The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions and item 310(b) of Regulations S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the nine months ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to the financial statements and footnotes thereto included in the Company's 1999 annual report filed on Form 10-K and Form 10-SB.

Inventories are comprised of the following major categories:

On May 6, 2000, the Company signed a joint venture agreement with Jones Environmental Services, LLC ("JES"), which provided for the formation of KBF Environmental Services, Inc., a jointly owned subsidiary, 80% owned by the Company and 20% owned by JES. The subsidiary shall provide revenue for the Company utilizing the existing sales force of both JES and the Company. The agreement provides for the issuance of 5 million stock options to JES, which vest based upon performance-based benchmarks. These benchmarks are based upon achieving annualized revenues of 15 million.

Total revenues for the nine months ended September 30, 2000 increased to $2,341,152 as compared to $1,940,679 for the same period in 1999, an increase of 21%. This increase in revenues is due to the Company's recent sales activities, through KBF Environmental Services, Inc. (see Note 3), and the expansion of the Company's Recycling and Commodity Manufacturing Center, resulting in increased market penetration. Management expects this upward trend to continue into the fourth quarter of this year.

Aged trade accounts receivable are as follows:

An allowance in the amount of $86,872 has been provided against the foregoing receivables, which are presented on the balance sheet net of said allowance. Based upon the Company's collection history, management believes this allowance is adequate.

Trade accounts receivable collected in cash subsequently through November 8, 2000 was $726,466. The Company now offers its customers the ability to pay their accounts online or over the phone by credit card. Management expects this to have a positive impact on the Company's collection activities.

Cost of operations for the nine months ended September 30, 2000 increased to 96% of revenues from 81% of revenues for the same period in 1999. This increase is primarily the result of a non-recurring administrative permit fee of $102,000 expensed during the second quarter of 2000, increased labor costs incurred to prepare the facility for increased production related to the current sales and marketing activities (see Note 3), higher costs on certain site work contracts, and costs related to previously shipped recovered product. The company expects the higher cost of operations to decline in future periods as volume increases.

General and administrative expenses increased by 13% to $961,508 for the nine months ended September 30, 2000 from $852,205 for 1999. This increase is primarily due to the costs associated with the Company's increased market penetration and volume, but is also attributable to development of the Company's information systems, employment advertisements and agency fees, and shareholder communication. This increase is partially offset by a decrease in administrative expenses attributable to Mr. Kevin Kreisler's (the Company's president) deferment of all cash salaried compensation commencing August 2000. Mr. Kevin Kreisler will not be paid a cash salary for the balance of the year 2000, and plans to reinstate his cash salary after the Company achieves its targeted benchmarks for the year 2000. The company expects general and administrative costs to decline marginally during the fourth quarter.

Selling expenses increased by 2% to $210,271 for the nine months ended September 30, 2000 as compared to $205,793 for the comparable period in 1999. This increase is due to the Company's expanded sales and marketing efforts related to the expansion of its Recycling and Commodity Manufacturing Center and the activities of KBF Environmental Services, Inc. For an update on these efforts, please read the Company's October 2000 Shareholder Letter, which is available online at the Company's website at http://www.kbf-pmi.com.

Interest income decreased by 99% to $454 for the nine months ended September 30, 2000 as compared to $53,237 earned during the same period in 1999. The interest earned during 1999 included $51,136 of imputed interest related to the Solucorp long term receivables which were deemed worthless. The decrease in interest income during the current period, without regard to this item, was $1,647, resulting from decreased cash on hand.

Interest expense increased by $152% to $40,999 for the nine months ended September 30, 2000 as compared to $16,241 for the same period in 1999. This increase is due to equipment acquired under capital leases during the latter part of 1999 and 2000.

The Company incurred a net loss of -$1,123,988 for the first nine months of 2000, a 70% increase from the net loss of -$656,628 for the same period in 1999, due to the increase in costs described above.

LIQUIDITY AND CAPITAL RESOURCES

The Company has working capital of $-446,074 at September 30, 2000. This amount is computed by subtracting current liabilities from current assets. As of September 30, 2000 the current liabilities include $225,000, which is the current portion of the long-term debt that is payable out of anticipated New World Recycling, Inc., (a wholly owned subsidiary) earnings only. Working capital without this debt is $-221,074.

Management intends to eliminate this working capital deficit ,complete its expansion of the facility and increase sales. Management believes that projected increases in sales will have a positive impact on cash flows from operations and will provide sufficient working capital for the next twelve months.

CERTAIN EVENTS The Company is party to the following matters. In all matters listed, Management's response has been and will be to vigorously contest the cases.

The first matter is entitled, Clean Earth Recycling, Inc. v. James Sullivan and KBF. The action was filed in the Supreme Court of New York, Columbia County, on July 9, 1998. The Complaint was originally filed against James Sullivan (an employee of the Company) only, and an Amended Complaint was subsequently filed naming the Company as a defendant. The Amended Complaint seeks compensatory and punitive damages, attorney's fees and costs of suit. The Amended Complaint also seeks to prevent Sullivan and the Company from doing business with, soliciting or contacting any customers or vendors who were customers or vendors of Clean Earth at the time of Sullivan's employment. The Company filed a Verified Answer to the Verified Complaint and a Verified Answer to the Amended Verified Complaint with Counterclaims, and served discovery upon Plaintiff's attorney. The counterclaim seeks compensatory and punitive damages. Discovery is ongoing, and counsel is unable to evaluate the probability of an unfavorable outcome, or range of potential impact, at this time.

The second matter is entitled KBF Pollution Management, Inc. v. EPS Environmental, Inc. d/b/a Solucorp Industries, Inc. and Joe Kemprowski v. Lawrence Kreisler, et al. The action was filed in the Superior Court of New Jersey, Law Division, Passaic County on October 7, 1998. The Complaint seeks compensatory and punitive damages, attorney's fees and costs. Defendants filed an Answer to the Complaint with Counterclaims and a Third-Party Complaint seeking compensatory and punitive damages, attorney's fees and costs. Discovery is ongoing and counsel is unable to evaluate the probability of an unfavorable outcome, or range of potential impact, at this time.

The third matter is entitled Passaic Valley Sewage Commissioners v. American Metals Recovery Corp. The action was filed in the Superior Court of New Jersey, Chancery Division, Essex County on April 23, 1999 against the Company's wholly owned subsidiary. The Complaint arises from alleged administrative deficiencies and seeks declarations against the defendant as well as administrative remedies, civil penalties, attorney's fees and costs. The Company filed an Answer to the Complaint and served discovery. Discovery is ongoing and counsel is unable to evaluate the probability of an unfavorable outcome, or range of potential impact, at this time.

The Company is also involved in various collection matters in which the Company is seeking payment for services rendered.

FORWARD-LOOKING STATEMENTS

When used herein, the terms "expect, plan, anticipate, believe" or similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. The Company has included certain forward-looking statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations. These statements are based on current expectations, estimates and projections about the industries in which the Company operates, management's beliefs and various assumptions made by management, which are difficult to predict. Among the factors that could affect the outcome of the statements are general industry and market conditions and growth rates. Therefore, actual outcomes and their impact on the Company may differ materially from what is expressed or forecasted. The Company undertakes no obligation to updated publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Total revenues for the three months ended September 30, 2000 increased to $1,074,469 as compared to $835,426 for the same period in 1999, an increase of 28%. This increase in revenues is due to the Company's recent sales activities, through KBF Environmental Services, Inc. (see Note 3), and the expansion of the company's recycling and commodity manufacturing center, resulting in increased market penetration. Management expects this upward trend to continue into the fourth quarter of this year.

Cost of operations for the three months ended September 30, 2000 increased to 98% of revenues from 78% of revenues for the same period in 1999. The increase is primarily related to increased labor costs incurred to prepare the facility for increased production related to the current sales and marketing activities (see Note 3), higher costs on certain site work contracts, and costs related to previously shipped recovered product. The company expects the higher cost of operations to decline in future periods as volume increases.

General and administrative expenses increased by 21% to $314,885 for the three months ended September 30, 2000 from $260,691 for 1999. This increase is primarily due to costs related to employment advertisements and agency fees, shareholder communication and increased professional fees. The company expects general and administrative costs to decline during the fourth quarter.

Selling expenses increased by 53% to $94,494 for the three months ended September 30, 2000 as compared to $61,556 for the comparable period in 1999. This increase is due to the company's expanded sales and marketing efforts related to the expansion of its recycling and commodity manufacturing center and the activities of KBF Environmental Services, Inc.

Interest income decreased by 99% to $72 for the three months ended September 30, 2000 as compared to $17,491 earned during the same period in 1999. The interest earned during 1999 included $17,045 of imputed interest related to the Solucorp long term receivables which were deemed worthless. The decrease in interest income during the current period, without regard to this item, was $374, resulting from decreased cash on hand.

Interest expense increased by $71% to $9,916 for the three months ended September 30, 2000 as compared to $5,791 for the same period in 1999. This increase is due to equipment acquired under capital leases during the latter part of 1999 and 2000.

The Company incurred a net loss of -$399,848 for the three months ended September 30, 2000, a 215% increase from the net loss of -$269,339 for the same period in 1999, due to the increase in costs described above.

PART II - OTHER INFORMATION

Item II Part (c) - Sale of Securities not Registered

(a) The Company sold 8,134,669 shares of unregistered common stock and 7,870,167 options were exercised from January 1, 2000 through November 8, 2000, which were exempt under section 4 (2).

(b) There were no underwriters relating to this sale. The stock was sold to accredited individual investors.

(c) The stock was sold for $1,163,740 and the option proceeds were $450,702, all of which was received by the registrant.

Item VI - Exhibits and Reports on Form 8-K

(a) Exhibits

(b) Reports on Form 8-K for the nine months ended September 30, 2000.

There were no reports filed on Form 8-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

We have reviewed the accompanying combined balance sheet and the related combined statements of income and cash flows of KBF Polution Management, Inc. and Subsidiaries as of September 30, 2000 and for the three-month and nine-month periods then ended. These financial statements are the responsibility of the company's management.

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

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

This schedule contains summary financial information extracted from the unaudited financial statements dated September 30, 2000 and is qualified in its entirety by reference to such financial statements.