EASTERN ENVIRONMENTAL SERVICES INC, S-3/A, 1997-06-27

EASTERN ENVIRONMENTAL SERVICES INC
S-3/A, 1997-06-27
REFUSE SYSTEMS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 1997

REGISTRATION NO. 333-27245
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1

TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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EASTERN ENVIRONMENTAL SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 59-2840783
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

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

LOUIS D. PAOLINO, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
1000 CRAWFORD PLACE 1000 CRAWFORD PLACE
MT. LAUREL, NEW JERSEY 08054 MT. LAUREL, NEW JERSEY 08054
(609) 235-6009 (609) 235-6009
(ADDRESS, INCLUDING ZIP CODE, AND (NAME, ADDRESS, INCLUDING ZIP CODE,
TELEPHONE NUMBER, AND TELEPHONE
INCLUDING AREA CODE, OF REGISTRANT'S NUMBER, INCLUDING AREA CODE, OF AGENT
PRINCIPAL EXECUTIVE OFFICES) FOR SERVICE)

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

COPIES TO:
H. JOHN MICHEL, JR., ESQUIRE STEPHEN P. FARRELL, ESQUIRE
DRINKER BIDDLE & REATH LLP MORGAN LEWIS & BOCKIUS LLP
1345 CHESTNUT STREET 101 PARK AVENUE
PHILADELPHIA, PENNSYLVANIA 19107-3496 NEW YORK, NEW YORK 10178-0060
(215) 988-2700 (212) 309-6000

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]

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

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED JUNE 27, 1997

PROSPECTUS
4,500,000 SHARES

[LOGO OF EASTERN ENVIRONMENTAL SERVICES, INC. APPEARS HERE]

COMMON STOCK

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All of the 4,500,000 shares offered hereby are being sold by the Company. The
Company's Common Stock is traded on the Nasdaq National Market under the symbol
"EESI." The reported last sale price of the Company's Common Stock on the
Nasdaq National Market on June 25, 1997 was $17.00 per share. See "Price Range
of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.

--------

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

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<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share $ $ $
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Total(3) $ $ $
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</TABLE>
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(1) For information regarding indemnification of the several Underwriters, see
"Underwriting."

(2) Before deducting expenses estimated at $1,000,000 payable by the Company.

(3) The Company has granted the several Underwriters a 30-day option to
purchase up to 675,000 additional shares of Common Stock solely to cover
over-allotments, if any. See "Underwriting." If such option is exercised in
full, the Price to Public, Underwriting Discounts and Commissions, and
Proceeds to Company will be $ , $ , and $ , respectively.

--------

The shares of Common Stock are being offered by the several Underwriters
named herein, subject to prior sale, when, as, and if accepted by them and
subject to certain conditions. It is expected that certificates for the shares
of Common Stock offered hereby will be available for delivery on or about
, 1997 at the office of Smith Barney Inc., 333 West 34th Street, New York, New
York 10001.

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SMITH BARNEY INC.
OPPENHEIMER & CO., INC.
SANDERS MORRIS MUNDY
PACIFIC GROWTH EQUITIES, INC. VAN KASPER & COMPANY

, 1997
<PAGE>

[Map of eastern United States indicating the location of the Company's
collection, transportation, and disposal operations]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS AND THE IMPOSITION
OF PENALTY BIDS. FOR A DISCUSSION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE
WITH RULE 103 OF REGULATION M UNDER THE SECURITIES ACT. SEE "UNDERWRITING."

<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements, and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy and information statements, and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549-1004 and at the
regional offices of the Commission located at 7 World Trade Center, Suite
1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such materials may also be
obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549-1004 at prescribed rates. The Commission
maintains a web site at http://www.sec.gov that contains reports, proxy and
information statements, and other information regarding registrants, like the
Company, that file electronically with the Commission. The Common Stock is
quoted on the Nasdaq National Market, and reports and other information
concerning the Company may be inspected at the National Association of
Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006-1500.

This Prospectus constitutes a part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
omits certain of the information contained in the Registration Statement in
accordance with the rules and regulations of the Commission. Reference is
hereby made to the Registration Statement and related exhibits for further
information with respect to the Company and the securities offered hereby. Any
statements contained herein concerning the provisions of any document are not
necessarily complete, and, in such instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.

3
<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents have been previously filed by the Company with the
Commission and are hereby incorporated by reference in this Prospectus as of
their respective dates:

(i) the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1996 (filed September 27, 1996) (as amended on Form 10-K/A filed
October 28, 1996);

(ii) the Company's Current Reports on Form 8-K dated June 21, 1996, July
2, 1996 (as amended on Forms 8-K/A filed September 16, 1996, May 13, 1997,
and June 6, 1997), September 27, 1996 (as amended on Forms 8-K/A filed
December 9, 1996 and June 6, 1997), December 10, 1996 (as amended on Forms
8-K/A filed February 11, 1997 and June 6, 1997), January 31, 1997 (as
amended on Form 8-K/A filed April 15, 1997), March 31, 1997 (as amended on
Form 8-K/A filed May 15, 1997), May 8, 1997, and May 12, 1997;

(iii) the Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1996 (filed November 13, 1996), December 31, 1996 (filed
February 14, 1997), and March 31, 1997 (filed May 15, 1997); and

(iv) the description of the Common Stock contained in the Registration
Statement on Form 8-A (File No. 0-16102), including all amendments and
reports filed for the purpose of updating such description prior to the
termination of the Offering.

Additionally, all documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this Prospectus and prior to the termination of the Offering
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement or
information contained herein or in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement or information contained herein or in any other
subsequently filed document that is also incorporated by reference herein
modifies or replaces such a statement or such information. Any such statement
or information so modified or replaced shall not be deemed, except as so
modified or replaced, to constitute a part of this Prospectus.

The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any and all
of the documents that have been incorporated by reference in this Prospectus,
other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the documents that this Prospectus
incorporates. Requests should be submitted by telephone to (609) 235-6009 or
in writing to Eastern Environmental Services, Inc., 1000 Crawford Place, Suite
101, Mt. Laurel, New Jersey 08054, Attention: Investor Relations.

4
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus and other information incorporated by
reference herein. Unless otherwise noted, all financial information and share
and per share data in this Prospectus (i) assume no exercise of the
Underwriters' over-allotment option and (ii) exclude 3,268,155 shares of Common
Stock issuable upon exercise of outstanding options and warrants at June 26,
1997. As used in this Prospectus, the term the "Company" includes Eastern
Environmental Services, Inc. and its subsidiaries, unless the context otherwise
indicates.

THE COMPANY

Eastern Environmental Services, Inc. is a non-hazardous solid waste
management company specializing in the collection, transportation, and disposal
of residential, industrial, commercial, and special waste, principally in the
eastern United States. In June 1996, control of the Company was acquired by a
group of investors who repositioned the Company for the purpose of implementing
an aggressive acquisition program in the solid waste industry. The Company
appointed a new Board of Directors, hired a new management team with an average
of 17 years of experience in the waste management industry, raised a total of
approximately $10.0 million through two private placements of Common Stock, and
established a credit facility principally for acquisitions. Since July 1996,
the Company has made 18 solid waste management acquisitions, and thereby
entered new markets in Florida, Illinois, New Jersey, New York, and
Pennsylvania. The businesses acquired operated 15 solid waste collection and
transportation operations, four solid waste transfer and processing facilities,
two landfills, and one special waste services operation. Largely as a result of
these acquisitions, during the nine months ended March 31, 1997, the Company's
revenues increased by 80.7% (from $29.0 million to $52.4 million) and its
results of operations (excluding merger costs and related tax provisions
incurred as a result of such acquisitions) increased from a net loss of
$541,000 for the nine months ended March 31, 1996 to net income of $4.0 million
for the nine months ended March 31, 1997.

The Company currently operates solid waste collection and transportation
operations in southern Florida, southeastern Illinois, southern New Jersey, the
greater metropolitan New York City area, eastern and southcentral Pennsylvania
(including Philadelphia), and South Carolina, and owns a landfill in each of
Florida, Kentucky, Pennsylvania, South Carolina, and West Virginia. The Company
has also recently exercised an option to acquire, subject to regulatory
approval, land in Illinois upon which it has received the necessary permits to
construct a landfill. Of the Company's revenues for the nine months ended March
31, 1997, approximately 80.3% was attributable to solid waste collection and
transportation operations, approximately 8.3% was attributable to solid waste
disposal operations, and approximately 11.4% was attributable to other waste
management services. The Company currently provides solid waste collection
services to approximately 29,000 commercial and industrial customers and
approximately 135,000 residential customers.

The Company's objective is to expand the geographic scope of its operations
and to become one of the leading providers of non-hazardous solid waste
management in each market that it serves. The Company's strategy to achieve
this objective is to capitalize on the continuing consolidation of the solid
waste management industry by (i) identifying and penetrating new markets and
expanding its operations in its existing markets through tuck-in acquisitions
that are combined with existing operations, (ii) increasing profitability by
integrating its operations and achieving economies of scale, and (iii)
achieving internal growth. The Company's management philosophy is to retain
senior management of acquired companies and implement centralized financial and
administrative controls.

The Company believes that significant opportunities exist to acquire
additional solid waste collection, transportation, and disposal businesses in
the eastern United States and to develop within its existing markets. As part
of its acquisition program, the Company reviews acquisition opportunities on an
ongoing basis and is currently in various stages of negotiating the acquisition
of additional solid waste management businesses.

5
<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.... 4,500,000 shares
Common Stock to be outstanding after
the Offering.......................... 20,652,955 shares(1)
Use of proceeds........................ To repay outstanding indebtedness
under the Company's revolving credit
facility, which may be reborrowed, and
for future acquisitions, capital
expenditures, and working capital. See
"Use of Proceeds."
Nasdaq National Market symbol.......... EESI
</TABLE>
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(1) Based upon the shares of Common Stock outstanding at June 26, 1997.
Excludes 3,268,155 shares of Common Stock issuable upon exercise of
outstanding options and warrants at June 26, 1997 and an additional 569,264
shares reserved for issuance pursuant to future option grants under the
Company's stock option plans. See "Description of Capital Stock," "Shares
Eligible for Future Sale," and "Underwriting."

RISK FACTORS

An investment in the Common Stock involves significant risks. See "Risk
Factors" beginning on page 8 of this Prospectus for a discussion of certain
factors that should be considered by prospective purchasers of the Common Stock
offered hereby.

6
<PAGE>

SUMMARY PRO FORMA FINANCIAL DATA

(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
ACTUAL AS ADJUSTED
NINE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1997(1)
----------------- -----------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................. $ 52,409 $ 77,938
Cost of revenues.......................... 38,027 54,346
Selling, general and administrative
expenses................................. 9,245 14,780
Merger costs(7)........................... 3,337 3,337
---------- -----------
Operating income.......................... 1,800 5,475
Interest expense.......................... (1,526) (578)
Other income.............................. 461 794
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Income before income taxes................ 735 5,691
Income taxes.............................. (940) 1,461
---------- -----------
Net income................................ ($205) $ 4,230
========== ===========
Earnings per share........................ ($.02) $.21
Weighted average number of shares
outstanding(2)........................... 13,316,698 20,404,405
OTHER DATA:
Cash flow from operating activities....... $ 2,989
Cash flow from investing activities....... $ (39,534)
Cash flow from financing activities....... $ 38,676
EBITDA(3)................................. $ 4,874 $ 10,321
EBITDA margin(4).......................... 9.3% 13.2%
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA AS ADJUSTED
MARCH 31, 1997(5) MARCH 31, 1997(5)(6)
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<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............... $ (923) $ 30,592
Total assets............................ 121,954 153,470
Long term debt, less current portion.... 43,207 3,431
Total liabilities....................... 77,679 37,902
Total stockholders' equity.............. 44,275 115,568
</TABLE>
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(1) The pro forma financial information reflect significant acquisitions by the
Company since July 1, 1996, which include Allied Waste Services, Inc. and
its affiliates, R&A Bender, Inc. and its affiliates, Waste Services, Inc.
and its affiliates, Golden Gate Carting, Co. Inc., and Coney Island Rubbish
Removal, Inc., as if such acquisitions had occurred on July 1, 1996. It
also includes operating data for predecessor operations of Apex Waste
Services, Inc. for the three month period ended September 30, 1996. The pro
forma financial information has been further adjusted to give effect to the
Offering and the application of the estimated net proceeds therefrom as if
the Offering had occurred on July 1, 1996. See Unaudited Pro Forma
Financial Information and notes thereto included elsewhere in this
Prospectus.

(2) Weighted average number of shares outstanding has been calculated on a pro
forma basis after the shares issued in the Offering.

(3) EBITDA represents operating income plus depreciation and amortization.
EBITDA does not represent and should not be considered as an alternative to
net income or cash flow from operations as determined by generally accepted
accounting principles. Further, EBITDA does not necessarily indicate
whether cash flow will be sufficient for items such as working capital,
capital expenditures, or to react to changes in the Company's industry or
economic changes generally. The Company believes that EBITDA is a
frequently used measure that provides additional information for
determining its ability to meet debt service requirements and that it is
one of the indicators upon which the Company, its lenders, and certain
investors assess the Company's financial performance and its capacity to
service debt. Because EBITDA is not calculated by all companies and
analysts in the same fashion, the EBITDA measures presented by the Company
may not necessarily be comparable to other similarly titled measures of
other companies.
(4) EBITDA margin represents EBITDA expressed as a percentage of revenues.

(5) The pro forma financial information reflects significant acquisitions by
the Company since March 31, 1997, which include Waste Services, Inc. and
its affiliates, Golden Gate Carting, Co. Inc., and Coney Island Rubbish
Removal, Inc., as if such acquisitions had occurred as of March 31, 1997.
See Unaudited Pro Forma Financial Information and notes thereto included
elsewhere in this Prospectus.

(6) Adjusted to reflect the sale of 4,500,000 shares of Common Stock offered by
the Company hereby at an assumed public offering price of $17.00 per share
and the application of the estimated net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."

(7) Merger costs incurred during the nine months ended March 31, 1997 of
$3,337,000 relating to the acquisition of Super Kwik, Inc., Donno Company,
Inc., and Apex Waste Services, Inc. include the transaction related costs
and costs of integrating operations. Additionally, the tax provision for
this same period includes $904,000 reflecting the recording of a deferred
tax provision as of the date of the respective mergers, at which time the
pooled entities S Corporation elections were terminated.

7
<PAGE>

RISK FACTORS

An investment in the shares of Common Stock being offered by this Prospectus
involves a high degree of risk. In addition, this Prospectus contains forward-
looking statements that involve risks and uncertainties. Discussions
containing such forward-looking statements may be found in the material set
forth under "Prospectus Summary," "Risk Factors," "The Company," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
"Business," as well as in this Prospectus generally. The Company's actual
results could differ materially from those anticipated in these forward-
looking statements as a result of certain factors, including those set forth
in the following risk factors and elsewhere in this Prospectus. Accordingly,
prospective investors should consider carefully the following risk factors, in
addition to the other information concerning the Company and its business
contained in this Prospectus and in those documents incorporated by reference
in this Prospectus, before purchasing the shares of Common Stock offered
hereby.

HISTORY OF LOSSES; WORKING CAPITAL DEFICITS; CONTINUING CHARGES

The Company has recorded net losses to common stockholders of approximately
$55,000, $4.4 million (including $2.8 million in unusual items principally
related to the Company's June 1996 change of control), and $205,000 (including
$4.2 million of merger costs and related tax provisions incurred as a result
of acquisitions) during the fiscal years ended June 30, 1995 and 1996 and
during the nine months ended March 31, 1997, respectively, and had working
capital deficits at June 30, 1996 and March 31, 1997 of approximately $1.9
million and $700,000, respectively. In connection with the financing of its
acquisitions and business growth, the Company has incurred, and anticipates
that it will continue to incur, significant debt and interest charges under
its revolving credit facility. In addition, the Company will continue to
recognize a significant amount of goodwill amortization charges in connection
with its acquisitions of collection and transportation businesses that are
accounted for under the "purchase" method of accounting. Such goodwill is
amortized over a period of 40 years depending on the business acquired,
resulting in an annual non-cash charge to earnings during that period. As the
Company continues to pursue its acquisition program, its financial position
and results of operations may fluctuate significantly from period to period.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations."

LIMITED OPERATING HISTORY IN REGARD TO SIGNIFICANT ASSETS

In June 1996, control of the Company was acquired by a group of investors
that elected a new Board of Directors, hired a new management team, and
implemented an aggressive acquisition program. Since then, the Company has
made 18 solid waste management acquisitions. Of these acquisitions, the nine
completed by March 31, 1997 collectively contributed approximately $47.3
million or 90.3% of the Company's revenues for the nine months ended March 31,
1997 and approximately $69.8 million or 78.1% of the Company's assets at March
31, 1997. Because of the Company's relatively limited operating history with
respect to these businesses, no assurances can be given that the Company will
be able to replicate or improve upon their historical financial performance.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources."

ABILITY TO MANAGE GROWTH

The Company's strategy of growing primarily through acquisitions has placed,
and is expected to continue to place, significant burdens on the Company's
management and on its operational and other resources. The Company will need
to attract, train, motivate, retain and supervise its senior managers,
technical professionals and other employees. Any failure to expand its
management information system capabilities, to implement and improve its
operational and financial systems and controls or to recruit appropriate
additional personnel in an efficient manner and at a pace consistent with the
Company's business growth could have a material adverse effect on the
Company's business and results of operations. See "Business--Strategy," "--
Acquisition Program," and "--Competition."

8
<PAGE>

DEPENDENCE ON ACQUISITIONS FOR GROWTH

The rate of future growth and profitability of the Company is largely
dependent on its ability to identify and acquire additional solid waste
collection, transportation, and disposal businesses. This strategy involves
risks inherent in assessing the values, strengths, weaknesses, risks, and
profitability of acquisition candidates, including adverse short-term effects
on the Company's reported operating results, diversion of management's
attention, dependence on retaining, hiring and training key personnel, and
risks associated with unanticipated problems or latent liabilities. There can
be no assurance that acquisition opportunities will be available, that the
Company will have access to the capital required to finance potential
acquisitions, that the Company will continue to acquire businesses or that any
business acquired by the Company will be integrated successfully into the
Company's operations or prove profitable. See "Business--Acquisition Program."

AVAILABILITY OF ACQUISITION TARGETS

Increased competition for acquisition candidates may result in fewer
acquisition opportunities being made available to the Company as well as less
advantageous acquisition terms which may increase acquisition costs to levels
that are beyond the Company's financial capability or that may have an adverse
effect on the Company's business and results of operations. Accordingly, no
assurance can be given as to the number or timing of the Company's
acquisitions or as to the availability of financing necessary to complete an
acquisition. The Company also believes that a significant factor in its
ability to consummate acquisitions following the Offering will be the
attractiveness of the Common Stock as an investment to potential acquisition
candidates. Such attractiveness may, in large part, be dependent upon the
market price and capital appreciation prospects of the Common Stock compared
to the equity securities of the Company's competitors. Many of the Company's
competitors for acquisitions are larger, more established companies with
significantly greater capital resources than the Company and whose equity
securities may be more attractive than the Common Stock. To the extent the
Common Stock is less attractive to acquisition candidates, the Company's
acquisition program may be adversely affected. See "Business--Acquisition
Program."

ABILITY TO INTEGRATE ACQUIRED BUSINESSES AND ACHIEVE OPERATING EFFICIENCIES

The Company is in the process of combining the businesses and assets that it
has acquired since July 1996 into an integrated operating structure. This
process may require, among other things, changes in the operating methods and
strategies of these separate businesses. The future growth and profitability
of the Company will be substantially dependent upon its ability to operate
recently acquired companies, as well as additional businesses that may be
acquired in the future, and integrate them in the Company's operations. The
Company's strategy is to achieve economies of scale and operating efficiencies
through increases in its size resulting from acquisitions. There can be no
assurance that the Company's efforts to integrate acquired operations will be
effective or that expected efficiencies and economies of scale will be
realized. The failure to achieve any of these results could have a material
adverse effect on the Company's business and results of operations. See
"Business--Strategy."

POTENTIAL LIABILITIES ASSOCIATED WITH ACQUISITIONS

The businesses acquired by the Company may have liabilities that the Company
does not discover or may be unable to discover during its pre-acquisition
investigations, including liabilities arising from environmental contamination
or non-compliance by prior owners with environmental laws or regulatory
requirements, and for which the Company, as a successor owner or operator, may
be responsible. Certain environmental liabilities, even if expressly not
assumed by the Company, may nonetheless be imposed on the Company under
certain legal theories of successor liability, including particularly under
CERCLA. The businesses acquired by the Company handled and stored petroleum,
motor oil, and other hazardous substances at their facilities. In the past,
there may have been releases of these hazardous substances into the soil or
groundwater. The Company may be required under federal, state or local law to
investigate and remediate this contamination. See "Business--Government
Regulation." Any indemnities or warranties, due to their limited scope,
amount, or duration, the financial limitations of the indemnitor or warrantor
or other reasons, may not fully cover such liabilities.

9
<PAGE>

NEED FOR ADDITIONAL CAPITAL; POTENTIAL DILUTION

The Company's acquisition program required a steady increase in capital,
which is expected to continue in the future as the Company pursues its
strategy. The Company has used with respect to completed acquisitions and
currently intends to use with respect to future acquisitions a combination of
Common Stock, cash, and the assumption of debt obligations as consideration.
In the event the Company uses Common Stock to make future acquisitions,
purchasers of Common Stock in the Offering may experience dilution in the net
tangible book value per share of Common Stock. To the extent the Company is
unable to use Common Stock to make future acquisitions, its ability to grow
may be adversely affected. The Company's capital requirements also include
working capital needs to maintain daily operations and significant capital
expenditures for cell construction and expansion of its landfills, closure and
post-closure care costs associated with its landfills, equipment purchases,
and debt repayment obligations and/or financial assurance obligations. To the
extent that cash available under the Company's credit facility and internally
generated cash are not sufficient to meet the Company's capital needs, the
Company will be required to raise additional funds through significant
additional equity and/or debt financing. No assurance can be given that
additional funding will be available on terms favorable to the Company.

DEPENDENCE ON KEY PERSONNEL

In June 1996, the Company appointed a new Board of Directors and hired a new
management team. The Company's operations are substantially dependent upon the
services of its executive officers, particularly Louis D. Paolino, Jr., the
Chairman of the Board, Chief Executive Officer, and President of the Company,
and Terry W. Patrick, the Chief Operating Officer and an Executive Vice
President of the Company. The loss of the services of Mr. Paolino, Mr. Patrick
or one or more of the other executive officers of the Company could have a
material adverse effect on the Company's business and results of operations.
All of the Company's executive officers have entered into employment
agreements with the Company, most of which contain noncompetition agreements.
The Company does not maintain key-man life insurance policies on its executive
officers. See "Management."

DEPENDENCE ON THIRD PARTY LANDFILLS

A substantial portion of the solid waste collected by the Company is
delivered to third party landfills under informal arrangements or without
long-term contracts. If these third parties increase their disposal fees and
the Company is unable to pass along such increase to its customers, or if
these third parties discontinue their arrangements with the Company and the
Company is unable to locate alternative disposal sites, the Company's business
and results of operations would be materially adversely affected.

EXTENSIVE PERMITTING AND LICENSING REQUIREMENTS

The Company is required to obtain and maintain in effect various federal,
state and local permits and licenses in connection with its solid waste
collection and transportation operations. The Company is also required to
obtain and maintain in effect various facility permits and other governmental
approvals, including those related to zoning, environmental and land use, in
order to develop and operate a landfill, a transfer station, or a waste
hauling operation, and is required to obtain additional permits and approvals
to expand its existing landfill operations. These permits and approvals are
difficult, time consuming and costly to obtain, may be subject to community
opposition, opposition by various local elected officials or citizens,
regulatory delays and other uncertainties, and may be dependent upon the
Company's facilities being included in state or local solid waste management
plans and the Company's entering into satisfactory host agreements with local
communities. In addition, operating permits may be subject to modification,
renewal, or revocation by the issuing agencies after issuance, which may
increase the Company's obligations and reopen opportunities for opposition
relating to the permits. Moreover, from time to time, regulatory agencies may
impose moratoria on, or otherwise delay, the review or granting of these
permits or approvals or such agencies may modify the procedures or increase
the stringency of the standards applicable to the review or granting of such
permits or approvals.

There can be no assurance that the Company will be successful in obtaining
and maintaining in effect the permits and approvals required for the
successful operation and growth of its business, including permits and
approvals required for the development of additional disposal capacity needed
to replace existing capacity that becomes exhausted. The failure of the
Company to obtain or maintain in effect a permit or agreement significant

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to its business would have a material adverse effect on the Company's business
and results of operations. See "Business--Permits and Licenses."

POTENTIAL PENNSYLVANIA LANDFILL RESTRICTIONS

The Pennsylvania landfill operation acquired by the Company in December 1996
has been in existence since 1972. For the period from 1972 to 1988, the 110
acres which received waste or were authorized by state permits to receive
waste either had received all necessary local zoning approvals or were not
required by local ordinance to receive a zoning permit or other approval to
operate. The Company received a state expansion permit for a 32 acre lined
expansion area in 1988, increasing the size of the permitted disposal area to
142 acres. Also in 1988, the landfill received a conditional use zoning
approval from the local township for the 32 acre expansion area. In 1990, the
Township adopted a new zoning ordinance which limits the height of municipal
waste landfills to 35 feet higher than the original land contour. The
landfill, as permitted in 1988 and as currently designed and permitted,
exceeds 35 feet in certain areas. The Company has maintained that the current
permitted area is an existing nonconforming use and is not subject to the 35
foot height limitation imposed in the 1990 ordinance. If the Township seeks to
impose this 35 foot height limitation, and is successful, the existing
permitted capacity of the Company's Pennsylvania landfill would be materially
affected. See "Business--Services--Waste Disposal."

KENTUCKY LANDFILL OBLIGATIONS

The Company ceased operations at its Kentucky landfill on June 30, 1995
because the existing permitted disposal area did not meet current state law
design requirements. From June 30, 1995 to June 30, 1996, the Company operated
a transfer station at the landfill site and disposed of waste at an alternate
location. The Company simultaneously pursued a final state permit for an
expansion area designed to meet the new state standards. The suspension of
landfill operations and the diversion of waste to an alternate location had an
adverse effect on the Company's operating results and the Company discontinued
its transfer station operation on July 1, 1996. The Company received a final
permit to construct its expansion area on October 14, 1996. The planned
development of the expansion area is currently expected to begin in the fall
of 1997. The initial capital costs required to meet the new state requirements
are anticipated to be approximately $3.3 million. The final permit issued for
the Kentucky landfill expansion area incorporated the requirements contained
in an October 8, 1996 Agreed Order which settled an administrative appeal
filed by the Somerset Pulaski County Concerned Citizens Group. Prior to actual
construction of the expansion area, the Company is required to complete an
additional hydrogeologic investigation to confirm the adequacy of the
groundwater monitoring program approved in the final permit. The results of
this investigation could have a material adverse impact on the permitted
disposal capacity at the Kentucky landfill expansion area and cause a delay in
reopening the landfill.

The final permit issued for the Kentucky landfill expansion area also
requires closure of the original disposal area, which ceased operations on
June 30, 1995, by August 15, 1997. The Company will commence but not complete
closure of this area by this date. Failure to complete closure activities by
this date would result in a violation of the final permit and could result in
the assessment of penalties and/or a forfeiture of the existing $1.3 million
payment bond posted by the Company to assure a proper closure of this area.

GOVERNMENT REGULATION

The Company is subject to extensive and evolving federal, state and local
environmental laws and regulations that have become increasingly stringent in
recent years as a result of greater public interest in protecting the
environment. These laws and regulations affect the Company's business in many
ways including the ways set forth below and under "Business--Government
Regulation," and will continue to impose substantial costs on the Company.

The design, operation, and closure of landfills is extensively regulated.
These regulations include, among others, the regulations establishing minimum
federal requirements adopted by the United States Environmental

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<PAGE>

Protection Agency ("EPA") in October 1991 under Subtitle D ("Subtitle D
Regulations") of the Resource Conservation and Recovery Act of 1976 ("RCRA").
The Subtitle D Regulations, which generally became effective in October 1993,
include location restrictions, facility design standards, operating criteria,
closure and post closure requirements, financial assurance requirements,
groundwater monitoring requirements, groundwater remediation standards, and
corrective action requirements. In addition, the Subtitle D Regulations
require that new landfill units meet more stringent liner design criteria
(typically, composite soil and synthetic liners or two or more synthetic
liners) designed to keep leachate out of groundwater and have extensive
collection systems to collect leachate for treatment prior to disposal.
Groundwater monitoring wells must also be installed at virtually all landfills
to monitor groundwater quality and, indirectly, the effectiveness of the
leachate collection system operation. Most states have adopted extensive
landfill regulations that have been updated or replaced with new regulations
consistent with, or more stringent than, the Subtitle D Regulations. Failure
to comply with these regulations could require the Company to undertake
investigatory or remedial activities, to curtail or modify operations or to
close a landfill temporarily or permanently. Future changes in federal or
state regulations may require the Company to modify, supplement, or replace
equipment or facilities at costs that may be substantial. The failure of
regulatory agencies to enforce these regulations vigorously or consistently
may give an advantage to competitors of the Company whose facilities do not
comply with the Subtitle D Regulations or its state counterparts. The
Company's ultimate financial obligations related to any failure to comply with
these regulations could have a material adverse effect on the Company's
business and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources."

The Company is also regulated under the Federal Water Pollution Control Act
of 1972 (the "Clean Water Act"), and the Clean Air Act, as amended in 1990
(the "Clean Air Act"). The Clean Water Act regulates the discharge of
pollutants from a variety of sources, including landfills, into streams or
other surface waters. The Clean Air Act, including the 1990 amendments,
provides for federal, state, and local regulation of emissions of air
pollutants into the atmosphere, including emissions resulting from landfill
operations. The EPA recently promulgated new standards regulating air
emissions of certain regulated pollutants from municipal solid waste
landfills. These standards, combined with the new permitting programs
established under the 1990 Clean Air Act amendments, likely will subject four
of the Company's landfills to new permitting requirements and may require the
installation of gas recovery systems. In addition to these requirements, the
Company's landfills are subject to Clean Air Act regulations regulating the
handling and disposal of asbestos-containing materials. The Company's
continued compliance with these existing and future regulations may impose a
significant expense upon the Company which could have a material adverse
effect on the Company's business and results of operations.

In addition, most states and municipalities in which the Company operates or
may operate have adopted laws or requirements which limit or ban certain
categories of waste or mandate the disposal or recycling of local refuse.
These recycling laws and requirements have the effect of reducing landfill
disposal tonnage. Additionally, certain permits and approvals, as well as
state and local regulations, may seek to limit a landfill to accepting waste
that originates from specified geographic areas or seek to restrict the
importation of out-of-state waste. Generally, such legislative or regulatory
restrictions have not withstood judicial challenges. However, from time to
time, federal legislation is proposed which would allow individual states to
prohibit the disposal of out-of-state waste or to limit the amount that could
be imported for disposal. This legislation would also authorize in certain
instances local governmental units to mandate the flow of waste to certain
designated facilities. Although, to date, no such federal legislation has been
enacted, if such federal legislation should be enacted in the future, states
in which the Company operates landfills could act to limit or prohibit the
importation of out-of-state waste or require the Company's collection
operations to utilize certain designated sites. Such federal or state actions
could have an adverse effect on the Company's landfills that receive a
significant portion of waste originating from other states and on the
Company's collection operations. See "Business--Government Regulation--Flow
Control/Interstate Waste Restrictions."

REGULATION BY NEW YORK CITY TRADE WASTE COMMISSION

In 1996, the New York City Council enacted Local Law 42 ("Local Law 42") in
order to control the corrupting influence of organized crime on the waste
hauling industry. Local Law 42 created the Trade Waste

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<PAGE>

Commission ("TWC") and established rules for licensing and regulating the
operations of the commercial and industrial waste industry in New York City.
The law prohibits the collection, disposal or transfer of commercial and
industrial waste without a license issued by the TWC and requires TWC approval
of all acquisitions or other business combinations proposed by all licensees.
Each acquisition, sale or merger transaction generally must be submitted for
review by the TWC 30 days before the transaction takes effect, although the
amount of time required for review depends on the complexity of the
transaction and the need to investigate the background of the principals
involved. In considering applications for licenses, which are now only
temporary licenses, the TWC closely examines the backgrounds of the applicant
and the applicant's principals for any history of criminal and other unlawful
activity or involvement with members of organized crime. The license issued to
the Company by the TWC for the Company's New York City collection operations
is only a temporary license that is subject to revocation by the TWC and there
is no assurance that the Company will be issued a permanent license. The TWC
also sets maximum rates for the industry and establishes operational
requirements. In May 1997, the TWC lowered the maximum collection rates that
may be charged by licensed companies. The Company's New York City collection
operations are subject to Local Law 42, which could preclude or materially
impact the Company's operations in this region, the time and cost of
completing future acquisitions in this region, and the rates which may be
charged for collection services.

POSSIBLE LEGAL ACTION

Companies in the solid waste management business, including the Company, are
frequently subject in the normal course of business to judicial and
administrative proceedings involving federal, state or local agencies or
citizen groups. These governmental agencies may seek to impose fines or
penalties on the Company or to revoke or deny renewal of the Company's
operating permits or licenses for violations or alleged violations of
environmental laws or regulations or require that the Company make
expenditures to remediate potential environmental problems relating to waste
disposed of or stored by the Company or its predecessors, or resulting from
its or its predecessors' transportation and collection operations. Any adverse
outcome in these proceedings could have an adverse effect on the Company's
business and results of operations and may subject the Company to adverse
publicity. The Company may also be subject to actions brought by local
governments, individuals or community groups in connection with the permitting
or licensing of its operations, any alleged violation of such permits or
licenses or other matters. See "Potential Environmental Liability" below and
"Business--Legal and Administrative Proceedings."

POTENTIAL ENVIRONMENTAL LIABILITY

General. The Company is subject to liability for any environmental damages
that its solid waste facilities may cause to neighboring landowners,
particularly as a result of the contamination of drinking water sources or
soil, including damage resulting from the conditions existing prior to the
acquisition of such facilities by the Company. The Company also may be subject
to liability from any off-site environmental contamination caused by
pollutants or hazardous substances whose transportation, treatment, or
disposal was arranged by the Company or its predecessors. Any substantial
liability for environmental damage incurred by the Company could have a
material adverse effect on the Company's business and results of operations.
See "Business--Government Regulation."

The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA" or "Superfund"), imposes strict, joint, and several
liability on the present owners and operators of facilities from which a
release of hazardous substances into the environment has occurred, as well as
any party that owned or operated the facility at the time of disposal of the
hazardous substances regardless of when the hazardous substance was first
detected. Similar liability is imposed upon the generators of waste that
contains hazardous substances and hazardous substance transporters that select
the treatment, storage, or disposal site. All such persons, who are referred
to as potentially responsible parties ("PRPs"), generally are jointly and
severally liable for the expense of investigation, cleanup, and natural
resource damages relating to environmental contamination, regardless of
whether they exercised due care and complied with all relevant laws and
regulations.

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<PAGE>

These costs can be very substantial. Liability can be based upon the existence
of even very small amounts of the more than 700 "hazardous substances" listed
by the EPA and is not limited to the disposal of "hazardous wastes," as
statutorily defined. It is likely that hazardous substances have in the past
come to be located in landfills which the Company has been associated as an
owner or operator or as a result of its solid waste collection operations.
Moreover, the Company's solid waste collection operations may have transported
hazardous substances in the past and may do so on occasion in the future.

The National Emission Standards for Hazardous Air Pollutants ("NESHAPs")
regulates the collection, packaging, transportation, and disposal of asbestos-
containing material. NESHAPs regulate visible emissions of asbestos fibers to
outside air and require emissions controls and appropriate work practices. It
should be noted that a few states have classified asbestos as hazardous waste
and require appropriate handling and disposal practices. Additionally,
asbestos is listed as a hazardous substance under CERCLA. The Company
transports and disposes of asbestos-containing materials. There can be no
assurance that the Company will not face claims resulting from environmental
liabilities relating to these and other materials with respect to its solid
waste management operations.

Pennsylvania Landfill. Prior to 1990, the Pennsylvania landfill, an active
Subtitle D disposal facility, disposed of municipal solid waste in an unlined
disposal area. This unlined area was operated by the former owner and has
caused localized ground water contamination. As a condition to a recent permit
modification, the Company has agreed to remove all waste from unlined areas to
remove the source of contamination and relocate the waste to a Subtitle D
approved disposal area at the landfill. For the period of trash relocation,
the Company will operate a groundwater removal and treatment system which has
received a permit for the associated surface water discharge. Relocation of
trash began in April 1997, is coordinated with new pad construction, and is
scheduled to be completed in fiscal year 2008. At March 31, 1997, the Company
had accrued $4.5 million for such removal costs. An additional condition of
the permit modification requires groundwater monitoring of five private water
supply wells off-site. Low levels of volatile organic compounds have been
detected in two of these private water supply wells. The Company does not
believe that this off-site contamination is related to the Company's on-site
groundwater contamination. Nevertheless, the Company voluntarily has supplied
one private residence with a carbon treatment unit on its water supply; the
other private residence is on bottled water. The Company has not established a
specific financial reserve for potential costs relating to this remediation or
any additional potential liabilities associated with this contamination. The
Company currently believes that ultimate resolution of these matters should
not have a material adverse effect on the Company's business or results of
operations. However, there can be no assurance that the Company's ultimate
financial obligations related to these matters will not have a material
adverse effect on the Company's business and results of operations.

Kentucky Landfill. The permit issued October 14, 1996 (reissued February 26,
1997) for the Kentucky landfill approved corrective action measures to abate a
ground water discharge containing vinyl chloride at an off-site spring. The
corrective action requires the installation of three vertical gas wells. This
corrective action has been completed by the Company and the Company is
monitoring the spring on a quarterly basis. On December 30, 1994, the Company
received a notice on intent to sue from a neighbor of the Kentucky landfill
for an alleged unauthorized discharge of hazardous substances resulting in
damage to the neighboring property. No lawsuit has been initiated. The Company
believes any lawsuit by this neighboring landowner would lack merit and
vigorously would defend such a lawsuit. The Company currently believes that
ultimate resolution of these matters should not have a material adverse effect
on the Company's business or results of operations. However, there can be no
assurance that the Company's ultimate financial obligations related to these
matters will not have a material adverse effect on the Company's business and
results of operations.

Illinois Landfill. The Company has received all required permits to
construct the new Illinois landfill. However, the Company intends to delay
construction of the new Illinois landfill until a closure permit for an
adjacent unlined landfill is issued. The Company currently anticipates
commencement of construction of the new landfill in the fall of 1997 and
commencement of operations in the spring of 1998 after completion of
construction and issuance of an operating permit. The Company estimates that
the cost of construction of the initial landfill areas will be $1.7 million.

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<PAGE>

Although the Company is not the owner or operator of the adjacent unlined
landfill and therefore disclaims financial responsibility for its closure and
any other potential liability associated therewith, the Company has contracted
with the owner to facilitate and partially fund closure. As part of the
Company's Landfill Management Agreement to operate the new Illinois landfill,
the Company agreed to contribute up to a maximum of $365,000 towards closure
of the adjacent unlined landfill. In addition, the Company has entered into an
agreement with a surety providing financial assurance for the closure and
post-closure care requirements for the adjacent unlined landfill pursuant to
which the Company agreed to indemnify the surety in the amount of $646,000 in
the event the owner of the adjacent landfill defaults on its closure and/or
post-closure care obligations. The Company believes that the ultimate
resolution of this matter should not have a material adverse effect on its
business and results of operations. However, there can be no assurance that
the Company's ultimate financial obligations related to these matters,
including a significant delay in commencement of operations of the new
landfill area, will not have a material adverse effect on the Company's
business and results of operations.

West Virginia Landfill. The Company has been advised by the State regulatory
agency that the West Virginia landfill is in violation of regulatory
requirements and its permit relating to stabilization of a slope area and
closure of a portion of the landfill. The State regulatory agency has not
issued a formal notice of violation. The Company has advised the state
regulatory agency that it will submit a schedule for a phased closure by July
1, 1997, commence closure activities by August 15, 1997, and submit a slope
stabilization plan by October 1, 1997. The costs associated with these
activities are $348,000. Although the State could assess penalties and/or
cause a forfeiture of the Company's closure bond, the Company believes that
such activities are unlikely. The Company believes that the ultimate
resolution of this matter will not have a material adverse effect on the
Company's business or results of operations. However, there can be no
assurance that the Company's ultimate financial obligation related to this
matter will not have a material adverse effect on the Company's business and
results of operations.

Superfund Liability. Super Kwik, Inc., one of the solid waste collection
companies acquired by the Company in 1996, has been named as a potentially
responsible party under CERCLA at a Superfund site. The Company assumed this
liability in connection with the acquisition. The Company believes that a
substantial portion of the defense costs and liability relating to this site
will be covered by insurance proceeds, and therefore, should not have a
material adverse effect on the Company's business and results of operations.
However, there can be no assurance that the Company's ultimate financial
obligations related to this matter will not have a material averse effect on
the Company's business or results of operation.

POTENTIAL INADEQUACY OF ACCRUALS FOR CLOSURE AND POST-CLOSURE COSTS

The Company has material financial obligations relating to closure and post-
closure costs of the landfills it operates. While the precise amounts of these
future obligations cannot be determined, at March 31, 1997 the Company
estimated the total costs (on a current dollar as opposed to a discounted
present value basis) to be approximately $13.6 million for final closure of
its operating facilities, of which $3.2 million has been accrued as of March
31, 1997. The Company makes an accrual for these costs based on consumed
airspace in relation to management's estimate of total available airspace of
the landfills. Post-closure monitoring costs pursuant to applicable
regulations (generally for a term of 30 to 40 years after final closure) are
estimated at $7.5 million. At March 31, 1997, the Company had accrued $1.5
million for such projected post-closure costs. The Company will provide
additional accruals based on engineering estimates of consumption of permitted
landfill airspace over the useful lives of its landfills. There can be no
assurance that the Company's ultimate financial obligations for actual closing
or post-closing costs will not exceed the amount then accrued and reserved or
amounts otherwise receivable pursuant to insurance policies or trust funds.
Such a circumstance could have a material adverse effect on the Company's
business and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources," "Business-Closure and Post-Closure Obligations," and Note 8 of
Notes to Consolidated Financial Statements.

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<PAGE>

ABILITY TO MEET BONDING REQUIREMENTS

The Company is required to post a form of financial assurance at five of its
landfills to ensure proper closure and post-closure monitoring and
maintenance. Additionally, some of the Company's collection and transportation
contracts require performance and payment bonds to guarantee project
completion and certain states may require collateral bonds to secure
compliance with hazardous waste transportation requirements. The Company's
ability to meet these bonding requirements is contingent upon the Company's
performance record and creditworthiness. Any inability by the Company to
maintain bonding capacity or a sizable increase in payment could have a
material adverse impact on the Company's business and results of operations.
See "Business--Insurance and Bonding."

LIMITS ON INSURANCE COVERAGE

The Company carries insurance covering its assets and operations, including
pollution liability coverage. Specifically, each of the Company's six
landfills has pollution liability coverage of $5.0 million per occurrence or
$5.0 million in the aggregate subject to a $500,000 deductible per occurrence.
Nevertheless, there can be no assurance that the Company's insurance will
provide sufficient coverage in the event an environmental claim were made
against the Company or that the Company will be able to maintain in place such
insurance at reasonable costs. An uninsured or underinsured claim against the
Company of sufficient magnitude could have a material adverse effect on its
business and results of operations. The Company also is subject to the risk of
claims by employees and others made after the expiration of the policy
coverage period, including asbestos-related illnesses (such as asbestosis,
lung cancer, mesothelioma, and other cancers), which may not become apparent
until many years after exposure. From May 15, 1985 through April 28, 1988, the
Company carried claims-made general liability coverage. Any claims presented
on the basis of exposure during that period may not be covered by insurance
and any liability resulting therefrom could, consequently, have an adverse
effect on the Company's business and results of operations. See "Business--
Insurance and Bonding."

WASTE REDUCTION PROGRAMS

Alternatives to landfill disposal, such as recycling, incineration and
composting, are increasingly being used. There also has been an increasing
trend at the state and local levels to mandate recycling and waste reduction
at the source and to prohibit the disposal of certain type of wastes at
landfills. Many states (including states in which the Company operates) have
enacted laws that require counties to adopt comprehensive plans to reduce the
volume of solid waste deposited in landfills through waste planning,
composting, recycling, or other programs. Some states (including Illinois,
Kentucky, Pennsylvania, South Carolina, and West Virginia) have adopted
legislation that prohibits the disposal of yard waste, tires, and other items
in landfills. These developments could result in a reduction in the volume of
waste destined for landfills in certain areas, which may affect the Company's
ability to operate its landfills at their full capacity and/or affect the
prices that can be charged for landfill disposal services. Such effects could
have a material adverse effect on the Company's business and results of
operations.

COMPETITION

The solid waste management industry is highly competitive and the Company
believes that industry consolidation will increase competitive pressures even
further. The Company competes with several large national waste management
companies, including Waste Management, Inc. (formerly WMX Technologies, Inc.),
Browning-Ferris Industries, Inc., U.S.A. Waste Services, Inc., United Waste
Systems, Inc., and Allied Waste Industries, Inc. A number of these competitors
have significantly greater financial, technical, marketing, and other
resources than the Company. The Company also competes with numerous well-
established smaller, local, or regional firms, some of which have accumulated
substantial goodwill. In addition, municipalities that operate their own waste
collection and disposal facilities often enjoy the benefits of tax-exempt
financing and may control the disposal of waste collected within their
jurisdictions. Increased competition from these companies or municipalities
could have a material adverse effect on the Company's business and results of
operations. See "Business--Competition."

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<PAGE>

At June 26, 1997, the Company provided residential collection services under
54 municipal contracts with terms ranging between one to five years. As is the
case in the waste management industry, such contracts come up for competitive
bidding periodically and there is no assurance that the Company will be the
successful bidder and will be able to retain such contracts. If the Company is
unable to replace any contract lost through the competitive bidding process
with a comparable contract within a reasonable time period or to use any
surplus equipment in other service areas, the Company's business and results
of operations could be adversely affected.

SEASONALITY; ECONOMIC CONDITIONS

The Company's revenues tend to be somewhat lower in the winter months. This
is primarily attributable to the fact that (i) the volume of waste relating to
construction and demolition activities tends to increase in the spring and
summer months, and (ii) the volume of industrial and residential waste in the
regions in which the Company operates tends to decrease during the winter
months. In addition, particularly harsh weather conditions may affect the
Company's operations by interfering with collection, transportation, and
disposal operations, delaying the development of landfill capacity, and/or
reducing the volume of waste generated by the Company's customers which could
have a material adverse effect on the Company's business and results of
operations.

The Company's business is affected by general economic conditions, both
nationally and in the geographic regions in which the Company's operations are
currently located. There can be no assurance that a national or local economic
downturn will not result in a reduction in the volume of waste being
collected, transported and disposed of by the Company and/or the prices that
the Company can charge for its services.

ANTI-TAKEOVER PROVISIONS; SEVERANCE AGREEMENTS

The Company's Certificate of Incorporation authorizes the Board of Directors
to issue up to 10,000,000 shares of Class A Common Stock, of which 8,319,799
shares are available for issuance as of the date of this Prospectus. Holders
of Class A Common Stock are entitled to four votes for each share held on all
matters submitted to a vote of the stockholders. The issuance of Class A
Common Stock could have the effect of delaying or preventing a change in
control of the Company without further action by the stockholders. At June 26,
1997, no shares of Class A Common Stock were outstanding, and the Company has
no present plans to issue any shares of Class A Common Stock in the future.
See "Description of Capital Stock--Common Stock and Class A Common Stock." In
the future, the Company may adopt other charter provisions, such as
authorizing the Board of Directors to issue undesignated preferred stock, that
also may have an anti-takeover effect.

In addition, certain of the Company's executive officers that have entered
into employment agreements with the Company will be entitled to receive
certain bonuses in cash or Common Stock upon a change in control of the
Company in such amounts that, in the aggregate, could have an adverse effect
on the Company's liquidity and capital resources. Accordingly, such provisions
could discourage or prevent bids to takeover the Company and decrease values
that would otherwise be obtained by stockholders for their Common Stock. See
"Management--Employment Agreements" and "Description of Capital Stock--Anti-
Takeover Provisions."

The Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which prohibits the Company from engaging in
a "business combination" with an "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
interest stockholder, unless the business combination is approved in a
prescribed manner. The application of Section 203 also could have the effect
of delaying or preventing a change in control of the Company without further
action by the stockholders. See "Description of Capital Stock--Anti-Takeover
Provisions."

CONTROL BY MANAGEMENT

At June 26, 1997, executive officers and directors of the Company as a group
beneficially owned 5,948,233 shares or approximately 28.3% of the outstanding
Common Stock after giving effect to the Offering. As a result, these existing
stockholders, if acting together, will be able to influence significantly the
election of individuals to

17
<PAGE>

the Board of Directors and the outcome of other matters submitted for
stockholder consideration. See "Principal Stockholders."

VOLATILITY OF STOCK PRICE

The market price of the Common Stock has been and is likely to continue to
be highly volatile. Factors such as fluctuations in the Company's quarterly
revenues and operating results, the Company's on-going acquisition program,
governmental regulations, market conditions for waste management stocks in
general, and economic conditions generally may have a significant impact on
the market price of the Common Stock. In addition, as the Company pursues its
acquisition program, it may agree to issue shares of Common Stock that will
generally become available for resale which may have an impact on the market
price of the Common Stock. See "Price Range of Common Stock," "Business--
Acquisition Program," and "Shares Eligible for Future Sale."

SHARES ELIGIBLE FOR FUTURE SALE; SUBSEQUENT REGISTRATION

Sales in the public market of substantial amounts of Common Stock could have
an adverse effect on the market price of the Common Stock and may make it more
difficult for the Company to sell its equity securities in the future at times
and prices that it deems appropriate. Upon completion of the Offering, the
Company will have outstanding 20,652,955 shares of Common Stock. Of these
shares, approximately 10,671,984 shares of Common Stock, including the
4,500,000 shares of Common Stock being sold in the Offering, will generally be
tradeable without restriction or limitation under the Securities Act, except
for any shares owned by "affiliates" of the Company, which will be subject to
the resale limitations under Rule 144 of the Securities Act. The remaining
approximately 9,980,971 outstanding shares of Common Stock held by existing
stockholders are "restricted securities" and may not be sold in a public
distribution except in compliance with the registration requirements of the
Securities Act or pursuant to an exemption therefrom, including that provided
by Rule 144. Of these restricted securities, 6,054,872 shares will be saleable
in the public market 180 days following the date of this Prospectus subject to
compliance with Rule 144. At June 26, 1997, there were outstanding options and
warrants to purchase a total of 3,268,155 shares of Common Stock and an
additional 569,264 shares reserved for issuance pursuant to future option
grants under the Company's stock option plans. See "Shares Eligible for Future
Sale."

Certain stockholders of the Company that hold restricted securities have
registration rights for an aggregate of up to 7,640,030 shares of Common Stock
and an additional 788,464 shares of Common Stock issuable upon exercise of
warrants. The Company expects that within 45 days after completion of the
Offering 5,206,831 of such shares will be covered by an effective registration
statement permitting such shares to be resold by certain of such stockholders.
The Company has agreed to pay substantially all expenses incident to such
registration statement, other than underwriting discounts and commissions. If
such stockholders cause a large number of shares to be sold in the market,
such sales could have an adverse effect on the market price for the Common
Stock. See "Shares Eligible for Future Sale."

The foregoing notwithstanding, the Company and the directors and certain
executive officers and stockholders of the Company who owned an aggregate of
3,073,333 shares of Common Stock and options and warrants to purchase
1,507,004 shares of Common Stock at June 26, 1997, have agreed, except for
certain limited exceptions, not to sell, offer to sell, solicit an offer to
buy, contract to sell, grant any option to purchase or otherwise transfer or
dispose of, any shares of Common Stock, or any securities convertible into or
exercisable or exchangeable for Common Stock for at least 120 days after the
date of this Prospectus without the prior written consent of Smith Barney Inc.
In addition, the other executive officers and certain other employees and
stockholders of the Company who owned an aggregate of 6,975,462 shares of
Common Stock and options and warrants to purchase 1,386,251 shares of Common
Stock at June 26, 1997 also have agreed to such transferability restrictions,
except that the restrictive period is for 90 days following the date of this
Prospectus. See "Shares Eligible for Future Sale" and "Underwriting."

18
<PAGE>

The Company intends to register two million shares of Common Stock under the
Securities Act not earlier than 30 days after the date of the Prospectus for
its use in connection with future acquisitions. These shares generally will be
freely tradable after their issuance by persons not affiliated with the
Company; however, resales of these shares during the 180-day period following
the date of the related shelf registration statement would require the prior
written consent of Smith Barney Inc.

IMMEDIATE AND SUBSTANTIAL DILUTION

Investors purchasing shares of Common Stock in the Offering will experience
immediate and substantial dilution in the net tangible book value of their
shares of approximately $12.64 per share from an assumed public offering price
of $17.00 per share. In the event the Company issues additional shares of
Common Stock in the future, purchasers of Common Stock in the Offering may
experience further dilution in the net tangible book value per share of the
Common Stock. See "Dilution."

LACK OF CASH DIVIDENDS ON COMMON STOCK

The Company does not expect to pay any cash dividends on the Common Stock in
the foreseeable future. Any cash otherwise available for such dividends will
be reinvested in the Company's business. In addition, the Company's credit
facility agreement prohibits the payment of cash dividends without prior bank
approval. See "Dividend Policy."

19
<PAGE>

THE COMPANY

Eastern Environmental Services, Inc. was incorporated in the State of
Delaware in April 1987. The Company's operations initially consisted of
asbestos abatement, which included asbestos waste hauling and laboratory
services. The Company subsequently expanded its solid waste management
services by acquiring landfills in West Virginia, Kentucky, and South Carolina
in August 1989, July 1990, and November 1990, respectively. In June 1994, the
Company discontinued and sold substantially all of the operating assets of its
asbestos abatement and laboratory services subsidiaries so that it could focus
on expanding its solid waste collection, transportation, and disposal
operations and other solid waste management services.

In June 1996, control of the Company was acquired by Louis D. Paolino, Jr.,
George O. Moorehead, Environmental Opportunities Fund, L.P., and Environmental
Opportunities Fund (Cayman), L.P. In connection therewith, William C. Skuba,
formerly the Company's Chairman of the Board, Chief Executive Officer, and
President, converted 1,591,201 shares of Class A Common Stock, which entitles
the holder thereof to four votes per share on all matters submitted to a vote
of stockholders, to Common Stock, sold a total of 500,000 shares of Common
Stock to the aforementioned individuals and limited partnerships, and then
resigned as a director and an officer of the Company. Immediately thereafter,
the Company implemented an aggressive acquisition program in the solid waste
industry, elected a new Board of Directors, and hired a new management team
with an average of 17 years of experience in the waste management industry.
Additionally, the Company raised a total of approximately $10.0 million
through two private placements of Common Stock in the summer of 1996 and
established a $30.0 million revolving credit facility (which was subsequently
increased to $100.0 million in May 1997), principally for acquisitions.

Since July 1996, the Company has made 18 solid waste management
acquisitions, and thereby entered new markets in Florida, Illinois, New
Jersey, New York, and Pennsylvania. The businesses acquired operated 15 solid
waste collection and transportation operations, four solid waste transfer and
processing facilities, two landfills, and one special waste services
operation. The Company has also recently exercised an option to acquire,
subject to regulatory approval, land in Illinois upon which it has received
the necessary permits to construct a landfill. The Company believes that
significant opportunities exist to acquire additional solid waste collection,
transportation, and disposal businesses in the eastern United States and to
develop within its existing markets. As part of its acquisition program, the
Company reviews acquisition opportunities on an ongoing basis and is currently
in various stages of negotiating the acquisition of additional solid waste
management businesses.

The Company's principal executive offices are located at 1000 Crawford
Place, Suite 101, Mt. Laurel, New Jersey 08054, and its telephone number is
(609) 235-6009.

20
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 4,500,000 shares of
Common Stock offered hereby are estimated to be $71.3 million ($82.1 million
if the Underwriters' over-allotment option is exercised in full), based on an
assumed public offering price of $17.00 per share after deduction of the
underwriting discounts and commissions and estimated offering expenses.

Approximately $52.0 million of the net proceeds to the Company will be used
to repay all of the Company's then outstanding indebtedness under its credit
facility. The remainder of the net proceeds will be used for future
acquisitions, capital expenditures, and working capital. Pending specific
application, the Company intends to invest unused net proceeds in short-term
investment-grade interest bearing securities. After repayment of the credit
facility, the Company will be able to redraw on the credit facility as needed
for future acquisitions and for working capital. The credit facility provides
for borrowing capacity, including letters of credit, of up to $100.0 million
(approximately $52.0 million and $1.4 million in letters of credit were
outstanding at May 31, 1997), presently bears interest based on an adjusted
prime rate or Eurodollar rate (the applicable interest rate was 8.5% at May
31, 1997), and matures on April 30, 2000. The bank indebtedness was incurred
primarily to fund acquisitions, including 18 solid waste management businesses
between July 1996 and June 1997, and for working capital. For a description of
the Company's acquisition program, see "Business--Acquisition Program."

DIVIDEND POLICY

The Company does not anticipate paying any cash dividends in the foreseeable
future and intends to retain all working capital and earnings, if any, for use
in the Company's operations and in the expansion of its business. Any future
determination with respect to the payment of dividends will be at the
discretion of the Board of Directors and will depend upon, among other things,
the Company's results of operations, financial condition and capital
requirements, the terms of any then existing indebtedness, general business
conditions, and such other factors as the Board of Directors deems relevant.
The Company's credit facility prohibits the payment of cash dividends without
prior bank approval.

21
<PAGE>

PRICE RANGE OF COMMON STOCK

The Common Stock is included for quotation on the Nasdaq National Market
under the symbol EESI. The sale prices reflect inter-dealer quotations, do not
include retail markups, markdowns, or commissions, and do not necessarily
represent actual transactions. Prospective purchasers of the Common Stock are
urged to obtain current market quotations. The following table sets forth for
the periods indicated the high and low sale prices for the Common Stock as
reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
HIGH LOW
-------- -------
<S> <C> <C>
YEAR ENDED JUNE 30, 1995:
First Quarter............................................. $ 1 7/16 $ 1
Second Quarter............................................ 1 5/16 3/4
Third Quarter............................................. 1 1/2 7/8
Fourth Quarter............................................ 1 3/4 7/8
YEAR ENDED JUNE 30, 1996:
First Quarter............................................. $ 2 1/4 $ 1 1/4
Second Quarter............................................ 2 1/4 1 1/2
Third Quarter............................................. 1 3/4 1
Fourth Quarter............................................ 7 1/8 1 1/4
YEAR ENDING JUNE 30, 1997:
First Quarter............................................. $ 7 1/16 $ 5
Second Quarter............................................ 10 3/8 6 1/2
Third Quarter............................................. 14 1/8 8 3/8
Fourth Quarter (through June 26).......................... 18 1/8 11 3/8
</TABLE>

For a recent reported sale price of the Common Stock, see the cover page of
this Prospectus.

22
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company (i) at
March 31, 1997, (ii) on a pro forma basis to reflect the acquisition of Waste
Services, Inc. and its affiliates, Coney Island Rubbish Removal, Inc., and
Golden Gate Carting, Co. Inc. as if such acquisitions had occurred at March
31, 1997, and (iii) on a pro forma as adjusted basis also to reflect the sale
by the Company of 4,500,000 shares of Common Stock in the Offering at an
assumed public offering price of $17.00 and the application of the estimated
net proceeds therefrom, after deducting the estimated underwriting discounts
and commissions and Offering expenses.

<TABLE>
<CAPTION>
MARCH 31, 1997
--------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ----------- -------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Cash and cash equivalents............... $ 3,907 $ 3,907 $ 35,422
========== ========== ===========
Long-term debt, less current
portion(1)............................. $ 33,981 $ 43,207 $ 3,431
Stockholders' equity:
Common Stock, $.01 par value,
50,000,000 shares authorized;
14,095,834 shares issued; 15,544,634
shares issued pro forma; 20,044,634
shares issued pro forma as
adjusted(2).......................... 141 155 200
Additional paid-in capital.............. 27,927 44,864 116,112
Retained deficit........................ (668) (668) (668)
---------- ---------- -----------
27,400 44,351 115,644
Less treasury stock (39,100 shares)..... (76) (76) (76)
---------- ---------- -----------
Total stockholders' equity.......... 27,324 44,275 115,568
---------- ---------- -----------
Total capitalization................ $ 61,305 $ 87,482 $ 118,999
========== ========== ===========
</TABLE>
- --------
(1) The Company's long-term debt primarily reflects obligations of the Company
relating to its credit facility. See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

(2) Excludes 3,073,153 shares of Common Stock issuable upon exercise of
outstanding options and warrants at March 31, 1997, an additional 704,766
shares reserved for issuance pursuant to future option grants under the
Company's stock option plans, and 10,000,000 shares of authorized Class A
Common Stock, of which no shares are issued or outstanding.

23
<PAGE>

DILUTION

The net tangible book value of the Company at March 31, 1997 was
approximately $9.8 million, or $.70 per share. Net tangible book value per
share is determined by dividing the net tangible book value before the
Offering by the number of shares of Common Stock outstanding before the
Offering. For purposes of calculating the net tangible book value as adjusted
for the Offering at March 31, 1997, the calculation gives effect to the sale
of 4,500,000 shares of Common Stock offered by the Company hereby (after
deducting the estimated underwriting discounts and commissions and Offering
expenses). Net tangible book value per share as adjusted is determined by
dividing the number of shares of Common Stock outstanding after the Offering
into the net tangible book value after the Offering. Dilution is determined by
subtracting net tangible book value per share as adjusted for the Offering
from the amount of cash paid by a new investor for one share of Common Stock.
The following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed offering price per share............................... $17.00
Net tangible book value per share before the Offering........ .70
Increase in net tangible book value per share attributable to
new investors............................................... 3.66
----
Net tangible book value per share as adjusted.................. 4.36
------
Dilution per share to new investors............................ $12.64
======
</TABLE>

24
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents (i) summary consolidated financial data of the
Company as of the dates and for the periods indicated, (ii) unaudited interim
consolidated financial data of the Company as of the date and for the period
indicated, (iii) summary pro forma consolidated financial data of the Company
as of the date and for the periods indicated, after giving effect to the
events described below and in the Unaudited Pro Forma Financial Information
and notes thereto included elsewhere in this Prospectus, and (iv) summary pro
forma balance sheet information as of March 31, 1997 after giving effect to
the events described below and in the Unaudited Pro Forma Financial
Information and notes thereto included elsewhere in this Prospectus. The
financial information as of June 30, 1995, June 30, 1996, March 31, 1997, and
for each of the three years in the period ended June 30, 1996 and the nine
months ended March 31, 1997 has been derived from the Company's audited
financial statements. The financial information derived from the Company's
unaudited consolidated financial statements for the nine months ended March
31, 1996 includes all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of financial position and results of
operations as of the dates and for the periods indicated. The summary pro
forma information does not purport to represent what the Company's results
actually would have been if such events had occurred at the date indicated,
nor does such information purport to project the results of the Company for
any future period. The selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Consolidated Financial Statements and notes
thereto and the Unaudited Pro Forma Financial Information and notes thereto
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA AS ADJUSTED
-------------------------- -----------
NINE NINE
NINE MONTHS FISCAL YEAR MONTHS MONTHS
YEAR ENDED JUNE 30, ENDED MARCH 31, ENDED ENDED ENDED
------------------------------- --------------------- JUNE 30, MARCH 31, MARCH 31,
1994(1) 1995(1) 1996(1) 1996(1) 1997(2)(3) 1996(4) 1997(4) 1997(10)
--------- --------- --------- --------- ---------- ----------- ---------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......... $ 37,314 $ 40,802 $ 39,519 $ 29,021 $ 52,409 $ 100,191 $ 77,938 $ 77,938
Cost of revenues.. 30,380 33,686 33,417 23,666 38,027 74,715 54,346 54,346
Selling, general
and
administrative
expenses......... 7,110 7,226 9,775 5,666 9,245 20,568 14,780 14,780
Merger costs...... -- -- -- -- 3,337(12) -- 3,337(12) 3,337
--------- --------- --------- --------- ---------- ---------- ---------- ----------
Operating (loss)
income........... (176) (110) (3,673) (311) 1,800 4,908 5,475 5,475
Interest expense.. (372) (580) (629) (417) (1,526) (4,154) (2,965) (578)
Other income
(expense)........ 226 488 (131) 187 461 267 794 794
--------- --------- --------- --------- ---------- ---------- ---------- ----------
(Loss) income from
continuing
operations before
income taxes..... (322) (202) (4,433) (541) 735 1,021 3,304 5,691
Income tax
(benefit)
expense.......... (229) (147) (10) -- 940 (9) 940 1,461
--------- --------- --------- --------- ---------- ---------- ---------- ----------
Net (loss) income
from continuing
operations....... $ (93) $ (55) $ (4,423) $ (541) $ (205) $ 1,030 $ 2,364 $ 4,230
========= ========= ========= ========= ========== ========== ========== ==========
Net (loss)
earnings per
share from
continuing
operations....... $ (0.01) $ (0.01) $ (0.49) $ (0.06) $ (0.02) $ 0.09 $ 0.15 $ 0.21
========= ========= ========= ========= ========== ========== ========== ==========
Weighted average
number of shares
outstanding...... 7,836,332 7,844,359 9,018,080 8,930,968 13,316,698 11,869,868 (5) 15,904,405 (5) 20,404,405 (11)
========= ========= ========= ========= ========== ========== ========== ==========
OTHER DATA:
Cash flow from
operating
activities....... $ 4,478 $ 4,714 $ 2,431 $ 2,371 $ 2,989
Cash flow from
discontinued
operations....... $ 1,533 $ -- $ -- $ -- $ --
Cash flow from
investing
activities....... $ (4,623) $ (5,029) $ (5,082) $ (3,842) $ (39,534)
Cash flow from
financing
activities....... $ (1,557) $1,396 $1,455 $ 835 $ 38,676
EBITDA(6)......... $ 2,686 $ 3,555 $ (779) $ 2,043 $ 4,874 11,758 10,321 10,321
EBITDA margin(7).. 7.2% 8.7% (2.0%) 7.0% 9.3% 11.7% 13.2% 13.2%
</TABLE>

25
<PAGE>

<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA AS ADJUSTED
JUNE 30, 1995(1) JUNE 30, 1996(1) MARCH 31, 1997 MARCH 31, 1997(8) MARCH 31, 1997(8)(9)
---------------- ---------------- -------------- ----------------- --------------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital
(deficit).............. $ 452 $(1,853) $ (700) $ (923) $ 30,952
Total assets............ 28,299 28,786 89,353 121,954 153,470
Long term debt, less
current portion........ 5,160 6,308 33,981 43,207 3,431
Total liabilities....... 14,559 18,365 62,029 77,679 37,902
Total stockholders'
equity................. 13,740 10,421 27,324 44,275 115,568
</TABLE>
- --------
SUMMARY FINANCIAL DATA FOOTNOTES
(1) Subsequent to June 30, 1996, the Company acquired Super Kwik, Inc. and
its affiliates ("Super Kwik") and Donno Company, Inc. and its affiliates
("Donno") in two separate transactions. Each of these business
combinations was accounted for as a pooling of interests and,
accordingly, the Company's consolidated financial statements were
restated for all periods prior to the acquisition to include the results
of operations, financial position and cash flows of Super Kwik and Donno.
(2) The acquisitions of Allied Waste Services, Inc. and its affiliates
("Allied") and R&A Bender, Inc. and its affiliates ("Bender") were
effective on July 2, 1996 and December 10, 1996, respectively. Both of
these acquisitions were accounted for as purchases. Accordingly, their
results of operations are included from the effective dates of the
acquisitions.
(3) The acquisition of Apex Waste Services, Inc. ("Apex") occurred on March
31, 1997 and was accounted for as a pooling of interests. Apex was formed
on October 1, 1996 as a result of the acquisition from the former owners
of certain assets of Waste Management, Inc. which was accounted for as a
purchase; accordingly, the results of operations are included only from
the date of inception of Apex.

(4) The pro forma financial information reflect significant acquisitions by
the Company since July 1, 1996, which include Allied, Bender, Waste
Services, Inc. and its affiliates ("WSI"), Golden Gate Carting, Co. Inc.
("Golden Gate"), and Coney Island Rubbish Removal, Inc. ("Coney Island"),
as if such acquisitions had occurred as of the beginning of the period
presented. It also includes operating data for predecessor operations of
Apex for the three month period ended September 30, 1996. See Unaudited
Pro Forma Financial Information and notes thereto included elsewhere in
this Prospectus.

(5) Weighted average number of shares outstanding has been calculated on a
pro forma basis prior to the shares issued in the Offering.

(6) EBITDA represents operating income plus depreciation and amortization.
EBITDA does not represent and should not be considered as an alternative
to net income or cash flow from operations as determined by generally
accepted accounting principles. Further, EBITDA does not necessarily
indicate whether cash flow will be sufficient for items such as working
capital, capital expenditures, or to react to changes in the Company's
industry or economic changes generally. The Company believes that EBITDA
is a frequently used measure that provides additional information for
determining its ability to meet debt service requirements and that it is
one of the indicators upon which the Company, its lenders, and certain
investors assess the Company's financial performance and its capacity to
service debt. Because EBITDA is not calculated by all companies and
analysts in the same fashion, the EBITDA measures presented by the
Company may not necessarily be comparable to other similarly titled
measures of other companies.
(7) EBITDA margin represents EBITDA expressed as a percentage of revenues.

(8) The pro forma financial information reflects significant acquisitions by
the Company since March 31, 1997, which include WSI, Golden Gate, and
Coney Island, as if such acquisitions had occurred as of March 31, 1997.
See Unaudited Pro Forma Financial Information and notes thereto included
elsewhere in this Prospectus.

(9) Adjusted to reflect the sale of 4,500,000 shares of Common Stock offered
by the Company hereby at an assumed public offering price of $17.00 per
share and the application of the estimated net proceeds therefrom. See
"Use of Proceeds" and "Capitalization."

(10) Adjusted to give effect to the Offering and the application of the
estimated proceeds therefrom, as described in "Use of Proceeds," as if
the Offering had occurred on July 1, 1996.

(11) Weighted average number of shares outstanding has been calculated on a
pro forma basis after the shares issued in the Offering.

(12) Merger costs incurred during the nine months ended March 31, 1997 of
$3,337,000 relating to the acquisition of Super Kwik, Inc., Donno
Company, Inc., and Apex Waste Services, Inc. include the transaction
related costs and costs of integrating operations. Additionally, the tax
provision for this same period includes $904,000 reflecting the recording
of a deferred tax provision as of the date of the respective mergers, at
which time the pooled entities S Corporation elections were terminated.

26
<PAGE>

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

The following discussion should be read in conjunction with the Company's
consolidated financial statements and notes thereto included elsewhere in this
Prospectus.

OVERVIEW

Revenues

The Company is a non-hazardous solid waste management company specializing
in the collection, transportation and disposal of residential, industrial,
commercial and special waste, principally in the eastern United States. The
Company's revenues for the nine months ended March 31, 1997 were attributable
80.3% to solid waste collection and transportation operations, 8.3% to solid
waste disposal operations, and 11.4% to other waste management services.

The Company's solid waste collection operations earn revenues from fees
collected from residential, commercial, and industrial collection and transfer
station customers. Solid waste collection is provided under two primary types
of arrangements depending on the customers being served. Collection services
for commercial and industrial customers are generally performed under a one to
three year service agreement. Collection services for residential customers
generally are performed under contracts with, or franchises granted by,
municipalities or regional authorities that grant the Company rights to
service all or a portion of the residents in their jurisdictions, except in
rural areas where the Company usually contracts directly with the customer.
Such contracts or franchises generally range in duration from one to three
years. Recently, some municipalities have bid their residential collection
contracts based on the volume of waste collected. Residential collection fees
are either paid by the municipalities out of tax revenues or service charges
or paid directly by residents receiving the services.

As part of its solid waste collection operations, the Company's four owned
or operated transfer stations receive solid waste collected primarily by its
various collection operations, compact the waste and transfer it to larger
company owned vehicles for transport to landfills. This procedure reduces the
Company's costs by improving its use of collection personnel and equipment.

The Company's solid waste landfills earn revenues from disposal fees charged
to third parties and from disposal fees charged to the Company's collection
and transportation operations that dispose of solid waste at the Company's
landfills. These landfills receive solid waste from its own collection
companies and transfer stations, as well as from independent collection
operators. Over the nine months ended March 31, 1997, approximately 6.1% of
the Company's revenue generated from collection operations represented solid
waste collected by the Company that was delivered for disposal at its own
landfills, and approximately 25.9% of the Company's revenue generated from
landfill disposal operations represented solid waste disposed of at the
Company's landfills that was delivered by the Company.

The Company's prices for solid waste collection, transportation, and
disposal services are typically determined by the volume, weight, and type of
waste collected, as well as other factors including the competitive pricing
environment. The Company's ability to pass on cost increases may be limited by
the terms of its contracts.

Cost of Revenues

Cost of revenues consist primarily of tipping fees paid to third party
landfills, amortization of capitalized direct landfill development costs,
accruals for future landfill closure and post-closure costs, direct labor and
related taxes and benefits, subcontracted transportation and equipment rental
charges, maintenance and repairs of equipment and facilities, environmental
compliance costs and site maintenance costs for landfills, fuel, and landfill
assessment fees and taxes.

27
<PAGE>

Certain direct engineering, legal, permitting, construction and other costs
associated with expansion of landfills, together with related interest
expense, are capitalized over the estimated useful life of the site using the
unit of production method as airspace is consumed. Successful permitting of
additional landfill disposal capacity improves the Company's profitability by
extending the time period over which the Company may amortize capitalized
costs of the landfill. The Company's policy is to charge against net income
any unamortized capitalized expenditures and advances relating to any landfill
that is permanently closed or any landfill expansion project that is not
completed.

The Company capitalizes direct incremental costs associated with
acquisitions. Indirect development and acquisition costs, such as executive
and corporate overhead, public relations and other corporate services and
overhead are expensed as incurred. The Company also charges against net income
any unamortized capitalized expenditures relating to proposed acquisitions
that are not consummated. Property and equipment is depreciated over the
estimated useful life of the assets using the straight line method.

At March 31, 1997, capitalized costs related directly to the acquisition and
expansion of existing and future landfills and cell development were $30.6
million and capitalized costs related directly to proposed acquisitions that
are not consummated were $451,000. The Company periodically reviews the future
realization of these capitalized project costs and makes provisions against
capitalized costs that are associated with projects that are not probable of
completion.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of
management, clerical and administrative salaries and costs and overhead,
amortization expense related to intangible assets, professional services,
facility rentals and associated costs, financial insurance bonding premiums,
landfill related financial assurance bonding premiums, and costs relating to
marketing and sales.

Merger Costs

In connection with acquisitions accounted for as under the pooling of
interests method, the Company records various merger costs including
transaction-related expenses and costs to bring the acquired assets into
conformity with corporate safety and operational standards.

Other Income (Expense)

Other income and expense, which is composed primarily of interest income and
gains and losses on sales of equipment, has not historically been material to
the Company's results of operations.

Taxes

The Company had a net operating loss carryforward for federal income tax
purposes of approximately $4.3 million at June 30, 1996 of which $601,000 was
utilized through March 31, 1997. After the Company utilizes the remaining net
operating loss carryforward, which may occur during fiscal 1998, the Company
will record a provision for taxes at statutory rates.

ACQUISITION PROGRAM

The Company has implemented an aggressive acquisition program to expand its
operations by acquiring solid waste collection, transportation, and disposal
companies, principally in the eastern United States. Approximately $47.3
million or 90.3% of the Company's revenues for the nine months ended March 31,
1997 and approximately $69.8 million or 78.1% of the Company's assets at March
31, 1997 resulted from the nine acquisitions consummated by the Company
between July 1996 and March 1997. Of the nine acquisitions (of its 18
acquisitions in total), six have been accounted for under the purchase method
of accounting and three have been accounted for under the pooling of interests
method of accounting.

28
<PAGE>

With respect to the six acquisitions that have been accounted for under the
purchase method of accounting, goodwill is amortized over a period of 40
years, resulting in an annual non-cash charge to earnings during the
amortization period. Accordingly, if the Company completes additional
acquisitions which are accounted for under the purchase method of accounting,
its financial position and results of operations may fluctuate significantly
from period to period, as a result of additional non-cash charges relating to
goodwill.

In connection with each of its acquisitions, the Company attempts to
implement a number of cost saving measures, including reductions (in certain
instances) in management levels and other personnel, the imposition of
centralized management and cost controls, and the elimination of duplicative
collection routes.

Because of the relative importance of acquired businesses and assets to the
Company's financial performance, the Company does not believe that its
historical financial statements are necessarily indicative of future
performance.

RECENT DEVELOPMENTS

On May 12, 1997, the Company acquired Waste Services, Inc. and its
affiliates ("WSI") in consideration of 1,159,980 shares of Common Stock and
the assumption of $6.2 million of debt, subject to adjustment upon the
occurrence of certain events. The Company also acquired Coney Island Rubbish
Removal, Inc. ("Coney Island") and Golden Gate Carting, Co. Inc. ("Golden
Gate"), which have been closed into escrow pending approval of the
transactions by the New York City Trade Waste Commission, in consideration of
131,359 shares of Common Stock and the assumption of $50,273 of debt, and
157,500 shares of Common Stock and the assumption of $3.0 million of debt,
respectively, subject to adjustment upon the occurrence of certain events. The
acquisitions of WSI, Coney Island, and Golden Gate were accounted for under
the purchase method of accounting. Each of these companies provide principally
commercial waste collection services in Brooklyn, New York and had total
revenues of $16.6 million for the nine months ended March 31, 1997.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE
NINE MONTHS ENDED MARCH 31, 1996

The following table presents the percentage each item in the consolidated
statements of operations bears to total revenues relating to continuing
operations.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
-------------------
1996 1997
-------- --------
<S> <C> <C>
Revenues............................................... 100.0% 100.0%
Cost of revenues....................................... 81.6 72.6
Selling, general and administrative expenses........... 19.5 17.6
Merger costs........................................... -- 6.4
-------- --------
Operating (loss) income................................ (1.1) 3.4
Interest expense....................................... (1.4) (2.9)
Other income........................................... .6 .9
-------- --------
(Loss) income before income taxes...................... (1.9) 1.4
Income taxes........................................... -- 1.8
-------- --------
Loss from continuing operations........................ (1.9)% (.4)%
======== ========
</TABLE>

Revenues for the nine months ended March 31, 1997 were $52.4 million
compared to $29.0 million for the nine months ended March 31, 1996, an
increase of $23.4 million or 80.7%. The principal factor affecting the
increase in revenues was the impact of acquisitions, primarily of Allied Waste
Services, Inc., K Hydraulic Truck Services, Inc., R & A Bender, Inc., Bayside
of Marion, Inc., Olney Sanitary Systems, Inc., and their respective
affiliates, which contributed aggregate revenues of $12.5 million for the nine
months ended March 31, 1997. The

29
<PAGE>

acquisition of Super Kwik, Inc. and Donno Company, Inc., which have been
accounted for under the pooling of interests method, contributed revenue of
$26.5 million for the nine months ended March 31, 1997 compared to $23.3
million for the nine months ended March 31, 1996, an increase of $3.2 million.
Additionally, Apex Waste Services, Inc., accounted for under the pooling of
interests method, contributed revenues of $8.6 million since its inception of
operations on October 1, 1996.

Cost of revenues for the nine months ended March 31, 1997 were $38.0 million
compared to $23.7 million for the nine months ended March 31, 1996, an
increase of $14.3 million. Cost of revenues as a percentage of revenues for
the nine months ended March 31, 1997 was 72.6% compared to 81.6% for the same
period in fiscal 1996. Cost of revenues as a percentage of revenues decreased
during this period primarily due to the acquisition by the Company of two
landfills, which operated at relatively higher margins than the Company's
other operations and due to the operating efficiencies imposed on previously
private acquired companies. A portion of the decrease was also attributable to
economies of scale relating to the Company's increase in size over the period.

Selling, general and administrative expenses for the nine months ended March
31, 1997 were $9.2 million compared to $5.7 million for the nine months ended
March 31, 1996, an increase of $3.5 million. These expenses as a percentage of
revenues for the nine months ended March 31, 1997 were 17.6% compared to 19.5%
for the same period in fiscal 1996. These reductions as a percentage of
revenue reflect certain cost savings related to economies of scale in
restructuring the Company's insurance programs and overall efficiencies gained
through integrating acquisitions partially offset by increases in corporate
functions, including accounting, finance, legal and administration, in
connection with providing these services.

Merger costs incurred during the nine months ended March 31, 1997 were a
total of $3.3 million relating to the acquisitions of Super Kwik, Inc., Donno
Company, Inc., and Apex Waste Services, Inc. Merger costs include $835,000 of
transactions costs and $2.5 million of costs related to integrating
operations.

Interest expense for the nine months ended March 31, 1997 was $1.5 million
compared to $417,000 for the nine months ended March 31, 1996, an increase of
$1.1 million. This increase is principally the result of borrowings under the
Company's credit facility for the purchase of R&A Bender, Inc. and increased
interest expense related to Super Kwik, Inc. for the purchase of real estate
and an increase in equipment financing over the prior year.

Other income for the nine months ended March 31, 1997 was $461,000 compared
to $187,000 for the nine months ended March 31, 1996, an increase of $274,000.
This increase in other income included a $140,000 increase in interest income,
reflecting earnings on the net proceeds from private placements of Common
Stock in the summer of 1996, and a $126,000 increase in gains from
dispositions of fixed assets.

The tax provision for the nine months ended March 31, 1997 included $904,000
relating to the completion of the mergers with Super Kwik, Inc., Donno
Company, Inc., and Apex Waste Services, Inc. and their respective affiliates.
The provision reflects the recording of a deferred tax provision as of the
date of the respective mergers, at which time the pooled entities' S
corporation elections were terminated. The remainder of the tax provision
relates to state income taxes. An effective tax rate lower than the federal
and state statutory rates in the year is primarily due to the use of net
operating loss carryforwards.

30
<PAGE>

RESULTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1996 COMPARED TO THE YEAR
ENDED JUNE 30, 1995

The following table presents the percentage each item in the consolidated
statements of operations bears to total revenues relating to continuing
operations.

<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
-------------
1995 1996
----- -----
<S> <C> <C>
Revenues................................................... 100.0% 100.0%
Cost of revenues........................................... 82.6 84.6
Selling, general and administrative expenses............... 17.7 24.7
----- -----
Operating loss............................................. (.3) (9.3)
Interest expense........................................... (1.4) (1.6)
Other income (expense)..................................... 1.2 (.3)
----- -----
Loss before income taxes................................... (.5) (11.2)
Income taxes............................................... .4 --
----- -----
Net loss from continuing operations........................ (.1)% (11.2)%
===== =====
</TABLE>

Revenues for the year ended June 30, 1996 were $39.5 million compared to
$40.8 million for the year ended June 30, 1995, a decrease of $1.3 million or
3.2%. The principal factors affecting the reduction in revenues were a
decrease in collection revenues at Donno due primarily to the discontinuation
of a subcontract from a solid waste services company for collection services
in New York City and the termination of a contract to operate a transfer
station in Hempstead, Long Island, the closure of the Company's collection
operations in South Carolina and declines in revenues at the Company's
landfills in South Carolina and Kentucky. During the year period ended June
30, 1995 Donno benefited from a one time contract termination settlement of
$660,000. Increased revenues at Super Kwik, due primarily to acquisitions
completed in January and November 1995 and at the Company's West Virginia
landfill, offset part of the decline in revenues.

Cost of revenues for the year ended June 30, 1996 were $33.4 million
compared to $33.7 million for the year ended June 30, 1995, a decrease of
$268,000. The principal factors affecting the reduction in cost of revenues
for the year ended June 30, 1996 were, reduced operating costs at Donno
primarily due to the discontinuation of a collection services contract in New
York City and the termination of a contract to operate a transfer station in
Hempstead, Long Island and the Company's discontinued collection operation at
the South Carolina landfill. Cost of revenues increased at Super Kwik due to
acquisitions completed in January and November 1995. Cost of revenues as a
percentage of revenues for the year ended June 30, 1996 was 84.6% compared to
82.6% for the same period in fiscal 1995 and increased during 1996 primarily
due to a charge of $900,000 for closure and post closure monitoring costs
relating to the Company's Kentucky landfill, and a one time contract
termination settlement of $660,000 at Donno which was included in revenues
during the year ended June 30, 1995.

Selling, general and administrative expenses for the year ended June 30,
1996 were $9.8 million compared to $7.2 million for the year ended June 30,
1995, an increase of $2.6 million. SG&A expenses as a percentage of revenues
for the year ended June 30, 1996 was 24.7% compared to 17.7% for the same
period in 1995, an increase of 7.0%. The increase in SG&A resulted primarily
from $1.8 million of additional salary and benefit expenses, rent, bad debt
expense, a one time sales tax claim and professional fees in connection with
the sale of Super Kwik to the Company, and the recording of $879,000 of
unusual costs, primarily severance and office relocation costs in connection
with the Company's change in control in June 1996.

Interest expense for the year ended June 30, 1996 was $629,000 compared to
$580,000 for the twelve months ended June 30, 1995, an increase of $49,000.
This increase is primarily due to additional interest expense

31
<PAGE>

at Super Kwik, partially offset by reduced interest expense in connection with
borrowings under the Company's credit facility.

Other income (expense) for the year ended June 30, 1996 was a loss of
$131,000 compared to income of $488,000 for the year ended June 30, 1995, a
decrease of $619,000. This decrease in other income is primarily due to a
$489,000 one-time write down to estimated net realizable value of landfill,
hauling and real estate assets no longer considered integral to the operation
of the Company after its change of control.

The Company's effective tax rate, including both federal and state taxes,
was 72.8% for fiscal 1995 with a minimal tax benefit being recorded in 1996.
In 1995, the Company's effective tax rate was higher than the federal
statutory rates primarily due to income generated from Super Kwik and Donno
which were taxed under Subchapter S of the Internal Revenue Code. In 1996, the
effective tax rate is less than the federal and state statutory rates
primarily due to a valuation allowance offsetting the current year tax benefit
of net operating loss carryforwards due to a lack of certainty of realization
of these loss carryforwards in future years as a result of recent historic
reported operating losses.

LIQUIDITY AND CAPITAL RESOURCES

The Company's business requires substantial amounts of capital. The
Company's capital requirements include acquisitions, equipment purchases, and
capital expenditures for cell construction and expansion of its landfills. The
Company plans to meet these capital needs from various financing sources,
including borrowings, internally generated funds, and the issuance of Common
Stock.

As of March 31, 1997, the Company had working capital deficit of $700,000,
including cash and cash equivalents of $3.9 million. For the first nine months
of fiscal 1997, net cash provided by operations was approximately $3.0
million, with net cash from financing activities of approximately $38.7
million, including net proceeds of $10.0 million from private placements of
Common Stock and net cash from investing activities of approximately $39.5
million. A significant portion of the capital expended during the period,
approximately $39.8 million, was used to fund the acquisition of property and
equipment, including $34.2 million relating to acquisitions of businesses,
$3.7 million for the purchase of operating equipment and real estate, and $1.9
million related to the permitting and development of landfill space.

The Company to date has required substantial amounts of capital and it
expects to continue to expend substantial amounts to support its acquisition
program and the expansion of its disposal and transportation operations. The
Company estimates aggregate capital expenditures of approximately $8.4 million
for the year ending June 30, 1997, of which $5.5 million has already been
expended through March 31, 1997, and $17.9 million for the year ending June
30, 1998. The Company has addressed its capital need through private
placements of Common Stock which generated net proceeds of $10.0 million in
the nine months ended March 31, 1997 and by establishing a revolving credit
facility. The Company believes that the revolving credit facility, the funds
expected to be generated from operations and the anticipated net proceeds of
the Offering will provide adequate cash to fund the Company's working capital
and other cash needs for the foreseeable future.

On September 25, 1996, the Company entered into a revolving credit facility
with BankBoston, N.A. (formerly known as First National Bank of Boston) and
Bank of America Illinois to provide for borrowings up to $30.0 million (the
"Credit Facility"). The Credit Facility, which was increased to $50.0 million
on January 27, 1997 and to $100.0 million on May 8, 1997, is available for
repayment of debt, funding of acquisitions, working capital, and for up to
$15.0 million in standby letters of credit. As of May 31, 1997, $52.0 million
and $1.4 million in letters of credit were outstanding under the Credit
Facility. The net proceeds of the Offering will be used to reduce outstanding
indebtedness under the Credit Facility.

At the Company's option, the interest rate on any loan under the Credit
Facility may be based on an adjusted prime rate or Eurodollar rate, as defined
in the agreement. As of May 31, 1997, the applicable interest rate was 8.5%.
The facility expires on April 30, 2000. The Credit Facility requires the
payment of a commitment fee based

32
<PAGE>

in part on the unused balance, payable in arrears, and provides for certain
restrictions on, among other things, the ability of the Company to incur
borrowings, sell assets, acquire assets, make capital expenditures or pay cash
dividends. The facility also requires the maintenance of certain financial
ratios, including interest coverage ratios and balance sheet and cash flow
leverage ratios, and requires profitable operations. The facility is
collateralized by all the stock of the Company's subsidiaries, whether now
owned or hereafter acquired.

The Company will have financial obligations related to closure and post-
closure monitoring and maintenance of the currently permitted and operating
landfills. While the exact amount of future closure obligations cannot be
determined, the Company estimates that the costs of final closure of the
currently permitted and operating areas at the Company's six landfills will be
approximately $13.6 million, of which $3.2 million has been accrued as of
March 31, 1997. The Company makes an accrual for these costs based on consumed
airspace in relation to management's estimate of total available airspace of
the landfills. The Company has accrued $1.5 million for post-closure
obligations as of March 31, 1997. The Company maintains a bonding facility
pursuant to certain statutory requirements regarding financial assurance for
the closure and post-closure monitoring cost requirements for its Kentucky,
West Virginia and Pennsylvania disposal facilities. Bonds outstanding at March
31, 1997 were $1.6 million for the Kentucky landfill, $214,000 for the West
Virginia landfill, and $1.6 million for the Pennsylvania landfill. The bonds
are collateralized by irrevocable letters of credit and trust fund deposits.
Additionally, the Company has on deposit $408,000 as financial assurance for
landfill closure and post-closure for closed disposal areas. The trust fund
and the certificates of deposit are restricted from current operations and are
included within other noncurrent assets. The Company's Kentucky landfill
bonding requirement will increase by $3.0 million for closure and $300,000 for
post-closure of the expansion area permitted October 14, 1996 (reissued
February 26, 1997). The Company anticipates that the West Virginia bonding
requirements will substantially increase when West Virginia's solid waste
program is approved by the federal government. The Company has agreed to
indemnify a surety providing financial assurance for closure and post-closure
care requirements for an unlined landfill located adjacent to the new Illinois
landfill in the new amount of $646,000 in the event the owner of the adjacent
landfill defaults on its closure and/or post-closure care obligations.
Financial assurance requirements could increase to approximately $3.1 million
for closure and $3.7 million for post-closure monitoring and care. Additional
collateral requirements will be imposed upon the Company which will affect
profitability of the Company. The Company anticipates providing financial
assurance incrementally over the life of the facility as disposal cells are
constructed and certified for acceptance of waste.

SEASONALITY AND INFLATION

The Company's revenues tend to be somewhat lower in the winter months. This
is primarily attributable to the fact that the volume of industrial and
residential waste in the regions in which the Company operates tends to
decrease during the winter months. In addition, particularly harsh weather
conditions may affect the Company's operations by interfering with collection,
transportation, and disposal operations, delaying the development of landfill
capacity, and/or reducing the volume of waste generated by the Company's
customers.

The Company believes that inflation and changing prices have not had, and
are not expected to have, any material adverse effect on its results of
operations in the near future.

RECENT ACCOUNTING PRONOUNCEMENT

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share," which is required to be adopted for fiscal
periods ending after December 15, 1997 (fiscal 1998 for the Company). At that
time, the Company will be required to change the method currently used to
compute earnings per share. Under the new standard, the dilutive effect of
stock options and stock warrants will be excluded from basic earnings per
share. If earnings per share had been calculated under the new requirements,
the effect would not have been material to the periods presented.

In October 1996, the AICPA issued SOP 96-1, Environmental Remediation
Liabilities. The SOP provides guidance with respect to the recognition,
measurement and disclosure of environmental remediation liabilities. The
Company will adopt SOP 96-1 in the first quarter of fiscal 1998 and, based on
current circumstances, does not believe the effect of such adoption will be
material.

33
<PAGE>

BUSINESS

GENERAL

Eastern Environmental Services, Inc. is a non-hazardous solid waste
management company specializing in the collection, transportation, and
disposal of residential, industrial, commercial, and special waste,
principally in the eastern United States. In June 1996, control of the Company
was acquired by a group of investors who repositioned the Company for the
purpose of implementing an aggressive acquisition program in the solid waste
industry. The Company appointed a new Board of Directors, hired a new
management team with an average of 17 years of experience in the waste
management industry, raised a total of approximately $10.0 million through two
private placements of Common Stock, and established a credit facility
principally for acquisitions. Since July 1996, the Company has made 18 solid
waste management acquisitions, and thereby entered new markets in Florida,
Illinois, New Jersey, New York, and Pennsylvania. The businesses acquired
operated 15 solid waste collection and transportation operations, four solid
waste transfer and processing facilities, two landfills, and one special waste
services operation. Largely as a result of these acquisitions, during the nine
months ended March 31, 1997, the Company's revenues increased by 80.7% (from
$29.0 million to $52.4 million) and its results of operations (excluding
merger costs and related tax provisions incurred as a result of such
acquisitions) increased from a net loss of $541,000 for the nine months ended
March 31, 1996 to net income of $4.0 million for the nine months ended March
31, 1997.

The Company currently operates solid waste collection and transportation
operations in southern Florida, southeastern Illinois, southern New Jersey,
the greater metropolitan New York City area, eastern and southcentral
Pennsylvania (including Philadelphia), and South Carolina, and owns a landfill
in each of Florida, Kentucky, Pennsylvania, South Carolina, and West Virginia.
The Company has also recently exercised an option to acquire, subject to
regulatory approval, land in Illinois upon which it has received the necessary
permits to construct a landfill. Of the Company's revenues for the nine months
ended March 31, 1997, approximately 80.3% was attributable to solid waste
collection and transportation operations, approximately 8.3% was attributable
to solid waste disposal operations, and approximately 11.4% was attributable
to other waste management services. The Company currently provides solid waste
collection services to approximately 30,000 commercial and industrial
customers and approximately 135,000 residential customers.

The Company believes that significant opportunities exist to acquire
additional solid waste collection, transportation, and disposal businesses in
the eastern United States and to develop within its existing markets. As part
of its acquisition program, the Company reviews acquisition opportunities on
an ongoing basis and is currently in various stages of negotiating the
acquisition of additional solid waste management businesses.

INDUSTRY OVERVIEW

According to the Environmental Business Journal (the "EBJ"), an industry
trade publication, the United States nonhazardous solid waste collection and
disposal industry generated estimated revenues of approximately $32.5 billion
in 1995. The EBJ also reports that 21% of the solid waste industry revenue is
accounted for by approximately 5,900 private, predominately small, collection
and disposal businesses; 31% by municipal governments that provide collection
and disposal services; and 48% by publicly-traded solid waste companies.

In recent years, the industry has experienced significant consolidation. The
Company believes that this consolidation has been caused primarily by four
factors: (i) increasingly stringent environmental regulation and enforcement,
especially with regard to landfill operations as a result of Subtitle D
Regulations; (ii) competition from other larger companies that have developed
or achieved economies of scale; (iii) an industry model that emphasizes
providing both collection and disposal capabilities; and (iv) the continuing
privatization by some municipalities of their collection or disposal
operations.

The overall consequences have been significant increases in the technical
and managerial expertise necessary to operate profitably, significant
increases in costs and capital requirements, and significant increases in the
competitive advantages enjoyed by larger and well capitalized companies. Many
smaller companies and

34
<PAGE>

municipalities have found the increased costs difficult to bear, and the
requisite technical and managerial sophistication difficult to obtain. As a
result, a large number of smaller operators and municipalities have either
closed or sold their operations. The Company anticipates that these trends
will continue, and possibly intensify, in the near-term future.

STRATEGY

EXPANSION THROUGH ACQUISITIONS. The Company has implemented an aggressive
acquisition program to expand its operations by acquiring solid waste
collection, transportation, and disposal companies, principally in the eastern
United States. The principal components of the Company's acquisition strategy
are as follows:

. Enter Markets. The Company typically seeks to enter a new market by
acquiring one or several solid waste collection and transportation
operations that can be served by a Company-owned landfill or transfer
station or in which there are expected to be sufficient disposal
alternatives to ensure competitive disposal pricing. The Company may also
acquire solid waste landfills in its targeted new markets with
significant additional current and permitted capacity and thereafter
acquire nearby solid waste collection and transfer station operations so
as to secure a captive waste stream for internal disposal into the
acquired landfill.

. Expansion of Market Share and Services. After its initial entry into a
new market, the Company continually seeks to expand its market share and
services through (i) the acquisition of solid waste management businesses
and operations that can be integrated with its existing operations
without increases in infrastructure or that complement its existing
services and (ii) expansion into adjacent markets. Such acquisitions may
involve adding collection operations, transfer stations, collection
routes, and landfill capacity which allow the Company to expand market
share and increase asset utilization by eliminating duplicative
management, administrative, and operational functions.

INCREASING PRODUCTIVITY AND OPERATING EFFICIENCY. The Company believes that
it can reduce the total operating expenses of owned and acquired businesses by
imposing centralized financial controls, consolidating certain functions
performed separately by each business prior to its acquisition by the Company,
and consolidating collection routes, equipment, and personnel through tuck-in
acquisitions. In addition, the Company is implementing programs to take
advantage of certain economies of scale in such areas as the purchase of
equipment, vehicles, parts and tools, vehicle and equipment maintenance, data
processing, financing arrangements, employee benefits, insurance and bonding,
and communications. Through the integration of certain of its solid waste
collection, transportation, and disposal operations, the Company believes that
it will be able to capture profits that would otherwise be paid to third
parties as tipping and other fees.

INTERNAL GROWTH. The Company believes that it can achieve internal growth,
principally from additional sales into its current markets, by providing
superior and improved service, and through its existing marketing efforts. The
Company also intends to selectively implement price increases when competitive
advantages and appropriate market conditions exist.

<PAGE>

ACQUISITION PROGRAM

Given the large size and fragmentation of the United States solid waste
industry, the Company believes that there are numerous potential acquisition
candidates, both within the markets that it currently serves and in other
eastern United States markets, meeting its acquisition criteria. The Company
targets fragmented markets in the eastern United States (i) that are served by
a Company-operated landfill, a landfill that the Company believes that it can
acquire, or in which collection companies can use comparably priced third
party disposal facilities, (ii) in which the Company can become one of the
leading providers of solid waste management services through strategic
acquisitions, (iii) where management believes additional complementary
acquisitions can be effected so as to obtain the market share necessary to
achieve economies of scale, and (iv) that have sufficient population density
to permit the Company to operate efficiently. The Company is continually
analyzing and engaging in discussions concerning potential acquisitions.

The Company's senior management spends a substantial portion of its time
identifying acquisition candidates, conducting due diligence investigations,
and other evaluations in connection with acquisitions, and negotiating and
consummating acquisitions. All material acquisitions are subject to the
approval of the Board of Directors of the Company. Since June 1996, the
Company has analyzed a substantially greater number of companies than it has
acquired. In considering a potential acquisition, the Company examines a large
number of factors, including the historical operating results of the entities
to be acquired, competition in the market served, the availability of
alternative disposal facilities or facilities that can be acquired on
satisfactory terms and conditions, the prospects for achieving synergies with
existing operations or through complementary acquisitions, the types of
services provided, the reputation of the entity, and the entity's customers,
accounts receivable, personnel, environmental and legal liability, capital
needs, regulatory compliance, and workplace productivity. Because the solid
waste management industry remains localized, a key component of the Company's
acquisition strategy for new markets entrance is to identify businesses with
proven management that can be retained following the acquisition.

The Company also evaluates each possible acquisition on a number of standard
industry measures, including the population density of the market served by
the acquired entity and the acquired entity's market share. Prior to
consummating an acquisition, the Company generally develops a pro forma budget
which includes capital needs, cash flow analysis, and operating details giving
effect to synergies, reductions, and eliminations expected to be achieved in
the acquisition, and which serves as the Company's principal financial tool in
evaluating acquisitions.

While the Company's typical acquisition target is a privately held
collection or transportation company or disposal facility, the Company
believes that there are currently significant opportunities to acquire solid
waste collection, transportation, and disposal operations, as well as
particular collection routes and lines of businesses from larger publicly held
companies as these companies restructure certain of their operations.

An integration plan is developed for each business prior to its acquisition.
In connection with each of its acquisitions, the Company seeks to maintain and
increase the profitability of the acquired company by imposing centralized
financial controls, consolidating certain functions performed separately by
each business prior to its acquisition by the Company, and consolidating
collection routes, equipment, and personnel. In addition, the Company
implements programs to take advantage of certain economies of scale in such
areas as the purchase of equipment, vehicles, parts and tools, vehicle and
equipment maintenance, data processing, financing arrangements, employee
benefits, insurance and bonding, and communications. During the period
immediately following the acquisition, the Company closely monitors the
operations of the acquired business to assure conformity to the pre-closing
budget and pro forma analyses, and where deviations develop, to take
corrective action.

As consideration for future acquisitions the Company intends to continue to
use combinations of Common Stock, cash and assumption of indebtedness. The
consideration for each future acquisition will vary on a case-by-case basis
depending on the financial interests of the Company and the historic operating
results and future prospects of the business to be acquired. The Company
expects to finance future acquisitions through funds

<PAGE>

provided by operations, with lines of credit available under its credit
facility, and from the proceeds of future equity and debt financings. See
"Shares Eligible for Future Sale."

COMPLETED ACQUISITIONS. Since July 1996, the Company has made 18 solid waste
management acquisitions, which operated 15 solid waste collection and
transportation operations, four solid waste transfer and processing
facilities, two landfills, and one special waste services operation. These
acquisitions are detailed below:

COMPLETED ACQUISITIONS

JULY 1996--JUNE 1997

<TABLE>
<CAPTION>
DATE ACQUIRED
COMPANY (ACCOUNTING METHOD) MARKET PRINCIPAL BUSINESS
- ------- ------------------- ------ ------------------
<S> <C> <C> <C>
A-1 Carting Corporation June 18, 1997 Southern Florida Solid waste
(Purchase) collection
Ameri Carting, Inc. June 18, 1997 Southern Florida Solid waste
(Purchase) collection
Waste Services, Inc., et May 12, 1997 Brooklyn, New York Solid waste
al. (Purchase) collection
C & R Waste Removal, May 10, 1997 Southern Florida Solid waste
Inc. (Purchase) collection
Combined Waste Services, May 10, 1997 Southern Florida Solid waste
Inc. (Purchase) collection
Environmental Waste May 10, 1997 Southern Florida Solid waste
Systems Inc. (Purchase) collection
Environmental Waste May 10, 1997 Southern Florida Solid waste
Systems of Palm Beach, (Purchase) collection
Inc.
Five Towns Recycling, May 1, 1997 Long Island, New York Transfer station
Inc. (Purchase)
Big T Disposal, Inc. April 11, 1997 Southeastern Illinois Solid waste
(Purchase) collection and
transfer station
Apex Waste Services, March 31, 1997 Scranton, Solid waste
Inc. (Pooling of Pennsylvania collection; transfer
Interests) station and
processing
Donno Company, Inc., et January 31, Long Island, New York Solid waste
al. 1997 collection and
(Pooling of transfer station
Interests)
R&A Bender, Inc., et al. December 10, Southcentral Solid waste
1996 Pennsylvania collection and
(Purchase) landfill (municipal
solid waste)
Bayside of Marion, Inc. November 5, Central Florida Landfill
1996 (construction &
(Purchase) demolition)
Super Kwik, Inc., et al. September 27, Southern New Jersey Solid waste
1996 collection
(Pooling of
Interests)
Olney Sanitary System, September 17, Southeastern Illinois Solid waste
Inc. 1996 collection
(Purchase)
Eastern Waste of August 1, 1996 Philadelphia, Solid waste
Philadelphia, Inc., et (Purchase) Pennsylvania collection
al.
K Hydraulic Truck July 27, 1996 Philadelphia, Solid waste
Services, Inc. (Purchase) Pennsylvania transportation
Allied Waste Services, July 2, 1996 New York, New Jersey, Arranges for the
Inc., et al. (Purchase) Pennsylvania, transportation of
California construction and
demolition waste and
disposal of soil and
special waste
products
</TABLE>

37
<PAGE>

PENDING ACQUISITIONS. The Company has entered into definitive agreements to
acquire Golden Gate Carting, Co. Inc. ("Golden Gate") and Coney Island Rubbish
Removal, Inc. ("Coney Island"), solid waste collection companies located in
Brooklyn, New York, for approximately $4.4 million and $1.2 million,
respectively. The acquisitions have been closed into escrow pending the
satisfaction of certain conditions, including the approval of the TWC. The
Company currently operates Golden Gate and Coney Island under management
agreements that have been approved by the TWC. The management agreements will
stay in place, at the Company's option, until the TWC approves the
acquisitions.

The Company believes that significant opportunities exist to acquire
additional solid waste collection, transportation, and disposal operations in
the eastern United States and to develop its existing markets. As part of its
acquisition program, the Company reviews acquisition opportunities on an
ongoing basis and is currently in various stages of negotiating the
acquisition of additional solid waste management businesses. There can be no
assurance that any of such acquisition negotiations will result in the actual
acquisition of additional solid waste management businesses.

SERVICES

The Company's services include solid waste collection, transportation,
disposal, and certain other waste management services.

WASTE COLLECTION AND TRANSPORTATION. The Company currently provides solid
waste collection services to approximately 29,000 commercial and industrial
customers and approximately 135,000 residential customers. The Company
contracts with local generators of solid waste and transfers the waste to a
Company-owned or third party landfill or incinerator for disposal or to a
transfer station for additional handling. After compacting and/or separating
at a Company-owned transfer station, the Company directs waste to its own
landfill, to a third party landfill, or to an incinerator.

Solid waste collection is provided under two primary types of arrangements
depending on the customer being served. Collection services for commercial and
industrial customers are generally performed under one to three year service
agreements and fees are determined by such factors as collection frequency,
the type of collection equipment furnished, the type, volume, and weight of
the solid waste collected, the distance to the disposal facility, and the cost
of disposal, although in certain instances the Company may contract for a
specific job. Collection services for residential customers generally are
performed under contracts with, or franchises granted by, municipalities or
regional authorities that grant the Company rights to service all or a portion
of the residents in their jurisdictions, except in rural areas where the
Company usually contracts directly with the customer. Such contracts or
franchises generally range in duration from one to three years. Recently, some
municipalities have bid their residential collection contracts based on the
volume of waste collected. Residential collection fees are either paid by the
municipalities out of tax revenues or service charges or paid directly by
residents receiving the service.

As part of its waste collection services, the Company provides steel
containers to most of its commercial and industrial customers to store its
solid wastes. These containers range in size from one to eight cubic yards and
are designed to be lifted mechanically and emptied into a collection vehicle's
compaction hopper. The Company also offers roll-off containers (industrial
dumpsters) that range in size from eight to 45 cubic yards. The use of
containers enables the Company to service most of its commercial and
industrial customers with collection vehicles operated by a single employee.

The Company's solid waste collection activities also include the ownership
of transfer stations in Long Island, New York, Scranton, Pennsylvania,
Somerset, Kentucky, and southeastern Illinois, and the operation of an
additional transfer station in Long Island, New York. The Company's transfer
stations receive solid waste collected primarily from its collection
operations, compact the waste and transfer the waste to larger Company-owned
vehicles for transport to landfills. This procedure reduces the Company's
costs by improving its utilization of collection personnel and equipment and
also extends the scope of its solid waste transportation services. Over the
nine months ended March 31, 1997, approximately 77.6% of the solid waste
disposed of at the Company's transfer stations was delivered by the Company
and approximately 22.4% was delivered by third parties.

38
<PAGE>

In response to the increasing public environmental awareness and expanding
federal and state regulations pertaining to waste recycling, the Company also
has developed recycling as a component of its solid waste collection services.
However, the Company does not presently intend to expand its recycling
operations, except as necessary to comply with applicable law.

The Company also provides solid waste transportation services for Company-
owned and third party landfills. At June 26, 1997, the Company maintained a
fleet of approximately 170 trailers owned or leased by the Company, or
operated under arrangements with independent owners/operators, and has
satellite trucking terminals at two of its landfills. The Company is expanding
its operations to include the transportation of other non-hazardous wastes,
including shredded and lead contaminated construction and demolition debris.
In many states, the transportation of these wastes requires special permits,
which the Company has obtained or is in the process of obtaining.

Waste collection and transportation services generated revenues of $35.8
million and $42.1 million for the year ended June 30, 1996 and for the nine
months ended March 31, 1997, respectively, representing approximately 90.7%
and 80.3%, respectively, of the Company's total revenue for such periods.

WASTE DISPOSAL. The Company owns five non-hazardous solid waste landfills,
of which four are currently operational and the other one is expected to be
operational in the spring of 1998. The Company has also recently exercised an
option to acquire, subject to regulatory approval, land in Illinois upon which
it has received the necessary permits to construct a landfill. Disposal
services generated revenues of $3.7 million and $4.3 million for the year
ended June 30, 1996 and for the nine months ended March 31, 1997,
respectively, representing approximately 9.3% and 8.3%, respectively, of the
Company's total revenue for such periods.

The following table summarizes certain information concerning the Company's
landfills:

COMPANY LANDFILLS

<TABLE>
<CAPTION>
TOTAL PERMITTED APPROXIMATE UNUSED APPROXIMATE LIFE
LOCATION TOTAL ACRES DISPOSAL ACRES PERMITTED CAPACITY(1) IN YEARS(2)
- -------- ----------- --------------- --------------------- ----------------
<S> <C> <C> <C> <C>
Ocala, Florida.......... 31 31 1.6 million 15
Bridgeport,
Illinois(3)............ 95 42 5.7 million 20
Somerset, Kentucky(4)... 244 42 5.5 million 20
Chambersburg,
Pennsylvania........... 278 142 14.3 million 35
Eastover, South
Carolina............... 73 39 3.1 million 25
Clarksburg, West
Virginia............... 145 45 4.8 million 24
</TABLE>
- --------
(1) Approximate cubic yards of airspace at March 31, 1997; total yards of
airspace does not represent total yards of actual waste volume because
daily, intermediate, and final soil cover consumes some airspace (thus
reducing the airspace available for waste disposal).

(2) Approximate figures based on existing volume limitations, anticipated
operations, and current permitted capacity at March 31, 1997. Life
expectancy will decrease with increases in the rate of waste disposed.

(3) In May 1997 the Company exercised an option to purchase the Illinois
landfill. The transfer of the Illinois landfill is subject to the consent
of Lawrence County, Illinois pursuant to the host agreement with the
current owner. The landfill is approved to accept municipal solid waste
and industrial and non-hazardous special waste and construction is planned
for the fall of 1997. The landfill is expected to be operational in the
spring of 1998.

(4) The Kentucky landfill received its final state construction permit on
October 14, 1996 (reissued February 26, 1997) and construction is planned
for the fall of 1997.

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

39
<PAGE>

Florida Landfill. Purchased in November 1996, this landfill is located near
Ocala, Florida and is currently permitted to accept Florida Class III landfill
debris, which includes asbestos, construction and demolition debris, yard
trash, waste tires, carpet, cardboard, glass, plastic, and other non-
putrescible (i.e., non-food) materials approved by the Florida Department of
Environmental Protection that are not expected to produce leachate and which
do not pose a threat to public health or the environment.

Illinois Landfill. In May 1997 the Company exercised an option to purchase
the landfill. The transfer of the Illinois landfill is subject to the consent
of Lawrence County, Illinois pursuant to the host agreement with the current
owner. This landfill is located in southeastern Illinois and is expected to be
operational in the spring of 1998 upon completion of construction and receipt
of a state operating permit. The landfill is approved to accept municipal
solid waste and industrial and non-hazardous special waste.

Kentucky Landfill. Purchased in July 1990, this landfill is located in
southcentral Kentucky and is currently permitted to accept municipal solid
waste from the surrounding 18 county area of Kentucky. The facility also may
accept commercial and industrial special waste approved by the State of
Kentucky on a case-by-case basis, and asbestos. The landfill is expected to
begin operations in the spring of 1998. The site also includes a permitted
transfer station.

Pennsylvania Landfill. Purchased in December 1996, this landfill is located
near Chambersburg, Pennsylvania and is currently permitted to accept up to 821
tons of waste per day, with a permitted quarterly average of 657 tons per day,
of municipal solid waste and non-hazardous industrial waste, petroleum
contaminated soil, and asbestos waste from anywhere in the United States.

South Carolina Landfill. Purchased in November 1990, this landfill is
located near Columbia, South Carolina and is currently permitted to accept up
to 122,400 in-place cubic yards per year of asbestos, construction and
demolition debris (excluding "white goods," such as household appliances),
plastic, fiberglass, trees, limbs, cardboard, paper, and tires from anywhere
within the continental United States. This site may also accept limited other
industrial and special wastes that meet certain minimum testing requirements
as approved by the State of South Carolina on a case-by-case basis.

West Virginia Landfill. Purchased in August 1989, this landfill is located
in northcentral West Virginia and is currently permitted to accept up to 9,999
tons per month of municipal solid waste, construction and demolition debris,
non-hazardous industrial waste, shredded tires, non-infectious medical waste,
petroleum contaminated soil, and asbestos waste from anywhere within the
continental United States and Canada.

OTHER WASTE MANAGEMENT SERVICES. The Company provides other waste management
services, most of which are provided on demand or are project-based, and
provide additional waste volumes to the Company's landfills. These other
integrated waste services include the transportation and disposal of non-
hazardous contaminated soils and similar materials, the removal and
transportation of special waste products, including asbestos, and arranging
for the transportation of construction and demolition waste and disposal of
soil and special waste products. Other waste management services generated
revenues of $6.0 million for the nine months ended March 31, 1997,
representing approximately 11.4% of the Company's total revenue for such
period. Revenues from other waste management services will fluctuate based on
the demand for such services.

OPERATIONS MANAGEMENT

The Company's financial, budgeting, and purchasing functions are centrally
managed, and at the conclusion of each acquisition, the Company typically
places financial personnel with the acquired entity to centralize authority
and financial reporting. The Company's day-to-day management, however, is
conducted on a decentralized basis, with the management of each operating
location responsible for local operations, profitability, the integration of
acquisitions, and growth, subject to the Company's overall business plan and
budget. Certain of the Company's corporate functions, including environmental
compliance, and purchasing and marketing expertise, are centralized and shared
among locations to improve productivity, lower operating costs, and stimulate
internal growth. Permits and other governmental approvals for the Company's
operations,

40
<PAGE>

including those related to zoning, environmental, and land use, are handled by
local engineers under the supervision of local and senior officers. While
local management operates with a high degree of autonomy, the Company's senior
officers monitor local operations and require conformance to its accounting,
purchasing, marketing, and internal control policies, particularly with
respect to financial matters. The performance of local management is reviewed
by the Company's executive officers on a regular basis.

The Company currently has a total of 18 operating locations in the eastern
United States. The acquisition by the Company of a solid waste management
business that will serve a new market area will operate as a separate
operating location. Solid waste management businesses acquired by the Company
that are located within an existing market are consolidated or "tucked-in"
with the Company's existing operations in such market.

MARKETING

Because of the local nature of the solid waste management industry, the
Company's marketing program is designed and implemented at the local level,
usually by experienced management retained by the Company from its acquired
businesses, under direct supervision of senior management. The Company
emphasizes providing quality services as well as customer satisfaction and
retention and believes that it will attract customers in the future because of
its reputation for quality service. The Company markets its services to a
broad spectrum of commercial, industrial, and residential customers, and has a
diverse customer base, with no single customer accounting for more than two
percent of the Company's revenues for the nine months ended March 31, 1997.
The Company does not believe that the loss of any single consumer would have a
material adverse effect on the Company's business or results of operations.

PROPERTY AND EQUIPMENT

The principal fixed assets used by the Company are its landfills which are
described under "Business--Services--Waste Disposal." The five landfills
currently owned by the Company are situated on sites owned by the Company.

The Company leases approximately 6,000 square feet of office space in Mt.
Laurel, New Jersey for its principal executive offices under a lease expiring
in June 2001. The Company owns real estate, buildings, and other physical
properties that it employs in substantially all of its solid waste collection
and transportation operations.

At June 26, 1997, the Company owned or leased approximately 630 items of
equipment including waste collection vehicles and related support vehicles, as
well as bulldozers, compactors, earth movers, and related heavy equipment and
vehicles used in landfill operations. At June 26, 1997, the Company also had
approximately 30,000 steel containers in use, ranging from one to 45 cubic
yards. The Company believes that its vehicles, equipment, and operating
properties are well maintained and adequate for its current operations.
However, the Company expects to make substantial investments in additional
equipment and property for expansion, for replacement of assets, and in
connection with future acquisitions.

COMPETITION

41
<PAGE>

The Company competes for waste disposal business on the basis of tipping
fees, geographical location, and quality of operations. The Company's ability
to obtain landfill business may be limited by the fact that some major
collection companies also own or operate landfills, to which they send their
waste. The Company competes for collection accounts primarily on the basis of
price and the quality of its services. Intense competition is encountered for
both quality of service and pricing. From time to time, competitors may reduce
the price of their services and accept lower profit margins in an effort to
expand or maintain market share or to win competitively bid contracts.

Increased public environmental awareness and certain mandated state
regulations have resulted in increased recycling efforts in many different
areas of the country that are currently, and will in the future, reduce the
amount of solid waste destined for landfills. However, such increased public
environmental awareness and certain mandated state regulations have also
increased the waste stream by programs of mandatory collection, disposal, and
clean-up programs. In addition, the Company could face competition from
companies engaged in waste incineration and other alternatives to landfill
disposal. Although the Company believes that landfills will continue to be the
primary depository for solid waste well into the future, there can be no
assurance that recycling, incineration, and other waste reduction efforts will
not affect future landfill disposal volumes. The effect, if any, on such
volumes could also vary between different regions of the country as well as
within individual market areas in each region.

LEGAL AND ADMINISTRATIVE PROCEEDINGS

The Company is routinely involved in certain legal and administrative
proceedings. All such proceedings arise in the ordinary course of business and
the Company believes that although the outcome of such proceedings cannot be
predicted with certainty, the cost of settlement or judgments arising from
such proceedings will not have a material adverse effect on the Company's
business or results of operations. However, a significant judgment against the
Company or the imposition of a significant fine or penalty could have a
material adverse effect upon the Company's business or results of operations.

EMPLOYEES

At June 26, 1997, the Company had approximately 760 full-time employees, of
which approximately 590 were employed in collection, transfer and disposal
operations, 130 in clerical, administrative, and sales positions

42
<PAGE>

and 40 in management. Approximately 200 of the Company's employees at four
operating locations are covered by collective bargaining agreements.
Management has not experienced a work stoppage and considers its employee
relations to be good.

GOVERNMENT REGULATION

INTRODUCTION. The Company is subject to extensive and evolving federal,
state, and local environmental laws and regulations. These regulations not
only strictly regulate the conduct of the Company's operations but also are
related directly to the demand for many of the services offered by the
Company.

These regulations are administered by the United States Environmental
Protection Agency ("EPA") and various other federal, state and local
environmental, zoning, health, and safety agencies. The Company believes that
it is currently in substantial compliance with applicable federal, state, and
local laws, permits, orders, and regulations. The Company believes that there
will continue to be increased regulation, legislation, and regulatory
enforcement actions related to the solid waste management industry. As a
result, the Company attempts to anticipate future regulatory requirements and
to plan accordingly to remain in compliance with the regulatory framework.

In order to develop and operate a landfill, a transfer station, and most
other solid waste management facilities, the Company typically must go through
several governmental review processes and obtain one or more permits and often
zoning or other land use approvals. Obtaining these permits and zoning or land
use approvals is difficult, time consuming, and expensive, and is often
opposed and appealed by various local elected officials and citizens' groups.
Once obtained, operating permits generally must be periodically renewed and
are subject to modification and revocation by the issuing agency.

The Company's operating facilities are subject to a variety of operational,
monitoring, site maintenance, closure, post-closure, and financial assurance
obligations which change from time to time and which could give rise to
increased capital expenditures and operating costs. In connection with the
Company's expansion of its existing or any newly acquired landfills, it is
often necessary to expend considerable time, effort, and money in complying
with the governmental review and permitting process necessary to maintain or
increase the capacity of these landfills. Governmental authorities have broad
authority to enforce compliance with these laws and regulations and to obtain
injunctions or impose civil or criminal penalties in the case of violations.
Failure to correct the problems to the satisfaction of the government
authorities could lead to curtailed operations, fines, and penalties or even
closure of a landfill or other facility. See "Risk Factors--Government
Regulation" for a discussion of certain of the material risks and liabilities
applicable to the Company and investment therein relating to governmental
regulation.

The principal federal, state, and local statutes and regulations applicable
to the Company's various operations are as follows:

THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976. The Resource
Conservation Act of 1976 ("RCRA") regulates the generation, treatment,
storage, handling, transportation, and disposal of solid waste and requires
states to develop programs to ensure the safe disposal of solid waste. RCRA
divides solid waste into two groups, hazardous and non-hazardous. Wastes are
generally classified as hazardous if they: (i) either (a) are specifically
included on a list of hazardous wastes or (b) exhibit certain hazardous
characteristics; and (ii) are not specifically designated as non-hazardous.
Wastes classified as hazardous under RCRA are subject to much stricter
regulation than wastes classified as non-hazardous. Among the wastes that are
specifically designated as non-hazardous waste are household waste and
"special" waste, including items such as petroleum contaminated soils,
asbestos, foundry sand, shredder fluff, and most non-hazardous industrial
waste products.

In October 1991, the EPA adopted regulations governing solid waste landfills
("Subtitle D Regulations"). The Subtitle D Regulations, which generally became
effective in October 1993, include location restrictions, facility design
standards, operating criteria, closure and post closure requirements,
financial assurance

43
<PAGE>

requirements, groundwater monitoring requirements, groundwater remediation
standards, and corrective action requirements. In addition, the Subtitle D
Regulations require that new landfill units meet more stringent liner design
criteria (typically, composite soil and synthetic liners or two or more
synthetic liners) designed to keep leachate out of groundwater and have
extensive collection systems to collect leachate for treatment prior to
disposal. Groundwater monitoring wells must also be installed at virtually all
landfills to monitor groundwater quality and, indirectly, the effectiveness of
the leachate collection system operation. The Subtitle D Regulations also
require, where threshold test levels are present, that methane gas generated
at landfills be controlled in a manner that protects human health and the
environment. Each state is required to revise its landfill regulations to meet
these requirements or such requirements will be automatically imposed upon it
by the EPA. Each state is also required to adopt and implement a permit
program or other appropriate system to ensure that landfills within the state
comply with Subtitle D Regulation criteria. A majority of the states in which
the Company currently operates or into which the Company may enter have
adopted regulations or programs as stringent as, or more stringent than, the
Subtitle D Regulations that have been approved by the EPA. Since the Company's
operating landfills are believed by the Company to be in compliance in all
material respects with such laws, the Company believes that all of its present
landfill operations meet or exceed the Subtitle D Regulations, where
applicable, in all material aspects.

THE FEDERAL WATER POLLUTION CONTROL ACT OF 1972. The Federal Water Pollution
Control Act of 1972, as amended (the "Clean Water Act"), establishes rules
regulating the discharge of pollutants from a variety of sources, including
solid waste disposal sites and transfer stations, into waters of the United
States. If runoff or collected leachate from the Company's landfills or
transfer stations is discharged into surface waters, the Clean Water Act would
require the Company to apply for and obtain a discharge permit, conduct
sampling and monitoring and, under certain circumstances, reduce the quantity
of pollutants in such discharge. Also, virtually all landfills are required to
comply with federal storm water regulations issued in November 1990, which are
designed to prevent possibly contaminated landfill storm water runoff from
flowing into surface waters. The Company believes that its facilities are in
compliance in all material respects with Clean Water Act requirements,
particularly as they apply to treatment and discharge of leachate and storm
water. The Company has secured or has applied for the required discharge
permits under the Clean Water Act or comparable state-delegated programs.

THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF
1980. The Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), establishes a regulatory and remedial program
intended to provide for the investigation and cleanup of facilities where
there has been, or is threatened, a release of any hazardous substance into
the environment. CERCLA's primary mechanism for remedying such problems is to
impose strict joint and several liability for cleanup of facilities on current
owners and operators of the site, former owners and operators of the site at
the time of the disposal of the hazardous substances, as well as the
generators of the hazardous substances and the transporters who arranged for
disposal or transportation of the hazardous substances. The costs of CERCLA
investigation and cleanup can be substantial. Liability under CERCLA does not
depend upon the existence or disposal of "hazardous waste" as defined by RCRA,
but can be founded upon the existence of even very small amounts of the more
than 700 "hazardous substances" listed by the EPA, many of which can be found
in household waste. If the Company were to be found to be liable under CERCLA,
the enforcing agency could hold the Company completely responsible for all
investigative and remedial costs even if other responsible parties may also be
liable. CERCLA also authorizes the imposition of a lien in favor of the United
States upon all real property subject to, or affected by, a remedial action
for all costs for which a party is liable. CERCLA provides a responsible party
with the right to bring legal action against other responsible parties for
their allocable share of investigative and remedial costs. The Company's
ability to get others to reimburse it for their allocable share of such costs
would be limited by the Company's ability to find other responsible parties
and prove the extent of their responsibility and the financial resources of
such other parties.

The Company handles and stores petroleum, motor oil, and other hazardous
substances at its facilities. In the past, there may have been historical
releases of these hazardous substances into the soil or ground water. The
Company may be required under federal, state, or local environmental law to
investigate and remediate this contamination.

44
<PAGE>

Pennsylvania Landfill. Prior to 1990, the Pennsylvania landfill, an active
Subtitle D disposal facility, disposed of municipal solid waste in an unlined
disposal area. This unlined area was operated by the former owner and has
caused localized ground water contamination. As a condition to a recent permit
modification, the Company has agreed to remove all waste from unlined areas to
remove the source of contamination and relocate the waste to a Subtitle D
approved disposal area at the landfill. For the period of trash relocation,
the Company will operate a groundwater removal and treatment system which has
received a permit for the associated surface water discharge. Relocation of
trash began in April 1997, is coordinated with new pad construction, and is
scheduled to be completed in fiscal year 2008. At March 31, 1997, the Company
had accrued $4.5 million for such removal costs. An additional condition of
the permit modification requires groundwater monitoring of five private water
supply wells off-site. Low levels of volatile organic compounds have been
detected in two of these private water supply wells. The Company does not
believe that this off-site contamination is related to the Company's on-site
groundwater contamination. Nevertheless, the Company has voluntarily supplied
one private residence with a carbon treatment unit on its water supply; the
other private residence is on bottled water. The Company has not established a
specific financial reserve for potential costs relating to this remediation or
any additional potential liabilities associated with this contamination. The
Company currently believes that ultimate resolution of these matters will not
have a material adverse effect on the Company's business or results of
operations. However, there can be no assurance that the Company's ultimate
financial obligations related to these matters will not have a material
adverse effect on the Company's business and results of operations.

Kentucky Landfill. The permit issued October 14, 1996 (reissued February 26,
1997) for the Kentucky landfill approved corrective action measures to abate a
ground water discharge containing vinyl chloride at an off-site spring. The
corrective action requires the installation of three vertical gas wells. This
corrective action has been completed by the Company and the Company is
monitoring the spring on a quarterly basis. On December 30, 1994 the Company
received a notice on intent to sue from a neighbor of the Kentucky landfill
for an alleged unauthorized discharge of hazardous substances resulting in
damage to the neighboring property. No lawsuit has been initiated. The Company
believes any lawsuit by this neighboring landowner would lack merit and
vigorously would defend such a lawsuit. The Company currently believes that
ultimate resolution of these matters should not have a material adverse effect
on the Company's business or results of operations. However, there can be no
assurance that the Company's ultimate financial obligations related to these
matters will not have a material adverse effect on the Company's business and
results of operations.

Superfund Liability. Super Kwik, Inc., one of the solid waste collection
companies acquired by the Company in 1996, has been named as a potentially
responsible party under CERCLA at one Superfund site. The Company assumed this
liability in connection with the acquisition. The Company believes that a
substantial portion of the defense costs and liability relating to this site
will be covered by insurance proceeds, and therefore, should not have a
material adverse effect on the Company's business and results of operations.
However, there can be no assurance that the Company's ultimate financial
obligations related to this matter will not have a material adverse effect on
the Company's business or results of operations.

THE CLEAN AIR ACT, AS AMENDED IN 1990. The Clean Air Act, as amended in 1990
("Clean Air Act") provides for regulation, through state implementation of
federal requirements, of the emission of air pollutants from certain landfills
based upon the date of the landfill construction and volume per year of
emissions of regulated pollutants. The EPA has recently promulgated new
standards regulating air emissions of certain regulated pollutants (methane
and non-methane organic compounds) from municipal solid waste landfills.
Landfills located in areas with air pollution problems may be subject to even
more extensive air pollution controls and emissions limitations. The EPA and
the states in which the Company operates also have adopted regulations under
Title V of the Clear Air Act requiring permits for certain disposal
facilities. This may require one or more of the Company's landfills to install
passive or active gas collection systems. In addition, the National Emission
Standards for Hazardous Air Pollutants ("NESHAPs") regulates the collection,
packaging, transportation, and disposal of asbestos-containing material.
NESHAPs regulate visible emissions of asbestos fibers to outside air and
requires emissions controls and appropriate work practices. It should be noted
that a few states have

45
<PAGE>

classified asbestos as hazardous waste and require appropriate handling and
disposal practices. Additionally, asbestos is listed as a hazardous substance
under CERCLA. The Company transports and disposes of asbestos containing
materials. There can be no assurance that the Company will not face claims
resulting from environmental liabilities relating to these and other materials
with respect to its solid waste management operations.

The federal statutes described above contain provisions authorizing, under
certain circumstances, the institution of lawsuits by private citizens to
enforce the provisions of these statutes.

THE OCCUPATIONAL SAFETY AND HEALTH ACT OF 1970. The Occupational Safety and
Health Act of 1970, as amended ("OSHA"), authorizes the Occupational Safety and
Health Administration to promulgate occupational safety and health standards.
Various of those promulgated standards, including standards for notices of
hazards, safety in excavation and the handling of asbestos, may apply to
certain of the Company's operations. OSHA regulations set forth requirements
for the training of employees handling, or who may be exposed in the work place
to, concentrations of asbestos-containing materials that exceed specified
action levels. The OSHA regulations also set standards for employee protection,
including medical surveillance, the use of respirators, protective clothing and
decontamination units, during asbestos demolition, removal, or encapsulation as
well as its storage, transportation, and disposal. In addition, OSHA specifies
a maximum permissible exposure level for airborne asbestos in the workplace.
The Company has no direct involvement in asbestos removal or abatement
projects. However, asbestos-containing waste materials are accepted at certain
of the Company's landfills that are authorized to accept such materials, and
some of the Company's collection businesses receive asbestos-containing waste
materials which have already been packaged and labeled. These packages are
loaded onto the Company's vehicles by employees of the asbestos abatement
contractors for transportation to and disposal at the Company's authorized
landfills. Accordingly, OSHA regulations designed to minimize employees'
exposure to airborne asbestos fibers and provide employees with proper training
and protection generally apply to the Company's operations in the
transportation, handling, and disposal of the asbestos waste. The Company's
employees are trained to respond appropriately in the event there is an
accidental spill or release of the packaged asbestos-containing materials
during transportation or landfill disposal.

FLOW CONTROL/INTERSTATE WASTE RESTRICTIONS. Certain permits and approvals may
limit the types of waste that may be accepted at a landfill or the quantity of
waste that may be accepted at a landfill during a given time period. In
addition, certain permits and approvals, as well as certain state and local
regulations, may seek to limit a landfill to accepting waste that originates
from specified geographic areas or seek to restrict the importation of out-of-
state waste or otherwise discriminate against out-of-state waste. Generally,
such legislative or regulatory restrictions on the importation of out-of-state
waste have not to date withstood judicial challenge. However, from time to
time, federal legislation is proposed which would allow individual states to
prohibit the disposal of out-of-state waste or to limit the amount of out-of-
state waste that could be imported for disposal and would require states, under
certain circumstances, to reduce the amounts of waste exported to other states.
Although no such federal legislation has to date been enacted, if such federal
legislation should be enacted in the future, states in which the Company
operates landfills could act to limit or prohibit the importation of out-of-
state waste. Such state actions could adversely affect the Company's landfills
within those states that receive a significant portion of waste originating
from other states. These restrictions may also result in higher disposal costs
for the Company's collection operations. If the Company were unable to pass
such higher costs through to its customers, the Company's business and results
of operations could be adversely affected.

In addition, certain states and localities may for economic and other reasons
restrict the exportation of waste from their jurisdiction or require that a
specified amount of waste be disposed at facilities within their jurisdiction.
In 1994, the United States Supreme Court held unconstitutional, and therefore
invalid, a local ordinance that sought to impose flow controls on taking waste
out of the locality. However, certain state and local jurisdictions continue to
seek to enforce such restrictions through legislation or contractually and, in
certain

46
<PAGE>

cases, the Company may elect not to challenge such restrictions based upon
various considerations. In addition, the aforementioned federal legislation
that has from time to time been proposed could, if enacted, allow states and
localities to impose certain flow control restrictions. These restrictions
could result in the volume of waste going to landfills being reduced in
certain areas, which may adversely affect the Company's ability to operate its
landfills at their full capacity and/or reduce the prices that can be charged
for landfill disposal services. These restrictions may also result in higher
disposal costs for the Company's collection operations. If the Company were
unable to pass such higher costs through to its customers, the Company's
business and results of operations could be adversely affected.

The Company's Kentucky landfill is subject to a host county agreement which
limits the origin and type of waste the landfill may accept for disposal. The
landfill is restricted to accept only municipal, commercial and residential
waste from 10 counties at any one time chosen from an 18 county area within
Kentucky, and areas of Tennessee within 75 miles of the landfill. The landfill
is also permitted to accept non-hazardous industrial and commercial special
waste from specific generators on a case-by-case basis from Kentucky and from
states contiguous to Kentucky. Once the landfill commences operations, it may
accept asbestos from anywhere in the United States for an initial three-year
period; from Kentucky and states contiguous to Kentucky during years four and
five; and, from Kentucky in year six and the period thereafter.

Such host county or host municipal restrictions could have a material
adverse effect on the Company's landfills that receive a significant portion
of their waste originating from other states, and in the Company's collection
operations which transport waste interstate. See "Business--Government
Regulations--Flow Control/Interstate Waste Restrictions."

NEW YORK CITY TRADE WASTE COMMISSION. In 1996, the New York City Council
enacted Local Law 42 ("Local Law 42") in order to control the corrupting
influence of organized crime on the waste hauling industry. Local Law 42
created the Trade Waste Commission ("TWC") and established rules for licensing
and regulating the operations of the commercial and industrial waste industry
in New York City. The law prohibits the collection, disposal or transfer of
commercial and industrial waste without a license issued by the TWC and
requires TWC approval of all acquisitions or other business combinations
proposed by all licensees. Acquisition, sale or merger transactions generally
must be submitted for review by the TWC 30 days before the transaction takes
effect, although the amount of time required for review depends on the
complexity of the transaction and the need to investigate the background of
the principals involved. In considering applications for licenses, which are
now only temporary licenses, the TWC closely examines the backgrounds of the
applicant and the applicant's principals for any history of criminal and other
unlawful activity or involvement with members of organized crime. The license
issued to the Company by the TWC for the Company's New York City collection
operations is only a temporary license that is subject to revocation by the
TWC and there is no assurance that the Company will be issued a permanent
license. The TWC also sets maximum rates for the industry and establishes
operational requirements. In May 1997 the TWC lowered the maximum collection
rates that may be charged by licensed companies. The Company's New York City
collection operations are subject to Local Law 42, which could preclude or
materially impact the Company's operations in this region, the time and cost
of completing future acquisitions in this region, and the rates which may be
charged for collection services.

PUBLIC UTILITY REGULATION. The rates that the Company may charge at its West
Virginia landfill for the disposal of municipal solid waste are regulated by
the West Virginia Public Service Commission ("PSC"). Effective June 30, 1994,
the Company received authorization from the PSC based on a revised tariff to
increase its municipal waste disposal rate from $22.50 per ton to $28.25 per
ton (net of taxes) upon receipt of waste on its composite lined disposal area.
Pursuant to this same tariff, the rate for municipal solid waste disposal will
gradually increase to $38.93 per ton. The adoption of rate regulation in other
states in which the Company owns landfills could have an adverse effect on the
Company's business and results of operations.

STATE AND LOCAL REGULATIONS. Each state in which the Company currently
operates, or may operate in the future, has laws and regulations governing the
generation, storage, treatment, handling, transportation, and

47
<PAGE>

disposal of solid waste, water and air pollution and, in most cases, the
siting, design, operation, maintenance, closure and post-closure maintenance
of landfills and other solid waste management facilities. In addition, many
states have programs that require investigation and clean up of sites
containing hazardous materials in a manner comparable to or more stringent
than CERCLA. These statutes impose requirements for investigation and cleanup
of contaminated sites and liability for costs and damages associated with such
sites, and some provide for the imposition of liens on property owned by
responsible parties. Furthermore, many municipalities also have ordinances,
local laws, and regulations affecting the Company's operations. These include
zoning and health measures that limit solid waste management activities to
specified sites or activities.

The permits or other land use approvals with respect to a landfill, as well
as state or local laws and regulations, may (i) limit a landfill to accepting
waste that originates from a specified geographic area, (ii) specify the
quantity of waste that may be accepted at the landfill during a given time
period, and (iii) specify the types of waste that may be accepted at the
landfill. Once an operating permit for a landfill is obtained, it is generally
necessary to renew the permit periodically. These restrictions could result in
the volume or types of waste going to landfills being reduced in certain
areas, which may materially adversely affect the Company's ability to operate
its landfills at their full capacity and/or affect the prices that can be
charged for solid waste disposal services. These restrictions may also result
in higher operating costs for the Company. If the Company is unable to pass
such increased costs to its customers, the Company's business and results of
operations could be materially adversely affected.

In 1996, the South Carolina Department of Health and Environmental Control
proposed new regulations governing industrial waste landfills, which includes
the Company's South Carolina landfill. If passed in proposed form, these
regulations would impose additional operating, reporting, and record-keeping
requirements on the Company's South Carolina landfill as well as new closure,
post-closure, and design requirements. To operate after the effective date of
the proposed regulations, the Company may need to upgrade the landfill's
design. The type of upgrades required would depend on the type of industrial
wastes the Company would choose to accept for disposal. If the Company would
continue to accept the limited classes of waste it currently accepts at its
South Carolina landfill (referred to in the proposed regulations as "Class 1"
wastes), the Company would only need to design and install a ground water
monitoring program. If the Company were to accept a broader class of
industrial wastes (referred to as "Class 2" or "Class 3" wastes), it would
need to install a clay liner ("Class 2") or a clay and synthetic liner ("Class
3") including a leachate collection system. If the regulations are finalized
in substantially the form proposed, the Company will determine the projected
costs and benefit of being able to accept Class 1, Class 2, or Class 3 wastes,
and choose the appropriate design for the facility, which may include separate
disposal areas for separate classes of wastes. These regulations are only in
draft form, and final regulations expected to become effective in 1997 may
have additional or substantially different requirements that could have a
material adverse effect on the Company's business and results of operations.

The Pennsylvania landfill operation acquired by the Company in December 1996
has been in existence since 1972. For the period 1972-1988, the 110 acres
which received waste or were authorized by state permits to receive waste
either had received all necessary local zoning approvals or were not required
by local ordinance to receive a zoning permit or other approval to operate.
The Company received a state expansion permit for a 32 acre lined expansion
area in 1988, increasing the size of the permitted disposal area to 142 acres.
Also in 1988, the landfill received a conditional use zoning approval from the
local township for the 32 acre expansion area. In 1990, the Township adopted a
new zoning ordinance which limits the height of municipal waste landfills to
35 feet or higher than the original contour. The landfill, as permitted in
1988 and as currently designed and permitted, exceeds 35 feet in certain
areas. The Company has maintained that the current permitted area is an
existing nonconforming use and is not subject to the 35 foot height limitation
imposed in the 1990 ordinance. If the Township seeks to impose this 35 foot
height limitation, and is successful, the existing permitted capacity of the
Company's Pennsylvania landfill would be materially affected.

There has been an increasing trend at the state and local level to mandate
and encourage waste reduction at the source, waste recycling, and limit or
prohibit the disposal of certain types of solid waste in landfills. Some

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<PAGE>

state solid waste laws, for example, have for several years prohibited the
landfilling of lead acid batteries, major appliances, waste oil, and yard
waste, and, more recently, some states have substantially limited the
landfilling of certain plastic, aluminum, glass and steel containers, newsprint
and magazines, foam, polystyrene packaging, office papers, and waste tires. The
enactment of regulations reducing the volume and types of waste available for
transport to and disposal in landfills has reduced and may continue to reduce
the volume of waste disposed by the Company's customers.

PERMITS AND LICENSES

The Company is required to obtain and maintain in effect various federal,
state and local permits and licenses in connection with its solid waste
collection and transportation operations. The Company is also required to
obtain and maintain in effect various facility permits and other governmental
approvals, including those related to zoning, environmental and land use, in
order to develop and operate a landfill or transfer station, and is required to
obtain additional permits and approvals to expand its existing landfill
operations. These permits and approvals are difficult, time consuming and
costly to obtain, may be subject to community opposition, opposition by various
local elected officials or citizens, regulatory delays and other uncertainties,
and may be dependent upon the Company's facilities being included in state or
local solid waste management plans and the Company's entering into satisfactory
host agreements with local communities. In addition, operating permits may be
subject to modification, renewal, or revocation by the issuing agencies after
issuance, which may increase the Company's obligations and reopen opportunities
for opposition relating to the permits. Moreover, from time to time, regulatory
agencies may impose moratoria on, or otherwise delay, the review or granting of
these permits or approvals or such agencies may modify the procedures or
increase the stringency of the standards applicable to the review or granting
of such permits or approvals.

There can be no assurance that the Company will be successful in obtaining
and maintaining in effect the permits and approvals required for the successful
operation and growth of its business, including permits and approvals required
for the development of additional disposal capacity needed to replace existing
capacity that becomes exhausted. The failure of the Company to obtain or
maintain in effect a permit or agreement significant to its business would have
a material adverse effect on the Company's business and results of operations.

Kentucky Landfill. The Company ceased operations at its Kentucky landfill on
June 30, 1995 because the existing permitted disposal area did not meet current
state law design requirements. From June 30, 1995 to June 30, 1996, the Company
operated a transfer station at the landfill site and disposed of waste at an
alternate location. The Company simultaneously pursued a final state permit for
an expansion area designed to meet the new state standards. The suspension of
landfill operations and the diversion of waste to an alternate location had an
adverse effect on the Company's operating results and the Company discontinued
its transfer station operation on July 1, 1996. The Company received a final
permit to construct its expansion area on October 14, 1996. The planned
development of the expansion area is currently expected to begin in the fall of
1997. The initial capital costs required to meet the new state requirements are
anticipated to be approximately $3.3 million. The final permit issued for the
Kentucky landfill expansion area incorporated the requirements contained in an
October 8, 1996 Agreed Order which settled an administrative appeal filed by
the Somerset Pulaski County Concerned Citizens Group. Prior to actual
construction of the expansion area, the Company is required to complete an
additional hydrogeologic investigation to confirm the adequacy of the
groundwater monitoring program approved in the final permit. The results of
this investigation could have a material adverse impact on the permitted
disposal capacity at the Kentucky landfill expansion area and cause a delay in
reopening the landfill.

The final permit issued for the Kentucky landfill expansion area also
requires closure of the original disposal area, which ceased operations on June
30, 1995, by August 15, 1997. The Company will commence but not complete
closure of this area by this date. Failure to complete closure activities by
this date would result in a violation of the final permit and could result in
the assessment of penalties and/or a forfeiture of the existing $1.3 million
payment bond posted by the Company to assure a proper closure of this area.

49
<PAGE>

Although the Company is not the owner or operator of the adjacent unlined
landfill and therefore disclaims financial responsibility for its closure and
any other potential liability associated therewith, the Company has contracted
with the owner to facilitate and partially fund closure. As part of the
Company's Landfill Management Agreement to operate the Illinois landfill, the
Company agreed to contribute up to a maximum of $365,000 towards closure of
the adjacent unlined landfill. In addition, the Company has entered into an
agreement with a surety providing financial assurance for the closure and
post-closure care requirements for the adjacent unlined landfill pursuant to
which the Company agreed to indemnify the surety in the amount of $646,000 in
the event the owner of the adjacent landfill defaults on its closure and/or
post-closure care obligations. The Company believes that the ultimate
resolution of this matter should not have a material adverse effect on its
business and results of operations. However, there can be no assurance that
the Company's ultimate financial obligations related to these matters,
including a significant delay in commencement of operations of the new
landfill area, will not have a material adverse effect on the Company's
business and results of operations.

CLOSURE AND POST-CLOSURE OBLIGATIONS

The Company will also incur costs in connection with state regulatory
requirements governing closure and post-closure monitoring and maintenance of
the inactive areas, the current operating areas and future expansion areas at
its landfill sites. The costs of closing current permitted operating areas of
the Company's landfills if all acreage is used is estimated to be
approximately $128,000 in Florida, approximately $8.0 million in Pennsylvania,
and approximately $465,000 in South Carolina (pursuant to the draft South
Carolina regulations expected to become effective in fiscal 1997). Closure
costs for the completed areas at the West Virginia landfill are estimated to
be approximately $750,000. Closure costs for the remaining unused areas are
estimated to be approximately $3.0 million. Closure costs for the original
permit area at the Kentucky landfill which ceased operations on June 30, 1995
are estimated to be approximately $1.3 million. Closure costs for the Kentucky
landfill expansion area which received a final permit on October 14, 1996
(reissued February 26, 1997) are estimated to be approximately $3.0 million.
Post-closure care and monitoring obligations at the Kentucky, Pennsylvania and
West Virginia landfills will add additional expenditures of $90,000 to
$125,000 per year per landfill over the 30-year period following closure.
Closure and post-closure care costs for the Illinois landfill are expected to
be similar to those for the Kentucky and West Virginia landfills. The Company
expects post-closure care to cost $13,000 to $16,000 per year per landfill for
the 30 years following closure at the South Carolina landfill and the Florida
landfill. The Company has also agreed to indemnify a surety providing
financial assurance for closure and post-closure care requirements for the
unlined landfill adjacent to the new Illinois landfill in the

50
<PAGE>

event the owner defaults on its closure and post-closure obligations. These
amounts are only estimates based on current and proposed regulatory
requirements. There can be no assurance that additional closure and post-
closure requirements will not be mandated. Although substantial changes in
applicable regulatory requirements are not currently expected, any such changes
could result in an increase in the cost of regulatory compliance and thereby
could have a material adverse effect on the Company's business and results of
operations.

INSURANCE AND BONDING

The Company carries insurance covering its assets and operations, including
pollution liability coverage. Specifically, each of the Company's landfills has
pollution liability coverage of $5.0 million per occurrence or $5.0 million in
the aggregate subject to a $500,000 deductible per occurrence. Nevertheless,
there can be no assurance that the Company's insurance will provide sufficient
coverage in the event an environmental claim were made against the Company or
that the Company will be able to maintain in place such insurance at reasonable
costs. An uninsured or underinsured claim against the Company of sufficient
magnitude could have a material adverse effect on its business and results of
operations. The Company also is subject to the risk of claims by employees and
others made after the expiration of the policy coverage period, including
asbestos-related illnesses (such as asbestosis, lung cancer, mesothelioma, and
other cancers), which may not become apparent until many years after exposure.
From May 15, 1985 through April 28, 1988, the Company carried claims-made
general liability coverage. Any claims presented on the basis of exposure
during that period may not be covered by insurance and any liability resulting
therefrom could, consequently, have an adverse effect on the Company's business
and results of operations.

The Company is required to post a form of financial assurance at five of its
landfills to ensure proper closure and post-closure monitoring and maintenance.
Additionally, some of the Company's collection and transportation contracts
require performance and payout bonds to guarantee project completion and
certain states may require collateral bonds to secure compliance with hazardous
waste transportation requirements. The Company's ability to meet these bonding
requirements is contingent upon the Company's performance record and
creditworthiness. Any inability by the Company to maintain bonding capacity or
a sizable increase in rates would have a material adverse impact on the
Company's business and results of operations.

The Company maintains a bonding facility pursuant to certain statutory
requirements regarding financial assurance for the closure and post-closure
monitoring cost requirements for its Kentucky, Pennsylvania and West Virginia
disposal facilities. West Virginia currently requires that the Company post
financial assurance of $168,000 for closure and post-closure care of up to 30
years for the closed disposal area and $214,000 for the newly permitted
expansion area. The West Virginia financial assurance is secured at June 30,
1996 by certificates of deposit totalling $196,000 including accumulated
earnings on the deposits for the closed disposal area and a $214,000 closure
bond for the expansion area. The Company anticipates that the West Virginia
bonding requirements will substantially increase in 1997 when the West Virginia
solid waste program is approved by the EPA under Subtitle D Regulations.
Financial assurance requirements for the newly permitted area may increase to
approximately $3.0 million for closure and $3.6 million for post-closure care.
The funds for this additional financial assurance are currently being escrowed
through a $1.37 per ton surcharge on municipal solid waste disposal imposed
through the Company's tariff approved by the West Virginia Public Service
Commission.

Pennsylvania requires a total closure and post-closure amount of
approximately $5.3 million for financial assurance of its currently permitted
area. The financial assurance is provided through a payment bond of $3.4
million and a phased 10-year cash collateral deposit of $185,737 per year. The
bond is collateralized by a $500,000 irrevocable letter of credit and other
covenants with the bonding company.

Kentucky has required approximately $1.3 million of financial assurance for
the closure of the original permitted area which ceased operations on June 30,
1995 and approximately $315,000 for the 30-year post-closure period. The
financial assurance for this area is secured by payment bonds totalling
approximately $1.6 million. The closure bond of approximately $1.3 million is
collateralized by a $626,000 irrevocable letter of credit and the post-closure
bond of $315,000 is collateralized by a $120,000 United States Government
security deposit in a trust fund.

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<PAGE>

Florida has required $127,884 of financial assurance for the closure of the
landfill's currently permitted areas and $480,000 for the 30-year post-closure
period. The mechanism of financial assurance is provided by a phased
collateral escrow account which is funded over the life of the landfill. The
current amount funded through December 1996 is approximately $79,800.

Illinois requires a demonstration of financial assurance prior to the
initiation of landfilling operations. No amounts are currently funded but
closure costs are estimated at approximately $1.9 million and post-closure
costs are estimated at approximately $1.9 million. The actual amounts required
as the financial assurance may be less depending on landfill sequencing and
the areas that remain to be properly closed.

If the Company was unable to obtain surety bonds or letters of credit in
sufficient amounts or at acceptable rates, it would be unable to remain in
compliance with Subtitle D Regulations or comparable state requirements, and,
among other things, may be precluded from entering into additional municipal
solid waste collection contracts or obtaining or retaining landfill operating
permits. See "Risk Factors--Potential Inadequacy of Accruals for Closure and
Post-Closure Costs."

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<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Company's Board of Directors currently consists of three members. The
Company intends to increase the size of its Board of Directors by four
members, to a total of seven. Of the four new members one will be independent.
The following table sets forth information regarding the current directors and
certain executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Louis D. Paolino, Jr............... 40 Chairman of the Board, President, and
Chief Executive Officer
Terry W. Patrick................... 51 Executive Vice President and Chief
Operating Officer
Gregory M. Krzemien................ 37 Chief Financial Officer and Treasurer
Robert M. Kramer................... 44 General Counsel, Executive Vice
President and Secretary
John W. Poling..................... 51 Vice President--Finance
Dennis M. Grimm.................... 47 Vice President--Operations
George O. Moorehead................ 44 Director
Kenneth Chuan-kai Leung............ 52 Director
</TABLE>

LOUIS D. PAOLINO, JR. has served as Chairman of the Board, President, and
Chief Executive Officer of the Company since June 1996. Mr. Paolino has over
14 years of experience in the solid waste management industry. From 1989 to
June 1996, Mr. Paolino was President of Soil Remediation of Philadelphia,
Inc., a company engaged in the business of treating contaminated soil and
which was sold to U.S.A. Waste Services Inc., a waste management corporation,
in September 1993. From September 1993 to June 1996, Mr. Paolino served as
Vice President of U.S.A. Waste Services, Inc. Mr. Paolino currently serves as
President of Blue Pointe, Inc., the lessor of the Company's executive offices
in Mt. Laurel, New Jersey. He also served on the Board of Directors of Metal
Management, Inc., formerly known as General Parametrics Corp., a publicly
traded company, from November 1995 to January 1996. Mr. Paolino received a
B.S. degree in Civil Engineering from Drexel University.

TERRY W. PATRICK has served as Executive Vice President and Chief Operating
Officer of the Company since June 1996. Mr. Patrick has over 25 years of
experience in the waste management industry. From September 1995 to June 1996,
Mr. Patrick was involved with personal investments and ownership of a chemical
manufacturing and distributing company. From April 1990 to August 1994, he
served as President and Chief Operating Officer of U.S.A. Waste Services,
Inc., and as Vice President of Operations at Mid-America Waste Systems, Inc.
from November 1988 to April 1990. Prior to joining Mid-America Waste Systems,
Inc., Mr. Patrick served in various district and regional management positions
with Waste Management, Inc. and Browning Ferris Industries, Inc. Mr. Patrick
received a B.S. degree in Business Management from Evangel College.

GREGORY M. KRZEMIEN has served as Chief Financial Officer and Treasurer of
the Company since August 1992. From October 1988 to August 1992, Mr. Krzemien
was a senior audit manager with Ernst & Young LLP, and held other positions
with that firm since 1981. Mr. Krzemien received a B.S. degree in Accounting
from Pennsylvania State University and is a certified public accountant.

ROBERT M. KRAMER has served as General Counsel, Executive Vice President and
Secretary of the Company since June 1996. Mr. Kramer is an attorney and has
practiced law with various firms, including Blank Rome Comisky & McCauley,
Philadelphia, Pennsylvania and Arent Fox Kitner Plotkin & Kahn, Washington,
D.C., since 1979. Mr. Kramer has represented public and private companies in
the waste management industry

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<PAGE>

for over 14 years. Since 1989, Mr. Kramer has been the sole partner of Robert
M. Kramer & Associates P.C., a law firm consisting of three lawyers. Although
Mr. Kramer will continue his private practice of law at Robert M. Kramer &
Associates, P.C., he has and will devote a substantial amount of time
performing his duties for the Company. Mr. Kramer has also served on the Board
of Directors of American Capital Corporation, a registered securities broker
dealer, since January 1992. Mr. Kramer received a J.D. degree from Temple
University Law School.

JOHN W. POLING has served as a Vice President of Finance of the Company
since November 1996. Mr. Poling has held senior financial positions in
publicly-held environmental services companies since 1979, and served as Vice
President and Treasurer of Smith Technology Inc. from 1994 to 1996, Vice
President, Finance and Chief Financial Officer of Envirogen, Inc. from 1993 to
1994, President of Tier Inc. from December 1992 to September 1993, and Vice
President--Finance and Chief Financial Officer of Roy F. Weston, Inc. from
1989 to 1992. Mr. Poling received a B.S. degree in Accounting from Rutgers
University.

DENNIS M. GRIMM has been employed with the Company since March 1997 and
currently serves as Vice President of Operations. Mr. Grimm has more than 25
years of experience in the solid waste industry. From January to March 1997,
Mr. Grimm was President and Chief Executive Officer of Apex Waste Services,
Inc., which was acquired by the Company in March 1997. From 1984 to 1994, he
served as Group Vice President and Regional Manager for Waste Management
Technologies (Northeast Region).

GEORGE O. MOOREHEAD has served as a Director of the Company since June 1996.
Mr. Moorehead has over 25 years of experience in the solid waste management
industry. Since 1993, Mr. Moorehead has been a director and principal
stockholder of EMCO Recycling Corp., a company engaged in the business of
metal recycling in Arizona and a subsidiary of Metal Management Inc., and has
served as President and Chief Executive Officer of EMCO Recycling Corp. since
February 1995. From 1990 to 1993, Mr. Moorehead was President and Chief
Executive Officer and a director of Custom Disposal, Inc., a solid waste
disposal company serving the Phoenix, Arizona area. Mr. Moorehead is a
director of Metal Management Inc.

KENNETH CHUAN-KAI LEUNG has served as a Director of the Company since June
1996. Mr. Leung has been a Managing Director of investment banking at Sanders
Morris Mundy since March 1995 and Chief Investment Officer of Environmental
Opportunities Fund, L.P. and Environmental Opportunities Fund (Cayman), L.P.
since January 1996. From 1988 to 1994, Mr. Leung was a Managing Director of
Smith Barney Inc. Mr. Leung has over 28 years of experience with the
environmental services industry as a securities analyst and investment banker.

EMPLOYMENT AGREEMENTS

In October 1996 and June 1997, Messrs. Paolino, Patrick, and Kramer entered
into amended and restated employment agreements with the Company that provide
for initial annual base salaries of $150,000, $150,000, and $125,000,
respectively, and certain fringe benefits including life and health insurance
and automobile allowances. Mr. Patrick is further entitled to an annual bonus
of $100,000, payable in cash or Common Stock. Upon a change in control of the
Company, Messrs. Paolino and Kramer are each entitled to receive a bonus in
cash or Common Stock of the Company equal to $1.00 less than three times the
sum of his annual salary and any bonus he was paid during the twelve months
prior to the change of control, and Mr. Patrick is entitled to receive in cash
or Common Stock equal to two times his salary. Mr. Patrick is further entitled
to the greater of (i) $200,000 or (ii) two times the bonus he was paid by the
Company during the 12 months prior to the change in control. Each agreement
terminates in June 2000, subject to earlier termination by either party. If
Mr. Paolino's or Mr. Kramer's employment is terminated for any reason,
including unsatisfactory performance of his duties, the terminated executive
will be entitled to receive a severence payment equal to $1.00 less than three
times the sum of his annual salary and any bonus he was paid during the twelve
months prior to the termination. In addition, all of his outstanding options
shall vest. During the term of employment and for a period of up to two years
thereafter, Messrs. Paolino and Patrick may not directly or indirectly engage
in the waste disposal industry within up to 75 miles of any Company business
operation.

54
<PAGE>

In June and November 1996, Messrs. Krzemien and Poling entered into
employment agreements with the Company that provide for initial annual base
salaries of $90,000 and certain fringe benefits, including life and health
insurance and automobile allowances. Mr. Krzemien's agreement is for a term of
18 months, and Mr. Poling's agreement is for a term of three years, in each
case subject to earlier termination by either party. Upon termination of
employment, Mr. Krzemien is entitled to receive up to the greater of six
months of his annual salary or the balance of his annual salary for the
remainder of the term of the agreement, depending on the circumstances, and
Mr. Poling is entitled to up to three months salary. Upon a change in control,
Messrs. Krzemien and Poling are further entitled to receive one year's annual
salary.

In May 1997, Mr. Grimm entered into an amended and restated employment
agreement with the Company that provides for an initial base salary of
$150,000 and certain fringe benefits, including life and health insurance and
an automobile allowance. Mr. Grimm's agreement is for a term of 4 years,
subject to earlier termination by either party. Mr. Grimm is further entitled
to an annual bonus of $50,000, payable in cash or Common Stock. Upon a change
in control of the Company, all of Mr. Grimm's outstanding options shall vest.
During the term of employment and for a period of up to one year thereafter,
Mr. Grimm may not directly or indirectly engage in the waste disposal industry
within up to 50 miles of any Company business operation.

At June 26, 1997, the Company's executive officers held options and warrants
to purchase an aggregate of 1,762,265 shares of Common Stock (which generally
vest over a period of four years or less) at exercise prices ranging between
$5.75 and $13.75 per share, of which 660,556 shares were purchasable under
options and warrants that are currently exercisable or exercisable within 60
days after the date of this Prospectus. In addition, one executive held
options to purchase 166,885 shares of Common Stock at exercise prices ranging
between $.01 and $1.50 per share, all of which are currently exercisable.

55
<PAGE>

CERTAIN TRANSACTIONS

In June 1996, the Company elected a new Board of Directors as a result of
the acquisition of 500,000 shares of Common Stock from William C. Skuba by
Louis D. Paolino, Jr., George O. Moorehead, Environmental Opportunities Fund,
L.P., and Environmental Opportunities Fund, (Cayman), L.P. Mr. Skuba resigned
as the Company's Chairman of the Board, Chief Executive Officer, and President
on June 20, 1996. In connection with Mr. Skuba's resignation, the Company
entered into a Severance Agreement with Mr. Skuba (the "Severance Agreement")
pursuant to which virtually all prior agreements between Mr. Skuba and the
Company were terminated, including the Company's obligation to make certain
cash payments to Mr. Skuba upon his resignation from the Company and, in
consideration therefor, the Company, among other things, (i) conveyed to Mr.
Skuba or a company controlled by Mr. Skuba (a) all of the outstanding capital
stock of a corporation that owns certain real property located in Drums,
Pennsylvania (the "Drums Real Property"), (b) certain real and personal
property located in Jasper County, South Carolina, and (c) certain vehicles
owned by the Company, (ii) transferred to Mr. Skuba certain potential business
opportunities that the Company decided that it had no interest in pursuing,
(iii) agreed to provide Mr. Skuba with certain health insurance benefits at
the Company's cost until June 1997, and (iv) agreed to indemnify Mr. Skuba to
the extent provided by the Company's Certificate of Incorporation and to
maintain director and officer liability insurance for him until June 2002.

Pursuant to the Severance Agreement, the Company also entered into two
leases with a company controlled by Mr. Skuba pursuant to which the Company
agreed to lease back a portion of the Drums Real Property. The Company paid
$1,686 a month in rent under one of the leases, which terminated in July 1996.
The Company currently pays $4,969 annually in rent under the other lease,
which remains in full force.

In June 1996, the Company and Mr. Skuba entered into a consulting agreement
(the "Consulting Agreement"), whereby Mr. Skuba has agreed to serve as a
general advisor and consultant to the Company on matters relating to the
Company's acquisition program. In consideration for performing such services,
the Company has agreed to reimburse Mr. Skuba for his secretarial support and
reasonable expenses incurred in connection with such consulting services, as
well as a car allowance. When Mr. Skuba is instrumental in locating an
acquisition which the Company closes, the Company pays Mr. Skuba a commission
mutually agreed upon by the Company and Mr. Skuba. The initial term of the
Consulting Agreement was for a period of six months, which has been extended
to June 20, 1998.

In July 1996, the Company entered into a five-year office lease with
Bluepointe, Inc., (formerly known as Girard Point Transfer, Inc.) a
corporation controlled by Louis D. Paolino, Jr., the Chairman of the Board,
President, and Chief Executive Officer of the Company, for the Company's
executive offices in Mt. Laurel, New Jersey. The lease provides for monthly
rental payments of $6,250 plus increases resulting from increases in the
Consumer Price Index. The lease is terminable at any time by the Company by
payment of a termination fee equal to one year's rent.

In August 1996, the Company acquired all of the assets of Eastern Waste of
Philadelphia, Inc. in consideration of 391,250 shares of Common Stock valued
at $4.00 per share, or $1.6 million in the aggregate. The stockholders of
Eastern Waste of Philadelphia, Inc. are Matthew Paolino and Donald Moorehead,
brothers of Louis D. Paolino, Jr. and George O. Moorehead, respectively.
Substantially all of the assets the Company acquired from Eastern Waste of
Philadelphia, Inc. were acquired by Eastern Waste of Philadelphia, Inc. in May
1996 in separate transactions with Tri-County Disposal & Recycling, Inc. and
National Ecosystems Inc. for an aggregate of $1.6 million in cash and stock.

In October 1996, the Company hired Premier Concrete, Inc., a corporation
owned by Matthew Paolino ("Premier"), to excavate a new cell for the Company's
landfill in West Virginia. The Company estimates that the total amount to be
paid to Premier for the job will be approximately $480,000. Premier was the
lowest bidder that satisfied all bid requirements for such job.

56
<PAGE>

In December 1995 and May 1996, Glen Miller and Willard Miller, executive
officers of the Company, executed promissory notes in favor of Super Kwik,
Inc. in the principal amounts of $83,741 and $350,902, respectively. The notes
bear interest at the rate of six percent per annum and become due and payable
on December 30, 2005 and May 1, 2006, respectively. The total principal amount
outstanding under the notes at May 31, 1997 was $432,902. The Company acquired
Super Kwik, Inc. in September 1996.

In connection with the Company's acquisition of Super Kwik in September
1996, the Company executed a $750,000 mortgage note in favor of Spruce Avenue
Associates, a general partnership whose partners are Glen Miller and Willard
Miller. The note bears interest at the rate of ten percent per annum, payable
semi-annually, and the principal amount becomes due and payable on September
27, 1999. The note is secured by a mortgage on certain real property of the
Company located in Voorhees, New Jersey. The principal amount outstanding
under the mortgage note at May 31, 1997 was $750,000.

Robert J. Powell, a former director of the Company, is the sole shareholder
of The Law Offices of Robert J. Powell, Hazelton, Pennsylvania, which provided
legal services to the Company from fiscal 1994 through July 1996. The Company
paid such firm approximately $78,000 in fiscal 1996 for such legal services.

Robert M. Kramer, the Company's General Counsel, Executive Vice President
and Secretary, is engaged in the practice of law through Robert M. Kramer &
Associates, P.C., a professional corporation owned by Mr. Kramer, which has
rendered legal services to the Company since June 1996. The Company paid such
corporation approximately $46,384 during the nine months ended March 31, 1997
for such legal services.

The Company believes that each of the transactions described above was
entered into on an arm's-length basis in the ordinary course of the Company's
business and on terms no less favorable to the Company than could be obtained
from unaffiliated third parties.

57
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth as of June 26, 1997 the beneficial ownership
of the Common Stock and as adjusted to reflect the sale of the shares offered
hereby by (i) each person or entity known to the Company to own beneficially
five percent more of the Common Stock, (ii) each director of the Company, and
(iii) all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENTAGE OF SHARES
NAME OF BENEFICIAL OWNER OWNED(1)(2) PRIOR TO OFFERING AFTER OFFERING
- ------------------------ ---------------- ----------------- --------------
<S> <C> <C> <C>
Willard Miller............. 1,365,688(3) 8.4% 6.6%
230 Orono Place
Sommerdale, NJ 08083
Sanders Morris Mundy Inc... 1,156,252(4) 7.1% 5.6%
3100 Texas Commerce Tower
Houston, TX 77002
Louis D. Paolino, Jr. ..... 1,151,407(5) 7.1% 5.5%
1000 Crawford Place
Mount Laurel, NJ 08054
Glen Miller................ 1,111,302(6) 6.8% 5.4%
429 Ocean Avenue
Ocean City, NJ 08226
Kenneth Chuan-kai Leung.... 1,070,836(7) 6.6% 5.2%
126 East 56th Street
24th Floor
New York, NY 10022
William C. Skuba........... 1,060,976(8) 6.6% 5.1%
RR #4, Box 4452
Drums, PA 18222
Environmental Opportunities 889,699 5.5% 4.3%
Fund, L.P. ...............
3100 Texas Commerce Tower
Houston, TX 77002
George O. Moorehead........ 405,834(9) 2.5% 2.0%
3700 West Lower Buckeye
Phoenix, AZ 85009
All executive officers and
directors as a group
(ten persons)............. 5,948,233(10) 36.0% 28.3%
</TABLE>
- --------
(1) The inclusion herein of any shares as beneficially owned does not
constitute an admission of beneficial ownership of those shares. Except
as otherwise indicated, each person has sole voting power and sole
investment power with respect to all shares beneficially owned by such
person.

(2) Shares not outstanding but deemed beneficially owned by virtue of the
right of an individual to acquire them within 60 days upon the exercise
of an option are treated as outstanding for purposes of determining
beneficial ownership and the percentage beneficially owned by such
individual.

(3) Includes 19,415 shares held of record by W&G Miller Family Limited
Partnership, of which Mr. Miller serves as a general partner, and 81,907
shares purchasable under currently exercisable warrants held by such
partnership.

(Footnotes continued on next page)

58
<PAGE>

(Footnotes continued from previous page)

(4) Includes 156,250 shares purchasable under currently exercisable warrants.
Also includes 889,699 shares held of record by the Environmental
Opportunity Fund, L.P. and 110,303 shares held of record by the
Environmental Opportunity Fund (Cayman), L.P., entities for which
Environmental Opportunities Management Company, LLC, in which Sanders
Morris Mundy, Inc., a representative of the Underwriters in the Offering,
holds a 75% membership interest, serves as the sole general partner.

(5) Includes 35,000 shares held of record by entities controlled by Mr.
Paolino, 171,166 shares held by family members, and 122,500 shares
purchasable under currently exercisable options.

(6) Includes 81,907 shares purchasable under currently exercisable warrants.

(7) Includes 70,834 shares purchasable under currently exercisable options.
Also includes 889,699 and 110,303 shares held of record by the
Environmental Opportunity Fund, L.P. and the Environmental Opportunities
Fund (Cayman), L.P., respectively, for which Mr. Leung serves as Chief
Investment Officer and as to which Environmental Opportunities Management
Company LLC, in which Sanders Morris Mundy Inc. holds a 75% membership
interest and Quirk Carson Peppet, Inc. holds a 25% membership interest,
serves as the sole general partner. Does not include 156,250 shares
purchasable under currently exercisable warrants held by Sanders Morris
Mundy Inc.

(8) Includes 13,400 shares held by Mr. Skuba's mother over which he exercises
voting control, 9,700 shares held by a trust of which Mr. Skuba is the
trustee, and 25,000 shares purchasable under currently exercisable
warrants.

(9) Includes 70,834 shares purchasable under currently exercisable options.

(10) See footnotes 3, 5, 6, 7 and 9 above. Also includes an aggregate of
468,924 shares and 374,242 shares issuable upon exercise of currently
exercisable options held by five executive officers of the Company who
are not listed in the table.

59
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, $.01 par value per share, and 10,000,000 shares of Class A
Common Stock, $.01 par value per share (the "Class A Common Stock"). At June
26, 1997, there were 16,152,955 shares of Common Stock outstanding and no
shares of Class A Common Stock outstanding. Based upon the number of shares
outstanding as of that date and giving effect to the issuance of the 4,500,000
shares of Common Stock offered hereby, there will be 20,652,955 shares of
Common Stock outstanding upon the closing of the Offering. In addition, at
June 26, 1997, there were outstanding stock options and warrants for the
purchase of a total of 3,268,155 shares of Common Stock and an additional
569,264 shares reserved for issuance pursuant to future option grants under
the Company's stock option plans. All shares of Class A Common Stock
previously issued and outstanding have been converted to Common Stock and are
not subject to reissuance pursuant to terms of the Class A Common Stock. See
"Description of Capital Stock."

COMMON STOCK AND CLASS A COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held and the
holders of Class A Common Stock are entitled to four votes for each share held
on all matters submitted to a vote of stockholders. Both the Common Stock and
Class A Common Stock have non-cumulative voting rights and vote together as a
single class on all matters, except matters specified otherwise by Delaware
law. Issuance of shares of Class A Common Stock could have the effect of
delaying or preventing a change in control of the Company without further
action by the stockholders. The Company has no present plans to issue any
shares of Class A Common Stock in the future.

The respective holders of record of the issued and outstanding Common Stock
and Class A Common Stock are entitled to receive in respect of all said shares
taken as single class, any dividends which may be declared by the Board of
Directors and/or any distributions that may be made, except that in the case
of dividends payable in shares of the Company, or in the case of rights to
subscribe to such shares, holders of shares of Class A Common Stock shall
receive their dividends in, or shall have rights to subscribe to, shares of
Class A Common Stock and holders of shares of Common Stock shall receive their
dividends in, or shall have rights to subscribe to, shares of Common Stock;
and except further that whenever either shares of Common Stock or shares of
Class A Common Stock are split-up or combined, the shares of the other class
shall be proportionately split-up or combined. Upon the liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary,
after payment or provision for payment of the debts or liabilities of the
Company, holders of Common Stock shall be entitled to receive out of the net
assets of the Company the amount of $1.00 per share, prior to any distribution
with respect to Class A Common Stock. After such payment or provision for such
payment to the holders of Common Stock, the holders of Common Stock and the
holders of Class A Common Stock shall be entitled to share ratably (i.e. an
equal amount of assets for each share of either Common Stock or Class A Common
Stock) in the remaining assets of the Company. Each holder of record of a
share of Class A Common Stock may, at any time or from time to time, without
cost to such holder and at such holder's option, convert any whole number or
all of such holder's shares of Class A Common Stock into fully paid and non-
assessable shares of Common Stock at the rate of one share of Common Stock for
each share of Class A Common Stock surrendered for conversion. No shares of
Class A Common Stock that are converted to Common Stock will be reissued.
Except as described above, holders of the Common Stock and Class A Common
Stock have no preemptive, subscription, redemption or conversion rights, nor
are they entitled to the benefit of any sinking fund. The outstanding shares
of Common Stock are, and the shares offered by the Company in the Offering
will be, when issued and paid for, validly issued, fully paid and
nonassessable by the Company.

ANTI-TAKEOVER PROVISIONS

The Company is a Delaware corporation and is subject to Section 203
("Section 203") of the Delaware General Corporation Law (the "DGCL"). In
general, Section 203 prevents an "interested stockholder" (defined generally
as a person owning 15% or more of a corporation's outstanding voting stock)
from engaging in a

60
<PAGE>

"business combination" (as defined) with a Delaware corporation for three
years following the time such person became an interested stockholder unless:
(i) before such person became an interested stockholder, the board of
directors of the corporation approved the transaction in which the interested
stockholder became an interested stockholder or approved the business
combination; (ii) upon consummation of the transaction that resulted in the
interested stockholder's becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding stock held by
directors who are also officers of the corporation and by employee stock plans
that do not provide employees with the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer); or (iii) at the time of or following the time of the
transaction in which such person became an interested stockholder, the
business combination was approved by the board of directors of the corporation
and authorized at a meeting of stockholders by the affirmative vote of the
holders of 66 2/3% of the outstanding voting stock of the corporation not
owned by the interested stockholder. Under Section 203, the restrictions
described above also do not apply to certain business combinations proposed by
an interested stockholder following the announcement or notification of one of
certain extraordinary transactions involving the corporation and a person who
had not been an interested stockholder during the previous three years or who
became an interested stockholder with the approval of a majority of the
corporation's directors or during certain prescribed times, if such
extraordinary transaction is approved or not opposed by a majority of the
directors who were directors prior to any person becoming an interested
stockholder during the previous three years or were recommended for election
or elected to succeed such directors by a majority of such directors.

Section 203 defines a business combination to include: (i) any merger or
consolidation of the corporation with the interested stockholder; (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of
the corporation involving the interested stockholder; (iii) subject to certain
exceptions, any transaction which results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder;
(iv) any transaction involving the corporation which has the effect of
increasing the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder; or (v) the
receipt by the interested stockholder of the benefit of any loans, advances,
guarantees, pledges or other financial benefits provided by or through the
corporation.

LIMITATIONS ON LIABILITY

Delaware law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of a director's fiduciary duty of care. The duty of care
requires that, when acting on behalf of the corporation, directors must
exercise an informed business judgment based on all material information
reasonably available to them. Absent the limitations authorized by Delaware
law, directors are accountable to corporations and their stockholders for
monetary damages for conduct constituting gross negligence in the exercise of
their duty of care. Delaware law enables corporations to limit available
relief to equitable remedies such as injunction or rescission. The Company's
Certificate of Incorporation ("Certificate of Incorporation") limits the
liability of directors of the Company to the fullest extent permitted by
Delaware law. Specifically, directors of the Company will not be personally
liable for monetary damages for breach of a director's fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which the director derived an improper personal benefit.

61
<PAGE>

The inclusion of this provision in the Certificate of Incorporation may have
the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing
a lawsuit against directors for breach of their duty of care, even though such
an action, if successful, might otherwise have benefited the Company and its
stockholders. The Certificate of Incorporation provides indemnification to its
officers and directors and certain other persons with respect to certain
matters, and the Company has entered into agreements with each of its
directors and executive officers providing for indemnification with respect to
certain matters.

STOCK TRANSFER AGENT AND REGISTRAR

The stock transfer agent and registrar for the Common Stock is American
Stock Transfer and Trust Company.

62
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Sales in the public market of substantial amounts of Common Stock could have
an adverse effect on the market price of the Common Stock and may make it more
difficult for the Company to sell its equity securities in the future at times
and prices that it deems appropriate. Upon completion of the Offering, the
Company will have outstanding 20,652,955 shares of Common Stock. Of these
shares, approximately 10,671,984 shares of Common Stock, including the
4,500,000 shares of Common Stock sold in the Offering, will be tradeable
without restriction or limitation under the Securities Act, except to the
extent such shares are subject to the agreement with the Underwriters
described below, and except for any shares owned by "affiliates" of the
Company which will be subject to the resale limitations under Rule 144 of the
Securities Act. The remaining approximately 9,980,971 outstanding shares of
Common Stock held by existing stockholders are "restricted securities" that
were issued and sold by the Company in private transactions in reliance upon
exemptions from registration under the Securities Act and may not be sold in a
public distribution except in compliance with the registration requirements of
the Securities Act or pursuant to an exemption therefrom, including that
provided by Rule 144. Of these restricted securities, 6,054,872 shares will be
saleable in the public market 180 days following the date of this Prospectus
subject to compliance with Rule 144.

In general, under Rule 144 as currently in effect, if one year has elapsed
since the date of acquisition of restricted shares from the Company or an
affiliate of the Company, the acquiror or subsequent holder thereof would be
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the then-outstanding shares of Common Stock
(approximately 206,530 shares after the Offering, assuming no exercise
thereafter of outstanding options or warrants) or the average weekly trading
volume in the Common Stock during the four calendar weeks immediately
preceding the date on which the notice of sale is filed with the Commission,
provided certain manner of sale and notice requirements and requirements as to
the availability of current public information about the Company are
satisfied. In addition, affiliates of the Company must comply with the
restrictions and requirements of Rule 144, other than the one-year holding
period requirement, in order to sell shares of Common Stock that are not
restricted securities (such as shares of Common Stock acquired by affiliates
in the Offering). Under Rule 144(k) as currently in effect, if two years have
elapsed since the date of acquisition of restricted shares from the Company or
any "affiliate" of the Company and the acquiror or subsequent holder is not
deemed to have been an affiliate of the Company for at least 90 days prior to
a proposed transaction, such person would be entitled to sell such shares
under Rule 144(k) without regard to the limitations and requirements described
above. As defined in Rule 144, an affiliate of an issuer is a person that
directly, or indirectly through the use of one or more intermediaries,
controls, or is controlled by, or is under common control with, such issuer.

Upon consummation of the Offering, the Company will have outstanding options
and warrants to purchase a total of 3,268,155 shares of Common Stock,
1,486,888 of which will then be exercisable, and an additional 569,264 shares
reserved for issuance pursuant to future option grants under the Company's
stock option plans. The Company has filed registration statements on Form S-8
under the Securities Act that registers all shares of Common Stock issuable
under the Company's 1987 stock option plan, 1991 stock option plan, and 1996
Stock Option Plan. Shares covered by such registration statements are eligible
for resale in the public market subject to Rule 144 limitations applicable to
affiliates, the vesting provisions of each option grant (generally up to five
years), and the lock-up agreement described below, if applicable.

The Company and the directors and certain executive officers and
stockholders of the Company, who own an aggregate of 3,073,333 shares of
Common Stock and options and warrants to purchase 1,507,004 shares of

63
<PAGE>

Common Stock at June 26, 1997, have agreed, except for certain limited
exceptions or with the prior written consent of Smith Barney Inc., that they
will not sell, offer to sell, solicit an offer to buy, contract to sell, grant
any option to purchase, or otherwise transfer or dispose of, any shares of
Common Stock, or any securities convertible into or exercisable or
exchangeable for Common Stock, for a period of 120 days after the date of this
Prospectus. In addition, the other executive officers and certain employees
and other stockholders of the Company, who own an aggregate of 6,975,462
shares of Common Stock and options and warrants to purchase 1,386,251 shares
of Common Stock at June 26, 1997, have also agreed to such transferability
restrictions, except that the restrictive period is for 90 days following the
date of this Prospectus. See "Underwriting."

Since the Company has issued, and may continue to issue, a significant
number of shares of Common Stock in connection with acquisitions of other
businesses, the number of outstanding shares of Common Stock that are likely
to be eligible for sale in the future is likely to increase significantly.

64
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, each of
the Underwriters named below have severally agreed to purchase from the
Company, and the Company has agreed to sell to such Underwriter, the
respective number of shares of Common Stock set forth opposite the name of
such Underwriter.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Smith Barney Inc...................................................
Oppenheimer & Co., Inc.............................................
Sanders Morris Mundy Inc...........................................
Pacific Growth Equities, Inc.......................................
Van Kasper & Company...............................................
---------
Total............................................................ 4,500,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock are
subject to approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all
shares of Common Stock offered hereby (other than those covered by the over-
allotment option described below) if any such shares are taken.

The Underwriters, for whom Smith Barney Inc., Oppenheimer & Co., Inc.,
Sanders Morris Mundy Inc., Pacific Growth Equities, Inc., and Van Kasper &
Company are acting as representatives (the "Representatives"), propose to
offer part of the shares of Common Stock directly to the public at the
offering price set forth on the cover page of this Prospectus and part of the
shares to certain dealers at a price which represents a concession not in
excess of $ per share under the public offering price. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain other dealers. The Representatives of the Underwriters have
advised the Company that the Underwriters do not intend to confirm any shares
to any accounts over which they exercise discretionary authority. After the
public offering, the offering price and other selling terms may be changed by
the Representatives.

The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to an additional 675,000
shares of Common Stock at the price to the public set forth on the cover page
of this Prospectus, minus the underwriting discounts and commissions. The
Underwriters may exercise such option solely for the purpose of covering over-
allotments, if any, in connection with the Offering. To the extent such option
is exercised, each Underwriter will be obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number of shares set forth opposite each Underwriter's name in
the proceeding table bears to the total number of shares listed in such table.

The Company, its executive officers and directors, and certain stockholders
(the "Stockholders") of the Company designated by the Representatives have
agreed that, for a period of 120 days from the date of this Prospectus, they
will not, without the prior written consent of Smith Barney Inc., sell, offer
to sell, solicit an offer to buy, contract to sell, grant any option to
purchase, or otherwise transfer or dispose of, any shares of Common Stock, or
any securities convertible into or exercisable or exchangeable for Common
Stock, except for (a) in the case of the Company, (i) the Common Stock offered
hereby; (ii) certain exceptions pertaining to the Company's stock option
plans, (iii) issuances of Common Stock upon the conversion of securities or
the exercise of warrants outstanding on the date the Underwriting Agreement is
executed and (iv) issuances and sales of

65
<PAGE>

Common Stock in connection with acquisitions by the Company, and (b) in the
case of the Stockholders and the directors and executive officers of the
Company, shares of Common Stock disposed of as a gift to his or her "immediate
family" or to one or more trusts established for the benefit of his or her
immediate family, provided that the recipient of such Common Stock agrees to
the foregoing restrictions on transferability. In addition, other executive
officers and certain employees and other stockholders of the Company
designated by the Representatives have also agreed to such transferability
restrictions, except that the restrictive period is for 90 days following the
date of this Prospectus.

In August 1996, Sanders Morris Mundy Inc., one of the Representatives and
the beneficial owner of approximately 6.9% of the issued and outstanding
shares of Common Stock at May 14, 1997, acted as placement agent in connection
with a private placement of 2,500,000 shares of Common Stock by the Company
for $4.00 per share. In connection therewith, Sanders Morris Mundy Inc.
received a warrant to purchase 156,250 shares of Common Stock at an exercise
price of $5.00 per share and a placement fee of $650,000. In the private
placement, Environmental Opportunities Fund, L.P. and Environmental
Opportunities Fund (Cayman), L.P., for which Environmental Opportunities
Management Company, LLC, in which Sanders Morris Mundy, Inc. holds a 75%
membership interest, serves as the sole general partner, purchased an
aggregate of 750,000 shares of Common Stock.

Kenneth Chuan-kai Leung, a Managing Director of Sanders Morris Mundy Inc.,
is a director of the Company. Sanders Morris Mundy Inc. has provided and is
currently providing financial advisory services for the Company.

The Company and the Underwriters each have agreed to indemnify the other
against certain liabilities, including liabilities under the Securities Act,
or will contribute to payments that the Underwriters may be required to make
in respect thereof.

The Representatives have advised the Company that, pursuant to Regulation M
under the Securities Act, certain persons participating in the Offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, which may have the effect of
stabilizing or maintaining the market price of the Common Stock at a level
above that which might otherwise prevail in the open market. A "stabilizing
bid" is a bid or the purchase of the Common Stock on behalf of the
Underwriters for the purpose of fixing or maintaining the price of the Common
Stock. A "syndicate covering transaction" is the bid for or the purchase of
the Common Stock on behalf of the Underwriters to reduce a short position
incurred by the Underwriters in connection with the Offering. A "penalty bid"
is an arrangement permitting the Representatives to reclaim the selling
concession otherwise accruing to an Underwriter or syndicate member in
connection with the Offering if the Common Stock originally sold by such
underwriter or syndicate member is purchased by the Representatives in a
syndicate covering transaction and has therefore not been effectively placed
by such Underwriter or syndicate member. The Representatives have advised the
Company that such transactions may be effected on the Nasdaq National Market
or otherwise and, if commenced, may be discontinued at any time.

LEGAL MATTERS

The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Drinker Biddle & Reath LLP, Philadelphia,
Pennsylvania, counsel for the Company. Certain legal matters relating to the
offering of the Common Stock will be passed upon for the Underwriters by
Morgan, Lewis & Bockius LLP, New York, New York.

66
<PAGE>

EXPERTS

The consolidated financial statements of the Company at March 31, 1997, June
30, 1996 and June 30, 1995, and for the nine months ended March 31, 1997 and
for each of the three years in the period ended June 30, 1996, appearing in
this Prospectus and the Registration Statement of which this Prospectus forms
a part have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein and in the
Registration Statement which, as to each of the three years in the period
ended June 30, 1996, is based in part on the reports of Bardall, Weintraub
P.C. and Paternostro, Callahan & DeFreitas, LLP, independent auditors. The
financial statements referred to above are included in reliance upon such
reports given upon the authority of such firms as experts in accounting and
auditing.

The combined financial statements of Allied Environmental Services, Inc. and
affiliates as of June 30, 1996 and 1995 and for the years then ended appearing
in the Company's Current Report on Form 8-K dated July 2, 1996, as amended by
its Forms 8-K/A filed September 16, 1996, May 13, 1997, and June 6, 1997, have
been audited by BDO Seidman LLP, independent auditors, as set forth in their
report thereon included therein and incorporated by reference herein. Such
financial statements are incorporated by reference herein in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.

The combined financial statements of Allied Environmental Services, Inc.,
Allied Environmental Services, West, Inc., Allied Mid-Atlantic, Inc., and
Allied Waste Management, Inc. as of June 30, 1994 and for the year then ended
appearing in the Company's Current Report on Form 8-K dated July 2, 1996, as
amended by its Form 8-K/A filed September 16, 1996, have been audited by B.J.
Klinger & Co., P.C., independent auditors, as set forth in their report
thereon included therein and incorporated by reference herein. Such financial
statements are incorporated by reference herein in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

The combined financial statements of Super Kwik, Inc. and Waste Maintenance
Services, Inc. appearing in the Company's Current Report on Form 8-K dated
September 27, 1996, as amended by its Forms 8-K/A filed December 9, 1996 and
June 6, 1997, have been audited by Bardall, Weintraub P.C., independent
auditors, as set forth in their report thereon included therein and
incorporated by reference herein. Such financial statements are incorporated
by reference herein in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.

The financial statements of R&A Bender, Inc. and R&A Property, Ltd.
appearing in the Company's Current Report on Form 8-K dated December 10, 1996,
as amended by its Forms 8-K/A filed February 11, 1997 and June 6, 1997, have
been audited by Boyer & Ritter, CPAs, independent auditors, as set forth in
their reports thereon included therein and incorporated by reference herein.
Such financial statements are incorporated by reference herein in reliance
upon such reports given upon the authority of such firm as experts in
accounting and auditing.

The combined financial statements of Donno Company, Inc. and affiliates
appearing in the Company's Current Report on Form 8-K dated January 31, 1997,
as amended by its Form 8-K/A filed April 15, 1997, have been audited by
Paternostro, Callahan & DeFreitas, LLP, independent auditors, as set forth in
their report thereon included therein and incorporated by reference herein.
Such financial statements are incorporated by reference herein in reliance
upon such report given upon the authority of such firm as experts in
accounting and auditing.

The financial statements of Apex Waste Services, Inc. appearing in the
Company's Current Report on Form 8-K dated March 31, 1997, as amended by its
Form 8-K/A filed May 13, have been audited by Daniel P. Irwin & Associates,
P.C., independent auditors, as set forth in their report thereon included
therein and incorporated by reference herein. Such financial statements are
incorporated by reference herein in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

67
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Summary Pro Forma Financial Information................................... F-2
Pro Forma Consolidated Balance Sheet at March 31, 1997.................... F-3
Pro Forma Consolidated Statement of Operations for the Year Ended June 30,
1996..................................................................... F-4
Pro Forma Consolidated Statement of Operations for the Nine Months Ended
March 31, 1997........................................................... F-5
Notes to Unaudited Pro Forma Consolidated Financial Information........... F-6
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors............................................ F-9
Consolidated Balance Sheets at March 31, 1997, June 30, 1996, and June 30,
1995..................................................................... F-10
Consolidated Statements of Operations for the Nine Months Ended March 31,
1997, Nine Months Ended March 31, 1996 (Unaudited), and Each of the Three
Years in the Period Ended June 30, 1996.................................. F-12
Consolidated Statements of Stockholders' Equity for the Nine Months Ended
March 31, 1997 and Each of the Three Years in the Period Ended June 30,
1996..................................................................... F-13
Consolidated Statements of Cash Flows for the Nine Months Ended March 31,
1997, Nine Months Ended March 31, 1996 (Unaudited), and Each of the Three
Years in the Period Ended June 30, 1996.................................. F-14
Notes to Consolidated Financial Statements................................ F-15
</TABLE>

F-1

<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

SUMMARY PRO FORMA FINANCIAL INFORMATION

The following Unaudited Pro Forma Consolidated Financial Statements give
effect to certain acquisition transactions described below and in this
offering.

On July 2, 1996, the Company consummated the acquisition of Allied
Environmental Services, Inc. and affiliates ("Allied") in exchange for 116,667
unregistered shares of the Company's common stock. The acquisition has been
accounted for as a purchase.

On December 10, 1996, the Company consummated the acquisition of R&A Bender,
Inc. and certain real estate owned by R&A Bender Property, Ltd. ("Bender").
The total purchase price was approximately $17,500,000 and the acquisition has
been accounted for as a purchase.

The Company completed the acquisition of Waste Services, Inc. and affiliates
on May 12, 1997 in exchange for 1,159,980 unregistered shares of the Company's
common stock and the assumption of $6,176,690 of debt. The Company has
assumed, as part of its purchase price, $6.2 million which is contingent upon
the resolution of certain events and is payable in either cash or a future-
maximum issuance of 357,849 shares of common stock. The Company has accounted
for this acquisition as a purchase. In connection with this acquisition, the
company has also executed Definitive Purchase Agreements for Coney Island
Rubbish Removal, Inc. and Golden Gate Carting Co., Inc., two hauling companies
which operate under common operational and management control with Waste
Services, Inc. Estimated consideration relating to the Golden Gate and Coney
Island acquisitions consists of 288,820 unregistered shares of the Company's
stock and the assumption of $3,050,273 of debt. The Golden Gate and Coney
Island acquisitions are contingent upon the approval of the New York Trade
Waste Commission. Pending closing of the acquisitions, the Company is
operating the business of Golden and Coney Island under management agreements.
Waste Services, Golden Gate and Coney Island are collectively referred to as
("WSI").

The pro forma consolidated statements of operations for the year ended June
30, 1996 and the nine months ended March 31, 1997 reflects the results of
operations of the Company as if the above acquisitions of Allied, Bender and
WSI had occurred at the beginning of the periods presented. The pro forma
consolidated balance sheet as of March 31, 1997 reflects the financial
position of the Company as if the acquisition of WSI and this offering had
occurred as of March 31, 1997.

The Company also acquired Apex Waste Services, Inc. ("Apex") on March 31,
1997. This business combination has been accounted for under the pooling of
interests method. Apex began operations on October 1, 1996 as a result of its
acquisition of certain assets of Waste Management, Inc., Northeast
Pennsylvania Division, which was accounted for under the purchase method. The
results of operations of Apex have been included in the Company's consolidated
financial statements since the date of inception of Apex. The pro forma
consolidated financial information includes the results of operations of the
predecessor company of Apex for the year ended June 30, 1996 and for the
period July 1, 1996 to September 30, 1996.

The unaudited pro forma consolidated financial statements are based upon
preliminary estimates, available information and certain assumptions that
management deems appropriate. Management does not expect material changes to
the final transaction adjustments. The unaudited pro forma consolidated
financial information presented herein is not necessarily indicative of the
results of operations or financial position that the Company would have
obtained had such events occurred at the beginning of the period, as assumed,
or the future results of the Company. The pro forma consolidated financial
information should be read in connection with the consolidated financial
statements and notes thereto include in this Prospectus.

F-2
<PAGE>

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AT MARCH 31, 1997

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA ADJUSTMENTS PRO FORMA
THE COMPANY WSI ADJUSTMENTS CONSOLIDATED FROM OFFERING AS ADJUSTED
----------- ----------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash
equivalents........... $ 3,906,902 $ 26,650 $ (26,650)(1) $ 3,906,902 $ 31,515,537(2) $ 35,422,439
Accounts receivable,
net of allowance...... 7,694,765 2,210,957 (2,210,957)(1) 7,694,765 7,694,765
Deferred income taxes.. 1,568,000 -- 1,568,000 1,568,000
Prepaid expenses and
other current assets.. 2,173,656 305,278 (305,278)(1) 2,173,656 2,173,656
----------- ----------- ------------ ------------ ------------ ------------
TOTAL CURRENT ASSETS... 15,343,323 2,542,885 (2,542,885) 15,343,323 31,515,537 46,858,860
NET PROPERTY, PLANT &
EQUIPMENT.............. 54,171,729 943,756 992,244 (1) 56,107,729 56,107,729
Assets held for resale.. 395,059 -- 395,059 395,059
Excess cost over fair
market value of net
assets acquired........ 15,764,939 13,164,368 16,701,011 (1) 45,630,318 45,630,318
Intangible assets, net.. 1,720,740 -- 800,000 (1) 2,520,740 2,520,740
Notes receivable from
shareholders /
officers............... 463,902 1,535,411 (1,535,411)(1) 463,902 463,902
Other assets............ 1,493,005 243,735 (243,735)(1) 1,493,005 1,493,005
----------- ----------- ------------ ------------ ------------ ------------
TOTAL ASSETS........... $89,352,697 $18,430,155 $ 14,171,224 $121,954,076 $ 31,515,537 $153,469,613
=========== =========== ============ ============ ============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Current maturities on
long-term debt........ $ 1,285,312 $ 2,801,426 $(2,801,426)(1) $ 1,285,312 -- $ 1,285,312
Current maturities of
obligations under
capital leases........ 1,445,100 -- 1,445,100 1,445,100
Accounts payable........ 3,835,667 3,586,644 (3,586,644)(1) 3,835,667 3,835,667
Accrued expenses and
other current
liabilities............ 8,361,616 -- 223,000 (1) 8,584,616 8,584,616
Income taxes payable.... 45,880 779,531 (779,531)(1) 45,880 45,880
Due to officers......... -- 470,115 (470,115)(1) -- --
Current portion of
accrued landfill
closure and other
environmental costs.... 1,070,000 -- 1,070,000 1,070,000
----------- ----------- ------------ ------------ ------------ ------------
TOTAL CURRENT
LIABILITIES........... 16,043,575 7,637,716 (7,414,716) 16,266,575 -- 16,266,575
Deferred income taxes... 3,832,203 -- 3,832,203 3,832,203
Long-term debt.......... 31,736,086 14,160,900 (4,933,937)(1) 40,963,049 (39,776,963)(2) 1,186,086
Capital lease
obligations--
long-term.............. 2,244,432 -- 2,244,432 2,244,432
Accrued landfill closure
and other environmental
costs.................. 8,172,364 -- 8,172,364 8,172,364
Other long-term
liabilities............ 6,200,000 (1) 6,200,000 6,200,000
STOCKHOLDERS' EQUITY
Common stock........... 140,958 65,620 (51,132)(1) 155,446 45,000 (2) 200,446
Additional paid-in
capital............... 27,927,552 -- 16,936,928 (1) 44,864,480 71,247,500 (2) 116,111,980
Retained earnings
(deficit)............. (668,214) (3,434,081) 3,434,081 (1) (668,214) (668,214)
Less treasury stock at
cost--
39,100 common shares.. (76,259) -- (76,259) (76,259)
----------- ----------- ------------ ------------ ------------ ------------
TOTAL STOCKHOLDERS'
EQUITY................ 27,324,037 (3,368,461) 20,319,877 44,275,453 71,292,500 115,567,953
----------- ----------- ------------ ------------ ------------ ------------
TOTAL LIABILITY AND
STOCKHOLDERS' EQUITY.. $89,352,697 $18,430,155 $ 14,171,224 $121,954,076 $ 31,515,537 $153,469,613
=========== =========== ============ ============ ============ ============
</TABLE>

F-3
<PAGE>

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED
JUNE 30, 1996

<TABLE>
<CAPTION>
PRO FORMA
R&A CONSOLIDATED
R&A BENDER BEFORE PREDECESSOR
THE BENDER, PROPERTY, PRO FORMA PREDECESSOR COMPANY TO
COMPANY ALLIED INC. LTD. WSI ADJUSTMENTS COMPANY APEX
----------- ----------- ---------- --------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........ $39,519,173 $10,549,739 $8,454,211 $490,270 $22,802,271 $ (183,919)(10) $81,148,375 $19,042,380
(483,370)(15)
-----------
(667,289)
(734,001)(4)
(390,709)(10)
-----------
Cost of
revenues........ 33,417,442 8,211,825 5,812,906 -- 13,053,202 (1,124,710) 59,370,665 16,115,293
(137,032)(3)
172,515 (4)
(885,723)(5)
(797,459)(8)
(9,807)(10)
(626,962)(11)
(2,387,983)(12)
(483,370)(15)
-----------
Selling, general
and
administrative
expenses........ 9,774,422 3,231,358 2,703,425 41,954 8,063,449 (5,155,821) 18,658,787 2,221,336
----------- ----------- ---------- -------- ----------- ----------- ----------- -----------
Operating (loss)
income.......... (3,672,691) (893,444) (62,120) 448,316 1,685,620 5,613,242 3,118,923 705,751
(1,168,191)(9)
1,311,073 (13)
-----------
Interest
expense......... (629,009) (108,881) (113,115) -- (2,049,230) 142,882 (2,757,353) (746,152)
Other (expense)
income.......... (130,640) (1,817,733) 277,518 3,032 86,024 1,817,733 (6) 235,934 31,365
----------- ----------- ---------- -------- ----------- ----------- ----------- -----------
(Loss) income
from continuing
operations
before income
taxes
(benefit)....... (4,432,340) (2,820,058) 102,283 451,348 (277,586) 7,573,857 597,504 (9,036)
Income tax
(benefit)....... (9,687) -- -- -- (94,379) 94,379 (14) (9,687) --
----------- ----------- ---------- -------- ----------- ----------- ----------- -----------
Net (loss)
income from
continuing
operations...... $(4,422,653) $(2,820,058) $ 102,283 $451,348 $ (183,207) $ 7,479,478 $ 607,191 $ (9,036)
=========== =========== ========== ======== =========== =========== =========== ===========
Earnings per
share...........
Weighted average
number of shares
outstanding.....
<CAPTION>
APEX
PRO FORMA PRO FORMA ADJUSTMENTS PRO FORMA
ADJUSTMENTS CONSOLIDATED FROM OFFERING AS ADJUSTED
--------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Revenues........ $ -- $100,190,755 $ -- $100,190,755
Cost of
revenues........ (770,634)(1) 74,715,324 -- 74,715,324
Selling, general
and
administrative
expenses........ (312,322)(1) 20,567,801 -- 20,567,801
--------------- ---------------- ---------------- -----------------
Operating (loss)
income.......... 1,082,956 4,907,630 -- 4,907,630
Interest
expense......... (650,775)(2) (4,154,280) 3,182,157(16) (972,123)
Other (expense)
income.......... -- 267,299 -- 267,299
--------------- ---------------- ---------------- -----------------
(Loss) income
from continuing
operations
before income
taxes
(benefit)....... 432,181 1,020,649 3,182,157 4,202,806
Income tax
(benefit)....... -- (9,687) -- (9,687)(14)
--------------- ---------------- ---------------- -----------------
Net (loss)
income from
continuing
operations...... $ 432,181 $ 1,030,336 $3,182,157 $ 4,212,493
=============== ================ ================ =================
Earnings per
share........... $ .09 $ .26
================ =================
Weighted average
number of shares
outstanding..... 11,869,868 (7) 16,369,868 (17)
================ =================
</TABLE>

F-4
<PAGE>

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS
ENDED MARCH 31, 1997

<TABLE>
<CAPTION>
PRO FORMA
R&A CONSOLIDATED
R&A BENDER BEFORE PREDECESSOR APEX
BENDER, PROPERTY, PRO FORMA PREDECESSOR COMPANY TO PRO FORMA
THE COMPANY INC. LTD. WSI ADJUSTMENTS COMPANY APEX ADJUSTMENTS
----------- ---------- --------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........ $52,409,183 $4,294,638 $214,324 $16,596,545 $ (41,019)(6) $73,262,989 $4,675,156 $ --
(210,682)(12)
----------
(251,701)
(196,402)(3)
(206,352)(6)
----------
Cost of 38,026,625 2,692,988 1,602 10,318,674 50,637,135 3,901,842 (192,658)(1)
revenues........ (402,754)
76,769 (3)
(963,807)(4)
(6,085)(6)
(610,088)(7)
(1,583,152)(8)
(210,682)(12)
----------
Selling, general
and
administrative
expenses........ 9,245,947 1,949,947 17,382 6,378,446 (3,297,045) 14,294,677 563,087 (78,081)(1)
Merger costs.... 3,336,792 -- -- -- -- 3,336,792 -- --
----------- ---------- -------- ----------- ---------- ----------- ---------- --------
Operating income 1,799,819 (348,297) 195,340 (100,575) 4,994,385 210,227 270,739
(loss).......... 3,448,098
714,024 (9)
Interest (1,525,509) (7,243) (1,267,642) (529,754)(5) (2,616,124) (172,534) (176,698)(2)
(expense)
income..........
Other income
(expense)....... 461,089 245,746 -- 83,997 -- 790,832 3,596 --
----------- ---------- -------- ----------- ---------- ----------- ---------- --------
Income (loss)
from continuing
operations
before income
taxes........... 735,399 (109,794) 195,340 (1,284,220) 3,632,368 3,169,093 41,289 94,041
Income tax
expense
(benefit)....... 940,405 -- -- 436,635 (436,635)(13) 940,405 -- --
----------- ---------- -------- ----------- ---------- ----------- ---------- --------
Net income
(loss) from
continuing
operations...... $ (205,006) $ (109,794) $195,340 $ (847,585) $3,195,733 $ 2,228,688 $ 41,289 $ 94,041
=========== ========== ======== =========== ========== =========== ========== ========
Earnings per
shares..........
Weighted average
number of shares
outstanding.....
<CAPTION>
PRO FORMA ADJUSTMENTS PRO FORMA
CONSOLIDATED FROM OFFERING AS ADJUSTED
---------------- ---------------- ---------------
<S> <C> <C> <C>
Revenues........ $77,938,145 $ -- $77,938,145
Cost of 54,346,319 -- 54,346,319
revenues........
Selling, general
and
administrative
expenses........ 14,779,683 -- 14,779,683
Merger costs.... 3,336,792 -- 3,336,792
---------------- ---------------- ---------------
Operating income 5,475,351 5,475,351
(loss)..........
Interest (2,965,356) 2,386,618(11) (578,738)
(expense)
income..........
Other income
(expense)....... 794,428 -- 794,428
---------------- ---------------- ---------------
Income (loss)
from continuing
operations
before income
taxes........... 3,304,423 2,386,618 5,691,041
Income tax
expense
(benefit)....... 940,405 520,532 1,460,937(13)
---------------- ---------------- ---------------
Net income
(loss) from
continuing
operations...... $ 2,364,018 $1,866,086 $ 4,230,104
================ ================ ===============
Earnings per
shares.......... $ .15 $ .21
================ ===============
Weighted average
number of shares
outstanding..... 15,904,405(10) 20,404,405(14)
================ ===============
</TABLE>

F-5
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET ADJUSTMENTS

THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1997 HAS
BEEN ADJUSTED TO REFLECT THE FOLLOWING:

(1) Reflects the acquisition of Waste Services, Inc. and affiliates and the
pending acquisitions of Golden Gate and Coney Island Rubbish Removal, Inc.
accounted for using the purchase method. Pursuant to the Purchase Agreements,
only property and equipment and intangible assets were acquired for
consideration of $16,951,416 in EESI stock, the assumption of debt of
$9,226,963, the assumption of a $6.2 million liability which is contingent
upon the resolution of certain events (payable in either cash or a future
maximum issuance of 357,849 shares of EESI stock) and the recording of a
purchase accounting reserve of $223,000 for terminated transitional employee
salaries. The excess purchase price over the estimated fair value of the net
assets acquired is being amortized on a straight-line basis for forty (40)
years from the date of acquisition. The preliminary allocation of the purchase
price is as follows:

<TABLE>
<S> <C>
Property and equipment....................................... $ 1,936,000
Cost over fair value of net assets acquired.................. 29,865,379
Identifiable intangible assets............................... 800,000
-----------
$32,601,379
===========
</TABLE>

(2) To record the issuance of 4,500,000 shares of common stock offered in
connection with this offering at an assumed offering price of $17.00 per
share, and the application of the estimated net proceeds therefrom.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS ADJUSTMENTS

THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR
ENDED JUNE 30, 1996 HAS BEEN ADJUSTED TO REFLECT THE FOLLOWING:

(1) To adjust depreciation and amortization expense for the change of the
basis of property, equipment and intangible assets, net of historical
depreciation and amortization expense of Waste Management, Inc. of Northeast
Pennsylvania (Predecessor Company to Apex) had the purchase of Waste
Management, Inc. of Northeast Pennsylvania been completed on July 1, 1995.

(2) To record additional interest expense of $650,775 from borrowings of
approximately $16.4 million (at an interest rate of 8.5%) to consummate the
acquisition of Waste Management of Northeast Pennsylvania, net of historical
interest expense of $746,152.

(3) To adjust depreciation and amortization expense for the change in the
basis of property and equipment, net of historical depreciation and
amortization of Allied Environmental Services, Inc. and affiliates had the
purchase of the assets of Allied been completed on July 1, 1995.

(4) To adjust depreciation and amortization expense for the change in the
basis of property, equipment, landfill site costs and intangible assets as if
the purchase of Bender had been completed on July 1, 1995 net of historical
depreciation and amortization expense of R&A Bender, Inc. and R&A Bender
Property, Ltd. and to reflect the Company's methodology of amortizing landfill
site costs and closure and post-closure costs. Landfill site costs and closure
and post-closure costs are amortized based upon consumed airspace using the
unit-of-production method of airspace filled during the period in relation to
estimates of total available airspace.

(5) To eliminate intercompany administrative charges related directly to
cost sharing arrangements provided by Allied's prior parent, which were
terminated as a result of the purchase transaction.

(6) To adjust for the write-off of certain intangible assets of Allied, to
reflect the recording of purchase accounting as if the acquisition was
consummated at the beginning of the year, whereby the Company would have
assigned a value of zero to this intangible asset.

F-6
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION--(CONTINUED)

(7) For the purposes of determining pro forma earnings per share, the
issuance of 116,667, 1,448,800, 106,667, and 796,927 shares of common stock as
consideration for the purchase of assets of Allied and WSI, the stock of R&A
Bender, Inc., and to reflect the shares issued relating to the Apex merger,
respectively, were considered to have been outstanding from July 1, 1995.

(8) To reflect the decrease in Bender's selling, general and administrative
expenses consisting of contractual reductions to former owners' salaries of
$606,815, and for the termination of R&A Bender's Profit Sharing Plan of
$190,644. The contractual reduction in owner salaries and the terminating of
R&A Bender's profit sharing plan were directly attributable to the acquisition
transaction.

(9) To record additional interest expense of $1,168,191 from borrowings (at
the Company's average borrowing rate of 8%) under the Company's Revolving
Credit Facility of $15.8 million incurred to consummate the acquisition of
Bender, net of historical interest expense of $113,115.

(10) To reflect the elimination of revenues and operating expenses relating
to certain operations of Bender not acquired by EESI.

(11) To reflect a reduction in WSI's selling, general, and administrative
salaries of employees terminated at the time of acquisition pursuant to
restrictive covenants mandated by the New York City Trade Waste Commission as
conditional approval for the Company to consummate the WSI acquisition. The
reduction is net of the estimated cost of replacement employees under
employment contracts.

(12) To adjust depreciation and amortization expense for the change in the
basis of equipment and intangible assets, and the change in the useful lives
and amortization period to conform to Company policies, net of historical
depreciation and amortization, which would have occurred had the acquisition
of WSI been completed at the beginning of the period.

(13) To reflect a reduction in interest expense of $1,311,073 resulting from
debt not acquired net of EESI interest of $738,157 on borrowings at the
Company's average borrowing rate of 8.0% to finance the WSI acquisition.

(14) The Company's pro forma effective tax provision is due to the
realization of federal net operating loss carryforwards and the reversal of
the related valuation allowance previously recorded. Excluding the effect of
the valuation allowance, pro forma as adjusted income taxes would be
approximately $1.8 million, or $.11 per share at an effective rate of 42%.

(15) To reflect the elimination of intercompany rental revenues and expenses
between R&A Bender, Inc. and R&A Bender Property, Ltd.

(16) Reduction in interest expense to reflect the use of proceeds of the
Offering to pay down the debt assumed to be outstanding of $39.8 million
resulting from the business combinations at an average interest rate of 8.0%.

(17) For the purpose of determining pro forma as adjusted earnings per
share, the issuance of 4,500,000 shares relating to this Offering were
considered to have been outstanding since July 1, 1995.

THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED MARCH 31, 1997 HAS BEEN ADJUSTED TO REFLECT THE FOLLOWING:

(1) To adjust depreciation and amortization expense for the change in the
basis of property, equipment and intangible assets, net of historical
depreciation and amortization expense of Waste Management, Inc. of Northeast
Pennsylvania (Predecessor company to Apex) had the purchase of Waste
Management Inc. of Northeast Pennsylvania been completed on July 1, 1996.

F-7
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION--(CONTINUED)

(2) To record additional interest expense of $176,698 from borrowings of
Apex of $16.4 million (at an interest rate of 8.5%) to consummate the
acquisition of Waste Management of Northeast Pennsylvania, net of historical
interest expense of $172,534.

(3) To adjust depreciation and amortization expense for the change in the
basis of property, equipment, landfill site costs and intangible assets as if
the purchase of Bender had been completed on July 1, 1996 net of historical
depreciation and amortization expense of R&A Bender, Inc. and R&A Bender
Property, Ltd. and to reflect the Company's methodology of amortizing landfill
site costs and closure and post-closure costs. Landfill site costs and closure
and post-closure costs are amortized based upon consumed airspace using the
unit-of-production method of airspace filled during the period in relation to
estimates of total available airspace.

(4) To reflect the decrease in Bender's selling, general and administrative
expenses consisting of a contractual reduction made to the former owners'
salaries of $706,807 and for the termination of R&A Bender's Profit Sharing
Plan of $257,000. The contracted reduction in owner salaries and the
termination of R&A Bender's profit sharing plan were directly attributable to
the acquisition transaction.

(5) To record additional interest expense of $529,754 resulting from
borrowings under the Company's Revolving Credit Facility of $15.8 million
incurred to consummate the acquisition of R&A Bender, net of historical
interest expense of $38,291.

(6) To reflect the elimination of revenues and operating expenses relating
to certain operations of Bender not acquired by EESI.

(7) To reflect a reduction in WSI's selling, general, and administrative
salaries of employees terminated at the time of acquisition pursuant to
restrictive covenants mandated by the New York City Trade Waste Commission as
conditional approval for the Company to consummate the WSI acquisition. The
reduction is net of the estimated cost of replacement employees.

(8) To adjust depreciation and amortization expense for the change in the
basis of equipment and intangible assets, net of historical depreciation and
amortization which would have occurred had the purchase of WSI been completed
on July 1, 1996.

(9) To reflect a reduction in interest expense of $714,024 resulting from
debt not acquired net of EESI interest of $553,618 on borrowings at the
Company's average borrowing rate of 8.0% to finance acquisitions.

(10) For the purposes of determining pro forma earnings per share, the
issuance of 63,066 shares of common stock as partial consideration for the
purchase of the stock of R&A Bender, Inc., and 1,448,800 shares related to the
acquisition of WSI were considered to have been outstanding from July 1, 1996.

(11) Reduction in interest expense to reflect the use of proceeds of the
Offering to pay down the balance outstanding at March 31, 1997 on the
revolving credit facility of $39.8 million at an average annual interest rate
of 8.0%.

(12) To reflect the elimination of intercompany rental revenues and expenses
between R&A Bender, Inc. and R&A Bender Property, Ltd.

(13) The Company's pro forma effective tax provision is after consideration
of the realization of federal net operating loss carryforwards and the
reversal of the related valuation allowance previously recorded. Excluding the
effect of the valuation allowance, pro forma taxes at an effective rate of 42%
would be $2.4 million, an increase of $900,000 ($.04 per share).

(14) For the purpose of determining pro forma earnings per share as
adjusted, the issuance of 4,500,000 shares relating to this Offering were
considered to have been outstanding since July 1, 1996.

F-8
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Eastern Environmental Services, Inc.

We have audited the accompanying consolidated balance sheets of Eastern
Environmental Services, Inc. as of March 31, 1997, June 30, 1996, and June 30,
1995, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the nine months ended March 31, 1997 and each of
the three years in the period ended June 30, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We did
not audit the financial statements of Super Kwik, Inc. and Donno Company, Inc.
and affiliates, wholly owned subsidiaries, which statements reflect total
assets constituting 46% in 1996 and 44% in 1995, and total revenues
constituting 81% in 1996, 79% in 1995, and 77% in 1994 of the related
consolidated totals. Those statements were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to
data included for Super Kwik, Inc. and Donno Company, Inc. and affiliates, is
based solely on the reports of the other auditors.

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

In our opinion, based on our audits and, for each of the three years in the
period ended June 30, 1996, the reports of other auditors, the financial
statements referred to above present fairly, in all material respects, the
consolidated financial position of Eastern Environmental Services, Inc. at
March 31, 1997, June 30, 1996, and June 30, 1995, and the consolidated results
of its operations and its cash flows for the nine months ended March 31, 1997
and each of the three years in the period ended June 30, 1996, in conformity
with generally accepted accounting principles.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
May 13, 1997

F-9
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
MARCH 31, -----------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ 3,906,902 $ 1,776,112 $ 2,972,188
Accounts receivable, less allowance for
doubtful accounts of $1,519,000,
$604,000, and $600,000.................. 7,694,765 3,349,159 3,422,000
Deferred income taxes.................... 1,568,000 372,445 168,186
Tax refund receivable.................... -- 74,467 152,871
Prepaid expenses and other current
assets.................................. 2,173,656 1,698,753 1,728,149
----------- ----------- -----------
Total current assets................... 15,343,323 7,270,936 8,443,394
Property and equipment:
Land..................................... 4,166,178 236,517 331,352
Landfill sites........................... 30,571,790 12,673,250 10,804,589
Buildings and leasehold improvements..... 6,441,336 2,098,512 2,392,784
Vehicles................................. 15,623,804 11,806,417 10,886,874
Machinery and equipment.................. 15,098,307 7,553,325 8,264,117
Furniture and fixtures................... 1,390,761 1,485,868 1,315,043
----------- ----------- -----------
Total property and equipment........... 73,292,176 35,853,889 33,994,759
Accumulated depreciation and amortization.. 19,120,447 17,510,520 16,882,942
----------- ----------- -----------
54,171,729 18,343,369 17,111,817
Assets held for sale....................... 395,059 859,262 517,659
Excess cost over fair market value of net
assets acquired, net of $663,000,
$440,000, and $360,000 accumulated
amortization.............................. 15,764,939 372,096 350,412
Other intangible assets, net of $3,344,000,
$3,202,000, and $3,031,000 accumulated
amortization.............................. 1,720,740 662,685 795,016
Notes receivable from officers............. 463,902 432,902 204,001
Other assets (including $538,000, $433,000,
and $545,000 of restricted cash on deposit
for landfill closure and insurance
bonding).................................. 1,493,005 844,837 876,899
----------- ----------- -----------
Total assets........................... $89,352,697 $28,786,087 $28,299,198
=========== =========== ===========
</TABLE>

See accompanying notes.

F-10

<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
MARCH 31, ------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings................. $ -- $ 595,000 $ 650,000
Accounts payable...................... 3,835,667 3,559,131 2,977,499
Accrued expenses and other current
liabilities.......................... 8,361,616 2,028,359 1,161,367
Note payable to stockholder/officer... -- -- 42,457
Income taxes payable.................. 45,880 57,739 59,506
Current portion of accrued landfill
closure and other environmental
costs................................ 1,070,000 870,000 870,000
Current portion of long-term debt..... 1,285,312 773,702 1,098,985
Current portion of capital lease
obligations.......................... 1,445,100 1,240,358 1,131,924
----------- ----------- -----------
Total current liabilities........... 16,043,575 9,124,289 7,991,738
Deferred income taxes................... 3,832,203 507,623 325,152
Long-term debt, net of current portion.. 31,736,086 3,534,716 2,962,451
Capital lease obligations, net of
current portion........................ 2,244,432 2,774,124 2,197,430
Accrued landfill closure and other
environmental costs.................... 8,172,364 2,424,137 1,082,246
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value:
Authorized shares--50,000,000
Issued and outstanding shares--
14,095,834, 9,523,785, and
6,614,231.......................... 140,958 95,238 66,142
Class A common stock (convertible to
common stock), $.01 par value:
Authorized shares--10,000,000
Issued and outstanding shares--0, 0,
and 1,591,201...................... -- -- 15,912
Additional paid-in capital............ 27,927,552 10,661,427 9,312,941
Retained earnings (deficit)........... (668,214) (259,208) 4,421,445
----------- ----------- -----------
27,400,296 10,497,457 13,816,440
Less treasury stock at cost--39,100
common shares........................ (76,259) (76,259) (76,259)
----------- ----------- -----------
Total stockholders' equity.......... 27,324,037 10,421,198 13,740,181
----------- ----------- -----------
Total liabilities and stockholders'
equity............................. $89,352,697 $28,786,087 $28,299,198
=========== =========== ===========
</TABLE>

See accompanying notes.

F-11
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31, YEAR ENDED JUNE 30,
-------------------------------------------------------------------
1997 1996 1996 1995 1994
------------- -------------------------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................ $ 52,409,183 $ 29,020,986 $39,519,173 $40,802,062 $37,314,442
Cost of revenues........ 38,026,625 23,666,269 33,417,442 33,685,537 30,380,304
Selling, general, and
administrative expenses
....................... 9,245,947 5,665,268 9,774,422 7,225,940 7,109,857
Merger costs............ 3,336,792 -- -- -- --
------------- ------------- ----------- ----------- -----------
Operating income
(loss)................. 1,799,819 (310,551) (3,672,691) (109,415) (175,719)
Interest expense........ (1,525,509) (416,590) (629,009) (580,632) (371,918)
Other income (expense).. 461,089 186,538 (130,640) 488,384 226,289
------------- ------------- ----------- ----------- -----------
Income (loss) from
continuing operations
before income taxes ... 735,399 (540,603) (4,432,340) (201,663) (321,348)
Income tax expense (ben-
efit).................. 940,405 -- (9,687) (147,093) (228,700)
------------- ------------- ----------- ----------- -----------
Loss from continuing op-
erations............... (205,006) (540,603) (4,422,653) (54,570) (92,648)
Discontinued operations:
Gain on disposal of
discontinued opera-
tions, net of appli-
cable income taxes of
$260,784............. -- -- -- -- 525,309
------------- ------------- ----------- ----------- -----------
Net (loss) income....... $ (205,006) $ (540,603) $(4,422,653) $ (54,570) $ 432,661
============= ============= =========== =========== ===========
Net (loss) earnings per
share
Continuing opera-
tions................ $ (.02) $ (.06) $ (.49) $ (.01) $ (.01)
Discontinued opera-
tions................ -- -- -- -- .07
------------- ------------- ----------- ----------- -----------
$ (.02) $ (.06) $ (.49) $ (.01) $ .06
============= ============= =========== =========== ===========
Weighted average number
of shares outstanding.. 13,316,698 8,930,968 9,018,080 7,844,359 7,836,332
============= ============= =========== =========== ===========
</TABLE>

See accompanying notes.

F-12
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
NUMBER OF SHARES PAR VALUE
--------------------- -----------------
CLASS A CLASS A ADDITIONAL RETAINED
COMMON COMMON COMMON COMMON PAID-IN EARNINGS TREASURY
STOCK STOCK STOCK STOCK CAPITAL (DEFICIT) STOCK TOTAL
---------- ---------- -------- -------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30,
1993................... 6,284,231 1,591,201 $ 62,842 $15,912 $ 8,989,991 $5,066,354 $(76,259) $14,058,840
Net income............. -- -- -- -- -- 432,661 -- 432,661
Dividends declared and
paid to former Donno
Company, Inc. and
affiliates
stockholders.......... -- -- -- -- -- (369,000) -- (369,000)
---------- ---------- -------- ------- ----------- ---------- -------- -----------
Balance at June 30,
1994................... 6,284,231 1,591,201 62,842 15,912 8,989,991 5,130,015 (76,259) 14,122,501
Exercise of common
stock options......... 30,000 -- 300 -- 25,950 -- -- 26,250
Issuance of common
stock................. 300,000 -- 3,000 -- 297,000 -- -- 300,000
Net loss............... -- -- -- -- -- (54,570) -- (54,570)
Dividends declared and
paid to former Donno
Company, Inc. and
affiliates
stockholders.......... -- -- -- -- -- (654,000) -- (654,000)
---------- ---------- -------- ------- ----------- ---------- -------- -----------
Balance at June 30,
1995................... 6,614,231 1,591,201 66,142 15,912 9,312,941 4,421,445 (76,259) 13,740,181
Exercise of common
stock options......... 140,000 -- 1,400 -- 141,100 -- -- 142,500
Exercise of common
stock warrants........ 303,353 -- 3,034 -- 424,312 -- -- 427,346
Issuance of common
stock................. 875,000 -- 8,750 -- 783,074 -- -- 791,824
Conversion of common
stock................. 1,591,201 (1,591,201) 15,912 (15,912) -- -- -- --
Net loss............... -- -- -- -- -- (4,422,653) -- (4,422,653)
Dividends declared and
paid to former Donno
Company, Inc. and
affiliates
stockholders.......... -- -- -- -- -- (258,000) -- (258,000)
---------- ---------- -------- ------- ----------- ---------- -------- -----------
Balance at June 30,
1996................... 9,523,785 -- 95,238 -- 10,661,427 (259,208) (76,259) 10,421,198
Exercise of common
stock options and
warrants.............. 405,576 -- 4,055 -- 324,004 -- -- 328,059
Proceeds from sale of
2,670,000 shares of
common stock, less
commissions and
issuance expenses of
$724,248.............. 2,670,000 -- 26,700 -- 9,929,052 -- -- 9,955,752
Common stock issued in
connection with
incorporation of
Apex.................. 796,927 -- 7,970 -- 3,242,030 -- -- 3,250,000
Common stock issued in
purchase
acquisitions.......... 697,046 -- 6,970 -- 3,751,064 -- -- 3,758,034
Common stock issued for
consulting services... 2,500 -- 25 -- 19,975 -- -- 20,000
Cash dividends paid to
former stockholders of
Donno Co., Inc. and
affiliates............ -- -- -- -- -- (204,000) -- (204,000)
Net loss............... -- -- -- -- -- (205,006) -- (205,006)
---------- ---------- -------- ------- ----------- ---------- -------- -----------
Balance at March 31,
1997................... 14,095,834 -- $140,958 $ -- $27,927,552 $ (668,214) $(76,259) $27,324,037
========== ========== ======== ======= =========== ========== ======== ===========
</TABLE>

See accompanying notes.

F-13

<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEAR ENDED JUNE 30,
------------------------- -------------------------------------
1997 1996 1996 1995 1994
------------ ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Loss from continuing
operations............. $ (205,006) $ (540,603) $(4,422,653) $ (54,570) $ (92,648)
Adjustments to reconcile
loss from continuing
operations to net cash
provided by operating
activities of
continuing operations:
Depreciation and
amortization.......... 3,073,817 2,354,427 2,893,712 3,665,360 2,861,884
Provision for losses
on receivables........ 272,834 95,908 304,496 300,481 203,893
Landfill closure
costs................. 206,816 68,517 1,006,211 281,619 312,360
Non-cash severance and
transition costs...... -- -- 740,827 -- --
Non-cash compensation
expense............... -- -- 138,173 -- --
Deferred income
taxes................. 795,761 (13,349) (21,788) (167,974) 19,573
Loss on write-down of
assets held for
sale.................. -- -- 402,616 -- --
Loss (gain) on sale of
property and
equipment............. (136,353) (428) 52,490 (77,579) (21,946)
Changes in operating
assets and
liabilities:
Accounts receivable.. (2,092,988) 28,718 (231,655) 749,534 (667,759)
Income taxes......... 170,914 75,680 76,637 (53,165) 575,093
Other................ 2,858,335 423,351 910,770 454,049 132,943
Accounts payable..... (1,955,278) (120,968) 581,632 (384,252) 1,154,502
------------ ----------- ----------- ----------- -----------
Net cash provided by
operating activities of
continuing operations.. 2,988,852 2,371,253 2,431,468 4,713,503 4,477,895
Net cash provided by
discontinued
operations............. -- -- -- -- 1,533,360
INVESTING ACTIVITIES
Acquisition of
businesses, net of cash
acquired............... (34,232,130) -- -- -- --
Development of landfill
sites.................. (1,857,546) (1,624,597) (1,868,661) (1,361,955) (3,836,701)
Proceeds from sale of
property and
equipment.............. 268,727 55,356 225,309 362,235 532,758
Purchase of property and
equipment.............. (3,660,007) (2,266,307) (3,213,874) (3,633,556) (1,544,529)
Payments received on
notes receivable....... -- -- (213,930) 197,428 234,119
Payments for intangible
assets................. -- (122,500) (122,500) (574,950) (92,500)
Landfill closure and
insurance bonding
deposits............... (53,209) 116,521 111,485 (18,145) 83,398
------------ ----------- ----------- ----------- -----------
Net cash used in
investing activities... (39,534,165) (3,841,527) (5,082,171) (5,028,943) (4,623,455)
FINANCING ACTIVITIES
Proceeds from revolving
line of credit, long
term debt and capital
lease obligations...... 31,693,650 3,498,942 3,801,500 4,916,792 2,523,142
Payments on revolving
line of credit, long
term debt and capital
lease obligations...... (6,316,358) (3,330,561) (3,408,086) (3,235,517) (3,711,181)
Net (payments)
borrowings on note
payable to
shareholder/officer.... (31,000) (42,457) (42,457) 42,457 --
Proceeds from the
incorporation of Apex.. 3,250,000 -- -- -- --
Proceeds from issuance
of common stock, net of
expenses............... 10,283,811 861,824 1,361,670 326,250 --
Dividends paid to former
stockholders of Donno
Company, Inc. and
affiliates............. (204,000) (153,000) (258,000) (654,000) (369,000)
------------ ----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities............. 38,676,103 834,748 1,454,627 1,395,982 (1,557,039)
------------ ----------- ----------- ----------- -----------
Net increase (decrease)
in cash and cash
equivalents............ 2,130,790 (635,526) (1,196,076) 1,080,542 (169,239)
Cash and cash
equivalents at
beginning of year...... 1,776,112 2,972,188 2,972,188 1,891,646 2,060,885
------------ ----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
year................... $ 3,906,902 $ 2,336,662 $ 1,776,112 $ 2,972,188 $ 1,891,646
============ =========== =========== =========== ===========
</TABLE>

See accompanying notes.

F-14
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of
Eastern Environmental Services, Inc. (the Company) and its wholly owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.

UNAUDITED FINANCIAL STATEMENTS

The consolidated financial statements for the nine months ended March 31,
1996 are unaudited; however, in the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of the consolidated financial statements for the interim period have been
included.

DESCRIPTION OF BUSINESS

The Company is engaged in the business of providing integrated solid waste
management services, consisting of collection, transportation, and disposal
services through nonhazardous waste disposal facilities and waste hauling
operations. The Company's customers include municipal, commercial, industrial,
and residential customers, both local and national companies in various
geographic regions throughout principally the eastern United States.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions regarding the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. Such
estimates include the Company's accounting for closure and post-closure
obligations, amortization of landfill development costs, and estimates of
reserves such as the allowance for doubtful accounts.

PROPERTY AND EQUIPMENT

Property and equipment is stated on the basis of cost. The Company provides
depreciation over the estimated useful lives of assets using the straight-line
method for its property and equipment except for landfill sites. The estimated
useful lives are 20 to 40 years for buildings and improvements, 5 to 10 years
for vehicles, machinery, and equipment, 5 to 10 years for containers and 5 to
10 years for furniture and fixtures.

Landfill site costs include expenditures for acquisition of land and related
airspace, in addition to, engineering, permitting, legal, capitalized
interest, and certain direct site preparation costs which management believes
are recoverable. The Company commences depreciation of landfill site costs
when the construction is completed and the constructed area begins to accept
waste. Landfill site costs for facilities currently in use are depreciated
based upon consumed airspace using the unit-of-production method of airspace
filled during the fiscal year in relation to estimates of total available
airspace.

Annually, the Company prepares topographic analyses of the sites, using
various survey techniques to confirm airspace utilization during the current
year and remaining capacity. Engineering, legal, and other costs associated
with the expansion of permitted capacity of existing sites are deferred until
receipt of all necessary operating permits. Such costs are capitalized and
amortized after receipt of the necessary operating permits. The Company
reviews the realization of landfill development projects on a periodic basis.
The portion of landfill sites currently under development for future expansion
and thus excluded from depreciation totaled $2,539,000, $2,701,000, and
$1,341,000 at March 31, 1997, June 30, 1996, and 1995, respectively.

F-15
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY AND EQUIPMENT (CONTINUED)

The Company capitalizes interest costs as part of the cost of developing
landfill sites and constructing disposal space. Interest costs of $125,000,
$84,000, $48,000, and $139,000 were capitalized for the nine-month period
ended March 31, 1997 and for the fiscal years ended 1996, 1995, and 1994,
respectively.

Depreciation expense includes depreciation recognized on assets under
capitalized lease obligations.

EXCESS COST OVER FAIR MARKET VALUE OF NET ASSETS ACQUIRED

The excess cost over fair market value of net assets acquired is amortized
on a straight-line basis over 40 years commencing on the dates of the
respective acquisitions. Amortization expense of excess cost over fair market
value of net assets acquired was $223,000, $81,000, $75,000, and $77,000 for
the nine months ended March 31, 1997 and for the fiscal years ended 1996,
1995, and 1994, respectively.

OTHER INTANGIBLE ASSETS

Other intangible assets consist principally of noncompete agreements and
waste collection and hauling contracts acquired in the acquisition of landfill
sites and waste collection operations. Noncompete agreements and waste
collection and hauling contracts are currently being amortized over a period
of five to fifteen years. Amortization of other intangible assets was
$142,000, $151,000, $230,000, and $239,000 for the nine months ended March 31,
1997 and for the fiscal years ended 1996, 1995, and 1994, respectively.

LANDFILL CLOSURE, POST-CLOSURE, AND OTHER ENVIRONMENTAL COSTS

Accrued landfill closure and other environmental costs include the cost of
closure and post-closure monitoring and maintenance of landfills, as well as,
environmental and remediation costs all of which are estimated based on
currently available facts, existing technology and interpretation of presently
enacted laws and regulations. Landfill post-closure costs represent
management's estimate of the current value of the future obligation associated
with maintaining and monitoring the landfill for generally a 30-year period
subsequent to the closure of the landfill. The Company estimates the future
cost of closure and post-closure costs based on its interpretation of the U.S.
Environmental Protection Agency's Subtitle D technical standards. The Company
periodically updates its estimates of future closure and post-closure costs
with the impact of changes in estimates accounted for on a prospective basis.
The Company recognizes these costs on the unit-of-production method based on
consumed airspace in relation to management's estimate of total available
airspace. Environmental costs relating to remediation work is accrued and
charged to operations in the period the potential environmental liability is
known.

STATEMENT OF CASH FLOWS

For the purposes of reporting cash flows, cash and cash equivalents consists
of money market accounts and certificates of deposit with original maturities
of three months or less.

Noncash investing and financing activities of the Company excluded from the
statement of cash flows include property and equipment additions financed by
debt of $750,000, $22,000, $109,000, and $267,000 and financed insurance
premiums of $712,000, $462,000, $458,000, and $310,000 for the nine months
ended March 31, 1997, and for the fiscal years ended 1996, 1995, and 1994,
respectively. In fiscal 1996 and 1994, the Company also sold property and
equipment in exchange for notes receivable of $36,000 and $449,000,
respectively.

F-16
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION

The Company recognizes revenues upon receipt and acceptance of waste
material at its landfills and upon collection of waste material at its waste
collection and hauling operations. Amounts billed prior to services being
performed are included in accrued expenses and other current liabilities as
deferred revenue.

EARNINGS PER SHARE

Earnings per share are computed based on the weighted average number of
common shares outstanding including the effect of stock options and warrants,
if dilutive.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist primarily of cash and cash
equivalents, trade receivables, investments in closure trust funds, trade
payables and debt instruments. The book value of cash and cash equivalents,
trade receivables, investments in closure trust funds and trade payables are
considered to be representative of their respective fair values. The carrying
value of the Company's long-term debt approximates fair value based on current
rates and terms.

LONG-LIVED ASSETS

Long-lived assets consist primarily of property and equipment, excess cost
over fair market value of net assets acquired and other intangible assets. The
recoverability of long-lived assets is evaluated at the operating unit level
by an analysis of operating results and consideration of other significant
events or changes in the business environment. If an operating unit has
current operating losses and based upon projections there is a likelihood that
such operating losses will continue, the Company will evaluate whether
impairment exists on the basis of undiscounted expected future cash flows from
operations before interest for the remaining period. If impairment exists, the
carrying amount of the long-lived assets is reduced to its estimated fair
value.

RECLASSIFICATIONS

Certain previously reported amounts have been reclassified to conform to
their 1997 presentation.

NEW ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share," which is required to be adopted for fiscal
periods ending after December 15, 1997 (fiscal 1998 for the Company). At that
time, the Company will be required to change the method currently used to
compute earnings per share. Under the new standard, the dilutive effect of
stock options and stock warrants will be excluded from basic earnings per
share. If earnings per share had been calculated under the new requirement,
the effect would not have been material to the periods presented.

F-17
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. ACQUISITIONS

ACQUISITIONS ACCOUNTED FOR UNDER THE POOLING OF INTERESTS METHOD

On September 27, 1996, the Company completed its merger with Super Kwik,
Inc. (Super Kwik) and approximately 2,308,176 unregistered shares of the
Company's common stock were issued in exchange for all outstanding shares of
Super Kwik. Super Kwik operates a municipal solid waste collection business in
southern New Jersey, operating over 75 collection vehicles and serving more
than 29,000 customers. The transaction has been accounted for using the
pooling of interests method; and accordingly, the accompanying consolidated
financial statements include the accounts of Super Kwik for all periods
presented.

On January 31, 1997, the Company completed its merger with Donno Company,
Inc., Suffolk Waste Systems, Inc., Residential Services, Inc. and N.R.T.
Realty Corporation (collectively referred to as the "Donno Companies") with
1,137,951 unregistered shares of the Company's common stock issued in exchange
for all issued and outstanding shares of the Donno Companies. The Donno
Companies operate over 75 vehicles and a transfer station and service over
60,000 residential and commercial customers in Nassau and Suffolk Counties of
Long Island, New York. The transaction has been accounted for using the
pooling of interests method; and accordingly, the accompanying consolidated
financial statements include the accounts of the Donno Companies for all
periods presented.

On March 31, 1997, the Company completed its merger with Apex Waste
Services, Inc. ("Apex"), with 796,927 unregistered shares of the Company's
common stock, par value $.01, (including 2,482 shares representing an
adjustment for long-term debt being less than $15,000,000 at March 31, 1997,
the date of closing) issued in exchange for all issued and outstanding shares
of Apex. Apex operates over 65 collection vehicles and a transfer and
processing station and provides services to approximately 10,000 residential
and 4,000 commercial customers in Northeastern Pennsylvania. The transaction
has been accounted for using the pooling of interests method. Apex was formed
on October 1, 1996 as a result of the acquisition of certain assets from Waste
Management of Pennsylvania, Incorporated, including $6.2 million excess cost
over fair market value of net assets acquired. The results of operations of
Apex have been included in the Company's consolidated financial statements
since the date of inception of Apex.

F-18
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. ACQUISITIONS (CONTINUED)

ACQUISITIONS ACCOUNTED FOR UNDER THE POOLING OF INTERESTS METHOD (CONTINUED)

Revenues and income (loss) from continuing operations of the separate
companies were as follows:

<TABLE>
<CAPTION>
INCOME (LOSS)
FROM CONTINUING
REVENUES OPERATIONS
----------- ---------------
<S> <C> <C>
Nine months ended March 31, 1997
Eastern Environmental Services, Inc............... $17,264,107 $ 855,357
Super Kwik........................................ 16,936,464 277,888
Donno Companies................................... 9,564,191 (434,038)
Apex.............................................. 8,644,421 (904,213)
----------- -----------
Combined.......................................... $52,409,183 $ (205,006)
=========== ===========
Year ended June 30, 1996
Eastern Environmental Services, Inc............... $ 7,632,503 $(3,500,043)
Super Kwik........................................ 20,521,676 (282,313)
Donno Companies................................... 11,364,994 (640,297)
----------- -----------
Combined.......................................... $39,519,173 $(4,422,653)
=========== ===========
Year ended June 30, 1995
Eastern Environmental Services, Inc............... $ 8,650,945 $(1,547,550)
Super Kwik........................................ 18,865,547 541,287
Donno Companies................................... 13,285,570 951,693
----------- -----------
Combined.......................................... $40,802,062 $ (54,570)
=========== ===========
Year ended June 30, 1994
Eastern Environmental Services, Inc............... $ 8,480,955 $ (722,973)
Super Kwik........................................ 16,000,394 219,293
Donno Companies................................... 12,833,093 411,032
----------- -----------
Combined.......................................... $37,314,442 $ (92,648)
=========== ===========
</TABLE>

Super Kwik, the Donno Companies, and Apex were Subchapter S Corporations
prior to the mergers whereby the taxable income or loss flowed through to the
individual shareholders. The effects of providing pro forma income taxes as a
C Corporation were not presented as such amounts are not material.

In the nine-month period ending March 31, 1997, the Company incurred
approximately $1,148,000, $955,000, and $1,234,000 in merger-related costs
associated with the Super Kwik, the Donno Companies, and Apex mergers,
respectively, of which approximately $2,545,000 is remaining in accrued
liabilities at March 31, 1997. The $3,337,000 of merger costs include $835,000
of transaction-related expenses and $2,502,000 costs to integrate operations.
Additionally, tax provisions of $660,000, $8,000, and $236,000 were recorded
at the date of the mergers relating to net deferred tax liabilities with
respect to the termination of the Super Kwik, the Donno Companies, and Apex,
respectively, previous S corporation elections. This total tax provision of
$904,000 is included within income tax expense for the nine-month period
ending March 31, 1997.

ACQUISITIONS ACCOUNTED FOR UNDER THE PURCHASE METHOD

During the nine-month period ended March 31, 1997, the Company consummated
six acquisitions that were accounted for under the purchase method of
accounting. Results of operations of companies that were acquired and subject
to purchase accounting are included from the dates of such acquisitions. The
total costs of

F-19
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. ACQUISITIONS (CONTINUED)

ACQUISITIONS ACCOUNTED FOR UNDER THE PURCHASE METHOD (CONTINUED)

acquisitions accounted for under the purchase method was $21,145,000. The
excess cost over the fair market value of the net assets acquired was
$9,503,000. The excess cost over the fair market value of the net assets
acquired is being amortized over 40 years from the date of acquisition on a
straight-line basis. The purchase price allocation is based on preliminary
estimates as of the acquisition date.

The unaudited pro forma information set forth below assumes two significant
acquisitions accounted for under the purchase method had occurred at the
beginning of the periods presented. Pro forma results including insignificant
acquisitions would not be materially different from those presented herein. In
addition this information includes the predecessor operations of Apex. Apex
was formed on October 1, 1996 as a result of the acquisition of certain assets
from Waste Management of Pennsylvania, Incorporated. The unaudited pro forma
information is presented for informational purposes only and is not
necessarily indicative of the results of operations that actually would have
been achieved had the acquisitions been consummated at that time:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
MARCH 31, 1997 JUNE 30, 1996
-------------- -------------
<S> <C> <C>
Revenues....................................... $61,341,600 $77,388,484
Net income (loss).............................. $ 4,799,785 $(3,391,838)
Earnings (loss) per share...................... $ .33 $ (.34)
</TABLE>

3. ACCOUNTS RECEIVABLE

The Company performs ongoing credit evaluations of its customers and
generally does not require collateral. The Company maintains an allowance for
doubtful accounts at a level that management believes is sufficient to cover
potential credit losses.

The following is a rollforward of the Company's allowance for bad debts:

<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED JUNE 30,
ENDED ------------------------------
MARCH 31, 1997 1996 1995 1994
-------------- --------- --------- --------
<S> <C> <C> <C> <C>
Balance at beginning of
year....................... $ 604,000 $ 600,000 $ 445,000 $301,000
Additions (charged to
expense)................... 273,000 304,000 300,000 204,000
Deductions.................. (280,000) (300,000) (145,000) (60,000)
Other--purchase price
allocation................. 922,000 -- -- --
---------- --------- --------- --------
Balance at end of year...... $1,519,000 $ 604,000 $ 600,000 $445,000
========== ========= ========= ========
</TABLE>

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:

<TABLE>
<CAPTION>
NINE MONTHS JUNE 30,
ENDED ---------------------
MARCH 31, 1997 1996 1995
-------------- ---------- ----------
<S> <C> <C> <C>
Insurance............................... $ 787,590 $ 398,391 $ 617,307
Landfill deposits....................... 134,842 341,522 325,382
Non-trade receivables................... 142,076 112,722 308,475
Performance bonds....................... 180,971 121,811 86,344
Other................................... 928,177 724,307 390,641
---------- ---------- ----------
$2,173,656 $1,698,753 $1,728,149
========== ========== ==========
</TABLE>

F-20
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

In September 1996, the Company entered into a new revolving credit facility
with two major banks, Bank Boston, N.A. and Bank of America Illinois, which
provides for borrowings of up to $100,000,000 (as amended on May 8, 1997) for
repayment of certain debt, funding of acquisitions, and includes up to
$15,000,000 of standby letters of credit availability. At the Company's
option, the interest rate on any loan under the revolving credit facility will
be based on an adjusted prime rate or Eurodollar rate, as defined in the
agreement. The facility matures on April 30, 2000. The revolving credit
facility, among other conditions, requires the payment of a commitment fee
range of .25% to .50% on the unused balance, payable in arrears, and provides
for certain restrictions on the ability of the Company, to incur borrowings,
sell assets, or pay cash dividends. The facility also requires the maintenance
of certain financial ratios, including interest coverage ratios, leverage
ratios, and profitable operations. The facility is collateralized by all the
stock of the Company's subsidiaries, whether now owned or hereafter acquired.
A portion of the credit facility was utilized to refinance the remaining
balance of the CoreStates Bank, N.A. revolving credit facility, and the note
payable to First Union National Bank.

Debt and capital lease obligations consist of the following:

<TABLE>
<CAPTION>
JUNE 30,
MARCH 31, ---------------------
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
Note payable to Bank Boston, N.A. and Bank
of America Illinois, maturity date of
September 1999, variable interest rates
ranging from 8.0% to 8.5%.................. $30,550,000 $ -- $ --
CoreStates Bank, N.A. revolving credit
facility................................... -- 237,500 --
Note payable to First Union National Bank in
monthly installments of $28,125 plus
interest at 7.03%.......................... -- 1,096,875 --
Notes payable to various financial
institutions, with various maturities
payable through September 2013, interest
rates (fixed and variable) ranging from
8.25% to 9.25%, and monthly installments
ranging from $6,092 to $12,500............. 1,340,236 1,608,287 2,440,919
Installment loan that bears interest at 6%
and is being repaid in monthly installments
of $11,600 through February 2000,
decreasing to $6,283 per month through
February 2005.............................. 686,907 772,359 881,525
Machinery and equipment notes payable,
secured by equipment, with various
maturities payable through April 2000,
interest rates ranging from 9.25% to 12%,
payable monthly in installments ranging
from $599 to $13,225....................... 3,853,995 4,419,006 3,837,358
Other....................................... 279,792 188,873 230,988
----------- ---------- ----------
36,710,930 8,322,900 7,390,790
Less current portion........................ 2,730,412 2,014,060 2,230,909
----------- ---------- ----------
$33,980,518 $6,308,840 $5,159,881
=========== ========== ==========
</TABLE>

Certain machinery and equipment notes payable discussed above have been
classified as capital lease obligations in the balance sheet. Cost and
accumulated depreciation related to assets under capital leases are as
follows:
<TABLE>
<CAPTION>
JUNE 30,
MARCH 31, ---------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Cost.................................... $3,677,649 $3,677,649 $1,994,490
Accumulated depreciation................ 958,540 659,828 197,099
---------- ---------- ----------
$2,719,109 $3,017,821 $1,797,391
========== ========== ==========
</TABLE>

F-21

<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (CONTINUED)

Maturities of long-term debt are as follows: 1998--$2,730,000; 1999--
$1,237,000; 2000--$830,000; 2001--$31,078,000; 2002 and thereafter--$836,000.

Interest paid on all indebtedness was $1,126,000, $699,000, $582,000, and
$520,000 for the nine months ended March 31, 1997, and for the fiscal years
ended 1996, 1995, and 1994, respectively.

Letters of credit have been provided to the Company supporting performances
of landfill closure and post-closure requirements, insurance contracts, and
other contracts. Letters of credit outstanding at March 31, 1997 aggregated
$1,426,000.

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:

<TABLE>
<CAPTION>
JUNE 30,
MARCH 31, ---------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Accrued compensation....................... $ 873,147 $ 417,631 $ 104,075
Workers' compensation...................... 284,217 117,382 67,981
Damage claims.............................. 60,500 277,609 187,000
Accrued professional fees.................. 165,531 165,500 46,138
Miscellaneous taxes........................ 231,756 112,941 214,108
Operating loss accrual..................... -- -- 170,000
Accrued severance costs.................... 387,990 583,832 --
Accrued transition costs................... 3,285,138 97,000 --
Deferred revenue........................... 1,327,771 -- --
Other...................................... 1,745,566 256,464 372,065
---------- ---------- ----------
$8,361,616 $2,028,359 $1,161,367
========== ========== ==========
</TABLE>

7. ACCRUED LANDFILL CLOSURE AND OTHER ENVIRONMENTAL COSTS

The Company owns six non-hazardous solid waste landfills, all of which are
permitted and four of which are operating. The Company will have financial
obligations related to closure and post-closure monitoring and maintenance of
these currently permitted and operating landfills. While the exact amount of
future closure and post-closure obligations cannot be determined, the Company
has developed procedures to estimate these total projected costs based on
currently available facts, existing technology, and presently enacted laws and
regulations. Accordingly, the Company will continue to periodically review and
update underlying assumptions and projected costs and record required
adjustments. The closure and post-closure requirements are established under
the standards of the U.S. Environmental Protection Agency's Subtitle D
regulations as implemented and applied on a state-by-state basis. Final
closure and post-closure accruals consider estimates for the final cap and
cover for the site, methane gas control, leachate management and groundwater
monitoring, and other operational and maintenance costs to be incurred after
the site discontinues accepting waste, which is generally expected to be for a
period of up to thirty years after final site closure. For disposal sites that
were previously operated by others, the Company assessed and recorded a final
closure and post-closure liability at the time the Company assumed closure
responsibility based upon the estimated total closure and post-closure costs
and the percentage of airspace utilized as of such date. Thereafter, the
difference between the final closure and post-closure costs accrued and the
total estimated closure and post-closure costs to be incurred is accrued and
charged to expense as airspace is consumed. As of March 31, 1997, the Company
estimates that the costs of final closure of the currently permitted and
operating areas at the Company's landfills will be approximately $13,593,000,
of which

F-22
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. ACCRUED LANDFILL CLOSURE AND OTHER ENVIRONMENTAL COSTS (CONTINUED)

$3,205,000 has been accrued as of March 31, 1997. The Company estimates that
the costs of post-closure monitoring of groundwater and methane gas and other
required maintenance procedures for the currently permitted and expansion
areas will approximate $90,000--$125,000 per year for 30 years after closure
at each of the Company's two municipal solid waste accepting facilities and
$10,000 per year for 30 years after closure at the Company's industrial
landfill sites. The Company has accrued $1,502,000 for post-closure
obligations as of March 31, 1997.

Funding of closure and post-closure obligations are estimated as follows:
1998--$1,070,000; 1999--$1,230,000; 2000--$400,000; 2001 and thereafter--
$6,542,000.

The Company maintains a bonding facility pursuant to certain statutory
requirements regarding financial assurance for the closure and post-closure
monitoring cost requirements for its Kentucky, Pennsylvania and West Virginia
landfills. Bonds outstanding at March 31 1997, total $1,322,000 and $315,000,
as closure and post-closure financial assurance, respectively, for the
Company's Kentucky landfill, $3,400,000 as closure and post-closure financial
assurance for the Company's Pennsylvania landfill, and $214,000 as closure
financial assurance for the Company's West Virginia landfill. The bonds are
collateralized by irrevocable letters of credit of $1,126,000 and trust fund
deposits of $120,000. Additionally, the Company has on deposit $196,000 as
financial assurance for landfill closure and post-closure for the closed
disposal area of its West Virginia disposal facility and $80,000 as financial
assurance for landfill Closure and post-closure for the Company's Florida
disposal facility. The trust fund and cash deposits are restricted from
current operations and are included within other noncurrent assets.

8. COMMON STOCK

Each share of the Company's Common Stock is entitled to one vote.

In 1996, William C. Skuba, the former President, Chief Executive Officer,
Chairman of the Board, and controlling stockholder of the Company, sold
500,000 shares of the Company's common stock ("Skuba Stock") at a price of
$2.00 per share to a group of investors ("Purchasers") pursuant to a Stock
Purchase Agreement dated as of May 8, 1996 by and among Mr. Skuba and the
Purchasers (the "Stock Purchase Agreement").

Pursuant to the Stock Purchase Agreement, Mr. Skuba also converted all of
his Class A common stock of the Company which carried four votes per share
into common stock which carries one vote per share. Mr. Skuba also granted to
the purchasers an irrevocable proxy over his remaining 1,111,101 shares of
common stock for a period to expire on the earlier of June 20, 1997 or the
date upon which Mr. Skuba disposes of such remaining shares.

In fiscal 1995, the Company, through a private placement, issued 300,000
shares of its common stock for cash of $1.00 per share or $300,000, pursuant
to stock subscription agreements with two individual accredited investors. In
fiscal 1996, the Company, through additional private placements of stock with
accredited investors, issued an additional 875,000 shares of its common stock
for cash of $1.00 per share or $875,000. Certain of the private placements
included the issuance of warrants to purchase a total of 525,000 additional
shares of common stock at an exercise price of $1.50 per share expiring three
years from the date of grant. As of June 30, 1996, 150,000 of these warrants
have been exercised. The Company registered these securities in February of
1996.

On August 9, 1996, the Company completed a private placement ("Placement")
of 2,500,000 shares of its common stock at $4 per share with various
accredited investors for the purpose of raising funds to construct disposal
space at the Company's landfills, to provide for closure of certain filled
disposal areas, and to provide working capital. Net proceeds, after deduction
of agent fees and related costs, were $9,350,000. The shares sold in the
private placement are not registered, and registration rights do not commence
for two years.

F-23
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. COMMON STOCK (CONTINUED)

The Company also issued 125,000 shares of its common stock at $4 per share
to a bank at substantially the same terms as the August 9, 1996 Placement.

9. STOCK OPTION PLANS

The Company's Stock Option Plans provide for the grant of incentive stock
options or non-qualified stock options to directors, officers or employees of
the Company. Under the 1987 and 1991 Stock Option Plans, as amended, 700,000
total shares were reserved effective January 1, 1991 for issuance upon the
exercise of such options. Incentive stock options have an exercise price of at
least 100% of the fair market value of the common stock at the date of grant
(or 110% of fair market value in the case of employees or officers holding ten
percent or more of the voting stock of the Company). Non-qualified options
have an exercise price of not less than 90% of the fair market value of the
common stock at the date of grant. The options generally expire five years
from the date of grant and are generally exercisable after two years based
upon graduated vesting schedules.

In August 1996, the Company's stockholders approved the 1996 Stock Option
Plan providing for the granting of incentive stock options or non-qualified
stock options to directors, officers, or employees of the Company. Under this
plan, 2,500,000 shares are reserved for issuance. Incentive stock options have
an exercise price consistent with the provisions of the previously existing
plans. Non-qualified options have an exercise price which is determined by the
Company's Stock Option Committee ("the Committee") in its discretion. The
options generally expire ten years from the date of grant and are exercisable
based upon graduated vesting schedules as determined by the Committee.
1,793,245 and 607,433 options have been granted under this Plan as of March
31, 1997 and June 30, 1996, respectively; including 801,780 and 291,308 non-
qualified stock options at March 31, 1997 and June 30, 1996, respectively. The
exercise price of all non-qualified stock options issued under the 1996 plan
was at fair market value ranging from $5.75 to $13.00 per share.

The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, "Accounting for Stock-Based Compensation," requires use of
option valuation models that are not developed for use in valuing employee
stock options. Under APB 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for grants in 1997 and 1996; risk-free interest rate of 6%;
dividend yield of 0%; expected volatility of the market price of the Company's
common stock of 70%; and a weighted-average expected life of the option of 4
years.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.

F-24
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. STOCK OPTION PLANS (CONTINUED)

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. Pro forma
results are not likely to be representative of the effects on reported or pro
forma results of operations for future years. The Company's pro forma
information is as follows (in thousands except for earnings per share
information):

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
MARCH 31, JUNE 30,
1997 1996
----------- -----------
<S> <C> <C>
Pro forma net loss................................ $(3,699,000) $(4,803,000)
Pro forma loss per share.......................... $ (.28) $ (.53)
</TABLE>

Options outstanding have been granted to officers and employees to purchase
common stock at prices ranging from $.01 to $13.00 per share. A summary of the
option transactions are as follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED JUNE 30,
MARCH 31, ----------------------------
1997 1996 1995 1994
----------- --------- ------- --------
<S> <C> <C> <C> <C>
Options outstanding, beginning
of period...................... 880,900 366,900 417,200 482,800
Options granted................. 1,243,236 655,000 20,000 45,000
Options exercised............... (66,945) (140,000) (30,000) --
Options canceled................ -- (1,000) (40,300) (110,600)
--------- --------- ------- --------
Options outstanding, end of
period......................... 2,057,191 880,900 366,900 417,200
========= ========= ======= ========
Options exercisable............. 547,379 338,333 350,650 337,450
========= ========= ======= ========
Options available for grant..... 862,864 2,113,667 300,100 279,800
========= ========= ======= ========
</TABLE>

Compensation expense has been recognized for those options granted with
exercise prices below the fair market value of the Company's stock on the date
of grant.

Stock options outstanding at March 31, 1997 are summarized as follows:

<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE AVERAGE
RANGE OF NUMBER REMAINING EXERCISE
EXERCISE PRICES OUTSTANDING CONTRACTURAL LIFE PRICE
--------------- ----------- ----------------- --------
<S> <C> <C> <C>
$.01-$5.00 263,946 1.8 years $1.02
$5.01-$10.00 1,527,945 9.2 years 6.41
$10.01-$13.00 265,300 9.9 years 11.86
--------- --------- -----
$.01-$13.00 2,057,191 8.3 years $6.42
========= ========= =====
</TABLE>

The Company's Employee Stock Bonus Plan and Employee Benefit Stock Purchase
Plan (the Employee Plans) are for eligible employees. Shares are awarded under
the Employee Stock Bonus Plan at the Company's discretion based on the
employees' performance. Under the Employee Benefit Stock Purchase Plan,
employees may purchase shares of common stock at a purchase price of 85% of
the fair market value at the date of purchase. A total of 450,000 common
shares are reserved under the Employee Plans. At March 31, 1997, 27,311 shares
have been issued under the Employee Plans.

At March 31, 1997, the Company has 1,015,964 warrants outstanding of which
615,964 are exercisable to purchase shares of Common Stock. Terms of warrants
have been established by the Board of Directors at prices between $1.25 and
$13.00 expiring at various dates through 2001.

F-25
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. INCOME TAXES

At March 31, 1997, the Company has net operating loss carryforwards for
federal income tax purposes of $3,727,000, that expire through 2011. However,
due to a change in control, these net operating loss carryforwards may be
limited. For financial reporting purposes, a valuation allowance has been
recognized to offset the deferred tax assets related to those carryforwards as
realization is not assured.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets are as follows:

<TABLE>
<CAPTION>
JUNE 30,
MARCH 31, ---------------------
1997 1996 1995
----------- ---------- ---------
<S> <C> <C> <C>
Deferred tax liabilities:
Tax over book depreciation............... $(3,282,204) $ (629,024) $(624,511)
Other, net............................... (549,999) (123,583) (113,507)
----------- ---------- ---------
Total deferred tax liabilities......... (3,832,203) (752,607) (738,018)
Deferred tax assets:
Allowance for doubtful accounts.......... 707,854 158,915 176,810
Discontinued operations accrual.......... -- -- 68,260
Accrued refurbishing costs............... 943,334 -- --
Reserve for loss on assets held for
sale.................................... 255,933 255,933 122,767
Net operating loss carryforwards......... 1,280,503 1,484,833 642,216
AMT credit............................... 24,376 24,376 24,376
Reserve for severance and transition
costs................................... -- 269,232 --
Other, net............................... -- 68,140 36,623
----------- ---------- ---------
Total deferred assets.................. 3,212,000 2,261,429 1,071,052
Valuation allowance for deferred tax
assets.................................... (1,644,000) (1,644,000) (490,000)
----------- ---------- ---------
Net deferred tax assets.................... 1,568,000 617,429 581,052
----------- ---------- ---------
Net deferred tax liabilities............... $(2,264,203) $ (135,178) $(156,966)
=========== ========== =========
</TABLE>

Significant components of the provision for income taxes (benefit)
attributable to continuing operations are as follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED FISCAL YEAR ENDED
MARCH 31, -----------------------------
1997 1996 1995 1994
----------- ------- --------- ---------
<S> <C> <C> <C> <C>
Current
Federal........................... $ -- $ -- $ -- $(309,317)
State............................. 144,644 12,101 20,881 61,044
-------- ------- --------- ---------
144,644 12,101 20,881 (248,273)
Deferred
Federal........................... 676,397 -- (66,052) 177,955
State............................. 119,364 (21,788) 37,188 4,724
Operating loss carryforward....... -- -- (139,110) (163,106)
-------- ------- --------- ---------
795,761 (21,788) (167,974) 19,573
-------- ------- --------- ---------
Provision for income taxes
(benefit)........................ $940,405 $(9,687) $(147,093) $(228,700)
======== ======= ========= =========
</TABLE>

F-26
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. INCOME TAXES (CONTINUED)

The reconciliation of income tax attributable to continuing operations
computed at the U.S. federal statutory tax rates to income tax expense is:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED FISCAL YEAR ENDED
MARCH 31, ---------------------------------
1997 1996 1995 1994
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Tax at U.S. statutory rates.... $250,036 $(1,190,015) $(608,505) $(346,369)
State income taxes, net of
federal tax benefit........... 30,619 (9,687) 70,652 50,983
Nondeductible amortization..... 55,519 24,918 24,918 24,918
Valuation allowance for
deferred tax assets........... -- 1,154,000 340,000 --
Permanent items................ (92,783) -- -- --
S Corporation status
termination................... 904,070 -- -- --
Utilization of NOL............. (204,330) -- -- --
Other.......................... (2,726) 11,097 25,842 41,768
-------- ----------- --------- ---------
Provision for income taxes
(benefit)..................... $940,405 $ (9,687) $(147,093) $(228,700)
======== =========== ========= =========
</TABLE>

Net income tax refunds (payments) received during the nine months ended
March 31, 1997 and for the fiscal years ended fiscal 1996, 1995, and 1994 were
$(50,000), $64,000, $(14,000), and $840,000, respectively.

11. COMMITMENTS AND CONTINGENCIES

The Company is obligated under various operating leases, primarily for
certain office facilities and transportation equipment. Lease agreements
frequently include renewal options and require that the Company pay for taxes,
insurance, and maintenance expense. Future minimum lease payments under
operating leases with initial or remaining noncancellable lease terms in
excess of one year as of March 31, 1997, are as follows: 1998--$792,000,
1999--$638,000, 2000--$322,000, 2001--$84,000, and 2002--$0. Total rental
expense under operating leases was approximately $408,000, $353,000, $411,000,
and $388,000 for the nine months ended March 31, 1997 and for the fiscal years
ended fiscal 1996, 1995, and 1994, respectively.

The Company is subject to extensive and evolving federal, state, and local
environmental laws and regulations in the United States and elsewhere that
have been enacted in response to technological advances and the public's
increased concern over environmental issues. The majority of expenditures
necessary to comply with environmental laws and regulations are made in the
normal course of business. Although the Company, to the best of its knowledge,
is in compliance in all material respects with the laws and regulations
affecting its operations, there is no assurance that the Company will not have
to expend substantial amounts for compliance in the future.

In October 1996, the Company received a final permit to construct its
expansion area at its Kentucky landfill. Prior to the actual construction of
the expansion area, the Company is required to complete certain investigations
to confirm the adequacy of the groundwater monitoring program approved in the
final permit. The final permit also requires closure of the original disposal
area. In addition, the Company has entered into an exclusive waste disposal
franchise agreement with Pulaski County, Kentucky to service the municipal
waste needs of the county at the Company's Kentucky landfill through the year
2002. The Company's obligations under this franchise agreement were suspended
on July 1, 1996 for a one-year period ending July 1, 1997 due to the Company's
cessation of operations at the original permit area and delay in initiating
operations at the expansion area. While management intends to resume the
transfer station operations to fulfill its responsibilities under the
franchise agreement until the initial disposal space is constructed, failure
to service the franchise agreement could result in a forfeiture of the
Company's performance bond.

F-27
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

11. COMMITMENTS AND CONTINGENCIES (CONTINUED)

The Company is subject to various contingencies pursuant to environmental
laws and regulations that in the future may require the Company to take action
to correct the effects on the environment of prior disposal practices or
releases of chemicals or petroleum substances by the companies or other
parties. At March 31, 1997, the Company has accrued for certain environmental
remediation activities as other long-term accrued environmental costs. Such
accrual amounted to $335,680 and in management's opinion, was appropriate
based on existing facts and circumstances. Under the most adverse
circumstances, however, this potential liability could reach $860,000 as
provided in independent engineering studies and evaluation. In the event that
future remediation expenditures are in excess of amounts accrued, management
does not anticipate that they will have a material adverse effect on the
consolidated financial position of the Company.

The Company carries insurance covering its assets and operations, including
pollution liability coverage. Specifically, each of the Company's five
landfills has pollution liability coverage of $5,000,000 per occurrence or
$5,000,000 in the aggregate subject to a $500,000 deductible per occurrence.
Nevertheless, there can be no assurance that the Company's insurance will
provide sufficient coverage in the event an environmental claim were made
against the Company or that the Company will be able to maintain in place such
insurance at reasonable costs. An uninsured or underinsured claim against the
Company of sufficient magnitude could have a material adverse effect on its
business and results of operations. The Company also is subject to the risk of
claims by employees and others made after the expiration of the policy
coverage period, including asbestos-related illnesses (such as asbestosis,
lung cancer, mesothelloma and other cancers), which may not become apparent
until many years after exposure. From May 15, 1985 through April 28, 1988, the
Company carried claims-made general liability coverage. Any claims presented
on the basis of exposure during that period may not be covered by insurance
and any liability resulting therefrom could, consequently, have an adverse
effect on the Company's business and results of operations and liquidity.

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material effect on the Company's
consolidated financial position or results of operations and liquidity.

Certain of the Company's executive officers have entered into employment
agreements whereby they will be entitled to receive certain bonuses in cash or
common stock upon a change in control of the Company. The Company estimates
that the total of these payments based on current salaries would be
approximately $1,100,000. Such agreements also include severance provisions
and immediate vesting provisions of issued options should the officer be
terminated.

12. UNUSUAL OPERATING COSTS

Unusual operating costs and other adjustments of $3,358,000 were included in
the fourth quarter of fiscal 1996 results of operations. A charge of $900,000
to cost of revenues to accrue for certain closure and post closure monitoring
costs was recorded for the Kentucky landfill as a valuation allowance for
possible impairments of this asset as the Company is working on finalizing the
draft permit which is currently being adjudicated. Additionally, charges
totaling approximately $879,000 were charged to selling, general and
administrative expenses relating to the change in control of the Company. Of
the $879,000 charge; $672,000 relates to recorded severance costs; $97,000
reflects management's estimate of various transition costs in moving the
Company's corporate offices; and $110,000 relates to certain legal and other
professional costs incurred in completing the transaction. Additionally,
management refined its estimates of necessary reserves against past due
receivables, outstanding contingencies, and deferred acquisitions costs and
increased such reserves by $221,000 $799,000, and $70,000, respectively. The
increase in contingency reserves included the $336,000 accrued for certain
long-term environmental remediation activities and $331,000 related to a
severance agreement settlement with an

F-28
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. UNUSUAL OPERATING COSTS (CONTINUED)

unionized workforce. Finally, in the fourth quarter, management made a
decision to replace certain of its equipment utilized in the landfill and
hauling operations, in addition to selling certain real estate previously used
in operations and currently being leased to unrelated parties. A charge of
$489,000 was recorded to other expenses to write down these assets held for
sale to estimated net realizable value.

Unusual operating costs of $532,000 were included in the fourth quarter of
fiscal 1995 results of operations. A total charge to cost of revenues of
$339,000 relates to the Company's cessation of waste acceptance at the
Kentucky landfill on June 30, 1995, and the Company's decision to
simultaneously permit and operate a waste transfer facility to continue to
service the waste needs of the local host county under the ten-year waste
disposal franchise agreement previously awarded to the Company expiring in the
year 2002. Of the $339,000 of unusual operating costs, $150,000 reflects the
Company's estimate of operating losses at the Kentucky facility through fiscal
1996, while the first disposal cell is constructed following approval of the
expansion permit, and $189,000 reflects a noncash charge to write-off
remaining capitalized costs relating to a disposal cell closed on June 30,
1995.

Additionally, a charge of $78,000 was recorded in the fourth quarter of
fiscal 1995 to reduce the remaining net assets of All Waste Refuse Services,
Inc. (AWRS), the Company's waste collection business located in Beaufort
County, South Carolina, to their estimated net realizable value at June 30,
1995. The $78,000 charge includes a write-down of $58,000 for certain
operating assets, receivables, and supplies inventory and the establishment of
a reserve at June 30, 1995, for the anticipated loss on final divestiture of
assets of $20,000. During fiscal 1995, the Board of Directors of the Company
made a decision to exit the local hauling business in Beaufort County as a
result of limited integration with the Company's landfill operation and
continued operating losses resulting from significant competitive pressures.
The majority of the operating assets of AWRS were sold in fiscal 1995 through
several asset sale transactions. Also in 1995, the Company refined its
estimate of necessary reserves against past due receivables resulting in a
charge to operations of $118,000.

13. RELATED PARTY TRANSACTIONS

In connection with the consummation of the Stock Purchase Agreement (see
Note 9), the Company entered into a series of agreements with Mr. Skuba,
including a Severance Agreement date June 20, 1996. Pursuant to the severance
agreement, virtually all prior agreements between Mr. Skuba and the Company
were terminated, including the Company's obligation to make certain cash
payments to Mr. Skuba upon his resignation from the Company, and in
consideration therefore, the Company (i) conveyed to a company controlled by
Mr. Skuba (a) all of the outstanding capital stock of a corporation that owns
certain real property, (b) certain real and personal property, and (c) certain
vehicles owned by the Company, (ii) transferred to Mr. Skuba certain potential
business opportunities that the Company has decided not to pursue, (iii)
agreed to provide Mr. Skuba with certain health benefits at the Company's cost
until June 1997. The Company recorded a total of $459,100 noncash expense
related to the Severance Agreement including $259,600 of compensation expense,
loss on the sale of certain assets of $156,000 and $43,500 of benefits related
to a Consulting Agreement entered into through June 1997.

The Company entered into an agreement in July 1996 to lease office space
from a company that is controlled by an officer of the Company. The lease is
for a period of five years and provides for a monthly rental of $6,250 subject
to annual increases derived from increases in the Consumer Price Index. The
lease is terminable at any time by the Company by payment of a termination fee
equal to one year's rent.

The Company received management services from a company that is 50% owned by
certain stockholders of the Company. The amount of these services charged to
expense was $56,000, $590,000, $414,000, and $320,000 for the nine month-
period ended March 31, 1997 and the fiscal years ended June 30, 1996, 1995,
and 1994, respectively.

F-29
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. RELATED PARTY TRANSACTIONS (CONTINUED)

The notes receivable from officers are due in fiscal 2006. The interest rate
on these loans was 6% at March 31, 1997 and June 30, 1996 and 8% at June 30,
1995.

In August 1996, the Company acquired all of the assets of Eastern Waste of
Philadelphia, Inc. in consideration of 391,250 shares of Common Stock valued
at $4.00 per share or $1.6 million in the aggregate. The stockholders of
Eastern Waste of Philadelphia, Inc. are brothers of directors of the Company.
Substantially all of the assets the Company acquired from Eastern Waste of
Philadelphia, Inc. were acquired by Eastern Waste of Philadelphia, Inc. in May
1996 in separate transactions with Tri-County Disposal & Recycling, Inc. and
National Ecosystems Inc. for an aggregate of $1.6 million in cash and stock.

In connection with the Company's acquisition of Super Kwik, in September
1996, the Company executed a $750,000 mortgage note in favor of Spruce Avenue
Associates, a general partnership whose partners are two officers of the
Company. The note bears interest at the rate of ten percent per annum and is
due and payable on September 27, 1999. The note is secured by mortgage on
certain real property of the Company located in Voorhees, New Jersey. The
principal amount outstanding under the mortgage note at March 31, 1997 was
$750,000.

The Company paid a professional corporation owned by an officer of the
Company approximately $46,000 during the nine months ended March 31, 1997 for
legal services rendered to the Company.

In October 1996, the Company hired a corporation owned by an employee of the
Company to excavate a new cell for the Company's landfill in West Virginia.
The Company estimates that the total amount to be paid will be approximately
$480,000. The selected corporation was the lowest bidder that satisfied all
bid requirements for such job.

14. SUBSEQUENT EVENTS

Subsequent to March 31, 1997 the Company acquired seven (7) waste hauling
and collection companies in separate transactions. Consideration includes
approximately 1,033,000 unregistered shares of the Company's stock, cash of
approximately $4,608,000 to the sellers and assumed debt of approximately
$5,945,000. These transactions will be accounted for using the purchase method
of accounting. Additionally, in May, 1997 the Company assumed and renegotiated
a lease agreement and entered into an agreement to operate a solid waste
transfer station in Long Island, New York.

Additionally on May 12, 1997, the Company completed the acquisition of Waste
Services, Inc. and affiliates, accounted for using the purchase method.
Pursuant to the Purchase Agreement, property and equipment and intangible
assets were acquired for consideration consisting of 1,159,980 unregistered
shares of the Company's common stock and the assumption of approximately $6.2
million of debt. The Company has accrued an obligation of $6.2 million as
additional purchase price which is contingent upon the resolution of certain
events and is payable in either cash or a future maximum issuance of 357,849
shares of the Company's Common Stock. As part of this contingency, the Company
also posted a Letter of Credit in the amount of $2.6 million and agreed to pay
up to $630,000 relating to a debt WSI owed to one of its creditors. Such
future payment is contingent upon authorization from the New York City Trade
Waste Commission or a court having jurisdiction. The Company also closed on
May 12, 1997 into Escrow the pending acquisitions of Golden Gate Carting Co.

F-30
<PAGE>

EASTERN ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. SUBSEQUENT EVENTS (CONTINUED)

Inc., ("Golden Gate") and Coney Island Rubbish Removal, Inc. ("Coney Island")
pending satisfaction of certain normal conditions which the Company believes
will be resolved. Estimated consideration relating to the Golden Gate and
Coney Island acquisitions consists of 288,820 unregistered shares of the
Company's stock and the assumption of approximately $3.0 million of debt. WSI,
Golden Gate and Coney Island are operated under common management control and
provide principally commercial waste collection services in Brooklyn, Queens,
and Long Island, New York. The acquisitions of Golden Gate and Coney Island
will also be accounted for under the purchase method.

F-31
<PAGE>

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

NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OF-
FERING OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPEC-
TUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RE-
LIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SHARES OF COMMON STOCK TO WHICH IT
RELATES OR AN OFFER TO, OR A SOLICITATION OF, ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COM-
PANY OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSE-
QUENT TO THE DATE HEREOF.

-----------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 4
Prospectus Summary....................................................... 5
Risk Factors............................................................. 8
The Company.............................................................. 20
Use of Proceeds.......................................................... 21
Dividend Policy.......................................................... 21
Price Range of Common Stock.............................................. 22
Capitalization........................................................... 23
Dilution................................................................. 24
Selected Consolidated Financial Data..................................... 25
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 27
Business................................................................. 34
Management............................................................... 53
Certain Transactions..................................................... 56
Principal Stockholders................................................... 58
Description of Capital Stock............................................. 60
Shares Eligible for Future Sale.......................................... 63
Underwriting............................................................. 65
Legal Matters............................................................ 66
Experts.................................................................. 67
</TABLE>

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

4,500,000 SHARES

[LOGO OF EASTERN ENVIRONMENTAL SERVICES, INC. APPEARS HERE]

COMMON STOCK

-------

PROSPECTUS

, 1997

-------

SMITH BARNEY INC.
OPPENHEIMER & CO., INC.
SANDERS MORRIS MUNDY
PACIFIC GROWTH EQUITIES, INC.
VAN KASPER & COMPANY

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses of the issuance and
distribution of the securities being registered hereby, all of which are being
borne by the Company.

<TABLE>
<S> <C>
SEC registration fee............................................ $ 22,543
NASD filing fee................................................. 8,165
Nasdaq National Market listing fee.............................. 17,500
Legal fees and expenses......................................... 375,000*
Accounting fees and expenses.................................... 360,000*
Printing expenses............................................... 125,000*
Blue sky filing and counsel fees and expenses................... 10,000*
Transfer agent and Registrar fees and expenses.................. 5,000*
Miscellaneous expenses.......................................... 76,792*
----------
Total......................................................... $1,000,000*
==========
</TABLE>
- --------
* Estimated

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") provides, in general, that a corporation incorporated under the laws
of the State of Delaware, such as the Company, may indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding (other than an action by or
in the right of the corporation) by reason of the fact that such person is or
was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee, or
agent of another enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit, or proceeding if
such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe such person's conduct was unlawful. In the case of an action
by or in the right of the corporation, a Delaware corporation may indemnify
any such person against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that
the court determines upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses.

Article Tenth, Paragraph (a) of the Certificate of Incorporation provides
that each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Company or is or was
serving at the request of the Company as a director, officer, employee, or
agent of another company or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
or not the basis of such proceeding is alleged action in an official capacity
as a director, officer, employee, or agent, or in any other capacity while
serving as a director, officer, employee, or agent, shall be indemnified and
held harmless by the Company to the fullest extent authorized by the DGCL, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment

II-1
<PAGE>

permits the Company to provide broader indemnification rights than said law
permitted the Company to provide prior to such amendment), against all
expense, liability, and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith. Such
indemnification continues as to a person who has ceased to be a director,
officer, employee, or agent or in any other capacity while serving as a
director, officer, employee, or agent and inures to the benefit of his or her
heirs, executors, and administrators; provided, however, that except as
provided in Paragraph (b) of the Article Tenth (described below), the Company
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the board of directors of the Company.
Article Tenth Paragraph (a) further provides that such right to
indemnification shall be a contract right and shall include the right to be
paid by the Company the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the DGCL
requires, the payment of such expenses incurred by a director or officer (in
his or her capacity as a director or officer and not in any other capacity in
which service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding shall be made only upon delivery to
the Company of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under the Certificate of
Incorporation or otherwise. The Company may, by action of its Board of
Directors, provide indemnification to employees and agents of the Company with
the same scope and effect as the foregoing indemnification of directors and
officers. The foregoing right to indemnification and advancement of expenses
is not exclusive.

Article Tenth, Paragraph (b) of the Certificate of Incorporation provides
further that if a claim described under Paragraph (a) of Article Tenth is not
paid in full by the Company within thirty days after a written claim has been
received by the Company, the claimant may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim and, if
successful, in whole or in part, the claimant shall be entitled to be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition where the
required undertaking, if any is required, has been tendered to the Company)
that the claimant has not met the standards of conduct which make it
permissible under the DGCL for the Company to indemnify the claimant for the
amount claimed, but the burden of providing such defense shall be on the
Company. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the DGCL, nor an actual determination by the
Company (including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard or
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.

As permitted by Article Eleventh of the Certificate of Incorporation and
Section 145(g) of the DGCL, the directors and officers of the Company and its
subsidiaries are covered by policies of insurance under which they are
insured, within limits and subject to certain limitations, against certain
expenses in connection with the defense of actions, suits or proceedings, and
certain liabilities which might be imposed as a result of such actions, suits
or proceedings, in which they are parties by reason of being or having been
directors or officers; the Company is similarly insured, with respect to
certain payments it might be required to make to its directors or officers
under the applicable statutes and its charter provisions. The Company has also
entered into indemnification agreements with certain of its directors and
officers.

Reference is also made to the indemnification provisions of the Underwriting
Agreement to be filed as Exhibit 1 and to the first undertaking contained in
Item 17 of this Registration Statement.

II-2
<PAGE>

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
5 Opinion of Drinker Biddle & Reath LLP regarding legality of
securities being registered
23.1 Consent of Ernst & Young LLP
23.2 Consent of B. J. Klinger & Co. P.C.
23.3 Consent of BDO Seidman, LLP
23.4 Consent of Bardall, Weintraub P.C.
23.5 Consent of Boyer & Ritter
23.6 Consent of Paternostro, Callahan & DeFreitas, LLP
23.7 Consent of Daniel P. Irwin and Associates P.C.
23.8 Consent of Drinker Biddle & Reath LLP (contained in their opinion
filed as Exhibit 5)
</TABLE>

ITEM 17. UNDERTAKINGS.

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

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual reports pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

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

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1
to Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in Mt. Laurel, New Jersey on June 27,
1997.

Eastern Environmental Services, Inc.

By: /s/ Louis D. Paolino, Jr.
---------------------------------
LOUIS D. PAOLINO, JR. CHAIRMAN OF
THE BOARD AND CHIEF EXECUTIVE
OFFICER

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement on Form S-3 has been signed by the following
persons, in the capacities indicated, on June 27, 1997.

SIGNATURE TITLE
--------- -----

<S> <C>
/s/ Louis D. Paolino, Jr. Chairman of the Board, President
- ------------------------------------- and Chief Executive Officer
LOUIS D. PAOLINO, JR. (Principal Executive Officer)

/s/ Gregory M. Krzemien Chief Financial Officer and
- ------------------------------------- Treasurer (Principal Financial
GREGORY M. KRZEMIEN and Accounting Officer)

George O. Moorehead* Director
- -------------------------------------
GEORGE O. MOOREHEAD

Director
Kenneth C. Leung*
- -------------------------------------
KENNETH C. LEUNG

</TABLE>

* Gregory M. Krzemien, pursuant to a Power of Attorney executed by each of the
directors and officers noted above and included in the signature page of the
initial filing of this Registration Statement, by signing his name hereto,
does hereby sign and execute this Amendment No. 1 to Registration Statement
on behalf of each of the persons noted above, in the capacities indicated,
and does hereby sign and execute this Amendment No. 1 to Registration
Statement on his own behalf, in the capacities indicated.

/s/ Gregory M. Krzemien

_________________________________

GREGORY M. KRZEMIEN

II-4
<PAGE>

EXHIBIT INDEX

<PAGE>

Exhibit 5
---------

DRINKER BIDDLE & REATH LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496

June 27, 1997

Eastern Environmental Services, Inc.
1000 Crawford Place
Mt. Laurel, New Jersey 08054

Re: Eastern Environmental Services, Inc.
Securities and Exchange Commission Registration
Statement on Form S-3 (Registration No. 333-27245)
--------------------------------------------------

Ladies and Gentlemen:

We have acted as counsel to Eastern Environmental Services, Inc., a
Delaware corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission of a Registration Statement
on Form S-3 (Registration No. 333-27245), as amended (the "Registration
Statement"), under the Securities Act of 1933, as amended, relating to the
public offering of 4,500,000 shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), plus up to an additional 675,000 shares of
Common Stock to cover over-allotments, to be issued and sold by the Company
(collectively, the "Offered Shares") as provided in the Registration Statement.

In this connection, we have examined the originals or copies,
certified or otherwise identified to our satisfaction, of the Certificate of
Incorporation and By-laws of the Company as amended through the effective date
of the Registration Statement, resolutions of the Company's Board of Directors
and stockholders, and such other documents and corporate records relating to the
Company and the issuance and sale of the Offered Shares as we have deemed
appropriate. We express no opinion concerning the laws of any jurisdiction
other than the General Corporation Law of the State of Delaware.

On the basis of the foregoing, we are of the opinion that the Offered
Shares have been duly and validly authorized for issuance and, when issued and
paid for in the manner as described
<PAGE>

in the Registration Statement, will have been legally issued, fully paid and
non-assessable by the Company under the laws of the State of Delaware.

We hereby consent to the reference to our firm under the caption
"Legal Matters" in the prospectus included in the Registration Statement and to
the filing of this opinion as an exhibit to the Registration Statement. This
does not constitute a consent under Section 7 of the Securities Act of 1933
since we have not certified any part of the Registration Statement and do not
otherwise come within the categories of persons whose consent is required under
Section 7 or the rules and regulations of the Securities and Exchange
Commission.

Very truly yours,

/s/ DRINKER BIDDLE & REATH LLP

<PAGE>

Exhibit No. 23.1

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated May 13, 1997, in Amendment No. 1 to the Registration
Statement (Form S-3 No. 333-27245) and related Prospectus of Eastern
Environmental Services, Inc. for the registration of 4,500,000 shares of its
common stock.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
June 26, 1997

<PAGE>

EXHIBIT NO. 23.2

Consent of Independent Auditors

We consent to the reference of our firm under the caption "Experts" and to the
incorporation by reference in Amendment No. 1 to the Registration Statement
(Form S-3 No. 333-27245) and related Prospectus of Eastern Environmental
Services, Inc., of our report dated August 19, 1996, with respect to the
combined financial statements of Allied Environmental Services, Inc., Allied
Environmental Services West, Inc., Allied Mid-Atlantic, Inc., and Allied Waste
Management, Inc. included in Eastern Environmental Services, Inc.'s Current
Report on Form 8-K dated July 2, 1996 (as amended on Forms 8-K/A dated September
16, 1996, May 13, 1997 and June 6, 1997), filed with the Securities and Exchange
Commission.

/s/ B.J. Klinger & Co. P.C.

Great Neck, New York
June 26, 1997

<PAGE>

EXHIBIT No. 23.3

Consent of Independent Auditors

We hereby consent to the incorporation by reference in Amendment No. 1 to the
Registration Statement (Form S-3 No. 333-27245) and related Prospectus of
Eastern Environmental Services, Inc., of our reports relating to the combined
financial statements of Allied Environmental Services, Inc. and affiliates dated
October 12, 1995 (except for Notes 1 and 7 which are June 25, 1996) for the five
month period ended November 30, 1994 and seven month period ended June 30, 1995
and November 12, 1996 for the year ended June 30, 1996, included in Eastern
Environmental Services, Inc.'s Form 8-K dated July 2, 1996 (as amended on Forms
8-K/A dated September 16, 1996, May 13, 1997 and June 6, 1997).

We also consent to the reference to us under the caption "Experts" in the
Prospectus constituting a part of Amendment No. 1 to the Registration Statement
on Form S-3.

/s/ BDO Seidman, LLP

Philadelphia, Pennsylvania
June 26, 1997

<PAGE>

EXHIBIT NO. 23.4

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in Amendment No. 1 to the Registration Statement
(Form S-3 No. 333-27245) and related Prospectus of Eastern Environmental
Services, Inc., of our report dated September 30, 1996, with respect to the
combined comparative financial statements of Super Kwik, Inc. and Waste
Maintenance Services, Inc. included in Eastern Environmental Services, Inc.'s
Current Report on Form 8-K dated September 27, 1996 (as amended on Forms 8-K/A
filed December 9, 1996 and June 6, 1997), filed with the Securities and Exchange
Commission.

/s/ Bardall, Weintraub, P.C.

Turnersville, New Jersey
June 26, 1997

<PAGE>

EXHIBIT NO. 23.5

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in Amendment No. 1 to the Registration Statement
(Form S-3 No. 333-27245) and related Prospectus of Eastern Environmental
Services, Inc., of our reports dated December 27, 1996, with respect to the
audited financial statements of R&A Bender, Inc., and R&A Bender Property, Ltd.,
included in Eastern Environmental Services, Inc.'s Current Report on Form 8-K
dated December 10, 1996 (as amended on Forms 8-K/A filed February 11, 1997 and
June 6, 1997), filed with the Securities and Exchange Commission.

/s/ Boyer & Ritter

Chambersburg, Pennsylvania
June 26, 1997

<PAGE>

Exhibit No. 23.6

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in Amendment No. 1 to the Registration Statement
(Form S-3 No. 333-27245) and related Prospectus of Eastern Environmental
Services, Inc., of our report dated March 3, 1997, with respect to the combined
financial statements of Donno Company, Inc. and affiliates included in Eastern
Environmental Services, Inc.'s Current Report on Form 8-K dated January 31, 1997
(as amended on Form 8-K/A filed April 15, 1997), both filed with the Securities
and Exchange Commission.

/s/ Paternostro, Callahan & DeFreitas, LLP

Mineola, New York
June 26, 1997

<PAGE>

Exhibit No. 23.7

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in Amendment No. 1 to the Registration Statement
(Form S-3 No. 333-27245) and related Prospectus of Eastern Environmental
Services, Inc., of our report dated April 22, 1997, with respect to the
financial statements of Apex Waste Services, Inc. included in Eastern
Environmental Services, Inc.'s Current Report on Form 8-K dated March 31, 1997
(as amended on Form 8-K/A filed May 15, 1997), both filed with the Securities
and Exchange Commission.

/s/ Daniel P. Irwin and Associates, P.C.

Stafford-Wayne, Pennsylvania
June 26, 1997