 Chicago,
Illinois, 60604.

Star Services intends to furnish to its shareholders annual reports
containing financial statements audited and reported upon by its independent
public accountants.

51
<PAGE> 54

[ALTERNATE PAGE FOR SELLING SHAREHOLDER PROSPECTUS]

PROSPECTUS

8,000,000 Shares

Common Stock

STAR SERVICES GROUP, INC.
(A FLORIDA CORPORATION)

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

This prospectus includes 8,000,000 shares that have been registered for
resale pursuant to rights granted to the shareholders of Star Services. Of these
8,000,000 shares, 2,000,000 were issued by Star Services in a private placement
in May 1999. See "Selling Shareholders." We will receive none of the proceeds
from the sale of these 8,000,000 shares, but will pay the expenses for their
registration. We will set forth in a supplement to this prospectus all material
information about a particular offer in the future, including any changes to the
identities of the selling shareholders. In general, the proceeds to the selling
shareholders will be the selling price of the shares sold less any discounts or
commissions.

The selling shareholders may offer, from time to time, all of their
respective shares included in this offering. Since the shares are being offered
on a delayed or continuous basis under Rule 415 of the Securities Act of 1933 we
cannot provide information about the price of the shares or proceeds to the
selling shareholders.

The selling shareholders and any brokers or dealers acting on their behalf
may be deemed underwriters under the Securities Act, in which case commissions
paid to the brokers may be deemed underwriting commissions under the Securities
Act.

Our stock trades on Nasdaq's OTC Bulletin Board(R) under the symbol "SSVC."
On December 15, 1999, the closing bid price of the stock was $8.25.

INVESTING IN THE COMMON STOCK INVOLVES RISKS. YOU SHOULD PURCHASE SHARES
ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 4.

Prospectus dated December 15, 1999
<PAGE> 55

[ALTERNATE PAGE FOR SELLING SHAREHOLDER PROSPECTUS]

USE OF PROCEEDS

We will not receive any of the proceeds of the offering of 8,000,000 of the
shares by the selling shareholders.

11
<PAGE> 56

[ALTERNATE PAGE FOR SELLING SHAREHOLDER PROSPECTUS]

DILUTION

The 8,000,000 shares offered by the selling shareholders are validly
issued, fully paid and nonassessable shares of Star Services' common stock. The
sale of those 8,000,000 shares will not dilute current equity positions.

12
<PAGE> 57

[ALTERNATE PAGES FOR SELLING SHAREHOLDER PROSPECTUS]

SELLING SHAREHOLDERS

The following table and footnotes set forth certain information regarding
the ownership of Star Services' common stock as of July 15, 1999, and as
adjusted to reflect the sale of the shares offered by Star Services and the
selling shareholders of the shares being registered hereunder by (i) persons
known by Star Services to beneficially own 5% or more of the outstanding shares
of common stock, (ii) each selling shareholder, (iii) each of Star Services'
executive officers, (iv) each director of Star Services and (v) all current
officers and directors as a group.

<TABLE>
<CAPTION>
PERCENT OF SHARES PERCENT OF SHARES
NUMBER OF OF COMMON NUMBER OF OF COMMON
NAME AND ADDRESS OF SELLING SHARES OWNED STOCK HELD PRIOR SHARES OFFERED STOCK HELD
SHAREHOLDER PRIOR TO OFFERING TO OFFERING HEREBY AFTER OFFERING
- --------------------------- ----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
A&A Family Trust................ 93,750 1.2 93,750 *
c/o Robert Smoley, Trustee
The Miami Center, 17th Floor
201 S. Biscayne Blvd.,
Miami, FL 33131
Abbatiello, Tony................ 12,500 * 12,500 *
3922 Marilyn Drive
Seaford, NY 11783
Bailey, Blanche................. 1,000 * 1,000 *
708 Marguerite
Marshall, MN 56258
Bailey, James H................. 19,000 * 19,000 *
10081 Royal Aberdeen Way
Orlando, FL 32828
Bailey, Janis................... 1,000 * 1,000 *
5349 110th Street
Jacksonville, FL 32244
Bailey, Joan.................... 1,000 * 1,000 *
6 Austin Avenue
Hanover, NH 03756
Bailey, Paul.................... 1,000 * 1,000 *
5 Wood Road
Marlboro, MA 01752
Bailey, Tom..................... 1,000 * 1,000 *
593 Wiseria Street
Chula Vista, CA 91911
Baker, Paul..................... 31,250 * 31,250 *
1101 NW 29th Court
Wilton Manors, FL 33311
BelCastro, Domenico............. 15,625 * 15,625 *
1 Jason Court
Dix Hills, NY 11746
Bender, George.................. 15,625 * 15,625 *
3801 Segovia Blvd
Coral Gables, FL
</TABLE>

12
<PAGE> 58
[ALTERNATE PAGES FOR SELLING SHAREHOLDER PROSPECTUS]

SELLING SHAREHOLDERS -- (CONTINUED)

<TABLE>
<CAPTION>
PERCENT OF SHARES PERCENT OF SHARES
NUMBER OF OF COMMON NUMBER OF OF COMMON
NAME AND ADDRESS OF SELLING SHARES OWNED STOCK HELD PRIOR SHARES OFFERED STOCK HELD
SHAREHOLDER PRIOR TO OFFERING TO OFFERING HEREBY AFTER OFFERING
- --------------------------- ----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Bender, Harry................... 15,625 * 15,625 *
980 NW North River Drive
Miami, FL 33136
Bladholm, Lisa.................. 1,000 * 1,000 *
665 N. Beau Chen Drive #26
Mandeville, LA 70471
Bruno, Anthony.................. 31,250 * 31,250 *
11860 NW 21st Street
Plantation, FL 33323
Burke, Paul..................... 31,250 * 31,250 *
2806 Juniper Hill Court
Louisville, KY 40206
Camillo, Joseph H............... 1,000 * 1,000 *
5028 Rosamind Drive #2602
Orlando, FL 32808
Caparelli, Ernest............... 268,750 3.7 268,750 *
3821 NW 92nd Ave
Hollywood, FL 33024
Casagrande, Angelo.............. 212,500 2.7 212,500 *
252 High View Lane
Media, PA 19063
Casagrande, Carl................ 31,250 * 31,250 *
1737 NW 126th Drive
Coral Springs, FL 33071
Casagrande, Jack R.............. 700,000 8.8 700,000 *
16224 NW 82nd Place
Miami, FL 33016
Casagrande, Rocco............... 531,250 6.7 531,250 *
62 E. Mall Drive
Melville, NY 11747
Cavo, John...................... 31,250 * 31,250 *
1151 NW 77th Avenue
Plantation, FL 33322
Cinelli, John................... 15,625 * 15,625 *
520 NW 83rd Way
Pembroke Pines, FL 33024
</TABLE>

13
<PAGE> 59
[ALTERNATE PAGES FOR SELLING SHAREHOLDER PROSPECTUS]

SELLING SHAREHOLDERS -- (CONTINUED)

<TABLE>
<CAPTION>
PERCENT OF SHARES PERCENT OF SHARES
NUMBER OF OF COMMON NUMBER OF OF COMMON
NAME AND ADDRESS OF SELLING SHARES OWNED STOCK HELD PRIOR SHARES OFFERED STOCK HELD
SHAREHOLDER PRIOR TO OFFERING TO OFFERING HEREBY AFTER OFFERING
- --------------------------- ----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Cohen, Patricia................. 1,000 * 1,000 *
203 Waymouth Harbor
Cove Longwood, FL 32779
Cohen, Stephanie................ 1,000 * 1,000 *
203 Waymouth Harbor
Cove Longwood, FL 32779
Cohen, Patricia Cohen C/F
Jessica....................... 1,000 * 1,000 *
203 Waymouth Harbor
Cove Longwood, FL 32779
Cooperman, William.............. 62,500 * 62,500 *
17 Beaumont Drive
Melville, NY 11747
Costa, James.................... 31,250 * 31,250 *
33 Suncrest Drive Dix
Hills, NY 11746
Cunningham, Louise.............. 1,000 * 1,000 *
9152 Balmoral Mewes Square
Windermere, FL 34786
D'Onofrio, Arthur............... 31,250 * 31,250 *
2114 Grenada Blvd
Coral Gables, FL 33134
DeCicco, Mary Ellen............. 31,250 * 31,250 *
125 W. Broadway
Long Beach, NY 11561
DeLuca, Domenico................ 62,500 * 62,500 *
4931 Van Buren Street
Hollywood, FL
DeMartine, Andy................. 62,500 * 62,500 *
112-01 Queens Blvd
Forest Hills, NY 11375
DeRocchia, Americo.............. 12,500 * 12,500 *
1852 Monroe Ave
Seaford, NY 11783
Derrick, Michael................ 1,000 * 1,000 *
1241 Foxden Road
Apopka, FL 32712
DeSimone, Michael............... 187,500 2.3 187,500 *
12677 NW 17th Place
Coral Springs, FL 33071
Disner, David................... 1,000 * 1,000 *
17th Way North St.
Petersburg, FL 33702
</TABLE>

14
<PAGE> 60
[ALTERNATE PAGES FOR SELLING SHAREHOLDER PROSPECTUS]

SELLING SHAREHOLDERS -- (CONTINUED)

<TABLE>
<CAPTION>
PERCENT OF SHARES PERCENT OF SHARES
NUMBER OF OF COMMON NUMBER OF OF COMMON
NAME AND ADDRESS OF SELLING SHARES OWNED STOCK HELD PRIOR SHARES OFFERED STOCK HELD
SHAREHOLDER PRIOR TO OFFERING TO OFFERING HEREBY AFTER OFFERING
- --------------------------- ----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Federicci, Robert............... 150,000 1.9 150,000 *
1775 York Avenue, Apt. 29F
New York, NY 10128
Feeley, John.................... 175,000 2.2 175,000 *
11245 SW 129th Court
Miami, FL 33168
Geller, Norman.................. 31,250 * 31,250 *
2 Chelsea Drive
Port Washington, NY 11050
Gorman, Bruce................... 31,250 * 31,250 *
36 Eleneagels Ct
Dover, DE 19904
Greene, Charles................. 1,100,000 13.8 1,100,000 *
910 NW 116th Terrace
Plantation, FL 33325
Grey, Wendy..................... 31,250 * 31,250 *
20191 E. Country Club Drive
Apt. 2302
Aventura, FL 33180
Guidi, Barbara.................. 120,000 1.5 120,000 *
153 Plandome Court
North Manhasset, NY 11030
Hawkins, Larry.................. 31,250 * 31,250 *
13641 Deering Bay Drive
Miami, FL 33158
Huffman, Scott.................. 12,500 * 12,500 *
1638 Nocatee Drive
Coconut Grove, FL 33133
Hughes, Thomas.................. 125,000 1.6 125,000 *
409 SE 28th Ave
Pompano Beach, FL 33062
Hulteen, Mark................... 25,000 * 25,000 *
3000 S. Ocean Drive
Apt. 11-7
Hollywood, FL 33019
Humphrey, Harold................ 12,500 * 12,500 *
14130 Cypress Court
Miami, FL 33014
Janusz, Kimberly................ 20,000 * 20,000 *
7157 Ballantrae Court
Miami Lakes, FL 33014
Johnson, Nicole................. 1,000 * 1,000 *
5018 Figwood Lane
Orlando, FL 32808
</TABLE>

15
<PAGE> 61
[ALTERNATE PAGES FOR SELLING SHAREHOLDER PROSPECTUS]

SELLING SHAREHOLDERS -- (CONTINUED)

<TABLE>
<CAPTION>
PERCENT OF SHARES PERCENT OF SHARES
NUMBER OF OF COMMON NUMBER OF OF COMMON
NAME AND ADDRESS OF SELLING SHARES OWNED STOCK HELD PRIOR SHARES OFFERED STOCK HELD
SHAREHOLDER PRIOR TO OFFERING TO OFFERING HEREBY AFTER OFFERING
- --------------------------- ----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Johnson, William................ 46,875 * 46,875 *
17971 NW 13th Street
Pembroke Pines, FL 33029
Jonza, Emil..................... 50,000 * 50,000 *
8 Ventura Court
Lawrence, NY 11559
Lambert, James.................. 12,500 * 12,500 *
113 Cedar Pt. Dr
West Islip, NY 11793
Levine, Ronald.................. 15,625 * 15,625 *
80 SW 91st Avenue
Apt. 208
Plantation, FL 33324
Lewis, Michael.................. 1,000 * 1,000 *
632 Stonefield Loop
Heathrow, FL 32746
Liebskind, Ada.................. 1,000 * 1,000 *
2460 Northside Drive
Clearwater, FL 34621
Lopez, Ezequial................. 1,000 * 1,000 *
1902 Maire Hill Drive
Conyers, GA 30094
Lopez, John..................... 1,000 * 1,000 *
2276 Concord Scotch
Plains, NJ 07076
Lopez, Zeke..................... 1,000 * 1,000 *
7 Norvilla Laguan
Legal, CA 92677
Mackie, Russell................. 31,250 * 31,250 *
2106 South Cypress Bend Drive
Apt. 204
Pompano Beach, FL 33069
Martorano, Anthony.............. 31,250 * 31,250 *
6054 Cricket Drive
Lakeland, FL 33813
Martorano, John................. 31,250 * 31,250 *
5148 Hanover Drive
Lakeland, FL 33813
Marzano, Angelo................. 287,500 3.6 287,500 *
10476 SW 52nd Street
Cooper City, FL 33328
Marzano, Frank.................. 1,100,000 13.8 1,100,000 *
30 Blueberry Court
Melville, NY 11747
</TABLE>

16
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[ALTERNATE PAGES FOR SELLING SHAREHOLDER PROSPECTUS]

SELLING SHAREHOLDERS -- (CONTINUED)

<TABLE>
<CAPTION>
PERCENT OF SHARES PERCENT OF SHARES
NUMBER OF OF COMMON NUMBER OF OF COMMON
NAME AND ADDRESS OF SELLING SHARES OWNED STOCK HELD PRIOR SHARES OFFERED STOCK HELD
SHAREHOLDER PRIOR TO OFFERING TO OFFERING HEREBY AFTER OFFERING
- --------------------------- ----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Marzano, Katherine.............. 90,000 1.1 90,000 *
75-50 Penelope Avenue
Middle Village, NY 11379
Marzano, Patrick................ 1,100,000 13.8 1,100,000 *
Sea Ranch Club C
4900 N. Ocean Blvd., #821
Ft. Lauderdale, FL 33306
Messina, Rafaele................ 15,625 * 15,625 *
4 Vanderbilt Parkway
Dix Hills, NY 11746
Mirabile, Len................... 31,250 * 31,250 *
266 Sussex Drive
Manhasset, NY 11030
Morea, Madeline................. 31,250 * 31,250 *
128 Revere Drive
Sayville, NY 11782
Noble, John..................... 12,500 * 12,500 *
1041 SW 91st Ave
Plantation, FL 33324
Parr, Steven.................... 1,000 * 1,000 *
1235 Phyllis Lane
Hudson, FL 34669
Pecoraro, Pat................... 31,250 * 31,250 *
125 W. Broadway Long
Beach, NY 11561
Perkins, Randal................. 62,500 * 62,500 *
8230 NW 49th Court
Coral Springs, FL 33067
Pernas, Alfredo................. 15,625 * 15,625 *
640 N. Mashta Drive
Key Biscayne, FL 33149
Persichetti, Joe................ 1,000 * 1,000 *
967 Fosloria Drive
Melbourne, FL 32940
Petchauer, John................. 31,250 * 31,250 *
61 Trenton Avenue E.
Atlantic Beach, NY 11561
Pollina, Sandrine............... 31,250 * 31,250 *
196 Burns St Forest
Hills, NY 11375
</TABLE>

17
<PAGE> 63
[ALTERNATE PAGES FOR SELLING SHAREHOLDER PROSPECTUS]

SELLING SHAREHOLDERS -- (CONTINUED)

<TABLE>
<CAPTION>
PERCENT OF SHARES PERCENT OF SHARES
NUMBER OF OF COMMON NUMBER OF OF COMMON
NAME AND ADDRESS OF SELLING SHARES OWNED STOCK HELD PRIOR SHARES OFFERED STOCK HELD
SHAREHOLDER PRIOR TO OFFERING TO OFFERING HEREBY AFTER OFFERING
- --------------------------- ----------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Roberts, Thomas................. 10,000 * 10,000 *
5386 NW 108th Way
Coral Springs, FL 33076
Sandler, Leonard................ 62,500 * 62,500 *
c/o Alphas Sylray Corp.
180 Madison Avenue
New York, NY 10016
Santucci, Robert................ 62,500 * 62,500 *
94 Castle Ridge Road
Manhasset, NY 11030
Sardinia, Sergio................ 31,250 * 31,250 *
3110 Brickell Ave
Miami, FL 33129
Saunders, Mary.................. 1,000 * 1,000 *
119-A University Boulevard
Harrisburg, VA 22801
Shore, Ronald................... 31,250 * 31,250 *
600 Three Islands Blvd
Hallandale, FL 33009
Trapana, Ronald................. 31,250 * 31,250 *
561 Ocean Blvd Golden
Beach, FL 33160
Velocci, Ralph.................. 187,500 2.3 187,500 *
349 Center Island
Golden Beach, FL 33160
Wallace, Frederick.............. 81,250 1.0 81,250 *
7815 SW 88th Terr
Miami, FL 33156
Ward, Doug...................... 1,000 * 1,000 *
1709 Fountain Head Drive
Lake Mary, FL 32745
Weiss, Samuel................... 16,000 * 16,000 *
1197 E. Broadway
Hewlett, NY 11557
Wilkinson, Pamela............... 1,000 * 1,000 *
9152 Balmoral Mewes Square
Windermere, FL 34786
Wilkinson, Terra................ 1,000 * 1,000 *
All current executive officers
and directors as a group (8
persons)...................... 4,844,750 61.0% 4,844,750 *
</TABLE>

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

* Less than 1%.

18
<PAGE> 64

[ALTERNATE PAGE FOR SELLING SHAREHOLDER PROSPECTUS]

PLAN OF DISTRIBUTION

Any distribution of the shares offered by the Selling Shareholders, or by
pledgees, donees, transferees or other successors-in-interest, may be effected
from time to time in one or more of the following transactions (which may
involve crosses or block transactions): (i) on the NASD OTC Bulletin Board (or
on such other national stock exchanges or over-the-counter market on which the
Common Stock may be listed from time to time) in transactions which may include
special offerings, exchange distributions and/or secondary distributions
pursuant to and in accordance with the rules of such exchanges, including sales
to underwriters who will acquire the Selling Shareholders' shares for their own
account and resell them in one or more transactions or through brokers, acting
as principal or agent, (ii) in transactions other than on such exchanges or in
the over-the-counter market, or a combination of such transactions, including
sales through brokers, acting as principal or agent, sales in negotiated
transactions, or dispositions for value by any Selling Shareholder to its
partners or members (provided, however, that any dispositions to affiliates are
subject to the restrictions for future sale described in "Shares Eligible for
Future Sale"), (iii) through the issuance of securities by issuers other than
Star Services convertible into, exchangeable for, or payable in such shares
(whether such securities are listed on a national securities exchange or
otherwise) or (iv) through the writing of options on the shares (whether such
options are listed on an options exchange or otherwise) other transactions
requiring delivery of the shares or the delivery of the shares to close out a
short position. Any such transactions may be effected at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. See "Selling Shareholders."

The Selling Shareholders and any such underwriters, brokers, dealers or
agents may be deemed "underwriters" as that term is defined by the Securities
Act.

Underwriters participating in any offering made pursuant to this prospectus
(as amended from time to time) may receive underwriting discounts and
commissions, and discounts or concessions may be allowed or reallowed or paid to
dealers, and brokers or agents participating in such transactions may receive
brokerage or agent's commissions or fees.

The 12,000,000 shares offered hereby may be offered and issued by Star
Services from time to time in connection with future acquisitions of other
businesses or properties. It is anticipated that future acquisitions by Star
Services will consist principally of additional solid waste related businesses.
The consideration for acquisitions may include cash, including installment
payments, shares of Common Stock, guarantees, assumptions of liabilities or any
two or more of the foregoing, as determined from time to time by negotiations
between Star Services and the owners or controlling persons of the businesses or
properties to be acquired. In addition, Star Services may enter into employment
contracts and non-competition agreements with former owners and key executive
personnel of these acquired businesses. Star Services at this time is engaged in
preliminary discussions with candidates for possible future acquisitions. Star
Services reasonably expects the 12,000,000 shares to be offered and sold within
two years from the initial effective date of the registration.

44
<PAGE> 65

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
STAR SERVICES GROUP, INC. AND SUBSIDIARIES
Independent Auditors' Report................................ F-2
Consolidated balance sheets as of December 31, 1998 and 1997
and September 30, 1999.................................... F-3
Consolidated statements of operations for the year ended
December 31, 1998 and for the period August 26, 1997
(inception) through December 31, 1997 and for the
nine-month periods ended September 30, 1999 and 1998...... F-4
Consolidated statements of shareholders' equity for the year
ended December 31, 1998 and for the period August 26, 1997
(inception) through December 31, 1997 and for the
nine-month periods ended September 30, 1999 and 1998...... F-5
Consolidated statements of cash flows for the year ended
December 31, 1998 and for the period August 26, 1997
(inception) through December 31, 1997 and for the
nine-month periods ended September 30, 1999 and 1998...... F-6
Notes to consolidated financial statements.................. F-7
Independent Auditors' Report on other financial
information............................................... F-17

PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Explanatory note relating to pro forma condensed
consolidated financial information........................ F-18
Pro forma condensed consolidated balance sheet as of
September 30, 1999 (unaudited)............................ F-19
Pro forma condensed consolidated statement of operations for
the nine-month period ended September 30, 1999
(unaudited)............................................... F-20
Pro forma condensed consolidated statement of operations for
the year ended December 31, 1998 (unaudited).............. F-21
Notes to pro forma condensed consolidated financial
statements (unaudited).................................... F-22

MARIO'S EQUIPMENT RENTAL, INC.
Independent Auditors' Report................................ F-23
Balance sheets as of December 31, 1998 and September 30,
1999...................................................... F-24
Statements of income for the year ended December 31, 1998
and for the nine-month periods ended September 30, 1999
and 1998.................................................. F-25
Statements of stockholders' deficit for the year ended
December 31, 1998 and for the nine-month periods ended
September 30, 1999 and 1998............................... F-26
Statements of cash flows for the year ended December 31,
1998 and for the nine-month periods ended September 30,
1999 and 1998............................................. F-27
Notes to financial statements............................... F-28
</TABLE>

F-1
<PAGE> 66

INDEPENDENT AUDITORS' REPORT

The Shareholders
Star Services Group, Inc.
and subsidiaries
Pompano Beach, Florida

We have audited the accompanying consolidated balance sheets of Star
Services Group, Inc. and subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the year ended December 31, 1998 and for the period August 26, 1997
(inception) through December 31, 1997. These consolidated 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. These standards require that we plan and perform the audits 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 consolidated financial position of Star Services
Group, Inc. and subsidiaries as of December 31, 1998 and 1997, and the results
of their consolidated operations and cash flows for the year ended December 31,
1998 and for the period August 26, 1997 (inception) through December 31, 1997,
in conformity with generally accepted accounting principles

HORTON & COMPANY, L.L.C.

Wayne, New Jersey
March 18, 1999, except for Note 8,
as to which the date is April 1, 1999

F-2
<PAGE> 67

STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1998 1997 1999
---------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents........................... $ 49,149 $115,033 $1,989,579
Accounts receivable............................ 579,042 75,824 1,326,461
Deferred income taxes.......................... -- -- 100,000
Prepaid expenses............................... 123,334 7,276 84,292
---------- -------- ----------
Total current assets................... 751,525 198,133 3,500,332
---------- -------- ----------
Property and equipment, at cost:
Machinery and equipment........................ 2,351,784 394,203 4,609,695
Office furniture and equipment................. 33,507 2,500 78,215
Structures and improvements.................... 32,291 6,000 798,309
---------- -------- ----------
2,417,582 402,703 5,486,219
Less accumulated depreciation.................. 189,443 12,081 455,716
Net property and equipment............. 2,228,139 390,622 5,030,503
---------- -------- ----------
Other assets:
Deferred income taxes, net of current
portion..................................... -- -- 217,883
Deferred charges............................... -- -- 95,247
---------- -------- ----------
Total other assets.......................... -- -- 313,130
---------- -------- ----------
Total assets........................... $2,979,664 $588,755 $8,843,965
========== ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.............. $ 365,265 $ 22,102 $ 733,738
Notes payable-related parties.................. 388,125 -- --
Accounts payable............................... 291,302 10,778 876,941
Accrued expenses............................... 30,923 4,954 504,629
Loans from shareholders........................ 149,000 10,000 --
---------- -------- ----------
Total current liabilities.............. 1,224,615 47,834 2,115,308
---------- -------- ----------
Long-term debt, net of current portion........... 1,316,899 220,229 2,666,812
---------- -------- ----------
Shareholders' equity:
Common stock, $.01 par value, 30,000,000 shares
authorized, 5,000,000 shares issued and
outstanding in 1998 and 1997; 8,000,000
shares issued and outstanding in 1999....... 50,000 50,000 80,000
Additional paid-in capital..................... 448,200 241,000 4,632,250
Retained earnings (accumulated deficit)........ (60,050) 29,692 (650,405)
---------- -------- ----------
Total shareholders' equity............. 438,150 320,692 4,061,845
---------- -------- ----------
Total liabilities and shareholders'
equity............................... $2,979,664 $588,755 $8,843,965
========== ======== ==========
</TABLE>

See notes to consolidated financial statements

F-3
<PAGE> 68

STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
AUGUST 26, 1997
(INCEPTION) NINE-MONTH PERIOD
YEAR ENDED THROUGH ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -----------------------
1998 1997 1999 1998
------------ --------------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues............................ $3,542,851 $ 235,596 $8,126,509 $1,879,979
---------- ---------- ---------- ----------
Expenses:
Direct costs...................... 2,449,085 129,029 6,494,178 1,284,899
Selling and administrative........ 935,723 63,181 1,944,063 382,947
Stock-based compensation.......... -- -- 215,050 --
Depreciation...................... 177,362 12,081 266,273 103,148
---------- ---------- ---------- ----------
3,562,170 204,291 8,919,564 1,770,994
---------- ---------- ---------- ----------
Income (loss) from operations....... (19,319) 31,305 (793,055) 108,985
Interest income..................... -- -- 52,777 --
Interest expense.................... (70,423) (1,613) (167,960) (35,382)
---------- ---------- ---------- ----------
Income (loss) before income taxes... (89,742) 29,692 (908,238) 73,603
Income tax benefit.................. -- -- 317,883 --
---------- ---------- ---------- ----------
Net income (loss)................... $ (89,742) $ 29,692 $ (590,355) $ 73,603
========== ========== ========== ==========
Earnings (loss) per share........... $ (0.02) $ 0.01 $ (0.09) $ 0.01
========== ========== ========== ==========
Weighted average shares
outstanding....................... 5,000,000 5,000,000 6,646,016 5,000,000
========== ========== ========== ==========

UNAUDITED PRO FORMA INCOME TAX, NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE INFORMATION
(INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1999 IS ACTUAL):
Historical income (loss) before
income taxes...................... $ (89,742) $ 29,692 $ (908,238) $ 73,603
Pro forma income tax (expense)
benefit........................... 27,000 (9,000) 317,883 25,761
---------- ---------- ---------- ----------
Pro forma net income (loss)......... $ (62,742) $ 20,692 $ (590,355) $ 47,842
========== ========== ========== ==========
Pro forma earnings (loss) per
share............................. $ (0.01) $ 0.00 $ (0.09) $ 0.01
========== ========== ========== ==========
Historical weighted average shares
outstanding....................... 5,000,000 5,000,000 6,646,016 5,000,000
========== ========== ========== ==========
</TABLE>

See notes to consolidated financial statements

F-4
<PAGE> 69

STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1998, AND THE PERIOD
AUGUST 26, 1997 (INCEPTION) THROUGH DECEMBER 31, 1997 AND
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998
(INFORMATION FOR NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1999
AND 1998 IS UNAUDITED)

<TABLE>
<CAPTION>
COMMON STOCK RETAINED
--------------------- ADDITIONAL EARNINGS
ISSUED PAID-IN (ACCUMULATED
SHARES PAR VALUE CAPITAL DEFICIT)
--------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Balance at inception, as restated for
recapitalization....................... 5,000,000 $50,000 $ 241,000 $ --
Net income............................... -- -- -- 29,692
--------- ------- ---------- ---------
Balance at December 31, 1997............. 5,000,000 50,000 241,000 29,692
Net capital contributed.................. -- -- 207,200 --
Net loss................................. -- -- -- (89,742)
--------- ------- ---------- ---------
Balance at December 31, 1998............. 5,000,000 $50,000 $ 448,200 $ (60,050)
========= ======= ========== =========
Balance at January 1, 1998............... 5,000,000 $50,000 $ 241,000 $ 29,692
Net capital contributed (unaudited)...... -- -- 207,200 --
Net income (unaudited)................... -- -- -- 73,603
--------- ------- ---------- ---------
Balance at September 30, 1998
(unaudited).............................. 5,000,000 $50,000 $ 448,200 $ 103,295
========= ======= ========== =========
Balance at January 1, 1999............... 5,000,000 $50,000 $ 448,200 $ (60,050)
Issuance of common stock and capital
contributions (unaudited).............. 2,000,000 20,000 3,969,000 --
Shares issued in business combination
(unaudited)............................ 1,000,000 10,000 -- --
Stock-based compensation (unaudited)..... -- -- 215,050 --
Net loss (unaudited)..................... -- -- -- (590,355)
--------- ------- ---------- ---------
Balance at September 30, 1999
(unaudited).............................. 8,000,000 $80,000 $4,632,250 $(650,405)
========= ======= ========== =========
</TABLE>

See notes to consolidated financial statements

F-5
<PAGE> 70

STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
AUGUST 26,
1997
(INCEPTION) NINE-MONTH PERIOD
YEAR ENDED THROUGH ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, ----------------------
1998 1997 1999 1998
------------ ------------ ---------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss)................. $(89,742) $ 29,692 $ (590,355) $ 73,603
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating
activities:
Depreciation................. 177,362 12,081 266,273 103,148
Stock-based compensation..... -- -- 215,050 --
Changes in operating assets
and liabilities:
Increase in accounts
receivable.............. (503,218) (75,824) (747,419) (291,836)
Increase in prepaid
expenses................ (116,058) (7,276) 39,042 (241,718)
Increase in deferred
income taxes............ -- -- (317,883) --
Increase in accounts
payable................. 280,524 10,778 585,639 221,234
Increase in accrued
expenses................ 25,969 4,954 473,706 (4,954)
-------- --------- ---------- ---------
Net cash used in
operating
activities........... (225,163) (25,595) (75,947) (140,523)
-------- --------- ---------- ---------
Cash flows from investing
activities:
Capital expenditures.............. (569,582) (158,501) (779,425) (418,239)
Deferred charges.................. -- -- (95,247) --
-------- --------- ---------- ---------
Net cash used in
investing
activities........... (569,582) (158,501) (874,672) (418,239)
-------- --------- ---------- ---------
Cash flows from financing
activities:
Proceeds from stockholder loans... 527,125 10,000 -- 326,626
Principal payments on stockholder
loans.......................... -- -- (537,125) --
Principal payments under loan
agreements..................... (142,424) (1,871) (570,826) (73,902)
Net proceeds from issuance of
common stock and capital
contributions.................. 344,160 291,000 3,999,000 207,200
-------- --------- ---------- ---------
Net cash provided by
financing
activities........... 728,861 299,129 2,891,049 459,924
-------- --------- ---------- ---------
Net increase (decrease) in cash and
equivalents....................... (65,884) 115,033 1,940,430 (98,838)
Cash and equivalents beginning of
period............................ 115,033 -- 49,149 115,033
-------- --------- ---------- ---------
Cash and equivalents end of
period............................ $ 49,149 $ 115,033 $1,989,579 $ 16,195
======== ========= ========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest expense paid..... $ 70,423 $ 1,613 $ 167,960 $ 35,382
======== ========= ========== =========
</TABLE>

See notes to consolidated financial statements

F-6
<PAGE> 71

STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(INFORMATION FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND
1998 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Star Services Group,
Inc. and subsidiaries (hereinafter "Star" or the "Company") is presented to
assist in understanding the consolidated financial statements. The financial
statements and notes are representations of the management of Star Services
Group, Inc. and subsidiaries which is responsible for their integrity and
objectivity. These accounting policies conform to generally accepted accounting
principles and have been consistently applied in the preparation of the
financial statements.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Star Services
Group, Inc. ("Star") and of its wholly-owned subsidiaries, Delta Recycling Corp.
("Recycling"), Delta Transfer Corp. ("Transfer"), Delrock Management Corp.
("Delrock"), Eastern Recycling, Inc. ("Eastern") and Delta Resources Corp.
("Resources"). Recycling, Transfer, Delrock, Eastern and Resources are
collectively referred to as the "Subsidiaries". Significant intercompany
accounts and transactions have been eliminated. On February 4, 1999, Star
acquired 100% of the issued and outstanding capital stock of Recycling,
Transfer, Delrock, Eastern and Resources, thereby making them wholly-owned
subsidiaries of Star. Prior to that date, and throughout the years ended
December 31, 1998 and 1997, the ownership and voting percentage of each of the
Subsidiaries were identical. The ownership and voting percentage of Star
Services subsequent to the acquisitions of the Subsidiaries is also identical to
that of the Subsidiaries prior to the acquisitions. Because of the identical
ownership of Star Services and the Subsidiaries, the acquisitions have been
accounted for as a recapitalization, similar to a pooling of interests, because
the transaction was not substantive. The capital structure for all periods has
been retroactively restated to give effect to the business combination and the
capital structure of Star Services.

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 period.
Actual results could differ from those estimates.

INTERIM FINANCIAL REPORTING

The unaudited financial statements for the nine-month periods ended
September 30, 1999 and 1998 reflect all adjustments which are in the opinion of
management, necessary

F-7
<PAGE> 72
STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

to a fair statement of the financial position, results of operations and cash
flows of the interim periods presented.

HISTORY AND BUSINESS ACTIVITY

Star Services Group, Inc. was incorporated in the State of Florida on
February 3, 1999. Its corporate offices and operations are located in Pompano
Beach, Florida. The Company operates in several segments of the environmental
services industry: collection, recycling and disposal of construction and
demolition debris, land clearing, yard waste debris, and source separated
recyclable materials. The Company's operations are carried out by Delta
Recycling Corp. which was incorporated in the State of Florida on August 26,
1997, Delrock Management Corp. which was incorporated in the State of Florida on
May 29, 1998, Delta Transfer Corp. which was incorporated in the State of
Florida on August 26, 1998, Eastern Recycling, Inc. which was incorporated in
the State of Florida on June 11, 1997, and Delta Resources Corp. which was
incorporated in the State of Florida on January 29, 1999. Operations commenced
with the incorporation of Delta Recycling Corp. on August 26, 1997.

Delta Recycling Corp. and Delta Transfer Corp. operate material resource
recovery facilities ("MRF"), which are environmentally licensed and regulated by
the State of Florida Department of Environmental Protection and the Broward
County Department of Natural Resources Protection. As a MRF, these facilities
accept assorted loads of debris consisting of construction and demolition
debris, land clearing, and yard waste and source separated materials primarily
from customers in the construction and demolition debris industry. The incoming
loads are processed using an semi-automated sorting system to separate
recyclables from the waste stream. Additional loads are also supplied by Delta
Recycling Corp. through its hauling operations. The reclaimed recyclables are
shipped to end user markets for re-use. Delta Recycling Corp. also operates a
solid waste disposal service to collect and transport materials for the industry
segment. Delrock Management Corp. owns real estate used in conjunction with the
Company's operations. Eastern Recycling, Inc. has been inactive throughout 1997
and 1998. Delta Resources Corp. commenced operations in February 1999 as the
operator of a construction and demolition debris landfill in Titusville,
Florida.

CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject the Company to
concentration of credit risk, consist principally of accounts receivable. The
Company's policies do not require collateral to support accounts receivable.
However, because of the diversity and credit worthiness of individual accounts
which comprise the total balance, management does not believe that the Company
is subject to any significant credit risk.

The Company routinely maintains cash balances with one bank under limits
insured by the Federal Deposit Insurance Corporation (FDIC). At December 31,
1998, the Company's cash balance with this bank did not exceed the FDIC insured
limit. At December 31, 1997, the Company's cash balance exceeded the FDIC
insured limit by

F-8
<PAGE> 73
STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

approximately $15,000. There is off-balance sheet risk to the extent that
outstanding checks, when added to the cash balance, exceed the limit insured by
the FDIC. The Company also maintains cash in a money market account with an
investment fund company. The Company has not experienced any losses in such
accounts and believes they are not exposed to any significant credit risk on
cash.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's receivables and payables are current and on normal terms and,
accordingly, are believed by management to approximate fair value. Management
also believes that notes payable, long-term debt and capital lease obligations
approximate fair value when current interest rates for similar debt securities
are applied.

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost. Depreciation is provided on the
straight-line method over the following estimated useful lives:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Machinery and equipment..................................... 5-10
Office furniture and equipment.............................. 5
Structures and improvements................................. 5-39
</TABLE>

Maintenance, repairs and renewals which neither materially add to the value
of the equipment nor appreciably prolong its life are charged to expense as
incurred. Gains or losses on dispositions of equipment are included in income.

REVENUE RECOGNITION

The Company recognizes revenue upon receipt and acceptance of waste
materials at its material recovery facilities and landfills and upon collection
of waste materials for its waste disposal operations.

ENVIRONMENTAL COSTS

It is our policy and a requirement of the Florida Administrative Code for
all environmental solid waste permits to establish and maintain financial
assurance for closure and post closure. This financial assurance must be
approved by the Florida Department of Environmental Protection. The financial
assurance mechanism must include funds for removing all stockpiles and provide
for site closure. We do not carry any additional insurance or other coverage for
environmental liabilities. Because the Company does not presently own any
landfill sites, there have been no accruals required for closure or post-
closure costs.

F-9
<PAGE> 74
STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASH AND EQUIVALENTS

For purposes of the consolidated statements of cash flows, the Company
considers all highly-liquid debt instruments purchased with an original maturity
date of three months or less to be cash equivalents.

SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING AND FINANCING ACTIVITIES

The Company financed equipment purchases as follows:

<TABLE>
<CAPTION>
NINE-MONTH
YEAR ENDED DECEMBER 31, PERIOD ENDED
----------------------- SEPTEMBER 30,
1998 1997 1999
----------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Property and equipment purchased........ $ 2,014,879 $ 402,703 $ 3,068,637
Long-term debt financing................ (1,445,297) (244,202) (2,289,212)
----------- --------- -----------
Capital expenditures.................... $ 569,582 $ 158,501 $ 779,425
=========== ========= ===========
</TABLE>

During 1998, the Company received capital contributions and its
subsidiaries purchased treasury stock as follows:

<TABLE>
<S> <C>
Capital contributions....................................... $ 411,000
Expenditures for treasury stock of subsidiaries............. (66,840)
---------
Net proceeds from capital contributions..................... 344,160
Debt issued to purchase treasury stock of subsidiaries...... (136,960)
---------
Net capital contributed..................................... $ 207,200
=========
</TABLE>

PRO FORMA INFORMATION (UNAUDITED)

The statements of operations present pro forma information (unaudited) of
income tax expense which would have been recorded had Star's subsidiaries been
taxable corporations based on the tax laws in effect during the period and the
resultant pro forma effect on net income (loss) and earnings (loss) per share.

F-10
<PAGE> 75
STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- SEPTEMBER 30,
1998 1997 1999
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Notes payable to various financial
institutions in monthly installments
totalling $33,469 in 1998 and $7,677 in
1997, including interest ranging from 5.9%
to 11.4%. The notes mature in April 2001
through November 2007. The notes are
secured by machinery and equipment......... $1,211,517 $ 242,331 $3,102,227
Mortgage payable to an individual in monthly
installments of $5,455, including interest
at 8%, through August 2003................. 337,387 -- 260,323
Notes payable to individuals in monthly
installments totalling $3,639, including
interest at 7%. The notes mature in
September 2001 through November 2003 and
are personally guaranteed by the Company's
majority shareholders...................... 133,260 -- 38,000
---------- ---------- ----------
1,682,164 242,331 3,400,550
Less current portion......................... 365,265 22,102 733,738
---------- ---------- ----------
$1,316,899 $ 220,229 $2,666,812
========== ========== ==========
</TABLE>

As of December 31, 1998, maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------
<S> <C> <C> <C>
1999..................................................... $ 365,265
2000..................................................... 414,234
2001..................................................... 344,676
2002..................................................... 222,213
2003..................................................... 138,731
Thereafter............................................... 197,045
----------
$1,682,164
==========
</TABLE>

3. NOTES PAYABLE - RELATED PARTIES

Notes payable -- related parties represent uncollateralized, non-interest
bearing loans made to the Company by related parties. The notes are payable on
demand.

4. LOANS FROM SHAREHOLDERS

Loans from shareholders represent uncollateralized, non-interest bearing
advances to the Company, payable on demand.

F-11
<PAGE> 76
STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. SHAREHOLDERS' EQUITY

COMMON STOCK

As described in Note 1, on February 4, 1999, Star Services Group, Inc.
issued 5,000,000 shares of common stock to acquire all of the issued and
outstanding shares of the Subsidiaries. Prior to that date, and throughout 1998
and 1997, the ownership and voting percentage of the Subsidiaries was identical.
The ownership and voting percentage of Star Services subsequent to the
acquisitions was also identical to that of the Subsidiaries prior to the
acquisitions. As a result, the business combination has been accounted for as a
recapitalization, similar to a pooling of interests. The capital structure for
all periods has been retroactively restated to give effect to the business
combination and the capital structure of Star Services.

PREFERRED STOCK

The Company's articles of incorporation provide that the Company may
authorize the issuance of up to 5,000,000 shares of preferred stock. The
preferred stock may be issued in series from time to time with such
designations, rights, preferences and limitations as the Company's Board of
Directors may determine by resolution.

6. COMMITMENTS AND CONTINGENCIES

LEASE AGREEMENTS

From inception through October 1998, the Company maintained its offices on
the site of the 50-acre material recovery facility described in the following
paragraph. During November 1998 through January 1999, the Company leased its
offices on a month-to-month basis. Effective February 1, 1999, the Company
entered into an operating lease for its office facilities. The lease is for a
three-year period ending January 2002 with an option to extend the lease for an
additional three years.

The Company leases a total of approximately 80 acres of land under
operating leases on which it operates its two material recovery facilities. The
Company is leasing approximately 50 acres for a five-year period ending in June
2002 at a monthly rental of $8,333. The lease provides for an option to renew
the lease for a second five-year term. The Company also leases approximately 30
acres for a one-year period ending August 1999, with a one-year option to renew.
The lease also provides for the option to purchase the facility for $4,000,000.
Rent expense under the above office and facilities leases totalled $154,610 for
the year ended December 31, 1998.

Effective February 15, 1999, Delta Resources Corp. entered into an
operating lease for approximately 90 acres of land which include a 48-acre
construction and demolition landfill in Titusville, Florida. Under the terms of
the 18-month agreement, the monthly rental is $4,000 for the first four months
and $8,000 per month thereafter. During the term of the lease, the Company is to
pursue certain environmental permits, wetland issues and zoning. In the event
that the Company exercises its option to purchase the property (as described in
Note 8), $4,000 of each $8,000 payment made shall be applied against the
$600,000

F-12
<PAGE> 77
STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

purchase price. If the aforementioned permits and licenses have not been
received, the Company has the option to renew the term of the lease for an
additional 18-month period. Rent during the renewal period shall not be applied
to the purchase price.

During 1998, the Company commenced leasing four of its trucks from a
financing corporation under operating leases, which expire in various months of
2003. The Company has the option to purchase the trucks and trailers for the
fair market value at the expiration of the lease term. Lease expense under these
operating leases for the year ended December 31, 1998 and was $47,372.

MINERAL EXTRACTION AGREEMENT

Eastern Recycling, Inc. entered into a mineral extraction agreement, dated
October 10, 1997, and amended May 26, 1998, whereby Eastern Recycling, Inc. has
the exclusive right to excavate, dredge, mine and remove all sand products in
and from an 18.2 acre lake area located in Pompano Beach, Florida.

The parties in the contract, through Eastern Recycling, Inc., will conduct
the mining production and sale of screened mason sand, its by-products, lawn
sand, stabilizer and fill for sale to third parties.

The agreement includes the lease of approximately 6.5 acres of land
adjoining the lake area. Under the terms of the agreement, the Company is
obligated to pay a royalty of 15% of gross sales price for all minerals and
materials extracted, or $.50 per ton, whichever is greater. Such royalty
payments shall not be less than $2,500 per month. Such payments commenced in
July 1998.

Royalty and rent payments under the mineral extraction agreement totalled
$15,000 for the year ended December 31, 1998.

FUTURE MINIMUM PAYMENTS

The minimum future payments under the above lease and mineral extraction
agreements are as follows:

<TABLE>
<CAPTION>
YEAR ENDING OPERATING MINERAL
DECEMBER 31, FACILITIES EQUIPMENT EXTRACTION
- ------------ ---------- --------- ----------
<S> <C> <C> <C>
1999.......................................... $354,202 $ 78,921 $ 30,000
2000.......................................... 190,085 78,921 30,000
2001.......................................... 131,724 78,921 30,000
2002.......................................... 52,655 78,921 30,000
2003.......................................... -- 47,863 30,000
Thereafter.................................... -- -- 120,000
-------- -------- --------
$728,666 $363,547 $270,000
======== ======== ========
</TABLE>

F-13
<PAGE> 78
STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

GOVERNMENT REGULATION

Substantially all of the Company's operations are subject to federal, state
and local regulations relating to the disposition of environmentally-sensitive
waste. Compliance with these provisions has not had, nor does the Company expect
such compliance to have, any material effect upon the capital expenditures, net
income, financial condition or competitive position of the Company. Management
believes that its current practices and procedures for the control and
disposition of such wastes comply with applicable federal, state and local
requirements.

7. INCOME TAXES

During 1998 and 1997, the Subsidiaries elected to be treated as S
Corporations under the provisions of the Internal Revenue Code and similar
provisions of state tax laws. As S Corporations, the net income or loss of the
Subsidiaries was reportable by the shareholders who were responsible for any
income taxes thereon. Therefore, no provision for taxes on income has been
included in the 1998 or 1997 financial statements. Star's acquisition of the
Subsidiaries in 1999 automatically terminated their S Corporation elections.
Therefore, a provision for income tax benefit has been recognized for the
nine-month period ended September 30, 1999 at the statutory U.S. income tax rate
of 35%.

There are no material differences in the basis of assets and liabilities
for income tax and financial reporting purposes.

8. SUBSEQUENT EVENTS

PRIVATE PLACEMENT

During February 1999, Star commenced a private placement under which it is
offering up to 1,500,000 shares of its $.01 par value common stock at a purchase
price of $2 per share. Under the terms of the offering, 500,000 shares will be
offered on a "best efforts, all-or-none" basis and up to an additional 1,000,000
shares on a "best efforts" basis. The Company may sell up to an additional
500,000 shares solely to cover over-allotments. The subscription period will end
on April 30, 1999 unless (i) extended by the Company for a period of up to an
additional 60 days, (or 90 days if the over-allotment option is exercised) or
(ii) terminated earlier, at any time, by the Company in its sole discretion. If
all of the 2,000,000 shares are sold, including the over-allotment, the Company
estimates receiving net proceeds of approximately $3,950,000. The Company
anticipates using such net proceeds to fund potential acquisitions, for debt
repayment and for working capital. The private placement was completed during
May 1999.

BUSINESS COMBINATION (UNAUDITED)

Effective June 22, 1999, Star Services effected a business combination with
Bailey & Baron, Inc., a publicly-held shell corporation. Under the terms of the
agreement, the shell corporation, which had 1,000,000 common shares outstanding,
issued 7,000,000 unregistered shares of its common stock in exchange for all of
the outstanding common stock of

F-14
<PAGE> 79
STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Star Services. As a result of the transaction, the shareholders of Star Services
received stock representing approximately 88% of the public shell corporation,
thereby effecting a change in control of the public entity.

Such business combination has been accounted for as a reverse acquisition.
Under the accounting rules for a reverse acquisition, Star Services is
considered the acquiring entity. As a result, historical financial information
for periods prior to the date of the transaction is that of Star Services.
However, the capital structure for all periods presented has been restated to
reflect the capital structure of Bailey & Baron, Inc. as the legal acquirer.
Goodwill was not recorded in the merger since the transaction was equivalent to
the issuance of stock by Star Services for the net monetary assets of the public
shell corporation.

Effective October 1, 1999, the Company acquired 100% of the capital stock
of Mario's Equipment Rental, Inc. ("Mario's") in exchange for 100,000 shares of
Star's common stock and a $100,000 note. The share issuance has been recorded at
the bid price of the Company's common stock for two days before and after
September 21, 1999, the date the agreement was entered into. The value of the
consideration given in excess of the fair value of the net equity of Mario's has
been recorded as goodwill which is being amortized over a 10-year period.

ACQUISITION AGREEMENT

During February 1999, the Company entered into an agreement to acquire the
operations of a landfill operation in Titusville, Florida. In connection
therewith, the Company entered into an operating lease for the landfill, as
described in Note 5. In addition, the Company entered into an option to purchase
the landfill, including licenses and permits and a noncompete agreement with the
owner, for $600,000. Such option expires July 31, 2000, but may be renewed for
an additional year if the operating lease agreement is renewed. In the event
that the option to purchase is exercised, consideration shall include a $500,000
mortgage payable every other month over a ten-year period in installments of
$11,577 including interest at 7%. In addition, the Company entered into a
consulting agreement with the owner of the landfill to provide consulting
services to the Company for a three-year period in exchange for a prepaid
consulting fee of $100,000.

STOCK OPTION PLAN

The 1999 Stock Option Plan was adopted by the Board of Directors effective
as of February 3, 1999. The plan is intended to provide employees, consultants
and directors with additional incentives by increasing their proprietary
interests in the Company. Under the plan, Star may grant options with respect to
2,000,000 shares of the Company's common stock. Concurrent with the effective
date of the plan, the Company's board granted options to purchase 759,000 shares
of common stock at an exercise price of $0.30 per share. All such options vest
over a four-year schedule and are exercisable no later than 10 years after the
grant date.

F-15
<PAGE> 80
STAR SERVICES GROUP, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB 25) and related
interpretations in accounting for its employee stock options. Under APB 25, the
Company is recording stock-based compensation based on the difference between
the $2.00 per share estimated fair market value of the Company's stock on the
date of the grant and the $0.30 per share exercise price. Such compensation is
being recorded over the four-year vesting period of the options. The Company has
adopted the disclosure-only provisions of Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation (Statement 123).

A summary of stock-based compensation is as follows:

<TABLE>
<S> <C>
Total compensation to be recognized........................ $1,290,300
Compensation recognized during the
nine-month period ended September 30, 1999............... 215,050
----------
Deferred compensation at September 30, 1999................ $1,075,250
==========
</TABLE>

F-16
<PAGE> 81

INDEPENDENT AUDITORS' REPORT ON OTHER FINANCIAL INFORMATION

The Shareholders
Star Services Group, Inc.

The audited consolidated financial statements of the Company and our report
thereon are presented in the preceding section of this report. The financial
information in Schedule II -- Valuation and Qualifying Accounts on page II-5 is
presented for purposes of additional analysis and is not a required part of the
financial statements of the Company. Such information has been subjected to the
auditing procedures applied in our audit of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.

HORTON & COMPANY, L.L.C.

Wayne, New Jersey
March 18, 1999

F-17
<PAGE> 82

STAR SERVICES GROUP, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)

The following pro forma condensed consolidated financial statements have
been prepared to give effect to the acquisition of Mario's Equipment Rental,
Inc. ("Mario's"), as if the transaction had taken place at September 30, 1999
for the pro forma condensed consolidated balance sheet, and at January 1, 1998
for the pro forma condensed consolidated statements of operations for the year
ended December 31, 1998 and the nine-month period ended September 30, 1999.

The pro forma information is based on historical financial statements
giving effect to the transaction using the purchase method of accounting and the
assumptions and adjustments in the accompanying notes to the pro forma financial
statements.

The unaudited pro forma financial information is not necessarily indicative
of the actual results of operations or the financial position which would have
been attained had the acquisitions been consummated at either of the foregoing
dates or which may be attained in the future. The pro forma financial
information should be read in conjunction with the historical consolidated
financial statements of Star Services Group, Inc.

F-18
<PAGE> 83

STAR SERVICES GROUP, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
HISTORICAL FINANCIAL
STATEMENTS PRO FORMA
------------------------ PRO FORMA FINANCIAL
STAR MARIO'S ADJUSTMENTS STATEMENTS
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents...... $1,989,579 $ 15,470 $ 2,005,049
Accounts Receivable....... 1,326,461 200,834 1,527,295
Prepaid expenses.......... 84,292 26,448 110,740
Deferred income taxes..... 100,000 -- 100,000
---------- ----------- -----------
Total current assets... 3,500,332 242,752 3,743,084
---------- ----------- -----------
Property and equipment,
net....................... 5,030,503 314,537 5,345,040
---------- ----------- -----------
Other assets
Deferred income taxes,
net.................... 217,883 -- 217,883
Deferred charges.......... 95,247 95,247
Goodwill.................. -- --(a) 719,046 719,046
---------- ----------- -------- -----------
313,130 -- 1,032,176
---------- ----------- -------- -----------
Total assets........... $8,843,965 $ 557,289 $719,046 $10,120,300
========== =========== ======== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of
long-term debt......... $ 733,738 $ 130,646 $ 864,384
Notes payable............. -- 87,000(a) 100,000 187,000
--------
Accounts payable.......... 876,941 237,929 1,114,870
Accrued expenses.......... 504,629 -- 504,629
---------- ----------- -----------
Total current
liabilities.......... 2,115,308 455,575 100,000 2,670,883
---------- ----------- -------- -----------
Long-term debt, net of
current portion........... 2,666,812 232,260 2,899,072
---------- ----------- -----------
Shareholders' equity:
Common stock, (8,000,000
actual shares and
8,100,000 pro forma
shares)................ 80,000 100(a) (100) 80,100
(a) 100
Additional paid-in
capital................ 4,632,250 900(a) (900) 5,120,650
(a) 488,400
Accumulated deficit....... (650,405) (131,546)(a) 131,546 (650,405)
---------- ----------- -------- -----------
Total shareholders'
equity............... 4,061,845 (130,546) 619,046 4,550,345
---------- ----------- -------- -----------
Total liabilities and
shareholders'
equity............... $8,843,965 $ 557,289 $719,046 $10,120,300
========== =========== ======== ===========
</TABLE>

See notes to pro forma condensed consolidated financial statements.

F-19
<PAGE> 84

STAR SERVICES GROUP, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1999
(UNAUDITED)

<TABLE>
<CAPTION>
HISTORICAL FINANCIAL
STATEMENTS PRO FORMA
--------------------- PRO FORMA FINANCIAL
STAR MARIO'S ADJUSTMENTS STATEMENTS
---------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue............................ $8,126,509 $922,674 $9,049,183
---------- -------- ----------
Expenses:
Direct costs..................... 6,494,178 502,587 6,996,765
Selling and administrative....... 1,944,063 289,100 2,233,163
Stock-based compensation......... 215,050 -- 215,050
Depreciation and amortization.... 266,273 96,141(b) 53,928 416,342
---------- -------- ----------
8,919,564 887,828 9,861,320
---------- -------- ----------
Income (loss) from operations...... (793,055) 34,846 (812,137)
Other income (expense):
Interest income.................. 52,777 -- 52,777
Interest expense................. (167,960) (25,595)(d) (4,513) (198,068)
Miscellaneous income............. -- 36,885 36,885
---------- -------- ----------
Income (loss) before income
taxes............................ (908,238) 46,136 (920,543)
Income tax benefit................. 317,883 --(c) 4,307 322,190
---------- -------- ----------
Net income (loss).................. $ (590,355) $ 46,136 $ (598,353)
========== ======== ==========
Earnings (loss) per share.......... $ (0.09) $ 0.46 $ (0.09)
========== ======== ==========
Weighted average shares
outstanding...................... 6,646,016 100,000 6,746,016
========== ======== ==========
</TABLE>

See notes to pro forma condensed consolidated financial statements.

F-20
<PAGE> 85

STAR SERVICES GROUP, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
HISTORICAL FINANCIAL
STATEMENTS PRO FORMA
------------------------ PRO FORMA FINANCIAL
STAR MARIO'S ADJUSTMENTS STATEMENTS
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue.................... $3,542,851 $1,044,424 $4,587,275
---------- ---------- ----------
Expenses
Direct costs............. 2,449,085 630,071 3,079,156
Selling and
administrative........ 935,723 292,956 1,228,679
Depreciation and
amortization.......... 177,362 81,108(b) $ 71,905 330,375
---------- ---------- ----------
3,562,170 1,004,135 4,638,210
---------- ---------- ----------
Income (loss) from
operations............... (19,319) 40,289 (50,935)
Interest expense........... (70,423) (10,643)(d) (6,017) (87,083)
Miscellaneous income....... -- 4,443 4,443
---------- ---------- ----------
Income (loss) before income
taxes.................... (89,742) 34,089 (133,575)
Income tax benefit......... -- --(c) 46,751 46,751
---------- ---------- --------- ----------
Net income (loss).......... $ (89,742) $ 34,089 $ (86,824)
========== ========== ==========
Earnings (loss) per
share.................... $ (0.02) $ 0.34 $ (0.02)
========== ========== ==========
Weighted average shares
outstanding.............. 5,000,000 100,000 5,100,000
========== ========== ==========
</TABLE>

See notes to pro forma condensed consolidated financial statements.

F-21
<PAGE> 86

STAR SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)

(a) Reflects the issuance of 100,000 shares of Star's common stock plus a
$100,000 note to purchase all outstanding shares of Mario's. The share issuance
has been recorded at the fair value of $4 7/8 per share which represents the
average of the bid price of the Company's common stock for two days before and
two days after September 21, 1999, the date the agreement was entered into. The
value of the consideration given in excess of the fair value of the net equity
of the company acquired is recorded as goodwill.

(b) Reflects the effect of amortization of goodwill recorded in connection
with the purchase acquisition of Mario's. Amortization is being recorded over a
10-year period.

(c) Reflects the pro forma effect on income taxes of the business
combination as if the companies had been taxable corporations during the period.

(d) Reflects interest expense on $100,000 note at 7%.

F-22
<PAGE> 87

INDEPENDENT AUDITOR'S REPORT

To the Shareholders
Mario's Equipment Rental, Inc.
Coral Springs, Florida

We have audited the accompanying balance sheet of Mario's Equipment Rental,
Inc. as of December 31, 1998, and the related statements of income,
stockholders' deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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 Mario's Equipment Rental,
Inc. as of December 31, 1998, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

GOLDSTEIN LEWIN & CO.
Boca Raton, Florida
July 9, 1999

F-23
<PAGE> 88

MARIO'S EQUIPMENT RENTAL, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash............................................ $ 3,241 $ 15,470
Accounts Receivable............................. 154,716 200,834
Other Current Assets............................ 6,488 26,448
--------- ---------
Total Current Assets.................... 164,445 242,752
EQUIPMENT, Net.................................. 279,356 314,537
--------- ---------
$ 443,801 $ 557,289
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Current Maturities of
Long-Term Debt.................................. $ 106,436 $ 130,646
Accounts Payable................................ 120,893 237,929
Accrued Liabilities............................. 22,034
Related Party Loan.............................. 124,000 87,000
--------- ---------
Total Current Liabilities............... 373,363 455,575
--------- ---------
LONG TERM DEBT,
Less Current Maturities......................... 187,158 232,260
--------- ---------
COMMITMENT
STOCKHOLDERS' DEFICIT
Common Stock $1 Par Value; Authorized 1,000
Shares, Issued and Outstanding, 100 Shares... 100 100
Additional Paid-in Capital...................... 900 900
Accumulated Deficit............................. (117,720) (131,546)
--------- ---------
(116,720) (130,546)
--------- ---------
$ 443,801 $ 557,289
========= =========
</TABLE>

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

F-24
<PAGE> 89

MARIO'S EQUIPMENT RENTAL, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, --------------------------
1998 1999 1998
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
REVENUE, Net..................................... $1,044,424 $922,674 $788,836
COST OF SALES.................................... 711,179 598,728 529,650
---------- -------- --------
Gross Profit.............................. 333,245 323,946 259,186
GENERAL AND ADMINISTRATIVE EXPENSES.............. 292,956 289,100 169,595
---------- -------- --------
Income from Operations.................... 40,289 34,846 89,591
---------- -------- --------
OTHER INCOME (EXPENSE)
Miscellaneous Income........................... 4,443 36,885 2,440
Interest Expense............................... (10,643) (25,595) (5,290)
---------- -------- --------
Total Other Income (Expense).............. (6,200) 11,290 (2,850)
---------- -------- --------
Net Income................................ $ 34,089 $ 46,136 $ 86,741
========== ======== ========
</TABLE>

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

F-25
<PAGE> 90

MARIO'S EQUIPMENT RENTAL, INC.

STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998.............. 100 $100 $900 $ (68,897) $ (67,897)
Distributions......................... (82,912) (82,912)
Net Income............................ 34,089 34,089
--- ---- ---- --------- ---------
Balance, December 31, 1998............ 100 100 900 (117,720) (116,720)
Distributions (unaudited)............. (59,962) (59,962)
Net Income (unaudited)................ 46,136 46,136
--- ---- ---- --------- ---------
Balance, September 30, 1999
(unaudited)........................... 100 $100 $900 $(131,546) $ 130,546
=== ==== ==== ========= =========
</TABLE>

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

F-26
<PAGE> 91

MARIO'S EQUIPMENT RENTAL, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -------------------------
1998 1999 1998
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income.................................. $ 34,089 $ 46,136 $ 86,741
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation........................... 81,035 96,141 40,985
Amortization........................... 73
Change in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable.................. (88,669) (46,118) (85,927)
Other Current Assets................. (1,306) (19,960) 44
Increase (Decrease) in:
Accounts Payable and Accrued
Liabilities....................... (11,790) 95,002 51,018
--------- --------- ---------
Net Cash Provided by Operating
Activities...................... 13,432 171,201 92,861
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment....................... (3,011) (5,000)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Related Party Loan................. 130,000 2,000
Payments on Related Party Loan................... (6,000) (39,000)
Payments on Notes Payable................... (58,384) (57,010) (37,140)
Distributions to Stockholders............... (82,912) (59,962) (62,925)
--------- --------- ---------
Net Cash Used In Financing
Activities...................... (17,296) (153,972) (100,065)
--------- --------- ---------
Increase (Decrease) in Cash....... (6,875) 12,229 (7,204)
Cash:
Beginning................................... 10,116 3,241 10,116
--------- --------- ---------
Ending...................................... $ 3,241 $ 15,470 $ 2,912
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
INFORMATION:
Cash Paid for Interest................. $ 10,643 $ 25,595 $ 5,290
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING
AND FINANCING ACTIVITIES:
Acquisition of Equipment through
Financing Arrangements, Net of
Trade-ins............................ $ 272,518 $ 126,322 $ 93,269
========= ========= =========
</TABLE>

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

F-27
<PAGE> 92

MARIO'S EQUIPMENT RENTAL, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

Mario's Equipment Rental, Inc. was incorporated on November 17, 1993, under
the laws of the State of Florida. The Company is engaged in the construction
site preparation service business with an emphasis on property grading and waste
collection in Southeastern Florida.

REVENUE RECOGNITION

Revenue is recognized on the accrual basis, when services have been
provided.

CASH AND CASH EQUIVALENTS

For purposes of the statements of cash flows, the Company considers all
short-term instruments purchased with a maturity of three months or less to be
cash equivalents. There are no cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Depreciation is provided using
accelerated methods over the estimated useful lives of the assets.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments include cash, notes payable, and
related party loans. The carrying amount of these financial instruments have
been estimated by management to approximate fair value.

ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain 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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.

INCOME TAX STATUS

The Company, with the consent of its stockholders, has elected under the
Internal Revenue Code to be treated as an S-corporation. In lieu of corporation
income taxes, the stockholders are taxed on their proportionate share of the
Company's taxable income.

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<PAGE> 93
MARIO'S EQUIPMENT RENTAL, INC.

NOTES TO FINANCIAL STATEMENTS

INTERIM FINANCIAL DATA

In the opinion of management, the accompanying unaudited interim financial
statements contain all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position of the Company
as of September 30, 1999, and the results of its operations, cash flows and
changes in stockholders' deficit for the nine months ended September 30, 1999.
The results of operations and cash flows for the nine-month period ended
September 30, 1999, are not necessarily indicative of the results of operations
or cash flows for the full year. The unaudited interim financial statements for
the nine-month period ended September 30, 1999, does not include all disclosures
required by generally accepted accounting principles.

NOTE 2: PROPERTY AND EQUIPMENT

Property and equipment at December 31, 1998, consists of:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C> <C>
Trucks and Equipment............................... $380,279 5-7
Less: Accumulated Depreciation..................... 100,923
--------
$279,356
========
</TABLE>

NOTE 3: LONG-TERM DEBT

<TABLE>
<S> <C>
Long-term debt consists of notes to financial institutions,
payable monthly in amounts aggregating $11,428, including
interest at rates ranging from 2.9% to 10.5%. The notes
mature at various dates through 2002 and are
collateralized by substantially all the Company's
equipment. The notes are guaranteed by the shareholders... $293,594
Less Current Maturities.............................. 106,436
--------
$187,158
========
</TABLE>

Aggregate maturities required on long-term debt are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1999..................................................... $106,436
2000..................................................... 100,099
2001..................................................... 70,600
2002..................................................... 16,459
--------
$293,594
========
</TABLE>

NOTE 4: RELATED PARTY TRANSACTIONS

The Company shares office facilities with two other related companies under
a month to month lease. Rent expense is computed based on the relationship of
the Company's sales to the total sales of the three companies. Rent expense for
the year ended December 31, 1998, was $1,618. In addition, administrative
expenses in the amount of

F-29
<PAGE> 94
MARIO'S EQUIPMENT RENTAL, INC.

NOTES TO FINANCIAL STATEMENTS

$1,605 have been allocated to the Company based on the same relationship.
Management believes these allocations to be reasonable.

The Company leases equipment from a related party under month to month
leases aggregating $2,962 per month.

A related party has secured a 300,000 line of credit from a financial
institution. The balance on the line at December 31, 1998 amounted to $124,000,
such amounts have been advanced to the Company. At December 31, 1998, the
interest rate was 8.05% and is being repaid by the Company.

Included in accounts payable at December 31, 1998 are the following amounts
payable to related entities:

<TABLE>
<S> <C>
Accounts payable to Magnum Land Development............... $ 615
Accounts payable to Plantation Auto Care.................. 1,068
Accounts payable to Watson Trucking and Equipment......... 32,053
-------
$33,736
=======
</TABLE>

NOTE 5: COMMITMENT

The Company is liable on a lease for a vehicle requiring monthly payments
of $285, which expires in February 2001. The minority shareholder is making the
payments on this lease.

NOTE 6: EVENT (UNAUDITED) SUBSEQUENT TO THE DATE OF THE REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

In September 1999, the Company signed an agreement, effective October 1,
1999, to sell and/or lease the assets and certain liabilities of the Company to
Delta Site Development Corporation, a wholly owned subsidiary of Star Services
Group, Inc. in consideration for a $100,000 7% promissory note payable in 36
monthly installments and 100,000 restricted shares (valued at $4.00 per share)
of Star Services Group, Inc. common stock.

The purchase price is subject to certain adjustments based upon future
revenue, sublease agreements and other items as defined in the agreement.

F-30