Exhibit 99.2

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS
AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

AND AS OF AND FOR THE THREE MONTHS

ENDED MARCH 31, 2004 AND 2003

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

TABLE OF CONTENTS

Independent Auditor’s Report
Consolidated Balance Sheets	Exhibit A
Consolidated Statements of Operations	Exhibit B
Consolidated Statements of Shareholder’s Equity (Deficit)	Exhibit C
Consolidated Statements of Cash Flows	Exhibit D
Notes to Consolidated Financial Statements

INDEPENDENT AUDITOR’S REPORT

To the Shareholders
Florida Recycling Services, Inc. of Illinois
Chicago, Illinois

     We have audited the accompanying consolidated balance sheets of Florida Recycling Services, Inc. of Illinois and Subsidiary as of December 31, 2003, 2002 and 2001, and the related consolidated statements of operations, cash flows and shareholder’s equity (deficit) for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Florida Recycling Services, Inc. of Illinois and Subsidiary as of December 31, 2003, 2002 and 2001, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Shepard Schwartz & Harris LLP

February 11, 2004

EXHIBIT A

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

	Three Months Ended March 31,						Years Ended December 31,
	2004			2003			2003			2002			2001
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	955,374		$	183,943		$	669,735		$	69,192		$	897,341
Receivables
Trade		11,582,265			12,996,103			16,156,222			10,691,735			12,256,134
Other		532			8,426			2,506			11,424			45,347
Prepaid expenses		1,035,687			831,337			1,643,739			492,026			370,707
Advances to related parties		875,000			510,000			855,000			510,000			—
Supplies and materials		950,632			682,803			963,480			487,520			432,939
Total current assets		15,399,490			15,212,612			20,290,682			12,261,897			14,002,468
PROPERTY AND EQUIPMENT
Building		607,636			583,628			607,636			699,721			1,451,221
Machinery and equipment		62,924,505			53,080,935			57,645,604			50,661,524			45,253,426
		63,532,141			53,664,563			58,253,240			51,361,245			46,704,647
Less - accumulated depreciation		40,206,036			36,223,605			40,312,888			33,828,548			24,966,942
		23,326,105			17,440,958			17,940,352			17,532,697			21,737,705
Land		98,197			98,197			98,197			413,198			476,226
		23,424,302			17,539,155			18,038,549			17,945,895			22,213,931
OTHER ASSETS
Deposits		17,962			18,435			17,962			18,435			2,878
Contract acquisition rights (net of accumulated amortization of $97,721 in 2003 and $21,667 in 2002)		434,670			387,968			453,601			363,566			—
Goodwill (net of accumulated amortization of $68,611 in 2001)		174,489			174,489			174,489			174,489			581,389
Deferred income taxes		584,100			617,000			601,100			636,000			636,000
		1,211,221			1,197,892			1,247,152			1,192,490			1,220,267
	$	40,035,013		$	33,949,659		$	39,576,383		$	31,400,282		$	37,436,666
LIABILITIES AND SHAREHOLDER’S DEFICIT
CURRENT LIABILITIES
Checks issued in excess of bank balance	$	—		$	—		$	—		$	—		$	2,170,476
Note payable - bank		9,610,000			5,700,000			10,000,000			4,500,000			—
Current maturities of long-term debt		27,162,569			8,344,231			12,928,121			8,198,916			10,687,496
Accounts payable		4,710,541			5,876,187			6,555,149			5,369,645			3,775,630
Accrued expenses		2,794,266			2,248,798			2,655,732			2,697,802			4,168,021
Total current liabilities		44,277,376			22,169,216			32,139,002			20,766,363			20,801,623
LONG-TERM DEBT - net of current maturities		—			15,850,553			12,060,243			15,051,757			25,457,100
SHAREHOLDER’S DEFICIT
Common stock - $1,000 par value, 1,000 shares authorized, 100 shares issued and outstanding		100,000			100,000			100,000			100,000			100,000
Additional paid-in capital		11,670,550			11,670,550			11,670,550			11,670,550			6,716,512
Accumulated deficit		(16,012,913	)		(15,840,660	)		(16,393,412	)		(16,188,388	)		(15,638,569	)
Total shareholder’s deficit		(4,242,363	)		(4,070,110	)		(4,622,862	)		(4,417,838	)		(8,822,057	)
	$	40,035,013		$	33,949,659		$	39,576,383		$	31,400,282		$	37,436,666

The accompanying notes are an integral part of these statements.

EXHIBIT B

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended March 31,				Years Ended December 31,
	2004		2003		2003			2002			2001
	(unaudited)
Sales	$	22,987,134	$	22,177,116	$	90,519,364		$	84,783,830		$	81,722,405
Cost of sales
Direct labor		5,750,775		5,160,218		23,844,185			22,268,603			23,188,341
Dumping and hauling		7,500,418		7,178,248		30,349,486			28,516,654			30,123,083
Depreciation and amortization		1,693,779		2,137,251		8,632,711			9,172,228			10,645,485
Amortization of contract rights		18,931		18,931		75,727			43,334			—
Other		3,419,767		2,880,815		10,051,118			9,561,909			9,938,131
		18,383,670		17,375,463		72,953,227			69,562,728			73,895,040
Gross profit		4,603,464		4,801,653		17,566,137			15,221,102			7,827,365
Operating expenses		3,710,422		3,741,739		14,910,255			13,666,493			12,497,884
Operating income (loss)		893,042		1,059,914		2,655,882			1,554,609			(4,670,519	)
Other (income) expense
(Gain) loss on sale of assets		—		—		(40,947	)		11,466			38,470
Interest expense		495,543		540,252		1,931,303			2,092,962			2,626,756
		495,543		540,252		1,890,356			2,104,428			2,665,226
Income (loss) before income tax expense (benefit)		397,499		519,662		765,526			(549,819	)		(7,335,745	)
Income tax expense (benefit) - deferred		17,000		19,000		34,900			—			(150,000	)
Net income (loss)	$	380,499	$	500,662	$	730,626		$	(549,819	)	$	(7,185,745	)
Earnings per share	$	3,804.99	$	5,006.62	$	7,306.26		$	(5,498.19	)	$	(71,857.45	)

The accompanying notes are an integral part of these statements.

EXHIBIT C

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY (DEFICIT)

					Additional
	Shares		Par		Paid-in		Accumulated
	Issued		Value		Capital		Deficit			Total
Balance - January 1, 2001		100	$	100,000	$	6,687,112	$	(8,452,824	)	$	(1,665,712	)
Net loss		—		0		0		(7,185,745	)		(7,185,745	)
Shareholder’s contribution		—		0		29,400		0			29,400
Balance - December 31, 2001		100		100,000		6,716,512		(15,638,569	)		(8,822,057	)
Net loss		—		0		0		(549,819	)		(549,819	)
Shareholder’s contribution		—		0		4,954,038		0			4,954,038
Balance - December 31, 2002		100		100,000		11,670,550		(16,188,388	)		(4,417,838	)
Net income		—		0		0		730,626			730,626
Shareholder’s distribution		—		0		0		(935,650	)		(935,650	)
Balance - December 31, 2003		100		100,000		11,670,550		(16,393,412	)		(4,622,862	)
Net income (unaudited)		—		—		—		380,499			380,499
Balance - March 31, 2004 (unaudited)		100	$	100,000	$	11,670,550	$	(16,012,913	)	$	(4,242,363	)

The accompanying notes are an integral part of these statements.

EXHIBIT D

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,						Years Ended December 31,
	2004			2003			2003			2002			2001
	(unaudited)
Cash flows from operating activities
Cash received from customers	$	27,561,089		$	19,872,747		$	85,054,877		$	86,348,229		$	81,572,652
Cash paid for goods and operating expenses		(21,539,330	)		(19,226,334	)		(79,728,995	)		(76,284,274	)		(78,757,105	)
Interest paid		(420,793	)		(491,272	)		(1,832,673	)		(2,011,004	)		(2,450,343	)
Net cash provided by operating activities		5,600,966			155,141			3,493,209			8,052,951			365,204
Cash flows from investing activities
Advances to related parties		(20,000	)		—			(345,000	)		(510,000	)		—
Deposits paid (returned)		—			—			472			(15,557	)		443,019
Cash received from sale of property and equipment		(7,079,532	)		(1,988,317	)		73,718			117,221			1,578,756
Purchase of property and equipment		—			—			(9,185,157	)		(5,821,311	)		(5,670,297	)
Payment for contract acquisition rights		—			(43,333	)		(165,762	)		—			—
Net cash used for investing activities		(7,099,532	)		(2,031,650	)		(9,621,729	)		(6,229,647	)		(3,648,522	)
Cash flows from financing activities
Proceeds from note payable - bank		—			1,200,000			5,500,000			1,300,000			—
Proceeds of long-term debt		4,256,644			3,000,000			10,699,978			1,590,216			11,282,538
Payments of long-term debt		(2,472,439	)		(2,055,896	)		(8,962,288	)		(7,641,669	)		(7,955,236	)
Contribution from shareholder		—			—			—			2,100,000			—
Distributions to shareholder		—			(152,844	)		(508,627	)		—			—
Net cash provided by (used for) financing activities		1,784,205			1,991,260			6,729,063			(2,651,453	)		3,327,302
Net increase (decrease) in cash and cash equivalents		285,639			114,751			600,543			(828,149	)		43,984
Cash and cash equivalents - beginning		669,735			69,192			69,192			897,341			853,357
Cash and cash equivalents - ending	$	955,374		$	183,943		$	669,735		$	69,192		$	897,341
Reconciliation of net income (loss) to net cash provided by operating activities
Net income (loss)	$	380,499		$	500,662		$	730,626		$	(549,819	)	$	(7,185,745	)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities
Depreciation and amortization		1,712,710			2,156,182			8,708,438			9,215,562			10,645,485
(Gain) loss on sale of property and equipment		—			—			(40,947	)		11,466			38,470
(Increase) decrease in
Receivables - trade		4,573,955			(2,304,369	)		(5,464,487	)		1,564,399			(149,753	)
Other receivables		1,974			3,088			8,918			33,923			(6,735	)
Supplies and materials		12,848			(195,283	)		(475,961	)		(54,580	)		(118,929	)
Prepaid expenses		608,052			(339,311	)		(1,151,712	)		(121,320	)		(4,052	)
Deferred income taxes		17,000			19,000			34,900			—			(150,000	)
Increase (decrease) in
Checks issued in excess of bank balance		—			—			—			(2,170,476	)		623,321
Accounts payable		(1,844,606	)		506,542			1,185,504			1,594,015			(3,681,907	)
Accrued expenses		138,534			(191,370	)		(42,070	)		(1,470,219	)		355,049
		5,220,467			(345,521	)		2,762,583			8,602,770			7,550,949
Net cash provided by operating activities	$	5,600,966		$	155,141		$	3,493,209		$	8,052,951		$	365,204

The accompanying notes are an integral part of these statements.

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A - Nature of Operations

Florida Recycling Services, Inc. of Illinois (FRS of Illinois) and its subsidiary Florida Recycling Services, Inc. of Delaware (FRS of Delaware) operate waste disposal and recycling services in central Florida.

Note B - Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of FRS of Illinois and its subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation.

Unaudited Interim Financial Statements

In the opinion of management, the unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company at March 31, 2004 and 2003 and the consolidated results of operations and cash flows for the three months ended March 31, 2004 and 2003.

Financial statement disclosures required by generally accepted accounting principles have not been included for the unaudited interim consolidated financial information where those disclosures are not significantly different than disclosures presented with the audited consolidated financial statements for the years ended December 31, 2003, 2002 and 2001.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

Accounts Receivable

Trade receivables are uncollateralized customer obligations due 30 days from the invoice date.

Trade receivables are stated at the amount billed to the customer. The carrying amount of trade receivables is reduced by an allowance for doubtful accounts that reflects management’s estimate of the amounts that will not be collected. Management reviews individual receivable balances and the Company’s average write offs to estimate the allowance for doubtful accounts. At December 31, 2003, 2002 and 2001, an allowance of $260,179, $379,120 and $363,332, respectively was considered necessary.

Property and Equipment

Property and equipment is stated at cost. Expenditures for maintenance, repairs and minor renewals are charged to expense as incurred. Expenditures for improvements, replacements and major renewals are capitalized.

Depreciation is provided principally by accelerated methods over estimated useful lives of 5 to 39 years.

In January 2003, the Company outsourced the refurbishing of its containers to a related party. Costs associated with the betterments totaling $1,000,000 have been capitalized

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to machinery and equipment. In prior years, the repair and refurbishing was done internally. No amounts were capitalized in previous years since there was no objective basis to measure the betterments.

Note B - Summary of Significant Accounting Policies (Cont’d)

Goodwill and Other Intangible Assets

Goodwill, representing the aggregate excess cost of companies acquired over the fair value of their net assets at dates of acquisition, was being amortized by the straight-line method over a period of 15 years for the year ended December 31, 2001.

In June 2001, Statement of Financial Accounting Standards (SFAS) No. 142 was issued to address the initial recognition and measurement of intangible assets acquired outside of a business combination and the accounting for goodwill and other intangible assets subsequent to their acquisition. SFAS No. 142 provides that intangible assets with finite useful lives be amortized and that goodwill and intangible assets with indefinite lives not be amortized, but rather be tested at least annually for impairment. The Company adopted SFAS No. 142 as of January 1, 2002. Upon adoption of SFAS 142, the Company assigned approximately $407,000 of previously reported goodwill to contract acquisition costs.

Contract acquisition costs are being amortized over their estimated remaining useful lives of approximately 8 years. Estimated amortization expense for each year is $84,014 through December 31, 2007 and $59,151 for 2008.

On January 1, 2002, goodwill amounting to $174,489 was not subject to further amortization as a result of SFAS No. 142. The Company conducted its initial impairment test in 2002, with no reduction of recorded goodwill resulting from the test. A reconciliation adjusting comparative net earnings and earnings per share for the year ended December 31, 2001, to show the effect of amortizing the contract acquisition costs and no longer amortizing goodwill, follows:

	2001
Reported net loss	$	(7,185,745	)
Adjustments:
Goodwill amortization		43,334
Contract acquisition costs amortization		(30,334	)
Adjusted net loss	$	(7,172,745	)
Basic earnings per share:
Reported net earnings	$	(71,857.45	)
Effect of amortization changes		130.00
Adjusted net loss per share	$	(71,727.45	)

Note B - Summary of Significant Accounting Policies (Cont’d)

Impairment of Long-Lived Assets

In accordance with SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, property and equipment and amortizable intangibles are reviewed for

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable from estimated future undiscounted cash flows, excluding interest charges. Impairment losses are measured as the amount by which the carrying amount of the assets exceed their fair value.

Fair Value of Financial Instruments

SFAS No. 107 requires disclosures about the fair value for all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about fair value of financial instruments are based on pertinent information available to management as of December 31, 2003, 2002 and 2001. Accordingly, the estimates presented in these statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.

Management estimates the fair value of (i) receivables, advances to related parties, accounts payable, accrued expenses and notes payable to approximate carrying value due to short maturity of these instruments; and (ii) borrowings under the long-term debt approximates carrying value because the most significant portion of these borrowings accrues interest at a floating interest rate based on the market.

The Company’s remaining assets and liabilities, which are not considered financial instruments, have not been valued differently than customary with historical cost accounting.

Per Share Data

Net earnings per share (EPS) are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Weighted average shares outstanding amounted to 100 shares in the years ended December 31, 2003, 2002 and 2001.

Income Taxes

FRS of Illinois, with the consent of its shareholder, has elected to be taxed as an S corporation for Federal and state income tax purposes. The shareholder of an S corporation includes his share of the company’s income or loss on his individual income tax returns. Therefore, no provision or liability for federal or state income taxes has been made in the 2003, 2002 and 2001 financial statements for FRS of Illinois net income / (loss) of approximately $673,000, $(480,000) and $(6,966,000), respectively.

FRS of Delaware provides for federal and state taxes currently due plus deferred taxes, if any, arising from temporary differences between income for financial reporting and income tax purposes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income.

Note B - Summary of Significant Accounting Policies (Cont’d)

Advertising

Advertising costs are expensed when incurred. Advertising expense for the years ended December 31, 2003, 2002 and 2001 was $79,000, $73,300 and $65,046, respectively.

Estimates and Assumptions

The presentation 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

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note C - Note Payable - Bank

The Company has a $12,000,000 commitment of which $9,610,000 (unaudited), $10,000,000, $5,700,000 (unaudited), and $4,500,000 is drawn at March 31, 2004, December 31, 2003, March 31, 2003, and December 31, 2002, respectively. The note, which is due June 2004, bears interest at the banks prime rate (effective rate of 4% in 2004 (unaudited), 3.8% in 2003 and 5% in 2002). Interest is payable monthly. The note is collateralized by a personal guarantee of the Company’s shareholder.

Note D - Long-Term Debt

     Long-term debt consists of the following:

	March 31, (unaudited)				December 31,
	2004		2003		2003		2002		2001
The Company has a $3,000,000 commitment that bears interest at the bank’s prime rate (effective rate of 4% in 2004 and 2003). The note is payable in monthly installments of $50,000 plus interest through January 2009 and is collateralized by a personal guarantee of the Company’s shareholder.	$	2,950,000	$	3,000,000	$	3,000,000	$	—	$	—
Property note - payable in monthly installments of $5,065 including interest at 8%, due February 2015. Collateralized by land and building with a cost of $835,000.		—		—		—		—		490,280
Equipment notes - payable in monthly installments aggregating $869,000 and $795,000 as of March 31,2004 and 2003 (unaudited), respectively, and $869,540, $777,591 and $803,579 as of December 31 2003, 2002 and 2001, respectively, including interest at rates ranging LIBOR plus 2% to 9.78% (effective rate of 5.9% and 5.7% for the three months ended March 31, 2004 and 2003 (unaudited), respectively, and 5.68%, 6.7% and 7.62% in 2003, 2002 and 2001, respectively) due at various dates through 2008. Collateralized by equipment with a cost of approximately $38,000,000 and $35,000,000 as of March 31, 2004 and 2003 (unaudited), respectively, and $37,719,523, $34,723,265 and $28,695,553 as of December 31, 2003, 2002 and 2001, respectively and personal guarantees of the Company’s shareholder.		17,555,925		19,794,784		19,588,364		21,850,673		27,891,166

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	March 31, (unaudited)				December 31,
	2004		2003		2003		2002		2001
Equipment note - due March 2004. Interest is payable monthly at 4%. The note is collateralized by a personal guarantee of the Company’s shareholder. The Company is presently negotiating the extension of this loan.		1,000,000		—		1,000,000		—		—
Unsecured note payable to shareholder, interest payable monthly at 8%.		—		—		—		—		3,163,150
Note payable - interest payable monthly at 8.0%, due April 2004. The note is collateralized by a personal guarantee of the Company’s shareholder.		4,256,644		—		1,400,000		1,400,000		1,400,000
Note payable - interest payable monthly at 5.75%, due on demand. The note is collateralized by a personal guarantee of the Company’s shareholder.		1,400,000		1,400,000		—		—		3,200,000
		27,162,569		24,194,784		24,988,364		23,250,673		36,144,596
Less - current maturities		27,162,569		8,344,231		12,928,121		8,198,916		10,687,496
	$	—	$	15,850,553	$	12,060,243	$	15,051,757	$	25,457,100

Maturities of long-term debt in the five years subsequent to 2003 are:

Year	Amount
2004	$	12,928,121
2005		6,192,013
2006		3,239,708
2007		1,472,491
2008		1,106,031
Thereafter		50,000
	$	24,988,364

Note E - Retirement Plan

The Company has a qualified cash or deferred compensation plan under Section 401(k) of the Internal Revenue Code. Under the plan, employees who meet minimum eligibility requirements may elect to defer portions of their salary, subject to Internal Revenue

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Service limits. Employer contributions are discretionary. There was no profit sharing expense during 2003, 2002 and 2001.

Note F - Leases

FRS of Illinois leases a recycling facility and warehouses under the terms of operating leases. The leases, which expire in September 2006 provide for minimum monthly rentals aggregating approximately $7,420 plus operating expenses. In addition, the Company rents office space for approximately $7,800 per month under a month-to-month lease. Minimum future rents under these leases are:

Year	Amount
2004	$	89,040
2005		89,040
2006		80,560
Total	$	258,640

Rent expense for the years ended December 31, 2003, 2002 and 2001 was $169,543, $268,108 and $311,422, respectively.

Note G - Income Taxes

Income tax expense (benefit) is comprised of the following:

	Years Ended December 31,
	2003		2002		2001
Current federal income tax	$	—	$	—	$	—
Deferred federal income tax		34,900		—		(150,000	)
Income tax expense (benefit)	$	34,900	$	—	$	(150,000	)

Income tax expense (benefit), as a percentage of pretax earnings, is as follows:

	As a Percent of Pretax Earnings
	2003			2002			2001
Combined statutory federal income tax rate		39.0	%		39.0	%		39.0	%

At December 31, 2003, FRS of Delaware has available net operating loss carryforwards that may be used to reduce future taxable income amounting to $1,580,000. The carryforwards expire in the years 2013 - 2017. A deferred tax asset, amounting to $601,100, $636,000 and $636,000 at December 31 2003, 2002 and 2001, respectively, was recorded relating to the future tax benefit of the net operating loss carryforwards. The Company has determined that it is more likely than not that the future tax benefit will be fully utilized; therefore no valuation allowance has been established related to the deferred tax asset.

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note H - Related Party Transactions

The Company has transactions with related parties as follows:

	2003		2002		2001
Management fee expense	$	3,062,000	$	2,720,000	$	2,972,500
Insurance expense		852,000		2,233,600		2,041,000
Capitalized container refurbishing		1,000,000		—		—
Container repair expense		323,000		—		—
Truck and truck parts		980,600		1,064,400		505,000

Balances due to and from related parties at December 31, were as follows:

	2003		2002		2001
Accounts payable and accrued expenses	$	1,911,600	$	556,000	$	949,500
Other receivables		38,800		241,700		—

Note I - Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with high credit quality financial institutions. Concentrations of credit risk with respect to accounts receivable are limited due to the Company’s large number of customers.

Note J - Cash Flow Information

Non-cash investing and financing activities:

During 2003, the Company distributed land and building to the Company’s shareholders with a book value of $427,023.

During 2002, the Company distributed land and building subject to the related debt to its sole shareholder as partial payment on the note payable to the shareholder. The Company’s shareholder contributed the remaining balance on the note payable to additional paid-in capital. No additional shares were issued to the shareholder for the capital contribution. The additional paid-in capital contributed by the shareholder is as follows:

Loan payable to shareholder				$	3,163,150
Less - property distributions
Net building	$	704,932
Land		83,500
Debt assumed		(479,320	)		(309,112	)
Loan contributed to additional paid-in capital					2,854,038
Cash contributions					2,100,000
Total				$	4,954,038

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In 2001, the shareholder contributed equipment (containers) valued at $29,400 to additional paid-in capital.

     Note K - Subsequent Event (unaudited)

In April 2004, the Company signed and closed a stock sale purchase agreement under which all of the Company’s outstanding shares were sold. The agreement provides that the Company’s outstanding debt is paid by the sales proceeds. The Company will become a wholly owned subsidiary of the purchaser.