ECO FORM INTERNATIONAL INC, SB-2/A, 2000-10-26

ECO FORM INTERNATIONAL INC
SB-2/A, 2000-10-26
CONVERTED PAPER & PAPERBOARD PRODS (NO CONTANERS/BOXES)

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<PAGE> 1

REGISTRATION NO. 333-48008

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ECO-FORM INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

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DELAWARE 2679 51-0388-906
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Code Identification Number)
No.)
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24 SOUTH WALPOLE PARK
WALPOLE, MASSACHUSETTS
(Address of principal place of business or
intended principal place of business)

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GARY D. BRUHN, ESQUIRE,
BERRY MOORMAN P.C.
600 WOODBRIDGE PLACE
DETROIT, MICHIGAN 48226
TELEPHONE (313) 567-1000
(Name, address and telephone number of agent for service)

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

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

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

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

If delivery of the Registration Statement is expected to be made pursuant
to Rule 434, check the following box. [ ]

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CALCULATION OF REGISTRATION FEE

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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED PER SECURITY(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock................ 3,000,000 Shares $5.00 $15,000,000 $3,960.00
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Underwriters Warrants....... 300,000 Shares $.001 $300.00 $0.08
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Common Stock(2)............. 300,000 Shares $6.00 $1,800,000 $475.20
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Total.................. $4,435.28
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(1) Estimated solely for purposes of calculating the registration fee.

(2) Issuable upon exercise of the Underwriter's Warrants.

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES OR OUR
SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER OR SALE WOULD NOT BE PERMITTED OR LEGAL.

3,000,000 SHARES

ECO-FORM INTERNATIONAL, INC.

COMMON STOCK

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This is an initial public offering of shares of our common stock. All of
the 3,000,000 shares of common stock are being sold by us.

Although our common stock is currently traded in the over-the-counter
market under the symbol "EFRM", there has been only limited trading. The prices
that have been reported for our shares in the "pink sheets" published by the
National Quotations Bureau Inc. are therefore not necessarily a reliable
indicator of the prices that would prevail in a more active market. We have
applied to have our shares of common stock listed for quotation on the Nasdaq
Small Cap Market under the symbol "XXXX".

SEE "RISK FACTORS" BEGINNING ON PAGE TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF THE COMMON STOCK.

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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.

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PER SHARE TOTAL
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Public Offering Price................................ $5.00 $15,000,000
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Possible Sales Commissions to Brokers................ $ .50 $1,500,000
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Proceeds Before Expenses............................. $4.50 $13,500,000
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</TABLE>

This is a best-efforts, minimum-maximum offering. Our executive officers
will sell the shares without the payment of any commission. We may also use
registered broker dealers to act as placement agents to assist in the sale of
the shares. Any placement agents will receive commissions of 10% of the sales
price of any shares sold by them. No shares will be sold unless at least
1,000,000 shares are sold. Our officers and any placement agents are not
required to sell any specific number or dollar amount of securities in excess of
the 1,000,000 share minimum offering, but will use their best efforts to sell
all of the 3,000,000 shares offered. Funds received from subscribers will be
held in escrow by Bank. Unless collected funds sufficient to
purchase at least the minimum offering of 1,000,000 shares are received by the
escrow agent from accepted subscribers within 120 days from the date of this
prospectus, all purchase payments will be returned in full to subscribers,
without interest or deduction. If the minimum offering is sold within the
foregoing period, the offering may continue until 3,000,000 shares are sold or
, 2001, whichever occurs first. However, we may terminate the
offering at any earlier time if we choose to do so.

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PROSPECTUS DATED , 2000.
<PAGE> 3

TABLE OF CONTENTS

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PROSPECTUS SUMMARY.......................................... 1
Business.................................................. 1
Objectives................................................ 1
The Offering.............................................. 3
Offices and Websites...................................... 3
Summary Historical Consolidated Financial Data............ 4
RISK FACTORS................................................ 5
Risks Related To Our Business............................. 5
Risks Related to the Offering............................. 9
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS........... 12
USE OF PROCEEDS............................................. 13
DIVIDEND POLICY............................................. 13
CAPITALIZATION.............................................. 14
DILUTION.................................................... 15
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA............. 17
MANAGEMENT'S DISCUSSION AND ANALYSIS........................ 18
Basis of Presentation..................................... 18
Results of Operation -- Six Months Ended June 30, 2000
Compared to June 30, 1999.............................. 18
Liquidity and Capital Resources........................... 18
BUSINESS.................................................... 19
General................................................... 19
Objectives................................................ 20
Molded Fiber Products..................................... 21
Competitive Products...................................... 21
Expansion Objectives...................................... 22
Marketing................................................. 23
Design Services........................................... 24
Manufacturing Process..................................... 25
Supplies.................................................. 26
Equipment Distribution Agreements......................... 26
Competition............................................... 26
Research and Development.................................. 27
Patents and Other Proprietary Rights...................... 27
Properties................................................ 27
Environmental Regulations................................. 28
Employees................................................. 28
MANAGEMENT.................................................. 29
Directors, Executive Officers and Key Employees........... 29
Board of Directors and Executive Officers................. 30
Board Committees.......................................... 30
Director's Compensation................................... 30
Limitations on Liability and Indemnification Matters...... 31
Executive Compensation.................................... 31
Employment Agreements..................................... 31
Employee Stock Option Plan................................ 32
Related Party Transactions................................ 33
PRINCIPAL SHAREHOLDERS...................................... 35
DESCRIPTION OF CAPITAL STOCK................................ 36
General................................................... 36
Common Stock.............................................. 36
Preferred Stock........................................... 36
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Anti-Takeover Effects of Our Certificate and Bylaws and
Delaware Law........................................... 36
Transfer Agent and Registrar.............................. 37
SHARES ELIGIBLE FOR FUTURE SALE............................. 37
PLAN OF DISTRIBUTION........................................ 38
LEGAL MATTERS............................................... 40
EXPERTS..................................................... 40
WHERE YOU CAN FIND MORE INFORMATION......................... 41
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.................. 42
</TABLE>

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PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
THIS SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION YOU SHOULD CONSIDER BEFORE
BUYING SHARES IN THIS OFFERING. THEREFORE, YOU SHOULD READ THIS ENTIRE
PROSPECTUS CAREFULLY, INCLUDING THE RISKS OF PURCHASING OUR COMMON STOCK
DISCUSSED UNDER THE "RISK FACTORS" SECTION AND OUR CONSOLIDATED FINANCIAL
STATEMENTS AND THE RELATED NOTES TO THOSE CONSOLIDATED FINANCIAL STATEMENTS
APPEARING ELSEWHERE IN THIS PROSPECTUS.

BUSINESS

We are Eco-form International, Inc., a Delaware corporation that designs,
manufactures and markets 100% recycled molded fiber packaging, a competitively
priced, environmentally friendly product that is used as a cushion for consumer
electronics, computers, appliances, tools, interconnectivity devices and food
products. Historically, molded fiber packaging has been used primarily in the
food industry including familiar applications such as egg cartons and fruit
separators. In recent years, original equipment manufacturers (OEMs) in the
customer electronics, computer and appliance industries have begun to show
interest in using molded fiber as interior packaging for their equipment. We
believe recent changes in consumer sentiment, corporate practices and government
regulations related to environmental and safety standards have created a climate
that is favorable to the use of molded fiber packaging products. We therefore
expect the market for molded fiber packaging products to increase dramatically
in the coming decade. We believe we are uniquely positioned to take advantage of
this opportunity because we have an established customer base, marketing
expertise, distributor agreements, exclusive molding equipment supplier
relationships, packaging design experience and the production facilities that
will allow for rapid expansion and increased market penetration.

We did not conduct any significant business operations prior to May 2000
when we acquired Eco-form, Inc., a Massachusetts corporation ("Eco-form") that
designs and manufactures molded fiber packaging materials. We acquired Eco-form
by merging it into us so that Eco-form is no longer a separate corporation. That
acquisition was treated as a purchase for accounting purposes. Unless the
context otherwise requires, any references to "we, us" or "our" will also
include our wholly-owned inactive subsidiary, Castle Keep Holding (USA), Inc.
("Castle Keep") and the operations that were previously conducted by Eco-form,
Inc.

OBJECTIVES

Our objective is to take advantage of what we believe will be a rapid
expansion in the demand for molded fiber packaging materials during the next
decade. The packaging industry, which includes metals, plastic and paper
products, is a $450 billion global market. At $300 million, the domestic molded
fiber market represents a fraction of the overall market. There are only 12
molded fiber manufacturers nationwide, compared with approximately 3,600
manufacturers of expanded polystyrene ("EPS") nationwide.

We intend to penetrate the overall packaging market by showing molded fiber
as a superior alternative to other interior packaging materials such as
corrugated cardboard and EPS. Our sales and marketing efforts are based on the
following product attributes:

- LOWER COST: Molded fiber packaging typically can be offered to original
equipment manufacturers (OEMs) at prices that are considerably lower than
EPS and corrugated cardboard. In the current market, prices can be 5% to
50% less expensive than other alternatives.

- HIGH PERFORMANCE: Molded fiber is dust free, provides exceptional
cushioning properties and can be designed three-dimensionally to package
any product.

- ENVIRONMENTALLY FRIENDLY: Molded fiber is fully biodegradable and can
typically be recycled through curbside collection programs. Since it is
made from recycled newsprint and paper, there is an abundance of low-cost
raw material available. In fact, at our Walpole, Massachusetts plant, we
use over-run copies of the Boston Globe as our primary paper supply.
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Provided that proper funding is available, we intend to:

- Establish additional manufacturing facilities in key areas of the United
States. Initially, we intend to build a second manufacturing facility in
the Northwestern United States in order to service existing contracts and
pursue additional opportunities we have cultivated over several years in
this market, which is also known as "the silicone forest". Subsequently,
we would establish additional plants in close proximity to existing and
potential customers in markets such as the Southwestern and Midwestern
United States. Our plan is to equip each new facility with molding
machines that will be able to produce a variety of products including
higher margin electronic packaging and lower margin food packaging
materials. Since there is high demand for commodity products such as
fruit separators and egg cartons, we intend to initially pursue sales of
these products, which require little design expertise, in order to
utilize manufacturing capacity and generate cash flow at new facilities.
Simultaneously, we intend to market and sell our capabilities and
capacity for higher margin electronics, computer and consumer goods
packaging.

- Acquire or form alliances with existing molded fiber manufacturers that
would offer manufacturing capacity in markets where our customers are
located. We are aware of several molded fiber manufacturers in the United
States and Europe that might make suitable acquisitions. Joint ventures
in Europe and Asia are also possible. However, at this time we have not
entered into any agreements or understandings regarding the acquisition
of any other companies or any joint ventures with any other companies.

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THE OFFERING

Common stock offered....... 3,000,000 shares

Common stock to be
outstanding immediately
after this offering...... 19,047,500 shares

Use of proceeds............ We intend to use the net proceeds from this
offering, together with available cash, for the
expansion of our operations, reduction of existing
debt, marketing and for general corporate purposes.
See "Use of Proceeds."

Current "Pink Sheet"
Symbol..................... "EFRM"

Proposed Nasdaq Small Cap
Market symbol............ "XXXX"
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All information in this prospectus regarding the number of shares of common
stock to be outstanding immediately after the offering:

- Assumes all 3,000,000 shares offered hereunder are sold. However although
at least 1,000,000 of the shares must be sold for the offering to be
declared effective, there is no guaranty as to how many, if any, of the
remaining 2,000,000 shares would be sold.

- is based upon 16,047,500 shares outstanding as of August 31, 2000;

- does not take into account 2,000,000 shares of common stock issuable upon
the exercise of outstanding warrants with an exercise price of $.01 per
share; and

- does not take into account 1,300,000 unissued shares authorized for
future awards under our 2000 Stock Option Plan.

OFFICES AND WEBSITES

Our principal executive offices are located at 24 South Walpole Park,
Walpole, Massachusetts, and our telephone number is (508) 660-1001. Our main
website is located at www.eco-form.com and we also maintain a website located at
www.itpackaging.com. The information on those websites is not a part of this
prospectus.

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA

The following tables present our selected historical consolidated financial
data. The information set forth below should be read together with "Management's
Discussion and Analysis" and our historical consolidated financial statements
and notes to those statements included elsewhere in this prospectus. Our
consolidated operations data set forth below for the period from February 22,
1999 (date of inception) through December 31, 1999 and the consolidated balance
sheet data as of December 31, 1999 are derived from our audited consolidated
financial statements included in this prospectus which have been audited by
Moore Stephens Doeren Mayhew, independent auditors, whose report is also
included in this prospectus.

The consolidated operations data for the six months ended June 30, 2000 and
1999 and the consolidated balance sheet data as of June 30, 2000 are derived
from unaudited pro forma condensed consolidated financial statements included in
this prospectus and, in the opinion of management, include all adjustments,
consisting only of normal recurring accruals, that are necessary for a fair
presentation of our financial position and operating results for these periods.
The historical financial information may not be indicative of our future
performance and does not reflect what our financial position and operating
results would have been had we operated as a separate, stand-alone entity during
the periods presented.

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FOR THE PERIOD SIX MONTHS
FEBRUARY 22, 1999 ENDED
THROUGH JUNE 30
DECEMBER 31, --------------------------
1999 1999 2000
PRO FORMA PRO FORMA PRO FORMA
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(UNAUDITED) (UNAUDITED) (UNAUDITED)
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STATEMENT OF CONSOLIDATED OPERATIONS DATA
Total Revenues......................................... $ 726,612 $ 344,431 $ 234,403
Cost of Sales.......................................... 818,957 457,594 117,782
--------- --------- ---------
Gross Income (Loss).................................... (92,345) (113,163) 116,621
Selling, General and Administrative Expenses........... (492,597) (244,063) (427,038)
--------- --------- ---------
Loss From Operations................................... (584,942) (357,226) (310,417)
Interest Expense....................................... (39,322) (27,895) (29,576)
--------- --------- ---------
Loss Before Income Taxes............................... (624,264) (385,121) (339,993)
Income Taxes........................................... -- -- --
--------- --------- ---------
Net Loss.......................................... $(624,264) $(385,121) $(339,993)
========= ========= =========
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DECEMBER 31,
1999 JUNE 30,
PRO FORMA 2000
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(UNAUDITED) (UNAUDITED)
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CONSOLIDATED BALANCE SHEET DATA
Current Assets.............................................. $ 32,348 $ 52,656
Equipment and Leasehold Improvements........................ 489,179 419,684
Goodwill.................................................... 581,081 730,924
Other Assets................................................ 18,670 16,455
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Total Assets........................................... $ 1,121,278 $ 1,219,719
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Current Liabilities......................................... 1,126,098 1,273,829
Long Term Debt.............................................. 45,000 50,434
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Total Liabilities...................................... 1,171,098 1,324,263
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Shareholders' Equity (deficit).............................. (49,820) (104,544)
Working Capital (deficit)................................... (1,093,750) (1,221,173)
</TABLE>

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RISK FACTORS

Investing in our common stock involves a high degree of risk and
uncertainty. You should carefully consider the risks and uncertainties described
below before purchasing our common stock. If any of the following risks actually
occur, our business, financial condition or results of operations could be
harmed. In that case, the trading price of our common stock could decline, and
you could lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS

WE HAVE A LIMITED OPERATING HISTORY, ARE AT AN EARLY STAGE OF DEVELOPMENT AND
MAY NOT SUCCEED OR BECOME PROFITABLE.

We incorporated in 1999 and subsequently acquired Castle Keep and Eco-form,
companies that had been formed in 1991 and 1995, respectively. Accordingly, we
have a limited operating history on which to base an evaluation of our business
and prospects. We expect our operating expenses to increase and we will need to
generate significant revenues to achieve profitability. We may not be able to
achieve growth in our revenues at levels which will sustain or increase
profitability on a quarterly or annual basis.

Many of the risks inherent in the development of a new enterprise will
affect our business, including:

- the amount of funds we receive in this offering;

- market acceptance of our existing and future products;

- our ability to continue to develop markets for our products;

- our ability to raise sufficient capital to support the cost of carrying
out our business objectives and strategies; and

- our ability to attract and retain qualified management, sales and
technical staff.

Because the shares are being offered on a "best efforts" basis with a
minimum of $5,000,000, there can be no assurance that we will receive more than
the minimum $5,000,000. Our planned uses of the remaining maximum proceeds would
therefore need to be financed from other sources, as would any other need we may
have for cash.

It is difficult for us to predict our future results of operations due to
our limited operating history and the uncertain nature of our markets. As we
increase our operating expenses to expand our manufacturing facilities into
other geographic regions, continue our research and development, and increase
our marketing efforts, these expenditures may not result in increased revenues
and we may incur sizable losses.

WE HAVE A HISTORY OF LOSSES AND MAY NOT BE PROFITABLE IN THE FUTURE. OUR
CONSOLIDATED FINANCIAL STATEMENTS HAVE A GOING CONCERN QUALIFICATION.

We have experienced significant operating losses on a pro forma basis since
we began operations, primarily from our acquisition of Eco-form. As of June 30,
2000 we had a deficit equity of approximately $104,544. We expect to continue to
incur operating losses in fiscal 2000. If we do not achieve continued revenue
growth sufficient to absorb our recent and planned expenditures, we could
experience additional losses in future periods. These losses or fluctuations in
our operating results could cause the market value of our common stock to
decline.

We anticipate that in the future we will make significant investments in
our operations, particularly to increase our manufacturing facilities and
increase our marketing activities and, that as a result, operating expenses are
expected to continue to increase. We intend to make such investments on an
ongoing basis, primarily from cash generated from operations and, to the extent
necessary, funds available from this offering. If net sales do not increase with
capital or other investments, we are likely to continue to incur net losses and
our financial condition could be materially adversely affected. There can be no
assurance that we will achieve or sustain profitability on a quarterly or annual
basis.

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As of June 30, 2000, we had current assets (cash and assets readily capable
of liquidating into cash) of $52,656 and current liabilities (amount presently
owing and amounts payable from existing debt within the current year) of
$1,273,829 resulting in a working capital deficit of $1,221,173. Our ability to
meet our obligations in the ordinary course of business is dependent upon our
ability to raise additional financing through public or private equity
financing, enter into collaborative or other arrangements with corporate
sources, secure other sources of financing to fund operations and to establish
profitable operations. However, there can be no assurance that such financing
can be successfully completed on terms acceptable to us. Accordingly, the report
of our auditors on our audited consolidated financial statements states that
there is substantial doubt about our ability to continue as a going concern. The
consolidated financial statements contained in this prospectus do not include
any adjustments that might result from the outcome of this uncertainty.

WE MAY NEED TO RAISE ADDITIONAL FUNDS TO OPERATE AND GROW OUR BUSINESS, AND IF
WE ARE UNABLE TO RAISE THESE FUNDS, OUR ABILITY TO EFFECT OUR BUSINESS STRATEGY
COULD BE DISRUPTED.

Pursuing our business strategy may require us to raise additional funds. At
present we will need to raise additional capital solely to operate our business
although we believe we have made improvements in our operations that will reduce
our historical operating losses. However, the extent of our future capital
requirements and the adequacy of available funds will depend on numerous
factors, including:

- market acceptance of our products;

- the level of operating profits or losses we incur; and

- the cost and timing of expenditures incurred in our planned expansion and
the timing of the receipt of revenues therefrom.

If we decide to raise additional funds, we likely would do so through
equity or debt financings, strategic alliances or other sources. The terms of
any future equity financings may be dilutive to our stockholders and the terms
of any debt financings likely will contain restrictive covenants that limit our
ability to pursue particular courses of action, including paying dividends. Our
ability to obtain financing depends upon the status of our future business
prospects, as well as conditions prevailing in the capital markets.

IF WE ARE UNABLE TO DEVELOP ADDITIONAL MANUFACTURING CAPACITY IN OTHER
LOCATIONS, OUR COMMERCIAL OPPORTUNITY WILL BE REDUCED OR ELIMINATED.

An important part of our business objectives is to open new manufacturing
facilities in different locations in the United States in order to be closer to
potential purchasers of our products. We believe this is necessary in order to
reduce shipping costs and to enable us to be able to deliver products to our
customers on a "just in time" basis. In order to achieve those goals we will
need to locate and equip suitable facilities in the proper locations and staff
them with qualified employees. Establishing and operating those new facilities
in locations that are distant from our existing facilities will require
financial resources that we do not currently have and will place additional
burdens on our management.

We will incur start-up costs in opening any new facility which will cause
our expenses to increase without a corresponding increase in revenues until we
start selling sufficient quantities of products from those plants. If we are
unable to get any new facilities operational on a timely basis and producing
products at acceptable quality and costs, and in sufficient quantities, or if we
experience unanticipated problems or delays in production, it will reduce our
revenues and the market price of our common stock could decline as a result.

IF WE FAIL TO PROPERLY MANAGE OUR GROWTH, OUR BUSINESS COULD BE ADVERSELY
AFFECTED.

We expect to experience significant growth in the number of our employees
and the scope of our operations. Our planned growth and need to develop many
different areas of our company will place a strain on our management and
operations. If we are unable to manage our growth effectively, our losses could
increase. The management of our growth will depend, among other things, upon our
ability to broaden our management team and attract, hire, train and retain
skilled employees. Our success will also depend on the ability of our
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officers and key employees to continue to implement and improve our operational
and other systems. We will also be required to expend funds, which may be
substantial, to improve our operational, financial and management controls,
reporting systems and procedures.

IF WE ARE UNABLE TO HIRE ADDITIONAL QUALIFIED PERSONNEL AS NECESSARY OR IF WE
LOSE KEY PERSONNEL, WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR BUSINESS OR
ACHIEVE OUR OBJECTIVES.

We believe our future success will depend in large part upon our ability to
identify, attract and retain highly skilled managerial, engineering, sales and
marketing, finance and operations personnel. Competition for such personnel is
relatively intense, and we compete for such personnel against numerous
companies, including larger, more established companies with significantly
greater financial resources than us. There can be no assurance we will be
successful in identifying, attracting and retaining such personnel.

Our success also depends to a significant degree upon the continued
contributions of our key management, engineering, sales and marketing, and
manufacturing personnel, many of whom would be difficult to replace. We
presently do not maintain key person life insurance on any of our executive
officers but we do have employment contracts with them. The loss of the services
of any of our key personnel, the inability to identify, attract or retain
qualified personnel in the future or delays in hiring required personnel could
make it difficult for us to manage our business and meet key objectives.

WE MAY NOT ACHIEVE ANTICIPATED REVENUES IF INCREASED MARKET ACCEPTANCE OF MOLDED
FIBER PACKAGING PRODUCTS IS NOT FORTHCOMING.

Our future financial performance depends in large part on the existence and
continued growth of market demand for molded fiber packaging products. There can
be no assurance that the market or demand for molded fiber packaging materials
will grow as rapidly as we believe it will. Any failure of this market to grow
as we project or our failure to satisfy our customers' needs could have a
material adverse effect on us. In addition, demand for our products is primarily
driven by the underlying market demand for the products that are packaged in our
products, and should this demand diminish, we may not achieve anticipated
revenues.

WE CURRENTLY HAVE NO PATENTS, AND IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY
INFORMATION, OUR BUSINESS WILL BE ADVERSELY AFFECTED.

Our business and competitive position depends upon our ability to protect
and exploit our proprietary techniques and software technology. Unauthorized
parties may attempt to obtain and use information that we regard as proprietary.
We currently have no issued patents or registered copyrights. We pursue a policy
of having our employees, consultants and advisors execute proprietary
information and invention agreements when they begin working for us. However,
these agreements may not be enforceable or may not provide meaningful protection
for our trade secrets or other proprietary information in the event of
unauthorized use or disclosure. We also cannot prevent others from independently
developing technology or software that might be covered by copyrights issued to
us, and trade secret laws do not prevent independent development.

OUR OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS, AND AN
UNANTICIPATED DECLINE IN REVENUES MAY CAUSE OUR STOCK PRICE TO FALL.

It is likely that in some future quarter or quarters our operating results
will be below the expectations of securities analysts and investors. If a
shortfall in revenues occurs, the market price for our common stock may decline
significantly. The factors that may cause our quarterly operating results to
fall short of expectations include:

- our ability to produce and market our products in a timely manner;

- actions of our competitors that could reduce the profitability of our
planned expansion efforts;

- market acceptance of our products and technology;

- the size and timing of customer orders;

7
<PAGE> 12

- difficulties with establishing new manufacturing facilities in a timely
and cost effective manner;

- seasonality of sales;

- the degree and rate of growth of the markets in which we compete and the
accompanying demand for our products; and

- our ability to build the required infrastructure to meet anticipated
growth.

Many of these factors are beyond our control. For these reasons, you should
not rely on period-to-period comparisons of our financial results to forecast
our future performance.

DEPENDENCE UPON DISTRIBUTORS WITH ONLY A LIMITED INTERNAL SALES FORCE CAN CAUSE
ADVERSE OPERATING RESULTS.

We have a limited internal sales staff and make most of our sales through
independent distributors who purchase our products and sell them to their
customers. We work closely with those distributors to design products to meet
the needs of their customers. We utilize distributors rather than expanding our
internal sales staff because those distributors already have established
goodwill and relationships with customers and have warehouse locations in
various geographic locations and the financial resources to purchase our
products and hold them in inventory until they are needed by the ultimate
customer. There can be no assurance that our distributors will continue their
current relationships with us or that they will not give higher priority to the
sale of other products, which could include products of our competitors. In
addition, effective distributors must devote significant technical, marketing
and sales resources to an often lengthy sales cycle. There can be no assurance
that our current and future distributors will devote sufficient resources to
market our products effectively or that economic or industry conditions will not
adversely affect such distributors. A reduction in sales efforts or a
discontinuance of distribution of our products by our distributors could lead to
reduced sales. In addition, because we intend to sell a significant portion of
our products through distributors, it is difficult for us to monitor end user
demand for our products on a current basis. For example, third-party
distributors may place large initial orders which may not be indicative of
long-term end user demand.

Our operating results could also be materially adversely affected by
changes in distributors' inventory strategies, which could occur rapidly and, in
many cases, may not be related to end user demand. New products may require
different marketing, sales and distribution strategies than those for our
current products. There can be no assurance that our distributors will choose or
be able to effectively market these new products or to continue to market our
products.

OUR SUCCESS DEPENDS IN PART UPON SALES TO DISTRIBUTORS, WHOSE UNPREDICTABLE
DEMANDS AND REQUIREMENTS MAY SUBJECT US TO POTENTIAL ADVERSE REVENUE
FLUCTUATIONS.

Demand for our products is subject to many risks beyond our control,
including, among others:

- competition faced by our distributors in their particular end markets;

- market acceptance of molded fiber packaging products by our OEM
customers;

- the technical, sales and marketing and management capabilities of our
distributors' customers; and

- the financial and other resources of our distributors.

WE HAVE BEEN DEPENDENT ON SALES TO A LIMITED NUMBER OF LARGE CUSTOMERS; THE LOSS
OF ANY OF THESE CUSTOMERS OR ANY REDUCTION IN ORDERS FROM SUCH CUSTOMERS COULD
MATERIALLY AFFECT OUR SALES.

Historically, we have sold a significant proportion of our products and
services to a limited number of distributors who in turn sold those products to
a limited number of ultimate customers. For example, in 1999, two distributors,
Stephen Gould Corporation and Hisco, Inc., accounted for 56% of our net sales.
None of our customers has entered into a long-term agreement requiring it to
purchase our products. Although the composition of the group comprising our
largest customers has varied from year to year, the loss of a significant
customer or any reduction or delays in orders from any significant customer,
including reductions or

8
<PAGE> 13

delays due to customer departures from recent buying patterns, or market,
economic or competitive conditions in our customers' business, could adversely
affect us.

INTENSE COMPETITION IN THE PACKAGING MATERIALS COULD PREVENT US FROM INCREASING
REVENUE AND SUSTAINING PROFITABILITY.

The market for packaging products in general is intensely competitive. We
expect to experience increasing levels of competition in the future if our
competitors decide to devote additional resources to the manufacture and sale of
molded fiber packaging materials. The principal competitive factors affecting
the markets for our products include, price, product design and functionality,
product quality and performance and increasing environmental concerns and
regulations that promote the use of packaging materials that are recyclable and
biodegradable. Although we believe that our products compete favorably with
respect to such factors, there can be no assurance that we can maintain our
competitive position against current or potential competitors, especially those
with greater financial, marketing, service, support, technical or other
competitive resources.

We currently compete primarily with larger and more established companies
that have larger production capacity, more established and larger marketing and
sales organizations and significantly greater financial resources than we do.
There can be, however, no assurance that such competitors will not be able to
respond more quickly to changes in customer requirements, devote greater
resources to the development, sale and promotion of their products than we do or
develop products that are superior to our products or that achieve greater
market acceptance.

Our future success will depend, in part, upon our ability to increase sales
in our targeted markets. There can be no assurance that we will be able to
compete successfully with our competitors or that the competitive pressures we
face will not have a material adverse effect on us. Our future success will
depend in large part upon our ability to increase our share of our target market
and to sell additional products to existing customers. Future competition may
result in price reductions, reduced margins or decreased sales. See "Business --
Competition."

WE MAY ENGAGE IN FUTURE ACQUISITIONS, WHICH COULD ADVERSELY AFFECT YOUR
INVESTMENT IN US AS WE MAY NEVER REALIZE ANY BENEFITS FROM SUCH ACQUISITIONS,
WHICH ALSO COULD BE EXPENSIVE AND TIME CONSUMING.

We intend to acquire other firms that are engaged in the manufacture and
sale of molded fiber products if we are able to locate suitable acquisition
prospects and acquire them on reasonable terms. We currently have no commitments
with respect to any acquisitions. If we do undertake any transactions of this
sort, the process of integrating an acquired business may result in operating
difficulties and expenditures and may absorb significant management attention
that would otherwise be available for ongoing development of our business.
Moreover, we may never realize the anticipated benefits of any acquisition.
Future acquisitions could result in potentially dilutive issuances of equity
securities, the incurrence of debt and contingent liabilities and amortization
expenses related to goodwill and other intangible assets, which could adversely
affect our results of operations and financial condition.

RISKS RELATED TO THE OFFERING

OUR SECURITIES HAVE NO PRIOR MARKET, AND WE CANNOT ASSURE YOU THAT OUR STOCK
PRICE WILL NOT DECLINE AFTER THE OFFERING. THAT COULD LEAD TO COSTLY LITIGATION
FOR US AND MAKE AN INVESTMENT IN US LESS APPEALING.

Before this offering, there has not been an active public market for our
common stock, and an active public market for our common stock may not develop
or be sustained after this offering. The market price of our common stock could
be subject to significant fluctuations after this offering. Among the factors
that could affect our stock price are:

- actual or anticipated fluctuations in our operating results;

- changes in revenue or earnings estimates or publication of research
reports by analysts;

9
<PAGE> 14

- speculation in the press or investment community;

- announcements concerning us or our competitors, or the packaging industry
in general;

- general and industry-specific economic conditions unrelated to our
performance;

- the loss of any of our key personnel; and

- actions by institutional stockholders prior to its divestiture of our
stock.

In addition, the stock market has experienced extreme price and volume
fluctuations that has often been unrelated to the operating performance of
particular companies. The market prices of the securities of smaller companies
like ours without consistent product revenues and earnings, have been highly
volatile and may continue to be highly volatile in the future. This volatility
has often been unrelated to the operating performance of particular companies.
In the past, securities class action litigation has often been brought against
companies that experience volatility in the market price of their securities.
Moreover, market prices for stocks of many companies, particularly following an
initial public offering, frequently reach levels that bear no relationship to
the operating performance of such companies. These market prices generally are
not sustainable and are subject to wide variations. Whether or not meritorious,
litigation brought against us could result in substantial costs, divert
management's attention and resources and harm our financial condition and
results of operations.

PRICE AND VOLUME FLUCTUATIONS -- THE TRADING VOLUME AND PRICE OF OUR COMMON
STOCK COULD FLUCTUATE SUBSTANTIALLY.

The market for our shares may be subject to extreme price and volume
fluctuations. We believe that a number of factors, both within and outside our
control, could cause the trading volume and price of our common stock to
fluctuate, perhaps substantially. Important factors that could cause our common
stock to fluctuate include:

- announcements of developments related to our business or our competitors'
or customers' businesses;

- fluctuations in our financial results;

- general conditions or developments in the packaging products business;

- potential sales of our common stock into the marketplace by us or our
stockholders; and

- a shortfall in revenue, gross margin, earnings or other financial results
or changes in research analysts' expectations.

OUR PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND DIRECTORS OWN A SIGNIFICANT
PERCENTAGE OF OUR STOCK, AND AS A RESULT, THE TRADING PRICE FOR OUR SHARES MAY
BE DEPRESSED AND THESE STOCKHOLDERS CAN TAKE ACTIONS THAT MAY BE ADVERSE TO YOUR
INTERESTS.

Our executive officers and directors and entities affiliated with them
will, in the aggregate, beneficially own approximately 72.4% of our common stock
following this offering. This significant concentration of share ownership may
adversely affect the trading price for our common stock because investors often
perceive disadvantages in owning stock in companies with controlling
shareholders. These stockholders, acting together, will have the ability to
exert substantial influence over all matters requiring approval by our
stockholders, including the election and removal of directors and any proposed
merger, consolidation or sale of all or substantially all of our assets. In
addition, they could dictate the management of our business and affairs. This
concentration of ownership could have the effect of delaying, deferring or
preventing a change in control, or impeding a merger or consolidation, takeover
or other business combination that could be favorable to you.

10
<PAGE> 15

PROVISIONS OF OUR GOVERNING DOCUMENTS AND DELAWARE LAW COULD DISCOURAGE
ACQUISITION PROPOSALS OR DELAY A CHANGE IN OUR CONTROL, AND THIS MAY ADVERSELY
AFFECT THE MARKET PRICE OF OUR COMMON STOCK OR DENY OUR STOCKHOLDERS A CHANCE TO
REALIZE A PREMIUM ON THEIR SHARES.

Our certificate of incorporation and by-laws contain anti-takeover
provisions, including those listed below, that could make it more difficult for
a third party to acquire control of us, even if that change in control would be
beneficial to our stockholders:

- our board of directors has the authority to issue common stock and
preferred stock and to determine the price, rights and preferences of any
new series of preferred stock without further stockholder approval;

- commencing with our 2001 annual meeting, our board of directors will be
divided into three classes, with each class serving staggered three-year
terms;

- supermajority voting is required to amend key provisions of our
certificate of incorporation and by-laws;

- there are limitations on who can call special meetings of stockholders;

- in order to nominate a director or make a proposal at a stockholders'
meeting, a stockholder must give us advance notice.

In addition, provisions of Delaware law may also discourage, delay or
prevent a change of control of our company or unsolicited acquisition proposals.

OUR MANAGEMENT WILL HAVE BROAD DISCRETION TO USE THE PROCEEDS OF THIS OFFERING
AND THEIR USES MAY NOT YIELD A FAVORABLE RETURN.

While we intend to use the net proceeds from this offering principally for
expansion of our operations and working capital needs and general corporate
purposes, including the repayment of approximately $720,000 of outstanding debt
and current liabilities, most of the net proceeds of this offering have not been
allocated for precise or specific uses. Our management will have broad
discretion to spend the proceeds from this offering in ways with which
stockholders may not agree. The failure of our management to use these funds
effectively could result in unfavorable returns. This could have significant
adverse effects on our financial condition and could cause the price of our
common stock to decline. See "Use of Proceeds."

YOU WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.

The initial public offering price of our shares is substantially higher
than the book value per share of the outstanding common stock. Accordingly,
investors purchasing shares of common stock in this offering will

- pay a price per share that substantially exceeds the value of our assets
after subtracting liabilities; and

- if only $5,000,000 of shares are sold, contribute 87.1% of the total
amount invested to date to fund us, but will own only 5.9% of the shares
of common stock outstanding (increasing to 95.3% of the total amount
invested and 15.8% of shares outstanding if all $15,000,000 of shares are
sold.

To the extent outstanding stock options or warrants are exercised, there
will be further dilution to new investors.

FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.

Upon completion of this offering, we will have 19,047,500 shares of common
stock outstanding. All the shares sold in this offering can be freely traded. Of
our 16,047,500 currently outstanding shares, 14,650,000 are "restricted
securities" within the meaning of Rule 144 ("Rule 144") promulgated under the
Securities Act of 1933. This means that they may not be sold without first being
registered under the Securities Act unless an exemption from registration is
available, including the exemptions contained in Rule 144. Almost all of those
14,650,000 shares, which are held by current stockholders, are currently
eligible for sale pursuant to Rule 144, subject to the volume and manner of sale
limitations under Rule 144. The remaining shares will become

11
<PAGE> 16

available at various times thereafter upon the expiration of one-year from the
date of initial acquisition of the shares. We cannot predict the effect, if any,
that public sales of these shares or the availability of shares for sale will
have on the market price of our common stock from time to time. Nevertheless, if
our stockholders, and particularly our directors and officers, sell substantial
amounts of our common stock in the public market, or if the public perceives
that such sales could occur, this could have an adverse impact on the market
price of our common stock, even if there is no relationship between such sales
and the performance of our business. See "Shares Eligible for Future Sale" for a
discussion of potential future sales of our common stock.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends," "may," "will," "should," "estimates,"
"predicts," "potential," "continue" and similar expressions to identify these
forward-looking statements. Our actual results could differ materially from the
results contemplated by these forward-looking statements due to a number of
factors, including those discussed in "Risk Factors," "Management's Discussion
and Analysis" and elsewhere in this prospectus. This prospectus also contains
forward-looking statements attributed to third parties relating to their
estimates regarding the growth of our markets. Forward-looking statements are
subject to known and unknown risks, uncertainties and other factors that may
cause our actual results, as well as those of the markets we serve, levels of
activity, performance, achievements and prospects to be materially different
from those expressed or implied by the forward-looking statements. We do not
have any intention or obligation to update forward-looking statements, even if
new information, future events or other circumstances make them incorrect or
misleading.

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR
SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS
PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS
ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY
HAVE CHANGED SINCE THAT DATE.

12
<PAGE> 17

USE OF PROCEEDS

We estimate that our net proceeds from this offering will be approximately
$4,200,000 if only $5,000,000 of shares are sold or approximately $13,200,000 if
all the shares are sold. The amount of those estimated net proceeds are after
deducting the selling commissions and estimated offering expenses payable by us
and assumes all shares are sold by placement agents that will be paid a
commission.

We intend to use the net proceeds of this offering in the following manner:

<TABLE>
<CAPTION>
MINIMUM OFFERING MAXIMUM OFFERING
--------------------- ----------------------
AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ -------
<S> <C> <C> <C> <C>
Equipment........................................ $2,500,000 59.5% $ 9,000,000 68.2%
Payment of Debt and Current Liabilities.......... 720,000 17.1 720,000 5.5
Sales, Marketing & Advertising................... 400,000 9.5 1,000,000 7.6
Equipment Installation and Start-up Costs........ 500,000 11.9 1,100,000 8.3
Research and Development......................... 80,000 1.9 380,000 2.9
Working Capital.................................. 0 0.0 1,000,000 7.6
---------- ----- ----------- -----
Total....................................... $4,200,000 100.0% $13,200,000 100.0%
========== ===== =========== =====
</TABLE>

Our anticipated use of net proceeds is based upon our current status of
operations and business plan. It is possible that the application of funds may
vary depending upon a number of factors including, without limitation, an
increase in orders for our products and the need for additional raw materials
and equipment, the availability of potential acquisitions, the availability of
bank or other financing and other factors beyond our control. Additional
financing will be required to implement our long-term business plan. We cannot
assure that any such financing will be available when needed on terms acceptable
to us, if it is available at all.

In addition, we may also use a portion of the net proceeds from this
offering to acquire businesses or product lines that complement our existing
business if we could make these acquisitions on terms which we deem to be
favorable. However, we do not have any commitments to make any acquisition and
have not allocated a specific amount of the net proceeds for this purpose.

Our management will have significant flexibility in applying the net
proceeds of the offering. Pending any use as described above, we intend to
invest the net proceeds in short-term, interest-bearing investment-grade
instruments.

DIVIDEND POLICY

After completion of this offering, we currently intend to retain any future
earnings to fund the development and growth of our business. Therefore, we do
not anticipate paying any cash dividends in the foreseeable future. Furthermore,
we anticipate that we will enter into loan agreements with one or more banks
which may place restrictions upon our ability to pay dividends.

13
<PAGE> 18

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2000. Our
capitalization is presented:

- - on an actual basis;

- - on a pro forma as adjusted basis to reflect our receipt of the
estimated net proceeds of $4,200,000 from the sale of 1,000,000 shares of
our common stock in this offering; and

- - on a pro forma as adjusted basis to reflect our receipt of the
estimated net proceeds of $13,200,000 from the sale of 3,000,000 shares
of our common stock in this offering.

You should read the information set forth below together with "Selected
Historical Consolidated Financial Data", "Management's Discussion and Analysis
-- Liquidity and Capital Resources" and our historical consolidated financial
statements and the notes to those statements included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
JUNE 30, 2000 (UNAUDITED)
----------------------------------------
PRO FORMA PRO FORMA
JUNE 30, 2000 AS ADJUSTED AS ADJUSTED
ACTUAL PRO FORMA FOR MINIMUM FOR MAXIMUM
UNAUDITED (A)(C) OFFERING(D) OFFERING(E)
------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents................... $ 8,268 $ 508,268 $4,250,988 $13,250,988
========= ========== ========== ===========
Current installments of long-term debt...... 451,846 451,846 -- --
Long-term debt, excluding current
installments:
Note payable -- related parties........... 45,000 45,000 45,000 45,000
Note payable.............................. 5,434 161,434 161,434 161,434
Common stock -- $.001 par value; 75,000,000
authorized shares; issued and outstanding
shares 15,669,500, 16,047,500 pro forma
17,047,500 pro forma as adjusted (d) and
19,047,500 pro forma as adjusted (e)...... 15,670 16,048 17,048 19,048
Additional paid-in capital.................. 70,540 726,162 4,925,162 13,923,162
Deficit accumulated during the development
stage..................................... (190,754) (190,754) (190,754) (190,754)
--------- ---------- ---------- -----------
Total shareholders' equity (deficit)........ (104,544) 551,456 4,751,456 13,751,456
--------- ---------- ---------- -----------
Total capitalization........................ $ 397,736 $1,209,736 $4,957,890 $13,957,890
========= ========== ========== ===========
</TABLE>

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

(a) Gives effect to the private placement of 300,000 restricted common shares on
July 8, 2000 for $500,000 in proceeds. See "Subsequent Events Footnote."

(b) In exchange for future consulting services to be rendered a stock warrant
for 2,000,000 shares was issued and is exercisable at $.01 per share during
the period ending June 30, 2003. See "Subsequent Events Footnote". Note that
the warrants were issued in July 2000 and are not included in the pro-forma
data.

(c) On August 1, 2000 we converted $312,000 in trade payables to $156,000 in
equity through the issuance of 78,000 restricted 144 common shares and
$156,000 in long term debt at 7% interest due October 1, 2005. See
"Subsequent Events Footnote".

(d) Assumes the sale of 1,000,000 shares at $5 per share for gross proceeds of
$5,000,000 and net proceeds of $4,200,000.

(e) Assumes the sale of 3,000,000 shares at $5 per share for gross proceeds of
$15,000,000 and net proceeds of $13,200,000.

14
<PAGE> 19

DILUTION

The deficit in our pro forma net tangible book value at June 30, 2000 was
approximately ($188,920), or approximately ($0.02) per share. The deficit in net
tangible book value per share is determined by dividing our net tangible book
value, which is total tangible assets less total liabilities, by the 16,047,500
shares of common stock outstanding immediately before this offering. Dilution in
net tangible book value per share represents the difference between the amount
per share paid by purchasers of shares of our common stock in this offering and
the net tangible book value per share of our common stock immediately
afterwards.

After giving effect to our sale of 1,000,000 shares in this offering at the
initial public offering price of $5.00 per share and after deducting the maximum
potential selling commissions and estimated offering expenses payable by us, our
adjusted net tangible book value at June 30, 2000 (on a pro forma basis) would
have been approximately $4,011,080, or $0.24 per share. The following table
illustrates the pro forma dilution per share that would occur if we sell
1,000,000 shares in this offering:

<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $5.00
Net tangible book value per share as of June 30, 2000....... $(0.02)
Increase in net tangible book value per share attributable
to new investors.......................................... 0.26
------
Adjusted pro forma net tangible book value per share after
this offering............................................. 0.24
-----
Dilution in net tangible book value per share to new
investors................................................. $4.76
=====
</TABLE>

After giving effect to our sale of 3,000,000 shares in this offering at the
initial public offering price of $5.00 per share and after deducting the maximum
potential selling commissions and estimated offering expenses payable by us, our
adjusted net tangible book value at June 30, 2000 (on a pro forma basis) would
have been approximately $13,011,080, or $0.69 per share. The following table
illustrates the pro forma dilution per share that would occur if we sell all
3,000,000 shares offered in this offering:

<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $5.00
Net tangible book value per share as of June 30, 2000....... $(0.02)
Increase in net tangible book value per share attributable
to new investors.......................................... 0.71
------
Adjusted pro forma net tangible book value per share after
this offering............................................. 0.69
-----
Dilution in net tangible book value per share to new
investors................................................. $4.31
=====
</TABLE>

The following tables presents the following data as of August 31, 2000, and
assumes an initial public offering price of $5.00 per share for our new
investors:

- The number of shares of common stock acquired from us;

- The total cash consideration paid;

- The average price per share paid before deducting possible selling
commissions and estimated expenses of the offering; and

- The average price per share paid by the existing shareholders.

15
<PAGE> 20

This table shows that information if we sell 1,000,000 of the shares in
this offering.

<TABLE>
<CAPTION>
SHARES PURCHASED AGGREGATE CONSIDERATION AVERAGE
--------------------- ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shareholders.................. 16,047,500 94.1% $ 738,460 12.9% $0.05
New Investors.......................... 1,000,000 5.9 5,000,000 87.1 $5.00
---------- ----- ---------- -----
Total............................. 17,047,500 100.0% $5,738,460 100.0%
========== ===== ========== =====
</TABLE>

This table shows that information if we sell all 3,000,000 of the shares in
this offering.

<TABLE>
<CAPTION>
SHARES PURCHASED AGGREGATE CONSIDERATION AVERAGE
--------------------- ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shareholders.................. 16,047,500 84.2% $ 738,460 4.7% $0.05
New Investors.......................... 3,000,000 15.8 15,000,000 95.3 $5.00
---------- ----- ----------- -----
Total............................. 19,047,500 100.0% $15,738,460 100.0%
========== ===== =========== =====
</TABLE>

The above information excludes:

- 2,000,000 shares of common stock issuable upon the exercise of
outstanding warrants with an exercise price of $.01 per share; and

- 1,300,000 unissued shares authorized for future awards under our 2000
Stock Option Plan. To the extent that any options are granted and
exercised, there will be further dilution to new investors.

16
<PAGE> 21

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The consolidated operations data for the six months ended June 30, 2000 and
1999 and the consolidated balance sheet data as of June 30, 2000 are derived
from unaudited pro forma condensed consolidated financial statements included in
this prospectus and, in the opinion of management, include all adjustments,
consisting only of normal recurring accruals, that are necessary for a fair
presentation of our financial position and operating results for these periods.
The pro forma balance sheet as of June 30, 2000 reflects the private placement
of 300,000 shares of restricted common stock for $500,000 ($1.67 per share) in
July, 2000. The historical financial information may not be indicative of our
future performance and does not reflect what our financial position and
operating results would have been had we operated as a separate, stand-alone
entity during the periods presented.

<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 22, 1999
THROUGH SIX MONTHS ENDED JUNE 30
DECEMBER 31, ----------------------------
1999 1999 2000
PRO FORMA PRO FORMA PRO FORMA
----------------- --------- ---------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF CONSOLIDATED OPERATIONS DATA
Total Revenues........................................ $ 726,612 $ 344,431 $ 234,403
Cost of Sales......................................... 818,957 457,594 117,782
--------- --------- ---------
Gross Income (Loss)................................... (92,345) (113,163) 116,621
Selling, General and Administrative Expenses.......... (492,597) (244,063) (427,038)
--------- --------- ---------
Loss From Operations.................................. (584,942) (357,226) (310,417)
Interest Expense...................................... (39,322) (27,895) (29,576)
--------- --------- ---------
Loss Before Income Taxes.............................. (624,264) (385,121) (339,993)
Income Taxes.......................................... -- -- --
--------- --------- ---------
Net Loss.............................................. $(624,264) $(385,121) $(339,993)
========= ========= =========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
1999 JUNE 30,
PRO FORMA 2000
------------ --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA
Current Assets....................................... $ 32,348 $ 52,656
Equipment and Leasehold Improvements................. 489,179 419,684
Goodwill............................................. 581,081 730,924
Other Assets......................................... 18,670 16,455
----------- -----------
Total Assets.................................... $ 1,121,278 $ 1,219,719
=========== ===========
Current Liabilities.................................. 1,126,098 1,273,829
Long Term Debt....................................... 45,000 50,434
----------- -----------
Total Liabilities............................... 1,171,098 1,324,263
----------- -----------
Shareholders' Equity (deficit)....................... (49,820) (104,544)
Working Capital (deficit)............................ (1,093,750) (1,221,173)
</TABLE>

17
<PAGE> 22

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion of our financial condition and results of
operations should be read together with our consolidated financial statements
and notes to those statements included elsewhere in this prospectus.

BASIS OF PRESENTATION

We were incorporated in February, 1999 and acquired Castle Keep in April
1999 and Eco-form in May, 2000. Other than the operations of Eco-form, we have
not had any material operations. Included in the financial statements included
elsewhere in this prospectus are the audited financial statements of Eco-form as
of August 31, 1998 and 1999 and for the years then ended. Because we did not
acquire Eco-form until May, 2000, its operations would not be included in our
financial statements prior to that date. In order to provide information that
shows the results of our operations as if we had acquired Eco-form and Castle
Keep when we were incorporated, those financial statements also include our
consolidated unaudited pro forma statement of operations for the period from
February 22, 1999 (date of inception) through December 31, 1999, unaudited
consolidated pro forma statements of operations for the six months ended June
30, 1999 and 2000, a consolidated unaudited pro forma balance sheet as of
December 31, 1999 and an unaudited consolidated balance sheet as of June 30,
2000. The following discussion is based upon those pro forma consolidated
financial statements and balance sheets

RESULTS OF OPERATION -- SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO JUNE 30, 1999

Our revenues decreased by $110,028 (32%) from $344,431 in 1999 to $234,403
in 2000. That decrease is because our 1999 revenues included revenues received
from the sale of tooling and the 2000 revenues only include revenues from the
sale of product. There was no tooling revenue in the first six months of 2000
because of a lack of sales activity in the preceding two quarters. The tooling
revenues represent amounts received from customers for tooling that we sold to
them at our cost of having outside firms produce that tooling.

The cost of sales decreased by $339,812 (74%) from 1999 to 2000 because of
two factors. First, a large tooling cost was incurred in 1999 from which revenue
had not been generated by the end of the comparative period. Secondly, the
manufacturing equipment was upgraded and improved in the fourth quarter of 1999,
which led to more efficient plant operations.

Sales, general and administrative expenses increased by $182,975 (75%) due
to the acquisition of Eco-form. Specifically, professional fees and travel
expenses increased considerably over the same period in 1999.

Interest expense increased by $1,681 (6%) from 1999 to 2000 due to the
additional debt service requirements from the acquisition of Eco-form.

LIQUIDITY AND CAPITAL RESOURCES

Our current liabilities exceed our current assets by $1,221,173 at June 30,
2000. This is a consequence of our acquisition of Eco-form, in which we assumed
current liabilities and primarily acquired long term assets and goodwill.
Subsequent to the merger date, $500,000 was raised through the private placement
of 300,000 common shares. Also, a significant trade payable to Emery
International was converted in the amounts of $156,000 in equity (for 78,000
common shares) and $156,000 in long term debt.

Our expansion into other areas of the country and the world will require
significant capital resources. The costs associated with the initial public
offering, as well as the acquisition of Eco-form have been funded by the private
sale of and issuance of capital stock and notes payable. Such private funding
through capital investment is expected to continue in the foreseeable future.
The capital required for expansion is expected to be met with proceeds from this
offering of common stock.

Our current loans with Massachusetts Business Development Corporation and
Rockland Trust were arranged by the principals of Eco-form. These loans were for
the purchase of a new forced-air drying system to meet new production
requirements and operating capital. Our Management team was able to make

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arrangements with both lenders to pay them up to date and keep the loans
current. We are negotiating with these two lenders for more favorable repayment
terms. As a result of our new management, our relationship with the lenders has
improved. However, we anticipate using approximately $720,000 of the proceeds
from this offering to pay outstanding debt and current liabilities.

BUSINESS

GENERAL

We are Eco-form International, Inc., a Delaware corporation that designs,
manufactures and markets 100% recycled molded fiber packaging, a competitively
priced, environmentally friendly biodegradable product that is used as a cushion
in the packaging of consumer electronics, computers, appliances, tools,
interconnectivity devices and food products. Historically, molded fiber
packaging has been used primarily in the food industry including familiar
applications such as egg cartons and fruit separators. In recent years, original
equipment manufacturers (OEMs) in the customer electronics, computer and
appliance industries have begun to show interest in using molded fiber as
interior packaging for their equipment. We believe recent changes in consumer
sentiment, corporate practices and government regulations related to
environmental and safety standards have created a climate that is favorable to
the use of molded fiber packaging products. We therefore expect the market for
molded fiber packaging products to increase dramatically in the coming decade.
We believe we are uniquely positioned to take advantage of this opportunity
because we have an established customer base, marketing expertise, distributor
agreements, exclusive molding equipment supplier relationships, packaging design
experience and the production facilities that will allow for rapid expansion and
increased market penetration.

We did not conduct any significant business operations until May 2000 when
we acquired Eco-form, Inc., a Massachusetts corporation ("Eco-form"). Eco-form
designs and manufactures molded fiber packaging materials. We acquired Eco-form
by merging it into us so that Eco-form is no longer a separate corporation. That
acquisition was treated as a purchase for accounting purposes. Unless the
context otherwise requires, any references to "we, us" or "our" will also
include our inactive wholly-owned subsidiary, Castle Keep Holding (USA), Inc.
("Castle Keep") and the operations that were previously conducted by Eco-form,
Inc.

Eco-form, Inc. was established in 1995 by M. Salahuddin Khan and Fuad Khan
to manufacture and market interior protective packaging. We acquired Eco-form
because it owned a fully functioning manufacturing facility in Walpole,
Massachusetts, had production contracts with large electronic, computer and
consumer product companies, and had developed proprietary design processes that
reduce the development time for new package designs and prototypes. Eco-form's
engineering experience and use of Solid Model (3-D CAD/CAM) software, combined
with its packaging design, prototyping, manufacturing and technology expertise
has enabled it to rapidly develop creative packaging prototypes and dies for its
customers. Its customers included Lucent Technologies, Cisco Systems, Inc.,
Motorola, Revlon Sony, Wyeth-Ayerst (a division of American Home Products),
Baxter Medical, Eco-star and Tekada of Japan (a tier one automotive supplier).
We are continuing and intend to expand all the operations that were conducted by
Eco-form prior to its acquisition by us.

In addition to the facilities and operations of Eco-form, we believe that
we will benefit from the experience and contacts that have been developed by our
officers, Howard Keep and Terry Keep, who have been engaged in various aspects
of the molded fiber industry since 1991. Howard Keep and Terry Keep were the
principals of a Canadian firm that did business as "International Technology
Funding" and "International Technology Packaging" and sold molded fiber
equipment manufactured by Emery International and negotiated sales orders for
new and existing molded fiber packaging plants. That firm, which has
subsequently been deactivated by Howard Keep and Terry Keep because they are now
devoting full time to our activities, had established relationships with
customers that included Xerox, Cisco Systems, Inc., Compaq Computer, Lexmark,
Lucent Technologies, 3Com and many other large electronics, computer and
consumer products companies. Howard Keep and Terry Keep also have extensive
experience with food producers that require commodity molded fiber products such
as egg and fruit tray cartons. Their prior company also had contractual

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and working relationships with distributions such as Weyerhaeuser, Xpedx,
Westcoast Paper, Hisco and Tharco.

Howard and Terry Keep's prior company also had distribution agreements with
Emery International and the British manufacturer of MoldMaster molded fiber
equipment that provided for exclusive rights to market their paper fiber molding
equipment in North America. Those agreements are now held by our subsidiary,
Castle Keep. We believe that the Emery International and MoldMaster pulp molding
equipment are the world's most advanced molded fiber technology and equipment.
We believe our exclusive North American distribution agreements with Emery
International and MoldMaster provide us with a competitive advantage over our
competitors.

OBJECTIVES

- HIGH PERFORMANCE: Molded fiber is dust free, provides exceptional
cushioning properties and can be designed three-dimensionally to package
any product.

As the result of our management's experience and contacts and our
acquisition of Eco-form, we believe we have put the following key components in
place to accomplish our objectives:

- An existing manufacturing facility located in Boston, Massachusetts,
which services existing, contracts throughout the US and has won awards
for its product designs.

- A proven marketing and sales team with nine years experience and
packaging sales accounts that include Lucent Technologies, Xerox,
Motorola, Wyeth-Ayerst, Baxter Medical and Tekada.

- Agreements with Emery International and MoldMaster that give us the
exclusive right to sell in North America what we believe is the world's
most advanced molded fiber technology and equipment in North America.

Provided that proper funding is available, we intend to:

- Establish additional manufacturing facilities in key areas of the United
States. Initially, we intend to build a second manufacturing facility in
the Northwestern United States in order to service existing contracts and
pursue additional opportunities cultivated over several years by our
management in this market, which is also known as "the silicone forest".
Subsequently, we would establish additional plants in close proximity to
existing and potential customers in markets such as the Southwestern and
Midwestern United States. Our plan is to equip each new facility with
molding machines that will be able to produce a variety of products
including higher margin electronic packaging and lower margin food
packaging materials. Since there is high demand for commodity products
such as fruit separators and egg trays, four cup carryout trays (used by
McDonalds and StarBucks), we intend to initially
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pursue sales of these products, which require little design expertise, in
order to utilize manufacturing capacity and generate cash flow at new
facilities. Simultaneously, we intend to market and sell our capabilities
and capacity for higher margin electronics, computer and consumer goods
packaging.

- Acquire or form alliances with existing molded fiber manufacturers that
would offer manufacturing capacity in markets where our customers are
located. As a result of their activities in the industry over the past
decade, our management is aware of several molded fiber manufacturers in
the United States and Europe that might make suitable acquisitions. Joint
ventures in Europe and Asia are also possible. However, at this time we
have not entered into any agreements or understandings regarding the
acquisition of any other companies or any joint ventures with any other
companies.

MOLDED FIBER PRODUCTS

Molded fiber packaging products consist of paper pulp fiber that is molded
into a desired shape and thickness. The raw material for the process includes
recycled newsprint ("ONP") and kraft paper (recycled printing and writing paper,
magazine stock and corrugated cardboard boxes). The formula for the molded fiber
product is determined through testing and is dependent on the shape, thickness
and strength required for packaging. To this mixture, aluminum sulfate and
soluble wax are added to ensure the pulp fiber adheres, provide the finish
surface of the molded product and impart varying degrees of waterproofing.

Molded fiber products are used for cushion packaging, carton and tray
packaging, inserts and receptacles and containers.

- CUSHION PACKAGING. Cushion packaging is used to protect moderately
fragile products being transported from the manufacturer to the end user.
Product groups requiring this type of packaging include consumer
electronics, cameras and related photography products, computers and
peripheral products, home appliances, power tools, medical products,
lighting products and hardware.

- CARTON AND TRAY PACKAGING. Carton and tray packaging is used for
perishable products to hold products for a relatively short period of
time. These products use less complex designs and are geared to high
production runs. Some examples of carton and tray packaging include trays
for food products such as eggs, fruit and vegetables and disposable trays
and plates used at fast food restaurants and for catering.

- INSERTS. In package inserts, a product is set into a shaped insert and
packed into an outer shell, which is generally made from chipboard. The
product is often visible so it requires a smooth finish and an appealing
appearance.

- RECEPTACLES AND CONTAINERS. The use of soluble wax and aluminum sulfate
allows molded fiber to hold liquids for long periods of time. In the
medical industry, molded fiber is used for urine bottles, emesis trays
and bedpan inserts. The shape of the receptacle may require a special
purpose machine to create a cavity.

COMPETITIVE PRODUCTS

Other competing products that are also used for those uses include expanded
polystyrene ("EPS") and corrugated paper inserts. EPS is used for cushion
packaging, carton and tray packaging and inserts and corrugated paper inserts
are used for cushion packaging and inserts. EPS is an oil byproduct, which is
volatile and does not meet current environmental standards. Corrugated paper
packaging meets environmental standards, but its use is limited due to its
two-dimensional approach in design. We believe that new OSHA policies will
motivate companies that currently use folded corrugated paper for their
protective packaging to convert to packaging that does not have the potential of
repetitive strain injuries currently experienced with folding corrugated paper.

We believe that molded fiber products will gradually replace EPS because of
growing environmental issues, both globally and in the US. By providing superior
packaging to the rapidly growing electronics and consumer product segments as
well as offering a "green" package with little or no producer responsibility
costs

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for the companies buying and disposing of the packaging, molded fiber is
economically, ecologically and structurally a superior product.

The competitors currently represent 99% of the market. Therefore, they have
significant relationships with customers, which may be difficult to displace.
Product designers are familiar with EPS and corrugated packaging solutions and
often design their products to conform to these known and tested packaging
solutions.

Molded fiber products enjoy the following competitive benefits over EPS and
corrugated paper:

- RECYCLABLE. By using 100% post consumer waster paper as the major raw
material, molded paper technology reduces municipal solid waste.
Although, small amounts of aluminum sulfate are used (1% of slurry
solution), molded fiber products are completely recyclable through this
manufacturing process and other recycling processes. Corrugated paper is
also recyclable. Although EPS is recyclable to an extent, the reclaimed
EPS material is very limited in its reuse as a material. EPS recycling
also lacks the strong paper-recycling infrastructure at the end user
level that paper products have. EPS cannot be incinerated since it is
toxic. Molded fiber packaging is quickly becoming the standard in
European, Asian and other countries with manufacturer "take-back"
responsibilities.

- BIODEGRADABLE. Since molded fiber is organic, it is completely
biodegradable. Fibers disintegrate in landfills or under damp conditions.
Corrugated paper is also biodegradable. EPS is oil based and is not
biodegradable.

- SHOCK AND VIBRATION PROTECTION. Molded fiber can absorb comparable shock
and static loads and has superior vibration absorption than EPS. Molded
fiber can be arranged in patterns of stiffeners and webs to protect areas
sensitive to shocks and vibration. EPS can only provide more protection
by increasing thickness, which will affect the size, shape and weight of
the box. EPS can lose its protective ability, since it crushes with
impact and does not return to its original shape. Molded fiber does not
readily lose its shape.

- SUPERIOR STACKING/NESTING REDUCES SHIPPING AND STORAGE COSTS. Molded
fiber reduces shipping and storage costs since it can "nest" together and
therefore requires less warehouse and manufacturing floor space and
allows more efficient shipping of packaging materials. Since molded fiber
depends on patterns of stiffeners and webs, rather than on thickness, its
thickness is generally in the area of 2 mm. and no greater than 5 mm.
Molded fiber products can be easily stacked. EPS does not "nest" due to
its thickness, which are generally several inches.

- MORE STABLE MATERIAL PRICES. The price of recycled newsprint and
corrugated containers used to manufacture molded fiber packaging has
historically been more stable than the prices of oil based materials such
as EPS.

- INCREASED MANUFACTURING EFFICIENCY. The use of molded fiber reduces
product costs since it can be formed to the exact shape and contour of
the end user's product and can be used with automated assembly and
packaging equipment. We have designed molded fiber products that are used
to hold the product as it is being assembled and then also serve as the
interior cushion packaging when the product is put into a package for
retail sale. Corrugated paper must be manually cut and folded which
increases labor costs and is difficult to use with automated packaging
equipment. We believe that new OSHA policies will cause a reduction in
the use of corrugated as an interior packaging product due to Workman's
Compensation issues with repetitive strain injuries associated with
repeated tasks such as folding corrugated.

EXPANSION OBJECTIVES

The Fiber Box Association ("FBA") has developed new specifications for
corrugated containers that are used in the grocery industry. The new boxes are
designed to enable boxes of different products from different suppliers to be
easily mixed on a single pallet, thereby allowing for improved efficiencies both
in the distribution center and at the retail level. The new standards would
allow containers to go directly from a shipping pallet to an in-store display to
take advantage of display-ready container merchandising efficiencies.

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We have worked with International Paper and Weyerhaeuser to design a new
fruit separator made of molded fiber that will fit the corrugated boxes that
conform to the new FBA box standards. We believe the new separator will be
widely sought by the grocery industry as a result of the new corrugated box
standards. The new fruit separators will be sold to manufacturers of corrugated
boxes who will use those new fruit separators in the boxes that they sell to
fruit packers.

Although the new fruit separators will be a lower margin "commodity" type
product, we believe that the anticipated demand for the fruit separators will
give us an opportunity to expand our business by building additional production
facilities in different geographic areas. We believe the fruit separator
business will act as an "engine" for each new facility. It will create immediate
cash flow at a reasonable rate of return and "cushion" the time lag in
generating new sales for the higher value, added electronics packaging at the
new facility.

We have had discussions with Weyerhaeuser who has indicated an interest in
purchasing the new fruit separators from us as soon as we have a facility to
produce them. We intend to initially produce the newly designed fruit separators
in the first new facility that we plan to establish in the Northwestern United
States. We would subsequently seek to establish new plants in Colorado, Texas,
and the Southwest United States to take advantage of what we believe are other
emerging sales opportunities.

All the new facilities will initially have two state-of-the-art molding
machines. Each machine will be capable of producing either electronic packaging
and or the "new" fruit separator with just a change of the tool(s). In either
case, one of the two machines' entire production capacity will be pre-sold to
the grocery industries' distributors before we establish that plant.

This new fruit separator is economically prohibitive for our competitors to
produce due to the size of the product in relation to the size of the forming
platen in the equipment used by the existing fruit separator manufacturers.
Thus, those existing manufacturers would need to re-machine to produce this
tray. The new molding machines that we would utilize will have a slightly
larger-than-standard molding platen. This design variation, which is one of the
benefits of our relationship with Emery International, will give us more
flexibility in packaging design and production.

Although we intend to use the fruit separator business to reduce the risk
of establishing new production facilities, our goal will be to manufacture
higher-margin interior packaging for the electronics, computer and consumer
goods industries. The fruit separator business can be reduced or spun-off into a
separate division in the future should we require production capacity for more
of the higher valued electronic or consumer packaging. Additional equipment can
be added or the fruit separator production reduced in favor for the higher
valued products, which will allow for improved revenue at no additional cost or
capital equipment investment.

MARKETING

The United States is the largest packaging-consuming nation in the world.
Molded fiber is a significant packaging alternative in every European and Asian
country in the world. We believe that, with each new environmental policy
approved in the US, Europe and Asia, demand for molded fiber packaging will grow
substantially because of its superior environmental characteristics.

Through their relationship with Emery International, our officers have been
attending and exhibiting in the major US and European packaging exhibitions for
eight years. In this time, they have been compiling information on clients'
manufacturing capacity requirements, creating relationships with national
packaging distributors, maintaining relationships with Emery International
machine purchasers throughout the world, establishing packaging sales standards
and working extensively with the International Molded Pulp Environmental
Packaging Association (I.M.E.P.A.), the world's only international molded fiber
association, to establish international molded fiber packaging standards.

Based upon the current Emery International and Mold Master machine sales
and inquiries, we believe that no major competitor has any current intention of
entering the North American molded fiber packaging market. The major companies
who might otherwise take advantage of this segment of the packaging industry
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consider molded fiber to be a niche market. As a result of their experience in
molded fiber machine sales and financing, our management has been involved with
many of the major paper and plastics manufacturers who have considered buying
equipment and entering the molded fiber industry. However, those who have tried,
failed due to a conflict of interest (especially with the plastics
manufacturers), little or no tooling design or manufacturing and the general
opinion amongst these companies is they don't want to enter a business they do
not know. They want to focus on their core businesses. They want to stand back
and watch the industry mature and then consider buying any significant players.
We believe this approach by the major chemical, plastic and paper companies
leaves us with a window of opportunity to expand our operations in what we
believe will be an expanding market.

We sell our products directly with our own sales personnel and through
national distribution companies. We use national distribution companies because
they have their own sales force and established relationships with customers and
they have the capability to hold products in inventory until they are required
by the customer. Most customers do not want to have to store large amounts of
packaging materials but prefer to receive smaller shipments on a more frequent
basis as they are needed. By using a distributor, we are able to ship larger
quantities of products in each shipment and get paid for them by the distributor
who then stores them and ships them to the customer as needed. Hisco, which is
based in Houston, Texas, has 24 warehouses in the United States and Northern
Mexico and over 100 sales engineers. Tharco, which is based near San Francisco,
California, has 20 warehouses throughout the southwestern, northwestern and
southeastern United States and it also has over 100 sales engineers.
Weyerhaeuser will use Westcoast Paper in Seattle and Portland to act as the
distributor for fruit separator trays we will sell to it. Westcoast Paper has
strong representation in the Pacific Northwest.

Currently, we promote the sale of our molded fiber products and design
services through our website (www.eco-form.com) and through our membership in
the Institute of Packaging Professionals (IoPP) and the International Molded
Pulp Environmental Packaging Association (IMPEPA). We also maintain another
website. (www.itpackaging.com) that we use to promote our sales of molded fiber
manufacturing equipment. Our officers have presented molded packaging case
studies at international symposiums such as Transpack '99 and also carried out
similar programs around the U.S. We will continue to be represented at major
North American packaging trade shows and conferences and will continue to
advertise in packaging trade journals and make direct mailings of brochures and
product sheets to consumer product manufacturers.

We intend to modify our website to be similar to that of the Cisco Systems
model. Credit applications, pre-approved purchasing, customer assistance, access
to our product testing database, corporate policies for employment
opportunities, even trouble shooting will be implemented through the website.

DESIGN SERVICES

We believe that one key element impeding the expansion of molded fiber
packaging is the ability to create and manufacture complex, sophisticated,
functional packaging designs. The design must be functional not only from the
client's perspective, but also just as importantly, from the production
packaging perspective. The marketing of cushion packaging requires engineers and
sales representatives experienced in molded fiber and protective packaging
design. Our engineers have completed and implemented some of the world's most
difficult designs and know the capability of molded fiber packaging.

A skilled team of engineers is required to develop superior packaging
designs and achieve a high level of customer service. We have developed a 3-D
CAD/CAM process unique to the industry to reduce the development time for new
package designs and prototypes. It uses high-powered computer simulation
techniques to accurately examine simulated testing results on the CAD/CAM
design. This permits our engineers to analyze the shape and thickness as well as
test the performance against shock and vibration. Prototypes replicate the exact
characteristics of the final product.

This ability to pre-test product designs without creating prototype tools,
shortens product development lead-time dramatically with 100% proven results to
date. This ability enables us to move through the quoting and design stage with
far superior tooling and product results than our current competition.

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We have an in-house tool making facility that is capable of developing
award winning packaging. In November 1998, the Institute of Packaging
Professionals (IoPP) awarded us two, first place "Ameristar" awards for
packaging we designed for Lucent Technologies. In June 1999, we were awarded two
more First Place Ameristar Awards from the IoPP for the airbag inflator unit
trays we designed and produced for Tekada of Japan.

Customer service is one of the most important aspects of our business. Our
design and production systems are integrated with the customer's operations to
assure rapid response and complete control of the process. In the design phase,
our engineering team works closely with customers to create packages that meet
their needs. The tool making staff sees the design through prototyping stages
and onto production tooling. Manufacturing engineers take over to produce the
first parts and to optimize production. Our quality control system, "E-qual",
assures the product's consistency for each shipment to the end user.

MANUFACTURING PROCESS

Molded fiber is paper pulp fiber molded into a desired shape and thickness.
The raw material for the process includes recycled newsprint ("ONP") and kraft
paper (recycled printing and writing paper, magazine stock and corrugated
cardboard boxes). The formula for the molded fiber product is determined through
testing and is dependent on the shape, thickness and strength required for
packaging. To this mixture, aluminum sulfate and soluble wax are added to ensure
the pulp fiber adheres, provide the finish surface of the molded product and
impart varying degrees of waterproofing.

The pulp mixture is stored in a pre-feed tank where it is sucked into the
molder. The molder consists of a series of wire mesh screen covered wet forming
dies mounted on a vacuum molding drum and a matching set of transfer dies. The
forming die is made up of rigid corrosive resistant metal and usually consists
of many component parts that are drilled with small drainage holes and covered
by pre-formed stainless steel screens. In the molder, the mold tool is
surrounded stainless steel gauze. A vacuum system attracts the fibers to the
forming die screens as the suspending recycled water is drawn through the screen
and drainage holes. The fibers orient in a mechanically interlocked layer to
form the molded fiber product. The suspending water is recycled to serve as
dilution water at the recirculating vat and the pulper stage.

The drained water is extracted by a vacuum through drain holes in the mold
and recycled back to the storage tank. The damp pulp product is transferred by a
transfer die to an output tray. The wet products are conveyed to a drying oven
where most of the remaining water content is evaporated off by means of
recirculating hot air until the products have only 8% water left. The endless
conveyor carries the products through 8 passes in the dryer. When the products
are dry, they are automatically discharged from the dryer and sorted by cam
operated doors onto a discharge conveyor that move them to automated stackers
where they are stacked into cartons or palletized and is ready for shipping.

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The following diagram shows the pulp molding process:

[graphic image]

SUPPLIES

We purchase recycled papers from regional collection companies at market
prices. Market prices are established by the Chicago Board of Trade, a commodity
exchange, and are not expected to increase materially due to continued high
projected recovery rates and government imposed landfill and incineration
restrictions. We do not anticipate any difficulty in being able to continue to
obtain adequate supplies of recycled papers and other raw materials we will
require. However, any delay or interruption in the supply of raw materials could
have a material adverse effect on our business.

EQUIPMENT DISTRIBUTION AGREEMENTS

We have agreements with Emery International and the British manufacturer of
MoldMaster molded fiber equipment that give us the exclusive rights to market
their pulp molding equipment in North America. We believe that the Emery
International and MoldMaster pulp molding equipment are the world's most
advanced molded fiber technology and equipment.

Emery International has been in business since 1951 and sells products
throughout the world. Emery International is the number one (in terms of dollar
volume) seller of molded fiber manufacturing equipment in the world during the
last 30 years. Emery International's experience has resulted in the development
of very sophisticated high speed molding machines in many sizes as well as
automated auxiliary packaging equipment and a wide variety of dies. Emery
International's customers receive excellent after sales service and support.

Emery International will provide us with technical support, spare parts,
maintenance services and offer technical improvements to existing machinery
which we believe will yield higher production rates

We believe that the exclusive North American distribution agreements with
Emery International and MoldMaster give us a competitive advantage by enabling
us to gain knowledge about any expansion plans of our competitors.

COMPETITION

The packaging products industry is highly competitive and we face
substantial competition from numerous global, national, and regional companies,
ranging from the largest packaging companies to small,
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emerging enterprises. Many competitors have greater financial and other
resources than we do. In addition, our products compete against products made
from alternative materials, including EPS and die-cut corrugated.

We believe that our customers typically select our products based primarily
on price, the favorable environmental qualities of our products, our design
capabilities, product performance and customer service.

RESEARCH AND DEVELOPMENT

We conduct research and development with respect to the design and
production of tooling that is needed to produce our products. Our main focus in
the past has been working with Emery International at their facilities to create
tools using our complex design geometry and their tool making expertise. During
this period we gained valuable knowledge in the construction of tools while
similarly Emery International gained valuable knowledge in designing cushion
packaging tools. However, the tooling for most projects was not cost effective,
despite Emery International absorbing many costs. We were charging customers the
market rate for tools and paying a greater amount to Emery International; we
attribute the surplus costs to research and development. Presently all prototype
tools are manufactured in house at our own facilities with some aspects out
sourced to Emery International and other vendors.

The main aim of future research is as follows:

- To create inexpensive tools for customers, thereby reducing the barriers
to using molded fiber and increasing our prospective client base;

- Decreasing the time to design and manufacture tooling for customers and
thus bringing products to market faster; and

- Creating cost efficient prototypes rapidly so that customers can make
decisions faster with respect to new projects.

PATENTS AND OTHER PROPRIETARY RIGHTS

We do not have any patents and rely upon trade secret protection as well as
contractual restrictions to protect our proprietary rights in our products,
technology and our business. We believe that the our design capabilities and
expertise, reliance upon trade secrets, unpatented proprietary know-how and the
development of new products are generally as important as patent protection in
establishing and maintaining a competitive advantage. Nevertheless, we may
attempt to obtain patents, when available, although there can be no assurance
that any patent obtained will provide substantial protection or be of commercial
benefit to us, or that its validity will be upheld if challenged.

We can give no assurance that we will not be subject to claims of patent
infringement, and that any such claim will not be successful and require us to
pay substantial damages or pay to obtain a license from a third party.

We have a U.S. registered trademark in the name "eco-form" that we use to
provide customer recognition for our products in the marketplace.

PROPERTIES

We currently lease a 15,000 square foot manufacturing and office facility
in Walpole, Massachusetts from an unrelated third party pursuant to a lease that
expires March 31, 2001. That lease currently requires us to pay monthly rental
of $6,503 plus taxes and insurance. We currently also occupy approximately 1,000
square feet of office space for our marketing staff in London, Ontario, Canada.

We believe that our manufacturing facilities and equipment generally are
well-maintained, in good operating condition, suitable for our purposes, and
adequate for our present operations. As described elsewhere in this prospectus,
we intend to open a second production facility in the Northwestern United States
with proceeds from this offering. That facility would be approximately 20,000
square feet.

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<PAGE> 32

ENVIRONMENTAL REGULATIONS

The packaging industry has been subject to user, industry, and legislative
pressure to develop environmentally responsible packaging alternatives that
reduce, reuse and recycle packaging materials. Government authorities have
enacted legislation relating to source reduction, specific product bans,
recycled content, recyclability requirements and "green marketing" restrictions.

In order to provide packaging that complies with all regulations regardless
of a product's destination, manufacturers seek packaging materials that meet
both environmentally related demands and performance specifications. Some
packaging manufacturers have responded by: reducing product volume and ultimate
waste product disposal through reengineering traditional packaging products;
adopting new manufacturing processes; participating in recovery and reuse
systems for resilient materials that are inherently reusable; creating programs
to recycle packaging following its useful life; and developing materials that
use a high percentage of recycled content in their manufacture.

Environmental regulations and public awareness have a significant impact on
the market for molded fiber products. According to Standard & Poors, 67% of the
newsprint is recycled 73% of the corrugated containers and 33% of the printing
and writing papers. Although, the government has not legislated the use of
recycled products, the pulp and paper industry has developed a recycling
infrastructure to collect waste paper and corrugated containers. Recycling has
enabled the pulp and paper industry to reduce its dependence on virgin timber
and the environmental impact of logging. Experts believe that increased recovery
will be difficult without government legislation or incentives.

In Europe and Asia, environmental laws are more developed than in North
America. This is attributed to fewer landfills and greater concern for the
environment in general. Many countries have "essential requirements" which aim
at reducing packaging that is not recyclable, restricting the disposal through
landfills and incineration, banning the use of hazardous materials, tracking
hazardous substances and charging fees for of the use non-recyclable materials.
In Europe, there are now also packaging fees directly linked to proportions by
weight of various materials according to their environment-friendliness. This
fee structure heavily favors molded fiber for packaging.

We are subject to environmental laws and regulations that regulate, among
other things: air emissions; water discharges; and the generation, use, storage,
transportation, handling and disposal of solid and hazardous wastes produced by
our activities. We believe that our operations are in compliance with applicable
environmental laws and regulations and that there are no pending environmental
matters that would have a material impact on our business.

EMPLOYEES

As of August 31, 2000, we had 25 employees. None of our employees are
represented by a labor union and we believe that we have good relationship with
our employees.

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<PAGE> 33

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The names, ages at August 31, 2000 and positions of our directors and
executive officers are set forth below.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Howard Keep............................... 58 Chairman, President & CEO
Terrance Keep............................. 36 Director, Treasurer and Vice President of
Marketing
M. Salahuddin Khan........................ 48 Director and Chief Designer and Packaging
Engineer
Fuad Khan................................. 37 Director and Vice President of Operations
M. Jalaluddin Khan........................ 46 Director and Vice President of
Manufacturing Operations
Heather Keep.............................. 31 Secretary
Eric L. Cross............................. 57 Director
</TABLE>

Set forth is certain biographical information about our directors and
executive officers:

HOWARD KEEP has been a member of our board of directors and our Chairman,
President & CEO since we acquired Castle Keep in April, 1999. He has been
President of Castle Keep since he co-founded that company in 1991. He has been
President of International Technology Funding ("ITF") since 1990. ITF was
deactivated by its two principals, Howard Keep and Terry Keep, because they have
ceased doing business in that company and have instead focused on our business
since they joined us in April, 1999. ITF had been the exclusive sales agent for
over eight years for Emery International in North America before we succeeded
ITF as Emery International's exclusive sales agent. ITF played a substantial
role in the start-up of new molding operations and projects as it performed the
sales and finance functions for Emery International in the U.S. and Mexico. ITF
also provided long-term product sales agreements for the products for these
plants. Howard has 35 years of experience in equipment sales, finance and lease
asset management. Howard structured many major Emery International molding
machine sales with complex finance structures. He has created a national sales
organization by contracting with electronic and consumer product packaging
distributors to service the United States, Canada and Mexico. He received a
degree in Electronic Technology from the Hamilton Institute of Technology.

TERRY KEEP has been a member of our board of directors and our Treasurer
and Vice President of Marketing since we acquired Castle Keep in April, 1999. He
has also been Vice President of Castle Keep since he co-founded that company in
1991. He has been the Vice President of ITF since 1990. ITF was deactivated by
its two principals, Howard Keep and Terry Keep, because they have ceased doing
business in that company and have instead focused on our business since they
joined us in April, 1999. Terry has been responsible for the sales and marketing
of Emery International equipment and the negotiation of sale with multinational
manufacturers such as Philips Lighting, Cisco Systems, Xerox, Eastman-Kodak,
Tekada and Baxter Medical. He is an active member of I.M.P.E.P.A. (International
Molded fiber Environmental Packaging Association) and the IoPP (Institute of
Packaging Professionals). He has his diploma in Architectural Technology from
Fanshawe College.

M. SALAHUDDIN KHAN has been a member of our board of directors and has
served as a design and engineering consultant since we acquired Eco-form in May,
2000. He was the Chief Designer and Packaging Engineer and a co-founder of
Eco-form. Previously, he was vice president of OEM marketing with Navigation
Technologies and vice president of R & D with Computervision Corp. Prior to
these positions, he was a design engineer for British Aerospace PLC and has many
years of experience in manufacturing operations, marketing and strategy in the
United States and England. He has a degree in aeronautics and astronautics from
the University of Southampton (Great Britain).

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<PAGE> 34

FUAD KHAN has been a member of our board of directors and our Vice
President of Operations since we acquired Eco-form in May, 2000. He was Vice
President of Operations and a co-founder of Eco-form. Previously he worked as a
principal with Delta Consulting Co. and as a vice president, corporate
development with Recognition Technologies, Inc. He has degrees in management,
economics and liberal arts from CCNY and is a member of the Institute of
Packaging Engineers.

M. JALALUDDIN KHAN has been a member of our board of directors and our Vice
President of Manufacturing Operations since we acquired Eco-form in May, 2000.
He has been actively involved with the manufacturing operations at Eco-form
since its inception. He has a Bachelors of Arts in Business Studies from Trent
Polytechnic in Nottingham, England. He is experienced in product design and the
use of the 3 D CAD/ CAM software that had been developed by Eco-form.

HEATHER KEEP has been our corporate secretary since August, 2000. She has
been the Treasurer of Castle Keep since June, 1997. Heather has had extensive
exposure to the molded fiber industry and thereby has gained the knowledge
necessary to offer her counsel on our major decisions. Since January, 1992,
Heather has been employed by Merrill Lynch where she started as a financial
advisor assistant and became a registered representative following formal
securities training.

ERIC L. CROSS has been a member of our Board of Directors since August,
2000. Since 1983, Mr. Cross has been Executive Vice President of Maxco, Inc., a
publicly owned investment company. He has been a secretary and a director of
Maxco, Inc. since 1971. Mr. Cross is also a director of VerticalVC, Inc., a
venture capital fund that has acted as one of our consultants. Mr. Cross
received a B.S. in Business Management from Andrews University and a M.B.A. from
Michigan State University.

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

Commencing with our 2001 annual meeting, our board of directors will be
divided into three classes, with the members of the respective classes serving
for staggered three-year terms. At each subsequent annual meeting of
stockholders, directors whose terms expire that year will be re-elected or
elected for full three-year terms. All executive officers are elected by, and
serve at the discretion of, the board of directors.

Howard Keep is the father of Terry Keep and the father-in-law of Heather
Keep. Terry Keep and Heather Keep are husband and wife. Salahuddin Khan and
Jalaluddin Khan are brothers and are not related to Fuad Khan. Other than those
relationships, none of our officers and directors are related.

Mr. Eric Cross was appointed to our board of directors pursuant to an
agreement we have with VerticalVC, Inc. that gives that firm the right to
designate one of our directors during the period ending June 30, 2003. See
"Management-Related Party Transactions" for more information regarding that
agreement.

BOARD COMMITTEES

In September, 2000, the Board of Directors appointed Audit and Executive
Compensation/Stock Option Committees. The Audit Committee consists of Messrs.
Eric Cross and Terrance Keep and the Executive Compensation/Stock Option
Committee consists of Messrs. Eric Cross, Fuad Khan and Terrance Keep. The Audit
Committee recommends the engagement of independent auditors to the board,
initiates and oversees investigations into matters relating to audit functions,
reviews the plans and results of audits with our independent auditors, reviews
our internal accounting controls, and approves services to be performed by our
independent auditors. The Executive Compensation/Stock Option Committee
considers and authorizes remuneration arrangements for senior management and
grants options under, and administers, our 2000 Incentive Stock Option Plan. The
entire Board of Directors operates as a nominating committee.

DIRECTOR'S COMPENSATION

We currently reimburse each director for expenses incurred in connection
with attendance at each meeting of the Board of Directors or a committee on
which he serves. In addition, non-employee directors are entitled to be paid a
fee of $1,000 for each board meeting attended. We have also adopted our 2000
Stock
30
<PAGE> 35

Option Plan that provides for the automatic annual grant to each nonemployee
director of options to purchase 5,000 shares of common stock. Those options are
for a 10 year term with an exercise price equal to the fair market value of our
common stock when the option is granted.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS

We have adopted provisions in our articles of incorporation and bylaws that
will limit the liability of our directors to the fullest extent permitted by the
Delaware General Corporation Law. Pursuant to such provisions, no director will
be liable to us or our security holders for monetary damages for breaches of
certain fiduciary duties as one of our directors. The limitation of liability
will not affect a director's liability for a breach of the director's duty of
loyalty to us or our security holders, an act or omission not in good faith or
that involves intentional misconduct or a knowing violation of the law, any
unlawful distributions, or a transaction from which the director receives an
improper personal benefit. The limitation of liability also will not affect the
availability of equitable remedies such as injunctive relief or rescission.

Our articles of incorporation will permit, and our bylaws will require, us
to indemnify officers and directors to the fullest extent permitted by law. We
have also entered into agreements to indemnify our directors and executive
officers, in addition to indemnification provided for in our bylaws. These
agreements, among other things, indemnify our directors and executive officers
for certain expenses, judgments, fines and settlement amounts incurred by them
in any action or proceeding, including any action by or in our right, arising
out of the person's services as our director or executive officer or any other
company or enterprise to which the person provides services at our request. We
believe that these provisions and agreements are necessary to attract and retain
qualified directors and executive officers.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling person based on the
foregoing provisions, we have been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy and is,
therefore, unenforceable.

EXECUTIVE COMPENSATION

During the years ended December 31, 1998 and 1999, we did not pay or accrue
any compensation to any of our executive officers. Howard Keep and Terry Keep
were employed at that time by a different company and paid by that other
company. Our other officers who were employees of Eco-form during those periods
were not paid by Eco-form.

EMPLOYMENT AGREEMENTS

In April 2000, we entered into employment agreements with four of our
executive officers and a consulting agreement with our chief designer. All five
of those persons are also members of our board of directors. The employment
contracts with Messrs. Howard Keep, Terry Keep, Fuad Khan and M. Jalaluddin Khan
terminate on April 14, 2005. Those contracts provide for each of those officers
to receive a base salary of $72,000. The contracts provided that they are
entitled to expense reimbursements and to severance payments if they are
terminated without cause. In addition, those officers are also entitled to
certain bonuses. They are all entitled to receive a bonus of $20,000 payable
upon our completion of an initial public offering if a minimum of $5,000,000 has
been raised by us. Howard Keep is entitled to receive an annual bonus of $31,500
and an additional annual bonus if $20,000 is all of our written annual
performance objectives are met. Terry Keep, Fuad Khan and M. Jalaluddin Khan
will be entitled to receive a bonus not to exceed $31,500 if all of our written
annual performance objectives are met or a bonus of $25,200 if all of those
written annual performance objectives are not met.

We have entered into a consulting agreement with M. Salahuddin Khan that
expires on April 30, 2005. Pursuant to that agreement, Mr. Khan will receive an
initial retainer fee of $15,000 that will be paid upon our receipt of at least
$25,000,000 of equity financing. He will also receive a minimum of $3,000 per
design that he performs at our request.

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<PAGE> 36

EMPLOYEE STOCK OPTION PLAN

Our board of directors adopted the Eco-form International 2000 Stock Plan
(the "2000 Plan") in September, 2000, and it was approved by our stockholders in
October, 2000. The purpose of the 2000 Plan is to provide us with the means to
retain and attract employees, directors and consultants who are essential to our
future growth and success by providing these individuals with an opportunity to
acquire shares of our common stock. Our 2000 Plan provides for the grant of
nonstatutory stock options to our employees, directors and consultants, and to
the employees, directors and consultants of our subsidiary corporations, and for
the grant of incentive stock options, within the meaning of Section 422 of the
Internal Revenue Code, to our employees and employees of our subsidiaries.

NUMBER OF SHARES OF COMMON STOCK AVAILABLE UNDER THE 2000 PLAN. A total of
1,300,000 shares of common stock have been authorized for issuance under the
2000 Plan. In addition, the following shares will again be available for grant
and issuance under the 2000 Plan:

- shares that are subject to issuance upon exercise of an option granted
under the 2000 Plan that cease to be subject to that option for any
reason other than exercise of the option;

- shares that have been issued in connection with the exercise of an option
granted under the 2000 Plan that are subsequently forfeited or
repurchased by us at the original purchase price; and

- shares that are subject to an award granted under a restricted stock
purchase agreement under the 2000 Plan that are subsequently forfeited or
repurchased by us at the original issue price.

ADMINISTRATION OF THE INCENTIVE PLAN. Our board of directors or a committee
of our board administers the 2000 Plan. In the case of options intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Internal Revenue Code, the committee must consist of two or more "outside
directors." The administrator has the power to determine the terms of the
options granted, including the exercise price, the number of shares subject to
each option, the exercisability of the options and the form of consideration
payable upon exercise.

OPTIONS. The administrator determines the exercise price of options granted
under the 2000 Plan, but with respect to nonstatutory stock options intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Internal Revenue Code and all incentive stock options, the exercise price
must at least be equal to the fair market value of our common stock on the date
of grant. The term of an incentive stock option may not exceed 10 years, except
that with respect to any participant who owns 10% of the voting power of all
classes of our outstanding capital stock, the term must not exceed five years
and the exercise price must equal at least 110% of the fair market value on the
grant date. The administrator is free to determine the term of all other
options.

No person may be granted an option to purchase more than 1,000,000 shares
in any fiscal year; provided that, in connection with his or her initial
service, an optionee may be granted options to purchase up to an additional
750,000 shares.

After termination of one of our employees, directors or consultants, he or
she may exercise his or her option for the period of time stated in his or her
option agreement. Generally, if termination is due to death or disability, the
option will remain exercisable for 12 months. In all other cases, the option
will generally terminate upon termination as an employee, director or
consultant. However, an option may never be exercised later than the expiration
of its term.

AUTOMATIC ANNUAL GRANTS TO NONEMPLOYEE DIRECTORS. The 2000 Plan provides
for the periodic automatic grant of options to our non-employee directors who do
not beneficially own 5% or more of our outstanding voting securities. Each
eligible non-employee director who does not beneficially own 5% or more of our
outstanding voting securities will automatically be granted an option to
purchase 5,000 shares of our common stock on the date the director first became
an eligible non-employee director and on each anniversary thereof if he or she
is then still an eligible non-employee director. Each annual grant will become
vested and exercisable on the first anniversary of the option grant date.

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<PAGE> 37

Each option granted under this automatic grant provision will have an
exercise price per share equal to 100% of the fair market value per share of our
common stock on the date of grant, and will have a term of 10 years, unless
terminated earlier upon the optionee's termination of service as a director. The
other terms and conditions of the options automatically granted to non-employee
directors are generally the same as those for other options granted under the
2000 Plan.

TRANSFERABILITY OF OPTIONS. The 2000 Plan generally does not allow for the
transfer of options, and only the optionee may exercise an option during his or
her lifetime. The administrator may, however, allow options to be transferable.

ADJUSTMENTS UPON MERGER OR ASSET SALE. The 2000 Plan provides that in the
event of our merger with or into another corporation or a sale of substantially
all of our assets, the successor corporation will assume or substitute each
option. If the outstanding options are not assumed or substituted, the
administrator will provide notice to each optionee that he or she has the right
to exercise the option as to all of the shares subject to the option, including
shares which would not otherwise be exercisable, for a period of 15 days from
the date of the notice. The option will then terminate upon the expiration of
this 15-day period.

AMENDMENT AND TERMINATION OF THE 2000 PLAN. The 2000 Plan will
automatically terminate in 2010, unless we terminate it sooner. In addition, our
board of directors has the authority to amend, suspend or terminate the 2000
Plan, provided that such change may not adversely affect any option previously
granted under the 2000 Plan.

FEDERAL INCOME TAX CONSEQUENCES

INCENTIVE STOCK OPTIONS. Upon the exercise of an incentive stock option,
the participant does not recognize any income. Nevertheless, the amount that the
fair market value on the exercise date exceeds the exercise price is an
adjustment that increases alternative minimum taxable income, the base upon
which alternative minimum tax is computed. If the participant has not been
employed by us within three months preceding his or her exercise of the option,
or if the shares acquired on exercise are sold at a gain within two years from
the grant date, or within one year after the participant exercises the option,
then the difference between the fair market value of the stock at the exercise
date and the exercise price will be considered ordinary income. If the shares
acquired on exercise are sold at a gain after they have been held at least one
year and more than two years has elapsed since the grant date, the gain will be
treated as a long-term capital gain. Any loss recognized upon a taxable
disposition of the shares generally would be characterized as a capital loss.

NON-QUALIFIED STOCK OPTIONS. Upon the exercise of a non-incentive stock
option, the participant recognizes taxable income in an amount equal to the
difference between the fair market value of common stock at the time of exercise
and the exercise price, times the number of option shares subject to the
exercise. Generally, we receive a corresponding tax deduction for the taxable
income recognized by the participant. Upon the subsequent sale of the shares
acquired in the exercise, the participant will recognize a short-term or
long-term capital gain or loss, depending on the length of time he or she has
held the shares.

As of the date hereof, no options have been granted pursuant to the Plan
other than options for 5,000 shares with an exercise price of $2.00 per share
granted to Mr. Eric Cross, a non-employee director. Those options are not
exercisable until October 11, 2001.

RELATED PARTY TRANSACTIONS

In April 1999, we acquired Castle Keep by issuing 10,000,000 shares of our
common stock to Howard Keep and Terry Keep, the former owners of Castle Keep, in
exchange for all of the shares of Castle Keep common stock owned by them. As a
result of that transaction, Castle Keep became our wholly-owned subsidiary and
Howard Keep and Terry Keep became our principal shareholders. Those 10,000,000
shares were issued to Howard and Terry Keep without registration under the
Securities Act of 1933. The number of shares issued to the Keeps was determined
by arms length negotiations between our prior management and the Keeps. After
our acquisition of Castle Keep, Howard Keep and Terry Keep became directors and

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<PAGE> 38

executive officers. We acquired Castle Keep in order to obtain the services and
contacts of Howard and Terry Keep. Although Castle Keep had not previously
conducted any business, it did have agreements with Emery International and
MoldMaster that the Keeps had transferred from their prior company.

In May 2000, we acquired Eco-form in a merger that was accounted for as a
purchase. In that transaction we issued a total of 3,750,000 shares of common
stock to the former shareholders of Eco-form, including the following shares
issued to persons who subsequently became our directors and/or executive
officer: M. Jalaluddin Khan -- 715,075 shares, Fuad Khan -- 1,062,376 shares and
M. Salahuddin Khan -- 1,463,177 shares. All of those shares were issued without
registration under the Securities Act of 1933. The number of shares that were
issued were determined by arm's length negotiations between us and the former
shareholders of Eco-form. Pursuant to the merger agreement, 10% of the shares
received by the former shareholders of Eco-form were deposited into an escrow
account to provide us with a source of recovery in the event they became liable
to us pursuant to certain indemnifications made to us in the merger agreement.
After that acquisition, Fuad Khan, M. Jalaluddin Khan and M. Salahuddin Khan
became directors and/or executive officers. We acquired Eco-form in order to
obtain its operating facility, design expertise and customer base.

As part of the acquisition of Eco-form, Howard Keep and Terry Keep agreed
to grant proxies on a total of 3,400,000 shares of common stock (1,700,000
shares from each of them) to Fuad Khan, M. Jalaluddin Khan and M. Salahuddin
Khan that would enable them to vote those 3,400,000 shares for a 5 year period.

In July 2000 we entered into an agreement with VerticalVC Inc.,
("VerticalVC"), whereby VerticalVC agreed to advise and consult with our
executive officers regarding strategic business issues and the development and
implementation of our business and financial plans. VerticalVC agreed that it
would not charge any fees for those services unless we request VerticalVC to
provide services in excess of those that were contemplated by the parties. In
exchange for the services that were to be provided by VerticalVC, we issued
VerticalVC a common stock purchase warrant that will enable VerticalVC to
purchase up to 2,000,000 shares of our common stock at a price of $.01 per share
during the period ended June 30, 2003. VerticalVC subsequently transferred half
of those warrants to one of its affiliates. We also agreed that, during the
period ended June 30, 2003, we will not increase the size of our board of
directors to more than 7 members without VerticalVC's consent and we will permit
VerticalVC, in its sole discretion, to designate one person for election to our
board of directors and will jointly approve with VerticalVC another person for
election to our board of directors. VerticalVC has designated Mr. Eric Cross as
its initial designee to our board.

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<PAGE> 39

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of our common stock as of August 31, 2000 by: (i) each person (or
group of affiliated persons) who is known by us to own beneficially more than 5%
of our common stock; (ii) each of our directors and executive officers and (iii)
all of our directors and executive officers as a group. Except as indicated in
the footnotes to this table, the persons named in the table, based on
information provided by them, have sole voting and sole investment power with
respect to all shares of common stock shown as beneficially owned by them,
subject to community property laws where applicable.

<TABLE>
<CAPTION>
SHARES PERCENTAGE PERCENTAGE
CURRENTLY CURRENTLY AFTER THE
NAME AND ADDRESS OWNED OWNED(1) OFFERING(1)(2)
---------------- --------- ---------- --------------
<S> <C> <C> <C>
Howard Keep(3)..................................... 5,275,000(4) 32.9% 27.7%
Terrance Keep(3)................................... 5,275,000(4)(5) 32.9 27.7
Heather Keep(3).................................... 8,500(5) 0.1 **
Salahuddin Khan(3)................................. 1,463,177(4)(6) 9.1 7.7
Fuad Khan(3)....................................... 1,062,376(4)(6) 6.6 5.6
Jalaluddin Khan(3)................................. 715,075(4)(6) 4.4 3.7
Eric L. Cross(3)................................... 0(6)(7) 0.0 0.0
All Directors and Executive Officers as a group (7
persons)......................................... 13,799,128 86.0 72.4
VerticalVC, Inc. .................................. 1,125,000(8) 6.6 5.6
4660 S. Hagadorn
East Lansing, MI 48823
George Eyde........................................ 1,125,000(8) 6.6 5.6
4660 S. Hagadorn
East Lansing, MI 48823
</TABLE>

-------------------------
** Less than 0.1% of the outstanding shares.

(1) For purposes of computing the percentage owned by any person, all shares
that could be purchased by that person upon the exercise of options or
warrants within the next sixty days are deemed to be outstanding but those
shares are not deemed to be outstanding when computing the percent ownership
of other persons.

(2) Assumes all shares offered hereunder are sold but that, except as set forth
below, no options or warrants are exercised.

(3) One of our executive officers and/or directors. The address of these persons
are c/o Eco-form International, Inc. at our principal office.

(4) As part of our acquisition of Eco-form, Howard Keep and Terry Keep each
agreed to provide proxies for 1,700,000 shares of common stock (3,400,000
shares in the aggregate), to Messrs. M. Salahuddin Khan, Fuad Khan and M.
Jalaluddin Khan for a period of 5 years. Accordingly, during that period,
the Khans will have the right to vote those 3,400,000 shares and the Keeps
will not. The numbers set forth above for the Keeps do not reflect the fact
that those proxies have been granted by them and the numbers set forth above
for the Khans do not reflect the fact that those proxies have been received
by them.

(5) Terrance Keep is the husband of Heather Keep. The shares set forth as owned
by each of them are the shares that they each own in their individual names
and does not include the shares shown as being owned by the other.

(6) As part of our agreement for the acquisition of Eco-form, the former
shareholders of Eco-form agreed to escrow 10% of the shares received by them
to provide us with a source of recovery for certain indemnifications they
gave us in the merger agreement. The numbers set forth herein do not reflect
any potential reduction in the number of shares to be owned by the former
shareholders of Eco-form in the event those indemnification provisions are
utilized.

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<PAGE> 40

(7) Does not include 125,000 shares owned by VerticalVC, Inc., a venture capital
fund of which Mr. Cross is a director, or 1,000,000 shares of common stock
that may be purchased by VerticalVC, Inc. upon the exercise of a common
stock purchase warrant. Also excludes options to purchase 5,000 shares
granted under our 2000 Stock Option Plan that are not exercisable until
October 11, 2001.

(8) Includes 1,000,000 shares that may be issued upon the exercise of common
stock purchase warrants that are exercisable for $.01 per share at any time
during the period ending June 30, 2003.

DESCRIPTION OF CAPITAL STOCK

GENERAL

We are authorized to issue 75,000,000 shares of common stock, $0.001 par
value and 10,000,000 shares of preferred stock, $.0001 par value. The rights and
preferences of the authorized preferred stock may be designated from time to
time by our Board of Directors. The following description of our capital stock
is subject to our certificate of incorporation and bylaws, which are included as
exhibits to the registration statement of which this prospectus forms a part,
and to the provisions of applicable Delaware law.

COMMON STOCK

The holders of our common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock that may be subsequently
authorized, the holders of our common stock are entitled to receive ratably such
dividends, if any, as our board of directors may declare from time to time out
of funds legally available for that purpose. See "Dividend Policy". In the event
of our liquidation, dissolution or winding up, the holders of our common stock
are entitled to share ratably in all assets remaining after payment of
liabilities, subject to the priority of preferred stock, if any, then
outstanding. The holders of our common stock have no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to our common stock.

PREFERRED STOCK

Our board of directors has the authority, without further action by the
stockholders, to issue up to 10,000,000 shares of preferred stock in one or more
series, to fix rights, preferences, privileges and restrictions of the
authorized preferred stock and to issue shares of each such series. The issuance
of preferred stock could have the effect of restricting dividends on the common
stock, diluting the voting power of the common stock, impairing the liquidation
rights of the common stock or delaying or preventing a change in control without
further action by the stockholders. At present, we have no plans to issue any
shares of preferred stock.

ANTI-TAKEOVER EFFECTS OF OUR CERTIFICATE AND BYLAWS AND DELAWARE LAW

Some provisions of Delaware law and our certificate of incorporation and
bylaws could make the following more difficult:

- acquisition of us by means of a tender offer;

- acquisition of us by means of a proxy contest or otherwise; or

- removal of our incumbent officers and directors.

These provisions, summarized below, are expected to discourage coercive
takeover practices and inadequate takeover bids. These provisions are also
designed to encourage persons seeking to acquire control of us to first
negotiate with our board of directors. We believe that the benefits of increased
protection give us the potential ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure us and outweigh the
disadvantages of discouraging those proposals because negotiation of those
proposals could result in an improvement of their terms.

36
<PAGE> 41

DELAWARE ANTI-TAKEOVER LAW. We are subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203 prohibits
a publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years following the date
the person became an interested stockholder, unless the "business combination"
or the transaction in which the person became an interested stockholder is
approved in a prescribed manner. Generally, a "business combination" includes a
merger, asset or stock sale, or other transaction resulting in a financial
benefit to the interested stockholder. Generally, an "interested stockholder" is
a person who, together with affiliates and associates, owns or within three
years prior to the determination of interested stockholder status, did own, 15%
or more of a corporation's voting stock. The existence of this provision may
have an anti-takeover effect with respect to transactions not approved in
advance by our board of directors, including discouraging attempts that might
result in a premium over the market price for the outstanding shares of our
common stock.

ELECTION AND REMOVAL OF DIRECTORS. Commencing with our annual meeting in
2001, our board of directors will be divided into three classes. The directors
in each class will serve for a three-year term, one class being elected each
year by our stockholders. This system of electing directors may discourage a
third party from making a tender offer or otherwise attempting to obtain control
of us because it generally makes it more difficult for stockholders to replace a
majority of the directors. Under the terms of our bylaws, this provision cannot
be changed without a supermajority vote of our stockholders.

STOCKHOLDER MEETINGS. Under our bylaws, only our board of directors, the
chairman or the vice chairman of our board of directors, or the chief executive
officer, may call special meetings of stockholders.

REQUIREMENTS FOR ADVANCE NOTIFICATION OF STOCKHOLDER NOMINATIONS AND
PROPOSALS. Our bylaws establish advance notice procedures with respect to
stockholder proposals and the nomination of candidates for election as
directors, other than nominations made by or at the direction of our board of
directors or a committee of our board of directors. Under the terms of our
bylaws, this provision cannot be changed without a supermajority vote of our
stockholders.

ELIMINATION OF CUMULATIVE VOTING. Our certificate of incorporation and
bylaws do not provide for cumulative voting in the election of directors.

UNDESIGNATED PREFERRED STOCK. The authorization of undesignated preferred
stock makes it possible for our board of directors to issue preferred stock with
voting or other rights or preferences that could impede the success of any
attempt to change control of us. These and other provisions may have the effect
of deferring hostile takeovers or delaying changes in control or management of
us.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is Signature Stock
Transfer, Inc., Dallas, Texas.

SHARES ELIGIBLE FOR FUTURE SALE

Once the offering made by this prospectus is complete, we will have
19,047,500 shares of common stock outstanding (assuming all 3,000,000 shares are
sold). Of these shares, approximately 4,297,500 shares (including the 3,000,000
shares sold in this offering) will be freely tradeable without restriction or
registration under the Securities Act by persons who are not our "affiliates",
as defined in the Securities Act. The remaining approximately 14,750,000 shares
of our common stock outstanding will be "restricted securities" as defined by
Rule 144.

In general, under Rule 144, a person (or a group of persons if their shares
are required to be aggregated) who for at least one year has beneficially owned
shares of our common stock that have not been registered under the Securities
Act or that were acquired from one of our "affiliates" as defined under the
Securities Act is entitled to sell shares of common stock subject to certain
limitations. The person or group may not sell within any three-month period a
number of shares that is more than the greater of (1) one percent of the

37
<PAGE> 42

number of then outstanding shares of our common stock and (2) the average weekly
reported trading volume during the four calendar weeks preceding the sale. The
sales of the person or group under Rule 144 also are subject to notice
requirements and to there being current information publicly available about us.
Also, these sales must be made in unsolicited brokers' transactions or to a
market maker.

A person, or a group of persons if their shares are required to be
aggregated, who is not our "affiliate" during the three months preceding a sale
and who had beneficially owned shares of our common stock for at least two years
is entitled to sell those shares without regard to the volume, notice,
information and manner of sale provisions of Rule 144.

We cannot predict the effect, if any, that sales of shares of our common
stock or the availability of shares of our common stock for sale will have on
the prevailing market price of our common stock. However, sales of significant
amounts of our common stock, or the perception that significant sales of our
common stock may occur, could adversely affect the prevailing market price of
our common stock. Significant sales of shares of our common stock could also
impair our ability to raise capital by issuing additional equity securities.

PLAN OF DISTRIBUTION

This is a best-efforts, minimum-maximum offering. Our executive officers
will sell the shares without the payment of any commission. We may also use
registered broker dealers to act as placement agents to assist in the sale of
the shares. No shares will be sold unless at least 1,000,000 shares are sold.
Our officers and any placement agents are not obligated to sell on our behalf
any number or dollar amount of our common stock in excess of the 1,000,000-share
minimum offering or to purchase any number or dollar amount of shares at any
time. They will use their best efforts to sell on our behalf all of the common
stock offered by this prospectus. However, we cannot guarantee how much stock in
excess of the required minimum, if any, will actually be sold in this offering.

All funds received from subscribers for our common stock will be held in
escrow by Bank, as escrow agent, pursuant to an agreement with the
escrow agent. Pending disbursement, subscription proceeds will be deposited in a
segregated account and invested in short-term United States government
securities, securities guaranteed by the United States government, certificates
of deposit or time or demand deposits in commercial banks located in the United
States.

Unless collected funds sufficient to purchase at least the minimum offering
of 1,000,000 shares are received by the escrow agent from accepted subscribers
within 120 days from the date of this prospectus, the offering will terminate
and all funds received from subscribers will be promptly returned in full by the
escrow agent directly to subscribers, without interest or deduction, as provided
in the escrow agreement. Provided that at least 1,000,000 shares of common stock
are sold within the foregoing period, we may continue to offer our common stock
for sale until 3,000,000 shares are sold or , 2001, whichever occurs
first. However, we may terminate the offering at any earlier time if we choose
to do so.

For services performed by it pursuant to the escrow agreement, we will pay
to the escrow agent fees in the amounts of $ .

We propose to offer our common stock to the public at the public offering
price set forth on cover page of this prospectus. No commissions will be paid
with respect to sales made by our executive officers but any placement agents
will receive commissions of 10% of the sales price of an shares sold by them. To
purchase common stock in this offering, a prospective investor must (1) complete
and sign a subscription agreement and any other documents that we may require
and (2) deliver such documents, together with payment in an amount equal to the
full purchase price of the shares of common stock being purchased, to the
selling selected placement agent. Checks should be made payable to "
Bank, Escrow Agent." Each subscription payment must be transmitted to the escrow
agent by 12:00 noon on the business day next following its receipt by a selected
placement agent.

We will determine, in our sole discretion, to accept or reject
subscriptions within five days following their receipt. Funds of an investor
whose subscription is rejected will be promptly returned directly to such person

38
<PAGE> 43

by the escrow agent, without interest or deduction, pursuant to the terms of the
escrow agreement. No subscription may be withdrawn, revoked or terminated by the
purchaser. We reserve the right to refuse to sell our common stock to any person
at any time.

We, and our executive officers, directors and respective affiliates have
agreed, subject to limited exceptions, not to sell, transfer or otherwise
dispose of, directly or indirectly, any shares of common stock or any securities
convertible or exchangeable for shares of common stock for a period of 120 days
after the date of this prospectus.

In connection with this offering, we will agree to sell to any placement
agent or its designee, which designee must be another selected placement agent
or a bona fide officer or partner of a selected placement agent, at a purchase
price of $0.01 each, warrants to purchase from us shares of common stock in an
amount equal to 10% of the number of shares of common stock sold by that
placement agent in this offering. These placement agent warrants are exercisable
for a period of four years, commencing one year after the date of this
prospectus, at an exercise price equal to 120% of the price per share set forth
on the cover page of this prospectus. The placement agent warrants will not be
transferable, except to officers of the placement agent. The placement agent
warrants contain provisions for adjustment of the exercise price upon the
occurrence of certain events, including stock dividends, stock splits and
recapitalizations. The holders of placement agent warrants have no voting,
dividend or other rights as stockholders with respect to shares underlying their
warrants, unless and until the placement agent warrants have been exercised.

A new registration statement or post-effective amendment to the
registration statement of which this prospectus is a part will be required to be
filed and declared effective before distribution to the public of shares of our
common stock issuable upon exercise of the placement agent warrants. We have
agreed, on one occasion when requested, to make necessary filings, at our
expense, in order to permit a public offering of the shares underlying the
placement agent warrants during the period beginning one year and ending five
years after the date of this prospectus, and to use our best efforts to cause
that registration statement or post-effective amendment to become effective and
remain effective for a period of at least one year. In addition, we have agreed
that, during the same four-year period, we will give advance notice to holders
of placement agent warrants and shares issued upon the exercise of placement
agent warrants, if any, of our intention to file a registration statement. In
any such case, the warrantholders so notified shall have the right to require us
to include any shares of common stock issued upon the exercise of their
placement agent warrants in that registration statement, at our expense, and to
maintain the effectiveness of such registration statement for a period of at
least one year.

For the period during which the placement agent warrants are exercisable,
the holders of the placement agent warrants will have the opportunity to profit
from a rise in the market price of our common stock, with a resulting dilution
in the interest of our other stockholders. In addition, the terms on which we
will be able to obtain additional capital during the exercise period may be
adversely affected in that the holders of the placement agent warrants are
likely to exercise the placement agent warrants at a time when we would, in all
likelihood, be able to obtain capital by a new offering of securities on terms
more favorable than those provided by the terms of the placement agent warrants.

Prior to this offering, there has been no active public market for our
common stock. Consequently, the initial public offering price for our shares was
arbitrarily determined by us. Among the factors considered in determining the
initial public offering price were our record of operations, our current
financial condition, our future prospects, our markets, the economic conditions
in and future prospects for the industry in which we compete, our management,
and currently prevailing general conditions in the equity securities markets,
including current market valuations of publicly traded companies considered
comparable to us. There can be no assurance, however, that the prices at which
our shares will sell in the public market after this offering will not be lower
than the price at which they are sold in this offering or that an active trading
market in our common stock will develop and continue after this offering.

Our common stock has been approved for quotation on the Nasdaq Small Cap
Market under the symbol "XXXX."

39
<PAGE> 44

We will indemnify the selected placement agents against any costs or
liabilities incurred by them by reasons of misstatements or omissions to state
material facts in connection with statements made in the registration statement
or the prospectus. The selected placement agents will, in turn agree to
indemnify us against any liabilities by reason of misstatements or omissions to
state material facts in connection with the statements made in the prospectus,
based on information relating to the selected placement agents and furnished in
writing. To the extent that this indemnification may purport to provide
exculpation from possible liabilities arising from the federal securities laws,
in the opinion of the Securities and Exchange Commission, such indemnification
is contrary to public policy and therefore unenforceable.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for us
by Berry Moorman, P.C., Detroit, Michigan.

EXPERTS

The audited financial statements of Eco-form International, Inc. as of
December 31, 1999 and for period ended from inception (February 22, 1999)
through December 31, 1999 included in this prospectus and elsewhere in this
registration statement have been audited by Moore Stephens Doeren Mayhew,
independent public accountants, as indicated in their report with respect
thereto, are included herein in reliance upon the authority of said firm as
experts in giving said report.

The audited financial statements of Eco-form, Inc. as of August 31, 1999
and 1998 and for the years ended August 31, 1999 and 1998 included in this
prospectus and elsewhere in this registration statement have been audited by
Moore Stephens Doeren Mayhew, independent public accountants, as indicated in
their report with respect thereto, are included herein in reliance upon the
authority of said firm as experts in giving said report.

40
<PAGE> 45

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission, Washington, D.C.
20549, a registration statement on Form SB-2 under the Securities Act with
respect to the common stock offered hereby. This prospectus does not contain all
of the information set forth in the registration statement and the exhibits and
schedules to the registration statement. Some items are omitted in accordance
with the rules and regulations of the SEC. For further information about us and
our common stock, reference is made to the registration statement and the
exhibits and any schedules to the registration statement. Statements contained
in this prospectus as to the contents of any contract or other document referred
to are not necessarily complete and in each instance, if the contract or
document is filed as an exhibit, reference is made to the copy of the contract
or other documents filed as an exhibit to the registration statement, each
statement being qualified in all respects by such reference. A copy of the
registration statement, including the exhibits and schedules to the registration
statement, may be read and copied at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Ste. 11400, Chicago,
Illinois 60661. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an
Internet site at http://www.sec.gov, from which interested persons can
electronically access the registration statement, including the exhibits and any
schedules to the registration statement.

As a result of this offering, we will become subject to the full
informational requirements of the Securities Exchange Act of 1934, as amended.
We will fulfill our obligations with respect to those requirements by filing
periodic reports and other information with the SEC. We intend to furnish our
stockholders with annual reports containing consolidated financial statements
certified by an independent public accounting firm. We also maintain an Internet
site at www.Eco-form.com. and one at www.itpackaging.com. Our websites and the
information contained therein or connected thereto shall not be deemed to be
incorporated into this prospectus or the registration statement of which it
forms a part.

41
<PAGE> 46

ECO-FORM INTERNATIONAL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS
Independent auditor's report................................ F-1
Consolidated balance sheets................................. F-2
Consolidated statements of operations....................... F-4
Consolidated statements of shareholders' equity (deficit)... F-5
Consolidated statements of cash flows....................... F-6
Notes to consolidated financial statements.................. F-7
ECO-FORM, INC.
Independent auditor's report................................ F-17
Balance sheets.............................................. F-18
Statements of operations.................................... F-20
Statements of shareholders' equity (deficit)................ F-21
Statements of cash flows.................................... F-22
Notes to financial statements............................... F-23
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Unaudited Pro Forma Financial Information Basis of
Presentation.............................................. F-31
Pro Forma Condensed Consolidated Balance Sheets June 30,
2000 and December 31, 1999............................. F-32
Pro Forma Condensed Consolidated Statement of Operations Six
months ended June 30, 2000............................. F-33
Pro Forma Condensed Consolidated Statement of Operations For
the period and year ended December 31, 1999............ F-34
Pro Forma Condensed Consolidated Statement of Operations Six
months ended June 30, 1999............................. F-35
</TABLE>

42
<PAGE> 47

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders
of Eco-Form International, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheet of Eco-Form
International, Inc. and Subsidiary (the "Company") (a development stage
enterprise) as of December 31, 1999, and the related consolidated statements of
operations, shareholders' equity (deficit) and cash flows for the period from
February 22, 1999 (date of inception) to December 31, 1999. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Eco-Form
International, Inc. and Subsidiary as of December 31, 1999, and the results of
their operations and their cash flows for the period from February 22, 1999
(date of inception) to December 31, 1999 in conformity with generally accepted
accounting principles.

The Company is in the development stage as of December 31, 1999. Recovery
of the Company's assets is dependent upon future events, the outcome of which is
indeterminable. In addition, successful completion of the Company's development
program and its transition, ultimately, to attaining profitable operations is
dependent upon obtaining adequate financing to fulfill its development
activities and achieving a level of sales adequate to support the Company's cost
structure.

The accompanying consolidated financial statements have been prepared
assuming that Eco-Form International, Inc. will continue as a going concern. As
discussed in notes 1 and 2 to the consolidated financial statements, Eco-Form
International, Inc. acquired Eco-Form, Inc. which has sustained losses and
negative cash flows from operations since its inception on September 14, 1995.
These matters raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
note 1. The accompanying consolidated financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result from
the outcome of this uncertainty.

/s/ MOORE STEPHENS DOEREN MAYHEW

Troy, Michigan
September 22, 2000

F-1
<PAGE> 48

ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash...................................................... $ 8,268 $13,575
Accounts receivable....................................... 29,849 --
Inventories
Raw materials.......................................... 5,400 --
Finished goods......................................... 3,740 --
Prepaid expenses.......................................... 5,399 --
---------- -------
Total current assets................................. 52,656 13,575
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
At cost, less accumulated depreciation of $4,586 at June
30, 2000 (notes 3 and 4)............................... 419,684 --
OTHER ASSETS
Goodwill, less accumulated amortization of $-0- at June
30, 2000 (note 1)...................................... 730,924 --
Loan origination costs, less accumulated amortization of
$6,469 at June 30, 2000 (note 1)....................... 9,452 --
Deposits and other assets................................. 7,003 --
---------- -------
Total other assets................................... 747,379 --
---------- -------
Total assets (note 4)................................ $1,219,719 $13,575
========== =======
</TABLE>

See accompanying notes to consolidated financial statements

F-2
<PAGE> 49

ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable.......................................... $ 463,434 $ --
Current portion of long-term debt (note 4)................ 451,846 --
Other accrued expenses (note 5)........................... 358,549 18,395
---------- --------
Total current liabilities.............................. 1,273,829 18,395
LONG-TERM DEBT (note 4)..................................... 50,434 45,000
CONTINGENCIES (notes 1, 4, 6, 8 and 10)..................... -- --
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock -- $.001 par value; 75,000,000 authorized
shares; issued and outstanding 15,669,500 shares at
June 30, 2000 and 11,897,500 shares at December 31,
1999................................................... 15,670 11,898
Additional paid-in capital................................ 70,540 1,677
Deficit accumulated during the development stage.......... (190,754) (63,395)
---------- --------
Total shareholders' equity (deficit)................... (104,544) (49,820)
---------- --------
Total liabilities and shareholders' equity (deficit)... $1,219,719 $ 13,575
========== ========
</TABLE>

See accompanying notes to consolidated financial statements

F-3
<PAGE> 50

ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 22, 1999
THROUGH
JUNE 30, DECEMBER 31,
2000 1999
-------- -----------------
(UNAUDITED)
<S> <C> <C>
REVENUES
Product................................................... $ 70,367 $ --
Tooling................................................... -- --
---------- --------------
Total revenues....................................... 70,367 --
COST OF SALES
Product..................................................... 23,932 --
Tooling..................................................... -- --
---------- --------------
Total cost of sales.................................. 23,932 --
---------- --------------
GROSS INCOME................................................ 46,435 --
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................ 171,082 60,969
---------- --------------
LOSS FROM OPERATIONS........................................ (124,647) (60,969)
INTEREST EXPENSE............................................ (2,712) (1,456)
---------- --------------
LOSS BEFORE INCOME TAXES.................................... (127,359) (62,425)
INCOME TAXES (note 7)....................................... -- --
---------- --------------
NET LOSS.................................................... $ (127,359) $ (62,425)
========== ==============
NET LOSS PER COMMON SHARE................................... $ (0.01) $ (0.01)
========== ==============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING........ 13,157,833 10,767,750
========== ==============
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 51

ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
PERIOD ENDED DECEMBER 31, 1999 AND SIX MONTHS ENDED JUNE 30, 2000

<TABLE>
<CAPTION>
DEFICIT
DEVELOPMENT
COMMON ADDITIONAL DURING THE
STOCK COMMON PAID-IN ACCUMULATED
SHARES STOCK CAPITAL STAGE TOTAL
------ ------ ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Balance -- February 22, 1999 (Date of
Inception)............................ -- $ -- $ -- $ -- $ --
Common Shares Issued in Exchange for all
Castle Keep Holding (USA), Inc. Shares
on April 1, 1999...................... 10,000,000 10,000 -- (970) 9,030
Issuance of Common Shares -- February
22, 1999.............................. 600,000 600 -- -- 600
Issuance of Common Shares -- April 1,
1999.................................. 1,212,500 1,213 912 -- 2,125
Issuance of Common Shares -- April 2,
1999.................................. 85,000 85 765 -- 850
Net Loss................................ -- -- -- (62,425) (62,425)
---------- ------- ------- --------- ---------
Balance -- December 31, 1999............ 11,897,500 11,898 1,677 (63,395) (49,820)
Issuance of Common Shares -- April 4,
2000.................................. 5,000 5 13,466 -- 13,471
Issuance of Common Shares -- April 10,
2000.................................. 15,000 15 49,841 -- 49,856
Common Shares Issued in Exchange for all
Eco-Form, Inc. Shares on May 11, 2000
Acquisition Date...................... 3,750,000 3,750 -- -- 3,750
Issuance of Common Shares -- June 6,
2000.................................. 1,000 1 2,796 -- 2,797
Issuance of Common Shares -- June 21,
2000.................................. 1,000 1 2,760 -- 2,761
Net Loss................................ -- -- -- (127,359) (127,359)
---------- ------- ------- --------- ---------
Balance -- June 30, 2000................ 15,669,500 $15,670 $70,540 $(190,754) $(104,544)
========== ======= ======= ========= =========
</TABLE>

See accompanying notes to consolidated financial statements

F-5
<PAGE> 52

ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 22,
1999 THROUGH
JUNE 30, DECEMBER 31,
2000 1999
-------- --------------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(127,359) $(62,425)
Adjustments (net of merger with Eco-Form, Inc.):
Depreciation......................................... 4,586 --
Amortization......................................... 2,215 --
Changes in assets and liabilities:
Increase in accounts receivable................... (22,244) --
Increase in inventories........................... (4,048) --
Decrease in prepaid expenses...................... 677 --
Increase in accounts payable...................... 5,001 --
Increase in other accrued expenses................ 67,347 17,425
--------- --------
Total adjustments............................ 53,534 17,425
--------- --------
Net cash used in operating activities....................... (73,825) (45,000)
CASH FLOWS FROM INVESTING ACTIVITIES........................ -- --
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt......................................... (367) --
Proceeds from additional debt............................. -- 45,000
Common stock issued....................................... 68,885 13,575
--------- --------
Net cash provided from financing
activities................................ 68,518 58,575
--------- --------
NET INCREASE (DECREASE) IN CASH............................. (5,307) 13,575
CASH -- BEGINNING........................................... 13,575 --
--------- --------
CASH -- ENDING.............................................. $ 8,268 $ 13,575
========= ========
</TABLE>

See accompanying notes to consolidated financial statements

F-6
<PAGE> 53

ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)

NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS/BUSINESS COMBINATION

Eco-Form International, Inc. (the "Company"), a Delaware corporation, was
incorporated on February 22, 1999. On May 11, 2000, the Company completed its
acquisition of Eco-Form, Inc. through the exchange of 3,750,000 shares of
newly-issued Eco-Form International, Inc. restricted 144 common stock in
exchange for all the outstanding shares of Eco-Form, Inc.'s common stock. The
business combination was accounted for as a purchase and structured as a
tax-free reorganization, where subsequent to the acquisition, Eco-Form
International, Inc. became the surviving corporation and all outstanding common
shares of Eco-Form, Inc. were cancelled. Eco-Form, Inc. operates a molded paper
pulp plant near Boston, Massachusetts, which produces environmentally friendly
biodegradable packaging for the electronics, computer and consumer goods
industries. Eco-Form, Inc. had operated as a development stage enterprise since
its inception on September 14, 1995 devoting substantially all its efforts to
research and development, developing markets for its products and raising
capital to support these efforts.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include Eco-Form International, Inc.
and its inactive, wholly-owned subsidiary Castle Keep Holding (USA), Inc. All
material intercompany transactions have been eliminated.

INTERIM FINANCIAL STATEMENTS (UNAUDITED)

The interim consolidated financial statements included herein for Eco-Form,
International, Inc. and Subsidiary have been prepared by management, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. In management's opinion, the interim financial date presented herein
include all adjustments (which include only normal recurring adjustments)
necessary for fair presentation. Certain information and footnote disclosure
normally included in the financial statements prepared in accordance with
generally accepted accounting principals have been condensed or omitted pursuant
to such rules and regulations. Results for interim periods are not necessarily
indicative of results to be expected for the full year.

GOING CONCERN

Eco-Form, Inc. has been in the development stage since its date of
incorporation on September 14, 1995, and has experienced aggregate net losses
through May 2000 of approximately $1,400,000. To date, no profits have been
realized and development activities are still ongoing. Eco-Form International,
Inc. expects to continue to incur operating losses until its products are
commercially produced through the addition of more equipment and operation of a
second plant with funds raised in a planned equity offering. Successful future
operations and recovery of the Company's investment in its equipment and
leasehold improvements depends upon the Company commercializing its products
using its initial manufacturing facility and ultimately, commercializing
multiple products and achieving broader market acceptance and penetration.

The Company has sustained losses and negative cash flows from operations
since its inception. The Company's ability to meet its obligations in the
ordinary course of business is dependent upon its ability to raise additional
financing through public or private equity financing, enter into collaborative
or other arrangements with corporate sources, secure other sources of financing
to fund operations and to establish profitable operations. However, there can be
no assurance that such financing can be successfully completed on terms
acceptable to the Company.

F-7
<PAGE> 54
ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)

NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The matters discussed above raise substantial doubt about the Company's
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments that might result from the outcome of this
uncertainty. The Company has a limited operating history and its prospects are
subject to the risks, expenses and uncertainties frequently encountered by
companies in new and evolving markets.

These risks include the failure to develop and extend the Company's
packaging operations, meet its working capital requirements or procure the
necessary sales to generate liquidity and to pay its current operations.

In the event that the Company does not successfully implement its business
plan, certain assets may not be recoverable.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first out) or market
value.

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Depreciation and amortization is provided using accelerated methods for
financial and tax reporting purposes based upon the estimated useful lives of
the assets, which range from 5 to 7 years.

OTHER ASSETS

Loan origination costs are being amortized using the straight-line method
over the five year loan term. Goodwill is the excess of the purchase price over
the fair value of net assets acquired, related to the Eco-Form, Inc.
acquisition, accounted for as a purchase. Goodwill is amortized on a
straight-line basis over 5 years.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically reviews the carrying amounts of long-lived assets
to determine whether current events or circumstances warrant adjustments to such
carrying amounts. An impairment adjustment is necessary in the event the net
book value of such long-lived assets exceeds the future undiscounted cash flows
attributable to such assets. In such an event, the loss is measured by the
amount that the carrying value of such assets exceeds their fair value.
Considerable management judgment is necessary to estimate the fair value of
assets; accordingly, actual results could vary significantly from such
estimates.

REVENUE RECOGNITION

Product revenues are recognized when shipped to customers. Tooling revenues
are recognized when the tool produces the required product and it is accepted by
the customer.

COMPREHENSIVE INCOME (LOSS)

SFAS No. 130, Reporting Comprehensive Income, requires disclosure of all
components of comprehensive income on an annual and interim basis. Comprehensive
income is defined as the change in equity of a business enterprise during a
period from transactions and other events and circumstances involving nonowner
sources. The Company does not have any items of comprehensive income (loss)
other than its reported net loss.

F-8
<PAGE> 55
ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)

NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE

SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, establishes standards for reporting information regarding operating
segments and establishes standards for related disclosures about products and
services and geographic areas. Operating segments are identified as components
of an enterprise about which separate discrete financial information is
available for evaluation by the chief operating decision maker, or decision
making group, in making decisions regarding resource allocation and assessing
performance. To date, the Company has viewed its operations and manages its
business as principally one operating segment, the design and manufacture of
recycled molded fiber packaging products.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial statements consist mainly of cash, accounts
receivable, accounts payable and term loans. The carrying amounts of these
instruments approximate their fair value.

CONCENTRATION OF CREDIT RISK

SFAS No. 115, Disclosure of Information about Financial Instruments with
Off-Balance Sheet Risk and Financial Instruments with Concentration of Credit
Risk, requires disclosure of any significant off-balance sheet and credit risk
concentrations. The Company has no significant off-balance sheet concentrations
such as foreign exchange contracts, option contracts, or other foreign hedging
arrangements.

RESEARCH AND DEVELOPMENT

Research and development costs are charged to operations when incurred and
are included in operating expenses.

INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes.
Deferred income tax assets and liabilities are computed annually for differences
between the financial statement and income tax bases of assets and liabilities.
Such deferred income tax asset and liability computations are based on enacted
tax laws and rates applicable to periods in which the differences are expected
to reverse. Valuation allowances are established, when necessary, to reduce
deferred income tax assets to the amounts expected to be realized. Income tax
expense is the tax payable or refundable for the period plus or minus the change
during the period in deferred income tax assets and liabilities. Deferred income
taxes result from temporary differences in the recognition of revenues and
expenses for financial and tax reporting purposes.

NEW ACCOUNTING PRONOUNCEMENTS

In December 1999, the SEC issued Staff Accounting Bulletin No. 101,
"Revenue Recognition." This bulletin summarizes certain views of the Staff on
applying generally accepted accounting principles to revenue recognition in
financial statements. The Company believes that the current revenue recognition
policy complies with the guidelines in the bulletin.

In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities" -- an amendment of
certain paragraphs FASB No. 133. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including derivative instruments

F-9
<PAGE> 56
ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)

NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
embedded in other contracts, and for hedging activities. The Company currently
does not engage in transactions covered by this pronouncement.

LOSS PER COMMON SHARE

Diluted earnings per share is similar to basic earnings per share but
presents the dilutive effect on a per share basis of potential common shares
(e.g. convertible securities, options, etc.) as if they had been converted at
the beginning of the periods presented. Potential common shares that have an
anti-dilutive effect (i.e., those that increase earnings per share or decrease
loss per share) are excluded from diluted earnings per share.

<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS FEBRUARY 22, 1999
ENDED (INCEPTION) TO
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
<S> <C> <C>
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS................ $ (127,359) $ (62,425)
========== ==========
BASIC AND DILUTED:
Weighted-average shares of common stock outstanding....... 13,157,833 10,767,750
========== ==========
Weighted-average shares used in computing basic and
diluted net loss per common share...................... 13,157,833 10,767,750
========== ==========
Basic and diluted net loss per common share............... $ (0.01) $ (0.01)
========== ==========
PRO FORMA UNAUDITED:
Shares used above......................................... 13,157,833
Pro forma adjustment to reflect conversion of warrants
issued on July 5, 2000................................. 2,000,000
Pro forma adjustment to reflect private placement of
common shares on July 8, 2000.......................... 300,000
Pro forma adjustment to reflect debt to equity conversion
on August 1, 2000...................................... 78,000
----------
Weighted-average shares used in computing pro forma basic
and diluted net loss per common share..................... 15,535,833
==========
Pro forma basic and diluted net loss per common share....... $ (0.01)
==========
Potentially dilutive securities excluded from computations
because they are anti-dilutive............................ $ --
==========
</TABLE>

F-10
<PAGE> 57
ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)

NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
ESTIMATES

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

NOTE 2 -- MERGERS AND ACQUISITIONS

On April 1, 1999, Eco-Form International, Inc. acquired Castle Keep Holding
(USA), Inc. in a merger accounted for as a pooling of interests. Castle Keep
Holding (USA), Inc. is an inactive shell company with no prior operations,
except for immaterial professional fees and state filing costs. Castle Keep
Holding (USA), Inc. became a wholly-owned subsidiary of Eco-Form International,
Inc. through the exchange of 10,000,000 shares of Eco-Form International, Inc.
common stock for all the assets and outstanding common stock of Castle Keep
Holding (USA), Inc.

Net sales and net loss of the Company and Castle Keep Holding (USA), Inc.
prior to the combination are as follows:

<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 22, 1999
(INCEPTION) TO
DECEMBER 31, 1999
-----------------
<S> <C>
Net sales
Eco-Form International, Inc. ............................. $ --
Castle Keep Holding (USA), Inc. .......................... --
Net loss
Eco-Form International, Inc. ............................. $62,210
Castle Keep Holding (USA), Inc. .......................... 215
</TABLE>

In May 2000, the Company acquired Eco-Form, Inc. for approximately
$1,600,000. The purchase was funded with the issuance of 3,750,000 of the
Company's common shares as valued based on the net assets acquired and
liabilities assumed and pending a third party valuation of the fair value of
shares given up. The acquisition has been accounted for as a purchase and,
accordingly, the operating results of Eco-Form, Inc. have been included in the
Company's consolidated financial statements since the date of acquisition. The
excess of the aggregate purchase price over the fair value of net assets
acquired of approximately $731,000 will be amortized over five years.

F-11
<PAGE> 58
ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)

NOTE 2 -- MERGERS AND ACQUISITIONS -- (CONTINUED)
The following unaudited pro forma consolidated results of operations for
the six months ended June 30, 2000 and for period ended December 31, 1999 assume
the Eco-Form, Inc. acquisition had occurred as of January 1, 1999:

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
(UNAUDITED)
<S> <C> <C>
Net sales.............................................. $ 234,403 $ 726,612
========= =========
Net loss............................................... $(339,993) $(624,264)
========= =========
Basic and diluted earnings per share................... $ (.03) $ (.06)
========= =========
</TABLE>

NOTE 3 -- EQUIPMENT AND LEASEHOLD IMPROVEMENTS

The principal categories of equipment and leasehold improvements may be
summarized as follows:

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
(UNAUDITED)
<S> <C> <C>
Equipment............................................. $400,059 $--
Furniture and fixtures................................ 7,469 --
Leasehold improvements................................ 16,742 --
-------- ---
Total cost....................................... 424,270 --
Less accumulated depreciation......................... 4,586 --
-------- ---
Undepreciated cost............................... $419,684 $--
======== ===
</TABLE>

F-12
<PAGE> 59
ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)

NOTE 4 -- NOTES PAYABLE AND LONG-TERM DEBT

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
(UNAUDITED)
<S> <C> <C>
Note payable to Massachusetts Business Development
Corporation, $5,834 monthly plus interest at 2.25% over
prime (9.50% at June 30, 2000), due November 2000, secured
by all Company assets and guaranteed by certain
shareholders.............................................. $259,375 $ --
Note payable to Massachusetts Business Development
Corporation, $1,786 monthly plus interest at prime (9.50%
at June 30, 1999), due November 2000, secured by second
lien and all Company assets............................... 119,569 --
Note payable to bank, monthly interest only payment at
10.75%, due November 2000, guaranteed by certain
shareholders.............................................. 49,909 --
Unsecured note payable to related party, non-interest
bearing through April 2001, interest accruing monthly at
7% commencing May 2001, due April 2006.................... 25,000 25,000
Unsecured note payable to related party, non-interest
bearing through December 2001, interest accruing monthly
at 7% commencing January 2002, due December 2006.......... 20,000 20,000
Unsecured shareholder notes payable, principal and interest
at 7% monthly, due February 2001.......................... 19,393 --
Note payable to finance company, $368 monthly, plus interest
at 10.49%, due December 2002, secured by related
equipment................................................. 9,034 --
-------- -------
Total.................................................. 502,280 45,000
Less current portion of long-term debt...................... 451,846 --
-------- -------
Total debt reflected as long-term...................... $ 50,434 $45,000
======== =======
</TABLE>

The amounts of long-term debt coming due during the next five years ending
December 31, 2004 and thereafter are as follows:

<TABLE>
<S> <C>
2000........................................................ $451,846
2001........................................................ 4,025
2002........................................................ 1,409
2003........................................................ --
2004........................................................ --
Thereafter.................................................. 45,000
--------
$502,280
========
</TABLE>

Interest expense included in the determination of net loss for the six
months ended June 30, 2000 and the period ended December 31, 1999 was
approximately $2,700 and $1,500, respectively.

F-13
<PAGE> 60
ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)

NOTE 4 -- NOTES PAYABLE AND LONG-TERM DEBT -- (CONTINUED)
the note agreements for 150 days subsequent to the exchange of common stock (See
note 10), unless during that time period MBDC deems its self insecure or another
source of financing is secured at which point the notes payable are due and
payable in full. The waiver maturity date was October 5, 2000, at which time the
notes payable were to be due on demand at the discretion of the MBDC. On August
15, 2000, the Company and the MBDC executed another waiver period extension
agreement through November 30, 2000. This agreement requires an up-front payment
of $30,000 with monthly payments of $15,000 through October 2000 with all
principal and unpaid interest due November 30, 2000.

It is the Company's intention to repay the note balances through an equity
injection or through refinancing with another lending source prior to the
expiration of the waiver period.

NOTE 5 -- OTHER ACCRUED EXPENSES

The principal components of other accrued expenses may be summarized as
follows:

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
(UNAUDITED)
<S> <C> <C>
Payroll taxes......................................... $ 96,970 $ --
Professional fees..................................... 173,450 15,939
Rent.................................................. 46,884 --
Interest.............................................. 23,046 1,691
Other................................................. 18,199 765
-------- -------
$358,549 $18,395
======== =======
</TABLE>

NOTE 6 -- OPERATING LEASES

The Company assumed Eco-Form, Inc.'s five year lease for its operating
facility which is located in South Walpole, Massachusetts. The operating lease
agreement expires in March 2001, with an option to renew for an additional five
years. The lease requires monthly rental payments of $6,503 plus a proportionate
share of the complex operating expenses such as property taxes and maintenance.

The following is a schedule by years of future minimum rental payments
required under the operating lease that has a remaining noncancelable lease term
in excess of one year as of December 31, 1999:

Total rental expense from this lease included in the determination of net
loss for the six months ended June 30, 2000 was approximately $11,920 and $-0-
the year ended December 31, 1999, respectively.

Eco-Form, Inc. received formal notice of default dated November 16, 1999
for failure to follow the lease agreement for timely payment of monthly rents
for September, October and November of 1999. There are no remedies available
under the terms of the operating lease to correct the default.

F-14
<PAGE> 61
ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)

NOTE 7 -- INCOME TAXES

The provision for income taxes (credit) is as follows:

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
(UNAUDITED)
<S> <C> <C>
Current............................................... $-- $--
Deferred.............................................. -- --
--- ---
Total income taxes (credit)...................... $-- $--
=== ===
</TABLE>

The deferred tax asset for Eco-Form International, Inc. is comprised of the
following at December 31, 1999:

<TABLE>
<S> <C>
Deferred tax asset:
Net operating loss carryforwards............................ $ 10,000
Valuation allowance......................................... (10,000)
--------
Net deferred tax asset................................. $ --
========
</TABLE>

The Company, with its acquisition of Eco-Form, Inc., received certain
potential tax benefits of Eco-Form, Inc.'s net operating loss carryovers (See
note 2). Due to the uncertainty of utilization of the future tax benefits of the
net operating loss carryovers, a valuation allowance has been recorded to reduce
the deferred tax asset to zero. The effect of the Company's acquisition will
limit the future benefit of the net operating loss carryovers due to the greater
than 50% change in ownership under Section 382 of the Internal Revenue Code.

NOTE 8 -- INDUSTRY INFORMATION

The Company's products are manufactured at one plant and are fabricated
from uncirculated newspaper print which is readily available from numerous
sources. In addition, tooling costs are also charged to customers for product
development to meet customer specifications. The majority of these sales are to
wholesalers who deliver the product to final customers.

Customers comprising 10% or greater of the Company's net sales, on a
pro-forma basis, are summarized as follows:

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
(UNAUDITED)
<S> <C> <C>
Stephen Gould Corporation............................. 30.0% 0%
Hisco, Inc............................................ 43.8 0
Orcon Industrial Corporation.......................... 17.0 0
Wyeth Ayerst.......................................... 9.2 0
West Coast Paper...................................... 0 0
All other............................................. 0 0
---- --
100% 0%
==== ==
</TABLE>

The Company uses Emery International Developments, Ltd. (Emery) as the sole
supplier for its tooling. If this supplier was unable to provide tooling to the
Company, this could adversely effect the Company's operations. The Company feels
that other tooling sources are available to meet its needs. Included in accounts
payable is $304,836 due to Emery at June 30, 2000 (See Note 10 -- Subsequent
Events).

F-15
<PAGE> 62
ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000 IS UNAUDITED)

NOTE 9 -- SUPPLEMENTAL CASH FLOW INFORMATION

The supplemental cash flow information and noncash investing and financing
activities are as follows:

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
Cash paid for interest................................ $1,064 $--
====== ==
</TABLE>

SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

<TABLE>
<S> <C> <C>
Acquisition of Eco-Form International, Inc. with
3,750,000 common shares............................. $3,750 $--
====== ==
</TABLE>

NOTE 10 -- SUBSEQUENT EVENTS

Initial Public Offering -- Subsequent to year-end, the Company initiated
proceedings directed at the completion of the initial public offering of its
common stock ("IPO"). In August 2000, the Board of Directors authorized
management of the Company to file a Registration Statement with the Securities
and Exchange Commission to sell shares of its common stock to the public. The
anticipated proceeds will be used to retire the Massachusetts Business
Development Corporation notes and provide working capital for expansion of
operations. There is no guarantee the proposed IPO will be consummated or that
the IPO, if consummated, will provide sufficient funds to fund the transactions
described above.

Common stock warrant issuance -- The Company on July 5, 2000 issued a
warrant to a venture capital group to purchase 2,000,000 shares of the Company's
common stock in consideration of various future consulting services rendered and
to be rendered. This warrant is exercisable at $.01 per share during the period
ending June 30, 2003.

Common stock issuance -- The Company on July 8, 2000 completed a private
placement of 300,000 restricted 144 common shares of Eco-Form, International,
Inc.'s common stock to an existing shareholder for $500,000.

Amendment and restatement of the Articles of Incorporation -- The Board of
Directors has unanimously recommended that the shareholders approve a proposal
to amend and restate the certificate of incorporation to authorize the issuance
of 10,000,000 shares of preferred stock with a par value of $.001 per share.

Vendor payable conversion to common stock and note payable -- On August 1,
2000, the Company reached agreement with Emery to convert $312,000 of trade
accounts payable, acquired as part of the merger with Eco-Form, Inc., into
equity through the issuance of 78,000 restricted 144 common shares at $2 per
share and a long-term note payable for $156,000 with monthly payments of
interest and principal of $3,082 at 7% interest due October 1, 2005.

New stock option plan -- In September 2000, the Board of Directors adopted
the Eco-Form International, Inc. 2000 stock option plan and the Board is
submitting this plan to the shareholders for their approval at the annual
meeting. A total of 1,300,000 shares of common stock have been authorized under
the 2000 stock option plan. The plan provides for the grant of nonstatutory
stock options to the Companies employees, directors and consultants within the
meaning of Section 422 of the Internal Revenue Code.

F-16
<PAGE> 63

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders
of Eco-Form, Inc.

We have audited the accompanying balance sheets of Eco-Form, Inc. (a
development stage enterprise) as of August 31, 1999 and 1998, and the related
statements of operations, shareholders' equity (deficit) and cash flows for the
years then ended and for the period from September 14, 1995 (date of inception)
to August 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Eco-Form, Inc. as of August
31, 1999 and 1998, and the results of its operations, its shareholders' equity
(deficit) and its cash flows for the years then ended and for the period from
September 14, 1995 (date of inception) to August 31, 1999 in conformity with
generally accepted accounting principles.

The Company is in the development stage as of August 31, 1999. Recovery of
the Company's assets is dependent upon future events, the outcome of which is
indeterminable. In addition, successful completion of the Company's development
program and its transition, ultimately, to attaining profitable operations is
dependent upon obtaining adequate financing to fulfill its development
activities and achieving a level of sales adequate to support the Company's cost
structure.

The accompanying financial statements have been prepared assuming that
Eco-Form, Inc. will continue as a going concern. As discussed in note 1 to the
financial statements, the Company has sustained losses and negative cash flows
from operations since its inception. These matters raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in note 1. The accompanying financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result from the outcome of this uncertainty.

/s/MOORE STEPHENS DOEREN MAYHEW

Troy, Michigan
April 22, 2000

F-17
<PAGE> 64

ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

BALANCE SHEETS

<TABLE>
<CAPTION>
AUGUST 31,
--------------------
1999 1998
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash...................................................... $ 39,605 $ 21,589
Accounts receivable....................................... 7,605 17,555
Inventories
Raw materials.......................................... 2,600 2,600
Finished goods......................................... 2,492 --
Prepaid expenses.......................................... 6,076 --
-------- --------
Total current assets................................. 58,378 41,744
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
At cost, less accumulated depreciation of $212,156 in 1999
and $104,119 in 1998 (notes 2 and 3)................... 521,487 219,033
OTHER ASSETS
Loan origination costs, less accumulated amortization of
$4,253 in 1999 and $1,160 in 1998 (note 1)............. 11,355 14,383
Deposits and other assets................................. 7,315 257,377
-------- --------
Total other assets................................... 18,670 271,760
-------- --------
Total assets (note 3)................................ $598,535 $532,537
======== ========
</TABLE>

See accompanying notes to financial statements

F-18
<PAGE> 65

ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS

<TABLE>
<CAPTION>
AUGUST 31,
------------------------
1999 1998
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable.......................................... $ 441,185 $ 80,955
Current portion of long-term debt (note 3)................ 98,314 91,429
Other accrued expenses (note 4)........................... 97,664 15,458
----------- ---------
Total current liabilities.............................. 637,163 187,842
LONG-TERM DEBT (note 3)..................................... 492,395 360,729
CONTINGENCIES (notes 1, 5, 7 and 9)......................... -- --
SHAREHOLDERS' EQUITY (DEFICIT) Common stock -- no par
value; authorized 500,000 shares; issued and
outstanding 500,000 shares in 1999 and 470,250 shares
in 1998................................................ 648,316 548,316
Stock subscription receivable............................. (22,000) --
Deficit accumulated during the development stage.......... (1,157,339) (564,350)
----------- ---------
Total shareholders' equity (deficit)................... (531,023) (16,034)
----------- ---------
Total liabilities and shareholders' equity (deficit)... $ 598,535 $ 532,537
=========== =========
</TABLE>

See accompanying notes to financial statements

F-19
<PAGE> 66

ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
INCEPTION YEAR ENDED
SEPTEMBER 14, 1995 AUGUST 31,
TO ----------------------
AUGUST 31, 1999 1999 1998
------------------ ---- ----
<S> <C> <C> <C>
REVENUES
Product............................................. $ 565,834 $ 440,733 $ 111,864
Tooling............................................. 223,762 115,817 107,945
----------- --------- ---------
Total revenues................................. 789,596 556,550 219,809

COST OF SALES
Product............................................. 933,268 519,235 224,291
Tooling............................................. 458,952 364,548 94,404
----------- --------- ---------
Total cost of sales............................ 1,392,220 883,783 318,695
----------- --------- ---------
GROSS LOSS............................................ (602,624) (327,233) (98,886)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.......... 498,783 242,195 107,204
----------- --------- ---------
LOSS FROM OPERATIONS.................................. (1,101,407) (569,428) (206,090)
OTHER INCOME (EXPENSE) -- (NET)....................... (55,932) (23,561) (21,164)
----------- --------- ---------
LOSS BEFORE INCOME TAXES.............................. (1,157,339) (592,989) (227,254)
INCOME TAXES (note 6)................................. -- -- --
----------- --------- ---------
NET LOSS.............................................. $(1,157,339) $(592,989) $(227,254)
=========== ========= =========
NET LOSS PER COMMON SHARE............................. $ (1.22) $ (0.53)
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING......................................... 487,604 430,521
========= =========
</TABLE>

See accompanying notes to financial statements

F-20
<PAGE> 67

ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM SEPTEMBER 14, 1995 (DATE OF INCEPTION)
THROUGH AUGUST 31, 1999

<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK DURING THE
STOCK COMMON SUBSCRIPTION DEVELOPMENT
SHARES STOCK RECEIVABLE STAGE TOTAL
------ ------ ------------ ----------- -----
<S> <C> <C> <C> <C> <C>
Balance -- September 14, 1995.......... -- $ -- $ -- $ -- $ --
Issuance of Shares -- September 20,
1995................................. 344,900 518,330 (113,383) -- 404,947
Net Loss............................... -- -- -- (150,768) (150,768)
------- -------- --------- ----------- ---------
Balance -- August 31, 1996............. 344,900 518,330 (113,383) (150,768) 254,179
Issuance of Shares -- February 15,
1997................................. 30,000 60,000 (26,279) -- 33,721
Stock Subscription Paid................ -- -- 10,189 -- 10,189
Net Loss............................... -- -- -- (186,328) (186,328)
------- -------- --------- ----------- ---------
Balance -- August 31, 1997............. 374,900 578,330 (129,473) (337,096) 111,761
Issuance of Shares -- February 15,
1998................................. 95,350 60,000 -- -- 60,000
Stock Subscription Paid................ -- -- 39,459 -- 39,459
Stock Subscription Cancelled........... -- (90,014) 90,014 -- --
Net Loss............................... -- -- -- (227,254) (227,254)
------- -------- --------- ----------- ---------
Balance -- August 31, 1998............. 470,250 548,316 -- (564,350) (16,034)
Issuance of Shares -- February 15,
1999................................. 29,750 100,000 (22,000) -- 78,000
Net Loss............................... -- -- -- (592,989) (592,989)
------- -------- --------- ----------- ---------
Balance -- August 31, 1999............. 500,000 $648,316 $ (22,000) $(1,157,339) $(531,023)
======= ======== ========= =========== =========
</TABLE>

See accompanying notes to financial statements

F-21
<PAGE> 68

ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
INCEPTION
SEPTEMBER 14, YEAR ENDED
1995 TO AUGUST 31,
AUGUST 31, ----------------------
1999 1999 1998
------------- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................... $(1,157,339) $(592,989) $(227,254)
Adjustments:
Depreciation...................................... 212,156 108,037 56,362
Amortization...................................... 4,253 3,093 848
Bad debt expense.................................. 11,289 11,289 --
Changes in assets and liabilities:
Increase in accounts receivable................ (18,894) (1,339) (17,555)
Increase in inventories........................ (5,092) (2,492) (2,600)
Decrease (increase) in prepaid expenses........ (6,076) (6,076) 2,762
Increase in deposits and other assets.......... (22,923) (2,003) (20,140)
Increase in accounts payable................... 441,185 360,230 80,955
Increase in other accrued expenses............. 97,664 82,206 14,215
----------- --------- ---------
Total adjustments......................... 713,562 552,945 114,847
----------- --------- ---------
Net cash used in operating activities.................... (443,777) (40,044) (112,407)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment and leasehold improvements.... (464,243) (141,092) (36,989)
Payments made for deposits on fixed assets............. (252,000) -- (252,000)
----------- --------- ---------
Net cash used in investing activities..... (716,243) (141,092) (288,989)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt...................................... (47,112) (45,326) (1,786)
Repayment of short-term debt........................... (130,000) -- (130,000)
Proceeds from additional debt.......................... 750,421 166,478 453,943
Common stock issued.................................... 626,316 78,000 99,459
----------- --------- ---------
Net cash provided from financing
activities.............................. 1,199,625 199,152 421,616
----------- --------- ---------
NET INCREASE IN CASH..................................... 39,605 18,016 20,220
CASH -- BEGINNING........................................ -- 21,589 1,369
----------- --------- ---------
CASH -- ENDING........................................... $ 39,605 $ 39,605 $ 21,589
=========== ========= =========
</TABLE>

See accompanying notes to financial statements

F-22
<PAGE> 69

ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1999 AND 1998

NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

Eco-Form, Inc. (the "Company"), a Delaware corporation, was incorporated on
September 14, 1995. The Company operates a molded paper pulp plant near Boston,
Massachusetts, which produces environmentally friendly biodegradable packaging
for the electronics, computer and consumer goods industries. The Company has
operated as a development stage enterprise since its inception by devoting
substantially all its efforts to research and development, developing markets
for its products and raising capital to support these efforts.

GOING CONCERN

The Company has been in the development stage since its date of
incorporation on September 14, 1995, and has experienced aggregate net losses
through August 31, 1999 of approximately $1,157,000. To date, no profits have
been realized and development activities are still ongoing. The Company expects
to continue to incur operating losses until its products are commercially
produced through the addition of more equipment and operation of a second plant
with funds raised in an equity offering. Successful future operations and
recovery of the Company's investment in its equipment and leasehold improvements
depends upon the Company commercializing its products using its initial
manufacturing facility and ultimately, commercializing multiple products and
achieving broader market acceptance and penetration.

The matters discussed above raise substantial doubt about the Company's
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments that might result from the outcome of this
uncertainty. The Company has a limited operating history and its prospects are
subject to the risks, expenses and uncertainties frequently encountered by
companies in new and evolving markets.

In the event that the Company does not successfully implement its business
plan, certain assets may not be recoverable.

CASH

The Company has no cash or cash equivalents as of August 31, 1999 and 1998,
or amounts in excess of FDIC limits.

INVENTORIES

Inventories consist primarily of finished goods and raw materials and are
stated at the lower of cost (first-in, first out) or market value.

F-23
<PAGE> 70
ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
AUGUST 31, 1999 AND 1998

NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Depreciation and amortization is provided using accelerated methods for
financial and tax reporting purposes based upon the estimated useful lives of
the assets which range from 5 to 7 years.

OTHER ASSETS

Loan origination costs are being amortized using the straight-line method
over the five year loan term.

IMPAIRMENT OF LONG-LIVED ASSETS

INCOME TAXES

ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 132-137 during the periods covered by these financial
statements. Applicable pronouncements were adopted by the Company with no
material effect on the Company's financial statements.

LOSS PER COMMON SHARE

The Company computes net loss per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" and Securities and
Exchange Commission Staff Accounting Bulletin No. 98 (SAB 98). Statement of
Financial Accounting Standards No. 128 requires companies with complex capital
structures to present basic and diluted earnings per share. Basic earnings per
share is measured as the earnings or loss available to common shareholders
divided by the weighted average outstanding common shares for the period.
Diluted earnings per share is similar to basic earnings per share but presents
the dilutive effect on a per share basis of potential common shares (e.g.
convertible securities, options, etc.) as if they had been converted at the
beginning of the periods presented. Potential common

F-24
<PAGE> 71
ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
AUGUST 31, 1999 AND 1998

NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
shares that have an anti-dilutive effect (i.e., those that increase earnings per
share or decrease loss per share) are excluded from diluted earnings per share.

ESTIMATES

NOTE 2 -- EQUIPMENT AND LEASEHOLD IMPROVEMENTS

The principal categories of equipment and leasehold improvements may be
summarized as follows:

<TABLE>
<CAPTION>
AUGUST 31,
--------------------
1999 1998
---- ----
<S> <C> <C>
Equipment................................................ $674,286 $289,368
Furniture and fixtures................................... 16,491 14,913
Leasehold improvements................................... 42,866 18,871
-------- --------
Total cost.......................................... 733,643 323,152
Less accumulated depreciation............................ 212,156 104,119
-------- --------
Undepreciated cost.................................. $521,487 $219,033
======== ========
</TABLE>

F-25
<PAGE> 72
ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
AUGUST 31, 1999 AND 1998

NOTE 3 -- NOTES PAYABLE AND LONG-TERM DEBT

<TABLE>
<CAPTION>
AUGUST 31,
--------------------
1999 1998
---- ----
<S> <C> <C>
Note payable to Massachusetts Business Development
Corporation, $5,834 monthly plus interest at 2.25% over
prime (8.00% at August 31, 1999), due October 2000,
secured by all Company assets and guaranteed by certain
shareholders.............................................. $325,000 $303,943
Note payable to Massachusetts Business Development
Corporation, $1,786 monthly plus interest at prime (8.00%
at August 31, 1999), due October 2000, secured by second
lien and all Company assets............................... 137,500 148,215
Note payable to bank, monthly interest only payment at
10.75%, due August 2000, guaranteed by certain
shareholders.............................................. 50,000 --
Note payable to finance company, $368 monthly plus interest
at 10.49%, due December 2002, secured by related
equipment................................................. 12,588 --
Unsecured shareholder notes payable, principal and interest
at 7% monthly, due February 2001.......................... 65,621 --
-------- --------
Total.................................................. 590,709 452,158
Less current portion of long-term debt...................... 98,314 91,429
-------- --------
Total debt reflected as long-term...................... $492,395 $360,729
======== ========
</TABLE>

The amounts of long-term debt coming due during the next four years ending
August 31, 2003 are as follows:

Interest expense included in the determination of net loss for the years
ended August 31, 1999 and 1998 amounted to $43,599 and $21,164, respectively.

The notes payable to Massachusetts Business Development Corporation (MBDC)
contain original maturity dates of August 2003 and July 2005 and default
provisions. These provisions include, among others, timely payment remittance
and specific approval for corporate merger. The MBDC has determined that the
Company is in default of these provisions at March 1, 2000 and has formally
waived its default rights under the note agreements for 150 days subsequent to
the exchange of common stock (See note 9), unless during that time period MBDC
deems its self insecure or another source of financing is secured at which point
the notes payable are due and payable in full. The waiver maturity date is
October 5, 2000, at which time the notes payable will be due on demand at the
discretion of the MBDC.

It is the Company's intention to repay the note balances through an equity
injection or through refinancing with another lending source prior to the
expiration of the waiver period.

F-26
<PAGE> 73
ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
AUGUST 31, 1999 AND 1998

NOTE 4 -- OTHER ACCRUED EXPENSES

The principal components of other accrued expenses may be summarized as
follows:

<TABLE>
<CAPTION>
AUGUST 31,
------------------
1999 1998
---- ----
<S> <C> <C>
Payroll taxes.............................................. $59,570 $12,229
Professional fees.......................................... 22,414 --
Rent....................................................... 7,947 --
Interest................................................... 7,192 3,229
Other...................................................... 541 --
------- -------
$97,664 $15,458
======= =======
</TABLE>

NOTE 5 -- OPERATING LEASES

The Company entered into a five year lease for its operating facility which
is located in South Walpole, Massachusetts. The operating lease agreement
expires in March 2001, with an option to renew for an additional five years. The
lease requires monthly rental payments of $6,503 plus a proportionate share of
the complex operating expenses such as property taxes and maintenance. The
Company subleased a portion of the facility in 1999 for ten months at $2,000 a
month. Total rental income for the year ended August 31, 1999 related to this
sublease was $20,000.

The following is a schedule by years of future minimum rental payments
required under the operating lease that has a remaining noncancelable lease term
in excess of one year as of August 31, 1999:

Total rental expense from this lease included in the determination of net
loss for the years ended August 31, 1999 and 1998 amounted to $84,898 and
$87,239, respectively.

The Company received formal notice of default dated November 16, 1999 for
failure to follow the lease agreement for timely payment of monthly rents for
September, October and November of 1999. There are no remedies available under
the terms of the operating lease to correct the default and the effect of the
default on the Company cannot be determined.

NOTE 6 -- INCOME TAXES

The provision for income taxes (credit) is as follows:

<TABLE>
<CAPTION>
AUGUST 31,
------------
1999 1998
---- ----
<S> <C> <C>
Current..................................................... $-- $--
Deferred.................................................... -- --
--- ---
Total income taxes (credit)............................ $-- $--
=== ===
</TABLE>

F-27
<PAGE> 74
ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
AUGUST 31, 1999 AND 1998

NOTE 6 -- INCOME TAXES -- (CONTINUED)
The deferred tax asset and deferred tax liability was comprised of the
following at August 31, 1999:

<TABLE>
<S> <C>
Deferred tax asset:
Accounts receivable....................................... $ 2,600
Prepaid expenses.......................................... 2,100
Net operating loss carryforwards.......................... 393,500
Other..................................................... 7,400
---------
Subtotal............................................. 405,600
Valuation allowance......................................... (222,400)
---------
Net deferred tax asset...................................... 183,200
---------
Deferred tax liability:
Accounts payable.......................................... (150,000)
Other accrued expenses.................................... (33,200)
---------
Gross deferred liability.................................. (183,200)
---------
Net deferred tax asset...................................... $ --
=========
</TABLE>

Due to the uncertainty of the Company being able to utilize the future tax
benefits of the net operating loss carryovers, a valuation allowance has been
recorded to reduce the deferred tax asset to zero. The effect of the Company's
merger (See note 9), will limit the future benefit of the net operating loss
carryovers due to the greater than 50% change in ownership under Section 382 of
the Internal Revenue Code.

The Company has unused net operating loss carryovers from prior years as
follows:

NOTE 7 -- INDUSTRY INFORMATION

F-28
<PAGE> 75
ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
AUGUST 31, 1999 AND 1998

NOTE 7 -- INDUSTRY INFORMATION -- (CONTINUED)
Customers comprising 10% or greater of the Company's net sales are
summarized as follows:

<TABLE>
<CAPTION>
AUGUST 31,
------------
1999 1998
---- ----
<S> <C> <C>
Stephen Gould Corporation................................... 34% 22%
Hisco, Inc.................................................. 22 8
Orcon Industrial Corporation................................ 3 53
Shepard Specialty Paper..................................... 0 17
All other................................................... 41 0
--- ---
100% 100%
=== ===
</TABLE>

NOTE 8 -- SUPPLEMENTAL CASH FLOW INFORMATION

The supplemental cash flow information and noncash investing and financing
activities are as follows:

<TABLE>
<CAPTION>
INCEPTION
SEPTEMBER 14, YEAR ENDED
1995 TO AUGUST 31,
AUGUST 31, ------------------
1999 1999 1998
------------- ---- ----
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the periods for interest...... $68,779 $39,636 $17,935
======= ======= =======
Interest received.............................. $ 38 $ 38 $ --
======= ======= =======
SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Equipment acquired with capital lease.......... $17,400 $17,400 $ --
======= ======= =======
</TABLE>

NOTE 9 -- SUBSEQUENT EVENT

On May 8, 2000, the Company completed its merger with Eco-Form
International, Inc. through the exchange of 3,750,000 shares of newly-issued
Eco-Form International, Inc. common stock in exchange for all the outstanding
shares of Eco-Form, Inc.'s common stock. The merger was structured as a tax-free
reorganization, where subsequent to the merger, Eco-Form International, Inc.
became the surviving corporation and all outstanding common shares of Eco-Form,
Inc. were cancelled. Eco-Form International, Inc. was formed on February 22,
1999 and is also a development stage enterprise. Eco-Form International, Inc.'s
operations have been limited to capital raising activities through August 31,
1999.

F-29
<PAGE> 76
ECO-FORM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
AUGUST 31, 1999 AND 1998

NOTE 9 -- SUBSEQUENT EVENT -- (CONTINUED)
The following summarized operating data gives effect of the merger had it
occurred on September 1, 1997:

<TABLE>
<CAPTION>
AUGUST 31,
--------------------
1999 1998
---- ----
<S> <C> <C>
Net sales
Eco-Form, Inc.......................................... $556,550 $219,809
Eco-Form International, Inc............................ -- --
-------- --------
$556,550 $219,809
======== ========
Net loss
Eco-Form, Inc.......................................... $592,989 $227,254
Eco-Form International, Inc............................ -- --
-------- --------
$592,989 $227,254
======== ========
Loss per common share.................................... $ (.04) $ (.02)
======== ========
</TABLE>

F-30
<PAGE> 77

ECO-FORM INTERNATIONAL, INC. AND SUBSIDIARY

UNAUDITED PRO FORMA FINANCIAL INFORMATION BASIS OF PRESENTATION

The Unaudited Pro Forma Consolidated Statement of Operations of the Company
for the fiscal year ended December 31, 1999 and the six-month period ended June
30, 2000 and 1999 (the "Pro Forma Consolidated Statements of Operations"), and
the Unaudited Pro Forma Consolidated Balance Sheet of the Company as of December
31, 1999 (the "Pro Forma Consolidated Balance Sheet" and, together with the Pro
Forma Consolidated Statements of Operations, The "Pro Forma Consolidated
Financial Statements"), have been prepared to illustrate the estimated effect of
the acquisition of Eco-Form, Inc. by Eco-Form International, Inc. The Pro Forma
Consolidated Financial Statements do not reflect any anticipated cost savings
from the Eco-Form, Inc. acquisition, or any synergies that are anticipated to
result from the Eco-Form, Inc. acquisition, and there can be no assurance that
any cost savings or synergies will occur. The Pro Forma Consolidated Financial
Statements of Operations give pro forma effect to the Eco-Form, Inc.
transactions as if they had occurred in operations since February 22, 1999 (date
of inception). The Pro Forma Consolidated Financial Statements do not purport to
be indicative of the results of the operations or financial position of the
Company that would have actually been obtained has such transactions been
completed as of the assumed dates and for the period presented, or which may be
obtained in the future. The pro forma adjustments are described in the
accompanying notes and based upon available information and certain assumptions
that the Company believes are reasonable. The Pro Forma Consolidated Financial
Statements should be read in conjunction with the separate historical
consolidated financial statements of Eco-Form, International, Inc. and Eco-Form,
Inc. and the notes thereto and "Management's Discussion and Analysis of
Financial Conditions and Results of Operations" included elsewhere or
incorporated by reference in this Prospectus.

F-31
<PAGE> 78

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999

<TABLE>
<CAPTION>
DECEMBER 31, 1999 JUNE 30, 2000
PRO FORMA PRO FORMA
CONSOLIDATED CONSOLIDATED
ECO-FORM ECO-FORM ECO-FORM
ECO-FORM, INC. INTERNATIONAL, INC. ADJUSTMENTS INTERNATIONAL, INC. INTERNATIONAL, INC.
-------------- ------------------- ----------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash..................... $ -- $ 13,575 $ -- $ 13,575 $ 508,268
Accounts receivable...... 7,605 -- -- 7,605 29,849
Inventories
Raw materials.......... 2,600 -- -- 2,600 5,400
Finished goods......... 2,492 -- -- 2,492 3,740
Prepaid expenses......... 6,076 -- -- 6,076 5,399
----------- -------- ----------- ---------- ----------
Total current
assets............ 18,773 13,575 -- 32,348 552,656
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, NET........ 489,179 -- -- 489,179 419,684
OTHER ASSETS
Goodwill................. -- -- 581,081(a) 581,081 730,924
Loan origination costs,
net.................... 11,667 -- -- 11,667 9,452
Deposits and other
assets................. 7,003 -- -- 7,003 7,003
----------- -------- ----------- ---------- ----------
Total other assets... 18,670 -- 581,081 599,751 747,379
----------- -------- ----------- ---------- ----------
Total assets......... $ 526,622 $ 13,575 $ 581,081 $1,121,278 $1,719,719
=========== ======== =========== ========== ==========
CURRENT LIABILITIES
Accounts payable......... $ 441,223 $ -- $ -- $ 441,223 151,434
Current portion of
long-term debt......... 552,731 -- -- 552,731 451,846
Other accrued expenses... 113,749 18,395 -- 132,144 358,549
----------- -------- ----------- ---------- ----------
Total current
liabilities....... 1,107,703 18,395 -- 1,126,098 961,829
LONG-TERM DEBT............. -- 45,000 -- 45,000 206,434
CONTINGENCIES.............. -- -- -- -- --
SHAREHOLDERS' EQUITY
(DEFICIT)
Common stock............. 648,316 11,898 (648,316)(a) 11,898 16,048
Additional paid-in
capital................ -- 1,677 1,677 726,162
Deficit accumulated
during the development
stage.................. (1,229,397) (63,395) 1,229,397(a) (63,395) (190,754)
----------- -------- ----------- ---------- ----------
Total shareholders'
equity
(deficit)......... (581,081) (49,820) 581,081 (49,820) 551,456
----------- -------- ----------- ---------- ----------
Total liabilities and
shareholders'
equity
(deficit)......... $ 526,622 $ 13,575 $ 581,081 $1,121,278 $1,719,719
=========== ======== =========== ========== ==========
</TABLE>

-------------------------
(a) Adjustment for the Company's acquisition of Eco-Form, Inc. on May 11, 2000.

(b) Gives effect to the private placement of 300,000 restricted 144 common
shares on July 8, 2000 for $500,000 in proceeds. See "Subsequent Events."

F-32
<PAGE> 79

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(SIX MONTH PERIOD ENDED JUNE 30, 2000)

<TABLE>
<CAPTION>
ECO-FORM PRO FORMA
ECO-FORM, INC. INTERNATIONAL, INC. CONSOLIDATED
JANUARY 1 - JANUARY 1 - ECO-FORM
MAY 11, 2000 JUNE 30, 2000 ADJUSTMENTS INTERNATIONAL, INC.
-------------- ------------------- ----------- -------------------
<S> <C> <C> <C> <C>
NET SALES............................. $ 164,036 $ 70,367 $-- $ 234,403
COST OF SALES......................... 93,850 23,932 -- 117,782
--------- --------- --- --------------
GROSS INCOME.......................... 70,186 46,435 -- 116,621

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES............................ 255,956 171,082 -- 427,038
--------- --------- --- --------------
LOSS FROM OPERATIONS.................. (185,770) (124,647) -- (310,417)
--------- --------- --- --------------
OTHER INCOME (EXPENSE) -- (NET)....... (26,864) (2,712) -- (29,576)
LOSS BEFORE INCOME TAXES.............. (212,634) (127,359) -- (339,993)
INCOME TAXES.......................... -- -- -- --
--------- --------- --- --------------
NET LOSS.............................. $(212,634) $(127,359) $-- $ (339,993)
========= ========= === ==============
NET LOSS PER COMMON SHARE............. $ (0.03)
==============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING.................. 13,157,833
==============

OPERATING AND OTHER DATA:
EBITDA.............................. (88,554) (121,709)
Depreciation and amortization....... 97,216 4,586
Capital expenditures................ -- --
Cash interest expense, net.......... 26,864 --

CASH FLOW PROVIDED BY (USED FOR)
Operating activities................ N/A 21,259
Investing activities................ N/A --
Financing activities................ N/A (26,566)
</TABLE>

F-33
<PAGE> 80

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(FOR THE PERIOD AND YEAR ENDED DECEMBER 31, 1999)

<TABLE>
<CAPTION>
PERIOD ENDED PRO FORMA
YEAR ENDED DECEMBER 31, CONSOLIDATED
DECEMBER 31, ECO-FORM ECO-FORM
ECO-FORM, INC. INTERNATIONAL, INC. ADJUSTMENTS INTERNATIONAL, INC.
-------------- ------------------- ----------- -------------------
<S> <C> <C> <C> <C>
NET SALES............................. $ 726,612 $ -- $-- $ 726,612
COST OF SALES......................... 818,957 -- -- 818,957
--------- -------- --- --------------
GROSS LOSS............................ (92,345) -- -- (92,345)

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES............................ 431,628 60,969 -- 492,597
--------- -------- --- --------------
LOSS FROM OPERATIONS.................. (523,973) (60,969) -- (584,942)
INTEREST EXPENSE...................... (37,866) (1,456) -- (39,322)
--------- -------- --- --------------
LOSS BEFORE INCOME TAXES.............. (561,839) (62,425) -- (624,264)
INCOME TAXES.......................... -- -- -- --
--------- -------- --- --------------
NET LOSS.............................. $(561,839) $(62,425) $-- $ (624,264)
========= ======== === ==============
NET LOSS PER COMMON SHARE............. (0.06)
==============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING.................. 10,767,750
==============

OPERATING AND OTHER DATA:
EBITDA.............................. (399,457) (60,969)
Depreciation and amortization....... 116,428 --
Capital expenditures................ 49,785 --
Cash interest expense............... 45,954 --

CASH FLOW PROVIDED BY (USED FOR)
Operating activities................ N/A (45,000)
Investing activities................ N/A --
Financing activities................ N/A 58,575
</TABLE>

-------------------------
* EBITDA represents the sum of income before income taxes, plus depreciation and
amortization, non recurring charges and certain other non-cash income and
expense items. The Company has presented EBITDA because it is commonly used by
investors to analyze and compare companies on the basis of operating
performance and determine a company's ability to service debt.

F-34
<PAGE> 81

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(SIX MONTHS ENDED JUNE 30, 1999)

<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED
ECO-FORM ECO-FORM
ECO-FORM, INC. INTERNATIONAL, INC. ADJUSTMENTS INTERNATIONAL, INC.
-------------- ------------------- ----------- -------------------
<S> <C> <C> <C> <C>
NET SALES............................. $ 344,431 $ -- $-- $ 344,431
COST OF SALES......................... 457,594 -- -- 457,594
--------- -------- --- ---------
GROSS LOSS............................ (113,163) -- -- (113,163)

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES............................ 219,063 25,000 -- 244,063
--------- -------- --- ---------
LOSS FROM OPERATIONS.................. (332,226) (25,000) -- (357,226)
--------- -------- --- ---------
OTHER INCOME (EXPENSE) -- (NET)....... (27,895) -- -- (27,895)
LOSS BEFORE INCOME TAXES.............. (360,121) (25,000) -- (385,121)
INCOME TAXES.......................... -- -- -- --
--------- -------- --- ---------
NET LOSS.............................. $(360,121) $(25,000) $-- $(385,121)
========= ======== === =========
NET LOSS PER COMMON SHARE............. $ (0.05)
=========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING.................. 7,258,500
=========

OPERATING AND OTHER DATA:
EBITDA*............................. (277,910) (25,000)
Depreciation and amortization....... 46,228 --
Capital expenditures................ 19,546 --
Cash interest expense............... 35,854 --

CASH FLOW PROVIDED BY (USED FOR)
Operating activities................ N/A (25,000)
Investing activities................ N/A --
Financing activities................ N/A 38,575
</TABLE>

F-35
<PAGE> 82

No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

3,000,000 Shares

ECO-FORM INTERNATIONAL, INC.

Common Stock

Eco-form International, Inc. Logo

Through and including , 2000 (the 25th day after the date of
this prospectus), all dealers effecting transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to a dealer's obligation to deliver a prospectus
when acting as an underwriter and with respect to an unsold allotment or
subscription.
<PAGE> 83

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in successfully defending against a
claim and authorizes a Delaware corporation to indemnify its officers and
directors under certain circumstances against expenses and liabilities incurred
in legal proceedings involving such persons because of their being or having
been an officer or director.

Section 102(b) of the Delaware General corporation Law permits a
corporation, by so providing in its certificate of incorporation, to eliminate
or limit a director's liability to the corporation and its stockholders for
monetary damages arising out of certain alleged breaches of their fiduciary
duty. Section 102(b)(7) provides that no such limitation of liability may affect
a director's liability with respect to any of the following: (i) breaches of the
director's duty of loyalty to the corporation or its stockholders; (ii) acts or
omissions not made in good faith or which involve intentional misconduct of
knowing violations of law; (iii) liability for dividends paid or stock
repurchased or redeemed in violation of the Delaware General Corporation law; or
(iv) any transaction from which the director derived an improper personal
benefit. Section 102(b)(7) does not authorize any limitation on the ability of
the company or its stockholders to obtain injunctive relief, specific
performance or other equitable relief against directors.

Article VI of the Registrant's Restated Certificate of Incorporation
provides that the personal liability of the directors of the Registrant be
eliminated to the fullest extent permitted under Section 102(b) of the Delaware
General Corporation law.

Article V of the Registrant's By-laws provides that all any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including any action or suit by or in the right of the Registrant
to procure a judgment in its favor) by reason of the fact that he or she is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall be indemnified by the Corporation, if, as and to the extent
authorized by applicable law, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or her in connection with the defense or settlement of such action, suit
or proceeding. Expenses incurred by an officer or director in defending a civil
or criminal action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by statute. Such expenses incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Bylaw or
statute in a specific case shall not be deemed exclusive of any other rights to
which any person seeking indemnification or advancement of expenses may be
entitled under any lawful agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.

The Registrant does not currently have and officers and directors liability
insurance but intends to obtain some before the effective date of this offering.

Insofar as indemnification for liabilities under the Securities Act of
1933, as amended (the "Securities Act") may be permitted to directors, officers
or persons controlling the Registrant pursuant to the foregoing provisions, the
Registrant has been informed that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefor unenforceable.

II-1
<PAGE> 84

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
SEC Registration Fee........................................ $4,435.28
NASD filing Fee............................................. *
Printing expenses........................................... *
Legal fees and expenses..................................... *
Blue Sky fees and expenses.................................. *
Accounting fees and expenses................................ *
Transfer agent's fees and expenses.......................... *
Miscellaneous............................................... *
---------
Total................................................ *
=========
</TABLE>

-------------------------
* To be filed by amendment

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

During the preceding three years, the Registrant has sold the following
securities without registration under the Securities Act pursuant to the
exemptions from the registration requirements of the Securities Act afforded by
Section 3 or 4(2) thereof. Except as set forth in subsection (c) below, each of
the purchasers represented in writing that its acquisition was being made for
investment and not with a view to distribution and appropriate restrictive
legends and stop transfer orders were placed upon the stock certificates
representing those shares. No general advertising or solicitation was used in
connection with the offer or sale of any of those securities. All investors had
adequate access, through their relationships with the Registrant, to information
about the Registrant before they made that investment and/or were provided with
written information about the Registrant. Except as set forth in subsection (c)
below, no underwriters were employed with respect to any such sales.

(a) Upon its formation in February, 1999, the Registrant sold 600,000
shares of common stock to CK Dragon Trust, a trust controlled by Charlene Kalk,
the Registrant's founder and initial president. Those shares were sold for $.001
per share in cash.

(b) In April 1999, the Registrant issued 10,000,000 shares of common stock
to Howard Keep and Terrance Keep in exchange for all of the shares of Castle
Keep Holdings, Inc.

(c) During the period from March 30 through April 6, 1999, the Registrant
sold 1,297,500 shares of common stock for $.01 per share in cash. Those shares
were sold pursuant to Rule 504 of Regulation D to 35 investors, all of which
were previously known to the officers and directors of the Registrant. Because
those shares were sold pursuant to Rule 504, no restrictive legends or stop
transfer orders were placed upon those shares.

(d) In April 2000, the Registrant issued 3,750,000 shares of common stock
to the former shareholders of Eco-form, Inc. pursuant to the merger of Eco-form,
Inc. into the Registrant.

(e) In April and June 2000, the Registrant sold 22,000 shares of common
stock to a single investor for cash in the amount of $68,885.

(f) In July 2000, the Registrant sold 300,000 shares of common stock to a
single investor for cash in the amount of $500,000.

(g) In August 2000, the Registrant issued 78,000 shares to a creditor in
cancellation of $156,000 of existing debt.

II-2
<PAGE> 85

ITEM 27. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<S> <C> <C>
2.1 Agreement for acquisition of shares of Castle Keep Holding
(USA), Inc. by the Registrant
2.2 Agreement and Plan of Merger dated as of April 13, 2000
between the Registrant and Eco-form, Inc. a Massachusetts
corporation
3.1 Restated Articles of Incorporation of the Company dated
October 11, 2000
3.2 Bylaws of the Company *
4.1 Instruments defining the rights of security holders *
4.2 Specimen Common Stock certificate *
5. Opinion of Berry, Moorman Professional Corporation, as to *
the legality of the securities being registered
10.1 2000 Stock Option Plan
10.2 Employment Agreement dated April 14, 2000 between the
Registrant and Howard Keep
10.3 Employment Agreement dated April 14, 2000 between the
Registrant and Terrance Keep
10.4 Employment Agreement dated April 7, 2000 between the
Registrant and Fuad Khan
10.5 Employment Agreement dated April 7, 2000 between the
Registrant and Mohammed Jalaluddin Khan
10.6 Consulting Agreement dated April 10, 2000 between the
Registrant and Mohammed Salahuddin Khan
10.7 Lease Agreement dated January 2, 1996 between Walpole Park
South (II) Trust and Eco-form, Inc.
10.8 Agreement dated January 2, 1998 between International
Technology Packaging and Emery International Developments
Ltd.
10.9 Letter Agreement dated January 26, 1999 from Hargreaves and
Gott Moldmaster to Castle Keep Holding (USA), Inc.
10.10 Distribution Agreement dated April 19, 1999 between Castle
Keep Holding (USA), Inc. and Hisco
10.11 Consulting Agreement dated July 5, 2000 between Eco-form
International, Inc. and VerticalVC, Inc.
10.12 Form of Common Stock Purchase Warrant issued to VerticalVC,
Inc.
10.13 Debt Cancellation and Stock Subscription Agreement dated *
August 1, 2000 between Eco-form International, Inc. as
debtor and Emery International Developments, Ltd. as
creditor, including amendment thereto dated September 25,
2000
10.14 Promissory Note dated August 1, 2000 in the principal amount *
of $156,000 from Eco-form International, Inc. to Emery
International Developments, Ltd.
10.15 Loan Agreement dated June 22, 1998 among Eco-form, Inc. as *
borrower, M. Salahuddin Khan and Fuad Khan as guarantors and
Massachusetts Business Development Corporation
10.16 Promissory Note dated June 22, 1998 in the principal amount *
of $350,000 from Eco-form, Inc. to the Massachusetts
Business Development Corporation
10.17 Second Loan Agreement dated June 22, 1998 among Eco-form, *
Inc. as borrower, M. Salahuddin Khan and Fuad Khan as
guarantors and Massachusetts Business Development
Corporation acting as administrator of DEP Recycling Loan
Fund
10.18 Promissory Note dated June 22, 1998 in the principal amount *
of $150,000 from Eco-form, Inc. to the Massachusetts
Business Development Corporation acting as administrator of
DEP Recycling Loan Fund
24.1 Consent of Moore Stephens Doeren Mayhew to the inclusion of
their report in the Prospectus
24.2 Consent of Moore Stephens Doeren Mayhew to the inclusion of
their schedule and report
</TABLE>

II-3
<PAGE> 86

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<S> <C> <C>
24.3 Consent of Berry Moorman P.C. to the inclusion of the *
reference to their opinion in the Prospectus (this is
contained in Exhibit 5)
99 Schedule of Valuation and Qualifying Accounts
</TABLE>

-------------------------
* To be filed by amendment.

ITEM 28. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

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

(i) include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) reflect in the prospectus any facts or events which,
individually or together represent a fundamental change in the
information set forth in the registration statement; and

(iii) include additional or changed material information on the
plan of distribution.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the termination of the offering.

The Registrant will provide to the underwriter at the closing specified in
the underwriting agreement certificates in such denominations and registered in
such names as required by the underwriter to permit prompt delivery to each
purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to its Articles of Incorporation, Bylaws, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than expenses incurred by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

II-4
<PAGE> 87

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Walpole, State of Massachusetts, on the 26th day of
October, 2000.

ECO-FORM INTERNATIONAL, INC,
By: /s/ HOWARD KEEP
------------------------------------
Howard Keep, President

In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

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

Principal Executive Officer:

/s/ HOWARD KEEP Chairman, President & CEO October 26, 2000
------------------------------------------
Howard Keep

Principal Financial and Accounting Officer:

* Director, Treasurer and Executive October 26, 2000
Vice President
--------------------------------------------
Terrance Keep

* Director October 26, 2000
--------------------------------------------
M. Salahuddin Khan

Director and Vice President October , 2000
--------------------------------------------
Fuad Khan

Director and Vice President October , 2000
--------------------------------------------
Jalaluddin Khan

* Director October 26, 2000
--------------------------------------------
Eric L. Cross

*Signed Pursuant to Power of Attorney

By: /s/ HOWARD KEEP
--------------------------------------------
Howard Keep, Attorney in fact
</TABLE>

II-5
<PAGE> 88

Exhibit Index
-------------

<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>

2.1 Agreement for acquisition of shares of Castle Keep Holding
(USA), Inc. by the Registrant

2.2 Agreement and Plan of Merger dated as of April 13, 2000
between the Registrant and Eco-form, Inc. a Massachusetts
corporation

3.1 Restated Articles of Incorporation of the Company dated
October 11, 2000

10.1 2000 Stock Option Plan

10.2 Employment Agreement dated April 14, 2000 between the
Registrant and Howard Keep

10.3 Employment Agreement dated April 14, 2000 between the
Registrant and Terrance Keep

10.4 Employment Agreement dated April 7, 2000 between the
Registrant and Fuad Khan

10.5 Employment Agreement dated April 7, 2000 between the
Registrant and Mohammed Jalaluddin Khan

10.6 Consulting Agreement dated April 10, 2000 between the
Registrant and Mohammed Salahuddin Khan

10.7 Lease Agreement dated January 2, 1996 between Walpole Park
South (II) Trust and Eco-form, Inc.

10.8 Agreement dated January 2, 1998 between International
Technology Packaging and Emery International Developments
Ltd.

10.9 Letter Agreement dated January 26, 1999 from Hargreaves and
Gott Moldmaster to Castle Keep Holding (USA), Inc.

10.10 Distribution Agreement dated April 19, 1999 between Castle
Keep Holding (USA), Inc. and Hisco

10.11 Consulting Agreement dated July 5, 2000 between Eco-form
International, Inc. and VerticalVC, Inc.

10.12 Form of Common Stock Purchase Warrant issued to VerticalVC,
Inc.

24.1 Consent of Moore Stephens Doeren Mayhew to the inclusion of
their report in the Prospectus

24.2 Consent of Moore Stephens Doeren Mayhew to the inclusion of
their schedule and report

99 Schedule of Valuation and Qualifying Accounts

</TABLE>