EASTCO INDUSTRIAL SAFETY CORP, 424B3, 1996-10-15

EASTCO INDUSTRIAL SAFETY CORP
424B3, 1996-10-15
ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES

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Rule 424(b)(3)
Registration No. 333-09517

703,591 UNITS
$5.00 PER UNIT
EASTCO INDUSTRIAL SAFETY CORP.

Each unit ("Unit") consists of one share of common stock $0.12 par value
("Common Stock") and one Class B Redeemable Common Stock Purchase Warrant
("Class B Warrant").

Eastco Industrial Safety Corp. (the "Company") is granting to all holders
of its outstanding common stock of record on the close of business September
24, 1996 ("Record Date"), in those states where qualified, or exempt from
qualification, (see page 3 for list of such states), the nontransferable
right ("Rights") to subscribe for Units, at the subscription price set forth
below on the basis of 4 Units for every 5 shares of Common Stock owned on the
Record Date. The number of Rights will be determined by dividing
shareholdings (as adjusted for all prior stock splits) by five, rounded down
to the nearest whole number, with the result multiplied by four. No
fractional Rights or Units will be issued. Rights and Units will be rounded
to the nearest lower whole number. Inasmuch as the Rights are not
transferable, there will be no market for the Rights, nor will Royce
Investment Group, Inc. (the "Underwriter") be purchasing any Rights. See "The
Offering -- Method of Exercising Rights" at page 41 for procedure to exercise
Rights.

The subscription period for the Rights will expire at 5:00 p.m. New York
Time on November 8, 1996 ("Expiration Date"). Any Units not subscribed for
pursuant to the exercise of Rights will be sold to the Underwriter ("Standby
Offering") at the Subscription Price under a Standby Agreement between the
Company and the Underwriter which is identical to the price under the
offering for the Rights. The term "Offering" as hereinafter utilized in this
Prospectus includes the offering in connection with the Rights, the Standby
Offering and the offering of the Optional Units as hereinafter defined. The
Underwriter will offer to sell the components of the Units to the public at
prices not to exceed the lowest asked prices then existing at the time of
sale as reported on the NASDAQ Small-Cap Market. No Units and/or components
thereof will be offered by the Underwriter to the public until at least two
business days after the Expiration Date of the Rights Offering. See "The
Offering" and "Underwriting".

Each Class B Warrant entitles the holder to purchase one share of Common
Stock commencing twelve months (or sooner with the consent of the
Underwriter) after the date of this Prospectus (the date of the Prospectus is
sometimes referred to herein as the "Effective Date") until the close of
business on the third year after the date of this Prospectus at an exercise
price of $6.25 per share subject to adjustment in certain circumstances
pursuant to anti-dilution provisions therein. The Common Stock and Class B
Warrants are immediately detachable from the Units and separately tradeable.
See "Description of Securities -- Class B Warrants" for a discussion of the
Company's right to redeem the Class B Warrants on 30 days notice commencing
18 months from the date of this Prospectus under certain conditions but no
sooner than 12 months from the date the Warrants become exercisable.
(continued on following page)

THESE ARE SPECULATIVE SECURITIES. THESE SECURITIES INVOLVE A HIGH DEGREE OF
RISK AND SUBSTANTIAL DILUTION AS DESCRIBED HEREIN. FOR A DISCUSSION OF
CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN
INVESTMENT IN THE SECURITIES, SEE "RISK FACTORS" BEGINNING ON PAGE 9 AND
"DILUTION" ON PAGE 18.

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

=============================================================================
Standby Proceeds to
Subscription Price Fees(1)(2) Company(1)(2)(3)
- -----------------------------------------------------------------------------
Per Unit ....... $5.00 $.50 $4.50
- -----------------------------------------------------------------------------
Total ......... $3,517,955 $351,795.50 $3,166,159.50
=============================================================================

(footnotes on following page)

ROYCE INVESTMENT GROUP, INC.

The date of this Prospectus is October 10, 1996

<PAGE>

- ------
(1) Represents a 10% standby fee of $351,795.50 ($.50 per share) but does not
include a 3% nonaccountable expense allowance of $105,538.65 ($.15 per
share) payable to the Underwriter in connection with this Offering unless
the Standby Offering is terminated pursuant to the terms of the Standby
Agreement. Before deducting approximately $365,000 for printing, legal
fees, accounting and other related expenses of the Offering. See
"Underwriting".

(2) Does not include additional compensation to the Underwriter consisting of
(i) an option (the "Underwriter's Warrant" or "Underwriter's Purchase
Option"), sold to the Underwriter for nominal consideration, entitling
the Underwriter to purchase one Unit for each ten Units sold in the
Offering, at a price of $6.00 per Unit, subject to the anti-dilution
provisions thereof, for a period of four years commencing one year after
the Effective Date; and (ii) a one year financial consulting agreement
providing for fees totaling 2% of the proceeds of the Offering, payable
on the closing date(s) of the Offering (the "Closing") and the Optional
Units. The Company has also agreed to pay the Underwriter a warrant
solicitation fee of 7% of the exercise price for each Class B Warrant
exercised during the period commencing one year after the Effective Date,
and to indemnify the Underwriter against certain liabilities, including
those arising under the Securities Act of 1933, as amended (the
"Securities Act"). See "Underwriting".

(3) In the event that the number of unsubscribed Units to be purchased by the
Underwriter is less than 300,000 Units, the Underwriter will have the
right but not the obligation to purchase such number of Units that will
bring the number of Units to be purchased by the Underwriter up to a
total of 300,000 Units at the Subscription Price less a 10% discount and
3% nonaccountable expense allowance within 30 days of the Closing. See
note (2) regarding a financial consulting fee applicable to the Optional
Units. Such additional Units are herein referred to as the "Optional
Units".

The Company's Common Stock is traded on the NASDAQ Small-Cap Market under
the symbol ESTO and upon the closing of the Standby Offering will be listed
on the Boston Stock Exchange under the symbol "EST". Upon closing of the
Standby Offering, the Class B Warrants will be listed on NASDAQ Small-Cap
Market under the symbol ESTOZ and the Boston Stock Exchange under the symbol
"ESTZ". The Company will not apply for listing of the Units on NASDAQ or the
Boston Stock Exchange. However, it is possible that some broker-dealers may
seek to have the Units listed on the NASD Electronic Bulletin Board, or in
the National Quotation Bureau's pink sheets at some time in the future. On
September 30, 1996, the reported closing sale price for the Common Stock as
reported by NASDAQ was $5 5/8 per share. The purchase price of the Units and
the Exercise Price of the Class B Warrants for each of the offerings have
been arbitrarily determined through negotiation between the Company and the
Underwriter, was set at approximately 77% of the average closing price as
reported by NASDAQ for the ten business days preceding October 1, 1996 and
may bear no relationship to current market price, earnings, assets or other
recognized criteria of value applicable to the Company. The Company is unable
to predict the impact of the Offering upon the market price of the stock.
There can be no assurances that shareholders who purchase Units under the
Rights Offering and/or investors who purchase shares under the Standby
Offering will be able to sell such shares at the price they purchased the
shares or at any price. See "Underwriting" and "Market Information".

------

It is expected that certificates for such Units will be ready for delivery
on or about the third business day after the Underwriter receives notice from
the Subscription Agent as to the number of unsubscribed Units for which it is
committed to purchase. The issuance of the Common Stock at below-market price
will have the effect of adding to the number of shares issuable under certain
outstanding options and warrants. See "Management".

2
<PAGE>

RESTRICTIONS IN CERTAIN STATES

THIS OFFERING WITH RESPECT TO THE UNITS TO BE ISSUED UPON THE EXERCISE OF THE
RIGHTS IS EXPECTED TO BE QUALIFIED OR IS BELIEVED TO BE EXEMPT FROM
QUALIFICATION IN THE FOLLOWING JURISDICTIONS: ALABAMA, ALASKA, ARIZONA,
ARKANSAS, CALIFORNIA, COLORADO, CONNECTICUT, DELAWARE, DISTRICT OF COLUMBIA,
FLORIDA, GEORGIA, HAWAII, ILLINOIS, IDAHO, INDIANA, IOWA, KANSAS, LOUISIANA,
MARYLAND, MASSACHUSETTS, MICHIGAN, MISSISSIPPI, MISSOURI, NEVADA, NEW
HAMPSHIRE, NEW JERSEY, NEW YORK, NORTH CAROLINA, OKLAHOMA, OREGON,
PENNSYLVANIA, PUERTO RICO, RHODE ISLAND, SOUTH CAROLINA, SOUTH DAKOTA,
UTAH, VERMONT, VIRGINIA, WASHINGTON, WEST VIRGINIA, WISCONSIN, AND WYOMING.
RESIDENTS OF OTHER JURISDICTIONS MAY NOT PURCHASE THE UNITS OFFERED
HEREBY UNLESS THEY CAN DEMONSTRATE TO THE SATISFACTION OF THE COMPANY THAT
THEY SATISFY CERTAIN SPECIFIC CRITERIA FOR EXEMPTION SET FORTH IN THE APPLICABLE
STATES SECURITIES LAWS. PROSPECTUSES WILL BE MAILED TO ALL HOLDERS OF
COMMON STOCK ON THE RECORD DATE. HOWEVER, RIGHTS CERTIFICATES WILL NOT BE
INCLUDED IN THE MAILING TO THOSE RESIDENTS OF JURISDICTIONS NOT LISTED ABOVE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OTHER THAN THOSE TO WHICH IT
SPECIFICALLY RELATES, OR A SOLICITATION OF AN OFFER TO BUY FROM ANY PERSON OR
ENTITY IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.

FOR RESIDENTS OF NEW JERSEY ONLY:

THE OFFERING COVERED BY THIS PROSPECTUS MAY BE MADE ONLY TO EXISTING COMMON
STOCK HOLDERS IN THE STATE OF NEW JERSEY AND TO ACCREDITED INVESTORS IN THE
STATE OF NEW JERSEY AS THAT TERM IS DEFINED UNDER REGULATION 501 OF THE
SECURITIES ACT OF 1933, AS AMENDED. RULE 501 DEFINES "ACCREDITED INVESTORS"
TO INCLUDE, AMONG OTHER THINGS: (I) ANY NATURAL PERSON WHOSE INDIVIDUAL NET
WORTH, OR JOINT NET WORTH WITH THAT PERSON'S SPOUSE, AT THE TIME OF HIS
PURCHASE EXCEEDS $1,000,000; (II) ANY NATURAL PERSON WHO HAD AN INDIVIDUAL
INCOME IN EXCESS OF $200,000 IN EACH OF THE TWO MOST RECENT YEARS OR JOINT
INCOME WITH THAT PERSON'S SPOUSE IN EXCESS OF $300,000 IN EACH OF THOSE YEARS
AND HAS A REASONABLE EXPECTATION OF REACHING THE SAME INCOME LEVEL IN THE
CURRENT YEAR; AND (III) ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS ARE
ACCREDITED INVESTORS. FURTHER, THE EXERCISE OF WARRANTS BY RESIDENTS OF THE
STATE OF NEW JERSEY MAY ONLY BE MADE BY EXISTING COMMON STOCKHOLDERS WHO
PURCHASED SUCH WARRANTS FROM THE COMPANY IN THIS OFFERING AND BY ACCREDITED
INVESTORS. IN THE EVENT WARRANTS ARE EXERCISED, THE WARRANT EXERCISE MAY ONLY
BE EFFECTED IN NEW JERSEY PURSUANT TO A REGISTERED BROKER/DEALER OR IN RELIANCE
ON AN EXEMPTION OR EXCEPTION UNDER N.J.S.A., 49:3-47 ET. SEQ."

FOR OKLAHOMA INVESTORS

THE OFFERING COVERED BY THE PROSPECTUS CONTAINS OFFERING EXPENSES IN EXCESS
OF 15% PERMITTED BY TITLE 660, CH.10 (660;10-9-35) UNDER THE OKLAHOMA
SECURITIES ACT. FOR FURTHER INFORMATION REGARDING THE EXPENSES OF THE
OFFERING, PLEASE SEE PAGE 2 OF THIS PROSPECTUS. MOREOVER, THIS REGISTRATION
STATEMENT PERTAINS ONLY TO THE SECURITIES OFFERED TO EXISTING COMMON STOCK
HOLDERS IN THE STATE OF OKLAHOMA AND MAY NOT BE USED FOR ANY OTHER SALES
UNLESS OTHERWISE REGISTERED OR EXEMPT FROM REGISTRATION UNDER THE OKLAHOMA
SECURITIES ACT.

FOR ALABAMA RESIDENTS

THE OFFERING COVERED BY THIS PROSPECTUS CONTAINS OFFERING AND MARKETING
EXPENSES IN EXCESS OF THE AMOUNTS PERMITTED BY RULE 830-X-4.09 UNDER THE
ALABAMA SECURITIES ACT. FOR FURTHER INFORMATION REGARDING THE EXPENSES OF THIS

3
<PAGE>

OFFERING, PLEASE SEE PAGE 2 OF THIS PROSPECTUS. MOREOVER, THIS REGISTRATION
STATEMENT PERTAINS ONLY TO THE SECURITIES OFFERED TO EXISTING COMMON STOCK
HOLDERS IN THE STATE OF ALABAMA AND MAY NOT BE USED FOR ANY OTHER SALES
UNLESS OTHERWISE REGISTERED OR EXEMPT FROM REGISTRATION UNDER THE ALABAMA
SECURITIES ACT.

STATEMENT OF AVAILABLE INFORMATION

The Company is subject to the information requirements of the Securities
and Exchange Act of 1934 and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission") under the File No. 0-8027. Such reports, proxy statements
and other information filed by the Company can be inspected at the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates, and at
the following Regional Offices of the Commission, Chicago Regional Office,
219 South Dearborn Street, Chicago, Illinois and New York Regional Office, 7
World Trade Center, New York, New York 10007.

The Company currently files its reports electronically by EDGAR. The
Company distributes annual reports containing audited financial statements to
its shareholders.

FORWARD-LOOKING STATEMENTS

THIS PROSPECTUS INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT
TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE
COMPANY. SUCH STATEMENTS REFLECT SIGNIFICANT ASSUMPTIONS AND SUBJECTIVE
JUDGMENTS BY THE COMPANY'S MANAGEMENT CONCERNING ANTICIPATED RESULTS. THESE
ASSUMPTIONS AND JUDGMENTS MAY OR MAY NOT PROVE TO BE CORRECT. MOREOVER, SUCH
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT MAY
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN SUCH
FORWARD-LOOKING STATEMENTS. FOR A DISCUSSION OF SUCH RISKS, SEE "RISK
FACTORS". INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE
UNDERWRITER HAS NOT ATTEMPTED TO VERIFY THE BASIS FOR ANY SUCH STATEMENTS
INDEPENDENTLY AND NEITHER THE UNDERWRITER NOR THE COMPANY UNDERTAKES ANY
OBLIGATION TO RELEASE PUBLICLY ANY REVISIONS TO THESE FORWARD-LOOKING
STATEMENTS TO REFLECT EVENTS OCCURRING OR CIRCUMSTANCES ARISING AFTER THE
DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

4
<PAGE>

PROSPECTUS SUMMARY

The following is a summary as of the date hereof of certain information
contained in this Prospectus and is qualified in its entirety by the more
detailed information and Consolidated Financial Statements, including the
Notes thereto, appearing elsewhere in this Prospectus. All shares and shares
issuable under outstanding warrants and options in this Prospectus have been
adjusted for a one-for-ten reverse stock split approved by the shareholders
of the Company on August 12, 1996.

THE COMPANY

Eastco Industrial Safety Corp. (the "Company" and sometimes "Eastco") is a
corporation organized and existing under the laws of the State of New York,
having been incorporated on May 15, 1958. The Company, through its
wholly-owned subsidiaries, Disposable Safety Wear, Inc. ("Disposable"),
Safety Wear Corp. ("Safety Wear"), Puerto Rico Safety Equipment Corporation
("Puerto Rico Safety Equipment"), and Puerto Rico Safety Corp. ("Puerto Rico
Safety"), manufactures industrial protective clothing products and
distributes a wide range of industrial safety products. The Company's
Manufacturing Operations sells its products to distributors. The Company's
Distribution Operations sells its products to "end users," including
manufacturing companies and service businesses, public utilities, fisheries,
pharmaceutical plants, the transportation industry and companies engaged in
hazardous materials abatement. The Company's executive offices are located at
130 West 10th Street, Huntington Station, New York 11746 and its telephone
number is (516) 427-1802.

MANUFACTURING OPERATIONS

Manufactured products are sold under the "Charkate/Worksafe", "Charkate",
"Worksafe" and "Cover-up" trade names. The Company, through Disposable,
Safety Wear and Puerto Rico Safety Equipment, manufactures disposable and
reusable industrial protective apparel. Disposable protective products items
include coveralls, shirts, pants, hats, hoods, aprons, smocks, lab coats,
hazardous material handler suits, examination gowns, sleeves, shoe covers and
related items. Disposable clothing is designed to protect the user from,
among other things, splash, dirt, contamination and against a wide range of
hazardous substances. Disposable clothing is made primarily of a spun bonded
polyolefin produced solely by Dupont under the trade name Tyvek(R). Reusable
industrial protective clothing consists of items for the protection of
various parts of the body which are designed to shield the user from, among
other things, splash, dirt, contamination, heat, fire, cold and the outside
environment. Specific products manufactured include coveralls, gloves, mitts,
shirts, thermal underwear, sleeves, coats, pants, leggings, spats, bibs,
safety vests and a variety of other kinds of protective clothing and
uniforms. The Company also manufactures welding blankets, curtains and
screens.

The Company's Manufacturing Operations and warehousing are located
primarily in Puerto Rico and Alabama, and are primarily directed from the
Company's offices in New York. The Company's products are sold primarily in
the United States and Puerto Rico. In addition, manufactured products are
sold to "end-users" through the Company's Distribution Operations (the
"Eastco Division") in the Northeastern region of the United States and Puerto
Rico.

DISTRIBUTION OPERATIONS

The Company, primarily through its Eastco Division, distributes industrial
safety products to "end-users" made by the Charkate/Worksafe division as
well as by non-affiliated companies. Products distributed include hard hats,
protective glasses, ear muffs, ear plugs, respirators, goggles, face shields,
rainwear, protective footwear, first-aid kits, monitoring devices, signs and
related products. These products are sold to manufacturing companies and
service businesses, including public utilities, fisheries, hospitals,
pharmaceutical plants, the transportation industry and companies engaged in
hazardous materials abatement.

5
<PAGE>

THE OFFERING

Securities Offered ........... 703,591 Units. Each Unit consists of one
share of Common Stock and one Class B
Warrant. See "Description of Securities".

Subscription Price ........... $5.00 per Unit (the "Subscription Price").

Common Stock Outstanding
Prior to the Offering(1) ... 879,488 shares of Common Stock (as adjusted
for prior stock splits and estimated
rounding for fractional shares)

Common Stock Outstanding
After the Offering(1) ...... 1,583,079 shares of Common Stock.

Terms of Rights Offering(3) .. Holders of record on the close of business
September 24, 1996 of the outstanding Common
Stock may subscribe to purchase Units on the
basis of 4 Units for each 5 shares of Common
Stock owned on the Record Date. The number
of Rights will be determined by dividing
shareholdings (as adjusted for all prior
stock splits) by five, rounded down to the
nearest whole number, with the result
multiplied by four.

Expiration of Offering ....... November 8, 1996 at 5:00 p.m. New York Time.
Payment must be received by American Stock
Transfer & Trust Co. (the "Subscription
Agent") by this time.

Standby Offering(3) .......... The Underwriter will offer to sell the
components of the Units at a price not to
exceed the lowest asked prices then existing
at the time of sale as reflected on NASDAQ.
No Units and/or components thereof will be
offered by the Underwriter to the public
until at least two business days after the
Expiration Date of the Rights Offering. See
"The Offering" and "Underwriting".

Class B Warrants to be Issued
in the Offering (2) ........ 703,591 Class B Warrants.

Exercise Terms................ Each Class B Warrant entitles the holder
thereof to purchase one share of Common
Stock for $6.25 (the "Exercise Price"),
during the period commencing twelve months
(or sooner with the Underwriter's consent)
after the Effective Date, subject to
adjustment in certain circumstances. See
"Description of Securities -- Class B
Warrants".

Expiration Date............... October 9, 1999 (three years after the
Effective Date).

6
<PAGE>

Redemption.................... Redeemable by the Company, in whole or in
part, at a price of $.01 per Class B Warrant
commencing eighteen months after the
Effective Date but no sooner than 12 months
after the Warrants become exercisable;
provided that: (i) prior notice of not less
than 30 days is given to the Class B
Warrantholders; and (ii) the closing high
bid price of the Company's Common Stock, for
the 15 consecutive trading days ending on
the third day prior to the date on which the
Company gives notice, has been at least
$9.375 per share (to be adjusted for any
stock dividends and stock splits, and which
may be adjusted to 150% of the exercise
price of the Class B Warrants, if such
exercise price is changed). See "Description
of Securities -- Class B Warrants".

Use of Proceeds ............... The Company intends to use the net proceeds
of this Offering, amounting to approximately
$2,696,000 to pay the financial consulting
fee of $70,359 to the Underwriter and the
balance to paydown the amount outstanding on
its line of credit thereby increasing the
amount available under such line of credit
for future working capital and other needs
such as acquisitions. See "Use of Proceeds".

Risk Factors .................. The securities offered hereby involve a high
degree of risk and immediate substantial
dilution. See "Risk Factors" and "Dilution".

NASDAQ Symbols ................ Common Stock: ESTO
Class B Warrants: ESTOZ

Boston Stock Exchange
Symbols (4) ................. Common Stock: EST
Class B Warrants: ESTZ

- ------
(1) Does not include Common Stock which may be issued upon the exercise of
any options or warrants currently outstanding. The Company currently has
outstanding options and warrants to purchase 617,930 shares of Common
Stock exercisable at prices between $5.302 and $30.00 per share which
will be adjusted to acquire 630,887 shares at prices between $5.169 and
$30.00 as a result of anti- dilution rights due to this Offering.

(2) Does not include Common Stock which may be issued upon exercise of
Underwriter's Purchase Option and Optional Units.

(3) Since the Company's shares are to a large extent registered in the names
of brokers, banks, and trust companies who may not be the beneficial
holders of such securities and/or nominees, the Company is unable to
determine the number of beneficial holders (and the amount of shares
owned by such persons) that reside in states where this Offering is being
made. Accordingly, there can be no assurances given that any of the Units
offered hereby will be subscribed for by shareholders and in this event
absent the market-out provision, the Underwriter will be obligated to
purchase all unsubscribed Units. Should the Underwriter not purchase the
unsold Units in accordance with the market-out provision, shareholders
who have exercised the Rights will not have a right to cancel their
subscription and under such circumstances, the Company will retain the
monies from the Rights subscribed for. See "Underwriting".

(4) The Company's Common Stock has been approved for listing on the Boston
Stock Exchange upon completion of the Rights Offering which is expected
to occur on or about November 15, 1996.

7
<PAGE>

SUMMARY FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL DATA

The following is a summary of the Company's financial information
extracted from the indicated year end Consolidated Financial Statements of
the Company, and is qualified in its entirety by the detailed financial
information appearing in the Consolidated Financial Statements and the Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Net sales .............................$26,982,699 $24,024,897
Cost of sales ......................... 21,495,693 19,254,571
------------- -------------
Gross profit .......................... 5,487,006 4,770,326
------------- -------------
Selling, general and administrative
expenses ........................... 4,546,222 4,148,517
Interest .............................. 836,359 583,665
Other expense (income)(net) ........... 16,388 (39,793)
Settlement with former underwriter ........ 78,000 --
------------- -------------
Total expenses ......................... 5,476,969 4,692,389
------------- -------------
Net income ............................ $ 10,037 $ 77,937
============= =============
Net income per share(1):
Primary ............................ $ .02 $ .20
============= =============
Assuming full dilution ............. $ .02 $ .17
============= =============
Average number of shares used in
computing per share amounts:
Primary ............................... 595,758 392,529
============= =============
Assuming full dilution ................ 595,758 471,698
============= =============
</TABLE>

CONSOLIDATED BALANCE SHEET DATA:

<TABLE>
<CAPTION>
As at June 30, 1996
----------------------------------------------
As at Pro-Forma
June 30, Pro- as
1995 Historical Forma(1) Adjusted(2)
------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Current Assets ...... $ 9,265,149 $10,987,100 $11,158,100 $11,228,459
Current Liabilities . 8,200,620 9,434,587 9,434,587 6,809,325
Working Capital ..... 1,064,529 1,552,513 1,723,513 4,419,134
Total Assets ........ 10,716,048 12,472,105 12,643,105 12,713,464
Long-Term Debt ...... 489,782 433,738 433,738 433,738
Total Liabilities ... 8,690,402 9,868,325 9,868,325 7,243,063
Shareholders' Equity 2,025,646 2,603,780 2,774,780 5,470,401
</TABLE>

- ------
(1) Adjusted to give effect to shares issued in a private placement with net
proceeds to the Company of $171,000.

(2) Adjusted to give effect to shares issued in the Rights Offering and the
sale of units offered and the receipt of $2,695,621 in net proceeds and
their initial application which is to prepay the Underwriter $70,359 for
a one year consulting agreement with the balance going to pay down the
amount outstanding on the Company's line of credit.

8
<PAGE>

RISK FACTORS

The securities offered hereby are highly speculative and should be
purchased only by persons who can afford to lose their entire investment in
the Company. Each prospective investor should carefully consider the
following risk factors, as well as all other information set forth elsewhere
in this Prospectus:

HISTORY OF PREVIOUS SIGNIFICANT LOSSES. Although for the fiscal years
ended June 30, 1996 and 1995, the Company had net income of $10,037 and
$77,937, respectively, the Company incurred losses (before extraordinary
items) of ($2,711,378), ($858,326), ($1,362,761) and ($1,388,831),
respectively, for the fiscal years ended June 30, 1994, 1993, 1992 and 1991.
Other than for the fiscal years ended June 30, 1996 and 1995, the Company has
not had a profitable fiscal year since its fiscal year ended June 30, 1989.
As of June 30, 1996, the Company had an accumulated deficit of $4,230,555
compared to an accumulated deficit of $4,240,592 as of June 30, 1995. There
can be no assurances that the Company will be profitable or will not incur
losses in the future. Recent hurricanes have adversely affected production
and shipments in Puerto Rico. As a result, preliminary sales information
indicates a decline of approximately $500,000 in the first quarter of fiscal
1997 when compared to sales in the first quarter of fiscal 1996 of
$6,522,386. However, the Company's production facilities have not been
damaged and the Company believes that such adverse effects will be temporary.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Consolidated Financial Statements".

LENDING ARRANGEMENTS; LIENS ON THE COMPANY'S ASSETS; USE OF ALL OF NET
PROCEEDS TOWARD PAYMENT OF DEBT. The Company is dependent upon its revolving
line of credit with Congress Financial Corporation ("Congress"), which as
revised during July, 1996, expires October 1, 1999, except that Congress at
its sole option may extend the termination date to October 1, 2000. The line
of credit was increased from $6,000,000 to $9,000,000 as of July, 1996.
Interest is payable monthly at 1.25% (previously 2.25%) over a prime rate,
with provision to further reduce such rate to 1% over the prime rate upon
consummation of this Offering for net proceeds of at least $2,500,000 which
must occur no later than December 31, 1996. Borrowings are currently limited
to 55% of the Company's eligible inventory and 85% of the Company's eligible
accounts receivable. As of June 30, 1996, the amount outstanding on the line
of credit was approximately $5,558,000, with an availability of borrowing
$76,000 based upon accounts receivable and inventory at that date. The loan
is subject to certain working capital and net worth covenants and is
collateralized by all of the Company's assets not previously pledged under
other loan agreements. Although the Company will use substantially all of the
net proceeds of this offering to reduce outstanding indebtedness under its
credit facility (See "Use of Proceeds"), the Company will, in all likelihood,
draw down funds under such facility in the future in order to continue to
finance its operations. In the event that the Company is unable to obtain
financing from its principal lender or alternative sources of financing, or
if able to do so but not on favorable terms, the Company's ability to operate
profitably could be materially adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

In the event that the Company fails to comply with its obligations, the
Company's indebtedness could be declared immediately due and payable and, in
certain cases, the Company's assets could be foreclosed upon. Moreover, to
the extent that all of the Company's assets continue to be pledged to secure
outstanding indebtedness, such assets are unavailable to secure additional
debt financing, which may adversely affect the Company's ability to borrow in
the future.

ASBESTOS LITIGATION AGAINST THE COMPANY. The Company, in the past,
manufactured certain products made of asbestos. Such use was terminated by
the Company in the mid-1980's. It has been alleged that asbestos is a cause
of cancer, such as asbestosis, mesothelioma, and other related diseases, the
symptoms of which may not appear for twenty or more years. Since the early
1980's, numerous lawsuits have been instituted against the Company by persons
who have been exposed to asbestos and asbestos products.

As of June 30, 1996, the Company estimates that it is a party to
approximately 280 cases with respect to exposure to asbestos involving
approximately 1300 plaintiffs. All of the actions against the Company to date
have been brought by non-employees of the Company and are based upon personal
injury claims.

These actions are pending in the states of New York, New Jersey, and
Pennsylvania. The number of first-party plaintiffs include, in various
instances, spouses of said plaintiffs. The actions, with the exception of one
pending action, involve a multitude of defendants. The complaints allege
exposure to asbestos and asbestos products over various periods of time. Each
seeks varying amounts of damages, usually unlimited, or for each plaintiff as
high as $10,000,000 for compensatory damages and $20,000,000 for punitive
damages.

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From 1981 through June 30, 1996, the Company estimates that approximately
900 actions on behalf of approximately 7500 first-party plaintiffs have been
instituted against it concerning asbestos-related claims, and that the claims
of approximately 6200 plaintiffs have been terminated against the Company.
The Company estimates that, with the exception of defense costs, a total of
approximately $1,400,000 has been paid, or agreed to be paid, in settlements
to date with regard to the terminated actions, of which all but approximately
$30,000 has been or will be paid by the Company's insurance carriers. Through
June 30, 1996, the Company has paid less than approximately $35,000 for legal
and defense costs to counsel appointed by the insurance carriers to defend
it. Past results of settlements and defense costs are not necessarily
indicative of future settlements and defense costs which the Company is
unable to predict.

The existence of the asbestos litigation may have an adverse effect upon
the financial liquidity of the Company in the future. The Company is unable
to predict the outcome of this uncertainty or the total extent to which its
insurance carriers will provide coverage. Based upon prior experience, the
Company believes that additional claims will be filed in the future. Further,
the Company's independent auditors report emphasizes the uncertainties of
these matters. See "Legal Proceedings" for a description of asbestos and
other litigation pending against the Company.

INSURANCE COVERAGE APPLICABLE TO ASBESTOS LITIGATION -- PERIODS OF NON-
COVERAGE. For the period commencing April 1, 1968 to April 1, 1969 and March
11, 1971 to November 27, 1985, the Company believes that it has various
policies of primary insurance in different amounts which would protect it
against liability for asbestos-made, product-related personal injuries. The
policies range in amounts from $50,000 to $1,000,000 on an annual basis. The
Company also believes that since August 10, 1972 to on or about August 11,
1986 it has had various policies for excess coverage applicable to asbestos
claims on an annual basis. These policies range in amounts from $500,000 to
$10,000,000 for excess coverage. There are gaps of approximately six weeks in
the primary coverage between March 11, 1971 to November 27, 1985 and
approximately thirty-six months in the excess coverage between August 10,
1972 and August 11, 1986, and an additional period of approximately thirteen
months for excess coverage insurance companies in liquidation, where there is
likely to be no coverage. The policies of insurance are not applicable to all
of the subsidiaries of the Company, which have varying coverage, and such
subsidiaries may also be without coverage for various times of their doing
business. Not all of these policies are in the possession of the Company.

Effective June 26, 1990, an agreement between Eastco and its primary
insurance carriers dated March 26, 1990 became effective. Eastco entered into
this agreement in an effort to resolve uncertainties as to its insurance
coverage which will cover asbestos claims against the parent Company, Eastco,
where any exposure to asbestos is alleged during the period 1971 to 1985,
inclusive. Pursuant to this agreement, the Company is obligated to share in
the payment of asbestos-related claims against Eastco. Pursuant to the
agreement, the Company is obligated to pay 12% of all attorneys' fees
incurred on its behalf and 17% of indemnity costs (which include judgment and
settlement amounts). The balance of these costs are to be paid by the
insurance carriers, which are parties to the agreement. The agreement is
subject to policy limitations of each insurance policy. The agreement may be
terminated at any time upon ninety (90) days' notice by any of the parties
provided that termination may not be effective as to any asbestos action that
has already been placed on the trial calendar, unless it has a scheduled
trial date more than twelve (12) months from the date the notice of
termination is given. The Company is aware of only one case pending against
it which is on the trial calendar.

Effective during May, 1991, the Company entered into a Settlement
Agreement and Release with Mount Vernon Fire Insurance Company. The Company
discontinued its action against Mount Vernon, which provided that, subject to
the terms of the agreement, Mount Vernon would reimburse the Company (where
applicable) for 6.25% of attorneys' fees (52.08% of the Company's 12% share
referred to in the agreement in the previous paragraph) and 6.25% of
indemnification costs (36.76% of the Company's 17% share referred to in the
agreement in the previous paragraph). The agreement is not applicable to any
asbestos actions against the Company where no exposure is alleged to products
manufactured or distributed by Eastco between April 1, 1968 and April 1,
1969. The agreement may be terminated at any time upon 90 days' notice, but
such notice is not applicable to asbestos actions placed on a trial calendar,
unless such has a trial date more than twelve months from the date the notice
of termination is given. The agreement provides that the limit available
under the policy is $100,000 plus attorneys' fees while the agreement is in
effect and is applicable only to the parent Company, Eastco. Approximately
$25,000 has been reimbursed by Mount Vernon Fire Insurance Company as of June
30, 1996 for indemnification.

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<PAGE>

During fiscal 1994, the Company reached a settlement (the "1994
Settlement") pertaining to all pending and future cases against it in the
State of New York brought by one firm of plaintiffs' attorneys, which firm
has been primarily responsible for bringing asbestos actions against the
Company in the State of New York. The settlement does not apply to Puerto
Rico Safety Equipment and is only applicable to cases brought by the same law
firm against the Company in the State of New York. The Company is to be
dismissed without any payment in cases not involving any exposure to a power
generating station in the State of New York ("Powerhouse"). Where there is
Powerhouse exposure, a payment of $100 is to be made for each alleged
nonmalignant case and $300 for each malignant case. Where plaintiffs consist
of two spouses, such is deemed one case. Payment is to await appropriate
documentation of exposure, releases from the plaintiffs and the agreement of
each plaintiff whose case is settled.

The two agreements referred to above between the Company and the insurance
carriers may not be applicable to Puerto Rico Safety Equipment, which is
covered by other insurance. To date, the claims settled by Puerto Rico Safety
Equipment have been paid in full by insurance. No agreement has been reached
with the insurance companies confirming all of these policies, which range
from $100,000 to $500,000 for primary coverage and $1,000,000 to $5,000,000
for excess coverage. The policies for Puerto Rico Safety Equipment cover the
period March 11, 1971 to July 23, 1986 with various gaps of fourteen months
on primary coverage and forty-two months on excess coverage.

The Company is unable to ascertain the total extent of insurance
applicable to asbestos claims against it or the extent to which its insurance
carriers will provide coverage. The Company's insurance may not provide
coverage for punitive damages where such damages are sought against it in
pending litigation. Punitive damages are allowable in addition to
compensatory damages and are awarded as a punishment to the defendant for
wrongs in a particular case as well as for the protection of the public
against similar acts, to deter the defendant from a repetition of the
wrongful act and to serve as a warning to others. Usually a wrong, aggravated
by an evil or wrongful motive or a willful and intentional misdoing or a
reckless indifference equivalent thereto, is required for a court to award
punitive damages. The Company is unable to specify whether its actions would
give rise to punitive damages. It believes that its actions should not give
rise to punitive damages. There, however, can be no assurance that this will
be the case. See "Legal Proceedings".

RECENT ISSUANCE OF SUBSTANTIAL SHARES AT REDUCED PRICE. During June and
July of 1996, the Company issued 513,000 shares at $1.50 per share at a time
when the market price range was approximately $8 to $12 per share and the
Company was contemplating a prospective rights offering at approximately
$5.00 per share. This offering was authorized to provide proceeds to pay
loans and provide working capital. None of the Company's officers, directors
or persons associated or affiliated with them participated in the Offering.
Melinda Tyrwhitt (owner of 38,000 shares or 7.4% of both placements), is the
married daughter of Anthony P. Towell, the Company's Chief Financial Officer,
and a Director and Mr. Towell disclaims beneficial ownership of these shares.
No other person has had a prior relationship with the Company, with the
exception of Heather Reiser (owner of 21,667 shares or 4.2% of both
placements) whose husband is affiliated with Donald & Co., the Company's
investment advisor. The shares issued are being registered for sale
concurrently herewith. Holders of 114,000 of these shares have agreed not to
sell their shares for nine months from the date hereof. See "Concurrent
Registration of Common Stock" and "Recent Private Placements".

GOVERNMENT REGULATION; NO ASSURANCE OF COMPLIANCE WITH OSHA. The Company's
manufacturing facilities are subject to regulation and inspection standards
established by the Occupational Safety and Health Administration ("OSHA"),
which were enacted, in part, to require employers to supply protective
clothing in certain work environments. To date, the Company's manufacturing
facilities have not been inspected for compliance with the standards
established by OSHA. Various of the Company's products are also subject to
other governmental standards. Although the Company believes that it is in
material compliance with current standards, there can be no assurance that
any inspection will not reveal that the Company has failed to comply with the
standards established by OSHA and that, as a result, the Company may be
required to expend sums, which can be costly, to assure compliance with OSHA
regulations.

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<PAGE>

such products. The Company had inventory of approximately $5,230,000 and
$4,364,000, as of June 30, 1996 and June 30, 1995, respectively. Although the
Company believes it currently maintains sufficient inventories, prior to a
1994 public offering (the "1994 Offering"), the Company experienced periods
where it did not have sufficient working capital to maintain its inventories
to meet the demands of certain of its customers. There can be no assurance
that the Company will be able to maintain sufficient inventories or the
Company will not return to periods where there is insufficient working
capital to maintain its inventories to meet the needs of its customers.

DEPENDENCE UPON DUPONT FOR SUPPLY OF TYVEK.(R) The Company is not
dependent upon any one company for a source of supply of raw materials for
its manufacturing operations other than DuPont, which supplies the Company
with Tyvek(R), a raw material which is used in various lines of its
disposable products. Products utilizing Tyvek(R) accounted for approximately
41% and 35% of consolidated sales for the fiscal years ended June 30, 1996
and June 30, 1995, respectively. Management believes that its current
relationship with DuPont is satisfactory. The Company has no contract with
DuPont for the supply of such raw material; therefore, DuPont could terminate
its relationship with the Company at any time. The Company does not believe
that an alternative source exists for the supply of Tyvek(R). Accordingly,
the loss of DuPont as a supplier of Tyvek(R) would have a material adverse
effect on the Company's operations.

NO DIVIDENDS. The Company intends to retain future earnings to finance
future growth. Accordingly, any potential investor who anticipates the need
for dividends for his investment should not purchase any of the securities
offered hereby. In addition, the Company's agreement with Congress contains
restrictions which prohibit the Company from paying cash dividends.

COMPETITION. The market for industrial protective clothing products and
industrial safety products is extremely competitive. The Company faces
competition in all of its product markets from large, established companies
that have greater financial, managerial, sales and technical resources than
the Company, and some of the Company's product markets are dominated by such
larger companies. Where larger competitors offer products that are directly
competitive with the Company's products, particularly as part of an
established line of products, there can be no assurance that the Company can
successfully compete for sales and customers. Larger competitors also may be
able to benefit from economies of scale or to introduce new products that
compete with the Company's products. There can be no assurance that the
Company can successfully compete in any of its product markets.

BROAD DISCRETION ON USE OF PROCEEDS. The net proceeds from the sale of the
Units will be approximately $2,696,000. The Company intends to use the net
proceeds of this Offering to prepay to the Underwriter $70,359 for a one year
consulting agreement with the balance going to paydown of the amount
outstanding on its line of credit thereby increasing the amount available
under such line of credit for future working capital and other needs such as
acquisitions. Although the Company may use substantially all of the net
proceeds of this offering to reduce outstanding indebtedness under its credit
facility, the Company will, in all likelihood, draw down funds under such
facility in the future in order to continue to finance its operations. The
proceeds of the Company's line of credit with Congress are used for working
capital and general corporate purposes which includes salaries, purchase of
inventory, marketing, and other applicable corporate expenses and needs. As a
result of the foregoing, the Company will have broad discretion in allocating
a substantial portion of the net proceeds of this Offering. See "Use of
Proceeds".

UNSPECIFIED ACQUISITIONS. The Company has broad flexibility in utilizing
the net proceeds of this Offering. It may utilize a substantial portion of
the proceeds to make unspecified acquisitions. The Company has been having
ongoing discussions with several companies regarding possible acquisitions
but has not entered into any definitive agreement or understanding with
respect to any such acquisition. No assurances can be given that any such
acquisition will be consummated, or if consummated, that such acquisition
will be successful. The Company's shareholders and investors in this Offering
are likely not to be able to vote on, or review the financial statements of
any such acquisitions. See "Use of Proceeds".

BENEFIT OF USE OF PROCEEDS FOR MANAGEMENT. In September 1993, the Company
received an overadvance of $500,000 from Congress. In connection therewith,
Messrs. A. Densen, L. Densen and A. Towell, directors and executive officers
of the Company, obtained a $250,000 junior participation in the loans made to
the Company from Congress by advancing $250,000 of their funds to Congress.
$250,000 of this overadvance has been repaid to Congress. $35,000 has been
repaid to L. Densen. The balance of $215,000 will

12
<PAGE>

be repaid by Congress, at its option, to Messrs. A. Densen and A. Towell,
subject to the availability of funds under the revolving line of credit. The
effect of the application of the proceeds of this Offering to the reduction
of the monies owed to Congress should have the effect of enabling the balance
of the overadvance of $215,000 to be repaid to Messrs. A. Densen and A.
Towell. See "Use of Proceeds."

LIMITATION ON NET OPERATING LOSS CARRYFORWARDS. As of June 30, 1996, the
Company had Federal net operating loss carryforwards for income tax purposes
of approximately $4,738,000 which expire through the year 2011. These
carryforwards are subject to limitations on the amount that can be utilized
by the Company in a fiscal year due to "change of ownership" rules as defined
by applicable Federal tax statutes. The amount of income which may be offset
after an ownership change is determined by multiplying the fair market value
of the Company at the time of the ownership change by the long-term tax
exempt rate. To the extent that such annual limitation is not utilized, it
may be further carried forward until the carryforward would have otherwise
expired. A "change in ownership" occurred upon the completion of two 1996
private placements ("Recent Private Placements"). See "Recent Private
Placements". Based upon the number of shares offered in the Recent Private
Placements and the applicable long-term tax exempt rate, the Company's
ability to utilize its net operating carryforward losses in future years is
limited to approximately $345,000 per year. A change in ownership may also
occur upon the completion of this Offering and the Company's ability to
utilize its net operating loss carryforwards could be further limited.

RELIANCE ON CURRENT MANAGEMENT. The Company's current operations and
future success is greatly dependent upon the services of Mr. Alan Densen, its
President, Lawrence Densen, its Senior Vice President and Anthony P. Towell,
its Vice President of Finance. The loss of services of any of the foregoing,
who are each employed under written agreements for five year terms, could
have a material adverse effect on the Company. There is no key man insurance
on the life of the executive officers of the Company. See "Management".

CONTROL BY MANAGEMENT. As of the date of this Prospectus, the Company's
executive officers and directors own of record and beneficially (assuming
exercise of all their options and warrants), an aggregate of approximately
23% of the Company's outstanding Common Stock and may be in a position to
have significant influence over the outcome of all matters submitted to
stockholders for approval, including the election of directors of the
Company, as a result of their control of such shares which will vote on all
matters. The Company's Board of Directors is divided into two classes, each
of which generally serves for a term of two years, with only one class of
directors being elected in each year. A classified board under certain
circumstances could discourage, prevent or delay a change in control of the
Company, which could have the effect of discouraging bids for the Company and
thereby prevent shareholders from receiving the maximum value for their
shares. In addition, there are provisions in the employment agreements with
Messrs. A. Densen, A. Towell and L. Densen, that provide for them to receive
immediately a lump sum payment of three years' compensation as well as
severance pay should a "Change in Control" occur, which also could have a
similar effect of deterring bids for the Company. Messrs. A. Densen, L.
Densen, and A. Towell, in modification agreements to their employment
agreements, have waived: (i) their right to bonuses based upon the Company's
earnings before interest and taxes for the fiscal years ended June 30, 1996
through June 30, 2000; (ii) their exercise rights on options and warrants and
repayment of their junior participation interests with Congress and
compensation payable in the event of a Change in Control with respect to the
Offerings; and (iii) their right to terminate their relationship with the
Company, as per the terms of their respective employment agreements. The
modification agreements and waivers provide that their right to terminate
their employment agreements and waiver of their bonuses shall not be waived
in the event that there is a material breach of such agreements by the
Company. Messrs. A. Densen, L. Densen and A. Towell have agreed that the
issuance of shares in this Offering will not result in any "Change of
Control" rights under their respective employment agreements. See
"Management" and "Executive Compensation -- Employment Agreements and Change
of Control Features".

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<PAGE>

holders. Moreover, the terms upon which the Company will be able to obtain
additional equity capital may be adversely affected since the holders of
outstanding options and warrants can be expected to exercise or convert them
at a time when the Company would, in all likelihood, be able to obtain any
needed capital on terms more favorable to the Company than those provided in
such securities. Outstanding options and warrants did not materially dilute
earnings per share in 1996, but could do so in the future if there is a
significant increase in the spread between their exercise price and the
quoted market price of the Company's Common Stock.

IMMEDIATE AND SUBSTANTIAL DILUTION. As of June 30, 1996, the pro-forma net
tangible book value, giving effect to the private placement closed in July
1996, of the Company was $2,724,059 or approximately $3.10 per share of
Common Stock, based upon 879,488 shares outstanding. Investors participating
in the Offering will incur immediate dilution in the pro-forma net tangible
book value of $1.58 per share, which is approximately 32%, based upon a
(subscription) price of $5.00 allocated in full to the Common Stock. See
"Dilution".

NON-REGISTRATION IN CERTAIN JURISDICTIONS OF SHARES UNDERLYING THE CLASS B
WARRANTS. Although the Units will not knowingly be sold to purchasers in
jurisdictions in which they are not registered or otherwise qualified for
sale, purchasers may buy Units or Class B Warrants in the aftermarket or may
move to jurisdictions in which the shares of Common Stock issuable upon
exercise of the Class B Warrants are not so registered or qualified during
the period that the Class B Warrants are exercisable. In such event, the
Company would be unable to issue shares to those persons desiring to exercise
their Class B Warrants unless and until the shares could be registered or
qualified for sale in the jurisdiction in which such purchasers reside, or an
exemption to such qualification exists in such jurisdiction. If the Company
were unable to register or qualify the shares in a particular state and no
exemption to such registration or qualification was available in such
jurisdiction, in order to realize any economic benefit from purchase of the
Class B Warrants, a holder might have to sell the Class B Warrants rather
exercise them. No assurance can be given, however, as to the ability of the
Company to effect any required registration or qualification of the Units,
Common Stock or Class B Warrants in any jurisdiction in which qualification
of registration has not already become effective. See "Description of
Securities -- Class B Warrants."

CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION REQUIRED TO EXERCISE
CLASS B WARRANTS. Holders of the Class B Warrants will have the right to
exercise the Class B Warrants for the purchase of shares of Common Stock only
if a current prospectus relating to such shares is then in effect and only if
the shares are qualified for sale under the securities laws of the applicable
state or states. The Company has undertaken and intends to file and keep
current the Prospectus which will permit the purchase and sale of the Common
Stock underlying the Class B Warrants, but there can be no assurance that the
Company will be able to do so. Although the Company intends to seek to
qualify for sale the shares of Common Stock underlying the Class B Warrants
in those states in which the securities are to be offered, no assurance can
be given that such qualification will occur. The Class B Warrants may be
deprived of any underlying shares which are not, or cannot be, registered in
the applicable states. See "Description of Securities -- Class B Warrants."

PENNY STOCK REGULATION. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks."
Penny stocks generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities exchanges or
quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in such securities is provided by
the exchange or system). The penny stock rules require a broker-dealer, prior
to a transaction in a penny stock not otherwise exempt from the rules to
deliver a standardized risk disclosure document prepared by the Commission
that provides information about penny stocks and the nature and level risks
in the penny stock market. The broker-dealer must also provide the customer
with current bid and offer quotations for the penny stock, the compensation
of the broker-dealer and its salesperson in the transaction, and monthly
account statements showing the market value of each penny stock held in the
customer's account. The bid and offer quotations, and broker-dealer and
salesperson compensation information must be given to the customer orally or
in writing prior to effecting the transaction and must be given in writing
before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction of a penny stock not otherwise
exempt from such rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These

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<PAGE>

disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the
penny stock rules. If the Company's securities become subject to the penny
stock rules, investors in this offering may find it more difficult to sell
such securities.

Although the Company believes that its securities will, as of the date of
this Prospectus, be outside the definitional scope of a penny stock, as it
will be listed on NASDAQ, in the event the Common Stock were subsequently to
become characterized as a penny stock, the market liquidity for the Company's
securities could be severely affected. In such event, the regulations on
penny stocks could limit the ability of broker-dealers to sell the Company's
securities, and thus, the ability of purchasers in this offering to sell
their securities in the secondary market.

RELATIONSHIP OF UNDERWRITER TO TRADING. Subsequent to the Underwriter
completing its distribution of any securities it acquires pursuant to the
Standby Offering, the Underwriter intends to be a market maker for the Common
Stock and Class B Warrants underlying the Units. The Underwriter also has the
right to act as the Company's exclusive agent in connection with any future
solicitation of warrantholders to exercise their Class B Warrants. Unless
granted an exemption by the Commission from Rule 10b-6 promulgated under the
Exchange Act, the Underwriter will be prohibited from engaging in any
market-making activities or solicited brokerage activities with regard to the
Company's securities during a period beginning two or nine business days,
whichever is applicable, prior to the commencement of any such solicitation
and ending on the later of the termination of such solicitation activity or
the termination (by waiver or otherwise) of any right that the Underwriter
may have to receive a fee for soliciting the exercise of the Class B
Warrants. As a result, the Underwriter may be unable to continue to make a
market for the Company's securities during certain periods while the Class B
Warrants are exercisable. Such a limitation, while in effect, could impair
the liquidity and market price of the Company's securities. See
"Underwriting."

NO PUBLIC MARKET FOR THE COMPANY'S UNITS AND CLASS B WARRANTS; POSSIBLE
VOLATILITY OF STOCK PRICE; ARBITRARY DETERMINATION OF SUBSCRIPTION PRICE.
The Common Stock and Class B Warrants are immediately detachable from the
Units and are separately tradeable. The Company will not apply for a listing
of the Units on NASDAQ and as a result, such Units are not likely to be
tradeable, although it is possible that some broker-dealers may seek to have
the Units listed on the NASD Electronic Bulletin Board or, in the National
Quotation Bureau's pink sheets at some time in the future. Prior to this
Offering, there has been no public market for the Class B Warrants, and there
can be no assurance that a market will develop at the conclusion of the
Offering, or if developed, that it will be sustained. In addition, if any
market does develop, the market price of these securities might be volatile.
Factors such as announcements by the Company or its competitors concerning
proposed plans, procedures and proposed government regulations, losses and
litigation may have a significant effect on the market price of the Company's
securities. Changes in the market price of the Company's securities may have
no connection with the Company's actual financial results.

In addition, the stock market has experienced extreme price and volume
fluctuations which have particularly affected the market prices for many
companies and which have often been unrelated to the operating performance of
the specific companies. These broad market fluctuations may adversely affect
the market price of the Company's securities. The Underwriter has the right
after 30 days from the commencement of trading on NASDAQ on at least 15
business days notice to NASDAQ to request the Company to de-list from NASDAQ
the Class B Warrants, which could have an adverse effect upon their trading.

UNDERWRITER'S WARRANTS, OPTIONAL UNITS, AND REGISTRATION RIGHTS. The
Company will sell to the Underwriter, for nominal consideration,
Underwriter's Warrants to purchase one Unit for each ten Units actually sold
in the Offering at an exercise price of $6.00, regardless of the number of
Units purchased by the Underwriter. The Underwriter's Warrants may not be
sold, transferred, assigned or hypothecated for a period of one year from the
Effective Date, except to officers of the Underwriter. Exercise of the
Underwriter's Warrants, which may be effected at any time, either in whole or
in part, beginning 12 months after the Effective Date and not more than four
years thereafter, may dilute the value of the Common Stock, may adversely
affect the Company's ability to obtain equity capital, and, if the Common
Stock issuable upon the exercise of the Underwriter's Warrants is sold in the
public market, may adversely affect the market price of the Common Stock. The
Units issuable upon exercise of the Underwriter's Warrants, the Common Stock
and Class

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<PAGE>

B Warrants comprising such Units, and the Common Stock issuable upon exercise
of the Class B Warrants, have been included in the Registration Statement of
which this Prospectus forms a part. The Company has an obligation to keep
such registration statement current, which could result in substantial
expense to the Company. This obligation is in addition to the demand
registration rights granted to the Underwriter in connection with the
Offering. In the event that the number of the unsubscribed Units to be
purchased by the Underwriter is less than 300,000 Units, the Underwriter will
have the right but not the obligation to purchase such number of Units that
will bring the total number of Units to be purchased by the Underwriter up to
a total of 300,000 Units. Any profit received by the Underwriter either from
the sale of the Underwriter's Warrants or from the sale of the shares of
Common Stock purchasable upon exercise of the Underwriter's Warrant may be
deemed additional underwriting compensation. See "Underwriting" with respect
to these and other rights to compensation that the Underwriter has.

STATE SECURITIES LAWS. The Offering with respect to the exercise of Rights
has been qualified or is exempt from qualification in the states listed on
page 3 of this Prospectus.Residents of other jurisdictions may not purchase
Units or exercise Class B Warrants unless they can demonstrate to the Company
that under the particular state's securities laws, an exemption is available
for their transaction. This Prospectus does not constitute an offer other
than those to which it specifically relates, or a solicitation of an offer to
buy from any person or entity in any jurisdiction in which such offer or
solicitation is unlawful. See "Restrictions in Certain States."

FAILURE TO CONSUMMATE STANDBY OFFERING; RETENTION OF RIGHTS
SUBSCRIPTIONS. In the event that all of the Units offered hereby are not
sold pursuant to the exercise of Rights, the Underwriter has agreed, on a
firm commitment basis, to take and pay for all of the unsold Units, except
if, in the reasonable judgment of the Underwriter, it is impracticable to
consummate the Standby Offering under normal "market out" conditions, such as
(i) the Company having sustained a material loss of whatsoever nature, except
losses which occur as result of litigations solely and unequivocally based 1)
upon asbestos provided that the Company remains and/or would remain a viable
entity, and 2) upon product liability provided such litigation is covered
under the Company's basic product liability insurance coverage and to the
extent that the losses in excess of such insurance coverage do not cause the
Company to be and/or result in it becoming an inviable entity, whether or not
insured, which, in the sole and absolute opinion of the Underwriter,
substantially affects the value of the property of the Company or materially
interferes with the operation of the business of the Company, (ii) any
material adverse change in the business, property or financial condition of
the Company, (iii) trading in securities on the New York Stock Exchange, the
American Stock Exchange or NASDAQ System having been suspended or limited or
minimum prices having been established on either such Exchange or System,
(iv) a banking moratorium having been declared by either federal or state
authorities, (v) an outbreak of major hostilities or other national or
international calamity having occurred, (vi) any action having been taken by
any government in respect of its monetary affairs which, in the reasonable
opinion of the Underwriter, has a material adverse effect on the United
States securities markets; (vii) any action, suit or proceeding at law or in
equity against the Company, or by any Federal, State or other Commission,
board or agency wherein any unfavorable decision would materially adversely
effect the business, property, financial condition or income of the Company;
or (viii) due to conditions arising subsequent to the execution hereof, the
Underwriter reasonably believes that, as a result of material and adverse
events affecting the market for the Company's Common Stock or the securities
markets in general, it is impracticable or inadvisable to proceed with the
Standby Offering. Accordingly should the Underwriter not purchase the unsold
shares in accordance with the market out conditions, shareholders who have
exercised the Rights will not have a right to cancel their subscription and
under such circumstances, the Company will retain the monies from the Rights
subscribed for. The Rights Offering is distinct and separate from the Standby
Offering under which the Underwriter has a "market out" right of cancellation
as described above. In such event, investors may be vulnerable to illiquidity
and/or a loss of their entire investment and the Company may also be at a
greater risk of default and accelerated repayment of the Congress loan. See
"The Offering" and "Underwriting".

16
<PAGE>

Company from operations are entitled to a 100% dividends received deduction
but are subject to a 10% withholding tax in Puerto Rico. The Omnibus Budget
Reconciliation Act of 1993 (the "Omnibus Act") imposes new limitations on
computing the Possession Tax Credit under Section 936 for tax years beginning
after 1993. There are two methods for determining the credit under the new
law. Under the first method, the amount of the credit may be determined by
using the so-called economic activity limit. This attempts to limit the
credit by applying various percentages to possession-based compensation,
depreciation and taxes paid or accrued. Alternatively, the Company may make
an irrevocable election when it files its June 30, 1996 federal income tax
return to have present rules apply, but to phase out the credit to 60% of the
1994 level, and further phase down by 5% per year to 40% in 1998 and years
thereafter. Since the credit is a function of future earnings, if any, the
effect of such limitations cannot be determined at the present time. In
addition, the Omnibus Act makes the 100% dividends received deduction subject
to the Alternative Minimum Tax Calculation. No dividends have been declared
on the aggregate undistributed earnings of Puerto Rico Safety Equipment and
Disposable (which through June 30, 1996, aggregates approximately $2,321,000)
and none are intended to be declared because it is management's intention to
reinvest the earnings from such subsidiaries indefinitely. The Company
believes that based upon current operations, the Omnibus Act will not have a
material effect on the Company for the foreseeable future. The Small Business
Job Protection Act of 1996 further limits the Possession tax credit for years
beginning after 2001 with the credit being eliminated for tax years beginning
after 2005.

As Puerto Rico tax exemptions are reduced or expire, the Company may be
required to pay taxes on income earned in Puerto Rico. The Company is unable
to predict the amount of such impact after such exemptions are reduced or
expire.

SHARES ELIGIBLE FOR FUTURE SALE. There are 879,488 shares of Common Stock
of the Company outstanding as of the Effective Date. Of these shares 528,607
shares are restricted securities, as that term is defined in Rule 144
promulgated under the Securities Act of 1933 (the "Securities Act"). Of the
restricted securities, 513,000 shares are being registered for sale, of which
holders of 114,000 shares have agreed not to sell their shares for nine
months from the Effective Date. See "Recent Private Placements" and
"Concurrent Registration of Common Stock". 14,602 of the shares are
restricted securities owned by officers and directors of the Company. Absent
registration under the Securities Act, the sale of such shares is subject to
Rule 144. In general, under Rule 144, subject to satisfaction of certain
other conditions, a person, including an affiliate of the Company, who has
beneficially owned restricted shares of Common Stock for at least two years
is entitled to sell, within any three-month period, a number of shares that
does not exceed the greater of 1% of the total number of outstanding shares
of the same class, or if the Common Stock is quoted on NASDAQ, the average
weekly trading volume during the four calendar weeks preceding the sale. A
person who has not been an affiliate of the Company for at least three months
immediately preceding the sale and who has beneficially owned the shares of
Common Stock for at least three years is entitled to sell such shares under
Rule 144 without regard to any of the volume limitations described above. The
Company's executive officers and directors have agreed not to sell their
shares for a period of twelve months from the Effective Date and an
additional six months without the prior consent of the Underwriter. The
Underwriter may consent to the sale of such shares at any time after 12
months from the date of this Prospectus, in its sole discretion, upon the
request of the holder. The Underwriter's decision to consent will be based
upon the current market conditions, liquidity of the Common Stock, as well as
such other factors the Underwriter deems appropriate. No public announcement
will be made with respect to the foregoing. See "Shares Eligible for Future
Sale".

AUTHORITY TO ISSUE BLANK CHECK PREFERRED STOCK. The Company is authorized
to issue 1,000,000 shares of $.01 preferred stock without further action of
the stockholders in one or more series and to fix before issuance with
respect to each series: (a) the designation and the number of shares to
constitute each series, (b) the liquidation rights, if any, (c) the dividend
rights and rates, if any, (d) the rights and terms of redemption, if any, (e)
whether the shares will be subject to the operation of a sinking or
retirement fund, if any, (f) whether the shares are to be convertible or
exchangeable into other securities of the Company, and the rates thereof, if
any, (g) any limitation on the payment of dividends on the Common Stock while
any such series is outstanding, if any, (h) the voting power, if any, in
addition to the voting rights provided by law, of the shares, which voting
powers may be general or special, and (i) such other provisions as shall not
be inconsistent with the certificate of incorporation. All the shares of any
one series of the Preferred Stock shall be identical in all respects. The
Company's board of directors has broad discretion with regard to the issuance
of such shares. No preferred shares are currently outstanding. See
"Description of Securities -- Preferred Stock".

17
<PAGE>

USE OF PROCEEDS

The net proceeds from the sale of the Units will be approximately
$2,695,621. The Company intends to use the net proceeds of this Offering to
(a) prepay the Underwriter for a one year financial consulting agreement, a
fee equal to 2% of the gross proceeds, or $70,359; and (b) with the balance
going to paydown the amount outstanding on its line of credit thereby
increasing the amount available under such line of credit for future working
capital and other needs such as acquisitions. The Company has been having
ongoing discussions with several companies regarding possible acquisitions
but has not entered into any definitive agreement or understanding with
respect to any such acquisition. No assurances can be given that any such
acquisition will be consummated, or if consummated, that such acquisition
will be successful. Although the Company may use substantially all of the net
proceeds of this offering to reduce outstanding indebtedness under its credit
facility, the Company will, in all likelihood, draw down funds under such
facility in the future in order to continue to finance its operations. The
proceeds of the Company's line of credit with Congress are used for working
capital and general corporate purposes which includes salaries, purchase of
inventory, marketing, and other applicable corporate expenses and needs. The
effect of the application of the proceeds of this Offering to the reduction
of the monies owed to Congress should have the effect of enabling the balance
of the overadvance of $215,000 to be repaid to Messrs. A.Densen and A.
Towell. See "Certain Relationships and Related Transactions". Any proceeds
from the sale of Optional Units will also be utilized to further pay down the
Company's line of credit.

DILUTION

The purchasers of the Units offered hereby can expect an immediate and
substantial dilution of the net tangible book value of their investment. As
of June 30, 1996, the Common Stock of the Company had a pro forma net
tangible book value of $2,724,059 or approximately $3.10 per share, which
gives effect to the private placement closed in July 1996. The Company's pro
forma net tangible book value after the Offering will be $5,419,680 or $3.42
per share, representing an immediate increase in pro forma net tangible book
value of $.32 per share to the existing shareholders and an immediate
dilution of $1.58 per share or 32% to the persons purchasing the Common Stock
contained in the Units offered hereby. The following table illustrates the
per share dilution:

<TABLE>
<CAPTION>
<S> <C> <C>
Subscription Price ................................... $5.00
Pro-forma net tangible book value before offering .... $3.10
Increase in net tangible book value attributable to the
Common Stock offered by the Company (1) ............ .32
------
Pro-forma net tangible book value after offering(1) .. 3.42
-------
Dilution to new investors ............................ $1.58
=======
</TABLE>

- ------
(1) After deduction of standby fees, the Underwriter's non-accountable
expense allowance and estimated offering expenses paid by the Company.
None of the price is allocated to the Class B Warrants.
(2) Gives no effect to outstanding options or warrants, or options or
warrants to be issued in connection with this Offering.

18
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
June 30, 1996: (i) on an historical basis; (ii) on a pro-forma basis giving
effect to the sale of 114,000 shares in a private placement; and (iii) on
such pro-forma basis as adjusted giving effect to the Rights Offering and the
sale of Units and the application of the proceeds therefrom. This table
should be read in conjunction with the Company's consolidated financial
statements and notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
As of June 30, 1996
----------------------------------------------
Pro-
Pro- Forma As
Actual Forma (1) Adjusted (2)
------------- ------------- -------------
<S> <C> <C> <C>
Current Liabilities:
Loans Payable ........................................ $ 5,853,075 $ 5,853,075 $ 3,227,813
============= ============= =============
Long-Term Debt (including the current portion) ....... $ 489,782 $ 489,782 $ 489,782
------------- ------------- -------------
Stockholders' Equity:
Common Stock, $.12 par value; authorized 20,000,000
shares; issued and outstanding; 765,488 actual
outstanding, 879,488 pro-forma outstanding, 1,583,079
pro- forma as adjusted outstanding .................. 91,859 105,539 189,970
Additional paid-in capital ........................... 6,742,476 6,899,796 9,510,986
Accumulated Deficit .................................. (4,230,555) (4,230,555) (4,230,555)
------------- ------------- -------------
Total Stockholders' Equity ........................... 2,603,780 2,774,780 5,470,401
------------- ------------- -------------
Total Capitalization ................................. $ 3,093,562 $ 3,264,562 $ 5,960,183
============= ============= =============
</TABLE>

- ------
(1) Adjusted to give effect to the issuance of 114,000 shares in a private
placement with net proceeds of approximately $171,000 during July, 1996.
See Note 7 in the "Consolidated Financial Statements" and "Recent Private
Placements".

(2) Adjusted to give the effect to shares issued in the Rights Offering and
the sale of Units offered hereby and the receipt of $2,695,621 in net
proceeds and their initial application which is to prepay the Underwriter
$70,359 for a one year consulting agreement with the balance going to
paydown the amount outstanding on the Company's line of credit.

19
<PAGE>

MARKET INFORMATION

The principal market on which the Common Stock of the Company is traded is
the NASDAQ Small-Cap Market and its symbol is ESTO. The following chart sets
forth the high and low sales price as determined from NASDAQ for the Common
Stock for the periods indicated as adjusted for its reverse 1 for 10 stock
split effective August 12, 1996:

<TABLE>
<CAPTION>
High Low
--------- --------
<S> <C> <C>
Fiscal Year Ended June 30,
1995
----
First Quarter .................................... $17.50 $ 8.75
Second Quarter ................................... 14.38 5.63
Third Quarter .................................... 16.25 7.50
Fourth Quarter ................................... 17.50 10.00

1996
----
First Quarter .................................... $20.00 $15.00
Second Quarter ................................... 20.63 10.63
Third Quarter .................................... 14.38 7.50
Fourth Quarter ................................... 14.38 6.25

1997
----
First Quarter (July 1, 1996 through September 30,
1996) .......................................... $10.00 $ 5.63

</TABLE>

The approximate number of holders of record of the Common Stock, as of
September 17, 1996 was 325. The Company believes there are in excess of 1200
beneficial holders of the Common Stock. On September 30, 1996, the closing
price of the Common Stock was $5.63.

DIVIDEND POLICY

The payment by the Company of dividends, if any, rests within the
discretion of the Board of Directors and, among other things, will depend
upon the Company's earnings, capital requirements and financial condition, as
well as other relevant factors. The Company has not declared any dividends
since inception, and has no present intention of paying any dividends on its
Common Stock in the foreseeable future, as it intends to reinvest its
earnings, if any, in the Company's business. In addition, the Company's
lending arrangement with Congress prohibits the payment of dividends without
their consent.

20
<PAGE>

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

RESULTS OF OPERATIONS

FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995

The Company's net income for fiscal 1996 was approximately $10,000, which
included non-recurring expenses of approximately $113,000, comprised
primarily of the settlement costs with the Company's former underwriter and
costs incurred in connection with the issuance and repurchase of debentures,
compared to net income of approximately $78,000 for fiscal 1995.

Consolidated net sales during fiscal 1996 increased by 12.3% to
$26,983,000 from $24,025,000 during fiscal 1995. In fiscal 1996,
Manufacturing Operations revenues increased 20.9% to $17,889,000 from
$14,791,000, while Distribution Operations revenues decreased 1.5% to
$9,094,000 from $9,234,000. The Company believes that the overall increase in
sales was due to improved industry conditions in the manufacturing segment.

The Company's gross profit margin continues to increase resulting in a
20.3% gross profit margin in fiscal 1996 as compared to 19.9% in fiscal 1995.
The Company believes that this increase was due primarily to continued
manufacturing efficiencies, targeting sales that produce higher gross profits
and improved inventory position.

Selling, general, and administrative expenses for fiscal 1996 were
$4,546,000 or 16.8% of sales compared to $4,149,000 or 17.3% for the prior
fiscal year. The decrease as a sales percentage was due to the increase in
sales volume for the year as well as the effect of the Company's continuing
cost reductions and increased purchase discounts and advertising incentives
earned.

Interest expense was $836,000 for fiscal 1996 as compared to $584,000 in
the prior year. This increase was due principally due to increased borrowings
during the year for working capital, including establishing of sales-point
warehouses in the southwest and western areas of the United States.

Outstanding options and warrants did not materially dilute earnings per
share in 1996, but could do so in the future if there is a significant
increase in the spread between their exercise price and the quoted market
price of the Company's Common Stock.

Recent hurricanes have adversely affected production and shipments in
Puerto Rico. As a result, preliminary sales information indicates a decline
of approximately $500,000 in the first quarter of fiscal 1997 when compared
to sales in the first quarter of fiscal 1996 of $6,522,386. However, the
Company's production facilities have not been damaged and the Company
believes that such adverse effects will be temporary.

ADOPTION OF NEW ACCOUNTING STANDARDS

Under Financial Accounting Standards Statement No. 123 (FASB 123),
"Accounting for Stock-Based Compensation", companies are required to provide
new information about stock options based upon their fair value at the date
of grant. This new rule becomes effective for fiscal years beginning after
December 15, 1995. FASB 123 provides for an option to disclose the pro-forma
effects of stock options on net income and earnings per share or to charge
their fair value to earnings when they are granted. The Company intends to
use the pro-forma disclosure method in its June 30, 1997 consolidated
financial statements.

LIQUIDITY AND CAPITAL RESOURCES

The Company had working capital as of June 30, 1996 of $1,553,000 as
compared to working capital of $1,065,000 as of June 30, 1995. The increase
resulted primarily from the sale of stock in a private placement in June
1996. A substantial portion of the Company's working capital consists of
inventory, which was $5,230,000 and $4,364,000, as of June 30, 1996 and 1995,
respectively. The Company is required to maintain substantial inventories of
its numerous products to meet the immediate requirements of its customers who
need products on short notice and who do not maintain an inventory of such
products.

21
<PAGE>

The Company had a line of credit agreement with Congress whereby the
Company could borrow up to $6,000,000, with interest payable at 2.25% above a
prime rate, plus an unused line fee of .25% per year. Borrowings under this
agreement were limited to 50% of the eligible inventory up to a maximum of
$2,875,000 and 80% of eligible accounts receivable. In July, 1996, the line
of credit was amended and extended until October 1, 1999 with an option by
Congress to extend the loan for an additional year. The line was increased to
$9,000,000 with an interest rate at 1.25% above the prime rate which will be
reduced to prime plus 1% subject to the consummation of the Company's
proposed public offering by December 31, 1996 and the net proceeds of this
offering being at least $2,500,000. The limits on borrowings were increased
to 85% of eligible accounts receivable and 55% of eligible inventory. The
amounts outstanding at June 30, 1996 and June 30, 1995 were $5,558,000 and
$4,829,000, respectively. The Company had $76,000 available for borrowing at
June 30, 1996. The loan is subject to certain working capital and net worth
requirements and is collateralized by all of the assets of the Company not
previously pledged under other loan agreements. The loan agreement prohibits
the payment of cash dividends by the Company.

In September 1993, the Company received an overadvance of $500,000 from
Congress. In connection therewith, Messrs. A. Densen, L.Densen, and A. Towell
obtained a Junior Participation from Congress by advancing $250,000 of their
funds to Congress. $250,000 of this overadvance has been repaid to Congress.
The balance of $215,000, after repayment of $35,000 to L. Densen, will be
repaid by Congress, at its option, to Messrs. A.Densen, and A. Towell subject
to the availability of funds.

Net cash used for operating activities was principally a result of an
increase in accounts receivable and inventories which was only partially
offset by an increase in accounts payable. Cash flows used in investing
activities was for the purchase of property, plant, and equipment. Cash flows
provided by financing activities was principally from increased borrowings
under the Company's line of credit and from the proceeds of a private
placement of the Company's Common Stock.

The Company has no material commitments for capital expenditures.

At the present time, the Company, together with a variety of defendants,
is a party to various asbestos- related lawsuits involving a number of
plaintiffs alleging damages from exposure to asbestos products sold by the
Company. The Company may become a party to additional asbestos-related
actions in the future. The Company is also party to a non-asbestos product
liability action. While as indicated in "Business-Legal Proceedings" legal
and settlement costs to the Company have not been material to date, the
Company cannot, at this time, determine the outcome of these uncertainties
which may have an adverse effect upon the liquidity of the Company in the
future.

From time to time, information provided by the Company or statements made
by its employees, or information provided in its filings with the Securities
and Exchange Commission (including this Prospectus) may contain forward
looking information. The Company's actual future results may differ
materially from those projections or statements made in such forward looking
information as a result of various risks and uncertainties, including each of
those risks set forth in the Risk Factors contained in this Prospectus. See
"Risk Factors". The market price of the Company's Common Stock may be
volatile at times in response to fluctuations in the Company's quarterly
operating results, changes in analyst earnings estimates, market conditions,
as well as general conditions and other factors general to the Company.

22
<PAGE>

BUSINESS

GENERAL

Eastco Industrial Safety Corp. is a corporation organized and existing
under the laws of the State of New York, having been incorporated on May 15,
1958. The Company, through its wholly-owned subsidiaries, Disposable, Safety
Wear, Puerto Rico Safety Equipment, and Puerto Rico Safety, manufactures
industrial protective clothing products and distributes a wide range of
industrial safety products. The Company's Manufacturing Operations sells its
products to distributors. The Company's Distribution Operations sells
products to "end users," including manufacturing companies and service
businesses, public utilities, fisheries, pharmaceutical plants, the
transportation industry and companies engaged in hazardous materials
abatement.

MANUFACTURING OPERATIONS

Manufactured products are sold under the "Charkate/Worksafe", "Charkate",
"Worksafe" and "COVER- UP" trade names. The Company, through Disposable,
Safety Wear and Puerto Rico Safety Equipment, manufactures disposable and
reusable industrial protective apparel. Disposable protective products items
include coveralls, shirts, pants, hats, hoods, aprons, smocks, lab coats,
hazardous material handler suits, examination gowns, sleeves, shoe covers and
related items. Disposable clothing is designed to protect the user from,
among other things, splash, dirt, contamination and against a wide range of
hazardous substances. Disposable clothing is made primarily of a spun bonded
polyolefin produced solely by DuPont under the trade name Tyvek(R). Reusable
industrial protective clothing consists of items for the protection of
various parts of the body which are designed to shield the user from, among
other things, splash, dirt, contamination, heat, fire, cold and the outside
environment. Specific products manufactured include coveralls, gloves, mitts,
shirts, thermal underwear, sleeves, coats, pants, leggings, spats, bibs,
safety vests and a variety of other kinds of protective clothing and
uniforms. The Company also manufactures welding blankets, curtains and
screens.

Sales of manufactured disposable clothing and related disposable products
accounted for approximately 43% and 39% of the Company's consolidated
revenues for the fiscal years ended June 30, 1996 and 1995, respectively.

The Company's Manufacturing Operations and warehousing are located
primarily in Puerto Rico and Alabama. The Company's Manufacturing Operations
are directed primarily from New York. The Company is presently testing the
use of contracted production facilities in Mexico. The Company's products are
sold primarily in the United States and Puerto Rico. The Company sells its
manufactured products through sales representatives. In addition,
manufactured products are sold through the Company's Distribution Operations
in the Northeastern region of the United States and Puerto Rico to "end
users."

DISTRIBUTION OPERATIONS

The Company, primarily through Eastco, distributes to "end users"
industrial safety products made by the Charkate/Worksafe division as well as
by non-affiliated companies. Products distributed include hard hats,
protective glasses, ear muffs, ear plugs, respirators, goggles, face shields,
rainwear, protective footwear, first-aid kits, monitoring devices, signs and
related products. These products are sold to manufacturing companies and
service businesses, including public utilities, fisheries, hospitals,
pharmaceutical plants, the transportation industry and companies engaged in
hazardous materials abatement.

The Company supplies a variety of items which may be used during the
removal and/or encapsulation of hazardous materials in office buildings,
chemical plants, refineries, electric generating plants and schools.
Abatement products sold by the Company include in the largest part, items
made by other companies, such as negative air machines, respirators, air
filtration equipment, vacuums, polybags and sheetings, decontamination
showers, signs, tools, pumps, sprayers and related equipment. The Company
does not engage in the removal or encapsulation of hazardous materials. Sales
of these products accounted for approximately 20% and 22% of the Company's
consolidated revenues for the fiscal years ended June 30, 1996 and June 30,
1995, respectively. The foregoing percentages do not include products used in
the abatement field which are manufactured by the Company.

23
<PAGE>

The Company's Distribution Operations are primarily directed from the
Company's offices in New York. The Company also has facilities for
warehousing and distribution of its non-manufactured products in Puerto Rico,
Connecticut and Florida. The Company sells a variety of safety products from
independent manufacturers, including, but not limited to, 3M, Racal Health
and Safety, Inc. and Willson Safety Products, a division of WGM Safety
Corporation. Items distributed are sold primarily in the Northeastern region
of the United States.

SALES AND MARKETING

The Company utilizes catalogs and telemarketing to aid in its sales
efforts; however, the Company does not engage in any mail-order business nor
sell on a retail basis. Sales are also promoted through trade shows, mailings
and advertising in directories and trade magazines. Sales are primarily to
"end users" comprised of industrial, commercial and governmental accounts.
The Company considers industrial accounts to be those businesses which are
primarily based upon manufacturing and production, while commercial accounts
are considered by the Company to be service businesses. The Company also
believes that standards established by OSHA have resulted in a need by others
to purchase the Company's products. The Company employs 10 full-time
salespeople in its Distribution Operations who sell products distributed by
the Company, and on a more limited basis, products manufactured by the
Company.

CUSTOMERS

For the year ended June 30, 1996 and the previous fiscal year, no one
customer accounted for more than 10% of the Company's sales. Accordingly, the
Company believes it is not dependent upon any single customer, the loss of
any one of which would not have an adverse effect on the business of the
Company.

COMPETITION

The market for industrial protective clothing and industrial safety
products is extremely competitive. The Company faces competition in all of
its product markets from large, established companies that have greater
financial, managerial, sales and technical resources than the Company, and
some of the Company's product markets are dominated by such larger companies.
Larger competitors also may be able to benefit from economies of scale and
introduce new products that compete with the Company's products.

The Company's primary competitors in its Manufacturing Operations are
Kappler Inc. and Lakeland Industries, Inc., in disposable clothing sales, and
P.G.I., Incorporated; Red Kap, a subsidiary of VF Industries Inc.; Topps Mfg.
Co. and Workrite Uniform Co. in the sale of reusable clothing. Primary
competitors in the manufacture of reusable gloves are Chicago Protective
Apparel, Inc. and Steel Grip, Inc. The Company's major competitors in its
Distribution Operations are Balco Industries, Inc. and Freemont Safety Corp.
in industrial sales, and Insulation Distributions Company, Industrial
Productions Company and Aramsco Company in abatement sales.

SUPPLIERS

The Company is not dependent upon any one Company for a source of supply
of raw materials for its manufacturing operations other than DuPont which
supplies the Company with Tyvek(R), a raw material which is used in various
lines of its disposable products. Products utilizing Tyvek(R) accounted for
approximately 41% and 35% of consolidated sales for the fiscal years ended
June 30, 1996 and June 30, 1995, respectively. Management believes that its
current relationship with DuPont is satisfactory. Loss of DuPont as a
supplier of Tyvek(R) would have a material adverse effect on the Company's
Operations.

GOVERNMENT REGULATION

The Company's manufacturing facilities are subject to regulation and
inspection standards established by OSHA. Such facilities have not yet been
inspected for compliance with OSHA. Various of the Company's products are
subject to other government standards. Although the Company believes it is in
material compliance with required standards, there can be no assurance that
any inspection will not reveal that the Company has failed to comply with
OSHA and that, as a result, the Company may be required to expend sums, which
can be costly, to assure compliance with OSHA regulations.

24
<PAGE>

SPECIAL TAX CONSIDERATIONS

Puerto Rico Safety Equipment is engaged in manufacturing in Puerto Rico
and was granted an exemption for seventeen (17) years under the Puerto Rico
Industrial Tax Exemption Act of 1963 (the "Industrial Tax Act") with respect
to Puerto Rico income taxes on the production of such items as safety
clothing, protective sleeves, coats, pants, hoods and jackets for the period
commencing January 1, 1970. On July 1, 1989 Puerto Rico Safety Equipment was
granted an extension of its exemption and has a 90% exemption from Puerto
Rico income taxes for the ten-year period ending on June 30, 1999. During
this period, Puerto Rico Safety Equipment has a 75% exemption from Puerto
Rico municipal taxes on its real and personal property utilized in its
operations.

Disposable has been granted a fifteen-year exemption under the Industrial
Tax Act with respect to Puerto Rico income taxes on its operations covering
the production of disposable clothing and with respect to the property used
in its operations for the period commencing June 4, 1977, subject to the
terms of the grant. This exemption has been extended until 2006 on the basis
of a 90% exemption on Puerto Rico income taxes and personal property taxes
and a 60% exemption on municipal license taxes.

Puerto Rico Safety Equipment and Disposable have elected to apply Section
936 of the Internal Revenue Code, effective July 1, 1979. The provisions of
Section 936 are effective until revoked by the Company. If the conditions of
Section 936(a)(2) are satisfied, the Section 936 credit equals the portion of
the United States income tax that is attributable to taxable income from
sources outside the United States derived from the active conduct of a trade
or business within a United States possession, or the sale or exchange of
substantially all of the qualified possession source investment income.
Dividends payable by each subsidiary to the Company from operations are
entitled to a 100% dividends received deduction but are subject to a 10%
withholding tax in Puerto Rico. The Omnibus Budget Reconciliation Act of 1993
(the "Omnibus Act") imposes new limitations on computing the Possession Tax
Credit under Section 936 for tax years beginning after 1993. There are two
methods for determining the credit under the new law. Under the first method,
the amount of the credit may be determined by using the so-called economic
activity limit. This attempts to limit the credit by applying various
percentages to possession-based compensation, depreciation and taxes paid or
accrued. Alternatively, the Company may make an irrevocable election when it
files its June 30, 1996 federal income tax return to have present rules
apply, but to phase out the credit to 60% of the 1994 level, and further
phase down by 5% per year to 40% in 1998 and years thereafter. Since the
credit is a function of future earnings, if any, the effect of such
limitations cannot be determined at the present time. In addition, the
Omnibus Act makes the 100% dividends received deduction subject to the
Alternative Minimum Tax Calculation. The Small Business Job Protection Act of
1996 further limits the Possession tax credit for years beginning after 2001
with the credit being eliminated for tax years beginning after 2005. No
dividends have been declared on the aggregate undistributed earnings of
Puerto Rico Safety Equipment and Disposable (which through June 30, 1996,
aggregates approximately $2,321,000) and none are intended to be declared
because it is management's intention to reinvest the earnings from such
subsidiaries indefinitely. The Company believes that based upon current
operations, the Omnibus Act will not have a material effect on the Company
for the foreseeable future.

EMPLOYEES

As of September 7, 1996, the Company has 195 employees in its
Manufacturing Operations and 15 in its Distribution Operations. In addition,
there are 4 executive management employees, and 17 clerical and
administrative personnel. None of the Company's employees are covered by a
collective bargaining agreement and the Company considers its relations with
its employees to be satisfactory.

PROPERTIES

The executive offices of the Company are located at 130 West 10th Street,
Huntington Station, New York (the "Huntington Property"), which building is
owned by the Company. The Huntington Property is also used for warehousing
and distributing and contains approximately 25,000 square feet of warehouse
space and 5,000

25
<PAGE>

square feet of office space. As of June 30, 1996, the Huntington Property was
subject to a first mortgage due to a group of investors (the "Associates") in
the amount of $489,782. The wives of Messrs. Alan Densen and Anthony P.
Towell, executive officers and directors of the Company, and Herbert
Schneiderman, a director, are members of Associates. See "Certain
Relationships and Related Transactions" regarding the extension of this
mortgage for five years.

The Company's wholly owned subsidiary, Disposable, leases a building in
Aguadilla, Puerto Rico, consisting of approximately 45,000 square feet, from
the Puerto Rico Industrial Development Company which is used for
manufacturing and warehousing. A lease was entered into for these premises on
February 21, 1995, effective for the ten year period commencing September 1,
1993. Monthly rent for the two-year period ending August 31, 1996 is at the
rate of $7,079, and escalates to $13,041 monthly in the final year of the
lease.

The Company's wholly owned subsidiary, Safety Wear, occupies approximately
30,000 square feet in Decatur, Alabama. The premises are utilized for the
cutting and warehousing of coveralls and the manufacturing of disposable
products. The Company pays $6,450 rent per month. The premises are leased on
a month-to-month basis. Should these facilities not be available to the
Company, the Company believes that alternative sites are available at a
comparative cost.

LEGAL PROCEEDINGS

The Company, in the past, manufactured certain products made of asbestos.
Such use was terminated by the Company in the mid-1980's. It has been alleged
that asbestos is a cause of cancer, such as asbestosis, mesothelioma, and
other related diseases, the symptoms of which may not appear for twenty or
more years. Since the early 1980's, numerous lawsuits have been instituted
against the Company by persons who have been exposed to asbestos and asbestos
products. Such legal proceedings, for the most part, are covered by the
Company's insurance policies.

As of June 30, 1996, the Company estimates that it is a party to
approximately 280 cases with respect to exposure to asbestos involving
approximately 1300 plaintiffs, of which no cases pertain to Puerto Rico
Safety Equipment. During the twelve months ended June 30, 1996, approximately
30 new actions involving approximately 630 plaintiffs were commenced against
the Company. During the same period, approximately 30 actions involving
approximately 670 plaintiffs were settled or discontinued, for which the
Company's obligations on these settlements were approximately $19,000. All of
the actions against the Company to date have been brought by non-employees of
the Company and are based upon personal injury claims. The pending actions
are in the Supreme Court of the State of New York,County of New York;
Superior Court of New Jersey, Middlesex County, Law Division; and Court of
Common Pleas of Luzerne County, Trial Division of Pennsylvania. The number of
first-party plaintiffs include, in various instances, spouses of said
plaintiffs. The actions, with the exception of one pending action, involve a
multitude of defendants. The complaints allege exposure to asbestos and
asbestos products over various periods of time. Each seeks varying amounts of
damages, usually unlimited, or for each plaintiff as high as $10,000,000 for
compensatory damages and $20,000,000 for punitive damages. The Company may
become a party to additional asbestos actions in the future.

From 1981 through June 30, 1996, the Company estimates that approximately
900 actions on behalf of approximately 7500 first-party plaintiffs have been
instituted against it concerning asbestos-related claims and that
approximately 600 actions and the claims of approximately 6200 plaintiffs
have been terminated against the Company. The Company estimates that as of
June 30, 1996, with the exception of defense costs, a total of approximately
$1,400,000 has been paid, or agreed to be paid, in settlements to date with
regard to the terminated actions (inclusive of actions against Puerto Rico
Safety Equipment) of which all but approximately $30,000 has been paid by the
Company's insurance carriers. The foregoing is based upon information
available to the Company to date. Through June 30, 1996, the Company has paid
less than $35,000 for legal and defense costs to counsel appointed by the
insurance carriers to defend it. Past results of settlements and defense
costs are not necessarily indicative of future settlements and defense costs,
which the Company is unable to predict.

For the period commencing April 1, 1968 to April 1, 1969 and March 11,
1971 to November 27, 1985, the Company believes that it has various policies
of primary insurance in different amounts which would protect it against
liability for asbestos-made, product-related personal injuries. The policies
range in amounts from $50,000

26
<PAGE>

to $1,000,000 on an annual basis. The Company also believes that since August
10, 1972 to on or about August 11, 1986 it has had various policies for
excess coverage applicable to asbestos claims on an annual basis. These
policies range in amounts from $500,000 to $10,000,000 for excess coverage.
There are gaps of approximately six weeks in the primary coverage between
March 11, 1971 to November 27, 1985 and approximately thirty-six months in
the excess coverage between August 10, 1972 and August 11, 1986 and an
additional period of approximately thirteen months for excess coverage
insurance companies in liquidation where there is likely to be no coverage.
The policies of insurance are not applicable to all of the subsidiaries of
the Company, which have varying coverage, and such subsidiaries may also be
without coverage for various times of their doing business. Not all of these
policies are in the possession of the Company.

Effective June 26, 1990, an agreement between Eastco and its primary
insurance carriers dated March 26, 1990 became effective. Eastco entered into
this agreement in an effort to resolve uncertainties as to its insurance
coverage which will cover asbestos claims against the parent Company where
any exposure to asbestos is alleged during the period 1971 to 1985,
inclusive. Pursuant to this agreement, the Company is obligated to share in
the payment of asbestos-related claims against Eastco. Pursuant to the
agreement, the Company is obligated to pay 12% of all attorneys' fees
incurred on its behalf and 17% of indemnity costs (which include judgment and
settlement amounts). The balance of these costs are to be paid by the
insurance carriers, which are parties to the agreement. The agreement is
subject to policy limitations of each insurance policy. The agreement may be
terminated at any time upon ninety (90) days' notice by any of the parties
provided that termination may not be effective as to any asbestos action that
has already been placed on the trial calendar, unless it has a scheduled
trial date more than twelve (12) months from the date the notice of
termination is given. The Company is presently aware of only one pending case
on the trial calendar.

Effective during May, 1991, the Company entered into a Settlement
Agreement and Release with Mount Vernon Fire Insurance Company. Pursuant to
this Agreement, the Company discontinued its action against Mount Vernon,
which provided that, subject to the terms of the Agreement, Mount Vernon
would reimburse the Company (where applicable) for 6.25% of attorneys' fees
(52.08% of the Company's 12% share referred to in the agreement in the
previous paragraph) and 6.25% of indemnification costs (36.76% of the
Company's 17% share referred to in the agreement in the previous paragraph).
The Agreement is not applicable to any asbestos actions against the Company
where no exposure is alleged to products manufactured or distributed by
Eastco between April 1, 1968 and April 1, 1969. The Agreement may be
terminated at any time upon 90 days' notice, but such notice is not
applicable to asbestos actions placed on a trial calendar, unless such has a
trial date more than twelve months from the date the notice of termination is
given. The agreement provides that the limit available under the policy is
$100,000 plus attorneys' fees while the agreement is in effect and is
applicable only to Eastco. Approximately $25,000 has been reimbursed by Mount
Vernon Fire Insurance Company as of June 30, 1996 for indemnification.

27
<PAGE>

An action entitled Michael F. Cilone and Marie Cilone v. Willson Safety
Products, Inc., Standard Coating Corporation, National Paint Co., Inc., E.I.
Dupont De Nemours & Co Inc., Orb Industries, Inc., PPG Industries Inc., Olde
England Paint & Varnish Corp., Oatey Co., d/b/a Bond Tight Products, Eastco
Industrial Safety Corp. was instituted on September 19, 1988 in the Supreme
Court of the State of New York, County of Kings. The Company has referred
this matter to its insurance carriers applicable to the period 1984 to 1986
and who have provided primary insurance on an annual basis of $1,000,000 per
year in addition to applicable excess carriers. The complaint alleges four
causes of action, including one for punitive damages on behalf of Michael F.
Cilone, against the Company in the amount of $5,000,000 each and one cause of
action for $500,000 on behalf of Marie Cilone. The complaint alleges that the
Company sold respirators made by Willson Safety Products and other safety
equipment to Michael F. Cilone's employer, the New York City Transit
Authority, between 1984 and 1986 and that he sustained injuries as a result
of chemicals and various materials made by the other defendants. The Company
has been advised by counsel, designated by its insurance carriers to defend
it, that any settlement and/or verdict expense should be within the policy
limits of the Company's insurance. This is based upon the present status of
the case and the fact that depositions have not yet all been completed.

28
<PAGE>

MANAGEMENT

DIRECTORS AND OFFICERS

The Board of Directors is separated into two classes. All directors hold
office until the second annual meeting of shareholders of the Company
following their election or until their successors are duly elected and
qualified officers are appointed by the Board of Directors and serve at its
discretion. The directors and executive officers of the Company are as
follows:

<TABLE>
<CAPTION>
Name Age Position
-------------------- ----- ---------------------------------------------
<S> <C> <C>
Alan E. Densen ..... 62 President, Chief Executive Officer, and Director
Lawrence Densen .... 38 Senior Vice President and Director
Anthony P. Towell .. 64 Vice President of Finance, Secretary, Treasurer,
Chief Financial Officer and Director
Dr. Martin Fleisher 59 Director
James Favia ........ 62 Director
Herbert Schneiderman 64 Director

</TABLE>

The term of office of Alan E. Densen, Lawrence Densen, and Anthony P.
Towell does not expire until the Company's next annual meeting and when their
successors are chosen. The remaining directors' term does not expire until
the following year's annual meeting and when their successors are chosen.

Alan E. Densen has been President, Chief Executive Officer and a director
of the Company since 1958 (except for the period September 1993 to January
1994, when he served as its Senior Vice President). He was also Treasurer and
Chief Financial Officer of the Company through 1992. He is the father of
Lawrence Densen.

Lawrence Densen, Senior Vice President and director of the Company, has
been a Vice President and a director of the Company since 1986. He is the son
of Alan E. Densen.

Anthony P. Towell has been the Company's Vice President of Finance,
Treasurer, and Chief Financial Officer since 1992, its Secretary since 1993,
and from 1989 to 1992 its Vice President. He has been a director of the
Company since 1989. He was a director of New York Testing Laboratories, Inc.
("NYT"), a laboratory testing Company and manufacturer of automotive
accessories, from 1988 to 1995. In addition, he has been a director since
1988 of Nytest Environmental Inc. ("Nytest"), a hazardous waste testing
Company. Mr. Towell was a director of Ameridata Technologies, Inc.
("Ameridata"), a provider of computer products and services from 1991 to
1996. The common stock of Nytest is registered, and the common stock of
Ameridata was registered, under Section 12(g) and (b), respectively, of the
Securities Exchange Act of 1934.

Dr. Martin Fleisher has been a director of the Company since 1989. He
holds a Ph.D. in biochemistry from New York University, and has been an
attending clinical chemist at Memorial Sloan-Kettering Cancer Center since
1967. He devotes only a limited portion of his time to the business of the
Company.

James Favia has been a director of the Company since July 26, 1995. He has
been a consultant during the past five years to Donald & Co. ("Donald"),
which has acted as the Company's investment advisor. He is a chartered
financial analyst and has an MBA in finance which he obtained from New York
University in 1959. He was a director of T.J. Systems until November, 1994.
The common stock of T.J. Systems is registered under Section 12(g) of the
Securities Exchange Act of 1934. He devotes only a limited portion of his
time to the business of the Company.

Herbert Schneiderman has been a director of the Company since July 26,
1995. He has been President of the Casablanca Group, L.P. during the past
five years, a manufacturer of diversified women's sportswear. He devotes only
a limited portion of his time to the business of the Company.

There is no key man insurance on the lives of the executive officers of
the Company.

29
<PAGE>

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established a Compensation Committee, a Stock
Option Committee and an Audit Committee. The Compensation Committee consists
of Messrs. Fleisher, Favia and Schneiderman. The purpose of the Compensation
Committee is to review the Company's compensation of its executives, to make
determinations relative thereto and to submit recommendations to the Board of
Directors with respect thereto.

The Stock Option Committee consists of Messrs. Fleisher, Favia and
Schneiderman. The purpose of the Stock Option Committee is to select the
persons to whom options to purchase shares of the Company's Common Stock
under the Company's stock option plans and to make various other
determinations with respect to such plans.

The Company has an Audit Committee consisting of Messrs. Towell, Favia and
Schneiderman. The purpose of the Audit Committee is to provide general
oversight of audit, legal compliance and potential conflict of interest
matters.

Each of the foregoing committees met once during the fiscal year ended
June 30, 1996.

EXECUTIVE COMPENSATION

The following describes the components of the total compensation of the
CEO and each other executive officer of the Company whose total annual salary
and bonus exceeds $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Annual Compensation Long term compensation
---------------------------------- ----------------------------------------------------
Awards Payouts
---------------------------- ----------------------
Other Securities All
Name and annual Restricted underlying LTIP other
principal Salary Bonus compen- stock options/ payouts
compen-
position Year ($) ($) sation($) award(s)($) SARs(#)(5) ($)
sation($)
---------------- --------- --------- ------- ----------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alan E. Densen, 1996 119,731 -0- 35,672(3) -0- 8,348(4) -0- -0-
CEO 1995 110,000 -0- 35,672(3) -0- 82,158(2) -0- -0-
1994(1) 119,225 -0- 30,078(3) -0- -0- -0- -0-

Lawrence Densen, 1996 103,848 -0- 4,200 -0- 8,348(4) -0- -0-
Senior VP 1995 87,000 -0- 4,200 -0- 82,158(2) -0- -0-
1994 84,806 -0- 4,200 -0- -0- -0- -0-

</TABLE>

- ------
(1) From September, 1993 to January, 1994, Mr. Densen was not CEO; he served
as Senior Vice President.

(2) Includes incentive stock options granted January 20, 1995 to acquire
2,000 shares at $10.625 as well as non-qualified stock options to acquire
80,158 shares exercisable at $5.302 per share, each exercisable until
January 19, 2005. Because it was determined that the audited pre-tax
profit for fiscal 1995 was greater than $50,000, non-qualified options
can now be exercised for 40,079 shares of Common Stock. The remaining
40,079 non-qualified options can not be exercised during the first five
years. The non-qualified options provide for adjustment in the event of
dilution as a result of sales of securities at less than the exercise
price. Each set of the options to acquire 40,079 shares at $5.302 per
share will, as a result of anti-dilution rights, following the
consummation of this Offering, be adjusted to acquire 41,110 shares at
$5.169 per share.

(3) Primarily life insurance premiums on the life of Alan E. Densen owned by
Mr. Densen's wife and paid for by the Company.

(4) Warrants to acquire 8,348 shares of Common Stock at $5.771 granted
February 23, 1996 until February 22, 2001, in consideration of the
guaranty of overadvances by Congress to the Company. These warrants
provide for adjustment in the event of dilution, and will be adjusted to
acquire 8,870 shares at $5.431 as a result of this Offering.

(5) Each person's options including only options directly held by such
person.

30
<PAGE>

STOCK OPTIONS

OPTION/SAR GRANTS IN LAST FISCAL YEAR
[INDIVIDUAL GRANTS]

<TABLE>
<CAPTION>
Number of Percent of
securities total options/
underlying SARs granted Exercise
Options/SARs in fiscal or base Expiration
Name granted (#)(1) year (1) price ($/Sh) Date
------------------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Alan E. Densen, CEO 8,348 33.3% $5.771 2/22/2001
Lawrence Densen,
Senior V.P. 8,348 33.3% $5.771 2/22/2001
</TABLE>

- ------
(1) See note (4) above in the Summary Compensation Table.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

Number
of securities Value
underlying unexercised in-
unexercised the-money options
Shares SARs at FY-end(#) SARs at FY-end($)
acquired on Value exercisable/ exercisable/
Name exercise (#) realized ($) unexercisable(2) unexercisable
----------------------- ------------- ------------ ---------------- -----------------
<S> <C> <C> <C> <C>
Alan E. Densen, CEO (1) 0 0 50,427/40,079 $117,685/$100,638
Lawrence Densen,
Senior VP 0 0 51,108/40,079 $117,685/$100,638
</TABLE>

- ------
(1) See footnotes (2) and (4) above in the Summary Compensation Table. Does
not include warrants to acquire 1,667 shares described in Note (1) under
Principal Shareholders or options held by Lawrence Densen.

(2) Each person's options include only options directly held by such person.

EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL FEATURES

As of July 1, 1995, Alan E. Densen entered into a new employment agreement
which provides for him to serve as the Company's President for a term of five
years and Lawrence Densen also entered into a new employment agreement to
serve as Senior Vice-President for a term of five years. Anthony P. Towell
has a similar contract. At the end of each fiscal year during the term of the
agreement, the agreements are automatically extended for one additional year
to be added at the end of the then current term of the agreements, unless the
Board of Directors determines not to extend the agreements. Each may also
terminate their agreements upon 30 days written notice. The base annual
salaries for Alan E. Densen and Lawrence Densen were $119,731 and $103,848,
respectively, for fiscal 1996 which is to be increased at the beginning of
each fiscal year commencing July 1, 1996, at the discretion of the Board of
Directors but not less than 10% of the minimum compensation paid to the
employees in the prior fiscal year. For fiscal 1997, their base fiscal
salaries are $133,100 and $115,500, respectively. Each is entitled to receive
an annual bonus equal to 3 1/3% of the Company's earnings before interest and
taxes for the fiscal year ended June 30, 1996 and each fiscal year thereafter
during the term of the agreement, and Lawrence Densen is entitled to .75% of
the Company's revenues in excess of $20.5 million. Bonuses are to be paid
within 30 days after the completion of the Company's audited financial
statements for each fiscal year and is to be paid in cash or registered
shares of common stock of the Company. In addition, each, in accordance with
Company policy, is entitled to receive reimbursement of ordinary and
necessary business expenses, a monthly automobile allowance of $700 and
disability, medical and hospitalization insurance.

The employment agreements entered into by Messrs. Alan E. Densen and
Lawrence Densen include provisions that provide for their right to terminate
the agreements and thereby receive additional compensation, as provided
below, in the event that they are not elected or retained as President and
Senior Vice-President, respectively, or as a director of the Company; the
Company acts to materially reduce their duties and responsibilities

31
<PAGE>

under the agreement; the Company changes the geographic location of their
duties to a location from the New York metropolitan area; their base
compensation is reduced by 10% or more; any successor to the Company fails to
assume the agreements; any other material breach of the agreements which is
not cured by the Company within 30 days; and a "Change of Control" by which a
person, other than a person who is an officer and/or director of the Company
as of the effective date of the agreements, or a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the
beneficial owner of 20% or more of the combined voting power of the then
outstanding securities of the Company or the composition of the board changes
so that officers of the Company no longer hold a majority of the seats.

In the event that Messrs. Alan E. Densen or Lawrence Densen terminate
their positions because of any of the aforesaid reasons other than a "Change
of Control", or if the Company terminates their employment in any way that is
a breach of the agreement by the employer, Messrs. Alan E. Densen and
Lawrence Densen shall be entitled to receive, in addition to their salary
continuation, as a bonus, a cash payment equal to their total base salary
plus projected expenses and bonuses for the remainder of the term thereof,
payable within 30 days of termination and all stock options, warrants and
other stock appreciation rights granted by the Company, with the exception of
qualified incentive stock option plans, to them shall become immediately
exercisable at an exercise price of $0.10 per share. In the event that either
owns or is entitled to receive any unregistered securities of the Company,
than the Company shall register such securities within 120 days of the their
termination.

In the event that there is a "Change of Control", Messrs. Alan E. Densen
and Lawrence Densen shall be paid within 30 days thereof a one-time bonus
equal to their total minimum base salary for the next three years and they
shall be immediately reimbursed for all amounts not yet received for their
participation in the balance of $215,000 ($35,000 has been repaid to Lawrence
Densen) junior participation in the loans made to the Company from Congress
Financial Corporation ("Congress") during September 1993, without regard to
whether such amount is currently due pursuant to the terms thereof.

Messrs. A. Densen, L. Densen, and A. Towell, in modification agreements to
their employment agreements, have waived: (i) their right to bonuses based
upon the Company's earnings before interest and taxes for the fiscal years
ended June 30, 1996 through June 30, 2000; (ii) their exercise rights on
options and warrants and repayment of their junior participation interests
with Congress and compensation payable in the event of a Change in Control
with respect to the Private Placement and this Rights Offering; and (iii)
their right to terminate their relationship with the Company, as per the
terms of their respective employment agreements. The modification agreements
and waivers provide that their right to terminate their employment agreements
and waiver of their bonuses shall not be waived in the event that there is a
material breach of such agreements by the Company. Messrs. A. Densen, L.
Densen, and A. Towell have agreed that the issuance of shares in this
Offering will not result in any "change of control" rights under their
respective employment agreements.

During February 1996, Messrs. A. Densen, L. Densen, and A. Towell
guaranteed to Congress overadvances to the Company of up to $500,000 in
excess of the Company's eligible borrowings. The Company issued warrants for
a term of five years in consideration for their guaranty to each Messrs. A.
Densen, L. Densen, and A. Towell to purchase 8,348 shares of Common Stock at
an exercise price of $5.771 per share commencing February 23, 1996. These
warrants provide for adjustment in the event of dilution, and will be
adjusted to acquire 8,870 shares at $5.431 as a result of this Offering. The
overadvances have since been repaid and their guarantees are no longer in
effect.

COMPENSATION TO DIRECTORS

No compensation is paid to officers who also serve as directors for their
serving solely as a director. Outside directors are compensated at the rate
of $500 for each board of directors meeting which they attend in person.

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

The Company's Certificate of Incorporation provides that the personal
liability of directors to the corporation or its shareholders for damages for
any breach of duty in such capacity is eliminated to the fullest extent
permitted by law. The bylaws of the corporation provide that directors or
officers of the corporation shall be indemnified by the corporation in the
manner and to the fullest extent permitted by law, as amended from time.

32
<PAGE>

Section 722 of the Business Corporation Law of the State of New York contains
provisions entitling directors and officers of the Company to indemnification
from judgments, fines, amounts paid in settlement and reasonable expenses,
including attorney's fees, as the result of an action or proceeding in which
they may be involved by reason of being or having been a director or officer
of the Company provided said officers or directors acted in good faith, the
acts were not the result of deliberate dishonesty, and that the indemnitee
does not personally gain or profit where not legally entitled to do so. The
Company maintains directors and officers liability insurance.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, or otherwise, the Company 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. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, or officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer of controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and is therefore
unenforceable and will be governed by the final adjudication of such issue.
See "Underwriting" with reference to provisions in the Standby Agreement
pertaining to reciprocal indemnification of the Company and the Underwriter.

1996 STOCK OPTION PLANS

At a special meeting of shareholders held on August 12, 1996, the
shareholders approved: (i) an incentive stock option plan (the "1996
Incentive Plan"); and (ii) a non-qualified stock option plan (the "1996 Non-
Qualified Plan").

1996 INCENTIVE STOCK OPTION PLAN

The 1996 Incentive Plan authorizes the grant of 300,000 shares of Common
Stock, subject to adjustment as provided in the plan. Eligibility to
participate in the 1996 Incentive Plan is limited to key employees of the
Company and its subsidiaries. The 1996 Incentive Plan terminates May 12,
2006. The term of each option may not exceed ten years. Options will not be
transferable except upon death and, in such event, transferability will be
effected by will or by the laws of descent and distribution. An option
granted under the 1996 Incentive Plan may not be exercised unless, at the
time of exercise, the optionee is then in the Company's employ and has
completed at least twelve (12) months of continuous employment with the
Company from the date of grant of the option. Incentive Stock Options may not
be granted at less than 100% of fair market value at the time of the grant.
Options granted to employees who own more than 10% of the Company's
outstanding Common Stock will be granted at not less than 110% of fair market
value for a term of five years. The aggregate market value of stock for which
Incentive Stock Options are exercisable during any calendar year by an
individual is limited to $100,000, but the value may exceed $100,000 for
which options may be granted to an individual. Payment of the exercise price
for options under the 1996 Incentive Plan are to be made in cash or by the
exchange of Common Stock having equivalent value.

No options have been granted under this Plan.

1996 NON-QUALIFIED STOCK OPTION PLAN

The 1996 Non-Qualified Plan authorizes the grant of 300,000 shares of
Common Stock, subject to adjustment as provided in the plan, to key
employees, consultants and others. The 1996 Non-Qualified Plan terminates ten
(10) years after stockholder approval. Options granted shall specify the
exercise price, the duration of the option, the number of shares to which the
option applies and such other terms and conditions not inconsistent with the
1996 Non-Qualified Plan as the committee, or other legally permissible
entity, administering the 1996 Non-Qualified Plan shall determine provided
that the option price shall not be less than 100% of the fair market value at
the time the option is granted and no option may be exercisable for more than
ten (10) years after the date on which it is granted. Payment of the exercise
price for options under the 1996 Non-Qualified Plan is

33
<PAGE>

to be made in cash, by the exchange of Common Stock having equivalent value
or through a "Cashless Exchange". If a Participant elects to utilize a
"Cashless Exercise" (as defined in the Plan), he shall be entitled to a
credit equal to the amount of that equity by which the current Fair Market
Value exceeds the option price on that number of options surrendered and to
utilize that credit to exercise additional options held by him that such
equity could purchase. There shall be canceled that number of options
utilized for the credit and for the options exercised with such credit.

No options have been granted under this Plan.

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<PAGE>

PRINCIPAL SHAREHOLDERS

The following are known by the Company, as of the date hereof, to be the
beneficial owners of more than five percent of Common Stock:

<TABLE>
<CAPTION>
Percent Percent
of Class of Class
Name and Address Amount and Nature Before After
Title of Class of Beneficial Owner of Beneficial Owner Offering Offering(A)
------------------ -------------------------- ----------------------- ------------ -------------
<S> <C> <C> <C> <C>
Common Stock Alan E. Densen 59,396(1)(4)(5) 6.4% 3.7%
$.12 par value 130 West 10th Street shares direct and
Huntington Station, NY beneficial

Common Stock Lawrence Densen 53,608(2)(4)(5) 5.8% 3.4%
$.12 par value 130 West 10th Street shares direct and
Huntington Station, NY beneficial

Common Stock Anthony P. Towell 138,739(3)(4)(5) 13.7% 8.6%
$.12 par value 130 West 10th Street shares direct and
Huntington Station, NY beneficial

Common Stock George Schiavoni 76,000 8.6% 0%(6)
$.12 par value 46 Bayview Avenue shares direct and
Sag Harbor, NY beneficial
</TABLE>
- ------
(A) Assumes no Rights, warrants or options will be exercised as a result of
this Offering. However, this column takes into consideration additional
shares issuable under the anti-dilution rights of certain options and
warrants.

(1) Includes warrants, held by Mr. Densen's wife, to acquire 1,667 shares of
Common Stock, exercisable at $13.00 per share which expire April 11,
1999. Also includes incentive stock options granted under the 1994 Plan
to acquire 2,000 shares of Common Stock, exercisable at $10.625 which
expire January 19, 2005. Amount indicated does not include shares
beneficially owned by Lawrence Densen, son of Alan E. Densen.

(2) Does not include shares beneficially owned by Alan E. Densen, father of
Lawrence Densen. Includes 700 Class A Warrants; incentive stock options
granted under the 1983 Incentive Stock Option Plan (the "1983 Plan") to
acquire 625 shares which expire December 17, 1996 and are exercisable at
$26.664 per share; incentive stock options granted under the 1983 Plan to
acquire 56 shares of Common Stock which expire May 31, 1998 and are
exercisable at $30.00 per share; and incentive stock options granted
under the 1994 Plan to acquire 2,000 shares of Common Stock, which expire
January 19, 2005 and are exercisable at $10.625.

(3) Includes 1,500 Class A Warrants; warrants, held by Mr. Towell's wife, to
acquire 1,667 shares of Common Stock, exercisable at $13.00 per share
which expire April 11, 1999; and incentive stock options granted under
the 1994 Plan to acquire 2,000 shares of Common Stock, exercisable at
$10.625 which expire January 19, 2005. Also includes warrants to acquire
82,645 shares of Common Stock exercisable at $6.292 per share which
expire April 11, 1999, which warrants provide for an anti-dilution
adjustment as a result of sales of securities at less than the exercise
price, and will be adjusted to acquire 90,941 shares at $5.718 as a
result of this Offering. Does not include 38,000 shares owned by Melinda
Tyrwhitt, the married daughter of Mr. Towell which he disclaims
beneficial ownership of. Her shares were acquired in a recent private
placement and are included in the concurrent registration. See "Recent
Private Placements" and "Concurrent Registration of Common Stock".

(4) Includes non-qualified options to acquire 40,079 shares to each Messrs.
A. Densen, A. Towell and L. Densen exercisable until January 19, 2005 at
an exercise price of $5.302. Does not include options to acquire an
additional 40,079 shares to each Messrs. A. Densen, A. Towell and L.
Densen which cannot be exercised until January 20, 2000. These options
provide for a dilution adjustment as a result of sales of securities at
less than the exercise price. Each of the options to acquire 40,079
shares at $5.302 per share will, as a result of anti-dilution rights,
following the consummation of this Offering, become options to acquire
41,110 shares at $5.169 per share. See "Certain Relationships and Related
Transactions".

35
<PAGE>

(5) Includes warrants to acquire 8,348 shares of Common Stock exercisable at
$5.771 per share, which expire February 22, 2001. These warrants provide
for a dilution adjustment as a result of sales of securities at less than
the exercise price, and will be adjusted to acquire 8,870 shares at
$5.431 as a result of this Offering. See "Certain Relationships and
Related Transactions".

(6) Mr. Schiavoni is a selling shareholder and this Prospectus assumes the
sale of his shares of Common Stock after nine months from the Effective
Date.

The following table sets forth as of August 12, 1996, the number of shares
of Common Stock owned by each of the present directors of the Company,
together with certain information with respect to each:

<TABLE>
<CAPTION>
Percent Percent
of Class of Class
Amount and Nature Before After
Name and Address of Beneficial Owner Offering Offering(A)
------------------------------ ----------------------- ------------ -------------
<S> <C> <C> <C>
Alan E. Densen 59,396(1) 6.4% 3.7%
130 West 10th Street shares direct
Huntington Station, NY and beneficial

Anthony P. Towell 138,739(2) 13.7% 8.6%
130 West 10th Street shares direct
Huntington Station, NY and beneficial

Lawrence Densen 53,608(3) 5.8% 3.4%
130 West 10th Street shares direct
Huntington Station, NY and beneficial

Dr. Martin Fleisher 1,000(4) * *
130 West 10th Street shares direct
Huntington Station, NY and beneficial

James Favia 2,000(5) * *
130 West 10th Street shares direct
Huntington Station, NY and beneficial

Herbert Schneiderman 3,833(6) * *
130 West 10th Street shares direct
Huntington Station, NY and beneficial

All executive officers and
directors as a group
(6 persons) 258,576 23.0% 14.8%
</TABLE>

- ------
* Less than 1%

(A) Assumes no Rights, warrants or options will be exercised as a result of
this Offering. However, this column takes into consideration additional
shares issuable under the anti-dilution rights of certain options and
warrants.

(1) See footnotes (1), (4), and (5) in the preceding chart.

(2) See footnotes (3), (4), and (5) in the preceding chart.

(3) See footnotes (2), (4), and (5) in the preceding chart.

(4) Includes stock options to acquire 1,000 shares of Common Stock.

(5) Includes stock options to acquire 1,000 shares of Common Stock.

(6) Includes warrants and stock options to acquire 1,833 shares of Common
Stock.

The foregoing reflects the outstanding options and warrants held by each
of such persons, and reflects all adjustments for anti-dilution rights
through this Offering.

36
<PAGE>

DESCRIPTION OF SECURITIES

RIGHTS

The Rights offered hereby to the Company's existing stockholders consist
of the right to acquire one Unit of the Company's Common Stock at a price of
$5.00 per Unit on the basis of 4 Rights for each 5 shares of Common Stock
currently owned by such holder. No fractional Rights will be issued. Rights
will be rounded to the nearest lower whole number. The Rights are
nontransferable and expire upon the Expiration Date of the Offering unless
exercised by the holder thereof. The number of Rights will be determined by
dividing shareholdings (as adjusted for all prior stock splits) by five,
rounded down to the nearest whole number, with the result multiplied by four.

UNITS

The Units offered in the Offering each consist of one share of Common
Stock and one Class B Warrant.

The Class B Warrants are immediately detachable, transferable and
separately tradeable from the Common Stock with which they are issued. The
Units will be evidenced by separate certificates for the Common Stock and the
Class B Warrants which comprise the Units.

COMMON STOCK

The authorized capital stock of the Company is 20,000,000 shares of Common
Stock, $0.12 par value per share. The holders of Common Stock (i) have equal
ratable rights to dividends from funds legally available, therefore, when, as
and if declared by the Board of Directors of the Company; (ii) are entitled
to share ratably in all of the assets of the Company available for
distribution to holders of Common Stock upon liquidation, dissolution or
winding up of the affairs of the Company; (iii) do not have preemptive,
subscription or conversion rights and there are no redemption or sinking fund
provisions applicable thereto; and (iv) are entitled to one vote per share on
all matters on which shareholders may vote at all meetings of shareholders.

The holders of shares of Common Stock of the Company do not have
cumulative voting rights, which means that the holders of more than 51% of
such outstanding shares voting for the election of Directors can elect all of
the Directors to be elected, if they so choose, and, in such event, the
holders of the remaining shares will not be able to elect any of the
Company's Directors.

CLASS B WARRANTS

The Class B Warrants will be issued pursuant to the Warrant Agreement
between the Company and American Stock Transfer and Trust Co., as warrant
agent (the "Warrant Agent"). None of the Class B Warrants have been issued
prior to the Offering. The following discussion of certain terms and
provisions of the Class B Warrants is qualified in its entirety by reference
to the detailed provisions of the Class B Warrant Agreement and the Class B
Warrant certificates, the forms of which have been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.

Each Class B Warrant entitles its holder to purchase one share of Common
Stock at an exercise price of $6.25 per share commencing twelve months (or
sooner with the consent of the Underwriter) until three years after the date
of this Prospectus.The Class B Warrants may be redeemed by the Company at any
time, commencing eighteen months after the Effective Date, but no sooner than
12 months from the date the Warrants become exercisable, at a redemption
price of $.01 per Warrant upon 30 days prior written notice, provided the
closing high bid price of the Common Stock for the 15 consecutive trading
days ending on the third day prior to the date of notice of redemption is in
excess of $9.375 (or 150% of the exercise price of the Class B Warrants to be
proportionately adjusted for any stock dividends and stock splits occurring
after the Effective Date and which may be adjusted to 150% of the current
exercise price of the Class B Warrants, if such exercise price is changed)
per share. Warrantholders shall exercise rights until the close of business
on the day preceding the date fixed for redemption. All Class B Warrants must
be redeemed, if any Class B Warrants are redeemed.

37
<PAGE>

In order for a holder to exercise a Class B Warrant, and as required in
the Warrant Agreement, there must be a current registration statement on file
with the Commission pertaining to the shares of Common Stock underlying the
Class B Warrants, and such shares must be registered or qualified for sale
under securities laws of the state in which such warrantholder resides or
such exercise must be exempt from registration in such state. The Company
will be required to file post-effective amendments to the Registration
Statement of which this Prospectus forms a part during the nine month period
from the date hereof, when events require such amendments. In addition, the
Company has agreed with the Underwriter to use its best efforts to keep the
Registration Statement covering the shares underlying the Class B Warrants
current and effective. There can be no assurance however, that such
Registration Statement (or any other Registration Statement filed by the
Company to cover shares of Common Stock underlying the Class B Warrants) can
be kept current. If a Registration Statement covering the shares of Common
Stock is not kept current for any reason, or if the shares underlying the
Class B Warrants are not registered in the state in which a holder resides,
the Class B Warrants will not be exercisable and will be deprived of any
value.

Holders of the Class B Warrants will be protected against dilution upon
the occurrence of certain events, including, but not limited to stock
dividends, stock splits, reclassifications, mergers, and sales of Common
Stock below the Exercise Price or then-current market value. However, holders
of Class B Warrants will have no voting rights and are not entitled to
dividends. In the event of liquidation, dissolution or winding up of the
Company, holders of Class B Warrants will not be entitled to participate in
any distribution of the Company's assets.

The purchase price payable upon exercise of the Class B Warrants is to be
paid in lawful money of the United States by certified or bank check. The
Company is not required to issue certificates representing fractions of
shares of Common Stock upon the exercise of Class B Warrants, but with
respect to any fraction of a share, it will make payment in cash based upon
the market price of the Common Stock as determined by the Warrant Agent based
upon the average of the closing sales prices for the Common Stock on the
NASDAQ SmallCap Market (or, if applicable, NASDAQ National Market) during the
ten day trading period immediately preceding the date of exercise.

TRANSFER AGENT, WARRANT AGENT AND REGISTRAR

The Transfer Agent and Warrant Agent for the Common Stock and the Class B
Warrants is American Stock Transfer and Trust Co., 40 Wall Street, New York,
New York 10005.

OTHER PUBLICLY HELD SECURITIES AND PREFERRED STOCK

CLASS A WARRANTS

The Company has issued and outstanding 2,262,500 Class A Warrants,
exercisable for 226,250 shares of Common Stock, which are publicly tradeable
and are exercisable at a price of $13.00 per share until April 11, 1999. Such
holders are protected against dilution upon the occurrence of certain events
including but not limited to stock dividends, stock splits,
reclassifications, and mergers, but have no voting rights and are not
entitled to dividends. In the event of liquidation, dissolution, or winding
up of the Company, holders of Class A Warrants are not entitled to
participate in the distribution of any of the Company's assets.

PREFERRED STOCK

Pursuant to shareholder approval at the August 12, 1996 Special
Shareholders' Meeting, the Company is authorized to issue 1,000,000 shares of
preferred stock par value $.01. The Board of Directors has the express
authority, without further action of the stockholders, to issue shares of
Preferred Stock from time to time in one or more series and to fix before
issuance with respect to each series: (a) the designation and the number of
shares to constitute each series, (b) the liquidation rights, if any, (c) the
dividend rights and rates, if any, (d) the rights and terms of redemption, if
any, (e) whether the shares will be subject to the operation of a sinking or
retirement fund, if any, (f) whether the shares are to be convertible or
exchangeable into other securities of the Company, and the rates thereof, if
any, (g) any limitation on the payment of dividends on the Common Stock while
any such series is outstanding, if any, (h) the voting power, if any, in
addition to the voting rights provided by law,

38
<PAGE>

of the shares, which voting powers may be general or special, and (i) such
other provisions as shall not be inconsistent with the certificate of
incorporation. All the shares of any one series of the Preferred Stock shall
be identical in all respects. No preferred shares are currently outstanding.

SHARES ELIGIBLE FOR FUTURE SALE

There are 879,488 shares of Common Stock of the Company outstanding as of
the Effective Date. Of these shares 528,607 shares are restricted securities,
as that term is defined in Rule 144 promulgated under the Securities Act of
1933 (the "Securities Act"). Of the restricted securities, 513,000 shares are
being registered for sale. The holders of 114,000 of these shares have agreed
not to sell any such shares for a period of nine months from the Effective
Date. See "Recent Private Placements" and "Concurrent Registration of Common
Stock". 14,602 of the shares are restricted securities owned by officers and
directors of the Company. Absent registration under the Securities Act, the
sale of such shares is subject to Rule 144. In general, under Rule 144,
subject to satisfaction of certain other conditions, a person, including an
affiliate of the Company, who has beneficially owned restricted shares of
Common Stock for at least two years is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1%
of the total number of outstanding shares of the same class, or if the Common
Stock is quoted on NASDAQ, the average weekly trading volume during the four
calendar weeks preceding the sale. A person who has not been an affiliate of
the Company for at least three months immediately preceding the sale and who
has beneficially owned the shares of Common Stock for at least three years is
entitled to sell such shares under Rule 144 without regard to any of the
volume limitations described above. The Company's executive officers and
directors have agreed not to sell their shares for a period of twelve months
from the Effective Date and an additional six months without the prior
consent of the Underwriter. The Underwriter may consent to the sale of such
shares at any time after 12 months from the date of this Prospectus, in its
sole discretion, upon the request of the holder. The Underwriter's decision
to consent will be based upon the current market conditions, liquidity of the
Common Stock, as well as such other factors the Underwriter deems
appropriate. No public announcement will be made with respect to the
foregoing.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During September 1993, the Company's lender, Congress, agreed to provide
an overadvance to the Company of $500,000. In connection therewith, Messrs.
A. Densen, L. Densen and A. Towell obtained a junior participation interest
from Congress by advancing $250,000 of their funds to Congress. $250,000 of
this overadvance was repaid to Congress during fiscal 1994. Mr. L. Densen was
repaid $35,000 of the previous balance in full by Congress during May, 1996.
The remaining balance of $215,000 will be repaid by Congress, at its option,
to Messrs. A. Densen and A. Towell, subject to the availability of funds.

Associates holds a first mortgage on the Company's executive offices and
warehouse facility in the principal amount of $489,782 as of June 30, 1996
and security interest on the Company's personal property. The wives of Alan
E. Densen and Anthony P. Towell, executive officers and directors of the
Company, and Herbert Schneiderman, a director of the Company, are members of
Associates owning approximately 38% thereof. During the fiscal year ended
June 30, 1996, the Company paid Associates $121,107 in principal and interest
on the mortgage, of which $72,346 constituted interest.

On January 20, 1995, the Company granted non-qualified options to acquire
80,158 shares of Common Stock to each of Messrs. A. Densen, A. Towell, and L.
Densen. Because it was determined that the audited pre- tax profit for fiscal
1995 was greater than $50,000, non-qualified options can now be exercised for
40,079 shares of Common Stock. The remaining 40,079 non-qualified options can
not be exercised during the first five years. The non-qualified options
provide for adjustment in the event of dilution as a result of sales of
securities at less than the exercise price. Each set of the options to
acquire 40,079 shares at $5.302 per share will, as a result of anti-dilution
rights, following the consummation of this Offering, become options to
acquire 41,110 shares at $5.169 per share. All of the options granted on
January 20, 1995 were granted in consideration of previous sacrifices
including reduction in salaries, cancellation of options, and other
surrendered benefits by executive officers as well as the turnaround
performance achieved by the Company. The turnaround achieved by the Company
in its performance can be directly related to the efforts of Messrs. A.
Densen, A. Towell, and L. Densen.

39
<PAGE>

On January 31, 1995, the Company's board of directors reduced the exercise
price of the 2.3 million outstanding Class A Warrants issued in connection
with the 1994 Public Offering to $13.00 per share. At the same time, the
board of directors also reduced the exercise price to $13.00 per share with
regard to the 10,833 warrants ("Associate Warrants") issued to a group of
investors, including the spouses of Alan Densen (1,667 Associate Warrants
owned by her) and Anthony P. Towell (1,667 Associate Warrants owned by her),
and Herbert Schneiderman (833 Associate Warrants owned by him), in connection
with a reduction of indebtedness regarding the Company's premises; 82,645
warrants purchased by Anthony P. Towell, the Company's Chief Financial
Officer, from Scorpio Partners, L.P. (90,941, as adjusted for this Offering);
4,078 Royce warrants issued in connection with a 1991 public offering to the
same Underwriter herein; and 833 warrants in connection with a 1991 bridge
loan. All these warrants have also been extended to April 11, 1999. These
warrants were all adjusted as indicated so as to treat them on an equal basis
and to provide incentives for them to be exercised.

The Company had employment agreements with Messrs. A. Densen, A. Towell
and L. Densen, which commenced as of the effective date of the Company's 1994
public offering in April, 1994. As of July 1, 1995, these executive officers
entered into new agreements. See "Executive Compensation -- Employment
Agreements and Change in Control Features" with regards to provisions
contained in the employment agreement of Alan E. Densen, the Company's
President and CEO, and Lawrence Densen, the Company's Senior Vice-President.
Similar provisions are contained in the employment agreement with Anthony P.
Towell. Messrs. A. Densen, L. Densen, and A. Towell, in modification
agreements to their employment agreements, have waived: (i) their right to
bonuses based upon the Company's earnings before interest and taxes for the
fiscal years ended June 30, 1996 through June 30, 2000; (ii) their exercise
rights on options and warrants and repayment for their junior participation
interests with Congress and compensation payable in the event of a Change in
Control with respect to the Private Placement and this Rights Offering; and
(iii) their right to terminate their relationship with the Company, as per
the terms of their respective employment agreements. The modification
agreements and waivers provide that their right to terminate their employment
agreements and waiver of their bonuses shall not be waived in the event that
there is a material breach of such agreements by the Company. Messrs. A.
Densen, L. Densen, and A. Towell have agreed that the issuance of shares in
this Offering will not result in any "change of control" rights under their
respective employment agreements.

On April 18, 1995, the Company entered into an agreement with Donald to
act as its investment adviser for a term of three years at a retainer of
$3,000 per month. The agreement may be terminated for cause at any time and
after eighteen (18) months by either party upon forty-five days notice.
Donald was also granted a five year warrant to purchase 12,500 shares
exercisable at $12.50 per share, the closing market price on the date of
grant. James Favia, a director of the Company, serves as a consultant to
Donald.

On July 10, 1995 the Company terminated its relationship with Lew
Lieberbaum & Co., Inc. ("Lew Lieberbaum"), the Company's underwriter in its
1994 public offering. Pursuant to an agreement dated July 10, 1995, the
Company canceled all of Lew Lieberbaum's rights under the Underwriting
Agreement (the "Underwriting Agreement"), including, but not limited to, the
right of first refusal to act on behalf of the Company in future
transactions, the cancellation of all Underwriter's Warrants held by Lew
Lieberbaum or its affiliates, their right to representation on the Company's
board of directors and the termination of any obligation by holders of
securities subject to a "lock-up" to obtain the permission of Lew Lieberbaum
prior to sale or other disposition of said securities. At the same time,
Leonard A. Neuhaus and Sheldon Lieberbaum, who are affiliated with Lew
Lieberbaum, resigned as directors of the Company. In exchange, the Company
issued 10,000 shares of common stock to Lew Lieberbaum.

During February 1996, Messrs. A. Densen, A. Towell and L. Densen,
executive officers and directors of the Company, guaranteed to Congress
overadvances to the Company of up to $500,000 in excess of the Company's
eligible borrowings. The Company issued warrants for a term of five years in
consideration for their guaranty to each Messrs. A. Densen, A. Towell, and L.
Densen to purchase 8,348 shares of Common Stock at $5.771 per share will, as
a result of anti-dilution rights, following the consummation of this
offering, become options to acquire 8,870 shares of Common Stock at $5.431
per share, which expire on February 22, 2001, and are subject to
anti-dilution provisions. The overadvance has since been repaid and their
guarantees have been returned to them.

40
<PAGE>

Company have agreed to extend the mortgage for five years from July 1, 1997
with interest at 12% per annum or 3% over prime, whichever is greater. At the
end of five years, the mortgage will come due in the amount of approximately
$283,000. The Company intends to explore the refinancing of this mortgage
with various lenders.

Considering the circumstances of each transaction, the Company believes
that all transactions heretofore with officers/directors and shareholders of
the Company and their affiliates have been made, and in the future will be
made on terms no less favorable to the Company than those available from
unaffiliated parties and will be approved by a majority of the disinterested
directors.

RECENT PRIVATE PLACEMENTS

On June 28, 1996, the Company completed a private placement offering,
pursuant to which it issued 399,000 shares at $1.50 per share to 20
investors, pursuant to provisions for exemption from registration under the
Securities Act of 1933 as amended. The terms of this private placement
offering were established by negotiation between the Company and Royce
Investment Group, Inc., the Underwriter herein, a registered broker/dealer
(the "Private Placement Agent"). Under the terms of this private placement
offering, 10 1/2 units (the "Units") were offered, and sold, in multiples of
$57,000 per Unit. Each full Unit consists of 38,000 shares of the Company's
Common Stock, par value $0.12 per share. The Company used net proceeds from
this private placement offering to pay off a short-term loan in the amount of
$500,000 from Elono Portfolio S.A., which had been used to reduce the amount
due to Congress. Gross proceeds from this private placement offering were
$598,500. The Underwriter acted as Placement Agent and received a commission
of 10% and a 3% non-accountable expense allowance. On July 9, 1996, the
Company completed an additional private placement offering for 114,000 shares
at $1.50 per share for use as working capital to 5 investors, pursuant to
provisions for exemption from registration under the Securities Act of 1933
as amended. Royce Investment Group, Inc., the Underwriter herein, did not act
as placement agent, nor was it involved in any way with the private placement
which closed on July 9, 1996. The shares sold in the foregoing private
placements are being registered concurrently herewith. None of the foregoing
purchasers of these private placements have had a prior relationship with the
Company, with the exception of Heather Reiser (owner of 21,667 shares or 4.2%
of both placements) whose husband is affiliated with Donald, the Company's
investment advisor. Melinda Tyrwhitt (owner of 38,000 shares or 7.4% of both
placements), is the married daughter of Anthony P. Towell, the Company's
Chief Financial Officer and a Director and Mr. Towell disclaims beneficial
ownership of these shares. See "Concurrent Registration of Common Stock".

THE OFFERING

THE RIGHTS

The Company is granting to holders of all its outstanding Common Stock of
record on September 24, 1996 ("Record Date"), in those states where
qualified, or exempt from qualification, (see page 3 for list of such
states), the nontransferable Rights to subscribe for Units, each of which
consists of one share of common stock $0.12 par value (the "Common Stock") of
the Company and one Class B Redeemable Common Stock Purchase Warrant (the
"Class B Warrants") of the Company on the basis of 4 Rights for each 5 shares
of Common Stock owned on the Record Date. The number of Rights will be
determined by dividing shareholdings (as adjusted for all prior stock splits)
by five, rounded down to the nearest whole number, with the result multiplied
by four. Inasmuch as the Rights are not transferable, there will be no market
for the Rights, nor will Royce Investment Group, Inc., the Underwriter
herein, be purchasing any Rights.

EXPIRATION DATE

The Rights Offering will terminate, and the Rights will expire, at 5:00
p.m. New York Time, on November 8, 1996 (the "Expiration Date").

METHOD OF EXERCISING RIGHTS

Rights may be exercised by completing and signing a rights certificate.
The completed and signed subscription form, accompanied by payment in full of
the Subscription Price for all Units purchased, must be received by the
Subscription Agent before the Expiration Date.

41
<PAGE>

The executed rights certificate and payment should be mailed or delivered
to the Subscription Agent at the following address:

American Stock Transfer & Trust Co.
40 Wall Street
New York, New York 10005

Payment of the Subscription Price must be made by certified check, bank
check or money order payable to American Stock Transfer & Trust Company as
agent for Eastco Industrial Safety Corp. on or before the Expiration Date.
Wire transfers may be directed to an account maintained by American Stock
Transfer and Trust Company at Chase Manhattan Bank, Account No. 610-045093;
ABA No. 021 000 021. There is no broker protect period. Questions regarding
completion, delivery and exercise of Rights may be directed to the
Subscription Agent at (718) 921-8200.

Certificates representing the Units purchased by exercising Rights will be
issued as soon as practicable after the Expiration Date, provided that the
Subscription Agent has received a properly completed subscription agreement
accompanied by proper payment in full of the Subscription Price. The sale of
the unsubscribed Units to the Underwriter is expected to occur on the third
business day after the Underwriter receives notice from the Subscription
Agent as to the number of unsubscribed Units for which it is committed to
purchase. All funds received by the Subscription Agent will, upon its
acceptance of subscriptions and its authorization of the issuance of
certificates representing the Common Stock, be placed in the Subscription
Agent's escrow account.

All questions as to the validity, form, eligibility (including times of
receipt and beneficial ownership) and the acceptance of rights certificates
and the Subscription Price will be jointly determined by the Company and the
Underwriter, whose determinations will be final and binding. Once made,
subscriptions are irrevocable, and no alternative, conditional or contingent
subscriptions will be accepted. The Company reserves the absolute right to
reject any or all subscriptions not properly submitted or the acceptance of
which would, in the opinion of the Company's counsel, be unlawful. The
Company also reserves the right to waive any irregularities or conditions,
and the Company's and the Underwriter's joint interpretations of the terms
and conditions of the Offering shall be final and binding. Any irregularities
in connection with subscriptions must be cured within such time as the
Company shall determine unless waived. The Company and the Underwriter are
not under any duty to give notification of defects in such subscriptions and
will not have any liability for failure to give such notifications.
Subscriptions will not be deemed to have been made until such irregularities
have been cured or waived and, if rejected, will be returned to the holder of
the Rights as soon as practicable. Risk of delivery of the Rights is with the
holder of the Rights Certificate. If delivery is by mail, it is suggested
that insured registered mail with return receipt be used.

STANDBY COMMITMENT

In accordance with a standby underwriting agreement (the "Standby
Agreement") entered into on the date of this Prospectus and pursuant thereto
the Underwriter shall be obligated to purchase the difference between 703,591
Units and the number of Units sold pursuant to the exercise of the Rights to
buy Units offered by the Company that have been exercised on or before the
expiration of the Rights Offering. The Underwriter will pay for the
securities on or about the third business day after the Underwriter receives
notice from the Subscription Agent as to the number of unsubscribed Units for
which it is committed to purchase, at the subscription price set forth on the
cover page of the Prospectus. If all of the Rights are exercised, the
Underwriter will not, subject to the following, purchase any of the Units
pursuant to the Standby Agreement.

In the event that the unsubscribed Units to be purchased by the
Underwriter is less than 300,000 Units, the Underwriter will have the right
but not the obligation to purchase such number of units that will bring the
number of units to be purchased by the underwriter up to a total of 300,000
Units at the Subscription Price less a 10% discount and 3% nonaccountable
expense allowance.

The Underwriter will offer to sell to the public the components of the
Units it acquires from the Company pursuant to the Standby Agreement (the
"Standby Offering") at prices not to exceed the lowest asked prices then
existing at the time of sale as reported on NASDAQ. If any of the Company's
affiliated stockholders acquire Units or components thereof directly from the
Underwriter in the Standby Offering, such purchases, if any, will not exceed
10% of the shares being offered hereby. Any securities acquired by affiliates
in the Offering or the Standby Offering will be acquired for investment
purposes only and made subject to a "lock-up" agreement for eighteen (18)
months from the date of this Prospectus with the Underwriter. See "Shares
Eligible for Future Sale."

42
<PAGE>

The Underwriter may terminate its obligations under the Standby Agreement
if there is a material adverse change in the condition of the Company, or if
certain other events occur. In such event investors will not have the right
to cancel their subscriptions. The Company has the right to retain the monies
from Rights subscribed for. The Rights Offering is distinct and separate from
the Standby Offering under which the Underwriter has a market out right of
cancellation as described herein.

TAX CONSEQUENCES OF THE OFFERING

Investors and stockholders are urged to consult with their independent tax
advisors for the tax consequences of this Offering for the following reasons.

Individual shareholders may be subject to federal and/or state inheritance
or estate taxes. A shareholder's evaluation of the federal and/or state
income tax consequences of this Offering may depend on his federal and/or
state tax situation. The Company is unable to determine the federal and/or
state income tax consequences to investors and stockholders of the Company
with regard to their subscribing, or failing to subscribe, for the Rights.

UNDERWRITING

Pursuant to the Standby Agreement, the Underwriter has participated in
establishing the terms and structure of the Offering. Pursuant to the Standby
Agreement, the Company will pay to the Underwriter a 10% standby fee of
$351,795.50 ($.50 per Unit) in consideration of its agreement to enter into
the standby commitment and also will pay the expenses of the Underwriter, on
a 3% nonaccountable basis, in the amount of $105,538.65 ($.15 per Unit). In
the event that the number of unsubscribed Units to be purchased by the
Underwriter is less than 300,000 Units, the Underwriter will have the right
but not the obligation to purchase a minimum of 300,000 Units at the
Subscription Price less a 10% discount and 3% nonaccountable expense
allowance to be purchased within 30 days of the date of the Closing. These
amounts will be paid by the Company to the Underwriter whether or not all of
the Rights are exercised and the Underwriter actually purchases any Units
under the Standby Agreement, unless the Standby Offering is terminated
pursuant to the terms of the Standby Agreement. In addition, the Company has
agreed to pay to the Underwriter for its agreement to act as a financial
consultant for a term of one year from the Effective Date, a fee totaling 2%
of the proceeds of the Offering (including the Optional Units) payable on the
Closing and the sale of the Optional Units.

The Offering is not being underwritten. However, subject to the terms and
conditions of the Standby Agreement, the Underwriter has committed to
purchase, at the Subscription Price, the difference between 703,591 Units and
the number of Units sold pursuant to the exercise of the Rights to buy Units
offered by the Company that have been exercised on or before the expiration
of the Rights Offering. The Underwriter's commitment to the Company in this
regard is made on a "firm commitment" basis except if, in the reasonable
judgment of the Underwriter, it is impracticable to consummate the Standby
Offering under normal "market out" conditions, such as (i) the Company having
sustained a material loss of whatsoever nature, except losses which occur as
result of litigations solely and unequivocally based 1) upon asbestos
provided that the Company remains and/or would remain a viable entity, and 2)
upon product liability provided such litigation is covered under the
Company's basic product liability insurance coverage and to the extent that
the losses in excess of such insurance coverage do not cause the Company to
be and/or result in it becoming an inviable entity, whether or not insured,
which, in the sole and absolute opinion ot the Underwriter substantially
affects the value of the property of the Company or materially interferes
with the operation of the business of the Company; (ii) any material adverse
change in the business, property or financial condition of the Company; (iii)
trading in securities on the New York Stock Exchange, the American Stock
Exchange or NASDAQ System having been suspended or limited or minimum prices
having been established on either such Exchange or System; (iv) a banking
moratorium having been declared by either federal or state authorities; (v)
an outbreak of major hostilities or other national or international calamity
having occurred; (vi) any action having been taken by any government in
respect of its monetary affairs which, in the reasonable opinion of the
Underwriter, has a material adverse effect on the United States securities
markets; (vii) any action, suit or proceeding at law or in equity against the
Company, or by any Federal, State of other Commission, board or agency
wherein any unfavorable decision would materially adversely effect the
business, property, financial condition or income of the Company; or (viii)
due to conditions arising

43
<PAGE>

subsequent to the execution hereof, the Underwriter reasonably believes that,
as a result of material and adverse events affecting the market for the
Company's Common Stock or the securities markets in general, it is
impracticable or inadvisable to proceed with the Standby Offering.
Accordingly, should the Underwriter not purchase the unsold Units in
accordance with the market out conditions, shareholders who have exercised
the Rights will not have a right to cancel their subscription. In addition,
in the event that all of the Units offered hereby are not sold pursuant to
the exercise of Rights, and the Underwriter fails to purchase the unsold
Units pursuant to its Standby Agreement, the Company will elect not to return
payment received on the Rights subscribed for, and investors may be
vulnerable to illiquidity and/or a loss of their entire investment. The
Subscription Price has been arbitrarily determined through negotiation
between the Company and the Underwriter, was set at approximately 77% of the
average closing bid price as reported by NASDAQ for the ten business days
preceding October 1, 1996, and may bear no relationship to current market
price, earnings, assets or other recognized criteria of value applicable to
the Company. Factors considered in determining such prices, in addition to
prevailing market conditions, included the history of and the prospects for
the industry in which the Company competes, an assessment of the Company's
management, the prospects of the Company, its capital structure and such
other factors as were determined relevant. Reference is made to the Standby
Agreement, which is annexed as an exhibit to the Registration Statement, of
which this Prospectus forms a part, for its complete terms and provisions.

On or after the second business day following the Expiration Date of the
Offering, the Underwriter proposes initially to offer from time to time, the
components of the Units, acquired by it pursuant to its standby commitment
directly to the public at prices not to exceed the lowest asked price then
existing on NASDAQ. The Underwriter presently does not make a market in the
Company's securities and in connection with any sales, does not intend to
stabilize prices. In addition, the Underwriter will not purchase or make a
market in any securities of the Company until it has completed its
distribution of the components of the Units acquired in the Standby Offering.

As a portion of the consideration for its standby commitment and the
investment banking services rendered by the Underwriter, the Company has
agreed to sell to the Underwriter for its own account, at a price of $.0001
per Unit covered thereby, warrants ("Underwriter's Warrants") to purchase 10%
of the Units offered pursuant to its standby commitment. The Underwriter's
Warrants may not be exercised for a period of twelve (12) months from the
date of this Prospectus. The Underwriter's Warrants will be exercisable in
whole or in part for a period of four (4) years thereafter at a price of $6
per Unit which is equal to 120% of the Subscription Price. The exercise price
and the number of shares of Common Stock issuable under the Underwriter's
Warrants and underlying warrants are subject to adjustment to protect the
holder against dilution in certain events. The Underwriter's Warrants are not
transferable by the Underwriter during the initial twelve (12) months except
to one or more of its officers. The holders of the Underwriter's Warrants
have no voting, dividend or other rights of shareholder of the Company with
respect to the shares underlying such Underwriter's Warrants unless such
Warrants have been exercised.

Moreover, in the event that the Underwriter elects to register securities
underlying the Underwriter's Warrants and commence a distribution of such
securities, it will comply with SEC Rule 10b-6 in that, among other things,
it will not make a market or continue to make a market if it should be a
market maker in any of the Company's securities until such time as the
distribution of such securities is completed. Any sale of Units and/or the
components thereof at a price in excess of the Underwriter's purchase price
pursuant to the Standby Offering will result in realization by the
Underwriter of additional underwriting compensation. It should be noted that
the Underwriter is acting as a principal in the Standby Offering, and not as
agent for the Company.

The Company has agreed, for a period of six(6) years commencing one (1)
year following the date of this Prospectus, that on any occasion that it
files a new registration statement or Regulation A offering within such
period (except on Form S-8 or any other appropriate form) it will include in
each such filing the Underwriter's Warrants and/or underlying securities to
the extent permitted by the then applicable rules and regulations of the
Commission, at the request of any holder or holders of such Underwriter's
Warrants and/or underlying securities at no expense to them.

Further, the Company has agreed to qualify or register the Underwriter's
Warrants and/or the underlying securities once at its own expense during the
four (4) year period commencing one (1) year after the date of this
Prospectus, upon request of the Underwriter or its specific duly authorized
designee or the holders of a least 40% of the Underwriter's Warrants and/or
underlying Securities together with the consent of the Underwriter or its

44
<PAGE>

specific duly authorized designee. Any profit received by the Underwriter
either from the sale of the Underwriter's Warrants or from the sale of the
shares of Common Stock or Warrants purchasable upon exercise of the
Underwriter's Warrants may be deemed additional underwriting compensation.
The Company has agreed to pay the Underwriter a warrant solicitation fee of
7% of the exercise price for each Class B Warrant exercised during the period
commencing twelve months after the Effective Date provided: (1) the market
price of the Common Stock on the date the Warrant was exercised was greater
than the Warrant exercise price on that date; (2) exercise of the Warrant was
solicited by the Underwriter or a member of the NASD; (3) the Warrant was not
held in a discretionary account; (4) disclosure of compensation arrangements
were made both at the time of the Offering and at the time of exercise of the
Warrant; and (5) the solicitation of the exercise of the Warrant was not in
violation of Rule 10b-6 (as such rule or any successor rule may be in effect
as of such time of exercise) promulgated under the Securities and Exchange
Act of 1934. See Risk Factor entitled "Relationship of Underwriter to
Trading" with reference to the Underwriter's inability to make a market
during any solicitation period.

The Company has agreed that the Underwriter shall have a right of first
refusal with respect to the public sale of any of the Company's securities to
be made by the Company, its principal stockholders (except George Schiavoni)
or subsidiaries during the three (3) year period commencing with the
consummation of the Standby Agreement, subject to certain exceptions.

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

The Standby Agreement provides that the Underwriter shall have the right
to designate a director and/or non-voting advisor to the Company's board of
directors for a period of sixty (60) months after the consummation of the
Standby Agreement and that the Company shall use its best efforts to cause
the election of said member. Said designee shall receive no more or less
compensation than is paid to other non-management directors of the Company
and shall be entitled to receive reimbursement for all reasonable costs
incurred in attending such meetings, including but not limited to food,
lodging and transportation. Moreover, to the extent permitted by law, the
Company will agree to indemnify the Underwriter and its designee(s) for the
actions of such designee(s) as director and/or as advisor of the Company. In
the event the Company maintains a liability insurance policy affording
coverage for the acts of its officers and/or directors, it will agree, to the
extent permitted by under such policy, to include each of the Underwriter and
its designee(s) as an insured under such policy. The Underwriter has no
present intent to exercise this right.

The Standby Agreement provides that if the Company shall within 5 years
from the Effective Date, enter into any agreement or understanding with any
person or entity introduced by the Underwriter involving (i) the sale of all
or substantially all of the assets and properties of the Company, (ii) the
merger or consolidation of the Company (other than a merger or consolidation
effected for the purpose of changing the Company's domicile) or (iii) the
acquisition by the Company of the assets or stock of another business entity,
which agreement or understanding is thereafter consummated, whether or not
during such 5 year period, the Company, upon such consummation, shall pay to
the Underwriter an amount equal to the following percentages of the
consideration paid by the Company in connection with such transaction: 5% of
the first $1,000,000 or portion thereof, of such consideration; 4% of the
second $1,000,000 or portion thereof, of such consideration; and 3% of such
consideration in excess of the first $2,000,000 of such consideration.

The Company, for a period of one year from the Effective Date, shall not
file a Registration Statement for the benefit of officers, directors,
employees, consultants and/or affiliates of the Company without the prior
written consent of the Underwriter. For a period of one year from the
Effective Date, without the consent of the Underwriter, the Company will not
place or sell any of its securities other than in connection with mergers,
acquisitions or the exercise of currently outstanding options and warrants.
The Company will maintain a current Registration Statement for the
Underwriter to offer and sell the securities purchased by it for a period of
at least nine months from the Effective Date or such reasonable further
period as the Underwriter may request. Nevertheless, the Underwriter agrees
to notify the Company when its distribution has been completed. Neither the
Company nor any officer or director thereof shall for a period of 5 years
from the Effective Date offer to sell any securities of the Company in a
Regulation S offering without the prior written consent of the Underwriter.

45
<PAGE>

CONCURRENT REGISTRATION OF COMMON STOCK

Concurrently with this Offering, 513,000 shares of Common Stock have been
registered under the Securities Act of 1933 for resale. The holders of
114,000 of these shares have agreed not to sell such shares for a period of
nine months from the Effective Date. See "Recent Private Placements"
regarding issuance of these shares. The following table sets forth the number
of shares of Common Stock of the Company owned by each of these shareholders:

<TABLE>
<CAPTION>
Name of Shareholder Number of Shares
--------------------------------------- ----------------
<S> <C>
RONALD SPINELLI & RICHARD SPINELLI 9,500
RAMESH PATEL 9,500
BRENDA FURINO 19,000
CINDY DOLGIN 9,500
JOHN CZINGER 9,500
LEONARD MOSKOWITZ & VICKIE MOSKOWITZ 9,500
ALOYSIUS G. FREEMAN & MARY FREEMAN 9,500
RAYMOND KAYAL 9,500
DAVID COHEN 9,500
JOANN WEAN & CHARLES WEAN III 9,500
ASHDOWN HOLDINGS LIMITED 38,000
BLAISE FINANCIAL CORP. 38,000
ELLIOT S. SCHLISSEL & LOIS C. SCHLISSEL 19,000
GLOBALSIDE LIMITED 38,000
CORNELIA COMPANY LIMITED 38,000
WAAL INVESTMENTS LTD 38,000
HARRIET REUTER 19,000
EDMOND O'DONNELL 19,000
DOMINICK LELIA & ALICE LELIA 9,500
MELINDA N. TYRWHITT(C) 38,000
GEORGE SCHIAVONI (A)(B) 76,000
ANTHONY C. SALVO (A) 5,000
ANDREW J. FINKLESTEIN (A) 6,667
HEATHER REISER (A) 21,667
ROBERT W. BURKE (A) 4,666
</TABLE>

- ------
(A) Have agreed not to sell any shares for a period of nine months from the
Effective Date.

(B) Has agreed not to exercise rights resulting in his ownership of more than
5% of the outstanding shares of the Company following the Offering.

(C) She is the married daughter of Anthony P. Towell, a Director and Officer
of the Company, who disclaims beneficial ownership of these shares.

LEGAL MATTERS

Certain legal matters with respect to the issuance of securities offered
hereby will be passed upon for the Company by Hollenberg Levin Solomon Ross
Belsky & Daniels, LLP, 585 Stewart Avenue, Garden City, New York 11530.
Members of the firm of Hollenberg Levin Solomon Ross Belsky & Daniels, LLP
are members of Associates and hold warrants to acquire 1,667 shares of Common
Stock exercisable until April 11, 1999 at $13.00 per share. Lester Morse,
P.C., 111 Great Neck Road, Great Neck, New York 11021, is acting as counsel
for the Underwriter in connection with certain legal matters relating to the
Units of Common Stock and Warrants offered hereby.

46
<PAGE>

EXPERTS

The Consolidated Financial Statements included in the Registration
Statement, of which this Prospectus forms a part, have been audited by
Cornick, Garber & Sandler, LLP, independent public accountants, to the extent
and for the periods indicated in their report with respect thereto and were
included herein in reliance upon the authority of said firm as experts in
giving said report. Reference is made to said report which contains an
emphasis of a matter with respect to the Company's litigation uncertainties.

ADDITIONAL INFORMATION

The Company has filed with the Commission, a Registration Statement on
Form SB-2 with respect to the securities being offered hereby. This
Prospectus does not contain all the information set forth in such
Registration Statement, as permitted by the Rules and Regulations of the
Commission. For further information with respect to the Company and such
securities, reference is made to the Registration Statement and to the
exhibits and schedules filed therewith. Each statement made in this
Prospectus referring to a document field as an exhibit to the Registration
Statement is qualified by reference to the exhibit for a complete statement
of its terms and conditions. The Registration Statement, including exhibits
thereto, may be inspected without charge, by anyone at the principal office
of the Commission in Washington D.C. and copies of all or any part of thereof
may be obtained from the Commission's office in Washington D.C. upon payment
of the Commission's charge for copying.

47
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
INDEPENDENT AUDITORS' REPORT ................................ F-2
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets ............................ F-3
Consolidated Statements of Operations .................. F-4
Consolidated Statements of Changes in Shareholders'
Equity ............................................... F-5
Consolidated Statements of Cash Flows .................. F-6
Notes to Consolidated Financial Statements ............. F-7

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Eastco Industrial Safety Corp.
Huntington Station, New York

We have audited the accompanying consolidated balance sheet of EASTCO
INDUSTRIAL SAFETY CORP. AND SUBSIDIARIES as at June 30, 1996 and the related
consolidated statements of operations, changes in shareholders' equity and
cash flows for each of the two years in the period ended June 30, 1996. 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 audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of Eastco
Industrial Safety Corp. and Subsidiaries as at June 30, 1996 and the results
of their operations and their cash flows for each of the two years in the
period ended June 30, 1996, in conformity with generally accepted accounting
principles.

As discussed in Note 11 to the consolidated financial statements, the
Company is a defendant in various lawsuits alleging exposure by plaintiffs to
asbestos and products containing asbestos sold by the Company. Since the
ultimate outcome or range of liability, if any, resulting from these lawsuits
cannot presently be determined, no provision for any liability that may
result has been made in the accompanying consolidated financial statements.

/s/ CORNICK, GARBER & SANDLER, LLP
-------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS

Uniondale, New York
September 11, 1996

F-2
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996

<TABLE>
<CAPTION>
<S> <C>
ASSETS

Current assets:
Cash and cash equivalents (Note 1) ................................................. $ 646,030
Accounts receivable, net of allowance for doubtful accounts of $155,000 (Notes 5 and
6) .............................................................................. 4,669,070
Inventories (Notes 1, 2 and 5) ..................................................... 5,230,237
Other .............................................................................. 441,763
-------------
Total current assets ....................................................... 10,987,100
Property, plant and equipment, net (Notes 1, 3, 5 and 6) ............................. 1,278,095
Other assets ......................................................................... 206,910
-------------
TOTAL ...................................................................... $12,472,105
=============

LIABILITIES
Current liabilities:
Loans payable (Note 5) ............................................................. $ 5,853,075
Current maturities of long-term debt (Note 6) ...................................... 56,044
Accounts payable ................................................................... 3,234,127
Accrued expenses ................................................................... 291,341
-------------
Total current liabilities .................................................. 9,434,587
Long-term debt, less current maturities (Note 6) ..................................... 433,738
-------------
Total liabilities .......................................................... 9,868,325
-------------
Commitments and contingencies (Notes 9, 10 and 11)

SHAREHOLDERS' EQUITY
(Notes 1, 5, 6, 7, 12 and 13)
Common stock, $.12 par value; authorized 20,000,000 shares;
outstanding 765,488 ................................................................ 91,859
Additional paid-in capital ........................................................... 6,742,476
(Deficit) (statement attached) ....................................................... (4,230,555)
-------------
2,603,780
-------------
TOTAL ...................................................................... $12,472,105
=============
</TABLE>

The notes to consolidated financial statements are made a part hereof.

F-3
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Net sales .................................................. $26,982,699 $24,024,897
------------- -------------
Costs and expenses:
Cost of sales (Note 1) ................................... 21,495,693 19,254,571
Selling, general and administrative (Note 1) ............. 4,546,222 4,148,517
Interest (Notes 5, 6 and 7) .............................. 836,359 583,665
Other expense (income) (net) ............................. 16,388 (39,793)
Settlement with former underwriter (Note 7) .............. 78,000
------------- -------------
Total costs and expenses ............................ 26,972,662 23,946,960
------------- -------------
NET INCOME ................................................. $ 10,037 $ 77,937
============= =============
Income per share (Note 1):
Primary ................................................... $ .02 $ .20
============= =============
Assuming full dilution .................................... $ .02 $ .17
============= =============
Average number of shares used in computing per share
amounts:
Primary .................................................. 595,758 392,529
============= =============
Assuming full dilution ................................... 595,758 471,698
============= =============
</TABLE>

The notes to consolidated financial statements are made a part hereof.

F-4
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(NOTES 1, 5, 6, 7, 12 AND 13)

<TABLE>
<CAPTION>
Additional
Common Stock* Paid-in
Shares Amount Capital (Deficit) Total
---------- --------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE -- JULY 1, 1994 ........... 347,738 $41,729 $6,224,509 $(4,318,529) $1,947,709
Net income for the year ended June
30, 1995 ......................... 77,937 77,937
---------- --------- ------------ -------------- -------------
BALANCE -- JUNE 30, 1995 .......... 347,738 41,729 6,224,509 (4,240,592) 2,025,646
Shares issued on settlement with
former underwriter ............... 10,000 1,200 70,825 72,025
Exercise of Class A warrants ...... 3,750 450 48,300 48,750
Shares issued on conversion of
subordinated debenture ........... 26,374 3,165 121,963 125,128
Purchase and retirement of common
stock ............................ (21,374) (2,565) (177,435) (180,000)
Shares issued in private placement 399,000 47,880 454,314 502,194
Net income for the year ended June
30, 1996 ......................... 10,037 10,037
---------- --------- ------------ -------------- -------------
BALANCE -- JUNE 30, 1996 .......... 765,488 $91,859 $6,742,476 $(4,230,555) $2,603,780
========== ========= ============ ============== =============

</TABLE>

- ------
* As restated to give retroactive effect to the 1-for-10 reverse stock split
in August 1996.

The notes to consolidated financial statements are made a part hereof.

F-5
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities:
Net income .............................................................. $ 10,037 $ 77,937
-------------- --------------
Adjustments to reconcile results of operations to net cash effect of
operating activities:
Depreciation and amortization ........................................ 134,290 164,533
Provision for (recovery of) losses on accounts receivable ............ 105,732 (38,655)
Shares issued for settlement with former underwriter ................. 72,025
Net changes in assets and liabilities:
Accounts receivable ................................................ (876,629) (430,003)
Inventories ........................................................ (866,339) (1,197,860)
Other current assets ............................................... 40,105 (37,608)
Other assets ....................................................... (75,122) 20,247
Accounts payable ................................................... 343,084 401,146
Accrued expenses ................................................... (40,566) (102,136)
-------------- --------------
Total adjustments ..................................... (1,163,420) (1,220,336)
-------------- --------------
Net cash used for operating activities ................ (1,153,383) (1,142,399)
-------------- --------------
Cash flows from investing activities:
Acquisition of property, plant and equipment ............................ (93,274) (191,242)
-------------- --------------
Cash flows from financing activities:
Repayments of long-term debt ............................................ (48,762) (42,426)
Borrowings under line of credit agreements .............................. 28,621,372 25,789,531
Repayments under line of credit agreements .............................. (27,697,205) (24,044,483)
Borrowing under Bridge loan ............................................. 500,000
Repayment of Bridge loan ................................................ (500,000)
Net proceeds from private placement of common stock ..................... 502,194
Net proceeds from convertible subordinated debenture .................... 225,128
Repurchase of convertible subordinated debenture ........................ (100,000)
Proceeds from excercise of Class A warrants ............................. 48,750
(Decrease) in bank overdrafts ........................................... (365,277)
Purchase of common stock ................................................ (180,000)
-------------- --------------
Net cash provided by financing activities ............. 1,371,477 1,337,345
-------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS ................................. 124,820
3,704
Cash and cash equivalents -- Beginning .................................... 521,210 517,506
-------------- --------------
CASH AND CASH EQUIVALENTS -- END .......................................... $ 646,030 $
521,210
============== ==============
Supplemental disclosure of cash paid for:
Interest ................................................................ $ 836,359 $ 583,665
============== ==============
Income taxes ............................................................ $ 5,440
==============
Supplemental disclosure of noncash financing activities:
Conversion of convertible subordinated debenture into common stock ...... $ 150,000
==============
</TABLE>

The notes to consolidated financial statements are made a part hereof.

F-6
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

OPERATIONS:

The Company operates in two industry segments. The first is the
manufacture and sale of disposable clothing, industrial protective clothing
and protective products to distributors throughout the United States and in
Puerto Rico. The second is the distribution and sale of industrial protective
clothing and protective products directly to "end users" located primarily in
the Northeast United States.

The Company's manufacturing division uses Tyvek(R), which is only
available from one supplier, to produce disposable clothing. Products made of
Tyvek(R) accounted for approximately 41% and 35% of consolidated sales for
the years ended June 30, 1996 and 1995, respectively.

PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the accounts of Eastco
Industrial Safety Corp. and its subsidiaries, all of which are wholly-owned.
All significant intercompany balances and transactions have been eliminated
in consolidation.

USE OF ESTIMATES:

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

CASH:

Cash includes certificates of deposit of approximately $300,000 and
$500,000 at June 30, 1996 and 1995, respectively, which are considered cash
equivalents. A $300,000 certificate has been pledged as collateral for a bank
loan to the extent of such loan (see Note 5).

INVENTORIES:

Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market, which represents estimated net realizable value.

DEPRECIATION AND AMORTIZATION:

Property, plant and equipment are depreciated on a straight-line basis
over the estimated useful lives of the related assets. Leasehold improvements
are amortized on a straight-line basis over the shorter of their estimated
useful lives or the remaining term of the lease.

INCOME TAXES:

The Company accounts for its income taxes under the provisions of
Statement of Financial Accounting Standards No. 109 (FASB 109).

PER SHARE AMOUNTS:

Primary earnings per share amounts have been computed utilizing the
weighted average number of common and, if material, common equivalent shares
outstanding during the period. Fully diluted earnings per share is based upon
the weighted average number of common and common equivalent shares
outstanding. Per share amounts give effect to the retroactive adjustment for
the 1-for-10 reverse stock split approved by the shareholders in August 1996
(see Note 12).

F-7
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 1 -- Summary of Significant Accounting Policies: - (Continued)

All other per share amounts and information set forth in the attached
financial statements and the notes thereto have also been adusted to give
effect to the reverse stock split.

NOTE 2 -- INVENTORIES:

Inventories at June 30, 1996 consist of the following:

Raw materials................ $1,701,676
Work-in-process.............. 514,555
Finished goods............... 3,014,006
------------
Total .................... $5,230,237
============

NOTE 3 -- PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment at June 30, 1996 is comprised of the
following:

<TABLE>
<CAPTION>
Estimated
Useful Life
(Years)
-------------
<S> <C> <C>
Cost:
Land ........................................ $ 382,000
Building and leasehold improvements ......... 827,451 5 - 40
Machinery and equipment ..................... 1,187,178 3 - 10
Furniture and fixtures ...................... 229,074 7 - 10
-----------
Total .................................. 2,625,703
Less accumulated depreciation and amortization 1,347,608
-----------
Balance ................................ $1,278,095
===========
</TABLE>

NOTE 4 -- INCOME TAXES:

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109). While SFAS 109 requires
the recognition of a deferred tax asset for the benefit of net operating loss
carryforwards, it also requires the recognition of a valuation allowance when
it is more likely than not that such benefit will not be realized. As a
result of the Company's past history of losses and the amount of its net
income for the two years ended June 30, 1996 and 1995, it has recorded
valuation allowances equal to its net deferred tax asset account.

Deferred income taxes relate to the following temporary differences and
carryforwards at June 30, 1996:

<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards ........... $1,800,000
Allowance for doubtful accounts and credits 66,000
Tax basis adjustments to inventory ......... 56,000
------------
Total .................................... 1,922,000

Less deferred tax liability:
Accelerated depreciation of property and
equipment ................................ 11,000
------------
Balance .................................. 1,911,000
Less valuation allowance .................... 1,911,000
------------
Net deferred income taxes after valuation
allowance ................................ $ --
============
</TABLE>

F-8
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 4 -- Income Taxes: - (Continued)

Two wholly-owned Puerto Rico based subsidiaries have been granted
exemptions from paying Puerto Rico income taxes under provisions of the
Puerto Rico Industrial Tax Exemption Act of 1963, provided such subsidiaries
continue to meet the terms and conditions of their grants. One subsidiary's
exemption expires on June 30, 1999. The subsidiary has received a 90%
exemption from Puerto Rico income taxes and a 75% exemption from Puerto Rico
municipal and property taxes. The second subsidiary has received a 90%
exemption from Puerto Rico income and property taxes and a 60% exemption from
Puerto Rico municipal income taxes to June 2006. These subsidiaries have
elected, pursuant to Section 936 of the Internal Revenue Code, to receive
credits equivalent to the amount of Federal income taxes which would
otherwise be due on their income. The Omnibus Budget Reconciliation Act of
1993 imposes limitations on computing the Possession Tax Credit under Section
936 for tax years beginning after 1993. In addition, the Act makes the 100%
dividends received deduction subject to the Alternative Minimum Tax
calculation. The Small Business Job Protection Act of 1996 further limits the
Possession Tax Credit for years beginning after 2001 with the credit being
eliminated for tax years beginning after 2005.

Dividends, if paid by the Puerto Rico based subsidiaries, are subject to a
withholding tax of 10%; however, no taxes have been provided on their
aggregate undistributed earnings (of approximately $2,321,000 at June 30,
1996) because it is management's intention to reinvest such earnings
indefinitely.

A reconciliation between the expected tax expense at the statutory federal
income tax rate and the Company's actual income tax expense is as follows:

<TABLE>
<CAPTION>
June 30,
-----------------------
1996 1995
--------- ----------
<S> <C> <C>
Income tax expense at the statutory rate ................... $ 3,000 $ 26,000
Effect of net operating loss of Puerto Rican subsidiaries
for which there is no current tax benefit ................
Effect of domestic net operating loss for which there is no
current tax benefit ...................................... (3,000)
Benefit of utilization of net operating loss carryforwards . (26,000)
--------- ----------
Actual income tax expense ................................ $ -- $ --
========= ==========

</TABLE>

At June 30, 1996, the Company has net operating loss carryforwards of
approximately $4,738,000 for federal income tax purposes. Such carryforwards
expire in 2005 through 2011. As a result of the private placement offering in
June 1996, the amount of the loss carryforwards which can be utilized to
offset future taxable income are limited to approximately $345,000 a year,
plus any loss carryforwards incurred after June 30, 1996.

The annual limitation of the Company's net operating loss deductions may
be further reduced as a result of the proposed public offering (see Note 13).

NOTE 5 -- LOANS PAYABLE:

Loans payable are comprised of short-term bank borrowings of $295,000 at
June 30, 1996 and borrowings under the Company's line of credit agreement
with Congress Financial Corporation ("Congress"). Short-term bank borrowings
(which usually have 30 day terms) are renewable at the bank's option and bear
interest at 1% above the bank's prime rate.

F-9
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995
NOTE 5 -- Loans Payable: - (Continued)
In July 1996, the line of credit with Congress was amended and extended
until October 1, 1999 with an option by Congress to extend the loan for one
year. The line was increased from $6,000,000 to $9,000,000 with interest at
1.25% above the prime rate. If the proposed public offering is consummated no
later than December 31, 1996 and the net proceeds are at least $2,500,000, the
interest charged will be reduced to 1% above prime. The limit on borrowings was
increased to 85% of eligible accounts receivable and 55% of eligible
inventory. The loans are subject to certain working capital and net worth
requirements and are collateralized by all assets of the Company not
previously pledged under other loan agreements. The loan agreement prohibits
the payment of dividends by the Company. In September 1993, Congress sold to
three individuals, who are officers and directors of the Company, a $250,000
junior participation in the loans made to the Company. The Company had an
informal agreement with Congress, whereby Congress agreed to provide the
Company an additional $500,000 in borrowing availability which was repaid at
$11,250 a week beginning November 1, 1993 until $250,000 of additional
borrowings was repaid. Congress can, at its option, repurchase the junior
participation if the Company has at least $250,000 in availability under the
financing agreement. In May 1996, participations of $35,000 were repurchased.
The participants' interest in the obligations, collateral and collections is
subordinated to Congress.

NOTE 6 -- LONG-TERM DEBT:

Long-term debt consists of a mortgage payable, collateralized by land,
building, accounts receivable and personal property. In June 1992, a group of
investors ("investors"), including a director and the spouses of certain
officers and directors of the Company, acquired for $650,000, the mortgage on
the Company's building with a balance of approximately $962,000 and $500,000
of subordinated debt from a bank. The group entered into a modification of
indebtedness agreement which reduced the mortgage to $650,000 and forgave the
balance, which, after the write off of related deferred financing costs,
resulted in a gain of $722,000 in fiscal 1992. In connection with this
transaction, the Company also issued five-year warrants to acquire 10,833
shares of common stock at $30.00 a share. In January 1995, the Company
reduced the exercise price to $13.00 and extended the expiration date until
April 1999. The mortgage is payable in monthly installments of $10,092,
including interest at 14% a year, with the remaining balance of approximately
$434,000 due in July 1997. Interest on the mortgage was $72,346 and $78,682
for the years ended June 30, 1996 and 1995, respectively, approximately 38%
of which was paid to a director and the spouses of the officers and directors
of the Company.

In September 1996, investors extended the mortgage until July 1, 2002,
with interest at 12% a year or 3% above the prime rate, whichever is greater.
The remaining balance of approximately $283,000 will be due on July 1, 2002.

Based upon the new terms, the non-current portion of the mortgage is due
as follows:

Year ending June 30,
--------------------
<S> <C>
1998 $22,000
1999 27,000
2000 30,000
2001 34,000
2002 38,000
2003 283,000
----------
Total $434,000
==========

</TABLE>

F-10
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 7 -- SHAREHOLDERS' EQUITY:

COMMON STOCK:

In April 1991, the Company sold, pursuant to a rights offering, 48,007
shares of common stock. In this connection, the underwriter was sold a
warrant to purchase 4,078 shares of common stock at $53.30 per share, which
was exercisable until February 28, 1996. The Company also had borrowed
$200,000 with interest at 17% per annum during February 1991 from five
unrelated parties. These loans were repaid out of the proceeds of the rights
offering, including interest. In connection with these loans, the Company
issued warrants to purchase 833 shares of common stock, exercisable at $30.00
per share until May 13, 1996. In January 1995, the Company reduced the
exercise price of the above warrants to $13.00 and extended their expiration
dates until April 1999.

On April 19, 1994, the Company sold in a public offering 200,000 units at
$20.00 per unit. Each unit consists of one share of the Company's common
stock and one Class A warrant. Each warrant entitled the holder to purchase
one share of common stock at an exercise price of $24.00 a share from April
12, 1995 through April 12, 1999. In January 1995, the Company reduced the
exercise price to $13.00 a share. These warrants are redeemable by the
Company commencing April 12, 1995 at $1.00 a warrant, provided that the high
bid price of its stock is at least $19.50 for the required number of days
prior to the Notice of Redemption. The Company also granted to the
underwriter an option to purchase, at the same price, 30,000 units to cover
over-allotments. This option was exercised in May 1994. In addition, the
Company sold to the underwriter for $10 an option, exercisable from April 12,
1995 to April 12, 1999, to purchase 23,000 additional units at $29.00 a unit
and entered into a two year consulting agreement with the underwriter at a
total cost of $72,000. Subsequent to the public offering, two officers of the
underwriter became directors of the Company until their resignations on July
10, 1995.

On July 10, 1995, the Company issued 10,000 shares of common stock to the
underwriter of its 1994 public stock offering in exchange for the
cancellation of all of its rights under the Underwriting Agreement. The
$78,000 cost thereof, based on the market value of the shares issued and
legal expenses incurred, is separately reflected on the consolidated
statement of operations for the year ended June 30, 1996.

PRIVATE PLACEMENTS:

On June 28, 1996, the Company issued, in a private placement, 10 1/2 units
at $57,000 a unit. Each unit consists of 38,000 shares of the Company's
common stock. The net proceeds to the Company were approximately $501,000
after fees to the placement agent and other expenses. The proceeds were used
to repay a $500,000 bridge loan, with interest at 10%, made on May 17, 1996.
In connection with the bridge loan, the Company issued warrants to purchase
2,500 shares at a $10.00 per share which expire on June 30, 1999. On July 9,
1996, an additional 3 units were sold for net proceeds of $171,000. No fees
were paid to the placement agent for these units. The 513,000 shares issued
will be registered in the proposed public offering (see Note 13). However,
the shares underlying the 3 units cannot be sold until nine months after the
effective date of the proposed public offering.

CONVERTIBLE SUBORDINATED DEBENTURE:

During April 1996, the holder of a $250,000 convertible subordinated
debenture, issued in February 1996, converted $150,000 of the debenture into
26,374 shares of the Company's common stock. The Company repurchased 21,374
of these shares for $180,000 and retired the stock. The remaining $100,000
balance of the debenture was repurchased for $120,000, including accrued
interest. The $20,000 excess has been included with interest expense for the
year ended June 30, 1996.

F-11
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 7 -- Shareholders' Equity: - (Continued)

OTHER WARRANTS:

In January 1994, a corporate officer/director of the Company purchased a
warrant from a prior lender. The warrant is for the purchase of 82,645 shares
at $6.29 per share. The warrant expires on March 31, 1997.

On May 13, 1996, warrants to purchase 8,348 shares each were granted to
the Company's president and two vice presidents for their gurantees of
overadvances by Congress (see Note 5). The warrants are exerciseable until
February 23, 2001 at $5.77 per share.

On July 26, 1995, the Company issued to a consulting firm, which is the
employer of a director of the Company, a five year warrant to purchase 12,500
shares of the Company for $12.50 a share.

INCENTIVE STOCK OPTION PLANS:

Under the Company's 1983 Incentive Stock Option Plan, options could be
granted to June 23, 1993 for a maximum of 5,625 shares of the Company's
common stock. At June 30, 1996, options to purchase 865 shares at $26.70 to
$30.00 a share are outstanding; no further options may be granted under this
plan.

The Company's 1992 Incentive Stock Option Plan provides for the granting
of options for 20,000 shares of the Company's common stock to December 20,
2002. The Company has agreed not to issue any additional options under this
plan.

The Company's 1994 Incentive Stock Option Plan provides for the granting
of options for 10,000 shares of the Company's common stock to January 2004.
Options for 1,500 shares may be issued under this plan.

Options granted under the incentive stock option plans must be exercised
within such period as stated in the plans and, in any event, must be
exercised no later than ten years after the date they are granted. The plans
provide that the exercise price of the options may not be less than 100% of
the fair market value of common stock at the date of grant or 110% in the
case of an incentive stock option granted to any employee owning more than
10% of the voting power of all classes of stock of the Company.

Transactions under the above plans are summarized as follows:

Shares Option Price Per Share
-------- ---------------------
Outstanding - June 30, 1994 ......... 1,178 $26.40 to $30.00
Granted ............................. 8,500 $10.63
Expired ............................. (13)
--------
Outstanding - June 30, 1995 and 1996 9,665 $10.63 to $30.00
========

1995 STOCK OPTIONS:

On January 20, 1995, the Board of Directors granted to the Company's
president and two vice-presidents each ten-year nonqualified options to
purchase 80,158 shares each at $5.30 per share. The options are exercisable
after five years but may become exercisable sooner upon the Company achieving
pretax earnings targets. Based on the earnings for the year ended June 30,
1995, options for 120,237 shares are now exercisable.

Other nonqualified options outstanding at June 30, 1996, under prior
years' grants, aggregate 3,108 shares at $16.875 to $30.00 a share.

F-12
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 7 -- Shareholders' Equity: - (Continued)

The following summarizes shares reserved at June 30, 1996 under options
and warrants outstanding:
Price Per
Number Share
--------- ---------------
Stock options:
Incentive stock
option plans ..... 9,665 $10.63 - $30.00
Nonqualified
options .......... 243,582 $ 5.30 - $30.00
Warrants:
Class A ........... 226,250 $13.00
Other ............. 138,433 $ 5.77 - $13.00

NOTE 8 -- COMMITMENTS AND CONTINGENCIES:

RENT:

The Company is obligated through August 2003 under several noncancellable
long-term operating leases covering office, factory and warehouse facilities.
Minimum annual rentals under these leases are:

Year ending June 30:
--------------------
1997 $ 116,000
1998 127,000
1999 137,000
2000 157,000
2001 142,000
Thereafter 332,000
------------
Total $1,011,000
============

Rent expense, including month-to-month rentals, was $226,000 and $219,000
in the fiscal years ended June 30, 1996 and 1995.

EMPLOYMENT AGREEMENTS:

The Company had employment agreements, which commenced as of the effective
date of the April 1994 public offering, with three of its officers. These
agreements provided for combined annual salaries of $247,000. On July 1,
1995, these officers entered into new agreements which provide for the
following:

Officer Period Annual Salary
------------------------- --------- ---------------
President ..... 5 years $121,000
Senior
Vice-President* 5 years $105,000
Vice-President
of Finance
and Treasurer . 5 years $ 55,000
- ------
* This officer is entitled to a bonus of 3/4 of 1% of net sales in excess of
$20,500,000 after June 30, 1997.

F-13
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 8 -- Commitments and Contingencies: - (Continued)

The above officers are also entitled to annual increases of not less than
10% of the prior year's compensation. In addition, should an unrelated party
obtain more than 20% of the Company's then outstanding stock, other than by
transactions initiated by the Company in the ordinary course of business, the
following will occur:

(a) Each will be paid a bonus equal to their minimum base salary for
the next three years.
(b) Each will be repaid their junior participation in loans made to the
Company (see Note 5).
(c) All rights (options, warrants, etc.) will become immediately vested
and exercisable.

These officers have waived their right to additional compensation payable
resulting from a change in control due to the private placements and the
proposed public offering (see Notes 7 and 13).

NOTE 9 -- PROFIT SHARING PLAN:

The Company's qualified profit sharing plan covering all eligible
full-time employees provides for discretionary (i.e., no minimum
contributions are required) contributions as approved by the Company's Board
of Directors. The profit sharing plan includes a 401(k) plan. There were no
contributions made for the fiscal years ended June 30, 1996 and 1995.

NOTE 10 -- INDUSTRY SEGMENT INFORMATION:

Information for the Company's distribution and manufacturing segments for
the years ended June 30, 1996 and 1995 is summarized as follows:

<TABLE>
<CAPTION>
1996 Distribution Manufacturing Total
---- -------------- --------------- -------------
<S> <C> <C> <C>
Net sales ............................... $9,094,046 $17,888,653 $26,982,699
============== =============== =============
Operating profit ........................ $ 133,760 $ 2,124,131 $ 2,257,891
============== ===============
General corporate expenses .............. (1,411,495)
Interest expense ........................ (836,359)
-------------
Income before provision for income taxes $ 10,037
=============
Identifiable assets ..................... $5,182,514 $ 7,289,591 $12,472,105
============== =============== =============
Capital expenditures .................... $ 43,704 $ 49,570 $ 93,274
============== =============== =============
Depreciation and amortization expense ... $ 58,941 $ 75,349 $ 134,290
============== =============== =============
1995
----
Net sales ............................... $9,233,456 $14,791,441 $24,024,897
============== =============== =============
Operating profit ........................ $ 156,199 $ 1,666,331 $ 1,822,530
============== ===============
General corporate expenses .............. (1,160,928)
Interest expense ........................ (583,665)
-------------
Loss before provision for income taxes .. $ 77,937
=============
Identifiable assets ..................... $4,291,806 $ 6,424,242 $10,716,048
============== =============== =============
Capital expenditures .................... $ 27,882 $ 163,360 $ 191,242
============== =============== =============
Depreciation and amortization expense ... $ 37,462 $ 127,071 $ 164,533
============== =============== =============
</TABLE>

F-14
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 11 -- LITIGATION:

At June 30, 1996, the Company is a defendant in approximately 280
lawsuits, together with a multitude of other defendants, in actions alleging
exposure by approximately 1,300 first party plaintiffs to asbestos and
products containing asbestos sold by the Company over unspecified periods of
time.

To June 30, 1996 and since 1981, the Company estimates approximately 900
actions on behalf of approximately 7,500 first party plaintiffs have been
instituted against it concerning asbestos related claims and that claims of
approximately 6,200 plaintiffs have been terminated. The foregoing numbers
assume the consummation of pending settlements. The Company estimates that
with the exception of defense costs, a total of approximately $1,400,000 has
been agreed to in settlements to date with regard to the terminated actions
of which all but $30,000 has been paid by the Company's insurance carriers.
To June 30, 1996, the Company has paid less than $35,000 for legal and
defense costs to counsel appointed by the insurance companies to defend it.
The Company entered into an agreement with its primary insurance companies,
wherein its liability is limited to 12% of the cost of the defense liability
and 17% of the settlement claim of certain litigation. The agreement, which
is subject to policy limitations on each insurance policy, may be terminated
at any time upon 90 days notice by any of the parties provided that
termination may not be effective as to any asbestos action that has already
been placed on the trial calendar, unless it has a scheduled trial date more
than 12 months from the date the notice is given. In May 1991, the Company
reached an agreement with Mount Vernon Fire Insurance Company, one of its
primary insurance carriers, with respect to its pending and future asbestos
litigation. Mount Vernon agreed to contribute 6.25% to the Company's defense
costs and 6.25% to its indemnity costs for so long a period of time as
$100,000 in aggregate has not been paid for indemnity costs. This agreement
applied only during the period Mount Vernon provided insurance coverage,
which is between April 1, 1968 to April 1, 1969. However, because past
results of settlements and defense costs are not necessarily indicative of
future settlements and defense costs and because, as of this date, management
is still unable to fully ascertain the extent of insurance coverage
applicable to asbestos claims against the Company or the extent to which
insurance carriers will provide coverage, neither management nor counsel is
able to predict the outcome of these matters or the range of any potential
liability that might result. In addition, based on past history, management
believes it is likely that there will be additional asbestos action
instituted against the Company.

The Company is party to one other product liability action arising in the
ordinary course of business. After consultation with counsel, the Company
considers that its ultimate liability, if any, after available insurance
coverage, in this matter, would not have a material adverse effect upon the
Company's financial position. However, there can be no assurances that the
Company's insurance coverage will adequately cover these cases or whether the
Company's insurance will provide coverage for punitive damages should they be
awarded.

NOTE 12 -- SUBSEQUENT EVENTS:

REVERSE STOCK SPLIT, PREFERRED STOCK, STOCK OPTION PLANS AND STOCK
OPTIONS:

On May 13, 1996, the Board of Directors approved the following proposals
which were approved by the shareholders at a special meeting on August 12,
1996.

1. A 1-for-10 reverse stock split of all outstanding shares of the
Company. The acompanying financial statements and notes thereto give
retroactive effect to this split.
2. Amendment of the certificate of incorporation to authorize a class
of preferred stock consisting of 1,000,000 shares.
3. Adoption of the 1996 incentive stock option plan for the issuance of
300,000 shares to key employees.
4. Adoption of the 1996 nonqualified stock option plan for the issuance
of 300,000 shares to key employees.

F-15
<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 13 -- PROPOSED PUBLIC OFFERING:

The Company has signed a letter of intent with an underwriter for a rights
offering and for the sale of units. Each holder of 5 shares of the Company's
common stock will be allowed to purchase 4 units. Each unit is comprised of
one share of common stock and a Class B warrant to purchase one share of
common stock. The warrants are exercisable twelve months after the effective
date of the offering or earlier with the underwriters consent and expire
three years from the effective date of the offering. These warrants are
redeemable by the Company eighteen months after the effective date at $.01 a
warrant provided the high bid price of its stock is at least 150% in excess
of the exercise price of the warrants for the required number of days prior
to the redemption notice. The Company entered into a standby agreement with
the underwriter whereby any units not sold pursuant to the exercise of rights
will be sold to the underwriter at the same price. In the event the
unsubscribed units to be purchased by the underwriter is less than 300,000
units, the underwriter will have the right, but not the obligation, to
purchase additional units that will bring the total up to 300,000 units. The
Company also granted to the underwriter, for $7, an option to purchase one
unit for each 10 units sold in the offering. The Company will also enter into
a one year financial consulting agreement at a cost of 2% of the gross
proceeds of the offering. The Company also agreed to pay the underwriter a
warrant solicitation fee of 7% of the exercise price of each Class B warrant.

F-16
<PAGE>

=============================================================================

TABLE OF CONTENTS

Page
--------
Restrictions in Certain States ................... 3
Statement of Available Information ............... 4
Forward-Looking Statements ....................... 4
Prospectus Summary ............................... 5
Summary Financial Information .................... 8
Risk Factors ..................................... 9
Use of Proceeds .................................. 18
Dilution ......................................... 18
Capitalization ................................... 19
Market Information ............................... 20
Dividend Policy .................................. 20
Management's Discussion and Analysis of Financial
Condition and Results of Operations ............. 21
Business ......................................... 23
Management ....................................... 29
Principal Shareholders ........................... 35
Description of Securities ........................ 37
Shares Eligible for Future Sale .................. 39
Certain Relationships and Related Transactions ... 39
Recent Private Placements ........................ 41
The Offering ..................................... 41
Underwriting ..................................... 43
Concurrent Registration of Common Stock .......... 46
Legal Matters .................................... 46
Experts .......................................... 47
Additional Information ........................... 47
Consolidated Financial Statements ................ F-1

No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations must
not be relied on as having been authorized by the Company. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy, by
any person in any jurisdiction in which it is unlawful for such person to
make such offer or solicitation.

=============================================================================

703,591 UNITS

EASTCO INDUSTRIAL
SAFETY CORP.

------
PROSPECTUS

ROYCE INVESTMENT
GROUP, INC.

OCTOBER 10, 1996

=============================================================================

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
513,000 SHARES OF COMMON STOCK

This Prospectus relates to the sale by certain selling stockholders (the
"Selling Stockholders") of 513,000 shares of common stock, $0.12 par value
per share (the "Common Stock") offered hereby (the "Offering"), of Eastco
Industrial Safety Corp., a New York corporation (the "Company" and sometimes
"Eastco" when referring to the parent company only). None of the proceeds
from the sale of the Common Stock by the Selling Stockholders will be
received by the Company. By agreement, 114,000 shares are restricted from
being sold until 9 months from the date hereof. The Company will bear all
expenses (other than selling commissions and fees and expenses of counsel or
other advisors to the Selling Stockholders) in connection with the
registration and sale of the Common Stock being offered by the Selling
Stockholders. See "Selling Stockholders".

The Common Stock will be offered by the Selling Stockholders in
transactions in the NASDAQ Small Cap Market and Boston Stock Exchange after
listing, in negotiated transactions or a combination of such methods of sale,
at prices related to such prevailing market prices, or at negotiated prices.
The Selling Stockholders may effect such transactions by selling the Common
Stock to or through broker/dealers, and such broker/dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of the Common Stock for whom such
broker/dealers may act as agent or to whom they sell as principal, or both.
The Selling Stockholders may be deemed to be "underwriters" as defined in the
Securities Act of 1933, as amended (the "Securities Act"). If any
broker/dealers are used by the Selling Stockholders, any commissions paid to
broker/dealers and, if broker/dealers purchase any shares of Common Stock as
principals, any profits received by such broker/dealers on the resales of the
shares of Common Stock may be deemed to be underwriting discounts or
commissions under the Securities Act. In addition, any profits realized by
the Selling Stockholders may be deemed underwriting commissions. All costs,
expenses and fees in connection with the registration of the shares offered
by the Selling Stockholders will be borne by the Company. Brokerage
commissions, if any, attributable to the sale of Common Stock will be borne
by the Selling Stockholders. See "Selling Stockholders" and "Plan of
Distribution".

The Company's Common Stock is traded on the NASDAQ Stock Market ("NASDAQ")
under the symbol "ESTO" and on the closing of the Unit Offering (as defined
below) will be listed on the Boston Stock Exchange under the symbol "EST". On
September 30, 1996, the reported closing sale price for the Common Stock as
reported by NASDAQ was $5 5/8 per share.

Concurrently with the commencement of this offering, the Company offered
by separate Prospectus, 703,591 units (the "Units") each Unit consisting of
one share of Common Stock and one Class B Common Stock purchase warrant (the
"Class B Warrants"). The concurrent offering (the "Unit Offering") grants to
the Company's stockholders as of September 24, 1996, in those states where
qualified, or exempt from qualification, the nontransferable right to
subscribe for Units. Any Units not subscribed for will be sold to Royce
Investment Group, Inc. (the "Underwriter") pursuant to a Standby Agreement.

------
THESE ARE SPECULATIVE SECURITIES. THESE SECURITIES INVOLVE A HIGH DEGREE OF
RISK AS DESCRIBED HEREIN. FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
SECURITIES, SEE "RISK FACTORS" BEGINNING ON PAGE 7.

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

The date of this Prospectus is October 10, 1996.

<PAGE>

RESTRICTIONS IN NEW JERSEY

FOR RESIDENTS OF THE STATE OF NEW JERSEY:

The offering covered by this Prospectus may only be made by selling
security holders in the State of New Jersey through a registered
broker/dealer or in reliance upon an exemption from registration. Further,
any sales in New Jersey may be made only to "accredited investors" as that
term is defined under Regulation 501 of the Securities Act of 1933, as
amended. Rule 501 defines "accredited investors" to include, among other
things: (i) any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
(ii) any natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable expectation
of reaching the same income level in the current year; and (iii) any entity
in which all of the equity owners are accredited investors.

<PAGE>

STATEMENT OF AVAILABLE INFORMATION

The Company currently files its reports electronically by EDGAR. The
Company distributes annual reports containing audited financial statements to
its shareholders.

FORWARD-LOOKING STATEMENTS

THIS PROSPECTUS INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT
TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE
COMPANY. SUCH STATEMENTS REFLECT SIGNIFICANT ASSUMPTIONS AND SUBJECTIVE
JUDGMENTS BY THE COMPANY'S MANAGEMENT CONCERNING ANTICIPATED RESULTS. THESE
ASSUMPTIONS AND JUDGMENTS MAY OR MAY NOT PROVE TO BE CORRECT. MOREOVER, SUCH
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT MAY
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN SUCH
FORWARD-LOOKING STATEMENTS. FOR A DISCUSSION OF SUCH RISKS, SEE "RISK
FACTORS". INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE
UNDERWRITER HAS NOT ATTEMPTED TO VERIFY THE BASIS FOR ANY SUCH STATEMENTS
INDEPENDENTLY AND NEITHER THE UNDERWRITER NOR THE COMPANY UNDERTAKES ANY
OBLIGATION TO RELEASE PUBLICLY ANY REVISIONS TO THESE FORWARD- LOOKING
STATEMENTS TO REFLECT EVENTS OCCURRING OR CIRCUMSTANCES ARISING AFTER THE
DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

<PAGE>

PROSPECTUS SUMMARY

THE COMPANY

MANUFACTURING OPERATIONS

Manufactured products are sold under the "Charkate/Worksafe", "Charkate",
"Worksafe" and "Cover- up" trade names. The Company, through Disposable,
Safety Wear and Puerto Rico Safety Equipment, manufactures disposable and
reusable industrial protective apparel. Disposable protective products items
include coveralls, shirts, pants, hats, hoods, aprons, smocks, lab coats,
hazardous material handler suits, examination gowns, sleeves, shoe covers and
related items. Disposable clothing is designed to protect the user from,
among other things, splash, dirt, contamination and against a wide range of
hazardous substances. Disposable clothing is made primarily of a spun bonded
polyolefin produced solely by Dupont under the trade name Tyvek(R). Reusable
industrial protective clothing consists of items for the protection of
various parts of the body which are designed to shield the user from, among
other things, splash, dirt, contamination, heat, fire, cold and the outside
environment. Specific products manufactured include coveralls, gloves, mitts,
shirts, thermal underwear, sleeves, coats, pants, leggings, spats, bibs,
safety vests and a variety of other kinds of protective clothing and
uniforms. The Company also manufactures welding blankets, curtains and
screens.

DISTRIBUTION OPERATIONS

The Company, primarily through its Eastco Division, distributes industrial
safety products to "end- users" made by the Charkate/Worksafe division as
well as by non-affiliated companies. Products distributed include hard hats,
protective glasses, ear muffs, ear plugs, respirators, goggles, face shields,
rainwear, protective footwear, first-aid kits, monitoring devices, signs and
related products. These products are sold to manufacturing companies and
service businesses, including public utilities, fisheries, hospitals,
pharmaceutical plants, the transportation industry and companies engaged in
hazardous materials abatement.

<PAGE>

THE OFFERING

<S> <C>
Securities Offered ........................ 513,000 shares of Common Stock
Common Stock outstanding prior to the Unit
Offering(2)(3) ........................... 879,488 shares of Common Stock
(as adjusted for prior stock
splits and estimated rounding
for fractional shares)
Common Stock to be outstanding after the
Unit Offering(1)(2)(3)(4) ................ 1,583,079 shares of Common Stock
Use of Proceeds ........................... None to the Company.
Risk Factors .............................. The securities offered hereby
involve a high degree of risk
and immediate substantial dilution.
See "Risk Factors."
NASDAQ Symbol ............................. Common Stock -- ESTO
Boston Stock Exchange Symbol(5) ........... Common Stock -- EST

</TABLE>

- ------
(1) Includes 703,591 shares of common stock issued concurrently as part of
the Unit Offering.

(2) All shares and shares issuable under outstanding warrants and options in
this Prospectus have been adjusted for a one-for-ten reverse stock split
approved by the shareholders of the Company on August 12, 1996.

(3) Does not include Common Stock which may be issued upon the exercise of
any options or warrants currently outstanding. The Company currently has
outstanding options and warrants to purchase 617,930 shares of Common
Stock exercisable at prices between $5.302 and $30.00 per share which
will be adjusted to acquire 630,887 shares at prices between $5.169 and
$30.00 as a result of anti- dilution rights as a result of the Unit
Offering.

(4) Does not include Common Stock which may be issued upon exercise of
Underwriter's Purchase Option and Optional Units.

(5) The Company's Common Stock has been approved for listing on the Boston
Exchange upon completion of the Unit Offering which is expected to occur
on or about November 15, 1996. See however Risk Factor entitled "Possible
Volatility of Stock Price; Risk of Non-Consummation of Unit Offering"
regarding the possibility of the Unit Offering not occurring.

<PAGE>

SUMMARY FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL DATA

STATEMENT OF OPERATIONS DATA:

Year Ended June 30,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Net sales .................................................. $26,982,699 $24,024,897
Cost of sales .............................................. 21,495,693 19,254,571
------------- -------------
Gross profit ............................................... 5,487,006 4,770,326
------------- -------------
Selling, general and administrative expenses ............... 4,546,222 4,148,517
Interest ................................................... 836,359 583,665
Other expense (income)(net) ................................ 16,388 (39,793 )
Settlement with former underwriter ......................... 78,000 --
------------- -------------
Total expenses ............................................. 5,476,969 4,692,389
------------- -------------
Net income ................................................. $ 10,037 $ 77,937
============= =============
Net income per share(1):
Primary .................................................. $ .02 $ .20
============= =============
Assuming full dilution ................................... $ .02 $ .17
============= =============
Average number of shares used in computing per share
amounts:
Primary .................................................. 595,758 392,529
============= =============
Assuming full dilution ................................... 595,758 471,698
============= =============
</TABLE>

CONSOLIDATED BALANCE SHEET DATA:

<TABLE>
<CAPTION>
As at June 30, 1996
----------------------------------------------
As at Pro-Forma
June 30, Pro- as
1995 Historical Forma(1) Adjusted(2)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Current Assets ...... $ 9,265,149 $10,987,100 $11,158,100 $11,228,459
Current Liabilities . 8,200,620 9,434,587 9,434,587 6,809,325
Working Capital ..... 1,064,529 1,552,513 1,723,513 4,419,134
Total Assets ........ 10,716,048 12,472,105 12,643,105 12,713,464
Long-Term Debt ...... 489,782 433,738 433,738 433,738
Total Liabilities ... 8,690,402 9,868,325 9,868,325 7,243,063
Shareholders' Equity 2,025,646 2,603,780 2,774,780 5,470,401

</TABLE>
- ------
(1) Adjusted to give effect to shares issued in a private placement with net
proceeds to the Company of $171,000.

(2) Adjusted to give effect to shares issued in the Unit Offering and the
sale of units offered and the receipt of $2,695,621 in net proceeds and
their initial application which is to prepay the Underwriter $70,359 for
a one year consulting agreement with the balance going to pay down the
amount outstanding on the Company's line of credit.

<PAGE>

RISK FACTORS

LENDING ARRANGEMENTS; LIENS ON THE COMPANY'S ASSETS. The Company is
dependent upon its revolving line of credit with Congress Financial
Corporation ("Congress"), which as revised during July, 1996, expires October
1, 1999, except that Congress at its sole option may extend the termination
date to October 1, 2000. The line of credit was increased from $6,000,000 to
$9,000,000 as of July, 1996. Interest is payable monthly at 1.25% (previously
2.25%) over a prime rate, with provision to further reduce such rate to 1%
over the prime rate upon consummation of the Unit Offering for net proceeds
of at least $2,500,000 which must occur no later than December 31, 1996.
Borrowings are currently limited to 55% of the Company's eligible inventory
and 85% of the Company's eligible accounts receivable. As of June 30, 1996,
the amount outstanding on the line of credit was approximately $5,558,000,
with an availability of borrowing $76,000 based upon accounts receivable and
inventory at that date. The loan is subject to certain working capital and
net worth covenants and is collateralized by all of the Company's assets not
previously pledged under other loan agreements.

These actions are pending in the states of New York, New Jersey, and
Pennsylvania. The number of first- party plaintiffs include, in various
instances, spouses of said plaintiffs. The actions, with the exception of one
pending action, involve a multitude of defendants. The complaints allege
exposure to asbestos and asbestos products over various periods of time. Each
seeks varying amounts of damages, usually unlimited, or for each plaintiff as
high as $10,000,000 for compensatory damages and $20,000,000 for punitive
damages.

<PAGE>

been or will be paid by the Company's insurance carriers. Through June 30,
1996, the Company has paid less than approximately $35,000 for legal and
defense costs to counsel appointed by the insurance carriers to defend it.
Past results of settlements and defense costs are not necessarily indicative
of future settlements and defense costs which the Company is unable to
predict.

<PAGE>

ment does not apply to Puerto Rico Safety Equipment and is only applicable to
cases brought by the same law firm against the Company in the State of New
York. The Company is to be dismissed without any payment in cases not
involving any exposure to a power generating station in the State of New York
("Powerhouse"). Where there is Powerhouse exposure, a payment of $100 is to
be made for each alleged nonmalignant case and $300 for each malignant case.
Where plaintiffs consist of two spouses, such is deemed one case. Payment is
to await appropriate documentation of exposure, releases from the plaintiffs
and the agreement of each plaintiff whose case is settled.

NEED FOR SUBSTANTIAL INVENTORIES. The Company is required to maintain
substantial inventories for both its Manufacturing Operations and its
Distribution Operations in order to meet the immediate requirements of its
customers who require products on short notice and who do not maintain an
inventory of such products. The Company had inventory of approximately
$5,230,000 and $4,364,000, as of June 30, 1996 and June 30, 1995,
respectively. Although the Company believes it currently maintains sufficient
inventories, prior to a 1994 public offering (the "1994 Offering"), the
Company experienced periods where it did not have

<PAGE>

sufficient working capital to maintain its inventories to meet the demands of
certain of its customers. There can be no assurance that the Company will be
able to maintain sufficient inventories or the Company will not return to
periods where there is insufficient working capital to maintain its
inventories to meet the needs of its customers.

DEPENDENCE UPON DUPONT FOR SUPPLY OF TYVEK(R). The Company is not
dependent upon any one company for a source of supply of raw materials for
its manufacturing operations other than DuPont, which supplies the Company
with Tyvek(R), a raw material which is used in various lines of its
disposable products. Products utilizing Tyvek(R) accounted for approximately
41% and 35% of consolidated sales for the fiscal years ended June 30, 1996
and June 30, 1995, respectively. Management believes that its current
relationship with DuPont is satisfactory. The Company has no contract with
DuPont for the supply of such raw material; therefore, DuPont could terminate
its relationship with the Company at any time. The Company does not believe
that an alternative source exists for the supply of Tyvek(R). Accordingly,
the loss of DuPont as a supplier of Tyvek(R) would have a material adverse
effect on the Company's operations.

LIMITATION ON NET OPERATING LOSS CARRYFORWARDS. As of June 30, 1996, the
Company had Federal net operating loss carryforwards for income tax purposes
of approximately $4,738,000 which expire through the year 2011. These
carryforwards are subject to limitations on the amount that can be utilized
by the Company in a fiscal year due to "change of ownership" rules as defined
by applicable Federal tax statutes. The amount of income which may be offset
after an ownership change is determined by multiplying the fair market value
of the Company at the time of the ownership change by the long-term tax
exempt rate. To the extent that such annual limitation is not utilized, it
may be further carried forward until the carryforward would have otherwise
expired. A "change in ownership" occurred upon the completion of two 1996
private placements ("Recent Private Placements"). See "Recent Private
Placements". Based upon the number of shares offered in the Recent Private
Placements and the applicable long-term tax exempt rate, the Company's
ability to utilize its net operating carryforward losses in future years is
limited to approximately $345,000 per year. A change in ownership may also
occur upon the completion of the Unit Offering and the Company's ability to
utilize its net operating loss carryforwards could be further limited.

<PAGE>

with only one class of directors being elected in each year. A classified
board under certain circumstances could discourage, prevent or delay a change
in control of the Company, which could have the effect of discouraging bids
for the Company and thereby prevent shareholders from receiving the maximum
value for their shares. In addition, there are provisions in the employment
agreements with Messrs. A. Densen, A. Towell and L. Densen, that provide for
them to receive immediately a lump sum payment of three years' compensation
as well as severance pay should a "Change in Control" occur, which also could
have a similar effect of deterring bids for the Company. Messrs. A. Densen,
L. Densen, and A. Towell, in modification agreements to their employment
agreements, have waived: (i) their right to bonuses based upon the Company's
earnings before interest and taxes for the fiscal years ended June 30, 1996
through June 30, 2000; (ii) their exercise rights on options and warrants and
repayment of their junior participation interests with Congress and
compensation payable in the event of a Change in Control with respect to the
Offerings; and (iii) their right to terminate their relationship with the
Company, as per the terms of their respective employment agreements. The
modification agreements and waivers provide that their right to terminate
their employment agreements and waiver of their bonuses shall not be waived
in the event that there is a material breach of such agreements by the
Company. Messrs. A Densen, L. Densen and A. Towell have agreed that the
issuance of shares in the Unit Offering will not result in any "change of
control" rights under their respective employment agreements. See
"Management" and "Executive Compensation -- Employment Agreements and Change
of Control Features".

OUTSTANDING OPTIONS AND WARRANTS. As of the date hereof, there are 617,930
shares of Common Stock subject to issuance upon currently outstanding options
and warrants at exercise prices between $5.302 and $30.00 per share, which
will be adjusted to acquire 630,887 shares at prices between $5.169 and
$30.00 as a result of anti-dilution rights as a result of the Unit Offering.
To the extent that outstanding options and warrants are exercised, additional
equity investment funds will be paid into the Company at the expense of
dilution to the interests of the Company's shareholders. Moreover, the terms
upon which the Company will be able to obtain additional equity capital may
be adversely affected since the holders of outstanding options and warrants
can be expected to exercise or convert them at a time when the Company would,
in all likelihood, be able to obtain any needed capital on terms more
favorable to the Company than those provided in such securities. Outstanding
options and warrants did not materially dilute earnings per share in 1996,
but could do so in the future if there is a significant increase in the
spread between their exercise price and the quoted market price of the
Company's Common Stock.

<PAGE>

RELATIONSHIP OF UNDERWRITER TO TRADING. Subsequent to the Underwriter
completing its distribution of any securities it acquires pursuant to the
Standby Offering, the Underwriter intends to be a market maker for the Common
Stock and Class B Warrants underlying the Units. The Underwriter also has the
right to act as the Company's exclusive agent in connection with any future
solicitation of warrantholders to exercise their Class B Warrants. Unless
granted an exemption by the Commission from Rule 10b-6 promulgated under the
Exchange Act, the Underwriter will be prohibited from engaging in any
market-making activities or solicited brokerage activities with regard to the
Company's securities during a period beginning two or nine business days,
whichever is applicable, prior to the commencement of any such solicitation
and ending on the later of the termination of such solicitation activity or
the termination (by waiver or otherwise) or any right that the Underwriter
may have to receive a fee for soliciting the exercise of the Class B
Warrants. As a result, the Underwriter may be unable to continue to make a
market for the Company's securities during certain periods while the Class B
Warrants are exercisable. Such a limitation, while in effect, could impair
the liquidity and market price of the Company's securities.

TAX INCENTIVES. Puerto Rico Safety Equipment and Disposable have elected
to apply Section 936 of the Internal Revenue Code, effective July 1, 1979.
The provisions of Section 936 are effective until revoked by the Company. If
the conditions of Section 936(a)(2) are satisfied, the Section 936 credit
equals the portion of the United States income tax that is attributable to
taxable income from sources outside the United States derived from the active
conduct of a trade or business within a United States possession, or the sale
or exchange of substantially all of the qualified possession source
investment income. Dividends payable by each subsidiary to the Company from
operations are entitled to a 100% dividends received deduction but are
subject to a 10% withholding tax in Puerto Rico. The Omnibus Budget
Reconciliation Act of 1993 (the "Omnibus Act") imposes new limitations on
computing the Possession Tax Credit under Section 936 for tax years beginning
after 1993. There are two methods for determining the credit under the new
law. Under the first method, the amount of the credit may be determined by
using the so-called economic activity limit. This attempts to limit the
credit by applying various percentages to possession-based compensation,
depreciation and taxes paid or accrued. Alternatively, the Company may make
an irrevocable election when it files its June 30, 1996 federal income tax
return to have present rules apply, but to phase out the credit to 60% of the
1994 level, and further phase down by 5% per year to 40% in 1998 and years
thereafter. Since the credit is a function of future earnings, if any, the
effect of such limitations cannot be determined at the present time. In
addition, the Omnibus Act makes the 100% dividends received deduction subject
to the Alternative Minimum Tax Calculation. No dividends have been declared
on the aggregate undistributed earnings of Puerto Rico Safety Equipment and
Disposable (which through June 30, 1996, aggregates approximately $2,321,000)
and none are intended to be declared because it is management's intention to
reinvest the earnings from such subsidiaries indefinitely. The Company
believes that based upon current operations, the Omnibus Act will not have a
material effect on the Company for the foreseeable future. The Small Business
Job Protection Act of 1996 further limits the Possession tax credit for years
beginning after 2001 with the credit being eliminated for tax years beginning
after 2005.

SHARES ELIGIBLE FOR FUTURE SALE. There are 879,488 shares of Common Stock
(not assuming the issuance of 703,591 shares of Common Stock as part of the
Unit Offering to be registered and sold therewith) of the Company outstanding
as of the Effective Date. Of these shares 528,607 shares are restricted
securities, as that term is defined in Rule 144 promulgated under the
Securities Act of 1933 (the "Securities Act"). Of the restricted securities,
513,000 shares have been registered for sale. The holders of 114,000 of these
shares have agreed not to sell any such shares for a period of nine months
from the Effective Date. See "Recent Private Placements" and "Concurrent
Registration of Common Stock". 14,602 of the restricted securities are owned
by officers and directors of the Company. Absent registration under the
Securities Act, the sale of such shares is subject to Rule 144. In general,
under Rule 144, subject to satisfaction of certain other conditions, a
person, including an affiliate of the Company, who has beneficially owned
restricted shares of Common Stock for at least two years is entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of 1% of the total number of outstanding shares of the same class, or
if the Common Stock is quoted on NASDAQ, the average weekly trading volume
during the four calendar weeks preceding the sale. A person who has

<PAGE>

not been an affiliate of the Company for at least three months immediately
preceding the sale and who has beneficially owned the shares of Common Stock
for at least three years is entitled to sell such shares under Rule 144
without regard to any of the volume limitations described above. The
Company's executive officers and directors have agreed not to sell their
shares for a period of twelve months from the Effective Date and an
additional six months without the prior consent of the Underwriter. The
Underwriter may consent to the sale of such shares at any time after twelve
months, in its sole discretion, upon the request of the holder. The
Underwriter's decision to consent will be based upon the current market
conditions, liquidity of the Common Stock, as well as such other factors the
Underwriter deems appropriate. No public announcement will be made with
respect to the foregoing. See "Shares Eligible for Future Sale".

POSSIBLE VOLATILITY OF STOCK PRICE; RISK OF NON-CONSUMMATION OF UNIT
OFFERING. Factors such as announcements by the Company or its competitors
concerning proposed plans, procedures, and proposed government regulations,
losses and litigation may have a significant effect on the market price of
the Company's securities. Changes in the market price of the Company's
securities may have no connection with the Company's actual financial
results. In addition, the stock market has experienced extreme price and
volume fluctuations which have particularly affected the market prices for
many companies and which have often been unrelated to the operating
performance of specific companies. These broad market fluctuations may
adversely affect the market price of the Company's Common Stock. In addition,
the Unit Offering may not be consummated for a variety of reasons including
the Underwriter having the right to withdraw under certain specified
provisions of the Standby Agreement. Failure of the Underwriter to consummate
the Unit Offering could adversely affect the market price of the Company's
Common Stock.

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of Common Stock in
the Selling Stockholder Offering.

<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
June 30, 1996: (i) on an historical basis; (ii) on a pro-forma basis giving
effect to the sale of 114,000 shares in a private placement; and (iii) on
such pro-forma basis as adjusted giving effect to the Unit Offering and the
sale of Units and the application of the proceeds therefrom. This table
should be read in conjunction with the Company's consolidated financial
statements and notes thereto included elsewhere in this Prospectus.

As of June 30, 1996
----------------------------------------------
Pro-
Pro- Forma As
Actual Forma (1) Adjusted (2)
------------- ------------- -------------
<S> <C> <C> <C>
Current Liabilities:
Loans Payable ........................................ $ 5,853,075 $ 5,853,075 $ 3,227,813
============= ============= =============
Long-Term Debt (including the current portion) ....... $ 489,782 $ 489,782 $ 489,782
------------- ------------- -------------
Stockholders' Equity:
Common Stock, $.12 par value; authorized 20,000,000
shares; issued and outstanding; 765,488 actual
outstanding, 879,488 pro-forma outstanding, 1,583,079
pro- forma as adjusted outstanding .................. 91,859 105,539 189,970
Additional paid-in capital ........................... 6,742,476 6,899,796 9,510,986
Accumulated Deficit .................................. (4,230,555) (4,230,555) (4,230,555)
------------- ------------- -------------
Total Stockholders' Equity ........................... 2,603,780 2,774,780 5,470,401
------------- ------------- -------------
Total Capitalization ................................. $ 3,093,562 $ 3,264,562 $ 5,960,183
============= ============= =============
</TABLE>
- ------
(1) Adjusted to give effect to the issuance of 114,000 shares in a private
placement with net proceeds of approximately $171,000 during July, 1996.
See Note 7 in the "Consolidated Financial Statements" and "Recent Private
Placements".

(2) Adjusted to give the effect to shares issued in the Unit Offering and the
sale of units offered therein and the receipt of $2,695,621 in net
proceeds and their initial application which is to prepay the Underwriter
$70,359 for a one year consulting agreement with the balance going to
paydown the amount outstanding on the Company's line of credit.

<PAGE>

MARKET INFORMATION

High Low
--------- --------
<S> <C> <C>
Fiscal Year Ended June 30,
1995
------------------------
First Quarter .................................... $17.50 $ 8.75
Second Quarter ................................... 14.38 5.63
Third Quarter .................................... 16.25 7.50
Fourth Quarter ................................... 17.50 10.00

1996
------------------------
First Quarter .................................... $20.00 $15.00
Second Quarter ................................... 20.63 10.63
Third Quarter .................................... 14.38 7.50
Fourth Quarter ................................... 14.38 6.25

1997
------------------------
First Quarter (July 1, 1996 through September 30,
1996) .......................................... $10.00 $ 5.63

</TABLE>

DIVIDEND POLICY

<PAGE>

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

RESULTS OF OPERATIONS

FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995

ADOPTION OF NEW ACCOUNTING STANDARDS

LIQUIDITY AND CAPITAL RESOURCES

<PAGE>

In September 1993, the Company received an overadvance of $500,000 from
Congress. In connection therewith, Messrs. A. Densen, L. Densen, and A.
Towell obtained a Junior Participation from Congress by advancing $250,000 of
their funds to Congress. $250,000 of this overadvance has been repaid to
Congress. The balance of $215,000, after repayment of $35,000 to L. Densen,
will be repaid by Congress, at its option, to Messrs. A. Densen, and A.
Towell subject to the availability of funds.

The Company believes that its current working capital position, line of
credit and operations will be sufficient to satisfy its cash needs through
June 30, 1997. In addition, the net proceeds of $171,000 from the second
private placement in July, 1996 and the net proceeds of the Unit Offering
will provide the Company with additional funds to be utilized substantially
to paydown the amount outstanding on the Company's line of credit thereby
increasing the amount available under such line of credit for working capital
and other needs such as acquisitions. The Company has not entered into any
definitive agreement or understanding regarding any acquisition.

The Company has no material commitments for capital expenditures.

<PAGE>

BUSINESS

GENERAL

MANUFACTURING OPERATIONS

DISTRIBUTION OPERATIONS

<PAGE>

SALES AND MARKETING

CUSTOMERS

COMPETITION

SUPPLIERS

GOVERNMENT REGULATION

<PAGE>

SPECIAL TAX CONSIDERATIONS

EMPLOYEES

PROPERTIES

<PAGE>

The Company's wholly owned subsidiary, Safety Wear, occupies approximately
30,000 square feet in Decatur, Alabama. The premises are utilized for the
cutting and warehousing of coveralls and the manufacturing of disposable
products. The Company pays $6,450 rent per month. The premises are leased on
a month-to- month basis. Should these facilities not be available to the
Company, the Company believes that alternative sites are available at a
comparative cost.

LEGAL PROCEEDINGS

From 1981 through June 30, 1996, the Company estimates that approximately
900 actions on behalf of approximately 7500 first-party plaintiffs have been
instituted against it concerning asbestos-related claims and that
approximately 600 actions and the claims of approximately 6200 plaintiffs
have been terminated against the Company. The Company estimates that as of
June 30, 1996, with the exception of defense costs, a total of approximately
$1,400,000 has been paid, or agreed to be paid, in settlements to date with
regard to the terminated actions (inclusive of actions against Puerto Rico
Safety Equipment) of which all but approximately $30,000 has been paid by the
Company's insurance carriers. The foregoing is based upon information
available to the Company to date. Through June 30, 1996, the Company has paid
less than $35,000 for legal and defense costs to counsel appointed by the
insurance carriers to defend it. Past results of settlements and defense
costs are not necessarily indicative of future settlements and defense costs,
which the Company is unable to predict.

<PAGE>

Effective June 26, 1990, an agreement between Eastco and its primary
insurance carriers dated March 26, 1990 became effective. Eastco entered into
this agreement in an effort to resolve uncertainties as to its insurance
coverage which will cover asbestos claims against the parent Company where
any exposure to asbestos is alleged during the period 1971 to 1985,
inclusive. Pursuant to this agreement, the Company is obligated to share in
the payment of asbestos-related claims against Eastco. Pursuant to the
agreement, the Company is obligated to pay 12% of all attorneys' fees
incurred on its behalf and 17% of indemnity costs (which include judgment and
settlement amounts). The balance of these costs are to be paid by the
insurance carriers, which are parties to the agreement. The agreement is
subject to policy limitations of each insurance policy. The agreement may be
terminated at any time upon ninety (90) days' notice by any of the parties
provided that termination may not be effective as to any asbestos action that
has already been placed on the trial calendar, unless it has a scheduled
trial date more than twelve (12) months from the date the notice of
termination is given. The Company is presently aware of only one pending case
on the trial calendar.

<PAGE>

MANAGEMENT

DIRECTORS AND OFFICERS

Name Age Position
-------------------- ----- -----------------------------------------------
Alan E. Densen ..... 62 President, Chief Executive Officer, and Director
Lawrence Densen .... 38 Senior Vice President and Director
Anthony P. Towell .. 64 Vice President of Finance, Secretary, Treasurer,
Chief Financial Officer and Director
Dr. Martin Fleisher 59 Director
James Favia ........ 62 Director
Herbert Schneiderman 64 Director

Lawrence Densen, Senior Vice President and director of the Company, has
been a Vice President and a director of the Company since 1986. He is the son
of Alan E. Densen.

There is no key man insurance on the lives of the executive officers of
the Company.

<PAGE>

COMMITTEES OF THE BOARD OF DIRECTORS

Each of the foregoing committees met once during the fiscal year ended
June 30, 1996.

EXECUTIVE COMPENSATION

The following describes the components of the total compensation of the
CEO and each other executive officer of the Company whose total annual salary
and bonus exceeds $100,000.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

Annual Compensation Long term compensation
---------------------------------- -------------------------
Awards Payouts
---------------------------- ----------------------
Other Securities All
Name and annual Restricted underlying LTIP other
principal Salary Bonus compen- stock options/ payouts compen-
position Year ($) ($) sation($) award(s)($) SARs(#)(5) ($) sation($)
----------- --------- --------- ------- ----------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alan E. 1996 119,731 -0- 35,672(3) -0- 8,348(4) -0- -0-
Densen, 1995 110,000 -0- 35,672(3) -0- 82,158(2) -0- -0-
CEO 1994(1) 119,225 -0- 30,078(3) -0- -0- -0- -0-

Lawrence 1996 103,848 -0- 4,200 -0- 8,348(4) -0- -0-
Densen, 1995 87,000 -0- 4,200 -0- 82,158(2) -0- -0-
Senior VP 1994 84,806 -0- 4,200 -0- -0- -0- -0-

</TABLE>

- ------
(1) From September, 1993 to January, 1994, Mr. Densen was not CEO; he served
as Senior Vice President.

(2) Includes incentive stock options granted January 20, 1995 to acquire
2,000 shares at $10.625 as well as non-qualified stock options to acquire
80,158 shares exercisable at $5.302 per share, each exercisable until
January 19, 2005. Because it was determined that the audited pre-tax
profit for fiscal 1995 was greater than $50,000, non-qualified options
can now be exercised for 40,079 shares of Common Stock.The remaining
40,079 non-qualified options can not be exercised during the first five
years. The non-qualified options provide for adjustment in the event of
dilution as a result of sales of securities at less than the exercise
price. Each set of the options to acquire 40,079 shares at $5.302 per
share will,as a result of anti-dilution rights, following the
consummation of the Unit Offering, be adjusted to acquire 41,110 shares
at $5.169 per share.

(3) Primarily life insurance premiums on the life of Alan E. Densen owned by
Mr. Densen's wife and paid for by the Company.

(5) Each person's options including only options directly held by such
person.

<PAGE>

STOCK OPTIONS

OPTION/SAR GRANTS IN LAST FISCAL YEAR
[INDIVIDUAL GRANTS]

</TABLE>
- ------
(1) See note (4) above in the Summary Compensation Table.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

Number
of securities Value
underlying unexercised in-
unexercised the-money options
SARs at FY-end
Shares (#) SARs at FY-end($)
acquired on Value exercisable/ exercisable/
Name exercise (#) realized ($) unexercisable(2) unexercisable
----------------------- ------------- ------------ ---------------- -----------------
<S> <C> <C> <C> <C>
Alan E. Densen, CEO (1) 0 0 50,427/40,079 $117,685/$100,638
Lawrence Densen,
Senior VP 0 0 51,108/40,079 $117,685/$100,638

</TABLE>

(2) Each person's options include only options directly held by such person.

EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL FEATURES

<PAGE>

tively, or as a director of the Company; the Company acts to materially
reduce their duties and responsibilities under the agreement; the Company
changes the geographic location of their duties to a location from the New
York metropolitan area; their base compensation is reduced by 10% or more;
any successor to the Company fails to assume the agreements; any other
material breach of the agreements which is not cured by the Company within 30
days; and a "Change of Control" by which a person, other than a person who is
an officer and/or director of the Company as of the effective date of the
agreements, or a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the beneficial owner of 20% or more of the
combined voting power of the then outstanding securities of the Company or
the composition of the board changes so that officers of the Company no
longer hold a majority of the seats.

Messrs. A. Densen, L. Densen, and A. Towell, in modification agreements
their employment agreements, have waived: (i) their right to bonuses based
upon the Company's earnings before interest and taxes for the fiscal years
ended June 30, 1996 through June 30, 2000; (ii) their exercise rights on
options and warrants and repayment of their junior participation interests
with Congress and compensation payable in the event of a Change in Control
with respect to the Private Placement and the Unit Offering; and (iii) their
right to terminate their relationship with the Company, as per the terms of
their respective employment agreements. The modification agreements and
waivers provide that their right to terminate their employment agreements and
waiver of their bonuses shall not be waived in the event that there is a
material breach of such agreements by the Company. Messrs. A. Densen, L.
Densen and A. Towell have agreed that the issuance of shares in the Unit
Offering will not result in any "change of control" rights under their
respective employment agreements.

During February 1996, Messrs. A. Densen, L. Densen, and A. Towell
guaranteed to Congress overadvances to the Company of up to $500,000 in
excess of the Company's eligible borrowings. The Company issued warrants for
a term of five years in consideration for their guaranty to each Messrs. A.
Densen, L. Densen, and A. Towell to purchase 8,348 shares of Common Stock at
an exercise price of $5.771 per share commencing February 23, 1996. These
warrants provide for adjustment in the event of anti-dilution, and will be
adjusted to acquire 8,870 shares at $5.431 as a result of the Unit Offering.
The overadvances have since been repaid and their guarantees are no longer in
effect.

COMPENSATION TO DIRECTORS

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

<PAGE>

1996 STOCK OPTION PLANS

1996 INCENTIVE STOCK OPTION PLAN

No options have been granted under this Plan.

1996 NON-QUALIFIED STOCK OPTION PLAN

<PAGE>

No options have been granted under this Plan.

<PAGE>

PRINCIPAL SHAREHOLDERS

The following are known by the Company, as of the date hereof, to be the
beneficial owners of more than five percent of Common Stock:
<TABLE>
<CAPTION>

Percent Percent
of Class of Class
Name and Address Amount and Nature Before Unit After Unit
Title of Class of Beneficial Owner of Beneficial Owner Offering Offering(A)
------------------ -------------------------- ----------------------- --------------- --------------
<S> <C> <C> <C> <C>
Common Stock Alan E. Densen 59,396(1)(4)(5) 6.4% 3.7%
$.12 par value 130 West 10th Street shares direct and
Huntington Station, NY beneficial

Common Stock Lawrence Densen 53,608(2)(4)(5) 5.8% 3.4%
$.12 par value 130 West 10th Street shares direct and
Huntington Station, NY beneficial

Common Stock Anthony P. Towell 138,739(3)(4)(5) 13.7% 8.6%
$.12 par value 130 West 10th Street shares direct and
Huntington Station, NY beneficial

Common Stock George Schiavoni 76,000 8.6% 0 %(6)
$.12 par value 46 Bayview Avenue shares direct and
Sag Harbor, NY beneficial
</TABLE>
- ------

(A) Assumes no Rights, warrants or options will be exercised as a result of
the Unit Offering. However, this column takes into consideration
additional shares issuable under the anti-dilution rights of certain
options and warrants.

(1) Includes warrants, held by Mr. Densen's wife, to acquire 1,667 shares of
Common Stock, exercisable at $13.00 per share which expire April 11,1999.
Also includes incentive stock options granted under the 1994 Plan to
acquire 2,000 shares of Common Stock, exercisable at $10.625 which expire
January 19, 2005. Amount indicated does not include shares beneficially
owned by Lawrence Densen, son of Alan E. Densen.

(2) Does not include shares beneficially owned by Alan E. Densen, father of
Lawrence Densen. Includes 700 Class A Warrants; incentive stock options
granted under the 1983 Incentive Stock Option Plan (the "1983 Plan") to
acquire 625 shares which expire December 17, 1996 and are exercisable at
$26.664 per share; incentive stock options granted under the 1983 Plan to
acquire 56 shares of Common Stock which expire May 31, 1998 and are
exercisable at $30.00 per share; and incentive stock options granted
under the 1994 Plan to acquire 2,000 shares of Common Stock , which
expire January 19, 2005 and are exercisable at $10.625.

(3) Includes 1,500 Class A Warrants; warrants, held by Mr. Towell's wife, to
acquire 1,667 shares of Common Stock, exercisable at $13.00 per share
which expire April 11, 1999; and incentive stock options granted under
the 1994 Plan to acquire 2,000 shares of Common Stock, exercisable at
$10.625 which expire January 19, 2005. Also includes warrants to acquire
82,645 shares of Common Stock exercisable at $6.292 per share which
expire April 11, 1999, which warrants provide for an anti-dilution
adjustment as a result of sales of securities at less than the exercise
price, and will be adjusted to acquire 90,941 shares at $5.718 as a
result of the Unit Offering. Does not include 38,000 shares owned by
Melinda Tyrwhitt the married daughter of Mr. Towell which he disclaims
beneficial ownership of. Her shares were acquired in a recent private
placement and are included in the concurrent registration. See "Recent
Private Placements" and "Concurrent Registration of Common Stock".

(4) Includes non-qualified options to acquire 40,079 shares to each Messrs.
A. Densen, A. Towell and L. Densen exercisable until January 19, 2005 at
an exercise price of $5.302. Does not include options to acquire an
additional 40,079 shares to each Messrs. A. Densen, A. Towell and L.
Densen which cannot be exercised until January 20, 2000 unless the
pre-tax profit for fiscal 1996 is greater than $250,000. These options
provide for an anti-dilution adjustment as a result of sales of
securities at less than the exercise price. Each of the options to
acquire 40,079 shares at $5.302 per share will, as a result of
anti-dilution rights, following the consummation of the Unit Offering,
become options to acquire 41,110 shares at $5.169 per share. See "Certain
Relationships and Related Transactions".

<PAGE>

(5) Includes warrants to acquire 8,348 shares of Common Stock exercisable at
$5.771 per share, which expire February 22, 2001. These warrants provide
for an adjustment anti-dilution adjustment as a result of sales of
securities at less than the exercise price, and will be adjusted to
acquire 8,870 shares at $5.431 as a result of the Unit Offering. See
"Certain Relationships and Related Transactions".

(6) Mr. Schiavoni is a selling shareholder and this Prospectus assumes the
sale of his shares of Common Stock after nine months from the Effective
Date.

Percent Percent
of Class of Class
Amount and Nature Before Unit After Unit
Name and Address of Beneficial Owner Offering Offering(A)
---------------------------------------- ----------------------- --------------- --------------
<S> <C> <C> <C>
Alan E. Densen 59,396(1) 6.4% 3.7%
130 West 10th Street shares direct
Huntington Station, NY and beneficial

Anthony P. Towell 138,739(2) 13.7% 8.6%
130 West 10th Street shares direct
Huntington Station, NY and beneficial

Lawrence Densen 53,608(3) 5.8% 3.4%
130 West 10th Street shares direct
Huntington Station, NY and beneficial

Dr. Martin Fleisher 1,000(4) * *
130 West 10th Street shares direct
Huntington Station, NY and beneficial

James Favia 2,000(5) * *
130 West 10th Street shares direct
Huntington Station, NY and beneficial

Herbert Schneiderman 3,833(6) * *
130 West 10th Street shares direct
Huntington Station, NY and beneficial

All executive officers and directors
as a group (6 persons) 258,576 23.0% 14.8%
</TABLE>
- ------
* Less than 1%

(1) See footnotes (1), (4), and (5) in the preceding chart.

(2) See footnotes (3), (4), and (5) in the preceding chart.

(3) See footnotes (2), (4), and (5) in the preceding chart.

(4) Includes stock options to acquire 1,000 shares of Common Stock.

(5) Includes stock options to acquire 1,000 shares of Common Stock.

(6) Includes warrants and stock options to acquire 1,833 shares of Common
Stock.

The foregoing reflects the outstanding options and warrants held by each of
such persons, and reflects all adjustments for anti-dilution rights through
the Unit Offering.

<PAGE>

DESCRIPTION OF SECURITIES

COMMON STOCK

TRANSFER AGENT

The Transfer Agent for the Common Stock is American Stock Transfer and
Trust Co., 40 Wall Street, New York, New York 10005.

OTHER PUBLICLY HELD SECURITIES AND PREFERRED STOCK

CLASS A WARRANTS

CLASS B WARRANTS

The Company will issue 703,591 Class B Warrants as part of the Unit
Offering for Units which also includes 703,591 shares of Common Stock. Each
Class B Warrant entitles its holder to purchase one share of Common Stock at
an exercise price of $6.25 per share commencing twelve months (or sooner with
the consent of the Underwriter) until three years after the date of this
Prospectus. The Class B Warrants may be redeemed by the Company at any time,
commencing eighteen months after the Effective Date, but no sooner than 12
months from the date the warrants become exercisable at a redemption price of
$.01 per Warrant upon 30 days prior written notice, provided the closing high
bid price of the Common Stock for the 15 consecutive trading days ending on
the third day prior to the date of notice of redemption is in excess of
$9.375 (or 150% of the exercise price of the Class B Warrants to be
proportionately adjusted for any stock dividends and stock splits occurring
after the Effective Date and which may be adjusted to 150% of the current
exercise price of the Class B Warrants, if such exercise price is changed)
per share. Warrantholders shall exercise rights until the close of business
on the day preceding the date fixed for redemption.

<PAGE>

PREFERRED STOCK

SHARES ELIGIBLE FOR FUTURE SALE

There are 879,488 shares of Common Stock (not assuming the issuance of
703,591 shares of Common Stock as part of the Unit Offering to be registered
and sold therewith) of the Company outstanding as of the Effective Date. Of
these shares 528,607 shares are restricted securities, as that term is
defined in Rule 144 promulgated under the Securities Act of 1933 (the
"Securities Act"). Of the restricted securities, 513,000 shares have been
registered for sale. The holders of 114,000 of these shares have agreed not
to sell any such shares for a period of nine months from the Effective Date.
See "Recent Private Placements" and "Concurrent Registration of Common
Stock". 14,602 shares of the restricted securities are owned by officers and
directors of the Company. Absent registration under the Securities Act, the
sale of such shares is subject to Rule 144, as promulgated under the
Securities Act. In general, under Rule 144, subject to satisfaction of
certain other conditions, a person, including an affiliate of the Company,
who has beneficially owned restricted shares of Common Stock for at least two
years is entitled to sell, within any three-month period, a number of shares
that does not exceed the greater of 1% of the total number of outstanding
shares of the same class, or if the Common Stock is quoted on NASDAQ, the
average weekly trading volume during the four calendar weeks preceding the
sale. A person who has not been an affiliate of the Company for at least
three months immediately preceding the sale and who has beneficially owned
the shares of Common Stock for at least three years is entitled to sell such
shares under Rule 144 without regard to any of the volume limitations
described above. The Company's executive officers and directors have agreed
not to sell their shares for a period of twelve months from the Effective
Date and an additional six months without the prior consent of the
Underwriter. The Underwriter may consent to the sale of such shares at any
time, in its sole discretion, upon the request of the holder. The
Underwriter's decision to consent will be based upon the current market
conditions, liquidity of the Common Stock, as well as such other factors the
Underwriter deems appropriate. No public announcement will be made with
respect to the foregoing. See "Concurrent Registration of Common Stock."

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

<PAGE>

On January 20, 1995, the Company granted non-qualified options to acquire
80,158 shares of Common Stock to each of Messrs. A. Densen, A. Towell, and L.
Densen. Because it was determined that the audited pre- tax profit for fiscal
1995 was greater than $50,000, non-qualified options can now be exercised for
40,079 shares of Common Stock. The remaining 40,079 non-qualified options can
not be exercised during the first five years. The non-qualified options
provide for adjustment in the event of dilution as a result of sales of
securities at less than the exercise price. Each set of the options to
acquire 40,079 shares at $5.302 per share will,as a result of anti-dilution
rights, following the consummation of the Unit Offering, become options to
acquire 41,110 shares at $5.169 per share. All of the options granted on
January 20, 1995 were granted in consideration of previous sacrifices
including reduction in salaries, cancellation of options, and other
surrendered benefits by executive officers as well as the turnaround
performance achieved by the Company. The turnaround achieved by the Company
in its performance can be directly related to the efforts of Messrs. A.
Densen, A. Towell, and L. Densen.

On January 31, 1995, the Company's board of directors reduced the exercise
price of the 2.3 million outstanding Class A Warrants issued in connection
with the 1994 Public Offering to $13.00 per share. At the same time, the
board of directors also reduced the exercise price to $13.00 per share with
regard to the 10,833 warrants ("Associate Warrants") issued to a group of
investors, including the spouses of Alan Densen (1,667 Associate Warrants
owned by her) and Anthony P. Towell (1,667 Associate Warrants owned by her),
and Herbert Schneiderman (833 Associate Warrants owned by him), in connection
with a reduction of indebtedness regarding the Company's premises; 82,645
warrants purchased by Anthony P. Towell, the Company's Chief Financial
Officer, from Scorpio Partners, L.P. (90,941, as adjusted for the Unit
Offering); 4,078 Royce warrants issued in connection with a 1991 public
offering to the same Underwriter herein; and 833 warrants in connection with
a 1991 bridge loan. All these warrants have also been extended to April 11,
1999. These warrants were all adjusted as indicated so as to treat them on an
equal basis and to provide incentives for them to be exercised.

The Company had employment agreements with Messrs. A. Densen, A. Towell
and L. Densen, which commenced as of the effective date of the Company's 1994
public offering in April, 1994. As of July 1, 1995, these executive officers
entered into new agreements. See "Executive Compensation -- Employment
Agreements and Change in Control Features" with regards to provisions
contained in the employment agreement of Alan E. Densen, the Company's
President and CEO, and Lawrence Densen, the Company's Senior Vice-President.
Similar provisions are contained in the employment agreement with Anthony P.
Towell. Messrs. A. Densen, L. Densen, and A. Towell, in modification
agreements to their employment agreements, have waived: (i) their right to
bonuses based upon the Company's earnings before interest and taxes for the
fiscal years ended June 30, 1996 through June 30, 2000; (ii) their exercise
rights on options and warrants and repayment for their junior participation
interests with Congress and compensation payable in the event of a Change in
Control with respect to the Private Placement and the Unit Offering; and
(iii) their right to terminate their relationship with the Company, as per
the terms of their respective employment agreements. The modification
agreements and waivers provide that their right to terminate their employment
agreements and waiver to their bonuses shall not be waived in the event that
there is a material breach of such agreements by the Company. Messrs. A.
Densen, L. Densen and A. Towell have agreed that the issuance of shares in
the Unit Offering will not result in any "Change of Control" rights under
their respective employment agreements. See "Management" and "Executive
Compensation -- Employment Agreements and Change of Control Features".

<PAGE>

rities subject to a "lock-up" to obtain the permission of Lew Lieberbaum
prior to sale or other disposition of said securities. At the same time,
Leonard A. Neuhaus and Sheldon Lieberbaum, who are affiliated with Lew
Lieberbaum, resigned as directors of the Company. In exchange, the Company
issued 10,000 shares of common stock to Lew Lieberbaum.

During February 1996, Messrs. A. Densen, A. Towell and L. Densen,
executive officers and directors of the Company, guaranteed to Congress
overadvances to the Company of up to $500,000 in excess of the Company's
eligible borrowings. The Company issued warrants for a term of five years in
consideration for their guaranty to each Messrs. A. Densen, A. Towell, and L.
Densen to purchase 8,348 shares of Common Stock at $5.771 per share, which
will, as a result of anti-dilution rights following the Unit Offering become
options to purchase 8,870 shares of Common Stock at $5.431 per share which
expire on February 22, 2001, and are subject to anti-dilution provisions. The
overadvance has since been repaid and their guarantees have been returned to
them.

The first mortgage held by Associates which they agreed on in 1992 and
upon which interest was being paid at the rate of 14% comes due on July 1,
1997 in the amount of approximately $434,000. Associates has agreed to extend
the mortgage for five years from July 1, 1997 with interest at 12% per annum
or 3% over prime, whichever is greater. At the end of five years, the
mortgage will come due in the amount of approximately $283,000.

RECENT PRIVATE PLACEMENTS

On June 28, 1996, the Company completed a private placement offering,
pursuant to which it issued 399,000 shares at $1.50 per share to 20
investors, pursuant to provisions for exemption from registration under the
Securities Act of 1933 as amended. The terms of this private placement
offering were established by negotiation between the Company and Royce
Investment Group, Inc., a registered broker/dealer (the "Private Placement
Agent"). Under the terms of this private placement offering, 10 1/2 units
(the "Units") were offered, and sold, in multiples of $57,000 per Unit. Each
full Unit consists of 38,000 shares of the Company's Common Stock, par value
$0.12 per share. The Company used net proceeds from this private placement
offering to pay off a short-term loan in the amount of $500,000 from Elono
Portfolio S.A., which had been used to reduce the amount due to Congress.
Gross proceeds from this private placement offering were $598,500. The
Underwriter acted as Placement Agent and received a commission of 10% and a
3% non-accountable expense allowance. On July 9, 1996, the Company completed
an additional private placement offering for 114,000 shares at $1.50 per
share for use as working capital to 5 investors, pursuant to provisions for
exemption from registration under the Securities Act of 1933 as amended.
Royce Investment Group, Inc. did not act as placement agent, nor was it
involved in any way with the private placement which closed on July 9, 1996.
The shares sold in the foregoing private placements are being registered
concurrently herewith. None of the foregoing purchasers of these private
placements have had a prior relationship with the Company, with the exception
of Heather Reiser (owner of 21,667 shares or 4.2% of both placements) whose
husband is affiliated with Donald, the Company's investment advisor. Melinda
Tyrwhitt (owner of 38,000 shares or 7.4% of both placements), is the married
daughter of Anthony P. Towell, the Company's Chief Financial Officer and a
Director and Mr. Towell disclaims beneficial ownership of these shares.

<PAGE>

CONCURRENT REGISTRATION OF COMMON STOCK

Concurrently with the commencement of this Offering, the Company has
offered by separate prospectus 703,591 Units at $5.00 per Unit. Each Unit
consists of one share of Common Stock and one Class B Warrant. In connection
therewith, the Company has granted to all holders of its outstanding Common
Stock of record on the close of business September 24, 1996 ("Record Date"),
in those states where qualified, or exempt from qualification, the
nontransferable right ("Rights") to subscribe for Units on the basis of 4
Units for every 5 shares of Common Stock owned on the Record Date. Any Units
not subscribed for pursuant to the exercise of Rights will be sold to the
Underwriter at the subscription price under the Standby Agreement which is
identical to the price for the Rights being offered to the Company's
shareholders, which is $5.00 per Unit.

SELLING STOCKHOLDERS

The following table sets forth the number of shares of Common Stock of the
Company owned by each Selling Stockholder and the number of shares of Common
Stock included for sale in this Prospectus.
<TABLE>
<CAPTION>

Beneficial Ownership Beneficial Ownership
of shares of Common of shares of Common
Selling Stockholders Stock prior to Sale Stock after Sale(B)
--------------------------------------- -------------------- --------------------
<S> <C> <C>
RONALD SPINELLI & RICHARD SPINELLI 9,500 0
RAMESH PATEL 9,500 0
BRENDA FURINO 19,000 0
CINDY DOLGIN 9,500 0
JOHN CZINGER 9,500 0
LEONARD MOSKOWITZ & VICKIE MOSKOWITZ 9,500 0
ALOYSIUS G. FREEMAN & MARY FREEMAN 9,500 0
RAYMOND KAYAL 9,500 0
DAVID COHEN 9,500 0
JOANN WEAN & CHARLES WEAN III 9,500 0
ASHDOWN HOLDINGS LIMITED 38,000 0
BLAISE FINANCIAL CORP. 38,000 0
ELLIOT S. SCHLISSEL & LOIS C. SCHLISSEL 19,000 0
GLOBALSIDE LIMITED 38,000 0
CORNELIA COMPANY LIMITED 38,000 0
WAAL INVESTMENTS LTD 38,000 0
HARRIET REUTER 19,000 0
EDMOND O'DONNELL 19,000 0
DOMINICK LELIA & ALICE LELIA 9,500 0
MELINDA N. TYRWHITT (C) 38,000 0
GEORGE SCHIAVONI (A) 76,000 0
ANTHONY C. SALVO (A) 5,000 0
ANDREW J. FINKLESTEIN (A) 6,667 0
HEATHER REISER (A) 21,667 0
ROBERT W. BURKE (A) 4,666 0
</TABLE>
- ------
(A) Has agreed not to sell their shares for 9 months from the date hereof.
(B) Assumes no exercise of rights in the Unit Offering.
(C) She is the married daughter of Anthony P. Towell, a Director and Officer
of the Company, who disclaims beneficial ownership of these shares.

<PAGE>

PLAN OF DISTRIBUTION

Each Selling Stockholder is free to offer and sell his or her shares of
Common Stock at such times, in such manner and at such prices as he or she
shall determine. Such shares may be offered by the Selling Stockholders in
one or more types of transactions, which may or may not involve brokers,
dealers or cash transactions. The Selling Stockholders may also use Rule 144
under the Securities Act, to sell such securities, if they meet the criteria
and conform to the requirements of such Rule. There is no underwriter or
coordinating broker acting in connection with the proposed sale of Common
Stock to the Selling Stockholders.

Sales of common stock by the Selling Stockholders may be effected from
time to time in transactions (which may include block transactions) in the
NASDAQ Small Cap Market and Boston Stock Exchange after listing, in
negotiated transactions, through the writing of options on the Common Stock,
or a combination of such methods of sale, at fixed prices which may be
changed, at market prices prevailing at the time of sale, or at negotiated
prices. The Selling Stockholders may effect such transactions by selling
Common Stock directly to purchasers or to or through broker/dealers which may
act as agents or principals. Such broker/dealers may receive compensation in
the form of discounts, concessions, or commissions from the Selling
Stockholders and/or purchasers of Common Stock for whom such broker/dealers
may act as agents or to whom they sell as principal, or both (which
compensation as to a particular broker/dealer might be in excess of customary
commissions). The Selling Stockholders and any broker/dealers that act in
connection with the sale of the Common Stock might be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the shares
of Common Stock as principal might be deemed to be underwriting discounts and
commissions under the Securities Act. The Selling Stockholders may agree to
indemnify any agent, dealer or broker/dealer that participates in
transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.

Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the Selling Stockholders will
be subject to prospectus delivery requirements under the Securities Act.
Furthermore, in the event of a "distribution" of his or her shares, any
Selling Stockholder, any selling broker or dealer and any "affiliated
purchasers" may be subject to Rule 10b-7 under the Exchange Act which
prohibits any "stabilizing bid" or "stabilizing purchase" for the purpose of
pegging, fixing or stabilizing the price of Common Stock in connection with
this Offering.

LEGAL MATTERS

EXPERTS

<PAGE>

ADDITIONAL INFORMATION

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
INDEX

INDEPENDENT AUDITORS' REPORT ................................ F-2
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets ............................ F-3
Consolidated Statements of Operations .................. F-4
Consolidated Statements of Changes in Shareholders'
Equity ............................................... F-5
Consolidated Statements of Cash Flows .................. F-6
Notes to Consolidated Financial Statements ............. F-7

F-1

<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Eastco Industrial Safety Corp.
Huntington Station, New York

/s/ CORNICK, GARBER & SANDLER, LLP
----------------------------------
CERTIFIED PUBLIC ACCOUNTANTS

Uniondale, New York
September 11, 1996

F-2

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>

ASSETS
<S> <C>
Current assets:
Cash and cash equivalents (Note 1) ................................................. $ 646,030
Accounts receivable, net of allowance for doubtful accounts of $155,000 (Notes 5 and
6) .............................................................................. 4,669,070
Inventories (Notes 1, 2 and 5) ..................................................... 5,230,237
Other .............................................................................. 441,763
-------------
Total current assets ....................................................... 10,987,100
Property, plant and equipment, net (Notes 1, 3, 5 and 6) ............................. 1,278,095
Other assets ......................................................................... 206,910
-------------
TOTAL ...................................................................... $12,472,105
=============

=============
</TABLE>

The notes to consolidated financial statements are made a part hereof.

F-3

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

Year Ended June 30,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Net sales .................................................. $26,982,699 $24,024,897
------------- -------------
Costs and expenses:
Cost of sales (Note 1) ................................... 21,495,693 19,254,571
Selling, general and administrative (Note 1) ............. 4,546,222 4,148,517
Interest (Notes 5, 6 and 7) .............................. 836,359 583,665
Other expense (income) (net) ............................. 16,388 (39,793)
Settlement with former underwriter (Note 7) .............. 78,000
------------- -------------
Total costs and expenses ............................ 26,972,662 23,946,960
------------- -------------
NET INCOME ................................................. $ 10,037 $ 77,937
============= =============
Income per share (Note 1):
Primary ................................................... $ .02 $ .20
============= =============
Assuming full dilution .................................... $ .02 $ .17
============= =============
Average number of shares used in computing per share
amounts:
Primary .................................................. 595,758 392,529
============= =============
Assuming full dilution ................................... 595,758 471,698
============= =============

</TABLE>

The notes to consolidated financial statements are made a part hereof.

F-4

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(NOTES 1, 5, 6, 7, 12 AND 13)

Additional
Common Stock* Paid-in
Shares Amount Capital (Deficit) Total
---------- --------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE -- JULY 1, 1994 ........... 347,738 $41,729 $6,224,509 $(4,318,529) $1,947,709
Net income for the year ended June
30, 1995 ......................... 77,937 77,937
---------- --------- ------------ -------------- -------------
BALANCE -- JUNE 30, 1995 .......... 347,738 41,729 6,224,509 (4,240,592) 2,025,646
Shares issued on settlement with
former underwriter ............... 10,000 1,200 70,825 72,025
Exercise of Class A warrants ...... 3,750 450 48,300 48,750
Shares issued on conversion of
subordinated debenture ........... 26,374 3,165 121,963 125,128
Purchase and retirement of common
stock ............................ (21,374) (2,565) (177,435) (180,000)
Shares issued in private placement 399,000 47,880 454,314 502,194
Net income for the year ended June
30, 1996 ......................... 10,037 10,037
---------- --------- ------------ -------------- -------------
BALANCE -- JUNE 30, 1996 .......... 765,488 $91,859 $6,742,476 $(4,230,555) $2,603,780
========== ========= ============ ============== =============
</TABLE>
- ------
* As restated to give retroactive effect to the 1-for-10 reverse stock split
in August 1996.

The notes to consolidated financial statements are made a part hereof.

F-5

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

Year Ended June 30,
--------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities:
Net income .............................................................. $ 10,037 $ 77,937
-------------- --------------
Adjustments to reconcile results of operations to net cash effect of
operat- ..............................................................
ing activities:
Depreciation and amortization ........................................ 134,290 164,533
Provision for (recovery of) losses on accounts receivable ............ 105,732 (38,655)
Shares issued for settlement with former underwriter ................. 72,025
Net changes in assets and liabilities:
Accounts receivable ............................................. (876,629) (430,003)
Inventories ..................................................... (866,339) (1,197,860)
Other current assets ............................................ 40,105 (37,608)
Other assets .................................................... (75,122) 20,247
Accounts payable ................................................ 343,084 401,146
Accrued expenses ................................................ (40,566) (102,136)
-------------- --------------
Total adjustments ..................................... (1,163,420) (1,220,336)
--------------------------------------------------------------------------- --------------
Net cash used for operating activities ................ (1,153,383) (1,142,399)
--------------------------------------------------------------------------- --------------
Cash flows from investing activities:
Acquisition of property, plant and equipment ............................ (93,274) (191,242)
-------------- --------------
Cash flows from financing activities:
Repayments of long-term debt ............................................ (48,762) (42,426)
Borrowings under line of credit agreements .............................. 28,621,372 25,789,531
Repayments under line of credit agreements .............................. (27,697,205) (24,044,483)
Borrowing under Bridge loan ............................................. 500,000
Repayment of Bridge loan ................................................ (500,000)
Net proceeds from private placement of common stock ..................... 502,194
Net proceeds from convertible subordinated debenture .................... 225,128
Repurchase of convertible subordinated debenture ........................ (100,000)
Proceeds from excercise of Class A warrants ............................. 48,750
(Decrease) in bank overdrafts ........................................... (365,277)
Purchase of common stock ................................................ (180,000)
-------------- --------------
Net cash provided by financing activities ............. 1,371,477 1,337,345
--------------------------------------------------------------------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS ................................. 124,820 3,704
Cash and cash equivalents -- Beginning .................................... 521,210 517,506
-------------- --------------
CASH AND CASH EQUIVALENTS -- END .......................................... $ 646,030 $ 521,210
============== ==============
Supplemental disclosure of cash paid for:
Interest ................................................................ $ 836,359 $ 583,665
============== ==============
Income taxes ............................................................ $ 5,440
==============
Supplemental disclosure of noncash financing activities:
Conversion of convertible subordinated debenture into common stock ...... $ 150,000
==============
</TABLE>

The notes to consolidated financial statements are made a part hereof.

F-6

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

OPERATIONS:

PRINCIPLES OF CONSOLIDATION:

USE OF ESTIMATES:

CASH:

INVENTORIES:

Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market, which represents estimated net realizable value.

DEPRECIATION AND AMORTIZATION:

INCOME TAXES:

The Company accounts for its income taxes under the provisions of
Statement of Financial Accounting Standards No. 109 (FASB 109).

PER SHARE AMOUNTS:

F-7

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 1 -- Summary of Significant Accounting Policies: - (Continued)

All other per share amounts and information set forth in the attached
financial statements and the notes thereto have also been adusted to give
effect to the reverse stock split.

NOTE 2 -- INVENTORIES:

Inventories at June 30, 1996 consist of the following:

Raw materials $1,701,676
Work-in-process 514,555
Finished goods 3,014,006
------------
Total ....... $5,230,237
============

NOTE 3 -- PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment at June 30, 1996 is comprised of the
following:
<TABLE>
<CAPTION>

Estimated
Useful Life
(Years)
-------------
<S> <C> <C>
Cost:
Land ........................................ $ 382,000
Building and leasehold improvements ......... 827,451 5 - 40
Machinery and equipment ..................... 1,187,178 3 - 10
Furniture and fixtures ...................... 229,074 7 - 10
-----------
Total .................................. 2,625,703
Less accumulated depreciation and amortization 1,347,608
-----------
Balance ................................ $1,278,095
===========

</TABLE>

NOTE 4 -- INCOME TAXES:

Deferred income taxes relate to the following temporary differences and
carryforwards at June 30, 1996:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards ........... $1,800,000
Allowance for doubtful accounts and credits 66,000
Tax basis adjustments to inventory ......... 56,000
------------
Total .................................... 1,922,000

</TABLE>

F-8

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 4 -- Income Taxes: - (Continued)

A reconciliation between the expected tax expense at the statutory federal
income tax rate and the Company's actual income tax expense is as follows:
<TABLE>
<CAPTION>

June 30,
-----------------------
1996 1995
--------- ----------
<S> <C> <C>
Income tax expense at the statutory rate ................... $ 3,000 $ 26,000
Effect of net operating loss of Puerto Rican subsidiaries
for which there is no current tax benefit ................
Effect of domestic net operating loss for which there is no
current tax benefit ...................................... (3,000)
Benefit of utilization of net operating loss carryforwards . (26,000)
---------------------------------------------------------------------- ----------
Actual income tax expense ................................ $ -- $ --
========== ==========
</TABLE>

The annual limitation of the Company's net operating loss deductions may
be further reduced as a result of the proposed public offering (see Note 13).

NOTE 5 -- LOANS PAYABLE:

F-9

<PAGE>

NOTE 6 -- LONG-TERM DEBT:

Based upon the new terms, the non-current portion of the mortgage is due
as follows:
<TABLE>
<CAPTION>

Year ending June 30,
-----------------------
<S> <C>
1998 $22,000
1999 27,000
2000 30,000
2001 34,000
2002 38,000
2003 283,000
----------
Total $434,000
==========

</TABLE>

F-10

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 7 -- SHAREHOLDERS' EQUITY:

COMMON STOCK:

PRIVATE PLACEMENTS:

CONVERTIBLE SUBORDINATED DEBENTURE:

F-11

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 7 -- Shareholders' Equity: - (Continued)

OTHER WARRANTS:

On July 26, 1995, the Company issued to a consulting firm, which is the
employer of a director of the Company, a five year warrant to purchase 12,500
shares of the Company for $12.50 a share.

INCENTIVE STOCK OPTION PLANS:

Transactions under the above plans are summarized as follows:

Shares Option Price Per Share
-------- ----------------------
Outstanding - June 30, 1994 ......... 1,178 $26.40 to $30.00
Granted ............................. 8,500 $10.63
Expired ............................. (13)
--------
Outstanding - June 30, 1995 and 1996 9,665 $10.63 to $30.00
========

1995 STOCK OPTIONS:

Other nonqualified options outstanding at June 30, 1996, under prior
years' grants, aggregate 3,108 shares at $16.875 to $30.00 a share.

F-12

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 7 -- Shareholders' Equity: - (Continued)

The following summarizes shares reserved at June 30, 1996 under options
and warrants outstanding:

Price Per
Number Share
--------- ---------------
Stock options:
Incentive stock
option plans ..... 9,665 $10.63 - $30.00
Nonqualified
options .......... 243,582 $5.30 - $30.00
Warrants:
Class A ........... 226,250 $13.00
Other ............. 138,433 $5.77 - $13.00

NOTE 8 -- COMMITMENTS AND CONTINGENCIES:

RENT:

The Company is obligated through August 2003 under several noncancellable
long-term operating leases covering office, factory and warehouse facilities.
Minimum annual rentals under these leases are:

Year ending June 30:
--------------------
1997 $ 116,000
1998 127,000
1999 137,000
2000 157,000
2001 142,000
Thereafter 332,000
------------
Total $1,011,000
============

Rent expense, including month-to-month rentals, was $226,000 and $219,000
in the fiscal years ended June 30, 1996 and 1995.

EMPLOYMENT AGREEMENTS:

- ------
* This officer is entitled to a bonus of 3/4 of 1% of net sales in excess of
$20,500,000 after June 30, 1997.

F-13

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 8 -- Commitments and Contingencies: - (Continued)

These officers have waived their right to additional compensation payable
resulting from a change in control due to the private placements and the
proposed public offering (see Notes 7 and 13).

NOTE 9 -- PROFIT SHARING PLAN:

NOTE 10 -- INDUSTRY SEGMENT INFORMATION:

Information for the Company's distribution and manufacturing segments for
the years ended June 30, 1996 and 1995 is summarized as follows:
<TABLE>
<CAPTION>

1996 Distribution Manufacturing Total
----------------------------------------- -------------- --------------- -------------
<S> <C> <C> <C>
Net sales ............................... $9,094,046 $17,888,653 $26,982,699
============== =============== =============
Operating profit ........................ $ 133,760 $ 2,124,131 $ 2,257,891
============== ===============
General corporate expenses .............. (1,411,495)
Interest expense ........................ (836,359)
-------------
Income before provision for income taxes $ 10,037
=============
Identifiable assets ..................... $5,182,514 $ 7,289,591 $12,472,105
============== =============== =============
Capital expenditures .................... $ 43,704 $ 49,570 $ 93,274
============== =============== =============
Depreciation and amortization expense ... $ 58,941 $ 75,349 $ 134,290
============== =============== =============
1995
- ----------------------------------------
Net sales ............................... $9,233,456 $14,791,441 $24,024,897
============== =============== =============
Operating profit ........................ $ 156,199 $ 1,666,331 $ 1,822,530
============== ===============
General corporate expenses .............. (1,160,928)
Interest expense ........................ (583,665)
-------------
Loss before provision for income taxes .. $ 77,937
=============
Identifiable assets ..................... $4,291,806 $ 6,424,242 $10,716,048
============== =============== =============
Capital expenditures .................... $ 27,882 $ 163,360 $ 191,242
============== =============== =============
Depreciation and amortization expense ... $ 37,462 $ 127,071 $ 164,533
============== =============== =============
</TABLE>

F-14

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 11 -- LITIGATION:

NOTE 12 -- SUBSEQUENT EVENTS:

REVERSE STOCK SPLIT, PREFERRED STOCK, STOCK OPTION PLANS AND STOCK
OPTIONS:

On May 13, 1996, the Board of Directors approved the following proposals
which were approved by the shareholders at a special meeting on August 12,
1996.

F-15

<PAGE>

EASTCO INDUSTRIAL SAFETY CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED JUNE 30, 1996 AND 1995

NOTE 13 -- PROPOSED PUBLIC OFFERING:

F-16

<PAGE>

=============================================================================

TABLE OF CONTENTS

Page
--------
Restrictions in New Jersey ....................... 2
Statement of Available Information ............... 3
Forward-Looking Statements ....................... 3
Prospectus Summary ............................... 4
Summary Financial Information .................... 6
Risk Factors ..................................... 7
Use of Proceeds .................................. 13
Capitalization ................................... 14
Market Information ............................... 15
Dividend Policy .................................. 15
Management's Discussion and Analysis of Financial
Condition and Results of Operations ............. 16
Business ......................................... 18
Management ....................................... 24
Principal Shareholders ........................... 30
Description of Securities ........................ 32
Shares Eligible for Future Sale .................. 33
Certain Relationships and Related Transactions ... 33
Recent Private Placements ........................ 35
Concurrent Registration of Common Stock .......... 36
Selling Stockholders ............................. 36
Plan of Distribution ............................. 37
Legal Matters .................................... 37
Experts .......................................... 37
Additional Information ........................... 38
Consolidated Financial Statements ................ F-1

=============================================================================

513,000 SHARES
EASTCO INDUSTRIAL
SAFETY CORP.
------
PROSPECTUS
OCTOBER 10, 1996
=============================================================================