SEILER POLLUTION CONTROL SYSTEMS INC, 10KSB, 1999-07-23

SEILER POLLUTION CONTROL SYSTEMS INC
10KSB, 1999-07-23
INDUSTRIAL PROCESS FURNACES & OVENS

Previous: DISPLAY TECHNOLOGIES INC, SC 13G, 1999-07-23

Next: CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 2, 10-K/A, 1999-07-23

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-KSB

[x] ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934.

For the fiscal year ended March 31, 1999
-------------------------------

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ECHANGE
ACT OF 1934.

For the transition period from to

Commission file number 0-222630

Seiler Pollution Control Systems, Inc.
(Name of Small Business Issuer in Its Charter)

Delaware 22-2448906
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

5115 Parkcenter Avenue, Suite 270, Dublin, Ohio 43017
(Address of Principal Executive Offices) (Zip Code)

614-792-0400
(Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock, par
value $.0001 per share.

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for past 90 days. Yes x No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ ]

State issuer's revenues for its most recent fiscal year. $1,288,380

-1-

<PAGE>

The aggregate market value for the 5,130,424 shares of voting stock
(all of one class of $.0001 par value Common Stock) held by non-affiliates * of
Registrant as of June 30, 1999 is $8,336,939 based upon the closing average of
the bid ($1.25) and asked ($2.00) prices for such stock on the date heretofore
indicated, i.e. $1.625. See Item 5 (a) which indicates the limited, if any,
trading activity in the Registrant's securities for the periods indicated. By
virtue hereof, it is difficult if not impossible to accurately arrive at a
completely realistic "aggregate market value" of Registrant shares held by
non-affiliates as called for herein especially in view of the fact that the
existence of limited or sporadic quotations should not of itself be deemed to
constitute an "established public trading market". The above statements
regarding "aggregate market value" and "established public trading market"
should be taken into careful consideration when considering the information
contained herein regarding the indicated "aggregate market value" of shares of
voting stock held by non-affiliates.

ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No Not Applicable

APPLICABLE ONLY TO CORPORATE REGISTRANTS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of June 30, 1999 - 7,565,362

Transitional Small Business Disclosure Format (check one): Yes No x

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The listed documents should be clearly described for identification purposes
(e.g., annual report to security holders for fiscal year ended December 24,
1990).

None

* Affiliates for the purpose of this item refers to the registrant's officers
and directors and/or any persons or firms (excluding those brokerage firms
and/or clearing houses and/or depository companies holding Registrant's
securities as record holders only for their respective clienteles' beneficial
interest) owning 5% or more of the Registrant's common stock, both of record and
beneficially - all as of June 30, 1999.

-2-

<PAGE>

FORWARD LOOKING STATEMENTS

Certain statements included in this Annual Report are not based on
historical facts, but are forward looking statements. These statements can be
identified by the use of forward looking terminology such as "believes",
"expects", "may", "will", "should", or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy. These statements reflect the Company's reasonable judgments with
respect to future events and are subject to risks and uncertainties that could
cause actual results to differ materially from those in the forward looking
statements. Such risks and uncertainties include, but are not limited to the
completion of an economically viable HTV system and the development and
marketing of additional systems. The Company must also generate additional
resources to enable it to continue the completion of the HTV system. Such
additional resources may be generated through the sale of additional equity
securities, the sale of an existing system, alliances, joint ventures or other
business transactions which would generate sufficient resources. Other factors
such as changes in business conditions and changes in regulations and laws may
also impact the outcome of forward looking statements.

-3-

<PAGE>

SEILER POLLUTION CONTROL SYSTEMS, INC.
Form 10-KSB
Fiscal Year Ended March 31, 1999

TABLE OF CONTENTS

Page No.

PART I

Item 1. Description of Business. 5

Item 2. Description of Property. 13

Item 3. Legal Proceedings. 14

Item 4. Submission of Matters to a Vote of Security Holders. 14

PART II

Item 5. Market For Common Equity and Related Stockholder
Matters. 15

Item 6. Management's Discussion and Analysis or Plan of
Operation. 19

Item 7. Financial Statements. F-1 to F-23

Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure. 25

PART III

Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the
Exchange Act. 26

Item 10. Executive Compensation. 30

Item 11. Security Ownership of Certain Beneficial Owners
and Management. 31

Item 12. Certain Relationships and Related Transactions. 33

Item 13. Exhibits, List and Reports on Form 8-K 34

SIGNATURES 35

-4-

<PAGE>

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Business Overview

Seiler Pollution Control Systems, Inc. (hereinafter, "Seiler", the
"Company", or the "Registrant) is engaged in the environmental service and
equipment business both within and without the United States (and through its
four subsidiaries as hereinafter indicated).

Seiler Pollution Control Systems International, Inc. ("Seiler
International") is a wholly owned subsidiary of the Company that holds the
exclusive rights to a High Temperature Vitrification System ("HTV System" or
"System"). The HTV System was initially developed and patented in Switzerland by
Seiler High Temperature Separating Systems Ltd. ("Seiler HT"), a company
controlled by a former director of the Company and his family. Seiler HT
transferred exclusive worldwide rights to the "System" to Maxon Finance & Trade
Ltd. SA ("Maxon"). In July 1993, Maxon transferred the European rights to Seiler
International with the remaining worldwide rights being acquired directly by the
Company from Maxon under a separate license agreement. On October 12, 1998, the
Company entered into an agreement with Maxon whereby the principal amount of
debt and accrued interest (approximately $2,056,000) owed to Maxon relating to
the license agreements was converted into 3,333,333 restricted shares of common
stock. See also "Security Ownership of Certain Beneficial Owners and Management"
as to Maxon's current percentage interest in the Company and the fact that it is
currently a principal stockholder.

Advanced Pollution Control ("APC AG") formally known as Seiler SEPC AG
("SEPC AG") is a wholly owned subsidiary of the Company located in Switzerland.
In February 1995, APC AG under its previous name SEPC AG formed a German company
known as Seiler Trenn-Schmelzanlagen Betreibs GmbH ("Seiler TSB"). APC AG owns
50% of Seiler TSB and Dr. Gerold Weser, the Company's President and CEO and
President of Seiler TSB owns the remaining 50%. Seiler TSB currently operates a
commercial HTV recycling facility in Freiberg, Germany which recently commenced
generating revenues. See also "Current Projects - Freiberg, Germany Project"
appearing hereinafter in this Item 1.

In March, 1997, Seiler acquired a majority interest in a private New
Jersey corporation now known as Advanced Nuclear Control Inc. ("ANC") and
formerly known as Seiler Nuclear Control Systems, Inc. ('Seiler Nuclear") and
N.W. Technology, Inc. ("NWT") ANC plans to design, develop, build, and operate
prototype and commercial vitrification facilities that will specialize in the
handling of low-level and mixed nuclear waste.

In the spring of 1998, the Company acquired an eighty percent (80%)
interest in a newly formed subsidiary called Seiler Abfallbehandlungs und
Dienstleistungs GmbH ("SABD GmbH"). The remaining twenty-percent (20%) is owned
by Dr. Gerold Weser the Company's President. SABD currently operates a liquid
waste processing facility in Berlin, Germany which recently commenced generating
revenues. See also "Current Projects - Berlin, German Project" appearing
hereinafter in this Item 1.

Unless specifically identified by their individual names, Seiler
Pollution Control Systems, Inc. and its four subsidiaries are hereinafter
referred to as 'Seiler", "Company", or the "Registrant".

-5-

<PAGE>

Competition

Competition to manage or dispose of hazardous waste is segmented among
waste landfills, waste treatment systems, incinerators and alternative
technology processors. Seiler belongs to the latter group as one of the small
number of companies engaged in recycling of wastes.

Landfills are the most prevalent means of waste disposal. In the United
States, landfill space is plentiful. However costs, permitting and other
regulatory considerations have restricted the number of landfills. Currently,
approximately eighteen (18) hazardous waste landfills exist in the United States
and these are in direct competition with incinerators and various forms of new
technologies.

Many hazardous waste treatment technologies mix waste with cement kiln
dust or lime and then dispose of the mixture in a landfill. This methodology
stabilizes waste and could prevent short term leaching characteristics, but does
not change the hazardous property makeup of the waste mixture.

Incineration technology is only effective in handling organic laden
waste feedstocks. Inorganic feedstocks will either fume or melt in incinerators
and will eventually settle or be imbedded in the incinerator ash residue
provided they are not directly released into the air. This ash residue then
needs to be disposed. A Seiler HTV system can be integrated into an industrial
waste incinerator process to handle the ash residue thereby preventing hazardous
waste land disposal and future problems and liabilities associated with this
disposal.

Among the available alternative waste handling technologies, the most
commonly known that could compete with the Seiler technology are metal
reclamation systems, plasma systems, and other vitrification systems, as
summarized in general terms below.

Metal reclamation systems need large concentrations of waste feedstocks
that have material quantities of particular metals to be cost effective.
Typically, commercial waste generators produce wastes that have only small
concentrations of various metals. Since metal reclamation systems concentrate on
the resources they reclaim, they often generate residues which contain hazardous
waste components. The residues generated from these systems remove the desired
materials and leave the hazardous components in a more concentrated form.
Therefore, this waste is usually more hazardous than the original waste
feedstock that was being reclaimed.

Plasma systems that handle wastes require a large electrical source.
This technology is very good at producing extreme heat. However, because of the
very high temperatures, there is virtually no viable commercial end product
(such as glass ceramic) control and capturing fumed hazardous particles is
difficult.

Most other competing vitrification systems use electric or joule melter
technology. Many of these systems are still in the pilot stage, concentrate
mostly on the radioactive waste marketplace, and/or have a very small market
share.

Licensing Agreements

In July 1993, the Company entered into two separate licensing
agreements with Maxon. The amended licensing agreements required the Company to
pay Maxon a licensing fee of $2.5 million for the European rights to the HTV

-6-
<PAGE>

System and $2.5 million for the remaining worldwide rights. The Company made
payments to Maxon prior to October 1998 totaling $3,022,751, and converted the
outstanding principal balance of approximately $1,977,000 plus accrued interest
of approximately $79,000 into 3,333,333 shares of common stock in accordance
with October 12, 1998 agreement hereinabove referred to. As a result of these
transactions, the Company currently owns the European and worldwide rights to
the HTV System outright.

The Technology

The HTV System is a high temperature vitrification process that
effectively processes a broad range of mixed and hazardous wastes into inert
glass ceramic materials. The heart of the HTV System is a patented high
temperature converter melter that operates at temperatures around 2700 to 3300
degrees F (1500 to 1800 degrees C). The energy causes chemical and physical
reactions that convert hazardous chemical compounds into inert nonhazardous
glass ceramics, metal oxides, and salts.

The dryer and preheater components permit processing wet materials
(e.g., sludges, metal hydroxide filter cake, wastewater treatment residues) or
dry waste feedstocks (e.g., incinerator ash, spent foundry sands, asbestos).

The System's flexibility allows processing organic, inorganic, or mixed
organic/inorganic waste feedstocks. The inorganics are the primary components
needed for producing glass ceramic products and metal oxides, while the organic
residues provide limited supplemental energy for the System.

The HTV System process can be controlled to produce materials in
different shapes and forms as well as in various degrees of hardness and
toughness. The resulting materials are made into nonhazardous marketable
products and recycled back into the commercial marketplace.

The HTV System

Seiler's commercial HTV Systems can process 2,000 to 15,000 tons of
waste feedstocks per year at a rate of 600 to 4400 pounds (250-2,000 kilograms)
per hour. The commercial system is built to operate 24 hours per day, 7 days per
week, shutting down only for scheduled maintenance or emergency repairs. The HTV
System includes extensive process controls, a combustion air heat exchanger, a
flue gas quench system, a refined glass ceramic exit system, and sophisticated
air pollution control components.

The Company promotes installing a commercial HTV System on the site
where the waste feedstocks are generated. By managing the waste onsite,
transportation costs, safety, and liability concerns associated with offsite
management are reduced if not eliminated. A commercial HTV System may, however,
be built in a central location to serve as a regional recycling center for a
number of hazardous and industrial waste generators in order to achieve
economies of scale.

Market Strategy and Business Development

Seiler's marketing strategy is to promote the Company's vitrification
process as the preferred option for managing hazardous and industrial wastes by
stressing the fact that Seiler's HTV System offers environmental and economic

-7-
<PAGE>

advantages over traditional waste disposal or storage methods. The Company also
plans to accelerate the product development and marketing side of the business.

Environmental Advantages

The HTV System recycles hazardous and industrial wastes into safe,
nonhazardous glass ceramic products by binding the metal components in the waste
feed in a glass ceramic matrix on a molecular level. The resultant inert
materials pass standardized governmental leachate tests including the United
States EPA Toxicity Characteristic Leaching Procedure and its European
equivalents. Dangers and liabilities associated with hazardous waste storage and
disposal are reduced or eliminated, thereby providing a safer and more
environmentally sound method of waste management.

Economic Advantages

Hazardous wastes require monitoring, disposal and/or storage costs not
only at the time of disposal but also over the long period of "cradle to grave"
responsibility. Liability issues with their accompanying legal fees and possible
fines also remain open-ended. Additionally, companies/responsible parties are
subject to financial accountability on contamination issues not only for the
future, but retroactively as well.

Product Development and Marketing

As heretofore indicated, the glass ceramic materials produced by the
HTV System are inert, nontoxic and reusable. Consistent characteristics such as
substantive hardness, toughness, color and insulating properties make the
recycled materials commercially marketable. The process produces reclaimable
products that can be sold, such as nonhazardous metal oxides and salts.

Seiler's product research and development is conducted on two fronts.
The United States product research and development operations are overseen
through the Company's Dublin, Ohio offices. In the United States, the Company
has developed ongoing relationships with The Ohio State University Department of
Material Science and Engineering (OSU) and the Edison Material Technology Center
(EMTEC) to expand glass ceramic product quality and development. In Europe, the
Company has an ongoing relationship with the University of Freiberg to expand
its glass ceramic processing capabilities and to supplement product development
efforts. The European product research and development operations are overseen
at the Company's Freiberg, Germany plant facility.

Bench studies and laboratory research have identified three commercial
glass ceramic product markets; architectural applications, abrasive
applications, and refractory applications. Examples of architectural
applications include floor and wall tile, sinks, bathtubs, patio stones,
mosaics, bricks, vanities, and counter tops. Examples of abrasive applications
include sandpaper, grinding media, shot blast media, garnet replacement media,
sandblast replacement media, grinding wheels, glass beads, buffing compounds,
and polishing compounds. Examples of refractory applications include fireproof
wallboard, roofing media, filtration media, high temperature specialty products,
and insulation.

This past year, the Company's product development efforts have been
intensified. The Company is currently marketing commercialized glass ceramic
products generated from its Freiberg, Germany recycling facility. Market and

-8-
<PAGE>

product development efforts have been expanded to incorporate more products and
to identify higher end use markets. Seiler intends to continue market
development and product expansion in the coming years.

Current Projects

Freiberg, Germany Project:

Groundbreaking for the Freiberg recycling facility took place in May of
1997. The facility was completed by the end of November 1998 with one
vitrification line active. The second vitrification line is not scheduled to be
completed until the end of 1999. The facility was designed to handle two
vitrification process lines with a capacity of processing 10,000 to 12,000 tons
of waste per year. Since January 18, 1999, the Freiberg facility has received
permission to process over 100 types of hazardous waste including; industrial
paint and hydroxide sludges, industrial wastewater treatment sludges,
electroplating sludges, contaminated chemicals, petrochemicals, spent solvents,
oils, pesticides, asbestos containing residuals, and mixed organic/inorganic
residuals.

Since opening, the Freiberg facility has operated over 4,000 hours. The
current revenue stream for the single operating line is approximately 400-600 DM
per input ton. The glass/ceramic products produced from the System are being
sold at a current average of 50 DM per ton.

Once operations began, the Freiberg system operated continuously for
approximately 2,500 hours on temperatures which exceeded 1550 degrees Celsius
(over 2800 degrees Fahrenheit). At this point, the process engineering staff
planned a system shutdown so as to conduct a comprehensive inspection. This
occurred in January 1999. Bringing the system down at this time was part of the
shakedown engineering procedures in as much this was the Company's first
operating commercial system. Each part of the system was carefully inspected
with extraordinary time spent on the inspection and evaluation of the high
temperature portions of the system. All of the designed components performed
better than expected especially the high temperature converter, which is the
primary high heat component. This component was expected to have the most wear
because it operates under the highest temperatures.

After this inspection, the plant was heated up again and the air
emission regulating authorities conducted full scale emission testing. Data was
gathered over a seventy-two hour time period. All of the critical air emissions
were far under the allowed regulatory values. As a result of these factors
Seiler TSB has secured regulatory authority to recycle approximately 150
different kinds of waste-streams for the Freiberg facility.

It is anticipated that the Freiberg facility will break even in 1999
even with only one vitrification line operating with a processing capacity of
5,000 to 6,000 tons per year. It is further anticipated that the Freiberg
facility will be at full operating capacity with two vitrification lines running
prior to December 2000. The Company sales staff has determined that significant
waste feedstocks are available for the Freiberg recycling facility.

The Company has moved its Research and Development operations and
European manufacturing facilities from Switzerland to Freiberg. Besides an
operating facility, Freiberg will also be a Company technical engineering and
know-how center. The Company is currently negotiating with a large German
engineering and industrial construction general contractor to handle European
projects.

-9-

<PAGE>

United States Air Force Project:

Testing for United States Air Force and other Department of Defense
waste streams under Seiler's Phase II Radian International contract has been
completed. This work has been formally documented. Due to the success of this
project, negotiations are currently proceeding to have the United States Air
Force, the Defense Logistics Agency, and other Department of Defense facilities
use the Seiler technology once a United States plant is operable. This is
expected to take place next year.

Coshocton, Ohio Project:

Construction of the building to house the high temperature
vitrification system was completed and a "Certificate of Occupancy" was issued
by the appropriate Ohio regulatory agency. Funding concerns delayed progress on
the engineering and design of the commercial vitrification system for Coshocton.
However with the new project financing in place, which is expected in August
1999, this project can proceed. See also Item 1 "Description of Business - Summa
Capital Project Financing Proposal" appearing hereinafter.

Significant progress was made in the regulatory arena with the
issuance, by the Ohio Environmental Protection Agency (OEPA), of a determination
recognizing Seiler's high temperature vitrification (HTV) technology as being
true recycling provided it meets all of the specified conditions described in a
formal recycling recognition letter which was sent to Seiler in July, 1998.
Seiler has been granted exempt status when processing electric arc furnace dust
from steel mills, contaminated sandblast media, and contaminated foundry sands.
The Ohio EPA determination also makes provisions for exempt status to be
extended to other types of waste feedstocks under a testing protocol. The next
step in the regulatory process for the Coshocton project is to secure air and
surface water permits to install and operate. The applications for these permits
are prepared under Ohio EPA's guidance. It is expected that this permit will not
be difficult to secure because it is mostly dependent on good engineering
practices and equipment.

California Project:

As was the case for the Coshocton, Ohio project, this project was also
delayed due to project financing problems. Since project financing is expected
to be available in August 1999, this project is not expected to continue until
later in the year. Seiler's exempt status in California allows that this system
can be placed anywhere within the State as long as it meets the recycling
exemption criteria standards that were expressed in the State of California EPA
letter of September, 1997. Ongoing negotiations with the Department of Defense
continue with respect to selection for the initial site of the California
system. Engineering for a California system is not projected to commence until
after the Coshocton, Ohio project is well underway.

The Edison Materials Technology Center (EMTEC) Projects:

Seiler's original Core Technology Project (CT-54) was successfully
completed. A final project report has been prepared. Some of the goals achieved
in this project were the production of lower cost glass ceramic products from
waste feedstocks, production of higher value products, production of new
prototype products, production of model product and process specifications,

-10-

<PAGE>

identification of an Ohio recycling site (Coshocton), and the preparation of
project financial templates.

Seiler has secured another Core Technology project from EMTEC (CT-68).
This project which was initially expected to start January 1,1999 will actually
commence August 1, 1999. This new project is expected to enhance
commercialization of the Seiler HTV technology and develop higher value glass
ceramic products that will be generated from waste feedstocks. Phase I of CT-68
has a value of $100.000 (US) and Phase II has a value of $350,000 (US). Phase II
will commence approximately July 1, 2000. The Company has a number of corporate
supporters and team affiliates for this project including The Ohio State
University, Allied Mineral Products, Armco Steel, Delphi Chassis, Consolidated
Natural Gas, Cleveland Fluid Systems, The RJ Marshall Company, American Rock
Wool, Coshocton County Jobs Plus, North American Processing Company, The US Air
Force, Stan-Blast Abrasive Company, and many others.

Berlin, Germany Project:

This project is being managed by the Company's subsidiary SABD GmbH.
The project involves three phases. Phase I includes the purchase and operation
of an existing chemical/physical treatment plant which is designed to treat
liquid hazardous wastes. Phase II involves the modernization of this facility.
In Phase III the Company intends to construct and operate a new HTV plant
facility for handling solid hazardous wastes. Permitting and licensing of the
HTV facility is expected to be completed by November, 1999. This system will be
designed with a processing capacity of 12,000 - 15,000 tons of input hazardous
materials per year.

The existing chemical/physical treatment plant has been generating
revenues since the late summer of 1998. Additional project financing for this
project is expected to come from Summa Capital LTD., the Company's new project
financing partner, and the German government and departmental authorities who
are expected to provide subsidies and credits similar to those already supplied
in the Freiberg project. See also Item 1 "Description of Business - Summa
Capital Project Financing Proposal" appearing hereinafter.

Swiss Projects:

There has been no significant change with respect to the RESH auto
shredder project; a cooperative joint venture between the Company and Swiss
Steel called PyRec AG. For prior information with respect to this project
reference is herewith made to the Company's Form 10- K for its fiscal year ended
March 31, 1998.

The Company has moved its R&D operations and European manufacturing
facilities from Switzerland to Freiberg, Germany (see Freiberg Project
discussion). Two hazardous waste projects and one low-level radioactive waste
project are in development for Switzerland.

Austrian Low-Level Radioactive Project:

The Company has entered into a joint venture to undergo rigorous
testing for the processing of low-level radioactive waste at the Austrian
Nuclear Research Center in Seibersdorf, Austria. A pilot facility constructed in
Switzerland has already successfully processed simulated low-level wastes. This
project is expected to get underway by year's end. Through this joint venture
structure, the Company expects to gain access to the permits necessary for

-11-

<PAGE>

processing low-level radioactive wastes in Austria while also having the
possibility of extending these permits throughout the European Economic
Community.

The International Atomic Energy Agency (IAEA) is based in Seibersdorf,
Austria. This is an international organization founded by countries using
nuclear power. All guidelines regarding the handling and processing of
radioactive waste is made through this organization. The Nuclear Research
Center not only has all permits for handling radioactive waste, but also they
have a highly regarded personnel-training program. These are key elements
for Seiler's low-level radioactive projects. The Company plans to integrate
its first low-level radioactive system within the Research Center's existing
facility.

French Projects:

There have been no new developments in the French projects that have
not already been reported. For prior information with respect to this project
reference is herewith made to the Company's Form 10-K for its fiscal year ended
March 31, 1998.

Possible Other Projects - Proposals:

A proposal for the installation of an HTV system was requested by a
Mexican Company. A proposal was submitted, and subsequently was put off
indefinitely due to the financial instability of the project.

A proposal was made for the installation of two HTV systems in Saudi
Arabia. The terms and conditions of this project are currently changing, and
further evaluation for going forward will need to be analyzed before the Company
formally commits.

Expressions of interest for HTV systems were received from groups in
Spain, India, Italy, Japan, Taiwan, West Virginia, New Mexico, Arkansas, and
Texas. Follow-up on these potential projects is ongoing.

Summa Capital Project Financing Proposal:

In January 1999 the Company entered into a financing agreement with
Summa Capital Corporation ("Summa"), a British West Indies company specializing
in Asset Management and Project Financing, whereby Summa agreed to provide
(through others) up to Seventy Five Million Dollars ($75,000,000) of financing
to Seiler for the construction of processing plants, research and development
and general business expansion; either through issuance of debentures or
utilization of note purchase agreements (or similar debt documents) with
accredited investors. Assuming specific project financing the Company will be
required to deliver a first lien position for financing participants so as to
secure assets for a specific financed project.

Agreed to financing terms include: (1) a financing term of 12 years
with interest at the rate of 7-7/8% per annum, with interest limited and payable
only on those funds drawn-down for each specific projects and with Seiler's
right to defer interest payment for the first 24 months subsequent to each
draw-down date, (2) Seiler being required to obtain contractually binding
agreements for processing waste and the sale of the recycled products for 65% of
vitrification system capacity with the understanding that contractual agreements
(with the exception of the first 2 U.S. projects and the first 2 foreign country
projects) shall be in place within six months of the time that the identified

-12-

<PAGE>

vitrification system is in commercial operation and with the further
understanding that contractual agreements for all subsequent projects shall be
in place prior to project funding draw-down and (3) the Company being required,
prior to draw-down, to have all necessary environmental permits and
determinations in place with all other permits to be obtained in accordance with
project schedule and with the Company acting as project manager for each
designated project.

In accordance with the terms of the agreement, Summa is to receive a
15% equity interest in the Company (assuming its compliance with each of its
warranties and representations). Additionally, Summa has already received from
the Company a $65,000 mobilization fee to cover all to its direct costs and
attendant fees incurred with respect to the transaction described. The Company
has also paid the sum of $200,000 to Summa's designated counsel as and for legal
fees and expenses directly related to this transaction and with the
understanding that (a) any further legal fees shall be the obligation of Summa
and (b) if for any reason other than the Company's failure to perform, such
$200,000 is to be fully refunded to the Company.

The foregoing is intended as a brief summary and overview of the
agreements between the Company, Summa and any other parties involved in the
transaction described above and does not purport to state each of the terms and
conditions involved in such transaction but rather attempts to highlight those
portions of the transaction which management deems most pertinent.

Notwithstanding all or any portion of the above and the fact that the
described transactions are being actively pursued by all parties thereto, no
funds have been received by the Company as of July 15, 1999 nor have any final
documents intended to evidence transfer of funds been executed so as to make
fund transfer and delivery eminent.

Employees

The Company currently has 37 full time employees as well as certain
contract staff members and part time employees as hereinafter indicated. The
Company's North America operations including the corporate headquarters in
Dublin, Ohio employs four (4) full time employees, two (2) part time employees
and eight (8) contract staff members. APC in Switzerland employs one (1) part
time staff member and one (1) contract staff member.Seiler TSB GmbH in Freiberg,
Germany employs eighteen (18) full time employees and one (1) contract staff
member. SABD GmbH in Berlin, Germany employs 14 full time employees and one (1)
contract staff member. ANC in Seibersdorf, Austria employs one (1) full time
employee and two (2) contract staff members.

ITEM 2. DESCRIPTION OF PROPERTY

Seiler's corporate headquarters are located at 5115 Parkcenter Avenue,
Suite 270, Dublin, Ohio 43017, its telephone number is 614-792-0400 and its fax
number is 614-792- 0474. The Company currently has a five -year lease for these
premises that runs until April 1, 2004.

The Company also has a five-year lease with an option to purchase for
its Coshocton, Ohio facility. The address for this facility is 405 Brewer Lane,
Coshocton, Ohio 43812.

Seiler TSB currently owns the property and buildings for its Freiberg,

-13-

<PAGE>

Germany plant facility. This facility is located at Frauensteiner Strasse 81,
D-09599. Freiberg, Germany.

SABD GmbH is located at Landsberger Allee 400, D-12681, Berlin,
Germany. The SABD GmbH Berlin plant facility is currently under a ten-year lease
with an option for an additional ten years.

ANC is currently negotiating for a two year lease that would end
December 31, 2001 with an option for an additional two years in Seiberdorf,
Austria. Assuming successful consummation of negotiations, the address for this
facility will be OEFZ, Seibersdorf, Austria.

For further information with respect to terms of leases, monetary
obligations thereunder and related matters, reference is herewith made to Note
16 to the audited financial statements which are part of this Form 10-KSB.

ITEM 3. LEGAL PROCEEDINGS

The Company currently is not a party to any material litigation in the
United States.

The Company is a party to a number of legal proceedings commenced
outside the United States and most particularly in both Switzerland and Germany.
For summarized information regarding such legal proceedings, reference is
herewith made to Note 17 to the audited financial statements which are part of
this Form 10-KSB.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

No matters were submitted to a vote of security holders during the
Company's fourth quarter.

-14-

<PAGE>

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) Marketing Information. The Company's Common Stock, $.0001 par value
(the "Common Stock") was listed on the NASDAQ Small Cap Market and traded under
the symbol SEPC(E) until October 12, 1998 delisting. Since such date the
Company's Common Stock has only traded in the National Quotation Data Service
("pink sheets"). The following table sets forth for the periods indicated, the
range of high and low bid prices on the dates indicated for the Company's Common
Stock for each full quarterly period. The data covers the two most recent fiscal
years and any subsequent interim period for which financial statements are
included and/or required to be included, as well as data for periods subsequent
to March 31, 1999.
<TABLE>
<CAPTION>

Fiscal Year Ended March 31, 1998 Quarterly Common Stock Price
By Quarter Ranges(1)(2)
Quarter Date High Low
<S> <C> <C> <C>

1st June 30, 1997 $18.5625 $13.8750
2nd September 30, 1997 17.2500 8.6250
3rd December 31, 1997 15.7500 9.0000
4th March 31, 1998 12.3750 4.3215

Fiscal Year Ended March 31, 1999 Quarterly Common Stock Price
By Quarter Ranges (1)(2)
Quarter Date High Low

1st June 30, 1998 $ 7.50 $ 1.3125
2nd September 30, 1998 3.75 1.3215
3rd December 31, 1998 (3) (3)
4th March 31, 1999 (3) (3)

Fiscal Year Ended March 31, 2000 Quarterly Common Stock Price
By Quarter Ranges (1)(2)
Quarter Date High Low

1st June 30, 1999 $ (3) $ (3)
- -------------------
</TABLE>
(1) The existence of limited or sporadic quotations should not of itself be
deemed to constitute an "established public trading market." To the
extent that limited trading in the Registrants's Common Stock has taken
place, such transactions have been limited to the over-the-counter
market for periods indicated subsequent to October 12, 1998 delisting.
Since October 12, 1998, all prices indicated are as reported to the
Registrant by broker-dealer(s) making a market in its common stock in
the National Quotation Data Service ("pink sheets"). Since October 12,
1998 the Registrant's Common Stock was not traded or quoted on any
automated quotation system other than as indicated herein. The
over-the-counter market and other quotes indicated reflect inter-dealer
prices without retail mark-up, mark-down or commission and do not
necessarily represent actual transactions. Prior to October 12, 1998
delisting and for all periods indicated above, the Registrant's Common
Stock was traded on the NASDAQ SmallCap Market.

-15-

<PAGE>

(2) All prices indicated herein and throughout this Form 10-KSB unless
otherwise indicated take into account and retroactively reflect a 1 for
6 reverse stock split effective October 1, 1998.
(3) During the periods indicated the Company's Common Stock "traded"
sporadically on the National Quotation Data Service ("pink sheets").
The Company has been unable to obtain quarterly Common Stock price
ranges for these periods but has been able to ascertain that the
closing bid and asked prices as of June 30, 1999 were $1.25 and $2.00
respectively in very limited trading.

(b) Holders. As of June 30, 1999 the approximate number of stockholders
of the Company's Common Stock (as indicated on its transfer agent's June 30,
1999 certified list of stockholders) amounted to 419 persons and/or firms
(inclusive of those brokerage firms and/or clearing houses and/or depository
companies holding the Company's securities for their respective clientele - each
such brokerage house, clearing house and/or depository firm being considered as
one record holder). The exact number of beneficial owners of the Company's
securities is not known but would necessarily exceed the number of record owners
indicated above in that brokerage firms and/or clearing house and/or depository
companies are normally record owners for presumably any number of unidentified
beneficial owners.

(c) Dividends. The payment by the Registrant of dividends, if any, in
the future rests within the discretion of its Board of Directors and will
depend, among other things, upon the Company's earnings, its capital
requirements and its financial condition, as well as other relevant factors. The
Registrant has not paid or declared any dividends upon its Common Stock since
its inception and, by reason of its present financial status and its
contemplated financial requirements, does not contemplate or anticipate paying
any dividends upon its Common Stock in the foreseeable future.

(d) NASDAQ Delisting. By decision dated October 12, 1998, the NASDAQ
Listing Qualifications Panel (the "Panel") determined to delist the Company's
securities due to the Company's failure to demonstrate its ability to maintain
compliance with the bid price and filing requirements set forth in NASD Rules
4310(c)(4) and 4310(c)(14), while at the same time raising concerns about
whether the Company could sustain compliance with the net tangible assets
requirements over the long term. This decision was appealed by the Company and
affirmed by the NASDAQ Listing and Hearing Review Council (the "Council") on
April 1, 1999.

Non compliance with aforementioned NASD Rule 4310(c)(14) related to the
fact that the Company had not timely filed its Form 10-K for fiscal year ended
March 31, 1998, while non compliance with aforementioned NASD Rule 4310(c)(4)
related to the fact that the Company failed to maintain compliance with the
minimum bid requirement price of $1.00 for more than 30 consecutive trading
days. The Council further noted in its April 1, 1999 decision that while the
Company had subsequently filed its aforementioned March 31, 1998 10-K such
report was almost four months delinquent and the Company remained delinquent in
the filing of its Forms 10-Q for quarters ended June 30, 1998, September 30,
1998 and December 31, 1998; finding that the Company's failure to comply with
these requirements for an extended period of time served as a separate grounds
for the Council's affirming of the Panel's decision. The foregoing summarizes
certain pertinent portions of the Council's aforesaid April 1, 1999 decision but
does not purport to be a complete review of all statements contained therein.

Since delisting the Company has changed auditing firms and is current
with respect to its Exchange Act of 1934 reporting requirements having since

-16-

<PAGE>

filed aforesaid 10-Qs for quarters ended June 30, 1998, September 30, 1998
and December 31, 1998.

(e) Recent Sale of Unregistered Securities.

During the fiscal years ended March 31, 1998 and March 31, 1999 the
Company engaged in sales of unregistered securities (including convertible
debentures ("debentures")) as follows:

1 a. During the month of November 1997 the Company received net proceeds of
$2,457,000 (out of gross proceeds of $3,000,000) from the sale of debentures
bearing interest at the rate of 7% per annum in accordance with Regulation D and
exemption provided by Rule 506. Such debentures provided for a 25% to 35%
discount from market dependent upon certain specific factors. $2,000,000 of such
debentures was sold to Dominion Capital Fund, Ltd. and $1,000,000 of such
debentures was sold to Sovereign Partners LP - both identifying themselves as
accredited investors.

1 b. In June of 1998 the Company issued (to Dominion Capital Fund Ltd.) 7%
debentures for gross proceeds of $220,000 and in August 1998 the Company issued
(to Sovereign Partners LP) additional debentures for gross proceeds of $230,000.
In each instance these debentures were issued to accredited investors in
accordance with Regulation D and Rule 506 and the debentures were convertible at
a 35% discount from market.

1 c. In January of 1999 the Company entered into a rollover transaction with
those debenture holders indicated in 1 a and b above, pursuant to which (after
providing for incentives, penalties and interest) the outstanding debentures
were converted into new debentures for gross proceeds of $6,055,280; of which
the Company received (in non-rollover funds) gross proceeds of $1,158,000;
$758,000 being received in January 1999, $150,000 being received in April 1999
and the balance of $250,000 being received in May 1999. The transactions
discussed in this paragraph were conducted in accordance with Regulation D and
Rule 506 and all debentures issued were issued to accredited investors. The
debentures as rolled over or as newly issued each provide for conversion at a
discount from market of 30% and bear interest at the rate of 7% per annum. These
debentures were issued to the same entities who purchased the debentures
indicated in Item 1 a and b above.

2. In January of 1998 the Company received gross proceeds of $2,000,000 from
Wilfried Groote, an accredited investor, in accordance with exemption provided
by Section 4(2) of the Securities Act of 1933 in exchange for which it issued to
Mr. Groote an aggregate of 416,667 restrictive shares.

3. In July of 1998 the Company received a loan of $250,000 from Sheltsville
Company SA ("Sheltsville"). Pursuant to February 18, 1999 agreement the Company
issued 294,444 restrictive shares to Sheltsville in exchange for extinguishment
of such outstanding indebtedness (as previously evidenced by July 20, 1998 8%
unsecured convertible promissory note).

4. In July of 1998 the Company received a loan of $150,000 from Peter Ruegg as
evidenced by a July 20, 1998 8% unsecured convertible promissory note. Pursuant
to February 1999 agreement the Company issued 500,000 restrictive shares to Mr.
Ruegg in exchange for extinguishment of such indebtedness.

-17-

<PAGE>

5. On October 12, 1998 the Company issued 3,333,333 restrictive shares of common
stock to Maxon Trade & Finance Ltd. SA in exchange for cancellation of
outstanding debt (inclusive of accrued interest) approximating $2,056,000. See
also Part I, Item 1 "Description of Business - Licensing Agreements".

6. In accordance with subscription agreements and convertible debentures the
Company received in February 1999 (a) $175,000 from Scorpion Nominees Ltd.
("Scorpion") and (b) $30,000 from Marcuard Cook & Cie S.A. ("Marcuard").
Pursuant to agreements in March 1999 (a) Scorpion exercised its conversion
rights in its entirety in exchange for 286,885 restrictive shares of Company
common stock while (b) Marcuard exercised its conversion rights in its entirety
in exchange for 49,180 restrictive shares of Company common stock. Both Scorpion
and Marcuard represented themselves to be accredited investors and the
transactions referred to were conducted in accordance with Regulation D and Rule
506.

7. Pursuant to February 1999 agreement the Company issued 214,141 restrictive
shares to Rolcan Finance Ltd. ("Rolcan") in exchange for extinguishment of then
outstanding debt from the Company to Rolcan amounting to $107,070.

8 a. In November of 1998 and December of 1998 the Company entered into two
separate subscription agreements and debentures with Apex Holding SA ("Apex"),
the first of which was for gross proceeds of $200,000 while the latter was for
gross proceeds of $865,000. In each instance these agreements were entered into
in accordance with Regulation D and Rule 506 and the debenture holder
represented itself to be an accredited investor.

8 b. In July of 1999 and subsequent to negotiations between the Company and Apex
the $200,000 debenture was extinguished in its entirety in exchange for 417,811
restrictive shares while the $865,000 debenture was similarly extinguished in
its entirety in exchange for 1,508,272 restrictive shares.

8 c. The issuance of the restrictive shares indicated in 8 a and b above
occurred subsequent to the close of the Company's March 31, 1999 fiscal year and
subsequent to the June 30, 1999 date being utilized throughout this Form 10-KSB
as a "record date" so as to determine shares outstanding and percentage of
ownership. For these reasons Apex does not appear as a principal stockholder in
Item 11 hereof nor is mention made of it in Item 9 hereof as same relates to
Section 16(a) compliance under the Exchange Act.

See also Note 10 to audited financial statements and "Management's
Discussion and Analysis - Liquidity and Capital Resources" for additional
information regarding sale of securities and/or manner in which Company has
financed its ongoing operations.

-18-

<PAGE>

Item 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

YEAR ENDED MARCH 31, 1999 COMPARED TO YEAR ENDED MARCH 31,
1998

Revenues

The Company commenced operations during the year with the completion of
the recycling facility in Freiberg, Germany by the end of August 1998, with one
vitrification line active. In addition the Company's subsidiary SABD has been
operating a leased chemical/physical treatment plant which is designed to treat
liquid hazardous waste since July 1, 1998. Accordingly, the Company has
generated revenues of $1,288,380 for the year.

Gross profit on the above revenues was $743,017 or 58%.

Operating Expenses

Operating expenses were $8,028,502 for the year ended March 31,1999,
compared to $11,522,229 for the year ended March 31, 1998. The principal items
were valuation adjustments of loans for High Temperature Vitrification Systems
of $3,443,516 compared to $2,696,855 for the year ended March 31, 1998,
salaries, wages and related fringe benefits of $1,314,374 for the year ended
March 31, 1999, compared to $800,607 for the prior years comparable period,
general and administrative expenses of $577,137 for the year ended March 31,
1999 compared to $1,644,901 for the year ended March 31, 1998, professional and
other consulting fees of $1,485,373 for the current year versus $382,813 for the
prior year and depreciation and amortization of $1,208,102 for the year ended
March 31, 1999 compared to $358,603 for the year ended March 31, 1998.

Interest and other financing expense increased to $1,375,345 for the
year ended March 31, 1999 compared to $455,987 for the year ended March 31, 1998
due to increased borrowings under the Dresdner Bank Financing agreements and
interest on convertible notes and debentures.

-19-

<PAGE>

Liquidity and Capital Resources

The Company funds its capital requirements with a combination of equity
financing, government subsidies and debt financing. The Company utilizes these
sources of capital to construct HTV Systems, perform research and development
related to these systems, and meet the daily requirements of operating the
Company.

In November 1997 the Company received $2,457,000 from the sale of 7%
cumulative convertible debentures pursuant to a registration under Regulation D.
Fifty percent of the debentures are convertible into shares of common stock
at the option of the debenture holder at the lesser of (1) 120% of the 5 day
average closing bid price for the 5 trading days immediately preceding the
closing date, or (2) 75% of the 5 day average closing bid price for the 5
trading days immediately preceding the applicable conversion date for any
conversion dates that are after the earlier of the registration effective date
or 120 days following the closing date. The purchaser may convert the
debentures into common stock at the lesser of (1) 120% of the five day average
bid price for the 5 trading days immediately preceding the closing date or (2)
65% of the 5 day average closing bid price for the 5 trading days immediately
preceding the applicable conversion date for any conversion dates after 120 days
following the closing date. The remaining 50% of the debentures may be
converted at 75% or 65% of the five day average closing bid price within or
without 120 days following the closing date respectively. Interest on the
debentures is payable in cash or common stock upon conversion, at the option of
the Company. Interest of $73,600 has accrued since the convertible debenture
issuance.

In June 1998, the Company received $220,000 from the sale of 7%
cumulative convertible debentures pursuant to a registration under Regulation D.
Interest on the debentures is payable in cash or common stock upon conversion,
at the option of the Company. The holder may convert the debentures into
common stock at the lesser of (1) 120% of the 5 day average bid price for the 5
trading days immediately preceding the closing date or (2) 65% of the 5 day
average closing bid price for the 5 trading days immediately preceding the
applicable conversion date.

In July 1998, the Company received $230,000 from the sale of 7%
cumulative debentures pursuant to a registration under Regulation D. Interest
on the debentures is payable in cash or common stock upon conversion, at the
option of the Company. The holder may convert the debentures into common stock
at the lesser of (1) 65% of the 5 day average bid price for the 5 trading days
immediately preceding the closing date or (2) 120% of the 5 day average closing
bid price for the 5 trading days immediately preceding the applicable conversion
date.

-20-

<PAGE>

In November 1998, the Company received $200,000 from the sale of 7%
cumulative convertible debentures. Interest on the debentures is payable in
cash or common stock upon conversion, at the option of the Company. The holder
may convert the debentures into common stock at the lesser of (1) 120% of the 5
day average bid price for the 5 trading days immediately preceding the closing
date or (2) 65% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date. In July of 1999 these
debentures were extinguished for 417,811 restrictive shares.

On December 14, 1998, the Company received $865,000 from the sale of 7%
cumulative convertible debentures. Interest on the debentures is payable in
cash or common stock upon conversion, at the option of the Company. The holder
may convert the debentures into common stock at the lesser of (1) 120% of the 5
day average bid price for the 5 trading days immediately preceding the closing
date or (2) 65% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date.

In January of 1999 the Company entered into a rollover transaction
with the debenture holders of November 1997 and June and July 1998, pursuant to
which (after providing for incentives, penalties of $852,290 and interest of
$283,452) the outstanding debentures were converted into new debentures for
gross proceeds of $6,055,280, 7% convertible debentures, convertible into
common stock of the Company. The Company received $1,158,000 cash proceeds from
the offering. These debentures are collateralized by the Company's land,
inventory, plant and equipment in Freiburg, Germany and guaranteed by the 50%
holder of STSB. Penalties are included in other financing expenses in the
Statement of Operations

On January 15, 1999 the Company received $20,000 from the sale of 7%
cumulative convertible debentures. Interest on the debentures is payable in
cash or common stock upon conversion, at the option of the Company. The holder
may convert the debentures into common stock at the lesser of (1) 60% of the 5
day average bid price for the 5 trading days immediately preceding the closing
date or (2) 125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date. Pursuant to an agreement
in March 1999 the holder converted the debentures into 32,787 shares of the
Company's common stock.

On January 12, 1999, the Company received $20,000 from the sale of 7%
cumulative convertible debentures. Interest on the debentures is payable in cash
or common stock upon conversion, at the option of the Company. The holder may
convert the debentures into common stock at the lesser of (1) 60% of the 5 day
average bid price for the 5 trading days immediately preceding the closing date
or (2) 125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date.

-21-

<PAGE>

On January 15, 1999, the Company received $20,000 from the sale of 7%
cumulative convertible debentures. Interest on the debentures is payable in cash
or common stock upon conversion, at the option of the Company. The holder may
convert the debentures into common stock at the lesser of (1) 60% of the 5 day
average bid price for the 5 trading days immediately preceding the closing date
or (2) 125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date. Pursuant to an agreement
in March 1999 the holder exercised its conversion rights in its entirety in
exchange for 32,787 restrictive shares of Company common stock.

On January 15, 1999, the Company received $10,000 from the sale of 7%
cumulative convertible debentures. Interest on the debentures is payable in cash
or common stock upon conversion, at the option of the Company. The holder may
convert the debentures into common stock at the lesser of (1) 60% of the 5 day
average bid price for the 5 trading days immediately preceding the closing date
or (2) 125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date.

On February 12, 1999, the Company received $175,000 from the sale of 7%
cumulative convertible debentures. Interest on the debentures is payable in cash
or common stock upon conversion, at the option of the Company. The holder may
convert the debentures into common stock at the lesser of (1) 60% of the 5 day
average bid price for the 5 trading days immediately preceding the closing date
or (2) 125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date. Pursuant to an agreement
in March 1999 the holder exercised its conversion rights in its entirety in
exchange for 286,885 restrictive shares of Company common stock.

On February 16, 1999, the Company received $10,000 from the sale of 7%
cumulative convertible debentures. Interest on the debentures is payable in cash
or common stock upon conversion, at the option of the Company. The holder may
convert the debentures into common stock at the lesser of (1) 60% of the 5 day
average bid price for the 5 trading days immediately preceding the closing date
or (2) 125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date. Pursuant to an agreement
in March 1999 the holder exercised its conversion rights in its entirety in
exchange for 16,393 restrictive shares of Company common stock.

-22-

<PAGE>

For purposes of the accompanying financial statements, the convertible
debentures are recorded as additional paid in capital since the debenture
agreement does not provide for repayment of the debenture in cash and requires
a mandatory conversion into common stock no later than 24 or 36 months after
issuance.

In July 1998 the Company received gross proceeds of $250,000 and
$150,000, pursuant to the issuance of unsecured convertible promissory notes
bearing interest at 8% per annum. Pursuant to a February 18, 1999 agreement the
Company issued 294,444 restrictive shares, on May 21, 1999, to the holder of the
$250,000 note in exchange for such outstanding indebtedness. Pursuant to an
additional agreement in February 1999, the Company issued 500,000 restrictive
shares, in February 1999, in exchange for the $150,000 convertible note
outstanding.

In January 1999 the Company entered into a financing agreement with
Summa Capital Corporation ("Summa"), a British West Indies company specializing
in Asset Management and Project Financing, whereby Summa agreed to provide
(through others) up to $75,000,000 of financing to Seiler for the construction
of processing plants, research and development and general business expansion;
either through issuance of debentures or utilization of note purchase agreements
(or similar debt documents) with accredited investors. Assuming specific project
financing the Company will be required to deliver a first lien position for
financing participants so as to secure assets for a specific financed project.

Agreed to financing terms include: (1) a financing term of 12 years
with interest at the rate of 7.875 % per annum, with interest limited to and
payable only on those funds drawn-down for each specific projects and with
Seiler's right to defer interest payment for the first 24 months subsequent to
each draw-down date, (2) Seiler being required to obtain contractually binding
agreements for processing waste and the sale of the recycled products for 65% of
vitrification system capacity with the understanding that contractual agreements
(for the first 2 U.S. projects and the first 2 foreign country projects) shall
be in place within six months of the time that the identified vitrification
system is in commercial operation and with the further understanding that
contractual agreements for all subsequent projects shall be in place prior to
project finding draw-down and (3) the Company being required, prior to draw-
down, to have all necessary environmental permits and determinations in place
with all other permits to be obtained in accordance with the Company acting as
project manager for each designated project.

-23-

<PAGE>

legal fees and expenses directly related to this transaction and with
the understanding that (a) any further legal fees shall be the obligation of
Summa and (b) if for any reason other than the Company's failure to perform,
such $200,000 is to be fully refunded to the Company.

Effect of Currency on Results of Operations

The results of operations and the financial position of the Company's
subsidiaries outside the United States is reported in the relevant foreign
currency (primarily Swiss Francs and German Marks) and then translated into US
dollars at the applicable foreign exchange rate for inclusion in the Company's
consolidated financial statements. Accordingly, the results of operations of
such subsidiaries as reported in US dollars can vary significantly as a result
of changes in currency exchange rates (in particular, the exchange rates between
the Swiss Franc, the German Mark and the US dollar).

-24-

<PAGE>

SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, 1999 AND 1998

Contents

Index.......................................................... .............F-1
Report of Independent Auditors...............................................F-2
Audited Consolidated Financial Statements:
Consolidated Balance Sheets..................................................F-3
Consolidated Statements of Operations........................................F-4
Consolidated Statements of Stockholders' Equity..............................F-5
Consolidated Statement of Cash Flows.........................................F-6
Notes to Consolidated Financial Statements...........................F-7 to F-23

F - 1

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Seiler Pollution Control Systems, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Seiler
Pollution Control Systems, Inc. and Subsidiaries as of March 31, 1999, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years ended March 31, 1999 and 1998 . These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Seiler
Pollution Control Systems, Inc. and Subsidiaries as of March 31, 1999, and the
results of its operations and its cash flows for the years ended March 31, 1999
and 1998, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that
Seiler Pollution Control Systems, Inc. and Subsidiaries, will continue as a
going concern. As discussed in Note 1 to the financial statements, the Company's
net working capital deficiency raises substantial doubt about the entity's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments relating to the recoverability and classification of reported
asset amounts and classification of liabilities that might result from the
outcome of this uncertainty.

/s/ Feldman Sherb Horowitz & Co., P.C.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
New York, New York
June 30, 1999

F-2

<PAGE>

SEILLER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

MARCH 31, 1999

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

CURRENT ASSETS:
Cash $ 96,419
Accounts receivable 163,723
Prepaid expenses and sundry receivables 807,382
Inventories 5,603
--------------
TOTAL CURRENT ASSETS 1,073,127
--------------

OTHER ASSETS
Licensing agreements, less accumulated amortization of
$1,812,719 and $1,495,384 2,947,284
Other assets 126,548
--------------
3,073,832
--------------

PROPERTY, PLANT, AND EQUIPMENT 10,373,273
--------------
$ 14,520,232
==============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable $ 1,311,808
Current portion of long - term debt 4,794,026
Accrued expenses 1,285,654
Other current liabilities 42,796
--------------
TOTAL CURRENT LIABILITIES 7,434,284
--------------
LEASES PAYABLE 618,949

LOANS PAYABLE - STOCKHOLDERS 539,131

DEFERRED INCOME - GOVERNMENT SUBSIDIES 3,335,410

CONVERTIBLE NOTES PAYABLE 900,000

MINORITY INTEREST 65,161

STOCKHOLDERS' EQUITY:
Common stock, $0.0001 par value, authorized 35,000,000 shares,
issued and outstanding 8,815,168 902
Additional paid in capital 38,823,982
Accumulated deficit (33,500,662)
Accumulated other comprehensive loss (3,696,925)
--------------
TOTAL STOCKHOLDERS' EQUITY 1,627,297
--------------

$ 14,520,232
==============
</TABLE>

See notes to consolidated financial statements

F - 3
<PAGE>

SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

Year ended March 31,
----------------------------------
1999 1998
-------------- ----------------

REVENUE $ 1,288,380 $ -

COST OF SALES 545,363 -
-------------- ----------------

GROSS PROFIT 743,017 -
-------------- ----------------

OPERATING EXPENSES
Research and development - 5,638,450
Write off of loans for HTV Systems 3,443,516 2,696,855
Professional and other consulting fees 1,485,373 382,813
Salaries, wages and related fringe benefits 1,314,374 800,607
General and administrative 577,137 1,644,901
Depreciation and amortization 1,208,102 358,603
-------------- ----------------
8,028,502 11,522,229
-------------- ----------------

LOSS FROM OPERATIONS 7,285,485 11,522,229
-------------- ----------------

OTHER INCOME AND (EXPENSES):
Miscellaneous 89,684 -
Interest income 529 46,622
Interest and other financing expense (1,375,345) (455,987)
-------------- ----------------
TOTAL OTHER INCOME AND (EXPENSES) (1,285,132) (406,365)
-------------- ----------------

LOSS BEFORE MINORITY INTEREST 8,570,617 11,928,594

Minority interest - (1,791,901)
-------------- ----------------

NET LOSS $ 8,570,617 $ 10,136,693
============== ================

NET LOSS PER SHARE - BASIC $ 1.45 $ 2.82
============== ================

WEIGHTED SHARES USED IN COMPUTATION - BASIC 5,908,624 3,594,679
============== ================

</TABLE>

See notes to consolidated financial statements

F - 4
<PAGE>

SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

YEARS ENDED MARCH 31,1999 AND 1998

Accumulated
Common stock Additional Other
---------------- Paid-in Accumulated Comprehensive
Shares Amount Capital Deficit Loss Total
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1997 3,523,685 $ 352 $ 26,540,202 $ (12,906,183) $ (484,008) $ 13,150,363

Exercise of stock options under
1996 Non - Statutory Stock
Option Plan 3,066 - 10,051 - - 10,051

Issuance of common stock
for cash 416,667 42 1,999,958 - - 2,000,000

Issuance of convertible debentures - - 2,457,000 - - 2,457,000

Foreign currency translation loss - - - - (2,241,371) (2,241,371)

Beneficial conversion feature of
convertible debentures - - 1,615,386 (1,615,386) - -

Net loss - - - (10,136,693) - (10,136,693)
----------------------------------------------------------------------
BALANCE, MARCH 31, 1998-(restated) 3,943,418 394 32,622,597 (24,658,262) (2,725,379) 5,239,350

Issuance of common stock
for debt 3,333,333 333 2,055,935 - - 2,056,268

Issuance of common stock
for debentures 1,538,417 154 (154) - - -

Issuance of convertible debentures - 21 3,627,338 - - 3,627,359

Interest on debentures - - 246,483 - - 246,483

Foreign currency translation loss - - - - (971,546) (971,546)

Beneficial conversion feature of
convertible debentures - - 271,783 (271,783) - -

Net loss - - - (8,570,617) - (8,570,617)
----------------------------------------------------------------------
BALANCE, MARCH 31, 1999 8,815,168 $ 902 $ 38,823,982 $ (33,500,662) $(3,696,925) $ 1,627,297
======================================================================

</TABLE>

See notes to consolidated financial statements

F - 5
<PAGE>

SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended March 31,
---------------------------------
1999 1998
------------- --------------
<S> <C> <C>

CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (8,570,617) $ (10,136,693)
------------- --------------

Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,208,102 320,205
Minority interest in net losses
of subsidiaries (22,937) -

Write off of loans for HTV Systems 3,443,516 2,696,855

Changes in operating assets and liabilities:
Increase in accounts receivable (163,723) -
(Increase) decrease in prepaid expenses
and sundry receivables (664,278) 1,927,350
Increase in inventories (5,603) -
Increase in deposits - (15,734)
(Increase) in other assets 331,122 (331,236)
Increase in accounts payable 41,412 297,977
(Decrease) in accrued expenses 850,007 (56,033)
Increase in other current liabilities 42,796 -
Increase in Government subsidies 25,748 -
------------- --------------
5,086,162 4,839,384
------------- --------------

CASH USED IN OPERATING ACTIVITIES (3,484,455) (5,297,309)
------------- --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,250,395) (772,125)
Advances for High Temperature
Vitrification Systems (126,707) (6,215,348)
------------- --------------

CASH USED IN INVESTING ACTIVITIES (2,377,102) (6,987,473)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - 2,010,051
Proceeds from Government subsidies - 3,728,266
Issuance of convertible debentures 3,873,821 2,457,000
Proceeds from convertible notes payable 900,000 -
Proceeds from bank loans 1,292,168 4,371,592
Payments on loans payable stockholder - (775,159)
Increase of leases payable 618,949 -
Borrowings (payments) of debt
to stockholder (138,650) -
------------- --------------

CASH PROVIDED BY FINANCING ACTIVITIES 6,546,288 11,791,750
------------- --------------

EFFECT OF EXCHANGE RATE CHANGES (971,546) (3,312,012)
------------- --------------

NET DECREASE IN CASH (286,815) (3,805,044)

CASH AND CASH EQUIVALENTS - beginning of year 383,234 4,188,278
------------- --------------

CASH AND CASH EQUIVALENTS - end of year $ 96,419 $ 383,234
============= ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 250,000 $ 367,107
============= ==============
NON-CASH FINANCING ACTIVITIES:
Conversion of license agreement payable
into common stock $ 2,056,268 $ -
============ ==============
</TABLE>

See notes to consolidated financial statements

F - 6
<PAGE>

SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, 1999 AND 1998

1. ORGANIZATION

Seiler Pollution Control Systems, Inc. (the "Company") was
incorporated under the laws of the State of Delaware in 1983. The
Company presently is an environmental service and equipment company
which acquired the rights to a technology called High Temperature
Vitrification ("HTV") which treats a potentially wide variety of waste
products. The HTV process transforms hazardous waste into non - toxic
substances which can either be stored in a non - hazardous waste
landfill or recycled.

The Company's consolidated financial statements include Seiler
Pollution Control Systems International, Inc., ("SPCSI") (incorporated
in Delaware) and Advanced Pollution Control ("APC") (formerly Seiler
SEPC AG) (incorporated in Switzerland), APC's 50%, owned subsidiary,
Seiler Trenn - Schmeizanlagen Betriebs GmbH (STSB) (incorporated in
Germany), APC's 100% owned subsidiary Pyrec AG ("Pyrec") (incorporated
in Switzerland), the Company's majority owned subsidiary Advanced
Nuclear Control, Inc. ("ANC") (formerly Seiler Nuclear Control, Inc)
(incorporated in New Jersey) and the Company's 80% owned subsidiary
Seiler Abfallbehanddlungs und Dienstleistungs GmbH ("SABD")
(incorporated in Germany).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Basis of Presentation

The Company's financial statements have been
presented on a basis that it is a going concern, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company
intends to seek additional equity capital through additional
equity offerings to adequately fund operations, working
capital demands, and growth plans.

The Company has a working capital deficiency of
$6,361,157 as of March 31, 1999. Accordingly, continued
existence is dependent upon the Company's ability to resolve
its liquidity problem principally by obtaining additional
equity capital or debt financing, neither of which can be
assured.

F-7

<PAGE>

B. Principles of Consolidation

The consolidated financial statements include the
accounts of the Company and its wholly owned and majority
owned/controlled subsidiaries. All material intercompany
balances and transactions have been eliminated in
consolidation.

C. Revenue Recognition

Revenues are recognized when finished products are
shipped to unaffiliated customers or services have been
rendered, with appropriate provision for uncollectible
accounts.

D. Reclassifications

Certain prior year balances have been reclassified to
conform with current year presentation.

E. Licensing Agreements

Licensing agreements are stated at cost, less
accumulated amortization. Amortization is computed by using
the straight - line method over an estimated life of fifteen
years based upon management's expectations relating to the
life of the technology and current competitive markets
conditions. The estimated life is reevaluated each year based
upon changes in these factors.

F. Property and Equipment

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

G. 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 at the date of the
financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from
these estimates.

F-8

<PAGE>

H. Fair Value of Financial Instruments

The respective carrying value of certain on - balance
- sheet financial instruments approximate their fair values.
Fair value estimates discussed herein are based upon certain
market assumptions and pertinent information available to
management. These financial instruments include cash, accounts
receivable, accounts payable and accrued expenses. Fair values
are assumed to approximate carrying values for these financial
instruments since they are short term in nature and their
carrying amounts approximate fair values or they are
receivable or payable on demand. The fair value of the
Company's long - term debt, which approximates its carrying
value, is estimated based upon the quoted market prices for
the same or similar debt instruments or on the current rates
offered to the Company for debt of the same remaining
maturities.

I. Long Lived Assets

The Company has adopted Statement of Financial
Accounting Standards No. 121 ("SFAS 121"), "Accounting for the
Impairment of Long - Lived Assets and Long Lived Assets to be
Disposed of." In accordance with this statement, the Company
evaluates the recovery of the carrying amount of its long
lived assets, primarily property and equipment, whenever
events or changes in circumstances indicate that the carrying
amount of such assets may not be fully recoverable. If this
review indicates that the carrying value of the assets will
not be recoverable, as determined based on the estimated non -
discounted cash flows of the Company over their remaining
estimated useful lives, the carrying amount is reduced by the
estimated shortfall of cash flows.

J. Loss Per Common Share

In February 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No.
128 ("SFAS 128"), "Earnings Per Share", which established new
standards for computation of earnings per share. SFAS 128
requires the presentation on the face of the income statement
of "basic" earnings per share and "diluted" earnings per
share.

Basic earnings per share is computed by dividing the
net income (loss) available to common shareholders by the
weighted average number of outstanding common shares. The
calculation of diluted earnings per share is similar to basic
earnings per share except the denominator includes dilutive
common stock equivalents such as stock options and convertible
debentures. Common stock options and the common shares
underlying the convertible debentures are not included for the
years ended March 31, 1999 ("Fiscal 1999"), March 31, 1998
("Fiscal 1998") as their effect would be anti - dilutitve.

F-9

<PAGE>

K. Foreign Currency Translation

Assets and liabilities of subsidiaries operating in
foreign countries are translated into U.S. dollars using both
the exchange rate in effect at the balance sheet date or
historical rate, as applicable. Results of operations are
translated using the average exchange rates prevailing
throughout the year. The effects of exchange rate fluctuations
on translating foreign currency assets and liabilities into
U.S. dollars are included in stockholders' equity (Accumulated
other comprehensive loss), while gains and losses resulting
from foreign currency transactions are included in operations.

L. Stock Based Compensation

The Company accounts for stock transactions in
accordance with APB Opinion No. 25, "Accounting For Stock
Issued To Employees." In accordance with Statement of
Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting For Stock-Based Compensation," the Company adopted
the pro forma disclosure requirements of SFAS 123.

M. Income Taxes

The Company follows Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases.

N. New Accounting Pronouncements

The Company will adopt Statement of Financial
Accounting Standards No. 131 "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131") for the year
ended March 31, 1999. SFAS No. 131 requires the Company to
report selected information about operating segments in its
financial statements. It also establishes standards for
related disclosures about products and services, geographic
areas, and major customers. The application of the new
pronouncement is not expected to have a material impact on the
Company's disclosures.

The Company will adopt Statement of Financial
Accounting Standards No. 132 ("SFAS 132"), "Employers'
Disclosures about Pensions and Other Postretirement Benefits"
for the year ended March 31, 1999. SFAS No. 132 revises
employers' disclosures about pension and other postretirement
benefit plans. The application of the new pronouncement is not
expected to have a material impact on the Company's financial
statements.

F-10

<PAGE>

3. LICENSING AGREEMENTS

The Company acquired two licensing agreements from Maxon
Finance and Trade, Ltd., S.A. ("Maxon") who owns 300,000 shares of the
Company's outstanding shares of common stock. The agreements, as
amended in March of 1994, are for an exclusive field of - use license
to use the proprietary information, including the patent rights,
worldwide for the High Temperature Vitrification System. Licensing fees
aggregating $5,000,000 are to be paid under the terms of the
agreements. These fees have been discounted at 7%, resulting in a net
capitalized cost of $4,760,000. These agreements are for an indefinite
term or until all of the proprietary information becomes public
knowledge and the patent rights expire. Amortization expense was
$317,336 for the year ended March 31, 1999 and 1998. In October 1998,
the Company entered into an agreement with Maxon whereby the
outstanding license payable of approximately $1,977,000 plus accrued
interest of approximately $79,000 was converted into 3,333,333 shares
of common stock.

4. WRITE - OFF OF NET REALIZABLE ADVANCES FOR HIGH TEMPERATURE
VITRIFICATION SYSTEMS

Due to the bankruptcy of Seiler Hochtemperatur - Trennanlagen
AG ("SHT") on February 11, 1999 net realizable advances for High
Temperature Vitrification systems of $4,218,329 as of March 31, 1999
have been written off.

F-11

<PAGE>

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, less accumulated depreciation
consists of the following at March 31, 1999:
<TABLE>
<CAPTION>

Life Range Amount
---------- ----------
<S> <C> <C>
Land $ 100,000
Equipment 10 1,288,069
HTV Equipment 10 5,728,289
Buildings 40 3,669,968
----------
10,786,326
Less: accumulated depreciation (413,053)
$10,373,273
==========
</TABLE>

The HTV system is a patented high temperature converter/melter
which supplies the energy necessary to provide final chemical and
physical reactions that convert hazardous chemical compounds into inert
nonhazardous glass ceramics, metal oxides, and salts.

6. PREPAID EXPENSES AND SUNDRY RECEIVABLES

Prepaid expenses and sundry receivables for the year ended
March 31, 1999 consists of $285,000 in deferred financing costs,
$429,207 receivable for January convertible debentures and $93,175 in
other prepaid expenses and sundry receivables.

7. LOANS PAYABLE - STOCKHOLDERS

Gerold Weser, President and Chairman of the Board of
Directors, made unsecured non-interest bearing advances to the Company
which are payable upon future mutual agreement of the parties. The
advances have been presented as a long term liability in the
accompanying balance sheet based upon the parties intent to not repay
the advances currently. The balance as of March 31, 1999 was $403,887.

Werner Heim, former chairman of the Board of Directors and a
stockholder, has made unsecured, non - interest bearing advances to the
Company which are payable upon future mutual agreement of the parties.
The advances have been presented as a long term liability in the
accompanying balance sheet based upon the parties intent to not repay
the advances currently. The balance at March 31, 1999 was $135,244. In
June 1999, the debt was converted into equity with the Company issuing
142,955 restrictive shares of its common stock.

F-12

<PAGE>

8. LOANS PAYABLE - BANK
<TABLE>
<CAPTION>

Long-term debt at March 31, 1999 is summarized as follows:

<C> <C>
2,100,000 DM ($1,157,100 at March 31, 1999)
revolving line of credit, monthly interest payable
at 7.50%. The line is 80% secured by another bank
and is guaranteed by the Company's chairman. $ 1,083,722

7,638,000 DM ($4,208,538 at March 31, 1999) credit
line on capital expenditures, with interest at 5%.
Interest is due quarterly; unpaid principal is
payable over a ten year period in bi-annual
installments. The line is 80% secured by another
bank and is guaranteed by the Company chairman. 3,710,304
-----------
4,794,026
Less current portion
4,794,026
-----------
$ -
===========
</TABLE>

On February 27, 1996, the Company obtained a credit line
commitment from the Dresdner Bank for approximately 2,100,000 DM and a
long term investment loan in the amount of 7,638,000 DM for the
fabrication, construction and installation of a high temperature
separating and melting facility on land located in Germany acquired by
the Company from the German State of Saxony. The commitments required
the German government to provide the Dresdner Bank with a surety bond
covering eighty - percent of the commitment, obtain the necessary
approvals and permits and meet certain financial covenants relating to
working capital requirements and debt to equity ratios. In connection
with this financing package, the Company received certain German
governmental grants of approximately $4,469,000. The remaining balance
of the long term investment loan is not available until certain Company
obligations are met, principally the construction of a second HTV line.

The Company is in default of certain bank covenants and
accordingly the bank loan is shown as current.

9. DEFERRED INCOME - GOVERNMENT SUBSIDIES
The Company received subsidies from legal government agencies
in Germany ("Agency"). Under the agreement with the agency the
Company is obligated to secure capital financing and must employ a
certain number of employees over a ten year period. The amount of
money received has been deferred and will be recognized as income as
the Company fulfills its obligation under this agreement.

F-13

<PAGE>

10. CONVERTIBLE DEBENTURES

In November 1997 the Company received $2,457,000 from the sale
of 7% cumulative convertible debentures pursuant to a registration
under Regulation D. Fifty percent of the debentures are convertible
into shares of common stock at the option of the debenture holder
at the lesser of (1) 120% of the 5 day average closing bid price for
the 5 trading days immediately preceding the closing date, or (2) 75%
of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date for any conversion
dates that are after the earlier of the registration effective date or
120 days following the closing date. The purchaser may convert the
debentures into common stock at the lesser of (1) 120% of the five day
average bid price for the 5 trading days immediately preceding the
closing date or (2) 65% of the 5 day average closing bid price for the
5 trading days immediately preceding the applicable conversion date for
any conversion dates after 120 days following the closing date. The
remaining 50% of the debentures may be converted at 75% or 65% of the
five day average closing bid price within or without 120 days following
the closing date respectively. Interest on the debentures is payable in
cash or common stock upon conversion, at the option of the Company.
Interest of $73,600 has accrued since the convertible debenture
issuance.

In June 1998, the Company received $220,000 from the sale of
7% cumulative convertible debentures pursuant to a registration under
Regulation D. Interest on the debentures is payable in cash or common
stock upon conversion, at the option of the Company. The holder may
convert the debentures into common stock at the lesser of (1) 120% of
the 5 day average bid price for the 5 trading days immediately
preceding the closing date or (2) 65% of the 5 day average closing bid
price for the 5 trading days immediately preceding the applicable
conversion date.

In July 1998, the Company received $230,000 from the sale of
7% cumulative debentures pursuant to a registration under Regulation D.
Interest on the debentures is payable in cash or common stock upon
conversion, at the option of the Company. The holder may convert the
debentures into common stock at the lesser of (1) 65% of the 5 day
average bid price for the 5 trading days immediately preceding the
closing date or (2) 120% of the 5 day average closing bid price for the
5 trading days immediately preceding the applicable conversion date.

In November 1998, the company received $200,000 from the sale
of 7% cumulative convertible debentures. Interest on the debentures is
payable in cash or common stock upon conversion, at the option of the
company. The holder may convert the debentures into common stock at the
lesser of (1) 120% of the 5 day average bid price for the 5 trading
days immediately preceding the closing date or (2) 65% of the 5 day
average closing bid price for the 5 trading days immediately preceding
the applicable conversion date. In july of 1999 these debentures were
extinguished for 417,811 restrictive shares.

On December 14, 1998, the company received $865,000 from the
sale of 7% cumulative convertible debentures. Interest on the
debentures is payable in cash or common stock upon conversion, at the
option of the company. The holder may convert the debentures into
common stock at the lesser of (1) 120% of the 5 day average bid price
for the 5 trading days immediately preceding the closing date or (2)
65% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date.

F-14

<PAGE>

In January of 1999 the Company entered into a rollover
transaction with the debenture holders of November 1997 and June and
July 1998, pursuant to which (after providing for incentives, penalties
of $852,290 and interest of $283,452) the outstanding debentures were
converted into new debentures for gross proceeds of $6,055,280, 7%
convertible debentures, convertible into common stock of the Company.
The Company received $1,158,000 cash proceeds from the offering. These
debentures are collateralized by the Company's land, inventory, plant
and equipment in Freiburg, Germany and guaranteed by the 50% holder of
STSB. Penalties are included in other financing expenses in the
Statement of Operations

On January 15, 1999 the Company received $20,000 from the sale
of 7% cumulative convertible debentures. Interest on the debentures is
payable in cash or common stock upon conversion, at the option of the
Company. The holder may convert the debentures into common stock at
the lesser of (1) 60% of the 5 day average bid price for the 5 trading
days immediately preceding the closing date or (2) 125% of the 5 day
average closing bid price for the 5 trading days immediately preceding
the applicable conversion date. Pursuant to an agreement in March
1999 the holder converted the debentures into 32,787 shares of the
Company's common stock.

On January 12, 1999, the Company received $20,000 from the
sale of 7% cumulative convertible debentures. Interest on the
debentures is payable in cash or common stock upon conversion, at the
option of the Company. The holder may convert the debentures into
common stock at the lesser of (1) 60% of the 5 day average bid price
for the 5 trading days immediately preceding the closing date or (2)
125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date.

On January 15, 1999, the Company received $20,000 from the
sale of 7% cumulative convertible debentures. Interest on the
debentures is payable in cash or common stock upon conversion, at the
option of the Company. The holder may convert the debentures into
common stock at the lesser of (1) 60% of the 5 day average bid price
for the 5 trading days immediately preceding the closing date or (2)
125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date. Pursuant to an
agreement in March 1999 the holder exercised its conversion rights in
its entirety in exchange for 32,787 restrictive shares of Company
common stock.

On January 15, 1999, the Company received $10,000 from the
sale of 7% cumulative convertible debentures. Interest on the
debentures is payable in cash or common stock upon conversion, at the
option of the Company. The holder may convert the debentures into
common stock at the lesser of (1) 60% of the 5 day average bid price
for the 5 trading days immediately preceding the closing date or (2)
125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date.

F-15
<PAGE>

On February 12, 1999, the Company received $175,000 from the
sale of 7% cumulative convertible debentures. Interest on the
debentures is payable in cash or common stock upon conversion, at the
option of the Company. The holder may convert the debentures into
common stock at the lesser of (1) 60% of the 5 day average bid price
for the 5 trading days immediately preceding the closing date or (2)
125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date. Pursuant to an
agreement in March 1999 the holder exercised its conversion rights in
its entirety in exchange for 286,885 restrictive shares of Company
common stock.

On February 16, 1999, the Company received $10,000 from the
sale of 7% cumulative convertible debentures. Interest on the
debentures is payable in cash or common stock upon conversion, at the
option of the Company. The holder may convert the debentures into
common stock at the lesser of (1) 60% of the 5 day average bid price
for the 5 trading days immediately preceding the closing date or (2)
125% of the 5 day average closing bid price for the 5 trading days
immediately preceding the applicable conversion date. Pursuant to an
agreement in March 1999 the holder exercised its conversion rights in
its entirety in exchange for 16,393 restrictive shares of Company
common stock.

For purposes of the accompanying financial statements, the
convertible debentures are recorded as additional paid in capital since
the debenture agreement does not provide for repayment of the debenture
in cash and requires a mandatory conversion into common stock no later
than 24 or 36 months after issuance.

11. CONVERTIBLE NOTES PAYABLE

In July 1998 the Company received gross proceeds of $250,000
and $150,000, pursuant to the issuance of unsecured convertible
promissory notes bearing interest at 8% per annum. Pursuant to a
February 18, 1999 agreement the Company issued 294,444 restrictive
shares, on May 21, 1999, to the holder of the $250,000 note in exchange
for such outstanding indebtedness. Pursuant to an additional agreement
in February 1999, the Company issued 500,000 restrictive shares, in
February 1999, in exchange for the $150,000 convertible note
outstanding.

F-16

<PAGE>

12. NOTES PAYABLE

On October 29, 1998 an unrelated party loaned the Company
$500,000 which was used to pay down part of the obligation due Dresdner
Bank. Debt service terms are currently being negotiated.

13. INCOME TAXES

Deferred income tax assets as of March 31, 1999 of $16,000,000
as a result of net operating losses, have been fully offset by
valuation allowances. The valuation allowances have been established
equal to the full amounts of the deferred tax assets, as the Company is
not assured that it is more likely than not that these benefits will be
realized.

A reconciliation between the statutory United States corporate
income tax rate (34%) and the effective income tax rates based on
continuing operations is as follows:

Year Ended March 31,
---------------------------
1999 1998
----------- ------------
<S> <C> <C>
Net loss $ 8,570,617 $10,136,693
=========== ===========
Statutory federal income tax (benefit) $(2,914,010) $(3,446,500)
Operating losses with no current tax benefits 837,930 1,703,300
Effect of foreign operations 2,076,080 1,743,200
----------- -----------
Provision for income taxes $ - $ -
=========== ===========

</TABLE>

14. STOCK OPTIONS

The Board of Directors has adopted Non - Statutory Stock
Option Plans and reserved 4,500,000 shares, for issuance to eligible
full and part - time employees, directors and consultants. Options are
nontransferable and are exercisable during a term of not more than ten
(10) years from the grant date. The options are issuable in such
amounts and at such prices as determined by the Board of Directors,
except that each option price of each grant will not be less than
eighty-five percent of the fair market value of such shares on the date
the options are granted. As of March 31, 1999, 500,000 options have
been granted under the plan.

F-17

<PAGE>

15. STOCK SPLIT

On September 24, 1998, pursuant to a Special Meeting of
Shareholders, the Board authorized a 1 for 6 reverse stock split of the
Company's $.0001 par value common stock. All references in the
accompanying financial statements to the number of common shares and
all computations of per share amounts have been restated to reflect the
reverse stock split.

16. COMMITMENTS AND CONTINGENCIES

The Company entered into written employment agreements with
Werner Heim (former President), Gerold Weser (President) Alan B.Sarko
(Vice President), and Niklaus Seiler (Former Vice President). The
agreements commenced January 1, 1996, expire five year thereafter and
provide for base salaries of $150,000 per year as well as certain
additional bonuses based upon the Company reaching certain levels which
have not yet been attained. Mr. Heim, Mr. Sarko, Mr. Weser, and Mr.
Seiler have also been granted options to purchase up to 300,000;
300,000; 200,000; and 300,000 shares, respectively of the Company's
Non Statutory Stock Option Plans. In June 1998 Werner Heim resigned
from the Company and in June, 1999 Niklaus Seiler was terminated for
cause. The commitment to both individuals in regards to their
employment agreements ceased on the date of separation from service.
With the exception of those options previously granted to Mr. Seiler
options indicated herein remain outstanding.

On July 1, 1998, the Company entered into an employment
agreement with the president of SABD. The agreement provides for a base
salary of approximately $70,000 as well as a 5% bonus. The agreement
automatically renews for one year increments.

The Company leases various office space in the United States,
Switzerland and Germany. The total charges to operations for the year
ended March 31, 1999 was $112,081. Future minimum annual lease
payments, based on the exchange rate in effect on March 31, 1999 under
the lease agreement are as follows:
<TABLE>
<CAPTION>

Year ending March 31,
<S> <C> <C>
2000 $ 143,531
2001 143,531
2002 143,531
2003 79,427
2004 79,427
--------
$ 589,447
========

</TABLE>

F-18

<PAGE>

On March 30, 1998, STSB entered into an agreement with AWU
Abfallwirtschaft und Recycling Berlin GmbH ("AWU"). The agreement
stipulates that STSB must purchase a chemical-physical liquid waste
treatment plant located in Berlin, Germany from AWU along with
laboratory equipment and instruments, vehicles and furniture and
fixtures for a price of 1.2 million German Marks ($648,600 at March 31,
1998), and lease and operate the site for a period of 20 years
commencing July 1, 1988. In addition STSB must (i) invest 7.5 million
German Marks ($4,167,000 at June 30,1998) by December 31, 1999 for the
construction of this new vitrification plant with a penalty of 80% of
the shortfall between the required investment and what was actually
spent and (ii) commit 1 million German Marks for modernizing and
enlarging of the existing leased building with such payment for
modernization due July 15, 1998. Such payment was not made and is now
accruing interest at the rate of 8% per year.

AWU must provide a financing commitment from a large German
Bank by September 30, 1998. Such commitment has not yet been provided.
STSB has the right to terminate this agreement if it does not receive
the necessary permits required for the construction of the
vitrification plant or the modernization of the existing liquid waste
treatment plant. On July 1, 1998, STSB, SABD, and AWU executed an
agreement transferring the rights and obligations under the purchase
agreement and rental lease agreement from STSB to SABD. Accordingly
the plant and equipment valued at 1,200,000 German Marks ($718,560)
was transferred as well.

17. LEGAL MATTERS

In March 1998, the Registrant was sued by Monoglas
Anlagenvertriebs, GmbH for 1,000,000 German Marks ($550,000) plus
interest since October 21, 1994 for payment of a consulting contract.
This action is considered to be in its early stage of arbitration but
it is the intention of the Company's management to contest this matter
vigorously and management believes that it has meritorious defenses to
this claim.

In November 1998, SHT sued APC for 4,327,218 Swiss Francs
($2,984,000) in respect of charges and expenses which SHT had invoiced
the Company in March 1998. Due to the bankruptcy of SHT (see Note 3)
the Administrator of SHT's estate can prosecute this claim. The
Company's management intends to contest this matter vigorously and
management believes that it has meritorious defenses to this claim.

In December 1998, APC was sued by Dresdner Management
Consulting, GmbH ("Dresdner") for 320,732 German Marks plus interest at
5% since December 17, 1997 ($190,608) for unpaid consulting costs. The
Court found for Dresdner on April 22, 1999 and such amount has been
accrued.

F-19

<PAGE>

The World Wildlife Foundation filed a complaint against Pyrec
AG in Switzerland on March 12,1998 regarding environmental protection
aspects of a project that Pyrec is involved in concerning the treatment
of the remains of shredded scrapped automobiles. The Company is in the
process of seeking an out of court settlement.

H. Jurgen Schlichting sued APC for 132,307 Swiss Francs
($96,000) plus interest at 5% since July 1, 1998 for financial
consulting services. On April 12, 1999 APC settled this lawsuit with a
payment of $55,000. Such amount was accrued at March 31, 1999.

In February 1999, the Company was sued by Lalive Gut & Partner
for 308,405 Swiss Francs plus interest at 5% for unpaid consulting
costs. Subsequent to year end the Company reached an out of court
settlement for approximately $83,000 with such amount being accrued at
year end.

18. BUSINESS SEGMENTS

The Company has adopted disclosure requirements of SFAS 131,
Management has determined that segment information by geographic
location is appropriate since the Company is developing HTV systems in
various geographic regions.

The Company derives all of its revenues from its subsidiaries
located in the United States, Switzerland and Germany. Sales by
geographic areas for the years ended March 31, 1999 and 1998 were as
follows:

1999 1998
-------- -------
<S> <C> <C>
United States $ 94,350 $ -
Switzerland - -
Germany 1,194,030 -
-------- -------
$1,288,380 $ -
======== =======

</TABLE>

F-20

<PAGE>

The following summarizes identifiable assets by geographic
area:

1999 1998
---------- ----------
<S> <C> <C>
United States $ 4,518,005 $ 3,628,045
Switzerland 611,018 3,836,803
Germany 9,391,209 9,114,212
---------- ----------
$14,520,232 $16,579,060
========== ==========

</TABLE>

The following summarizes operating losses before provision for
income tax:

1999 1998
---------- ----------
<S> <C> <C>
United States $ 2,464,498 $ 3,413,311
Switzerland 5,144,251 6,052,550
Germany 961,868 670,832
---------- ----------
$ 8,570,617 $10,136,693
========== ==========
</TABLE>

19. RESTATEMENT

The accompanying financial statements have been restated to
properly record the accounting treatment of certain beneficial
conversion features and debt issuance costs of convertible debentures
issued during the year ended March 31, 1999.

Stockholders' equity has been restated to reflect the following:

Additional
Paid-in Accumulated
Capital Deficit
---------- ------------
<S> <C> <C>
As originally reported, March 31, 1998 $31,007,211 $(23,042,876)
Beneficial conversion feature 1,615,386 (1,615,686)
As restated, March 31, 1998 $32,622,597 $(24,658,262)
========== ===========

</TABLE>
F-21

<PAGE>

20. PROJECT FINANCING PROPOSAL

In January 1999 the Company entered into a financing agreement
with Summa Capital Corporation ("Summa"), a British West Indies company
specializing in Asset Management and Project Financing, whereby Summa
agreed to provide (through others) up to $75,000,000 of financing to
Seiler for the construction of processing plants, research and
development and general business expansion; either through issuance of
debentures or utilization of note purchase agreements (or similar debt
documents) with accredited investors. Assuming specific project
financing the Company will be required to deliver a first lien position
for financing participants so as to secure assets for a specific
financed project.

Agreed to financing terms include: (1) a financing term of 12
years with interest at the rate of 7.875% per annum, with interest
limited to and payable only on those funds drawn - down for each
specific projects and with Seiler's right to defer interest payment for
the first 24 months subsequent to each draw - down date, (2) Seiler
being required to obtain contractually binding agreements for
processing waste and the sale of the recycled products for 65% of
vitrification system capacity with the understanding that contractual
agreements ( for the first 2 U.S. projects and the first 2 foreign
country projects) shall be in place within six months of the time that
the identified vitrification system is in commercial operation and with
the further understanding that contractual agreements for all
subsequent projects shall be in place prior to project funding draw -
down and (3) the Company being required, prior to draw - down, to have
all necessary environmental permits and determinations in place with
all other permits to be obtained in accordance with the Company acting
as project manager for each designated project.

In accordance with the terms of the agreement, Summa is to
receive a 15% equity interest in the Company (assuming its compliance
with each of its warranties and representations). Additionally, Summa
has already received from the Company a $65,000 mobilization fee to
cover all its direct costs and attendant fees incurred with respect to
the transaction described. The Company has also paid the sum of
$200,000 to Summa's designated counsel as and for legal fees and
expenses directly related to this transaction and with the
understanding that (a) any further legal fees shall be the obligation
of Summa and (b) if for any reason other than the Company's failure to
perform, such $200,000 is to be fully refunded to the Company.

Notwithstanding all or any portion of the above and the fact
that the described transactions are being actively pursued by all
parties thereto, no funds have been received by the Company as of July
15, 1999 nor have any final documents intended to evidence transfer of
funds been executed so as to make fund transfer and delivery eminent.

F-22

<PAGE>

21. SUBSEQUENT EVENTS

On April 26, 1999 the Company received $75,000 from the sale
of 7% cumulative convertible debentures. Interest on the debentures is
payable in cash or common stock upon conversion, at the option of the
Company. The holder may convert the debentures into common stock at 70%
of the 5 day average bid price for the 5 trading days immediately
preceding the closing date. These debentures are collateralized by the
Company's plant in Freiburg, Germany and requires a mandatory
conversion into common stock no later than 24 months after issuance.

F-23

<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

There were no disagreements with the Company and its former auditors,
Schneider Downs & Company, Inc. ("Schneider Downs") on any matter of accounting
principals or practices, financial statement disclosures or the scope of
accounting procedures other than as heretofore indicated in the Company's Form
8-K and 8-K/A with date of report of February 12, 1999, the full contents of
which are herewith incorporated by reference. Additionally, subsequent to filing
of 8-K/A the Company received a request for further information from the
Assistant Chief Accountant dated March 26, 1999 which the Company responded to
by letter dated May 5, 1999. Due to the disagreement contained in such documents
and the ongoing demands by Schneider Downs for what the Company considered to be
exorbitant and unjustifiable fees and due to the Company's overall lack of faith
in its former auditors, management of the Company determined that it would be in
the Company's best interest to have its current auditors not only audit its
finanical statements for the fiscal year ended March 31, 1999 but to also audit
for the prior fiscal year ended March 31, 1998. Accordingly, the audited reports
for both fiscal years ended March 31, 1998 and 1999 as contained in this Form
10-KSB have been audited by Feldman Sherb Horowitz & Co., P.C., the Company's
current auditors.

-25-

<PAGE>

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

(a) The Directors and Executive Officers of the Company, as of March
31, 1999, were as follows:

Name Position(s) Held Age

Dr. Gerold Weser Chairman of the Board (since June, 1998), 53
President (since November, 1997),
Vice President, European Operations
(through November, 1997),
President; Seiler TSB and a Director

Werner Heim (1) Chairman of the Board (through June 1998), 66
President (through November 1997) and
President; APC AG

Alan B. Sarko Vice President; North American Operations 51
Chief Financial Officer
Secretary, Treasurer and a Director

Niklaus Seiler (2) Former Vice President; System Research 61
Development
President; Seiler HT AG and a Director

Eckhart Busch Director (since November 1997) 58

Morris D. Jaffe, Jr. (3) Director (since May 1998) 48

(1) Resigned from all positions held effective June 1998.
(2) Resigned/terminated from all positions held effective June 1999.
(3) Summary biographical information regarding Mr. Jaffe has been taken
verbatim from such information as previously appeared in the Company's
Form 10-K for fiscal year ended March 31, 1998 due to Mr. Jaffe's
failure to respond to written requests for updated biographical
information. It is not anticipated that Mr. Jaffe shall be proposed as
a nominee to the Company's Board of Directors at its next Annual
Meeting of Stockholders.

Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have
qualified. Officers are appointed to serve until the meeting of the
Board of Directors following the next annual meeting of shareholders
and until their successors have been elected and have qualified.

Dr. Gerold Weser served as Vice President of European Operations
between January 1996 and November 1997, having joined the Company in January
1995. He became a Director of the Company in May 1997. In November 1997 Dr.
Weser was elected President and CEO and in June 1998 was elected Chairman of the
Board. Dr. Weser serves as President of STSB GmbH. From 1993 until he began

-26-

<PAGE>

his association with Seiler, Dr. Weser was Chief Executive Officer and
Administrator of Dr. Weser & Partner. From 1990 to 1993, Dr. Weser served as
Managing Director of Centralsug, Hamburg/Stockholm, Sweden. Dr. Weser is also
President of SABD GmbH.

Dr. Weser received Vordiploma (B.A.) in Chemistry and Physics from
Technical University of Karlsruhe in 1969. Subsequently, Dr. Weser received
a Diploma in Chemistry from the University of Oxford, England, and a Diploma in
Physics from the University of Marburg, Germany. In 1978, he received his Dr.
Rer. Natl. (Ph.D.) from the Institute for Physical Chemistry, University of
Marburg. From 1978 to 1990, Dr. Weser worked for various companies engaged in
environmental processing, handling, recycling and management. Dr. Weser devotes
his full time and best efforts to the Company's business activities.

Werner Heim - by virtue of the fact that Mr. Heim has resigned from all
positions held by him effective June 1998, summary biographical information has
been excluded. To obtain such summary biographical information, reference is
made to the Company's Form 10-K for fiscal year ended March 31, 1998.

Alan B. Sarko has served as Vice President of North American Operations
since March 1995. That same year, he also became a Director of the Company. In
May 1996, Mr. Sarko was appointed Secretary, Treasurer and Chief Financial
Officer of Seiler. Mr. Sarko joined the Company in February 1994 as Director of
Marketing. Before joining Seiler, Mr. Sarko worked for 10 years as Director of
Marketing and Environmental Compliance for Inorganic Recycling Corporation. From
1973 until 1984, Mr. Sarko was Chief Executive Officer and Administrator of
Sarko Equipment, Inc., a Midwestern industrial demolition contractor.

Mr. Sarko received a Bachelor of Arts Degree from Michigan State
University in 1969 and his Juris Doctorate from Detroit College of Law in 1972.
He has also received Certificates of Completion for various post graduate
courses in the field of hazardous waste management. Mr. Sarko devotes his full
time and best efforts to the Company's business activities.

Niklaus Seiler - by virtue of the fact that Mr. Seiler has
resigned/terminated from all positions held by him effective June 1999, summary
biographical information has been excluded. To obtain such summary biographical
information, reference is made to the Company's Form 10-K for fiscal year ended
March 31, 1998.

Eckart Busch is a Swiss National with more than 30 years of
international financial, business and engineering experience. He has worked on
many government projects and joint ventures throughout the world. Three years
ago, Mr. Busch founded Busch Consultants, a global international environmental,
engineering and financial consulting company. Before launching his own company,
Mr. Busch was Project Development Manager for the Middle East for ALCATEL's SEL
Standard Electric Lorenz Company for six years. Prior to that, Mr. Busch served
for more than twelve years the Group of Glencore, an international Swiss company
that traded in oil, aluminum and metals.

Morris D. Jaffe, Jr. is currently Chairman of the Board of Directors of
Jaffe Group, Inc. a closely held Texas corporation which is the parent company
of the following subsidiaries: Comtran International, Inc., Lake LBJ Investment

-27-

<PAGE>

Corporation, Jaffe Energy, Inc., Jaffe Realty, Inc. and Jaffe International,
Inc. Since 1995, Mr. Jaffe has been on the Board of Directors of Sino-Swearingen
Aircraft Company, a Taiwan/U.S. joint venture company. He is a Board Member of
Seven Q Seven, Inc., a Texas corporation, and from 1988 to 1990, Mr. Jaffe
served on the Board of Directors of Apache Corporation. See also footnote 3 to
Item 9 (a) chart.

(b) Significant Employees.

(i) Those persons indicated directly below are neither
officers or directors of the Company but have made and are expected to continue
to make significant contributions to its business operations, principally
through their respective activities at the Company's 80% owned subsidiary SABD
GmbH located in Berlin, Germany where it currently operates a liquid waste
processing facility. See also Part I, Item 1 "Description of Business - Berlin,
Germany Project".

Dr. Anke Schwan (45 years of age) has been Managing Director with SABD
GmbH Berlin since July of 1998. Prior thereto and from 1997 until Dr. Schwan's
association with the Company Dr. Schwan served (a) from 1997-1998 as Executive
Vice President with Berlin subsidiaries of Abfallwirtschaft und Recycling GmbH
engaged in waste disposal and recycling activities, (b) from 1995-1997 as
Managing Director with "Druckplattenwerk Berlin GmbH", an ALBA AG subsidiary;
ALBA AG being one of the largest corporations in Germany engaged in the chemical
and waste disposal industry, and (c) from 1991-1995 as Managing Director with
"AWETA Berlin GmbH", which firm was similarly engaged in the field of
physical-chemical treatment of waste. By virtue of the above and related
employment activities Dr. Schwan has had in excess of 13 years experience in
activities directly related to the Company's current business affairs. Dr.
Schwan received her doctorate degree from Dresdner University in 1980, was
graduated with a degree in Chemistry from TU Dresden University in 1977, is
Licensed as Assistant Professor at Humboldt University, Berlin, Germany, has
served on the faculty at TU Dresden University and since 1991 has lectured at
various academies in Berlin, Germany on topics of waste disposal management.

Juergen Rehberg (46 years of age). Prior to Mr. Rehberg's association
with the Company in 1999 he was engaged as Sales Department Head for a group of
companies engaged in the waste managing field as well as being involved in
negotiations relating to project acquisitions. From (a) 1995-1997 he served as
Managing Director with MBO GmbH and (b) 1989-1995 he served as Managing Director
with Eckelmann AG - both of which firms were engaged in the field of waste
management and soil redemption. Mr Rehberg received his college degree at
Kirchenpauer-Gymnasium Hamberg in 1973 and his graduate degree in Mineralogy at
Hamburg University in 1978.

(ii) The additional persons indicated directly below are
similarly neither officers or directors of the Company but have made and are
expected to continue to make significant contributions to its business
operations in Freiberg, German with respect to Dr. Ing. Rainer Lohrmann and in
the United States with respect to Robert F. Kroeger. See also Part I, Item 1

-28-

<PAGE>

"Description of Business".

Dr. Ing. Rainer Lohrmann, Operations Manager at Seiler
Trenn-Schmelzanlagen Betriebs GmbH, Freiberg, Germany, received his engineering
degree from the Technical University of Freiberg, Saxonia, Germany. Dr. Lohrmann
specialized in thermal technology processing and flue-gas cleaning systems. In
1967, he worked as a scientist in a company that designed and built machinery
and equipment for high temperature aggregates. In 1970, Dr. Lohrmann worked as a
scientist and area manager at a metallurgical research center where he
specialized in emission research, starting up thermal plants, research of old
waste, waste treatment, environmental consulting and improving environmental
protection. In 1994 he was a manager of a waste management center that developed
storage facilities for special wastes, the treatment of industrial wastewater
and the recycling of synthetic material. In 1997 he joined Seiler Freiberg,
where he currently serves as the managing director.

Robert F. Kroeger, currently head of U.S. Project Management
Operations, joined the Company in October 1996 as an independent engineering
consultant and became a full time Company employee in January 1998. Mr. Kroeger
brings 37 years of management, engineering, project management, project
development/implementation, and quality assurance experience to the Company,
including 20 years in the nuclear power field. He received a Bachelor of Science
degree in Electrical Engineering from Purdue University and has extensive post
graduate education and training in numerous areas.

Section 16(a) of the Exchange Act requires the Company's directors,
officers and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission (the
"Commission"). Such persons are required by the Commission to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on its
review of the copies of Forms 3, 4 and 5 received by it, if any, during
the fiscal year ended March 31, 1998 the Company believes that, with the
exception of those persons and/or firms indicated below, all directors, officers
and 10% stockholders complied with such filing requirements.

According to the Company's records, the following filings appear not to
have been timely made: an initial statement of beneficial ownership on Form 3
and statements of changes in beneficial ownership on Form 5 covering
transactions (such Form 5 representing a delinquent Form 4) were not filed
timely by Maxon Finance & Trade Ltd. SA ("Maxon"); Maxon having been the
recipient during the most recent fiscal year of 3,333,333 restrictive shares of
Company common stock in accordance with October 12, 1998 agreement and in
exchange for converting outstanding indebtedness owned to it and amounting to
$2,056,000.

-29-

<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

Executive Compensation

The following table sets forth information concerning the Chief
Executive Officer of the Company and the Company's executive officers whose
total annual salary and bonus exceeded $100,000 for the fiscal year ended March
31, 1999 and 1998.
<TABLE>
<CAPTION>

Long Term Compensation
Annual Compensation Awards
Securities
Name and Principal Other Annual Underlying All other
Position Year(1) Salary Compensation Options Compensation (4)
- --------------------------- ------- -------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Dr. Gerold Weser, Chairman 1999 $173,644 - - -
(since June 1998), President 1998 165,375 - - -

Werner Heim, Chairman (2) 1999 43,411 - - -
(through June 1998), 1998 165,375 - - -
President (through
November 1997)

Alan B. Sarko, Vice
President, CFO, 1999 173,644 - - -
Secretary, Treasurer 1998 165,375 - - 7,500

Niklaus Seiler, Former (3) 1999 173,644 - - -
President 1998 165,375 - - -

</TABLE>

(1) For the Fiscal year ended March 31, of the year listed below.
(2) Resigned from all positions held effective June 1998.
(3) Resigned/terminated from all positions held effective June 1999.
(4) Pension benefits.

Option Exercises & Values

None of the persons identified in the Summary Compensation Table above
were granted any stock options during fiscal years ended March 31, 1999 and 1998
nor have any of the persons identified in the table exercised any stock options
during the fiscal years ended March 31, 1999 and 1998 that were granted in
previous fiscal years.

-30-

<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners. The following
persons are known to the Company to be the beneficial owners of more than 5% of
the 7,565,362 shares of the Company's outstanding $.0001 par value common stock
as of June 30, 1999. To the best of the Company's knowledge each person has
beneficial ownership of the shares and has sole voting power and sole investment
power with respect to the number of shares beneficially owned.
<TABLE>
<CAPTION>

Name and Address of Amount and Nature of Percent
Beneficial Owner * Beneficial Ownership Of Class
<S> <C> <C>

Wilfried Groote 416,666 5.51%
28 rue Emile de Loth
98000 Monaco
Monte Carlo

Maxon Finance & Trade Ltd. SA 1,083,000 14.32%
c/o Buetler Consulting SA
Chemin G. Ritter 3
CH-1701 Fribourg, Switzerland

Peter Ruegg 500,000 6.61%
Spitzackerstrasse 7
CH-8916 Jonen
Switzerland

Dominion Capital Fund, Ltd. 123,952 (1) 1.63%
Bahama Financial Centre, 3rd Floor
Shirley & Charlotte Streets
P.O. Box CB-13136
Nassau, Bahamas

Sovereign Partners LP 100,412 (2) 1.32%
Executive Pavilion
90 Grove Street
Ridgefield, Connecticut 06877
</TABLE>

* Thomson Kernaghan & Co. Ltd. ("TK") is a broker dealership located in
Ontario, Canada and the number of shares indicated refer to record
ownership; the Company's transfer sheets as of June 30, 1999 indicating
that TK is the record owner of 434,939 shares (or 5.75% of all
outstanding Company shares). To the best of Company's knowledge such
broker dealership is not the beneficial owner of more than 5% of the
Company's outstanding shares.

(1) Does not include up to 3,894,563 shares which normally could be issued,
at any time, upon conversion of previously issued convertible
debentures (the "Convertible Debentures") assuming conversion based on
70% of the closing bid price on June 30, 1999 but exclusive of interest
earned. This number of shares, if issued, would require disclosure of
beneficial ownership of in excess of 5%. However, pursuant to certain
terms contained in Convertible Debentures, the holders thereof may not
beneficially own more than 4.99% of outstanding Company shares (other
than as a result of mandatory conversion provisions, Company exercise

-31-
<PAGE>

of redemption rights, more than 50% of the Company being acquired and
provisions of a similar nature as same relate to control of the
Company).

(2) Does not include up to 3,025,757 shares which normally could be issued,
at any time, upon conversion of previously issued convertible
debentures (the "Convertible Debentures") assuming conversion based on
70% of the closing bid price on June 30, 1999. This number of shares,
if issued, would require disclosure of beneficial ownership of in
excess of 5%. However, pursuant to terms of Convertible Debentures, the
holders thereof may not beneficially own more than 4.99% of outstanding
Company shares (other than as a result of mandatory conversion
provisions, Company exercise of redemption rights or in the event that
50% or more of the Company is acquired and provisions of a similar
nature as same relate to control of the Company).

(b) Security Ownership of Management. The number and percentage of
shares of common stock owned of record and beneficially by each current officer
and director of the Company and by all current officers and directors of the
Company as a group, are as follows as of June 30, 1999. To the best of the
Company's knowledge each individual has beneficial ownership of the shares and
sole voting power and sole investment power with respect to the number of shares
beneficially owned.
<TABLE>
<CAPTION>

Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership (1) of Class (2)
- ----------------------- ------------------------ ------------
<S> <C> <C>
Dr. Gerold Weser 200,000 2.58%
Seiler Pollution Control
Systems, Inc.
Dorfstrasse 12
D-22941
Jersbek, Germany

Alan B. Sarko 300,000 3.81%
Seiler Pollution Control
Systems, Inc.
5115 Parkcenter Avenue
Dublin, Ohio 43017

Eckart Busch -0- --
Petit Schoenberg 61
CH-1700
Fribourg, Switzerland

Morris D. Jaffe, Jr. -0- --
711 Navarro Street
Suite 707
San Antonio, Texas ;78205

All Officers and Directors
As a Group (4 Persons) 500,000 6.20%
</TABLE>

(1) The shares represented above (500,000) are in the form of options to
purchase shares of Company Common Stock. The options are presently
exercisable but are not transferable. The options were granted pursuant
to the Company's 1993 Non-Statutory Stock Option Plan, 1994
Non-Statutory Stock Option Plan or 1995 Non-Statutory Stock

-32-
<PAGE>

Option Plan.
(2) The percentage shown has been determined by dividing the number of
options and shares, if any, held by the named person by the sum of the
7,565,362 outstanding shares and the option shares held by the above
referenced person while the number of shares indicated for all officers
and directors as a group includes 500,000 options which were added to
the total number of shares outstanding in order to determine percentage
interest.

The Company does not know of any arrangements or pledge of its
securities by persons now considered in control of the Company that might result
in a change of control.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PTI Management AG ("PTI"), a stockholder of the Company has, from time
to time, loaned the Company sums of money on an interest-free basis. The
principal sum due and outstanding, as of March 31, 1999, was $89,085. Persons
controlling PTI have advised that PTI has been liquidated and that it was no
longer seeking any repayment whatsoever from the Company.

Maxon Finance & Trade Ltd. SA ("Maxon") as of June 30, 1999 owns
1,083,000 shares (or approximately 14.23% of all issued and outstanding shares)
of common stock of the Company. In October of 1998 Maxon agreed to accept
3,333,333 shares of restrictive common stock in exchange for cancellation of
outstanding Company indebtedness to it approximating $2,056,000. See also Part
1, Item 1 "Description of Business - Licensing Agreements".

Peter Ruegg ("Ruegg") owns as of June 30, 1999 500,000 shares (or
approximately 6.61% of all issued and outstanding shares) of common stock of the
Company. Pursuant to February 1999 agreement the Company issued 500,000
restrictive shares to Peter Ruegg in exchange for extinguishment of outstanding
debt of $150,000 (evidenced by July 22, 1998 8% unsecured convertible promissory
note).

Werner Heim (a former officer and director who resigned from all
positions held in June 1998) has individually loaned funds to the Company. As of
March 31, 1999, the sum of $107,216 (inclusive of interest of $12,724) was
outstanding. In June 1999, the debt was converted into equity with the Company
issuing 142,955 restrictive shares of its common stock to Werner Heim in
cancellation of such outstanding indebtedness.

Heinz Heim (a brother of the Company's former President, Werner Heim)
has individually loaned funds to the Company. As of March 31, 1999, the sum of
$55,525 (inclusive of interest of $5,225) was outstanding. In June 1999, the
debt was converted into equity with the Company issuing 73,633 restrictive
shares of its common stock to Heinz Heim in cancellation of such outstanding
indebtedness.

The Company has paid during the years ended March 31, 1998 and March
31, 1999, to a supplier, Seiler HT AG, a total of $6,040,371 towards the
purchase of its initial High Temperature Vitrification System. Seiler HT AG on
behalf of the Company was to construct system plants, test the system and
perform research and development services on an ongoing basis. Mr. Niklaus
Seiler, a former Vice President and director of the Company, was the founder and
a director of Seiler HT AG. In February 1999 Seiler HT AG declared bankruptcy
and the entire amount indicated above has been written off.

Gerold Weser, Chairman of the Board of Directors and President, has
made unsecured non-interest bearing advances to the Company which are payable
upon future mutual agreement of the parties. The advances have been presented

-33-
<PAGE>

as a long term liability in the accompanying balance sheet based upon the
parties intent to not repay the advances currently. The balance at March 31,
1999 was $403,887.

See also Note 7 to financial statements as same relates to Related
Party Transactions.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

(a) Reference is herewith made to the reports and audits of
consolidated financial statements.

(b) During the last quarter of the Company's fiscal year ended
March 31, 1999, the Company filed Form 8-K and 8-K/A with date
of report of February 12, 1999 (as filed February 23, 1999 and
March 9, 1999).

-34-
<PAGE>

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

SEILER POLLUTION CONTROL SYSTEMS, INC.
By: \S\Dr. Gerold Weser
Dr. Gerold Weser, Chairman of the Board
of Directors, President and CEO

In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

Chairman of the Board Dated: July 22, 1999
\S\Dr. Gerold Weser of Directors, President
and CEO

Vice President, Treasurer, Dated: July 21, 1999
\S\Alan B. Sarko Secretary, CFO and
Director

Director Dated: July 22, 1999
\S\Eckart H. Busch

Director Dated: July , 1999
Morris D. Jaffe, Jr.

-35-

<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000718827
<NAME> SEILER POLLUTION CONTROL SYSTEMS, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 96,419
<SECURITIES> 0
<RECEIVABLES> 163,723
<ALLOWANCES> 0
<INVENTORY> 5,603
<CURRENT-ASSETS> 1,073,127
<PP&E> 9,482,506
<DEPRECIATION> 890,767
<TOTAL-ASSETS> 14,520,232
<CURRENT-LIABILITIES> 7,434,284
<BONDS> 0
0
0
<COMMON> 902
<OTHER-SE> 1,626,395
<TOTAL-LIABILITY-AND-EQUITY> 14,520,232
<SALES> 1,288,380
<TOTAL-REVENUES> 1,288,380
<CGS> 545,363
<TOTAL-COSTS> 8,573,865
<OTHER-EXPENSES> 1,375,345
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 516,750
<INCOME-PRETAX> (8,570,617)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,570,617)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 766,084
<EPS-BASIC> (1.45)
<EPS-DILUTED> (1.45)

</TABLE>