EPL TECHNOLOGIES INC, S-1, 1998-02-17

EPL TECHNOLOGIES INC
S-1, 1998-02-17
MISCELLANEOUS CHEMICAL PRODUCTS

Previous: EPL TECHNOLOGIES INC, S-3/A, 1998-02-17

Next: EPL TECHNOLOGIES INC, PRES14A, 1998-02-17

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 17, 1998

REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

EPL TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
COLORADO 2869 84-0990658
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE) IDENTIFICATION NO.)
</TABLE>

2 INTERNATIONAL PLAZA, SUITE 245
PHILADELPHIA, PENNSYLVANIA 19113-1507
(610) 521-4400
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

PAUL L. DEVINE
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
2 INTERNATIONAL PLAZA, SUITE 245
PHILADELPHIA, PENNSYLVANIA 19113-1507
(610) 521-4400
(NAME, ADDRESS, INCLUDING ZIP CODE AND
TELEPHONE NUMBER, INCLUDING AREA CODE OF AGENT FOR SERVICE)
------------------------
COPIES TO:

<TABLE>
<S> <C>
RAYMOND D. AGRAN, ESQ. BRYAN E. DAVIS, ESQ.
BALLARD SPAHR ANDREWS & INGERSOLL, LLP ALSTON & BIRD LLP
1735 MARKET STREET ONE ATLANTIC CENTER
51ST FLOOR 1201 WEST PEACHTREE STREET
PHILADELPHIA, PA 19103-7599 ATLANTA, GA 30309-3424
(215) 864-8524 (404) 881-7000
(215) 864-8999 (FAX) (404) 881-7777 (FAX)
</TABLE>

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

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, please 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: [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
==========================================================================================================
TITLE OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1)(2) PRICE(1)(2) FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share......... 8,050,000 shares $5.407 $43,526,350 $12,841
==========================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

(2) Based on the average high and low price of the Common Stock as reported on
the Nasdaq SmallCap Market on February 9, 1998.
------------------------

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.
================================================================================
<PAGE> 2

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 FEBRUARY 17, 1998

PROSPECTUS
- --------------------------------------------------------------------------------
3,500,000 Shares

(EPL Technologies, Inc. Logo)

Common Stock
- --------------------------------------------------------------------------------

Of the 3,500,000 shares of common stock, par value $.001 per share (the "Common
Stock"), offered hereby (the "Offering"), 809,097 shares are being sold by EPL
Technologies, Inc. ("EPL" or the "Company") and 2,690,903 shares are being sold
by a shareholder of the Company (the "Selling Shareholder"). The Company will
not receive any of the proceeds from the sale of shares of Common Stock by the
Selling Shareholder. See "Principal and Selling Shareholders."

The Common Stock of the Company is included in The Nasdaq Stock Market's
SmallCap Market (the "Nasdaq SmallCap Market") under the symbol "EPTG." An
application has been made to include the Common Stock on The Nasdaq Stock
Market's National Market (the "Nasdaq National Market"). On February 12, 1998,
the last reported sales price of the Common Stock on the Nasdaq SmallCap Market
(adjusted to give effect to a proposed 1-for-2 reverse stock split) was $11.00
per share. See "Price Range of Common Stock."

SEE "RISK FACTORS" ON PAGES 7 TO 14 FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN 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.

<TABLE>
<CAPTION>
=====================================================================================================
Proceeds to
Price to Proceeds to Selling
Public Underwriting Company(2) Shareholder(2)
Discounts and
Commissions(1)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Per Share.................... $ $ $ $
- -----------------------------------------------------------------------------------------------------
Total(3)..................... $ $ $ $
=====================================================================================================
</TABLE>

(1) The Company and the Selling Shareholder have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting offering expenses payable by the Company estimated to be
$ and expenses payable by the Selling Shareholder estimated to be
$ . See "Use of Proceeds."

(3) The Company has granted the several Underwriters a 30-day over-allotment
option to purchase up to 525,000 additional shares of Common Stock on the
same terms and conditions as set forth above. If all such additional shares
are purchased by the Underwriters, the total Price to Public will be
$ , the total Underwriting Discounts and Commissions will be
$ , the total Proceeds to Company will be $ and the total
Proceeds to the Selling Shareholder will be $ . See "Underwriting."
- --------------------------------------------------------------------------------

The shares of Common Stock are offered by the several Underwriters subject to
delivery by the Company and the Selling Shareholder and acceptance by the
Underwriters, to prior sale and to withdrawal, cancellation or modification of
the offer without notice. Delivery of the shares to the Underwriters is expected
to be made through the facilities of the Depository Trust Company, New York, New
York, on or about March , 1998.

PRUDENTIAL SECURITIES INCORPORATED

March , 1998
<PAGE> 3

[PHOTOS]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES OF
COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS, AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS, IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK ON THE NASDAQ STOCK MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SEE "UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. This Prospectus contains
"forward-looking statements" which involve risks and uncertainties. The
Company's actual results may differ significantly from the results discussed in
the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed under "Risk Factors." Unless
otherwise indicated, the information in this Prospectus (i) gives retroactive
effect to a proposed 1-for-2 reverse stock split, which will be voted on by the
Company's shareholders and, if approved, becomes effective on March 6, 1998,
(ii) assumes the conversion of 1,933,000 shares of the Company's Series A 10%
Cumulative Convertible Preferred Stock into 1,288,666 shares of Common Stock by
the Selling Shareholder in connection with the Offering and (iii) assumes that
the Underwriters' over-allotment option will not be exercised.

THE COMPANY

The Company is a leading developer and marketer of integrated produce
systems solutions specifically designed to address the needs of the rapidly
growing market for fresh-cut produce. In this regard, the Company develops,
manufactures and markets proprietary produce processing aids, packaging
technologies, and scientific and technical services, which are designed to
maintain the quality and integrity of fresh-cut produce. The foundation of the
Company's integrated systems solutions is its proprietary produce processing aid
technology, which inhibits the natural enzymatic degradation of fruits and
vegetables after they have been processed. Fresh-cut fruits and vegetables that
are treated with the Company's proprietary processing aids better maintain their
natural characteristics such as color, texture, taste and smell. The use of the
Company's processing aids allows for increased availability of certain fresh-cut
produce products, such as sliced apples, potatoes and corn. The Company has
concluded that the use of the Company's processing aids, in accordance with the
Company's recommended protocols, is "generally recognized as safe" ("GRAS")
under U.S. Food and Drug Administration ("FDA") regulations. The Company also
uses a variety of film technologies to create packaging specifically designed to
complement and enhance the effectiveness of the Company's processing aids by
allowing fruits and vegetables to "breathe" after they have been cut and
packaged. The Company markets these packaging products to produce growers and
processors. In addition, the Company's scientific and technical services, which
include food safety and microbiological testing, provide fresh produce
processors with expertise in food safety, post-harvest horticulture and
processing techniques, and support the cross-marketing efforts for the Company's
other products. The Company believes its processing aids are safe and
environmentally "friendly" and, together with its packaging and scientific and
technical services, add significant value to the businesses of its customers. In
addition to its integrated systems solutions for fresh-cut produce, the Company
also markets flexible packaging for uses in the snack food, bakery and
confectionery industries and for other uses.

According to industry statistics, the U.S. fresh-cut produce industry
totaled $5.2 billion in 1994, and is expected to grow to $19 billion by 2000.
The Company believes that the market for fresh produce is evolving toward
ready-to-eat, pre-packaged, fresh-cut fruits and vegetables in response to
increasing consumer preferences for healthy foods, convenience and variety. In
this regard, according to industry estimates, U.S. sales of fruits and
vegetables sold in pre-cut, pre-packaged form are expected to grow from 8.9% of
all fruits and vegetables sold in the U.S. in 1994 to 25.8% by 2000. In addition
to increasing consumer preferences for fresh-cut produce, the Company believes
that food service providers have shown an increase in demand for fresh-cut,
packaged produce to reduce the risk of bacterial contamination and enhance food
safety and improve produce consistency. The Company believes that its integrated
systems solutions for fresh-cut produce uniquely position the Company to address
the evolving needs of the rapidly growing and developing fresh-cut produce
market and enable the development of a number of new fresh-cut produce products.
Development of new fresh-cut produce applications is further supported by
produce growers and processors who are seeking to increase revenues and margins
by establishing differentiated, brand-name, fresh-cut alternatives to their
existing commodity produce lines.

3
<PAGE> 5

To capitalize on these industry trends and as a key part of its operating
strategy, the Company has formed strategic alliances with leading growers,
processors and brand-name marketers of fresh-cut french fries, sliced apples,
"baby" carrots and sweet corn. In 1997, the Company formed an alliance with
Potandon Produce LLC, a major U.S. supplier of fresh potatoes and licensee of
the Green Giant Fresh(R) brand name from the Pillsbury Company for use on
potatoes and onions. This alliance allows the Company to market fresh-cut french
fries to the food service market under the Green Giant Fresh(R) brand name.
Additionally, in 1997, the Company entered into a strategic alliance with
Farmington Fresh, a major grower and marketer of Fuji apples. Under this
alliance, the Company has licensed its "Apple Fresh(R)" processing aids and
provides flexible packaging and scientific and technical services in connection
with the production by Farmington Fresh of certain varieties of pre-packaged,
fresh-cut sliced apples, targeted at the retail market.

The Company's goal is to become a world-class provider of products and
scientific and technical services designed to maintain the quality and integrity
of fresh-cut produce. The principal elements of the Company's business strategy
include: (i) continuing the Company's focus on developing and marketing
integrated produce systems solutions that incorporate the Company's processing
aids, packaging technologies and scientific and technical services, (ii) forming
and maintaining strategic alliances with leading produce companies which will
enable the Company to influence the sourcing, processing, distribution and
brand-name identification of fresh-cut products that utilize the Company's
technologies, and (iii) maintaining its commitment to scientific integrity in
its products and services.

The Company's growth strategy is designed to capitalize on its proprietary
technologies and the growing market demand for fresh-cut produce by: (i)
continuing its focus on fresh-cut french fries, sweet corn, sliced apples and
"baby" carrots, four targeted produce categories for which the Company has a
commercially available proprietary product, has identified significant market
potential and has established key strategic alliances; (ii) introducing its
processing aid technology into new fruit and vegetable categories; (iii) cross-
marketing its complementary products and services to current and prospective
customers; (iv) expanding its growing international business, principally in
Europe; and (v) acquiring related packaging and scientific and technical service
companies.

The Company's revenues consist of (i) revenues derived from the sale of
processing aids and flexible packaging, (ii) revenues derived from the sale of
certain fresh-cut fruits and vegetables, (iii) royalties from the sale of
certain fresh-cut fruits and vegetables, and (iv) fees received for scientific
and technical services provided by the Company. The Company's revenues from the
sale of produce and royalty revenues are derived from sales of various kinds and
varieties of fresh-cut fruits and vegetables which use the Company's proprietary
technologies and which the Company believes would not be available commercially
without the use of its proprietary technologies. Historically, substantially all
of the Company's revenues have been derived from the sale of flexible packaging
to the snack food, produce, bakery, and confectionery industries and for other
uses. The Company believes that its packaging technologies, coupled with
acquisitions of produce packagers, provide a platform to increase its sales of
packaging, processing aids and scientific and technical services to growers and
processors of fresh produce. Therefore, the Company anticipates that the
proportion of its revenues derived from the sale of its products and services
addressing the needs of the fresh-cut produce industry will increase over time
and constitute a significant portion of the Company's future revenue growth.

The Company was incorporated in 1985 under the laws of the State of
Colorado. The Company's executive offices are located at 2 International Plaza,
Suite 245, Philadelphia, Pennsylvania 19113-1507, and its telephone number is
(610) 521-4400.

SELLING SHAREHOLDER

The Selling Shareholder, Trilon Dominion Partners, L.L.C., a Delaware
limited liability company, is the beneficial owner of 1,402,236 shares of Common
Stock and 1,288,666 shares of Common Stock issuable upon conversion of 1,933,000
of the Company's Series A 10% Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock"). Founded in 1995, the Selling Shareholder is the
successor to a significant portion of the venture capital portfolio of Dominion
Capital, Inc. ("Dominion"), a wholly-owned subsidiary of Dominion Resources,
Inc. In June 1995, Dominion contributed its investment in the Company, as well
as

4
<PAGE> 6

investments in 17 other portfolio companies, to the Selling Shareholder in
exchange for a significant membership interest in the Selling Shareholder. The
sole managing member of the Selling Shareholder is VC Holdings, Inc., a Delaware
corporation. The Operating Agreement of the Selling Shareholder contemplates a
three-year time horizon, to expire on December 31, 1998 (subject to extension),
to monetize all of the investments contributed by Dominion to the Selling
Shareholder. The sale by the Selling Shareholder of its entire holdings of
Common Stock is consistent with this stated objective and the sale of other
investments that comprise the Selling Shareholder's portfolio. See "Principal
and Selling Shareholders" and "Certain Transactions".

THE OFFERING

Common Stock Offered by the Company... 809,097 shares

Common Stock Offered by the Selling
Shareholder........................... 2,690,903 shares

Common Stock to be Outstanding after
the Offering.......................... 11,145,746 shares(1)

Use of Proceeds by the Company........ To repay long-term debt, to make
additional capital expenditures in
its corn, potato and packaging
businesses, and for working capital
and general corporate purposes. See
"Use of Proceeds."

Nasdaq SmallCap Market Symbol......... EPTG

Proposed Nasdaq National Market
Symbol................................ EPTG
- ---------------
(1) Excludes (i) 1,427,500 shares of Common Stock issuable upon exercise of
stock options outstanding at September 30, 1997, at a weighted average
exercise price of $6.90 per share, (ii) 142,250 shares of Common Stock
issuable upon exercise of warrants outstanding at September 30, 1997, at a
weighted average exercise price of $5.68 per share, and (iii) 212,222 shares
of Common Stock issuable upon conversion of the Company's Series A Preferred
Stock (other than those shares to be converted into Common Stock by the
Selling Shareholder in connection with this Offering) and conversion of the
Company's Series C Convertible Preferred Stock (the "Series C Preferred
Stock") outstanding at September 30, 1997. Also excludes 1,334,118 shares of
Common Stock issuable as of February 12, upon conversion of the Company's
Series D Convertible Preferred Stock (the "Series D Preferred Stock") and
201,614 shares of Common Stock issuable upon exercise of warrants issued in
connection with the Company's private placement of the Series D Preferred
Stock at an exercise price of $20.16 per share (the "Series D Warrants"),
consummated on November 11, 1997. As of September 30, 1997, an additional
963,500 shares of Common Stock were reserved for issuance under the
Company's 1994 Stock Incentive Plan, as amended (the "Option Plan").

RISK FACTORS

Investors should consider the material risk involved in connection with an
investment in the Common Stock and the impact to investors from various events
that could adversely affect the Company's business. See "Risk Factors."

5
<PAGE> 7

SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA(1)
PRO FORMA(1) -------------
------------ NINE MONTHS ENDED NINE MONTHS
YEAR ENDED DECEMBER 31, YEAR ENDED SEPTEMBER 30, ENDED
---------------------------------- DECEMBER 31, --------------------- SEPTEMBER 30,
1994 1995 1996 1996 1996 1997 1997
---------- --------- --------- ------------ --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales............................... $ 578 $ 3,240 $ 11,314 $ 19,435 $ 7,063 $ 14,047 $ 19,041
Cost of Sales....................... 387 2,469 9,136 15,511 5,828 12,604 16,715
Gross Profit........................ 191 771 2,178 3,924 1,235 1,443 2,326
Total operating expenses............ 3,472 3,813 6,362 8,188 4,544 6,238 7,488
Net loss from operations............ (3,281) (3,042) (4,184) (4,264) (3,309) (4,795) (5,162)
Net loss............................ (3,373) (3,320) (4,296) (4,213) (3,313) (4,667) (4,665)
Net loss for common shareholders.... (3,697) (3,634) (5,295) (6,512) (4,187) (5,078) (5,451)
Loss per common share............... $ (1.02) $ (0.78) $ (0.71) $ (0.88) $ (0.56) $ (0.62) $ (0.67)
Weighted average number of common
shares outstanding................ 3,629,362 4,655,529 7,436,759 7,436,759 7,330,479 8,150,423 8,150,423
</TABLE>

<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
-------------------------------------------------
PRO FORMA
HISTORICAL PRO FORMA(1) AS ADJUSTED(1)(2)
---------- ------------ -----------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................................................... $ 1,348 $ 9,997 $16,954
Long-term debt, less current maturities............................ 2,107 2,107 164
Convertible Series D Preferred Stock............................... -- 12,000 12,000
Accumulated deficit................................................ (21,022) (21,022) (21,022)
Total shareholders' equity......................................... 6,829 6,829 15,729
</TABLE>

- ---------------
(1) The Pro Forma Statement of Operations Data for the year ended December 31,
1996 and the nine months ended September 30, 1997 reflect (i) the Company's
acquisition of Fabbri Artes Graficas Valencia S.A. ("Fabbri"), located in
Valencia, Spain, which was consummated on December 11, 1997 (the "Fabbri
Acquisition") and (ii) the $12.5 million private placement of the Series D
Preferred Stock and the Series D Warrants consummated on November 11, 1997
(the "Series D Placement") as if both such transactions had occurred as of
January 1, 1996. The Pro Forma Balance Sheet Data as of September 30, 1997
reflect the Fabbri Acquisition and the Series D Placement as if such
transactions had occurred on September 30, 1997.

(2) Adjusted to give effect to (i) the sale of 809,097 shares of Common Stock
offered hereby by the Company at an assumed public offering price of $11.00
per share (the last reported split-adjusted sales price, which assumes a
price that is twice the pre-split price, on the Nasdaq SmallCap Market on
February 12, 1998), and the application of the estimated net proceeds
therefrom and (ii) the conversion of 1,933,000 shares of Series A Preferred
Stock into 1,288,666 shares of Common Stock by the Selling Shareholder in
connection with the Offering. See "Use of Proceeds" and "Capitalization."

6
<PAGE> 8

RISK FACTORS

An investment in the shares of Common Stock offered hereby is speculative
and involves a high degree of risk. Prospective investors should consider
carefully the following risk factors, in addition to the other information
presented in this Prospectus, before purchasing the shares of Common Stock
offered hereby.

This Prospectus contains statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act (and Section
21E of the Exchange Act). Such statements appear in a number of places in this
Prospectus and include statements regarding the intent, belief or expectations
of the Company, its directors or its officers with respect to, among other
things: (i) trends affecting the Company's financial condition or results of
operations; (ii) the Company's financing plans; (iii) the Company's business and
growth strategies; and (iv) the use of the net proceeds to the Company of this
Offering. Prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors. The
accompanying information contained in this Prospectus, including without
limitation the information set forth under the headings "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Business," as well as information contained in the Company's
filings with the SEC, identify important factors that could cause such
differences.

HISTORICAL LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY. To date, the
Company has generated limited revenues from operations. Primarily as a result of
expenses incurred in organization, efforts to build an appropriate
infrastructure, research and development and marketing activities, the Company
has accumulated net losses aggregating $21,022,000 through September 30, 1997.
The Company expects that it will continue to incur significant operating losses
until such time, if ever, that the Company is able to attain sales levels from
its products and services that are sufficient to support its operations. There
can be no assurance that the Company's products and services can be successfully
marketed or that the Company will ever achieve significant revenues or
profitable operations.

LIMITED RELEVANT OPERATING HISTORY. Historically, the Company operated
exclusively as a manufacturer and marketer of processing aids for fruits and
vegetables. After the advent of new management in December 1992, the Company
began to alter its operational and growth strategies by seeking to add
incremental resources and capabilities, in an effort to develop integrated
systems solutions designed to maintain the quality and integrity of fresh-cut
produce. Since 1994, a majority of the Company's revenues have been derived from
sales of packaging materials, a substantial portion of which are used in
applications in the snack food, bakery and confectionery industries, and for
other uses unrelated to the Company's systems approach to fresh produce.
However, the Company's long term growth will depend on the success of its
integrated systems solutions for fresh-cut produce, in general, and on its
processing aids, in particular. Consequently, the Company's limited relevant
operating history makes it difficult to predict future operating results on an
annual or quarterly basis. The Company's prospects must be considered in light
of the risks, uncertainties, expenses and difficulties frequently encountered by
companies marketing new technologies in new and evolving markets. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and the related notes
thereto appearing elsewhere in this Prospectus.

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING. The Company has
sustained operating losses and, as of September 30, 1997, had accumulated net
losses aggregating $21,022,000. The Company's revenues have not been sufficient
to fund the development of the Company's business, and thus it has had to
finance its operating losses externally, principally through equity financing.
The Company's needs for capital, including for acquisitions, have been and are
expected to continue to be substantial as the Company pursues its operating and
growth strategies. The Company's continued ability to operate is dependent upon
its ability to obtain adequate financing and to achieve levels of revenue
necessary to support its cost structure. There can be no assurance that the
Company will be successful in obtaining additional financing on commercially
acceptable terms, if at all. Failure to obtain additional financing on terms
satisfactory to the Company could materially limit the Company's ability to fund
its operations and its growth plan.

7
<PAGE> 9

EXTENDED PRODUCT DEVELOPMENT AND SALES PROCESS. The process by which the
Company develops and sells its integrated systems solutions for certain kinds
and varieties of fresh-cut produce is both expensive and time-consuming. After
preliminary discussions with a potential customer, the Company performs a
comprehensive review of the potential customer's methods and facilities and
initiates a series of tests in an effort to tailor the application of the
Company's proprietary and other technologies to the kind or variety of produce
to be processed. The Company also works closely with the potential customer to
develop a detailed protocol to be followed in processing such produce. Once the
development of this integrated systems solution is substantially complete, the
Company conducts increasingly sophisticated tests in an effort to refine the
prescribed solution before the potential customer makes any purchase decision.
Although the Company believes it has improved its sales efforts significantly,
the Company's product development and sales process continues to be lengthy and
resource intensive and could limit the Company's growth. Additionally, limited
awareness of the Company and its products in the marketplace and the highly
fragmented nature of the fresh-cut produce industry may extend the Company's
product development and sales process. The Company does not believe that this
process is likely to shorten significantly, and there can be no assurance that
the Company will have adequate resources to continue to fund this process.

UNCERTAINTY OF MARKET ACCEPTANCE. The Company's penetration to date of the
various markets it is seeking to develop has been limited. Some of the markets
targeted by the Company are newly defined or emerging, such as fresh-cut
potatoes and sliced apples. In light of the evolving nature of these markets,
there can be no assurance as to the ultimate or continuing level of demand for,
or market acceptance of, the Company's products or services. Consequently, there
is no assurance that the Company will be able to obtain sufficient market
acceptance of its processing aids to achieve profitability on a timely basis, or
at all. Failure to gain sufficient market acceptance for the Company's
processing aids would have a material adverse effect on the Company's business,
financial condition and results of operations.

LIMITED MARKETING AND SALES EXPERIENCE. The Company has limited experience
in marketing and selling its products and services as integrated systems
solutions designed to maintain the quality and integrity of fresh-cut produce.
The marketing and sales process requires use of scientific and technical
services and the Company's process engineering capabilities. To achieve broad
market penetration for its products, the Company will be required to develop an
expanded marketing and sales force, including technical and scientific service
and support personnel. Limited market awareness of the Company and its products,
the highly fragmented nature of the fresh produce processing industry and the
lengthy sales cycle for the Company's products heighten the need for an
increased number of sufficiently skilled marketing and sales personnel. There
can be no assurance that the Company will be able to recruit and retain skilled
sales, marketing, service or support personnel on a timely basis, or at all, or
that the Company's marketing and sales efforts will be successful. Failure to
further develop and maintain a marketing and sales staff would have a material
adverse effect on the Company's business, financial condition and results of
operations.

MULTIPLE PRODUCT LINES. The Company currently is engaged in three related
areas of business, which are focused primarily on the fresh-cut produce
industry: processing aids, packaging, and scientific and technical services. The
Company believes that its products and services are complementary and present
cross-marketing opportunities. However, there can be no assurance that the
Company's products or services can be successfully cross-marketed. Additionally,
if problems are encountered with any area of the Company's business, the
financial and personnel resources available to a business of the size of the
Company may be diverted from the other business areas, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

DEPENDENCE ON PROPRIETARY TECHNOLOGY AND OTHER INTELLECTUAL PROPERTY; RISKS
OF INFRINGEMENT OR MISAPPROPRIATION. The Company's success is dependent in part
on its ability to obtain patent protection for its products, maintain trade
secret protection and operate without infringing the proprietary rights of
others. The Company currently has two U.S. patents, four U.S. patents pending
and numerous others licensed to the Company or under review for application.
Furthermore, the Company has two patents outside the U.S. and 23 patent
applications pending in countries outside the U.S. for its processing aid
technologies, with others under review. There can be no assurance that patent
applications owned by or licensed to the Company will be issued or that patents
issued or licensed to the Company will provide the Company with any competitive
advantages

8
<PAGE> 10

or adequate protection for its products. Moreover, no assurance can be given
that any patents issued or licensed to the Company will not be challenged,
invalidated or circumvented by others. The Company's products might conflict
with the patent rights of others, whether existing now or in the future.
Alternatively, the products of others could infringe the patent rights of the
Company. Although the Company intends to defend its proprietary intellectual
property rights, the defense and prosecution of patent claims is costly and time
consuming, even if the outcome were favorable to the Company. An adverse outcome
could subject the Company to significant liabilities to third parties, require
that disputed rights be licensed from third parties or require the Company to
cease selling its products.

The Company also relies on trade secrets and proprietary know-how, which it
seeks to protect in part by confidentiality agreements with its collaborators,
employees and consultants, as much of the Company's technology may not be
patentable. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any such breach or
that the Company's trade secrets will not otherwise become known or be developed
independently by competitors.

In addition, the Company uses certain trademarks owned by other companies
through licensing agreements. For example, the Company uses the Green Giant
Fresh(R) brand on its fresh-cut potato products sold to the food service
industry pursuant to a license agreement, the initial term of which expires in
2007. There can be no assurance that any such licensing agreements will not be
terminated or will be renewed in the future. The inability of the Company to use
the trademarks of such other companies in the future would have a material
adverse effect on the Company's business, financial condition and results of
operations.

GOVERNMENT REGULATION; RISKS ASSOCIATED WITH FOOD PROCESSING PRODUCTS. The
Company is subject to numerous U.S. and foreign regulations. Although the
Company has concluded that the use of the Company's processing aids in
accordance with the Company's protocols is GRAS under FDA regulations, there is
a risk that new scientific information about an ingredient could change its GRAS
status, that the FDA could revise its regulations governing the GRAS status of
the ingredients, or that the FDA might take the position that an ingredient is
not GRAS under the current regulations. Any such change could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, the Company is subject to risks generally associated
with food processing products, which include, among others, that (i) production
defects may occur; (ii) an ingredient used in the Company's products may be
banned, have its use limited or be found to cause health problems; and (iii)
sales may be limited or discontinued due to perceived health concerns
(regardless of actual effects), adverse publicity or other reasons within or
beyond the control of the Company. Moreover, although the Company has concluded
that the use of the Company's processing aids in accordance with the Company's
recommended protocols currently does not require the Company's customers to list
the Company's processing aids in the list of ingredients on labels on fresh-cut
fruits and vegetables under the FDA's current labeling requirements for such
foods, and production of the Company's processing aids and packaging materials
has not been subject to intensive regulation, regulations applicable to the
Company and its products, including the FDA's requirements regarding current
"good manufacturing practices" and labelling requirements applicable to food,
may change. Any such change could have a material adverse effect on the Company.
The FDA also regulates the material content of direct-contact food containers
and packages. The Company purchases the plastic film used in its food-related
packaging from third parties which guarantee or warrant the compliance of such
films with applicable FDA or foreign regulations. The failure, however, of any
such third party to comply with applicable regulations could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Regulatory Matters."

ENVIRONMENTAL MATTERS. The Company's packaging operations are subject to
federal, state and local U.S., U.K. and other European environmental laws and
regulations that impose limitations on the generation, storage, transport,
disposal and emission of various substances into the environment, including laws
that restrict the discharge of pollutants into the air and water and establish
standards for the treatment, storage and disposal of solid and hazardous wastes.
The Company is subject to U.S. and foreign laws and regulations regarding the
use, storage, transport and disposal of inks used with its packaging products.
There can be no assurance that there will not be an accidental contamination,
disposal or injury from the use, storage, transport or disposal of inks used in
the Company's packaging business. Additionally, the Company's use of plastic
film

9
<PAGE> 11

in its packaging operations may subject it, in certain jurisdictions, to laws
and regulations designed to reduce solid wastes by requiring, among other
things, plastics to be degradable in landfills, minimum levels of recycled
content, various recycling requirements, disposal fees and limits on the use of
plastic products. In addition, various consumer and special interest groups have
lobbied from time to time for the implementation of additional environmental
protection measures. The Company may be required to make capital expenditures in
response to changing compliance standards and environmental regulations.
Furthermore, unknown contamination of sites currently or formerly owned or
operated by the Company (including contamination caused by prior owners and
operators of such sites) and off-site disposal of hazardous substances and
wastes may give rise to additional compliance costs. There can be no assurance
that the Company will not incur liabilities for environmental matters in the
future, including those resulting from changes in environmental regulations,
that may have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Regulatory Requirements."

INTEGRATION OF ACQUISITIONS; POSSIBLE ADVERSE EFFECT OF RAPID
EXPANSION. An element of the Company's growth strategy is the pursuit of
acquisitions that either expand or complement its existing lines of business.
There can be no assurance that the Company will be able to identify and acquire
acceptable acquisition candidates on terms favorable to the Company and in a
timely enough manner to the extent necessary to fulfill its expansion plans, or
that any such acquisitions can be operated profitably or successfully integrated
into the Company's operations. The Company's failure to complete acquisitions
and continue its expansion could have a material adverse effect on the Company's
business, financial condition and results of operations. As the Company proceeds
with its acquisition strategy, there can be no assurance that the Company's
management and financial controls, personnel, computer systems and other
corporate support systems will be adequate to manage the resulting increase in
the size and scope of the Company's operations. In addition, acquisitions
involve a number of special risks, including adverse short-term effects on the
Company's reported financial results, the diversion of management's attention,
the dependence on retention, hiring and training of key personnel, and risks
associated with unanticipated problems or legal liabilities, some or all of
which could have a material adverse effect on the Company's business, financial
condition and results of operations. Additionally, if the Company acquires an
existing business, a significant portion of the purchase price for such business
may be allocated to goodwill and intangibles if such acquisition does not
involve the purchase of significant amounts of tangible property. All of such
goodwill and intangibles must be amortized over time, which amortization would
reduce the Company's reported earnings.

PRODUCT OBSOLESCENCE. The market for products used in maintaining the
integrity of fresh-cut produce is characterized by changing technologies and
evolving industry standards, which could result in product obsolescence or short
product life cycles. The Company's ability to achieve and maintain
profitability, therefore, may be dependent upon its ability to continually
enhance its products and its related applications technology, which may require
the Company to make substantial, unexpected expenditures. The Company may find
it necessary to develop additional products and services to satisfy evolving
industry and customer requirements, which may consume significant funds and
resources. There can be no assurance that the Company will be able to allocate
or obtain the funds and resources as may be necessary to improve its current
products or develop new products, or that the Company will be successful in such
efforts.

RELIANCE ON KEY EMPLOYEES. The Company's success is dependent upon the
efforts of certain key personnel, including Paul L. Devine, the Company's
Chairman, President and Chief Executive Officer. The loss of the services of Mr.
Devine or other key employees could have a material adverse effect on the
Company's business, financial condition and results of operations. Additional
suitably qualified staff will also need to be recruited and retained to expand
the business as planned. There can be no assurance that the Company will be able
to recruit or retain any such personnel to the extent necessary. The Company
currently maintains key person life insurance on Mr. Devine in the amount of
$1,000,000. The Company is not the beneficiary of any life insurance policies on
any other executive officers.

COMPETITION. The Company's direct, indirect and potential competitors
include producers of sulfites and "sulfite substitutes," as well as other
providers of alternative preservation and packaging technologies for fresh-cut
produce, including those employing temperature, gas and humidity control. Many
competitors and potential competitors, particularly in the market for produce
packaging, are larger, have greater financial,

10
<PAGE> 12

marketing, sales, distribution, technological and management resources, and
enjoy greater name recognition than does the Company. Certain of these companies
may also enjoy long-standing relationships with processors of fresh produce.
Accordingly, there can be no assurance that the Company will be able to compete
effectively against such competitors and potential competitors.

POTENTIAL FOR DILUTION FROM OUTSTANDING SECURITIES. To the extent
outstanding options or warrants are exercised or shares of preferred stock are
converted, there will be dilution to new investors. At September 30, 1997, (i)
1,427,500 shares of Common Stock were issuable upon exercise of outstanding
stock options at a weighted average exercise price of $6.90 per share, (ii)
142,250 shares of Common Stock were issuable upon exercise of warrants
outstanding, at a weighted average exercise price of $5.68 per share, and (iii)
212,222 shares of Common Stock were issuable upon conversion of the Company's
Series A Preferred Stock (other than those shares to be converted into Common
Stock by the Selling Shareholder in connection with this Offering) and Series C
Preferred Stock outstanding. As of February 12, the outstanding shares of Series
D Preferred Stock are convertible into 1,334,118 shares of Common Stock and the
Series D Warrants are convertible into an aggregate of 201,614 shares of Common
Stock at an exercise price of $20.16 per share. See "Description of Capital
Stock."

INTERNATIONAL SALES. A significant portion of the Company's revenues is
earned outside of the United States, principally in Europe, and, therefore, is
subject to the risks associated with international sales, including economic or
political instability, shipping delays, changes in regulation, adverse tax
consequences and various trade restrictions, all of which could have a
significant impact on the Company's ability to deliver products on a competitive
and timely basis. Future imposition of, or significant increases in the level
of, customs, duties, export quotas or other trade restrictions, could have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the laws of certain foreign countries do not
protect the Company's intellectual property rights to the same extent as do the
laws of the United States, although this effect is lessened in countries that
adhere to the General Agreement on Tariffs and Trade. Although the impact of
currency fluctuation has not been significant in the past with respect to the
Company's operations in the U.K., the impact of future fluctuations in exchange
rates cannot be predicted with any measure of accuracy. As the Company increases
its operations abroad, particularly in light of the Fabbri Acquisition, no
assurance can be given that any future exchange rate fluctuations will not have
a material adverse effect on the Company's business, financial condition and
results of operations.

CERTAIN RISKS ASSOCIATED WITH AGRICULTURAL PRODUCTS. Because the Company's
business relies, both directly and indirectly, on the availability of fresh
produce, the Company's results of operations will be subject to certain risks
associated with agricultural products. The market for agricultural products is
unpredictable and volatile, and is affected by numerous factors. The most
important of such factors are weather conditions and patterns, current and
projected produce stocks and prices, and governmental agricultural policies,
including those that directly or indirectly influence the number of acres
planted, the mix of crops planted, and crop prices. Any or all of such factors
may adversely affect the Company's business, financial condition and results of
operations.

PRICE AND AVAILABILITY OF RAW MATERIALS. The Company's results of
operations may be affected by the price and availability of raw materials used
in the Company's products. Should there be an increase in the price of one or
more of the raw materials used in the manufacture of the Company's products, the
Company may not be able to increase sufficiently the sales price of its products
to compensate for any such increase in raw material costs. Certain of the raw
materials used in the Company's products are obtained from single source
suppliers and the Company has not arranged for alternative supply sources. The
Company's inability to obtain sufficient quantities of such raw materials on
commercially reasonable terms, or in a timely manner, would have a material
adverse effect on its business, financial condition or results of operations.

SEASONALITY AND FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. Although,
historically, the management of the Company has not discerned a seasonal pattern
in the Company's business on a consolidated basis, certain aspects of the
Company's business are seasonal. For example, Fabbri, one of the Company's
subsidiaries, historically has reported relatively higher sales and income in
the Company's first and fourth

11
<PAGE> 13

fiscal quarters because of the timing of citrus and other crop harvests. The
Company's results of operations may become subject to greater seasonality as its
various businesses develop at different rates.

The Company may experience significant quarter to quarter fluctuations in
its results of operations. Quarterly results of operations may fluctuate as a
result of a variety of factors including, but not limited to, the timing, market
acceptance and speed of nationwide roll-outs of fresh-cut potato, corn and apple
products by the Company or through its strategic alliances and the timing of
introduction, commercialization and market acceptance of other such produce
products that utilize the Company's proprietary processing aids. In addition,
significant quarterly fluctuations may occur due to the timing of any new
acquisitions. Additional factors that may affect the quarter to quarter results
of operations include competitive conditions in the industry and general
economic conditions. As a result, the Company believes that period to period
comparisons of its results of operations are not necessarily meaningful or
indicative of the results that the Company may achieve in any subsequent
quarters or full years. Such quarterly fluctuations may result in volatility in
the market price of the Common Stock of the Company, and it is possible that in
future quarters the Company's results of operations could be below the
expectations of the public markets. Such an event could have a material adverse
effect on the market price of the Common Stock of the Company.

PRODUCT LIABILITY. The Company's agreements with its customers typically
contain provisions designed to limit the Company's exposure to potential product
liability claims. These agreements generally contain provisions such as
disclaimers of warranties and limitations on liability. It is possible, however,
that the limitation of liability provisions contained in such agreements may not
be effective as a result of existing or future federal, state or local laws or
ordinances or unfavorable judicial decisions. Although EPL has not experienced
any product liability claims to date, the sale and support of products by the
Company may entail the risk of such claims. Although the Company currently
maintains product liability insurance coverage, there can be no assurance that
this coverage will be adequate to protect the Company against future product
liability claims or that product liability insurance will be available to the
Company in the future on commercially reasonable terms, if at all. Furthermore,
there can be no assurance that the Company will be able to avoid significant
product liability claims and the attendant adverse publicity. Consequently, a
product liability claim or other claim with respect to uninsured or underinsured
liabilities could have a material adverse effect on the Company's business,
financial condition and results of operations.

RELIANCE ON KEY CUSTOMERS. The Company's processing aids are specifically
developed for certain varieties and kinds of produce. In marketing its
integrated systems solutions for fresh-cut produce, the Company generally
targets a select group of processors as customers and works closely with each
processor to develop protocols designed to be suited to the particular needs of
such processor. For the nine months ended September 30, 1997, two packaging
customers accounted for an aggregate of approximately 38% of the Company's total
sales. The Company has entered into strategic alliances with certain of its
major customers; however, there can be no assurance that the Company's customer
relationships can be maintained. The loss of any of the Company's major
customers could have a material adverse effect on the Company's business,
financial condition and results of operations.

Furthermore, the development and evolution of markets for the Company's
processing aids is substantially dependent upon the efforts of its customers.
Although the Company believes that its customers will be motivated to
commercialize the products covered by these relationships in a timely and
effective manner, the amount of financial and other resources devoted to these
activities generally is beyond the Company's control.

DILUTION IN THIS OFFERING. Purchasers of the Common Stock offered hereby
will experience an immediate and substantial dilution of $ , assuming a
public offering price of $11.00 (the last reported split-adjusted sales price of
the Common Stock on the Nasdaq SmallCap Market on February 12, 1998), in the net
tangible book value per share of Common Stock from the public offering price.
See "Dilution."

POSSIBLE VOLATILITY OF SHARE PRICE. The market price of the Common Stock
could be subject to significant fluctuations in response to the Company's
operating results and other factors, and there can be no assurance that the
market price of the Common Stock will not decline below the public offering
price herein. Factors such as operating results, contractual arrangements with
customers, natural disasters or other developments relating to the Company's
products or its competitors, changes in analysts' estimates or in conditions of
the economy or the financial markets, and regulatory changes, as well as changes
within the

12
<PAGE> 14

industry, may have a significant effect on the market price of the Common Stock.
In addition, the stock market has experienced from time to time extreme price
and volume fluctuations that may be unrelated to the operating performance of
particular companies. Historically, the average daily trading volume of the
Common Stock as reported on the Nasdaq SmallCap Market has been relatively low.
Additionally, liquidity could be adversely affected by the reduced number of
shares of Common Stock outstanding after the proposed 1-for-2 reverse stock
split. There can be no assurance that a more active trading market will develop
in the future. See "Price Range of Common Stock."

DIVIDEND POLICY. Other than in connection with the payment of accumulated
dividends, which have not been declared or paid, on its Series A Preferred
Stock, Series B Convertible Preferred Stock and Series C Preferred Stock
(collectively with the Series D Preferred Stock, the "Preferred Stock"), the
Company intends to retain earnings, if any, which may be generated from
operations to finance the expansion and development of its business. No cash
dividends have been declared or paid to date on the Common Stock or the
Preferred Stock. The Company does not expect to declare or pay cash dividends to
the holders of the Common Stock in the foreseeable future and no such dividends
may be declared or paid until all accumulated dividends on the Series A, Series
B and Series C Preferred Stock have been paid. See "Dividend Policy."

SHARES ELIGIBLE FOR FUTURE SALE. Upon completion of this Offering, the
Company will have 11,145,746 shares of Common Stock outstanding (11,585,746
shares if the Underwriters' over-allotment option is exercised in full), and an
additional 1,499,673 shares of Common Stock will be issuable upon conversion of
Preferred Stock. The 3,500,000 shares offered hereby (4,025,000 shares if the
Underwriters' over-allotment option is exercised in full) will be freely
tradeable without restrictions or further registration under the Securities Act.
Substantially all of the remaining shares, including those shares issuable upon
conversion of the Preferred Stock, are either registered or are planned to be
registered with the SEC pursuant to registration statements currently declared
effective by the SEC or which the Company expects to become effective, or are
otherwise freely tradeable without restriction, except for approximately
1,741,149 shares which are held by "affiliates" of the Company within the
meaning of the Securities Act and not covered by an effective registration
statement, which will be subject to the resale limitations of Rule 144. In
addition, an aggregate of 1,758,125 shares are issuable upon the exercise of
outstanding stock options and 341,198 shares are issuable upon the exercise of
warrants. An additional 512,125 shares of Common Stock are reserved for issuance
under the Option Plan. The Company, its executive officers and directors, and
the Selling Shareholder have agreed that they will not, without the prior
written consent of Prudential Securities Incorporated, on behalf of the
Underwriters, directly or indirectly, offer, sell, offer to sell, contract to
sell, pledge, grant any option to purchase, or otherwise sell or dispose of (or
announce any offer, sale, offer of sale, contract of sale, pledge, grant of any
option to purchase or other sale or disposition of) any shares of Common Stock
or any other securities convertible into, or exercisable for shares of Common
Stock or other similar securities of the Company, currently beneficially owned
or hereafter acquired by such persons, for a period of 180 days after the date
of this Prospectus. Prudential Securities Incorporated may, in its sole
discretion, at any time and without prior notice, release all or any portion of
the shares of Common Stock subject to such agreements. Further sales of
substantial amounts of Common Stock (including shares issued upon the exercise
of outstanding options and warrants) in the public market after this Offering or
the prospect of such sales could adversely affect the market price of the Common
Stock and may have a material adverse effect on the Company's ability to raise
any necessary capital to fund its future operations.

CONTROL BY PRINCIPAL SHAREHOLDERS; ANTI-TAKEOVER CONSIDERATIONS. After the
Offering, Paul L. Devine, the Company's Chairman of the Board, President and
Chief Executive Officer, will beneficially own or control approximately 6.6% of
the outstanding shares of Common Stock (6.4%, assuming that the Underwriters'
over-allotment option is exercised in full). Lancer Partners, L.P. will own
approximately 16.0% of the outstanding shares of the Common Stock (15.3%,
assuming that the Underwriters' over-allotment option is exercised in full).
Such persons will have the ability to significantly influence the election of
the Company's directors and the outcome of all other issues submitted to the
Company's shareholders. The beneficial ownership of such persons, together with
the ability of the Board of Directors of the Company to issue shares of
preferred stock and to fix the rights and preferences thereof, also may have the
effect of delaying, deferring or preventing an unsolicited change in the control
of the Company, which may adversely affect the market price of the

13
<PAGE> 15

Common Stock or the ability of shareholders to participate in a transaction in
which they might otherwise receive a premium for their shares. See "Management"
and "Principal and Selling Shareholders."

YEAR 2000 COMPLIANCE. The Company uses a significant number of computer
software programs and operating systems in its internal operations, including
applications used in manufacturing, product development, financial business
systems and various administrative functions. To the extent that these software
applications contain source code that is unable to appropriately interpret the
upcoming calendar year "2000," some level of modification or even possibly
replacement of such source code or applications will be necessary. The Company
is currently in the process of completing its identification of software
applications that are not "Year 2000" compliant and expects to make appropriate
responses to address any issue identified. Given the information known at this
time about the Company's systems, coupled with the Company's ongoing, normal
course-of-business efforts to upgrade or replace business critical systems as
necessary, it is currently not anticipated that these "Year 2000" costs will
have any material adverse effect on the Company's business, financial condition
or results of operations. However, the Company is still in the preliminary
stages of analyzing its software applications and, to the extent they are not
fully "Year 2000" compliant, there can be no assurance that the costs necessary
to update software, or potential systems interruptions, would not have a
material adverse effect on the Company's business, financial condition or
results of operations.

14
<PAGE> 16

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of Common Stock by
the Selling Shareholder. The net proceeds to the Company from the sale of the
809,097 shares of Common Stock being offered by the Company hereby, at an
assumed public offering price of $11.00 per share (the last reported
split-adjusted sales price of the Common Stock on the Nasdaq SmallCap Market on
February 12, 1998) and after deducting underwriting discounts and commissions
and the Company's estimated Offering expenses, are estimated to be $ million
($ million if the Underwriters' over-allotment option is exercised in full).
See "Principal and Selling Shareholders."

The Company expects to use approximately $1.9 million of the estimated net
proceeds of this Offering to repay outstanding borrowings under its credit
facility for its U.K. operations (the "U.K. Credit Facility"), and the remainder
to make additional capital expenditures in its corn, potato and packaging
businesses and for working capital and general corporate purposes, including the
possibility the Company may use a portion of the net proceeds of the Offering
for the acquisition of businesses, products and technologies that are
complementary to those of the Company (for which additional equity or debt
financing may be required), although no such acquisitions are currently being
negotiated and no portion of the net proceeds has been allocated for any
specific acquisition. Furthermore, there can be no assurance that suitable
acquisition candidates will be identified or that any acquisition will be
consummated. The U.K. Credit Facility includes a term loan and a revolving
facility. The term loan matures in annual installments from December 1998
through December 2003. Upon repayment, the Company expects that the revolving
facility, in the amount of $660,000 (assuming an exchange rate of L1:$1.65),
will remain available for borrowings. The revolving facility matures in annual
installments from December 2001 through December 2003. Borrowings under both the
term loan and the revolving facility bear interest at a variable rate equal to a
base rate (currently 7.25%) plus 2% to 2.25%. Pending such uses, the Company
intends to invest the net proceeds in interest-bearing, investment grade
securities or guaranteed obligations of the United States government. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

DIVIDEND POLICY

Other than in connection with the payment of accumulated dividends, which
have not been declared or paid, on its Series A Preferred Stock, Series B
Convertible Preferred Stock and Series C Preferred Stock (collectively with the
Series D Preferred Stock, the "Preferred Stock"), the Company intends to retain
earnings, if any, which may be generated from operations to finance the
expansion and development of its business. No cash dividends have been declared
or paid to date on the Common Stock. The Company does not expect to declare or
pay cash dividends to the holders of the Common Stock in the foreseeable future
and no such dividends may be declared or paid until all accumulated dividends on
the Series A, Series B and Series C Preferred Stock have been paid. See Note 9
to the Company's Consolidated Financial Statements and "Description of Capital
Stock."

15
<PAGE> 17

PRICE RANGE OF COMMON STOCK

The Company's Common Stock commenced trading on the Nasdaq SmallCap Market
under the symbol "EPTG" in July 1996. From September 1995 to July 1996, the
Common Stock traded on the National Association of Securities Dealers "bulletin
board." Prior to September 1995, the Common Stock traded on the National
Association of Securities Dealers "pink sheets." An application has been made to
include the Common Stock on the Nasdaq National Market under the symbol "EPTG."
The following table sets forth the high and low reported sales prices for the
Company's Common Stock during the periods indicated (reflecting actual prices
before the reverse stock split and assuming a post-split price that is twice the
pre-split price):

<TABLE>
<CAPTION>
HIGH LOW
---------------- ----------------
PRE- POST- PRE- POST-
SPLIT SPLIT SPLIT SPLIT
----- ------ ----- ------
<S> <C> <C> <C> <C>
1996
First quarter........................................ $5.88 $11.75 $3.06 $6.13
Second quarter....................................... 9.00 18.00 4.75 9.50
Third quarter........................................ 7.63 15.25 5.00 10.00
Fourth quarter....................................... 7.13 14.25 4.00 8.00
1997
First quarter........................................ 6.68 13.38 4.88 9.75
Second quarter....................................... 6.56 13.13 4.00 8.00
Third quarter........................................ 9.06 18.13 5.63 11.25
Fourth quarter....................................... 9.63 19.25 5.00 10.00
1998
First quarter (through February 12, 1998)............ 6.38 12.75 5.00 10.00
</TABLE>

On February 12, 1998, the last reported split-adjusted sales price of the
Company's Common Stock was $11.00 on the Nasdaq SmallCap Market under the symbol
"EPTG." As of February 12, 1998, there were approximately 300 holders of record
of the Company's Common Stock.

16
<PAGE> 18

CAPITALIZATION

The following table sets forth, as of September 30, 1997 (i) the actual
capitalization of the Company (ii) the pro forma capitalization of the Company
giving effect to the Fabbri Acquisition and the Series D Placement as if such
transactions had occurred on such date and (iii) the pro forma capitalization of
the Company as adjusted to reflect the sale of the 809,097 shares of Common
Stock being offered by the Company in this Offering at an assumed public
offering price of $11.00 per share (the last reported split-adjusted sales price
of the Common Stock on the Nasdaq SmallCap Market on February 12, 1998) and the
application by the Company of the estimated net proceeds therefrom (less the
underwriting discounts and commissions and estimated Offering expenses payable
by the Company), and the conversion of 1,933,000 shares of Series A Preferred
Stock into 1,288,666 shares of Common Stock by the Selling Shareholder in
connection with the Offering. See "Use of Proceeds" and "Principal and Selling
Shareholders." This table should be read in conjunction with the Consolidated
Financial Statements and the related Notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
---------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Line of credit -- related party.............................. $ 338 $ -- $ --
Current portion of long-term debt............................ 222 222 222
Long-term debt............................................... 2,107 2,107 164
Convertible Series D Preferred Stock, $0.01 par
value -- authorized, no shares actually issued and
outstanding; 12,500 shares pro forma and pro forma as
adjusted(2)................................................ -- 12,000 12,000
Shareholders' equity:
Convertible Series A Preferred Stock, $1.00 par
value -- authorized 3,250,000 shares; issued and
outstanding 2,143,000 shares actual and pro forma, and
210,000 shares pro forma as adjusted(1).................... 2,143 2,143 210
Convertible Series C Preferred Stock, $0.01 par
value -- authorized, issued and outstanding, 144,444
shares(1).................................................. -- -- --
Undesignated Preferred Stock $0.01 par value -- authorized
actual 3,855,556 shares; 3,843,056 shares pro forma and pro
forma as adjusted; no shares actually issued and
outstanding................................................ -- -- --
Common Stock, $0.01 par value -- authorized, 50,000,000
shares; issued and outstanding, 8,837,899 shares actual and
pro forma, and 10,935,663 shares pro forma as
adjusted(1)................................................ 9 9 11
Additional paid-in capital................................. 25,635 25,635 36,466
Accumulated deficit........................................ (21,022) (21,022) (21,022)
Foreign currency translation adjustments................... 64 64 64
-------- -------- --------
Total shareholders' equity................................. 6,829 6,829 15,729
-------- -------- --------
Total capitalization......................................... $ 9,496 $ 21,158 $ 28,115
======== ======== ========
</TABLE>

- ---------------
(1) Excludes (i) 1,427,500 shares of Common Stock reserved for issuance upon
exercise of options outstanding at September 30, 1997 at a weighted average
exercise price of $6.90 per share and (ii) 142,250 shares of Common Stock
issuable upon the exercise of warrants at a weighted average exercise price
of $5.68 per share. As of September 30, 1997, an additional 963,500 shares
of Common Stock were reserved for issuance under the Company's Option Plan.
All of the outstanding shares of the Company's Series B Preferred Stock were
converted into an aggregate of 265,957 shares of Common Stock on August 20,
1997. As of September 30, 1997, the outstanding shares of Series A Preferred
Stock and Series C Preferred Stock were convertible into an aggregate of
212,222 shares of Common Stock.

(2) As of February 12, the outstanding shares of Series D Preferred Stock are
convertible into an aggregate of 1,334,118 shares of Common Stock and the
warrants issued in connection with the Series D Placement are convertible
into an aggregate of 201,614 shares of Common Stock.

17
<PAGE> 19

DILUTION

Purchasers of the Common Stock offered hereby will experience an immediate
and substantial dilution in the net tangible book value of their Common Stock
from the public offering price. The net tangible book value of the Company as of
September 30, 1997 was $3.2 million, or $0.39 per share of Common Stock. Net
tangible book value represents the amount of the Company's tangible net worth
divided by the total number of shares of Common Stock outstanding as of
September 30, 1997. After giving effect to the sale of 809,097 shares of Common
Stock by the Company in the Offering and the application of the estimated net
proceeds therefrom (at an assumed public offering price of $11.00 per share, the
last reported split-adjusted sales price of the Common Stock on the Nasdaq
SmallCap Market on February 12, 1998, and after the deduction of underwriting
discounts and commissions and estimated Offering expenses payable by the
Company), the pro forma net tangible book value of the Company as of September
30, 1997 would have been $ million or $ per share of Common Stock.
This represents an immediate increase in net tangible book value of $
per share to existing shareholders and an immediate dilution of $ per
share to purchasers of shares in the Offering. The following table illustrates
this per share dilution:

<TABLE>
<S> <C> <C>
Assumed public offering price................................ $ 11.00
Net tangible book value at September 30, 1997......... $ 0.39
Increase attributable to new investors................
-----------
Pro forma net tangible book value after the Offering.........
-----------
Dilution in net tangible book value to new investors(1)...... $
===========
</TABLE>

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

(1) If the Underwriters' over-allotment option is exercised in full, then the
dilution to new investors will be $ per share.

The calculation of pro forma net tangible book value and the other
computations above assume no exercise of outstanding options or warrants or the
conversion of the Company's Series A Preferred Stock (other than those shares to
be converted into Common Stock by the Selling Shareholder in connection with
this Offering) or Series C Preferred Stock. At September 30, 1997, (i) 1,427,500
shares of Common Stock were issuable upon exercise of outstanding stock options
at a weighted average exercise price of $6.90 per share which, if exercised,
would provide the Company with gross proceeds of approximately $9,850,000, (ii)
142,250 shares of Common Stock were issuable upon exercise of warrants
outstanding, at a weighted average exercise price of $5.68 per share which, if
exercised, would provide the Company with gross proceeds of approximately
$807,000, and (iii) 212,222 shares of Common Stock were issuable upon conversion
of the Company's Series A Preferred Stock (other than those shares to be
converted into Common Stock by the Selling Shareholder in connection with this
Offering) and Series C Preferred Stock outstanding. To the extent the
outstanding options or warrants are exercised or shares of Preferred Stock are
converted, there will be further dilution to purchasers of the Common Stock
offered hereby.

18
<PAGE> 20

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected condensed consolidated statement of
operations and balance sheet data for the Company. The selected condensed
consolidated financial data for the years ended December 31, 1994, 1995 and 1996
and as of December 31, 1995 and 1996 are derived from the audited Consolidated
Financial Statements of the Company, which are included elsewhere in this
Prospectus, and are qualified by reference to such Consolidated Financial
Statements and the related Notes thereto. The selected condensed consolidated
financial data for the fiscal year ended April 30, 1992, the eight month period
ended December 31, 1992 and the year ended December 31, 1993, and as of April
30, 1992 and December 31, 1992, 1993 and 1994 are derived from audited
consolidated financial statements of the Company not included herein. The
selected condensed consolidated financial data as of and for the nine month
periods ended September 30, 1996 and 1997 are derived from the unaudited
condensed consolidated financial statements prepared by the Company. Such data
reflects all adjustments (consisting solely of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair statement of
results for such periods. The selected consolidated financial data set forth
below is qualified in its entirety by, and should be read in conjunction with
the Consolidated Financial Statements, the related Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR EIGHT MONTHS
ENDED ENDED FISCAL YEAR ENDED DECEMBER 31,
APRIL 30, DECEMBER 31, ------------------------------------------------------------
1992 1992 1993 1994 1995 1996
----------- ------------ ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales.......................... $ 165 $ 142 $ 178 $ 578 $ 3,240 $ 11,314
Cost of Sales.................. 84 77 47 387 2,469 9,136
Gross Profit................... 81 65 131 191 771 2,178
Total operating expenses....... 311 496 2,768 3,472 3,813 6,362
Net loss from operations....... (230) (431) (2,637) (3,281) (3,042) (4,184)
Net loss....................... (202) (416) (2,666) (3,373) (3,320) (4,296)
Net loss for common
shareholders.................. (202) (416) (2,666) (3,697) (3,634) (5,295)
Net loss per common share...... $ (0.07) $ (0.14) $ (0.88) $ (1.02) $ (0.78) $ (0.71)
Weighted average number of
common shares................. 2,932,620 2,954,308 3,035,620 3,629,362 4,655,529 7,436,759

<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1996 1997
----------- -----------

<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales.......................... $ 7,063 $ 14,047
Cost of Sales.................. 5,828 12,604
Gross Profit................... 1,235 1,443
Total operating expenses....... 4,544 6,238
Net loss from operations....... (3,309) (4,795)
Net loss....................... (3,313) (4,667)
Net loss for common
shareholders.................. (4,187) (5,078)
Net loss per common share...... $ (0.56) $ (0.62)
Weighted average number of
common shares................. 7,330,479 8,150,423
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
APRIL 30, ----------------------------------------------------------------------------
1992 1992 1993 1994 1995 1996
----------- ------------ ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital (deficiency)... $ (270) $ (150) $ (623) $ (378) $ 1,167 $ 2,269
Total assets................... 1,905 3,194 2,630 3,189 10,041 15,215
Long-term debt................. -- 238 76 1,812 844 1,554
Total liabilities.............. 322 1,011 984 2,771 3,665 6,797
Accumulated deficit............ (1,588) (2,004) (4,670) (8,043) (11,363) (16,283)
Total shareholders' equity..... $ 1,584 $2,183 $1,646 $ 418 $ 6,376 $ 8,418

<CAPTION>
SEPTEMBER 30,
------------------
1996 1997
------- -------

<S> <C> <C>
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital (deficiency)... $ 2,881 $ 1,348
Total assets................... 15,136 15,374
Long-term debt................. 1,139 2,107
Total liabilities.............. 5,966 8,544
Accumulated deficit............ (15,301) (21,022)
Total shareholders' equity..... $ 9,170 6,829
</TABLE>

19
<PAGE> 21

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

OVERVIEW

The Company is a leading developer, manufacturer and marketer of
proprietary produce processing aids, packaging technologies, and scientific and
technical services, which are designed to maintain the quality and integrity of
fresh-cut produce. The Company designs products which are components of
integrated systems solutions, specifically to address the needs of a variety of
fresh-cut produce categories. The foundation of the Company's integrated system
is its proprietary produce processing aid technology, which inhibits the natural
enzymatic degradation of fruits and vegetables after they have been processed.
Fresh-cut fruits and vegetables that are treated with the Company's proprietary
processing aids better maintain their natural characteristics, such as color,
texture, taste and smell. In certain fresh-cut produce categories, such as
fresh-cut sliced apples, fresh-cut potatoes and fresh corn, the Company's
processing aids allow increased availability of these fresh-cut produce products
in retail and commercial markets. The Company has concluded that the use of the
Company's processing aids, in accordance with the Company's recommended
protocols, is GRAS under FDA regulations. The Company also uses a variety of
film technologies to create packaging specifically designed to complement and
enhance the effectiveness of the Company's processing aids by allowing fruits
and vegetables to "breathe" after they have been cut and packaged. The Company
markets these packaging products to produce growers and processors. The Company
also markets flexible packaging for uses in the snack food, bakery and
confectionery industries, and for other uses. In addition, the Company's
scientific and technical services, which include food safety and microbiological
testing, provide fresh produce processors with expertise in food safety,
post-harvest horticulture and processing techniques, and serve to support the
cross-marketing efforts for the Company's other products.

The Company's revenues consist of (i) revenues derived from the sale of
processing aids and flexible packaging, (ii) revenues derived from the sale of
certain fresh-cut fruits and vegetables, (iii) royalties from the sale of
certain fresh-cut fruits and vegetables and (iv) fees received for scientific
and technical services provided by the Company. The Company's revenues from the
sale of produce and royalty revenues are derived from sales of various kinds and
varieties of fresh-cut fruits and vegetables which use the Company's proprietary
technologies and which the Company believes would not be available commercially
without such use. Historically, substantially all of the Company's revenues have
been derived from the sale of flexible packaging to the snack food, produce,
bakery, and confectionery industries and for other uses. The Company believes
that its packaging technologies, coupled with acquisitions of produce packagers,
provide a platform to increase its sales of packaging, processing aids and
scientific and technical services to growers and processors of fresh produce.
Therefore, the Company expects that the proportion of its revenues derived from
the sale of its products and services addressing the needs of the fresh-cut
produce industry will increase over time and constitute a significant portion of
the Company's future revenue growth.

Prior to 1994, the Company was a development-stage enterprise with limited
capital resources and limited revenues operating exclusively as a manufacturer
and marketer of processing aids. After the advent of new management and an
infusion of capital in December 1992, the Company began to expand its business
to include packaging and scientific and technical services in an effort to
develop integrated systems solutions designed to maintain and support the
quality and integrity of fresh-cut produce. The Company has made the following
acquisitions to accomplish this objective:

- In September 1994, the Company acquired Respire Films, Inc. ("Respire"),
a U.S.-based business involved in the marketing of packaging films.

- In September 1995, the Company acquired Bakery Packaging Services
Limited, based near Runcorn, England (the "Runcorn Facility"). The
Runcorn Facility provided the Company with a U.K. base for packaging,
together with access to numerous produce and other food companies in the
U.K. and elsewhere in Europe. The Runcorn Facility also provided the
Company with proprietary perforating technology to enhance the Company's
strategic position, as well as an incremental source of packaging
revenue. The U.K. packaging business was further enhanced by the
acquisition of a food-grade printing facility and certain other assets
located at Gainsborough, Lincolnshire, England (the "Gainsborough
Facility"), from Printpack Europe (St. Helens) Limited in July 1996. The
Company

20
<PAGE> 22

has consolidated the operations of the Runcorn Facility and the
Gainsborough Facility into those of its subsidiary, EPL Flexible
Packaging Limited ("EPL Flexible").

- In April 1996, the Company acquired the assets of Pure Produce, Inc.
("Pure Produce") based in Worcester, Massachusetts, providing the Company
with in-house scientific and technical capabilities, specifically in the
areas of food safety and microbiological testing.

- In July 1996, the Company acquired Crystal Plastics, Inc. ("Crystal"),
located outside Chicago, to provide a base for the proprietary gas flame
perforation equipment and increase the Company's packaging presence in
the U.S. Crystal uses "K" and polystyrene resins to manufacture and
convert a range of films for numerous applications, some of which are
used to support the Company's U.S. packaging business as a part of the
Company's integrated systems solutions. Crystal also provides the U.S.
base for facilitating fulfillment of an exclusive agreement with E.I.
duPont de Nemours & Co. Inc. ("DuPont"), whereby the Company provides all
of DuPont's perforating requirements for DuPont's Mylar(R) films (the
"DuPont Agreement").

- In October 1997, the Company acquired California Microbiological
Consulting, Inc., based in Walnut Creek, California ("CMC"). Together
with Pure Produce, CMC specializes in food safety, forensic testing and
microbiological consulting, and provides the Company with scientific and
technical facilities on the East and West Coasts.

- In December 1997, the Company acquired Fabbri Artes Graficas Valencia
S.A., a converter, printer and marketer of specialty flexible packaging,
serving principally the European produce market, based in Valencia,
Spain. This acquisition complements and enhances the Company's existing
U.K.-based packaging businesses, providing incremental capacity for more
efficient production of the combined product mix, as well as a strategic
foothold on the European continent for the launch of the Company's
related processing aid and scientific and technical services businesses.

The Company's packaging technologies complement and enhance the
effectiveness of its processing aids, making packaging an integral component of
the integrated system. In marketing its packaging technologies, the Company
works closely with its customers to determine optimal packaging characteristics
for the customer's products, thereby being in a position to influence a
customer's buying decision with respect to its packaging needs. The Company's
packaging business also provides a revenue stream that helps to fund market
development and the Company's lengthy sales process, and the presence of its
packaging infrastructure in regions where produce is grown enhances its sales
prospects to produce growers and processors.

The scientific and technical services the Company provides complement the
processing aids and packaging as a part of its integrated systems solutions. The
Company's scientific and technical expertise provides the Company with an
expanding base of knowledge about food technology, and the Company believes this
expertise helps to establish credibility with customers and support the
commercialization of the Company's products.

The Company markets its processing aids, packaging technologies and
scientific and technical services to processors of packaged, fresh-cut produce
as part of integrated systems solutions for processing fresh-cut produce. To
this end, the Company has been developing relationships with produce processors
and other companies in an effort to penetrate further the fresh-cut produce
market.

- In July 1996, the Company formed NewCorn Co LLC ("Newcorn"), a limited
liability company in which the Company has a 51% membership interest.
Newcorn is a joint venture among the Company and Underwood Ranches and
Twin Garden Farms, two major regional growers and processors of fresh-cut
sweet corn. Newcorn processes, packages, markets and sells fresh-cut corn
products using the Company's processing aids and packaging materials,
with the aim of developing year-round, nationally available branded
fresh-cut corn products.

- Effective September 22, 1997, the Company executed a ten-year exclusive
trademark license agreement (subject to extension) and strategic alliance
with Potandon Produce LLC ("Potandon"), a Green Giant Fresh(R) brand
licensee of the Pillsbury Company. The agreement is subject to the terms

21
<PAGE> 23

of Potandon's license of the Green Giant Fresh(R) brand, and contains
certain minimum royalty requirements and other customary provisions.
During the first three years of the term of the agreement, Potandon has
the option to require the Company to negotiate in good faith to form a
business entity in which Potandon and the Company would jointly
participate in the fresh-cut potato products business on terms yet to be
established. The Company sells fresh-cut potato products, such as french
fries, to the food service industry under the Green Giant Fresh(R) brand
name, utilizing the Company's "Potato Fresh(R) System" processing aid
technologies and related protocols in processing potatoes supplied by
Potandon. In order to produce and market its fresh-cut potato products,
the Company uses one co-packer and plans to add several other regional
co-packers, and is building a dedicated sales and marketing
infrastructure to support its efforts.

- In October 1997, the Company entered into a strategic alliance with
Farmington Fresh, a major grower and marketer of Fuji apples. Under this
alliance, the Company has licensed its "Apple Fresh(R)" processing aids
and provides flexible packaging and scientific and technical services in
connection with the production by Farmington Fresh of certain varieties
of fresh-cut sliced apples. The agreement, which currently extends until
December 2002, grants Farmington Fresh production exclusivity in its
local geographic market. In addition to revenues from sales of the
Company's processing aids, packaging and scientific and technical
services, the agreement entitles the Company to receive a royalty from
each package of fresh-cut apple slices sold.

Management believes changes in prices of raw materials for its products
have not had a material effect on the Company's results of operations; however,
as the Company's business becomes more reliant upon sales of its processing
aids, results of operations may be more susceptible to the effects of changing
prices due to the pricing of certain kinds of produce, as well as ingredients
used in the Company's processing aids.

Nine Months Ended September 30, 1997 Compared to Nine Months Ended September
30, 1996

Sales. Sales increased from $7,064,000 for the first nine months of 1996 to
$14,047,000 for the same period in 1997, an increase of $6,984,000 or 99%.

Sales of processing aids and related activities increased from $720,000 for
the first nine months of 1996 to $2,098,000 for the same period in 1997, an
increase of $1,378,000 or 191%. This increase was mainly from the inclusion of
revenue from the sale of fresh-cut corn products through the Company's
majority-owned subsidiary, Newcorn, which commenced sales in the third quarter
of 1996. The Company is continuing to focus on the sale and development of its
processing aid technologies, particularly with respect to corn, potatoes and
apples. Product testing continues, and in some cases has been expanded or
accelerated and significant costs have been incurred to date, which have yet to
yield material revenues. Some of the initial results of this work are evidenced
by the agreements with Potandon and Farmington Fresh. The Company believes that
both of these agreements have the potential to result in increased sales in the
future, although there can be no assurance this will be the case.

Sales of packaging materials to U.S. customers increased from $1,084,000
for the first nine months of 1996 to $2,048,000 for the same period in 1997, an
increase of $963,000 or 89%, primarily as a result of the Company's acquisition
of Crystal in July 1996. The balance of the increase came from growth in the
existing business.

Sales of packaging materials to customers in the U.K. and Europe increased
from $5,259,000 for the first nine months of 1996 to $9,901,000 for the same
period in 1997, an increase of $4,642,000 or 88%. This increase is attributable
to the growth in sales of EPL Flexible to its main customer Pepsico and
increased sales of produce packaging.

During the nine months ended September 30, 1997, two packaging customers,
Walkers Snack Foods Ltd., a division of Frito-Lay Europe, a subsidiary of
Pepsico, Inc. ("Pepsico"), and Geest Bananas Ltd. ("Geest"), a

22
<PAGE> 24

leading marketer of fresh produce, accounted for approximately 32% and 6%,
respectively, of the Company's sales.

Gross Profit. Gross profit increased from $1,235,000 for the first nine
months of 1996 to $1,443,000 for the same period in 1997, an increase of
$208,000 or 16.8%, but decreased as a percentage of sales from 17.5% for the
first nine months of 1996 to 10.3% for the same period in 1997. This reduction
was principally due to: (i) increased fixed costs related to newly-acquired
packaging manufacturing operations at the Gainsborough Facility, (ii) costs
incurred in the relocation of the film printing activities to the Gainsborough
Facility, (iii) operating inefficiencies associated with the subsequent plant
reorganization at the Runcorn Facility and the Gainsborough Facility and (iv) a
greater proportion of the Company's packaging sales being attributable to lower
margin packaging products.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $3,172,000 for the nine months ended
September 30, 1996 to $4,437,000 for the same period in 1997, an increase of
$1,265,000 or 40%. This increase was due to (i) incremental expenses from the
inclusion of results from EPL Flexible, Crystal, and Newcorn, and (ii) the
continuing and accelerating development of the Company's sales and marketing
efforts, including projects supporting prospective large customers. The
Company's sales and marketing efforts are primarily focused on potatoes, corn
and apples and, to a lesser extent, other produce categories. The Company
expects that sales and marketing expenses will continue at recent levels and may
increase. In addition, the Company continues to spend significant amounts on
patent preparation and filing.

Research and Development Costs. Research and development costs increased
from $683,000 for the first nine months of 1996 to $869,000 for the same period
in 1997, an increase of $186,000 or 27%. This reflects increased costs of the
scientific activities related to sales efforts for prospective large customers,
principally related to broccoli, mushrooms and perforated films. The Company
expects that research and development costs will continue at recent levels and
may increase.

Depreciation and Amortization. Depreciation and amortization increased from
$689,000 in the first nine months of 1996 to $931,000 for the same period in
1997, an increase of $242,000 or 35%, as a result of capital expenditures and
the assets acquired in the EPL Flexible, Crystal and Newcorn acquisitions in the
second half of 1996.

Loss from Operations. Loss from operations increased from $3,309,000 for
the first nine months of 1996 to $4,795,000 for the same period in 1997, an
increase of $1,486,000 or 45%. The increase was principally due to the increase
in total operating expenses. However, total operating expenses, excluding
depreciation and amortization, decreased as a percentage of sales from 54.6% in
the nine months ended September 30, 1996 to 37.8% for the same period in 1997.
This reflects the leveraging of the Company's infrastructure through the
expansion of the Company's business.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Sales. Sales increased from $3,240,000 in 1995 to $11,314,000 in 1996, an
increase of $8,075,000 or 249%. Sales of processing aids increased from $473,000
in 1995 to $1,327,000 in 1996, an increase of $854,000 or 181%. Sales for the
U.S. packaging materials business increased from $868,000 in 1995 to $1,717,000
in 1996, an increase of $849,000 or 98%. Sales from the U.K. and European
packaging materials businesses grew from $1,899,000 in 1995 to $8,270,000 in
1996, an increase of $6,372,000 or 336%.

The increase in processing aid sales was mainly from the inclusion of
revenue from the sale of fresh-cut corn through the Company's majority-owned
subsidiary, Newcorn, which commenced sales in the third quarter of 1996. The
growth in the U.S. packaging materials business mainly reflected the
contribution of the Crystal business acquired in July 1996. The sales increase
from U.K. and European packaging materials reflected a full period contribution
from the Runcorn Facility, acquired in September 1995, together with an initial
contribution from the Gainsborough Facility, which includes sales to its main
customer Pepsico.

In 1996, one customer, Pepsico, accounted for 13.0% of consolidated sales
and in 1995, no customer accounted for more than 10.0% of consolidated sales.

23
<PAGE> 25

Gross Profit. Gross profit increased from $771,000 in 1995 to $2,178,000
in 1996, an increase of $1,407,000 or 183%, but decreased as a percentage of
sales from 23.8% in 1995 to 19.2% in 1996. This reduction was due principally to
the increase in sales of packaging materials as a percentage of total sales.
Packaging sales generate a lower average margin than processing aids.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $2,638,000 in 1995 to $4,413,000 in 1996,
an increase of $1,775,000 or 67%. A significant part of the increase was due to
the inclusion of expenses from the Runcorn Facility operations, as well as
incremental expenses from the inclusion of the Gainsborough Facility, Crystal
and Newcorn in consolidated results. The remainder of the increase was due to
the continuing development of the sales and marketing effort as well as projects
to support prospective large customers. This effort was focused on a number of
produce categories, including potatoes and apples, where market test activity
continued. Furthermore, additional investor relations costs were incurred,
including SEC-related and other legal work.

Research and Development Costs. Research and development costs increased
from $601,000 in 1995 to $939,000 in 1996, an increase of $338,000 or 56%. This
reflects the costs of third-party collaborative projects commenced during 1995,
as well as the costs associated with additional staff to support the Company's
scientific and technical objectives relating to sales efforts for prospective
large customers.

Depreciation and Amortization. Depreciation and amortization increased
from $574,000 in 1995 to $1,010,000 in 1996, an increase of $435,000 or 76%. The
most significant portion of this increase was due to a full year of depreciation
of fixed assets and amortization of goodwill arising from the acquisition of the
Runcorn Facility in September 1995, with the remainder due to capital
expenditures and the assets acquired in the Gainsborough Facility, Crystal and
Newcorn acquisitions during 1996.

Loss from Operations. Loss from operations increased from $3,042,000 in
1995 to $4,184,000 in 1996, an increase of $1,142,000 or 38%. The increase was
due to an increase in total operating expenses. However, total operating
expenses, excluding depreciation and amortization, decreased as a percentage of
sales from 100.0% in 1995 to 47.3% in 1996, reflecting the leveraging of the
Company's infrastructure through the expansion of its business.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Sales. Sales increased from $578,000 in 1994 to $3,240,000 in 1995, an
increase of $2,661,000 or 460%. Sales of processing aids increased from $346,000
in 1994 to $473,000 in 1995, an increase of $127,000 or 37%. Sales for the U.S.
packaging materials business increased from $233,000 in 1994 to $868,000 in
1995, an increase of $635,000 or 273%. Sales for the U.K. and European packaging
materials business increased from $0 in 1994 to $1,899,000 in 1995.

The U.S. packaging materials business results in 1995 reflect the inclusion
of a full year's sales from Respire, which the Company acquired in September
1994. This total compares with the 1994 total sales (pre and post acquisition)
of $494,000, an increase of 76%. The U.K. and European packaging materials
business of the Runcorn Facility was acquired on September 19, 1995.

Gross Profit. Gross profit increased from $191,000 in 1994 to $771,000 in
1995, an increase of $580,000 or 304%, but decreased as a percentage of sales
from 33% in 1994 to 24% in 1995.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $2,572,000 in 1994 to $2,638,000 in 1995,
an increase of $66,000 or 2.5%, despite the 460% increase in revenues.

Research and Development Costs. Research and development costs increased
from $522,000 in 1994 to $601,000 in 1995, an increase of $78,000 or 14.9%. This
reflects the costs of collaborative projects commenced in 1995.

Depreciation and Amortization. Depreciation and amortization increased
from $378,000 in 1994 to $574,000 in 1995, an increase of $197,000 or 52%. Of
this increase, $88,000 represents increased amortization of goodwill
attributable to the Company's acquisitions of the Runcorn Facility in September
1995 and Respire

24
<PAGE> 26

in September 1994. The remainder represents increased depreciation as a result
of 1994 and 1995 capital expenditures.

Loss from Operations. Loss from operations decreased from $3,281,000 in
1994 to $3,042,000 in 1995, a decrease of $239,000 or 7.3%. The decrease was due
to an increase in gross profit, partially offset by increases in total operating
expenses and depreciation and amortization due to the Company's acquisition of
the Runcorn Facility and Respire.

YEAR 2000 COMPLIANCE

The Company uses a significant number of computer software programs and
operating systems in its internal operations, including applications used in
manufacturing, product development, financial business systems and various
administrative functions. To the extent that these software applications contain
source code that is unable to appropriately interpret the upcoming calendar year
"2000," some level of modification or even possibly replacement of such source
code or applications will be necessary. The Company is currently in the process
of completing its identification of software applications that are not "Year
2000" compliant and expects to make appropriate responses to address any issue
identified. Given the information known at this time about the Company's
systems, coupled with the Company's ongoing, normal course-of-business efforts
to upgrade or replace business critical systems as necessary, it is currently
not anticipated that these "Year 2000" costs will have any material adverse
effect on the Company's business, financial condition or results of operations.
However, the Company is still in the preliminary stages of analyzing its
software applications and, to the extent they are not fully "Year 2000"
compliant, there can be no assurance that the costs necessary to update
software, or potential systems interruptions, would not have a material adverse
effect on the Company's business, financial condition or results of operations.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1997 the Company had $1,166,000 in cash and short term
investments, compared with $1,640,000 at December 31, 1996, a decrease of
$474,000. During the nine months ended September 30, 1997, $3,857,000 of cash
was used in operating activities and $777,000 of cash was used to purchase fixed
and intangible assets. The increase in cash used in operating activities of
$611,000 in the nine months ended September 30, 1997, as compared to the nine
months ended September 30, 1996, reflects the increased loss in 1997 offset by
lower amounts used in inventory and a smaller increase in accounts receivable
balances. Total financing activities were $4,145,000 during the nine month
period ended September 30, 1997, principally through the issuance of new stock.

Effective November 11, 1997, the Company raised gross proceeds of
$12,500,000 in the Series D Placement. The Company also issued warrants to
purchase 201,614 shares of Common Stock at a price of $20.16 per share, which,
if exercised, would provide the Company with gross proceeds of $4,065,000.

At September 30, 1997, the Company had warrants (excluding those issued in
connection with the Series D Placement) outstanding and exercisable to purchase
142,250 shares of common stock at a weighted average price of $5.68 per share,
which, if exercised, would provide the Company with gross proceeds of
approximately $807,000. In addition, at September 30, 1997, the Company had
1,427,500 options outstanding and exercisable to purchase shares of common stock
at a weighted average price of $6.90 per share, which, if exercised, would
provide the Company with gross proceeds of up to approximately $9,850,000. At
September 30, 1997, there were no material commitments for capital expenditures.

The Company has a line of credit in the amount of L300,000 ($495,000 at an
exchange rate of L1:$1.65) with the Bank of Scotland as part of its U.K. Credit
Facility, under which L23,000 ($38,000 at an exchange rate of L1:$1.65) was
outstanding as of December 31, 1997. The U.K. Credit Facility also contains a
term loan and a revolving facility, under which L710,000 ($1,172,000 at an
exchange rate of L1:$1.65) and L400,000 ($660,000 at an exchange rate of
L1:$1.65), respectively, were outstanding as of December 31, 1997. The Company
plans to repay the outstanding amounts under the term loans and the revolving
facility with the net proceeds of the Offering. While the term loan will be
terminated upon repayment, the Company currently anticipates that the revolving
facility, in the amount of L400,000 ($660,000 at an exchange rate of L1:$1.65),

25
<PAGE> 27

will remain available for future borrowings. The U.K. Credit Facility is secured
by the assets of the Company's U.K. subsidiaries. See "Use of Proceeds."

Historically, the Company's revenues have not been sufficient to fund the
development of the Company's business, and thus it has had to finance its
operating losses externally principally through equity financing. The Company's
management believes that cash flows from consolidated operations and existing
resources, together with the net proceeds of this Offering, will be sufficient
to meet the Company's operating needs for the next twelve months. The Company
may, however, be required to seek additional debt or equity financing to
implement its growth strategy.

26
<PAGE> 28

BUSINESS

OVERVIEW

The Company is a leading developer, manufacturer and marketer of
proprietary produce processing aids, packaging technologies, and scientific and
technical services, which are designed to maintain the quality and integrity of
fresh-cut produce. The Company markets products which are components of
integrated systems solutions, and which are specifically designed to address the
needs of a variety of fresh-cut produce categories. The foundation of the
Company's integrated system is its proprietary produce processing aid
technology, which inhibits the natural enzymatic degradation of fruits and
vegetables after they have been processed. Fresh-cut fruits and vegetables that
are treated with the Company's proprietary processing aids better maintain their
natural characteristics, such as color, texture, taste and smell. In certain
fresh-cut produce categories, such as fresh-cut sliced apples, fresh-cut
potatoes and fresh corn, the Company's processing aids allow increased
availability of these fresh-cut produce products in retail and food service
markets. The Company has concluded that the use of the Company's processing
aids, in accordance with the Company's recommended protocols, is generally
recognized as safe ("GRAS") under FDA regulations. The Company also uses a
variety of film technologies to create packaging specifically designed to
complement and enhance the effectiveness of the Company's processing aids by
allowing fruits and vegetables to "breathe" after they have been cut and
packaged. The Company markets these packaging products to produce growers and
processors. The Company also markets flexible packaging for uses in the snack
food, bakery and confectionery industries, and for other uses. In addition, the
Company's scientific and technical services, including food safety and
microbiological testing, provide fresh produce processors and wholesalers with
expertise in food safety, post-harvest horticulture and product formulation
techniques, and serve to support the cross-marketing efforts for the Company's
other products. The Company believes its products are safe and environmentally
"friendly" and, together with its scientific and technical services, add
significant value to the businesses of its customers.

INDUSTRY OVERVIEW

According to industry statistics, the U.S. fresh-cut produce industry
totaled $5.2 billion in 1994, and is expected to grow to $19 billion by 2000.
The Company believes that the market for fresh produce is evolving toward
ready-to-eat, pre-packaged, fresh-cut fruits and vegetables in response to
increasing consumer preferences for healthy foods, convenience and variety. In
this regard, according to industry estimates, U.S. sales of fruits and
vegetables sold in pre-cut, pre-packaged form are expected to grow from 8.9% in
1994 to 25.8% by 2000. Promotion by the U.S. government and others of
consumption of fresh fruits and vegetables in the government's "five-a-day"
program has made consumers more conscious of the benefits of including as many
as five servings of such foods every day as part of a balanced diet. In addition
to increasing consumer preferences for fresh-cut produce, the Company believes
that food service providers have shown an increase in demand for fresh-cut,
packaged produce to reduce the risk of bacterial contamination and enhance food
safety and improve produce consistency. Further, the FDA and the USDA are
working in cooperation with the agricultural community to develop safety
standards specifically applicable to growing and harvesting fruits and
vegetables as part of an initiative to enhance consumer confidence in the
consistent availability of safe produce. The Company believes that its
integrated systems solutions for fresh-cut produce uniquely position the Company
to address the evolving needs of the rapidly growing and developing fresh-cut
produce market and enable the development of a number of new fresh-cut produce
products. Development of new fresh-cut produce applications is further supported
by produce growers and processors who are seeking to increase revenues and
margins by establishing differentiated, brand-name, fresh-cut alternatives to
their existing commodity produce lines.

Furthermore, as consumer awareness of the potential health hazards of
untreated produce and traditional produce processing aids using sulfite-based
preservatives increases, the Company believes that the demand for fresh produce
processed without sulfites or other comparable preservatives will rise.
Moreover, for some types of produce, the trend toward pre-packaging has been
limited by the fact that many fruits and vegetables are subject to rapid
enzymatic degradation, a natural process that causes discoloration (such as
browning) and

27
<PAGE> 29

spoilage. For example, the flavor, integrity and quality of fresh-cut apples,
potatoes and corn deteriorate rapidly after harvest and these fruits and
vegetables, therefore, generally are not suitable for pre-packaging as fresh-cut
produce without the use of processing aids, such as those marketed by the
Company, or the use of alternative methods.

OPERATING STRATEGY

The Company's goal is to become a world-class provider of products and
scientific services designed to maintain the integrity of fresh produce. The
Company has developed the following operating strategies to support this goal:

Integrated Systems Solutions. The Company pursues a total systems approach
to fresh produce, marketing its processing aids, packaging and food safety and
scientific services to producers of pre-packaged, fresh-cut produce as part of
integrated systems solutions which are designed to maintain the quality and
integrity of fresh-cut produce. While the foundation of the Company's business
is its proprietary food processing aids, the Company's packaging capabilities
and technologies can be and are used to enhance the effectiveness of its
processing aids. In marketing its packaging technologies, the Company works
closely with its customers in an effort to determine the optimal packaging
characteristics for customers' products. As a result, the Company is in a
position to influence a customer's buying decision with respect to its packaging
needs. In addition, by offering packaging infrastructure in regions where
produce is grown, the Company enhances its sales prospects by accessing new
customers. The Company believes its food safety and scientific expertise helps
establish its credibility in the fresh-cut produce industry, and that its
scientific and technical services support the commercialization of the Company's
products and provide the Company with an expanding base of food technology
knowledge. The Company believes that its integrated systems solutions for
fresh-cut produce uniquely position the Company to address the evolving needs of
the rapidly growing and developing fresh-cut produce market and enable the
development of a number of new fresh-cut produce products.

Strategic Alliances. The Company intends to continue to form strategic
alliances with leading produce companies. The Company will also seek, where
appropriate and available, alliances with produce, packaging and scientific
services companies. In entering into such alliances, the Company will seek
allies which will enable it to influence the four key elements of
commercialization: (i) sourcing; (ii) processing; (iii) distribution; and (iv)
brand name identification. By requiring higher standards of quality in each of
these aspects of production, the Company seeks to ensure the integrity of
produce products that utilize the Company's technologies and services. During
1997, the Company formed strategic alliances with leading growers, processors
and brand-name marketers, including Potandon in the case of potatoes and
Farmington Fresh in the case of apples.

Commitment to Scientific Integrity. The Company believes the safety and
scientific integrity of its products are crucial to its long-term success. In
this regard, the Company carefully scrutinizes the selection of its strategic
allies. In addition, the Company has created research alliances with leading
institutes of produce and food research, as well as trade associations. Since
1994, the Company has a Cooperative Research and Development Agreement ("CRADA")
with the U.S. Department of Agriculture ("USDA")/Agricultural Research Services
in Philadelphia, Pennsylvania, principally regarding peeled potatoes. The
Company's collaborative projects also include a research grant from the
Washington Apple Commission for a study of enzymatic browning of apples; a
collaborative effort with Rutgers University for post-processing residue
analysis; a collaborative agreement with Penn State University for research on
the preservation of mushrooms; and a grant from the Ben Franklin Technology
Center, also for research on the preservation of mushrooms. The Company also
maintains a Scientific Advisory Board, consisting of experts in the field of
food science. Members of the Scientific Advisory Board meet regularly and
consult with the Company to provide advice on the design and development of the
Company's processing aid and packaging products and scientific and technical
services. See "-- Scientific Advisory Board."

28
<PAGE> 30

GROWTH STRATEGY

Capitalize on Existing Technology and Strategic Alliances. The Company
intends to increase sales and results of operations by capitalizing on its
proprietary processing aids and network of strategic alliances. The Company
currently is targeting four specific produce categories in which it has: (i) a
commercially available proprietary product; (ii) perceived consumer demand for
such a product; and (iii) strategic alliances with capabilities in either raw
material supply, processing, distribution, or brand recognition. Four current
markets where the Company believes significant growth opportunities exist are:

Fresh-Cut French Fries. Effective September 22, 1997, the Company
executed a ten-year exclusive trademark license agreement and strategic
alliance with Potandon, a Green Giant Fresh(R) brand licensee of the
Pillsbury Company, to market fresh-cut potato products, such as french
fries under the Green Giant Fresh(R) brand name to the food service market.
The Company intends to target the approximately 18% of food service (non
fast-food) providers that prepare their own fresh french fries or other
potato products, in-house. The Company believes that its fresh-cut potato
products enable restaurant operators to serve a fresh french fry product,
which is consistent in quality and of high food safety standards, while
reducing significant associated processing and storage costs.

Fresh-Cut Sweet Corn. The Company has entered into a majority-owned
joint venture with Underwood Farms and Twin Garden Farms, leading regional
growers and processors of fresh corn, to market processed fresh-cut sweet
corn on the cob utilizing the Company's processing aids and packaging
technology. The Company is seeking to develop a market for year-round,
nationally available branded fresh-cut corn products.

Fresh-Cut Apple Slices. The Company has entered into a three-year
license agreement under which it provides its "Apple Fresh(R)" processing
aids, packaging and scientific and technical services to Farmington Fresh,
a major grower and marketer of Fuji apples in California, for use in the
production of pre-packaged, fresh-cut Granny Smith and Fuji sliced apples
targeted at the retail market. Fresh-cut sliced apples are currently being
marketed only in a limited geographic region in California.

Fresh-Cut "Baby" Carrots. The Company sells its processing aids to
several processors of fresh-cut, packaged carrots. The Company believes
that its processing aids will enable processors of fresh-cut carrots to
distinguish their products from those of their competitors. The fresh-cut
carrot market is highly developed and the Company believes substantial
opportunities exist to expand sales of its processing aids to additional
fresh-cut carrot processors.

Introduce Proprietary Processing Aid Technology into New Produce
Categories. The Company has developed or is developing processing aids for
other vegetables and fruits, including artichokes, broccoli florets, baby leaf
lettuce, mushrooms, onions and parsnips. The Company believes that opportunities
may exist in each of these produce categories for a pre-packaged, fresh-cut
branded product.

Develop Cross-Marketing Opportunities. The Company believes that its
proprietary processing aids, packaging technologies and scientific and technical
services represent complementary components of the Company's integrated systems
solutions for fresh-cut produce. As a result, the Company believes that
significant cross-marketing opportunities exist for its products and services.

Expand International Business. The Company believes that the trends
driving the growth of the fresh-cut produce market in the U.S. are more mature
in the European food markets, where there is a heightened sensitivity to food
safety and freshness. Currently, the Company's European revenues are principally
generated through its specialty packaging business in the U.K., which are used
primarily in the packaging of snack food, produce and bakery products. The
Company believes its proprietary perforating technology provides it with a
competitive advantage in servicing the needs of produce processors. In December
1997, the Company completed the acquisition of Fabbri, which is located in the
Valencia region of Spain, one of the principal agricultural growing areas in
Southern Europe. Fabbri provides specialty packaging products to the Southern
European produce industry. The Company believes its current specialty packaging
business and its relationships with European produce processors present
opportunities to introduce its processing aid technology in

29
<PAGE> 31

selected produce categories. The Company believes additional opportunities exist
to market its technology and products throughout the world.

Pursue Strategic Acquisitions. The Company seeks to make opportunistic
acquisitions of companies that enable the Company to increase sales of its
products and services. In pursuing such acquisitions, the Company seeks to (i)
gain immediate access to the acquired company's customer base, (ii) gain access
to large produce processing companies, and (iii) cross-market the Company's
proprietary processing aids, packaging technologies, and scientific and
technical services.

PRODUCTS AND SERVICES

The Company's products and services fall into three major classifications:
processing aids, packaging technologies and scientific and technical services,
which are complementary components of the Company's integrated systems solutions
for fresh-cut produce.

Processing Aids. The Company develops, manufactures and markets
proprietary and patented processing aids, designed to inhibit the enzymatic
degradation that causes fruits and vegetables to begin to deteriorate
immediately after processing, thereby better maintaining their natural
characteristics, such as color, texture, taste and smell. The Company believes
its processing aids provide it with competitive advantages over other existing
fresh-cut produce processing technologies.

According to FDA regulations, a processing aid is a substance used as a
manufacturing aid to enhance the appeal or utility of a food. FDA regulations do
not require packaged produce to identify certain processing aids used in
processing the products. The Company's processing aids are designed to be
applied to produce during post-harvest processing. The Company's processing aids
are then removed from the produce prior to packaging, although insignificant
amounts may remain on the produce. As a result, the Company believes that
produce treated with the Company's processing aids does not require labeling
referring to those processing aids under FDA regulations. Based on advice from
FDA counsel and on assessment of relevant scientific literature by the Company
and by third parties, the Company has concluded that the use of the Company's
processing aids in accordance with the Company's protocols is GRAS under FDA
regulations.

The Company formulates processing aids for certain varieties of produce in
accordance with its detailed scientific protocols. The Company believes that its
Apple Fresh(R), Corn Fresh(R) and Potato Fresh(R) processing aids have the
potential to create new markets for fresh-cut apple slices, fresh-cut sweet corn
and fresh-cut potato products because effective, non-sulfite based processing
aids have not previously been commercially available. For example, Apple
Fresh(R), when used in conjunction with the Company's packaging technology, can
be used to inhibit browning and other enzymatic degradation in certain varieties
of fresh apple slices for up to 14 days after processing. Corn Fresh(R) and
Potato Fresh(R) are designed to provide similar pre-packaged distribution
capability for fresh-cut corn on the cob and fresh-cut potato products. In
addition to Apple Fresh(R), Potato Fresh(R) and Corn Fresh(R), the Company
currently markets its Carrot Fresh(R) processing aid for carrots. The Company is
developing processing aids for artichokes, broccoli florets, baby leaf lettuce,
mushrooms, onions and parsnips. Because several variables influence the efficacy
of the Company's processing aids, the Company must work closely with each
customer and potential customer, using its scientific and technical services for
product formulation and extensive on-site testing, as well as assisting in
designing packaging to optimize the effectiveness of the processing aid for the
particular type of produce.

Packaging. The Company's produce packaging business involves perforating,
converting and printing flexible packaging, using technologies and processes,
some of which are proprietary to the Company. The Company also designs packaging
films the structure of which allows gas and moisture transmission at different
rates, thereby maintaining a balance that enhances the effectiveness of the
Company's processing aids. As with processing aids, in marketing its packaging
technology the Company works closely with each customer and potential customer,
using its scientific and technical services to determine optimal packaging
characteristics, such as the type of film and extent of perforation, including
the size, shape and number of holes, of the packaging, based on the respiration
rate of the particular type of produce.

30
<PAGE> 32

As one of the leading perforators of packaging film, the Company is
targeting specialty and, in some instances, new markets. Although historically
the films used in the produce industry have not been perforated, perforating has
been shown to be beneficial to the packaging of certain varieties of fresh-cut
produce, which by their nature continue to consume oxygen and produce carbon
dioxide and moisture after being cut and packaged. Proper perforation of the
packaging materials allows the produce to "breathe," thereby permitting the
packaging to work with the processing aid to inhibit the process of enzymatic
degradation. The Company's microperforation technology is proprietary. The
Company's proprietary production capability allows the Company to produce
perforated films of high quality and great consistency in a cost-effective
manner, which provide control over moisture and oxygen transmission rates, among
other performance characteristics. The Company believes its broad range of
capabilities to produce perforated films provides it with a competitive
advantage. The Company has an exclusive agreement with DuPont, whereby DuPont
purchases its entire requirement for flame perforation services for its Mylar(R)
film from the Company.

Another aspect of the Company's packaging business is the conversion of
packaging film into bags designed for its customer's food packaging needs for
applications such as produce and bakery. The Company also has food-grade
standard printing capabilities in the U.K., utilizing three six-color presses.
The Company's packaging business provides additional market presence in certain
geographic regions that the Company believes can enhance sales prospects for the
Company's processing aids and provide cross-marketing opportunities. In the
U.S., the Company subcontracts its printing and converting requirements.

In addition to its produce packaging capabilities, the Company provides
packaging to the snack food, bakery and confectionery industries, and for other
uses.

Scientific and Technical Services. The Company provides scientific and
technical services in the areas of post-harvest horticulture, the forensic
analysis of food contaminants and food safety, which are areas of critical
importance for processors of fresh produce. The Company's post-harvest
horticulture services are designed to help processors understand the impact of
harvesting and handling methods on the flavor, texture and nutritional value of
produce. In providing these services, the Company focuses on solving particular
problems unique to certain kinds and varieties of fruits and vegetables in an
effort to maintain the quality and integrity of fresh-cut produce and reduce
post-harvest loss. The Company's forensic testing services involve the analysis
of food adulteration by foreign or unlabelled substances or contaminants. The
Company's food safety services, which are intended to reduce or eliminate
pathogens known to cause serious illness in humans, include research,
microbiological testing, production monitoring, and the implementation of Total
Quality Management and Hazard Analysis and Critical Control Point ("HACCP")
programs at its customers' facilities. The FDA recently announced its intention
to introduce a new rule requiring HACCP programs, which programs are designed to
prevent microbial and other safety hazards in food products through appropriate
controls during production and processing, at certain juice processing plants.
The Company believes that HACCP programs ultimately will become standard in the
produce processing industry in response to emerging concerns about the microbial
safety of fresh fruits and vegetables.

The Company's scientific and technical services team consists of five
Ph.D.'s, four senior scientists, and additional support technicians, with
expertise in the areas of microbiology, food science, post-harvest plant
physiology and plant pathology. The Company maintains two laboratories dedicated
to microbiological testing, as well as an applications laboratory used as part
of the Company's sales and marketing program. The Company also maintains a
laboratory at the USDA's Eastern Regional Research Center through a USDA CRADA.
As part of its sales force, the Company also employs process engineers and a
chemical engineer with expertise in applying the Company's scientific and
technical expertise to a full-scale production facility.

The Company believes its scientific and technical expertise enhances its
credibility in marketing its processing aids and packaging materials to
fresh-cut produce processors. Accordingly, the majority of the Company's
scientific and technical services are provided to support marketing efforts for
the Company's other products, as an integral component of the Company's
integrated systems solutions for fresh-cut produce. The Company also provides
microbiological services on a contract basis for some customers, in what the
Company believes is a growing market for food safety-based testing and
consulting services. In addition to providing incremental revenue, these
consulting relationships may provide cross-marketing opportunities for the
Company's products.

31
<PAGE> 33

To increase its scientific resources and expertise, the Company has entered
into research alliances with leading institutes of produce and food research, as
well as trade associations. These include a CRADA with the USDA/Agricultural
Research Services in Philadelphia, Pennsylvania; a research grant from the
Washington Apple Commission for a study of enzymatic browning of apples; a
collaborative effort with Rutgers University for residue analysis; a
collaborative agreement with Penn State University for research on the
presentation of mushrooms; and a grant from the Ben Franklin Technology Center,
also for research on the preservation of mushrooms. As an additional technical
resource, the Company maintains a Scientific Advisory Board, consisting of
experts in the field of food science, the members of which are available for
consulting on an as-needed basis. See "-- Scientific Advisory Board."

MARKETS

The Company's products are used in the processing of fresh-cut fruits and
vegetables for both the retail and food service markets. By helping to maintain
the quality and integrity of fresh-cut produce, the Company can meet the needs
of its customers who are seeking to offer differentiated, brand-name, nationally
available fresh-cut alternatives to commodity produce lines. In certain produce
categories, such as fresh-cut sweet corn on the cob, the Company's processing
aids have the potential to develop a national market for its customers, who have
previously been limited to regional markets. The Company's packaging products
are used in the fresh-cut produce industry in the U.S. and by leading companies
in the U.K. and Europe in the fresh-cut produce, bakery, snack food and
confectionery industries, and for other uses. The scientific and technical
services offered by the Company provide companies in the produce industry,
especially those involved with fresh-cut and minimally processed produce, with
analysis, protocols and plans relating to food safety and quality assurance
programs, including microbiological testing, and provides additional internal
technical support in developing the Company's processing aid and packaging
protocols. The Company's products are increasingly being marketed in concert as
integrated systems solutions comprised of products, processes and scientific and
technical services to maintain the quality and integrity of fresh-cut produce.

The Company's penetration to date of the various markets it is seeking to
develop has been limited. The Company's Respire(R) packaging is used on a number
of produce categories, including apples and potatoes. The Company has been
developing relationships with processors and other companies in connection with
the use of the Company's processing aid technology and related protocols in
various fruit and vegetable categories.

The Company believes that demand for fresh-cut produce is being driven at
the retail level by consumer preferences for healthy foods, convenience and
variety. Similarly, demand for fresh-cut produce by food service providers is
increasingly driven by the need to be able to deliver a product which is
consistent in quality and of high food safety standards while reducing
significant processing and storage costs associated with fresh-cut produce.
Development of new fresh-cut produce applications is further supported by
produce growers and processors who are seeking to increase revenues and margins
by establishing differentiated, brand-name, fresh-cut alternatives to commodity
produce lines.

SALES AND PRODUCT COMMERCIALIZATION PROCESS

In developing its processing aid products, the Company first seeks to
identify the physiological and biochemical issues associated with a particular
fresh-cut fruit or vegetable (e.g., white blush on carrots) and to determine the
cause of any issue so identified. Then the Company seeks to develop an
appropriate solution in a laboratory setting when it perceives a significant
market opportunity may exist.

The Company has compiled an extensive database of processors, their
processing capabilities and the varieties of fruits and vegetables they process
and, therefore, can approach potential customers from a position of extensive
knowledge and experience with a proposed produce solution. After initial
discussions, the Company initiates a detailed review and testing process to
customize the application of the Company's technologies to the potential
customer's processing system. The testing process involves both application of
the Company's processing aids and, where appropriate, other scientific and
technical support services, such as HACCP and the design of tailored packaging
solutions. Once such development is completed, the product moves through
successive steps of an increasingly sophisticated testing program, during which
the Company identifies and proposes any processing changes that may be needed
and which ultimately leads to a product

32
<PAGE> 34

decision. The Company also works with the customer to develop specific protocols
that should be applied. See "Risk Factors -- Extended Sales and Product
Commercialization Process."

With respect to its packaging business, the Company plans to meet the
growing needs of existing customers, develop new products that can be sold to
existing customers, and sell existing and new products to new customers as such
opportunities are identified. The experience accumulated by the Company in all
aspects of the produce industry, together with its scientific expertise, is
helping to facilitate an integrated systems solution approach to the packaging
needs of the processor.

In the area of scientific and technical services, the Company has an
existing customer base that it has built up over time. Since the acquisition of
CMC, the Company has been actively marketing an increased range of available
services, with a specific emphasis on enhancing cross-marketing opportunities.

The Company has been developing relationships with produce processors and
other companies in an effort to penetrate the fresh-cut produce market. The
Company believes that its recent packaging acquisitions in regions where produce
is grown will serve as a platform to enhance the Company's ability to
cross-market its other products and services to other produce processors and
growers in those regions. Similarly, with sales of processing aids, the Company
has an opportunity to sell its complementary packaging. The Company also plans
to make proposals for product development or food safety programs to other
existing customers of its processing aids and packaging.

Due to the extended nature of the development, testing and sales process
for processing aids, the Company has experienced no significant backlog of
orders to date for these products and, based on the relatively small incremental
cost and time frame required to increase product output, the Company does not
believe that any backlog measurement is material. Similarly, the Company has not
experienced a significant backlog of orders for its packaging materials.

SOURCES OF SUPPLY

The Company purchases its U.S. processing aid ingredient requirements from
a number of suppliers, some of which use sources outside the U.S. Requirements
for certain raw materials used in the Company's processing aids are obtained
pursuant to a contract with Jungbunzlauer, Inc., a U.S. subsidiary of a Swiss-
based company which is a former Company shareholder. These raw materials
transactions are undertaken on a commercial, arm's-length basis. The mixing of
the Company's processing aids is currently conducted under a subcontract with a
third party. The Company believes that the mixing of its processing aids could
be performed in-house or by numerous other parties on an out-sourcing basis
without incurring substantial additional expense.

Potatoes used in processing are provided under a long-term supply agreement
with Potandon. This long-term agreement represents a source of supply that might
be difficult for the Company to replace without incurring potentially
substantial additional expense. Corn is supplied under a number of fixed-price
supply agreements, principally with the parties to the Newcorn strategic
alliance.

The Company's U.S. packaging business utilizes a number of subcontractors
for film manufacturing, conversion and printing. The U.K. packaging business
sources its film and other requirements from a number of suppliers, most of
which are based in the U.K. and Europe. The U.K. packaging business performs its
own conversion and printing. The Company believes that it is not dependent on a
single or a few suppliers or subcontractors for its packaging businesses.

INDUSTRY AND GEOGRAPHIC AREAS

Of the Company's two primary product lines, processing aids are sold
primarily in the U.S. with smaller amounts also sold in Canada, while packaging
materials are marketed in North America, the U.K. and, to a lesser extent,
Continental Europe. Since the acquisition of BPS in later 1995 there has been an
increase in marketing activity, both in the Company's processing aid and
applications technology in Europe. In addition, proprietary perforating
technologies developed by BPS have been introduced into the U.S. market. See
Note 17 to Consolidated Financial Statements.

33
<PAGE> 35

CUSTOMER CONCENTRATION

During the nine months ended September 30, 1997, two customers, Pepsico and
Geest, accounted for 32% and 6%, respectively, of the Company's sales. During
1996, Pepsico accounted or 13% of the Company's sales. During 1995, no customer
accounted for more than 10% of the Company's sales.

COMPETITION

Although many other companies provide packaging or microbiological testing
and, to a lesser extent, processing aids for fresh produce, the Company is
unaware of any competitor which provides each of these as components of
integrated systems solutions for processing fresh-cut produce. The Company's
direct, indirect and potential competitors include producers of sulfites and
"sulfite substitutes," as well as other providers of alternative preservation
and packaging technologies, including those employing temperature, gas and
humidity control. The Company believes its products may provide technological
advantages over competing technologies and processes, particularly in terms of
their safety and effectiveness. Despite the potential advantages of the
Company's products and technologies, however, many competitors and potential
competitors, particularly in the market for produce packaging, are larger, have
greater financial, marketing, sales, distribution and technological resources,
and enjoy greater name recognition than the Company. Certain of these companies
may also enjoy long-standing relationships with processors of fresh produce.
Accordingly, there can be no assurance that the Company will be able to compete
effectively against such competitors.

The Company believes the primary competitive factors in the market for
fresh-cut produce technologies include safety and consistency,
cost-effectiveness and ease of use, availability of technical service and
support and product innovation.

PATENTS, PROPRIETARY INFORMATION AND TRADEMARKS

The Company currently has two U.S. patents, four U.S. patents pending and
numerous others licensed to the Company or under review for application. The
U.S. patents for the Company's "Potato Fresh(R)" and "Carrot Fresh(R)" products
were granted on June 26, 1990 and September 13, 1994, respectively. Patents are
pending for the Company's processing aids for broccoli and apples. Patents that
had been granted, or applications that were pending as of June 8, 1995 run for
the longer of 17 years from the date of formal grant or 20 years from the date
of filing. For all subsequent filings, U.S. patents (once granted) run for 20
years from the date of formal application. The Company also has various
registered U.S. trademarks, including Respire(R), and its processing aid names,
such as Potato Fresh(R), and five trademark applications. The Company will also
license other trademarks which it believes will add value to a proposed product,
as evidenced by its license of the "Green Giant Fresh(R)" brand for fresh-cut
potato products. Furthermore, the Company has two patents and 23 patent
applications pending outside the U.S. for its main technology, with others under
review. To help protect the Company's technology and proprietary information,
the Company has confidentiality agreements with its customers, as well as
internal non-disclosure agreements and safeguards, although there can be no
assurance that these safeguards will be adequate to fully protect the Company.
The importance the Company attaches to its patent position is reflected in the
significant efforts made on research and development (see Consolidated Financial
Statements and the notes thereto). In addition to its patent protection, the
Company believes it has a competitive advantage through its proprietary
knowledge of the applications for its technology.

Green Giant Fresh(R) is a registered trademark of the Pillsbury Company.
This Prospectus contains trademarks and tradenames of companies other than the
Company.

REGULATORY REQUIREMENTS

Based on advice from FDA counsel and on assessment of relevant scientific
literature by the Company and by third parties, the Company has concluded that
the use of the Company's processing aids in accordance with the Company's
recommended protocols is GRAS under FDA regulations, there is a risk that new
scientific information about an ingredient could change its GRAS status, that
the FDA could revise its regulations governing the GRAS status of the
ingredients, or that the FDA might take the position that an ingredient is not
GRAS under the current regulations. Any such change could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company employs a firm of Washington-based FDA lawyers to advise
the Company on the effect of FDA regulations on the Company's

34
<PAGE> 36

operations, together with any planned or potential changes in government
attitude and legislation. The Company also consults with advisors outside the
U.S. concerning foreign regulatory issues. Compliance with existing FDA
regulations has not been a material burden on the Company's operations to date,
although there can be no assurance that the regulatory requirements will not
change and increase the burden to the Company.

The Company's packaging operations are subject to federal, state and local
U.S., U.K. and other European environmental laws and regulations that impose
limitations on the generation, storage, transport, disposal and emission of
various substances into the environment, including laws that restrict the
discharge of pollutants into the air and water and establish standards for the
treatment, storage and disposal of solid and hazardous wastes. The Company is
subject to U.S. and foreign laws and regulations regarding the use, storage,
transport and disposal of inks used with its packaging products. There can be no
assurance that there will not be an accidental contamination, disposal or injury
from the use, storage, transport or disposal of inks used in the Company's
packaging business. Additionally, the Company's use of plastic film in its
packaging operations may subject it, in certain jurisdictions, to laws and
regulations designed to reduce solid wastes by requiring, among other things,
plastics to be degradable in landfills, minimum levels of recycled content,
various recycling requirements, disposal fees and limits on the use of plastic
products. In addition, various consumer and special interest groups have lobbied
from time to time for the implementation of additional environmental protection
measures. The Company may be required to make capital expenditures in response
to changing compliance standards and environmental regulations. Furthermore,
unknown contamination of sites currently or formerly owned or operated by the
Company (including contamination caused by prior owners and operators of such
sites) and off-site disposal of hazardous substances and wastes may give rise to
additional compliance costs. There can be no assurance that the Company will not
incur liabilities for environmental matters in the future, including those
resulting from changes in environmental regulations, that may have a material
adverse effect on the Company's business, financial condition and results of
operations.

EMPLOYMENT

As of December 31, 1997, the Company had 191 employees providing services
in the U.S. and Europe, of which 19 were engaged in sales and marketing, 121 in
production, 16 in technical services and research and 35 in management and
administration. Some of the managerial employees are employed pursuant to
employment agreements, and the Company maintains key man insurance on Mr. Devine
in the amount of $1,000,000. See "Management -- Employment and Consulting
Contracts." The Company expects to recruit additional personnel as and when
required.

PROPERTIES

The Company believes that its current facilities are adequate for its
present needs and that it would not have any difficulty in obtaining additional
or alternate space at prevailing rates if necessary. The Company's current
facilities are as follows:

<TABLE>
<CAPTION>
SQUARE
LOCATION FEET OWNED/LEASED (EXPIRATION) CHARACTER OF USE
- ---------------------------- -------- ------------------------- ------------------------------
<S> <C> <C> <C>
Philadelphia, PA............ 6,600 Leased (1/2002) Principal administrative
office
Fresno, CA.................. 2,700 Leased (2/1999) Applications laboratory
Oswego, IL.................. 16,000 Leased (6/1999) Packaging operations
Gainsborough, England....... 19,500 Leased (10/2004) Printing facility
Runcorn, England............ 17,478 Owned Perforating and converting
facilities
Runcorn, England............ 5,085 Leased (9/2007) Perforating and converting
facilities
Runcorn, England............ 8,500 Leased (12/2000) Perforating and converting
facilities
Runcorn, England............ 4,000 Month-to-month Vacated 1/1998
Runcorn, England............ 5,500 Month-to-month Vacated 1/1998
Somis, CA(a)................ 74,248 Leased (8/2002) Fresh-cut corn processing
facility
Worcester, MA............... 1,400 Leased (12/1998) Food safety and
microbiological testing
laboratory and office space
Valencia, Spain............. 142,106 Owned Packaging operations
</TABLE>

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

(a) Property is leased by Newcorn and the lease is guaranteed by the Company.
Newcorn will occupy approximately 25% of the facility. The Company intends
to sublease the remaining space.

35
<PAGE> 37

The Company also occupies additional space under agreements with third
parties, primarily in connection with research and development arrangements and
processing activities.

LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Company is a
party or to which any of its property is subject. None of the Company's officers
or directors are involved in any legal proceedings relating to the Company. To
the best of the Company's knowledge, there are no proceedings being contemplated
by governmental authorities.

SCIENTIFIC ADVISORY BOARD

The Company has arrangements with professionals in the field of food
science, who serve as the Company's Scientific Advisory Board. Members are
chosen for their expertise in areas that are important to the development of the
Company's products. The Company's advisors devote only a small portion of their
time to the affairs of the Company and have commitments to, or consulting or
advisory contracts with, other institutions which may conflict or compete with
their obligations to the Company. Members of the Scientific Advisory Board
consult with the Company to provide advice on the design and development of the
Company's products. With the exception of Dr. Romig, none of the advisors is a
Company employee. The Company requires each of its scientific advisors to
execute a confidentiality agreement upon the commencement of his or her
relationship with the Company. The agreements generally provide that all
confidential information made known to the individual during the term of the
relationship shall be the exclusive property of the Company and shall be kept
confidential and not disclosed to third parties except in specified
circumstances. Members of the Scientific Advisory Board receive reimbursement of
travel expenses for Company business. Certain members of the Scientific Advisory
Board or entities with which they are associated perform services for the
Company in addition to their Scientific Advisory Board duties, for which they
may be separately compensated. The Company's current Advisory Board consists of
the following persons:

Dr. Margaret M. Barth. Director, Research and Development, Redi-Cut Foods,
Inc., Chicago, Illinois. Dr. Barth has conducted research on the effect of
modified atmosphere packaging for the retention of vitamin and market quality
characteristics of intact and fresh-cut vegetables and on novel approaches to
the retention of sensory and nutritional properties of fresh-cut vegetables.

Dr. Robert B. Beelman. Professor, Department of Food Science, The
Pennsylvania State University. Dr. Beelman's principal research concentration is
in pre- and post-harvest factors influencing the quality of mushrooms.

Dr. Larry R. Beuchat. Research Professor, Center for Food Safety,
University of Georgia. Dr. Beuchat has published extensively in the area of
microbiology and is on the Editorial Board for Food Microbiology, the
International Journal of Food Microbiology, and the Journal of Food Mycology. He
is also an associate editor for the Journal of Food Science.

Dr. Joe E. Cherry. Professor, Department of Botany and Microbiology,
Auburn University. Dr. Cherry's current research focuses on plant physiology,
biochemistry, and molecular biology in relation to environmental stress biology,
particularly thermotolerance in plants. Dr. Cherry was the founder of Agra
Research, Inc., where he developed the Company's processing aids. The Company
completed the acquisition of Agra Research, Inc. in early 1993.

Dr. William R. Romig. Vice President, Research and Development, EPL
Technologies, Inc.

Dr. Mikal E. Saltveit. Professor, Department of Vegetable Crops,
University of California, Davis. Dr. Saltveit's research focus is on the
physiological effects of abiotic stresses (e.g., heat, chilling, low oxygen,
elevated carbon dioxide, and wounding) on plant tissue.

Dr. Gerald Sapers. Supervisory Research Food Technologist and Lead
Scientist, USDA/ERRC, Philadelphia. Dr. Sapers has expertise in various areas of
food chemistry, including the inhibition of browning reactions in food systems.
His research emphasis is on minimally processed juices, the preservation of
sensory characteristics in fresh-cut fruits and vegetables, and microbiology of
minimally processed fruits and vegetables. Dr. Sapers is the Principal
Investigator on a CRADA with the Company.

36
<PAGE> 38

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to each of
the directors and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY AND AFFILIATES
- ----------------------------------- --- ----------------------------------------------------
<S> <C> <C>
Paul L. Devine..................... 43 Chairman of the Board of Directors, President, Chief
Executive Officer
Timothy B. Owen.................... 38 Secretary and Treasurer
Derrick W. Lyon.................... 54 Chief Executive Officer of EPL Technologies (Europe)
Limited
Dr. William R. Romig............... 51 Senior Vice President -- Science and Technology
Karen A. Penichter................. 44 Vice President -- Sales
Antony E. Kendall.................. 54 Chief Executive Officer of EPL Flexible Packaging
Ltd.
Virginia N. Finnerty............... 37 Chief Operating Officer of IPS Produce, Inc.
Jose Saenz de Santa Maria.......... 42 Managing Director of Fabbri Artes Graficas Valencia
SA
Robert D. Mattei(1)(2)............. 58 Director
Ronald W. Cantwell(2)(3)........... 53 Director
</TABLE>

- ---------------
(1) Member of Compensation Committee

(2) Member of Audit Committee

(3) Mr. Cantwell has informed the Company that he intends to resign from the
Board of Directors following completion of the Offering or at such later
time as his replacement has been identified and appointed. The Company is
currently interviewing potential candidates for additional directors, but no
particular individual has yet been identified.

Paul L. Devine. Mr. Devine was appointed Chairman and Chief Executive
Officer of the Company in March 1992. From 1989 to 1992, Mr. Devine was involved
as a business consultant in the identification and targeting of acquisitions for
various public companies. During this time, he also served as a director and
chief executive officer of various companies, including three U.K. subsidiaries
of Abbey Home Healthcare, Inc., a U.S. public health care group. Prior to this,
he was the Chief Executive of Leisure Time International, plc from 1986 to 1989.
He is a graduate of London University and holds Bachelors and Masters degrees in
curriculum research. Throughout his business career, he has been intimately
involved in the design and implementation of new product strategies, both in
financial services and health/hygiene services.

Timothy B. Owen. Mr. Owen was appointed Secretary and Treasurer in October
1996, having served as European Financial Controller of the Company since 1995.
From 1992 until 1995, Mr. Owen performed financial and accounting services for
the Company as an independent consultant. From 1990 to 1993, Mr. Owen served as
chief financial officer and secretary of various companies, including three U.K.
subsidiaries of Abbey Home Healthcare, Inc. Prior to this, from 1986 to 1990, he
was a financial controller for The Foseco Group Plc, holding both corporate and
operational positions. Mr. Owen qualified as a chartered accountant with Touche
Ross & Co. (now Deloitte & Touche) in 1985. He is a graduate of Brunel
University, and holds an Honors degree in economics.

Derrick W. Lyon. Mr. Lyon was appointed Chief Executive Officer of EPL
Technologies (Europe) Limited in August 1996. Mr. Lyon previously served as
Chief Operating Officer of Bakery Packaging Services Limited ("BPS") (now EPL
Flexible Packaging Ltd.) following its acquisition by the Company in September
1995 until December 1996. From 1981 to 1995, Mr. Lyon was Managing Director and
a founding shareholder of BPS. Prior to this, Mr. Lyon held senior management
positions within Bernard Wardle & Co., Smurfit Limited, and W.R. Grace, where he
had over 25 years experience in the printing and packaging industries. He holds
a degree in mechanical engineering from City University, London, and Bachelors
and Masters degrees in economics from St. John's College, Cambridge.

37
<PAGE> 39

Dr. William R. Romig. Dr. Romig was appointed Vice President of Research
and Development of the Company in September of 1994, and, as of January 1, 1998,
serves as Senior Vice President of Science and Technology. From 1988 until 1994,
Dr. Romig was first Senior Director of Vegetable Genetics and then Senior
Director of Business Development and Director of Product Development for
FreshWorld, a joint venture between DNA Plant Technology Corporation, a public
company, and DuPont. Prior to 1988, he worked for General Foods Corporation
(Kraft) eventually attaining the highest technical position of Principal
Scientist. Dr. Romig received his B.S. in Plant Pathology from Cornell
University and his Ph.D. from the University of Delaware. He has held positions
of Adjunct Professor at several universities and has lectured and published in
the area of fresh-cut fruits and vegetables. Dr. Romig is also Chairman of the
Company's Scientific Advisory Board.

Karen A. Penichter. Ms. Penichter joined the Company as Vice
President-Sales in March 1996. From 1986 until 1996, Ms. Penichter worked for
FMC Corporation -- Food Ingredients Division in several sales management
positions until attaining the position of Director of Sales in 1993. She worked
as a Sales Representative and then Sales Manager for SCM Corporation -- Durkee
Foods Division until 1986. Ms. Penichter was employed by Thomas J. Lipton
Company as a Food Technologist from 1978-1982. Ms. Penichter holds a BA in
Biology from SUNY Binghamton and an M.S. in Food Technology from Rutgers
University.

Antony P. Kendall. Mr. Kendall joined the Company in August 1996 as chief
executive of BPS (now EPL Flexible Packaging Ltd. From 1970 to 1996, Mr. Kendall
worked for the UCB group of companies in various senior management positions.
Most recently he was Managing Director of UCB Flexible Ltd., responsible for
marketing its specialty packaging products in the U.K. and for Pepsico European
contracts. He holds a B.S. degree in Mechanical Engineering from the University
of London.

Virginia N. Finnerty. Ms. Finnerty has served as Chief Operating Officer
of IPS Produce, Inc., the subsidiary through which the Company conducts its
activities related to fresh-cut potatoes, since June 1997. From June 1994 to
June 1997, Ms. Finnerty served as the Company's Director of Business
Development. From December 1993 to June 1994, Ms. Finnerty worked in sales and
marketing development for the Greater Philadelphia Chamber of Commerce. From
1990 to 1993, Ms. Finnerty served as a sales and marketing manager for Osterman
Foods. Ms. Finnerty holds a BFA and an Education Certification from Temple
University and an MBA in marketing from St. Joseph's University.

Jose Saenz de Santa Maria. Mr. Saenz has served as Managing Director of
Fabbri since its acquisition by the Company in December 1997. Mr. Saenz joined
the Company in July 1997 as an independent consultant, and was responsible for
conducting the Company's on-site due diligence with respect to the Fabbri
Acquisition. From January 1994 to July 1997 Mr. Saenz served as Managing
Director of AMCOR Flexibles Espano. Prior to this, Mr. Saenz served as a senior
executive of Ramondine, Inc., a specialty packaging company, from August 1987 to
December 1993. He is a law graduate of the University of Madrid and holds
Masters degrees in Commercial Management and Marketing from CESEM Business
School (Madrid).

Robert D. Mattei. Mr. Mattei is an investor and entrepreneur. Mr. Mattei
has been self-employed in various aspects of the food service industry for more
than 20 years. As a restaurateur, Mr. Mattei has developed, operated and sold
many successful operations. Mr. Mattei currently owns three restaurants, and
acts as an industry consultant primarily involved in the development of
restaurant concepts. Mr. Mattei has been a member of the Board of Directors of
the Company since February 1988 and was Secretary of the Company from February
1988 to March 1993.

Ronald W. Cantwell. Mr. Cantwell currently serves as President of Trilon
and has done so since its inception in June 1995. Mr. Cantwell also serves as
President of VC Holdings, Inc., the sole manager of Trilon. Prior to this, Mr.
Cantwell served as President of The Catalyst Group, Inc., where he executed a
variety of merchant banking activities and developed and directed the strategic
plan for a diverse mix of utility assets. In addition, he was involved in
advising numerous mergers, acquisitions and restructuring matters for The Edper
Group, the principal investor in The Catalyst Group. Prior to joining The
Catalyst Group, Mr. Cantwell spent nineteen years in the practice of public
accounting, most recently with Ernst & Young, where he was a tax partner and
headed the Dallas-based Mergers and Acquisitions practice.

38
<PAGE> 40

The Company is currently interviewing potential candidates to fill the seat
to be vacated by Mr. Cantwell upon completion of the Offering or at such later
time as his replacement has been identified and appointed. No particular
individual has yet been identified.

EXECUTIVE COMPENSATION

The following table sets forth the aggregate cash compensation paid by the
Company for the year ended December 31, 1997 for services rendered in all
capacities to the Chief Executive Officer and each of the other four most highly
compensated executive officers (the "Named Executive Officers").

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------------------
AWARDS
ANNUAL COMPENSATION --------------------- PAYOUTS
--------------------------------------- RESTRICTED ----------------------
OTHER STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- -------------------------- ---- ------- ------- ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul L. Devine............ 1997 275,000 225,000 0 100,000 0 0
Chairman, President 1996 225,000 210,978 0 0 250,000 0 0
and Chief Executive 1995 56,250 100,000 120,000 0 100,000 0 0
Officer
Derrick W. Lyon........... 1997 0 0 148,500(1) 0 0 0 0
CEO -- EPL 1996 0 0 184,000(1) 0 50,000 0 0
Technologies 1995 0 0 36,000(1) 0 50,000 0 0
(Europe) Ltd
Antony Kendall............ 1997 125,470 8,200 13,089(2) 0 25,000 0 0
Chief Executive 1996 47,839 0 2,470(2) 0 50,000 0 0
EPL Flexible 1995 0 0 0 0 0 0 0
Packaging Ltd
Timothy B. Owen........... 1997 105,000 40,000 0 0 50,000 0 0
Treasurer and 1996 90,000 0 0 0 57,500 0 0
Secretary 1995 60,000 0 30,000 0 62,500 0 0
William R. Romig.......... 1997 105,750 14,075 1,634 0 75,000 0 0
Vice President, 1996 94,089 5,000 0 0 87,500 0 0
Research & 1995 85,000 0 0 0 17,500 0 0
Development
</TABLE>

- ---------------
(1) includes payments made to DWL Associates Limited, an entity controlled by
Mr. Lyon, for the provision of consulting and advisory services. Amounts
assume an exchange rate in 1995/6 of L1:$1.60 and L1:$1.65 in 1997.

(2) assumes an exchange rate of L1:$1.65.

COMPENSATION OF DIRECTORS

With the exception of Mr. Devine in his capacity as an officer of the
Company, no cash compensation was paid to any director of the Company during the
year ended December 31, 1997. In May 1997, in accordance with the terms of the
Company's 1994 Stock Incentive Plan, Robert D. Mattei and former director Dr.
Rainer G. Bichlbauer were each granted an option to acquire 7,500 shares of
Common Stock at an exercise price of $10.50 per share, for their services as
members of the audit and compensation committees. Also pursuant to the 1994
Stock Incentive Plan, Mr. William Hopke, also a former director, served for part
of fiscal 1996 and was granted an option to acquire 5,000 shares of Common Stock
at an exercise price of $10.50 per share for his services as a member of such
committees. These options are exercisable for five-year terms and have exercise
prices equal to the fair market value of such shares on the date of grant.

EMPLOYMENT AND CONSULTING CONTRACTS

Mr. Devine and the Company are parties to an employment agreement dated as
of January 1, 1997 which provides that Mr. Devine is to serve as the Company's
Chairman of the Board, President and Chief Executive Officer. The agreement
provides for a rolling three year term. The Agreement provides for a base salary
to be fixed by the Board which, as of January 1, 1997, was $275,000 per year.
Pursuant to the agreement the Company will maintain life insurance on Mr.
Devine's life with a face amount equal to at least $1,000,000, for which Mr.
Devine may designate a beneficiary. Under the agreement Mr. Devine also will be
entitled to receive a retirement benefit if he remains continuously employed (as
defined) by the Company until age fifty.

39
<PAGE> 41

Generally, if Mr. Devine retires at age 65, the retirement benefit to be
received annually will be equal to 50% of his average annual base salary and
bonus during the final three years of his employment (less benefits from any
other defined benefit pension plan of the Company). The percentage of Mr.
Devine's average annual base salary and bonus will be reduced or increased by 6%
for each year by which Mr. Devine elects to have such retirement benefit
commence earlier or later than his 65th birthday. The agreement also provides
that Mr. Devine is entitled to participate in all benefit plans and arrangements
of the Company and may also receive bonuses, if any, as determined by the Board
of Directors. The agreement also provides certain disability and death benefits
to Mr. Devine, as well as severance payments approximately equal to Mr. Devine's
average salary and bonus for the previous three years, to continue for three
years if Mr. Devine is terminated under certain conditions. Additionally, Mr.
Devine is entitled to receive a payment of slightly less than three times his
"base amount" (as defined in the Internal Revenue Code of 1986) in the event of
a "change of control" of the Company (as defined in the agreement). This
agreement also contains certain customary provisions regarding confidentiality
and non-competition.

The Company entered into a Consulting Agreement with DWL Associates Ltd.,
an entity controlled by Mr. Lyon, for the provision of consulting and advisory
services. The agreement, which was signed as part of the acquisition by the
Company of BPS in September 1995, has an original term of two years, expiring
September 30, 1997. As notice not to renew was not served by either party, the
agreement has automatically renewed for a further twelve months, expiring
September 30, 1998. Under this agreement, either party may terminate this
agreement upon six months notice. Annual fees of L90,000 ($149,000 at an
exchange rate of L1: $1.65) are payable under this agreement, plus the
reimbursement of directly incurred expenses.

The Company, through Bakery Packaging Services Limited (now known as EPL
Flexible Packaging Limited ("EPL Flexible")), entered into an employment
agreement with Mr. Kendall commencing on August 1, 1996, which provides that Mr.
Kendall is to serve as Chief Executive of EPL Flexible. The agreement originally
provided for an annual salary of L70,000 ($115,000 at an exchange rate of
L1:$1.65), which salary is reviewable on January 1 annually and has been
increased to L83,000 ($137,000 at an exchange rate of L1:$1.65) as of July 1,
1997, together with customary benefits, such as vacation, the provision of an
automobile, healthcare coverage and contributions into a defined contribution
pension scheme. A bonus is also payable upon the achievement of certain
performance targets, as agreed on an annual basis. After the first twelve
months, the contract may be terminated by either side upon six months' notice.
The agreement also contains certain customary provisions regarding
confidentiality and non-competition.

The Company entered into an employment agreement with Dr. Romig effective
September 1, 1994, which provides for a twelve month term, with annual renewal
terms. Effective January 1, 1998, the Company entered into a new agreement with
Dr. Romig, which runs for an initial term of two years, with annual renewal
terms thereafter. Either party may terminate the contract upon six months'
notice. The initial annual salary is $120,000, with a bonus of up to 25% of the
salary based upon the achievement of agreed-upon objectives. In addition to the
customary provisions on vacation and healthcare coverage, the agreement also
provides that, in the event of a termination of employment by either party due
to a change in control (as defined in the agreement), Dr. Romig would receive a
total payment equal to twice his annual salary plus a bonus equal to his average
bonus earned over the previous twelve months. The agreement also contains
certain customary provisions regarding confidentiality and non-competition.

1994 STOCK INCENTIVE PLAN

The Company's 1994 Stock Incentive Plan was adopted by the shareholders on
July 21, 1994, and modified by the shareholders to increase the shares issuable
thereunder and to make certain other changes on July 22, 1996, and again on July
21, 1997. The Plan is intended as an additional incentive to certain employees,
certain consultants or advisors and non-employee members of the Board of
Directors to enter into or remain in the employ of the Company or to serve on
the Board of Directors by providing them with an additional opportunity to
increase their proprietary interest in the Company and to align their interests
with those of the Company's shareholders generally through the receipt of
options to purchase Common Stock and has been structured to comply with the
applicable provisions of Section 16(b) of the Securities Exchange Act of 1934,
as amended, and Rule 16b-3 thereunder. The Plan provides for the grant of
incentive stock options within the meaning of the Internal Revenue Code of 1986,
as amended, and non-qualified stock options and

40
<PAGE> 42

the award of shares of Common Stock. The particular terms of each option grant
or stock award are set forth in a separate agreement between the Company and the
optionee or award recipient. The Plan is administered by the 1994 Stock
Incentive Plan Administration Committee appointed by the Board of Directors,
which is currently comprised of Robert D. Mattei and Ronald W. Cantwell. The
committee has the discretion to determine the number of shares subject to each
award, and other applicable terms and conditions, including a grant's vesting
schedule. The term of an option may not be more than five years from the grant
date. Options granted under the Plan generally terminate three months after an
optionee ceases to be employed by the Company (twelve months in the case of
death or disability). The Plan provides that no option may be granted under it
after May 4, 1999.

The following table sets forth certain information concerning grants of
stock options made during the year ended December 31, 1997 to Named Executive
Officers.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
INDIVIDUAL GRANTS AT
---------------------------------- ASSUMED ANNUAL RATES OF
% OF STOCK PRICE APPRECIATION
TOTAL OPTIONS FOR
GRANTED TO EXERCISE OPTION TERM (5 YEARS)(1)
OPTIONS EMPLOYEES IN OR BASE EXPIRATION ---------------------------
NAME GRANTED FISCAL YEAR PRICE DATE 0% 5% 10%
- --------------------------------- ------- ------------- -------- ----------- --- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul L. Devine................... 100,000 18.51% $14.00 11/14/2002 0 386,794 854,714
Derrick W. Lyon.................. 0 0 0 N/A N/A N/A N/A
Antony Kendall................... 25,000 4.63 14.00 11/14/2002 0 96,699 213,679
Timothy B. Owen.................. 50,000 9.25 14.00 11/14/2002 0 193,397 427,357
William R. Romig................. 75,000 13.88 14.00 11/14/2002 0 290,096 641,036
</TABLE>

- ---------------
(1) The dollar amounts under these columns are the result of calculations at 0%,
5% and 10% rates set by the Securities and Exchange Commission and therefore
are not intended to forecast possible future appreciation of the price of
the Common Stock.

The following table sets forth certain information concerning exercises of
stock options during the year ended December 31, 1997 and the value of
unexercised stock options at December 31, 1997 for Named Executive Officers.

AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES(1)

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1997 DECEMBER 31, 1997(1)
ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul L. Devine.......... 200,000(1) 2,212,500(1) 400,000 0 1,462,500 0
Derrick W. Lyon......... 0 0 100,000 0 618,750 0
Antony Kendall.......... 0 0 75,000 0 109,375 0
Timothy B. Owen......... 5,000(1) 60,625(1) 170,000 0 669,375 0
William R. Romig........ 0 0 180,000 0 468,751 0
</TABLE>

- ---------------
(1) None of the shares underlying the exercised options has been sold as at
December 31, 1997.

(2) At December 31, 1997, the split-adjusted closing price of a share of Common
Stock on the Nasdaq SmallCap Market was $12.25.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Company's Compensation Committee during fiscal 1997 were
Mr. Mattei, who served for the entire year, and Mr. Cantwell, who was elected to
the committee in May 1997. Neither Mr. Mattei nor Mr. Cantwell were officers of
the Company during such period. Except as disclosed under "Certain
Transactions," neither of the members of the Compensation Committee nor any of
their affiliates entered into any transactions with the Company during 1997.

41
<PAGE> 43

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of February 12, 1998, and as adjusted to
reflect the sale of the Common Stock offered hereby by: (i) each person known by
the Company to be the beneficial owner of more than 5% of the Common Stock, (ii)
each director, (iii) each of the executive officers named in the Summary
Compensation Table, (iv) all executive officers and directors of the Company as
a group, and (v) the Selling Shareholder. Except as set forth below, the
shareholders named below have sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by them.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
THE OFFERING(1) NUMBER OF THE OFFERING
---------------------- SHARES BEING ---------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------------------------- --------- ------- ------------- --------- -------
<S> <C> <C> <C> <C> <C>
Trilon Dominion Partners, L.L.C...... 2,690,903(2) 26.0% 2,690,903 -- --
Lancer Partners, L.P. ............... 1,788,505(3) 19.8 -- 1,788,505 16.0%
Norwich Union Investment Management
Limited............................ 481,250(4) 5.3 -- 481,250 4.3
Willbro Nominees Ltd................. 146,965(5) 1.6 -- 146,965 1.3
Paul L. Devine....................... 770,416(6) 8.1 -- 770,416 6.6
Robert D. Mattei..................... 214,482(7) 2.4 -- 214,482 1.9
Ronald W. Cantwell................... 2,690,903(8) 26.0 -- -- --
Derrick W. Lyon...................... 100,000(9) 1.1 -- 100,000 *
Dr. William R. Romig................. 180,000(9) 2.0 -- 180,000 1.6
Timothy B. Owen...................... 187,500(10) 2.0 -- 187,500 1.7
Antony E. Kendall.................... 75,000(9) * -- 75,000 *
Directors and executive officers as a
group (10 persons)................. 4,449,552(11) 38.5 2,690,903 1,758,649 14.1
</TABLE>

- ---------------
* Less than one percent.

(1) Unissued shares of Common Stock of each owner subject to currently
exercisable options or other rights to acquire securities exercisable
within 60 days of the date hereof are included in the totals listed and are
deemed to be outstanding for the purpose of computing the percentage of
Common Stock owned by such person, but are not deemed to be outstanding for
the purpose of computing the percentage of the class owned by any other
person. The effect of this calculation is to increase the stated total
ownership percentage currently controlled. Information in the table is
based solely upon information contained in filings with the Securities and
Exchange Commission, pursuant to sections 13(d) and 13(g) of the Securities
Exchange Act of 1934, as amended, and the records of the Company.

(2) Includes 1,288,666 shares of Common Stock that may be acquired by
converting 1,933,000 shares of Series A Preferred Stock into shares of
Common Stock. Trilon Dominion Partners, L.L.C. beneficially owns 93.2% of
the Company's outstanding Series A Preferred Stock. The address for Trilon
Dominion Partners, L.L.C. is 245 Park Avenue, Suite 2820, New York, NY
10017.

(3) Includes shares of Common Stock held by funds other than Lancer Partners,
L.P., but which are commonly managed in a group that includes Lancer
Partners, L.P. The address for Lancer Partners, L.P. is 375 Park Avenue,
Suite 2006, New York, NY 10017.

(4) Includes 31,250 shares of Common Stock issuable upon exercise of warrants.
The address for Norwich Union Investment Management Limited is Sentinel
House, 37 Surrey Street, Norwich NR13UZ U.K.

(5) Includes 72,222 shares of Common Stock issuable upon conversion of Series C
Preferred Stock and 30,993 shares of Common Stock issuable upon exercise of
warrants. Willbro Nominees beneficially owns 100% of the Series C Preferred
Stock. The address for Willbro Nominees is 6 Broadgate, London, U.K.

(6) Includes 440,000 shares of Common Stock that may be acquired by (i)
converting 50,000 shares of A Preferred Stock into 33,333 shares of Common
Stock, (ii) exercising options to acquire 400,000 shares of Common Stock
and (iii) exercising warrants to acquire 6,666 shares of Common Stock.

42
<PAGE> 44

Mr. Devine beneficially owns 2.4% of the Series A Preferred Stock. The address
for Mr. Devine is c/o the Company, 2 International Plaza, Suite 245,
Philadelphia, PA 19113-1507.

(7) Includes 47,500 shares of Common Stock that may be acquired by exercising
options to acquire 47,500 shares of Common Stock and 10,000 shares of
Common Stock owned by Mr. Mattei's wife, as to which he disclaims
beneficial ownership.

(8) Mr. Cantwell may be considered to be an indirect beneficial owner of such
shares of Common Stock by virtue of his ownership of all of the voting
stock of VC Holdings, the sole manager of Trilon Dominion Partners, L.L.C.
("Trilon") and owner of 100% of the voting interest in Trilon. The only
other member of Trilon is Dominion Capital, Inc., a Virginia Corporation
("Dominion Capital"), which holds a non-voting membership interest in
Trilon. Dominion Capital is a wholly owned subsidiary of Dominion
Resources, Inc., a Virginia corporation ("Dominion Resources"). Both
Dominion Capital and Dominion Resources may be considered to be indirect
beneficial owners of such shares of Common Stock of the Company. However,
both entities disclaim any indirect beneficial ownership of such shares.

(9) Amount shown represents shares of Common Stock issuable upon exercise of
options.

(10) Includes 170,000 shares of Common Stock that may be acquired by exercising
options.

(11) Includes 2,513,666 shares of Common Stock that may be acquired by (i)
converting 1,983,000 shares of A Preferred Stock into 1,322,000 shares of
Common Stock, (ii) exercising options to acquire 1,185,000 shares of Common
Stock and (iii) exercising warrants to acquire 6,666 shares of Common
Stock.

RELATIONSHIPS BETWEEN THE COMPANY AND THE SELLING SHAREHOLDER

The Company had a revolving line of credit under an agreement originally
obtained from Dominion Capital, Inc. ("Dominion"), a related party of the
Selling Shareholder, which was to have expired on March 21, 1998, bearing
interest at prime plus 2.5%. In July 1995, Dominion transferred its interest in
this line of credit to the Selling Shareholder. On October 2, 1995, the Selling
Shareholder agreed to convert the outstanding principal amount of $4,050,000
under the line of credit into 506,250 shares of Common Stock and Warrants to
purchase 25,000 shares of Common Stock for $8.00 per share. The Company also
issued 40,653 shares of Common Stock in settlements of accrued interest under
this facility of $310,164, and 22,350 shares of Common Stock in settlement of
commitment fees.

Effective October 21, 1997, the Company completed a revolving line of
credit agreement with the Selling Shareholder (the "Trilon Line"). In connection
with obtaining the Trilon Line, Company paid the Selling Shareholder a total
transaction fee of $100,000. Under the Trilon Line, the Selling Shareholder made
available to the Company $2.1 million for working capital purposes. Any amounts
drawn were secured by, among other things, a blanket lien on the assets of the
Company's wholly-owned U.S. subsidiaries and on the assets of the Company
itself. Interest was at the "prime rate" (as published in the Wall Street
Journal) plus 3% or 4% and payable quarterly in arrears. $337,500 was drawn at
September 30, 1997. Part of the proceeds of the Series D Placement was used to
repay the Trilon Line on November 12, 1997, whereupon the Company instructed the
Selling Shareholder to cancel the Trilon Line and to file appropriate releases
of all collateral securing the Trilon Line. The Trilon Line therefore is no
longer available for drawings.

Trilon's investment in the Company constitutes a substantial portion of
Trilon's overall investment portfolio and as such, Mr. Cantwell, by virtue of
his share ownership in VC Holdings, may be deemed to have a significant economic
interest in the proposed Offering. The Company and Trilon have agreed that the
expenses of the Offering will be apportioned to and paid by Trilon in the same
proportion as the gross proceeds of the Offering received by Trilon bears to the
aggregate gross proceeds of the Offering. The Company and Trilon also have
agreed to indemnify each other from certain liabilities in connection with the
Offering, including liabilities under the Securities Act.

43
<PAGE> 45

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $0.001 per share, 3,250,000 shares of Series A Preferred Stock, par value
$1.00 per share, and 4,000,000 shares of preferred stock, par value $0.01 per
share ("Board Designated Preferred Stock"), of which 3,843,056 shares remain
undesignated. All outstanding shares of Common Stock issued are fully paid and
nonassessable. As of December 31, 1997, the Company had 9,047,983 shares of
Common Stock outstanding. All of the Series A Preferred Stock has been issued
and 2,073,000 shares remain outstanding (including the 1,933,000 shares of
Series A Preferred Stock that are to be converted by the Selling Shareholder as
part of this Offering). The Board designated and issued 531,915 shares of Board
Designated Preferred Stock as Series B Preferred Stock in July 1996. These
shares were converted into shares of Common Stock in August 1997. In May 1997,
the Board designated and issued 144,444 shares of Board Designated Preferred
Stock as Series C Preferred Stock, and as of December 31, 1997, all such shares
of Series C Preferred Stock were outstanding. In November 1997, the Board
designated and issued 12,500 shares of Board Designated Preferred Stock, and as
of February 12, 1998, all such shares of Series D Preferred Stock were
outstanding. As of December 31, 1997, assuming exercise of all outstanding
options and warrants to purchase Common Stock and conversion of all outstanding
Preferred Stock, there would be 13,872,095 shares of Common Stock outstanding.

The following is a summary description of the Company's capital stock and
is qualified in its entirety by reference to the Company's Amended and Restated
Articles of Incorporation, as amended (the "Articles of Incorporation"), and the
Company's Amended and Restated Bylaws, as amended (the "Bylaws"), which are
exhibits to the Registration Statement of which this Prospectus is a part.

COMMON STOCK

Each holder of Common Stock is entitled to one vote per share owned of
record on all matters submitted to the vote of shareholders. The holders of a
majority of the outstanding shares entitled to vote constitute a quorum for the
taking of corporate action by shareholders. There are no cumulative voting
rights. Except on matters for which a higher vote is required by law, the vote
of the holders of a majority of the outstanding shares present or represented
and entitled to vote is required. Subject to preferences of the Preferred Stock,
the holders of Common Stock will be entitled to such dividends as may be
declared from time to time by the Board of Directors from funds legally
available therefor and will be entitled, after payment of all prior claims, to
receive, on a pro rata basis, all assets of the Company upon liquidation,
dissolution or winding up of the Company. The Common Stock is not redeemable,
does not have any conversion rights and is not subject to call. Holders of
Common Stock have no preemptive right to maintain their respective percentage of
ownership in future offers and sales of stock by the Company. The rights,
preferences and privileges of holders of Common Stock are subject to the rights,
preferences and privileges of the Preferred Stock.

The Common Stock currently trades on the Nasdaq SmallCap Market under the
symbol EPTG. An application has been made to include the Common Stock on the
Nasdaq National Market under the same symbol.

SERIES A PREFERRED STOCK

Holders of the Series A Preferred Stock are entitled to dividends at the
rate of 10% of par value ($1.00 per share) per annum. At the option of the
Company, dividends may be paid either in cash or in Common Stock. If dividends
are paid in Common Stock, the Common Stock will be valued at the conversion
price of $1.50 per share (subject to adjustment for stock splits, stock
dividends, the effect of mergers and the like). If dividends are not paid, the
right to receive unpaid dividends will accumulate, but without interest. No
dividends may be paid on the Common Stock at a time when payment of dividends on
the Series A Preferred Stock is in arrears. As of December 31, 1997, accumulated
dividends on the Series A Preferred Stock were $1,334,000. At the election of a
holder of Series A Preferred Stock, each share of Series A Preferred Stock may
be converted into that number of shares of Common Stock determined by dividing
$1.00 by the

44
<PAGE> 46

conversion price of $1.50 per share (subject to adjustment for stock splits,
stock dividends, the effect of mergers and the like). Each holder of Series A
Preferred Stock is entitled to the number of votes equal to the number of whole
shares of Common Stock into which such holder's shares of Series A Preferred
Stock are convertible. Except when voting by class or series is required by law
or the Articles of Incorporation, holders of the Series A Preferred Stock are
entitled to vote together with the holders of the Common Stock as a single
class. In the event of the liquidation, dissolution or winding up of the
Company, the holders of shares of Series A Preferred Stock are entitled to be
paid out of the assets of the Company available for distribution to its
shareholders at the rate of $1.00 per share (subject to adjustment for stock
splits, stock dividends, the effect of mergers and the like). This payment to
the holders of Series A Preferred Stock shall be made in full by the Company
prior to any payment being made to the holders of Common Stock. The Series A
Preferred Stock ranks pari passu with the Series C and Series D Preferred Stock.

SERIES B PREFERRED STOCK

In August 1997, the holders of all 531,915 shares of Series B Preferred
Stock converted their shares into Common Stock, at which time dividends ceased
to accumulate. As of the date on which such stock was converted, accumulated
dividends on the Series B Preferred Stock were $270,000. Accrued but unpaid
dividends do not bear interest and may, at the Company's option, be paid in cash
or in Common Stock at a stated conversion price of $9.40 per share (subject to
adjustment for stock splits, stock dividends, the effect of mergers and the
like). No dividends may be paid, declared or set apart for payment on the Common
Stock until all accumulated dividends on the Series B Preferred Stock have been
paid, or declared and set apart for payment. With respect to dividends, the
Series B Preferred Stock ranks pari passu with the Series A and Series C
Preferred Stock.

SERIES C PREFERRED STOCK

Holders of the Series C Preferred Stock, par value $0.01 per share, are
entitled to dividends at the rate of 10% of a "stated conversion price"
(currently $9.00, subject to appropriate adjustment in the event of any stock
dividend, stock split or combination or similar recapitalization affecting such
shares) per annum. At the option of the Company, dividends may be paid either in
cash or in Common Stock. If dividends are paid in Common Stock, the Common Stock
will be valued at the stated conversion price. Dividends are cumulative, and no
dividends may be paid on the Common Stock at a time when payment of dividends on
the Series C Preferred Stock is in arrears. The Series C Preferred Stock ranks
pari passu with the Series A and Series B Preferred Stock with respect to
dividends. Accrued but unpaid dividends do not bear interest. As of December 31,
1997, accumulated dividends on the Series C Preferred Stock were $38,000. At the
election of a holder, each of the issued and outstanding shares of Series C
Preferred Stock may be converted into such number of fully paid and
nonassessable shares of Common Stock by dividing $9.00 by the "stated conversion
price" in effect at the time of conversion. Each holder of Series C Preferred
Stock is entitled to the number of votes equal to the number of whole shares of
Common Stock into which such holder's shares of Series C Preferred Stock are
convertible. Except when voting by class or series is required by law or the
Articles of Incorporation, holders of the Series C Preferred Stock are entitled
to vote together with the holders of the Common Stock as a single class. In the
event of the liquidation, dissolution or winding up of the Company, the holders
of shares of Series C Preferred Stock are entitled to be paid out of the assets
of the Company available for distribution to its shareholders at a rate of $9.00
per share (subject to appropriate adjustment in the event of any stock dividend,
stock split or combination or similar recapitalization affecting such shares).
This payment to the holders of Series C Preferred Stock shall be made in full by
the Company prior to any payment being made to the holders of Common Stock. The
Series C Preferred Stock ranks pari passu with the Series A and Series D
Preferred Stock.

SERIES D PREFERRED STOCK

Holders of the Series D Preferred Stock, which has a stated value of $1,000
per share (the "Stated Value"), are not entitled to any dividends. So long as
any shares of Series D Preferred Stock remain outstanding, the Company may not
(i) declare or pay any dividend upon, (ii) make any distribution upon, or

45
<PAGE> 47

(iii) purchase or redeem, any shares of Common Stock without the approval of the
holders of at least two-thirds of the outstanding shares of Series D Preferred
Stock, voting together as a class.

At the option of each holder, each share of the Series D Preferred Stock is
convertible, subject to certain limitations, into such number of shares of
Common Stock as is determined by dividing the sum of (i) the Stated Value and
(ii) a premium equal to 4% of the Stated Value per annum accruing from the date
of issuance, by the "Conversion Price" then in effect (generally, the lesser of
(x) 94% of the lowest five-day average closing bid price per share of Common
Stock during a specified period of time and (y) $11.63, subject to adjustment),
subject to certain limitations and exceptions; provided, however, that no holder
of shares of Series D Preferred Stock may convert any such shares during the
180-day period following the issuance thereof, and may thereafter convert only a
percentage of such shares prior to the 271st day after such issuance. At the
option of the holder of shares of Series D Preferred Stock, such shares are
redeemable upon the occurrence of certain events, including defaults under
certain agreements relating to the Series D Preferred Stock and the failure to
maintain the listing of the Common Stock on certain stock exchanges. The Series
D Preferred Stock is redeemable immediately upon the occurrence of other events,
including (i) an assignment by the Company for the benefit of creditors or the
filing of an application for or the appointment of a receiver or trustee for its
business or property, (ii) the institution of bankruptcy or similar proceedings,
or (iii) the failure to obtain the requisite approval of the Corporation's
shareholders if required by Nasdaq in connection with the issuance of shares of
Common Stock upon the conversion of the Series D Preferred Stock, or the waiver
by Nasdaq of such requirement.

The holders of the Series D Preferred Stock have limited voting rights. To
the extent holders of the Series D Preferred Stock are entitled by law to vote
on a matter with holders of Common Stock, voting together as one class, each
share of Series D Preferred Stock shall be entitled to a number of votes equal
to the number of shares of Common Stock into which it is convertible. So long as
any shares of Series D Preferred Stock are outstanding, the Company cannot take
the following actions without first obtaining the approval of the holders of at
least two-thirds of the then outstanding shares of the Series D Preferred Stock:
(i) altering or changing the rights, preferences or privileges of the Series D
Preferred Stock or any other securities of the Company as to affect adversely
the Series D Preferred Stock ("Change of Rights"); (ii) creating any new class
or series of capital stock having a preference over the Series D Preferred Stock
as to distribution of assets upon liquidation, dissolution or winding up of the
Company; (iii) creating any new class or series of capital stock ranking pari
passu with the Series D Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Company; (iv) increasing the
authorized number of shares of Series D Preferred Stock, or any other shares of
capital stock that rank senior to or pari passu with the Series D Preferred
Stock as to distribution of assets upon liquidation, dissolution or winding up
of the Company; or (v) taking any action not authorized or contemplated by the
Series D Certificate that would result in taxation of the holders of shares of
Series D Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended. In the event holders approve a Change of Rights by at least a
two-thirds vote, any dissenting holder of Series D Preferred Stock shall have
the right for a period of thirty (30) days to convert its shares to Common Stock
pursuant to the Series D Certificate.

In the event of a liquidation, dissolution or winding up of the Company,
the holders of the Series D Preferred Stock are entitled to be paid out of the
assets of the Company available for distribution to its shareholders an amount
equal to 115% of the Liquidation Preference (as defined below) with respect to
each outstanding share of Series D Preferred Stock. The "Liquidation Preference"
shall mean an amount equal to the sum of (a) the stated value of the Series D
Preferred Stock, plus (b) an amount equal to 4% per annum of such stated value
for the period beginning on the date of issuance of such share and ending on the
date of final distribution to the holder thereof, pro rated for any portion of
such period. If, upon liquidation, dissolution or winding up of the Company, the
assets and funds available for distribution among the holders of Series D
Preferred Stock and holders of pari passu securities are insufficient to permit
payment to all such holders of all preferential amounts, the Company's assets or
funds shall be distributed ratably among such shares in proportion to the ratio
that the Liquidation Preference payable on each share of Series D Preferred
Stock bears to the aggregate liquidation preference payable on all such shares.
The (i) disposition of substantially all the assets of the Company, (ii)
effectuation of a transaction or series of related transactions (other than an

46
<PAGE> 48

underwritten public offering) in which more than 50% of the voting power of the
Company is disposed of or (iii) consolidation, merger or other business
combination of the Company with or into any other entity when the Company is not
the survivor, shall, at the option of any holder of Series D Preferred Stock,
either (a) be deemed a liquidation, dissolution or winding up of the Company,
pursuant to which the Company will be required to distribute upon consummation
of the transaction an amount equal to 115% of the Liquidation Preference with
respect to each share of Series D Preferred Stock, or (b) be treated, in
accordance with the Series D Certificate, as an adjustment to the conversion
price by which shares of Series D Preferred Stock may be converted into Common
Stock.

In addition, in connection with the issuance of the Series D Preferred
Stock, the Company issued warrants to purchase 201,614 shares of Common Stock
exercisable at $20.16 at any time until November 6, 2002.

BOARD DESIGNATED PREFERRED STOCK

The Board of Directors currently has the authority to issue up to 3,843,056
additional shares of Board Designated Preferred Stock, in one or more classes or
series with full, limited, multiple, fractional or no voting rights and with
such designation, preferences, qualification, privileges, limitations,
restrictions, options, conversion rights or other special or relative rights,
without any further vote by shareholders, except for and subject to, in each
case, the limitations and provisions of the Colorado Business Corporation Act.

REGISTRATION RIGHTS

The holders of a total of approximately 207,750 shares of Common Stock
either issued in the acquisition of CMC, or purchased during the period in which
the private placement of the Series C Preferred Stock was pending and
consummated (the "1997 Common Sale Shares"), and all of the Preferred Stock
convertible into shares of Common Stock are entitled to certain rights with
respect to the registration under the Securities Act of such shares of Common
Stock.

Series A Preferred Stock. Under registration rights agreements concluded
in connection with the issuance of the Series A Preferred Stock, at any time
after the conversion of Series A Preferred Stock into shares of Common Stock, a
holder of such shares of Common Stock may require the Company to file with the
SEC a registration statement on Form S-3 or such other registration statement
for which the Company may then be eligible and appropriate amendments, if any,
to such registration statement necessary to cause such registration statement to
become effective and to register such holder's shares of Common Stock under the
Securities Act. On October 11, 1996, the Company filed a registration statement
on Form S-3 with the SEC (declared effective by the SEC on November 12, 1996)
(the "1996 Form S-3") registering, among other shares, all 1,586,666 shares of
Common Stock issuable upon conversion of the outstanding shares of Series A
Preferred Stock. The Selling Shareholder owns Series A Preferred Stock
convertible into 1,288,666 shares of Common Stock, which are proposed to be sold
in this Offering, and are also covered by the 1996 Form S-3. Upon completion of
the Offering, the Selling Shareholder will no longer hold any shares carrying
registration rights and 140,000 shares of Series A Preferred Stock convertible
into 93,333 shares of Common Stock will remain outstanding.

Series B Preferred Stock. Upon written request of the holders representing
not less than 51% of the shares of Common Stock registerable upon conversion of
the Series B Preferred Stock, given at any time after conversion, the Company is
required to prepare and file with the SEC a registration statement on Form S-3
or such other registration statement for which the Company may then be eligible
and appropriate amendments, if any, to the registration statement necessary to
cause such registration statement to become effective and to register such
shares of Common Stock under the Securities Act. During the three months ended
September 30, 1997, the holders of all 531,915 shares of Series B Preferred
Stock elected to fully exercise their right to convert such shares into 531,915
shares of Common Stock. The registration rights associated with such shares of
Common Stock expire on July 11, 1999. The 1996 Form S-3 registered, among other
shares, all 531,915 shares of Common Stock issued upon conversion of the
outstanding shares of Series B Preferred Stock.

47
<PAGE> 49

Series C Preferred Stock. On no more than three occasions after
conversion, the holders representing not less than 51% of the shares of Common
Stock issuable upon conversion of the Series C Preferred Stock into Common
Stock, may require the Company to prepare and file with the SEC a registration
statement on Form S-3 or such other registration statement for which the Company
may then be eligible and appropriate amendments, if any, to cause such
registration statement to become effective and to register such shares of Common
Stock under the Securities Act. A holder's registration right terminates upon
written agreement between the Company and the holder of the Series C Preferred
Stock. On December 12, 1997, the Company obtained such an agreement and filed a
registration statement on Form S-3 (the "1997 Form S-3") with the SEC (declared
effective by the SEC on February , 1998) registering, among other shares, the
1997 Common Sale Shares and all 144,444 shares of Common Stock issuable upon
conversion of the outstanding shares of Series C Preferred Stock at the time.

Series D Preferred Stock. On December 12, 1997, in accordance with the
terms of a registration rights agreement by and among the Company and the
initial purchasers of the Series D Preferred Stock and related warrants, the
Company filed the 1997 Form S-3 with the SEC registering, among other shares, up
to 1,500,000 shares of Common Stock issuable upon conversion of the outstanding
shares of Series D Preferred Stock and 201,614 shares of Common Stock issuable
upon the exercise of the related warrants. If, among other things, such
registration statement is not declared effective by the SEC by March 11, 1998,
then the Company must pay each holder of the Series D Preferred Stock or related
warrants certain amounts, in cash or Common Stock, at each holder's option, as
partial and non-exclusive relief for the damages to the holders of the delay in
or reduction of their ability to sell the Common stock issuable upon conversion
of the outstanding shares of Series D Preferred Stock or the shares of Common
Stock issuable upon the exercise of the related warrants. However, in the nine
months following November 11, 1997, there are restrictions on the ability of the
holders to convert the Series D Preferred Stock into shares of Common Stock and,
thus, restrictions on their ability to sell such shares of Common Stock.

Furthermore, in the event that the Company fails to timely obtain
effectiveness of such registration statement or maintain effectiveness of such
registration statement during the Registration Period (as hereinafter defined),
the holders of the Series D Preferred Stock and related warrants shall have
certain "piggy back" registration rights upon the Company's filing of another
registration statement relating to an offering for the Company's own account or
the account of others under the Securities Act of any of the Company's equity
securities (with limitations). The Registration Period is defined to be the time
during which the Company obtains and maintains effectiveness of the 1997 Form
S-3 until such date as is the earlier of (i) the date on which all of the shares
of common stock issued upon conversion of the Series D Preferred Stock have been
sold and (ii) the date on which such shares may be immediately sold without
restriction and without registration under the Securities Act.

Common Stock Owned by Clifford M. Coles. On October 17, 1997, in
connection with the Company's acquisition of CMC, the Company issued 39,000
shares of Common Stock to Clifford M. Coles ("Coles"). At the time of the
acquisition, the Company and Coles also entered into a registration rights
agreement whereby the Company granted Coles certain "piggy back" registration
rights. In accordance with the registration rights agreement, Coles is entitled
to participate in a registered offering by the Company up to, in the aggregate,
no more than 50% of the Common Stock issued to Coles in connection with the
acquisition (less the number of shares otherwise sold or transferred by Coles).
The 1997 Form S-3 registers, among other shares, 19,500 of the shares owned by
Coles. The Company has obtained a waiver from Coles with respect to any
registration rights he may have in connection with the Offering.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is
Securities Transfer Corporation, based in Dallas, Texas. The Company acts as the
transfer agent and registrar for all classes of Preferred Stock.

48
<PAGE> 50

CERTAIN TRANSACTIONS

Effective October 21, 1997, the Company completed the Trilon Line. In
connection with obtaining the Trilon Line, Company paid Trilon a total
transaction fee of $100,000. Under the Trilon Line, Trilon made available to the
Company $2.1 million for working capital purposes. Amounts drawn were secured
by, among other things, a blanket lien on the assets of the Company's
wholly-owned U.S. subsidiaries and on the assets of the Company itself. Interest
was at the "prime rate" (as published in the Wall Street Journal) plus 4% and
payable quarterly in arrears. $337,500 was drawn as of September 30, 1997. Part
of the proceeds of the placement of the Series D Preferred Stock and the
warrants issued in connection with the Series D Preferred Stock was used to
repay the Trilon Line on November 12, 1997, whereupon the Trilon Line was
cancelled. The Trilon Line therefore is no longer available for drawings. Mr.
Cantwell, a director of the Company, is the President of Trilon and President of
VC Holdings, the sole managing member of Trilon.

The Company had a revolving line of credit under an agreement originally
obtained from Dominion Capital, Inc. ("Dominion"), a related party of Trilon,
which was to have expired on March 21, 1998, bearing interest at prime plus
2.5%. In July 1995, Dominion transferred its interest in this line of credit to
Trilon. On October 2, 1995 Trilon agreed to convert the outstanding principal
amount of $4,050,000 under the line of credit into 1,012,500 shares of Common
Stock and warrants to purchase 50,000 shares of Common Stock for $4.00 per
share. In addition, the Company issued 81,306 shares of Common Stock in
settlement of accrued interest of $310,164, and 12,000 shares of Common Stock in
settlement of commitment fees.

49
<PAGE> 51

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, the Company will have 11,145,746 shares
of Common Stock outstanding (11,670,746 shares if the Underwriters'
over-allotment option is exercised in full), and an additional 1,499,673 shares
of Common Stock will be issuable upon conversion of Preferred Stock, calculated
as of February 12, 1998 in accordance with the provisions of the Series D
Preferred Stock. The 3,500,000 shares offered hereby (4,025,000 shares if the
Underwriters' over-allotment option is exercised in full) will be freely
tradeable without restrictions or further registration under the Securities Act.
Substantially all of the remaining shares, including those issuable upon
conversion of Preferred Stock, are either registered or are planned to be
registered with the SEC pursuant to effective registration statements, or are
otherwise freely tradeable without restriction, except for approximately
1,758,649 shares held by "affiliates" of the Company within the meaning of the
Securities Act and not covered by an effective registration statement, which
will be subject to the resale limitations of Rule 144.

In general, under Rule 144, a person who has beneficially owned shares for
at least one year, including an "affiliate," as that term is defined in the
Securities Act, is entitled to sell within any three-month period a number of
shares that does not exceed the greater of one percent of the then-outstanding
shares of Common Stock (approximately 111,457 shares after the completion of the
Offering), or the average weekly trading volume during the four calendar weeks
preceding filing of notice of such sale, subject to certain requirements
concerning availability of public information, manner and notice of sale.

In addition, affiliates 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 which are not restricted securities. Under Rule
144(k), a person who is not an affiliate and has not been an affiliate for at
least three months prior to the sale and who has beneficially owned restricted
shares for at least a two-year holding period may resell such shares without
compliance with the foregoing requirements.

The Company, its executive officers, directors and the Selling Shareholder,
who will own upon completion of the Offering an aggregate of 1,758,649 shares of
Common Stock, have agreed that they will not, directly or indirectly, offer,
sell, offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose of (or announce any offer, sale, offer of sale,
contract of sale, pledge, grant of any option to purchase or other sale or
disposition of) any shares of Common Stock or other capital stock of the Company
or any other securities convertible into, or exercisable or exchangeable for,
any shares of Common Stock, or other capital stock of the Company, for a period
of 180 days from the date of this Prospectus, without the prior written consent
of Prudential Securities Incorporated, on behalf of the Underwriters. Prudential
Securities Incorporated may, in its sole discretion, at any time and without
notice, release all or any portion of the securities subject to such lock-up
agreements. See "Underwriting."

As of December 31, 1997, the Company has effective registration statements
covering an aggregate of 1,758,125 shares available for issuance upon the
exercise of options granted under the Option Plan and another plan and 341,198
shares issuable upon the exercise of warrants. An additional 512,125 shares of
Common Stock are reserved for issuance under the Option Plan.

50
<PAGE> 52

UNDERWRITING

The Underwriters named below (the "Underwriters"), for whom Prudential
Securities Incorporated is acting as representative (the "Representative"), have
severally agreed, subject to the terms and conditions contained in the
Underwriting Agreement, to purchase from the Company and the Selling
Shareholder, the number of shares of Common Stock set forth below opposite their
respective names:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
Prudential Securities Incorporated........................................

Total..................................................................... 3,500,000
=========
</TABLE>

The Company and the Selling Shareholder are obligated to sell, and the
Underwriters are obligated to purchase, all of the shares of Common Stock
offered hereby, if any are purchased.

The Underwriters, through the Representative, have advised the Company and
the Selling Shareholder that they propose to offer the shares of Common Stock
initially at the public offering price set forth on the cover page of this
Prospectus; that the Underwriters may allow to selected dealers a concession of
$ per share; and that such dealers may reallow a concession of
$ per share to certain other dealers. After the public offering, the
public offering price and the concessions may be changed by the Representative.

The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase up to 525,000 additional shares of
Common Stock at the public offering price less underwriting discounts and
commissions, as set forth on the cover page of this Prospectus. The Underwriters
may exercise such option solely for the purpose of covering over-allotments
incurred in the sale of the shares of Common Stock offered hereby. To the extent
such option to purchase is exercised, each Underwriter will become 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 preceding table bears to 3,500,000.

The Company, its executive officers and directors and the Selling
Shareholder have agreed that they will not, without the prior written consent of
Prudential Securities Incorporated, on behalf of the Underwriters, directly or
indirectly, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase, or otherwise sell or dispose of (or announce any offer,
sale, offer of sale, contract of sale, pledge, grant of any option to purchase
or other sale or disposition of) any shares of Common Stock or any other
securities convertible into, or exercisable for shares of Common Stock or other
similar securities of the Company, currently beneficially owned or hereafter
acquired by such persons, for a period of 180 days after the date of this
Prospectus. Prudential Securities Incorporated may, in its sole discretion, at
any time and without prior notice, release all or any portion of the shares of
Common Stock subject to such lock-up agreements.

The Company and the Selling Shareholder have agreed to indemnify the
several Underwriters and to contribute to losses arising out of certain
liabilities, including liabilities under the Securities Act. The Company and the
Selling Shareholder also have agreed to indemnify each other from certain
liabilities in connection with the Offering, including liabilities under the
Securities Act.

In connection with this Offering, certain Underwriters or their respective
affiliates who are qualified market makers on the Nasdaq SmallCap Market or the
Nasdaq National Market may engage in passive market making transactions in the
Common Stock of the Company on the Nasdaq SmallCap Market or the

51
<PAGE> 53

Nasdaq National Market in accordance with Rule 103 of Regulation M under the
Exchange Act during the business day prior to the pricing of the Offering before
the commencement of offers and sales of Common Stock. Passive market makers must
comply with applicable volume and price limitations and must be identified as
such. In general, a passive market maker must display its bid at a price not in
excess of the highest independent bid for such security, if all independent bids
are lowered below the passive market maker's bid, however, such bid must then be
lowered when certain purchase limits are exceeded.

In connection with the Offering, certain Underwriters (and selling group
members, if any) and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M promulgated by the Securities and Exchange
Commission, pursuant to which such persons may bid for or purchase Common Stock
for the purpose of stabilizing its market price. The Underwriters also may
create a short position for the account of the Underwriters by selling more
Common Stock in connection with the Offering than they are committed to purchase
from the Company, and in such case may purchase Common Stock in the open market
following the closing of the Offering to cover all or a portion of such short
position. The Underwriters may also cover all or a portion of such short
position, up to 525,000 shares of Common Stock, by exercising the Underwriters'
over-allotment option referred to above. In addition, Prudential Securities
Incorporated, on behalf of the Underwriters, may impose "penalty bids" under
contractual arrangements with the Underwriters whereby it may reclaim from an
Underwriter (or selling group member participating in the Offering) for the
account of the other Underwriters, the selling concession with respect to Common
Stock that is distributed in the Offering but subsequently purchased for the
account of the Underwriters in the open market. Any of the transactions
described in this paragraph may result in the maintenance of the price of the
Common Stock at a level above that which might otherwise prevail in the open
market. None of the transactions described in this paragraph are required, and,
if they are undertaken, then they may be discontinued at any time.

LEGAL MATTERS

Certain legal matters in connection with the shares of Common Stock being
offered hereby will be passed upon for the Company by Ballard Spahr Andrews &
Ingersoll, LLP, Philadelphia, Pennsylvania and Denver, Colorado, and for the
Underwriters by Alston & Bird LLP, Atlanta, Georgia.

EXPERTS

The consolidated financial statements of EPL Technologies, Inc. as of
December 31, 1995 and 1996, and for each of the three years in the period ended
December 31, 1996 included in this Prospectus and Registration Statement of
which this Prospectus is a part have been audited by Deloitte & Touche LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein and in the Registration Statement, and have been so included in reliance
upon such report given upon their authority as experts in accounting and
auditing.

The consolidated financial statements of Fabbri Artes Graficas Valencia
S.A. as of September 30, 1997 and 1996 and for each of the two years in the
period ended September 30, 1997 included in this Prospectus and Registration
Statement of which this Prospectus is a part have been audited by Coopers &
Lybrand, S.A., independent auditors, as set forth in their report thereon
appearing elsewhere herein and in the Registration Statement, and have been so
included in reliance upon such report given upon their authority as experts in
accounting and auditing.

AVAILABLE INFORMATION

The Company has filed a registration statement on Form S-1 (herein,
together with all amendments and exhibits thereto, the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities offered pursuant to this Prospectus. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in

52
<PAGE> 54

accordance with the rules and regulations of the SEC. For further information,
reference is made to the Registration Statement and the exhibits filed as a part
thereof. Statements contained herein concerning any document filed as an exhibit
are, in each instance, qualified by, and reference is made to, the copy of such
document filed as an exhibit to the Registration Statement.

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy and information statements
and other information with the SEC. Reports, proxy statements and other
information concerning the Company filed with the SEC can be inspected and
copied at the public reference facilities maintained by the SEC at its office at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the
Regional Offices of the SEC at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. The SEC maintains a Web site (http://www.sec.gov.) that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. Shares of the
Company's Common Stock are currently traded on the Nasdaq SmallCap Market and an
application has been made to list the Common Stock on the Nasdaq National
Market. Such reports, proxy and information statements and other information can
also be inspected and copied at the offices of The Nasdaq Stock Market, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.

53
<PAGE> 55

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EPL TECHNOLOGIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS:
Independent Auditors' Report........................................................ F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996........................ F-3
Consolidated Statements of Operations for the Years Ended December 31, 1994, 1995
and 1996......................................................................... F-4
Consolidated Statements of Shareholders' Equity for the Years Ended December 31,
1994, 1995 and 1996.............................................................. F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995
and 1996......................................................................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets as of December 31, 1996 and September 30,
1997............................................................................. F-18
Condensed Consolidated Statement of Operations -- Nine Months Ended September 30,
1996 and 1997.................................................................... F-19
Condensed Consolidated Statements of Cash Flows -- Nine Months Ended September 30,
1996 and 1997.................................................................... F-20
Notes to Condensed Consolidated Financial Statements................................ F-21
FABBRI ARTES GRAFICAS VALENCIA S.A.
Independent Auditors' Report........................................................ F-26
Balance Sheets as of September 30, 1997 and 1996.................................... F-27
Statements of Income for the Years Ended September 30, 1997 and 1996................ F-28
Statements of Cash Flows for the Years Ended September 30, 1997 and 1996............ F-29
Notes to the Accounts............................................................... F-30
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS:
Introduction........................................................................ F-39
Unaudited Condensed Consolidated Pro Forma Statement of Operations.................. F-40
Unaudited Condensed Consolidated Pro Forma Balance Sheet............................ F-41
</TABLE>

F-1
<PAGE> 56

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
EPL Technologies, Inc.
Philadelphia, Pennsylvania

We have audited the accompanying consolidated balance sheets of EPL
Technologies, Inc. and subsidiaries (the "Company") as of December 31, 1995 and
1996, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the three years in the period ended December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of EPL Technologies, Inc. and
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
March 28, 1997, (March , 1998 as to the third paragraph of Note 18)

The accompanying financial statements reflect a one-for-two reverse stock
split of Common Stock, which is to be effective prior to the effective date of
this Registration Statement, which is expected to be on or about March , 1998.
The above report is in the form which will be signed by Deloitte & Touche, LLP
upon consummation of such reverse stock split, which is described in Note 18 of
Notes to Consolidated Financial Statements of the Company and, assuming that
from March 28, 1997 to the date of such reverse split, no other events shall
have occurred that would affect the accompanying financial statements and notes
thereto.

F-2
<PAGE> 57

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1995 1996
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents..................................... $ 1,522,075 $ 1,639,567
Accounts receivable, net...................................... 1,333,353 2,911,660
Due from related parties...................................... 74,777 34,101
Inventories................................................... 561,255 1,938,819
Prepaid expenses and other current assets..................... 442,814 623,792
---------- ----------
Total current assets.................................. 3,934,274 7,147,939
---------- ----------
PROPERTY AND EQUIPMENT, Net..................................... 1,786,534 4,005,711
---------- ----------
OTHER ASSETS:
Patent and distribution rights, net of accumulated
amortization of $2,130,381 and $2,459,757 at December 31,
1995 and 1996.............................................. 1,632,497 1,303,121
Goodwill...................................................... 2,396,380 2,503,655
Other intangibles, less accumulated amortization of $45,645
and $82,161 at December 31, 1995 and 1996.................. 291,512 254,996
---------- ----------
Total other assets.................................... 4,320,389 4,061,772
---------- ----------
TOTAL ASSETS.................................................... $ 10,041,197 $ 15,215,422
========== ==========
CURRENT LIABILITIES:
Accounts payable.............................................. $ 1,701,578 $ 3,005,577
Accrued expenses.............................................. 539,313 1,213,964
Other liabilities............................................. 288,651 396,418
Current portion of long-term debt............................. 237,811 262,779
---------- ----------
Total current liabilities............................. 2,767,353 4,878,738
LONG-TERM DEBT.................................................. 844,333 1,554,161
DEFERRED INCOME TAXES........................................... 53,672 161,926
MINORITY INTEREST............................................... -- 202,120
---------- ----------
Total liabilities..................................... 3,665,358 6,796,945
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 13)
SHAREHOLDERS' EQUITY:
Convertible Series A Preferred Stock, $1.00 par
value -- authorized, 3,250,000 shares; issued and
outstanding 2,890,000 and 2,490,000 shares in 1995 and
1996....................................................... 2,890,000 2,490,000
Convertible Series B Preferred Stock $0.01 par value
authorized, issued and outstanding 0 and 531,915 shares in
1995 and 1996.............................................. -- 5,319
Common Stock, $0.001 par value -- authorized, 50,000,000
shares; issued and outstanding, 6,604,276 and 7,765,600
shares in 1995 and 1996.................................... 6,604 7,765
Additional paid-in capital.................................... 14,850,596 21,947,444
Accumulated deficit........................................... (11,362,545) (16,283,464)
Foreign currency translation adjustment....................... (8,816) 251,413
---------- ----------
Total shareholders' equity............................ 6,375,839 8,418,477
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...................... $ 10,041,197 $ 15,215,422
========== ==========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE> 58

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Sales............................................... $ 578,463 $ 3,239,566 $11,314,141
Cost of sales....................................... 387,547 2,468,843 9,136,286
----------- ----------- -----------
Gross profit........................................ 190,916 770,723 2,177,855
Selling, general and administrative expenses........ 2,571,865 2,638,116 4,413,365
Research and development costs...................... 522,495 600,529 938,719
Depreciation and amortization....................... 377,592 574,293 1,009,746
----------- ----------- -----------
Loss from operations................................ (3,281,036) (3,042,215) (4,183,975)
Interest expense, net............................... 91,554 267,176 20,223
Minority interest................................... -- -- (9,711)
----------- ----------- -----------
Loss before income tax expense...................... (3,372,590) (3,309,391) (4,194,487)
Income tax expense.................................. -- 10,543 101,432
----------- ----------- -----------
Net loss............................................ (3,372,590) (3,319,934) (4,295,919)
Accretion, discount and dividends on Preferred
Stock............................................. 324,185 313,854 998,924
----------- ----------- -----------
Net loss available for common shareholders.......... $(3,696,775) $(3,633,788) $(5,294,843)
=========== =========== ===========
Loss per common share............................... $ (1.02) $ (0.78) $ (0.71)
=========== =========== ===========
Weighted average common shares outstanding.......... 3,629,362 4,655,529 7,436,759
=========== =========== ===========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE> 59

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
----------------------------------------------------------------------
SERIES B
SERIES A PREFERRED
COMMON SHARES PREFERRED SHARES SHARES ADDITIONAL
----------------- --------------------- --------------- PAID-IN
NUMBER AMOUNT NUMBER AMOUNT NUMBER AMOUNT CAPITAL
--------- ------ --------- ---------- ------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994................................... 3,080,496 $3,080 3,000,000 $3,000,000 $ 3,313,557
Shares issued to employees............................... 12,500 13 32,487
Shares issued for professional services.................. 15,644 15 46,923
Shares issued as commitment fee.......................... 37,500 38 104,962
Common shares issued for cash............................ 612,066 612 1,432,187
Shares issued for acquisition of subsidiary.............. 70,000 70 279,930
Preferred shares issued for cash......................... 250,000 250,000
Net loss.................................................
Foreign currency translation adjustment..................
---------- ------- --------- ---------- ------- ------ -----------
BALANCE, DECEMBER 31, 1994................................. 3,828,206 3,828 3,250,000 3,250,000 5,210,046
Shares issued in private placement (net of issuance
cost).................................................. 1,375,000 1,375 4,878,625
Conversion of note payable to common shares (net of
write-off of deferred finance costs)................... 1,012,500 1,012 3,910,643
Shares issued to pay expenses and fees................... 115,236 115 424,889
Conversion of preferred shares to common shares.......... 240,000 240 (360,000) (360,000) 359,760
Exercise of warrants..................................... 33,334 34 66,633
Net loss.................................................
Foreign currency translation adjustment..................
---------- ------- --------- ---------- ------- ------ -----------
BALANCE, DECEMBER 31, 1995................................. 6,604,276 6,604 2,890,000 2,890,000 14,850,596
Preferred shares issued for cash......................... 531,915 $5,319 2,494,681
Discount on Series B Preferred Stock..................... 625,000
Exercise of options...................................... 192,000 192 255,328
Shares issued to pay expenses and fees................... 2,992 3 23,929
Conversion of preferred shares to common shares.......... 266,667 267 (400,000) (400,000) 399,733
Exercise of warrants (net of costs)...................... 699,665 699 3,298,177
Net loss.................................................
Foreign currency translation adjustment..................
---------- ------- --------- ---------- ------- ------ -----------
BALANCE, DECEMBER 31, 1996................................. 7,765,600 $7,765 2,490,000 $2,490,000 531,915 $5,319 $21,947,444
========== ======= ========= ========== ======= ====== ===========

<CAPTION>
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
--------------------------------------------
FOREIGN
CURRENCY TOTAL
ACCUMULATED TRANSLATION SHAREHOLDERS'
DEFICIT ADJUSTMENT EQUITY
------------ ------------ -------------
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1994................................... $(4,670,021) $ (492) $ 1,646,124
Shares issued to employees............................... 32,500
Shares issued for professional services.................. 46,938
Shares issued as commitment fee.......................... 105,000
Common shares issued for cash............................ 1,432,799
Shares issued for acquisition of subsidiary.............. 280,000
Preferred shares issued for cash......................... 250,000
Net loss................................................. (3,372,590) (3,372,590)
Foreign currency translation adjustment.................. (2,632) (2,632)
------------ -------- -----------
BALANCE, DECEMBER 31, 1994................................. (8,042,611) (3,124) 418,139
Shares issued in private placement (net of issuance
cost).................................................. 4,880,000
Conversion of note payable to common shares (net of
write-off of deferred finance costs)................... 3,911,655
Shares issued to pay expenses and fees................... 425,004
Conversion of preferred shares to common shares..........
Exercise of warrants..................................... 66,667
Net loss................................................. (3,319,934) (3,319,934)
Foreign currency translation adjustment.................. (5,692) (5,692)
------------ -------- -----------
BALANCE, DECEMBER 31, 1995................................. (11,362,545) (8,816) 6,375,839
Preferred shares issued for cash......................... 2,500,000
Discount on Series B Preferred Stock..................... (625,000)
Exercise of options...................................... 255,520
Shares issued to pay expenses and fees................... 23,932
Conversion of preferred shares to common shares..........
Exercise of warrants (net of costs)...................... 3,298,876
Net loss................................................. (4,295,919) (4,295,919)
Foreign currency translation adjustment.................. 260,229 260,229
------------ -------- -----------
BALANCE, DECEMBER 31, 1996................................. $(16,283,464) $251,413 $ 8,418,477
============ ======== ===========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 60

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss....................................................... $(3,372,590) $(3,319,934) $(4,295,919)
Adjustments to reconcile net loss to net cash used in operating
activities:
Expenses paid with common stock.............................. 184,438 425,004 23,932
Depreciation and amortization................................ 377,592 574,293 1,009,746
Minority interest and gain on sale of fixed assets........... -- -- (10,376)
Changes in assets and liabilities, net of effects from
acquisitions of businesses, which provided (used) cash:
Accounts receivable.......................................... (174,860) 536,394 (1,381,262)
Due from related parties..................................... (76,206) 1,429 40,676
Inventories.................................................. (76,391) 247,262 (1,136,800)
Prepaid expenses and other current assets.................... (50,900) (8,549) (168,520)
Accounts payable............................................. 264,093 (185,067) 1,192,893
Accrued expenses............................................. (187,775) (207,513) 669,632
Other liabilities............................................ 41,444 43,237 216,022
----------- ----------- -----------
Net cash used in operating activities...................... (3,071,155) (1,893,444) (3,839,976)
----------- ----------- -----------
INVESTING ACTIVITIES:
Fixed assets acquired.......................................... (168,343) (442,438) (1,997,071)
Proceeds from sale of fixed assets............................. -- -- 23,033
Acquisition of businesses, net of cash acquired................ (57,156) (3,172,528) (767,869)
Cost of patent acquired........................................ (44,914) (8,000)
----------- ----------- -----------
Net cash used in investing activities...................... (270,413) (3,622,966) (2,741,907)
----------- ----------- -----------
FINANCING ACTIVITIES:
Deferred financing cost........................................ (90,778) -- --
Repayment to shareholders...................................... (41,863) (74,912) --
Proceeds from long-term debt................................... -- -- 1,511,127
Payment of long-term debt...................................... (89,015) (145,719) (1,126,377)
Proceeds from notes payable -- shareholder..................... 1,800,000 2,250,000 --
Proceeds from sale of common stock/warrants/options............ 1,432,799 4,946,667 3,554,396
Proceeds from sale of preferred stock.......................... 250,000 -- 2,500,000
----------- ----------- -----------
Net cash provided by financing activities.................. 3,261,143 6,976,036 6,439,146
----------- ----------- -----------
EFFECT OF EXCHANGE RATE ON CASH.................................. (2,632) (5,692) 260,229
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................. (83,057) 1,453,934 117,492
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..................... 151,198 68,141 1,522,075
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR........................... $ 68,141 $ 1,522,075 $ 1,639,567
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid.................................................. $ 60,290 $ 26,683 $ 107,027
Income taxes paid.............................................. -- -- $ 55,635
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Issuance of common stock for:
Conversion of note payable to common shares.................. -- $ 4,050,000 --
Acquisition of subsidiary.................................... $ 280,000 -- --
Exchange for services and other fees......................... $ 184,438 $ 114,840 $ 23,932
Payment of interest.......................................... -- $ 310,164 --
Conversion of preferred shares to common shares.............. -- $ 360,000 $ 400,000
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 61

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization -- EPL Technologies, Inc. (the "Company") is engaged in the
development, manufacture and marketing of proprietary food processing
aids, packaging technologies and related scientific services that
facilitate the maintenance of the quality and integrity of fresh
produce.

B. Principles of Consolidation -- The consolidated financial statements
include the accounts of EPL Technologies, Inc. and its majority and
wholly owned subsidiaries. All material intercompany transactions and
balances have been eliminated in consolidation.

C. Cash and Cash Equivalents -- The Company considers all short-term
investments with a maturity of three months or less to be cash
equivalents.

D. Accounts Receivable -- Accounts receivable are shown net of allowance
for doubtful accounts of $143,210 and $153,037 as of December 31, 1995
and 1996, respectively.

E. Inventories -- Inventories are stated at the lower of cost or net
realizable value. Cost is determined by the first-in, first-out (FIFO)
method (Note 3).

F. Property and Equipment -- Property and equipment are stated at cost.
Depreciation and amortization is calculated by the straight-line method,
based upon the estimated useful lives of the assets which are as
follows:

<TABLE>
<S> <C>
Production and laboratory
equipment........................ 5-10 years
Machinery and office equipment..... 3-7 years
The term of the lease or the estimated life of
Leasehold improvements............. the asset, whichever is shorter.
Motor Vehicles..................... 3-4 years
Buildings.......................... 40 years
</TABLE>

G. Other Assets --

GOODWILL (NOTE 6) -- Goodwill related to the acquisition of certain
subsidiaries is being amortized on a straight-line basis over 10 years

DISTRIBUTION RIGHTS (NOTE 5) -- Are being amortized on a straight-line
basis over the ten-year life of the distribution rights agreement.

PATENTS (NOTE 5) -- Are being amortized on a straight-line basis over
the life of the patent. Initially, costs related to new patents are
expensed as incurred. However, once a patent has been confirmed to
patent pending status, then the direct incremental cost is capitalized
and amortized over the estimated useful life of the patent.

OTHER INTANGIBLES (NOTE 6) -- Other intangibles which consist of
trademarks, formulations and non-compete agreements are being amortized
on a straight-line basis over 5 to 10 years.

H. Income Taxes -- The Company has adopted the provisions of Financial
Accounting Standards Board Statement No. 109, Accounting for Income
Taxes (SFAS No. 109). SFAS No. 109 requires that deferred income taxes
reflect the tax consequences in future years of differences between the
tax bases of assets and liabilities and their financial report amounts
using the enacted marginal rate in effect for the year in which the
differences are expected to reverse.

I. Revenue Recognition -- Revenues are recognized either at the time of
shipment to customers or, for inventory held at customers' facilities,
at the time the product is utilized in the customers' processing
operations.

F-7
<PAGE> 62

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

J. Foreign Currency Translation Adjustment -- The financial statements of
the Company's foreign subsidiary have been translated into U.S. dollars
in accordance with SFAS No. 52. All balance sheet accounts have been
translated using the current exchange rate at the balance sheet date.
Income statement amounts have been translated using the average rate
for the year. The profit or loss resulting from the change in exchange
rates has been reported separately as a component of shareholders'
equity.

K. Reclassifications -- Certain reclassifications have been made to the
1995 consolidated financial statements in order to conform with the 1996
presentation.

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

M. Long Lived Assets -- The Company evaluates the carrying value of its
long lived assets for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. Measurement of the amount of impairment, if any, is based
upon the difference between the carrying value and fair value.

N. Stock-Based Compensation -- During the year ended December 31, 1996, the
Company adopted Statement of Financial Accounting Standards (SFAS) No.
123, Accounting for Stock-Based Compensation. The Company will continue
to measure compensation expense for its stock-based employee
compensation plans using the intrinsic value method prescribed by APB
Opinion No. 25, Accounting for Stock Issued to Employees. See Note 11
for pro forma disclosures of net income and earnings per share as if the
fair value-based method prescribed by SFAS No. 123 had been applied in
measuring compensation expense.

2. OPERATIONS

The Company's continued ability to operate is dependent upon its ability to
maintain adequate financing and to achieve levels of revenue necessary to
support the Company's cost structure. The nature of the processing aid business
is such that fresh cut produce processors and other third-party users supplying
retail markets require extensive on site, and, in certain cases, independent
testing prior to utilizing the Company's product in their production. This
results in an extended sales process. Management believes that this process is
the basis for developing sustainable growth in revenues which will enable the
Company to achieve profitable operations.

The Company's management believes that cash flows from operations, together
with its current resources (including cash received in the recent private
placement, see Note 18) and with the availability of financing from other
sources, will allow the Company to maintain adequate financing for the next
year.

3. INVENTORIES

Inventories consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996
-------- ----------
<S> <C> <C>
Raw materials and supplies........................... $361,252 $ 938,050
Finished goods....................................... 200,003 1,000,769
-------- ----------
Total inventories.......................... $561,255 $1,938,819
======== ==========
</TABLE>

F-8
<PAGE> 63

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1996
---------- ----------
<S> <C> <C>
Production and laboratory equipment................. $ 868,128 $3,489,187
Machinery and office equipment...................... 233,315 243,213
Leasehold improvements.............................. 24,099 26,099
Motor vehicles...................................... 143,645 88,251
Buildings........................................... 731,247 814,154
---------- ----------
Total property and equipment...................... 2,000,434 4,660,904
Accumulated depreciation and amortization........... (213,900) (655,193)
---------- ----------
Property and equipment (net)........................ $1,786,534 $4,005,711
========== ==========
</TABLE>

Depreciation expense was $33,945, $121,929, and $384,902 for the years
ended December 31, 1994, 1995 and 1996, respectively.

5. PATENTS AND DISTRIBUTION RIGHTS

The Company owns the exclusive right to establish the worldwide sales,
marketing and distribution network for the food processing products of Agra
Research, Inc. for a period of ten years. In 1988, the Company issued 1,530,656
restricted shares of common stock for these product rights at a value of $1.50
per share for a total of $2,295,984. The asset is being amortized on a
straight-line basis over the ten-year life of the distribution rights agreement.
Distribution rights, net, totaled $459,197 and $229,599 as of December 31, 1995
and 1996, respectively.

In connection with the acquisition of Agra Research, Inc. on December 31,
1992, the purchase cost was allocated primarily to patents acquired. The patent
was formally approved in June 1990, and, therefore, the patent value is being
amortized over the remaining fourteen and one half years of its life commencing
January 1, 1993. Patents, net, totaled $1,173,299 and $1,073,522 as of December
31, 1995 and 1996, respectively.

6. ACQUISITIONS

On April 19, 1996, the Company acquired substantially all of the tangible
and intangible assets of Pure Produce, a Massachusetts general partnership,
through a wholly-owned subsidiary, Pure Produce, Inc., a Massachusetts
corporation. The total cost of the acquisition was approximately $150,000. Pure
Produce is in the business of providing companies in the food industry,
especially those involved with fresh and minimally processed produce, with
analysis, protocols and plans relating to food and quality assurance programs
including microbial testing.

In July 1996, the Company acquired, through a wholly-owned UK subsidiary
(EPL Flexible Packaging Limited ("EPL Flexible")), some of the fixed assets
located at Gainsborough, Lincolnshire, UK, of a division of Printpack Europe
(St. Helens) Limited ("Printpack St. Helens"). EPL Flexible also assumed a real
estate lease and offered employment to some of the employees of Printpack St.
Helens. The total net consideration paid was L830,000 plus costs ($1,286,500 at
an exchange rate of $1.55 per pound sterling). This company specializes in the
printing of flexible packaging films serving primarily the snack food industry.

In July 1996, the Company formed a wholly-owned US subsidiary, Crystal
Specialty Films, Inc., to acquire the assets and assume some of the liabilities
of Crystal Plastics, Inc., based in Illinois. Crystal uses "K" resin and
polystyrene resins to manufacture a range of proprietary films for a variety of
applications. After

F-9
<PAGE> 64

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

an initial payment of approximately $400,000, an additional amount of $267,000
is payable in quarterly installments over two years, with a final payment based
on the performance of the business over the next two years. Crystal serves as
the site for proprietary gas-flame perforation equipment which the Company has
had custom-built in the UK and which is planned to be the basis for penetration
of the US film perforation market.

In addition, also in July 1996, the Company formed Newcorn Co., a
jointly-owned limited liability company in which the Company owns a 51% equity
interest. The Company's partner is Underwood Ranches ("Underwood"), the trade
name of Agricultural Innovation and Trade, Inc. The new company utilizes the
Company's proprietary processing aid and packaging technologies and Underwood's
existing corn processing and distribution capabilities to develop a yearround,
national, value-added market for fresh corn products.

The pro forma effects of the above acquisitions were not significant in
1996.

On September 19, 1995 the Company acquired all of the issued and
outstanding share capital of Bakery Packaging Services Limited ("BPS"), an
English company, through a wholly-owned subsidiary of the Company, EPL
Technologies (Europe) Limited, also an English Company. BPS is based in the
northwest of England and is in the business of the manufacture and sale of
packaging materials, principally perforated packaging materials, used by leading
companies in the fresh cut produce and institutional bakery industries, which
the Company intends that BPS continue. BPS also produces wax-coated packaging
used principally in the confectionery industry, which also is intended to
continue. The total purchase price (including acquisition costs) was
approximately (pound sterling)2,100,000 (approximately $3,251,000 at an
exchange rate of $1.55 per pound sterling). The acquisition has been accounted
for under the purchase method of accounting. The cost of the acquisition has
been allocated on the basis of the estimated fair market value of the assets
acquired and the liabilities assumed. This allocation resulted in goodwill of
approximately $2,456,000 which is being amortized over 10 years.

The results of BPS have been included with those of the Company since the
date of the acquisition. Pro Forma unaudited consolidated operating results of
the Company and BPS for the year ended December 31, 1995, assuming the
acquisition had been made as of January 1, 1995, are summarized below:

<TABLE>
<S> <C>
Sales........................................... $ 8,149,255
Net loss........................................ (3,281,953)
Loss per common share........................... (0.35)
</TABLE>

7. INCOME TAXES

The provision for income taxes for the years ended December 31, 1995 and
1996 consists of deferred foreign income tax of $10,543 and $101,432,
respectively. There was no federal or state benefit provided for domestic losses
as a 100% valuation allowance was recorded based on management's assessment that
realization was not likely. In addition, there was no foreign benefit provided
for certain foreign losses as a 100% valuation allowance was recorded based on
management's assessment that realization was not likely. The tax rate on other
foreign income was less than the U.S. rate.

F-10
<PAGE> 65

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and is a summary of the significant components of the Company's
deferred federal tax assets and liabilities:

<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Deferred Tax Asset:
Other assets.............................. $ 11,488 $ 49,414 $ 31,340
Operating loss carryforwards.............. 2,292,211 3,396,572 4,552,532
----------- ----------- -----------
Gross deferred tax asset.................. 2,303,699 3,445,986 4,583,872
Valuation allowance....................... (2,195,845) (3,338,968) (4,570,246)
----------- ----------- -----------
Deferred tax asset..................... 107,854 107,018 13,626
----------- ----------- -----------
Deferred Tax Liability:
Fixed assets.............................. 107,854 160,690 13,626
Foreign liability......................... -- -- 161,926
----------- ----------- -----------
Deferred tax liability................. 107,854 160,690 175,552
----------- ----------- -----------
NET DEFERRED TAX LIABILITY.................. $ -- $ 53,672 $ 161,926
=========== =========== ===========
</TABLE>

For income tax reporting purposes, the Company has net operating loss
carryforwards as follows:

<TABLE>
<CAPTION>
NET
OPERATING LOSS
CARRYFORWARDS EXPIRATION
U.S. DATE
-------------- ----------
<S> <C> <C>
Net Operating Loss 4/30/88.......................... $ 75,031 2003
Net Operating Loss 4/30/89.......................... 269,949 2004
Net Operating Loss 4/30/90.......................... 203,605 2005
Net Operating Loss 4/30/91.......................... 42,024 2006
Net Operating Loss 12/31/92......................... 262,926 2007
Net Operating Loss 12/31/93......................... 2,301,851 2008
Net Operating Loss 12/31/94......................... 3,159,453 2009
Net Operating Loss 12/31/95......................... 3,182,663 2010
Net Operating Loss 12/31/96......................... 3,892,298 2011
-----------
$ 13,389,800
===========
</TABLE>

A change in fiscal year caused the $262,926 of U.S. loss for the period
ended December 31, 1992 to be utilized ratably over a six-year period. The
Company's ability to utilize the U.S. net operating loss carryover amounts
disclosed above may be significantly limited under U.S. Internal Revenue Code
("IRC") Section 382 as a result of various changes affecting the Company's
capital structure during 1996 and prior years.

F-11
<PAGE> 66

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. LONG-TERM DEBT

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1996
---------- ----------
<S> <C> <C>
Mortgage loan....................................... $ 465,600 --
Directors' pension fund loan........................ 465,600 --
Bank term loan...................................... -- $1,387,125
Notes payable....................................... -- 233,625
Capital leases...................................... 150,944 196,190
-------- --------
1,082,144 1,816,940
Less current portion................................ 237,811 262,779
-------- --------
Long-term debt...................................... $ 844,333 $1,554,161
======== ========
</TABLE>

In 1996, the Company refinanced the mortgage loan and Directors' pension
fund loan by EPL Technologies (Europe) Limited entering into a bank term loan
agreement. The bank term loan carries an interest rate ranging from 2% to 2 1/4%
over the Bank of Scotland Base Rate, which base rate at December 31, 1996 was
6%. EPL Europe also entered into a line of credit with Bank of Scotland for
approximately $514,000 which bears interest of 2 1/2% over bank base rate. Both
the term loan and the line of credit are collateralized by the assets of BPS.

In conjunction with the acquisition of some of the assets of Crystal
Plastics, Inc., (Note 6), the Company entered into a $267,000 note payable with
the prior owner. The note is payable in 8 quarterly principal installments of
$33,375 through June 1998 with additional consideration based on the performance
of the business over the next two years and bears an interest rate of 8%.

Other debt relates to capital leases that bear interest rates from 5.9%
through 13.0%, with varying monthly principal and interest payments.

At December 31, 1996, aggregate annual maturities of long-term debt were as
follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
-----------------------------------------------
<S> <C>
1997........................................... $ 262,779
1998........................................... 325,926
1999........................................... 200,735
2000........................................... 205,500
2001........................................... 222,625
Thereafter..................................... 599,375
----------
$1,816,940
==========
</TABLE>

9. CONVERTIBLE PREFERRED STOCK

The Series A Preferred Stock, (the "Series A Stock") which has been issued
up to its authorized limit of 3,250,000, was issued at a price of $1.00 per
share with each share of Series A Stock carrying the option to convert into
common shares at a rate of $1.50 per share. The Series A Stock carries equal
voting rights to the common shares, based on the underlying number of common
shares after conversion. The Series A Stock carries a dividend rate of 10% per
annum, payable in cash and/or common shares ($1.50 per share) at the Company's
option (dividends in arrears at December 31, 1995 and 1996 totaled $837,237 and
$1,100,716, respectively.) During 1996, shareholders holding 400,000 shares of
Series A Stock elected to exercise their right of conversion, leaving 2,490,000
shares of Series A Stock outstanding at December 31, 1996. In addition, 20% of
the common stock conversion option carries detachable warrants at a price of
$2.00 per warrant.

F-12
<PAGE> 67

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

During 1996 and 1995, 12,333 and 33,334 warrants were exercised, respectively,
leaving 119,266 unexercised at December 31, 1996.

At the Annual Meeting of the Company held on July 22, 1996, the
shareholders of the Company authorized the issuance of up 2,000,000 shares of
Board Designated Preferred Stock. On July 23, 1996, the Company issued 531,915
of these shares, designated as Series B Preferred Stock (the "Series B Stock").
The Series B Stock contains the option to convert into shares of Common Stock at
the rate of $9.40 per share and carries equal voting rights to the shares of
Common Stock, based on the underlying number of shares of Common Stock after
conversion. The Series B Stock carries a dividend rate of 10% per annum, payable
in cash and/or shares at the Company's option. Gross proceeds to the Company
were $2,500,000. The outstanding dividends on the Series B Stock at December 31,
1996 totaled $110,445.

The Series B Stock, when issued, was convertible into shares of common
stock at a fixed conversion price of $9.40 per share. The extent of the
beneficial conversion feature, representing the difference between the $9.40
conversion price and the prevailing market price of the Common Stock at the date
of issuance, a total of $625,000, was accreted immediately from accumulated
deficit to additional paid-in-capital.

10. COMMON STOCK

During 1996 the Company issued a total of 1,161,324 shares of Common Stock.
A total of 699,665 shares were issued from the exercise of warrants, resulting
in net proceeds to the Company of $3,298,876. A total of 192,000 shares were
issued from the exercise of options, resulting in net proceeds to the Company of
$255,520. A total of 266,667 shares were issued on conversion of the Series A
Preferred Stock. A further 2,991 shares were issued pursuant to the Company's
Option Plan as payment for professional services resulting in expense of
$23,932.

During 1995, the Company issued a total of 2,776,069 shares of Common
Stock. In September 1995, the Company completed a private placement transaction
of 1,375,000 restricted shares of its Common Stock (the "Offering"), par value
$0.001 per share, at a price of $4.00 per share, to raise gross proceeds of
$5,500,000. Proceeds were used for the acquisition of BPS (see Note 6) and for
working capital. Expenses associated with the Offering were $620,000, which were
charged against additional paid-in capital. Furthermore, the Company issued
1,012,500 shares of Common Stock in the conversion of a note payable. A total of
23,250 shares were issued as a commitment fee for a line of credit from a
corporate shareholder, resulting in the capitalization of deferred finance costs
totaling $77,459. A further 10,680 shares were issued as compensation to
employees and as payment for professional services pursuant to the Company's
Option Plan, resulting in expense of $37,381. In connection with the Offering,
warrants for a total of 27,500 shares of Common Stock, exercisable at $4.00 per
share up to October 1998, were issued in October 1995.

At December 31, 1996 the Company had warrants outstanding to purchase
196,766 shares of Common Stock at between $2.00 and $4.00 per share, which, if
exercised, would provide the Company with gross proceeds of approximately
$548,000. In addition, the Company had options outstanding to purchase 1,647,750
shares of Common Stock at an average price of $6.02 per share, which, if
exercised, would provide the Company with gross proceeds of approximately
$9,900,000.

11. STOCK OPTION PLANS

The 1994 Stock Incentive Plan (the "1994 Plan") originally provided for up
to 750,000 shares of unissued Common Stock to be made available for the granting
of options. This was approved by shareholders on July 21, 1994. On July 22,
1996, shareholders approved an increase in the number of shares available for
the granting of options under the 1994 Plan to 1,500,000. On December 31, 1995
and 1996, 312,750 and 332,750 shares, respectively, were available for grant.

F-13
<PAGE> 68

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Information regarding these plans is as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE
UNDER OPTION PRICE
------------ --------
<S> <C> <C>
Outstanding and Exercisable at December 31, 1993.............. 535,000 $ 1.38
Activity for the Year Ended December 31, 1994
Expired/Canceled............................................ (20,000) $ 6.50
---------
Outstanding and Exercisable at December 31, 1994.............. 515,000 $ 1.20
Activity for the Year Ended December 31, 1995
Granted..................................................... 437,250 $ 3.68
Expired..................................................... (15,000) $ 9.24
---------
Outstanding and Exercisable at December 31, 1995.............. 937,250 $ 2.24
Activity for the Year Ended December 31, 1996
Granted..................................................... 902,500 $ 8.94
Exercised................................................... (192,000) $ 1.34
---------
Outstanding and Exercisable at December 31, 1996.............. 1,647,750 $ 6.02
=========
</TABLE>

These options expire between March 10, 1998 and December 4, 2001. Of the
above options, 172,500 options issued during 1996 were issued outside of the
1994 Plan.

The estimated fair value of options granted during 1996 and 1995 ranged
between $5.86 -- $12.62 and $3.46 -- $3.96 per share, respectively. The Company
applies Accounting Principles Board Opinion No. 25 and related interpretations
in accounting for its stock option plans. Accordingly, no compensation cost has
been recognized for its fixed stock option plans and its stock purchase plan.
Had compensation cost for the Company's stock option plans been determined based
on the fair value at the grant dates for awards under those plans consistent
with the method of FASB Statement No. 123, the Company's net loss and loss per
share for the years ended December 31, 1995 and 1996 would have been increased
to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Net loss available for common shareholders:
As reported.............................................. $3,633,788 $ 5,294,843
Pro forma................................................ $5,224,529 $11,666,398
Net loss per common share:
As reported.............................................. $ 0.78 $ 0.71
Pro forma................................................ $ 1.12 $ 1.57
</TABLE>

The fair value of options granted under the Company's stock option plans
during 1995 and 1996 was estimated on the date of grant using the Black-Scholes
option-pricing mode with the following assumptions used: no dividend yield,
expected volatility ranging from 88% to 224%, risk free interest rate ranging
from 5.6% -- 6.91%, and expected lives of 5 years. Pro forma compensation cost
of options granted under the 1994 Plan is measured based on the discount from
market value. The pro forma effect on net income for 1996 and 1995 is not
representative of the pro forma effect on net income in future years because it
does not take into consideration pro forma compensation expense related to
grants made prior to 1995. SFAS No. 123 does not apply to awards prior to 1995,
and additional awards in future years are anticipated.

F-14
<PAGE> 69

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. NET LOSS PER COMMON SHARE

Net loss per common share is computed by dividing the loss applicable to
common shareholders by the weighted average number of common shares and common
share equivalents outstanding during the period. Outstanding options,
convertible preferred stock and stock warrants were determined to be
antidilutive for the years ended December 31, 1994, 1995 and 1996, as
applicable, and were therefore excluded from the per share calculations.

13. COMMITMENTS

The Company has entered into various leases for facilities, vehicles and
equipment. At December 31, 1996, future minimum lease payments were as follows:

<TABLE>
<CAPTION>
CAPITALIZED OPERATING
YEAR ENDED DECEMBER 31, LEASES LEASES
------------------------------------- ----------- ----------
<S> <C> <C>
1997................................. $39,020 $ 425,559
1998................................. 40,689 399,877
1999................................. 7,789 312,539
2000................................. -- 264,972
2001................................. -- 264,440
------- ----------
Future Minimum Lease Payments........ $87,498 $1,667,387
======= ==========
</TABLE>

Rental expense for operating leases amounted to $119,022, $162,559 and
$224,461 for the years ended December 31, 1994, 1995 and 1996, respectively.

The Company has entered into agreements for services with certain executive
officers, which currently will expire, if not renewed, in 1997. In addition to a
base salary, certain other benefits are provided.

14. RELATED PARTY TRANSACTIONS

The Company purchased certain raw materials from Jungbunzlauer Inc., a
subsidiary of a shareholder, in the amount of $35,760 and $35,280 for the years
ended December 31, 1995 and 1996, respectively.

15. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, accounts receivable, due
from related parties and accounts payable approximate fair value because of the
short maturities of these items.

Interest rates that are currently available to the Company for issuance of
long-term debt (including current maturities) with similar terms and remaining
maturities are used to estimate fair value for long-term debt. The estimated
fair values of the long-term debt approximate its carrying value.

The fair values are based on pertinent information available to the
management as of respective year ends. Although management is not aware of any
factors that could significantly affect the estimated fair value amounts, such
amounts have not been comprehensively revalued for purposes of these
consolidated financial statements since that date, and current estimates of fair
value may differ from amounts presented herein.

16. CUSTOMER CONCENTRATION

In 1996, one customer accounted for 13% of annual revenues and in 1995, no
customers accounted for 10% or more of annual revenues. Two customers
represented 35% of revenues for the year ended December 31, 1994.

F-15
<PAGE> 70

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. INDUSTRY AND GEOGRAPHIC AREA SEGMENT INFORMATION

The Company develops, manufactures, and markets proprietary technologies
designed to maintain the integrity of fresh produce. These products fall into
two major classifications; processing aids and packaging materials. Processing
aids are sold primarily in the United States with smaller amounts also sold in
Canada, while packaging materials are marketed in North America, United Kingdom
and, to a lesser extent, Continental Europe.

<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
SALES
Domestic Operations:
Processing aids................................ $ 345,795 $ 472,747 $ 1,326,669
Packaging materials............................ 232,668 868,229 1,716,984
----------- ----------- -----------
Total Domestic............................... 578,463 1,340,976 3,043,653
United Kingdom Operations -- packaging
materials...................................... -- 1,898,590 8,270,488
----------- ----------- -----------
Total..................................... $ 578,463 $ 3,239,566 $11,314,141
=========== =========== ===========
NET (LOSS) INCOME FROM OPERATIONS
Domestic Operations:
Processing aids................................ $(3,289,917) $(2,661,480) $(2,700,793)
Packaging materials............................ 8,881 (385,653) (1,552,376)
----------- ----------- -----------
Total Domestic............................... (3,281,036) (3,047,133) (4,253,169)
United Kingdom Operations -- packaging
materials...................................... -- 4,918 69,194
----------- ----------- -----------
Total..................................... $(3,281,036) $(3,042,215) $(4,183,975)
=========== =========== ===========
TOTAL ASSETS
Domestic Operations:
Processing aids................................ $ 2,673,450 $ 3,061,720 $ 2,876,117
Packaging materials............................ 515,295 657,357 2,149,822
----------- ----------- -----------
Total Domestic............................... 3,188,745 3,719,077 5,025,939
United Kingdom Operations -- packaging
materials...................................... -- 6,322,120 10,189,483
----------- ----------- -----------
Total..................................... $ 3,188,745 $10,041,197 $15,215,422
=========== =========== ===========
DEPRECIATION AND AMORTIZATION EXPENSE
Domestic Operations:
Processing aids................................ $ 368,131 $ 432,135 $ 434,313
Packaging materials............................ 9,461 43,172 117,543
----------- ----------- -----------
Total Domestic............................... 377,592 475,307 551,856
United Kingdom Operations -- packaging
materials...................................... -- 98,986 457,890
----------- ----------- -----------
Total..................................... $ 377,592 $ 574,293 $ 1,009,746
=========== =========== ===========
</TABLE>

F-16
<PAGE> 71

EPL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
CAPITAL EXPENDITURES
Domestic Operations:
Processing aids................................ $ 168,343 $ 127,471 $ 92,858
Packaging materials............................ -- 75,989 4,994
----------- ----------- -----------
Total Domestic............................... 168,343 203,460 97,852
United Kingdom Operations -- packaging
materials...................................... -- 238,978 1,899,219
----------- ----------- -----------
Total..................................... $ 168,343 $ 442,438 $ 1,997,071
=========== =========== ===========
</TABLE>

18. SUBSEQUENT EVENTS

Subsequent to the year end, in March 1997, the Company executed a letter of
intent containing its conditional offer to acquire a specialty packaging
business ("Fabbri"), based in Europe, with sales revenue of approximately
$7,500,000 and net assets of approximately $6,300,000. The Company believes that
this would complement its existing European operations and advance its strategic
plan of products and services it should be offering. The expected purchase price
will be based on the net asset value of the business at the date of acquisition,
as adjusted by an agreed reduction in the book value of certain assets. The
offer is subject to the preparation, negotiation, and execution of an agreement
on definitive documentation and the Company's due diligence. Such negotiation
and investigations are continuing. There can, however, be no assurance that such
negotiations and the due diligence will be satisfactory or that this transaction
will in fact be consummated.

In addition, also in March 1997, the Company received subscriptions of $1.0
million in connection with a private placement of Common and Board Designated
Preferred Stock. Further subscriptions for this limited private placement are
expected shortly from other existing offeree shareholders, although there can be
no assurance that any further subscriptions will in fact be received.

The Company anticipates declaring a one-for-two reverse stock split prior
to the effective date of the Form S-1 Registration Statement.

F-17
<PAGE> 72

EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER
DECEMBER 31, 30,
1996 1997
------------- ------------
* (UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents..................................... $ 1,639,567 $ 1,165,749
Accounts receivable, net...................................... 2,911,660 2,973,065
Due from related parties...................................... 34,101 30,585
Inventories................................................... 1,938,819 2,195,201
Prepaid expenses and other current assets..................... 623,792 1,279,702
------------ ------------
Total Current Assets....................................... 7,147,939 7,644,302
------------ ------------
PROPERTY AND EQUIPMENT, NET..................................... 4,005,711 4,120,961
------------ ------------
OTHER ASSETS
Patent and distribution rights, net........................... 1,303,121 1,056,089
Goodwill...................................................... 2,503,655 2,324,556
Other intangibles, net........................................ 254,996 227,608
------------ ------------
Total Other Assets......................................... 4,061,772 3,608,253
------------ ------------
Total Assets.......................................... $ 15,215,422 $ 15,373,516
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.............................................. $ 3,005,577 $ 4,362,175
Accrued expenses.............................................. 1,213,964 712,996
Other liabilities............................................. 396,418 661,114
Line of credit -- related party............................... -- 337,500
Current portion of long-term debt............................. 262,779 222,345
------------ ------------
Total Current Liabilities.................................. 4,878,738 6,296,130
LONG TERM DEBT.................................................. 1,554,161 2,107,032
DEFERRED INCOME TAXES........................................... 161,926 141,284
MINORITY INTEREST............................................... 202,120 --
------------ ------------
Total Liabilities.......................................... 6,796,945 8,544,446
SHAREHOLDERS' EQUITY
Series A Convertible Preferred Stock.......................... 2,490,000 2,143,000
Series B Convertible Preferred Stock.......................... 5,319 --
Series C Convertible Preferred Stock.......................... -- 144
Common Stock.................................................. 7,765 8,838
Additional paid-in capital.................................... 21,947,444 25,635,200
Accumulated deficit........................................... (16,283,464) (21,022,441)
Foreign currency translation adjustment....................... 251,413 64,329
------------ ------------
Total Shareholders' Equity................................. 8,418,477 6,829,070
------------ ------------
Total Liabilities And Shareholders' Equity............ $ 15,215,422 $ 15,373,516
============ ============
</TABLE>

- ---------------
* Condensed from audited financial statements

The accompanying notes are an integral part of these condensed financial
statements.

F-18
<PAGE> 73

EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1996 1997
----------- -----------
<S> <C> <C>
Sales............................................................. $ 7,063,578 $14,047,404
Cost of sales..................................................... 5,828,264 12,604,440
----------- -----------
Gross profit...................................................... 1,235,314 1,442,964
Selling, general and administrative expenses...................... 3,172,052 4,437,477
Research and development costs.................................... 682,597 869,067
Depreciation and amortization..................................... 689,428 931,359
----------- -----------
Net loss from operations.......................................... (3,308,763) (4,794,939)
Interest expense, net............................................. 12,227 84,488
Minority interest................................................. (7,773) (212,672)
----------- -----------
Net loss.......................................................... $(3,313,217) $(4,666,755)
Deduct:
Accretion, discount and dividends on Preferred Stock............ 873,357 411,139
----------- -----------
Net loss for common shareholders.................................. $(4,186,574) $(5,077,894)
=========== ===========
Loss per common share............................................. $ (0.56) $ (0.62)
=========== ===========
</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.

F-19
<PAGE> 74

EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
-------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1997
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss........................................................ $ (3,313,217) $ (4,666,755)
Adjustments to reconcile net loss to net cash
used in operating activities:................................ 689,428 918,481
Gain on foreign currency translation............................ 23,647 27,788
Minority interest............................................... (7,773) (212,672)
Changes in assets and liabilities............................... (638,106) 75,886
----------- -----------
Net cash (used) in operating activities...................... (3,246,021) (3,857,272)
----------- -----------
INVESTING ACTIVITIES:
Purchase of intangible assets................................... (59,488) --
Purchase of fixed assets........................................ (2,207,402) (776,919)
Proceeds from sale of fixed assets.............................. -- 15,658
----------- -----------
Net cash (used) in investing activities...................... (2,266,890) (761,261)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from the exercise of options/warrants.................. 3,584,213 1,388,454
Proceeds from issuance of preferred and common stock, net....... 2,500,000 1,875,978
Proceeds from note payable/net borrowings/line of credit........ 939,000 1,086,495
Repayment of long term debt..................................... (643,012) (206,212)
----------- -----------
Net cash provided from financing activities.................. 6,380,201 4,144,715
----------- -----------
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS.................. 867,290 (473,818)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR...................... 1,522,075 1,639,567
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD.......................... $ 2,389,365 $ 1,165,749
=========== ===========
</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.

F-20
<PAGE> 75

EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 -- BASIS OF PRESENTATION

The financial information of EPL Technologies, Inc. and Subsidiaries (the
"Company") included herein is unaudited; however, such information reflects all
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of financial
position and results of operations for the interim periods.

The financial information has been prepared in accordance with generally
accepted accounting principles for interim financial information, the
instructions to Form 10-Q and Article 10 of Regulation S-X. Moreover, the
results of operations for the nine months ended September 30, 1997 are not
necessarily indicative of the results to be expected for the full year. At this
stage of the Company's development, month to month and quarter to quarter
anomalies in operating results are to be expected. This information must also be
read in connection with the Company's Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1996.

NOTE 2 -- OPERATIONS

The Company develops, manufactures and markets complementary proprietary
technologies designed to maintain the quality and integrity of fresh produce.
The Company's primary products are processing aids and packaging materials,
together with a range of scientific and technical services that support and
complement its product offerings. The Company's continued ability to operate is
dependent upon its ability to maintain adequate financing and to achieve levels
of revenues necessary to support its cost structure, of which there can be no
assurance. The nature of the processing aid business is such that fresh-cut
produce processors and other third party users supplying retail markets require
extensive and confidential on-site, and, in certain cases, independent testing
prior to utilizing the Company's products and related protocols in their
production and then, for competitive reasons, protect the supply relationship
with confidentiality agreements. This results in an extended sales process,
which the Company supports by absorbing the costs of testing work undertaken and
by retaining in a proprietary context the data generated. This level of support
adds to the cost of market development. Management believes that success in this
sales process with large processors is the primary basis for developing
sustainable growth in revenues, which will enable the Company to achieve
profitable operations in this area of the business, although there can be no
assurance such will be the case. The nature of the packaging materials business
is such that the sales process is shorter than that for processing aids, but
there is still an approval process to be completed with new customers prior to
sale.

In September 1997, IPS Produce, Inc., ("IPSP"), one of the U.S.
subsidiaries of the Company, executed a ten-year exclusive trademark license
agreement and strategic alliance with Potandon Produce LLC ("Potandon"), a
"Green Giant Fresh(R)" brand licensee of the Pillsbury Company. Under this
agreement, which is subject to extension beyond August 2007, and is subject to
the terms of Potandon's license of the "Green Giant Fresh(R)" brand from the
Pillsbury Company, certain minimum royalties and other customary provisions, the
Company will sell fresh-cut potato products, such as french fries, to the
wholesale foodservice industry under the "Green Giant Fresh(R)" brand name,
utilizing the Company's "Potato Fresh(R) System" processing aid technologies and
related protocols. The sales process and documentary negotiations involved in
securing this alliance took two years. The fresh-cut potato products will be
sold to the foodservice industry through IPSP using raw materials from Potandon,
in conjunction with one or more co-packers expected to be operating at several
sites around the US. There can, however, be no assurance as to the pace of
development or degree of success of the expansion of this part of the Company's
business.

Subsequent to September 30, 1997, the Company also announced a license
agreement for its "Apple Fresh(R) System" processing aid (see note 9
below -- Subsequent Events).

F-21
<PAGE> 76

EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's management believes that cash flows from consolidated
operations and the availability of financing from other sources, such as
additional borrowing under its available line of credit, or other private or
public issuances of equity which the Company believes may be obtainable
acceptable terms, will provide the Company adequate financing for the next year,
assuming minimal sales budgets are met. For example, the Company, subsequent to
September 30, 1997, successfully raised gross proceeds of $12.5 million in new
equity in a private transaction. See Note 6, Note 9 and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" contained
elsewhere herein.

NOTE 3 -- INVENTORIES

Inventories consisted of the following:

<TABLE>
<CAPTION>
SEPTEMBER
DECEMBER 31, 30,
1996 1997
------------- ------------
<S> <C> <C>
Raw Materials and Supplies......................... $ 938,050 $1,198,962
Finished Goods..................................... 1,000,769 996,239
---------- ----------
Total Inventories........................ $ 1,938,819 $2,195,201
========== ==========
</TABLE>

NOTE 4 -- INTANGIBLE ASSETS -- PATENT AND DISTRIBUTION RIGHTS AND GOODWILL

Patents are amortized over the shorter of their estimated useful lives or
the life of the patent. The net book value of acquired and developed patents
totaled $998,689 as of September 30, 1997. Distribution rights are amortized
over the ten-year life of the relevant agreement. The net book value of
previously acquired distribution rights totaled $57,400 as of September 30,
1997. Amortization expense related to patent and distribution rights totaled
$247,032 for the nine months ended September 30, 1997. Goodwill related to the
acquisition of certain subsidiaries is being amortized on a straight line basis
over ten years. Amortization expense related to goodwill and other intangible
assets totaled $247,844 for the nine months ended September 30, 1997.

NOTE 5 -- CONVERTIBLE PREFERRED STOCK

The Company's 10% Series A Convertible Preferred Stock (the "Series A
Stock"), which has been issued up to its authorized limit of 3,250,000, was
issued more than three years ago at a price of $1.00 per share, with each share
of Series A Stock carrying the option to convert into common shares at a rate of
$1.50 per share. The Series A Stock carries equal voting rights to the common
shares, based on the underlying number of common shares after conversion. The
Series A Stock carries a dividend rate of 10% per annum, payable in cash and/or
common shares ($1.50 per share) at the Company's option. Dividends in arrears at
September 30, 1997 totaled $1,279,986.

During the nine months ended September 30, 1997, shareholders holding
347,000 shares of Series A Stock elected to exercise their right of conversion,
leaving 2,143,000 shares of Series A Stock outstanding at September 30, 1997. In
addition, 20% of the common stock into which the Series A Stock may be converted
carries detachable warrants at an exercise price of $2.00 per warrant. During
the nine months ended September 30, 1997, 51,533 of these warrants were
exercised, leaving 67,732 of these warrants unexercised at September 30, 1997.

At the Annual Shareholders Meeting of the Company held on July 21, 1996,
the shareholders approved an amendment to the Company's Articles of
Incorporation to permit the issuance of up to 2,000,000 shares of preferred
stock (the "Board Designated Preferred Stock") with such designations and
preferences as the Company's Board of Directors may determine from time to time.
On July 23, 1996, the Company issued 531,915 of these shares -- designated
Series B Convertible Preferred Stock -- at an aggregate consideration of

F-22
<PAGE> 77

EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$2,500,000 to two existing institutional investors in the Company (the "Series B
Stock"). Such issuance was made under Regulation D under the Securities Act of
1933, as amended, as a transaction not involving a public offering. The Series B
Stock carries the option to convert into shares of common stock at the rate of
$9.40 per share and votes as a class, except as otherwise provided by law, with
the Series A Stock, the Series C Stock (as defined below) and the common stock,
based on the underlying number of shares of common stock after conversion.
During the nine months ended September 30, 1997, the shareholders of Series B
Stock elected to fully exercise their right of conversion into common stock and
thus there were no shares of Series B Stock outstanding at September 30, 1997.
The Series B Stock carried a dividend rate of 10% per annum, payable in cash
and/or shares ($9.40 per share) at the Company's option. Dividends in arrears on
the Series B Stock at September 30, 1997 totaled $270,092. The Series B Stock,
when issued, was convertible into shares of common stock at a fixed conversion
price of $9.40 per share. The extent of the beneficial conversion feature,
representing the difference between the $9.40 conversion price and the
prevailing market price of the common stock at the date of issuance, a total of
$625,000, was accreted immediately from accumulated deficit to additional
paid-in-capital.

During the nine months ended September 30, 1997, the Company received $1.0
million from an existing institutional shareholder in connection with a private
offering of common and Board Designated Preferred Stock. This resulted in the
issuance of 43,750 shares of common stock, together with 144,444 shares of Board
Designated Preferred Stock -- designated Series C Convertible Preferred Stock
(the "Series C Stock"). Such issuance was made under Regulation D under the
Securities Act of 1933, as amended, as a transaction not involving a public
offering. The Series C Stock carries the option to convert into shares of common
stock at the rate of $9.00 per share and votes as a class, except as otherwise
provided by law, with the Series A Stock, the Series B Stock and the common
stock, based on the underlying number of shares of common stock after
conversion. The Series C Stock carries a dividend rate of 10% per annum, payable
in cash and/or shares ($9.00 per share) at the Company's option. Dividends in
arrears on the Series C Stock at September 30, 1997 totaled $20,583. The Series
C Stock, when issued, was convertible into shares of common stock at a fixed
conversion price of $9.00 per share. The extent of the beneficial conversion
feature, representing the difference between the $9.00 conversion price and the
prevailing market price of the common stock at the date of issuance, a total of
$72,222, was accreted immediately from accumulated deficit to additional
paid-in-capital.

At the Annual Meeting of the Company held on July 21, 1997, the
shareholders of the Company approved an increase in the number of shares of
Board Designated Preferred Stock reserved for issuance from 2,000,000 to
4,000,000. See also Note 9 below.

NOTE 6 -- ISSUANCE OF COMMON STOCK AND EXERCISE OF WARRANTS

In addition to the 231,333 shares of common stock issued upon the
conversion of 347,000 shares of Series A Stock, the 265,957 shares of common
stock issued upon conversion of an equal number of shares of Series B Stock and
51,533 shares of common stock issued upon the exercise of warrants underlying
the Series A Stock, all as described in Note 5 above, 289,500 shares of common
stock were issued due to the exercise of stock options during the nine month
period ended September 30, 1997. This exercise of options resulted in gross
proceeds to the Company of $1,037,406. Furthermore, 62,225 previously
privately-issued warrants were exercised, which resulted in additional gross
proceeds to the Company of $260,900.

At the Annual Meeting of the Company held on July 21, 1997, the
shareholders also approved an amendment to the Company's 1994 Stock Incentive
Plan (the "Plan") which increased the number of shares of common stock reserved
for issuance under the Plan from 1,500,000 to 2,250,000.

F-23
<PAGE> 78

EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7 -- NET LOSS PER COMMON SHARE

Net loss per common share is computed by dividing the loss applicable to
common shareholders by the weighted average number of common shares and common
share equivalents during the period. Outstanding options, convertible Series A
Stock, Series B Stock and Series C Stock and stock warrants were determined to
be antidilutive for the periods ended September 30, 1996 and 1997 and were
therefore excluded from the per share calculations.

NOTE 8 -- NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board ("FASB") has issued SFAS No. 128,
"Earnings Per Share," which will result in changes to the computation and
presentation of earnings per share. The Company will be required to adopt this
standard during its year ended December 31, 1997 with earlier adoption not
permitted. At this time, the Company has not determined the impact this standard
will have on the Company's earnings per share.

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," This statement, which establishes standards for reporting and
disclosing comprehensive income, is effective for interim and annual periods
beginning after December 15, 1997, although earlier adoption is permitted.
Reclassification of financial information for earlier periods presented for
comparative periods is required under SFAS No. 130. As this statement only
requires additional disclosures in the Company's consolidated financial
statements, its adoption will not have any impact on the Company's consolidated
financial position or results of operations. The Company expects to adopt SFAS
No. 130 effective January 1, 1998.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," This statement, which establishes
standards for the reporting of information about operating segments and requires
the reporting of selected information about operating segments in interim
financial statements, is effective for fiscal years beginning after December 15,
1997, although earlier application is permitted. Reclassification of segment
information for earlier periods presented for comparative periods is required
under SFAS No. 131. The Company does not expect adoption of this statement to
result in changes to its presentation of financial information. The Company
expects to adopt SFAS No. 131 effective January 1, 1998.

NOTE 9 -- SUBSEQUENT EVENTS

On October 3, 1997, Integrated Produce Systems, Inc. a subsidiary of the
Company, announced a three-year license agreement with Farmington Fresh ("FF"),
a major grower and marketer of Fuji apples in California. Under this agreement,
which may be extended beyond its initial term, FF will produce fresh-cut apple
slices, utilizing the Company's "Apple Fresh(R)" processing aid technologies and
related protocols, as well as the Company's scientific support and packaging
technologies. The new sliced apple product will be processed at FF's newly-built
processing plant in California. The agreement grants FF production exclusivity
in FF's local geographic market. The Company announced this arrangement in a
report on a Form 8-K filed October 3, 1997.

Effective October 21, 1997, the Company completed a revolving line of
credit agreement with Trilon Dominion Partners LLC, the Company's largest
shareholder (the "Trilon Line"). Under the Trilon Line, which makes available to
the Company $2.1 million for working capital purposes, any amounts drawn are
secured by, amongst other things, a blanket lien on the assets of the Company's
wholly-owned US subsidiaries and on the assets of the Company itself. Any amount
drawn under this line of credit are repayable on September 30, 1998, unless
repaid earlier or the repayment date is renegotiated. Interest at the "prime
rate" (as published in the Wall Street Journal) plus 3% or 4% is payable
quarterly in arrears. $337,500 was drawn at

F-24
<PAGE> 79

EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

September 30, 1997 . The Company reported this arrangement in a report on Form
8-K filed October 24, 1997.

Effective October 31, 1997, the Company announced the acquisition of 100%
of the issued shares of California Microbiological Consulting, Inc. ("CMC"),
based in Walnut Creek, California. CMC specializes in food safety, forensic
testing and microbiological consulting. The acquisition provides the Company
with a West Coast food safety laboratory and microbiological testing facility to
complement the Company's East Coast capabilities at the facilities of its Pure
Produce, Inc. subsidiary. The two companies together afford the Company
increased food safety management capability, together with production
monitoring, contract research and HACCP (Hazard Analysis Critical Control
Points) and TQM (Total Quality Management) program services. The consideration
was settled almost exclusively through the issuance of shares of common stock in
the Company. The total consideration was not material.

Effective November 10, 1997, the Company issued 12,500 shares of Board
Designated Preferred Stock -- designated Series D Convertible Preferred
Stock -- at an aggregate consideration, before associated costs and expenses, of
$12,500,000, to three new institutional investors (the "Series D Stock"). Such
issuance was made under Regulation D under the Securities Act of 1933, as
amended, in a transaction not involving a public offering. The Series D Stock
carries the option to convert into shares of common stock at a variable rate,
based on a formula linked to the prevailing market price at the time of
conversion, and subject to certain limitations. The conversion rate may be up to
a 50% premium to the closing market price at the consummation of the transaction
(i.e. a 50% premium to the November 7, 1997 closing price of $15.50). In
addition, the Company issued 201,614 warrants exercisable at 130% of the closing
price (i.e. $20.16) exercisable at any time over the next 5 years. Part of the
proceeds of this offering were used to repay the Trilon Line on November 12,
1997, whereupon the Company instructed Trilon to cancel the Trilon Line and to
file appropriate releases of all collateral securing the Trilon Line. The Trilon
Line therefore is no longer available for drawings.

F-25
<PAGE> 80

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Unique Shareholder of
FABBRI ARTES GRAFICAS VALENCIA, S.A.

We have audited the accompanying balance sheets of FABBRI ARTES GRAFICAS
VALENCIA, S.A as of September 30, 1997 and 1996 and the related statements of
income and cash flows for each of the two years in the period ended September
30, 1997. 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.

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

3. In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of FABBRI ARTES
GRAFICAS VALENCIA, S.A as of September 30, 1997 and 1996, and the results of
their operations and their cash flows for each of the two years in the period
ended September 30, 1997, in conformity with generally accepted accounting
principles.

4. In accordance with Royal Decree Law 7/1996 of June 7, on urgent tax and
other measures designed to promote and deregulate economic activities, the
Company has revalued its tangible assets as for statutory purposes. The effect
of this revaluation has led to an increase in tangible assets of Ptas 104,4
million and a revaluation reserve of Ptas 101,3 million, net of the tax thereon
of Ptas 3,1 million. Due to the fact that the revaluation of tangible assets is
not acceptable under generally accepted accounting principles in the United
States, the effect has been offset. As a consequence, the tax bases of the
revalued assets are higher than the reported amounts as for United States
purposes, which supposes a temporary difference according with SFAS-109.
Therefore the Company has recorded a deferred tax asset against the provision
for income taxes for an amount of Ptas 33,1 million, which will be reversed with
the tax effect of the annual depreciation of the revaluation. Ptas 6,4 million
have been reversed in the twelve month period ended on September 30, 1997. This
effect supposes that the income statement for the year ended September 30, 1997
is not strictly comparable with 1996.

COOPERS & LYBRAND, S.A.

Jorge Molina

February 9, 1998
Valencia, Spain

F-26
<PAGE> 81

FABBRI ARTES GRAFICAS VALENCIA, S.A.

BALANCE SHEETS
(THOUSAND PESETAS)

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1997 1996
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................................. 54.074 11.893
Marketable securities (note 4)......................................... 25.000 25.000
Accounts receivable (note 5)........................................... 225.073 299.434
Deferred tax assets.................................................... 9.536 333
Inventories (note 6)................................................... 221.959 173.944
------- -------
TOTAL CURRENT ASSETS........................................... 535.642 510.604
------- -------
Property and equipment, net (note 7)................................... 286.084 294.856
Deferred tax assets (note 10).......................................... 26.753 --
Long-term receivables and other assets (note 8)........................ 1.096 812
------- -------
TOTAL LONG-TERM ASSETS......................................... 313.933 295.668
------- -------
TOTAL ASSETS................................................... 849.575 806.272
======= =======

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, trade (note 9)....................................... 135.650 89.990
Amounts owed to group undertakings..................................... 12.050 10.685
Other accrued liabilities (note 9)..................................... 27.680 21.147
------- -------
TOTAL CURRENT LIABILITIES...................................... 175.380 121.822
------- -------
LONG-TERM LIABILITIES:
Deferred tax liabilities............................................... 2.354 6.215
------- -------
TOTAL LONG-TERM LIABILITIES.................................... 2.354 6.215
------- -------
TOTAL LIABILITIES.............................................. 177.734 128.037
------- -------
SHAREHOLDERS' EQUITY (NOTE 10)
Share capital.......................................................... 74.686 74.686
Reserves............................................................... 573.270 593.362
Profit for the year.................................................... 23.885 10.187
------- -------
TOTAL SHAREHOLDERS' EQUITY..................................... 671.841 678.235
------- -------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY....................... 849.575 806.272
======= =======
</TABLE>

F-27
<PAGE> 82

FABBRI ARTES GRAFICAS VALENCIA, S.A.

STATEMENTS OF INCOME
(THOUSAND PESETAS)

<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------
1997 1996
--------- ---------
<S> <C> <C>
Net sales............................................................. 1.088.634 1.030.015
Cost of sales....................................................... (937.374) (855.567)
--------- ---------
Gross profit..................................................... 151.260 174.448
Selling, general and administrative exp............................. (187.729) (193.851)
--------- ---------
Operating income................................................. (36.469) (19.403)
Interest expense, net (note 13)..................................... 12.275 23.838
Other income, net................................................... 8.262 9.389
--------- ---------
Income before income taxes.......................................... (15.932) 13.824
Provision for income taxes.......................................... 39.817 (3.637)
--------- ---------
Net income....................................................... 23.885 10.187
========= =========
</TABLE>

F-28
<PAGE> 83

FABBRI ARTES GRAFICAS VALENCIA, S.A.

STATEMENTS OF CASH FLOWS
(THOUSAND PESETAS)

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
NET INCOME........................................................... 23.885 10.187
Adjustments to reconcile net income to net cash from operating
activities:
Amortization...................................................... 40.836 38.153
Provisions........................................................ (375) 2.283
Other income...................................................... (279) (965)
Gain or losses on sale of fixed assets............................ 1.210 --
Deferred income taxes............................................. (39.817) (3.662)
Changes in current assets and liabilities:
Accounts receivable............................................... 73.629 (119.665)
Inventories....................................................... (46.908) 14.416
Accounts payable.................................................. 53.558 17.131
NET CASH FROM OPERATING ACTIVITIES................................... 105.739 (42.122)
-------- --------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Proceeds from sales of marketable securities...................... 285.000 677.000
Purchases of marketable securities................................ (285.000) (605.000)
Purchase of fixed and intangible assets........................... (37.260) (31.850)
Proceeds from sales of fixed and intangible assets................ 3.986 --
(Increase)/Decrease in other assets............................... (284) (184)
NET CASH FROM (USED IN) INVESTING ACTIVITIES......................... (33.558) 39.966
-------- --------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Dividends paid.................................................... (30.000) --
NET CASH FROM (USED IN) FINANCING ACTIVITIES......................... (30.000) --
-------- --------
INCREASE OR DECREASE IN CASH AND CASH EQUIVALENTS................. 42.181 (2.156)
-------- --------
Cash and cash equivalents, beginning of the year.................. 11.893 14.049
CASH AND CASH EQUIVALENTS, END OF THE YEAR........................ 54.074 11.893
======== ========
</TABLE>

F-29
<PAGE> 84

FABBRI ARTES GRAFICAS VALENCIA, S.A.

NOTES TO THE ACCOUNTS

1. ACTIVITIES

FABBRI ARTES GRAFICAS VALENCIA, S.A. (hereinafter, Fabbri, S.A.) is
primarily engaged in printing text and images, in addition to manufacturing
plastic containers. Its industrial installations, together with its registered
domicile for tax and mercantile purposes are located at Avda. de les Comarques
del Pais Valencia, 56, in Quart de Poblet (Valencia).

In accordance with Additional Provision 2 of Law 2/1995 of 23 March on
Limited Liability Companies, which amends the content of the Spanish Companies
Act, the Company has registered at the Mercantile Registry as a Single
Shareholder Company.

2. BASIS OF PRESENTATION

a) True and fair view

The annual accounts have been prepared on the basis of the Company's
accounting records and are presented in compliance with the United States
generally accepted accounting principles so as to provide a true and fair view
of the Company's net worth, its financial situation and the results of its
operations.

b) Comparability

At the General Meeting held on 20 June 1997, a resolution was adopted to
revalue as for Spanish accounting and tax purposes its fixed assets in
accordance with Royal Decree-Law 7/1996, of 7 June, on Urgent Tax Measures to
Liberalise Economic Activities. As a result the Company has recorded an increase
in tangible fixed assets totalling Ptas 114,428,000 pesetas and a revaluation
reserve totalling Ptas 101,295,000 pesetas. Therefore the 1997 financial
statements are not necessarily comparable with those from 1996.

The effect of the fixed assets revaluation has been offset in these
financial statements in order to comply with United States generally accepted
accounting principles. This accounting treatment supposes a difference between
the tax bases of fixed assets and their amounts for financial reporting. As a
consequence and in accordance with SFAS-109, the Company has recorded a deferred
tax asset-non current for the effect of the revalued amount corresponding to
depreciable assets, which raises to Ptas 33.1 million. This asset will be
reversed in future years with the tax effect corresponding to the excess of the
tax over accounting depreciation.

As a consequence, the income statement for the year ended September 30,
1997 is not strictly comparable with 1996.

3. ACCOUNTING POLICIES

a) Property and equipment, net

Property and equipment are stated at cost and are depreciated on a straight
line basis over their estimated useful lives, which are as follows:

<TABLE>
<CAPTION>
%
-----
<S> <C>
Buildings............................................................. 3-5
Plant and machinery................................................... 9-15
Tooling............................................................... 10
Fixtures.............................................................. 10
Data-processing equipment............................................. 25
Vehicles.............................................................. 16
Other tangible fixed assets........................................... 10
</TABLE>

F-30
<PAGE> 85

FABBRI ARTES GRAFICAS VALENCIA, S.A.

NOTES TO THE ACCOUNTS

Improvements which extend the useful lives of existing assets are
capitalized. Repair and maintenance costs are expensed in the year in which they
are incurred. When tangible fixed assets are retired or otherwise disposed of,
the asset and accumulated depreciation accounts are adjusted accordingly.

The Company adopted Statement of Financial Accounting No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed
of", as of October 1, 1996. No effect has been recorded of adopting this
standard.

b) Inventories

Inventories are stated at the lower of acquisition or production cost and
market value. Production cost includes materials, labour and manufacturing
expense and is calculated using average weighted cost method.

In those cases where the market or replacement value of inventories is
lower than the acquisition/production cost the relevant corrections in value are
made.

c) Transactions denominated in foreign currencies

Debtors and creditors denominated in foreign currencies are stated at
year-end exchange rates. Transactions in foreign currencies are recorded in the
profit and loss account at the exchange rates on the dates when they took place.
Realized gains, together with realized and unrealized losses on exchange, are
taken to profit and loss for the year.

d) Marketable securities

Marketable securities are recorded according with Statement of Financial
Accounting Standards N(0).115, "Accounting for certain investments in debt and
equity securities". SFAS N(0) 115 requires certain securities to be categorized
as either trading, available for sale or held to maturity. Trading securities
are carried at fair value with unrealized gains and losses included in income.
Available for sale securities are carried at fair value with unrealized gains
and losses recorded as a separate component of shareholders' equity. Held to
maturity securities are carried at amortized cost.

e) Corporation tax

Corporation tax expense is recognized based on the reported profit as
adjusted for permanent differences between reported and taxable profits and the
effects of any tax credits and deductions. Deferred tax assets and liabilities
arising from timing differences in the recognition of income and expense for
accounting and tax purposes and other events that create differences between the
tax bases of assets and their amounts for financial reporting, are recorded in
the balance sheet until the underlying timing differences reverse.

Tax credits and deductions and the tax effect of applying tax loss
carryforwards are treated as a reduction in the corporation tax expense for the
year in which the losses and credit occurred, if the compensation is reasonably
secured in future years.

The Company provides in full for all its deferred tax liabilities even
though they may not be expected to reverse in the foreseeable future. The
provision is adjusted to reflect changes in the Corporation Tax rate. Deferred
tax assets are recorded if there is reasonable assurance that they will be
realized.

f) Creditors

Short and long-term loans are stated at the amount at which they are to be
repaid and any implicit interest included either in their face value or their
repayment value is recorded as long-term receivables and others. Such interest
is charged to earnings using a financial method.

F-31
<PAGE> 86

FABBRI ARTES GRAFICAS VALENCIA, S.A.

NOTES TO THE ACCOUNTS

g) Severance payments

According with SFAS-5 and EITF Issue 94-3 the Company records the liability
for certain employee termination benefits, when it has been approved by the
management having the appropriate level of authority and it has been announced
to a group of employees that includes the affected employees.

h) Revenue Recognition and Allowance for doubtful accounts

Revenue is recognized when products are shipped. The Company provides for
all receivables which collection is not reasonably assured.

4. MARKETABLE SECURITIES

The movements and the classification of marketable securities are set out
below:

<TABLE>
<CAPTION>
THOUSAND PESETAS
-------------------------------------------------
OPENING CLOSING
BALANCE BALANCE
01.10.96 ADDITIONS DISPOSALS 30.09.97
-------- --------- --------- --------
<S> <C> <C> <C> <C>
Securiting porfolio.......................... 25.000 285.000 285.000 25.000
------ ------- ------- ------
(Government debt)............................ 25.000 285.000 285.000 25.000
====== ======= ======= ======
</TABLE>

5. ACCOUNTS RECEIVABLE

A breakdown of this account is as follows:

<TABLE>
<CAPTION>
THOUSAND PESETAS
-------------------------
30.09.1997 30.09.1996
---------- ----------
<S> <C> <C>
Trade debtors.................................................. 271.612 250.069
Other debtors.................................................. 965 2.986
Notes receivable to group undertakings......................... -- 101.953
Taxes refundable............................................. 9.292 760
------- -------
281.869 355.768
Less provisions for doubtful accounts.......................... (56.796) (56.334)
------- -------
225.073 299.434
======= =======
</TABLE>

6. INVENTORIES

A breakdown of this account is as follows:

<TABLE>
<CAPTION>
THOUSAND PESETAS
-------------------------
30.09.1997 30.09.1996
---------- ----------
<S> <C> <C>
Raw material and other consumables............................. 171.056 135.424
Goods purchased for resale..................................... 56.492 42.845
Payments on account............................................ -- 2.371
------- -------
227.548 180.640
Less provision for obsolescence................................ (5.589) (6.696)
------- -------
221.959 173.944
======= =======
</TABLE>

F-32
<PAGE> 87

FABBRI ARTES GRAFICAS VALENCIA, S.A.

NOTES TO THE ACCOUNTS

7. PROPERTY AND EQUIPMENT, NET

Movements in the accounts included under Property and equipment, net are
set out below:

<TABLE>
<CAPTION>
THOUSAND
COST PESETAS
------------------------------------------------------------------- -------
<S> <C>
OPENING BALANCE 01.10.96........................................... 768.855
Additions.......................................................... 37.260
Disposals.......................................................... (15.462)
-------
CLOSING BALANCE 30.09.97........................................... 790.653
-------
AMORTIZATION
-------------------------------------------------------------------
OPENING BALANCE 01.10.96........................................... 473.999
Additions.......................................................... 40.836
Disposals.......................................................... (10.266)
-------
CLOSING BALANCE 30.09.97........................................... 504.569
-------
NET BOOK VALUE
-------------------------------------------------------------------
OPENING BALANCE 01.10.96........................................... 294.856
=======
CLOSING BALANCE 30.09.97........................................... 286.084
=======
</TABLE>

- ---------------
a) Fully-depreciated assets

At 30 September 1997 fully depreciated assets with an original cost of Ptas
127,921,000 pesetas are still being used in operations (1996: Ptas 92,868,000
pesetas)

b) Commitments

The company has no commitments to purchase new tangible fixed assets.

c) Liens and encumbrances

There are no liens or encumbrances on any tangible fixed assets owned by the
company.

d) Fixed assets no longer used in operations

At 30 September 1997 tangible fixed assets with an original cost of Ptas
2,573,000 pesetas and accumulated depreciation totalling Ptas 15,094,000 were
no longer used in operations. (1996: Ptas 42,573,000 and Ptas 13,752,000
respectively).

The Company has entered an agreement with a third Company to hire this asset.
The Company has not recorded any impairment loss for this asset, because it
considers that the future cash inflows of the agreement will exceed the
depreciation and other fixed charges of the asset.

8. LONG-TERM RECEIVABLES AND OTHER ASSETS

The balance recorded under this heading refers to deposits and guarantees
which at the year end amounted to Ptas. 1.096.000.

F-33
<PAGE> 88

FABBRI ARTES GRAFICAS VALENCIA, S.A.

NOTES TO THE ACCOUNTS

9. CURRENT LIABILITIES

a) Accounts payable, trade

<TABLE>
<CAPTION>
THOUSAND
PESETAS
----------
30.09.1997
----------
<S> <C>
Prepayments received for orders................................... 226
Payables for goods or services.................................... 135.931
Containers to be returned to suppliers............................ (507)
-------
135.650
=======
</TABLE>

b) Other accrued liabilities

<TABLE>
<CAPTION>
THOUSAND
PESETAS
----------
30.09.1997
----------
<S> <C>
Employee taxes and VAT payable.................................... 19.853
Accrued wages and salaries........................................ 7.827
------
27.680
======
</TABLE>

c) Bank loans and overdrafts falling due within one year

The Company maintains facilities for discounting of bills with the credit
institutions listed below:

<TABLE>
<CAPTION>
DRAWN COLLECTION
ENTITY LIMIT DOWN MANAGEMENT
-------------------------------------------- ------- ----- ----------
<S> <C> <C> <C>
Banco Bilbao-Vizcaya........................ 75.000 -- --
Banesto..................................... 50.000 -- --
Bankinter................................... 50.000 -- --
Banco de Santander.......................... 70.000 -- 2.974
------- ------ -----

245.000 2.974
======= ====== =====
</TABLE>

10. CORPORATION TAX AND TAX SITUATION

Because certain items are treated differently for tax and financial
reporting purposes, the tax profit differs from the profit reported in these
accounts. Deferred tax assets and liabilities arise when an item is recorded
under income or expense for the computation of taxable income in one period but
is included for the computation of accounting income in another period.

F-34
<PAGE> 89

FABBRI ARTES GRAFICAS VALENCIA, S.A.

NOTES TO THE ACCOUNTS

The reconciliation between reported profits and taxable profits is set out
below:

<TABLE>
<CAPTION>
THOUSAND PESETAS
--------------------------------------------------
30.09.1996
-----------------------------------
INCREASES DECREASES 30.09.1997
--------- --------- ----------
<S> <C> <C> <C> <C>
Reported net profit/(loss)....... 23.885 10.187
Corporation tax.................. (39.817) 3.637
-------- ------
Profit/(loss) before taxes....... (15.932) 13.824
Permanent differences............ 3.220 (244) 2.976 2.063
Timing differences:
-arising during the year......... (1.508) (1.508) 10.465
-from prior years................ 12.596 (19.085) (6.489) --
Offset of tax-loss
carryforwards.................. -- --
-------- ------
Taxable income................... (20.953) 26.352
======== ======
</TABLE>

Corporation tax is as follows:

<TABLE>
<CAPTION>
THOUSAND PESETAS
-------------------------
30.09.1997 30.09.1996
---------- ----------
<S> <C> <C>
Current taxes........................................ -- 7.299
Deferred tax liability............................... (3.861) (4.369)
Deferred tax assets.................................. (35.956) 707
-------- ---------
(39.817) 3.637
======== =========
</TABLE>

Current corporation tax is the result of applying the 35% rate to taxable
income.

Tax loss carryforwards recorded by the company totalling Ptas 20,953,000
may be used to offset profits made over the next 7 years.

The components of income before income taxes are as follows:

<TABLE>
<CAPTION>
THOUSAND
PESETAS
-------
1997
-------
<S> <C>
Spanish operations............................................... (15.932)
--------
(15.932)
========
</TABLE>

The Corporation tax charge for the year is analyzed as follows:

<TABLE>
<CAPTION>
THOUSAND PESETAS
------------------
1997 1996
------- ------
<S> <C> <C>
Corporation tax payable for the year.................... -- 7.299
Deferred tax liability.................................. (3.861) (4.369)
Deferred tax assets..................................... (7.068) 707
Revaluation's net tax effect............................ (26.753) --
Tax credits............................................. (2.135) --
-------- -------
(39.817) 3.637
======== =======
Effective tax rate...................................... (249,9) 26,3
======== =======
</TABLE>

F-35
<PAGE> 90

FABBRI ARTES GRAFICAS VALENCIA, S.A.

NOTES TO THE ACCOUNTS

THE TAX EFFECTS OF THE SIGNIFICANT TEMPORARY DIFFERENCES THAT COMPRISE THE
DEFERRED TAX ASSETS AND LIABILITIES ARE AS FOLLOWS:

<TABLE>
<CAPTION>
THOUSAND PESETAS
----------------
1997
----------------
<S> <C>
Assets:
Non-current
Revaluation's tax effect..................................... 26.753
------
Current:
Investment tax credits....................................... 2.135
Tax loss carry forward....................................... 7.334
Other........................................................ 67
------
9.536
------
Gross deferred tax assets.................................... 36.289
======
Liabilities:
Non-Current:
Fixed assets................................................. 2.354
======
</TABLE>

The Company has recorded Ptas. 2,1 million pesetas corresponding to
investment tax credits, which may be reversed with taxable income during the
five following years.

All the Company's returns for the last five years for the main taxes to
which it is subject to are open to inspection by the tax authorities.

As a result, amongst other things, of the different interpretations to
which Spanish tax legislation lends itself, additional tax assessments may be
raised in the event of a tax inspection. The Directors consider, however, that
any additional assessments that might be made would not significantly affect
these accounts.

11. SHAREHOLDERS' EQUITY

Movements in Capital and reserves are set out below:

<TABLE>
<CAPTION>
THOUSAND PESETAS
-----------------------------------------
OTHER PROFIT FOR
SHARE CAPITAL RESERVES THE YEAR
------------- -------- ----------
<S> <C> <C> <C>
CLOSING BALANCE 30.09.96................... 74.686 593.362 10.187
====== ======= =======
Distribution to reserves................... -- 10.187 (10.187)
Profit for the year........................ -- -- 23.885
Dividends.................................. -- (30.000) --
Other movements............................ -- (279) --
------ ------- -------
CLOSING BALANCE 30.09.97................... 74.686 573.270 23.885
====== ======= =======
</TABLE>

a) Share capital

Share capital consists of 149,372 fully paid registered shares with a par
value of Ptas 500 each.

F-36
<PAGE> 91

FABBRI ARTES GRAFICAS VALENCIA, S.A.

NOTES TO THE ACCOUNTS

At 30 September 1997 the companies which hold an interest equalling or
exceeding 10% of the Company are as follows:

<TABLE>
<CAPTION>
PERCENT INTEREST
-------------------------
NUMBER OF SHARES 30.09.1997 30.09.1996
---------------- ---------- ----------
<S> <C> <C> <C>
Sidlaw Plc............................. 149.372 100% 75%
</TABLE>

b) Other reserves

Movements in other reserves are set out below:

<TABLE>
<CAPTION>
THOUSAND PESETAS
--------------------------------
VOLUNTARY
LEGAL RESERVES TOTAL
------ --------- -------
<S> <C> <C> <C>
OPENING BALANCE 30.09.96....................... 14.937 578.425 593.362
Distribution profit............................ -- 10.187 10.187
Dividends...................................... -- (30.000) (30.000)
Other movements................................ -- (279) (279)
------ ------- -------
CLOSING BALANCE 30.09.97....................... 14.937 558.333 573.270
====== ======= =======
</TABLE>

Legal reserve

Appropriations to the legal reserve are made in compliance with Article 214
of the Spanish Companies Act, which stipulates that 10% of profits must be
transferred to this reserve until it represents at least 20% of share capital.

The legal reserve is not available for distribution. Should it be used to
offset losses in the event of no other reserves being available, it must be
replenished out of future profits.

Voluntary reserve

The voluntary reserve contains profits from prior years which were not
distributed or assigned to obligatory reserves. The balance of this reserve is
freely available. During the year, in accordance with a resolution adopted by
the General Meeting held on 28 November 1996 this reserve was distributed to
shareholders as a dividend totalling Ptas 200.84 per share, for a total amount
of Ptas 30,000,000 and charged to voluntary reserves.

c) Profit for the period

The distribution of 1997 profit and other reserves will be proposed at the
Annual General Meeting, as well as the distribution of profits for 1996 is set
out below.

<TABLE>
<CAPTION>
AVAILABLE FOR DISTRIBUTION 1997 1996
----------------------------------------------------------- ------- -------
<S> <C> <C>
Profit and loss for the year............................... 23.885 10.187
====== ======
DISTRIBUTION
-----------------------------------------------------------
Voluntary reserves......................................... 23.885 10.187
====== ======
</TABLE>

F-37
<PAGE> 92

FABBRI ARTES GRAFICAS VALENCIA, S.A.

NOTES TO THE ACCOUNTS

12. INCOME AND EXPENSE

a) Transactions with Group undertakings

<TABLE>
<CAPTION>
30.09.1997 30.09.1996
---------- ----------
<S> <C> <C>
Net purchases.......................................... 10.070 96
Services received...................................... 12.050 --
Net sales.............................................. 3.738 659
</TABLE>

Services received records Ptas 11,000,000 relating to a contract concluded
with the single shareholder (Sidlaw Group Plc.), in accordance with which the
shareholder provides financial, human resource, market research and advisory
services. This agreement is in force between 1 October 1996 and 30 September
1997.

b) Transactions denominated in foreign currencies

The amounts of transactions denominated in foreign currencies are set out
below:

<TABLE>
<CAPTION>
THOUSAND PESETAS
------------------------
01.10.1996 TO 30.09.1997
------------------------
<S> <C>
Purchases................................................ 18.883
Sales.................................................... 107.638
Services received........................................ 2.606
Services rendered........................................ --
</TABLE>

13. INTEREST EXPENSE, NET

Interest expense, net comprises:

<TABLE>
<CAPTION>
THOUSAND PESETAS
-------------------------
30.09.1997 30.09.1996
---------- ----------
<S> <C> <C>
Income Gains on exchange............................... 1.418 79
Other income........................................... 17.698 18.565
Income from trading securities......................... 841 5.899
------ ------
19.957 24.543
------ ------
Less expenses:
Losses on exchange................................... 103 466
Amounts owed to third parties and similar expenses... 7.579 239
------ ------
(7.682) (705)
------ ------
INTEREST EXPENSE, NET.................................. 12.275 23.838
====== ======
</TABLE>

14. POST-BALANCE SHEET EVENTS

Subsequent to the year end the Company's single shareholder, Sidlaw Group
Plc., sold its interest in the Company to the company "EPL TECHNOLOGIES, S.L.",
a subsidiary of EPL TECHNOLOGIES INC.

F-38
<PAGE> 93

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS

The following unaudited condensed consolidated pro forma financial
statements ("the Pro Forma Financial Statements") of the Company are based on
historical consolidated financial statements of the Company as adjusted to give
effect to the Fabbri Acquisition and the Series D Placement, as described in the
notes to the Pro Forma Financial Statements below. The unaudited condensed
consolidated pro forma statements of operations for the year ended December 31,
1996 and the nine months ended September 30, 1997 give effect to the Fabbri
Acquisition and the Series D Placement as if they occurred as of January 1,
1996. The pro forma balance sheet gives effect to the Fabbri Acquisition and the
Series D Placement as if they occurred as of September 30, 1997. The allocation
of purchase price for the Fabbri acquisition is based on a preliminary estimate
of the fair value of the assets acquired.

The pro forma adjustments are based upon available information and upon
certain assumptions that management believes are reasonable under the
circumstances. The Pro Forma Financial Statements and accompanying notes should
be read in conjunction with the historical Consolidated Financial Statements of
the Company, including the notes thereto, and other financial information
pertaining to the Company included elsewhere in this Prospectus. The Pro Forma
Financial Statements do not purport to represent what the Company's actual
results of operations or actual financial position would have been if the Fabbri
Acquisition and the Series D Placement had, in fact, occurred on such dates or
to project the Company's results of operations or financial position for any
future period or date. The Pro Forma Financial Statements do not give effect to
any transactions other than the Fabbri Acquisition and the Series D Placement,
discussed in the notes to the Pro Forma Financial Statements below.

The pro forma statement of operations for the year ended December 31, 1996
includes the results of operations of Fabbri for the year ended September 31,
1996, and the pro forma statement of operations for the nine months ended
September 30, 1997 includes the results of operations of Fabbri for the nine
months ended September 30, 1997.

F-39
<PAGE> 94

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS

(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
------------------------------------------------- -----------------------------------------------
HISTORICAL RESULTS HISTORICAL RESULTS
---------------------- PRO FORMA ---------------------- PRO FORMA
THE COMPANY FABBRI(a) ADJUSTMENTS PRO FORMA THE COMPANY FABBRI(a) ADJUSTMENTS PRO FORMA
----------- --------- ----------- ---------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales.................. $ 11,314 $ 8,121 $ -- $ 19,435 $ 14,047 $ 4,994 $ -- $ 19,041
Cost of sales.............. 9,136 6,375 -- 15,511 12,604 4,111 -- 16,715
--------- ----- ------ --------- --------- ----- ----- ---------
Gross profit............... 2,178 1,746 -- 3,924 1,443 883 -- 2,326
Selling, general and
administrative expenses... 4,413 1,440 -- 5,853 4,438 966 -- 5,404
Research and development
costs..................... 939 -- -- 939 869 -- -- 869
Depreciation and
amortization.............. 1,010 301 85(a) 1,396 931 220 64(c) 1,215
--------- ----- ------ --------- --------- ----- ----- ---------
Income (loss) from
operations................ (4,184) 5 (85) (4,264) (4,795) (303) (64) (5,162)
Allocations from
corporate................. -- 87 (87)(b) -- -- 62 (62)(b) --
Interest expense (income),
net....................... 20 (191) -- (171) 85 (60) -- 25
Minority interest.......... (10) -- -- (10) (213) -- -- (213)
--------- ----- ------ --------- --------- ----- ----- ---------
Income (loss) before income
taxes..................... (4,194) 109 2 (4,083) (4,667) (305) (2) (4,974)
Provision (benefit) for
income taxes(g)........... 101 29 -- 130 -- (309) -- (309)
--------- ----- ------ --------- --------- ----- ----- ---------
Net income (loss).......... (4,295) 80 2 (4,213) (4,667) 4 (2) (4,665)
Accretion, discount and
dividends on Preferred 500(d)
Stock(f).................. 999 -- 800(e) 2,299 411 -- 375(d) 786
--------- ----- ------ --------- --------- ----- ----- ---------
Net income (loss) available
for common shareholders... $ (5,294) $ 80 $(1,298) $ (6,512) $ (5,078) $ 4 $(377) $ (5,451)
========= ===== ====== ========= ========= ===== ===== =========
Loss per common share...... $ (0.71) (0.88) $ (0.62) $ (0.67)
========= ========= ========= =========
Weighted average number of
common shares
outstanding............... 7,436,759 7,436,759 8,150,423 8,150,423
========= ========= ========= =========
</TABLE>

(a) To reflect the inclusion of the historical statement of operations for
the year ended December 31, 1996 and the nine months ended September 30, 1997 of
Fabbri. The historical statement of operations, denominated in pesetas, was
converted into U.S. dollars using an average exchange rate of 126.84 and 145.82
for the year ended December 31, 1996 and for the nine months ended September 30,
1997, respectively.
(b) To eliminate corporate overhead, such as technology expenses and
management fees, allocated to Fabbri from its parent as recorded in Fabbri's
historical financial statements. These charges are not a component of the
on-going expense structure of the Company and are not expected to be incurred in
future periods.
(c) To reflect additional depreciation expense resulting from a $1.3
million increase in property and equipment valuation recorded as part of the
overall purchase price allocation of the Fabbri acquisition.
(d) To reflect the 4% per annum increase in value of the Series D Preferred
Stock as a dividend.
(e) To reflect the accretion of the discount on the Series D Preferred
Stock (6%) over nine months, the date after which all of the Series D Preferred
Stock could be converted into shares of Common Stock.
(f) The Company issued warrants in connection with its Series D Preferred
Stock. The Company is presently in the process of evaluating the fair value of
such warrants. Such fair value, when determined, will be accreted over the
beneficial conversion feature period of the Series D Preferred Stock (9 months),
resulting in an increase in Accretion, Discount and Dividends on Preferred Stock
and Net Loss Available for Common Shareholders.
(g) During the nine months ended September 30, 1997, Fabbri revalued its
property, plant and equipment to fair market value to comply with Spanish law,
resulting in the recording of a one-time increase to both the book and tax bases
of such assets in the amount of 104.4 million pesetas (approximately $716,000 at
an exchange rate of $1.00:145.82 pesetas). Because such adjustment is not
permitted for financial reporting purposes under U.S. generally accepted
accounting principles, this amount has been eliminated from the historical
Fabbri balances included herein to properly reflect the assets at historical
cost. Accordingly, the Company has recorded a one-time income tax benefit of
33.2 million pesetas to account for the difference between the book and tax
bases of its property, plant and equipment.

F-40
<PAGE> 95

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET

AS OF SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
HISTORICAL RESULTS
----------------------- PRO FORMA
THE COMPANY FABBRI(a) ADJUSTMENTS PRO FORMA
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents................................................ $ 1,166 $ 525 $11,662(b) $ 7,853
(5,500)(c)
Accounts receivable, net................................................. 2,973 1,493 -- 4,466
Due from related parties................................................. 31 -- -- 31
Inventories.............................................................. 2,195 1,472 -- 3,667
Prepaid expenses and other current assets................................ 1,280 63 (241)(c) 1,102
--------- ------ ------- ---------
Total current assets................................................... 7,645 3,553 5,921 17,119
--------- ------ ------- ---------
PROPERTY AND EQUIPMENT, Net............................................... 4,121 1,898 1,285(c) 7,304
--------- ------ ------- ---------
OTHER ASSETS
Patents and distribution rights, net of accumulated amortization......... 1,056 -- -- 1,056
Goodwill................................................................. 2,324 -- -- 2,324
Other intangibles, less accumulated amortization......................... 228 -- -- 228
Other assets............................................................. -- 185 -- 185
--------- ------ ------- ---------
Total other assets..................................................... 3,608 185 -- 3,793
--------- ------ ------- ---------
TOTAL ASSETS....................................................... $ 15,374 $ 5,636 $ 7,206 $ 28,216
========= ====== ======= =========
CURRENT LIABILITIES
Accounts payable......................................................... $ 4,362 $ 980 -- $ 5,342
Accrued expenses......................................................... 713 184 -- 897
Other liabilities........................................................ 661 -- -- 661
Line of credit -- related party.......................................... 338 -- (338)(b) 0
Current portion of long-term debt........................................ 222 -- -- 222
--------- ------ ------- ---------
Total current liabilities.............................................. 6,296 1,164 (338) 7,122
LONG TERM DEBT............................................................ 2,107 -- -- 2,107
DEFERRED INCOME TAXES..................................................... 142 16 -- 158
--------- ------ ------- ---------
TOTAL LIABILITIES...................................................... 8,545 1,180 (338) 9,387
CONVERTIBLE SERIES D PREFERRED STOCK...................................... -- -- 12,000(b) 12,000
SHAREHOLDERS' EQUITY
Convertible Series A Preferred Stock..................................... 2,143 -- -- 2,143
Convertible Series C Preferred Stock..................................... -- -- -- --
Common Stock............................................................. 9 495 (495)(c) 9
Additional paid-in capital............................................... 25,635 -- -- 25,635
Accumulated deficit...................................................... (21,022) 3,961 (3,961)(c) (21,022)
Foreign currency translation adjustment.................................. 64 -- -- 64
--------- ------ ------- ---------
Total Shareholders' Equity............................................. 6,829 4,456 (4,456) 6,829
--------- ------ ------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......................... $ 15,374 $ 5,636 $ 7,206 $ 28,216
========= ====== ======= =========
</TABLE>

(a) To reflect the net assets of Fabbri as of September 30, 1997 which were
acquired on December 11, 1997. The historical balance sheet of Fabbri,
denominated in pesetas, was converted into U.S. dollars using a month-end
exchange rate of 150.75 as of September 30, 1997.

(b) To give effect to the $12.5 million Series D Placement which was
consummated on November 11, 1997 and the application of the net proceeds
therefrom. The Series D Preferred Stock Agreement contains certain provisions,
some of which may be considered to be outside of the Company's control, that
could provide the Series D holders with the ability to redeem their shares.
Subsequent to September 30, 1997, additional amounts under the line of
credit-related party were drawn down by the Company. All such amounts, including
any associated costs and interest, together with the amounts drawn as of
September 30, 1997, were repaid out of the net proceeds of the Series D
Placement.

(c) To give effect to the (i) cash payment to purchase the net assets of
Fabbri pursuant to the Fabbri Acquisition, (ii) reclassification of the prepaid
costs associated with the Fabbri Acquisition, (iii) net increase in valuation of
fixed assets acquired from Fabbri and (iv) elimination of the net assets of
Fabbri on a consolidated basis. Subsequent to September 30, 1997, additional
costs, currently estimated at approximately $200,000, were incurred with respect
to the Fabbri Acquisition. Such costs have not been reflected herein.

F-41
<PAGE> 96

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDER OR ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY
OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY
OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................... 3
Risk Factors............................... 7
Use of Proceeds............................ 15
Dividend Policy............................ 15
Price Range of Common Stock................ 16
Capitalization............................. 17
Dilution................................... 18
Selected Consolidated Financial Data....... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 20
Business................................... 27
Management................................. 37
Principal and Selling Shareholders......... 42
Description of Capital Stock............... 44
Certain Transactions....................... 49
Shares Eligible for Future Sale............ 50
Underwriting............................... 51
Legal Matters.............................. 52
Experts.................................... 52
Available Information...................... 52
Index to Consolidated Financial
Statements............................... F-1
</TABLE>

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

3,500,000 Shares

(EPL Technologies, Inc. Logo)

Common Stock

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

PROSPECTUS
------------------------
PRUDENTIAL SECURITIES INCORPORATED
March , 1998

============================================================
<PAGE> 97

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated amount of various expenses in
connection with the sale and distribution of the securities being registered:

<TABLE>
<S> <C>
SEC registration fee.................................................... $ 12,841
NASD filing fee......................................................... 4,853
Transfer agent's fee and expenses*......................................
Accounting fees and expenses*...........................................
Legal fees and expenses*................................................
"Blue Sky" fees and expenses (including legal fees)*....................
Costs of printing and engraving*........................................
Miscellaneous*..........................................................
--------
Total*........................................................ $
========
</TABLE>

- ---------------
* Estimated

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under Article 109 of the Colorado Business Corporation Act, as amended (the
"CBCA"), the Company has the power to indemnify directors and officers under
prescribed circumstances and subject to certain limitations, against certain
costs and expenses, including attorneys' fees actually and reasonably incurred
in connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which any of them is a party by reason of
his or her being a director or officer of the Company if it is determined that
he or she acted in accordance with the applicable standard of conduct set forth
in such statutory provisions.

Article V F. of the Company's Amended and Restated Articles of
Incorporation, as amended, and Article VI of the Company's Bylaws, as amended,
provide that the Company shall indemnify directors and officers of the Company
against all expenses, liability and loss incurred as a result of such person's
being a party to, or threatened to be made a party to, any proceeding (as
defined, which includes any threatened proceeding) by reason of the fact that he
or she is or was a director or officer of the Company or is otherwise the
subject of any such proceeding by reason of that person's relationship with the
Company, to the fullest extent authorized by the CBCA, if the person conducted
the activities in question in good faith, reasonably believed that the conduct
was in the Company's best interests or was not opposed to the Company's best
interests and, in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful. Article VI of the Bylaws, as amended, further
permits the Company to maintain insurance, at its expense, to protect itself and
any such director or officer of the Company against any such expenses, liability
or loss, whether or not the Company would have the power to indemnify such
person against such expenses, liability or loss under the Bylaws, as amended.
The Company has directors' and officers' liability insurance.

The Underwriting Agreement (to be filed as Exhibit 1.1 to an amendment to
this Registration Statement) will provide that the Underwriters severally and
not jointly will indemnify and hold harmless the Company and each director,
officer or controlling person of the Company from and against any liability
caused by any statement or omission in the Registration Statement or Prospectus
based upon information furnished to the Company by the Underwriters for use
therein.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Effective November 10, 1997, the Company issued 12,500 shares of Series D
Convertible Preferred Stock for aggregate consideration of $12,500,000 to three
new institutional investors (the "Series D Stock"). Such

II-1
<PAGE> 98

issuance was made under Section 4(2) of the Securities Act of 1933, as amended
(the "1933 Act"). The Series D Stock carries the option to convert into shares
of Common Stock at a variable rate, based on a formula linked to the prevailing
market price at the time of conversion, and subject to certain limitations. The
conversion rate may be up to a 50% premium to the closing market price at the
consummation of the transaction (i.e., a 50% premium to the November 7, 1997
closing price of $15.50). In addition, the Company issued warrants to purchase
201,614 shares of Common Stock exercisable at $20.16 for 5 years.

Effective October 31, 1997, the Company issued an aggregate of 40,000
shares of Common Stock to two individuals in exchange for all of the issued and
outstanding capital stock of California Microbiological Consulting, Inc., in a
transaction exempt from registration pursuant to Section 4(2) of the 1933 Act.

On July 23, 1996, the Company issued 531,915 shares of 10% cumulative
convertible Series B Preferred Stock ("Series B Preferred Stock") to certain
accredited investors who were existing shareholders of the Company, in a
transaction exempt from registration pursuant to Section 4(2) of the 1933 Act.
These shares carry the option to convert into shares of Common Stock at the rate
of $9.40 per share and carry equal voting rights to the shares of Common Stock,
based on the underlying number of shares of Common Stock after conversion. The
Series B Preferred Stock carries a dividend rate of 10% per annum, payable in
cash and/or shares at the Company's option. The aggregate dividend due on the
Series B Preferred Stock at December 31, 1996 was $110,445.

During 1996, a total of 699,666 shares of Common Stock were issued pursuant
to the exercise of outstanding warrants, resulting in net proceeds to the
Company of $3,298,876 in a transaction exempt from registration pursuant to
Section 4(2) of the 1933 Act.

In September 1995, the Company sold 1,375,000 shares of Common Stock to
"accredited investors" (within the meaning of Rule 501 under the 1933 Act) for
an aggregate consideration of $5,500,000 in a transaction exempt from
registration pursuant to Section 4(2) of the 1933 Act (the "1995 Placement").
The Company issued warrants to purchase 55,000 shares of Common Stock for $2.00
per share to Hermitage Capital Corp., as placement agent for the 1995 Placement.
Additionally, on October 2, 1995, $4,050,000 in outstanding borrowings under a
line of credit with Trilon was converted into 1,012,500 shares of Common Stock
and warrants to purchase 50,000 shares of Common Stock for $4.00 per share. The
Company also issued to Trilon 81,306 shares of Common Stock in settlement of
accrued interest of $310,164, and 23,250 shares of Common Stock in settlement of
commitment fees.

All information provided under this Item 15 gives effect to the proposed
1-for-2 reverse stock split.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ ----------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated Articles of Incorporation of the Company, as amended.
(Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997 on file with the Securities and
Exchange Commission (the "SEC").)
3.2 Amended and Restated Bylaws of the Company, as amended. (Incorporated by reference
to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997 on file with the SEC.)
4.1 Specimen Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to
the Company's Annual Report on Form 10-K for the eight months ended December 31,
1992 on file with the SEC.)
5.1* Opinion of Ballard Spahr Andrews & Ingersoll, LLP as to the validity of the shares
of Common Stock being registered.
10.1 Office Lease Agreement dated October 15, 1993 between Extended Product Life, Inc.
and B.I.G., a Partnership for Fresno, CA Applications Laboratory. (Incorporated by
reference to Exhibit 10.3 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 on file with the SEC.)
</TABLE>

II-2
<PAGE> 99

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ ----------------------------------------------------------------------------------
<C> <S>
10.2 Stock Purchase and Supply Agreement dated May 19, 1994 between Jungbunzlaur
Holding AG and Extended Product Life, Inc. (Incorporated by reference to Exhibit
10.10 to the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1994 on file with the SEC.)
10.3 1994 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.11 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 on
file with the SEC.)
10.4 Employment Agreement between EPL Packaging, Inc. (now known as Respire Films,
Inc.) and Joel Longstreath, President, dated September 30, 1994. (Incorporated by
reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 on file with the SEC.)
10.5 Agreement for the sale and purchase of the entire issued share capital of Bakery
Packaging Services Limited, dated September 15, 1995. (Incorporated by reference
to Exhibit 2.1 to the Company's Report on Form 8-K dated October 3, 1995 on file
with the SEC.)
10.6 Disclosure letter in relation to the agreement for the sale of the entire issued
share capital of Bakery Packaging Services Limited, dated September 15, 1995.
(Incorporated by reference to Exhibit 2.2 to the Company's Report on Form 8-K
dated October 3, 1995 on file with the SEC.)
10.7 Agreement between EPL Technologies (Europe) Limited and DWL Associates for the
services of D. W. Lyon as Chief Operating Officer of Bakery Packaging Services
Limited. (Incorporated by reference to Exhibit 2.3 to the Company's Report on Form
8-K dated October 3, 1995 on file with the SEC.)
10.8 Employment agreement between EPL Technologies, Inc. and P. L. Devine, Director,
President and Chief Executive Officer, dated as of January 1, 1997. (Incorporated
by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-Q for the
quarter ended June 30, 1997 on file with the SEC.)
10.9 Employment agreement dated March 4, 1996 between EPL Technologies, Inc. and Karen
Penichter, Vice President-Sales. (Incorporated by reference to Exhibit 10.15 to
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996
on file with the SEC.)
10.10 Office Lease Agreement dated September 11, 1996 between EPL Technologies, Inc. and
K/B Fund II for Headquarters office. (Incorporated by reference to Exhibit 10.10
to the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996 on file with the SEC.)
10.11 License Agreement dated as of April 29, 1997 by and between Integrated Produce
Systems, Inc. and Farmington Fresh (confidential treatment has been requested for
certain portions of this agreement). (Incorporated by reference to Exhibit 10.1 to
the Company's Registration Statement on Form S-3 (File No. 333-42185) on file with
the SEC.)
10.12 Amendment to License Agreement, dated December 1, 1997, between Integrated Produce
Systems, Inc. and Farmington Fresh. (Incorporated by reference to Exhibit 10.2 to
the Company's Registration Statement on Form S-3 (File No. 333-42185) on file with
the SEC.)
10.13 Operating Agreement of NewCornCo, LLC, dated July 19, 1996, between the Company
and Agricultural Innovation & Trade, Inc. (confidential treatment has been
requested for certain portions of this agreement). (Incorporated by reference to
Exhibit 10.3 to the Company's Registration Statement on Form S-3 (File No.
333-42185) on file with the SEC.)
10.14 Fresh-Cut Corn Processing Agreement, dated July 22, 1996, between NewCornCo, LLC,
and Agricultural Innovation & Trade, Inc. (confidential treatment has been
requested for certain portions of this agreement). (Incorporated by reference to
Exhibit 10.4 to the Company's Registration Statement on Form S-3 (File No.
333-42185) on file with the SEC.)
10.15 Assignment of Membership Interest, dated December 6, 1997, between Agricultural
Innovation & Trade, Inc. and Twin Garden Sales, Inc. (confidential treatment has
been requested for certain portions of this agreement). (Incorporated by reference
to Exhibit 10.5 to the Company's Registration Statement on Form S-3 (File No.
333-42185) on file with the SEC.)
10.16 Requirements Agreement, dated as of January 1, 1998, between NewCornCo, LLC, and
Twin Garden Farms (confidential treatment has been requested for certain portions
of this agreement). (Incorporated by reference to Exhibit 10.6 to the Company's
Registration Statement on Form S-3 (File No. 333-42185) on file with the SEC.)
</TABLE>

II-3
<PAGE> 100

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ ----------------------------------------------------------------------------------
<C> <S>
10.17 Employment Agreement, dated January 1, 1998, between the Company and William R.
Romig. (Incorporated by reference to Exhibit 10.17 to the Company's Registration
Statement on Form S-3 (File No. 333-42185) on file with the SEC.)
10.18 Agreement for the Sale and Purchase of the entire issued share capital of Fabbri
Artes Graficas Valencia S.A., dated December 11, 1997. (Incorporated by reference
to Exhibit 2.1 to the Company's Current Report on Form 8-K filed December 24,
1997.)
10.19 Securities Purchase Agreement dated as of November 6, 1997 between the Company and
each of the purchasers of the Company's Series D Preferred Stock. (Incorporated by
reference to Exhibit 4.4 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.)
10.20 Registration Rights Agreement dated as of November 6, 1997 between the Company and
each of the purchasers of the Company's Series D Preferred Stock. (Incorporated by
reference to Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.)
10.21 Trademark License Agreement between IPS Produce, Inc. and Potandon Produce LLC
(confidential treatment has been granted for certain portions of this document).
(Incorporated by reference to Exhibit 10.12 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997.)
11.01 Computation of Earnings per Common Share and Fully Diluted Earnings per Common
Share.
21 Subsidiaries of the Company.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Coopers & Lybrand, S.A.
23.3* Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in Exhibit 5.1).
24.1 Power of Attorney (included in signature page).
27.1* Financial Data Schedules.
</TABLE>

- ---------------
* to be filed by amendment

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above or
otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities 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 Securities 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, 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; and

(2) For the purpose of determining any liability under the Securities
Act, 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-4
<PAGE> 101

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Township of
Tinicum, Commonwealth of Pennsylvania, on February 13, 1998.

EPL TECHNOLOGIES, INC.

By /s/ PAUL L. DEVINE

------------------------------------
Paul L. Devine
Chairman, President and Chief
Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

We, the undersigned directors and officers of EPL Technologies, Inc., do
hereby constitute and appoint each of Paul L. Devine and Timothy B. Owen, each
with full power of substitution, our true and lawful attorney-in-fact and agent
to do any and all acts and things in our names and in our behalf in our
capacities stated below, which acts and things either of them may deem necessary
or advisable to enable EPL Technologies, Inc. to comply with the Securities Act
of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but not limited to, power and authority to
sign for any or all of us in our names, in the capacities stated below, any and
all amendments (including post-effective amendments) hereto, and any
registration statement filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended; and we do hereby ratify and confirm all that they shall do or
cause to be done by virtue hereof.

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

/s/ PAUL L. DEVINE Chairman, President and Chief February 13, 1998
- ------------------------------------------ Executive Officer (Principal
Paul L. Devine Executive Officer)

/s/ TIMOTHY B. OWEN Secretary and Treasurer February 13, 1998
- ------------------------------------------ (Principal Financial and
Timothy B. Owen Accounting Officer)

/s/ ROBERT D. MATTEI Director February 13, 1998
- ------------------------------------------
Robert D. Mattei

/s/ RONALD W. CANTWELL Director February 13, 1998
- ------------------------------------------
Ronald W. Cantwell
</TABLE>

II-5
<PAGE> 102

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ---------------------------------------------------------------------------- ------------
<C> <S> <C>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated Articles of Incorporation of the Company, as amended.
(Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997 on file with the
Securities and Exchange Commission (the "SEC").)
3.2 Amended and Restated Bylaws of the Company, as amended. (Incorporated by
reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997 on file with the SEC.)
4.1 Specimen Common Stock Certificate. (Incorporated by reference to Exhibit 4.1
to the Company's Annual Report on Form 10-K for the eight months ended
December 31, 1992 on file with the SEC.)
5.1* Opinion of Ballard Spahr Andrews & Ingersoll, LLP as to the validity of the
shares of Common Stock being registered.
10.1 Office Lease Agreement dated October 15, 1993 between Extended Product Life,
Inc. and B.I.G., a Partnership for Fresno, CA Applications Laboratory.
(Incorporated by reference to Exhibit 10.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993 on file with the SEC.)
10.2 Stock Purchase and Supply Agreement dated May 19, 1994 between Jungbunzlaur
Holding AG and Extended Product Life, Inc. (Incorporated by reference to
Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994 on file with the SEC.)
10.3 1994 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.11 to
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 on file with the SEC.)
10.4 Employment Agreement between EPL Packaging, Inc. (now known as Respire
Films, Inc.) and Joel Longstreath, President, dated September 30, 1994.
(Incorporated by reference to Exhibit 10.11 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 on file with the
SEC.)
10.5 Agreement for the sale and purchase of the entire issued share capital of
Bakery Packaging Services Limited, dated September 15, 1995. (Incorporated
by reference to Exhibit 2.1 to the Company's Report on Form 8-K dated
October 3, 1995 on file with the SEC.)
10.6 Disclosure letter in relation to the agreement for the sale of the entire
issued share capital of Bakery Packaging Services Limited, dated September
15, 1995. (Incorporated by reference to Exhibit 2.2 to the Company's Report
on Form 8-K dated October 3, 1995 on file with the SEC.)
10.7 Agreement between EPL Technologies (Europe) Limited and DWL Associates for
the services of D. W. Lyon as Chief Operating Officer of Bakery Packaging
Services Limited. (Incorporated by reference to Exhibit 2.3 to the Company's
Report on Form 8-K dated October 3, 1995 on file with the SEC.)
10.8 Employment agreement between EPL Technologies, Inc. and P. L. Devine,
Director, President and Chief Executive Officer, dated as of January 1,
1997. (Incorporated by reference to Exhibit 10.15 to the Company's Annual
Report on Form 10-Q for the quarter ended June 30, 1997 on file with the
SEC.)
10.9 Employment agreement dated March 4, 1996 between EPL Technologies, Inc. and
Karen Penichter, Vice President-Sales. (Incorporated by reference to Exhibit
10.15 to the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996 on file with the SEC.)
10.10 Office Lease Agreement dated September 11, 1996 between EPL Technologies,
Inc. and K/B Fund II for Headquarters office. (Incorporated by reference to
Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 on file with the SEC.)
</TABLE>
<PAGE> 103

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ---------------------------------------------------------------------------- ------------
<C> <S> <C>
10.11 License Agreement dated as of April 29, 1997 by and between Integrated
Produce Systems, Inc. and Farmington Fresh (confidential treatment has been
requested for certain portions of this agreement). (Incorporated by
reference to Exhibit 10.1 to the Company's Registration Statement on Form
S-3 (File No. 333-42185) on file with the SEC.)
10.12 Amendment to License Agreement, dated December 1, 1997, between Integrated
Produce Systems, Inc. and Farmington Fresh. (Incorporated by reference to
Exhibit 10.2 to the Company's Registration Statement on Form S-3 (File No.
333-42185) on file with the SEC.)
10.13 Operating Agreement of NewCornCo, LLC, dated July 19, 1996, between the
Company and Agricultural Innovation & Trade, Inc. (confidential treatment
has been requested for certain portions of this agreement). (Incorporated by
reference to Exhibit 10.3 to the Company's Registration Statement on Form
S-3 (File No. 333-42185) on file with the SEC.)
10.14 Fresh-Cut Corn Processing Agreement, dated July 22, 1996, between NewCornCo,
LLC, and Agricultural Innovation & Trade, Inc. (confidential treatment has
been requested for certain portions of this agreement). (Incorporated by
reference to Exhibit 10.4 to the Company's Registration Statement on Form
S-3 (File No. 333-42185) on file with the SEC.)
10.15 Assignment of Membership Interest, dated December 6, 1997, between
Agricultural Innovation & Trade, Inc. and Twin Garden Sales, Inc.
(confidential treatment has been requested for certain portions of this
agreement). (Incorporated by reference to Exhibit 10.5 to the Company's
Registration Statement on Form S-3 (File No. 333-42185) on file with the
SEC.)
10.16 Requirements Agreement, dated as of January 1, 1998, between NewCornCo, LLC,
and Twin Garden Farms (confidential treatment has been requested for certain
portions of this agreement). (Incorporated by reference to Exhibit 10.6 to
the Company's Registration Statement on Form S-3 (File No. 333-42185) on
file with the SEC.)
10.17 Employment Agreement, dated January 1, 1998, between the Company and William
R. Romig. (Incorporated by reference to Exhibit 10.17 to the Company's
Registration Statement on Form S-3 (File No. 333-42185) on file with the
SEC.)
10.18 Agreement for the Sale and Purchase of the entire issued share capital of
Fabbri Artes Graficas Valencia S.A., dated December 11, 1997. (Incorporated
by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K
filed December 24, 1997.)
10.19 Securities Purchase Agreement dated as of November 6, 1997 between the
Company and each of the purchasers of the Company's Series D Preferred
Stock. (Incorporated by reference to Exhibit 4.4 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997.)
10.20 Registration Rights Agreement dated as of November 6, 1997 between the
Company and each of the purchasers of the Company's Series D Preferred
Stock. (Incorporated by reference to Exhibit 4.5 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997.)
10.21 Trademark License Agreement between IPS Produce, Inc. and Potandon Produce
LLC (confidential treatment has been granted for certain portions of this
document). (Incorporated by reference to Exhibit 10.12 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.)
11.01 Computation of Earnings per Common Share and Fully Diluted Earnings per
Common Share.
21 Subsidiaries of the Company.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Coopers & Lybrand, S.A.
23.3* Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in Exhibit 5.1).
24.1 Power of Attorney (included in signature page).
27.1* Financial Data Schedules.
</TABLE>

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

<PAGE> 1
EXHIBIT 11.01

EPL Technologies, Inc.

Computation of Earnings per Common Share and
Fully diluted Earnings per Common Share

EPL TECHNOLOGIES, INC.

COMPUTATION OF LOSS PER COMMON SHARE AND
FULLY DILUTED LOSS PER COMMON SHARE
(in thousands except per share data)

<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94
<S> <C> <C> <C>
Net Loss $ (4,296) $(3,320) $(3,373)
Deduct effect of 10% cumulative loss per computation 999 314 324
-------- ------- -------
Adjusted net loss for loss per share computation $ (5,295) $(3,634) $(3,697)
======== ======= =======
Weighted average number of common shares outstanding $ 7,437 4,056 3,629
======== ======= =======
Primary loss per share $ (0.71) $ (0.78) $ (1.02)
======== ======= =======
Net loss for fully diluted loss per common share
computation $ (4,296) $(3,320) $(3,373)
======== ======= =======
Weighted average number of common shares
outstanding 7,437 4,656 3,629

Common share equivalent applicable to:
Series A, convertible preferred stock 1,309 2,071 2,167
Series A, warrants 124 157 232
Series B, convertible preferred stock 133
Other warrants 249 765 515
Stock options outstanding 1,239 789 522
-------- ------- -------
Weighted average number of common shares and
common share equivalents used to compute fully
diluted loss per share 10,491 8,438 7,065
-------- ------- -------

Fully diluted loss per share $ (0.41) $ (0.39) $ (0.48)
======== ======= =======
</TABLE>

<PAGE> 1
EXHIBIT 21

List of Subsidiaries

Integrated Produce Systems, Inc., a Pennsylvania corporation
IPS Produce, Inc., a Pennsylvania corporation
Pure Produce, Inc., a Massachusetts corporation
Respire Films, Inc., a Pennsylvania corporation
Crystal Specialty Films, Inc., an Illinois corporation
Agra Research, Inc., an Indiana corporation
NewCorn Co LLC, a Delaware limited liability company
EPL Technologies (Europe) Limited, an English company
EPL Flexible Packaging Limited, an English company
Bakery Packaging Services Limited, an English company
BPS Produce Packaging Limited, an English company
Integrated Produce System Limited, an English company

EPL Technologies S.L., a Spanish company
Fabbri Artes Graficas Valencia S.A., a Spanish company
California Microbiological Consulting, Inc., a California corporation

<PAGE> 1

Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to use in this Registration Statement of EPL Technologies, Inc. on
Form S-1 of our report dated March 28, 1997 (March , 1998 as to the third
paragraph of Note 18) appearing in the Prospectus, which is part of this
Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania

February 13, 1998

<PAGE> 1
EXHIBIT 23.2

[COOPERS & LYBRAND LETTERHEAD]

INDEPENDENT AUDITOR'S CONSENT

We consent to the use in this Registration Statement of EPL Technologies,
Inc. on Form S-1 of our report dated February 9, 1998 (relating to the
financial statements of Fabbri Artes Graficas Valencia, S.A., for the years
ended September 30, 1997 and 1996).

We also consent to the reference to us under the heading "Experts" in such
Registration Statement.

COOPERS & LYBRAND, S.A.

/s/ Jorge Molina

Jorge Molina
Valencia (Spain), February 13, 1998