Aegion Corp – ‘S-4’ on 9/15/95

As of:  Friday, 9/15/95   ·   Accession #:  950123-95-2642   ·   File #:  33-62677

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Registration of Securities Issued in a Business-Combination Transaction   —   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4         Insituform Technologies, Inc. - Form S-4             360   1.94M 
 2: EX-3.1      Certificate of Incorporation of Iti                   41     92K 
 3: EX-5.1      Opinion of Krugman, Chapnick, & Grimshaw               2     11K 
 4: EX-8.1      Opinion of Thompson & Mitchell                        12     39K 
 5: EX-10.29    Registration Rights Agreement                         13     57K 
 6: EX-21       Subsidiaries of Iti                                    3     11K 
 7: EX-23.1     Consent of Bdo Seidman, LLP                            1      7K 
 8: EX-23.2     Consent of Kpmg Peat Marwick LLP                       1      8K 
 9: EX-23.3     Consent of Deloitte & Touche LLP                       1      8K 
10: EX-23.4     Consent of Aldrich Kilbride & Tatone                   1      8K 
11: EX-23.7     Consent of Merrill Lynch, Pierce, Fenner & Smith       1      8K 
12: EX-23.8     Consent of Schroder Wertheim & Co. Incorporated        1      7K 
13: EX-99       Consent of Persons Named as Prospective Directors      3      7K 

S-4   —   Insituform Technologies, Inc. – Form S-4
Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 1995
                                                  REGISTRATION NO. 33-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

FORM S-4
REGISTRATION STATEMENT
UNDER 
THE SECURITIES ACT OF 1933
------------------------

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

                                                                [Download Table]
                                                                               
          DELAWARE                        1623                   13-3032158    
(STATE OR OTHER JURISDICTION  (PRIMARY STANDARD INDUSTRIAL    (I.R.S. EMPLOYER 
    OF INCORPORATION OR       CLASSIFICATION CODE NUMBER)   IDENTIFICATION NO.)
        ORGANIZATION)                                                          

1770 KIRBY PARKWAY, SUITE 300 
MEMPHIS, TENNESSEE 38138
(901) 759-7473
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, 
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) 
------------------------

JEAN-PAUL RICHARD 
1770 KIRBY PARKWAY, SUITE 300 
MEMPHIS, TENNESSEE 38138
(901) 759-7473
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, 
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:

                                                                [Download Table]
                                                                           
     HOWARD KAILES, ESQ.                             THOMAS A. LITZ, ESQ.  
 KRUGMAN, CHAPNICK & GRIMSHAW                        THOMPSON & MITCHELL   
    PARK 80 WEST-PLAZA TWO                          ONE MERCANTILE CENTER  
SADDLE BROOK, NEW JERSEY 07663                    ST. LOUIS, MISSOURI 63101
        (201) 845-3434                                  (314) 231-7676     

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

     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this                                                          
Registration Statement becomes effective and all other conditions to the        
consummation of the Merger pursuant to the Merger Agreement described in the    
enclosed Joint Proxy Statement/Prospectus have been satisfied or waived.        

If the securities being registered on this Form are to be offered in  
connection with the formation of a holding company and there is compliance with 
General Instruction G, check the following box.  / /                            

CALCULATION OF REGISTRATION FEE 

                                                        [Enlarge/Download Table]

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


                                                   PROPOSED MAXIMUM PROPOSED MAXIMUM                  
                                                       AGGREGATE        AGGREGATE        AMOUNT OF    
     TITLE OF EACH CLASS OF         AMOUNT TO BE       OFFERING         OFFERING       REGISTRATION   
   SECURITIES TO BE REGISTERED      REGISTERED(1)  PRICE PER UNIT(2)     PRICE(2)         FEE(3)      
                                                                                                      
------------------------------------------------------------------------------------------------------
Class A Common Stock,                                                                                 
  $.01 par value................. 12,914,238 shares     $14.9375     $192,906,430.10    $32,591.32    
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------

(1) Based upon the maximum number of shares of the Registrant's Class A Common  
Stock issuable in the Merger to holders of Class A Common Stock of      
Insituform Mid-America, Inc. ("IMA") (including shares issuable upon    
  conversion of outstanding shares of Class B Common Stock of IMA and shares
  issuable upon the exercise of outstanding stock options of IMA and options
permitted to be granted by IMA prior to consummation of the Merger).    
(2) Estimated solely for the purpose of calculating the registration fee, as    
required by Section 6(b) of the Securities Act of 1933, as amended (the 
   "Securities Act"), and calculated pursuant to Rule 457(f) of the Securities
Act in accordance with Rule 457(c) of the Securities Act based on the   
 average of the high and low prices reported on The Nasdaq Stock Market on
September 14, 1995.                                                     
(3) Calculated based on a registration fee in the amount of $66,519.46, less    
  $33,928.14 previously paid by the Registrant in connection with the filing
of its preliminary proxy materials.                                     
------------------------

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

Cross Reference Sheet pursuant to Rule 404(a) of the Securities Act of
1933, as amended and Item 501(b) of Regulation S-K, showing the location or     
heading in the Joint Proxy Statement/Prospectus of the information required by  
Part I of Form S-4.                                                             

                                                        [Enlarge/Download Table]

                                                                LOCATION OR              
                                                          HEADING IN JOINT PROXY         
NUMBER        S-4 ITEM NUMBER AND CAPTION                  STATEMENT/PROSPECTUS          
------        ---------------------------                 ----------------------         
                                                                                         
   A.   INFORMATION ABOUT THE TRANSACTION                                                

   1.   Forepart of the Registration Statement                                           
        and Outside Front Cover Page of                                                  
        Prospectus..............................  Outside Front Cover Page               
   2.   Inside Front and Outside Back Cover                                              
        Pages of Prospectus.....................  Available Information; Table of        
                                                  Contents                               
   3.   Risk Factors, Ratio of Earnings to Fixed                                         
        Charges, and Other Information..........  Joint Proxy Statement/Prospectus       
                                                  Summary; Risk Factors                  
   4.   Terms of the Transaction................  The Merger; The Merger -- Background;  
                                                  -- Recommendations of the Boards of    
                                                  Directors; Reasons for Approving the   
                                                  Merger Agreement; -- Opinion of ITI    
                                                  Financial Advisor; -- Opinion of IMA   
                                                  Financial Advisor; -- Basic Terms of   
                                                  Merger Agreement; -- Certain Federal   
                                                  Income Tax Consequences of Merger;     
                                                  -- Accounting Treatment; Description of
                                                  Capital Stock of ITI; Comparative      
                                                  Rights of Stockholders of ITI and IMA  
   5.   Pro Forma Financial Information.........  Unaudited Pro Forma Combined Condensed 
                                                  Financial Information                  
   6.   Material Contacts with the Company Being                                         
        Acquired................................  The Merger -- Background; -- Interests 
                                                  of Certain Persons in the Merger and   
                                                  Related Transactions                   
   7.   Additional Information Required for                                              
        Reoffering by Persons and Parties Deemed                                         
        to Be Underwriters......................  Inapplicable                           
     8.   Interests of Named Experts and                                                 
        Counsel.................................  Legal Matters                          
     9.   Disclosure of Commission Position on                                           
        Indemnification for Securities Act                                               
        Liabilities.............................  Inapplicable                           

   B.   INFORMATION ABOUT THE REGISTRANT                                                 

  10.   Information with Respect to S-3                                                  
        Registrants.............................  Inapplicable                           
  11.   Incorporation of Certain Information by                                          
        Reference...............................  Inapplicable                           
  12.   Information with Respect to S-2 or S-3                                           
        Registrants.............................  Inapplicable                           
  13.   Incorporation of Certain Information by                                          
        Reference...............................  Inapplicable                           

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                                                                LOCATION OR              
                                                          HEADING IN JOINT PROXY         
NUMBER        S-4 ITEM NUMBER AND CAPTION                  STATEMENT/PROSPECTUS          
------  ----------------------------------------  ---------------------------------------
                                                                                         
  14.   Information with Respect to Registrants                                          
        Other than S-3 or S-2 Registrants.......  Business of ITI; Market Prices of and  
                                                  Dividends on ITI Common Stock and IMA  
                                                  Class A Common Stock; Selected         
                                                  Financial Data of ITI;                 
                                                  ITI -- Management's Discussion and     
                                                  Analysis of Financial Condition and    
                                                  Results of Operations; Security        
                                                  Ownership of Principal Stockholders and
                                                  Management of ITI; Financial Statements
                                                  of ITI; Financial Statements of Gelco  
                                                  and affiliates                         
   C.   INFORMATION ABOUT THE COMPANY BEING ACQUIRED                                     
  15.   Information with Respect to S-3                                                  
        Companies...............................  Inapplicable                           
  16.   Information with Respect to S-2 or S-3                                           
        Companies...............................  Inapplicable                           
  17.   Information with Respect to Companies                                            
        Other than S-2 or S-3 Companies.........  Business of IMA; Market Prices of and  
                                                  Dividends on ITI Common Stock and IMA  
                                                  Class A Common Stock; Selected         
                                                  Financial Data of IMA;                 
                                                  IMA -- Management's Discussion and     
                                                  Analysis of Financial Condition and    
                                                  Results of Operations; Management of   
                                                  IMA; Security Ownership of Principal   
                                                  Stockholders and Management of IMA;    
                                                  Financial Statements of IMA; Financial 
                                                  Statements of Enviroq                  
   D.   VOTING AND MANAGEMENT INFORMATION                                                
  18.   Information if Proxies, Consents or                                              
        Authorizations are to be Solicited......  Information Concerning the Meetings;   
                                                  Outside Front Cover Page; The Merger --
                                                  Interests of Certain Persons in the    
                                                  Merger and Related Transactions;       
                                                  -- Management of ITI Following         
                                                  Consummation of the Merger; Election of
                                                  ITI Directors; Security Ownership of   
                                                  Principal Stockholders and Management  
                                                  of ITI; Management of IMA; Security    
                                                  Ownership of Principal Stockholders and
                                                  Management of IMA                      
  19.   Information if Proxies, Consents or                                              
        Authorizations are not to be Solicited                                           
        or in an Exchange Offer.................  Inapplicable                           

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INSITUFORM TECHNOLOGIES, INC. 

                                                              September 15, 1995

Dear ITI Stockholder:                                                           

     You are cordially invited to attend the Annual Meeting of Stockholders (the
"ITI Meeting") of Insituform Technologies, Inc. ("ITI") to be held on October   
12, 1995 at 10:00 a.m., local time, at The Hilton-Memphis East, 5069 Sanderlin  
Avenue, Memphis, Tennessee. At this important meeting you will be asked to      
approve an Agreement and Plan of Merger dated as of May 23, 1995 (the "Merger   
Agreement"), providing for the merger (the "Merger") of ITI Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of ITI ("ITI Sub"), with and 
into Insituform Mid-America, Inc., a Delaware corporation ("IMA"), as a result  
of which IMA would become a wholly-owned subsidiary of ITI. Pursuant to the     
Merger Agreement, holders of Class A Common Stock, $.01 par value ("IMA Class A 
Common Stock"), of IMA will be entitled to receive 1.15 shares of Class A Common
Stock, $.01 par value ("ITI Common Stock"), of ITI for each share of IMA Class A
Common Stock held. In connection with the Merger, the holders of Class B Common 
Stock, $.01 par value (the "IMA Class B Common Stock"), of IMA have agreed to   
convert their shares into IMA Class A Common Stock on a share-for-share basis   
immediately prior to the consummation of the Merger.                            

  In addition, as contemplated by the Merger Agreement, at the ITI Meeting
you will be asked (i) to approve a proposed amendment of the Certificate of     
Incorporation of ITI, effective as of the effective time of the Merger (the     
"Effective Time"), to increase the number of authorized shares of ITI Common    
Stock from 25,000,000 shares to 40,000,000 shares (the "Capitalization          
Amendment"), and (ii) to approve a proposed amendment to the Certificate of     
Incorporation of ITI, effective as of the Effective Time, to provide for the    
filling of vacancies in the Board of Directors of ITI in accordance with Section
7.3 of the Merger Agreement (the "Board Vacancy Amendment"). The Capitalization 
Amendment will provide for a sufficient number of shares of ITI Common Stock to 
permit ITI to issue the shares that will be issued to holders of IMA Class A    
Common Stock in the Merger, the additional shares necessary to effectuate the   
exercise following the consummation of the Merger of options and warrants with  
respect to ITI Common Stock and otherwise to address future corporate purposes. 

   Upon amendment of the Certificate of Incorporation of ITI as contemplated
by the proposed Board Vacancy Amendment, and as a condition to effectuation of  
the Merger, ITI's Board of Directors will be expanded to consist of thirteen    
members, ten of whom, Paul A. Biddelman, Brian Chandler, Douglas K. Chick,      
William Gorham, James D. Krugman, Jean-Paul Richard, Steven Roth, Silas         
Spengler, Sheldon Weinig and Russell B. Wight, Jr., are current ITI directors,  
and three of whom, Jerome Kalishman, Robert W. Affholder and Alvin J. Siteman,  
were designated by IMA and are current directors of IMA. Messrs. Affholder and  
Kalishman, together with his associates, are the largest stockholders of IMA.   

    It is expected that the Merger will combine complementary strengths of the
companies and create a larger enterprise which should have better economies of  
scale, greater operations flexibility, and the enhanced ability to fund         
strategic initiatives such as technology development, industrial marketing and  
overseas territorial expansion.                                                 

  At the ITI Meeting, you will be asked to approve, in separate proposals,
the Merger Agreement and the transactions contemplated thereby, the proposed    
Capitalization Amendment and the proposed Board Vacancy Amendment. Also, you    
will be asked to elect four Class III Directors of ITI for the ensuing          
three-year term, and to authorize the Board of Directors to adjourn the ITI     
Meeting to permit the further solicitation of proxies, if necessary. The        
consummation of the Merger is subject to approval of the proposed Capitalization
Amendment and the proposed Board Vacancy Amendment, neither of which will become
effective until consummation of the Merger.                                     

YOUR BOARD OF DIRECTORS BELIEVES THAT THE MERGER AGREEMENT AND THE    
TRANSACTIONS CONTEMPLATED THEREBY, THE PROPOSED CAPITALIZATION AMENDMENT AND THE
PROPOSED BOARD VACANCY AMENDMENT ARE IN THE BEST INTERESTS                      

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OF ITI AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS HAS UNANIMOUSLY             
APPROVED THE TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED    
THEREBY, THE PROPOSED CAPITALIZATION AMENDMENT AND THE PROPOSED BOARD VACANCY   
AMENDMENT AND RECOMMENDS THAT YOU VOTE FOR APPROVAL OF EACH SUCH PROPOSAL, FOR  
THE ELECTION OF THE FOUR CLASS III DIRECTORS OF ITI NAMED IN THE ATTACHED JOINT 
PROXY STATEMENT/PROSPECTUS AND FOR AUTHORIZATION OF THE BOARD OF DIRECTORS TO   
ADJOURN THE ITI MEETING TO PERMIT THE FURTHER SOLICITATION OF PROXIES, IF       
NECESSARY.                                                                      

  Merrill Lynch & Co., ITI's financial advisor, has rendered an opinion to
the Board of Directors of ITI to the effect that, at the date of the attached   
Joint Proxy Statement/Prospectus, based upon the assumptions made, the matters  
considered and the limitations on the review undertaken, the consideration to be
paid by ITI pursuant to the Merger is fair to ITI from a financial point of     
view.                                                                           

  The determination of whether to vote in favor of the Merger involves the
consideration by you of certain risk factors, among them: IMA's                 
non-Insituform(R) operations; competition and IMA's development of additional   
products; IMA's western hemisphere operations; IMA's dependence on significant  
governmental customers; outstanding issues between ITI and IMA; certain         
conflicts of interest between IMA and its principal stockholders and directors; 
effects of environmental regulation and inclement weather on operations; and the
occurrence of unanticipated events and circumstances, and the variation of the  
operations of IMA or ITI from conditions projected, so as to result in the      
failure of ITI to realize the anticipated value of the contribution of IMA's    
operations through the Merger. For a more detailed discussion of these and other
factors, see "Risk Factors -- Certain Considerations Relating to the Merger" in 
the enclosed Joint Proxy Statement/Prospectus.                                  

   Other important information regarding ITI, IMA, the Merger Agreement, the
proposed amendments to ITI's Certificate of Incorporation, the election of      
directors and related matters, is also included in the enclosed Joint Proxy     
Statement/Prospectus. You are urged to read carefully the Joint Proxy           
Statement/Prospectus, as well as the Annexes thereto.                           

   YOUR VOTE IS IMPORTANT.  The affirmative vote of holders of a majority of
the outstanding shares of ITI Common Stock will be required to approve,         
respectively, the Merger Agreement and the transactions contemplated thereby,   
the proposed Capitalization Amendment and the proposed Board Vacancy Amendment. 
Directors are elected by a plurality vote. Approval of the proposal to authorize
the Board of Directors to adjourn the ITI Meeting to permit the further         
solicitation of proxies, if necessary, requires the affirmative vote of holders 
of a majority of the outstanding shares of ITI Common Stock present in person or
represented by proxy and entitled to vote at the ITI Meeting. Whether or not you
plan to attend the ITI Meeting, it is important that your shares be represented.
If you are not certain that you will attend, please complete, sign and date your
proxy card and return it in the enclosed prepaid envelope as soon as possible.  
If after voting your shares by proxy, you decide you would rather vote them in  
person, you may do so at the ITI Meeting.                                       

              Sincerely,

                    JAMES D. KRUGMAN
                         Chairman of the Board

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INSITUFORM MID-AMERICA, INC.

                                                              September 15, 1995

Dear Fellow Stockholder:                                                        

    You are cordially invited to attend a Special Meeting of Stockholders (the
"IMA Meeting") of Insituform Mid-America, Inc. ("IMA") to be held on October 12,
1995 at 10:00 a.m., local time, at the Sheraton West Port Plaza Hotel, 900 West 
Port Plaza, St. Louis, Missouri. At this important meeting you will be asked to 
approve an Agreement and Plan of Merger dated as of May 23, 1995 (the "Merger   
Agreement"), providing for the merger (the "Merger") of ITI Acquisition Corp., a
Delaware corporation ("ITI Sub") and a wholly-owned subsidiary of Insituform    
Technologies, Inc., a Delaware corporation ("ITI"), with and into IMA, as a     
result of which IMA would become a wholly-owned subsidiary of ITI. Pursuant to  
the terms of the Merger Agreement, holders of Class A Common Stock, $.01 par    
value ("IMA Class A Common Stock"), of IMA will be entitled to receive 1.15     
shares of Class A Common Stock, $.01 par value ("ITI Common Stock"), of ITI for 
each share of IMA Class A Common Stock held (the "Conversion Ratio"). In        
connection with the Merger, the holders of Class B Common Stock, $.01 par value 
(the "IMA Class B Common Stock"), of IMA have agreed to convert their shares    
into IMA Class A Common Stock on a share-for-share basis immediately prior to   
the consummation of the Merger.                                                 

At the IMA Meeting, you will also be asked to authorize the Board of  
Directors to adjourn the IMA Meeting to permit the further solicitation of      
proxies, if necessary.                                                          

   YOUR BOARD OF DIRECTORS CAREFULLY CONSIDERED AND UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT  
YOU VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED 
THEREBY AND FOR AUTHORIZATION OF THE BOARD OF DIRECTORS TO ADJOURN THE IMA      
MEETING TO PERMIT THE FURTHER SOLICITATION OF PROXIES, IF NECESSARY.            

     Schroder Wertheim & Co. Incorporated, IMA's financial advisor, has rendered
its opinion that, at the date of the attached Joint Proxy Statement/Prospectus, 
the Conversion Ratio is fair, from a financial point of view, to the            
stockholders of IMA.                                                            

 The determination of whether to vote in favor of the Merger and acquire
shares of ITI Common Stock involves the consideration by you of certain risk    
factors, among them: the reliance of ITI's business on the Insituform(R)        
Process; ITI's dependence on a licensee network to distribute its products, and 
on governmental and quasi-governmental customers; ITI's international           
operations; the limited protection afforded by patents; the fluctuations in     
ITI's operating results and the possible volatility of the ITI Common Stock; the
uncertainties and costs of litigation between IMA and ITI; other litigation to  
which ITI is a party; ITI's dividend policy; the interests of certain affiliates
of ITI in the transaction; the composition of ITI's Board following the         
consummation of the transaction; certain conflicts of interest; the effect of   
anti-takeover provisions contained in ITI's Certificate of Incorporation and    
By-Laws; the federal income tax consequences of whether the conversion of shares
contemplated by the Merger Agreement will constitute a tax-free reorganization; 
and the effect on the market for ITI Common Stock of the shares of ITI Common   
Stock eligible for future sale. For a more detailed discussion of these and     
other factors relating to acquiring ITI Common Stock, see "Risk                 
Factors -- Certain Considerations Relating to Acquiring Shares of ITI Common    
Stock" in the enclosed Joint Proxy Statement/Prospectus.                        

   The enclosed Joint Proxy Statement/Prospectus and related proxy materials
set forth financial data and other important information relating to IMA and ITI
and describe the terms and conditions of the proposed Merger. The Board of      
Directors recommends that you carefully review the materials before completing  
the enclosed proxy card or attending the IMA Meeting.                           

     Please complete, sign and date the enclosed proxy card and return it in the
enclosed, pre-addressed envelope which requires no postage if mailed within the 
United States. If you later decide to attend the IMA Meeting and vote in person,
or if you wish to revoke your proxy for any reason prior to the vote at the IMA 

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Meeting, you may do so by following the procedures set forth in the Joint Proxy 
Statement/Prospectus and your proxy will have no further effect.                

   YOUR VOTE IS IMPORTANT.  The affirmative vote of holders of a majority of
the outstanding shares of IMA Class A Common Stock and IMA Class B Common Stock 
voting together as one class will be required to approve the Merger Agreement   
and the transactions contemplated thereby. Approval of the proposal to authorize
the Board of Directors to adjourn the IMA Meeting to permit the further         
solicitation of proxies, if necessary, requires the affirmative vote of holders 
of a majority of the outstanding shares of IMA Class A Common Stock and IMA     
Class B Common Stock present in person or represented by proxy and entitled to  
vote at the IMA Meeting voting together as one class. Whether or not you plan to
attend the IMA Meeting, it is important that your shares be represented.        

              Sincerely,

                    JEROME KALISHMAN
                         Chairman of the Board

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INSITUFORM TECHNOLOGIES, INC. 
1770 Kirby Parkway, Suite 300 
Memphis, Tennessee 38138
Telephone (901) 759-7473

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF 
CLASS A COMMON STOCK

   NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Class A
Common Stock, $.01 par value ("ITI Common Stock"), of Insituform Technologies,  
Inc., a Delaware corporation ("ITI"), will be held at The Hilton-Memphis East,  
5069 Sanderlin Avenue, Memphis, Tennessee, on October 12, 1995 at 10:00 a.m.,   
local time, for the following purposes:                                         

        (1) To consider and vote upon a proposal to approve an Agreement and
     Plan of Merger dated as of May 23, 1995 (the "Merger Agreement") among ITI,
   ITI Acquisition Corp., a Delaware corporation and wholly-owned subsidiary
of ITI ("ITI Sub"), and Insituform Mid-America, Inc., a Delaware      
   corporation ("IMA"), and the transactions contemplated thereby, providing
    for, among other things, the merger (the "Merger") into IMA of ITI Sub, as
  a result of which IMA would become a wholly-owned subsidiary of ITI, and
    the consummation of the transactions contemplated by the Merger Agreement,
  including the conversion of each share of Class A Common Stock, $.01 par
   value ("IMA Class A Common Stock"), of IMA into the right to receive 1.15
     shares of ITI Common Stock subsequent to conversion into IMA Class A Common
   Stock, in accordance with its terms, of all outstanding shares of Class B
Common Stock, $.01 par value, of IMA.                                 

         (2) To consider and vote upon a proposal to approve an amendment (the
 "Capitalization Amendment") of the Certificate of Incorporation of ITI,
effective contemporaneously with the consummation of the Merger, to   
increase the number of authorized shares of ITI Common Stock from     
25,000,000 shares to 40,000,000 shares.                               

         (3) To consider and vote upon a proposal to approve an amendment (the
"Board Vacancy Amendment"), effective contemporaneously with the      
consummation of the Merger, to provide for the filling of vacancies on
ITI's Board of Directors as contemplated by Section 7.3 of the Merger 
Agreement.                                                            

(4) To elect four Class III Directors of ITI for the ensuing
    three-year term and until their respective successors are elected and have
qualified.                                                            

     (5) To authorize the Board of Directors to adjourn the meeting to
permit further solicitation of proxies, if necessary.                 

       (6) To transact such other business as may properly come before the
meeting, including any adjournments or postponements thereof.         

The consummation of the Merger is subject to approval of the proposed 
Capitalization Amendment and the proposed Board Vacancy Amendment, neither of   
which will become effective until consummation of the Merger.                   

The proposals to approve, respectively, the Merger Agreement, the     
Capitalization Amendment and the Board Vacancy Amendment must be approved by an 
affirmative vote of holders of a majority of the outstanding shares of ITI      
Common Stock. Directors are elected by a plurality vote. The proposal to        
authorize the Board of Directors to adjourn the meeting to permit the further   
solicitation of proxies, if necessary, requires the affirmative vote of holders 
of a majority of the shares of ITI Common Stock present in person or represented
by proxy and entitled to vote at the meeting.                                   

   The Board of Directors has fixed the close of business on August 30, 1995
as the record date for the determination of holders of ITI Common Stock entitled
to notice of and to vote at the meeting, including any adjournments or          
postponements thereof.                                                          

These items are more fully described in the enclosed Joint Proxy      
Statement/Prospectus, which is hereby made a part of this Notice.               

 Whether you plan to attend the meeting or not, please sign and date the
enclosed proxy and return it promptly by mail in the enclosed envelope. No      
postage is required if mailed in the United States. If you attend the meeting,  
you may vote either in person or by your proxy.                                 

                                       By Order of the Board of Directors,

                 HOWARD KAILES
             Secretary
Memphis, Tennessee                                                              
September 15, 1995                                                              

IMPORTANT 

    STOCKHOLDERS CAN HELP AVOID THE NECESSITY AND EXPENSE OF FOLLOW-UP LETTERS
TO ASSURE THAT A QUORUM IS PRESENT AT THE MEETING BY PROMPTLY RETURNING THE     
ENCLOSED PROXY. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE      
UNITED STATES.                                                                  

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INSITUFORM MID-AMERICA, INC.
17988 Edison Avenue 
Chesterfield, Missouri 63005
Telephone (314) 532-6137

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF
CLASS A COMMON STOCK AND CLASS B COMMON STOCK 

  NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Class A
Common Stock, $.01 par value ("IMA Class A Common Stock"), and Class B Common   
Stock, $.01 par value ("IMA Class B Common Stock"), of Insituform Mid-America,  
Inc., a Delaware corporation ("IMA"), will be held at the Sheraton West Port    
Plaza Hotel, 900 West Port Plaza, St. Louis, Missouri, on October 12, 1995 at   
10:00 a.m., local time, for the following purposes:                             

        (1) To consider and vote upon a proposal to approve an Agreement and
     Plan of Merger dated as of May 23, 1995 (the "Merger Agreement") among IMA,
Insituform Technologies, Inc., a Delaware corporation ("ITI"), and ITI
  Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
    ITI ("ITI Sub"), and the transactions contemplated thereby, providing for,
 among other things, the merger (the "Merger") into IMA of ITI Sub, as a
    result of which IMA would become a wholly-owned subsidiary of ITI, and the
consummation of the transactions contemplated by the Merger Agreement,
     including the conversion of each share of IMA Class A Common Stock into the
  right to receive 1.15 shares of Class A Common Stock, $.01 par value, of
   ITI subsequent to conversion into IMA Class A Common Stock, in accordance
with its terms, of all outstanding shares of IMA Class B Common Stock.

     (2) To authorize the Board of Directors to adjourn the meeting to
permit the further solicitation of proxies, if necessary.             

       (3) To transact such other business as may properly come before the
meeting, including any adjournments or postponements thereof.         

The proposal to approve the Merger Agreement must be approved by an   
affirmative vote of holders of a majority of the outstanding shares of IMA Class
A Common Stock and IMA Class B Common Stock voting together as one class. The   
proposal to authorize the Board of Directors to adjourn the meeting to permit   
the further solicitation of proxies, if necessary, must be approved by an       
affirmative vote of holders of a majority of the outstanding shares of IMA Class
A Common Stock and IMA Class B Common Stock present in person or represented by 
proxy and entitled to vote at the meeting voting together as one class.         

     The Board of Directors has fixed the close of business on September 1, 1995
as the record date for the determination of holders of IMA Class A Common Stock 
and IMA Class B Common Stock entitled to notice of and to vote at the meeting,  
including any adjournments or postponements thereof.                            

These items are more fully described in the enclosed Joint Proxy      
Statement/Prospectus, which is hereby made a part of this Notice.               

 Whether you plan to attend the meeting or not, please sign and date the
enclosed proxy and return it promptly by mail in the enclosed envelope. No      
postage is required if mailed in the United States. If you attend the meeting,  
you may vote either in person or by your proxy.                                 

                                       By Order of the Board of Directors,

                   JOSEPH F. OLSON
             Secretary
Chesterfield, Missouri                                                          
September 15, 1995                                                              

IMPORTANT 

    STOCKHOLDERS CAN HELP AVOID THE NECESSITY AND EXPENSE OF FOLLOW-UP LETTERS
TO ASSURE THAT A QUORUM IS PRESENT AT THE MEETING BY PROMPTLY RETURNING THE     
ENCLOSED PROXY. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE      
UNITED STATES.                                                                  

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JOINT PROXY STATEMENT/PROSPECTUS

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

PROSPECTUS RELATING TO UP TO 12,914,238 SHARES OF 
CLASS A COMMON STOCK OF 

INSITUFORM TECHNOLOGIES, INC. 
------------------------------

PROXY STATEMENT RELATING TO 

  INSITUFORM TECHNOLOGIES, INC.               INSITUFORM MID-AMERICA, INC.
   ANNUAL MEETING OF HOLDERS OF                SPECIAL MEETING OF HOLDERS OF
   CLASS A COMMON STOCK                       CLASS A COMMON STOCK AND
TO BE HELD OCTOBER 12, 1995                     CLASS B COMMON STOCK  
                                             TO BE HELD OCTOBER 12, 1995

This Joint Proxy Statement/Prospectus is being furnished to the       
stockholders of Insituform Technologies, Inc., a Delaware corporation ("ITI"),  
and the stockholders of Insituform Mid-America, Inc., a Delaware corporation    
("IMA"), in connection with the solicitation of proxies by the respective Boards
of Directors of ITI and IMA for use at the annual meeting of stockholders of ITI
to be held on October 12, 1995 (including any adjournments or postponements     
thereof, the "ITI Meeting") and the special meeting of stockholders of IMA to be
held on October 12, 1995 (including any adjournments or postponements thereof,  
the "IMA Meeting").                                                             

At the ITI Meeting, holders (the "ITI Stockholders") of Class A Common
Stock, $.01 par value ("ITI Common Stock"), of ITI will be asked to consider and
vote upon (i) a proposal to approve an Agreement and Plan of Merger dated as of 
May 23, 1995 (the "Merger Agreement"), among ITI, ITI Acquisition Corp., a      
Delaware corporation and a wholly-owned subsidiary of ITI ("ITI Sub"), and IMA, 
and the transactions contemplated thereby, providing for, among other things,   
the merger (the "Merger") into IMA of ITI Sub,                                  

                                               Cover page continued on next page

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

SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN MATTERS 
WHICH SHOULD BE CONSIDERED BEFORE VOTING. 

------------------------------
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 JOINT   
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION            
TO THE CONTRARY IS A CRIMINAL OFFENSE.

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

The date of this Joint Proxy Statement/Prospectus is September 15, 1995.

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as a result of which IMA would become a wholly-owned subsidiary of ITI, (ii) a  
proposal to approve an amendment (the "Capitalization Amendment") of the        
Certificate of Incorporation of ITI (the "ITI Charter"), effective              
contemporaneously with the consummation of the Merger, to increase the number of
authorized shares of ITI Common Stock from 25,000,000 shares to 40,000,000      
shares, and (iii) a proposal to approve an amendment (the "Board Vacancy        
Amendment") of the ITI Charter, effective contemporaneously with the            
consummation of the Merger, to provide for the filling of vacancies on ITI's    
Board of Directors as contemplated by Section 7.3 of the Merger Agreement. The  
consummation of the Merger is subject to approval of the proposed Capitalization
Amendment and the proposed Board Vacancy Amendment, neither of which will become
effective until consummation of the Merger. At the ITI Meeting, ITI Stockholders
will also be asked to consider and vote upon a proposal to elect four Class III 
Directors of ITI for the ensuing three-year term and until their respective     
successors are elected and have qualified, and a proposal to authorize ITI's    
Board of Directors to adjourn the ITI Meeting to permit the further solicitation
of proxies, if necessary.                                                       

At the IMA Meeting, holders (the "IMA Stockholders") of Class A Common
Stock, $.01 par value (the "IMA Class A Common Stock"), of IMA and Class B      
Common Stock, $.01 par value (the "IMA Class B Common Stock"), of IMA will be   
asked to consider and vote upon a proposal to approve the Merger Agreement, and 
the transactions contemplated thereby, and a proposal to authorize IMA's Board  
of Directors to adjourn the IMA Meeting to permit the further solicitation of   
proxies, if necessary.                                                          

     This Joint Proxy Statement/Prospectus serves as the prospectus of ITI under
the Securities Act of 1933, as amended (the "Securities Act"), for the issuance 
of up to 12,914,238 shares of ITI Common Stock which will be delivered to the   
IMA Stockholders pursuant to the Merger Agreement.                              

 Subject to the terms, conditions and procedures set forth in the Merger
Agreement, upon consummation of the Merger the business and operations of IMA   
will be continued as a wholly-owned subsidiary of ITI and each share of IMA     
Class A Common Stock will be converted into the right to receive 1.15 shares of 
ITI Common Stock (the "Conversion Ratio") subsequent to the conversion into IMA 
Class A Common Stock of all of the outstanding shares of IMA Class B Common     
Stock in accordance with its terms. The fair market value of ITI Common Stock to
be received pursuant to the Merger may fluctuate and at the consummation of the 
Merger may be more or less than the current fair market value of such shares.   
See "The Merger -- Basic Terms of Merger Agreement." No fractional shares of ITI
Common Stock will be issued in the Merger, but cash will be paid in lieu of such
fractional shares. See "The Merger -- Basic Terms of Merger Agreement."         

    The information included herein with respect to ITI and its affiliates was
supplied by ITI, and the information included herein with respect to IMA and its
affiliates was supplied by IMA.                                                 

   This Joint Proxy Statement/Prospectus and the accompanying forms of proxy
are first being mailed to the ITI Stockholders and the IMA Stockholders on or   
about September 18, 1995.                                                       

    The ITI Common Stock is quoted on The Nasdaq Stock Market under the symbol
"INSUA." The IMA Class A Common Stock is quoted on The Nasdaq Stock Market under
the symbol "INSMA." On September 14, 1995, the closing prices on The Nasdaq     
Stock Market of ITI Common Stock and IMA Class A Common Stock were $14.94 and   
$16.75, respectively.                                                           

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY        
REPRESENTATION NOT CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS, AND IF   
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS  
HAVING BEEN AUTHORIZED. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT          
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE     
SECURITIES OFFERED BY THIS JOINT PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION
OF A PROXY, IN ANY JURISDICTION, TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN SUCH         
JURISDICTION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR 
ANY DISTRIBUTION OF THE SECURITIES OFFERED PURSUANT TO THIS JOINT PROXY         
STATEMENT/PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN SINCE THE DATE OF  
THIS JOINT PROXY STATEMENT/PROSPECTUS.                                          

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AVAILABLE INFORMATION 

ITI has filed with the Securities and Exchange Commission (the        
"Commission") a Registration Statement on Form S-4 (together with all exhibits  
thereto, the "Registration Statement") under the Securities Act with respect to 
the ITI Common Stock to be issued in connection with the Merger. This Joint     
Proxy Statement/Prospectus does not contain all of the information contained in 
the Registration Statement, certain parts of which are omitted in accordance    
with the rules and regulations of the Commission. The Registration Statement is 
available for inspection and copying at the public reference facilities of the  
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549-1004.              

 Each of ITI and IMA is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in        
accordance therewith files periodic reports and other information with the      
Commission. Such reports and other information may be inspected and copied at   
the public reference facilities maintained by the Commission at 450 Fifth       
Street, N.W., Washington, D.C. 20549-1004 and at the following Regional Offices 
of the Commission: Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and New York Regional  
Office, 7 World Trade Center, New York, New York 10048. Copies of such material 
can be obtained in person from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549-1004 at prescribed rates. Such   
reports and other information may also be inspected at the offices of the       
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,          
Washington, D.C. 20006. The ITI Common Stock and the IMA Class A Common Stock   
are traded in the over-the-counter market and quoted on The Nasdaq Stock Market.

COPIES OF ITI'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL   
STATEMENTS, FOR THE YEAR ENDED DECEMBER 31, 1994, WHICH HAS BEEN FILED WITH THE 
COMMISSION, WILL BE SENT WITHOUT CHARGE TO ITI STOCKHOLDERS TO WHOM THIS JOINT  
PROXY STATEMENT/PROSPECTUS IS DELIVERED UPON WRITTEN REQUEST TO ITI'S SECRETARY 
AT INSITUFORM TECHNOLOGIES, INC., 1770 KIRBY PARKWAY - SUITE 300, MEMPHIS,      
TENNESSEE 38138.                                                                

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

     The following trademarks mentioned in this Joint Proxy Statement/Prospectus
are registered trademarks which are owned by ITI and licensed to IMA:           
Insituform(R), Insitucutter(R), Insitutube(R), Insitupipe(R) and NuPipe(R).     
UltraPipe(R) is a registered trademark owned by ITI. The following additional   
trademarks are owned by or licensed to IMA: PALTEM(R), PAL-Liner(TM),           
SZ-Liner(TM), Sprayroq(TM) and Tite Liner(TM).                                  

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TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]

                                                                                       PAGE
                                                                                       ----
                                                                                           
Available Information.................................................................   3 
Table of Contents.....................................................................   4 
Joint Proxy Statement/Prospectus Summary..............................................   6 
  The Parties.........................................................................   6 
  Risk Factors........................................................................   6 
  Information Concerning the Meetings.................................................   6 
  The Merger..........................................................................   7 
  The Capitalization Amendment........................................................  10 
  The Board Vacancy Amendment.........................................................  10 
  Election of ITI Directors...........................................................  11 
  Adjournment of Meetings.............................................................  11 
  Summary Historical and Unaudited Pro Forma Combined Condensed Financial Data........  11 
  Comparative Unaudited Per Share Data of ITI and IMA.................................  14 
Risk Factors..........................................................................  16 
  Certain Considerations Relating to Acquiring ITI Shares.............................  16 
  Certain Considerations Relating to the Merger.......................................  19 
Information Concerning the Meetings...................................................  22 
  The ITI Meeting.....................................................................  22 
  The IMA Meeting.....................................................................  23 
The Merger............................................................................  26 
  Background..........................................................................  26 
  Recommendations of the Boards of Directors; Reasons for Approving the Merger             
     Agreement........................................................................  31 
  Opinion of ITI Financial Advisor....................................................  33 
  Opinion of IMA Financial Advisor....................................................  36 
  Interests of Certain Persons in the Merger and Related Transactions.................  39 
  Basic Terms of Merger Agreement.....................................................  41 
  Management of ITI Following Consummation of the Merger..............................  46 
  Resales of ITI Common Stock.........................................................  47 
  Registration Rights Agreement.......................................................  47 
  Pooling Letters.....................................................................  48 
  Conversion Letters..................................................................  48 
  Governmental and Regulatory Matters.................................................  49 
  Certain Federal Income Tax Consequences of the Merger...............................  49 
  Accounting Treatment................................................................  50 
  Expenses............................................................................  51 
The Capitalization Amendment..........................................................  51 
The Board Vacancy Amendment...........................................................  52 
Market Prices of and Dividends on ITI Common Stock and IMA Class A Common Stock.......  54 
Unaudited Pro Forma Combined Condensed Financial Information..........................  56 
Selected Financial Data of ITI........................................................  66 
ITI -- Management's Discussion and Analysis of Financial Condition and Results of          
  Operations..........................................................................  67 
Selected Financial Data of IMA........................................................  81 
IMA -- Management's Discussion and Analysis of Financial Condition and Results of          
  Operations..........................................................................  82 
Election of ITI Directors.............................................................  88 
Business of ITI....................................................................... 102 
Security Ownership of Principal Stockholders and Management of ITI.................... 120 
Business of IMA....................................................................... 123 
Management of IMA..................................................................... 133 
Security Ownership of Principal Stockholders and Management of IMA.................... 136 
Description of ITI Capital Stock...................................................... 137 
Comparative Rights of Stockholders of ITI and IMA..................................... 138 
Adjournment of Meetings............................................................... 141 
Legal Matters......................................................................... 141 
Experts............................................................................... 141 
Index to Financial Statements......................................................... 143 

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                                                                [Download Table]
                                                            
Annex A -- Merger Agreement                                 
  Exhibit A -- Agreement of Merger                          
  Exhibit B -- Form of Pooling Letter                       
  Exhibit C -- Form of IMA Accountants' Comfort Letters     
  Exhibit D -- Form of ITI Accountants' Comfort Letter      
  Exhibit E -- Amendments to ITI Charter                    
  Exhibit F -- Amendments to ITI By-laws                    
  Exhibit G -- Form of Conversion Letter                    
  Exhibit H -- Form of ITI Counsel's Opinion                
  Exhibit I -- Form of IMA Counsel's Opinion                
  Exhibit J -- Form of Rule 145 Letter                      
  Exhibit K -- Form of Affholder Agreement                  
  Exhibit L -- Form of Kalishman Agreements                 
Annex B -- Opinion of Merrill Lynch & Co.                   
Annex C -- Opinion of Schroder Wertheim & Co. Incorporated  
Annex D -- The Capitalization Amendment                     
Annex E -- The Board Vacancy Amendment                      

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JOINT PROXY STATEMENT/PROSPECTUS SUMMARY

   The following is a summary of certain information contained in this Joint
Proxy Statement/Prospectus. This summary is not intended to be complete and is  
qualified in its entirety by the more detailed information and financial        
statements, including the notes thereto, contained elsewhere in this Joint Proxy
Statement/Prospectus and the attached Annexes, all of which are important and   
should be reviewed carefully. Capitalized terms used herein without definition  
shall have the meanings ascribed to them elsewhere in this Joint Proxy          
Statement/Prospectus.                                                           

THE PARTIES                                                                     

    ITI.  ITI is engaged in the provision, throughout the world, of trenchless
pipeline rehabilitation systems and technologies. ITI utilizes state-of-the-art 
processes to repair sewers, tunnels and pipelines, usually without excavation   
and with minimal interruption of traffic and commercial activity. ITI's primary 
technology is the Insituform Process, a "cured-in place," non-disruptive        
pipeline rehabilitation process that, during ITI's most recent fiscal year,     
contributed to approximately 79% of ITI's revenues. In addition, ITI offers     
certain other products in trenchless applications, such as its NuPipe Process,  
which utilizes a "fold-and-formed" technology used primarily to repair smaller  
or less damaged pipe or in situations where polyvinylchloride pipe is preferred,
and has acquired a variety of pipeline and ancillary technologies that, under   
the UltraPipe name, employ a diameter reduction technique tailored to meet the  
pressure pipe rehabilitation needs of the oil and gas transmission market. The  
principal executive offices of ITI are located at 1770 Kirby Parkway, Suite 300,
Memphis, Tennessee 38138, and the telephone number is (901) 759-7473. See       
"Business of ITI."                                                              

IMA.  IMA applies various trenchless and other technologies to solve  
problems requiring rehabilitation, new construction and improvement of pipeline 
systems, including sewers, industrial waste lines, slurry lines and oil field   
and industrial process pipelines. Rehabilitation process revenues, primarily    
derived by IMA from the Insituform Process as a licensee of ITI, accounted for  
approximately 68% of IMA's contract revenues during its most recent fiscal year.
IMA is also the exclusive North American licensee of Ashimori Industry Co. Ltd. 
proprietary pipeline rehabilitation technologies and, as such, utilizes the     
PALTEM-HL system of rehabilitating pressure pipes. In addition to its pipeline  
system rehabilitation methods, IMA utilizes trenchless technologies to construct
tunnels ranging from four to ten feet in diameter through a variety of soils and
provides the Tite Liner Process, a method of inserting a corrosive and abrasive 
resistant lining in oil field, mining and industrial process pipelines. The     
principal executive offices of IMA are located at 17988 Edison Avenue,          
Chesterfield, Missouri 63005, and the telephone number is (314) 532-6137. See   
"Business of IMA."                                                              

RISK FACTORS                                                                    

     There are certain factors that should be considered by ITI Stockholders and
IMA Stockholders in determining whether to vote to approve the Merger Agreement 
and the transactions contemplated thereby. See "Risk Factors."                  

INFORMATION CONCERNING THE MEETINGS                                             

THE ITI MEETING                                                                 

Date, Time and Place of Meeting.  The ITI Meeting will be held at The 
Hilton-Memphis East, 5069 Sanderlin Avenue, Memphis, Tennessee on October 12,   
1995 at 10:00 a.m., local time.                                                 

    Purpose of the Meeting.  The purpose of the ITI Meeting is to consider and
vote upon (i) the proposal to approve the Merger Agreement and the transactions 
contemplated thereby, (ii) the proposal to approve the Capitalization Amendment,
(iii) the proposal to approve the Board Vacancy Amendment, (iv) the election of 
four Class III directors for the ensuing three-year term, (v) the proposal to   
authorize ITI's Board of Directors to adjourn the ITI Meeting to permit the     
further solicitation of proxies, if necessary, and (vi) such other business as  
may properly come before the ITI Meeting. See "Information Concerning the       
Meetings -- ITI Meeting."                                                       

   Record Date.  Only holders of record of shares of ITI Common Stock at the
close of business on August 30, 1995 are entitled to notice of and to vote at   
the ITI Meeting. On August 30, 1995, 14,609,804 shares of ITI Common Stock were 
outstanding and entitled to vote.                                               

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Vote Required.  The proposals to approve, respectively, the Merger    
Agreement, the Capitalization Amendment and the Board Vacancy Amendment must be 
approved by an affirmative vote of the holders of a majority of the outstanding 
shares of ITI Common Stock. Directors are elected by a plurality vote. The      
proposal to authorize ITI's Board of Directors to adjourn the ITI Meeting to    
permit the further solicitation of proxies, if necessary, requires the          
affirmative vote of holders of a majority of the shares of ITI Common Stock     
present in person or represented by proxy and entitled to vote at the ITI       
Meeting. If there are insufficient votes to constitute a quorum or to approve   
the Merger Agreement, or to approve the Capitalization Amendment or to approve  
the Board Vacancy Amendment, at the ITI Meeting, it is contemplated that such   
meeting would be adjourned in order to permit further solicitation of proxies.  
As of August 30, 1995, directors and executive officers of ITI and their        
affiliates beneficially owned an aggregate of 3,879,047 shares of ITI Common    
Stock (approximately 25.6% of the aggregate shares of ITI Common Stock then     
outstanding) entitled to notice of and to vote at the ITI Meeting. See "Security
Ownership of Principal Stockholders and Management of ITI."                     

THE IMA MEETING                                                                 

Date, Time and Place of Meeting.  The IMA Meeting will be held at the 
Sheraton West Port Plaza Hotel, 900 West Port Plaza, St. Louis, Missouri on     
October 12, 1995 at 10:00 a.m., local time.                                     

    Purpose of the IMA Meeting.  The purpose of the IMA Meeting is to consider
and vote upon (i) the proposal to approve the Merger Agreement and the          
transactions contemplated thereby, (ii) the proposal to authorize IMA's Board of
Directors to adjourn the IMA Meeting to permit the further solicitation of      
proxies, if necessary, and (iii) such other business as may properly come before
the IMA Meeting. See "Information Concerning the Meetings -- IMA Meeting."      

    Record Date.  Only holders of record of shares of IMA Class A Common Stock
and IMA Class B Common Stock at the close of business on September 1, 1995 are  
entitled to notice of and to vote at the IMA Meeting. On September 1, 1995,     
8,330,303 shares of IMA Class A Common Stock and 2,472,985 shares of IMA Class B
Common Stock were outstanding and entitled to vote.                             

Vote Required.  The proposal to approve the Merger Agreement must be  
approved by an affirmative vote of the holders of a majority of the outstanding 
shares of IMA Class A Common Stock and IMA Class B Common Stock voting together 
as one class. The proposal to authorize IMA's Board of Directors to adjourn the 
IMA Meeting to permit the further solicitation of proxies, if necessary,        
requires the affirmative vote of holders of a majority of the shares of IMA     
Class A Common Stock and IMA Class B Common Stock present in person or          
represented by proxy and entitled to vote at the IMA Meeting voting together as 
one class. If there are insufficient votes to constitute a quorum or to approve 
the Merger Agreement at the IMA Meeting, it is contemplated that such meeting   
would be adjourned in order to permit further solicitation of proxies. As of    
September 1, 1995, directors and executive officers of IMA and their affiliates 
beneficially owned an aggregate of 4,197,835 shares of IMA Class A Common Stock 
and IMA Class B Common Stock (approximately 38.5% of the aggregate shares of IMA
Class A Common Stock and IMA Class B Common Stock then outstanding) entitled to 
notice of and to vote at the IMA Meeting. See "Security Ownership of Principal  
Stockholders and Management of IMA."                                            

THE MERGER                                                                      

     General.  The Merger Agreement provides for the merger into IMA of ITI Sub,
as a result of which IMA would become a wholly-owned subsidiary of ITI. Pursuant
to the terms of the Merger Agreement, each share of IMA Class A Common Stock    
outstanding immediately prior to the Effective Time will, by virtue of the      
Merger, be converted into the right to receive 1.15 shares of ITI Common Stock  
subsequent to conversion into IMA Class A Common Stock, in accordance with its  
terms, of all outstanding shares of IMA Class B Common Stock. The fair market   
value of ITI Common Stock to be received pursuant to the Merger may fluctuate   
and at the consummation of the Merger may be more or less than the current fair 
market value of such shares. See "The Merger -- Basic Terms of Merger           
Agreement."                                                                     

 Fractional Shares.  No fractional shares will be issued pursuant to the
Merger. In lieu of any such fractional shares, the Exchange Agent shall, on     
behalf of all holders of such fractional shares, aggregate all such fractional  
shares and sell the resulting shares of ITI Common Stock for the accounts of    
such holders who                                                                

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thereafter shall be entitled to receive on a pro rata basis the proceeds of the 
sale of such shares of ITI Common Stock, without interest thereon.              

Recommendations of the Boards of Directors; Reasons for Approving the 
Merger Agreement.  The Board of Directors of ITI believes that the approval of  
the Merger Agreement, and the transactions contemplated thereby, the approval of
the proposed Capitalization Amendment and the approval of the proposed Board    
Vacancy Amendment are in the best interests of ITI and its stockholders. The    
consummation of the Merger is subject to approval of the proposed Capitalization
Amendment and the proposed Board Vacancy Amendment, neither of which will become
effective until consummation of the Merger, and failure of ITI Stockholders to  
approve the proposed Capitalization Amendment and the proposed Board Vacancy    
Amendment would enable ITI or IMA to terminate the Merger Agreement.            
Accordingly, the Board of Directors of ITI recommends that ITI Stockholders vote
FOR the approval of the Merger Agreement, and the transactions contemplated     
thereby, FOR approval of the proposed Capitalization Amendment, FOR approval of 
the proposed Board Vacancy Amendment, FOR approval of the election of the four  
Class III directors named in this Joint Proxy Statement/Prospectus and FOR      
authorization of the Board of Directors of ITI to adjourn the ITI Meeting in    
order to permit the further solicitation of proxies, if necessary. See "The     
Merger -- Recommendations of the Boards of Directors; Reasons for Approving the 
Merger Agreement -- Board of Directors of ITI," "The Capitalization Amendment," 
"The Board Vacancy Amendment," "Election of ITI Directors," and "Adjournment of 
Meetings."                                                                      

The Board of Directors of IMA believes that the approval of the Merger
Agreement, and the transactions contemplated thereby, is in the best interests  
of the IMA Stockholders and recommends that IMA Stockholders vote FOR the       
approval of the Merger Agreement, and the transactions contemplated thereby, and
FOR authorization of the Board of Directors of IMA to adjourn the IMA Meeting in
order to permit the further solicitation of proxies, if necessary. See "The     
Merger -- Recommendations of the Boards of Directors; Reasons for Approving the 
Merger Agreement -- Board of Directors of IMA" and "Adjournment of Meetings."   

Opinions of Financial Advisors.  Merrill Lynch & Co. rendered an oral 
opinion on May 22, 1995, which was subsequently confirmed in a written opinion  
dated the date of this Joint Proxy Statement/Prospectus, to the Board of        
Directors of ITI to the effect that, as of such dates, based upon the           
assumptions made, the matters considered, and the limitations on the review     
undertaken, the consideration to be paid by ITI pursuant to the Merger is fair  
to ITI from a financial point of view. Schroder Wertheim & Co. Incorporated     
rendered its opinion to the Board of Directors of IMA to the effect that, as of 
May 22, 1995, the Conversion Ratio is fair, from a financial point of view, to  
the IMA Stockholders. Schroder Wertheim has delivered an updated written opinion
to the Board of Directors of IMA to the same effect dated as of the date of this
Joint Proxy Statement/Prospectus. Copies of the opinions of Merrill Lynch and   
Schroder Wertheim, each dated as of the date of this Joint Proxy                
Statement/Prospectus, setting forth the assumptions made, the matters considered
and the limitations on the review undertaken in rendering such opinions, are    
attached to this Joint Proxy Statement/Prospectus as Annexes B and C,           
respectively, and should be read carefully in their entirety. See "The          
Merger -- Opinion of ITI Financial Advisor" and "-- Opinion of IMA Financial    
Advisor."                                                                       

Management of ITI Following Consummation of the Merger.  The Merger   
Agreement provides, in part, that the Board of Directors of ITI, which is       
divided into three classes serving staggered three-year terms, will be expanded 
so that, at the Effective Time, all of ITI's current directors will remain on   
ITI's Board of Directors and three of IMA's current directors, Messrs.          
Kalishman, Affholder and Siteman, will become ITI directors, serving terms      
expiring, respectively, with the terms of the existing classes of directors of  
ITI. ITI has agreed that, during the period from the Effective Time to December 
9, 1998, ITI shall nominate and recommend such persons for re-election to the   
ITI Board of Directors upon expiration of their terms. At the Effective Time,   
ITI will enter into agreements with Mr. Kalishman, under which he will serve as 
Vice Chairman of the Board of ITI through a term expiring on December 9, 1998   
and as a consultant for two years, and will also enter into a three-year        
employment agreement with Mr. Affholder, under which he will initially serve as 
chief operating officer for ITI's North American contracting operations. See    
"The Merger -- Management of ITI Following Consummation of the Merger."         

    Interests of Certain Persons in the Merger.  As more fully described under
"The Merger -- Management of ITI Following Consummation of the Merger," all ten 
of ITI's current directors will remain on ITI's Board                           

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of Directors following the Effective Time, and three of IMA's current directors,
Messrs. Kalishman, Affholder and Siteman, will become ITI directors as of the   
Effective Time.                                                                 

At the Effective Time, ITI will enter into agreements with Jerome     
Kalishman, the Chairman of IMA, under which Mr. Kalishman will serve as Vice    
Chairman of the Board of Directors of ITI for a term expiring on December 9,    
1998, and will enter into a consulting agreement with Mr. Kalishman pursuant to 
which ITI will engage Mr. Kalishman as a consultant in connection with the      
business of ITI for a two-year term. Pursuant to the terms of the Merger        
Agreement, ITI will also enter into a three-year employment agreement with      
Robert W. Affholder, the President of IMA, under which Mr. Affholder will serve 
initially as chief operating officer for ITI's North American contracting       
operations and thereafter in such other executive staff position as may be      
designated by ITI. Each of Messrs. Kalishman and Affholder will also enter into 
non-competition agreements with ITI, extending from the Effective Time until the
later of five years thereafter or two years after all service to ITI has ended. 
See "The Merger -- Interests of Certain Persons in the Merger and Related       
Transactions -- Employment and Consulting Agreements."                          

At the Effective Time, all outstanding options to acquire IMA Class A 
Common Stock under IMA's Stock Option Plan will be assumed by ITI upon the same 
terms and conditions as contained under such plan, except that each such option 
will be exercisable for that number of shares of ITI Common Stock into which the
number of shares of IMA Class A Common Stock subject to such option immediately 
prior to the Effective Time would be convertible in the Merger if such shares   
were outstanding at the Effective Time, and the exercise price per share will be
calculated as more fully described under "The Merger -- Basic Terms of Merger   
Agreement -- IMA Stock Options" below.                                          

 From and after the Effective Time, ITI will, to the extent permitted by
Delaware law, honor all obligations of IMA pursuant to IMA's Certificate of     
Incorporation, By-Laws and agreements with certain directors, which provide in  
various respects for indemnification of officers and directors of IMA with      
respect to events occurring prior to the Effective Time.                        

ITI has entered into a registration rights agreement with Robert W.   
Affholder and Xanadu Investments, L.P., pursuant to which ITI is, under certain 
circumstances, required to use its reasonable best efforts to effect a          
registration under the Securities Act of shares of ITI Common Stock held by such
parties and their affiliates. See "The Merger -- Registration Rights Agreement."

    The obligations of ITI and ITI Sub to effect the Merger are subject to the
modification, upon terms reasonably satisfactory to ITI, of the equipment lease 
between IMA and A-Y-K-E Partnership, a partnership of which Messrs. Kalishman   
and Affholder are partners. See "The Merger -- Interests of Certain Persons in  
the Merger and Related Transactions -- A-Y-K-E Equipment Agreement."            

In connection with the acceptance of employment as President and chief
executive officer of ITI by Jean-Paul Richard, in October 1993 ITI granted to   
Mr. Richard a five-year option to purchase up to 300,000 shares of ITI Common   
Stock, currently exercisable with respect to up to 50,000 of such shares. At the
Effective Time, however, in accordance with its terms, such option will become  
exercisable with respect to all shares covered thereby upon the election of a   
Board of Directors of ITI other than pursuant to the arrangements in effect upon
the date of grant. See "The Merger -- Interests of Certain Persons in the Merger
and Related Transactions -- Certain ITI Options."                               

On July 3, 1992, ITI restructured a loan previously made to Ringwood  
Limited, a member of the Ringwood Group, which includes Douglas K. Chick and    
Brian Chandler, both directors of ITI. The outstanding loan, evidenced by a     
non-recourse promissory note in the principal amount of $3,624,842.40 executed  
by Ringwood Limited to ITI, is secured by 255,801 shares of ITI Common Stock    
beneficially owned by Ringwood Limited and Messrs. Chandler and Chick, and was  
originally due July 3, 1995. Such loan has been extended by one year because    
legal restrictions in connection with the Merger prevented members of the       
Ringwood Group from selling sufficient shares of ITI Common Stock to be able to 
repay the loan, and the value of such security was less than the amount of the  
outstanding indebtedness.                                                       

   Under IMA's existing credit facilities, the consent of certain banks will
be required in connection with the Merger. Mr. Siteman is the largest           
stockholder and Chairman of the Board of the parent of one such bank, and Lee M.
Liberman, a director of IMA, is director of the parent of another.              

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     Effective Time of the Merger.  The Merger will become effective at the time
a certificate of merger is duly filed with the Secretary of State of Delaware.  
Such filing, together with all other filings or recordings required by Delaware 
law in connection with the Merger, will be made within ten business days after  
the approval by the stockholders of each of ITI and IMA of the Merger Agreement 
and the satisfaction or, to the extent permitted under the Merger Agreement,    
waiver of all conditions to the Merger contained in the Merger Agreement (except
that ITI may delay closing for up to 15 business days in order to effectuate the
restructurings described by "The Merger -- Basic Terms of Merger                
Agreement -- Restructuring Transactions").                                      

     Governmental and Regulatory Matters.  Under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, the Merger is subject to review by the Antitrust      
Division of the Department of Justice and the Federal Trade Commission to       
determine whether it complies with applicable antitrust laws. ITI and IMA filed 
notification reports, together with requests for early termination of the       
waiting period, with the Department of Justice and the FTC on June 16, 1995.    
Effective June 26, 1995, the FTC confirmed early termination of the waiting     
period.                                                                         

    Certain Federal Income Tax Consequences.  Thompson & Mitchell, IMA's legal
counsel, has delivered its opinion to IMA to the effect that, assuming the      
Merger occurs in accordance with the Merger Agreement and conditioned on the    
accuracy of certain representations made by ITI, IMA and certain stockholders of
IMA, the Merger will constitute a "reorganization" for federal income tax       
purposes and that, accordingly, no gain or loss will be recognized by IMA       
Stockholders who exchange their shares of IMA Class A Common Stock solely for   
shares of ITI Common Stock in the Merger. However, cash received in lieu of     
fractional shares may give rise to taxable income. It is a condition to the     
obligations of ITI, ITI Sub and IMA to consummate the Merger that the foregoing 
opinion be confirmed in writing as of the Closing Date. Each IMA Stockholder is 
urged to consult his own tax advisor to determine the specific tax consequences 
of the Merger to him, including the applicability of various state, local and   
foreign tax laws. See "The Merger -- Certain Federal Income Tax Consequences of 
the Merger."                                                                    

  Conditions to the Merger.  The consummation of the Merger is conditioned
upon the fulfillment or waiver, where permissible, of certain conditions set    
forth in the Merger Agreement. See "The Merger -- Basic Terms of Merger         
Agreement -- Conditions to Consummation of the Merger."                         

     Accounting Treatment.  It is expected that the Merger will be accounted for
as a pooling-of-interests under generally accepted accounting principles. See   
"The Merger -- Accounting Treatment."                                           

Effects of the Merger on Rights of Stockholders.  As a result of the  
Merger, holders of IMA Class A Common Stock who receive shares of ITI Common    
Stock will become stockholders of ITI. For a comparison of the charter and      
by-law provisions of ITI and IMA governing the rights of ITI Stockholders and   
IMA Stockholders, respectively, see "Comparative Rights of Stockholders of ITI  
and IMA."                                                                       

    Absence of Appraisal Rights.  Under Delaware law, neither ITI Stockholders
nor IMA Stockholders will be entitled to demand appraisal rights as a result of 
the consummation of the Merger. See "Information Concerning the                 
Meetings -- Dissenters' Rights."                                                

THE CAPITALIZATION AMENDMENT                                                    

In connection with the approval of the Merger Agreement and the       
transactions contemplated by the Merger Agreement, ITI Stockholders are also    
being asked to approve an amendment to the ITI Charter that will become         
effective at the Effective Time, and will increase the number of authorized     
shares of ITI Common Stock from 25,000,000 shares to 40,000,000 shares. The     
consummation of the Merger is subject to approval of the proposed Capitalization
Amendment, which will not become effective until consummation of the Merger. See
"The Capitalization Amendment."                                                 

THE BOARD VACANCY AMENDMENT                                                     

In connection with the approval of the Merger Agreement and the       
transactions contemplated by the Merger Agreement, ITI Stockholders are also    
being asked to approve an amendment to the ITI Charter that will become         
effective at the Effective Time, and will provide for the filling of vacancies  
on ITI's Board of Directors as contemplated by Section 7.3 of the Merger        
Agreement. The consummation of the Merger is                                    

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subject to approval of the proposed Board Vacancy Amendment, which will not     
become effective until consummation of the Merger. See "The Board Vacancy       
Amendment."                                                                     

ELECTION OF ITI DIRECTORS                                                       

     At the ITI Meeting, the ITI Stockholders will vote to elect four persons to
the ITI Board of Directors as described under "Election of ITI Directors," to   
hold office from the conclusion of the ITI Meeting for a three-year term. See   
"Election of ITI Directors."                                                    

ADJOURNMENT OF MEETINGS                                                         

At the ITI Meeting, the ITI Stockholders will vote upon a proposal to 
authorize the Board of Directors of ITI to adjourn the ITI Meeting in order to  
permit the further solicitation of proxies, if necessary. At the IMA Meeting,   
the IMA Stockholders will vote upon a proposal to authorize the Board of        
Directors of IMA to adjourn the IMA Meeting in order to permit the further      
solicitation of proxies, if necessary. See "Adjournment of Meetings."           

SUMMARY HISTORICAL AND UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA

    The following summary historical financial data of ITI and IMA and summary
unaudited pro forma combined condensed financial data have been derived from the
historical consolidated financial statements of ITI and IMA, respectively,      
included herein and previously published historical financial statements of ITI 
and IMA not appearing herein. In December 1992, ITI consummated the IGL         
Acquisition, which ITI has accounted for as a pooling-of-interests and,         
accordingly, the historical financial statements of the combining companies have
been retroactively combined (after adjustments to eliminate intercompany        
balances and transactions, and to conform accounting methods) as if the         
companies had operated as a single entity for the periods presented. Certain    
historical financial data of IMA have been reclassified to conform to ITI's     
accounting policies.                                                            

  The unaudited pro forma combined condensed financial data give effect to
the Merger as if it had been effected on January 1, 1992 by combining the       
financial statement data of ITI and IMA at and for each year in the three-year  
period ended December 31, 1994 and at and for the six months ended June 30, 1995
and 1994 on a pooling-of-interests basis of accounting. In addition, the        
unaudited pro forma combined condensed financial data for the six months ended  
June 30, 1995 and 1994 and for the year ended December 31, 1994 illustrate      
management's estimates of the financial statement effect of IMA's acquisition of
the pipeline rehabilitation business of Enviroq Corporation completed by IMA in 
April 1995, which has been accounted for under the purchase method of           
accounting. See "Business of IMA." Further, the unaudited pro forma combined    
condensed financial data for the year ended December 31, 1994 and for the six   
months ended June 30, 1994, illustrate the financial statement effect of ITI's  
acquisition of Gelco and affiliates completed in October 1994, which has been   
accounted for under the purchase method of accounting. See "Business of ITI."   

The unaudited pro forma combined condensed financial data have been   
included as required by the rules of the Commission and are provided for        
comparative purposes only. The unaudited pro forma combined condensed financial 
data do not purport to be indicative of the results which would have been       
obtained if the transactions, in fact, had been effected on the date or dates   
indicated or which may be obtained in the future.                               

     Historical financial data at and for the six months ended June 30, 1995 and
1994 for ITI and at and for the nine months ended on such dates, respectively,  
for IMA are unaudited, and, in the opinion of ITI's and IMA's respective        
managements, include all adjustments, consisting of only normal recurring       
adjustments, necessary for a fair presentation of the results of operations and 
the financial position at and for each of the interim periods presented.        
Operating results for the six months ended June 30, 1995 for ITI, and for the   
nine months ended on such date for IMA, are not necessarily indicative of the   
results that may be obtained for the entire fiscal years ending, respectively,  
December 31, 1995 and September 30, 1995.                                       

     The summary historical and unaudited pro forma combined condensed financial
data set forth below should be read in conjunction with "Selected Financial Data
of ITI," "ITI -- Management's Discussion and                                    

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Analysis of Financial Condition and Results of Operations," "Selected Financial 
Data of IMA," "IMA -- Management's Discussion and Analysis of Financial         
Condition and Results of Operations," "Unaudited Pro Forma Combined Condensed   
Financial Information" and ITI's and IMA's Consolidated Financial Statements,   
including the notes thereto, contained elsewhere herein.                        

ITI HISTORICAL

                                                        [Enlarge/Download Table]

                                      SIX MONTHS ENDED JUNE                                                                
                                               30,                                YEAR ENDED DECEMBER 31,                  
                                     -----------------------     ----------------------------------------------------------
                                      1995(1)         1994       1994(2)      1993(3)      1992(4)       1991        1990  
                                     ----------     --------     --------     --------     -------     --------     -------
                                                            (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                       
                                                                                                                           
INCOME STATEMENT DATA:                                                                                                     
Total revenues.....................   $ 83,446      $ 62,283     $148,247     $100,508     $95,559     $ 76,402     $60,683
Merger and restructuring costs.....         --            --           --         (981)     14,572(5)       733         292
Gain on sale of investment in                                                                                              
  IMA..............................         --            --           --           --          --       17,280(6)       --
Income (loss) from continuing                                                                                              
  operations.......................      2,995(7)      3,643        9,794        7,260      (5,671)(5)   15,360(6)    1,408
Income (loss) from continuing                                                                                              
  operations per common share......        .21           .25          .68          .51        (.41)        1.12         .11
BALANCE SHEET DATA (AT PERIOD END):                                                                                        
Total assets.......................    164,820       132,684      162,494      129,175      87,379      105,579      89,599
Long-term debt and redeemable                                                                                              
  preferred stock..................     53,131        34,307       47,347       36,454       7,421        8,059       9,030

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

(1) In February 1995, ITI consummated the acquisition of 66% of Insituform      
France S.A., which has been accounted for under the purchase method of  
accounting.                                                             

(2) In October 1994, ITI consummated the acquisition of Gelco Services, Inc. and
affiliates, which has been accounted for under the purchase method of   
accounting.                                                             

(3) In July 1993, ITI consummated the acquisitions of Naylor Industries, Inc.   
and Insituform Midwest, Inc., which have been accounted for under the   
purchase method of accounting.                                          

(4) In December 1992, ITI consummated the acquisition of the minority interest  
 in IGL Canada Limited, and the acquisition of H.T. Schneider, Inc., which
have been accounted for under the purchase method of accounting.        

(5) Reflects $9.667 million in costs associated with the IGL Acquisition, which 
    have been charged to operations primarily in the fourth quarter of 1992, and
 a pre-tax charge in the amount of $4.905 million for restructuring costs,
primarily for asset-related write-offs, lease termination provisions and
personnel-related costs.                                                

(6) In May 1991, ITI completed the sale of its equity interest in IMA as a      
 result of which ITI received payments aggregating $22.058 million, which,
after accounting for the aggregate carrying amount of the investment,   
    expense associated with the transaction and taxes (subsequent to utilization
    of ITI's capital loss carryover reported as an extraordinary item), resulted
in a contribution of approximately $10.574 million to net income        
(approximately $9.451 million to income before extraordinary item).     

(7) On May 23, 1995, ITI entered into a memorandum of understanding, subject to 
execution of an appropriate stipulation of settlement (which occurred on
September 11, 1995), court approval and other customary conditions, to  
settle certain outstanding litigation for a cash payment of $3.2 million
  (which ITI has deposited into escrow) and issuance of 30,000 shares of ITI
  Common Stock, resulting in an after-tax charge against second quarter 1995
earnings of approximately $2.2 million.                                 

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IMA HISTORICAL

                                                        [Enlarge/Download Table]

                                           NINE MONTHS ENDED                                                             
                                               JUNE 30,                          YEAR ENDED SEPTEMBER 30,                
                                          -------------------     -------------------------------------------------------
                                          1995(1)      1994        1994       1993(2)     1992(3)      1991        1990  
                                          -------     -------     -------     -------     -------     -------     -------
                                                                                                                         
                                                             (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                    
INCOME STATEMENT DATA:                                                                                                   
Total revenues........................... $77,611     $54,293     $75,279     $60,086     $66,690     $49,545     $36,272
Income from continuing operations........   4,956       3,743       5,049       3,408       7,676       5,354       3,375
Income from continuing operations per                                                                                    
  common share...........................     .45         .34         .45         .31         .70         .52         .33
BALANCE SHEET DATA (AT PERIOD END):                                                                                      
Total assets.............................  91,920      54,488      63,879      52,936      45,116      34,414      22,690
Long-term debt...........................  14,024 (4)      --          --          --         341         360         425

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

(1) In April 1995 IMA completed the Enviroq Acquisition, which has been         
accounted for under the purchase method of accounting.                  

(2) In November 1992, IMA acquired substantially all of the assets of Pipeline  
Rehabilitation Systems, Inc., which has been accounted for under the    
purchase method of accounting.                                          

(3) In October 1991, IMA acquired United Pipeline Systems Inc., which has been  
 accounted for under the purchase method of accounting. In connection with
such acquisition, IMA acquired all of the outstanding stock of United   
Corrosion Corporation, the parent of UPSI.                              

(4) See "IMA -- Management's Discussion and Analysis of Financial Condition and 
 Results of Operations -- Liquidity and Capital Resources" for information
regarding demands made for payment under IMA's $3.0 million subordinated
    promissory note issued in the Enviroq Acquisition and IMA's reclassification
thereof as a current liability at June 30, 1995.                        

ITI AND IMA PRO FORMA COMBINED

                                                        [Enlarge/Download Table]


                                                              SIX MONTHS ENDED                   YEAR ENDED             
                                                                  JUNE 30,                       DECEMBER 31,           
                                                            ---------------------     ----------------------------------
                                                              1995         1994         1994         1993         1992  
                                                            --------     --------     --------     --------     --------
                                                                      (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)          
                                                                                                                        
INCOME STATEMENT DATA:                                                                                                  
Total revenues............................................. $138,945     $113,538     $261,396     $151,829     $156,581
Income from continuing operations..........................    4,819        6,983       16,978        9,734        2,288
Income from continuing operations per common share.........      .18          .26          .63          .36          .09
BALANCE SHEET DATA (AT PERIOD END):                                                                                     
Total assets...............................................  254,136      186,070      227,537      177,010      133,682
Long-term debt and redeemable preferred stock..............   67,177       34,307       47,347       36,454        7,759

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COMPARATIVE UNAUDITED PER SHARE DATA OF ITI AND IMA 

     The following table summarizes certain unaudited comparative per share data
for ITI and IMA on an historical basis, and pro forma combined comparative per  
share data and comparative per share data on a pro forma equivalent basis giving
effect to the Merger as a pooling-of-interests for accounting purposes. Such    
information is derived from and should be read in conjunction with the Unaudited
Pro Forma Combined Condensed Financial Information and ITI's and IMA's          
Consolidated Financial Statements, including the notes thereto, contained       
elsewhere herein. The pro forma information presented is for comparative        
purposes only and is not necessarily indicative of future combined earnings or  
financial position or of combined earnings or financial position that would have
been reported had the Merger been completed at the beginning of the respective  
periods or as of the dates for which such unaudited pro forma information is    
presented. For a description of the pooling-of-interests accounting basis with  
respect to the Merger and the related effects on the historical financial       
statements of ITI, see "Unaudited Pro Forma Combined Condensed Financial        
Information."                                                                   

                                                        [Enlarge/Download Table]

                                                  AT OR FOR THE                              
                                                   SIX MONTHS                                
                                                      ENDED        AT OR FOR THE YEAR ENDED  
                                                    JUNE 30,             DECEMBER 31,        
                                                 ---------------  -------------------------- 
                                                 1995      1994   1994      1993       1992  
                                                 -----     -----  -----     -----     ------ 
                                                                                             
ITI:                                                                                         
Historical:                                                                                  
  Income (loss) per share from continuing                                                    
     operations................................. $0.21     $0.25  $0.68     $0.51     $(0.41)
  Net tangible book value per share.............  1.51      1.90   1.28      1.52       2.52 
  Cash dividends declared per share.............    --        --     --        --         -- 
Pro forma combined:                                                                          
  Income per share from continuing operations...  0.18      0.26   0.62      0.36       0.09 
  Net tangible book value per share.............  1.50      2.14   1.91      1.86       2.34 
  Cash dividends declared per share.............  0.03      0.03   0.06      0.06       0.05 

                                                        [Enlarge/Download Table]

                                                   AT OR FOR THE                            
                                                    NINE MONTHS                             
                                                       ENDED             AT OR FOR THE      
                                                     JUNE 30,      YEAR ENDED SEPTEMBER 30, 
                                                  ---------------  -------------------------
                                                  1995      1994   1994      1993      1992 
                                                  -----     -----  -----     -----     -----
                                                                                            
IMA:                                                                                        
Historical:                                                                                 
  Income per share from continuing operations.... $0.45     $0.34  $0.45     $0.31     $0.70
  Net tangible book value per share..............  2.64      2.79   2.93      2.54      2.45
  Cash dividends declared per share..............  0.14      0.14   0.14      0.14      0.10

                                                        [Enlarge/Download Table]

                                                   AT OR FOR THE                            
                                                    SIX MONTHS                              
                                                       ENDED       AT OR FOR THE YEAR ENDED 
                                                     JUNE 30,            DECEMBER 31,       
                                                  ---------------  -------------------------
                                                  1995      1994   1994      1993      1992 
                                                  -----     -----  -----     -----     -----
                                                                                            
Pro forma equivalent combined(a):                                                           
  Income per share from continuing operations.... $0.21     $0.30  $0.71     $0.41     $0.10
  Net tangible book value per share..............  1.73      2.46   2.20      2.14      2.69
  Cash dividends declared per share..............  0.03      0.03   0.07      0.07      0.06

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

(a) Pro forma equivalent combined amounts for IMA represent the pro forma       
combined amounts for ITI above multiplied by the Conversion Ratio     
     (subsequent to conversion into IMA Class A Common Stock, in accordance with
its terms, of all outstanding shares of IMA Class B Common Stock).    

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COMPARATIVE PER SHARE MARKET PRICES 

ITI Common Stock is traded on The Nasdaq Stock Market under the symbol
"INSUA." IMA Class A Common Stock is also traded on The Nasdaq Stock Market     
under the symbol "INSMA." The IMA Class B Common Stock has no established       
trading market and IMA is not aware of any recent sales of such stock. The      
following table sets forth, for the calendar periods indicated, the high and low
closing sales prices for ITI Common Stock and IMA Class A Common Stock,         
respectively, as reported on The Nasdaq Stock Market.                           

                                                                [Download Table]

                                                 ITI                IMA       
                                          -----------------  -----------------
                PERIOD:                    HIGH       LOW     HIGH       LOW  
----------------------------------------  ------     ------  ------     ------
                                                                              
1992                                                                          
  Fourth Quarter........................  $26.50     $14.00  $20.50     $14.00
1993                                                                          
  First Quarter.........................  $25.75     $17.63  $21.00     $13.25
  Second Quarter........................   20.25      12.25   14.00      10.00
  Third Quarter.........................   14.50      11.25   14.75      10.00
  Fourth Quarter........................   16.50      12.25   16.25      12.25
1994                                                                          
  First Quarter.........................  $15.25     $10.50  $15.00     $12.50
  Second Quarter........................   14.75      12.50   15.00       9.75
  Third Quarter.........................   13.75      12.50   10.50       8.25
  Fourth Quarter........................   13.75      10.88   10.88       8.13
1995                                                                          
  First Quarter.........................  $13.00     $11.13  $11.50     $ 8.63
  Second Quarter........................   14.00      11.88   15.00      10.38
  Third Quarter                                                               
     (through September 14, 1995).......   16.63      12.88   18.63      14.50

 The information set forth in the table below presents the closing sales
price per share of ITI Common Stock and IMA Class A Common Stock, respectively, 
as reported on The Nasdaq Stock Market, on May 23, 1995, the last full trading  
day prior to the public announcement of the Merger Agreement, and on September  
14, 1995, the last full trading day prior to the date of this Joint Proxy       
Statement/Prospectus, and, applying such closing sales prices, the equivalent   
value per share of IMA Class A Common Stock based upon the Conversion Ratio:    

                                                                [Download Table]

                                                          EQUIVALENT VALUE
                                           ITI     IMA     PER IMA SHARE  
                                          ------  ------  ----------------
                                                                          
At May 23, 1995.......................... $13.50  $12.00       $15.53     
At September 14, 1995....................  14.94   16.75        17.18     

    Because the market price of ITI Common Stock is subject to fluctuation due
to numerous market forces, the market value of the shares of ITI Common Stock   
that holders of IMA Class A Common Stock will receive in the Merger may increase
or decrease prior to the Effective Time. Stockholders of ITI and IMA are urged  
to obtain current market quotations for their shares.                           

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RISK FACTORS

 THE DETERMINATION OF WHETHER TO VOTE IN FAVOR OF APPROVAL OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY INVOLVES THE CONSIDERATION  
BY IMA STOCKHOLDERS OF WHETHER TO ACQUIRE SHARES OF ITI COMMON STOCK AND BY ITI 
STOCKHOLDERS OF WHETHER TO AUTHORIZE THE MERGER, AS A RESULT OF WHICH IMA WILL  
BECOME A WHOLLY-OWNED SUBSIDIARY OF ITI. ACCORDINGLY, IN ANALYZING THE MERGER   
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, IMA STOCKHOLDERS AND ITI   
STOCKHOLDERS, RESPECTIVELY, SHOULD CAREFULLY CONSIDER, ALONG WITH THE OTHER     
MATTERS REFERRED TO IN THIS JOINT PROXY STATEMENT/PROSPECTUS, THE RISK FACTORS  
DESCRIBED BELOW.                                                                

CERTAIN CONSIDERATIONS RELATING TO ACQUIRING ITI SHARES                         

   Reliance on the Insituform Process.  ITI's business relies primarily upon
the Insituform Process (the "Insituform Process"), a "cured-in-place" technology
for the trenchless rehabilitation of sewers, tunnels and pipelines. During its  
most recent fiscal year, ITI derived approximately 79% of its consolidated      
revenues from royalties, sales and construction revenues related to the         
Insituform Process. Although ITI believes that the Insituform Process is a      
unique process which has competitive advantages over other methods of pipe      
replacement and repair, the pipe replacement and repair business is highly      
competitive. The Insituform Process has in recent years encountered increasing  
competition from other trenchless rehabilitation methods in addition to its     
historical principal competition from more traditional pipeline rehabilitation  
approaches. ITI and its licensees who perform pipe replacement and repair may   
not be successful in marketing the Insituform Process to state and municipal    
authorities and potential industrial customers relative to competitive          
technologies. Furthermore, to the extent that other processes for pipe          
replacement and repair gain wide acceptance, ITI's business could be adversely  
affected. See "Business of ITI -- Trenchless Rehabilitation Processes" and      
"-- Competition" below.                                                         

   Reliance on Licensee Network.  Although ITI's strategy has been to expand
its business into direct installation operations in its principal markets, ITI  
currently licenses to unaffiliated parties (including IMA) the rights to the    
Insituform Process under agreements covering a substantial portion of the United
States and in numerous foreign countries. A significant portion of ITI's revenue
is dependent on the efforts of its existing licensee network to expand and      
develop the market for the Insituform Process. See "Business of ITI -- Licensing
Operations" below.                                                              

International Operations.  ITI's business includes the widespread     
international operations of its licensees, subsidiaries and affiliates.         
Accordingly, the political, economic and regulatory environment within the      
countries in which such entities do business will significantly affect ITI's    
operations. Actions taken by the governments in such countries in respect of    
national, state and local regulation, including taxation, national and local    
environmental protection regulations and exchange control and convertibility    
regulations may cause delay and increased costs and may prevent ITI from        
carrying on business in such countries and could therefore materially affect    
ITI's operations.                                                               

Dependence on Governmental Customers.  The trenchless rehabilitation  
businesses of ITI and its licensees are substantially dependent upon revenues   
generated from municipalities and governmental agencies, and there can be no    
assurance that ITI's business will not be adversely affected by governmental    
budgetary and appropriations policies at the federal, state and local levels.   
Government contracts generally are obtained through competitive bidding and may 
be amended or terminated at the convenience of the respective governmental      
agencies. See "Business of ITI -- Marketing" below.                             

Patents.  ITI holds certain patents with respect to its trenchless    
rehabilitation processes. While ITI believes that its long experience with the  
Insituform Process, its continued commitment of resources to support and develop
the Insituform Process, the strength of its trademarks and its degree of market 
penetration should enable ITI to compete effectively in the pipeline            
rehabilitation market, a judicial determination of invalidity or the expiration 
of one or more of the patents covering ITI's processes could adversely affect   
the business of ITI. Two important patents relating to the Insituform Process   
already have expired in many countries, in particular in the United States,     
Canada, Japan, the United Kingdom and Germany. See "Business of ITI -- Patents" 
and "-- Legal Proceedings" below.                                               

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Uncertainties and Costs of Litigation Between IMA and ITI.  Various   
disputes have arisen in the context of the existing licensing and supply        
arrangements between ITI and IMA, as a result of, among other things: IMA's     
commercialization of the PALTEM systems, IMA's consummation of its acquisition  
(the "Enviroq Acquisition") of the pipeline rehabilitation business of Enviroq  
Corporation (since renamed IMA Merger Sub, Inc.; "Enviroq") without the consent 
of ITI, ITI's entry into installation activities in the United States and other 
matters. Although IMA has advised ITI that it has fulfilled and will continue to
fulfill all of its obligations to ITI, ITI has communicated to IMA its concerns 
regarding the ability of IMA to operate in compliance with its existing         
Insituform licenses in view of IMA's commercialization of the PALTEM systems. In
April 1995, ITI declined to grant its consent, as requested by Enviroq under the
various Insituform and NuPipe license agreements with Enviroq's subsidiaries, in
connection with the Enviroq Acquisition, and initiated judicial proceedings in  
which it seeks a declaratory judgment confirming its action. The Insituform and 
NuPipe license agreements, respectively, contain certain provisions which       
require the consent of the licensor in order to avoid termination in the event  
of change in control of the licensee and/or assignment of the licenses. See "The
Merger -- Background" and "ITI -- Legal Proceedings" below. If the Merger       
Agreement is not approved by stockholders of IMA and ITI, respectively, IMA and 
ITI anticipate that they would engage in litigation arising out of disputes     
between the parties (including the Enviroq Acquisition), if they are unable to  
reach a mutually acceptable settlement. See "The Merger -- Recommendations of   
the Boards of Directors -- Reasons for Approving the Merger Agreement -- Board  
of Directors of ITI" and "-- Board of Directors of IMA" below.                  

    Certain Other Litigation.  A stockholder of ITI has filed an action in the
United States District Court for the Western District of Tennessee, which has   
been certified as a class action on behalf of all purchasers of ITI Common Stock
during the relevant period, against ITI and one current and one former officer, 
alleging various misstatements and omissions relating to, among other things,   
acquisition and restructuring costs arising from ITI's acquisition of IGL in    
December 1992, in public disclosures by ITI during a specified period in        
violation of, among other things, Rule 10b-5 under the Exchange Act.            
Notwithstanding ITI's belief that it has defenses to the plaintiff's claim that 
are well grounded in fact and law, ITI has entered into a stipulation of        
settlement to settle such litigation. Under the settlement, which remains       
subject to court approval and other customary conditions, ITI would make a cash 
payment in the amount $3.2 million (which it has deposited into escrow) and     
issue 30,000 shares of ITI Common Stock. For additional information concerning  
such suit and other litigation pending against ITI and its subsidiaries, see    
"Business of ITI -- Legal Proceedings" below.                                   

     Effect of Environmental Regulation.  Installation operations of ITI and its
licensees, as well as ITI's manufacturing facilities, are subject to various    
laws and regulations governing environmental protection, and changes in such    
laws and regulations may in the future adversely impact ITI's operations. For   
example, while many of ITI's direct installation operations have established    
monitoring programs relating to the use of solvents in the installation process,
there can be no assurance that further restrictions will not be imposed on the  
use of solvents or the thermosetting resins used in the Insituform Process. See 
"Business of ITI -- Government Regulation" below.                               

     Fluctuations in Operating Results; Possible Volatility of Stock.  ITI's net
income or loss has fluctuated during the last five years as follows: net income 
of $116,000 in 1990 (when equity in earnings of associated companies, primarily 
IMA, was $1.2 million), net income of $16.7 million in 1991 ($10.6 million of   
which resulted from ITI's sale of its equity interest in IMA and the subsequent 
utilization of a capital loss carryforward), a net loss of $6.2 million in 1992 
(reflecting $9.7 million in costs associated with the acquisition by ITI of     
Insituform Group Limited and a pre-tax charge of $4.9 million for restructuring 
costs), net income of $5.0 million and $8.6 million in 1993 and 1994,           
respectively, and net income of $3.0 million in the first half of 1995          
(subsequent to an after-tax charge against second quarter 1995 earnings of      
approximately $2.2 million resulting from a litigation loss). See               
"ITI -- Management's Discussion and Analysis of Financial Condition and Results 
of Operations" below. During such period, the market price of the ITI Common    
Stock, as reported on The Nasdaq Stock Market, fluctuated from a high price of  
$26.50 to a low price of $2.44. At September 14, 1995, the closing sales price  
per share of ITI Common Stock reported on The Nasdaq Stock Market was $14.94.   
The market price of the ITI Common Stock may be subject to fluctuations in      
response to variations in ITI's operating results, market conditions and        
economic factors.                                                               

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    Seasonality; Effect of Inclement Weather.  Historically, the work reported
by ITI's licensees (including affiliated licensees) in the first calendar       
quarter of the year has been disproportionately low, averaging, for the past    
five years, approximately 21% of the work they reported over the full year.     
Seasonal variations arising from the budgetary and appropriations process of the
governmental customers of ITI and its licensees and the contraction of pipeline 
rehabilitation activity in certain regions during severe weather conditions may 
contribute to interim fluctuations in ITI's results of operations.              

Dividend Policy.  ITI has never paid cash dividends on the ITI Common 
Stock. ITI's present policy is to retain earnings to provide funds for the      
operation and expansion of its business. It is anticipated that after the       
Merger, ITI's board will review ITI's earnings, financial condition, cash flows,
financing agreements and other relevant factors in making determinations        
regarding future dividends, if any. ITI's and IMA's credit agreements currently 
limit their ability to pay cash dividends. There can be no assurance that ITI   
will pay any cash dividends in the future.                                      

Control.  If the Merger Agreement, and the transactions contemplated  
thereby, are approved by the ITI Stockholders and the other conditions to the   
parties' obligations under the Merger Agreement are satisfied or waived, ITI has
agreed that: (x) its Board of Directors will be expanded as of the Effective    
Time of the Merger hereinafter defined to include 13 members, of whom Paul A.   
Biddelman, Brian Chandler, Douglas K. Chick, James D. Krugman and Silas Spengler
will constitute the "INA Group," William Gorham, Steven Roth, Sheldon Weinig and
Russell B. Wight, Jr. will constitute the "IGL Group," Jerome Kalishman, Robert 
W. Affholder and Alvin J. Siteman will constitute the "IMA Group," and the      
remaining member will consist of Jean-Paul Richard, ITI's President and chief   
executive officer, such members to be divided into classes with terms expiring  
at staggered intervals, and (y) during the period from the Effective Time until 
December 9, 1998 (the "Term"), ITI will nominate and recommend for re-election  
to the ITI Board of Directors each such member or his successor designated by   
the remaining members of that director's group. The INA Group and the IGL Group,
together with Mr. Richard, comprise the current Board of Directors of ITI, and  
the IMA Group has been designated for appointment by IMA. Messrs. Roth and Wight
are general partners in Interstate Properties, which beneficially owns          
approximately 11.3% of the outstanding ITI Common Stock, and Messrs. Chandler   
and Chick are members of a group (the "Ringwood Group"), within the meaning of  
Section 13(d)(3) under the Exchange Act, which beneficially owns approximately  
10.1% of the outstanding ITI Common Stock. Messrs. Kalishman (together with his 
wife, Nancy F. Kalishman) and Affholder beneficially own approximately 76.6% and
19.1%, respectively, of the outstanding IMA Class B Common Stock, which as a    
class is entitled to elect 55% of the IMA Board of Directors (rounded up to the 
nearest whole number), and 10.9% and 8.0%, respectively, of the outstanding IMA 
Class A Common Stock (exclusive of shares issuable upon conversion of IMA Class 
A Common Stock). Immediately following the consummation of the Merger, Mr.      
Kalishman (and his wife), Interstate Properties, the Ringwood Group and Mr.     
Affholder will own approximately 11.9%, 6.1%, 5.5% and 4.8%, respectively, of   
the outstanding ITI Common Stock. See "The Merger -- Management of ITI Following
Consummation of the Merger" below.                                              

Conflicts of Interest.  ITI has entered into certain remuneration     
arrangements with Messrs. Krugman and Richard and, pursuant to the Merger       
Agreement, will enter into agreements with Messrs. Kalishman and Affholder. See 
"Management of ITI -- Certain Agreements with Directors and Executive Officers" 
and "The Merger -- Interests of Certain Persons in the Merger and Related       
Transactions" below. ITI has provided loan arrangements for the benefit of      
members of the Ringwood Group, has paid fees for professional services to Mr.   
Krugman's firm and obtained financing from Mr. Biddelman's firm, and, after     
consummation of the Merger, will use certain equipment currently owned by a     
partnership in which Messrs. Kalishman and Affholder are partners. See "Election
of ITI Directors -- Compensation Committee Interlocks and Insider Participation"
and "-- Other Information Concerning Nominees for Directors, Directors, Officers
and Stockholders" and "The Merger -- Interests of Certain Persons in the Merger 
and Related Transactions" below. Messrs. Chandler and Chick and their affiliates
have been engaged in the development of certain pipeline rehabilitation and     
repair processes which relate to the business of ITI and could be competitive   
with such business. See "Election of ITI Directors -- Other Information         
Concerning Nominees for Director, Directors, Officers and Stockholders" below.  
All current ITI directors will continue as directors of ITI after the Effective 
Time. Pursuant to the Merger Agreement, ITI has entered into a registration     
rights agreement                                                                

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with Mr. Affholder and Xanadu Investments, L.P.; and after the Effective Time   
ITI will continue in effect certain indemnification arrangements covering       
officers and directors of IMA (including Messrs. Kalishman, Affholder and       
Siteman, who will become directors of ITI after the consummation of the Merger) 
with respect to events occurring prior to the Effective Time. See "The          
Merger -- Registration Rights Agreement" and "-- Interests of Certain Persons in
the Merger and Related Transactions" below. ITI also is a party to customary    
indemnification arrangements with its incumbent directors.                      

 Exchange Rate Fluctuations.  Adverse fluctuations in the exchange rates
between the United States dollar and the currencies of other countries in which 
ITI operates or has licensees may have a negative impact on ITI's consolidated  
results during the reporting period affected by such fluctuations. While ITI    
intends to manage any such foreign currency exposure in the context of discrete 
commercial transactions, the failure of ITI to offset its exposure to currency  
fluctuations could materially impact ITI's financial results.                   

Anti-Takeover Provisions.  The ITI Charter and ITI's By-Laws contain  
provisions that may have the effect of perpetuating existing management and     
discouraging a takeover attempt that might be beneficial to stockholders who    
wish to receive a premium from a potential bidder. These provisions include: (i)
the classification of the ITI Board of Directors, (ii) the restriction that     
directors can only be removed for cause and only by a vote of the stockholders, 
(iii) the elimination of the stockholders' ability to act by written consent,   
and (iv) the ability of the ITI Board of Directors (without a stockholder vote) 
to issue one or more series of preferred stock with such voting rights and other
provisions as the board may determine. See "Description of Capital Stock of     
ITI -- Anti-Takeover Provisions."                                               

  Shares Eligible for Future Sale.  As of September 1, 1995, approximately
7,720,077 shares of ITI Common Stock to be issued pursuant to the Merger will be
eligible for immediate sale in the public market and approximately 4,703,704    
shares will be held by affiliates of ITI and IMA. Certain agreements entered    
into by such affiliates prohibit them from disposing of any ITI Common Stock    
until after the date of the first publication of the operating results of ITI   
covering at least a 30-day period after the Merger has been consummated, after  
which time such shares will be eligible for sale under Rule 144 or Rule 145 of  
the Securities Act, as applicable. As of September 1, 1995, ITI has also        
reserved up to 490,457 shares for issuance upon the exercise of outstanding     
stock options granted by IMA, and additional options that IMA is permitted to   
grant under the Merger Agreement, that will be assumed by ITI in the Merger,    
which shares will be registered on a Form S-8 registration statement as soon as 
is practicable following the consummation of the Merger. In addition,           
registration rights have been granted to Mr. Affholder and Xanadu Investments,  
L.P. with respect to approximately 4,530,696 shares of ITI Common Stock to be   
held by them and their affiliates (all, except 1,000 shares, of which are       
issuable pursuant to the Merger). Sales of substantial amounts of ITI Common    
Stock after the consummation of the Merger could adversely affect the prevailing
market price of ITI Common Stock. See "Unaudited Pro Forma Combined Condensed   
Financial Information," "The Merger -- Basic Terms of Merger                    
Agreement -- Treatment of IMA Stock Options," "-- Resales of ITI Common Stock," 
"-- Registration Rights Agreement" and "-- Pooling Letters" below.              

CERTAIN CONSIDERATIONS RELATING TO THE MERGER                                   

   Non-Insituform Operations.  Although rehabilitation activities, primarily
utilizing the Insituform Process, have traditionally been the principal activity
of IMA, at June 30, 1995 backlog from rehabilitation projects accounted for     
$40.2 million of aggregate backlog of $65.2 million at such date, while backlog 
from tunneling and corrosion and abrasion protection operations accounted for   
$17.4 million and $7.6 million of such aggregate amount, respectively. During   
the nine months ended June 30, 1995 and the fiscal year ended September 30,     
1994, approximately 51% and 22%, respectively, of IMA's consolidated revenues   
were derived from non-Insituform Process operations, principally consisting of  
such tunneling and corrosion and abrasion protection activities. See "Business  
of IMA" below.                                                                  

Competition; Development of Additional Products.  The pipeline        
reconstruction, rehabilitation and repair business is highly competitive and IMA
has numerous competitors in that market. In recent years, additional trenchless 
rehabilitation methods competing with the Insituform Process have been          
introduced by other companies, which may provide an alternative to more         
traditional pipeline rehabilitation approaches and                              

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to the Insituform Process. Although IMA is the exclusive North American licensee
of Ashimori Industry Co. Ltd. ("Ashimori") proprietary pipeline rehabilitation  
technologies, and is actively pursuing development of its Ashimori products     
business, the Ashimori products licensed to IMA are in various stages of        
development and require significant financial support, and IMA may not be       
successful in achieving the market acceptance which would generate a profit     
contribution consistent with IMA's evaluation of the future potential of such   
products.                                                                       

   Western Hemisphere Business; Exchange Rate Fluctuations.  IMA's business,
in particular its activities utilizing corrosion and abrasion protection        
methods, includes operations outside of the United States, such as those of its 
subsidiaries in Canada and Chile. During the nine months ended June 30, 1995 and
the fiscal year ended September 30, 1994, operations outside of the United      
States represented 27% and 15%, respectively, of IMA's consolidated revenues. As
such activities expand further, the political, economic and regulatory          
environment in which such subsidiaries operate will increasingly affect IMA's   
business, as will adverse fluctuations in the exchange rates between the United 
States dollar and the currencies of other countries in which IMA operates.      

Dependence on Governmental Customers.  IMA's business is substantially
dependent upon revenues generated from customers which are municipalities and   
state agencies. During fiscal 1994, these customers accounted for approximately 
75% of IMA's revenues. There can be no assurance that IMA's business will not be
adversely affected by fiscal policies of state and local governments or by the  
policy of the federal government in connection with various projects. Government
contracts generally are obtained through competitive bidding and may be amended 
or terminated at the convenience of the respective governmental agencies. IMA's 
four largest customers in fiscal 1994 were municipalities and state agencies    
which accounted for approximately 39% of IMA's contract revenues. See "Business 
of IMA -- Customers" below.                                                     

Reliance on Patents.  Although IMA relies upon its own and licensed   
know-how to exploit the Insituform Process and other trenchless technologies, it
also relies on a series of patents relating to the Insituform Process and such  
other technologies. Certain important Insituform Process patents have already   
expired in IMA's licensed territory. The invalidity or expiration of patents    
covering technology licensed to IMA could have a material adverse effect on     
IMA's business. See "Business of IMA -- License Agreements and Patents" below.  

    Outstanding Issues Between ITI and IMA.  As a result of any termination of
the Merger Agreement prior to completion of the Merger, ITI and IMA would be    
released from their respective obligations under a cooperation agreement entered
into in April 1995, as amended. While in effect, such agreement postpones       
assertion by the parties of any rights in dispute as a result of IMA's          
consummation of the Enviroq Acquisition without consent of ITI. See "The        
Merger -- Background" and "Business of ITI -- Legal Proceedings" below for a    
description of such agreement and litigation commenced by ITI against IMA and   
Enviroq prior to the execution of such agreement, and other disputes between the
parties. ITI has also communicated to IMA its concerns regarding the ability of 
IMA to operate in compliance with its existing Insituform licenses in view of   
IMA's commercialization of the PALTEM systems. ITI and IMA would anticipate     
prosecution or reinstatement of the foregoing litigation if the Merger Agreement
were terminated prior to completion of the Merger, or other litigation          
addressing the same subject matter or other matters, or possibly other          
approaches to resolving the outstanding issues between the parties, in the      
absence of mutually agreeable alternative arrangements. See "The                
Merger -- Recommendations of the Boards of Directors; Reasons for Approving the 
Merger Agreement -- Board of Directors of ITI" and "-- Board of Directors of    
IMA" below.                                                                     

Effect of Environmental Regulation.  IMA's operations facilities are  
subject to state and federal environmental protection regulations and, in       
compliance therewith, IMA has established a monitoring program relating to its  
solvents. Although, IMA does not anticipate any material impediments to its     
business arising from existing or anticipated future regulations or             
requirements, changes in such laws and regulations may in the future adversely  
impact IMA's operations. See "Business of IMA -- Regulations and Bonding."      

     Conflicts of Interest.  Messrs. Kalishman (together with his wife, Nancy F.
Kalishman) and Affholder beneficially own approximately 76.6% and 19.1%,        
respectively, of the outstanding IMA Class B Common Stock, which as a class is  
entitled to elect 55% of the IMA Board of Directors (rounded up to the nearest  
whole number), and 10.9% and 8.0%, respectively, of the outstanding IMA Class A 
Common Stock                                                                    

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(exclusive of shares issuable upon conversion of IMA Class B Common Stock). IMA 
has designated three of its current directors, Messrs. Kalishman, Affholder and 
Siteman, to become directors of ITI as of the Effective Time. Under the terms of
the Merger Agreement, ITI has entered into a registration rights arrangement    
with Mr. Affholder and Xanadu Investments, L.P., and is obliged to undertake    
certain obligations with respect to the indemnification of officers and         
directors of IMA. In addition, upon the consummation of the Merger, ITI will    
enter into agreements with Messrs. Kalishman and Affholder with respect to their
continuing positions in ITI and will use certain equipment currently owned by a 
partnership agreement in which Messrs. Kalishman and Affholder are partners.    
See. "The Merger -- Interests of Certain Persons in the Merger and Related      
Transactions" below.                                                            

   Seasonality; Potential Adverse Effects of Weather.  IMA's business may be
affected by various climatic seasons through its operating territories, as well 
as by the fiscal years and budgetary processes of IMA's governmental customers. 
In July 1993, IMA's headquarters and operations facilities in St. Louis were    
severely damaged by flooding and all activities that were performed at these    
facilities temporarily were relocated. There can be no assurance that severe    
weather conditions will not in the future adversely effect IMA's operations in a
material respect.                                                               

     Significant Premium on IMA Class A Common Stock.  On May 23, 1995, the last
full trading day prior to the public announcement of the Merger Agreement, the  
closing sales price per share of ITI Common Stock reported on The Nasdaq Stock  
Market was $13.50 and the closing sales price per share of IMA Class A Common   
Stock was $12.00. Accordingly, the Conversion Ratio represents a significant    
premium paid for the IMA Class A Common Stock, based on such market prices.     
Although the ITI Board of Directors has determined, based on a number of factors
(including the opinion of Merrill Lynch & Co. that the consideration to be paid 
by ITI in the Merger is fair, from a financial point of view, to ITI) that the  
Merger is in the best interests of ITI and the ITI Stockholders, there can be no
assurance that the evaluations by, and the underlying assumptions of, the ITI   
Board of Directors and its advisors will materialize, that unanticipated events 
and circumstances will not occur, or that subsequent operations of IMA or ITI   
will not vary, possibly in material respects, from conditions projected so as to
result in the failure of ITI to realize the anticipated value of its transaction
with IMA. See "The Merger -- Recommendations of the Boards of Directors; Reasons
for Approving the Merger -- Board of Directors of ITI" below.                   

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INFORMATION CONCERNING THE MEETINGS 

THE ITI MEETING                                                                 

 Purpose of the Meeting.  This Joint Proxy Statement/Prospectus is being
furnished by ITI to the ITI Stockholders in connection with the solicitation of 
proxies by the Board of Directors of ITI for use at the ITI Meeting. At the ITI 
Meeting, ITI Stockholders will consider and vote upon (i) the Merger Agreement  
and the transactions contemplated thereby, (ii) the proposal to approve the     
Capitalization Amendment, (iii) the proposal to approve the Board Vacancy       
Amendment, (iv) the election of four Class III directors for the ensuing        
three-year term, (v) the proposal to authorize ITI's Board of Directors to      
adjourn the ITI Meeting to permit the further solicitation of proxies, if       
necessary, and (vi) such other business as may properly come before the ITI     
Meeting. The consummation of the Merger is subject to approval of the proposed  
Capitalization Amendment and the proposed Board Vacancy Amendment, neither of   
which will become effective until consummation of the Merger.                   

THE BOARD OF DIRECTORS OF ITI BELIEVES THAT THE APPROVAL OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, THE APPROVAL OF THE        
PROPOSED CAPITALIZATION AMENDMENT AND THE APPROVAL OF THE PROPOSED BOARD VACANCY
AMENDMENT ARE IN THE BEST INTERESTS OF ITI AND THE ITI STOCKHOLDERS AND         
RECOMMENDS THAT THE ITI STOCKHOLDERS VOTE FOR APPROVAL OF EACH SUCH PROPOSAL,   
FOR THE ELECTION OF THE FOUR CLASS III DIRECTORS NAMED IN THIS JOINT PROXY      
STATEMENT/PROSPECTUS AND FOR AUTHORIZATION OF THE BOARD OF DIRECTORS OF ITI TO  
ADJOURN THE ITI MEETING TO PERMIT THE FURTHER SOLICITATION OF PROXIES, IF       
NECESSARY. See "The Merger -- Recommendations of the Boards of Directors;       
Reasons for Approving the Merger Agreement -- Board of Directors of ITI," "The  
Capitalization Amendment," "The Board Vacancy Amendment," "Election of ITI      
Directors" and "Adjournment of Meetings" below.                                 

   Date, Time and Place of Meeting.  The ITI Meeting will be held on October
12, 1995 at The Hilton-Memphis East, 5069 Sanderlin Avenue, Memphis, Tennessee  
at 10:00 a.m., local time.                                                      

     Record Date; Stockholders Entitled to Vote and Required Vote.  Only holders
of record of ITI Common Stock at the close of business on August 30, 1995 are   
entitled to notice of and to vote at the ITI Meeting. On August 30, 1995,       
14,609,804 shares of ITI Common Stock were outstanding and entitled to vote. On 
August 30, 1995, there were 1,842 holders of record of ITI Common Stock.        

The presence in person or by proxy of holders of a majority of the    
outstanding shares of ITI Common Stock is necessary to constitute a quorum at   
the ITI Meeting. At the ITI Meeting, each holder of ITI Common Stock will be    
entitled to one vote for each share held.                                       

   If there are insufficient votes to constitute a quorum or for approval of
the Merger Agreement, the Capitalization Amendment or the Board Vacancy         
Amendment, the ITI Meeting would be adjourned in order to permit further        
solicitation of proxies. The affirmative vote of holders of a majority of the   
outstanding shares of ITI Common Stock is required to approve the proposals to  
approve, respectively, the Merger Agreement, the Capitalization Amendment and   
the Board Vacancy Amendment. Directors are elected by a plurality vote. The     
proposal to authorize ITI's Board of Directors to adjourn the ITI Meeting in    
order to permit the further solicitation of proxies, if necessary, requires the 
affirmative vote of holders of a majority of the shares of ITI Common Stock     
present in person or represented by proxy and entitled to vote at the ITI       
Meeting.                                                                        

  As of August 30, 1995, directors and executive officers of ITI and their
affiliates beneficially owned an aggregate of 3,879,047 shares of ITI Common    
Stock (approximately 25.6% of the aggregate shares of ITI Common Stock then     
outstanding) entitled to notice of and to vote at the ITI Meeting.              

    Other Business.  The management of ITI does not intend to present and does
not have any reason to believe that others will present, at the ITI Meeting, any
item of business other than those set forth herein. However, if any other       
business is properly presented at the ITI Meeting and may properly be considered
and acted upon, proxies will be voted by those named on the proxy card in their 
best judgment.                                                                  

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Proposals by ITI Stockholders.  Stockholder proposals intended to be  
presented at the 1996 Annual Meeting of Stockholders of ITI must be received by 
ITI by May 21, 1996 in order to be considered for inclusion in ITI's Proxy      
Statement relating to its 1996 Annual Meeting.                                  

THE IMA MEETING                                                                 

 Purpose of the Meeting.  This Joint Proxy Statement/Prospectus is being
furnished by IMA to the IMA Stockholders in connection with the solicitation of 
proxies by the Board of Directors of IMA for use at the IMA Meeting. At the IMA 
Meeting, IMA Stockholders will consider and vote upon (i) a proposal to approve 
the Merger Agreement and the transactions contemplated thereby, (ii) a proposal 
to authorize IMA's Board of Directors to adjourn the IMA Meeting to permit the  
further solicitation of proxies, if necessary, and (iii) such other business as 
may properly come before the IMA Meeting.                                       

THE BOARD OF DIRECTORS OF IMA BELIEVES THAT THE APPROVAL OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY IS IN THE BEST INTERESTS OF 
IMA AND THE IMA STOCKHOLDERS AND RECOMMENDS THAT THE IMA STOCKHOLDERS VOTE FOR  
THE APPROVAL OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY  
AND FOR AUTHORIZATION OF THE BOARD OF DIRECTORS OF IMA TO ADJOURN THE IMA       
MEETING TO PERMIT THE FURTHER SOLICITATION OF PROXIES, IF NECESSARY. See "The   
Merger -- Recommendations of the Boards of Directors; Reasons for Approving the 
Merger Agreement -- Board of Directors of IMA" and "Adjournment of Meetings"    
below.                                                                          

   Date, Time and Place of Meeting.  The IMA Meeting will be held on October
12, 1995 at the Sheraton West Port Plaza Hotel, 900 West Port Plaza, St. Louis, 
Missouri at 10:00 a.m., local time.                                             

     Record Date; Stockholders Entitled to Vote and Required Vote.  Only holders
of record of IMA Class A Common Stock and IMA Class B Common Stock at the close 
of business on September 1, 1995 are entitled to notice of and to vote at the   
IMA Meeting. On September 1, 1995, 8,330,303 shares of IMA Class A Common Stock 
and 2,472,985 shares of IMA Class B Common Stock were outstanding and entitled  
to vote. On September 1, 1995, there were 731 holders of record of IMA Class A  
Common Stock and six holders of IMA Class B Common Stock.                       

The presence in person or by proxy of holders of a majority of the    
outstanding shares of IMA Class A Common Stock and IMA Class B Common Stock as a
single class is necessary to constitute a quorum at the IMA Meeting. At the IMA 
Meeting, each holder of IMA Class A Common Stock and each holder of IMA Class B 
Common Stock will be entitled to one vote for each share held.                  

   If there are insufficient votes to constitute a quorum or for approval of
the Merger Agreement, the IMA Meeting would be adjourned in order to permit     
further solicitation of proxies. The affirmative vote of holders of a majority  
of the outstanding shares of IMA Class A Common Stock and IMA Class B Common    
Stock voting together as one class is required to approve the Merger Agreement  
and the transactions contemplated thereby. The proposal to authorize IMA's Board
of Directors to adjourn the IMA Meeting to permit the further solicitation of   
proxies, if necessary, requires the affirmative vote of holders of a majority of
the shares of IMA Class A Common Stock and IMA Class B Common Stock present in  
person or represented by proxy and entitled to vote at the IMA Meeting voting   
together as one class.                                                          

    As of September 1, 1995, directors and executive officers of IMA and their
affiliates beneficially owned an aggregate of 4,197,835 shares of IMA Class A   
Common Stock and IMA Class B Common Stock (approximately 38.5% of the aggregate 
shares of IMA Class A Common Stock and IMA Class B Common Stock then            
outstanding) entitled to notice of and to vote at the IMA Meeting.              

    Other Business.  The management of IMA does not intend to present and does
not have any reason to believe that others will present, at the IMA Meeting, any
item of business other than those set forth herein. However, if any other       
business is properly presented at the IMA Meeting and may properly be considered
and acted upon, proxies will be voted by those named on the proxy card in their 
best judgment.                                                                  

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Proposals by IMA Stockholders.  If the Merger is approved, the other  
conditions to the Merger are satisfied and the Merger is consummated,           
stockholders of IMA will become stockholders of ITI at the Effective Time. In   
order to be eligible for inclusion in ITI's proxy materials for the 1996 Annual 
Meeting of Stockholders of ITI, any stockholder proposal to take action at such 
meeting must be received at the principal executive offices of ITI, 1770 Kirby  
Parkway-Suite 300, Memphis, Tennessee 38138 no later than May 21, 1996. If the  
Merger is not consummated, IMA would plan to hold a 1996 Annual Meeting of      
Stockholders. In the event the Merger is not consummated before such date, any  
stockholder who wishes to present a proposal for inclusion in the proxy         
materials for IMA's 1996 Annual Meeting of Stockholders must have submited such 
proposal to IMA no later than September 12, 1995.                               

ABSTENTIONS AND BROKER NON-VOTES                                                

  At the ITI Meeting and the IMA Meeting, abstentions and broker non-votes
(as hereinafter defined) will be counted as present for the purpose of          
determining the presence or absence of a quorum for the transaction of business.
For the purpose of determining the vote required for approval of matters to be  
voted on at such meetings, shares held by stockholders who abstain from voting  
will be treated as being "present" and "entitled to vote" on the matter and,    
thus, an abstention has the same effect as a vote against the matter. In the    
case of a broker non-vote, such shares will not be treated as "present" and     
"entitled to vote" on the matter. Accordingly, a broker non-vote will also have 
the same effect as a vote at the ITI Meeting against approval of the Merger     
Agreement, the Capitalization Amendment and the Board Vacancy Amendment, or at  
the IMA Meeting against approval of the Merger Agreement. In the election of    
directors, and in the determination of whether to authorize ITI's Board of      
Directors and IMA's Board of Directors to adjourn, respectively, the ITI Meeting
or the IMA Meeting to permit the further solicitation of proxies, if necessary, 
a broker non-vote or the withholding of a proxy's authority will have no effect 
on the outcome of the vote on the matter. A "broker non-vote" refers to shares  
represented at such meetings in person or by proxy by a broker or nominee where 
such broker or nominee (i) has not received voting instructions on a particular 
matter from the beneficial owners or persons entitled to vote; and (ii) the     
broker or nominee does not have the discretionary voting power on such matter.  

SOLICITATION, REVOCATION AND USE OF PROXIES                                     

    All holders of ITI Common Stock represented at the ITI Meeting by properly
executed proxies received prior to or at the ITI Meeting, and all holders of IMA
Class A Common Stock and IMA Class B Common Stock represented at the IMA Meeting
by properly executed proxies received prior to or at the IMA Meeting, unless    
such proxies previously have been revoked, will be voted at such meetings,      
respectively, in accordance with the instructions on the proxies. If no contrary
instructions are indicated, such proxies will be voted at the ITI Meeting FOR   
the approval of the Merger Agreement and the transactions contemplated thereby, 
FOR the approval of the proposed Capitalization Amendment, FOR the approval of  
the proposed Board Vacancy Amendment, FOR the election of the four Class III    
directors named in this Joint Proxy Statement/ Prospectus, and FOR authorization
of ITI's Board of Directors to adjourn the ITI Meeting to permit the further    
solicitation of proxies, if necessary. If no contrary instructions are          
indicated, such proxies will be voted at the IMA Meeting FOR the approval of the
Merger Agreement and the transactions contemplated thereby and FOR authorization
of IMA's Board of Directors to adjourn the IMA Meeting to permit the further    
solicitation of proxies, if necessary.                                          

Any proxy given pursuant to this solicitation with respect to the ITI 
Meeting may be revoked by the person giving it at any time before the beginning 
of the ITI Meeting. Proxies may be revoked by filing with the Secretary of ITI  
written notice of revocation bearing a later date than the proxy, by duly       
executing a later-dated proxy relating to the same ITI Common Stock, or by      
attending the ITI Meeting and voting in person (although attendance at the ITI  
Meeting will not in and of itself constitute revocation of a proxy). Any written
notice revoking a proxy with respect to the ITI Meeting should be sent to       
Secretary, Insituform Technologies, Inc., 1770 Kirby Parkway, Suite 300,        
Memphis, Tennessee 38138.                                                       

Any proxy given pursuant to this solicitation with respect to the IMA 
Meeting may be revoked by the person giving it at any time before the beginning 
of the IMA Meeting. Proxies may be revoked by filing with                       

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the Secretary of IMA written notice of revocation bearing a later date than the 
proxy, by duly executing a later-dated proxy relating to the same IMA Class A   
Common Stock or IMA Class B Common Stock, or by attending the IMA Meeting and   
voting in person (although attendance at the IMA Meeting will not in and of     
itself constitute revocation of a proxy). Any written notice revoking a proxy   
with respect to the IMA Meeting should be sent to Secretary, Insituform         
Mid-America, Inc., 17988 Edison Avenue, Chesterfield, Missouri 63005.           

Proxies will be solicited by use of the mails. Directors, officers and
employees of ITI and IMA and their respective subsidiaries also may solicit     
proxies by telephone, telegram or personal contact and such persons will receive
no additional compensation for such services. Copies of solicitation materials  
will be furnished to fiduciaries, custodians and brokerage houses for forwarding
to beneficial owners of ITI Common Stock and IMA Class A Common Stock held in   
their names. ITI has also engaged Morrow & Co., Inc., 345 Hudson Street, New    
York, New York 10011, to aid in the solicitation of proxies with respect to the 
ITI Meeting for a fee estimated at $7,500 plus reimbursement for reasonable and 
customary out-of-pocket expenses. ITI and IMA will bear the cost of mailing the 
proxy material in connection with, respectively, the ITI Meeting and the IMA    
Meeting. ITI and IMA will each bear one-half of the filing and printing costs in
connection with this Joint Proxy Statement/Prospectus.                          

DISSENTERS' RIGHTS                                                              

Neither holders of ITI Common Stock, nor holders of IMA Class A Common
Stock nor IMA Class B Common Stock, have any appraisal rights under Delaware law
with respect to any of the matters to be voted on at the ITI Meeting or the IMA 
Meeting, respectively.                                                          

RELATIONSHIP WITH INDEPENDENT AUDITORS                                          

The ITI Board of Directors has selected BDO Seidman, LLP, independent 
certified public accountants, as the auditors of ITI for the year ending        
December 31, 1995. Such firm has audited the consolidated financial statements  
of ITI for the year ended December 31, 1994. One or more representatives of BDO 
Seidman, LLP are expected to be present at the ITI Meeting, and will be given an
opportunity to make a statement if they desire to do so, and will be available  
to respond to appropriate questions by ITI Stockholders.                        

 KPMG Peat Marwick LLP reported on IMA's financial statements for fiscal
1994, and it is anticipated that such firm will be appointed to serve as IMA's  
auditors for fiscal 1995. One or more representatives of KPMG Peat Marwick LLP  
are expected to be present at the IMA Meeting with the opportunity to make a    
statement if they desire to do so. Representatives of such firm also will be    
available to respond to appropriate questions from stockholders.                

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THE MERGER

     The description of the Merger Agreement set forth below does not purport to
be complete and is qualified in its entirety by reference to the text of the    
Merger Agreement which is attached as Annex A to this Joint Proxy               
Statement/Prospectus and is incorporated herein by reference.                   

ALL ITI STOCKHOLDERS AND IMA STOCKHOLDERS ARE URGED TO READ THE MERGER
AGREEMENT, AS WELL AS THE OTHER ANNEXES, IN THEIR ENTIRETY.                     

BACKGROUND                                                                      

  IMA became a licensee of ITI for the Insituform Process in December 1982
and began to perform significant Insituform operations during 1984. Since 1982  
and through the completion of its most recent fiscal year, IMA's licensed       
Insituform territory was expanded on five separate occasions, so as to cover all
or a portion of 17 states, Puerto Rico and the U.S. Virgin Islands. In addition,
IMA historically has purchased substantially all its requirements of the        
polyester-fiber felt tubing, known as the Insitutube, from ITI. In December     
1990, IMA became a licensee of ITI for the NuPipe Process, and entered into     
arrangements to purchase from ITI its thermoplastic folded pipe used for the    
NuPipe Process. See "Business of ITI" and "Business of IMA" below.              

ITI, as part of a policy of stimulating royalties and sales of its    
products, initially invested in IMA in February 1984, successively acquiring    
shares of IMA preferred stock, which subsequently were converted into common    
equity. Also, in 1989, ITI acquired additional common equity in connection with 
the transactions relating to IMA's acquisition of Insituform North, Inc. and    
Insituform de Puerto Rico, Inc. In May 1991, pursuant to an underwritten public 
offering registered under the Securities Act, ITI completed the sale of its     
entire equity position in IMA (constituting approximately 26% of the outstanding
equity of IMA), which generated proceeds aggregating $22.1 million, net of      
underwriting discounts.                                                         

As a consequence of the ongoing business relationships in the ordinary
course between ITI and IMA, a number of issues arose out of the operations of   
the parties' respective businesses, including aspects of their licensor-licensee
and supplier-customer relationships. Although these issues did not arise in the 
context of discussions relating to the Merger, they affected the companies'     
respective determinations concerning the Merger and the transactions            
contemplated thereby.                                                           

Commencing in 1991, ITI initiated activities in the United States as a
direct installer using trenchless methods through the acquisition of domestic   
Insituform licensees, acquiring the controlling interest in Insituform Southwest
(in March 1991), H.T. Schneider, Inc., the parent of Insituform of New England, 
Inc. (in December 1992), Naylor Industries, Inc., the parent of Insituform Gulf 
South, Inc. (in July 1993), Insituform Midwest, Inc. (in July 1993), and Gelco  
Services, Inc. and its affiliates (in October 1994). From time to time, IMA     
communicated to ITI that, in view of such strategy, IMA believed that it was in 
IMA's strategic interest to reduce its dependence on ITI as a provider of       
technology and materials. In furtherance of its strategy, in 1991, IMA acquired 
companies offering the Tite Liner Process in the United States and worldwide.   

   Also, pursuant to its strategy of expanding its technological support, in
mid-1992 IMA entered into negotiations with Ashimori with respect to its        
acquisition of rights to current and future Ashimori pipeline rehabilitation    
technologies in North America, known as the PALTEM systems. In September 1992,  
IMA entered into arrangements with Ashimori providing for IMA's acquisition of  
an exclusive license to offer the PALTEM systems in substantially all of North  
America and the exclusive right in such territory to utilize and sell materials 
manufactured by Ashimori for use in pipeline rehabilitation. By letter dated    
October 2, 1992, ITI communicated to IMA, among other things, ITI's concerns    
regarding the ability of IMA to operate in compliance with its Insituform       
licenses in view thereof. See "Business of ITI -- Licensing Operations" below.  

    On October 26, 1992, IMA announced publicly an agreement-in-principle with
Ashimori, and disclosed ITI's concerns and indicated that IMA had advised ITI   
that IMA had fulfilled and would continue to fulfill all of its commitments to  
ITI and that IMA did not intend to engage in any actions violative of its       
Insituform Process licenses as a result of offering PALTEM systems or otherwise.
IMA also indicated that IMA and ITI                                             

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were engaged in discussions aimed at achieving an arrangement in which ITI and  
its licensees would offer non-gas applications of the PALTEM systems.           

Thereafter, through the remainder of 1993 and into 1994, the companies
exchanged various communications relating to matters in contention, such as:    
IMA's potential obligations to ITI with regard to cross-over royalties arising  
from work done by IMA in Insituform territories assigned to licensees acquired  
by ITI; the ability of ITI's contracting subsidiaries to cross-over into        
territory assigned to IMA under its Insituform licenses; and claims by IMA to   
use of ITI's manufacturing know-how. By agreement dated April 15, 1994, ITI and 
IMA agreed that, until further notice and without prejudice to either party's   
position, ITI and its subsidiaries may operate in IMA's territories upon payment
of the cross-over payment provided for under the applicable Insituform license  
agreements with IMA.                                                            

     During early 1994, Jean-Paul Richard, President and Chief Executive Officer
of ITI, and E. Randolph Jayne II, former President of IMA, engaged in a number  
of discussions relating to Mr. Richard's suggestion regarding the possibility of
forming a joint venture with respect to the companies' respective domestic      
contracting operations. The discussions led to a meeting on February 14, 1994 at
which representatives of ITI and IMA discussed various means of resolving       
outstanding issues. At a regular meeting of the ITI Board of Directors on March 
7, 1994, the Board of ITI was apprised of the outstanding issues with IMA and   
authorized management to continue discussions with IMA.                         

  On May 1, 1994, Messrs. Richard and Jayne met in Memphis to continue the
discussion of various means of resolving outstanding issues. At such meeting,   
they determined that a combination of the two companies appeared to offer an    
approach for achieving the parties' strategic objectives, if the parties could  
resolve the issues which would likely arise in the process of negotiating a     
transaction. It was also understood that the parties would continue to pursue   
their respective business plans without regard to a possible transaction. On May
11, 1994, James D. Krugman, Chairman of the Board of ITI, and Mr. Richard, met  
with Jerome Kalishman, Chairman of the Board of IMA, and Robert M. Leopold, a   
director of IMA, to discuss the possibility of a combination of the companies.  
On May 17, 1994, the IMA Board considered and discussed at its regular quarterly
meeting various strategic business issues concerning the relationship of ITI and
IMA, including the possibility of a business combination.                       

On June 9, 1994, Messrs. Kalishman, Jayne, Leopold, and Robert W.     
Affholder, Vice Chairman of IMA, on behalf of IMA, and Messrs. Krugman, Richard 
and William A. Martin, Senior Vice President -- Chief Financial Officer of ITI, 
on behalf of ITI, met in St. Louis to discuss the parties' respective views of  
possible business strategies for a combined company. At such time, the parties  
believed that a shared vision and common strategy was an essential precondition 
to proceeding with a possible transaction. The IMA representatives also         
expressed their belief that the United States contracting operations of the     
combined company should be headquartered in St. Louis under the direction of Mr.
Affholder. In IMA's view, this approach would enable contracting operations of  
the combined company to maintain and build upon IMA's long-standing,            
customer-driven business strategy. ITI also indicated its belief that, as a     
result of consummation of any transaction, Mr. Affholder should become chief    
operating officer of North America contracting operations, with such focus.     

At a regular meeting of the Board of Directors of ITI held on June 14,
1994, the board was apprised of proposals for ITI and IMA to review the         
respective business plans of the companies, and the board authorized management 
to proceed in such regard, together with the informal advice of Merrill Lynch & 
Co. ("Merrill Lynch"), which had proposed the terms of a financial advisory     
agreement with ITI.                                                             

    On June 30, 1994, ITI and IMA entered into a confidentiality agreement and
commenced exchange of confidential non-public information, to better facilitate 
investigation and evaluation of a possible transaction between the companies.   
Beginning in July 1994, Messrs. Krugman, Richard, Martin and Anthony W. Hooper, 
Senior Vice President -- Marketing of ITI, on behalf of ITI, and Messrs.        
Kalishman, Affholder, Jayne, Joseph F. Olson, Vice President -- Finance and     
Administration of IMA, and John Kalishman, Director of Marketing of IMA, on     
behalf of IMA, subject to the confidentiality agreement discussed the companies'
respective business plans and financial forecasts with a view to determining    
whether there was any basis for future discussions.                             

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    At IMA's regular quarterly board meeting held July 27, 1994, Mr. Kalishman
briefed the board on the background of the discussions and Mr. Jayne reported on
the current status. At its regular meeting held August 2, 1994, management of   
ITI reported to the ITI Board the status of such discussions with IMA and the   
board authorized continuation thereof.                                          

  On August 30, 1994, IMA entered into a financial advisory agreement with
Schroder Wertheim & Co. Incorporated ("Schroder Wertheim"). In early October    
1994, Mr. Kalishman advised Mr. Krugman that, given the relative stock prices of
ITI and IMA, Mr. Kalishman believed it was unlikely that a transaction could be 
achieved and suggested that negotiations be deferred indefinitely.              

On October 18, 1994, Mr. Krugman met with Mr. Kalishman in Chicago and
discussed the timeliness of a transaction, given the respective needs of the two
companies from a management perspective, in particular following the departure  
in September 1994 of Mr. Jayne from IMA. Mr. Krugman asked Mr. Kalishman to     
authorize IMA's financial advisors to explore possible economic terms for a     
combination and Mr. Kalishman agreed to do so. At a regular meeting of ITI's    
Board of Directors held on October 24, 1994, management apprised the board of   
continuing discussions with IMA, and the board endorsed the continuation        
thereof.                                                                        

 On November 2, 1994, following a special IMA Board meeting at which the
status of the communications with ITI was reviewed, IMA entered into an         
agreement dated such date (the "Enviroq Agreement") which provided for IMA's    
proposed acquisition of the pipeline rehabilitation business of Enviroq.        
Enviroq, through subsidiaries, was a licensee of ITI for the Insituform and     
NuPipe Processes in five states and the holder of a 42.5% partnership interest  
in Midsouth Partners, a licensee in all or a part of three additional states.   
IMA subsequently indicated to ITI IMA's position that the completion of the     
Enviroq Acquisition was not contingent upon Enviroq's obtaining ITI's consent   
thereto.                                                                        

    On November 20, 1994, representatives of ITI and IMA met at the offices of
Schroder Wertheim in New York, with representatives of Schroder Wertheim present
on behalf of IMA and representatives of Merrill Lynch present on behalf of ITI, 
at which the respective business plans of the companies were distributed for    
consideration in an effort to present background information which could        
facilitate the determination of the relative values of the two companies. Each  
company presented a projection of its performance over the next three to five   
years. During these discussions, the parties considered that any possible       
transaction should be tax-free to IMA Stockholders and that the accounting      
treatment for any transaction should be on a pooling-of-interests basis, as     
allowed by generally accepted accounting principles. The parties further        
proposed to attempt to determine the economics of any transaction prior to      
resolving outstanding questions of corporate governance.                        

Subsequently, Mr. Kalishman advised Mr. Krugman that, based upon IMA's
evaluation of the information then available, it would not be interested in a   
transaction involving a conversion ratio that would provide to IMA Stockholders 
less equity in the surviving company than would be held by ITI Stockholders, and
Mr. Krugman responded that such an arrangement would not be acceptable to ITI.  
On November 21, 1994, the IMA Board at a regular quarterly meeting, considered  
and discussed the issues between ITI and IMA.                                   

    On December 5, 1994, Mr. Krugman met with Mr. Kalishman to ascertain IMA's
possible continuing interest in a transaction with ITI on a basis involving     
another conversion ratio. Upon Mr. Kalishman's advising Mr. Krugman that IMA    
would not reconsider with respect to the conversion ratio, they agreed to meet  
to discuss possible resolutions of disputes and disagreements. Accordingly, on  
December 19, 1994 Messrs. Krugman, Richard, Kalishman and Affholder met in      
Memphis and discussed possible resolution of various issues between the         
companies, such as those involving IMA's commercialization of the PALTEM        
processes, cross-over activities regarding the Insituform Process and IMA's     
planned manufacturing activities, but did not agree to any definitive           
arrangements. At such meeting, the parties renewed discussions regarding a      
possible combination, and Messrs. Kalishman and Affholder advised the ITI       
representatives that IMA would reconsider IMA's requirement of a conversion     
ratio based upon equal total equity values if they were furnished information   
regarding ITI's research and development activities and future prospects which  
would justify a different relative valuation. Thereupon, representatives of ITI 
presented a status report on ITI's research and                                 

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development initiatives and growth plans. Based upon such report, Messrs.       
Kalishman and Affholder withdrew the equal value requirement to allow           
negotiations to proceed.                                                        

By letter dated January 4, 1995, Enviroq requested that ITI grant its 
consent under various Insituform and NuPipe licenses with Enviroq's subsidiaries
in connection with the proposed Enviroq Acquisition. See "Business of           
ITI -- Licensing Operations -- Insituform License Agreements" below. Enviroq's  
letter requested a response by January 13, 1995. By letter dated January 13,    
1995, Enviroq advised ITI that Enviroq did not expect a response to its prior   
letter by January 13, 1995 but that ITI be given every reasonable opportunity to
consider Enviroq's request and that ITI proceed with all due diligence.         

At a regular meeting of the ITI Board of Directors held on January 24,
1995, the board was apprised of developments concerning the Enviroq Acquisition 
and discussions with IMA, and management presented an analysis of combined      
operations of ITI and IMA. The ITI Board authorized management to continue      
discussions with IMA including a potential combination of the companies, and to 
take appropriate steps to preserve ITI's rights in the context of the Enviroq   
Acquisition.                                                                    

     On February 7, 1995, representatives of Merrill Lynch and Schroder Wertheim
met to discuss a possible conversion ratio relative to a transaction between ITI
and IMA. Based upon the conversion ratio suggested by Merrill Lynch at such     
time, IMA terminated its negotiations with respect to a proposed transaction.   

    At IMA's annual board meeting on February 14, 1995, Mr. Kalishman reported
to the IMA Board that, in view of the perceived inadequacy of the conversion    
ratio suggested by Merrill Lynch, he had terminated discussions with ITI        
regarding a possible merger. He also advised the board that management of IMA   
intended to proceed to explore a possible resolution of disputes and            
disagreements between the parties.                                              

   Mr. Krugman and Mr. Kalishman met on February 21, 1995 in Naples, Florida
for the purpose of discussing a resolution of the pending disputes between the  
parties. At such meeting, Mr. Krugman suggested that the parties continue       
attempts to achieve an agreement regarding a conversion ratio. Mr. Kalishman    
advised that reopening discussions regarding a conversion ratio should only be  
accomplished through IMA's financial advisor and after there was an agreement   
regarding corporate governance issues for a combined company. Messrs. Kalishman 
and Krugman agreed to meet in St. Louis with Mr. Richard on February 24, 1995 to
discuss the issues between the companies. At such meeting, the possibility of a 
merger was revisited, and Mr. Krugman agreed to pursue the matter with          
representatives of Schroder Wertheim.                                           

 On February 28, 1995, Mr. Krugman met with a representative of Schroder
Wertheim to explore the principal terms of a transaction, including a possible  
range for the conversion ratio, consideration of the formation of a regular     
dividend policy with respect to the shares of ITI, the composition of the ITI   
Board and the roles of Messrs. Kalishman and Affholder in the management of the 
combined companies.                                                             

On March 15, 1995, Mr. Krugman followed up with Schroder Wertheim by  
telephone and proposed the Conversion Ratio of 1.15 shares of ITI Common Stock  
for each share of IMA Class A Common Stock, and a board comprised of ten        
directors, six of whom would be named by ITI, three of whom would be designed by
IMA and one of whom would be ITI's chief executive officer. Mr. Krugman further 
concurred, in view of previous discussions with IMA, that he not continue as    
Chairman of the Board, in favor of Mr. Kalishman. The representative of Schroder
Wertheim indicated, on behalf of IMA, that he believed the terms would be       
substantially acceptable to IMA.                                                

     On March 15 and 16, 1995, ITI's legal advisor communicated with IMA's legal
advisor in order to confirm the proposed terms of a transaction between the     
companies, including the proposed Conversion Ratio, board composition and       
composition of management. On March 16, 1995, IMA's legal advisor communicated  
to ITI's legal advisor IMA's position that the board of directors after         
consummation of a transaction should be comprised of four members designated by 
ITI, the chief executive officer of the company and at least three and possibly 
four directors designated by IMA. On March 29, 1995, ITI's legal advisor        
submitted to IMA's legal advisor the working draft of an agreement and plan of  
merger so as to identify outstanding issues between the companies.              

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    On April 4, 1995, ITI publicly announced that it had declined to grant its
consent, as requested by Enviroq under the various Insituform and NuPipe Process
license agreements with Enviroq's subsidiaries, in connection with the          
transactions contemplated by the Enviroq Agreement. ITI also announced that it  
had filed an action (the "Declaratory Action") in Tennessee Chancery Court      
pursuant to which it sought a declaratory judgment confirming its action. See   
"Business of ITI -- Legal Proceedings" below. On April 4, 1995, ITI, Enviroq and
IMA entered into and publicly announced an agreement (the "Cooperation          
Agreement") providing that no further action would be taken through April 30,   
1995 in that lawsuit or any other court action taken through such date, pending 
attempts by the parties to resolve their differences.                           

  On April 11, 1995, Messrs. Krugman and Richard, together with Russell B.
Wight, Jr., a director of ITI and partner of Interstate Properties, ITI's       
largest stockholder, and Brian Chandler and Douglas K. Chick, also both         
directors of ITI and members of the Ringwood Group, holding the next largest    
position in ITI's stock, met with Mr. Kalishman at the offices of Interstate    
Properties in Saddle Brook, New Jersey. During the meeting, the participants    
discussed the terms of a possible transaction between ITI and IMA and failed to 
resolve issues relating to board composition and Mr. Kalishman's future role in 
ITI after the effectuation of a transaction. Such failure was attributable,     
among other reasons, to the views of various ITI directors that certain         
principal ITI Stockholders had relied upon Mr. Krugman's serving as Chairman of 
the Board for the period determined in the context of ITI's acquisition of      
Insituform Group Limited in 1992, and that the Conversion Ratio reflected a     
substantial premium to market (while at the same time Messrs. Kalishman and     
Affholder, collectively, would own a substantially greater position in ITI's    
outstanding stock than any other single stockholder constituency), such that IMA
should accept ITI's proposals regarding board composition and board             
chairmanship.                                                                   

     On April 18, 1995, IMA completed the Enviroq Acquisition. On such date, ITI
announced that it had entered into additional agreements with Enviroq and IMA to
postpone through April 30, 1995 assertion by ITI of any rights under the        
Insituform and NuPipe Process license agreements with Enviroq's subsidiaries,   
and any rights under the partnership agreement of Midsouth Partners (see        
"Business of ITI -- Investments" below), arising as a result of the acquisition 
of Enviroq by IMA without ITI's consent.                                        

On April 21, 1995, Mr. Richard met with Mr. Kalishman to discuss      
alternative corporate governance arrangements for the board of directors of the 
combined companies, and proposed that the board be comprised of thirteen        
directors, ten of whom would be the current ITI directors (including ITI's Chief
Executive Officer) and three of whom would be designated by IMA (the "April     
Board Proposal"). Mr. Kalishman indicated that he would recommend such proposal 
to the IMA Board and concurred that any future dividend policy would be a matter
for determination by ITI's Board of Directors.                                  

 At a regular meeting of the Board of Directors of ITI held on April 25,
1995, the terms of the proposed agreement and plan of merger and the            
transactions contemplated thereby as of such date were presented to the board.  
At the meeting, management presented an analysis of the proposed transaction,   
Merrill Lynch reviewed for the board certain financial calculations for         
consideration by the board in evaluating the transaction proposed and ITI's     
legal counsel reviewed legal matters pertinent to such transactions. The board  
authorized management to propose a transaction with IMA providing for the       
Conversion Ratio and the April Board Proposal and to continue negotiation of Mr.
Kalishman's role in ITI after the effectuation of a transaction. On April 25,   
1995 following the board meeting, Messrs. Krugman and Richard telephoned Mr.    
Kalishman and proposed a transaction providing for the Conversion Ratio and the 
April Board Proposal. They further advised Mr. Kalishman that, although ITI     
would be prepared to accept his serving as co-chairman of the ITI Board, the ITI
Board's support for the transaction would be strengthened if Mr. Kalishman were 
then to agree to serve in a newly-created position of Vice Chairman of the Board
of ITI and as a consultant of ITI for a period of two years.                    

  On April 28, 1995, ITI publicly announced that it had agreed with IMA to
extend through May 31, 1995 the period during which ITI would postpone assertion
of any rights in dispute as a result of the consummation of the Enviroq         
Acquisition by IMA without consent of ITI. During such period, the parties      
agreed not to take further action in the Declaratory Action regarding such      
matters, except for certain procedural actions to preserve the parties' rights. 

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On May 8, 1995, Mr. Kalishman communicated to ITI IMA's willingness to
proceed to conclude a transaction providing for the Conversion Ratio, the April 
Board Proposal, and the appointment of Mr. Kalishman as Vice Chairman of the    
Board of ITI and his engagement as consultant.                                  

At a regular quarterly meeting of the IMA Board held May 12, 1995, the
terms of the proposed merger and related transactions were presented to the     
directors. At the meeting, the board considered presentations from IMA          
management, representatives of Schroder Wertheim and IMA's legal counsel, which 
described and analyzed in detail the proposed business combination. The Schroder
Wertheim representatives advised the IMA Board that, based upon their analysis  
of the information then available, they believed that their firm would be in a  
position to render an opinion that the Conversion Ratio was fair, from a        
financial point of view, to the IMA Stockholders. The board authorized          
management to continue negotiation of various terms of the Merger Agreement,    
including clarification of provisions relative to the future roles of Messrs.   
Kalishman and Affholder in the operations of the combined companies.            

On May 22, 1995, ITI entered into definitive financial advisory       
arrangements with Merrill Lynch.                                                

 On May 22, 1995, the terms of the Merger Agreement and the transactions
contemplated thereby were presented to the Board of Directors of IMA at a       
special telephonic meeting of the board. At the meeting, Schroder Wertheim      
presented an analysis of considerations attendant to the Merger and advised the 
IMA Board orally that the Conversion Ratio is fair, from a financial point of   
view, to the IMA Stockholders. The directors unanimously approved the terms of  
the Merger Agreement and the transactions contemplated thereby and authorized   
the execution of the Merger Agreement.                                          

 On May 22, 1995, the terms of the Merger Agreement and the transactions
contemplated thereby were presented to the Board of Directors of ITI at a       
special meeting of the board. At the meeting, the board considered presentations
from ITI management, representatives of Merrill Lynch and ITI's legal counsel,  
and asked questions of ITI's independent auditors, regarding the proposed       
transactions. At the meeting, Merrill Lynch presented an analysis of the        
financial terms of the proposed Merger and advised the Board orally to the      
effect that, based upon the assumptions made, the matters considered, and the   
limitations on the review undertaken, as of such date, the consideration to be  
paid by ITI pursuant to the Merger is fair to ITI from a financial point of     
view. At the meeting, the directors authorized management to formulate          
arrangements with Interstate Properties, in order to confirm to Interstate that 
the period during which Interstate and its partners would be held to            
restrictions governing transactions in ITI and IMA stock, in order to support   
the accounting treatment of the transaction as a pooling-of-interests, would not
be unduly extended. On May 23, 1995, the Board of Directors of ITI reconvened   
telephonically, at which time the directors unanimously approved the terms of   
the Merger Agreement and the transactions contemplated thereby and authorized   
the execution of the Merger Agreement.                                          

On May 23, 1995, ITI, ITI Sub and IMA executed the Merger Agreement.  

RECOMMENDATIONS OF THE BOARD OF DIRECTORS; REASONS FOR APPROVING THE MERGER     
AGREEMENT                                                                       

     Board of Directors of ITI.  THE BOARD OF DIRECTORS OF ITI BELIEVES THAT THE
TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,        
INCLUDING THE PROPOSED CONVERSION RATIO OF 1.15 SHARES OF ITI COMMON STOCK FOR  
EACH SHARE OF IMA CLASS A COMMON STOCK OUTSTANDING, ARE FAIR TO AND IN THE BEST 
INTERESTS OF ITI AND THE ITI STOCKHOLDERS. ACCORDINGLY, THE BOARD HAS APPROVED  
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS   
THAT HOLDERS OF ITI COMMON STOCK VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND  
THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT.                    

     At a special meeting of the Board of Directors of ITI held on May 23, 1995,
the Board of Directors of ITI approved the Merger Agreement and the transactions
contemplated thereby, including the issuance by ITI of 1.15 shares of ITI Common
Stock to the IMA Stockholders for each share of IMA Class A Common Stock held   
subsequent to conversion into IMA Class A Common Stock, in accordance with its  
terms, of all                                                                   

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outstanding shares of IMA Class B Common Stock. This approval followed, and was 
based upon discussions at, meetings of the Board of Directors of ITI at which   
matters relating to ITI and IMA were considered, held on March 7, June 14,      
August 2 and October 24, 1994 and January 24, April 25, May 22 and May 23, 1995.
In arriving at its conclusion, the Board of Directors of ITI received           
presentations from, and reviewed carefully the terms and conditions of the      
Merger Agreement with, its management, counsel and financial advisor.           
Thereafter, the Board of Directors of ITI approved the Merger Agreement and the 
transactions contemplated thereby.                                              

   Such determination by the Board of Directors of ITI was based on a number
of factors, including, without limitation, the following: (i) the anticipated   
creation of a larger and stronger company with better economies of scale,       
greater operations flexibility and the enhanced ability to fund key strategic   
initiatives through the combination of complementary attributes of the two      
companies; (ii) the enhanced ability of ITI to market the Insituform and NuPipe 
Processes in territories licensed to IMA and its subsidiaries (including Enviroq
and its subsidiaries), and to provide a national network for new industrial     
applications of such processes; (iii) the infusion by ITI through its domestic  
contracting operations of the strong contracting capabilities and culture of    
IMA; (iv) the opportunities presented by IMA's proprietary technologies such as 
the PALTEM systems for trenchless pipeline rehabilitation, in particular insofar
as addressing pressure pipes used in the gas utility industry, and the Tite     
Liner Process for corrosion and abrasion protection, insofar as addressing      
mining and oil and gas transmission lines; (v) the uncertainties arising from   
outstanding issues between ITI and IMA, including those arising from the Enviroq
Acquisition and operations under IMA's existing Insituform and NuPipe licenses  
from ITI, and the uncertainties and costs of litigation such as the Declaratory 
Action and other proceedings that may arise from such disputes; (vi) the        
financial condition, results of operations and prospects resulting from the     
combination of ITI and IMA, including potential costs savings that could be     
achieved by the combined entity through elimination of duplicative costs in     
contracting and manufacturing operations and administration, and the risks      
involved in achieving these prospects; (vii) the relative historical market     
values of ITI Common Stock and IMA Class A Common Stock; (viii) the structure of
the Merger allowing accounting for the transaction as a pooling-of-interests;   
and (ix) the opinion of ITI's financial advisor, Merrill Lynch, to the effect   
that, based upon the assumptions made, the matters considered, and the          
limitations on the review undertaken, as of such date, the consideration to be  
paid by ITI pursuant to the Merger is fair to ITI from a financial point of     
view. Merrill Lynch has confirmed this opinion as of the date of this Joint     
Proxy Statement/Prospectus in a written opinion delivered to the Board of       
Directors of ITI. See "-- Opinion of ITI Financial Advisor" below. A copy of    
this opinion, dated the date of this Joint Proxy Statement/Prospectus, is       
attached hereto as Annex B, and the ITI Stockholders are urged to read such     
opinion carefully in its entirety.                                              

   The directors of ITI evaluated the factors listed above in light of their
knowledge of the business and options of ITI and IMA and their business         
judgment. The Board of Directors of ITI considered these factors in their       
totality and did not quantify or otherwise attempt to assign relative weights to
the specific factors considered in making its determinations.                   

    ITI expects that, if the Merger is not approved by the stockholders of ITI
or IMA, ITI would continue to operate as it has in the past. As a result of any 
termination of the Merger Agreement without effectuation of the Merger, ITI and 
IMA would be released from their respective obligations under the Cooperation   
Agreement and ITI would anticipate prosecution or reinstitution of the          
Declaratory Action or other litigation addressing the same subject matter or    
other matters, or possibly other approaches to resolve the outstanding issues   
with IMA in the absence of alternative agreements with IMA.                     

     Board of Directors of IMA.  THE BOARD OF DIRECTORS OF IMA BELIEVES THAT THE
TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,        
INCLUDING THE PROPOSED CONVERSION RATIO OF 1.15 SHARES OF ITI COMMON STOCK FOR  
EACH SHARE OF IMA CLASS A COMMON STOCK OUTSTANDING, ARE FAIR TO, AND IN THE BEST
INTERESTS OF, IMA AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS OF  
IMA HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY 
AND RECOMMENDS THAT THE HOLDERS OF IMA CLASS A COMMON STOCK AND IMA CLASS B     
COMMON STOCK VOTE                                                               

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FOR THE APPROVAL OF THE MERGER AGREEMENT AND THE OTHER TRANSACTIONS CONTEMPLATED
BY THE MERGER AGREEMENT.                                                        

   Given the significance of the Insituform Process to IMA's business, IMA's
Board of Directors has regularly reviewed the status of IMA's relationships with
ITI, including the desirability of a strategic alliance between the two         
companies. The IMA Board of Directors considered and evaluated the desirability 
of the Merger Agreement at its regular quarterly meeting held May 12, 1995 and  
at a special meeting held May 22, 1995. During these meetings, IMA's Board of   
Directors received presentations from and consulted with its financial advisors 
and legal counsel.                                                              

     In reaching its conclusion, IMA's Board of Directors carefully reviewed the
terms and conditions of the Merger Agreement and considered a number of factors,
including: (i) the perceived complementary strengths of IMA (which include its  
demonstrated ability to successfully operate and grow its Insituform Process    
installation business in its licensed territories and to utilize tunneling and  
Tite Liner and PALTEM products to offer a full line of pipeline construction and
rehabilitation products to municipal and industrial customers) and of ITI (which
include its technological base, international presence and manufacturing        
capabilities), which the board believed would provide synergies and growth      
opportunities unique to a combination of the two companies; (ii) the            
uncertainties and costs of litigation which could result from IMA's continuing  
to operate as an independent licensee, particularly in light of the lawsuit     
initiated by ITI with respect to the Insituform Process licenses acquired in the
Enviroq Acquisition and possible litigation involving other disputes between the
parties; (iii) the enhanced ability of the combined companies to compete with   
existing and emerging pipeline rehabilitation technologies, given developments  
regarding other proprietary technologies and the expiration of certain principal
patents relating to the Insituform Process; (iv) the perceived effect of the    
Merger on many of IMA's employees and customers resulting from the anticipated  
organizational framework within which North American contracting operations are 
planned to be conducted on a consolidated basis by the combined companies; (v)  
the fact that the receipt by the IMA Stockholders of ITI Common Stock in the    
Merger would be pursuant to a tax-free reorganization such that no taxable gain 
or loss would be recognized for United States federal income tax purposes by IMA
Stockholders as a result of the Merger, except to the extent of cash received in
respect of fractional shares; (vi) information concerning the financial         
performance, condition, business operations and prospects of each of IMA and ITI
and of the combined companies on a pro forma basis; (vii) the historical market 
prices of IMA Class A Common Stock and ITI Common Stock for which IMA Class A   
Common Stock would be exchanged; and (viii) the receipt by IMA's Board of       
Directors of a fairness opinion from its financial advisor, Schroder Wertheim,  
to the effect that the Conversion Ratio is fair to IMA Stockholders, from a     
financial point of view. In particular, the board reviewed and analyzed the     
relative contribution analysis, comparable company analysis, comparable merger  
and acquisition transaction analysis and discounted cash flow analysis presented
by Schroder Wertheim. See "-- Opinion of IMA Financial Advisor" below.          

The directors of IMA evaluated the foregoing factors in light of their
knowledge of the business and operations of IMA and ITI and their business      
judgment. IMA's Board of Directors considered these factors in their totality   
and did not quantify or otherwise attempt to assign relative weights to the     
specific factors considered in making its determination.                        

 If the Merger Agreement is not approved by stockholders of IMA and ITI,
respectively, IMA would expect to continue to operate in accordance with its    
historical business. IMA anticipates that it and ITI would engage in the        
litigation arising out of the Enviroq Acquisition and possibly other litigation 
arising out of other disputes between the parties, if they were unable to reach 
a mutually acceptable settlement.                                               

OPINION OF ITI FINANCIAL ADVISOR                                                

On May 22, 1995, Merrill Lynch delivered its oral opinion, which was  
subsequently confirmed in a written opinion dated the date of this Joint Proxy  
Statement/Prospectus, to the ITI Board of Directors to the effect that, as of   
such dates, based upon the assumptions made, the matters considered and the     
limitations on the review undertaken, the consideration to be paid by ITI       
pursuant to the Merger is fair to ITI from a financial point of view.           

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    A COPY OF THE MERRILL LYNCH OPINION, DATED THE DATE HEREOF, WHICH INCLUDES
THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND CERTAIN LIMITATIONS ON THE SCOPE OF
REVIEW, IS ATTACHED TO THIS PROXY STATEMENT/PROSPECTUS AS ANNEX B. HOLDERS OF   
SHARES OF ITI COMMON STOCK ARE URGED TO READ THE MERRILL LYNCH OPINION IN ITS   
ENTIRETY. THE SUMMARY OF THE MERRILL LYNCH OPINION SET FORTH IN THIS PROXY      
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT 
OF SUCH OPINION.                                                                

The opinion of Merrill Lynch is directed only to the fairness from a  
financial point of view of the consideration to be paid by ITI pursuant to the  
Merger Agreement and does not constitute a recommendation to any ITI Stockholder
as to how such stockholder should vote.                                         

In arriving at the opinion of Merrill Lynch dated May 22, 1995 (the   
"Merrill Lynch Opinion"), which Merrill Lynch discussed with the ITI Board of   
Directors, Merrill Lynch, among other things, (i) reviewed IMA's Annual Reports,
Forms 10-K and related financial information for the five fiscal years ended    
September 30, 1994 and IMA's Forms 10-Q and the related unaudited financial     
information for the quarterly periods ended December 31, 1994 and March 31,     
1995; (ii) reviewed ITI's Annual Reports, Forms 10-K and related financial      
information for the five fiscal years ended December 31, 1994, and ITI's Form   
10-Q and the related unaudited financial information for the quarterly period   
ended March 31, 1995; (iii) reviewed certain information, including financial   
forecasts, relating to the business, earnings, cash flow, assets and prospects  
of IMA and ITI, furnished to Merrill Lynch by IMA and ITI, respectively; (iv)   
conducted discussions with members of senior management of IMA and ITI          
concerning their respective businesses and prospects; (v) reviewed certain      
information furnished to Merrill Lynch by ITI and conducted discussions with    
members of senior management of IMA and ITI concerning potential synergies to be
realized as a result of the Merger; (vi) reviewed the historical market prices  
and trading activity for the IMA Class A Common Stock and ITI Common Stock;     
(vii) considered the pro forma effect of the Merger on ITI's capitalization     
ratios and earnings, cash flow and book value per share; (viii) reviewed the    
Merger Agreement; and (ix) reviewed such other financial studies and analyses   
and performed such other investigations and took into account such other matters
as Merrill Lynch deemed necessary including its assessment of general economic, 
market and monetary conditions. The financial information referred to in clause 
(iii) above furnished to Merrill Lynch included projected information with      
respect to the anticipated future performance of ITI and IMA. These projections 
were not prepared with a view to public disclosure or compliance with the       
published guidelines of the Commission or the guidelines established by the     
American Institute of Certified Public Accountants regarding projections.       
Furthermore, Merrill Lynch did not ascribe any particular weight to such        
projections.                                                                    

In preparing the Merrill Lynch Opinion, Merrill Lynch relied upon the 
accuracy and completeness of all information supplied or otherwise made         
available to it by ITI and IMA and assumed that financial forecasts and         
estimates of operating efficiencies and potential synergies expected to result  
from the Merger furnished by ITI and IMA reflected the best currently available 
estimates and judgments of the managements of ITI and IMA as to the expected    
future financial performance of their respective companies. Merrill Lynch did   
not independently verify such information or assumptions, conduct a physical    
inspection of the properties or facilities of ITI or IMA or undertake an        
independent appraisal or evaluation of the assets or liabilities of ITI or IMA. 

The Merrill Lynch Opinion does not address the relative merits of the 
Merger as compared to any other business plan or opportunity that might be      
presented to ITI, or the effect of any other arrangement in which ITI might     
engage.                                                                         

    In arriving at the Merrill Lynch Opinion, Merrill Lynch considered certain
financial analyses. In connection with its presentation to the ITI Board of     
Directors, Merrill Lynch has provided the ITI Board of Directors with a summary 
of valuation results obtained by using several different valuation methods as   
well as other materials concerning the IMA Class A Common Stock (the "Merrill   
Lynch Report"), the material portions of which are summarized below.            

Discounted Cash Flow Analysis-IMA.  Merrill Lynch calculated ranges of
equity value for IMA based upon the value, discounted to the present, of its    
fiscal year end five-year stream of unlevered after-tax cash flow and its       
projected fiscal year 2000 terminal value based upon a range of multiples of    
5.5x to 9.5x of                                                                 

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earnings before interest, taxes, depreciation and amortization ("EBITDA").      
Merrill Lynch utilized discount rates reflecting a weighted average cost of     
capital ranging from 21.0% to 25.0%.                                            

Discounted Cash Flow Analysis-ITI.  Merrill Lynch calculated ranges of
equity value for ITI based upon the value, discounted to the present, of its    
fiscal year end five-year stream of unlevered after-tax free cash flow and its  
projected fiscal year 2000 terminal value based upon a range of multiples of its
projected fiscal year 2000 EBITDA. In conducting its analysis, Merrill Lynch    
utilized two sets of projections supplied by ITI management, referred to herein 
as the ITI Base Case and the ITI Downside Case. For purposes of the Merrill     
Lynch Report, the "ITI Base Case" is defined as ITI management's projections of 
ITI assuming ITI maintains normal business relations with IMA, while the "ITI   
Downside Case" is defined as ITI management's projections of ITI assuming the   
Merger is not consummated and IMA and ITI assume adversarial postures with      
respect to each other. In both cases, Merrill Lynch utilized discount rates     
reflecting a weighted average cost of capital ranging from 21.0% to 25.0% and   
terminal value multiples of fiscal year 2000 EBITDA ranging from 4.0x to 8.0x.  

Relative Implied Exchange Ratio Analysis.  Merrill Lynch utilized a   
discounted cash flow methodology to compare implied exchange ratios based on    
relative ranges of value for IMA and ITI. The comparison of IMA to the ITI Base 
Case yielded an implied exchange ratio of (i) between 1.12 and 1.26 shares of   
ITI Common Stock for each share of IMA Class A Common Stock, assuming Synergies 
(as defined below) and (ii) between 1.06 and 1.16 shares of ITI Common Stock for
each share of IMA Class A Common Stock, assuming no Synergies. For purposes of  
the Merrill Lynch Report, "Synergies" are defined as and based on ITI management
forecasts of projected annual savings arising from the Merger of $2.8 million in
1996 and $3.7 million in 1997-2000.                                             

    Contribution Analysis.  Merrill Lynch also compared the relative ownership
of the stockholders of ITI and the stockholders of IMA to the combined company  
of 55.3% and 44.7% on a fully-diluted basis, respectively, to the relative      
contributions of each of ITI and IMA to the combined company for the years      
ending December 31, 1995 through 2000, to revenues, earnings before interest and
taxes ("EBIT") (assuming Synergies and assuming no Synergies) and net income    
(assuming Synergies and assuming no Synergies). This analysis indicated that,   
for the years ending December 31, 1995 through 2000, IMA would have contributed 
amounts ranging from 38.2% to 43.7% of revenues of the combined entity; amounts 
ranging from 37.2% to 46.6% of EBIT of the combined entity, with Synergies      
contributing amounts ranging from 0% to 5.3%; amounts ranging from 37.2% to     
44.9% of EBIT of the combined entity, assuming no Synergies; amounts ranging    
from 44.2% to 46.5% of net income of the combined entity, with Synergies        
contributing amounts ranging from 0% to 5.7%; and amounts ranging from 41.0% to 
44.3% of net income of the combined entity, assuming no Synergies.              

    Pro Forma Analysis.  In addition, Merrill Lynch analyzed certain pro forma
effects resulting from the Merger, including the potential impact of the Merger 
on the estimated earnings per share ("EPS") for the years ending December 31,   
1995 through 2000, including Synergies. This analysis indicated that for a      
holder of ITI Common Stock, (i) based on the ITI Base Case including Synergies, 
the Merger would be dilutive on an estimated EPS basis for the years ending     
December 31, 1995 through 1999 in amounts ranging from 14.1% to 1.7% and        
accretive in the year ending December 31, 2000 by 0.4%, and (ii) based on the   
ITI Downside Case with no Synergies, the Merger would be accretive for the years
ending December 31, 1996 through 2000 in amounts ranging from 2.1% to 54.5% and 
dilutive in the year ending December 31, 1995 by 14.1%. The analysis indicated  
that for a holder of IMA Class A Common Stock, the Merger would be accretive on 
an estimated EPS basis for the years ending December 31, 1995 through 2000 in   
amounts ranging from 5.7% to 19.9%.                                             

Historical Stock Price Analysis.  Merrill Lynch reviewed the per share
weekly stock price and trading volume of IMA Class A Common Stock and ITI Common
Stock over the period from May 15, 1992 to May 17, 1995 compared with the       
performance of the Standard & Poor's 500 Index. Merrill Lynch also reviewed the 
performance of the per share weekly closing price of IMA Class A Common Stock   
and ITI Common Stock over the period from May 15, 1992 to May 17, 1995 compared 
with the movement of the Standard & Poor's 400 Index and a composite index of   
certain other publicly-traded companies which Merrill Lynch deemed to be        
reasonably comparable to IMA and ITI.                                           

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     Merrill Lynch also performed analyses of selected publicly-traded companies
and of selected acquisition transactions. However, Merrill Lynch did not rely on
the results of either of these analyses as the group of companies deemed by     
Merrill Lynch to be comparable to ITI or IMA was too limited in number to be    
meaningful.                                                                     

   The summary set forth above does not purport to be a complete description
of the analyses performed by Merrill Lynch. Arriving at a fairness opinion is a 
complex process not necessarily susceptible to partial or summary description.  
Merrill Lynch believes that its analysis must be considered as a whole and that 
selecting portions of its analyses and of the factors considered by it, without 
considering all such factors and analyses, could create a misleading view of the
process underlying its analyses set forth in the Merrill Lynch Opinion and the  
Merrill Lynch Report. The matters considered by Merrill Lynch in its analyses   
are based on numerous macroeconomic, operating and financial assumptions with   
respect to industry performance, general business and economic conditions and   
other matters, many of which are beyond ITI's or IMA's control. Any estimates   
incorporated in the analyses performed by Merrill Lynch are not necessarily     
indicative of actual past or future results or values, which may be             
significantly more or less favorable than such estimates. Estimated values do   
not purport to be appraisals and do not necessarily reflect the prices at which 
businesses or companies may be sold in the future, and such estimates are       
inherently subject to uncertainty.                                              

   The ITI Board of Directors selected Merrill Lynch to act as its financial
advisor on the basis of Merrill Lynch's reputation as an internationally        
recognized investment banking firm with substantial expertise in transactions   
similar to the Merger and because it is familiar with ITI and its business. As  
part of its investment banking business, Merrill Lynch is continually engaged in
the valuation of businesses and their securities in connection with mergers and 
acquisitions. Merrill Lynch has rendered from time to time various investment   
banking and financial advisory services to a predecessor of ITI for which it has
received customary compensation.                                                

    Merrill Lynch Fees.  With respect to Merrill Lynch's services as financial
advisor in connection with the Merger, ITI has agreed to pay Merrill Lynch (i) a
retainer of $100,000, (ii) a fee of $150,000 which became payable upon execution
of the Merger Agreement and (iii) a transaction fee of 0.825% of the aggregate  
purchase price upon the consummation of the Merger, against which the fees      
earned from (i) and (ii) will be credited. In addition, ITI also has agreed to  
reimburse Merrill Lynch for its reasonable out-of-pocket expenses (including    
reasonable fees and expenses of its legal counsel) and to indemnify Merrill     
Lynch and certain related persons against certain liabilities, including        
liabilities under the federal securities laws, arising out of its engagement.   

OPINION OF IMA FINANCIAL ADVISOR                                                

Schroder Wertheim has delivered a written opinion and made an oral    
presentation to the Board of Directors of IMA that, as of May 22, 1995, the     
Conversion Ratio is fair, from a financial point of view, to the IMA            
Stockholders. Schroder Wertheim has delivered an updated written opinion, dated 
as of the date of this Joint Proxy Statement/Prospectus, to the Board of        
Directors of IMA that, as of such date, the Conversion Ratio is fair, from a    
financial point of view, to the IMA Stockholders. Schroder Wertheim, as part of 
its investment banking business, is continually engaged in the valuation of     
businesses and their securities in connection with mergers and acquisitions,    
negotiated underwritings, secondary distributions of listed and unlisted        
securities, private placements and valuations for estate, corporate and other   
purposes. The Board of Directors of IMA selected Schroder Wertheim on the basis 
of such experience. In requesting the Schroder Wertheim opinion, neither IMA nor
the Board of Directors of IMA gave any special instructions to Schroder Wertheim
or imposed any limitations upon the scope of the investigations that Schroder   
Wertheim deemed necessary to enable it to deliver its opinion.                  

   THE FULL TEXT OF THE OPINION OF SCHRODER WERTHEIM DATED AS OF THE DATE OF
THIS JOINT PROXY STATEMENT/PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE,   
MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN BY SCHRODER WERTHEIM, IS 
ATTACHED AS ANNEX C TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND INCORPORATED BY
REFERENCE HEREIN. IMA STOCKHOLDERS ARE URGED TO READ THIS OPINION IN ITS        
ENTIRETY.                                                                       

     The May 22, 1995 opinion (the "Schroder Wertheim Opinion") is substantially
similar to the opinion attached hereto as Annex C. Schroder Wertheim's opinions 
are directed only to the fairness, from a financial                             

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point of view, to IMA Stockholders of the Conversion Ratio and do not address   
IMA's underlying business decision to enter into the Merger Agreement and effect
the transactions contemplated therein. Schroder Wertheim's opinions were        
directed to the Board of Directors of IMA and were not rendered with a view     
toward serving as or constituting a recommendation to any IMA Stockholders as to
how such stockholders should vote with respect to approval of the Merger        
Agreement and the transactions contemplated therein.                            

In connection with rendering the Schroder Wertheim Opinion, Schroder  
Wertheim, among other things: (i) reviewed the Merger Agreement; (ii) reviewed  
the audited financial statements of (a) IMA for the fiscal years ended September
30, 1990 through 1994 and (b) ITI for the fiscal years ended December 31, 1990  
through 1994; (iii) reviewed the Form 10-Qs for IMA for the quarters ended      
December 31, 1994 and March 31, 1995; (iv) reviewed the Form 10-Q for ITI for   
the quarter ended March 31, 1995; (v) reviewed the Form 8-Ks for IMA and ITI    
filed during the period January 1, 1994 to May 21, 1995; (vi) had discussions   
with IMA management regarding the business and operations of IMA and            
management's financial projections for the fiscal years ending September 30,    
1995 through 1999; (vii) had discussions with ITI management regarding the      
business and operations of ITI and management's financial projections for the   
years ending December 31, 1995 through 1999; (viii) performed a relative        
contribution analysis; (ix) compared the results of IMA's operations with those 
of certain publicly traded companies that were deemed to be reasonably similar; 
(x) reviewed the financial terms, to the extent publicly available, of certain  
acquisition transactions that were deemed to be reasonably comparable; (xi)     
performed a discounted cash flow analysis of IMA's and ITI's projections; (xii) 
reviewed the stock price and trading volume history for IMA and ITI; (xiii)     
reviewed research reports and news articles on IMA and ITI; and (xiv) performed 
such other financial studies, analyses, inquiries and investigations as Schroder
Wertheim deemed appropriate. The financial information referred to in clauses   
(vi) and (vii) above furnished to Schroder Wertheim included projected          
information with respect to the anticipated future performance of IMA and ITI.  
These projections were not prepared with a view to public disclosure or         
compliance with the published guidelines of the Commission or the guidelines    
established by the American Institute of Certified Public Accountants regarding 
projections. Furthermore, Schroder Wertheim did not ascribe any particular      
weight to such projections.                                                     

   In rendering its opinions, Schroder Wertheim relied upon the accuracy and
completeness of all information supplied or otherwise made available to it by   
IMA and ITI or obtained by it from other sources, and Schroder Wertheim did not 
assume any responsibility for independently verifying such information, or      
undertake an independent appraisal of the assets or liabilities (contingent or  
otherwise) of IMA or ITI and was not furnished with such appraisals. With       
respect to financial forecasts for IMA and ITI, Schroder Wertheim was advised by
the managements of IMA and ITI, respectively, and it assumed without independent
investigation, that the forecasts were reasonably prepared and reflected the    
best currently available estimates and judgment as to the expected future       
financial performance of each company.                                          

     General.  The preparation of a fairness opinion is a complex project and is
not necessarily susceptible to partial or summary description. The nature of    
available information may further affect the value of any particular methodology
or technique. Schroder Wertheim's conclusion was based upon all the analyses and
factors that it considered taken as a whole and also on the application of      
Schroder Wertheim's experience and judgment. Its conclusion involved significant
elements of subjective judgment and qualitative analysis. No value, merit or    
weight of any single technique or factor was assigned by Schroder Wertheim.     
Accordingly, Schroder Wertheim believes that its analyses must be considered as 
a whole and that to focus upon specific portions of such analyses and factors   
would create an incomplete and misleading view of the process underlying the    
preparation of the opinion. Schroder Wertheim's analyses and opinions were      
based, in part, upon forecasts and projections of future results which are not  
necessarily indicative of actual future results. Actual results may be          
significantly more or less favorable than the projected results. In performing  
its analyses, Schroder Wertheim made numerous assumptions with respect to       
industry performance, general business and economic conditions and other        
matters, many of which are beyond IMA's or ITI's control, and therefore are     
inherently imprecise.                                                           

   In arriving at its opinions, Schroder Wertheim performed various analyses
of IMA. Schroder Wertheim performed a relative contribution analysis based upon 
the historical and projected results for IMA and ITI. Schroder Wertheim also    
reviewed the historical trading prices for IMA Class A Common Stock and ITI     

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Common Stock. In addition, Schroder Wertheim analyzed IMA's ongoing operations  
based upon three valuation methodologies: (i) analysis of comparable publicly   
traded companies; (ii) analysis of mergers and acquisitions of comparable       
companies; and (iii) discounted cash flow analysis. The following is only a     
summary of each of the financial analyses utilized by Schroder Wertheim and does
not purport to be a complete description of each such analysis.                 

 Relative Contribution Analysis.  Schroder Wertheim performed a relative
contribution analysis based upon the terms of the Merger and the historical and 
projected results of IMA and ITI. Schroder Wertheim reviewed IMA's and ITI's    
historical and projected revenues, operating cash flow, operating income and net
income. Schroder Wertheim also analyzed certain pro forma effects resulting from
the Merger. Compared to the 44.6% fully-diluted ownership that the IMA          
Stockholders would receive in the Merger, IMA would contribute 41.3%, 40.6% and 
42.0% to combined revenue, 36.0%, 33.0% and 39.9% to combined EBITDA, 34.9%,    
35.3% and 44.5% to combined EBIT, and 36.5%, 39.2% and 47.1% to combined net    
income, based on the latest twelve months ended March 31, 1995, projected 1995  
results and projected 1996 results, respectively. In addition, the projections, 
including IMA and ITI assumptions for cost savings, indicate the Merger is      
projected to result in greater pro forma earnings per share for IMA Stockholders
than the projected earnings per share for IMA Stockholders assuming no Merger.  

     Stock Trading History.  Schroder Wertheim reviewed and analyzed the history
of the trading prices and volume for both IMA Class A Common Stock and ITI      
Common Stock, both separately and in relation to each other. In addition,       
Schroder Wertheim reviewed and analyzed the relationship between movements of   
the prices of IMA Class A Common Stock and ITI Common Stock and movement of the 
composite index based on the prices of companies considered by Schroder Wertheim
to be comparable (see "-- Comparable Publicly Traded Company Analysis" below) to
IMA and ITI, respectively. During the period January 1, 1994 to May 16, 1995,   
IMA Class A Common Stock underperformed both ITI Common Stock and the composite 
index.                                                                          

   Based upon a Conversion Ratio of 1.15 shares of ITI Common Stock for each
share of IMA Class A Common Stock and a per share price of ITI Common Stock of  
$13.50 (the closing per share price of ITI Common Stock on May 16, 1995), the   
consideration to be received by the IMA Stockholders represented a premium of   
28.0% over the per share price of IMA Class A Common Stock as of May 16, 1995   
($12.13 per share) and a premium of 37.0% over the previous 30 trading days'    
average per share price of IMA Class A Common Stock as of May 16, 1995 ($11.33  
per share).                                                                     

Comparable Publicly Traded Company Analysis.  Schroder Wertheim used a
comparable publicly traded company analysis to prepare a valuation for IMA. For 
the valuation of IMA, Schroder Wertheim considered ITI, Michael Baker           
Corporation, Banister Foundation, Inc., Granite Construction, Inc., The L.F.    
Myers Co. Group and J. Ray McDermott, S.A., as comparable publicly traded       
companies. Such companies had trading multiples which ranged from 0.1x to 1.5x  
last twelve months ("LTM") revenues, 6.3x x 14.4x LTM operating income, 3.6x to 
8.6x LTM operating cash flow, 11.3x to 21.8x LTM net income, and 10.6x to 15.9x 
projected 1995 net income. Applying these multiples to IMA results, the IMA per 
share equity value ranged from $11.73 to $16.73.                                

     Comparable Merger and Acquisition Transactions.  Schroder Wertheim reviewed
merger and acquisition transactions specifically involving construction         
companies and in general involving industrial manufacturing companies. While    
there have been more than 40 transactions in the construction industry since    
January 1992, most of these transactions have been small or have involved       
private companies or the subsidiaries of public companies. As a result, limited 
information was available for review and Schroder Wertheim did not view these   
transactions as being helpful for determining a valuation of IMA. Schroder      
Wertheim reviewed the prices and multiples paid in twelve recent acquisitions of
industrial manufacturing companies. Such transactions had implied multiples     
which ranged from 0.6x to 1.6x LTM revenues, 6.7x to 17.3x LTM operating income,
and 5.1x to 11.7x LTM operating cash flow. Applying these multiples to IMA's LTM
result, the IMA per share equity value ranged from $9.51 to $14.49.             

  Discounted Cash Flow Analysis.  Schroder Wertheim used a discounted cash
flow analysis to estimate the present value of IMA's future cash flows based    
upon five-year financial forecasts prepared by IMA                              

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management. Schroder Wertheim calculated the estimated present value of the cash
flows of IMA as the sum of (i) the aggregate discounted cash flow (using various
discount rates based on a weighted average cost of capital) for each of the     
fiscal years 1995 through 1999, plus (ii) the discounted value (using various   
discount rates based on a weighted average cost of capital) of the estimated    
"terminal value" (or value of the cash flow in fiscal years after 1999),        
determined by applying multiples to IMA's operating cash flow. Applying terminal
multiples ranging from 5.0x to 7.0x and using discount rates ranging from 14.0% 
to 16.0%, the IMA per share equity value ranged from $11.79 to $18.24.          

    The terms of the engagement of Schroder Wertheim by the Board of Directors
of IMA are set forth in a letter agreement, dated August 30, 1994, between      
Schroder Wertheim and IMA (the "IMA Engagement Letter"). Pursuant to the terms  
of the IMA Engagement Letter, IMA agreed to pay Schroder Wertheim, in           
consideration of certain advisory services with respect to a business           
combination involving IMA, a fee equal to the sum of 0.875% of the Aggregate    
Consideration (as defined in the IMA Engagement Letter). IMA also agreed to     
reimburse Schroder Wertheim for its reasonable out-of-pocket expenses. In       
connection with the IMA Engagement Letter IMA agreed to indemnify Schroder      
Wertheim against certain liabilities relating to or arising out of its          
engagement, including liabilities under federal securities laws.                

INTERESTS OF CERTAIN PERSONS IN THE MERGER AND RELATED TRANSACTIONS             

     In considering the recommendations of the Board of Directors of ITI and the
Board of Directors of IMA with respect to the Merger Agreement and related      
matters, ITI Stockholders and IMA Stockholders should be aware that certain     
members of ITI's and IMA's respective managements or their respective Boards of 
Directors have certain interests that are described below that may present them 
with actual or potential conflicts of interest in connection with the Merger    
Agreement and the transactions contemplated thereby.                            

    New Directors of ITI.  As more fully described under "-- Management of ITI
Following Consummation of the Merger" below, all ten of ITI's current directors,
Messrs. Biddelman, Chick, Chandler, Gorham, Krugman, Richard, Roth, Spengler,   
Weinig and Wight, will remain on ITI's Board of Directors following the         
Effective Time and three of IMA's current directors, Messrs. Kalishman,         
Affholder and Siteman, will become ITI directors as of the Effective Time. ITI  
has agreed that during the period from the Effective Time to December 9, 1998,  
ITI shall nominate and recommend such persons for re-election to the ITI Board  
of Directors upon expiration of their respective terms.                         

    Employment and Consulting Agreements.  Pursuant to the terms of the Merger
Agreement, at the Effective Time ITI will enter into agreements with Messrs.    
Kalishman and Affholder, the Chairman and President of IMA, respectively,       
containing the terms of their continuing relationship with ITI. ITI and Mr.     
Kalishman will enter into an agreement under which Mr. Kalishman will serve as  
Vice Chairman of the Board of Directors of ITI, for a term commencing at the    
Effective Time and expiring on December 9, 1998, at an annual salary of         
$100,000. In addition, at the Effective Time ITI will enter into a consulting   
agreement with Mr. Kalishman pursuant to which ITI will engage Mr. Kalishman as 
a consultant in connection with the business of ITI, for a two-year term at an  
annual fee of $150,000. Such agreements are terminable by Mr. Kalishman at any  
time upon at least 60 days' written notice. Pursuant to the terms of the Merger 
Agreement, ITI will also enter into an employment agreement with Mr. Affholder  
under which Mr. Affholder will serve initially as chief operating officer for   
ITI's North American contracting operations and thereafter in such other        
executive staff position as may be designated by ITI, for a three-year term at  
an annual salary of $250,000. Each of Messrs. Kalishman and Affholder will also 
enter into non-competition agreements with ITI, extending from the Effective    
Time until the later of five years thereafter or two years after all service to 
ITI has ended.                                                                  

IMA Stock Options.  At the Effective Time, all outstanding options to 
acquire IMA Class A Common Stock under IMA's Stock Option Plan will be assumed  
by ITI upon the same terms and conditions as contained under such plan, except  
that each such option will be exercisable for that number of shares of ITI      
Common Stock into which the number of shares of IMA Class A Common Stock subject
to such option immediately prior to the Effective Time would be convertible in  
the Merger if such shares were outstanding at                                   

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the Effective Time, and the exercise price per share will be calculated as more 
fully described under "-- Basic Terms of Merger Agreement -- IMA Stock Options" 
below.                                                                          

   Indemnification of Officers and Directors of IMA.  Pursuant to the Merger
Agreement, from and after the Effective Time ITI will, to the extent permitted  
by the Delaware law, honor all obligations of IMA pursuant to IMA's certificate 
of incorporation, by-laws and agreements with certain directors, which provide  
in various respects for indemnification of officers and directors of IMA with   
respect to events occurring prior to the Effective Time.                        

 Registration Rights.  Pursuant to the Merger Agreement, ITI has entered
into a registration rights agreement with Mr. Affholder and Xanadu Investments, 
L.P., pursuant to which ITI is, under certain circumstances, required to use its
reasonable best efforts to effect a registration under the Securities Act of    
shares of ITI Common Stock held by such parties and their affiliates. See       
"-- Registration Rights Agreement" below.                                       

A-Y-K-E Equipment Agreement.  The obligations of ITI and ITI Sub to   
consummate the transactions contemplated by the Merger Agreement and to effect  
the Merger are subject, among other conditions, to the modification, upon terms 
reasonably satisfactory to ITI, of the tunneling equipment lease between IMA and
A-Y-K-E Partnership, a partnership of which Messrs. Kalishman and Affholder are 
partners. Such arrangements cover equipment held by such partnership for lease  
both to IMA and other parties, as available, and are currently terminable upon  
30 days' notice by either such partnership or IMA. The modification of such     
arrangements may entail (i) the purchase, at fair market value determined by an 
independent appraiser qualified in such matters and reasonably satisfactory to  
ITI, of such equipment, (ii) the long-term lease of such equipment, at fair     
market rental rates determined by such an appraiser, which at the option of ITI 
may be on a non-exclusive basis and from time to time, and terminable by IMA on 
the same or substantially similar basis as is contained in the arrangements     
currently in effect or (iii) certain other modifications of the arrangements    
currently in effect.                                                            

    Acceleration of Certain ITI Options.  In connection with the acceptance of
employment as President and Chief Executive Officer of ITI by Mr. Richard, in   
1993 ITI granted to Mr. Richard a five-year option to purchase up to 300,000    
shares of ITI Common Stock, exercisable with respect to up to 50,000 shares upon
commencement of employment and with respect to the remainder of such shares on  
the third anniversary thereof. At the Effective Time, however, in accordance    
with its terms, such option will become exercisable with respect to all shares  
covered thereby upon the election of a Board of Directors of ITI other than     
pursuant to the arrangements entered into by ITI upon its acquisition in        
December 1992 of Insituform Group Limited.                                      

     Ringwood Loan.  On July 3, 1992, ITI restructured a loan previously made to
Ringwood Limited ("Ringwood"), a member of the Ringwood Group, comprised of     
Ringwood, Parkwood Limited, as trustee of the Anthony Basmadjian "P" Settlement,
Barford Limited, as trustee of the Anthony Basmadjian Settlement, and Douglas K.
Chick and Brian Chandler, both directors of ITI. The outstanding loan, evidenced
by Ringwood's non-recourse promissory note in the principal amount of           
$3,624,842.40 executed to ITI, is secured by 255,801 shares of ITI Common Stock 
beneficially owned by Ringwood and Messrs. Chandler and Chick, and was          
originally due July 3, 1995. On May 21, 1995, such loan was extended by one year
because legal restrictions prevented members of the Ringwood Group from selling 
sufficient shares of ITI stock to be able to repay the loan, and the value of   
such security was less than the amount of the outstanding indebtedness.         

     Consent of IMA's Bank Lenders.  Under IMA's existing credit facilities, the
consent of The Boatmen's National Bank of St. Louis ("Boatmen's") and Mark Twain
Bank ("Mark Twain") will be required in connection with the Merger. Alvin J.    
Siteman, an IMA director who has been designated to become a director of ITI at 
the Effective Time, is the largest shareholder and Chairman of the Board of the 
parent of Mark Twain. Lee M. Liberman, an IMA director, serves as a director of 
the parent of Boatmen's. See "IMA -- Management's Discussion and Analysis of    
Financial Condition and Results of Operations -- Liquidity and Capital          
Resources" below for a description of IMA's current credit facilities and       
"ITI -- Management's Discussion and Analysis of Financial Condition and Results 
of Operations -- Liquidity and Capital Resources" below for a description of    
additional facilities under discussion by ITI which would refinance IMA's       
long-term indebtedness to such banks, in which such banks may participate.      

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BASIC TERMS OF MERGER AGREEMENT                                                 

The Merger; Conversion Ratio.  Pursuant to the terms of the Merger    
Agreement, each share of IMA Class A Common Stock outstanding immediately prior 
to the Effective Time will, by virtue of the Merger, be converted into the right
to receive 1.15 fully paid and non-assessable shares of ITI Common Stock;       
provided that IMA Stockholders will receive cash in lieu of fractional shares of
ITI Common Stock as described in "-- Exchange Procedure; Treatment of Fractional
Shares" below. The market value of the shares of ITI Common Stock to be received
by IMA Stockholders is subject to fluctuation and, at the consummation of the   
Merger, may be more or less than the current fair market value of such shares.  
At the Effective Time, ITI Sub will be merged into and with IMA, the separate   
corporate existence of ITI Sub will cease and IMA will continue as the surviving
corporation, as a wholly-owned subsidiary of ITI. From and after the Effective  
Time, IMA, as the surviving corporation, will possess all the assets, rights,   
privileges, immunities and franchises and be subject to all of the liabilities, 
obligations and penalties of IMA and ITI Sub, as provided under Delaware law.   

     IMA Stock Options.  At the Effective Time, all options to acquire IMA Class
A Common Stock which are outstanding at the Effective Time under IMA's Stock    
Option Plan will be assumed by ITI upon the same terms and conditions as        
contained under such plan, except that: (i) each such option will be exercisable
for that number of shares of ITI Common Stock (rounded to the nearest whole     
share) into which the number of shares of IMA Class A Common Stock subject to   
such option immediately prior to the Effective Time would be convertible in the 
Merger if such shares were outstanding at the Effective Time, and (ii) the      
option price per share of ITI Common Stock will be an amount obtained by        
dividing (x) the exercise price per share in effect on such date times the      
number of shares of IMA Class A Common Stock previously covered by such option, 
by (y) the number of shares of ITI Common Stock covered by the option as so     
assumed.                                                                        

Effective Time of the Merger.  The Merger Agreement provides that the 
Merger will become effective at the time a certificate of merger is duly filed  
with the Secretary of State of Delaware. The time at which the Merger will      
become effective is referred to herein as the "Effective Time." Such filing,    
together with all other filings or recordings required by Delaware law in       
connection with the Merger, will be made within ten business days after the     
approval by the stockholders of each of ITI and IMA of the Merger Agreement and 
the satisfaction or, to the extent permitted under the Merger Agreement, waiver 
of all conditions to the Merger contained in the Merger Agreement (except that  
ITI may delay closing for up to 15 business days in order to effectuate the     
restructurings referenced under "-- Restructuring Transactions" below).         

     Exchange Procedure; Treatment of Fractional Shares.  Prior to the Effective
Time, ITI Sub will designate American Stock Transfer and Trust Company, or, at  
its election a bank or trust company or similar entity, reasonably satisfactory 
to IMA, which is authorized to act as the exchange agent in the Merger (the     
"Exchange Agent"). As soon as possible after the Effective Time but no later    
than 15 days after the Effective Time, the Exchange Agent will send a notice and
letter of transmittal to each record holder of IMA Class A Common Stock         
outstanding immediately prior to the Effective Time, advising such record holder
of the terms of the exchange effected by the Merger and the procedure for       
surrendering to the Exchange Agent such record holder's certificate(s)          
evidencing IMA Class A Common Stock for exchange for shares of ITI Common Stock.
Upon surrender to the Exchange Agent of all of a record holder's certificate(s) 
formerly representing IMA Class A Common Stock, together with a duly executed   
letter of transmittal, the certificate(s) will be cancelled and such holder will
be entitled to receive in exchange therefor a certificate evidencing the number 
of full shares of ITI Common Stock for which the IMA Class A Common Stock       
theretofore represented by the certificate(s) so surrendered shall have been    
exchanged.                                                                      

   No fractional shares of ITI Common Stock will be issued in the Merger. In
lieu of issuing certificates for fractional shares of ITI Common Stock, the     
Exchange Agent will, on behalf of all holders of such fractional shares, on or  
before the tenth day following the Effective Time, aggregate all such fractional
shares and sell the resulting shares of ITI Common Stock for the accounts of    
such holders, and such holders will thereafter be entitled to receive, on a pro 
rata basis, the net proceeds of the sale of such shares of ITI Common Stock,    
without interest thereon, upon surrender of all such holders' certificates for  
exchange.                                                                       

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No dividend or other distribution payable to holders of record of ITI 
Common Stock as of any date subsequent to the Effective Time will be paid to the
holders of outstanding certificates formerly representing IMA Class A Common    
Stock until such certificates are so surrendered. All such dividends and        
distributions will be accrued and paid, without interest, to the record holder  
of the ITI Common Stock for which certificates are delivered, upon such         
surrender.                                                                      

   Any holder of IMA Class A Common Stock, other than an officer or director
of IMA or holder of more than 5% of the IMA Class A Common Stock, may request   
that certificates evidencing shares of ITI Common Stock to be issued or any cash
payment to be made upon surrender of IMA Class A Common Stock be issued or paid 
in a name other than that in which the certificate is registered. If any        
certificate evidencing shares of ITI Common Stock is to be issued in a name     
other than that in which the certificate surrendered in exchange therefor is    
registered or if any payment of cash is to be made to a person other than the   
person in whose name such certificate is registered, the certificate so         
surrendered must be properly endorsed and otherwise in proper form for transfer 
and the person requesting the exchange must either (i) pay to the Exchange Agent
any transfer or other taxes required by reason of such issuance or (ii)         
establish to the satisfaction of the Exchange Agent that such transfer or other 
taxes have been paid or are not applicable.                                     

 Certain Covenants.  IMA has agreed that, during the period prior to the
Effective Time (except to the extent that ITI shall otherwise agree in writing),
IMA will and will cause each of its subsidiaries to: (a) make no purchase, sale,
or lease in respect of, nor introduce any method of management or operation in  
respect of, its business or its assets and properties, except in a manner       
consistent with prior practice and as set forth in IMA's capital expenditure    
budget provided to ITI, except as expressly permitted by the Merger Agreement;  
(b) maintain, preserve, and in no way further encumber its assets and properties
other than in the ordinary course of business consistent with past practice, and
not enter into any agreement to effectuate the foregoing after the Effective    
Time; (c) use its best efforts: (i) to preserve its present business            
organization intact, (ii) to keep available the services of the present         
employees assigned to it, and (iii) to preserve its present relationships with  
entities or persons having business dealings with IMA or any of its             
subsidiaries, in each case except as set forth in the Merger Agreement; (d)     
maintain its books and records in accordance with good business practices, on a 
basis consistent with prior practice; (e) comply in all material respects with  
all laws, rules, regulations, writs, statutes, ordinance, judgments,            
injunctions, decrees, determinations, awards, and other orders of every court,  
government and governmental agency and instrumentality, domestic or foreign,    
applicable to it and to the conduct of its business and perform in all material 
respects all its obligations without default; (f) not incur, or agree to incur, 
any indebtedness for money borrowed, except in the ordinary course of business  
and, to the extent set forth in the Merger Agreement, under its existing line of
credit with Boatmen's and Mark Twain, or issue any bond, debenture, note, or    
similar obligation, or any guarantee any obligation of any person or entity,    
except for guarantees of construction performance bonds in the ordinary course  
of business; (g) not mortgage, pledge, or subject to lien any of its assets and 
properties, other than existing encumbrances; (h) not make any loans, advances  
or contributions to, or investments in, or guarantees of, any other person      
(other than as permitted by the Merger Agreement), and not acquire any shares of
ITI Common Stock; (i) maintain and pay all premiums with respect to all policies
of insurance relating to its business, and its assets and properties, as are    
presently held in its name and timely renew all such policies or substitute     
substantially similar coverage therefor; (j) except as permitted by the Merger  
Agreement, not make any change adverse to it in any material respect in the     
terms of any principal agreement (nor approve, amend or modify any agreement to 
which an insider is a party); (k) not make any capital expenditure (including,  
without limitation, expenditures for property, plant and equipment) or          
appropriations or commitments with respect thereto, except to the extent of the 
total dollar amount and, to the extent indicated therein, at the times set forth
in IMA's capital expenditure budget; (l) not acquire or agree to acquire by     
merging or consolidating with, or by purchasing a substantial equity interest in
or substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, association or other business      
organization or division thereof or otherwise acquire or agree to acquire any   
assets outside the ordinary course of business consistent with past practice,   
except as permitted by the Merger Agreement; (m) not amend, modify, supplement, 
or in any way change in any material respect any plan or arrangement established
for the benefit of its employees; (n) not enter into any license or sublicense  
agreement or other arrangement conferring any rights to utilize any intellectual
property the rights to which are held by IMA or any subsidiary; (o) not settle  

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or compromise any litigation involving the payment of, or an agreement to pay   
over time an amount in cash, notes, or other property, except as permitted by   
the Merger Agreement; (p) not pay, discharge or satisfy claims, liabilities or  
obligations (absolute, accrued, contingent or otherwise and whether due or to   
become due) which involve payments or commitments to make payments exceeding    
$100,000 in the aggregate, other than (i) liabilities or obligations incurred in
the ordinary course of business and consistent with past practice, and (ii)     
scheduled repayments of current portions of and interest on long term           
indebtedness or repayments under existing revolving credit agreements; (q) not  
take any action in furtherance of the utilization for commercial purposes of the
additional facilities planned for construction in Chesterfield, Missouri, nor   
acquire nor install any equipment or machinery on any such property, nor take   
any action in furtherance of any loan arrangements heretofore contemplated in   
connection with such facilities, without the prior consent of ITI in each case, 
it being understood that, without the consent of ITI, IMA will be permitted to  
complete construction of such facility in accordance with the plans contemplated
by IMA's capital expenditure budget (without the contemplated tower and         
manufacturing equipment) and IMA will be permitted to acquire (but not install) 
manufacturing equipment which it has ordered; and (r) not take any action or    
fail to take any action which would result in any breach of any of its          
representations, warranties or covenants contained under the Merger Agreement.  

    In addition, IMA has agreed that, during the period prior to the Effective
Time (except to the extent that ITI shall otherwise agree in writing), it will  
not and will cause each of its subsidiaries not to: (a) except as permitted     
under the Merger Agreement, make or propose any change to their respective      
certificates of incorporation or by-laws (or similar documents); or (b) except  
as permitted under the Merger Agreement, issue, grant, sell or encumber any     
shares of their capital stock, or any security, option, warrant, put, call,     
subscription or other right of any kind, fixed or contingent, that directly or  
indirectly calls for the acquisition, issuance, sale, pledge or other           
disposition of any shares of capital stock or other equity interest, enter into 
any agreement, commitment or understanding calling for any such transaction or  
make any other changes in their equity capital structure; (c) split, combine or 
reclassify any of its capital stock; (d) except for any payment of regular      
semi-annual cash dividends at a rate not to exceed its present dividend rate,   
declare, set aside or pay any dividend on or make any other distribution        
(whether in cash, stock, securities, indebtedness, rights or property or any    
combination thereof) in respect of any shares if its capital stock or other     
equity interests, or redeem or otherwise acquire any shares of the capital stock
of IMA.                                                                         

  IMA has also agreed that none of IMA or any of its subsidiaries or their
respective officers, directors, employees, agents or representatives will,      
directly or indirectly, initiate, solicit or encourage discussions, inquiries or
proposals or, participate in any negotiation or discussion, for the purpose of  
or with the intention of leading to any proposal concerning any merger,         
consolidation or other business combination involving IMA or any subsidiary of  
IMA or any acquisition of any equity interest in or a material portion of the   
assets of IMA or any subsidiary of IMA, taken as a whole, except for the Merger 
Arrangement, unless the Board of Directors of IMA, based on the written opinion 
of counsel, determines that the exercise of its fiduciary responsibilities      
requires that such information be furnished or such negotiations be commenced.  

   ITI has agreed that during the period prior to the Effective Time (except
to the extent that IMA shall otherwise agree in writing), ITI will and will     
cause each of its subsidiaries to: (a) make no purchase, sale, or lease in      
respect of, nor introduce any method of management or operation in respect of,  
its business or its assets and properties, except in a manner in all material   
respects consistent with prior practice; (b) use its best efforts: (i) to       
preserve its present business organization intact, and (ii) to preserve its     
present relationships with entities or persons having business dealings with ITI
or any of its subsidiaries, in each case except insofar as permitted by the     
Merger Agreement; (c) maintain its books and records in accordance with good    
business practices, on a basis consistent with prior practice; and (d) maintain 
in all material respects the current character of the business of ITI and its   
subsidiaries, taken as a whole, except as expressly permitted under the Merger  
Agreement and not enter into any agreement to effectuate the foregoing after the
Effective Time.                                                                 

  In addition, ITI has agreed that, prior to the Effective Time, except as
permitted by the Merger Agreement or to the extent IMA shall otherwise consent  
in writing, it will not (i) issue, grant, sell or encumber any shares of its    
capital stock, or any security, option, warrant, put, call, subscription or     
other right of any kind, fixed or contingent, that directly or indirectly calls 
for the acquisition, issuance, sale, pledge or                                  

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other disposition of any shares of capital stock of ITI, enter into any         
agreement, commitment or understanding calling for any such transaction or make 
any other changes in its equity capital structure, except, in all such cases for
(A) issuances or grants of options to purchase shares of ITI Common Stock       
pursuant to any option plan of ITI in effect or pursuant to any options or      
warrants outstanding and (B) any transaction or transactions relating directly  
or indirectly (through issuance, grant or sale of rights, warrants, options or  
otherwise) to the issuance of up to an aggregate number of shares of ITI Common 
Stock which would not, without reference to any transaction or transactions, or 
issuance, prior to the date of the Merger Agreement, or any of the foregoing    
permitted transactions, require the filing of a Report on Form 10-C under the   
rules of the Commission, or (ii) split, combine or reclassify any shares of its 
capital stock, declare, set aside or pay any dividend or other distribution     
(whether in case, stock, securities, indebtedness, rights or property or any    
combination thereof) in respect of any shares of its capital stock or other     
equity interests, or redeem or otherwise acquire any shares of its capital stock
or other equity interests.                                                      

    Restructuring Transactions.  IMA has agreed that, following the receipt of
approvals by the ITI Stockholders and the IMA Stockholders of the Merger        
Agreement and the transactions contemplated thereby, IMA will effect such       
restructurings of IMA's subsidiaries and transfers of the assets and liabilities
of IMA and its subsidiaries that are requested by ITI. ITI has agreed to        
indemnify IMA and its subsidiaries against any out-of-pocket costs and tax      
liabilities arising out of any such restructurings and transfers in the event   
that the Merger and the other transactions contemplated by the Merger Agreement 
are not consummated.                                                            

Representations and Warranties.  ITI and IMA have made a number of    
representations and warranties to one another. IMA has made representations and 
warranties to ITI concerning, among other things, organization, good standing   
and qualification to do business, corporate power and authority, conflicts,     
capitalization, subsidiaries, securities filings, financial statements, absence 
of undisclosed liabilities, absence of material adverse effects,                
pooling-of-interests accounting treatment, taxes, title, property, contracts,   
employee compensation and benefits, labor relations, insurance, intellectual    
property and technology, disputes and litigation, environmental matters,        
interest of insiders, supplies and inventory, licenses and franchises. ITI has  
made representations and warranties to IMA concerning, among other things,      
organization, good standing and qualification to do business, conflicts,        
capitalization, corporate power and authority, financial statements, securities 
filings, absence of undisclosed liabilities, absence of material adverse        
effects, disputes and litigation, interests of insiders and pooling-of-interests
accounting treatment.                                                           

  Conditions to Consummation of the Merger.  The respective obligations of
each of ITI, ITI Sub and IMA to consummate the transactions contemplated by the 
Merger Agreement and to effect the Merger are subject to the satisfaction or    
waiver, if permissible by law, at or prior to the Effective Time of the         
following conditions: (a) the waiting period applicable to the consummation of  
the transactions contemplated by the Merger Agreement required under the        
Hart-Scott-Rodino Antitrust Improvements Act of 1976 shall have expired or been 
terminated (see "-- Government and Regulatory Matters" below for information    
concerning early termination of such period on June 26, 1995); (b) the Merger   
Agreement, the Merger and the transactions contemplated therein shall have been 
duly approved and adopted by the requisite vote of the respective stockholders  
of ITI and IMA in accordance with applicable law and the rules promulgated by   
the National Association of Securities Dealers, Inc.; (c) the proposed          
Capitalization Amendment and the proposed Board Vacancy Amendment, which are    
contemplated by the Merger Agreement, shall have been approved by the requisite 
vote of ITI Stockholders entitled to vote thereon and duly filed in accordance  
with the requirements of Delaware law; (d) the amendments to ITI's By-Laws as   
contemplated in the Merger Agreement shall have been adopted by the Board of    
Directors of ITI; (e) the registration statement filed with the Commission with 
respect to shares of ITI Common Stock to be issued in the Merger shall be       
effective as of the date (the "Closing Date") of the closing (the "Closing") of 
the transactions contemplated by the Merger Agreement and as of the Effective   
Time, and no stop order suspending the effectiveness of the registration        
statement or similar restraining order shall have been threatened or initiated  
by the Commission or any state or foreign securities administrator; (f) ITI     
shall have received an opinion from BDO Seidman, LLP, dated the Closing Date, in
form and substance reasonably satisfactory to ITI and to IMA, to the effect that
the transactions contemplated by the Merger Agreement and the Merger will       
qualify for pooling-of-interests                                                

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accounting treatment under generally accepted accounting principles; (g) at or  
prior to the Effective Time, all of the shares of IMA Class B Common Stock      
issued and outstanding immediately prior to the Effective Time shall have been  
converted into shares of IMA Class A Common Stock on a share-for-share basis in 
accordance with IMA's Certificate of Incorporation, as currently in effect; (h) 
no order, stay, judgment, injunction or decree shall have been issued and be in 
effect by any court restraining or prohibiting the consummation of the          
transactions contemplated in the Merger Agreement and no statute, rule or       
regulation shall have been promulgated or enacted by any foreign or United      
States federal or state government, governmental authority or governmental      
agency, which would prevent or make illegal the consummation of the transactions
contemplated in the Merger Agreement including the Merger; (i) IMA shall have   
received from counsel to IMA, an opinion, dated the Closing Date, in form and   
substance reasonably satisfactory to IMA and to ITI and its counsel, to the     
effect that the Merger will be treated for federal income tax purposes as a     
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of  
the Internal Revenue Code of 1986, as amended (the "Code"), and that ITI, ITI   
Sub and IMA will each be a party to that reorganization within the meaning of   
Section 368(b) of the Code; and (j) ITI's Board of Directors and its offices    
shall have been expanded and filled, respectively, as set forth under the Merger
Agreement.                                                                      

The obligations of ITI and ITI Sub to consummate the transaction      
contemplated by the Merger Agreement and to effectuate the Merger are also      
subject to the satisfaction or waiver, if permissible by law, of certain        
conditions, including the following: (a) the representations and warranties of  
IMA contained in the Merger Agreement shall be true and correct in all material 
respects at and as of the Closing Date with the same effect as through all such 
representations and warranties were made at and as of the Closing Date, and IMA 
shall have complied with all of its covenants contained in the Merger Agreement 
in all material respects; (b) ITI shall have received assurances, reasonably    
satisfactory to it, that at and after the Effective Time, and except as         
permitted by the Merger Agreement, there shall not exist any security, option,  
warrant, right, put, call, subscription, agreement, commitment, understanding or
claim of any kind, fixed or contingent, that directly or indirectly calls for   
IMA or any of its subsidiaries to acquire, issue, deliver or sell, or to cause  
to be acquired, issued, delivered or sold, any shares of the capital stock of or
equity interest in IMA or any subsidiary or obligating IMA or any subsidiary to 
grant, extend or enter into any of the foregoing; (c) the holders of not more   
than 5% of the outstanding shares of IMA Class A Common Stock shall, at the     
Closing Date, be entitled to demand payment of the fair value of their shares as
dissenting shareholders (see "Information Concerning the Meetings -- Dissenters'
Rights" above for a discussion of the absence of such rights in the Merger under
applicable Delaware law); (d) all notices to, and declarations, filings and     
registrations with, and consents, authorizations, approvals and waivers from,   
governmental and regulatory bodies required to consummate the transactions      
contemplated by the Merger Agreement shall have been made or obtained, and all  
other notices, consents or waivers with respect to the transactions contemplated
by the Merger Agreement shall have been made or obtained; (e) ITI shall have    
received the resignations of all such officers and directors of IMA and each    
subsidiary of IMA requested by it; and (f) no action, suit or proceeding against
any party hereto relating to the consummation of any of the transactions        
contemplated in the Merger Agreement or any governmental action seeking to delay
or enjoin any such transactions shall be pending or threatened and no           
investigation by any governmental or regulatory body shall have been commenced  
(and be pending), seeking to restrain or prohibit (or questioning the validity  
or legality of) the consummation of the transactions contemplated by the Merger 
Agreement, including the Merger, or seeking material damages in connection      
therewith which ITI, in good faith and with the advice of ITI's counsel,        
reasonably believes makes it undesirable to proceed with the consummation of the
transactions contemplated by the Merger Agreement. See also "-- Interests of    
Certain Persons in the Merger and Related Transactions" above for a discussion  
of the agreements intended with, respectively, Messrs. Kalishman and Affholder  
and the treatment of certain equipment owned by a partnership of such persons.  

   The obligations of IMA to consummate the transactions contemplated by the
Merger Agreement and to effectuate the Merger are also subject to the           
satisfaction or waiver, if permissible by law, of certain conditions, including 
the following: (a) the representations and warranties of ITI and ITI Sub        
contained in the Merger Agreement shall be true and correct in all material     
respects at and as of the Closing Date with the same effect as though all such  
representations and warranties were made at and as of the Closing Date, and ITI 
and ITI Sub shall have complied with their respective covenants contained under 
the Merger Agreement in all                                                     

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material respects; and (b) no action, suit or proceeding against any current    
director of IMA relating to the consummation of any of the transactions         
contemplated in the Merger Agreement, and seeking material damages in connection
therewith, shall be pending or threatened which IMA, in good faith and with the 
advice of IMA's counsel, reasonably believes makes it undesirable to proceed    
with the consummation of the transactions contemplated by the Merger Agreement. 
See "-- Interests of Certain Persons in the Merger and Related Transactions"    
above for a discussion of the agreements intended with, respectively, Messrs.   
Kalishman and Affholder and certain director indemnification arrangements.      

   Amendments.  At any time prior to the Effective Time, the parties may, by
written agreement, make any modification or amendment of the Merger Agreement   
approved by their respective boards of directors; provided, that, the Conversion
Ratio may not be amended or modified without the approval of holders of the IMA 
Class A Common Stock at any time after such holders have approved the Merger    
Agreement, and any such amendments will conform to the requirements of Delaware 
law.                                                                            

Termination.  The Merger Agreement may be terminated and the Merger   
abandoned at any time prior to the Effective Time, whether prior to or after    
approval by the stockholders of either IMA or ITI, by the consent of the parties
thereto, or by either IMA or ITI if: (i) the other party shall have breached in 
any material respect any of its representations or warranties contained in the  
Merger Agreement; (ii) any such representation or warranty shall not be correct 
or accurate in all material respects at and as of the Closing Date with the same
effect as if made at such time; (iii) the other party shall have failed to      
comply in all material respects with any of its covenants or agreements         
contained in the Merger Agreement to be complied with or performed by it at or  
prior to the Closing Date; (iv) at the stockholders meeting (including any      
adjournment or postponement thereof) of the other party, or any successor       
meeting called for the same purpose, the requisite affirmative approval of the  
stockholders of the other party shall not have been obtained; (v) if a permanent
injunction is entered, enforced or deemed applicable to the Merger Agreement    
which prohibits the consummation of the transactions contemplated thereby and   
all appeals of such injunction shall have been taken and shall have been        
unsuccessful; (vi) if any governmental entity, the consent of which is a        
condition to the obligation of such party to consummate the transactions        
contemplated thereby, shall have determined not to grant its consent and all    
appeal of such determination shall have been taken and shall have been          
unsuccessful; or (vii) the Closing shall not have occurred on or prior to       
January 31, 1996.                                                               

   Cooperation Agreement.  The Merger Agreement, as supplemented by a letter
agreement dated May 23, 1995 (the "Litigation Agreement") between ITI and IMA,  
continues the moratorium on further assertion of any rights in dispute as a     
result of the consummation of the Enviroq Acquisition by IMA without consent of 
ITI, except for certain procedural steps to preserve the respective rights of   
the parties. See "-- Background" above. Under the Litigation Agreement, the     
parties to the Declaratory Action submitted a joint motion seeking to stay all  
proceedings until January 31, 1996 or the earlier termination of the Merger     
Agreement. The motion was granted by order dated July 5, 1995.                  

MANAGEMENT OF ITI FOLLOWING CONSUMMATION OF THE MERGER                          

 If the Merger Agreement, and the transactions contemplated thereby, are
approved by the ITI Stockholders and the conditions to the parties' obligations 
under the Merger Agreement are satisfied or waived, ITI has agreed that its     
Board of Directors will be expanded as of the Effective Time to include the     
following persons: William Gorham, Alvin J. Siteman, Silas Spengler and Sheldon 
Weinig, for a term expiring at the 1996 Annual Meeting of Stockholders of ITI   
("Merger Class I Directors"); Robert W. Affholder, Paul A. Biddelman, Douglas K.
Chick and Steven Roth, for a term expiring at the 1997 Annual Meeting of        
Stockholders of ITI ("Merger Class II Directors"); and Brian Chandler, Jerome   
Kalishman, James D. Krugman, Jean-Paul Richard and Russell B. Wight, Jr., for a 
term expiring at the 1998 Annual Meeting of Stockholders of ITI ("Merger Class  
III Directors"). Other than Mr. Richard, the directors are grouped as follows:  
(i) Messrs. Biddelman, Chandler, Chick, Krugman and Spengler constitute the "INA
Group;" (ii) Messrs. Gorham, Roth, Weinig and Wight constitute the "IGL Group;" 
and (iii) Messrs. Affholder, Kalishman and Siteman constitute the "IMA Group."  
The INA Group and the IGL Group, together with Mr. Richard, comprise the current
Board of Directors of ITI, and the IMA Group has been designated for appointment
by IMA. ITI has further agreed that, during the Term, ITI will nominate and     
recommend for re-election to the ITI Board of Directors, upon expiration of     
their terms, the Merger Class I Directors, the                                  

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Merger Class II Directors and the Merger Class III Directors. If, during the    
Term, any director resigns or is unable to serve for any reason, such vacancy   
will be filled with a designee chosen by the remaining members of that          
director's group and thereafter ITI will nominate and recommend such designee   
for election to the Board of Directors of ITI.                                  

     At the Effective Time, ITI will enter into an agreement with Mr. Kalishman,
under which he will serve as Vice Chairman of ITI during the Term, and will also
enter into a three-year employment agreement with Mr. Affholder, under which he 
will initially serve as chief operating officer for ITI's North American        
contracting operations. See "-- Interests of Certain Persons in the Merger"     
above.                                                                          

RESALES OF ITI COMMON STOCK                                                     

The shares of ITI Common Stock to be issued to IMA Stockholders in    
connection with the Merger may be traded freely and without restriction by those
IMA Stockholders who are not deemed to be "affiliates" of either IMA or ITI     
within the meaning of Rule 145 promulgated under the Securities Act ("Rule      
145"). Persons who may be deemed to be affiliates of IMA generally include      
individuals or entities that control or are controlled by, or are under common  
control with IMA and may include certain officers and directors of IMA, as well 
as principal IMA Stockholders. Affiliates may resell shares of ITI Common Stock 
only in transactions permitted by Rule 145, pursuant to an effective            
registration statement under the Securities Act or in transactions otherwise    
exempt from registration. This Joint Proxy Statement/Prospectus does not cover  
resales of ITI Common Stock received by any person who may be deemed an         
affiliate of IMA. IMA has caused to be delivered to ITI a written agreement in  
the form included as Exhibit J to the Merger Agreement attached hereto as Annex 
A (a "Rule 145 Letter") from each person who may be deemed to be an affiliate to
the effect that no disposition of ITI Common Stock received pursuant to the     
Merger Agreement will be made except in accordance with applicable provisions of
the Securities Act and the rules and regulation promulgated thereunder. The     
certificates evidencing the shares of ITI Common Stock received by such persons 
who may be deemed affiliates of IMA pursuant to the Merger Agreement will bear a
legend setting forth such restrictions.                                         

REGISTRATION RIGHTS AGREEMENT                                                   

    ITI has entered into a Registration Rights Agreement dated as of September
1, 1995 (the "Registration Rights Agreement"), with Robert W. Affholder and     
Xanadu Investments, L.P. (the "Registration Rights Stockholders"). Mr. Affholder
and Xanadu Investments, L.P. represent all parties known to ITI and IMA who may 
be deemed affiliates and who would be unable to dispose of all of their shares  
of ITI Common Stock issued in connection with the Merger within the volume      
limitations of Rule 144 promulgated under the Securities Act. The Registration  
Rights Agreement will become effective on the date of the first publication of  
operating results of ITI covering at least a 30-day period after the Effective  
Time and all registration rights granted pursuant to the Registration Rights    
Agreement will terminate on December 9, 1998.                                   

 The Registration Rights Agreement provides that any Registration Rights
Stockholder may make a written request for registration under the Securities Act
(a "Demand Registration") of all or part, but no less than 500,000, of the      
shares of ITI Common Stock owned beneficially by it or by its affiliates (the   
"Registrable Securities"). However, ITI shall not be obligated (i) to effect    
more than one Demand Registration for each Registration Rights Stockholder and  
its affiliates unless ITI qualifies and is entitled to use a registration       
statement on Form S-3, in which case each Registration Rights Stockholder shall 
be entitled to a total of three Demand Registrations, (ii) to effect a Demand   
Registration for fewer than 500,000 shares of ITI Common Stock, (iii) to effect 
a Demand Registration if such written request is given after December 9, 1998,  
(iv) to effect a Demand Registration for any Registrable Securities if, in the  
written opinion of counsel to ITI, such Registrable Securities could, within    
three months of the date of a Registration Rights Stockholder's request, be     
publicly offered and sold without registration under the Securities Act, (v) to 
effect a Demand Registration if a Demand Registration has been effectuated      
within the prior six months, (vi) to effect a Demand Registration during the    
period commencing on the date of delivery of the Incidental Registration Notice 
(as defined in the Registration Rights Agreement) and ending on the earlier of  
the 20th day after the effectiveness of the registration statement with respect 
to which such Incidental Registration Notice relates or the date ITI abandons   
plans to pursue the registration contemplated by such registration statement or 
(vii) to effect a                                                               

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Demand Registration during a period in which ITI would be required to undertake 
an audit in order to have available for inclusion in the registration statement 
current financial statements as required in accordance with the Securities Act, 
unless the Registration Rights Stockholder undertakes to bear the costs of such 
audit.                                                                          

   In addition, if ITI proposes to file a registration statement relating to
an underwritten public offering of shares of ITI Common Stock to be offered for 
its own account or for the account of others and if the managing underwriter for
such proposed offering advises ITI that the inclusion of some or all of the     
Registrable Securities in such registration statement would not interfere with  
the successful marketing of ITI Common Stock for the account of ITI in such     
offering, ITI shall provide written notice of the proposed offering to the      
Registration Rights Stockholders, setting forth a description of the intended   
method of distribution and use its reasonable best efforts (subject to any      
limits as may have been set by ITI's Board of Directors or the managing         
underwriters on the number of Registrable Securities which may be included in   
the offering) to register pursuant to such registration statement (an           
"Incidental Registration") such number of Registrable Securities requested by   
such Registration Rights Stockholder. ITI shall not be obligated to effect an   
Incidental Registration for any Registrable Securities if, in the written       
opinion of counsel to ITI, such Registrable Securities could, within three      
months of the date of a Registration Rights Stockholder's request, be publicly  
offered and sold without registration under the Securities Act.                 

     In connection with the registration of any Registrable Securities, ITI will
pay all out-of-pocket expenses of ITI incurred as a result of such registration,
including Commission filing fees, fees and expenses incurred complying with the 
securities or Blue Sky laws, printing expenses, fees and expenses of counsel and
independent certified public accountants for ITI and any reasonable fees and    
expenses of any additional experts retained by ITI in connection with such      
registration, as well as internal ITI expenses. Each participating Registration 
Rights Stockholder will pay any underwriting fees, discounts or commissions     
attributable to the sale of such Registration Rights Stockholder's Registrable  
Securities, and any out-of-pocket expenses of such Registration Rights          
Stockholder, including its counsel's fees and expenses. ITI has also agreed to  
indemnify each Registration Rights Stockholder and certain other persons for    
certain liabilities arising under the Securities Act, or to contribute to       
payments such persons may be required to make in respect thereof in connection  
with any such registration statement.                                           

POOLING LETTERS                                                                 

In connection with the Merger Agreement, ITI and IMA have entered into
additional agreements, each dated May 23, 1995, a form of which is included as  
Exhibit B to the Merger Agreement attached hereto as Annex A (the "Pooling      
Letter Agreements"), with (i) Interstate Properties and its partners, Steven    
Roth, Russell B. Wight, Jr. and David Mandelbaum, and Douglas K. Chick, Brian   
Chandler, Ringwood Limited, Barford Limited and Parkwood Limited, constituting  
the largest stockholders of ITI; (ii) each other director and executive officer 
of ITI; (iii) Jerome and Nancy F. Kalishman, individually and as trustees and/or
tenants by the entirety, Xanadu Investments, L.P. and Robert W. Affholder,      
constituting the largest stockholders of IMA; and (iv) each other director and  
executive officer of IMA. Pursuant to the Pooling Letter Agreements, and subject
to specified exceptions, such persons have agreed, among other things, not to   
transfer or dispose of any shares of ITI Common Stock, IMA Class A Common Stock 
or IMA Class B Common Stock owned by them, respectively, until the earlier of:  
(x) the termination of the Merger Agreement or (y) the date of the first        
publication of the operating results of ITI covering at least a 30-day period   
after the Merger has been consummated.                                          

     In connection with execution of Pooling Letter Agreements by Interstate and
its partners, ITI and IMA confirmed that such agreements would not remain in    
effect if the Merger did not occur on or prior to January 31, 1996, and ITI     
committed that, at the request of Interstate, it will use its best efforts to   
publish at the earliest practicable date following the Effective Time the       
operating results of ITI covering the first full calendar month after the Merger
is consummated, consistent with the release by ITI of year-end results.         

CONVERSION LETTERS                                                              

In connection with the Merger Agreement, ITI and IMA have entered into
agreements, each dated May 23, 1995, a form of which is included as Exhibit G to
the Merger Agreement attached hereto as Annex A (the "Conversion Letter         
Agreements"), with each of Robert W. Affholder, James Kalishman, John           

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Kalishman, Susan Kalishman, Thomas Kalishman and Xanadu Investments, L.P.,      
constituting the holders of all of the outstanding shares of IMA Class B Common 
Stock. Pursuant to the Conversion Letter Agreements, such persons have agreed to
convert, immediately prior to the consummation of the transactions contemplated 
by the Merger Agreement, each outstanding share of IMA Class B Common Stock     
beneficially owned by them, respectively, into one share of IMA Class A Common  
Stock in accordance with the terms of the IMA Class B Common Stock.             

GOVERNMENTAL AND REGULATORY MATTERS                                             

   The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), requires parties to proposed business combinations exceeding a      
certain size to file Notification and Report Forms with respect to such business
combinations. Accordingly, on June 16, 1995, both ITI and IMA filed Notification
and Report Forms with respect to the Merger with the Antitrust Division of the  
Department of Justice (the "Antitrust Division") and the Federal Trade          
Commission (the "FTC") for review pursuant to the HSR Act. Effective June 26,   
1995, the FTC confirmed early termination of the waiting period applicable to   
the Merger under the HSR Act. Neither ITI nor IMA believes that the Merger will 
violate in any respect the antitrust laws of the United States; however, at any 
time before or after the consummation of the Merger, the Antitrust Division or  
the FTC or another person could seek to enjoin or restrain the Merger on        
antitrust or other grounds. There can be no assurance that such challenge, or   
any additional challenge, if made, will not be successful.                      

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER                           

    The following discussion has been prepared by Thompson & Mitchell, counsel
to IMA ("IMA Counsel"), and, except as otherwise indicated, summarizes IMA      
Counsel's opinion. The discussion is a general summary of the material federal  
income tax consequences of the Merger to certain IMA Stockholders and does not  
purport to be a complete analysis or listing of all potential tax considerations
or consequences relevant to a decision whether to vote for the approval of the  
Merger Agreement and the transactions contemplated thereby. The discussion does 
not address all aspects of federal income taxation that may be applicable to IMA
Stockholders subject to special federal income tax treatment including (without 
limitation) foreign persons, insurance companies, tax-exempt entities,          
retirement plans, dealers in securities and persons who acquired their IMA Class
A Common Stock pursuant to the exercise of employee stock options or otherwise  
as compensation. The discussion addresses neither the effect of any applicable  
state, local or foreign tax laws, nor the effect of any federal tax laws other  
than those pertaining to the federal income tax. IN VIEW OF THE INDIVIDUAL      
NATURE OF FEDERAL INCOME TAX CONSEQUENCES, IMA STOCKHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER 
TO THEM.                                                                        

   The discussion is based on the Internal Revenue Code of 1986, as amended,
regulations proposed or promulgated thereunder, and administrative              
interpretations and judicial precedents relating thereto, all of which are      
subject to change. Any such change, which may or may not be retroactive, could  
alter the tax consequences discussed herein. The discussion is also based on    
certain assumptions regarding the factual circumstances that will exist at the  
Effective Time of the Merger, including certain representations of ITI, IMA, and
certain stockholders of IMA. If any of these factual assumptions is inaccurate, 
the tax consequences of the Merger could differ from those described herein. The
discussion assumes that the shares of IMA Class A Common Stock are held as      
capital assets (within the meaning of Section 1221 of the Code) at the Effective
Time.                                                                           

 Assuming the Merger occurs in accordance with the Merger Agreement, the
Merger will constitute a "reorganization" for federal income tax purposes under 
Section 368(a)(1)(A) of the Code, by reason of the application of Section       
368(a)(2)(E) of the Code, with the following federal income tax consequences:   

          (1) IMA Stockholders will recognize no gain or loss as a result of the
    exchange of their IMA Class A Common Stock solely for shares of ITI Common
    Stock pursuant to the Merger, except with respect to cash received in lieu
of fractional shares, if any, as described in paragraph (4) below.    

          (2) The aggregate adjusted tax basis of the shares of ITI Common Stock
  received by each IMA Stockholder in the Merger (including any fractional
share of ITI Common Stock deemed to be received,                      

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    as described in paragraph 4 below) will be equal to the aggregate adjusted
tax basis of the shares of IMA Class A Common Stock surrendered.      

        (3) The holding period of the shares of ITI Common Stock received by
   each IMA Stockholder in the Merger (including any fractional share of ITI
     Common Stock deemed to be received, as described in paragraph 4 below) will
include the holding period of the shares of IMA Class A Common Stock  
exchanged therefor.                                                   

       (4) An IMA Stockholder who receives cash in the Merger in lieu of a
   fractional share of ITI Common Stock will be treated as if the fractional
     share had been received by such stockholder in the Merger and then redeemed
by ITI in return for the cash. The receipt of such cash will cause the
     recipient to recognize capital gain or loss equal to the difference between
   the amount of cash received and the portion of such holder's adjusted tax
    basis in the shares of ITI Common Stock allocable to the fractional share.

    IMA has received from IMA Counsel an opinion to the effect that the Merger
will be a "reorganization" for federal income tax purposes under Section        
368(a)(1)(A) of the Code, by reason of Section 368(a)(2)(E) of the Code, and    
that the other federal income tax consequences of the Merger are in all material
respects as described in this section. Such opinion is subject to the conditions
and assumptions stated therein and also relies on various representations made  
by ITI, IMA, and certain stockholders of IMA. Copies of the opinion are         
available, without charge, to IMA Stockholders upon written request to Joseph F.
Olson, Vice President -- Finance and Administration, Insituform Mid-America,    
Inc., 17988 Edison Avenue, Chesterfield, Missouri 63005. An opinion of counsel, 
unlike a private letter ruling from the Internal Revenue Service (the           
"Service"), has no binding effect on the Service. The Service could take a      
position contrary to IMA Counsel's opinion and, if the matter were litigated, a 
court may reach a decision contrary to the opinion. The Service is not expected 
to issue a ruling on the tax consequences of the Merger, and no such ruling is  
being requested.                                                                

    It is a condition to the obligations of ITI, ITI Sub and IMA to consummate
the Merger that the foregoing opinion be confirmed in writing to IMA as of the  
Closing Date. See "-- Basic Terms of Merger Agreement -- Conditions to          
Consummation of the Merger" above.                                              

  THE FOREGOING IS A GENERAL DISCUSSION OF THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO CERTAIN IMA STOCKHOLDERS AND IS INCLUDED FOR      
GENERAL INFORMATION ONLY. THE FOREGOING DISCUSSION DOES NOT TAKE INTO ACCOUNT   
THE PARTICULAR FACTS AND CIRCUMSTANCES OF EACH IMA STOCKHOLDER'S TAX STATUS AND 
ATTRIBUTES. AS A RESULT, THE FEDERAL INCOME TAX CONSEQUENCES ADDRESSED IN THE   
FOREGOING DISCUSSION MAY NOT APPLY TO EACH IMA STOCKHOLDER. IN VIEW OF THE      
INDIVIDUAL NATURE OF INCOME TAX CONSEQUENCES, EACH IMA STOCKHOLDER SHOULD       
CONSULT HIS OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE      
MERGER TO SUCH STOCKHOLDER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL,    
STATE, LOCAL AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL  
AND OTHER TAX LAWS.                                                             

ACCOUNTING TREATMENT                                                            

    It is a condition to the obligations of ITI, ITI Sub and IMA to effect the
Merger that ITI has received an opinion from BDO Seidman, LLP, in form and      
substance reasonably satisfactory to ITI and IMA, stating that the transactions 
contemplated by the Merger Agreement will qualify for pooling-of-interests      
accounting treatment under generally accepted accounting principles. See        
"-- Basic Terms of Merger Agreement -- Conditions to Consummation of the Merger"
above. BDO Seidman, LLP has advised ITI and IMA that the Merger would not       
qualify for pooling-of-interests treatment in accordance with generally accepted
accounting principles if, among other things (i) IMA Class B Common Stock is not
converted into IMA Class A Common Stock on a share for share basis prior to the 
Effective Time without the payment of a premium and (ii) ITI Common Stock is    
exchanged for less than 90% of the outstanding IMA Class A Common Stock.        
Although certain transactions could have the effect of shares of IMA Class A    
Common Stock being deemed                                                       

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not to be exchanged for ITI Common Stock or could violate requirements for the  
use of pooling-of-interests accounting treatment (e.g., sales of shares by      
directors or executive officers of ITI or IMA, see "-- Pooling Letters" above), 
ITI and IMA are not aware of any such transaction. The Merger Agreement provides
as a condition to ITI's obligations to consummate the Merger that the holders of
not more than 5% of the outstanding shares of IMA Class A Common Stock shall be 
entitled to demand payment of the fair value of their shares. See "Information  
Concerning Meetings -- Dissenters' Rights" for a discussion of the absence of   
such rights in the Merger under applicable Delaware law.                        

   The pooling-of-interests method of accounting is intended to present as a
single interest two or more common stockholder interests which were previously  
independent. The pooling-of-interests method of accounting assumes that the     
combining companies have been combined from their inception. Consequently, the  
historic financial statements for periods prior to the consummation of the      
combination are restated as though the companies had been combined. The restated
financial statements are adjusted to conform the accounting policies of IMA with
those of ITI. See "Unaudited Pro Forma Combined Condensed Financial Information"
below.                                                                          

EXPENSES                                                                        

IMA, ITI and ITI Sub have agreed that, whether or not the Merger is   
effected, all costs and expenses incurred in connection with the Merger         
Agreement and the transactions contemplated thereby will be paid by the party   
incurring such costs and expenses, except that ITI has agreed to reimburse IMA  
for certain expenses incurred by IMA in connection with certain corporate       
restructurings requested by ITI if the Merger is not consummated. See "-- Terms 
of Merger Agreement -- Restructuring Transactions" above.                       

THE CAPITALIZATION AMENDMENT

In connection with its approval of the Merger Agreement, and the      
transactions contemplated by the Merger Agreement, the Board of Directors of ITI
also has approved an amendment to Article FOURTH of the ITI Charter to provide  
for an increase in the number of authorized shares of ITI Common Stock from     
25,000,000 shares to 40,000,000 shares. Approval of the proposed Capitalization 
Amendment, which will become effective upon consummation of the Merger, is a    
condition to the obligations of ITI, ITI Sub and IMA to consummate the Merger.  

    The following summary description of the proposed Capitalization Amendment
is not intended to be complete and is qualified in its entirety by reference to 
the complete text of the proposed Capitalization Amendment attached to this     
Joint Proxy Statement/Prospectus as Annex D.                                    

     ITI is presently authorized to issue 27,000,000 shares of capital stock, of
which 25,000,000 shares are ITI Common Stock and 2,000,000 shares are preferred 
stock, $.10 par value ("ITI Preferred Stock"). At the close of business on      
August 30, 1995, there were outstanding 14,609,804 shares of ITI Common Stock.  
No shares of Preferred Stock were outstanding on such date. An additional       
2,314,443 shares of ITI Common Stock were reserved for possible future issuance 
upon exercise of outstanding stock options and warrants and options that may be 
granted under ITI's existing stock option plans. Further, it is anticipated     
that, based on the number of shares of IMA Class A Common Stock and IMA Class B 
Common Stock outstanding on September 1, 1995, 12,423,781 shares of ITI Common  
Stock will be issued to IMA Stockholders in connection with the Merger and,     
based on the number of shares covered by stock options granted by IMA and       
outstanding on such date, and options that IMA is permitted to grant under the  
Merger Agreement, up to an additional 490,457 shares of ITI Common Stock will be
reserved for issuance upon exercise of stock options granted by IMA and assumed 
by ITI in connection with the Merger. Holders of capital stock of ITI do not    
have any preemptive rights to subscribe for or purchase any shares of capital   
stock of ITI.                                                                   

   The proposed amendment to Article FOURTH of the ITI Charter will increase
the number of authorized shares of capital stock to 42,000,000, of which        
40,000,000 shares will be ITI Common Stock and 2,000,000 shares will be ITI     
Preferred Stock. Thus, the proposed Capitalization Amendment will increase the  
authorized number of shares of ITI Common Stock from 25,000,000 shares to       
40,000,000 shares. The authorized number of shares of ITI Preferred Stock will  
remain unchanged. The proposed Capitalization Amendment will not                

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change any other aspect of Article FOURTH of the ITI Charter. Approval of the   
proposed Capitalization Amendment will not of itself cause any change in the    
capital stock account or surplus account of ITI.                                

The primary purpose of the proposed Capitalization Amendment is to    
authorize the additional shares of ITI Common Stock necessary to effectuate the 
Merger and the exercise following the consummation of the Merger of options and 
warrants with respect to ITI Common Stock. If the proposed amendment is         
approved, any or all of the remaining part of the authorized but unissued shares
of ITI Common Stock may thereafter be issued for such purposes and on such      
conditions as the Board of Directors of ITI may determine, without further      
approval by the ITI Stockholders, unless the issuance is in connection with a   
transaction for which stockholder approval is otherwise required under          
applicable law or the rules of The Nasdaq Stock Market.                         

Although, except for the Merger, the transactions contemplated by the 
Merger Agreement and ITI's existing option and warrant arrangements, no         
commitments have been made, and no particular transactions are pending or       
intended, with respect to the issuance of any of the additional shares which    
will be authorized by the amendment to Article FOURTH of the ITI Charter, ITI   
continuously evaluates, explores and has discussions with respect to future     
potential acquisitions which may involve the issuance of the additional shares. 
The additional shares may also be used for any issuance in connection with      
future financings, employee benefit plans or other corporate purposes. See      
"ITI -- Management's Discussion and Analysis of Financial Condition and Results 
of Operations -- Liquidity and Capital Resources" below for information         
concerning financing alternatives that may be considered by ITI in connection   
with plans for the expansion of its business following completion of the Merger 
and for general corporate purposes.                                             

    The overall effect of an issuance of additional shares of ITI Common Stock
may be to render more difficult the accomplishment of any attempted takeover or 
other change in control affecting ITI and/or the removal of ITI's Board of      
Directors and management. ITI has not proposed the Capitalization Amendment as  
an anti-takeover measure, nor is the proposal to amend the ITI Charter to       
increase the number of authorized shares of ITI Common Stock being made in      
response to any specific efforts known to management of ITI to obtain control or
accumulate the securities of ITI. ITI's management has no knowledge of any such 
specific efforts.                                                               

    The affirmative vote of holders of a majority of the outstanding shares of
ITI Common Stock is required to approve the proposed Capitalization Amendment.  

 The Board of Directors of ITI believes that the proposed Capitalization
Amendment is in the best interests of ITI and the ITI Stockholders and          
recommends that the ITI Stockholders vote FOR approval of the proposed          
Capitalization Amendment. Because consummation of the Merger is subject to      
approval of the proposed Capitalization Amendment, if the Capitalization        
Amendment is not approved by the requisite vote of the ITI Stockholders, the    
Merger, notwithstanding approval of the Merger Agreement by the ITI             
Stockholders, will not be effected. In addition, if the Merger is not           
consummated for any reason, the Capitalization Amendment will be null and void. 

THE BOARD VACANCY AMENDMENT 

   In connection with approval of the Merger Agreement, and the transactions
contemplated by the Merger Agreement, the Board of Directors of ITI has also    
approved an amendment to Article SIXTH of the ITI Charter to provide for the    
filling of vacancies on the Board of Directors of ITI as contemplated by Section
7.3 of the Merger Agreement, to become effective at the Effective Time. Approval
of the Board Vacancy Amendment is a condition to the obligations of ITI, ITI Sub
and IMA to consummate the Merger.                                               

  Pursuant to the Merger Agreement, ITI has agreed that, during the period
from the Effective Time until December 9, 1998, if any director resigns or is   
unable to serve for any reason such vacancy will be filled with a designee      
chosen by the remaining members of that director's group, and thereafter ITI    
will nominate and recommend such designee for election to the ITI Board of      
Directors until the end of the Term. The proposed Board Vacancy Amendment       
implements these provisions of the Merger Agreement. The foregoing summary      
description of the proposed Board Vacancy Amendment is not intended to be       
complete and is qualified in its                                                

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entirety by reference to the complete text of the proposed Board Vacancy        
Amendment attached to this Joint Proxy Statement/Prospectus as Annex E.         

     The affirmative vote of holders of a majority of the outstanding ITI Common
Stock is required to approve the proposed Board Vacancy Amendment.              

The Board of Directors of ITI believes that the proposed Board Vacancy
Amendment is in the best interests of ITI and the ITI Stockholders and          
recommends that the ITI Stockholders vote FOR approval of the proposed Board    
Vacancy Amendment. Because consummation of the Merger is subject to approval of 
the proposed Board Vacancy Amendment, if the Board Vacancy Amendment is not     
approved by the requisite vote of the ITI Stockholders, the Merger,             
notwithstanding approval of the Merger Agreement by the ITI Stockholders, will  
not be effected. In addition, if the Merger is not consummated for any reason,  
the Board Vacancy Amendment will be null and void.                              

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MARKET PRICES OF AND DIVIDENDS ON 
ITI COMMON STOCK AND IMA CLASS A COMMON STOCK 

ITI Common Stock is traded on The Nasdaq Stock Market under the symbol
"INSUA." IMA Class A Common Stock is also traded on The Nasdaq Stock Market     
under the symbol "INSMA." The IMA Class B Common Stock has no established       
trading market and IMA is not aware of any recent sales of such stock. The      
following table sets forth, for the calendar periods indicated, the high and low
closing sales prices for ITI Common Stock and IMA Class A Common Stock,         
respectively, as reported on The Nasdaq Stock Market. Quotations represent      
prices between dealers and do not include retail mark-ups, mark-downs or        
commissions.                                                                    

                                                        [Enlarge/Download Table]

                                                                 ITI                IMA       
                                                          -----------------  -----------------
PERIOD:                                                    HIGH       LOW     HIGH       LOW  
--------------------------------------------------------  ------     ------  ------     ------
                                                                                              
1992                                                                                          
  Fourth Quarter........................................  $26.50     $14.00  $20.50     $14.00
1993                                                                                          
  First Quarter.........................................  $25.75     $17.63  $21.00     $13.25
  Second Quarter........................................   20.25      12.25   14.00      10.00
  Third Quarter.........................................   14.50      11.25   14.75      10.00
  Fourth Quarter........................................   16.50      12.25   16.25      12.25
1994                                                                                          
  First Quarter.........................................  $15.25     $10.50  $15.00     $12.50
  Second Quarter........................................   14.75      12.50   15.00       9.75
  Third Quarter.........................................   13.75      12.50   10.50       8.25
  Fourth Quarter........................................   13.75      10.88   10.88       8.13
1995                                                                                          
  First Quarter.........................................  $13.00     $11.13  $11.50     $ 8.63
  Second Quarter........................................   14.00      11.88   15.00      10.38
  Third Quarter                                                                               
     (through September 14, 1995).......................   16.63      12.88   18.63      14.50

     On May 23, 1995, the last full trading day prior to the public announcement
of the Merger Agreement, the closing sales price per share of ITI Common Stock  
reported on The Nasdaq Stock Market was $13.50 and the closing sales price per  
share of IMA Class A Common Stock reported on The Nasdaq Stock Market was       
$12.00. On September 14, 1995, the last full trading day prior to the date of   
this Joint Proxy Statement/Prospectus, the closing sales price per share of the 
ITI Common Stock reported on The Nasdaq Stock Market was $14.94 and the closing 
sales price per share of IMA Class A Common Stock reported on The Nasdaq Stock  
Market was $16.75. Because the market price of ITI Common Stock is subject to   
fluctuation due to numerous market forces, the market value of the shares of ITI
Common Stock that holders of IMA Class A Common Stock will receive in the Merger
may increase or decrease prior to the Effective Time. STOCKHOLDERS OF ITI AND OF
IMA ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THEIR SHARES.             

     As of August 30, 1995, the number of record holders of ITI Common Stock was
1,842.                                                                          

     As of September 1, 1995, the number of record holders of IMA Class A Common
Stock was 731 and the number of record holders of IMA Class B Common Stock was  
six.                                                                            

   Holders of ITI Common Stock are entitled to receive dividends as and when
they may be declared by ITI's Board of Directors. ITI has never paid a cash     
dividend on the ITI Common Stock. ITI's present policy is to retain earnings to 
provide funds for the operation and expansion of its business. However, pursuant
to discussions between representatives of ITI and IMA in connection with the    
Merger Agreement, the parties anticipate that after the Merger, ITI's Board will
review ITI's dividend policy from time to time and will consider ITI's earnings,
financial condition, cash flows, financing agreements and other relevant factors
in making determinations regarding future dividends, if any. Under the terms of 
certain credit arrangements to which ITI is a party, ITI is subject to certain  
limitations in paying dividends. See Note 9 of the Notes to ITI's               

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Consolidated Financial Statements, including the notes thereto, contained       
elsewhere herein and "ITI -- Management's Discussion and Analysis of Financial  
Condition and Results of Operations -- Liquidity and Capital Resources."        

   IMA has a policy of paying regular cash dividends at current annual rates
of $.14 per share of IMA Class A Common Stock and $.1272 per share of IMA Class 
B Common Stock. IMA has paid dividends at such rates semi-annually in January   
and July of each year since the beginning of fiscal 1993. Holders of IMA Class A
Common Stock and IMA Class B Common Stock are entitled to receive dividends if, 
as and when they may be declared by IMA's Board of Directors. Under IMA's       
Certificate of Incorporation, no cash dividends may be declared or paid on      
shares of IMA Class B Common Stock unless there is or has been declared or paid 
a cash dividend on each share of IMA Class A Common Stock of at least 110% of   
the per share dividend on IMA Class B Common Stock. Under the provisions of its 
outstanding term loan agreement, IMA is subject to certain limitations in paying
dividends. See "IMA -- Management's Discussion and Analysis of Financial        
Condition and Results of Operations -- Liquidity and Capital Resources."        

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UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

   The following Unaudited Pro Forma Combined Condensed Financial Statements
are presented to illustrate the financial statement effect of the Merger. The   
pro forma financial statements have been prepared assuming that the Merger will 
be accounted for as a pooling-of-interests. Under the pooling-of-interests      
method of accounting, the historical financial statements of the combining      
companies are retroactively combined (after adjustments to eliminate            
intercompany balances and transactions, and to conform reporting periods and    
accounting methods) as if the companies had operated as a single entity for the 
periods presented. Certain historical financial data of IMA have been           
reclassified to conform to ITI's accounting policies.                           

The accompanying Unaudited Pro Forma Combined Condensed Balance Sheet 
combines the balance sheets of ITI and IMA as of June 30, 1995. The Unaudited   
Pro Forma Combined Condensed Statements of Operations combine the statements of 
operations of ITI and the statements of operations of IMA for the years ended   
December 31, 1994, 1993, and 1992 and the six months ended June 30, 1995 and    
1994.                                                                           

   The Unaudited Pro Forma Combined Condensed Financial Statements are based
upon the historical financial statements of ITI and the historical financial    
statements of IMA. The primary historical financial statements of IMA are       
prepared on the basis of a fiscal year ending September 30. Following the       
consummation of the Merger, IMA's assets, liabilities and results of operations 
will be consolidated with ITI's on the basis of a calendar year ending December 
31. The Unaudited Pro Forma Combined Condensed Financial Statements should be   
read in conjunction with the respective historical financial statements of ITI  
and IMA which are contained elsewhere in this Joint Proxy Statement/Prospectus, 
the related notes thereto and the Notes to the Unaudited Pro Forma Combined     
Condensed Financial Statements.                                                 

  In addition to the Merger, the accompanying Unaudited Pro Forma Combined
Condensed Statements of Operations for the year ended December 31, 1994 and the 
six months ended June 30, 1995 and 1994 also illustrate management's current    
estimate of the financial statement effect of the Enviroq Acquisition completed 
by IMA in April 1995, which has been accounted for under the purchase method of 
accounting. The accompanying Unaudited Pro Forma Combined Condensed Statement of
Operations for the year ended December 31, 1994 and for the six months ended    
June 30, 1995 and 1994 adjust the historical consolidated statements of         
operations of IMA as if the Enviroq Acquisition had become effective at the     
beginning of each such period. Further, the accompanying Unaudited Pro Forma    
Combined Condensed Statement of Operations for the year ended December 31, 1994 
and for the six months ended June 30, 1994 adjust the historical Consolidated   
Statement of Operations of ITI as if its acquisition of Gelco Services, Inc.    
("Gelco") and affiliates (which was completed in October 1994) had become       
effective at the beginning of such period.                                      

   The following Unaudited Pro Forma Combined Condensed Financial Statements
have been included as required by the rules of the Commission and are provided  
for comparative purposes only. The pro forma financial statements do not purport
to be indicative of the results of which would have been obtained if the        
transactions, in fact, had been effected on the date or dates indicated or which
may be obtained in the future.                                                  

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INSITUFORM TECHNOLOGIES, INC. 
AND 
INSITUFORM MID-AMERICA, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AT JUNE 30, 1995
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                            ITI          IMA        PRO FORMA        MIDSOUTH       PRO FORMA      PRO FORMA 
                                         HISTORICAL   HISTORICAL  ADJUSTMENTS(1)   HISTORICAL(2)  ADJUSTMENTS(3)   COMBINED  
                                         ----------   ----------  --------------   -------------  --------------   --------- 
                                                                                                                             
ASSETS                                                                                                                       
Current:                                                                                                                     
  Cash and cash equivalents.............  $  10,553    $  2,925      $                $   241        $             $ 13,719  
  Marketable securities.................          1           0                                                           1  
  Receivables -- net....................     42,740      31,571        (1,757)(A)       2,277            (153)(A)    74,678  
  Income tax refundable.................      1,678         419                                                       2,097  
  Inventories...........................      8,197       5,376           (25)(C)         432                        13,980  
  Deferred income taxes.................      2,256           0         2,800(C)                                      5,056  
  Prepaid expenses and miscellaneous....      5,477       4,486        (1,070)(C)         116                         9,009  
                                         ----------   ----------      -------          ------         -------      --------- 
    Total current assets................     70,902      44,777           (52)          3,066            (153)      118,540  
Property and equipment, net.............     30,646      29,136        (3,331)(C)       1,319                        57,770  
Other assets:                                                                                                                
  Intangibles...........................     56,106      15,102          (855)(C)          42                        69,931  
                                                                         (464)(D)                                            
  Investments in licensees and                                                                                               
    affiliated companies................      1,940       1,519                                        (2,038)(B)     1,421  
  Deferred income taxes.................      1,586           0                                                       1,586  
  Other.................................      3,640       1,386          (138)(C)                                     4,888  
                                         ----------   ----------      -------          ------         -------      --------- 
    Total other assets..................     63,272      18,007        (1,457)             42          (2,038)       77,826  
                                         ----------   ----------      -------          ------         -------      --------- 
    Total assets........................  $ 164,820    $ 91,920      $ (4,840)        $ 4,427        $ (2,191)     $254,136  
                                           ========    ========   ============     ==========     ============     ========= 
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                         
Current liabilities:                                                                                                         
  Accounts payable and accruals.........  $  20,636    $ 13,675      $ (1,757)(A)     $   811        $   (153)(A)  $ 41,293  
                                                                        8,081(C)                                             
  Income taxes payable..................      1,945         133                                                       2,078  
  Deferred income taxes.................        536           0                                                         536  
  Notes payable and current maturities                                                                                       
    of long-term debt...................      7,285      17,256                            49                        24,590  
                                         ----------   ----------      -------          ------         -------      --------- 
    Total current liabilities...........     30,402      31,064         6,324             860            (153)       68,497  
Long-term debt, less current                                                                                                 
  maturities............................     53,131      14,024                            22                        67,177  
Deferred income taxes...................      1,073       1,018                                                       2,091  
Other...................................          0         891                                                         891  
                                         ----------   ----------      -------          ------         -------      --------- 
    Total liabilities...................     84,606      46,997         6,324             882            (153)      138,656  
                                         ----------   ----------      -------          ------         -------      --------- 
Minority interests......................      2,345       1,391                                         1,507(B)      5,243  
                                         ----------   ----------      -------          ------         -------      --------- 
Stockholders' equity:                                                                                                        
  Common stock..........................        144         108            16(B)                                        268  
  Additional paid-in capital............     45,867      18,565           (16)(B)                                    64,416  
  Retained earnings.....................     36,295      25,245       (10,700)(C)       3,545          (3,545)(B)    50,376  
                                                                         (464)(D)                                            
                                         ----------   ----------      -------          ------         -------      --------- 
                                             82,306      43,918       (11,164)          3,545          (3,545)      115,060  
  Treasury stock........................          0           0                                                           0  
  Cumulative foreign currency                                                                                                
    translation adjustments.............       (813)       (386)                                                     (1,199 )
  Note receivable from affiliates.......     (3,624)          0                                                      (3,624 )
  Unrealized gain on investments                                                                                             
    available for sale..................          0           0                                                           0  
                                         ----------   ----------      -------          ------         -------      --------- 
    Total stockholders' equity..........     77,869      43,532       (11,164)          3,545          (3,545)      110,237  
                                         ----------   ----------      -------          ------         -------      --------- 
    Total liabilities and stockholders'                                                                                      
      equity............................  $ 164,820    $ 91,920      $ (4,840)        $ 4,427        $ (2,191)     $254,136  
                                           ========    ========   ============     ==========     ============     ========= 

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INSITUFORM TECHNOLOGIES, INC. 
AND 
INSITUFORM MID-AMERICA, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET 

BASIS OF PRESENTATION                                                           

Reference is made to the material following the caption "Unaudited Pro
Forma Combined Condensed Financial Information."                                

(1) Pro forma adjustments and eliminations to effect the Merger are as follows: 

(A) To eliminate intercompany balances.                               

    (B) To reflect the issuance of ITI Common Stock for the IMA Class A Common
Stock.                                                        

(C) To record estimated restructuring provisions, net of income tax   
        benefit, and the estimated expense of the Merger as if the transaction
had occurred at the balance sheet date.                       

    (D) To reflect the recharacterization of the net of tax gain recognized by
    ITI upon the sale of its holdings in Enviroq as a reduction of the
 purchase consideration paid by IMA, resulting in a reduction of
goodwill.                                                     

(2) At June 30, 1995, a 15% general partnership interest in Midsouth Partners, a
  domestic Insituform licensee, was held by a subsidiary of ITI, and a 42.5%
interest therein was held by a subsidiary of Enviroq. As a result of the
  Enviroq Acquisition, the pro forma statements reflect a majority ownership
   (57.5%) in Midsouth Partners as held by the combined ITI/IMA. See "Business
of ITI-Investments" below for a description of arbitration proceedings  
  brought by the remaining partner of Midsouth Partners alleging an event of
    default by Enviroq under the partnership agreement of Midsouth Partners as a
    result of entering into the Enviroq Agreement, and the purported exercise by
such partner of its alleged rights as a non-defaulting partner to name a
    majority of the members of the management committee of Midsouth Partners, an
action to which both ITI and Enviroq have objected.                     

(3) Eliminations to effect the consolidation of Midsouth Partners are as        
follows:                                                                        

(A) To eliminate intercompany balances.                               

(B) To reflect minority interests and the elimination of ITI's and    
Enviroq's equity-method investments in Midsouth.              

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INSITUFORM TECHNOLOGIES, INC. 
AND 
INSITUFORM MID-AMERICA, INC.

UNAUDITED PRO FORMA COMBINED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                                       SIX MONTHS ENDED JUNE 30, 1995                   
                                                     -------------------------------------------------------------------
                                                        ITI          IMA        ENVIROQ       PRO FORMA        PRO FORMA
                                                     HISTORICAL   HISTORICAL   HISTORICAL   ADJUSTMENTS(2)        IMA   
                                                     ----------   ----------   ----------   --------------     ---------
                                                                                                                        
Revenues............................................  $ 83,446     $ 51,493      $6,843                         $58,336 
Operating costs and expenses:                                                                                           
  Cost of revenues..................................    53,243       38,230       6,070                          44,300 
  Selling, general and                                                                                                  
    administrative..................................    17,254        7,563       1,165             362(A)        9,090 
  Research and development..........................     3,315          702          24                             726 
  Merger and restructuring costs....................         0            0           0                               0 
                                                     ----------   ----------   ----------       -------        ---------
    Total operating costs and expenses..............    73,812       46,495       7,259             362          54,116 
                                                     ----------   ----------   ----------       -------        ---------
Operating income....................................     9,634        4,998        (416)           (362)          4,220 
Other income (expense)..............................    (4,783)        (333)        (85)           (389)(B)        (807)
                                                     ----------   ----------   ----------       -------        ---------
  Income before taxes on income.....................     4,851        4,665        (501)           (751)          3,413 
Taxes on income.....................................     1,911        1,710        (104)           (265)(C)       1,341 
                                                     ----------   ----------   ----------       -------        ---------
  Income before minority interests and equity in                                                                        
    earnings of associated companies................     2,940        2,955        (397)           (486)          2,072 
Minority interests..................................      (260)        (299)          0                            (299)
Equity in earnings of associated companies..........       315          365         140                             505 
                                                     ----------   ----------   ----------       -------        ---------
Income from continuing operations...................  $  2,995     $  3,021      $ (257)       $   (486)        $ 2,278 
                                                      ========     ========    ========     ============       ======== 
Income from continuing operations per common                                                                            
  share.............................................  $   0.21     $   0.27                                     $  0.21 
                                                      ========     ========                                    ======== 
Number of shares used to compute net income per                                                                         
  share.............................................    14,442       11,110                                      11,110 
                                                      ========     ========                                    ======== 



                                                       PRO FORMA          MIDSOUTH        PRO FORMA        PRO FORMA    
                                                     ADJUSTMENTS(3)     HISTORICAL(4)   ADJUSTMENTS(5)     COMBINED     
                                                     --------------     -------------   --------------     ---------    
                                                                                                                        
Revenues............................................    $ (4,119)(A)       $ 4,512          $ (543)(A)     $138,945     
                                                          (2,414)(A)                          (273)(A)                  
Operating costs and expenses:                                                                                           
  Cost of revenues..................................      (4,119)(A)         3,253            (543)(A)       93,447     
                                                          (2,414)(A)                          (273)(A)                  
  Selling, general and                                                                                                  
    administrative..................................         (10)(D)           517                           26,851     
  Research and development..........................                             0                            4,041     
  Merger and restructuring costs....................           0(B)              0                                0     
                                                         -------            ------          ------         ---------    
    Total operating costs and expenses..............      (6,543)            3,770            (816)         124,339     
                                                         -------            ------          ------         ---------    
Operating income....................................          10               742               0           14,606     
Other income (expense)..............................        (755)(D)            24                           (6,321)    
                                                         -------            ------          ------         ---------    
  Income before taxes on income.....................        (745)              766               0            8,285     
Taxes on income.....................................        (291)(D)             0                            2,961     
                                                         -------            ------          ------         ---------    
  Income before minority interests and equity in                                                                        
    earnings of associated companies................        (454)              766               0            5,324     
Minority interests..................................                             0            (326)(B)         (885)    
Equity in earnings of associated companies..........                             0            (440)(B)          380     
                                                         -------            ------          ------         ---------    
Income from continuing operations...................    $   (454)          $   766          $ (766)        $  4,819     
                                                     ============       ==========      ============       ========     
Income from continuing operations per common                                                                            
  share.............................................                                                       $   0.18     
                                                                                                           ========     
Number of shares used to compute net income per                                                                         
  share.............................................            (C)                                          27,218     
                                                                                                           ========     

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INSITUFORM TECHNOLOGIES, INC. 
AND 
INSITUFORM MID-AMERICA, INC.

UNAUDITED PRO FORMA COMBINED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                                 YEAR ENDED DECEMBER 31, 1994                                
                                         ----------------------------------------------------------------------------        
                                                                                       PRO                                   
                                            ITI          GELCO        PRO FORMA       FORMA       IMA       ENVIROQ          
                                         HISTORICAL  HISTORICAL(1)  ADJUSTMENTS(1)     ITI     HISTORICAL  HISTORICAL        
                                         ----------  -------------  -------------    --------  ----------  ----------        
                                                                                                                             
Revenues................................  $148,247      $17,685        $(1,854)(A)   $164,078   $ 84,023    $ 21,156         
Operating costs and expenses:                                                                                                
 Cost of revenues.......................    94,629       10,045         (1,854)(A)    102,820     60,718      16,516         
 Selling, general and administrative....    33,560        3,761            730(B)      38,051     11,969       2,622         
 Research and development...............     1,509                                      1,509        652          66         
 Merger and restructuring costs.........         0                                          0          0                     
                                          --------      -------        -------       --------    -------     -------         
   Total operating costs and expenses...   129,698       13,806         (1,124)       142,380     73,339      19,204         
                                          --------      -------        -------       --------    -------     -------         
Operating income........................    18,549        3,879           (730)        21,698     10,684       1,952         
Other income (expense)..................    (2,440)          (2)        (1,364)(C)     (3,806)        42         250         
                                          --------      -------        -------       --------    -------     -------         
 Income before taxes on income..........    16,109        3,877         (2,094)        17,892     10,726       2,202         
Taxes on income.........................     6,140                         620(D)       6,760      4,317       1,137         
                                          --------      -------        -------       --------    -------     -------         
 Income before minority interests and                                                                                        
   equity in earnings of associated                                                                                          
   companies............................     9,969        3,877         (2,714)        11,132      6,409       1,065         
Minority interests......................      (584)                                      (584)      (696)          0         
Equity in earnings of associated                                                                                             
 companies..............................       409                                        409        160         419         
                                          --------      -------        -------       --------    -------     -------         
Income from continuing operations.......  $  9,794      $ 3,877        $(2,714)      $ 10,957   $  5,873    $  1,484         
                                          ========      =======        =======       ========    =======     =======         
Income from continuing operations per                                                                                        
 common share...........................  $   0.68                                   $   0.76   $   0.53                     
                                          ========                                   ========    =======                     
Number of shares used to compute net                                                                                         
 income per share.......................    14,414                                     14,414     11,085                     
                                          ========                                   ========    =======                     



                                            PRO FORMA     PRO FORMA    PRO FORMA       MIDSOUTH       PRO FORMA     PRO FORMA

                                          ADJUSTMENTS(2)     IMA     ADJUSTMENTS(3)  HISTORICAL(4)  ADJUSTMENTS(5)  COMBINED 

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

                                                                                                                             
Revenues................................     $            $105,179      $ (9,283)(A)    $ 7,048        $ (1,089)(A) $261,396 

                                                                          (4,121)(A)                       (416)(A)          
Operating costs and expenses:                                                                                                
 Cost of revenues.......................                    77,234        (9,283)(A)      5,103          (1,089)(A)  170,248 

                                                                          (4,121)(A)                       (416)(A)          
 Selling, general and administrative....          971(A)    15,562           (19)(D)        951                       54,545 

 Research and development...............                       718                            0                        2,227 

 Merger and restructuring costs.........                         0             0(B)           0                            0 

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

   Total operating costs and expenses...          971       93,514       (13,423)         6,054          (1,505)     227,020 

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

Operating income........................         (971)      11,665            19            994               0       34,376 

Other income (expense)..................       (1,125)(B)     (833 )                        (12)                      (4,651)

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

 Income before taxes on income..........       (2,096)      10,832            19            982               0       29,725 

Taxes on income.........................         (741)(C)    4,713                            0                       11,473 

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

 Income before minority interests and                                                                                        
   equity in earnings of associated                                                                                          
   companies............................       (1,355)       6,119            19            982               0       18,252 

Minority interests......................                      (696 )                          0            (417)(B)   (1,697)

Equity in earnings of associated                                                                                             
 companies..............................                       579                            0            (565)(B)      423 

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

Income from continuing operations.......     $ (1,355)    $  6,002      $     19        $   982        $   (982)    $ 16,978 

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

Income from continuing operations per                                                                                        
 common share...........................                  $   0.54                                                  $   0.63 

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

Number of shares used to compute net                                                                                         
 income per share.......................                    11,085              (C)                                   27,162 

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


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INSITUFORM TECHNOLOGIES, INC. 
AND 
INSITUFORM MID-AMERICA, INC.

UNAUDITED PRO FORMA COMBINED
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                            SIX MONTHS ENDED JUNE 30, 1994                                
                            ----------------------------------------------------------------------------------------------
                               ITI          GELCO        PRO FORMA       PRO FORMA     IMA       ENVIROQ      PRO FORMA   
                            HISTORICAL  HISTORICAL(1)  ADJUSTMENTS(1)       ITI     HISTORICAL  HISTORICAL  ADJUSTMENTS(2)
                            ----------  -------------  --------------    ---------  ----------  ----------  --------------
                                                                                                                          
Revenues...................  $ 62,283      $ 9,576        $ (1,290)(A)    $70,569    $ 36,918    $ 10,722                 
Operating costs and                                                                                                       
  expenses:                                                                                                               
  Cost of revenues.........    39,396        5,468          (1,290)(A)     43,574      26,388       8,160                 
  Selling, general and                                                                                                    
    administrative.........    13,448        2,080             200(B)      15,728       6,221       1,411          486(A) 
  Research and                                                                                                            
    development............     2,964                                       2,964          54          19                 
  Merger and restructuring                                                                                                
    costs..................         0                                           0                       0                 
                            ----------      ------         -------       ---------  ----------  ----------      ------    
        Total operating                                                                                                   
          costs and                                                                                                       
          expenses.........    55,808        7,548          (1,090)        62,266      32,663       9,590          486    
                            ----------      ------         -------       ---------  ----------  ----------      ------    
Operating income...........     6,475        2,028            (200)         8,303       4,255       1,132         (486)   
Other income (expense).....      (853)          35            (710)(C)     (1,528)        (14)        155         (511)(B)
                            ----------      ------         -------       ---------  ----------  ----------      ------    
  Income before taxes on                                                                                                  
    income.................     5,622        2,063            (910)         6,775       4,241       1,287         (997)   
Taxes on income............     2,035                          541(D)       2,576       1,657         560         (351)(C)
                            ----------      ------         -------       ---------  ----------  ----------      ------    
  Income before minority                                                                                                  
    interests and equity in                                                                                               
    earnings of associated                                                                                                
    companies..............     3,587        2,063          (1,451)         4,199       2,584         727         (646)   
Minority interests.........      (216)                                       (216)        (71)          0                 
Equity in earnings of                                                                                                     
  associated companies.....       272                                         272         120           4                 
                            ----------      ------         -------       ---------  ----------  ----------      ------    
Income from continuing                                                                                                    
  operations...............  $  3,643      $ 2,063        $ (1,451)       $ 4,255    $  2,633    $    731       $ (646)   
                             ========   ==========     ============      ========    ========    ========   ============  
Income from continuing                                                                                                    
  operations per common                                                                                                   
  share....................  $   0.25                                     $  0.30    $   0.24                             
                             ========                                    ========    ========                             
Number of shares used to                                                                                                  
  compute net income per                                                                                                  
  share....................    14,412                                      14,412      11,125                             
                             ========                                    ========    ========                             



                             PRO FORMA    PRO FORMA         MIDSOUTH       PRO FORMA       PRO FORMA                      
                                IMA     ADJUSTMENTS(3)    HISTORICAL(4)  ADJUSTMENTS(5)    COMBINED                       
                             ---------  --------------    -------------  --------------    ---------                      
                                                                                                                          
Revenues...................   $47,640      $ (4,603)(A)      $ 2,665         $ (377)(A)    $113,538                       
                                             (2,196)(A)                        (160)(A)                                   
Operating costs and                                                                                                       
  expenses:                                                                                                               
  Cost of revenues.........    34,548        (4,603)(A)        2,194           (377)(A)      72,980                       
                                             (2,196)(A)                        (160)(A)                                   
  Selling, general and                                                                                                    
    administrative.........     8,118           (10)(D)          465                         24,301                       
  Research and                                                                                                            
    development............        73                              0                          3,037                       
  Merger and restructuring                                                                                                
    costs..................         0              (B)             0                              0                       
                             ---------      -------       -------------      ------        ---------                      
        Total operating                                                                                                   
          costs and                                                                                                       
          expenses.........    42,739        (6,809)           2,659           (537)        100,318                       
                             ---------      -------       -------------      ------        ---------                      
Operating income...........     4,901            10                6              0          13,220                       
Other income (expense).....      (370)                             3                         (1,895)                      
                             ---------      -------       -------------      ------        ---------                      
  Income before taxes on                                                                                                  
    income.................     4,531            10                9              0          11,325                       
Taxes on income............     1,866                              0                          4,442                       
                             ---------      -------       -------------      ------        ---------                      
  Income before minority                                                                                                  
    interests and equity in                                                                                               
    earnings of associated                                                                                                
    companies..............     2,665            10                9              0           6,883                       
Minority interests.........       (71)                             0             (4)(B)        (291)                      
Equity in earnings of                                                                                                     
  associated companies.....       124                              0             (5)(B)         391                       
                             ---------      -------       -------------      ------        ---------                      
Income from continuing                                                                                                    
  operations...............   $ 2,718      $     10          $     9         $   (9)       $  6,983                       
                             ========   ============      ==========     ============      ========                       
Income from continuing                                                                                                    
  operations per common                                                                                                   
  share....................   $  0.24                                                      $   0.26                       
                             ========                                                      ========                       
Number of shares used to                                                                                                  
  compute net income per                                                                                                  
  share....................    11,125              (C)                                       27,206                       
                             ========                                                      ========                       

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INSITUFORM TECHNOLOGIES, INC. 
AND 
INSITUFORM MID-AMERICA, INC.

UNAUDITED PRO FORMA COMBINED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED DECEMBER 31, 1993                 
                                             ------------------------------------------------------------ 
                                                ITI            IMA           PRO FORMA          PRO FORMA 
                                             HISTORICAL     HISTORICAL     ADJUSTMENTS(3)       COMBINED  
                                             ----------     ----------     --------------       --------- 
                                                                                                          
Revenues...................................   $ 100,508      $ 60,495         $ (6,485)(A)      $ 151,829 
                                                                                (2,689)(A)                
Operating costs and expenses:                                                                             
  Cost of revenues.........................      60,066        45,044           (6,485)(A)         95,936 
                                                                                (2,689)(A)                
  Selling, general and administrative......      27,672        11,292                              38,964 
  Research and development.................       2,718            61                               2,779 
  Merger and restructuring costs...........        (981)                              (B)            (981)
                                             ----------     ----------     --------------       --------- 
          Total operating costs and                                                                       
            expenses.......................      89,475        56,397           (9,174)           136,698 
                                             ----------     ----------     --------------       --------- 
Operating income...........................      11,033         4,098                0             15,131 
Other income (expense).....................        (511)           43                                (468)
                                             ----------     ----------     --------------       --------- 
  Income before taxes on income............      10,522         4,141                0             14,663 
Taxes on income............................       3,314         1,845                               5,159 
                                             ----------     ----------     --------------       --------- 
  Income before minority interests and                                                                    
     equity in earnings of associated                                                                     
     companies.............................       7,208         2,296                0              9,504 
Minority interests.........................        (408)            0                                (408)
Equity in earnings of associated                                                                          
  companies................................         460           178                                 638 
                                             ----------     ----------     --------------       --------- 
Income from continuing operations..........   $   7,260      $  2,474         $      0          $   9,734 
                                               ========       =======      ===========           ======== 
Income from continuing operations per                                                                     
  common share.............................   $    0.51      $   0.22                           $    0.36 
                                               ========       =======                            ======== 
Number of shares used to compute net income                                                               
  per share................................      14,330        11,053                 (C)          27,040 
                                               ========       =======                            ======== 

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INSITUFORM TECHNOLOGIES, INC. 
AND 
INSITUFORM MID-AMERICA, INC.

UNAUDITED PRO FORMA COMBINED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED DECEMBER 31, 1992                 
                                              ----------------------------------------------------------- 
                                                 ITI            IMA           PRO FORMA         PRO FORMA 
                                              HISTORICAL     HISTORICAL     ADJUSTMENTS(3)      COMBINED  
                                              ----------     ----------     --------------      --------- 
                                                                                                          
Revenues....................................   $  95,559      $ 69,709         $ (5,864)(A)     $ 156,581 
                                                                               $ (2,823)(A)               
Operating costs and expenses:                                                                             
  Cost of revenues..........................      59,721        47,497           (5,864)(A)        98,531 
                                                                                 (2,823)(A)               
  Selling, general and administrative.......      21,982         9,559                             31,541 
  Research and development..................       4,349           286                              4,635 
  Merger and restructuring costs............      14,572             0                 (B)         14,572 
                                              ----------     ----------     --------------      --------- 
          Total operating costs and                                                                       
            expenses........................     100,624        57,342           (8,687)          149,279 
                                              ----------     ----------     --------------      --------- 
Operating income............................      (5,065)       12,367                0             7,302 
Other income (expense)......................       2,868            (9)                             2,859 
                                              ----------     ----------     --------------      --------- 
  Income before taxes on income.............      (2,197)       12,358                0            10,161 
Taxes on income.............................       4,223         4,684                              8,907 
                                              ----------     ----------     --------------      --------- 
  Income before minority interests and                                                                    
     equity in earnings of associated                                                                     
     companies..............................      (6,420)        7,674                0             1,254 
Minority interests..........................        (248)            0                               (248)
Equity in earnings of associated                                                                          
  companies.................................         997           285                              1,282 
                                              ----------     ----------     --------------      --------- 
Income from continuing operations...........   $  (5,671)     $  7,959         $      0         $   2,288 
                                                ========       =======      ===========          ======== 
Income from continuing operations per common                                                              
  share.....................................   $   (0.41)     $   0.89                          $    0.09 
                                                ========       =======                           ======== 
Number of shares used to compute net income                                                               
  per share.................................      13,884         8,915                 (C)         24,136 
                                                ========       =======                           ======== 

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INSITUFORM TECHNOLOGIES, INC. 
AND 
INSITUFORM MID-AMERICA, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED 
CONDENSED STATEMENTS OF OPERATIONS

BASIS OF PRESENTATION                                                           

Reference is made to the material following the caption "Unaudited Pro
Forma Combined Condensed Financial Information."                                

(1) Pro forma adjustments and eliminations to effect the Gelco acquisition are  
as follows:                                                                     

(A) To eliminate intercompany transactions.                           

(B) To reflect (i) amortization of goodwill, (ii) depreciation on the 
        step-up of property and equipment to fair value and (iii) reduction of
management fees, executive compensation and rent expense.     

  (C) To record interest expense associated with acquisition indebtedness.

(D) Pro forma taxes on income have been provided as if Gelco and its  
      affiliates had not been "S" Corporations prior to their acquisition.

(2) Pro forma adjustments and eliminations to effect the Enviroq Acquisition are
as follows:                                                                     

(A) Reflects the payment of a $.2 million annual consulting fee,      
amortization of the non-compete agreement over five years and 
        amortization of goodwill over 25 years. The consulting fee is based on
a five-year consulting agreement.                             

 (B) Reflects the interest expense associated with (i) $15.25 million in
        long-term debt to fund the purchase of Enviroq based on a 60-day LIBOR
         rate plus 1.75% and (ii) $3 million non-compete note payable at 6%. See
         "IMA -- Management's Discussion and Analysis of Financial Condition and
     Results of Operations -- Liquidity and Capital Resources" below for
information regarding demands made for payment of such note.  

 (C) Reflects the tax benefit associated with the pro forma adjustments,
      excluding goodwill amortization which will not receive an income tax
benefit.                                                      

(3) Pro forma adjustments and eliminations to effect the Merger are as follows: 

(A) Intercompany transactions, primarily ITI royalty income of $2.414 
    million, $4.121 million, $2.196 million, $2.689 million and $2.823
     million and product sales of $4.119 million, $9.283 million, $4.603
      million, $6.485 million and $5.864 million, have been eliminated for
    the periods ended June 30, 1995, December 31, 1994, June 30, 1994,
December 31, 1993 and December 31, 1992, respectively.        

    (B) The Pro Forma Combined Condensed Consolidated Statements of Operations
       do not reflect estimated restructuring provisions or costs associated
      with the Merger of $7.0 million and $6.5 million, respectively. Such
       costs associated with the Merger will be charged to operations in the
       quarter in which the Merger is effected. Such estimated restructuring
      provisions are expected to be charged to operations primarily in the
     quarter in which the Merger is effected and in the months following
consummation of the Merger.                                   

(C) The number of shares used to compute net income per share from    
         continuing operations has been calculated using the Conversion Ratio of
      1.15 shares of ITI Common Stock for each share of IMA Class A Common
Stock.                                                        

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   (D) To recharacterize the net of tax gain recognized by ITI upon the sale
         of its holdings in Enviroq as a reduction of the purchase consideration
paid by IMA and adjust the related goodwill amortization.     

(4) At June 30, 1995 and through the periods reported, a 15% general partnership
  interest in Midsouth Partners was held by a subsidiary of ITI, and a 42.5%
interest therein was held by a subsidiary of Enviroq. As a result of the
  Enviroq Acquisition, the pro forma statements reflect a majority ownership
   (57.5%) in Midsouth Partners as held by the combined ITI/IMA. See "Business
 of ITI -- Investments" below for a description of arbitration proceedings
  brought by the remaining partner of Midsouth Partners alleging an event of
    default by Enviroq under the partnership agreement of Midsouth Partners as a
    result of entering into the Enviroq Agreement, and the purported exercise by
such partner of its alleged rights as a non-defaulting partner to name a
    majority of the members of the management committee of Midsouth Partners, an
action to which both ITI and Enviroq have objected.                     

(5) Eliminations to effect the consolidation of Midsouth Partners are as        
follows:                                                                        

(A) To eliminate intercompany transactions.                           

   (B) To reflect income attributable to minority interests and to eliminate
   ITI's and Enviroq's historical share of earnings under the equity
method.                                                       

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SELECTED FINANCIAL DATA OF ITI

   The selected financial data of ITI set forth below have been derived from
ITI's consolidated financial statements included herein and previously published
historical financial statements of ITI not appearing herein. In December 1992,  
ITI consummated the acquisition (the "IGL Acquisition") of Insituform Group     
Limited ("IGL"), which ITI has accounted for as a pooling-of-interests and,     
accordingly, the historical financial statements of the combining companies have
been retroactively combined (after adjustments to eliminate intercompany        
balances and transactions, and to conform accounting methods) as if the         
companies had operated as a single entity for the periods presented. The        
selected financial data as at and for the six months ended June 30, 1995 and    
1994 is unaudited; however, in the opinion of the management of ITI, include all
adjustments, consisting of only normal recurring adjustments, necessary for a   
fair presentation of the results of operations and the financial position at and
for each of the interim periods presented. Operating results for the six months 
ended June 30, 1995 are not necessarily indicative of the results that may be   
obtained for the entire year ending December 31, 1995. The selected financial   
data of ITI set forth below and should be read in conjunction with              
"ITI -- Management's Discussion and Analysis of Financial Condition and Results 
of Operations" and ITI's Consolidated Financial Statements, including the notes 
thereto, contained elsewhere herein.                                            

                                                        [Enlarge/Download Table]

                                   SIX MONTHS ENDED                                                              
                                       JUNE 30,                          YEAR ENDED DECEMBER 31,                 
                                 ---------------------   ------------------------------------------------------- 
                                  1995(1)       1994     1994(2)    1993(3)       1992(4)       1991      1990   
                                 ----------   --------   --------   --------      -------      -------   ------- 
                                                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                     
                                                                                                                 
INCOME STATEMENT DATA:                                                                                           
Total revenues.................   $ 83,446    $ 62,283   $148,247   $100,508      $95,559      $76,402   $60,683 
Merger and restructuring                                                                                         
  costs........................         --          --         --       (981)      14,572(5)       733       292 
Other income (expense):                                                                                          
  Gain on sale of investment in                                                                                  
    IMA........................         --          --         --         --           --       17,280(6)      --
Income (loss) from continuing                                                                                    
  operations...................      2,995(7)    3,643      9,794(8)    7,260(8)   (5,671)(5)   15,360(6)   1,408
Income (loss) from continuing                                                                                    
  operations per common                                                                                          
  share........................        .21         .25        .68        .51         (.41)        1.12       .11 
BALANCE SHEET DATA (AT PERIOD                                                                                    
  END):                                                                                                          
Total assets...................    164,820     132,684    162,494    129,175       87,379      105,579    89,599 
Long-term debt and redeemable                                                                                    
  preferred stock..............     53,131      34,307     47,347     36,454        7,421        8,059     9,030 

---------------                                                                 
(1) In February 1995, ITI consummated the acquisition of 66% of Insituform      
France S.A., which has been accounted for under the purchase method of  
accounting.                                                             
(2) In October 1994, ITI consummated the acquisition of Gelco Services, Inc. and
affiliates, which has been accounted for under the purchase method of   
accounting.                                                             
(3) In July 1993, ITI consummated the acquisitions of Naylor Industries, Inc.   
and Insituform Midwest, Inc., which have been accounted for under the   
purchase method of accounting.                                          
(4) In December 1992, ITI consummated the acquisition of the minority interest  
 in IGL Canada Limited, and the acquisition of H.T. Schneider, Inc., which
have been accounted for under the purchase method of accounting.        
(5) Reflects $9.667 million in costs associated with the IGL Acquisition, which 
    have been charged to operations primarily in the fourth quarter of 1992, and
 a pre-tax charge in the amount of $4.905 million for restructuring costs,
primarily for asset-related write-offs, lease termination provisions and
personnel related costs.                                                
(6) In May 1991, ITI completed the sale of its equity interest in IMA as a      
 result of which ITI received payments aggregating $22.058 million, which,
after accounting for the aggregate carrying amount of the investment,   
    expense associated with the transaction and taxes (subsequent to utilization
    of ITI's capital loss carryover reported as an extraordinary item), resulted
in a contribution of approximately $10.574 million to net income        
(approximately $9.451 million to income before extraordinary item).     
(7) On May 23, 1995, ITI entered into a memorandum of understanding, subject to 
execution of an appropriate stipulation of settlement (which occurred on
September 11, 1995), court approval and other customary conditions, to  
settle certain outstanding litigation for a cash payment of $3.2 million
  (which ITI has deposited into escrow) and issuance of 30,000 shares of ITI
  Common Stock, resulting in an after-tax charge against second quarter 1995
earnings of approximately $2.2 million.                                 
(8) In December 1993, ITI determined to discontinue the operations of its       
   division engaged in the offsite rehabilitation of downhole tubulars for the
    oil and gas industry. As a result, ITI recorded a fourth quarter 1993 charge
    to write down the division's assets to their estimated net realizable values
   and to accrue for operating losses during the anticipated phase-out period.
The statements of operations and balance sheets have been restated to   
reflect continuing operations. ITI also recorded a fourth quarter 1994  
 charge resulting from the abandonment of efforts to find a purchaser for,
and shut-down of, such division.                                        

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

RESULTS OF OPERATIONS                                                           

ITI's revenues include product sales of materials and equipment to    
licensees, construction revenues from trenchless installation and non-trenchless
contracting activities and royalty income and initial license fees received from
licensees for the use of ITI's trenchless rehabilitation processes. Product     
sales consist primarily of sales of Insitutubes and NuPipe to licensees.        
Construction contract revenue is generated by ITI's wholly-owned subsidiaries,  
principally Insituform Southwest, Insituform of New England, Inc. ("Insituform  
New England"), Insituform Gulf South, Inc. ("Gulf South"), Insituform Midwest,  
Inc. ("Insituform Midwest"), Gelco Services, Inc., IGL Canada Limited ("IGL     
Canada"), Insituform Permaline Limited ("Insituform Permaline"), Insituform     
Overseas Limited ("IOL"), NuPipe Limited and Insituform France S.A. ("Insituform
France"). Royalties and license fees are paid by ITI's 33 unaffiliated          
Insituform licensees and sub-licensees and its ten unaffiliated NuPipe          
licensees. During the three years ended December 31, 1994, 1993 and 1992        
approximately 78.7%, 77.7% and 70.5%, respectively, of ITI's consolidated       
revenues were derived from sales, construction and royalty revenues related to  
the Insituform Process.                                                         

Product sales and royalties are primarily a function of the contracts 
performed by ITI's licensees. However, changes in product sales may vary from   
changes in royalties because of several factors, including differences between  
the timing of Insitutube sales and contract performance by licensees and the    
accrual by ITI of minimum royalties in excess of royalties otherwise due on work
performed. Construction revenues generated by ITI's consolidated subsidiaries   
include revenues from the non-trenchless operations of IGL Canada. ITI's        
consolidated subsidiaries obtain supplies of Insitutubes and related materials  
from ITI.                                                                       

     ITI was incorporated in Delaware in 1980 in order to act as IGL's exclusive
licensee of the Insituform Process in most of the United States. In December    
1992, ITI consummated the IGL Acquisition, which has been accounted for as a    
pooling-of-interests. Under the pooling-of-interests method of accounting, the  
historical financial statements of the combining companies are retroactively    
combined (after adjustments to eliminate intercompany balances and transactions,
and to conform accounting methods) as if the companies had always operated as a 
single entity.                                                                  

ITI's acquisition in 1991 of the controlling interest in Insituform   
Southwest, its acquisitions in December 1992 of the minority interest in IGL    
Canada, at that time a majority-owned subsidiary of IGL, and of H.T. Schneider, 
Inc., the parent of Insituform New England, its acquisitions in July 1993 of    
Naylor Industries, Inc. ("Naylor"), the parent of Gulf South, and of Insituform 
Midwest, its acquisition in October 1994 of Gelco and its February 1995         
acquisition of two-thirds of the interest in Insituform France have been        
accounted for under the purchase method of accounting, so that the results of   
the acquired companies are included in ITI's historical results of operations   
from the consummation of such transactions, respectively. In addition, product  
sales and purchases and royalty revenues and expenses related to intercompany   
transactions occurring subsequent to the acquisition dates of Insituform        
Southwest, Insituform New England, Gulf South, Insituform Midwest, Gelco and    
Insituform France have been eliminated.                                         

   See "-- Liquidity and Capital Resources" below for information concerning
the proposed disposition of IGL Canada's non-trenchless business. During the six
months ended June 30, 1995, such operations generated revenues of $3.3 million, 
resulting in an operating loss of $.3 million, compared to revenues of $4.0     
million, resulting in an operating loss of $.2 million, during the six months   
ended June 30, 1994. During the years ended December 31, 1994, 1993 and 1992,   
such operations generated revenues of $14.0 million, $14.1 million and $23.5    
million, respectively, resulting in operating income of, respectively, $.8      
million, $1.1 million and $2.5 million.                                         

     Fluctuations in the exchange rates between the United States dollar and the
currencies of other countries in which ITI operates or has licensees may have an
impact on ITI's consolidated results during the relevant reporting period. ITI  
intends to manage any such foreign currency exposure in the context of discrete 
commercial transactions and, when appropriate, to offset such exposure in whole 
or in part by entering into foreign currency forward contracts, in order to     
reduce the impact of such fluctuations on results of operations. ITI does not   
anticipate that the circumstances in which such hedging activity would be       
appropriate will have a material effect on ITI's liquidity.                     

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Six Months Ended June 30, 1995 and 1994                                     

 Revenues.  Revenues for the first half of 1995 increased 34.0% to $83.4
million from $62.3 million in the prior year, primarily as a result of an       
increase in construction revenues and, to a lesser extent, royalties and license
fees, offset by a decrease in product sales. The significant increase in        
construction revenues was due in part to the October 1994 acquisition of Gelco  
and its affiliates and the February 1995 acquisition of a two-thirds interest in
Insituform France. Subsequent to their respective acquisitions, however, product
sales to and royalty revenues from these entities have been eliminated from     
ITI's consolidated revenues. Fluctuations in currency exchange rates of the     
Japanese yen and British pound sterling to the United States dollar favorably   
impacted total revenues by approximately $.8 million in the first half of 1995. 

   Construction revenues during the first half of 1995 increased by 51.3% to
$64.5 million from $42.6 million in the comparable period of the prior year,    
primarily due to the acquisitions of Gelco and Insituform France. During the    
six-month period, $10.0 million of construction revenues were attributable to   
the recently-acquired Gelco operations and $2.6 million of construction revenues
were attributable to Insituform France. Increases in construction revenues also 
reflect increases in revenues for the six-month period by Insituform New        
England, of $4.9 million (primarily attributable to continuing project work on  
its contracts with the Massachusetts Water Authority), by Insituform Midwest, of
$3.9 million, and by Gulf South, of $3.1 million, offset by decreases in        
revenues for the six-month period by Insituform Permaline, of $.8 million, and  
by Insituform Southwest, of $1.9 million. During the first six months of 1995,  
50.0% of the revenues of IGL Canada (or 3.9% of ITI's consolidated revenues) was
derived from non-Insituform operations in Canada, compared to 64.5% of the      
revenues of IGL Canada during the first half of the prior year (6.4% of ITI's   
consolidated revenues). Fluctuations in the currency exchange rates of the      
British pound sterling and the Canadian dollar to the United States dollar      
favorably impacted construction revenues by approximately $.1 million in the    
first half of 1995.                                                             

  Product sales for the first half of 1995 decreased 8.0% to $13.2 million
from $14.3 million for the first half of 1994. For the first half of 1994,      
product sales included $.8 million in sales to ITI's recently-acquired          
subsidiaries, Gelco and Insituform France. Decreased construction activity in   
Japan, due to delays in projects caused in part by the January earthquake,      
resulted in decreased sales of $.5 million for the six-month period. The        
decrease in product sales was partially offset by improved sales to European    
licensees of $.4 million for the six-month period. Fluctuations in the currency 
exchange rates of the Japanese yen and British pound sterling to the United     
States dollar, collectively, positively impacted product sales by approximately 
$.7 million in the first half of 1995.                                          

    Royalties and license fees for the first half of 1995 increased by 7.9% to
$5.8 million from $5.3 million for the same period in 1994. While gross         
royalties for the six-month period increased by $1.8 million, the elimination of
an additional $1.4 million in intercompany royalties from wholly-owned licensees
($.5 million of which were attributable to newly-acquired entities) resulted in 
a net increase of $.4 million. During the first half of 1995 and 1994,          
respectively, license fee revenue of $.2 million and $.2 million was recorded.  

Operating Costs and Expenses.  In the first half of 1995, cost of     
construction contracts increased 45.7% to $44.7 million from $30.7 million in   
1994, primarily attributable to newly-acquired licensees which added,           
collectively, $9.1 million to costs for the six-month period in 1995. During the
first half of 1995, construction costs as a percentage of construction revenues 
decreased to 69.2% from 71.9% in 1994, primarily due to higher margins achieved 
by certain of the newer subsidiaries, partially offset by lower margins in some 
regions of the United States which resulted from competitive bidding conditions.

     For the first half of 1995, cost of product sales decreased by 2.0% to $8.5
million from $8.6 million in the first half of 1994. For the first half of 1995,
cost of product sales as a percentage of product sales increased to 64.3% in    
1995 compared to 60.3% for the same period in 1994, due primarily to changes in 
the mix of products sold and an increase in European product sales at           
historically lower margins.                                                     

     For the first half of 1995, selling, general and administrative expenses as
a percentage of revenues was 20.7% compared to 21.6% in the first half of 1994, 
due to the increase in revenues in the 1995 period over 1994. In the first half 
of 1995, selling, general and administrative expenses increased 28.3% to $17.3  
million compared to $13.4 million in 1994, primarily attributable to the costs  
of operations for Gelco and Insituform                                          

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France (aggregating $2.5 million for the six months in the current year),       
including amortization of additional goodwill of $.6 million for the six-month  
period in 1995. In addition, in 1995 costs have increased at Insituform New     
England due to management transition and additional crew management personnel to
handle increased volume.                                                        

 For the first half of 1995, strategic marketing and product development
costs increased 11.8% to $3.3 million compared to $3.0 million in the prior     
year, due primarily to industrial marketing efforts in the chemical and pulp and
paper industries.                                                               

Litigation Settlement.  As more fully described under "Business of    
ITI -- Legal Proceedings" below, during the second quarter of 1995 ITI entered  
into a memorandum of understanding to settle a pending shareholder class action 
lawsuit. Under the settlement, which has been evidenced by a stipulation of     
settlement and remains subject to court approval and other customary conditions,
ITI would make a cash payment to class members in the amount of $3.2 million    
(which has been deposited in escrow) and issue 30,000 shares of ITI Common Stock
(valued at $.4 million at June 30, 1995). Accordingly, ITI charged earnings for 
$3.6 million (after-tax effect of approximately $2.2 million) during the second 
quarter of 1995.                                                                

 Realized Gain on Disposal of Investment.  In April 1995, ITI realized a
gain on the disposal of its investment in Enviroq of approximately $.8 million, 
as a result of the consummation of the Enviroq Acquisition by IMA.              

    Other Expense.  For the first half of 1995, other expense increased 127.4%
to $1.9 million from $.9 million, attributable to $1.3 million of additional    
interest incurred on debt issued to fund the acquisitions of Gelco and          
Insituform France, coupled with an increase in interest rates from early 1994.  
Partially offsetting this decrease was an increase in investment income of      
$212,000, resulting from improved market interest rates and implementation of a 
domestic cash management program which maximizes funds available for short-term 
investment.                                                                     

     Taxes on Income.  In the first half of 1995, taxes on income decreased 6.1%
to $1.9 million from $2.0 million in the prior year, primarily as a result of an
$.8 million decrease in income before taxes on income, which was offset         
partially by an increase in the effective tax rate to 39.4% from 36.2% during   
the first half of 1994. The effective rate increased in 1995, primarily as a    
result of foreign earnings being taxed at higher rates, and tax benefits on     
losses in certain foreign jurisdictions being reserved while full future        
utilization is uncertain.                                                       

 Net Income.  For the first half of 1995, total revenues increased $21.2
million, or 34.0%, over the first half of 1994, which was coupled with an       
increase in gross profit of $7.3 million, or 32.0%, partially offset by         
increased operating costs of $4.2 million, or 25.3%. These factors resulted in  
an increased operating profit of $3.2 million, or 48.8%, compared to the prior  
period. An increase in other expense of $1.1 million, coupled with the          
litigation loss of $3.6 million, offset slightly by the gain on the sale of an  
investment of $.7 million and lower taxes on income of $.1 million, resulted in 
a decrease in income before minority interests and equity in earnings of        
affiliated companies of $.6 million, or 18.0%. As a result of the foregoing, net
income for the first half of 1995 was $3.0 million, a decrease of $.6 million   
from net income of $3.6 million in the first half of 1994.                      

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993       

   Revenues.  Revenues increased 47.5% to $148.2 million in 1994 from $100.5
million in the prior year, primarily as a result of an increase in construction 
revenues, and to a lesser extent, product sales. As discussed above, during 1994
and 1993 ITI consolidated the construction revenues of four newly-acquired      
former licensees, resulting in the elimination of the related product sales and 
royalty revenues.                                                               

     Construction contract revenues increased 74.3% to $109.7 million from $63.0
million in 1993, primarily as a result of the acquisitions of Gelco (in October 
1994) and Insituform Midwest and Gulf South (both in July 1993), which          
collectively added $51.3 million to 1994 construction revenues, compared to     
$20.7 from Insituform Midwest and Gulf South in the prior year. Construction    
revenues also reflected an increase in 1994 of $12.6 million by Insituform New  
England, due primarily to the project work on its contracts with the            
Massachusetts Water Resources Authority. Fluctuations in the currency exchange  
rates of Canadian dollars to United States dollars negatively impacted 1994     
construction revenues by approximately $1.2 million. In 1994,                   

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71.7% of the revenues of IGL Canada (or 9.5% of ITI's consolidated revenues) was
derived from non-Insituform operations in Canada.                               

     Product sales increased 4.4% to $28.3 million in 1994 from $27.1 million in
1993. The increase in 1994 was primarily due to increased licensee activity in  
the United States, activity in Japan relating to the Narita Airport project, and
recovering economic conditions in Europe. These increases were offset by        
eliminations of intercompany sales to ITI's recently-acquired subsidiaries.     
Post-acquisition intercompany sales to Gelco of $.7 million were excluded from  
1994 consolidated product sales. In addition, 1993 sales included $2.9 million  
of pre-acquisition sales to Insituform Midwest and Gulf South.                  

 Royalty and license fee revenue decreased 1.9% in 1994 to $10.3 million
compared to $10.5 million in 1993. The decrease was primarily attributable to   
the elimination of $.2 million in post-acquisition intercompany royalties from  
Gelco in 1994. Royalties in 1993 included $.6 million of pre-acquisition        
royalties from Insituform Midwest and Gulf South. In 1994, ITI added licenses   
for South Korea and, on a non-exclusive basis, for Japan and Poland, recognizing
license fee revenue of $.3 million. In 1993, ITI signed licenses in Australia,  
Belgium, Hawaii, Switzerland and, on a non-exclusive basis, various territories 
in the former Soviet Union, recognizing $.6 million in license fee revenue.     

Operating Costs and Expenses.  In 1994, cost of construction contracts
(which include both trenchless installations and open-cut excavation) increased 
72.6% to $77.2 million from $44.7 million in 1993. The increase was primarily   
attributable to newly-acquired licensees, which added, collectively, $40.0      
million to 1994 construction costs, compared to $14.0 million in 1993. During   
1994, construction costs as a percentage of construction revenues decreased to  
70.4% from 71.1% in 1993, due primarily to the 1994 acquisition of Gelco and    
1993 acquisition of Insituform Midwest, which achieved comparatively higher     
gross margins, offset by poorer performance at Insituform New England and       
increased price competition in certain markets.                                 

   Cost of product sales as a percentage of product sales increased to 60.8%
in 1994 compared to 55.5% in 1993 with the gross profit decreasing to $11.1     
million in 1994 from $12.0 million in 1993. Those results primarily reflected an
increase of $2.9 million in product sales in 1994 by Japan and the United       
Kingdom, where margins are lower. In addition, ITI recorded a provision of $.6  
million for certain obsolete inventories of NuPipe in 1994. Also, in 1993, ITI  
recorded reductions in certain European warranty reserves no longer required in 
the amount of $.5 million, which favorably impacted cost of product sales,      
whereas, in 1994, no such reductions were recorded.                             

   As a percentage of revenues, selling, administrative and general expenses
were 22.6% compared to 27.5% in 1993. The decreases in 1994 as a percent of     
revenues was attributable primarily to economies of scale realized by the       
allocation of fixed costs over a larger revenue base. Further, ITI incurred     
approximately $.7 million in costs late in 1993 in connection with reorganizing 
management. Selling, administrative and general expenses increased 21.3% to     
$33.6 million compared to $27.7 million in 1993 due, in part, to the incremental
costs of operations for recently acquired entities of $2.3 million (of which $.7
million related to incremental goodwill and noncompete amortization). Also      
contributing to the increase were the additional ongoing costs of expanded      
administrative and marketing efforts in 1994, including salaries and related    
benefits of $2.8 million for additional personnel, travel and other costs.      

Research and development costs decreased 44.5% to $1.5 million in 1994
compared to $2.7 million in 1993, primarily due to the elimination of           
duplicative United Kingdom research and development costs, including personnel  
and facilities, as a result of the acquisition of IGL in December 1992, and the 
concentration of such efforts in the United States. In addition, certain        
employees in the United Kingdom were reassigned from research and development to
technical support and selling and marketing in 1994. In 1995, ITI anticipates an
increase in research and development costs as a result of new and expanded      
projects.                                                                       

   In 1993, ITI recognized merger and restructuring credits of approximately
$1.0 million, which primarily reflected the effect of an early termination of a 
sub-lease under ITI's Langley, United Kingdom, lease (which resulted in the     
receipt of $.8 million). ITI continues to seek to negotiate a termination of the
underlying lease in Langley.                                                    

   Other Income (Expense).  Other income (expense) increased to $2.4 million
from $.5 million in 1993, primarily attributable to additional interest incurred
on debt issued to fund ITI's corporate acquisitions (an                         

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increase of $1.8 million compared to 1993). In the prior year, other expenses   
also included $.3 million incurred in connection with a postponed public equity 
offering.                                                                       

Taxes on Income.  Taxes on income applicable to continuing operations 
increased to $6.1 million from $3.3 million in 1993 as a result of an increase  
in the effective tax rate to 38.1%, as compared to 31.5% in 1993, combined with 
a $5.6 million increase in income before taxes on income. As indicated in Note  
17 of the Notes to ITI's Consolidated Financial Statements included elsewhere   
herein, the 1993 effective tax rate was lower than the United States federal    
statutory rate, primarily due to the favorable foreign tax treatments of certain
foreign earnings generated in the period. The additional amortization of        
goodwill of $1.0 million associated with the Gulf South and Insituform Midwest  
acquisitions, which was not deductible for tax purposes, contributed to the     
increase in the 1994 rate over the statutory rate, as did ITI's inability to    
utilize current year losses in certain tax jurisdictions to offset current year 
profits in other jurisdictions.                                                 

In its financial statements, ITI has reported net deferred income tax 
assets of $2.8 million as of December 31, 1994. ITI has net operating loss and  
foreign tax credit carryforwards which, if fully realized, would produce future 
tax benefits of $6.3 million. The realization of these benefits is dependent on 
the generation of future taxable income in the applicable jurisdictions, and ITI
has recorded a valuation allowance of $3.4 million to reduce the related net    
deferred tax assets to $2.8 million. Such amounts represent the level of future 
income tax benefits the realization of which, in management's opinion, meets the
"more likely than not" threshold required under Statement of Financing          
Accounting Standards No. 109, Accounting for Income Taxes ("FAS 109"). The net  
operating loss carryforwards ("NOLs") of ITI's subsidiaries are summarized in   
Note 17 of the Notes to Consolidated Financial Statements included elsewhere    
herein.                                                                         

     Approximately $1.2 million of the United States NOLs, expiring in 2007, are
further subject to limitations imposed by Section 382 of the Code and may only  
be utilized to the extent of approximately $.4 million per year as a result of  
the ownership change which occurred upon ITI's acquisition of Insituform New    
England. However, this limitation is such that the full amount of NOLs may be   
utilized before the expiration of the carryforward period.                      

    Management of ITI has prepared projections of the respective subsidiaries'
taxable income for future years that indicate that the NOLs that are subject to 
a Section 382 limitation would be absorbed within four to seven years, that the 
remaining United States and Canadian NOLs would be absorbed within three years  
and a substantial portion of the United Kingdom NOLs would be absorbed within   
seven years. However, ITI does not believe that the future realization of all of
these future tax benefits indicated by its projections is sufficiently assured  
to allow their full recognition in the consolidated financial statements. In    
particular, projections of operating results over an extended period, such as   
seven years, are inherently imprecise. Accordingly, a valuation allowance of    
$3.4 million has been recorded as of December 31, 1994.                         

     The realization of the net deferred tax asset of $2.8 million would require
that certain of ITI's subsidiaries, including Insituform California, Insituform 
Southwest, Insituform New England, IGL Canada, Insituform Permaline, and        
Insituform Technical Services generate various levels of annual taxable income  
over the respective carryforward periods. Management of ITI believes that it is 
more likely than not that the applicable levels of taxable income can be        
generated. In reaching this conclusion, management noted a number of factors,   
including the following related to its domestic operations: (i) the operations  
of Insituform New England were historically profitable, it has substantial      
contract backlog and the NOL carryforward was generated by a non-recurring      
charge immediately prior to its acquisition by ITI; and (ii) historically       
profitable partnership investments held by Insituform California are expected to
continue to result in annual taxable income. With regard to its foreign         
operations, management noted a number of factors including that, with the       
exception of NuPipe Limited, ITI's United Kingdom operations have had a history 
of profitability until the United Kingdom recession and ITI has eliminated      
duplicative administrative and research and development facilities in the United
Kingdom and has also reduced managerial and other staffing levels in the United 
Kingdom.                                                                        

  Discontinued Operations.  In December 1993, ITI adopted a formal plan to
discontinue the operations of its division engaged in the off-site              
rehabilitation of downhole tubulars for the oil and gas industry. ITI offered   
the business and the related assets, including a facility located in Dallas,    
Texas, for sale during 1994, but was unable to obtain a commitment from         
prospective buyers, and management determined to shutdown the                   

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division. ITI recorded a charge of $2.0 million ($1.3 million net of applicable 
income tax benefit) in the fourth quarter of 1993 to write-down the division's  
assets to their estimated net realizable value and to accrue for estimated      
operating losses during the phase-out period. Upon the determination to         
liquidate the division's assets, ITI recorded, in the fourth quarter of 1994, a 
charge of $1.8 million ($1.2 net of applicable income tax benefit) to writedown 
the division's assets to their estimated liquidation values and to accrue for   
estimated costs to shut-down the operation.                                     

   The downhole tubular division's revenues for the years ended December 31,
1994 and 1993 were $1.1 million and $1.9 million, respectively. The results of  
operations of the downhole tubular division have been reclassified to separately
identify them as discontinued operations.                                       

   Net Income.  Total revenues increased by $47.7 million, or 47.5%, in 1994
over 1993, which was coupled with an increase in gross profit of $13.2 million, 
or 32.6%, partially offset by increased operating costs of $5.7 million, or     
19.2%. These factors contributed to an increase in operating income of $7.5     
million, or 68.1%. Excluding merger and restructuring credits in 1993, operating
income would have increased by $8.5 million. An increase in other expense of    
$1.9 million, coupled with an increase in taxes on income of $2.8 million,      
resulted in an increase in income from continuing operations of $2.5 million, or
34.9%. Losses in 1994 from discontinued operations were $1.2 million (net of    
applicable income tax benefits of $.6 million). In 1993, ITI recognized $218,000
from the cumulative effect of an accounting change to FAS 109. As a result of   
the foregoing, net income for 1994 was $8.6 million, an increase of $3.6        
million, or 72.2%, from 1993.                                                   

Year Ended December 31, 1993 Compared to Year Ended December 31, 1992         

 Revenues.  Revenues increased 5.1% to $100.5 million in 1993 from $95.6
million in the prior year, reflecting an increase in construction revenues,     
partially offset by declines in product sales and royalties. As discussed above,
in 1993 ITI began to consolidate the construction revenues of three             
newly-acquired former licensees and to eliminate the related product sales and  
royalty revenues.                                                               

    Construction contract revenues increased 18.4% to $63.0 million from $53.2
million in 1992, primarily as a result of the acquisitions of such licensees,   
which collectively added $27.1 million to 1993 construction revenues. This      
incremental revenue was partially offset by decreases in revenues of $7.3       
million and $9.6 million experienced by IGL Canada and Insituform Permaline,    
respectively, which were attributable to the effects of a Canadian economic     
recession and to a change in the traditional spending patterns in the United    
Kingdom, where the privatized water authorities have deferred rehabilitation    
projects in favor of pollution control projects. In 1993, 75.4% of the revenues 
of IGL Canada (or 12.6% of ITI's consolidated revenues) was derived from        
non-Insituform operations in Canada. In addition, fluctuations in currency      
exchange rates of the British pound sterling and Canadian dollar to United      
States dollars negatively impacted 1993 construction revenues by approximately  
$2.5 million.                                                                   

     Product sales decreased 9.4% to $27.1 million in 1993 from $29.9 million in
the prior year. Post-acquisition intercompany sales to Insituform New England,  
Gulf South and Insituform Midwest, totalling $3.8 million, were excluded from   
1993 consolidated product sales. Royalties and license fees decreased 15.3% in  
1993 to $10.5 million compared to $12.4 million in 1992, primarily as a result  
of the exclusion of $1.7 million in post-acquisition royalties as well as the   
decrease in licensee installation activity during the first half of 1993        
primarily due to weather conditions in the United States and economic recessions
in Europe and Canada. The decrease in royalties was partially offset by a 1993  
increase of $.6 million in license fees, reflecting the grant of new Insituform 
licenses for Hawaii, Australia, Belgium, Switzerland, and, on a non-exclusive   
basis, various territories in the former Soviet Union.                          

 Operating Costs and Expenses.  Cost of construction contracts increased
9.6% to $44.7 million in 1993 from $40.8 million in the prior year, primarily   
attributable to the newly-acquired licensees which, collectively, added $19.0   
million to 1993 construction costs. Construction costs as a percentage of       
construction revenues improved to 71.0% in 1993 from 76.6% in 1992, principally 
due to margins achieved by new subsidiaries (Gulf South and Insituform Midwest),
partially offset by lower margins in the United Kingdom which resulted from     
volume decreases and competitive bidding conditions. During 1993, management    
reduced the size of its United Kingdom installation work force in response to   
this decrease in work load.                                                     

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    Costs of product sales as a percentage of product sales decreased to 55.5%
in 1993 compared to 62.2% in 1992 with gross profit increasing to $12.0 million 
in 1993 from $11.3 million in 1992. The change was due primarily to higher      
production volume and productivity improvements in the United Kingdom and Japan 
combined with NuPipe margin improvements in the United States.                  

   As a percentage of revenues, selling, administrative and general expenses
were 27.5% compared to 23.0% in 1992. Selling, administrative and general       
expenses increased 25.9% to $27.7 million compared to $22.0 million in 1992,    
primarily due to expanded selling and marketing efforts, the realignment of     
employee responsibilities in 1993 from research and development to technical    
support and selling and marketing departments, and certain 1993 fourth quarter  
costs associated with reorganizing management. In addition, costs of operations 
for Insituform New England, Insituform Midwest and Gulf South of approximately  
$5.5 million were included in 1993 consolidated operations, including           
amortization of additional goodwill and noncompete obligations of $1.1 million. 
This increase was offset partially by savings realized upon the elimination of  
duplicative facilities and employees in the United Kingdom in 1993, following   
the acquisition of IGL in December 1992.                                        

Research and development costs decreased 37.2% to $2.7 million in 1993
compared to $4.3 million in 1992, primarily due to the realignment of employee  
responsibilities from research and development to technical support and         
marketing, as well as the cost savings experienced in the United Kingdom due to 
the combination of research and development efforts of ITI with those previously
conducted by IGL through the elimination of redundancies.                       

  Merger and restructuring costs in 1992 were incurred in conjunction with
the acquisition of IGL and, in 1993, restructuring credits primarily from the   
early termination of a sub-lease under the Langley lease resulted in the receipt
of $845,000. At December 31, 1993, ITI was seeking to negotiate a termination of
the underlying lease in Langley. As discussed above, ITI realized certain cost  
savings in 1993 as a result of the elimination of duplicative facilities and    
employees.                                                                      

Other Income (Expense).  Other income (expense) decreased 117.2% to   
($511,000) from $2.9 million in 1992. The decrease was primarily attributable to
$1.2 million of additional interest incurred on debt issued to fund the         
acquisitions of Insituform New England, Insituform Midwest and Gulf South. In   
addition, investment income decreased $1.1 million, resulting from lower        
investment portfolio balances, as well as lower market interest rates. ITI also 
incurred costs of $276,000 associated with a postponed public equity offering.  

Taxes on Income.  Taxes on income applicable to continuing operations 
decreased 21.4% to $3.3 million in 1993 from $4.2 million in 1992 as a result of
a decrease in the effective tax rate to 31.5% from 192.2%, partially offset by a
$12.7 million increase in income before taxes on income. In 1992, a significant 
portion of ITI's IGL merger costs of $9.7 million was not deductible for federal
income tax purposes. In addition, in accordance with the provisions of          
Accounting Principles Board Opinion No. 11, Accounting for Income Taxes, ITI did
not recognize the expected amount of income tax benefits associated with its    
$4.9 million restructuring provision in 1992 due to existing net operating loss 
situations in certain of the applicable jurisdictions.                          

  As permitted by FAS 109, ITI elected to include the cumulative effect of
this accounting change in its statement of income in the period of initial      
application. The application of this standard resulted in the $2.1 million      
reduction of previously recorded net deferred income tax liabilities, of which  
$1.8 million related to future income tax benefits of pre-acquisition NOLs of   
certain subsidiaries and which has been recorded as a reduction to the costs in 
excess of assets of the businesses acquired. Except for the inclusion of the    
cumulative effect of $218,000, or $.02 per share, in the first quarter 1993 net 
income, the application of this statement had no material impact on the results 
of operations. In its financial statements, ITI reported net deferred income tax
assets of $2.4 million as of December 31, 1993.                                 

Discontinued Operations.  In connection with ITI's determination to   
discontinue the operations of its division engaged in the off-site              
rehabilitation of downhole tubulars for the oil and gas industry, ITI put the   
business and the related assets, including a facility located in Dallas, Texas, 
up for sale or liquidation during 1994. As a result, ITI recorded a charge of   
$2.0 million ($1.3 million net of applicable income tax benefit) in the fourth  
quarter to write down the division's assets to their estimated net realizable   
value and to accrue for operating losses estimated at $585,000 during the       
anticipated phase-out period.                                                   

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   The downhole tubular division's revenues for the years ended December 31,
1993 and 1992 were $1.9 million and $.2 million, respectively. The downhole     
tubular division did not commence operations until the third quarter of 1992.   
The results of operations for the downhole tubular division have been           
reclassified to separately identify them as discontinued operations. For the    
years ended December 31, 1993 and 1992, operating losses, net of applicable     
income tax benefits were $1.1 million and $.5 million, respectively.            

    Net Income.  Total revenues increased by $4.9 million or 5.2% in 1993 over
the prior year, which was coupled with an increase in gross profit of $4.6      
million or 12.9%. Operating costs decreased $11.5 million, resulting in an      
increase in operating income of $16.1 million. Excluding merger and             
restructuring provisions in each year, operating income would have been $10.1   
million in 1993, or $545,000 greater than the corresponding amount of $9.5      
million in 1992. The decrease of $3.4 million in other income in 1993, was      
partially offset by a decrease of $.9 million in taxes on income. As a result of
the foregoing, 1993 income from continuing operations was $7.3 million, compared
to $5.7 million loss in 1992 ($14.0 million of which was attributable to merger 
and restructuring costs). Losses from discontinued operations were $2.5 million 
and $540,000 in 1993 and 1992, respectively (net of applicable income tax       
benefits, of $1.3 million and $278,000, respectively). ITI also recognized      
$218,000 from the cumulative effect of an accounting change to FAS 109 in 1993. 
As a result of the foregoing, net income was $5.0 million in 1993, an increase  
of $11.2 million from the net loss of $6.2 million in 1992.                     

  Pro Forma Combined Operations (ITI/IMA).  Giving pro forma effect (i) to
the consummation of the Merger, and assuming that the Merger will be accounted  
for as a pooling-of-interests (so that the historical financial statements of   
ITI and IMA are retroactively combined, as if the companies had been operating  
as a single entity), (ii) to ITI's acquisition of Gelco and affiliates, and     
assuming that such transaction (which has been accounted for under the purchase 
method of accounting) had occurred on January 1, 1994, and (iii) to the Enviroq 
Acquisition, and assuming that such transaction (which has been accounted for   
under the purchase method of accounting) had occurred on January 1, 1994, for   
the years ended December 31, 1994, 1993 and 1992 the combined companies would   
have recorded revenues of $261.4 million, $151.8 million and $156.6 million. At 
June 30, 1995, a 15% general partnership interest in Midsouth Partners was held 
by a subsidiary of ITI and a 42.5% interest therein was held by a subsidiary of 
Enviroq; and, as a consequence of the Enviroq Acquisition, Midsouth Partners has
been consolidated in the Pro Forma Combined Condensed Statements. See "Business 
of ITI -- Investments" below for a description of arbitration proceedings       
brought by the remaining partner of Midsouth Partners alleging an event of      
default by Enviroq under the governing partnership agreement as a result of     
entering into the Enviroq Agreement, and the purported exercise by such partner 
of its alleged rights as a non-defaulting partner to name a majority of the     
members of the management committee of Midsouth Partners, an action to which    
both ITI and Enviroq have objected.                                             

 The increased aggregate revenues for the most recently completed fiscal
year reflect: (i) the operations of Gelco and its affiliates, and Enviroq, (ii) 
the operations for the entire year of Gulf South and Insituform Midwest         
(acquired by ITI in July 1993), (iii) greater market penetration through        
increasing acceptance of the Insituform Process, and the normalization of IMA's 
rehabilitation operations which had been adversely impacted by floods and rains 
in the prior year, and (iv) the expansion of IMA's abrasion and corrosion       
protection operations and improved market conditions for its tunneling          
operations. In the prior period, the decrease in revenues reflected the weak    
market for IMA's tunneling operations, the impact of excessive rains and floods 
in IMA's area of operations, and decreased revenues in IGL Canada and Insituform
Permaline, attributable, respectively, to Canadian recessionary conditions and  
to the changed priorities of privatized water authorities in the United Kingdom.

     ITI and IMA believe that the trenchless rehabilitation processes offered by
them, including additional product introductions (in particular, involving the  
PALTEM processes in pressure pipe applications in the gas utility industry),    
will continue to find increased market acceptance, although there can be no     
assurance that such processes will be able to effectively meet competitive      
pressures, that any new products will be successfully introduced, or that recent
historical results will be indicative of future results. Given the geographical 
limitations of the existing Insituform licenses, the markets in which ITI's and 
IMA's Insituform contracting operations are conducted have historically not     
overlapped.                                                                     

The historical results of the combined companies for each of the three
years in the period ended December 31, 1994 confirm ITI's increasing            
concentration of revenues derived from direct installation                      

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activities (85.3%, 75.3% and 73.0%, respectively, of total revenues for the     
combined companies, as compared to 74.0%, 62.6% and 55.7%, respectively, for ITI
alone, but including Gelco in the most recent year), resulting from the         
acquisition of domestic licensees. For the six months ended June 30, 1995, 86.4%
of total revenues for the combined companies were derived from direct           
installation operations (as compared to 77.3% for ITI alone).                   

     ITI's corresponding pro forma combined gross profit would have increased to
$91.1 million, $55.9 million and $58.1 million for the years ended December 31, 
1994, 1993 and 1992, respectively (compared to $61.3 million, $40.4 million and 
$35.8 million, respectively, for ITI alone, but including Gelco in the most     
recent year), as a result of additional construction contract revenue in IMA    
(including Enviroq). Such amounts represent 34.9%, 36.8% and 37.1%,             
respectively, of total revenues (compared to 37.3%, 40.2% and 37.5%,            
respectively, for ITI alone, but including Gelco in the most recent year),      
reflecting the change in revenue mix. For the six months ended June 30, 1995 and
1994, pro forma combined gross profit would have been $45.5 million and $40.1   
million, respectively (compared to $30.2 million and $27.0 million,             
respectively, for ITI alone, but including Gelco in the earlier period),        
representing 32.7% and 35.3% of total revenues, respectively (or 36.2% and      
38.3%, respectively, for ITI alone, but including Gelco in the earlier period). 

   Selling, general and administrative costs in the combined companies, as a
percentage of total revenues, would have been 19.3%, 20.9%, 25.7% and 20.1% for 
the six months ended June 30, 1995 and the years ended December 31, 1994, 1993  
and 1992, respectively (compared to 20.7%, 23.2%, 27.5% and 23.0%, respectively,
for ITI alone, but including Gelco in the most recent year). ITI believes that  
savings may be achieved by the combined companies, including without limitation,
potential savings through elimination of duplicative costs in contracting and   
manufacturing operations and administration.                                    

     In accordance with generally accepted accounting principles applicable to a
pooling-of-interests, all costs associated with the Merger, estimated in the    
amount of $6.5 million, will be charged to operations in the quarter in which   
the Merger is effected. In accordance with such principles as so applied, all   
restructuring provisions, estimated in the amount of $7.0 million, will be      
expensed primarily in the quarter in which the transaction is completed and in  
the months following the consummation of the Merger. Of the costs associated    
with the Merger, ITI anticipates aggregate expenses in connection with the      
transaction of approximately $3.8 million, and IMA anticipates aggregate        
expenses in connection with the transaction of approximately $2.7 million. The  
restructuring provisions are anticipated to derive primarily from (i)           
elimination of duplicative manufacturing operations, including the              
rationalization of IMA's planned facility in Chesterfield, Missouri with ITI's  
existing capacity, (ii) consolidation of operations conducted by ITI under the  
UltraPipe name and related facilities maintained by ITI in Everman, Texas with  
IMA's larger corrosion and abrasion protection activities, (iii) reorganization 
of Insituform Process field crews and related facilities once territories       
serviced by IMA's installation activities are combined with territories serviced
by ITI installation activities, and (iv) personnel-related costs.               

    On a pro forma basis, the effective tax rate of the combined companies was
38.1% and 40.4% for the six months ended June 30, 1995, and the year ended      
December 31, 1994, respectively, compared to 39.0% and 38.2% for ITI alone (but 
including Gelco in the most recent year). Both ITI and IMA operate in foreign   
countries which have different tax rates than the United States. Accordingly,   
the combined companies will also be subject to some fluctuation in effective tax
rates depending on the jurisdictions in which profits are generated, and in     
which current operating losses may remain unutilized. Additionally, the         
combining companies anticipate that, in the period in which the combination is  
effected, the effective tax rate of the combined companies will be higher than  
the pro forma combined effective tax rate presented as a result of the          
non-deductibility of merger costs.                                              

Income from continuing operations for the combined companies, on a pro
forma basis, would have been, $17.0 million, $9.7 million and $2.3 million for  
each of the three years in the period ended December 31, 1994, respectively     
($11.0 million, $7.3 million and ($5.7 million), respectively, of which would   
have been derived from ITI alone, but including Gelco in the most recent year), 
and $4.8 million and $7.0 million for the six months ended June 30, 1995 and    
1994, respectively ($3.0 million and $4.3 million, respectively, of which would 
have been derived from ITI alone, but including Gelco in the earlier period).   

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LIQUIDITY AND CAPITAL RESOURCES                                                 

    At June 30, 1995, ITI reported $10.6 million in cash, U.S. treasury bills,
and short-term investments, as compared to $16.6 million at December 31, 1994   
and $15.7 million at December 31, 1993. Cash and cash equivalents decreased $6.0
million during the six months ended June 30, 1995 as a result of $3.0 million of
cash used by operations and capital expenditures of $2.7 million. Cash and cash 
equivalents increased $.9 million in the year ended December 31, 1994 as a      
result of $14.7 million provided by operations, offset by capital expenditures  
of $9.0 million and repayments of long-term debt of $5.8 million. ITI received  
proceeds of $9.8 million from long-term debt during 1994 which it used primarily
to fund $9.4 million in expenditures for business acquisitions. The foregoing   
contributed to a working capital ratio (current ratio) of 2.3-to-1 at June 30,  
1995, constituting an increase from the 1.8-to-1 ratio at December 31, 1994,    
which constituted a decrease from the 2.0-to-1 ratio at December 31, 1993.      

     Continuing operations used cash of $2.9 million during the six months ended
June 30, 1995, compared to cash provided by operations of $6.2 million during   
the same period in the prior year. This change was primarily attributable to a  
litigation loss (see "Business of ITI -- Legal Proceedings" below), reductions  
in accounts payable and income taxes payable, and increases in prepaid expenses 
and miscellaneous assets from the respective December 31, 1994 balances,        
partially offset by increased depreciation and amortization and a slightly      
smaller increase in receivables as compared with the six months ended June 30,  
1994. Additional federal and state income tax payments were made by ITI in March
and June 1995 as a result of greater 1994 United States taxable income as       
compared with that generated for the 1993 tax year. Further, in the first       
quarter of 1995, ITI made its 1994 profit-sharing plan contribution and bonus   
payments. Prepaid expenses and miscellaneous assets increased at June 30, 1995, 
primarily due to the deferral of expenses of approximately $.8 million related  
to the pending transaction with IMA. In addition, in April 1995 ITI realized a  
gain on the disposal of its investment in Enviroq of approximately $.8 million; 
ITI has recorded the proceeds from such disposition in the amount of            
approximately $1.2 million in prepaid expenses and miscellaneous assets since   
such proceeds were not received until August 1995.                              

     Continuing operations provided $14.8 million in cash in 1994 as compared to
$5.3 million in 1993. This increase was due primarily to an increase in income  
from continuing operations of $2.5 million, additional depreciation and         
amortization of $1.2 million associated with continuing capital expenditures and
to incremental amortization of $.7 million relating to goodwill and             
non-competition agreements arising from the acquisitions of the Gelco companies,
Gulf South and Insituform Midwest, and an increase of $4.3 million in income    
taxes payable. Discontinued operations used cash of $.1 million in 1994 compared
to $.9 million in 1993.                                                         

During 1994, increases in accounts payable and accruals provided $2.3 
million in cash as compared to 1993, in which $7.3 million was used, primarily  
to retire approximately $10.0 million of non-recurring merger and restructuring 
liabilities which arose during 1992.                                            

     Receivables, which include amounts unbilled and retainage receivables under
construction contracts, increased $2.5 million during the six months ended June 
30, 1995 and $9.9 million during 1994 and decreased $.2 million in 1993. During 
the first half of 1995, trade receivables decreased $.8 million from product    
sales in the United States, Japan and, to a lesser extent, in the United        
Kingdom, while retainage receivables decreased by $1.1 million. Primarily due to
the Gelco acquisition and the significantly increased activity of United States 
contracting operations in 1994, receivables, including costs and estimated      
earnings in excess of billings, increased 51.1% to $41.6 million from $27.5     
million at December 31, 1993, reflecting a $1.9 million increase in retainage   
receivables and an increase of $2.9 million in costs and estimated earnings in  
excess of billings on construction contracts over 1993. The collection cycle for
construction receivables is generally longer than for ITI's other operations due
to provisions for retainage, often 5% to 10% of the contract amount, as well as 
the slow internal review processes often employed by the construction           
subsidiaries' municipal customers. Retainage receivables are generally collected
within 60 to 90 days after completion of a contract.                            

    In October 1994, ITI acquired all of the outstanding common stock of Gelco
and affiliates, ITI's licensees of the Insituform Process in Oregon, Washington,
Idaho, Alaska, Hawaii, Guam, northern California and northern Nevada, portions  
of Montana and British Columbia, and related assets. The purchase price of $18.0
million was paid with $9.0 million in cash at closing and $9.0 million in       
promissory notes due on the first                                               

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and second anniversaries of closing. In addition, ITI issued promissory notes,  
aggregating approximately $2.85 million, to the former Gelco shareholders and   
their affiliates, representing net current liabilities of the acquired companies
to related parties and a portion of working capital at closing. The notes issued
in the Gelco closing are secured by the assets acquired, subject to the rights  
of Third National Bank in Nashville under its loan arrangements with ITI. See   
Note 1 of the Notes to ITI's Consolidated Financial Statements included         
elsewhere herein.                                                               

     In February 1995, ITI acquired two-thirds of the stock of Insituform France
for the sum of approximately $1.4 million, which was funded with proceeds from  
ITI's existing credit facility with Third National Bank in Nashville.           

 In view of the start-up nature of operations conducted by ITI under the
UltraPipe name, management of ITI is considering alternatives to continued      
maintenance of facilities maintained in Everman, Texas, including, in the event 
of consummation of the transaction with IMA, consolidation with IMA's larger    
corrosion and abrasion protection activities. ITI has also been engaged in      
discussions with respect to a potential sale by IGL Canada of the assets        
utilized in its multi-service, open-cut sewer and water pipeline construction   
and rehabilitation operations to certain members of management of IGL Canada,   
for a purchase price equal to the book value at closing of the assets sold      
(approximately $1.5 million at June 30, 1995, exclusive of inventory, which     
would be included in the sale at cost calculated at closing). Such discussions  
have included payment by IGL Canada to the purchasers of (i) $375,000, to       
provide working capital for such business, and (ii) an amount to be determined  
to assume warranty work to be performed after closing. Such transaction remains 
subject to completion of such discussions and formulation of definitive         
arrangements among the parties, and there can be no assurance that any such     
transaction will be consummated.                                                

     Capital expenditures increased in 1994 to $9.0 million from $5.3 million in
1993, primarily as a result of additional equipment needed for expanding        
construction contract volume. During 1994, ITI also received $1.2 million in    
proceeds upon disposal of older equipment.                                      

    Financing activities provided $.4 million in cash during the first half of
1995, primarily reflecting borrowings to finance the acquisition of ITI's       
interest in Insituform France and proceeds from issuance of ITI Common Stock    
upon option exercises, offset by amortization of long-term debt. Financing      
activities provided $3.6 million in cash during 1994 as compared with $35.0     
million in 1993. During 1994, ITI received $9.8 million in proceeds from        
long-term obligations, primarily utilized to fund the Gelco acquisition. In     
1993, ITI borrowed in excess of $35.4 million in connection with the Gulf South 
and Insituform Midwest acquisitions. Principal payments increased to $5.8       
million in 1994 from $2.6 million in 1993, primarily as a result of ITI's 1993  
borrowings under its Third National Bank of Nashville facility. At June 30,     
1995, an additional installment of $1.05 million remained outstanding on ITI's  
promissory note delivered upon completion of the acquisition of Insituform New  
England in 1992, which has been deposited into escrow pending resolution of     
outstanding matters with the seller.                                            

    ITI has outstanding borrowings of $35.2 million under its credit agreement
with Third National Bank in Nashville entered into in July 1993, which initially
provided for advances of up to $30 million and was subsequently amended in      
August 1994 to provide for an additional $12 million so as to aggregate $42     
million. Until June 1995, borrowings under this facility accrued interest,      
payable quarterly on the original $30 million (and monthly through August 1995, 
and then quarterly, on the additional facility), at the lesser of (i) the bank's
prime rate or (ii) 2.75% above a 30-day adjusted LIBOR rate, as defined in the  
facility (or, if ITI maintained certain financial ratios, 2.25% above such      
adjusted LIBOR rate). Quarterly principal payments of $1.1 million were due     
until the facility was further amended in June 1995, with the entire remaining  
principal due on December 31, 1997. The facility obligates ITI to comply with   
certain financial ratios and restrictive covenants that, among other things,    
limit the ability of ITI and its subsidiaries to incur further indebtedness, pay
dividends, make loans and encumber their properties, and requires guarantees of 
certain domestic subsidiaries.                                                  

  In June 1995, the facility was further amended to provide for additional
credit available for two years on a revolving basis, in the amount, together    
with the then existing facility, aggregating up to $50 million, the additional  
amounts to be utilized for working capital and expansion of ITI's business. The 
amended facility provides that all new advances, together with all existing     
indebtedness, are due in June 2000, subject to earlier                          

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installments after June 1997 based on a five-year amortization schedule for the 
existing and additional indebtedness. Under the revised arrangements, interest  
on all existing and additional indebtedness would be payable quarterly at a rate
selected monthly by ITI as either the bank's prime rate, plus a margin up to    
.25% in the event certain financial ratios are not maintained, or a 30-day    
adjusted LIBOR rate, plus a margin ranging from 1.75% to 2.25%, depending on    
maintenance of certain financial ratios. Other covenants and guaranties         
contained in the facility prior to amendment remain in effect.                  

ITI's senior subordinated note in the principal amount of $5 million, 
acquired by Hanseatic Corporation in July 1993 for discretionary customer       
accounts, requires quarterly payments of interest at 8.5% per annum and         
installments of principal in the amount of $1 million on each of the fifth      
through eighth anniversary dates of closing, with the entire remaining principal
due nine years after closing. The note is subordinated to bank and other        
institutional financing (including the credit facility with Third National Bank 
in Nashville), and purchase money debt incurred in completion with acquisitions 
of businesses. The note is pre-payable at the option of ITI, at premiums until  
the fifth anniversary of closing ranging from 3% to 1% of the amount prepaid,   
and is subject to defeasance thereafter in the event ITI deposits cash or       
government securities sufficient to service payments under the note. Warrants   
with respect to 350,877 shares of Common Stock issued in connection with such   
note are exercisable, at the election of the holder, through July 25, 1998, at a
price per share of ITI Common Stock of $14.25 and holders of such shares are    
entitled to demand and incidental registration rights.                          

   On May 21, 1995, ITI agreed to extend by one year, through July 1996, the
maturity of the note held by ITI issued by Ringwood Limited in the principal    
amount of $3.624 million (see "Election of ITI Directors -- Other Information   
Concerning Nominees for Director, Directors, Officers and Stockholders").       

     See Note 9 of the Notes to ITI's Consolidated Financial Statements included
elsewhere herein, for information describing credit lines obtained by ITI's     
subsidiaries in Canada, the United Kingdom and Japan. At June 30, 1995, an      
aggregate amount of $.9 million was outstanding, including bank overdrafts,     
under such facilities. As more fully described under Note 11 of the Notes to    
ITI's Consolidated Financial Statements included elsewhere herein, ITI also     
remains obligated on industrial revenue and development bonds in the outstanding
aggregate principal amount of $4.9 million at June 30, 1995.                    

   In October 1992, Naylor sold (the "NISI Sale") all of the common stock of
Naylor Industrial Services, Inc. ("NISI"), which was engaged primarily in the   
provision of industrial cleaning services to refineries and chemical and        
petrochemical manufacturing plants. As part of the NISI Sale, Naylor agreed to  
indemnify the purchaser, with certain exceptions and subject to specified       
limitations, against certain claims that may arise out of the breach by Naylor  
of its representations, warranties and covenants to the purchaser or from       
actions or omissions of Naylor prior to the NISI Sale, and further to indemnify 
the purchaser for certain pending or threatened litigation claims that were     
known to Naylor as of the date of purchase. At the time of ITI's acquisition of 
Naylor, Naylor maintained general liability, worker's compensation and          
automobile insurance policies with an annual aggregate coverage limit of $6     
million, subject to per occurrence deductibles of up to $250,000 for worker's   
compensation claims and up to $100,000 for general liability and automobile     
claims. Although such coverage was obtained by Naylor so as to be generally     
consistent with industry practice, there can be no assurance that any such      
claims that arise, if successful, are or will be wholly or partially insured, or
covered by financial reserves, or that such claims will not result in           
retroactive adjustments in Naylor's insurance premiums based on the terms of its
retrospective rated policies. ITI's financial statements reflect its            
management's estimate of the likely amounts of such remaining premiums. At June 
30, 1995, Naylor had outstanding letters of credit securing future premium      
payments which were collateralized by cash and cash equivalents of approximately
$1.0 million.                                                                   

As more fully described in Note 20 of the Notes to ITI's Consolidated 
Financial Statements included elsewhere herein, ITI has also provided in its    
financial statements for the estimated amounts of liabilities that are likely to
be incurred from pending litigation and claims involving Naylor. In addition, as
discussed in such note, ITI is a defendant in a lawsuit alleging various        
misstatements and omissions relating to, among other things, costs arising from 
its 1992 acquisition of IGL in public disclosures by ITI. Notwithstanding ITI's 
belief that it has defenses to the plaintiff's claim that are well grounded in  
fact and law, on May 23, 1995 ITI entered into a memorandum of understanding to 
settle such litigation. Under the settlement, which has been                    

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evidenced by a stipulation of settlement and remains subject to court approval  
and other customary conditions, ITI would make a cash payment to class members  
in the amount of $3.2 million (which ITI has deposited into escrow) and issue to
class members 30,000 shares of ITI Common Stock which resulted in an after-tax  
charge against second quarter 1995 net income in the order of approximately $2.2
million.                                                                        

ITI is also reviewing settlement proposals received in connection with
certain litigation continuing before the Maine Superior Court, alleging labor   
regulations violations by Insituform New England which pre-date the 1992        
acquisition of such company by ITI. Such settlement would not become effective  
unless Insituform New England is unsuccessful in its appeal of a prior judgment 
rendered by the Maine court, and would liquidate the amount of Insituform New   
England's liability to plaintiffs in the amount of $1.25 million, plus          
attorneys' fees and costs. Under the arrangements pursuant to which ITI         
acquired Insituform New England, ITI is indemnified by the seller against any   
damages and expenses in connection with this litigation, and, without limiting  
ITI's recourse, approximately $1.05 million is held in an escrow account        
jointly maintained by counsel to the seller and counsel to ITI in order to      
secure such obligation.                                                         

    ITI has declined to grant its consent, as requested by Enviroq, a domestic
licensee, under various Insituform and NuPipe license agreements with Enviroq's 
affiliates in connection with the agreement pursuant to which, on April 18,     
1995, the pipeline rehabilitation business of Enviroq was acquired by IMA. See  
"Business of ITI -- Legal Proceedings" below, for a description of the suit     
filed by ITI in Tennessee Chancery Court (subsequently removed by defendants to 
federal district court) seeking a declaratory judgment confirming such action.  
ITI has agreed with IMA that, unless the Merger Agreement is terminated, neither
party will take any further action in such suit, or to assert any rights in     
dispute as a result of consummation of the Enviroq Acquisition without ITI's    
consent, except for certain procedural steps to preserve the respective rights  
of the parties. See "The Merger -- Basic Terms of Merger Agreement --           
Cooperation Agreement" above. ITI has also communicated to IMA its concerns     
regarding the ability of IMA to operate in compliance with its existing         
Insituform licenses in view of IMA's commercialization of the PALTEM systems.   
See "Business of ITI -- Licensing Operations" below. ITI and IMA would          
anticipate prosecution or reinstatement of the foregoing litigation if the      
Merger Agreement were terminated prior to completion of the Merger, or other    
litigation addressing the same subject matter or other matters, or possibly     
other approaches to resolving the outstanding issues between the parties in the 
absence of mutually agreeable alternative arrangements.                         

Management believes its working capital and its existing credit       
availability will be adequate to meet its capital requirements for the          
foreseeable future.                                                             

  On May 23, 1995, ITI, ITI Sub and IMA executed the Merger Agreement. See
"The Merger -- Basic Terms of Merger Agreement." ITI presently plans to         
consummate the Merger after the occurrence (or waiver) of all conditions        
precedent. ITI has deferred approximately $.8 million of expenses incurred      
through June 30, 1995 related to the Merger, which will be expensed in the      
quarter in which the transaction is completed. ITI anticipates that the total   
amount of expenses, exclusive of reorganization provisions, related to the      
transaction (including amounts deferred through June 30, 1995) will be          
approximately $6.5 million, $3.8 million of which ITI estimates will be incurred
by it and $2.7 million of which IMA estimates will be incurred by it. See       
"-- Results of Operations -- Pro Forma Combined Operations (ITI/IMA)" above for 
information concerning reorganization provisions anticipated in the event the   
Merger is consummated.                                                          

 In the event the Merger is consummated, and assuming that the Merger is
accounted for on a pooling-of-interests basis, at June 30, 1995 the combined    
companies would have had $13.7 million in cash and cash equivalents ($2.9       
million of which derive from IMA), and a working capital ratio (current ratio)  
of 1.7-to-1. Long-term debt of the combined companies, on a pro forma basis,    
would have been $67.2 million ($14.0 million of which is attributable to IMA    
indebtedness incurred in connection with the Enviroq Acquisition). See          
"IMA -- Management's Discussion and Analysis of Financial Condition and Results 
of Operations -- Liquidity and Capital Resources" for information regarding     
demands made for repayment of a $3 million subordinated note, which IMA has     
reclassified as a current liability. In the event the Merger is consummated,    
management of ITI believes working capital, credit availability (including IMA's
credit lines; see "IMA -- Management's Discussion and Analysis of Financial     
Condition and Results of Operations") and liquid assets will continue to be     
adequate to meet requirements for the foreseeable future.                       

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  In anticipation of any plans for the expansion of ITI's business and for
general corporate purposes following the completion of the Merger, and in order 
to consolidate the long-term debt of ITI and IMA, ITI has obtained the          
commitment of Third National Bank in Nashville with respect to an expansion of  
ITI's current facility, subject to closing with IMA under the Merger Agreement. 
The expanded facility would provide for advances by participating lenders, on a 
revolving basis over a two-year period following closing, of up to $100 million,
$35.5 million of which would represent ITI's indebtedness under the current     
facility and $15.6 million of which would be utilized to refinance IMA's        
long-term indebtedness. Such indebtedness would mature five years after closing,
subject to prior installments after the second year based on a five-year        
amortization schedule. Interest on all indebtedness under the expanded facility 
would be payable at a rate selected by ITI as either the bank's prime rate, plus
a margin of up to 0.25% in the event certain financial ratios are not           
maintained, or an adjusted LIBOR rate, plus a margin ranging from 1.00% to      
1.75%, depending on maintenance of certain financial ratios. Any such           
arrangements remain subject to definitive documentation, which would include any
modification of other covenants and guarantees contained in the existing        
facility, and completion of the group of participating lenders.                 

  Following completion of the Merger, and in connection with any plans for
the expansion of ITI business and for general corporate purposes, ITI may       
consider an offering of shares of ITI Common Stock or convertible or other debt.
ITI has not reached any determination with respect to the size or nature of any 
such offering or whether any such offering will be undertaken, and there can be 
no assurance that any such offering will be made.                               

RECENTLY ISSUED ACCOUNTING STANDARD                                             

     In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of        
Long-Lived Assets and for the Long-Lived Assets to be Disposed Of ("FAS 121").  
FAS No. 121 requires that long-lived assets, certain identifiable intangibles   
and goodwill to be held and used by an entity be reviewed for impairment        
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.                                                

  FAS No. 121 is effective for ITI beginning with the year ending December
31, 1996. Management of ITI is currently evaluating the impact of the adoption  
of this accounting standard on ITI's operating results and financial condition, 
and management does not anticipate a material effect.                           

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SELECTED FINANCIAL DATA OF IMA

  The selected financial data of IMA set forth below has been derived from
IMA's consolidated financial statements included herein and previously published
historical financial statements of IMA not appearing herein. The selected       
financial data at and for the nine months ended June 30, 1995 and 1994 is       
unaudited; however, in the opinion of the management of IMA, include all        
adjustments, consisting of only normal recurring adjustments, necessary for a   
fair presentation of the results of operations and the financial position for   
and as at the end of each of the interim periods presented. Operating results   
for the nine months ended June 30, 1995 are not necessarily indicative of the   
results that may be obtained for the entire fiscal year ending September 30,    
1995. The selected data of IMA set forth below and should be read in conjunction
with "IMA -- Management's Discussion and Analysis of Financial Condition and    
Results of Operations" and IMA's Consolidated Financial Statements, including   
the notes thereto, contained elsewhere herein.                                  

                                                        [Enlarge/Download Table]

                                      NINE MONTHS ENDED                                              
                                           JUNE 30,                YEAR ENDED SEPTEMBER 30,          
                                      ------------------  -------------------------------------------
                                      1995(1)     1994     1994    1993(2)  1992(3)   1991     1990  
                                      -------    -------  -------  -------  -------  -------  -------
                                      (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                       
                                                                                                     
INCOME STATEMENT DATA:                                                                               
Total revenues....................... $77,611    $54,293  $75,279  $60,086  $66,690  $49,545  $36,272
Income from continuing operations....   4,956      3,743    5,049    3,408    7,676    5,354    3,375
Income from continuing operations per                                                                
  common share.......................     .45        .34      .45      .31      .70      .52      .33
Dividends per share of IMA Class A                                                                   
  Common Stock.......................     .14        .14      .14      .14      .10      .07      .06
BALANCE SHEET DATA (AT PERIOD END):                                                                  
Total assets.........................  91,920     54,488   63,879   52,936   45,116   34,414   22,690
Long-term debt.......................  14,024(4)      --       --       --      341      360      425

---------------                                                                 
(1) In April 1995, IMA completed the Enviroq Acquisition, which has been        
accounted for under the purchase method of accounting.                  

(2) In November 1992, IMA acquired substantially all of the assets of Pipeline  
Rehabilitation Systems, Inc., which has been accounted for under the    
purchase method of accounting.                                          

(3) In October 1991, IMA acquired United Pipeline Systems Inc. ("UPSI"), which  
has been accounted for under the purchase method of accounting. In      
   connection with such acquisition, IMA acquired all of the outstanding stock
of United Corrosion Corporation, the parent of UPSI.                    

(4) See "IMA Management's Discussion and Analysis of Financial Condition and    
Results of Operations -- Liquidity and Capital Resources" below for     
information regarding demands made for payment under IMA's $3.0 million 
subordinated promissory note issued in the Enviroq Acquisition and IMA's
reclassification thereof as a current liability at June 30, 1995.       

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

RESULTS OF OPERATIONS                                                           

IMA's results of operations are affected by the nature and level of   
activity of its three principal product lines: pipeline system rehabilitation   
(including the Insituform Process); corrosion and abrasion protection; and      
tunneling. Revenues and profit contribution from these product lines tend to be 
affected by various factors unique to each, including market demand and         
competitive conditions, weather conditions, product mix within each line and    
whether IMA is furnishing proprietary technology or acting as general contractor
on particular projects.                                                         

  Over the past three fiscal years, IMA's contract revenues increased from
$66.7 million to $75.3 million. This growth resulted principally from increases 
in Insituform Process volume derived from IMA's licensed territories, as well as
growth in IMA's corrosion and abrasion protection business, especially in Canada
and Chile. These factors were offset in part by a decrease in tunneling revenues
due to weakness in the construction markets in the areas served by IMA. Contract
revenues were adversely affected in fiscal 1993 by the flooding and rains which 
occurred in IMA's Midwest operating area, and the increase from $60.1 million in
fiscal 1993 to $75.3 million in fiscal 1994 reflects, in large measure, the     
return to more normal weather conditions in the most recently completed fiscal  
year.                                                                           

  Income from operations and net income during the past three fiscal years
generally reflected trends similar to changes in contract revenues for the      
above-stated reasons. Additionally, margins in the corrosion and abrasion       
operation decreased in fiscal 1994 due to operations of IMA's Latin American    
subsidiary as general contractor, which carry lower margins than those achieved 
from IMA's proprietary technologies. Over the past two years, tunneling margins 
were significantly constrained by competitive pressures. Also during such       
period, IMA incurred significant costs associated with the development of IMA's 
PALTEM product line which was acquired early in fiscal 1993.                    

 During the nine months ended June 30, 1995, contract revenues increased
significantly compared to the corresponding period of the prior year due        
primarily to the growth in Latin American operations and recovery of the        
tunneling market. Despite these increases, margins were adversely affected by   
general contracting activities of the corrosion and abrasion protection         
operations and by the effect of competitive conditions on tunneling             
profitability. PALTEM development costs also continued to negatively affect     
IMA's operating margin.                                                         

    On April 18, 1995, IMA completed the Enviroq Acquisition. IMA expects that
such acquisition will add significant incremental Insituform revenues in future 
periods. For its fiscal year ended March 1995, Enviroq reported Insituform and  
NuPipe revenues of $20.3 million. See "The Merger -- Basic Terms of Merger      
Agreement -- Cooperation Agreement" above for a description of the moratorium on
assertion of rights in dispute, including with respect to the Insituform        
licenses of Enviroq's subsidiaries, as a result of the consummation of the      
Enviroq Acquisition without ITI's consent. IMA incurred $15.25 million of       
long-term senior bank debt to finance the cash portion of the purchase price of 
the acquisition. In connection with the acquisition IMA also issued a five-year 
$3 million subordinated note in consideration for a covenant not to compete and 
agreed to pay $1 million for consulting services over five years. See           
"-- Liquidity and Capital Resources" below for information regarding demands    
made for payment under the foregoing subordinated note, which IMA has           
re-classified as a current liability.                                           

Nine Months Ended June 30, 1995 and 1994                                    

Contract revenues for the nine months ended June 30, 1995 were $77.6  
million, an increase of 43% from the corresponding period in fiscal 1994.       
Corrosion and abrasion protection revenues increased 173% as a result of the    
Latin American general contracting and Tite Liner operations. Tunneling revenues
increased 98% due to the continuation of more normalized market conditions.     
Rehabilitation revenues, generated primarily by the Insituform Process,         
increased 6% due principally to the consummation of the Enviroq Acquisition on  
April 18, 1995. See "The Merger -- Basic Terms of Merger                        
Agreement -- Cooperation Agreement" above for a                                 

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description of the moratorium rights in dispute, including with respect to the  
Insituform licenses of Enviroq's subsidiaries, as a result of the consummation  
of the Enviroq Acquisition without the consent of ITI.                          

   Gross profit for the nine months ended June 30, 1995 was $20.3 million, a
35% increase compared to the amount reported in the prior-year period. The      
increase resulted from the contract revenue increases. Gross profit as a        
percentage of contract revenues was 26.2% for the recent year-to-date period,   
compared to 27.8% in the corresponding period of the prior year. The reduction  
in gross profit percentage for the current year period was primarily            
attributable to IMA's operating as a general contractor in its corrosion and    
abrasion business in Latin America, which yields lower profit margins than      
revenues generated by IMA's proprietary technologies.                           

     The 28% increase in operating expenses for the year-to-date period resulted
primarily from the research and development costs associated with development of
high pressure PALTEM products, operating expenses attributable to the Enviroq   
Acquisition and administrative expenses for the corrosion and abrasion          
protection operations in Latin America which commenced in January 1994. For the 
year-to-date period, operating expenses represented 14.4% for contract revenues 
compared to 16.1% in the prior year period, as contract revenue growth continued
to outpace operating expense increases.                                         

    Income from operations for the nine-month period June 30, 1995 represented
11.8% of contract revenues. For the current fiscal year, income from operations 
increased 44% over the comparable period in the prior year, primarily as a      
result of improved leveraging of operating expense, partially offset by the     
reduction in gross profit margin.                                               

     Net income for the nine month period ended June 30, 1995 increased 32% over
the prior year period and represented 6.4% of contract revenues compared to 6.9%
for the comparable period of the prior year. The reduction in net income as a   
percentage of contract revenues was attributable to the allocation of income to 
the owner of the minority interest in IMA's Latin American subsidiary which is  
reported on a consolidated basis.                                               

Year Ended September 30, 1994 compared to Year Ended September 30, 1993     

In 1994, contract revenues increased 25% over the prior year, due to  
normalization of rehabilitation operations which had been adversely impacted by 
floods and rains in the prior year, the start-up of abrasion and corrosion and  
pipeline construction operations in Latin America, an improved Tite Liner market
in Canada, and improved market conditions for IMA's tunneling operations.       

    The growth in contract revenues resulted in a 26% increase in gross profit
over the prior year. As a percentage of contract revenues, gross profit improved
from 27.5% to 27.6%, even though IMA's tunneling business continued to          
experience lower than historic margins due to a weak construction market. Also, 
the pipeline construction work undertaken in Latin America adversely impacted   
margins, because of IMA's acting as general contractor, which activity generally
carries lower margins than IMA achieves on work performed utilizing the         
Company's proprietary methods. These reductions were offset by improvements in  
rehabilitation revenue margins attributable primarily to improved installation  
efficiencies.                                                                   

    Operating expenses increased 10% primarily as a result of costs associated
with the start-up of the Latin American operation and increased research and    
development expenses for the PALTEM product line. As a percentage of contract   
revenues, operating expenses were 15.4% for 1994 compared to 17.5% in 1993, as  
contract revenues grew faster than operating expenses.                          

    Income from operations as a percentage of contract revenues increased from
10.0% to 12.2%, resulting primarily from improvement in expense leveraging as   
contract revenues increased.                                                    

Net income increased 48% as a result of contract revenue growth and   
improved operating margins. As a percentage of contract revenues, net income    
increased from 5.7% to 6.7% due to increased operating margins. Offsetting the  
improvement somewhat was the income allocated to the owner of the minority      
interest in a consolidated subsidiary and an increase in the effective tax rate 
from 40.4% to 41.7% due to a change in mix of profit contributions among        
non-U.S. operations.                                                            

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Year Ended September 30, 1993 Compared to Year Ended September 30, 1992     

 Contract revenues decreased 10%, principally due to the weak market for
tunneling. Strong demand for IMA's rehabilitation processes, particularly the   
Insituform Process, enabled IMA to increase rehabilitation process revenues by  
5%, despite the adverse effects of excessive rains and floods experienced       
throughout most of IMA's Insituform licensed territories. Corrosion and abrasion
protection revenues increased 7%, despite weak economic conditions in Canada and
a weakening of the Canadian dollar by approximately 7%. This increase resulted  
from the continuing development of the U.S. marketplace, primarily in the mining
sector.                                                                         

 A 22% reduction in gross profit resulted from the reduction in contract
revenues. The decrease from 31.9% to 27.5% in gross profit as a percentage of   
contract revenues was due primarily to the underutilization of equipment in     
rehabilitation and tunneling operations.                                        

 Operating expenses, associated with the PALTEM product line acquired in
November 1992 were the primary cause for the 17% increase in operating expenses.

 The increase in operating expenses as a percentage of contract revenues
from 13.5% to 17.5% resulted from the aforementioned decrease in contract       
revenues and PALTEM-related expenses.                                           

The reduction in operating income and operating income margin was     
attributable to the reduction in gross profit and the expenses associated with  
the PALTEM operation.                                                           

     Net income decreased 56% from the prior year amount and represented 5.7% of
contract revenues compared to 11.5% in the prior year. These reductions were the
result of the above-described factors which negatively impacted gross and       
operating profit margins. In addition, IMA's current year results were affected 
by an increase in its effective tax rate from 36.7% to 40.4%, which increase was
attributable primarily to a change in the mix of profit contributions among     
non-U.S. operations.                                                            

  Pro Forma Combined Operations (IMA/Enviroq).  Giving pro forma effect to
the consummation of the Enviroq Acquisition, which has been accounted for by IMA
on the purchase method, as if such transaction had occurred on the first day of 
the respective fiscal periods, IMA would have reported contract revenues of     
$58.3 million and $105.2 million, respectively, for the six months ended June   
30, 1995 and the twelve months ended December 31, 1994. The IMA/Enviroq pro     
forma consolidated income statement (see "Unaudited Pro Forma Combined Condensed
Financial Information" above) illustrates the significant incremental Insituform
Process revenues which the Enviroq Acquisition would have added to IMA's        
rehabilitation contract revenues. As a result, it is anticipated that one future
effect of the Enviroq Acquisition will be to increase the proportion of pipeline
system rehabilitation revenues compared to revenues from IMA's other product    
lines. See "The Merger -- Basic Terms of Merger Agreement -- Cooperation        
Agreement" above for a description of the moratorium on assertion of rights in  
dispute, including with respect to the Insituform licenses of Enviroq           
subsidiaries, as a result of the consummation of the Enviroq Acquisition without
ITI's consent.                                                                  

    The pro forma consolidated income statements also illustrate the effect of
Enviroq's historical cost structure on IMA's historical performance. IMA        
reported gross profit margins of 27.7% and 25.8% for the twelve months ended    
December 31, 1994 and the six months ended June 30, 1995, respectively, compared
to gross margins of 26.6% and 24.1% on a pro forma basis including Enviroq for  
such periods. IMA will seek to improve the cost structure of Enviroq's          
operations over time by introducing contracting efficiencies utilized by IMA,   
however, there can be no assurance that such improvements will be realized.     

    Operating income as a percentage of contract revenues also illustrates the
effects of the differences in historical cost structures of the two companies.  
IMA reported income from operations as a percentage of contract revenues of     
12.7% and 9.5%, respectively, for the twelve months ended December 31, 1994 and 
six months ended June 30, 1995. On a pro forma basis, such ratios were 11.1% and
7.2%, respectively, for the corresponding periods. This reflects differences in 
the cost structures of the two companies, particularly, IMA's historical ability
to leverage overhead costs over a larger revenue base and achieve economies of  
scale. In addition, the pro forma financial statements give effect to           
amortization of goodwill under the purchase method of accounting, amortization  
of non-compete costs of $.6 million per year and reflect a $.2 million annual   
consulting fee payable in connection with the Enviroq Acquisition.              

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    The pro forma consolidated income statements also illustrate the effect of
additional interest expense of $.4 million for the six-month period and $1.1    
million for the twelve-month period resulting from the $15.25 million term loan 
used to fund the Enviroq Acquisition and the $3.0 million subordinated          
promissory note issued in respect of a non-compete agreement. Interest on the   
term loan will vary based upon, at IMA's option, LIBOR or prime rate. Interest  
on the subordinated promissory note is fixed at 6% per annum. See "-- Liquidity 
and Capital Resources" below for information regarding demands made for payment 
under the foregoing subordinated note.                                          

As a result of the Enviroq Acquisition, the effective tax rate of the 
combined company increases significantly due to the inability to deduct the     
goodwill created by the transaction for tax purposes. For the twelve months     
ended December 31, 1994 and the six months ended June 30, 1995, IMA reported    
effective tax rates of 40.2% and 36.7%, respectively. On a pro forma basis, the 
effective tax rates increase to 43.5% and 39.3% for such periods.               

LIQUIDITY AND CAPITAL RESOURCES                                                 

     IMA's current ratio decreased to 1.4-to-1 as of June 30, 1995 from 1.5-to-1
at fiscal year end. The decrease in the current ratio at June 30, 1995 was      
primarily attributable to the reclassification of IMA's subordinated promissory 
note, as described below. For the nine months ended June 30, 1995, IMA expended 
approximately $.3 million in cash for operating activities, the major uses of   
which were an increase in costs and estimated earnings in excess of billings on 
uncompleted contracts of approximately $4.5 million, resulting from timing      
differences between the recognition of costs incurred for two tunneling projects
and one corrosion and abrasion project compared to the contractual terms as to  
when the customer may be invoiced for work completed. IMA anticipates that a    
major portion of this increase associated with these three projects will be     
invoiced by the end of IMA's fourth fiscal quarter. Inventory increased for the 
nine months ended June 30, 1995 by approximately $1.6 million, due primarily to 
purchases pursuant to IMA's license agreement for its PALTEM systems products   
and inventory stocks associated with the commencement of limited manufacturing  
operations for rehabilitation and corrosion and abrasion protection products.   
Prepaid expenses and other current assets increased for the nine months ended   
June 30, 1995 by approximately $900,000, with the majority of the increases     
representing an insurance claim receivable. Accrued expenses decreased for the  
nine months ended June 30, 1995 by $3.3 million, of which a major portion       
related to the completion of a large construction project in Latin America.     

     As of June 30, 1995, approximately $1.1 million of cash represented cash of
foreign subsidiaries. Unremitted earnings from foreign subsidiaries as of such  
date approximated $3.3 million. IMA does not provide for federal income taxes on
such unremitted earnings because earnings are reinvested and, in the opinion of 
management of IMA, will continue to be reinvested indefinitely. Upon            
distribution of these earnings in the form of dividends or otherwise, IMA would 
be subject to both United States income taxes and withholding taxes in the      
various international jurisdictions. Withholding taxes would be payable if all  
previously unremitted earnings were remitted to the United States company. A    
portion or all of such withholdings taxes may be offset as credits against the  
United States income taxes payable.                                             

    For the nine months ended June 30, 1995, IMA recorded capital expenditures
of approximately $5.3 million of which approximately $2.1 million related to the
construction of a new manufacturing facility and $3.2 million was for equipment 
purchases.                                                                      

 IMA's current ratio decreased from 1.7-to-1 as of September 30, 1993 to
1.5-to-1 as of September 30, 1994. The decrease in the current ratio was        
primarily attributable to the start-up of IMA's Latin American operation, which 
expended approximately $3.9 million for capital expenditures, offset by         
approximately $1.2 million of deferred income taxes which were reclassified to a
long-term liability status as a result of IMA's adoption of Statement of FAS    
109.                                                                            

IMA's operations generated approximately $10.7 million of cash in 1994
compared to $7.2 million in the prior year. Cash provided by operating          
activities was primarily used for capital expenditures of $9.9 million          
(consisting mainly of buildings and equipment purchases) and payment of cash    
dividends aggregating                                                           

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$1.5 million. The cash balance of $3.1 million as of September 30, 1994         
primarily represented cash and cash equivalents of foreign subsidiaries invested
in United States dollar denominated short-term investments.                     

As of fiscal year-end, IMA reported an increase in costs and estimated
earnings in excess of billings on uncompleted contracts of approximately $4.3   
million over the amount reported at the end of fiscal 1993. The increase        
primarily represented timing differences between billing of work completed and  
the cutoff date for financial statement purposes for two large tunneling        
projects.                                                                       

   At September 30, 1993, IMA reported an insurance claim receivable of $3.0
million. Such receivable had been eliminated by year-end 1994, as during fiscal 
1994 IMA received proceeds from claims filed under various insurance policies,  
which were used for the repair and replacement of flood-damaged buildings and   
equipment.                                                                      

During 1994, IMA maintained a short-term $10 million unsecured line of
credit for working capital purposes. Subsequent to September 30, 1994, IMA      
increased the unsecured line of credit to $13 million. During fiscal 1994, the  
average balance drawn under the line of credit was approximately $4.2 million   
and the largest outstanding balance was $6.8 million. During the second fiscal  
quarter, IMA entered into a new bank credit agreement pursuant to which its     
short-term unsecured working capital line of credit was increased to $20        
million. The line of credit was further increased to $23 million in September   
1995. Interest on the line of credit is payable, at IMA's option, at the bank's 
prime rate or a rate tied to LIBOR. The applicable interest rate was 8.5% per   
annum at June 30, 1995. IMA believes that the existing line of credit and funds 
generated internally from operations are adequate for IMA's current capital     
needs.                                                                          

   On April 18, 1995, IMA completed the Enviroq Acquisition. Pursuant to the
transaction, IMA paid $15.25 million cash funded by a seven-year term loan from 
IMA's banks. Principal payments of such loan amortize at the rate of $1.5       
million per year during the term thereof. Under the term loan arrangement, IMA  
granted first mortgages on various real estate it owns and pledged all the      
shares of its U.S. subsidiaries and a portion of the shares of its Canadian     
subsidiaries. The term loan agreement contains customary representations and    
warranties and affirmative and negative covenants, including the maintenance of 
certain financial ratios and a prohibition on the payment of cash dividends in  
excess of the regular dividend rate currently in effect, which dividend payments
require the lenders' consent as a result of the execution of the Merger         
Agreement. In addition, IMA issued a $3 million five-year subordinated          
promissory note (the "Subordinated Enviroq Note") in consideration for a        
covenant not to compete and entered into an agreement for consulting services   
providing for IMA's payment of $1 million over five years.                      

  By letter dated July 14, 1995, counsel for Enviroq Corporation (formerly
known as New Enviroq Corporation; "New Enviroq") alleged that an event of       
default had occurred with respect to the payment of the interest due to New     
Enviroq on June 30, 1995 under the Subordinated Enviroq Note. New Enviroq       
demanded payment of such interest installment and purported to declare the      
entire principal, in the amount of $3 million, due and payable. IMA advised New 
Enviroq that such purported acceleration was improper and directed New Enviroq  
to withdraw it. On August 1, 1995, New Enviroq filed a lawsuit against IMA in   
the Circuit Court of Jefferson County, Alabama, seeking a judgment in respect of
IMA's alleged default under the Subordinated Note.                              

  IMA denies liability to New Enviroq and intends to vigorously defend the
lawsuit and pursue claims against New Enviroq arising out of the Enviroq        
Acquisition, including Enviroq's obligations under the Enviroq Agreement. IMA's 
senior lenders have waived the event of default under IMA's principal financing 
agreements which otherwise would have occurred as a result of New Enviroq's     
actions in respect of the Subordinated Enviroq Note. IMA is seeking to negotiate
a mutually acceptable resolution regarding the status of the Subordinated       
Enviroq Note. Pending such resolution, IMA has classified the obligation as a   
current liability. In IMA's opinion, the ultimate resolution thereof will not   
have a material adverse effect upon IMA's financial condition or results of     
operations.                                                                     

See "The Merger -- Basic Terms of Merger Agreement -- Cooperation     
Agreement" above for a description of the moratorium on assertion of rights in  
dispute, including with respect to the Insituform licenses of Enviroq's         
subsidiaries, as a result of the consummation of the Enviroq Acquisition without
ITI's consent, and "IMA -- Legal Proceedings" below for information concerning  
arbitration proceedings initiated                                               

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by one of the partners of Midsouth Partners (in which a subsidiary of IMA       
acquired in the Enviroq Acquisition owns a 42.5% general partnership interest)  
alleging an event of default by such subsidiary. If the Merger Agreement is not 
approved by stockholders of IMA and ITI, respectively, IMA and ITI anticipate   
that they would engage in litigation arising out of the disputes between the    
parties (including the Enviroq Acquisition), if they are unable to reach a      
mutually acceptable settlement.                                                 

  On May 23, 1995, IMA entered into the Merger Agreement. IMA has deferred
approximately $.3 million of expenses incurred through June 30, 1995 related to 
the transaction, which will be expensed in the quarter in which the transaction 
is complete. IMA anticipates that the total amount of expenses exclusive of     
reorganization costs related to the transaction (including amounts deferred     
through June 30, 1995) will be approximately $2.7 million.                      

   During April 1995, IMA commenced construction of a manufacturing facility
to produce materials used for proprietary rehabilitation technologies, including
those licensed under its agreement with Ashimori. IMA acquired land adjacent to 
its headquarters building in fiscal 1994 for the construction of the facility.  
Prior to the execution of the Merger Agreement, construction activities had     
progressed to site excavation, completion of the foundation and erection of a   
portion of the structural steel. To date IMA has funded the land acquisition and
construction expenditures utilizing borrowings under its line of credit. As a   
result of the Merger Agreement, IMA and ITI have discussed the possible         
relocation of the planned manufacturing processes to ITI's present facility. As 
of the date hereof, IMA has not determined whether, in view of the covenants    
contained in and consents required under the Merger Agreement, to complete      
construction of the building for use as a manufacturing facility or an office   
and operations facility or whether to seek to dispose of the property. It is    
anticipated that such determination will be made in consultation with ITI based 
upon the perceived needs of the proposed North American contracting operations  
and the business plans of the combined companies after the Merger. If IMA       
determines to utilize such property in connection with its future operations, it
would expect to obtain long-term financing therefor; however, it has abandoned  
its previous plans to utilize industrial revenue bond financing for the project.
See "The Merger -- Basic Terms of Merger Agreement" for a description of the    
covenants governing construction while the Merger Agreement is in effect.       

IMA has entered into certain license agreements to offer pipeline     
rehabilitation technologies. IMA anticipates that it will have no difficulty    
exceeding its minimum royalty requirements under its Insituform licenses and its
Ashimori license. Based upon the favorable preliminary market reception of      
PALTEM and IMA's evaluation of the long-term potential for this technology, IMA 
is pursuing product development and manufacturing in the United States. IMA does
not believe that its commitments under its technology license agreements will   
have a material adverse effect on its income from operations in future periods. 

RECENTLY ISSUED ACCOUNTING STANDARD                                             

     In March 1995, the Financial Accounting Standards Board issued FAS No. 121.
FAS No. 121 requires that long-lived assets, certain identifiable intangibles   
and goodwill to be held and used by an entity be reviewed for impairment        
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.                                                

FAS No. 121 is effective for IMA fiscal year 1997. Management of IMA  
believes that the adoption of this accounting standard will not have a material 
impact on its operating results and financial condition.                        

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ELECTION OF ITI DIRECTORS 

   At the ITI Meeting, stockholders will elect four directors denominated as
Class III directors. This is in accord with the ITI Charter which provides for  
the division of its Board of Directors into three classes with the term of      
office of the Class III directors expiring at the ITI Meeting. The remaining two
classes of directors will be elected at the Annual Meeting of Stockholders of   
ITI to be held in 1996 and 1997, respectively, at which, in the event the Merger
is consummated, nominations will be made pursuant to the Merger Agreement. After
the expiration of the term of each class, the stockholders will elect directors 
in each class to serve for a term of three years.                               

   Accordingly, four Class III directors will be elected at the ITI Meeting,
each to serve for three years and until a successor has been elected and has    
qualified. It is the intention of each of the persons named in the accompanying 
form of proxy to vote the shares represented thereby in favor of the four Class 
III nominees listed in the following table, unless otherwise instructed in such 
proxy. Each such nominee is presently serving as a director of ITI. ITI's Board 
of Directors has no reason to believe that any of the nominees listed in the    
following table will be unable or will decline to serve. In case any of the     
nominees is unable or declines to serve the persons named in the accompanying   
form of proxy will vote the shares represented by such proxy for another person 
duly nominated by ITI's Board of Directors in such nominee's stead or, if no    
other person is so nominated, to vote such shares only for the remaining        
nominees.                                                                       

CERTAIN INFORMATION CONCERNING NOMINEES AND DIRECTORS                           

     Certain information concerning: (i) the four nominees for election as Class
III directors of ITI, (ii) the other current directors of ITI of whose term of  
office will continue after the ITI Meeting, and (iii) those individuals         
designated by IMA for appointment to the ITI Board upon consummation of the     
Merger, is set forth below. Such information was furnished by them to ITI:      

                                                        [Enlarge/Download Table]

     NAME OF DIRECTOR       AGE                   BIOGRAPHICAL INFORMATION                  
--------------------------  ---  -----------------------------------------------------------
                                                                                            
Nominees for Election:                                                                      
CLASS III DIRECTORS                                                                         
Brian Chandler............  69   Private investor since prior to 1990; consultant to ITI    
                                 from prior to 1990 to 1994; Director of ITI since 1987.    

James D. Krugman..........  47   Partner, Krugman, Chapnick & Grimshaw (attorneys) since    
                                 prior to 1990; Chairman of the Board of ITI since 1988 and 
                                 Chief Executive Officer of ITI from April to October 1990  
                                 and from April to June 1989; Director: Hayward Industries, 
                                 Inc. and Meadox Medicals, Inc.; Director of ITI since 1987.

Jean-Paul Richard.........  52   President and Chief Executive Officer of ITI since 1993;   
                                 Chief Executive of Massey-Ferguson Group of Varity         
                                 Corporation from 1992 to 1993, and Senior Vice             
                                 President-Corporate Development of Varity from 1991 to     
                                 1992; Executive Vice President of Asea Brown Boveri, Inc., 
                                 a subsidiary of Asea Brown Boveri, from 1990 to 1991;      
                                 Director: AGCO Corporation; Director of ITI since 1994.    

Russell B. Wight, Jr......  56   General Partner, Interstate Properties (real estate        
                                 development and construction) since prior to 1990;         
                                 Director: Vornado Realty Trust; Director of ITI since 1992.

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                                                        [Enlarge/Download Table]

     NAME OF DIRECTOR         AGE                   BIOGRAPHICAL INFORMATION                  
--------------------------    ---  -----------------------------------------------------------
                                                                                              
Other Directors Whose Term of                                                                 
     Office Will Continue                                                                     
     After the ITI Meeting:                                                                   

CLASS I DIRECTORS                                                                             

Paul A. Biddelman.........    49   Treasurer, Hanseatic Corporation (private investment       
                                   company) since 1992; Managing Director, Clements Taee      
                                   Biddelman Incorporated (financial advisors) from 1991 to   
                                   1992; Managing Director, Corporate Finance Department,     
                                   Drexel Burnham Lambert Incorporated from 1982 to 1990;     
                                   Director: Celadon Group, Inc., Electronic Retailing Systems
                                   International, Inc., Premier Parks Inc., Petroleum Heat &  
                                   Power Company, Inc., TLC Beatrice International Holdings,  
                                   Inc., Oppenheimer Group, Inc.; Director of ITI since 1988. 

Douglas K. Chick..........    71   Private investor since prior to 1990; consultant to ITI    
                                   from 1991 to 1994; Director of ITI since 1990.             

Steven Roth...............    53   General Partner, Interstate Properties (real estate        
                                   development and construction) since prior to 1990; Chairman
                                   and Chief Executive Officer, Vornado Realty Trust (real    
                                   estate operating company) since 1990; Chief Executive      
                                   Officer of Alexander's Inc. since March 1995; Director:    
                                   Vornado Realty Trust, Alexander's Inc.; Director of ITI    
                                   since 1992.                                                

CLASS II DIRECTORS                                                                            

William Gorham............    64   President, The Urban Institute (government policy research)
                                   since prior to 1990; Director of ITI since 1992.           

Silas Spengler............    64   Principal, Sullivan Associates, Inc. (board of directors   
                                   search firm) since 1994; Partner, Reid & Priest (attorneys)
                                   from 1992 to 1994; Partner, Spengler Carlson Gubar Brodsky 
                                   & Frischling (attorneys) from prior to 1990 to 1992;       
                                   Director of ITI since 1987.                                

Sheldon Weinig............    67   Consultant, Sony Engineering and Manufacturing of America  
                                   since 1994, and Vice Chairman from 1990 to 1994; Director: 
                                   Aseco Corporation, Unique Mobility, Inc., Intermagnetics   
                                   General Corporation; Director of ITI since 1992.           

Designated by IMA for Appointment                                                             
     at Effective Time:*                                                                      

MERGER CLASS I DIRECTOR                                                                       

Alvin J. Siteman..........    66   Chairman of the Board and a director of Mark Twain         
                                   Bancshares, Inc. since prior to 1990; President of Flash   
                                   Oil Corporation, Site Oil Corporation, Site Oil Company of 
                                   Missouri and The Siteman Organization (oil and real estate)
                                   since prior to 1990.                                       

MERGER CLASS II DIRECTOR                                                                      

Robert W. Affholder.......    59   President of IMA since 1994 and from prior to 1990 to 1993;
                                   Vice Chairman of IMA from 1993 to 1995.                    

MERGER CLASS III DIRECTOR                                                                     

Jerome Kalishman..........    67   Chairman and chief executive officer of IMA since prior to 
                                   1990.                                                      

---------------                                                                 
* At the Effective Time, the Class I, Class II and Class III directors are      
referred to, respectively, as the Merger Class I, Merger Class II and Merger
Class III directors.                                                        

     Messrs. Kalishman, Affholder and Siteman are all directors of IMA, and none
currently serve on the Board of Directors of ITI.                               

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   In December 1992, in connection with the IGL Acquisition, the ITI Charter
was amended: (x) to divide the Board of Directors of ITI into three classes, as 
equal in size as possible, having staggered three-year terms, with the term of  
one class expiring each year; (y) to fix the number of directors of ITI at not  
less than six nor more than 15, the exact number to be specified in the By-Laws 
of ITI; and (z) to provide for the appointment of directors and the filling of  
vacancies as contemplated by the agreement dated July 3, 1992, as amended       
September 1, 1992 (the "IGL Acquisition Agreement"), among ITI, INA Acquisition 
Corp. (ITI's wholly-owned subsidiary), and IGL. Upon consummation of the IGL    
Acquisition, the Board of Directors of ITI was reconstituted to include: Messrs.
Spengler, Gorham and Weinig, for a term initially expiring at the 1993 annual   
meeting of stockholders of ITI ("Class I Directors"); Messrs. Chick, Biddelman  
and Roth, for a term initially expiring at the 1994 annual meeting of           
stockholders of ITI ("Class II Directors"); and Messrs. Chandler, Krugman and   
Wight, for a term initially expiring at the 1995 annual meeting of stockholders 
of ITI ("Class III Directors"). Messrs. Spengler, Chick, Biddelman, Chandler and
Krugman were designated by ITI, and Messrs. Gorham, Weinig, Roth and Wight were 
designated by IGL. ITI has further agreed that during the period from the       
consummation of the IGL Acquisition to the sixth anniversary thereof (the       
"Current Term"), ITI will nominate and recommend for re-election to its Board of
Directors, upon expiration of their terms, the Class I Directors, the Class II  
Directors and the Class III Directors; and that, if during the Current Term any 
director resigns or is unable to serve for any reason, such vacancy will be     
filled with a designee chosen by the remaining members of that director's group 
and thereafter ITI will nominate and recommend such designee for election to the
Board of Directors of ITI.                                                      

In March 1994, in connection with the commencement of Mr. Richard's   
employment as President and Chief Executive Officer of ITI, ITI's Board of      
Directors completed action to amend the By-Laws of ITI to increase the size of  
the board from nine to ten, and to appoint Mr. Richard as a Class III Director, 
to fill the vacancy created by the increase in the size of the board.           

  For a description of arrangements with respect to the composition of the
Board of Directors of ITI that will become effective upon consummation of the   
Merger, see "The Merger -- Management of ITI Following Consummation of the      
Merger" above.                                                                  

 No family relationship exists between any of the directors or executive
officers of the Company.                                                        

EXECUTIVE OFFICERS OF ITI                                                       

     The executive officers of ITI, and their respective ages and positions with
ITI, are as follows:                                                            

                                                                [Download Table]

            NAME              AGE                 POSITION WITH ITI               
----------------------------  ---  -----------------------------------------------
                                                                                  
James D. Krugman............  47   Chairman of the Board                          
Jean-Paul Richard...........  52   President and Chief Executive Officer          
William A. Martin...........  53   Senior Vice President -- Chief Financial       
                                   Officer                                        
Anthony W. Hooper...........  47   Senior Vice President -- Marketing             
Raymond P. Toth.............  47   Vice President -- Human Resources              

 For information concerning Messrs. Krugman and Richard, see "-- Certain
Information Concerning Nominees and Directors" above.                           

 William A. Martin has been Chief Financial Officer of ITI since 1988, a
Vice President from 1989 to January 1993 and a Senior Vice President since      
January 1993.                                                                   

 Anthony W. Hooper has been Senior Vice President-Marketing of ITI since
November 1993. Mr. Hooper was previously, since 1992, President of Huyck        
Formex/Weavexx Corporation, a North Carolina industrial textile and process     
equipment manufacturer and subsidiary of BTR, Inc. From prior to 1990 to 1991,  
Mr. Hooper was employed by Sprout Bauer, Inc., an industrial machinery and      
systems manufacturer owned by Combustion Engineering, Inc., where he was Vice   
President -- Marketing before becoming President of the Pulp and Paper Division.

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Raymond P. Toth has been ITI's Vice President -- Human Resources since
February 1994. Since prior to 1990 and until joining the Company, Mr. Toth was  
employed as Director of Human Resources for Sprout Bauer, Inc.                  

    Effective upon consummation of the Merger, Mr. Kalishman would become Vice
Chairman of the Board of ITI and Mr. Affholder would become chief operating     
officer of ITI's North American contracting operations. See "-- Certain         
Information Concerning Nominees and Directors" above.                           

BOARD MEETINGS AND COMMITTEES                                                   

     During the year ended December 31, 1994, the Board of Directors of ITI held
six meetings, and took action by unanimous written consent on six occasions. No 
current director of ITI attended fewer than 75% of the aggregate number of      
meetings of the Board of Directors of ITI and meetings of committees of the     
board on which such person served which were held during the period that he     
served.                                                                         

 The members of the Audit Committee of the Board of Directors of ITI are
Silas Spengler and Sheldon Weinig. The Audit Committee is responsible for       
overseeing that management fulfills its responsibilities in connection with the 
preparation of the consolidated financial statements of ITI and its             
subsidiaries. The committee's functions include making recommendations to the   
board regarding the engaging and discharging of ITI's independent auditors,     
reviewing with the independent auditors the plan and the results of the auditing
engagement, reviewing the scope and results of ITI's procedures for internal    
auditing, approving the professional services provided by the independent       
auditors, reviewing the independence of the independent auditors, and reviewing 
the adequacy of ITI's system of internal accounting controls. During the year   
ended December 31, 1994, the Audit Committee held two meetings.                 

    The members of the Compensation Committee of the Board of Directors of ITI
are Paul A. Biddelman, William Gorham, James D. Krugman and Steven Roth. The    
functions of the Compensation Committee including making recommendations to the 
Board of Directors of ITI regarding the salaries, bonuses, fringe benefits or   
compensation of any kind for the officers and directors of ITI. The Compensation
Committee is also responsible for the administration of ITI's 1983 Stock Option 
Plan (under which no further options may be granted), and its 1992 Employee     
Stock Option Plan, and determines the eligible persons who are to receive       
options under the latter such plan, the number of shares to be subject to each  
option and the other terms and conditions upon which options under such plan are
granted and made exercisable. During the year ended December 31, 1994, the      
Compensation Committee held two meetings and took action by unanimous written   
consent on two occasions.                                                       

The members of the Director Stock Option Committee of the Board of    
Directors of ITI are Brian Chandler and Douglas K. Chick. The Director Stock    
Option Committee administers the 1992 Director Stock Option Plan and determines 
the eligible persons who are to receive options, the number of shares to be     
subject to each option and the other terms and conditions upon which options    
under such plan are granted and made exercisable. During the year ended December
31, 1994, the Director Stock Option Committee did not meet.                     

 ITI has not appointed a nominating committee of its Board of Directors.

DIRECTOR COMPENSATION                                                           

    Each director of ITI who is not an operating officer of ITI is entitled to
receive compensation in the amount of $12,000 per annum and $1,000 per meeting  
of the Board of Directors attended by such director, plus reimbursement of his  
expenses.                                                                       

 James D. Krugman, Chairman of the Board of ITI, holds an option granted
under ITI's 1992 Director Stock Option Plan (the "Director Plan") on December   
13, 1993 covering 95,000 shares of ITI Common Stock, exercisable at a per share 
price of $14.50, the closing price of the ITI Common Stock on The Nasdaq Stock  
Market on such date. As a consequence of the exchange of options previously     
granted by IGL for options granted by ITI (see "-- Stock Plans" below), on      
December 9, 1992 William Gorham, Sheldon Weinig and Russell B. Wight, Jr., who  
became directors of ITI upon consummation of the IGL Acquisition, were granted  
options covering 57,720 shares, 22,200 shares and 16,650 shares of ITI Common   
Stock,                                                                          

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respectively, at exercise prices ranging from $6.53 to $13.74 per share,        
calculated in accordance with the provisions of the IGL Acquisition Agreement.  
In January 1995, Mr. Weinig exercised options covering 5,550 shares at an       
exercise price of $6.53 per share, at which time options covering 11,100 shares 
held by Mr. Wight expired. In July 1993, options covering 23,310 shares of ITI  
Common Stock were granted by ITI to William Gorham in replacement of options    
then expiring covering the same number of shares, at the exercise price per     
share under the prior options of $9.68, which were exercised by Mr. Gorham in   
June and July 1995 with respect to all such shares.                             

   Except as aforesaid, no current director of ITI holds any options granted
by ITI under any stock option plan. Mr. Richard holds additional options granted
in connection with his acceptance of employment with ITI. For information with  
respect to such options and other agreements entered into by ITI and certain    
directors, see "-- Certain Agreements with Directors and Executive Officers"    
below.                                                                          

EXECUTIVE COMPENSATION                                                          

Summary Compensation Table.  The following table sets forth certain   
information with respect to compensation for each of the last three completed   
years of ITI's Chief Executive Officer and each of the four other most highly   
compensated executive officers whose salary and bonus exceeded $100,000 during  
the most recent year:                                                           

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                              LONG TERM                  
                                                                            COMPENSATION                 
                                          ANNUAL COMPENSATION               -------------                
                              --------------------------------------------   SECURITIES                  
          NAME AND                                              OTHER        UNDERLYING     ALL OTHER    
     PRINCIPAL POSITION       YEAR    SALARY     BONUS     COMPENSATION(1)   OPTIONS(#)    COMPENSATION  
----------------------------  ----   --------   --------   ---------------  -------------  ------------  
                                                                                                         
Jean-Paul Richard             1994   $400,000   $264,000            --              --       $ 83,405(3) 
  President and Chief         1993     35,386    236,250(4)          --        300,000          5,613    
  Executive Officer(2)        1992         --         --            --              --             --    
William A. Martin             1994    165,334     51,709            --           8,000         15,623(5) 
  Senior Vice President --    1993    155,807     15,800            --          15,000         14,759    
  Chief Financial Officer     1992    126,627     40,000            --              --         12,227    
R. William Pittman            1994    230,000         --            --          12,000         24,217(7) 
  Senior Vice President --    1993     49,539     50,000(4)          --         75,000          5,039    
  Operations(6)               1992         --         --            --              --             --    
Anthony W. Hooper             1994    220,000    100,100        53,968          12,000         80,730(9) 
  Senior Vice President --    1993     17,770         --            --          75,000          2,315    
  Marketing(8)                1992         --         --            --              --             --    
Raymond P. Toth               1994    110,000     40,040        16,353           8,000         53,286(11)
  Vice President -- Human     1993         --         --            --              --             --    
  Resources(10)               1992         --         --            --              --             --    

---------------                                                                 
(1) Excludes perquisites and other personal benefits unless the aggregate     
    amount of such compensation exceeds the lesser of either $50,000 or 10% of
the total of annual salary and bonus reported for the named executive 
    officer. Includes 1994 reimbursement for taxes for Messrs. Hooper and Toth
in the respective amounts of $43,509 and $16,353.                     

(2) Mr. Richard joined ITI in November 1993.                                  

(3) Represents $79,006 in relocation expense and $4,399 in term life insurance
premiums.                                                             

(4) Represents amounts in lieu of bonus from former employer.                 

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(5) Represents $12,465 in profit-sharing contributions under ITI's 401(k)     
 Profit-Sharing Plan (the "Restated Plan"), $400 in 401(k) contributions
under such plan and $2,758 in term life insurance premiums.           

(6) Mr. Pittman joined ITI in October 1993 and resigned in June 1995.         

(7) Represents $20,497 in relocation expense, $400 in 401(k) contributions    
under the Restated Plan and $3,320 in term life insurance premiums.   

(8) Mr. Hooper joined ITI in November 1993.                                   

(9) Represents $78,779 in relocation expense, $400 in 401(k) contributions    
under the Restated Plan and $1,551 in term life insurance premiums.   

(10) Mr. Toth joined ITI in February 1994.                                      

(11) Represents $51,778 in relocation expense and $1,508 in term life insurance 
premiums.                                                                       

Messrs. Richard, Pittman, Hooper and Toth joined ITI following the IGL
Acquisition, as ITI recruited management in order to support the consolidation  
of its multinational and domestic operations.                                   

    For information with respect to compensation to James D. Krugman, Chairman
of the Board of ITI, see "-- Director Compensation" above and "-- Certain       
Agreements with Directors and Executive Officers" below.                        

 Option Grant Table.  The following table sets forth certain information
regarding options granted by ITI during the year ended December 31, 1994 to the 
individuals named in the above compensation table:                              

OPTION GRANTS IN LAST FISCAL YEAR 

                                                        [Enlarge/Download Table]

                                                                                           POTENTIAL     
                                                                                          REALIZABLE     
                                                                                       VALUE OF ASSUMED  
                                                                                        ANNUAL RATES OF  
                                              INDIVIDUAL GRANTS                                          
                          ----------------------------------------------------------         STOCK       
                          NUMBER OF                                                   PRICE APPRECIATION 
                          SECURITIES       % OF TOTAL                                 FOR OPTION TERM(1) 
                          UNDERLYING     OPTIONS GRANTED     EXERCISE                                    
                           OPTIONS        TO EMPLOYEES        PRICE       EXPIRATION  -------------------
          NAME            GRANTED(#)     IN FISCAL YEAR       ($/SH)         DATE       5%          10%  
------------------------  ----------     ---------------     --------     ----------  -------     -------
                                                                                                         
Jean-Paul Richard.......        --               --               --              --       --          --
William A. Martin.......     8,000              4.3%          $13.31        04/01/99  $12,214     $43,297
R. William Pittman......    12,000              6.4            13.31        04/01/99   18,321      64,496
Anthony W. Hooper.......    12,000              6.4            13.31        04/01/99   18,321      64,496
Raymond P. Toth.........     8,000              4.3            13.31        04/01/99   12,214      43,297

---------------                                                                 
(1) Amounts represent hypothetical gains that could be achieved for the         
  respective options if exercised at the end of the option term. These gains
    are based on arbitrarily assumed rates of stock price appreciation of 5% and
   10% compounded annually from the date the respective options are granted to
their expiration date.                                                  

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    Aggregate Option Exercises and Year-End Option Table.  The following table
sets forth certain information regarding exercises of stock options, and stock  
options held as of December 31, 1994, by the individuals named in the above     
compensation table:                                                             

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES 

                                                        [Enlarge/Download Table]

                                                            NUMBER OF SECURITIES                                 
                                                           UNDERLYING UNEXERCISED        VALUE OF UNEXERCISED    
                              SHARES                             OPTIONS AT              IN-THE-MONEY OPTIONS    
                            ACQUIRED ON                      FISCAL YEAR-END (#)            AT YEAR-END(1)       
                             EXERCISE        VALUE       ---------------------------  ---------------------------
           NAME                 (#)         REALIZED     EXERCISABLE   UNEXERCISABLE  EXERCISABLE   UNEXERCISABLE
--------------------------  -----------  --------------  -----------   -------------  -----------   -------------
                                                                                                                 
Jean-Paul Richard.........        --        $     --        50,000        250,000       $    --        $    --   
William A. Martin.........     1,750          15,531        19,500         13,500            --             --   
R. William Pittman........        --              --        53,000         34,000            --             --   
Anthony W. Hooper.........        --              --        28,000         59,000            --             --   
Raymond P. Toth...........        --              --         2,000          6,000            --             --   

---------------                                                                 
(1) Calculated on the basis of the fair market value of the underlying          
 securities at the exercise date or at year-end, as the case may be, minus
the exercise price.                                                     

STOCK PLANS                                                                     

Under ITI's 1983 Stock Option Plan (the "Prior Plan"), there were     
outstanding options for 37,653 shares of ITI Common Stock as of June 1, 1995. No
further options may be granted under the Prior Plan.                            

  In June 1992, the stockholders of ITI approved ITI's 1992 Employee Stock
Option Plan (the "Employee Plan"), under which options to purchase an aggregate 
of 500,000 shares of ITI Common Stock (as subsequently increased) were subject  
to grants to key employees who are not directors (including executive officers),
and the Director Plan, under which options to purchase an aggregate of 500,000  
shares of ITI Common Stock may be granted to directors of ITI (including        
executive officers), as previously adopted by the Board of Directors. In June   
1994, the stockholders of ITI approved an increase in the number of authorized  
shares of ITI Common Stock available for issuance under the Employee Plan to    
1,000,000 shares.                                                               

The Employee Plan is administered by the Compensation Committee of the
Board of Directors of ITI, and the Director Plan is administered by the Director
Stock Option Committee of the Board of Directors of ITI. Each such committee,   
with respect to the plan that it administers, is empowered to determine the     
persons who are to receive options, the number of shares to be subject to each  
option and whether such options will be incentive stock options or non-qualified
stock options. Pursuant to amendments to the Employee Plan adopted in April     
1994, the Compensation Committee may authorize another committee of the Board of
Directors of ITI constituted for such purpose to allocate options approved in   
the aggregate by the Compensation Committee among employees who are not         
officers. The exercise price of an option under either the Employee Plan or the 
Director Plan may not be less than the lesser of the fair market value of the   
ITI Common Stock on the date of grant of the option, or the tangible book value 
per share of ITI Common Stock as of the end of the fiscal quarter of ITI        
immediately preceding the grant, provided that no incentive stock option may be 
granted at an option price which is less than the market value per share of the 
ITI Common Stock on the date of grant.                                          

In December 1992, the stockholders of ITI approved the INA Acquisition
Corp. Share Option Plan previously adopted by the Board of Directors and sole   
stockholder of INA Acquisition Corp. In connection with the consummation of the 
IGL Acquisition, options (the "Substitute IGL Options") covering an aggregate of
562,938 shares of ITI Common Stock (303,712 shares of which were covered by     
options outstanding at June 1, 1995), granted pursuant to such plan in          
substitution for options (the "IGL Options") outstanding prior to the IGL       
Acquisition to acquire Ordinary Shares of IGL, became exercisable. Each         

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Substitute IGL Option covers the number of shares of ITI Common Stock that would
have been received in the IGL Acquisition had the underlying IGL Option been    
exercised for Ordinary Shares in accordance with the terms of such option       
immediately prior to the IGL Acquisition (subsequent to vesting thereof pursuant
to the IGL Acquisition Agreement), at a price per share equal to: (x) the       
exercise price per share in effect on such date times the number of Ordinary    
Shares previously covered by such IGL Option, divided by (y) the number of      
shares of ITI Common Stock covered by such Substitute IGL Option. ITI caused the
adoption of such plan solely in order to implement the provisions of the IGL    
Acquisition Agreement, and INA Acquisition Corp. will not grant any additional  
options under such plan.                                                        

     See "-- Certain Agreements with Directors and Executive Officers" below for
a description of additional options granted to Mr. Richard in connection with   
his acceptance of employment with ITI, and "The Merger -- Basic Terms of Merger 
Agreement -- IMA Stock Options" above for a description of options granted by   
IMA that will be assumed by ITI at the Effective Time.                          

CERTAIN AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS                        

  ITI and James D. Krugman, Chairman of the Board of ITI are parties to an
employment agreement which became effective on December 9, 1992 upon the closing
of the IGL Acquisition. Such agreement provides that Mr. Krugman will serve as  
Chairman of the Board of ITI until the later of (i) the sixth anniversary of    
such closing or (ii) the date of the sixth annual meeting of stockholders of ITI
following July 3, 1992 or until such other date as Mr. Krugman's employment     
terminates pursuant to such agreement, at an annual salary of $100,000. In the  
event of Mr. Krugman's death, the agreement terminates automatically. Mr.       
Krugman may cancel the agreement at any time upon 60 days' written notice       
delivered to ITI, and ITI may terminate the agreement upon the failure of Mr.   
Krugman to perform his duties thereunder owing to illness or other incapacity,  
if such failure continues for a period of more than six months, or if Mr.       
Krugman commits any act in bad faith and to the material detriment of ITI or is 
convicted of a felony.                                                          

   ITI's arrangements with Jean-Paul Richard, under which Mr. Richard became
President and Chief Executive Officer of ITI in November 1993, in addition to   
base salary provide for bonus payments in an amount per annum up to 75% of base 
salary, conditioned on fulfilling performance criteria. As an inducement to his 
accepting employment with ITI, the Board of Directors authorized the grant to   
Mr. Richard of a five-year option covering 300,000 shares of ITI Common Stock,  
which ITI will register under the Securities Act, issuable upon exercise of such
option at a per share price of $16.25 (equal to the closing price of the ITI    
Common Stock as quoted on The Nasdaq Stock Market on the date of grant). Such   
option vested and became exercisable through the option term with respect to    
50,000 shares upon commencement of employment and will vest and become          
exercisable through the option term with respect to the remainder of such shares
on the third anniversary thereof, except that in the event of: (i) the          
termination of Mr. Richard's employment without cause, the option will vest with
respect to a share of the portion not then vested calculated pro-rated on the   
basis of the proportion that the period of service bears to three years, and    
(ii) the election of a Board of Directors of ITI other than pursuant to the IGL 
Acquisition Agreement while Mr. Richard remains employed, the option will become
fully-vested. Accordingly, in the event of consummation of the Merger, such     
option would become fully-vested.                                               

ITI also agreed to reimburse Mr. Richard for specified reasonable     
relocation costs, and to provide a $700 per month car allowance, reimbursement  
for country club membership fees and health insurance benefits. ITI's           
arrangements with Mr. Richard provide that in the event Mr. Richard's employment
with ITI is terminated other than for cause, ITI will be obligated to pay       
severance to Mr. Richard in an amount equal to two years' base salary.          

  In connection with the commencement of his employment as chief financial
officer of ITI, ITI extended a severance arrangement to William A. Martin       
pursuant to which, in the event of termination of employment by ITI without     
cause, ITI will deliver six months' prior notice thereof plus payments equal in 
amount to six months' base salary.                                              

    ITI's arrangements with R. William Pittman, under which Mr. Pittman became
Senior Vice President -- Operations in October 1993, until Mr. Pittman's        
resignation in June 1995 in addition to base salary provided                    

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for bonus payments in an amount up to $100,000 per annum, based upon performance
criteria. ITI's arrangements with Mr. Pittman provided for ITI to reimburse Mr. 
Pittman for reasonable relocation costs, and to provide a $750 per month car    
allowance, reimbursement for one country club membership and medical and life   
insurance benefits. Under ITI's severance arrangements with Mr. Pittman, ITI is 
obligated to pay to him amounts equal to twelve months' base salary in          
installments during the period ending June 1996, and to defend and indemnify Mr.
Pittman in certain outstanding litigation.                                      

  ITI's arrangements with Anthony W. Hooper, under which Mr. Hooper became
Senior Vice President -- Marketing in November 1993, in addition to base salary 
provide for bonus payments in an amount up to $110,000 per annum based on       
performance criteria. ITI's arrangements with Mr. Hooper provided for ITI to    
reimburse Mr. Hooper for reasonable relocation costs, and to provide a $700 per 
month car allowance, reimbursement for one country club membership and medical  
and life insurance benefits. In connection with his relocation to Memphis, ITI  
extended an interest-free bridge loan in the amount of $230,000 to Mr. Hooper,  
which was repaid in August 1994. In the event Mr. Hooper's employment is        
terminated by ITI other than for cause, ITI would be obligated to pay to him    
amounts equal to twelve months' base salary.                                    

   ITI's arrangements with Raymond P. Toth, under which Mr. Toth became Vice
President -- Human Resources in February 1994, in addition to base salary       
provide for bonus payments in an amount up to 40% of base salary per annum,     
based upon performance criteria. ITI's arrangements with Mr. Toth also provided 
for ITI to reimburse Mr. Toth for reasonable relocation costs, and to provide   
medical and life insurance benefits. In connection with his relocation to       
Memphis, ITI extended an interest-free bridge loan in the amount of $110,000 to 
Mr. Toth, which was repaid in October 1994.                                     

  ITI had consulting arrangements with Brian Chandler and Douglas K. Chick
through December 1994, pursuant to which ITI remunerated each in the amount of  
$5,000 per month, in exchange for consultation in connection with development of
the European market for the NuPipe Process. Each of Messrs. Chandler and Chick  
is a director of ITI and a member of the Ringwood Group. ITI's arrangements with
Messrs. Chandler and Chick, respectively, were terminable at will by either ITI 
or the consultant, and provided for devotion by Messrs. Chandler and Chick,     
respectively, of such business time as would be required by ITI and             
reimbursement by ITI of out-of-pocket expenses incurred in connection with      
provision of such consulting services. Such arrangements were terminated by ITI 
in December 1994. See "Other Information Concerning Nominees for Director,      
Directors, Officers and Stockholders" for information concerning additional     
arrangements proposed with Messrs. Chandler and Chick arising from their        
development activities regarding pipeline rehabilitation and repair processes,  
and discussions regarding the application, if any, of certain commitments       
previously alleged by IGL (which was acquired by ITI in 1992) to have been made 
by Mr. Chandler in 1983 requiring him, through November 1993, to offer new      
technology to IGL free of cost.                                                 

    Effective upon consummation of the Merger, Mr. Kalishman would become Vice
Chairman of the Board of ITI and would also be retained by ITI as a consultant, 
and Mr. Affholder would enter into an employment agreement with ITI under which 
he would initially become chief operating officer of ITI's North American       
contracting operations. See "The Merger -- Interest of Certain Persons in the   
Merger and Related Transactions -- Employment and Consulting Agreements" for a  
description of such arrangements.                                               

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

    During the year ended December 31, 1994, the members of ITI's Compensation
Committee were James D. Krugman, Paul A. Biddelman, William Gorham and Steven   
Roth.                                                                           

    In order to finance a portion of the purchase price for its acquisition of
Insituform Midwest, in July 1993 ITI sold its 8.5% senior subordinated note in  
the principal amount of $5 million (the "Subordinated Hanseatic Note"), and     
related warrants exercisable with respect to 350,877 unregistered shares of ITI 
Common Stock, to Hanseatic Corporation ("Hanseatic"), which Hanseatic holds for 
discretionary customer accounts. Paul A. Biddelman, who will continue as a      
director of ITI after the Effective Time, is Treasurer of Hanseatic and, during 
the year ended December 31, 1993, Hanseatic received fees of $100,000 from ITI  
in connection with the arrangement. For a description of the terms of the       
Subordinated Hanseatic Note and such warrants, see "ITI -- Management's         
Discussion and Analysis of Financial Condition and Results of                   
Operations-Liquidity and Capital Resources" above. During the years ended       
December 31, 1994 and 1993, ITI paid to Hanseatic,                              

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for the benefit of its discretionary customer accounts, respectively, $425,000  
and $75,556 in interest on the Subordinated Hanseatic Note.                     

   James D. Krugman, who will continue as Chairman of the Board of ITI after
the Effective Time, and Howard Kailes, who will continue as Secretary of ITI    
after the Effective Time, are members of the law firm of Krugman, Chapnick &    
Grimshaw. During the years ended December 31, 1994, 1993 and 1992, Krugman,     
Chapnick & Grimshaw received fees for legal services rendered to ITI,           
respectively, of $755,000, $1,069,000 and $945,000, together with reimbursement 
of out-of-pocket expenses of $161,745, $254,579 and $144,790. It is expected    
that Krugman, Chapnick & Grimshaw will continue to render legal services to ITI 
in the future.                                                                  

Mr. Roth is a member of a partnership which holds certain registration
rights extended by ITI. See "-- Other Information Concerning Nominees for       
Director, Directors, Officers and Stockholders" below.                          

PERFORMANCE GRAPH                                                               

  The following performance graph compares the total stockholder return on
the ITI Common Stock to the S&P 500 Index and to a Composite Peer Group Index   
for the past five years. The companies in the peer group are Enviroq, Insituform
East, Incorporated, IMA, Roto Rooter, Inc., and UTILX Corporation, which are    
weighted by market capitalization. The graph assumes that $100 was invested in  
the ITI Common Stock and each such Index on December 31, 1989 and that all      
dividends were reinvested.                                                      

COMPARISON OF FIVE-YEAR CUMULATIVE RETURN 

                                                                [Download Table]

                                  INSITUFORM                       COMPOSITE  
      MEASUREMENT PERIOD         TECHNOLOGIES     S&P 500 IN-     PEER GROUP  
    (FISCAL YEAR COVERED)            INC.             DEX            INDEX    
                                                                              
1989                                    100.00          100.00          100.00
1990                                     44.60           93.40           72.80
1991                                    244.60          118.00          108.00
1992                                    313.80          123.30          150.00
1993                                    150.80          132.00          121.60
1994                                    143.10          130.00           88.60

   Notwithstanding anything set forth in any of ITI's previous filings under
the Securities Act or the Exchange Act which might incorporate future filings,  
including this Joint Proxy Statement/Prospectus, in whole or in part, the       
preceding performance graph and the report that follows shall not be deemed     
incorporated by reference into any such filings.                                

REPORT OF THE COMPENSATION COMMITTEE                                            

    The Compensation Committee is composed of the Chairman of the Board of ITI
and three additional directors who are not executive officers of ITI. The       
Compensation Committee of the Board of Directors of ITI makes recommendations to
the Board of Directors of ITI regarding the compensation arrangements for       
executive officers of ITI, including ITI's Chief Executive Officer, and         
administers ITI's stock-based employee                                          

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compensation plans. Since ITI's Employee Plan, under which stock-based          
compensation is granted to employees, does not permit participation of employees
who are directors of ITI, in future years stock option grants to ITI's Chief    
Executive Officer, who was appointed to the board during the most recently-ended
year, will be determined by ITI's Director Stock Option Committee.              

The Compensation Committee's objectives in formulating ITI's executive
compensation program are: (i) to offer levels of compensation which are         
competitive with those offered by other companies in similar businesses; (ii) to
compensate executives based on each executive's level of responsibility and     
contribution to ITI's business goals; (iii) to link compensation with ITI's     
financial performance; and (iv) to align the interests of ITI's executives with 
the interests of ITI's stockholders.                                            

During the fiscal year ended December 31, 1994, the achievement of the
foregoing objectives was directed to support ITI's consolidation, following the 
consummation of the IGL Acquisition in December 1992, of multinational and      
domestic operations, involved in both technology development and contract       
management. During the year ended December 31, 1994, ITI completed its new      
management team with the addition of Raymond Toth, as Vice President-Human      
Resources, following the hiring in the year ended December 31, 1993 of Jean-Paul
Richard, as new President and Chief Executive Officer, R. William Pittman, as   
Senior Vice President -- Operations and Anthony W. Hooper, as Senior Vice       
President -- Marketing.                                                         

The compensation program for ITI's executives, including its Chief    
Executive Officer, consists of: (i) base salary; (ii) bonuses; and (iii) stock  
options. Since the majority of ITI's executive management has been engaged      
during the two most recent fiscal years, compensation has in large part resulted
from arrangements negotiated in connection with the initial engagement of such  
managers, respectively.                                                         

(i) Base Salary.  The Compensation Committee determines executive base
salaries by level of responsibility, individual performances and ITI            
performance, as well as by the need to provide a competitive package that allows
ITI to retain key executives. At the commencement of each year, the Chief       
Executive Officer in consultation with key executives, establishes individual   
performance objectives for the ensuing year. After reviewing individual and ITI 
performance for the year and available information on salaries at other         
companies of similar size (with particular focus on other construction-based    
operations) and other Insituform installers, the Chief Executive Officer makes  
recommendations to the Compensation Committee concerning the base salaries of   
other executive officers. The Compensation Committee reviews and, with any      
changes it deems appropriate, approves these recommendations for submission to  
the Board of Directors. Using the same review process, the Compensation         
Committee makes decisions pertaining to the Chief Executive Officer. During the 
year ended December 31, 1994, Mr. Richard was remunerated as Chief Executive    
Officer pursuant to arrangements reached in connection with the commencement of 
his employment in November 1993, as endorsed by the Board of Directors. Such    
arrangements provided for an initial base salary of $400,000 per annum.         

  (ii) Cash Bonuses.  Under historical guidelines designed to motivate and
reward key management personnel through the award of cash bonuses, key employees
who report to the Chief Executive Officer are eligible for bonuses of up to     
approximately 50% of base salary. Direct reports to the senior executive staff  
are eligible for bonuses of up to approximately 35% of base salary. Such        
guidelines provide for an award of cash bonuses based on the achievement of     
corporate goals recommended by senior executive management and approved by the  
Board of Directors (which in the most recently completed year were weighted to  
account for 70% of overall quantitative criteria), individual objectives        
established for executive management by the Compensation Committee in           
discussions with the chief executive officer (which in the most recently        
completed year were weighted to account for 30% of overall quantitative         
criteria), and an evaluation of executive management by the Compensation        
Committee. During the most recently completed year, the Board of Directors in   
recognition of the efforts of executive management, endorsed evaluation of the  
achievement of initially established corporate goals without reference to the   
effects on consolidated operations of the losses in ITI's discontinued          
operations. See "ITI -- Management's Discussion and Analysis of Financial       
Condition and Results of Operations" above. In connection with its hiring       
commitments, ITI also extended bonus arrangements to executives retained during 
and prior to its most recent fiscal year, entitling such executives to bonuses  
ranging up to 75% of base salary in the case of Mr. Richard.                    

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    (iii) Stock Options.  The primary purpose of ITI's stock option program is
to align the interests of ITI's executive officers more closely with the        
interests of ITI's stockholders by offering the executives an opportunity to    
benefit from increases in the market price of the ITI Common Stock. ITI's stock 
option program provides long-term incentives that have enabled ITI to attract   
and retain key employees by encouraging their ownership of ITI Common Stock. In 
connection with attracting new executive management, the Compensation Committee 
has typically authorized the grant of options effective upon commencement of    
employment.                                                                     

ITI's current executive officers, collectively, hold options under the
Prior Plan (which, except for options then outstanding, terminated after ITI's  
1992 Annual Meeting of Stockholders) and the Employee Plan, both of which are   
administered by the Compensation Committee. In addition, Mr. Richard, in        
connection with his acceptance of employment in 1993 was granted additional     
options covering 300,000 shares of ITI Common Stock. During the year ended      
December 31, 1994, the Compensation Committee, pursuant to amendments to the    
continuing Employee Plan, authorized Mr. Richard, acting as a committee of the  
board, to grant options to employees who were not officers, within limits       
defined by the Committee, while retaining authority to effectuate option grants 
to eligible officers. In defining the limits of option grants and in selecting  
individual officers for options under the Employee Plan, and determining the    
terms thereof, the Compensation Committee may take into consideration any       
factors it deems relevant, including present and potential contributions to the 
success of ITI.                                                                 

During the year ended December 31, 1994, the Compensation Committee   
authorized option grants to officers (not including the Chief Executive Officer,
who was not granted additional options during such year) covering 40,000 shares 
of ITI Common Stock, representing options with respect to approximately 21% of  
the ITI Common Stock covered by options granted that year. In future years,     
stock option grants to Mr. Richard, who was appointed to the ITI Board during   
the most recently-ended year, will be evaluated by the Director Stock Option    
Committee pursuant to its authority under ITI's Director Plan.                  

* * * 

The Compensation Committee believes that the compensation program for 
executives of ITI is competitive with the compensation programs provided by     
other companies with which ITI competes for executive talent and by other       
companies of similar size in similar industries. The Compensation Committee     
believes that amounts paid under ITI's cash bonus program are appropriately     
related to ITI and individual performance. The Compensation Committee also      
believes that its stock option program provides opportunities to executives that
are consistent with the returns that are generated on behalf of ITI's           
stockholders.                                                                   

    Section 162(m) ("Section 162") of the Code generally limits federal income
tax deductions for compensation paid after 1993 to the chief executive officer  
and the four other most highly compensated officers of ITI to $1 million per    
year, but contains an exception for performance-based compensation that         
satisfies certain conditions. In the absence of final regulations under Section 
162, the Committee has not adopted an absolute policy regarding Section 162 and 
is currently studying the implications of Section 162(m) on its compensation    
programs. In making compensation decisions, the Committee will consider the net 
cost of compensation to ITI and whether it is practicable and consistent with   
other compensation objectives to qualify ITI's incentive compensation under the 
applicable exemption of Section 162. The Committee anticipates that             
deductibility of compensation payments will be one among a number of factors    
used by the Committee in ascertaining appropriate levels or modes of            
compensation, and that the Committee will make its compensation decision based  
upon an overall determination of what it believes to be in the best interests of
ITI and its stockholders.                                                       

                          Compensation Committee

                    James D. Krugman
                     Paul A. Biddelman
                  William Gorham
               Steven Roth

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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934            

    Based solely upon a review of copies of reports received by it pursuant to
Section 16(a) of the Exchange Act, and the written representations of its       
incumbent directors and officers, and holders of more than 10% of any registered
class of ITI's equity securities, ITI believes that during 1994 all filing      
requirements applicable to its directors, officers and ten percent holders under
said section were satisfied, except that Interstate Properties, a New Jersey    
general partnership ("Interstate"), and each of its three general partners,     
Steven Roth, Russell B. Wight, Jr. and David Mandelbaum, filed a report on Form 
4 subsequent to the due date thereof, disclosing one transaction consisting of  
the open market purchase by Interstate of 4,000 shares of ITI Common Stock.     

OTHER INFORMATION CONCERNING NOMINEES FOR DIRECTOR, DIRECTORS, OFFICERS AND     
STOCKHOLDERS                                                                    

 Prior to the consummation of the IGL Acquisition, during the year ended
December 31, 1992 ITI incurred royalty expense of $4.9 million to Insituform    
Licensees, B.V., an indirect wholly-owned subsidiary of IGL, under the licensing
arrangements pursuant to which ITI commercially exploited the Insituform        
Process. Such amounts are eliminated from the consolidated results of operations
of ITI for such period as a result of accounting for the IGL Acquisition as a   
pooling-of-interests. Prior to the consummation of the IGL Acquisition, the     
members of the Ringwood Group beneficially owned approximately 16.9% of the     
outstanding Ordinary Shares of IGL (with Parkwood Limited, as trustee of the    
Anthony Basmadjian "P" Settlement ("Parkwood"), beneficially owning 12.9% of the
Ordinary Shares, Mr. Chandler, 4%, and Mr. Chick, 12.9%).                       

In connection with the IGL Acquisition, and so as to enable the IGL   
Acquisition to qualify as a pooling-of-interests under generally accepted       
accounting principles, ITI, Parkwood, Ringwood, and Messrs. Chandler and Chick  
entered into an agreement dated July 3, 1992 pursuant to which a prior pledge   
agreement extended by Messrs. Chandler and Chick and Parkwood, covering Ordinary
Shares of IGL and securing a promissory note in the principal amount of $3.5    
million due August 30, 1992 (the "Prior Note"), accruing interest at a rate per 
annum of 10.5%, from Mr. Chandler and Parkwood to ITI were, together with Mr.   
Chick's guaranty of such note, cancelled, and in exchange Messrs. Chick and     
Chandler and Ringwood executed and delivered to ITI a substitute stock pledge   
agreement (the "New Pledge Agreement"), and Ringwood executed and delivered to  
ITI a secured non-recourse promissory note in the principal amount of           
$3,623,842.40 (the "Non-Recourse Note"), which included outstanding principal   
and accrued interest on the Prior Note. Parkwood and Messrs. Chandler and Chick,
together with Ringwood and Barford Limited, as trustee of the Anthony Basmadjian
Settlement ("Barford"), are members of the Ringwood Group, and Messrs. Chandler 
and Chick will continue as directors of ITI after the Effective Time. The       
Non-Recourse Note bears interest at a rate per annum equal to 2 1/2% above the  
prime rate from time to time in effect at Citibank, N.A. and was originally due 
July 3, 1995. See "The Merger -- Interests of Certain Persons in the            
Merger -- Ringwood Loan" for a description of the extension of such maturity    
date by one year. Pursuant to the New Pledge Agreement, and as security for the 
Non-Recourse Note, Ringwood and Messrs. Chick and Chandler pledged to ITI       
255,801 shares of class B common stock, $.01 par value, of ITI beneficially     
owned by them (which, in connection with the IGL Acquisition and in accordance  
with their terms, were converted into shares of ITI Common Stock on a           
share-for-share basis). During the years ended December 31, 1994 and 1993,      
Ringwood paid to ITI, respectively, $352,892 and $462,040 in interest on the    
Non-Recourse Note.                                                              

 ITI has been engaged in discussions with Messrs. Chandler and Chick and
their affiliates with respect to a proposed license by ITI of certain pipe      
rehabilitation technologies from or other arrangement with such parties, which  
have involved an amount equal to $.7 million, which would be payable at closing,
an additional $.5 million upon commercialization of certain systems, an         
additional $.5 million upon commercialization of alternate systems and          
thereafter royalties payable over a term so that the aggregate of such royalties
would not exceed $5 million for the two technologies. Such discussions have also
included the extension to ITI of a right-of-first offer on additional           
technologies. No definitive arrangements have been formulated with respect to   
any such proposals, and there can be no assurance that ITI would have access to 
any technology developed by Messrs. Chandler and Chick and their affiliates on  
favorable terms or at all, or would be in a position to prevent the conduct of  
potentially competing activities utilizing such developments.                   

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    ITI and Messrs. Chandler and Chick and their affiliates have addressed the
application, if any, of certain commitments alleged by IGL (which was acquired  
by ITI in 1992) to have been made by Mr. Chandler in 1983 requiring him, through
November 1993, to offer free of cost to IGL any new ideas, inventions and       
technology for which Mr. Chandler was responsible. Mr. Chandler had previously, 
in an amended Statement on Schedule 13D filed in 1989 by the Ringwood Group     
with respect to its shareholdings in IGL, taken the position that such          
commitments are not enforceable. ITI has acknowledged Mr. Chandler's position,  
but has not formally agreed or disagreed with it. ITI will submit any           
definitive arrangements regarding a transaction with Messrs. Chandler and Chick 
and their affiliates for review and approval by a majority of the disinterested 
members of ITI's Board of Directors. Such review will include consideration of  
any legal issues concerning such technologies and the applicability and         
enforceability of the 1983 commitments made by Mr. Chandler.                    

 As principal stockholders of IGL, the members of the Ringwood Group and
Interstate (each, a "Current Registration Rights Stockholder"), in connection   
with the IGL Acquisition, received certain registration rights covering the     
shares of ITI Common Stock issued in exchange for their Ordinary Shares, and all
other shares of ITI Common Stock held by them. Such agreement terminates in May 
1999. Under such agreement, a Current Registration Rights Stockholder may demand
registration under the Securities Act on one occasion (unless ITI is entitled to
use a registration statement on Form S-3, in which case each Current            
Registration Rights Stockholder is entitled to three demand registrations) of no
less than 500,000 shares of ITI Common Stock. In addition, the Current          
Registration Rights Stockholders are entitled to incidental registration rights,
during the term of such agreement, with respect to the shares of ITI Common     
Stock beneficially owned by them.                                               

    See "-- Compensation Committee Interlocks and Insider Participation" above
for information concerning legal services rendered to ITI by a firm in which    
James D. Krugman, who will continue as Chairman of the Board of ITI after the   
Effective Time, and Howard Kailes, who will continue as Secretary of ITI after  
the Effective Time, are members, and concerning a company in which Paul A.      
Biddelman, who will continue as a director of ITI after the Effective Time, is  
Treasurer, which holds ITI's 8.5% senior subordinated note in the principal     
amount of $5 million.                                                           

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BUSINESS OF ITI 

GENERAL                                                                         

ITI is engaged in the provision, throughout the world, of trenchless  
pipeline rehabilitation systems and technologies. ITI utilizes state-of-the-art 
processes to repair sewers, tunnels and pipelines, usually without excavation   
and with minimal disruption of traffic and commercial activity. ITI's primary   
technology is the Insituform Process, a "cured-in-place," non-disruptive        
pipeline rehabilitation process that, during ITI's most recent fiscal year,     
contributed to approximately 79% of ITI's revenues. The Insituform Process is   
based on a custom manufactured polyester-fiber tubing, known as the Insitutube, 
which forms a seamless, jointless and leakproof "pipe within a pipe." ITI       
believes the repaired pipe, the Insitupipe, is stronger and has equal or greater
flow capacity than the original pipe.                                           

The Insituform Process has been used successfully for approximately 23
years in the repair of sewers, tunnels and pipelines throughout the world. ITI  
believes that the Insituform Process offers many advantages over traditional    
"dig and replace" methods of pipeline replacement. Such advantages include      
installation without excavation, design and application versatility, extension  
of the pipeline's useful life and speed of installation. ITI believes that,     
under normal conditions, sewer pipe repaired with the Insituform Process will   
generally have a useful life in excess of 50 years.                             

     In addition to the Insituform Process, ITI offers certain other products in
trenchless applications. ITI's NuPipe Process, which utilizes a "fold and       
formed" technology, is used primarily to repair smaller or less damaged pipe and
in situations where polyvinylchloride pipe is preferred. ITI has also acquired a
variety of pipeline and ancillary technologies that employ a diameter-reduction 
technique tailored to meet the pressure pipe rehabilitation needs of the oil and
gas transmission market.                                                        

ITI's products are marketed to governmental and industrial customers  
primarily in North America and Western Europe, and have also been introduced in 
South America, Eastern Europe, the Middle East, Australia and the Pacific Rim.  
In the industrial market, ITI focuses its marketing efforts on companies in the 
pulp and paper, chemical, petrochemical, food and drug, and nuclear and utility 
industries.                                                                     

As a result of the IGL Acquisition, ITI also conducts multi-service,  
open-cut sewer and water pipeline construction and rehabilitation operations in 
Canada. See "ITI -- Management's Discussion and Analysis of Financial Condition 
and Results of Operations -- Liquidity and Capital Resources" above for         
information concerning the proposed disposition of such operations.             

     Historically, ITI's primary business has been to license other companies to
market and provide Insituform installation services using ITI's proprietary     
technology in return for royalties and product sales revenue from materials     
manufactured by ITI. As a result of its acquisitions, ITI has further integrated
its business to perform the entire process of manufacture and installation using
its trenchless processes. ITI intends to continue pursuing this integration     
strategy in its principal markets. In other areas, ITI will continue to         
emphasize marketing its products through license or joint venture arrangements. 
ITI provides design assistance, marketing, research and technical support to all
its licensees in an effort to stimulate demand for its products and to ensure a 
high standard of quality control throughout the process.                        

     ITI was incorporated in Delaware in 1980 under the name Insituform of North
America, Inc., in order to act as the exclusive licensee of the Insituform      
Process in most of the United States of IGL, the owner of the worldwide rights  
to the Insituform Process. Contemporaneously with the consummation of the IGL   
Acquisition, the name of ITI was changed to Insituform Technologies, Inc.       

   The IGL Acquisition has been accounted for as a pooling-of-interests and,
accordingly, ITI's consolidated financial statements included elsewhere herein  
for the period prior to the acquisition, and (unless the context otherwise      
requires) all other financial information of ITI included herein for such       
period, include the combined historical results of ITI and IGL. ITI's           
acquisition in 1991 of the controlling interest in Insituform Southwest, its    
acquisitions in December 1992 of the minority interest in IGL Canada , at that  
time a majority-owned subsidiary of IGL, and of H.T. Schneider, Inc., the parent
of Insituform New England, its acquisitions in July 1993 of Naylor Industries,  
Inc., the parent of Gulf South, and Insituform Midwest, its acquisition in      

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October 1994 of Gelco and various affiliated entities and its February 1995     
acquisition of two-thirds of the interest in Insituform France have been        
accounted for under the purchase method of accounting, so that the results of   
the acquired companies are included in ITI's historical results of operations   
from the consummation of such transactions, respectively.                       

As used herein, the term "ITI" refers to ITI and, unless the context  
otherwise requires, its direct and indirect subsidiaries. For certain           
information concerning each of ITI's industry segments, and domestic and foreign
operations, see Note 19 of the Notes to ITI's Consolidated Financial Statements 
included elsewhere in this Joint Proxy Statement/Prospectus.                    

TRENCHLESS REHABILITATION PROCESSES                                             

   The Insituform Process.  The Insituform Process for the rehabilitation of
sewers, pipelines and other conduits utilizes a tubing made of a polyester-fiber
felt, the Insitutube, which is constructed with a strong, smooth, watertight    
polyurethane coating on the outside. The Insitutube is custom manufactured to   
the diameter, length and other characteristics of the pipe, sewer or conduit to 
be repaired.                                                                    

 A pipe to be repaired is first cleaned by removing tree roots and other
debris and a remote-controlled video camera is inserted into the pipe to inspect
it and in order to make a recording of the location of the lateral connections  
for use in subsequent re-opening of the connections. If necessary, the section  
of pipe to be rehabilitated is bypassed from the balance of the pipeline system.
Services to users in the affected section are usually not disconnected but usage
may be curtailed to prevent excess back-up in the lateral connections.          

 In the case of a typical pipe to be repaired by the Insituform Process,
access is gained through an existing manhole. Prior to the installation, the    
Insitutube is saturated throughout its length with a thermosetting liquid resin.
In most cases, the Insitutube is installed using pressure from a column of water
maintained inside an inversion tube, and the Insitutube is turned inside out and
advanced through the pipe to be repaired with the resin-saturated surface held  
against the surface of the existing pipe. The smooth-coated side of the         
Insitutube forms the new interior surface of the pipe. After the Insitutube is  
fully extended through the pipe to be repaired, the water inside the Insitutube 
is heated to a prescribed temperature in order to cause the thermosetting liquid
resin to harden, or cure. Essentially, the Insituform Process creates a "pipe   
within a pipe," the Insitupipe. Each end of the Insitupipe is cut off at the    
manhole walls and the flow is re-established.                                   

  During the installation of the Insitutube, smaller lateral lines feeding
into the existing pipe are temporarily blocked. Lateral lines are side          
connecting pipes, typically between four and six inches in diameter, which      
discharge flow from homes and businesses into the main pipe undergoing repair.  
To complete the installation, the Insitupipe must be cut, or routed out, at the 
lateral junctions to re-establish the flow from these laterals. A               
remote-controlled cutter, the Insitucutter, and a video camera are inserted into
the pipe and used to open the lateral lines into the pipe. ITI's lateral        
rehabilitation service includes the cleaning, inspection, evaluation and        
rehabilitation of laterals, utilizing the Insituform Process.                   

    The NuPipe Process.  The NuPipe Process entails the manufacture for ITI of
a flattened and folded replacement pipe from a thermoplastic material which is  
stored on a reel in a reduced shape. The pipe is heated at the installation site
in order to make it flexible enough to be inserted into an existing expanded    
conduit, pulled into place and then sequentially expanded to match the existing 
conduit by internal heat and pressure creating a tight fit against the conduit  
being repaired. In this position, the now expanded conduit is subjected to      
internal pressure, and cooled to create a new pipe for permanent installation,  
with lateral connections then cut from within.                                  

  The NuPipe Process requires little or no excavation for installation and
produces a pipe approximating the physical properties of a manufactured         
thermoplastic pipe of the same thickness and diameter. In addition, the NuPipe  
Process does not materially reduce the diameter of the existing pipe, eliminates
most of the annular space between the new rounded pipe and the original pipe,   
and eliminates the need for grouting the main pipe. Because the pipe is         
tight-fitting and jointless, flow capacity in most cases is at least equal to   
that of the existing pipe, or is improved. The NuPipe Process involves          
manufacture of pipe in continuous lengths of standard pipe diameters, rather    
than custom manufacture for specific applications, as is the case with the      
Insituform Process, making it suited for small-diameter pipes.                  

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   PRI Technologies.  The pipe lining and ancillary technologies acquired in
November 1991 and further developed by ITI (the "PRI Technologies") are         
intended, under the UltraPipe name, to rehabilitate pipe used in the oil and gas
industry using a diameter reduction technology in a variety of applications.    
Diameter reduction involves temporarily reducing the diameter of a polyethylene 
pipe by inserting it in certain down-sizing equipment. In its down-sized        
condition, the polyethylene pipe is inserted into the pipe to be rehabilitated  
and is then allowed to revert back to its original size resulting in a tight fit
through the length of the lined pipe.                                           

   A specific application introduced in the first quarter of 1993 allows the
use of the diameter reduction process to line collection and transmission       
pipelines, known as in-field pipe, by fusing lengths of polyethylene pipe to    
form a pipe of a length equal to the section being lined, up to 3,000 feet at   
one time. After installation, the ends of the polyethylene pipe are then        
finished by formation of a flange. ITI believes that its in-field lining system 
provides corrosion and erosion protection to the lined pipe and allows the      
pressure rating of the lined system to remain equal to that of the unlined      
system as a result of reversion of the compressed polyethylene to its original  
condition after the lining is completed. See "ITI -- Management's Discussion and
Analysis of Financial Condition and Results of Operations" above for information
concerning ITI's determination to divest other operations utilizing certain of  
the PRI Technologies for offsite application in lining downhole tubulars.       

MANUFACTURING AND PRODUCT SALES                                                 

ITI's manufacturing and product sales operations accounted for        
approximately 19% of ITI's consolidated revenues in 1994 (approximately 16%     
during the six months ended June 30, 1995). Although ITI's Insituform license   
agreements typically contain no requirement that licensees purchase equipment or
materials from ITI, ITI sells Insitutubes and related products utilized in the  
Insituform Process pursuant to supply contracts with all of its domestic        
Insituform licensees. Based on past experience and the nature of the work       
generated in the individual licensed areas, ITI believes that gross revenues    
from the sale of Insitutubes to its licensees will exceed gross revenues derived
from license royalties.                                                         

    Under the current term of ITI's domestic supply arrangements, the licensee
purchases from ITI a specified percentage (60% or 90%) of its Insitutube        
requirements, unless excused in certain circumstances, subject to minimum annual
purchases by the buyer and maximum required sales by ITI. Prices under such     
contracts are fixed, subject to limited annual increases by ITI. Such contracts 
are renewable on an annual basis.                                               

    In Europe, Insituform Linings Plc ("Linings"), a joint venture between ITI
and five licensees, manufactures and sells Insitutube linings. ITI owns 51% of  
the equity of Linings, but does not control a majority of its board. In 1992,   
ITI inaugurated its Insitutube manufacturing facility in Matsubuse, Japan.      

 The Insitutube is manufactured by ITI in varying lengths, diameters and
thicknesses to accommodate the requirements of each specific installation. The  
average lead time necessary to produce the custom manufactured Insitutube varies
from one to two weeks depending principally on the length, thickness and        
diameter required. ITI maintains an inventory of the plain and coated materials 
used in the manufacture of Insitutubes and a small inventory of the most common 
diameters and thicknesses of Insitutubes.                                       

While raw materials used in ITI's Insituform products are typically   
available from multiple sources, ITI's historical practice has been to purchase 
the Insitutube materials from a limited number of suppliers. ITI maintains its  
own felt manufacturing facility contiguous to its Insitutube manufacturing      
facility in Batesville, Mississippi. ITI does not presently intend to           
manufacture, blend or distribute resins, which are readily available from a     
number of major corporations and, as described under "-- Investments" below, has
terminated its joint venture arrangements with respect to resins. ITI believes  
that the sources of supply in connection with its Insituform operations are     
adequate for its needs and that it is not substantially dependent upon any one  
supplier.                                                                       

     ITI has discontinued its previously reported discussions with Nordifa S.A.,
of Liege-Sclessin, Belgium, for the marketing by ITI of Nordifa's Tubetex(R)    
pipeline renovation products in North America.                                  

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  In connection with the introduction of the NuPipe Process, each domestic
licensee has entered into supply agreements pursuant to which the licensee is   
required to purchase from ITI all of its requirements for the thermoplastic pipe
utilized in the application of the NuPipe Process. Prices under each supply     
agreement are subject to limited increases by ITI. Each supply agreement is     
automatically renewed for successive periods of two years each, unless the      
licensee exercises a non-renewal option, which is available if ITI's quality and
prices are not competitive with commercially practicable alternative sources.   
ITI has not received notice of exercise of any such non-renewal option.         

ITI's supply agreement with an unaffiliated party, under which ITI was
entitled to purchase pipe to satisfy its licensees' NuPipe requirements, expired
in June 1995, and ITI has been engaged in discussions with such supplier with   
respect to the extension of the arrangement through the end of 1999, subject to 
automatic renewal unless one party terminates upon at least twelve months' prior
notice and to minimum purchases by ITI. ITI believes that alternative sources of
supply for its pipe requirements in connection with the NuPipe Process are      
available. If ITI were unable to obtain its NuPipe requirements under its       
existing third party arrangements, as extended, ITI might be adversely affected 
until arrangements with alternative sources are formulated.                     

    During 1994, ITI's wholly-owned subsidiary, Pipe Rehab International, Inc.
("PRI"), in connection with its acquisition of certain territories initially    
reserved by the seller of the PRI Technologies, assumed the seller's obligations
under an equipment manufacturing agreement with a licensee for territories      
comprising much of the Middle East, and has an agreement-in-principle for a     
similar arrangement to a new licensee for territories in Africa south of the    
equator. See "-- Licensing" below. In December 1993, ITI determined to          
discontinue the operations of a division of PRI which engaged in the off-site   
rehabilitation of downhole tubulars from its plant in Dallas, Texas. ITI        
subsequently determined to abandon its efforts to find a purchaser for such     
division and to shut down the Dallas facility. See Note 8 of the Notes to ITI's 
Consolidated Financial Statements included elsewhere herein.                    

DIRECT INSTALLATION AND OTHER CONSTRUCTION OPERATIONS                           

   ITI's direct installation operations utilizing the Insituform Process and
its other construction operations accounted for approximately 74% of ITI's      
consolidated revenues in 1994 (approximately 77% during the six months ended    
June 30, 1995). Such operations are principally conducted through the following 
subsidiaries:                                                                   

                                                        [Enlarge/Download Table]

            COMPANY*                   HEADQUARTERS                 TERRITORY           
--------------------------------  ----------------------  ------------------------------
                                                                                        
Insituform Southwest              Santa Fe Springs,       Arizona, New Mexico,          
                                    California              southern California,        
                                                            southern Nevada, two        
                                                            counties in Texas           
Insituform of New England,        Charlton,               Maine, New Hampshire,         
  Inc.                              Massachusetts           Vermont, Massachusetts,     
                                                            Connecticut, Rhode Island   
NuPipe New England, Inc.          Charlton,               Maine, New Hampshire,         
                                    Massachusetts           Vermont, Massachusetts,     
                                                            Connecticut, Rhode Island   
Insituform Gulf South, Inc.       Houston, Texas          Texas Gulf coast area,        
                                                            Louisiana and central       
                                                            and south Mississippi       
Insituform Midwest,               Lemont, Illinois        Indiana and portions of       
  Inc.                                                      Illinois, Iowa and          
                                                            Wisconsin                   

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            COMPANY*                   HEADQUARTERS                 TERRITORY           
--------------------------------  ----------------------  ------------------------------
                                                                                        
Gelco Services, Inc.              Salem, Oregon           Northern California,          
                                                            northern Nevada,            
                                                            Oregon, Washington,         
                                                            Idaho, Alaska, Hawaii,      
                                                            Guam and portions of        
                                                            Montana                     
Gelco NuPipe, Inc.                Salem, Oregon           Northern California,          
                                                            northern Nevada,            
                                                            Oregon, Washington,         
                                                            Idaho, Alaska, Hawaii,      
                                                            Guam and portions of        
                                                            Montana                     
IGL Canada Limited                West Edmonton,          Canada**                      
                                    Alberta                                             
Mar-Tech Insituform Ltd.          Surrey, British         British Columbia              
                                    Columbia                                            
Insituform Permaline              Ossett, England         United Kingdom                
  Limited                                                                               
NuPipe Limited                    Ossett, England         United Kingdom                
Insituform France S.A.            LaCourneuve, France     France                        
Insituform Overseas               Northampton,            spot repair services          
  Limited                           England                                             

---------------                                                                 
* All such subsidiaries are wholly-owned, directly or indirectly, by ITI,     
except for Insituform France S.A., two-thirds of which is so owned.       

** IGL Canada Limited has granted a sub-license under its rights to the         
Insituform and NuPipe Processes in British Columbia to Mar-Tech Insituform
 Ltd., which was acquired as part of the acquisition of Gelco Services, Inc.

Gelco Services, Inc., Gelco NuPipe, Inc. and Mar-Tech Insituform Ltd.,
together with certain related assets, were acquired by ITI in October 1994, for 
an aggregate purchase price of $18 million, one-half of which was paid at       
closing and the remainder in guaranteed secured promissory notes issued         
contemporaneously with notes to affiliates of the sellers aggregating           
approximately $2.85 million (as adjusted), in evidence of payables and current  
indebtedness and working capital. See Note 1 of the Notes to ITI's Consolidated 
Financial Statements included elsewhere herein. In February 1995, ITI acquired  
two-thirds of the stock of Insituform France from Entrepose Montalev S.A., a    
subsidiary of Lyonnaise des Eaux S.A. and ITI's prior French licensee of the    
Insituform Process ("Entrepose"), for the sum of approximately $1.5 million. The
remaining one-third of the stock in Insituform France will continue to be held  
by Entrepose and be entitled to certain co-sale rights.                         

   In 1994, ITI commenced spot contracting services through its newly-formed
subsidiary, Insituform Overseas Limited. ITI intends to provide such services in
unlicensed territories through the use of sub-contracted crews provided by its  
subsidiaries as well as unaffiliated licensees.                                 

Insituform and NuPipe installation operations are organized into field
installation and construction crews. Each field unit is typically composed of   
crews responsible for cleaning and preparation, installation, and video/cutter  
operations, respectively, and is typically equipped with a high-pressure water  
cleaning truck, a boiler truck, a refrigeration truck, a television van with    
cutting apparatus, other support trucks and vans, and pumping and safety        
equipment.                                                                      

     In addition to its Insituform and NuPipe business, Gulf South evaluates the
overall condition of a sewerage collection system by inspection of the          
individual components of the system, creating an automated                      

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database system that, among other things, inventories the customer's entire     
sewerage system by individual pipe segments and results in recommendations for  
rehabilitation. During the year ended December 31, 1994, Gulf South's revenues  
from such activities aggregated $2.1 million.                                   

In the first quarter of 1993, ITI introduced its technology for lining
in-field pipe utilizing the PRI Technologies, the rights of ITI to which exclude
agricultural irrigation applications worldwide, all of which were licensed,     
royalty-free, to the seller upon acquisition of the PRI Technologies. During    
1994, ITI acquired certain territories initially reserved under such license by 
the seller for non-agricultural applications. Under ITI's acquisition           
arrangements, in addition to amounts paid at closing and installments due       
through 1995, the seller is entitled, subject to an initial grace period, to    
contingent payments calculated on the basis of the length of pipe lined and     
other criteria. In view of the start-up nature of operations utilizing the PRI  
Technologies, management of ITI will consider alternatives to continued         
maintenance of PRI's facilities in Everman, Texas, including, in the event of   
consummation of the Merger, consolidation with IMA's larger corrosion and       
abrasion protection activities.                                                 

During the year ended December 31, 1994 and six months ended June 30, 
1995, approximately 71.7% and 50.0%, respectively, of the revenues of IGL       
Canada (9.5% and 3.9%, respectively, of ITI's consolidated revenues) were       
derived from non-trenchless construction contracting, primarily new open-cut    
water and sewer work, as a prime contractor or as a subcontractor to others for 
private developers and municipalities. IGL Canada also conducts tunnelling      
operations utilizing horizontal boring, pipe jacking, pipe extraction and       
microtunnelling techniques, which entail digging work shafts, and then tunnels, 
and installing pipe in the newly-dug tunnel, in connection with the             
construction of new sewer and water systems and water and oil and gas           
pipelines. See "ITI -- Management's Discussion and Analysis of Financial        
Condition and Results of Operations -- Liquidity and Capital Resources" above   
for information concerning the proposed disposition of the open-cut sewer and   
water pipeline construction and rehabilitation operations of IGL Canada.        

The direct installation business of ITI (including the non-trenchless 
business of IGL Canada) is project-oriented, and contracts may be obtained      
through competitive bidding, often requiring performance at a fixed price. The  
profitability of these operations to ITI depends upon the ability to estimate   
costs accurately, and such estimates may prove to be inaccurate as a result of  
unforeseen conditions or events. A substantial proportion of the work on any    
given project may be subcontracted out to third parties by ITI.                 

    Proper trenchless installation requires certain expertise that is acquired
on the job and through training, and, if an installation is improperly          
performed, ITI may be required to repair the defect, which may involve          
excavation. ITI, accordingly, has incurred significant costs in establishing new
field installation crews, in training new operations personnel and in equipping 
its direct installation staff. ITI generally invoices installation revenues on a
percentage-of-completion basis. Typically, collection from governmental agencies
is made within 60 to 90 days of billing.                                        

   ITI is required to carry insurance and bonding in connection with certain
direct installation projects, and, accordingly, maintains comprehensive         
insurance policies, including workers' compensation, general and automobile     
liability, and property coverage. ITI believes that it presently maintains      
adequate insurance coverage for all direct installation activities. See         
"ITI -- Management's Discussion and Analysis of Financial Condition and Results 
of Operations" for information concerning contingencies related to insurance    
maintained in connection with operations of Naylor that were divested before the
acquisition of Naylor by ITI. ITI has also arranged bonding capacity for bid,   
performance and payment bonds. Typically, the cost of a performance bond is     
approximately 1% of the contract value. ITI is required to indemnify surety     
companies for any payments the sureties are required to make under the bonds.   

LICENSING OPERATIONS                                                            

ITI grants licenses for the Insituform Process, covering exclusive and
non-exclusive territories, to licensees who provide sewer and pipeline repair   
and rehabilitation services to governmental, industrial and commercial users    
throughout their respective licensed territories. The licenses generally grant  
to the licensee the right to utilize the know-how and practice the invention of 
the patent rights (where they exist) relating to the Insituform Process, to use 
ITI's copyrights and to use the trademark "Insituform." During 1994 and the     
first half of 1995, ITI entered into new Insituform license agreements covering,
on an exclusive basis, New                                                      

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Zealand, South Korea and, on a non-exclusive basis Poland and (supplementing its
other eleven non-exclusive licenses in such territory), Japan. At present, the  
Insituform Process is commercialized under license by an aggregate of 33        
unaffiliated licensees and sublicensees. From time to time, in those territories
which do not justify the granting of a license, ITI also appoints agents which  
promote the Insituform Process and secure contracts to be performed by ITI or   
its licensees. During the year ended December 31, 1994, license fees and royalty
income from ITI's Insituform licensees represented $10.0 million, or 6.7% of    
consolidated revenues.                                                          

     Effective in December 1990, NuPipe, Inc., a wholly-owned subsidiary of ITI,
entered into licenses granting the exclusive right to commercialize the NuPipe  
Process in assigned territories covering the United States, Puerto Rico and the 
United States Virgin Islands. NuPipe International, Inc., a wholly-owned        
subsidiary of NuPipe, Inc., has entered into a number of licensing arrangements 
outside of the United States, and has identified, and is engaged in discussions 
with, additional prospective licensees. During the year ended December 31, 1994,
ITI recognized royalty income and license fees from its NuPipe licensees in the 
amount of approximately $254,000, or .2% of consolidated revenues.              

As a result of ITI's acquisition during 1994 of certain territories   
initially reserved by the seller of the PRI Technologies, ITI assumed the       
seller's obligations under the grant of an exclusive license of the PRI         
Technologies for much of the Middle East, in exchange for royalty payments based
upon gross profits. ITI also has an agreement-in-principle for an exclusive     
license covering in-field lining and factory-lined pipe utilizing the PRI       
Technologies in Africa south of the equator, which remains subject to           
formulation of definitive terms. The license would be for an initial term of    
five years expiring in 2000, renewable for an additional five-year term at the  
licensee's option, and provide for continuing royalties based upon net selling  
price of the products and services under license and a license fee of $300,000  
(one-half of which would be payable at inception, and the remainder of which    
would be paid in installments through 1998).                                    

     Insituform License Agreements.  Each licensee has entered into an agreement
with ITI setting forth the rights and obligations of the parties with respect to
the exploitation of the Insituform Process. Each of ITI's domestic Insituform   
licensees pays a minimum annual royalty, which varies according to the          
population of the licensed territory, against a royalty of 8% of the gross      
contract price (9% in the case of contracts in Puerto Rico and the United States
Virgin Islands) of all sales and contracts utilizing the Insituform Process,    
including any preparatory and finishing work performed and subject to specified 
allowances. Domestic licensees are also obligated to pay a royalty surcharge of 
8% to 12% of their sales and contracts utilizing the Insituform Process outside 
of their licensed territories. The amount of such surcharges are then paid by   
ITI to the domestic licensee in whose territory the installation was performed. 

   In the event any domestic Insituform licensee has, for any year, produced
to ITI an acceptable plan for marketing and sales penetration, minimum royalties
otherwise established for such year will not apply, subject to achievement of   
performance objectives established with respect to utilization of ITI's         
trenchless rehabilitation processes. In addition, ITI is obligated to pay to    
Insituform East, Incorporated ("Insituform East"), a domestic licensee, one-half
of one percent of the gross contract value of certain contracts using the       
Insituform Process entered into by licensees introduced to ITI by Insituform    
East's predecessor-in-interest, SAW Associates, and also one-half of one percent
of the reported turnover of Insituform East.                                    

Insituform licensees outside of the United States are obligated to pay
royalties, calculated by reference to the gross contract price of all contracts 
utilizing the Insituform Process, ranging from 5% to 8%. Foreign licenses may   
also provide for minimum annual royalties as well as initial license fees and   
trademark fees.                                                                 

  ITI requires its licensees to be well-trained and fully qualified in the
installation and service of the Insituform Process. ITI typically establishes   
certain financial, professional and operating requirements which must be met by 
each licensee. In addition to possessing adequate capital and competent         
technical personnel each licensee must demonstrate an ability to market the     
Insituform Process aggressively to potential users within its territory.        

 Any improvements or modifications a licensee may make in the Insituform
Process during the term of the license agreement becomes the property of ITI or 
are licensed to ITI. ITI is generally required to disseminate                   

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all information with regard to the Insituform Process developed by it or any    
licensee to all licensees, without any additional royalty.                      

  Should a licensee fail to meet its royalty obligations or other material
obligations, ITI may terminate the license. Many licensees (including all       
domestic licensees), upon prior notice to ITI, may also terminate the license   
for any reason. ITI may vary the agreement used with new licensees according to 
prevailing conditions.                                                          

  IMA, ITI's largest domestic licensee, has reported its acquisition of an
exclusive license for substantially all of North America to use a               
"cured-in-place" rehabilitation technology potentially competitive in some      
applications with the Insituform Process, known as the PALTEM systems. ITI has  
communicated to IMA its concerns regarding the ability of IMA to operate in     
compliance with its Insituform licenses in view thereof, and has notified IMA of
its obligations not to use, nor induce any other Insituform licensee to use,    
"Insituform" as a trademark in connection with the exploitation of PALTEM, nor  
to associate "Insituform" with the PALTEM systems; not to interfere with ITI's  
relations with its other licensees by inducing them to divert their efforts from
promotion of the Insituform Process; not to utilize or disclose any information 
proprietary to ITI in the commercialization of PALTEM; and not to violate its   
obligations regarding utilization of all reasonable endeavors to create a demand
within its licensed territory for Insituform products.                          

In January 1995, ITI received a request from Enviroq, another domestic
licensee, for ITI to grant its consent under various Insituform and NuPipe      
license agreements with Enviroq's subsidiaries, in connection with the          
transactions contemplated by the Enviroq Agreement pursuant to which IMA, on    
April 18, 1995, acquired the pipeline rehabilitation business of Enviroq. The   
Insituform and NuPipe license agreements (see "-- NuPipe Process License        
Agreements" below), respectively, contain certain provisions which require the  
consent of the licensor in order to avoid termination in the event of change in 
control of the licensee and/or assignment of the licenses. ITI has declined to  
grant its consent, as requested by Enviroq and, as described under "-- Legal    
Proceedings" below, has initiated the Declaratory Action in Tennessee Chancery  
Court (subsequently removed by defendants to federal district court) seeking a  
declaratory judgment confirming such action.                                    

 See "-- Investments" below for a description of arbitration proceedings
initiated by Insituform East against Enviroq seeking a declaration that an event
of default has occurred under the partnership agreement of Midsouth Partners,   
another domestic licensee in which subsidiaries of Enviroq, Insituform East and 
ITI are partners, as a result of the execution by Enviroq of the Enviroq        
Agreement. ITI has agreed with IMA that, unless the Merger Agreement is         
terminated, neither party will take any further action in the Declaratory       
Action, or to assert any rights in dispute as a result of the Enviroq           
Acquisition without consent of ITI, except for certain procedural steps to      
preserve the respective rights of the parties.                                  

NuPipe Process License Agreements.  In consideration for its NuPipe   
license, each domestic NuPipe licensee has paid an initial license fee of       
$60,000, and has agreed thereafter to pay a royalty of 6.75% of the gross       
contract price (including sales) of all contracts to the extent covering        
installations performed utilizing the NuPipe Process. "Gross contract price" is 
defined to include preparatory and finishing work and does not exclude certain  
allowances as does the comparable calculations utilized by ITI for domestic     
Insituform royalties. If the licensee commercializes the NuPipe Process outside 
of its assigned territory, it will be obligated to pay to ITI, for repayment in 
turn to the licensee assigned such territory, 10.125% of the gross contract     
price of such installations. In connection with its introduction in 1995 of a   
second fold and formed product, ITI has offered domestic licensees the right to 
elect to modify royalty calculations so as to be based upon linear feet of pipe 
delivered, but has not completed such arrangements with its unaffiliated        
licensees.                                                                      

Each domestic NuPipe licensee has committed to use its best efforts to
create a demand for the NuPipe Process within the territory covered by its      
license, and to use its best efforts to fill such demand. In furtherance of its 
commitments under the license, each domestic licensee has agreed that, in order 
to maintain the license it will, during each year of the term of the license,   
complete contracts covering the repair, rehabilitation or reconstruction in its 
territory, by utilizing ITI's trenchless rehabilitation processes, of the       
minimum quantities of length of pipeline as established under the license.      

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    Each domestic licensee has, pursuant to its license, entered into a supply
agreement with ITI relating to its requirements of the thermoplastic pipe       
utilized in the application of the NuPipe Process, as described under           
"-- Manufacturing and Product Sales" above. Domestic NuPipe licensees are       
subject to terms similar to those in ITI's Insituform licenses with respect to  
maintenance of quality standards, rights in improvements to the process and     
termination of the license.                                                     

ITI has entered into licensing arrangements covering Sweden and       
Switzerland, agreed in principle to licenses in certain Pacific Rim territories,
and also, through affiliates, introduced the NuPipe Process in the United       
Kingdom and Canada. In consideration for its NuPipe license, each unaffiliated  
foreign NuPipe licensee has paid an initial license fee, and each foreign       
licensee remains obligated to pay a royalty of 8% of its net invoices in        
connection with the operation of the NuPipe Process in its exclusive territory, 
subject to minimum royalty payments, throughout the life of the 20-year         
agreements. Under the agreements, the licensees have committed to use their best
efforts to promote the operation of the NuPipe Process in their respective      
territories, but may, upon six months' prior notice, terminate the license. The 
licensor may also terminate the license in the event the licensee fails to make 
payments when due, or fails to meet its other material obligations. Foreign     
licensees have granted to the licensor a non-exclusive, royalty-free license,   
without limit of time, covering all improvements to the NuPipe Process that the 
licensees may develop or acquire.                                               

     NuPipe Acquisition Arrangements.  Under the terms of the agreement pursuant
to which ITI acquired the NuPipe Process, ITI was obligated to make ongoing     
payments to the former stockholders of the predecessor of NuPipe, Inc. until the
later to occur of 15 years after the closing of the transaction or the          
expiration of all patents or copyrights granted with respect to the NuPipe      
Process. Payments amounted to 35% of the royalty income collected by ITI in     
connection with the NuPipe Process from unaffiliated and affiliated licensees.  
Until such arrangements were modified in October 1994, one-half of such payments
were made in cash and one-half in shares of the Series C Cumulative Non-Voting  
Preferred Stock, $.10 par value ("Series C Preferred Stock"), of ITI; in October
1994, all such shares were repurchased (for an amount aggregating approximately 
$228,000), and the parties agreed that payments would thereafter be made solely 
in cash. In March 1995, ITI exercised an option, granted in October 1994, to    
acquire all rights to such contingent payments in exchange for ITI's notes      
aggregating $1 million, payable over three years, and accruing interest at 5.4% 
per annum (reflecting the rate of return on the Series C Preferred Stock).      

INVESTMENTS                                                                     

 ITI makes investments in its licensees, and enters into joint ventures,
from time to time so as to encourage additional royalties and sales of its      
products and further enable ITI to influence and participate in the exploitation
of its trenchless rehabilitation processes. During the six months ended June 30,
1995 and years ended December 31, 1994, 1993 and 1992, ITI's earnings from such 
investments, other than ITI's pro rata portion of the earnings of Insituform    
Brochier Rohrsanierungstechnik GmbH ("Insituform Brochier"), were not material  
to ITI's results of operations. See Note 7 of the Notes to ITI's Consolidated   
Financial Statements included elsewhere herein. ITI has divested minority       
positions in licensees as appropriate opportunities arose, in order to focus on 
supporting licensee operations through more active marketing, research and      
development and technical support efforts.                                      

     As a result of the IGL Acquisition, ITI, through its subsidiary, Insituform
Technologies Limited ("ITL"), holds one-third of the equity interest in         
Insituform Brochier, ITI's licensee of the Insituform Process in Germany.       
Pursuant to Insituform Brochier's joint venture agreement, ITL granted an       
exclusive Insituform license to Insituform Brochier covering central and        
southern Germany (the remaining territory of which is covered by licenses       
assigned by another joint venturer or subsequently extended by IGL). Under the  
joint venture arrangements, the managing director of Insituform Brochier is     
appointed by the unanimous agreement of the parties, and the joint venture      
partners have rights-of-first-refusal in the event any party determines to      
divest its interest. During the six months ended June 30, 1995, ITI recorded    
earnings of $.1 million based on its investment in Insituform Brochier; during  
the year ended December 31, 1994, ITI did not record earnings from such         
investment; and during the two prior years recorded earnings of $390,000 and    
$675,000, respectively, from such investment.                                   

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ITI holds additional investments in licensees as follows:             

                                                        [Enlarge/Download Table]

     LICENSEE          PROCESSES            TERRITORY                 INTEREST        
-------------------  --------------  ------------------------  -----------------------
                                                                                      
Midsouth Partners    Insituform      Tennessee, portions of    15% general partnership
                     NuPipe          Kentucky and Mississippi  interest(1)            
N.V. K-Insituform    Insituform      Belgium,                  50% joint venture      
  S.A.                               Luxembourg                interest(2)            
Ka-Te Insituform     Insituform      Switzerland,              50% joint venture      
  A.G.                               Liechtenstein and         interest(3)            
                                     Voralberg, Austria                               

------------------------                                                        
(1) The remaining interest is divided equally between Insituform East and       
Enviroq.                                                                

(2) The remaining interest is held by N.V. Kumpen.                              

(3) The remaining interest is held by Ka-Te Holding A.G.                        

   The management and conduct of the business of Midsouth Partners is vested
in a management committee comprised of one representative of ITI, three         
representatives of Insituform East and three representatives of Enviroq (one of 
which is also the chairman of the management committee). Partnership interests  
in Midsouth Partners may not be transferred by the subsidiaries of ITI,         
Insituform East and Enviroq holding such interests, nor may there be a change in
control of any partner, without the approval of all partners. In December 1994, 
Insituform East notified Enviroq of its claim that, as a result of Enviroq's    
execution of the Enviroq Agreement with IMA, an event of default had occurred   
under the Midsouth Partners partnership agreement. Subsequently, Insituform East
commenced arbitration proceedings seeking a declaration to such effect and      
unspecified remedies available under the partnership agreement. The partnership 
agreement grants non-defaulting partners the right to require compliance with   
the agreement, enjoin any breach or seek dissolution of the partnership, among  
other alternatives. ITI is not a party to such arbitration proceedings, which   
have been stayed to October 2, 1995. Instituform East also has purported to     
exercise its alleged rights as a non-defaulting partner to name a majority of   
the members of the management committee, an action to which both ITI and Enviroq
have objected.                                                                  

     The interests in ITI's Belgian joint venture, formed in April 1993, and its
Swiss joint venture, formed in September 1993, are subject to its partners'     
right-of-first-refusal. ITI's joint venture in Belgium is managed by four       
directors, two named by ITI, who are responsible for technical and financial    
matters, and two named by N.V. Kumpen, who are responsible for marketing, sales 
and general management. ITI's Swiss joint venture is managed by three directors,
with unanimity required of the directors, or of the shareholders, to take       
certain actions. Of the directors of the Swiss joint venture, one is named by   
Ka-Te Holding A.G., who is responsible for marketing, sales and general         
management, one is named by ITI, who is responsible for technical and financial 
matters, and a third is named by ITI with the approval of its partner, which may
not unreasonably be withheld.                                                   

     Until March 1995, ITI was also a party to a joint venture, called Enhansco,
which develops, blends and sells resins used in connection with the Insituform  
Process. At such date, ITI's joint venture partner purchased ITI's one-half     
interest in the joint venture for the sum of $400,000, one-half of which was    
paid within 30 days of closing and the remainder of which is due on December 31,
1997. ITI has agreed that it will not compete with the continuing resin business
of the joint venture for a period of three years after such buy-out.            

MARKETING                                                                       

    ITI's licensees have provided sewer and pipeline repair and rehabilitation
services utilizing ITI's trenchless pipeline rehabilitation processes to        
industrial, commercial and municipal users throughout the territories assigned. 
ITI's licensees (including affiliated licensees) are responsible for selling and
marketing ITI's trenchless rehabilitation process in their respective           
territories and each has a staff for this purpose. In addition, ITI markets its 
processes by providing numerous marketing support services to its licensees and 
by other means including participation in exhibitions, trade shows, a national  
advertising program, press releases in specialized publications, product        
literature, informational and sales aids and by making presentations to         
prospective clients and interested parties in the municipal, governmental and   
industrial fields.                                                              

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The bulk of the trenchless repair and rehabilitation services of the  
licensees has historically been performed for municipalities, and ITI expects   
this to remain the largest part of the licensees' business for the foreseeable  
future. ITI believes that other markets and, in particular, the industrial      
market, offer significant opportunities for the Insituform Process. ITI believes
that the ability of the Insituform Process to restore effluent and sewer lines  
with little or no excavation is important to industrial customers. Furthermore, 
the Insituform Process allows the selection of resin systems which are suitable 
for a wide range of industrial applications. ITI believes that power generation,
hydrocarbon processing, chemical processing and pulp and paper are the          
industries which offer the most potential for use of the Insituform Process. As 
part of its increased effort in the industrial market ITI has hired two national
account executives who are former senior executives of the targeted industrial  
fields, who provide specialized support and guidance to licensees who are       
serving the hydrocarbon processing, chemical processing and pulp and paper      
industries.                                                                     

 ITI's open-cut sewer and water operations in Canada have been conducted
primarily with private developers and commercial customers, and approximately   
61.3% of IGL Canada's revenues in the most recent fiscal year were derived from 
such customers with the remainder from municipalities. See "ITI -- Management's 
Discussion and Analysis of Financial Condition and Results of                   
Operations -- Liquidity and Capital Resources" above for information concerning 
the proposed disposition of such operations.                                    

ITI expects to continue licensing the Insituform Process, the NuPipe  
Process and the PRI Technologies pursuant to existing arrangements and in those 
additional areas of the world in which ITI's management believes it would not be
profitable for ITI to exploit such processes directly. ITI intends to continue  
to investigate the formation of subsidiaries and other affiliates, including    
joint ventures, which will directly provide installation services utilizing     
ITI's processes.                                                                

No customer accounted for more than 10% of ITI's consolidated revenues
during the years ended December 31, 1994, 1993 and 1992, respectively, except   
that, in 1994, the City of Houston, Texas accounted for 11.6% of ITI's          
consolidated revenues.                                                          

BACKLOG                                                                         

    Orders for Insitutubes are generally shipped within one to two weeks after
receipt, and, accordingly, no substantial backlog of orders for this product    
normally exists. At June 30, 1995 and 1994, respectively, ITI recorded contract 
backlog from construction operations as follows:                                

                                                                [Download Table]

                                                                JUNE 30,       
                                                           ------------------- 
                                                           1995          1994  
                                                           -----         ----- 
                                                              (IN MILLIONS)    
                                                                               
Total...................................................   $45.4         $48.3 
  Insituform Southwest..................................     4.7           1.2 
  Insituform of New England, Inc.(1)....................     5.1          17.3 
  Insituform Gulf South, Inc............................    16.4          15.3 
  Insituform Midwest, Inc...............................     2.4           5.8 
  Gelco Services, Inc.(2)...............................     5.6            (3)
  IGL Canada Ltd. ......................................     7.1           7.6 
  Insituform Permaline Ltd.(4)..........................     2.1           1.1 
  Pipe Rehab International, Inc.........................      .1            -- 
  Insituform Overseas Limited...........................     1.9            -- 

---------------                                                                 
(1) Includes NuPipe of New England, Inc.                                        
(2) Includes Mar-Tech Insituform Ltd. and Gelco NuPipe, Inc.                    
(3) Gelco Services, Inc. was acquired by ITI in October 1994.                   
(4) Includes NuPipe Limited.                                                    

ITI anticipates that substantially all contract backlog recorded at June 30,    
1995 will be completed in 1995, except for certain work in connection with the  
projects undertaken by Gulf South (approximately $4.3 million), which may extend
into 1996.                                                                      

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SEASONALITY                                                                     

Seasonal variations in ITI's results of operations may arise from the 
budgetary and appropriations process of the governmental customers of ITI and   
its licensees and the contraction of pipeline rehabilitation activity in certain
northern regions during severe weather conditions. Severe cold weather affects  
ITI's operations in Canada in the months of December, January, February and     
March where, over the past three years, the volume of work performed in the     
first calendar quarter by IGL Canada has averaged 5.9% of the total year's work.
The volume of work reported on a consolidated basis by ITI's licensees          
(including affiliated licensees) in the first calendar quarter of the year has  
averaged, for the past five years, approximately 21.3% of the work they reported
over the full year.                                                             

COMPETITION                                                                     

   The pipeline reconstruction, rehabilitation and repair business is highly
competitive, and ITI competes against many companies, some of which have far    
greater financial resources and experience than ITI. Accordingly, there can be  
no assurance as to the success of the Insituform Process in competition with    
such companies and alternative technologies for pipeline rehabilitation.        

ITI currently faces its principal competition from more traditional   
pipeline rehabilitation approaches, including: (i) total replacement, which is  
the excavation and replacement of an entire section of pipe; (ii) point repair, 
which is the replacement of cracked or structurally failed sections of pipes by 
actual excavation and replacement; (iii) sliplining, which is the placement of a
smaller pipe within an existing deteriorated pipe; and (iv) grouting, which is  
the placement of gelatinous material, hydraulic cement, or other acceptable     
material in defective pipe joints to repair leaks and prevent infiltration. In  
addition, the Insituform Process more recently has encountered competition from 
cured-in-place processes, including one of Japanese origin (PALTEM), as to which
IMA has acquired an exclusive license in substantially all of North America (see
"-- Licensing Operations" above), two of German origin (KM-Liner and InLiner)   
and, outside of the United States, from additional cured-in-place processes     
currently in regional use in Europe, such as FormaPipe, InPipe, Copeflex,       
Phoenix, Rees and Kanal Muller. ITI also faces competition from folded          
thermoplastic processes using polyethylene pipe (U-Liner, Compact Pipe) and     
polyvinylchloride pipe (AM-Liner, Ex-Pipe). ITI believes that the Insituform    
Process generally offers a cost advantage over full replacement, the practical  
advantage of avoiding excavation, a higher quality rehabilitation than          
sliplining (which may significantly reduce the diameter of the pipe) and a      
longer-term rehabilitation than grouting, and competes favorably with all       
alternative processes now known.                                                

  ITI's Canadian subsidiary conducts its non-trenchless open-cut sewer and
water operations utilizing total replacement, point repair and sliplining       
methods, as well as engaging in new excavation and, accordingly, competes with  
traditional construction companies. See "ITI -- Management's Discussion and     
Analysis of Financial Condition and Results of Operations -- Liquidity and      
Capital Resources" above for information concerning the proposed disposition of 
such operations.                                                                

ITI's in-place polyethylene lining systems for the oil and gas field  
transmission market compete against a number of alternative methods, some of    
which are provided by companies with a substantial market presence. For example,
competing methods of in-place pressure pipe rehabilitation which offer a        
polyethylene liner are marketed by IMA (Tite Liner), British Gas (Swagelining)  
and Miller Pipeline Corporation.                                                

PATENTS                                                                         

   The Insituform Process was developed in the United Kingdom in 1971. ITI's
commercialization of the Insituform Process has been protected by patents which 
cover certain aspects of the Insituform Process including the Insitutube        
construction, the resin saturation process and the process of reconstructing the
pipeline. Pursuant to provisions recently adopted under the General Agreement on
Tariffs and Trade, patents in force on June 8, 1995 are entitled to a patent    
term of the longer of 17 years from issuance or 20 years from the earliest      
filing date of the patent. ITI currently holds 54 patents in the United States  
relating to the Insituform Process, the last to expire of which will remain in  
effect until 2013, and has obtained patent protection in its principal overseas 
markets covering aspects of the Insituform Process.                             

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     One of the significant patents relating to the Insituform Process, covering
the curing of a resin-impregnated tube, has expired in many countries, in       
particular the United States, Canada, Japan, the United Kingdom and Germany.    
Another important method patent relating to the Insituform Process, which covers
material aspects of the inversion process has also expired in the United States,
Canada, Japan, the United Kingdom and Germany. The following patents of ITI     
relate to the Insituform Process, collectively constituting an integrated       
product and service:                                                            

                                                                [Download Table]

                   EXPIRY             EXPIRY             EXPIRY              EXPIRY 
PATENT    U.S.      DATE    CANADA     DATE     JAPAN     DATE      U.K.      DATE  
-------  -------  --------  -------  --------  -------  --------  --------  --------
                                                                                    
  (a)    4366012  02/05/01    --        --       --        --        --        --   
  (b)    4434115  02/11/02    --        --       --        --     2096265   02/18/01
  (c)    4446181  05/01/01  1134290  10/26/99  1202781  04/25/99  2031107   09/02/99
  (d)    4581247  12/27/04  1254852  05/30/06    --        --        --        --   
  (e)    4776370  10/11/05    --        --       --        --        --        --   
  (f)    5044405  08/21/09    --        --       --        --        --        --   
  (g)    5108533  10/10/09    --        --       --        --        --        --   
  (h)    5154936  10/05/10     *        *         *        *         *         *    
  (i)    5167901  10/05/10     *        *         *        *         *         *    
  (j)    5285741  03/06/11     *        *         *        *         *         *    

---------------                                                                 
(a)  Method of serial vacuum impregnation of a resin into an Insitutube.        

(b)  Method for remote lining of side connections.                              

(c)  Manufacture of tubular laminates.                                          

(d)  Method for lining pipes incorporating the curing of a resin-impregnated    
liner using a light source.                                           

(e)  Apparatus for securing cable to a tubular pipe liner.                      

(f)  Method of installing a lateral lining from the main line by use of a       
carrier tube.                                                         

(g)  Method of installing a lateral lining from the lateral clean-out to the    
main.                                                                 

(h)  Apparatus for everting an Insitutube.                                      

(i)   Method of everting an Insitutube.                                         

(j)   Method of producing a flexible tubular.                                   

* application pending.                                                          

In addition, in Germany, applications for patents (h), (i) and (j) are pending, 
and an application for patent (d) has been abandoned. In the United Kingdom, in 
respect of certain classes of patents, any person has the right to compel the   
patent holder to license such person during the last four years of the patent's 
life, on such terms as are agreed with the patent holder (including the level   
and/or amount of royalty) failing which such terms are judicially determined.   

  The specifications and/or rights granted in relation to each patent will
vary from jurisdiction to jurisdiction. In addition, as a result of differences 
in the nature of the work performed and in the climate of the countries in which
the work is carried out, not every licensee uses each patent, and ITI does not  
necessarily seek patent protection for all of its inventions in every           
jurisdiction in which it does business.                                         

   Although ITI believes these patents are important to the business of ITI,
there can be no assurance that the validity of the patents will not be          
successfully challenged or that they are sufficient to afford protection against
another company utilizing a process similar to the Insituform Process. ITI's    
business could be adversely affected by increased competition in the event that 
one or more of the patents were adjudicated to be invalid or inadequate in scope
to protect ITI's operations or upon expiration of the patents. ITI believes,    
however, that while ITI has relied on the strength and validity of its patents, 
ITI's long experience with the Insituform Process, its continued commitment to  
support and develop the Insituform Process, the strength of its trademarks, and 
its degree of market penetration, should enable ITI to continue to compete      
effectively in the pipeline rehabilitation market.                              

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 In September 1989, the United States Patent and Trademark Office issued
ITI's initial patent covering the NuPipe Process, which was followed by six     
additional patent grants. Patents covering the NuPipe Process or the materials  
used in connection with the NuPipe Process have also been issued in 15 other    
countries. ITI intends aggressively to pursue the remaining U.S. and foreign    
patent applications related to the NuPipe Process, but there can be no assurance
that any of the remaining patents will issue as a result of such applications,  
or that any patent granted will be sufficient to afford protection against      
another company utilizing a process similar to the NuPipe Process.              

  The PRI Technologies acquired by ITI in November 1991, and complementary
rights acquired in December 1992, included certain United States patents and    
patent applications. ITI is also pursuing patent applications in a number of    
foreign jurisdictions covering the PRI Technologies. Although ITI will rely upon
a combination of patents and trade secrets to protect the PRI Technologies, ITI 
believes that the success of its processes addressing the oil and gas field     
transmission market will depend primarily upon its proprietary know-how and its 
marketing and sales skills.                                                     

RESEARCH AND DEVELOPMENT                                                        

ITI, by utilizing its own laboratories and test facilities and outside
consulting organizations and academic institutions, continues to develop        
improvements to the Insituform and NuPipe Processes, including the materials    
used and the methods of manufacturing and installing pipe. During the years     
ended December 31, 1994, 1993 and 1992, ITI spent $1.5 million, $2.7 million and
$4.3 million, respectively, on all research and development activities, and, for
the six-month periods ended June 30, 1995 and 1994, respectively (excluding     
strategic marketing costs), spent $.9 million and $.3 million on such           
activities.                                                                     

EMPLOYEES                                                                       

    As of June 1, 1995, ITI employed 882 individuals, including five officers,
149 technical specialists and managers, 121 manufacturing staff, 400 direct     
installation staff, 137 administrative personnel and 70 marketing personnel.    
During peak seasons, IGL Canada typically employs 80 to 100 additional employees
in direct installation operations. Each of Insituform Southwest and Insituform  
Midwest is a party to a collective bargaining agreement covering an aggregate of
79 employees engaged in direct installation activities. None of ITI's other     
employees is represented by a labor union, although Insituform Permaline belongs
to a trade association that prescribes minimum terms of employment for members. 
ITI generally considers its relations with its employees to be good.            

GOVERNMENT REGULATION                                                           

   ITI and its licensees are required to comply with all national, state and
local statutes, regulations and ordinances, including those disclosure and      
filing requirements relating to the grant of licenses. In addition, ITI's       
licensees (including ITI's direct installation operations) may have to comply   
with building code specifications, permit requirements, and extensive bonding   
and insurance requirements with regard to installation activities as well as    
with fire regulations relating to the storage, handling and transporting of     
flammable materials. ITI's manufacturing facilities, as well as its direct      
installation operations and those of its licensees, are subject to state and    
national environmental protection regulations, none of which presently has any  
material effect on ITI's capital expenditures, earnings or competitive position 
in connection with ITI's present business. However, while ITI's direct          
installation operations have established monitoring programs relating to the use
of solvents in the installation process, further restrictions could be imposed  
on the use of solvents or the thermosetting resins used in the Insituform       
Process. ITI believes that it is in material compliance with environmental laws 
and regulations applicable to it.                                               

     The use of both thermoplastics and thermosetting resin materials in contact
with drinking water is strictly regulated in most countries. In the United      
States, a consortium led by NSF International ("NSF"), under arrangements with  
the United States Environmental Protection Agency (the "EPA"), establishes      
criteria for materials that come into contact with drinking water. The NSF      
standards establish minimum requirements for the control of potential human     
health effects from substances added indirectly to water via contact with       

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treatment, storage, transmission and distribution system components, by defining
the maximum permissible concentration of materials which may be leached from    
such components into drinking water, and methods for testing them. The NSF      
assumes no liability for use of any products, and the NSF's arrangements with   
the EPA do not constitute the EPA's endorsement of the NSF, the NSF's policies  
or its standards. ITI does not currently have an NSF certified product, but has 
submitted an improved product for NSF certification.                            

PROPERTIES                                                                      

    In May 1993, ITI relocated its executive offices to a new site in Memphis,
at 1770 Kirby Parkway. ITI's seven-year lease of such premises with an          
unaffiliated party covers 17,885 square feet of office space, at an annual      
rental of $254,868, plus taxes and operating expenses in excess of a base       
amount.                                                                         

     ITI's manufacturing facilities in Memphis, Tennessee are sub-leased from an
unaffiliated entity for an initial term of 40 years expiring on December 31,    
2020. The annual rental cost to ITI during the initial term of the lease is     
currently $28,956, plus real estate taxes, and increases by varying percentages 
every five years to $44,952, plus real estate taxes, in 2016 and thereafter. The
premises consist of 56,000 square feet of manufacturing space, with an adjoining
6,000 square foot administrative office complex, the cost of a portion of which,
together with certain machinery and equipment, was financed from the sale of a  
$1.5 million industrial development bond and secured by a mortgage on the       
premises and equipment. See Note 11 of the Notes to ITI's Consolidated Financial
Statements included elsewhere herein. An additional 2,700 square feet of space  
added to the facility is used for research and development.                     

ITI maintains 87,000 square feet of space on 20 acres of land in      
Batesville, Mississippi, 27,000 square feet of which is utilized as an          
Insitutube fabrication facility, 27,000 square feet as a contiguous felt        
manufacturing facility, 27,000 square feet as warehousing space, and 6,000      
square feet as office space. The costs relating to the acquisition, construction
and equipping of the Batesville facilities, in the aggregate amount of $5.5     
million, were financed from the proceeds of the sale of an industrial           
development bond and secured by the issuer's title to the property, which is    
leased to ITI for a term that expires concurrently with maturity of the bond in 
January 2004. See Note 11 of the Notes to ITI's Consolidated Financial          
Statements included elsewhere herein.                                           

  In January 1995 ITI sold to Linings (a 51%-owned subsidiary), for a sale
price of L750,000, the land and building previously leased to Linings and       
comprising its Insitutube manufacturing facility located on 1.3 acres and       
comprising 25,100 square feet of space in Wellingborough, England. ITI leases   
additional Insitutube manufacturing space in Matsubuse, Japan, and a facility in
Everman, Texas which has been used for equipment manufacturing and other        
activities relating to the PRI Technologies.                                    

  In support of its direct installation operations, ITI owns facilities in
Ossett, England (36,250 square feet), Waterville, Maine (7,200 square feet),    
Lemont, Illinois (24,378 square feet), and West Edmonton, Canada (16,008 square 
feet). The Ossett and Edmonton properties are subject to mortgages granted to,  
respectively, National Westminster Bank Plc and Alberta Treasury Branches. ITI  
manages installation operations from leased sites in the United States in       
Houston, Indianapolis, Santa Fe Springs, Sacramento and Charlton, Massachusetts,
Kent, Washington, Kailua, Hawaii, Hammond, Louisiana and Salem, Oregon; and in  
Canada in Edmonton, Alberta, Surrey, British Columbia, Pickering, Ontario and   
Vaudreuil, Quebec. ITI's contracting subsidiaries maintain additional sales and 
administrative offices in the event required by operations.                     

  ITI remains party to a lease with an unaffiliated entity entered into in
1990 by IGL and expiring in April 2015 for a two-story office building          
comprising 12,226 square feet located in Langley, Berkshire, England. The       
initial rent under the lease is L245,960 per annum, subject to adjustment every 
five years based upon the open market rent applicable at that time.             

    The foregoing facilities are regarded by management of ITI as adequate for
the current and anticipated future requirements of ITI's business. In order to  
rationalize ITI's operations acquired in the IGL Acquisition, ITI intends to    
seek to negotiate terminations of its lease in Langley and of leases on certain 
additional properties in the United Kingdom. In addition, in view of the        
start-up nature of operations that have utilized PRI's Everman, Texas facility, 
ITI will consider alternatives to the continued maintenance thereof, including, 
in the event of consummation of the Merger, consolidation with IMA's larger     
corrosion and abrasion protection activities. See "ITI -- Management's          
Discussion and Analysis of Results of Operations -- Liquidity and Capital       
Resources" above for information concerning the proposed disposition of IGL     
Canada's non-trenchless operations, which may include certain Canadian          
facilities.                                                                     

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LEGAL PROCEEDINGS                                                               

A stockholder of ITI has filed an action in the United States District
Court for the Western District of Tennessee against ITI and one former and one  
current officer alleging various misstatements and omissions, relating to, among
other things, acquisition and restructuring costs arising from the IGL          
Acquisition in December 1992, in public disclosures by ITI during the period    
from October 28, 1992 to May 12, 1993 in violation of, among other things, Rule 
10b-5 under the Exchange Act (Neil Weinberg, on behalf of himself and all others
similarly situated, Plaintiffs v. Insituform Technologies, Inc., William C.     
Willis, Jr., and William A. Martin, Defendants (United States District Court for
the Western District of Tennessee, Western Division)). On September 30, 1994,   
the court ruled on ITI's motion to dismiss the first amended complaint, granting
in part and denying in part ITI's motion. The court further granted plaintiffs  
leave to amend their complaint insofar as defective from a pleading perspective.
ITI has filed an answer to the complaint as so amended, denying its material    
allegations. On April 7, 1995, the court issued its order certifying the action 
as a class action on behalf of all purchasers of ITI Common Stock during the    
relevant time period. The court has entered a scheduling order which establishes
a trial date in November 1995.                                                  

    Notwithstanding ITI's belief that it has defenses to the plaintiff's claim
that are well grounded in fact and law, on May 23, 1995 ITI entered into a      
memorandum of understanding to settle such litigation and, on September 11,     
1995, executed a stipulation of settlement in evidence thereof. Under the       
settlement, which remains subject to court approval and other customary         
conditions, ITI would make a cash payment to class members in the amount of $3.2
million (which ITI has deposited into escrow) and issue to class members 30,000 
shares of ITI Common Stock.                                                     

   In October 1992, Naylor sold (the "NISI Sale") all of the common stock of
Naylor Industrial Services, Inc. ("NISI"), which was engaged primarily in the   
provision of industrial cleaning services to refineries and chemical and        
petrochemical manufacturing plants. The NISI Sale followed the sale in September
1992 of substantially all of the inventory, equipment and patents related to    
NISI's specialized project services division. As part of the NISI Sale, Naylor  
agreed to indemnify the purchaser, with certain exceptions and subject to       
certain specified limitations, against certain claims that may arise out of the 
breach by Naylor of its representations, warranties and covenants to the        
purchaser or from actions or omissions of Naylor prior to the NISI Sale, and    
further to indemnify the purchaser for certain pending or threatened litigation 
claims that were known to Naylor as of the date of purchase. Among other        
matters, NISI has been one of approximately 181 defendants in approximately     
3,029 plaintiff cases, collectively known as the Lone Star Steel litigation     
pending in Morris County, Texas, in which plaintiffs allege unspecified damages 
against defendants, who supplied services or products to Lone Star Steel over a 
period in excess of 40 years, arising from the alleged exposure of Lone Star's  
workers to toxic and hazardous circumstances (Sam Fowler, et al. v. Union       
Carbide, Naylor Industrial Services, Inc., et al., Case No. 15477, District     
Court, Morris County, Texas 76th Judicial District (July, 1987)). ITI has been  
advised that NISI utilized non-toxic detergents performing its cleaning services
during an eight-year period ending in 1987. Although it has not been possible to
assess likely jury verdicts at such an early stage in the proceedings or any    
allocation of the amount of any such verdict, Naylor's position has been that   
there is no substantial medical evidence connecting NISI to plaintiffs' alleged 
injuries. In August 1995, the court entered an order that dismissed the lawsuit 
against Naylor without prejudice of plaintiffs to refile such claims, in        
connection with plantiffs' failure to connect NISI to such injuries.            

   Naylor is among approximately 210 other parties served with a third-party
complaint by McDermott, Inc. ("McDermott") in an action filed by more than 1,200
named plaintiffs (on behalf of a potential class of over 8,000 plaintiffs)      
against 84 defendants including McDermott (In re: Combustion, Inc. Hazardous    
Substance Litigation (United States District Court for the Middle District of   
Louisiana transferred to the Western District of Louisiana)). Plaintiffs seek   
damages for personal injury, property diminution, mental anguish and other      
injuries allegedly resulting from alleged exposure to an escape of hazardous    
substances from an oil reclamation facility located near Dernham Springs,       
Louisiana and operated from 1964 through 1982 by Earl G. Dubose/Dubose Oil      
Company and later Arthur Gammons/Combustion, Inc. McDermott's third-party       
complaint seeks, among other things, clean-up costs under the Comprehensive     
Environmental Response, Compensation and Liability Act ("CERCLA") and tort      
contribution and indemnity. The cases, initiated in the Twenty-First District   
Court in the Parish of Livingston, Louisiana, were subsequently removed to the  

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United States District Court for the Middle District of Louisiana and           
transferred to the Western District of Louisiana, with the initial phases of the
trial scheduled for late 1996. By court order, all defendants and third party   
defendants were deemed to have cross-claimed and counter-claimed against the    
others for contribution under CERCLA and indemnity. In July 1995, Naylor entered
into a settlement agreement which, subject to court approval, would resolve all 
claims for personal injuries, property diminution, mental anguish and other     
injuries which were asserted or which could have been asserted against Naylor,  
for the amount of $50,000. The court has scheduled a fairness hearing on the    
proposed settlement for September 1995. The claims asserted under CERCLA remain 
outstanding, and it is probable that Naylor's exposure will be limited to a pro 
rata or proportionate share of all defendants' and third party defendants'      
liability, if any.                                                              

 ITI, together with Insituform Licensees B.V., an indirect, wholly-owned
subsidiary of IGL and, prior to the IGL Acquisition, ITI's licensor of the      
Insituform Process, has filed suit against competitors alleging infringement of 
certain of the Insituform patents in connection with projects undertaken in     
Houston, Texas and Pittsburgh, Pennsylvania, respectively. The proceedings      
pending in the United States District Court for the District of New Jersey (the 
"New Jersey Proceedings") against Spiniello Limited, Inc. and Spiniello         
Construction Co. (Civil Action No. 89-4174 (MTB)) address certain conduit       
relining work to be performed in Pittsburgh by certain licensees of             
Kanal-Mueller-Grappe-Frehruhngs-Gesselschaft ("KM"). The proceedings pending in 
the United States District Court for the Southern District of Texas, Houston    
Division (the "Texas Proceedings") against Cat Contracting, Inc. et al. (Civil  
Action No. H-90-1690) address certain conduit relining work performed in Houston
by certain licensees of KM. In both proceedings, defendants asserted            
counterclaims alleging that suit was brought in bad faith, certain antitrust    
violations, and, in the Texas proceedings, defendants alleged that ITI engaged  
in unfair competition. The New Jersey Proceedings have been stayed pending a    
final judgment in the Texas Proceedings.                                        

In June 1991, the jury in the Texas Proceedings rendered its verdict  
finding that the competitors named as defendants had infringed the Insituform   
patents at issue, and that such patents were not invalid. The court had also    
previously severed defendants' antitrust counterclaims, for hearing at a later  
date. In the continuing proceedings, the court, in August 1991, declined to     
declare such patents invalid, as was requested by defendants, and did not       
disturb the jury's verdict finding that the plaintiffs were not liable on the   
defendant's counterclaims alleging that the suit had been brought in bad faith  
and that plaintiffs had engaged in unfair competition. The court, however,      
granted the defendants a new trial on the matter of whether they had infringed  
certain Insituform patents, under the doctrine of equivalents, setting aside    
that portion of the jury's verdict, and granting defendants judgment            
notwithstanding the jury verdict on the issue of literal infringement of that   
patent. The new trial was concluded in February 1995 and the matter is sub      
judice.                                                                         

     In August 1995, ITI also applied for a preliminary injunction in the United
States District Court for the Central District of California against Spiniello  
Limited, Inc., Spiniello Construction Co. and certain former employees of ITI's 
licensees (Civil Action No. 95-5484 (GHK)) prohibiting use or disclosure of     
ITI's trade secrets, in a suit alleging infringement of certain Insituform      
patents in connection with rehabilitation work being performed in Los Angeles,  
California. Defendants have not yet filed an answer to the complaint.           

ITI has commenced an action in Tennessee Chancery Court (which was    
subsequently removed by defendants to the United States District Court for the  
Western District of Tennessee, Western Division), captioned Insituform North    
America Corp. and NuPipe, Inc. v. Insituform Southeast, Inc., NuPipe Southeast, 
Inc., Enviroq Corporation and Insituform Mid-America Inc., seeking a declaratory
judgment confirming its action in declining to grant its consent as requested by
Enviroq, under the various Insituform and NuPipe license agreements with        
Enviroq's subsidiaries, in connection with the transactions contemplated by the 
Enviroq Agreement. ITI has agreed with IMA that, unless the Merger Agreement is 
terminated, neither party will take any further action in such suit, or to      
assert any rights in dispute as a result of the consummation of the Enviroq     
Acquisition without ITI's consent, except for certain procedural steps to       
preserve the respective rights of the parties. In this connection, the court, by
order dated July 5, 1995, has stayed all proceedings until such time as closing 
under the Merger Agreement is effectuated, at which time the case would be      
dismissed, or until January 31, 1996, whichever date occurs first. See "The     
Merger -- Basic Terms of Merger Agreement -- Cooperation Agreement" above.      

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    ITI is involved in certain additional litigation incidental to the conduct
of its business and affairs, among other matters in the Maine Superior Court    
(Griffin and others vs. Insituform of New England, Inc., Docket No. CV-91-606), 
as described under "ITI -- Management's Discussion and Analysis of Financial    
Condition and Results of Operations -- Liquidity and Capital Resources."        
Management of ITI does not believe that the outcome of any such litigation will 
have a material adverse effect on the consolidated financial condition or       
operations of ITI.                                                              

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SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT OF ITI 

    The following table sets forth certain information as of June 1, 1995 with
respect to the number of shares of ITI Common Stock beneficially owned by (i)   
each person known by ITI to own beneficially more than 5% of the outstanding    
shares of ITI Common Stock, (ii) each director of ITI, (iii) each current and   
former executive officer of ITI named in the summary compensation table under   
"Election of ITI Directors" above and (iv) all directors and executive officers 
of ITI as a group:                                                              

                                                        [Enlarge/Download Table]

                                                                         SHARES OF ITI COMMON   
                                                  SHARES OF ITI        STOCK BENEFICIALLY OWNED 
                                                   COMMON STOCK            SUBSEQUENT TO THE    
                                              BENEFICIALLY OWNED(1)            MERGER(1)        
                                             ------------------------  -------------------------
                                              NUMBER         PERCENT    NUMBER          PERCENT 
              BENEFICIAL OWNER               OF SHARES       OF CLASS  OF SHARES        OF CLASS
-------------------------------------------- ---------       --------  ---------        --------
                                                                                                
Group comprised of Parkwood Limited, as                                                         
  trustee of the Anthony Basmadjian "P"                                                         
  Settlement, Brian Chandler, Ringwood                                                          
  Limited, Barford Limited, as trustee of                                                       
  the Anthony Basmadjian Settlement, and                                                        
  Douglas K. Chick.......................... 1,512,773(2)      10.5%   1,512,773           5.7% 
  Parkwood Limited, as trustee of the                                                           
     Anthony Basmadjian "P" Settlement,                                                         
     c/o Century House                                                                          
     Richmond Road                                                                              
     Hamilton, Bermuda(3)...................   880,641          6.1      880,641           3.3  
  Brian Chandler                                                                                
     8933 St. Gallen 60                                                                         
     Steiermark, Austria(4).................   632,132          4.4      632,132           2.4  
  Ringwood Limited                                                                              
     Century House                                                                              
     Richmond Road                                                                              
     Hamilton, Bermuda(4)...................   461,391          3.2      461,391           1.7  
  Barford Limited, as trustee of the Anthony                                                    
     Basmadjian Settlement                                                                      
     LeGrand Dixcart                                                                            
     Sark, Channel Islands(4)(5)............   461,391          3.2      461,391           1.7  
  Douglas K. Chick                                                                              
     Bays Hill Cottage                                                                          
     Barnett Lane                                                                               
     Elstree, Hertfordshire                                                                     
     United Kingdom(3)(4)(5)................ 1,342,032          9.3    1,342,032           5.0  
Interstate Properties                                                                           
  Park 80 West-Plaza Two                                                                        
  Saddle Brook, New Jersey 07663(6)......... 1,660,072         11.5    1,660,072           6.2  
  David Mandelbaum                                                                              
     80 Main Street                                                                             
     West Orange, New Jersey 07052.......... 1,660,072(7)      11.5    1,660,072           6.2  
  Steven Roth                                                                                   
     Park 80 West-Plaza Two                                                                     
     Saddle Brook, New Jersey 07663......... 1,670,072(7)      11.6    1,670,072           6.2  
  Russell B. Wight, Jr.                                                                         
     Park 80 West-Plaza Two                                                                     
     Saddle Brook, New Jersey 07663......... 1,670,294(7)(8)   11.6    1,670,294           6.3  

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                                                        [Enlarge/Download Table]

                                                                           SHARES OF ITI COMMON     
                                                  SHARES OF ITI          STOCK BENEFICIALLY OWNED   
                                                   COMMON STOCK              SUBSEQUENT TO THE      
                                              BENEFICIALLY OWNED(1)              MERGER(1)          
                                             ------------------------    -------------------------  
                                              NUMBER         PERCENT      NUMBER          PERCENT   
              BENEFICIAL OWNER               OF SHARES       OF CLASS    OF SHARES        OF CLASS  
-------------------------------------------- ---------       --------    ---------        --------  
                                                                                                    
T. Rowe Price Associates, Inc.                                                                      
  100 East Pratt Street                                                                             
  Baltimore, Maryland 21202................. 1,407,400(9)       9.8%     1,810,590(10)       6.8%   
Paul A. Biddelman...........................   380,877(11)      2.6        380,877           1.4    
William Gorham..............................    56,995(12)         (13)     67,345(14)          (13)
James D. Krugman............................   131,164(15)         (13)    131,164              (13)
Silas Spengler..............................     2,000             (13)      2,000              (13)
Sheldon Weinig..............................    28,749(16)         (13)     28,749              (13)
Jean-Paul Richard...........................    60,900(17)         (13)    310,900(18)       1.1    
William A. Martin...........................    30,625(19)         (13)     30,625              (13)
R. William Pittman..........................    56,000(20)         (13)     56,000              (13)
Anthony W. Hooper...........................    46,300(21)         (13)     46,300              (13)
Raymond P. Toth.............................     4,000(20)         (13)      4,000              (13)
Directors and Executive Officers                                                                    
  as a group (14 persons)................... 3,932,357(22)     26.1      4,192,707(17)      15.3    

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

(1) Except as otherwise indicated, all of such shares are owned with sole     
voting and investment power.                                          
(2) Represents: (i) 170,741 shares beneficially owned by Mr. Chandler; (ii)   
880,641 shares beneficially owned by Parkwood, with shared voting and 
  investment power with Mr. Chick (see footnote (3)); (iii) 461,391 shares
     beneficially owned by Ringwood with shared voting and investment power with
Mr. Chandler, Barford, and Mr. Chick (see footnotes (4) and (5)).     
(3) In a Statement on Schedule 13D, as amended (the "Ringwood Schedule 13D"), 
   filed with the Commission by the Ringwood Group and its members, Parkwood
 and Mr. Chick have reported that the 880,641 shares of ITI Common Stock
   beneficially owned by Parkwood are held with shared voting and investment
    power with Mr. Chick under an oral agreement under which Parkwood will not
  vote or dispose of any securities of ITI without the written approval of
Mr. Chick having first been obtained. Parkwood and Mr. Chick have also
   reported that the settlor of the Anthony Basmadjian "P" Settlement, as to
     which Parkwood acts as trustee, has expressed his wishes to the effect that
    the powers of the trustee be exercised in consultation with Mr. Chick with
     due regard to any suggestions made, and that, accordingly, Mr. Chick has an
 informal ability to influence decisions of Parkwood with respect to the
securities of ITI held by Parkwood as trustee of such settlement, but,
    under governing law, no right to enforce such settlement so as to override
    or compel the trustee or the councillors who nominate beneficiaries of the
   settlement in the exercise of a trust power or discretion in a particular
manner.                                                               
 (4) In the Ringwood Schedule 13D, the Ringwood Group has reported that Ringwood
   is a holding company whose stockholders are Mr. Chandler and Barford, and
    that the 461,391 shares of ITI Common Stock beneficially owned by Ringwood
are held with shared voting and investment power with Mr. Chandler and
    Barford and, as a result of the arrangements described under footnote (5),
Mr. Chick.                                                            
(5) In the Ringwood Schedule 13D, Barford and Mr. Chick have reported that any
 securities of ITI that may become beneficially owned by Barford will be
   held with shared voting and investment power with Mr. Chick under an oral
     agreement under which Barford will not vote or dispose of any securities of
   ITI without the written approval of Mr. Chick having first been obtained.
  Barford and Mr. Chick have also reported that the settlor of the Anthony
   Basmadjian Settlement, as to which Barford acts as trustee, has expressed
 his wishes to the effect that the powers of the trustee be exercised in
  consultation with Mr. Chick with due regard to any suggestions made, and
     that, accordingly, Mr. Chick has an informal ability to influence decisions
  of Barford with respect to any securities of ITI that may become held by
   Barford as trustee of such settlement, but, under governing law, no right
to enforce such settlement so as                                      

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to override or compel the trustee or the councillors who nominate     
beneficiaries of the settlement in the exercise of a trust power or   
discretion in a particular manner.                                    
(6) In a Statement on Schedule 13D filed with the Commission by Interstate and
its partners, such parties has reported that Interstate is a general  
partnership consisting of David Mandelbaum, Steven Roth and Russell B.
Wight, Jr.                                                            
(7) Includes 1,660,072 shares beneficially owned by Interstate.               
(8) Includes 5,550 shares issuable upon exercise of stock options granted by  
ITI and exercisable within 60 days of June 1, 1995.                   
(9) Includes 961,200 shares beneficially owned by T. Rowe Price New Horizons  
     Fund, Inc. (the "Fund"), a registered investment company. In a Statement on
Schedule 13G filed with the Commission, T. Rowe Price Associates, Inc.
     ("Associates"), a registered investment advisor, and the Fund have reported
   that Associates has sole investment power over all such 1,407,400 shares,
     and that Associates and the Fund have sole voting power over, respectively,
112,000 shares and 961,200 shares.                                    
(10) Includes 403,190 shares issuable pursuant to the Merger in exchange for    
shares of IMA Class A Common Stock held.                              
(11) Includes 350,877 shares issuable pursuant to currently exercisable warrants
   granted by ITI to Hanseatic and held for discretionary customer accounts.
     Mr. Biddelman is Treasurer of Hanseatic and, accordingly, would hold shared
    voting and investment power in the event of exercise of such warrants. See
     "Election of ITI Directors -- Compensation Committee Interlocks and Insider
Participation" above.                                                 
(12) Includes 52,170 shares issuable upon exercise of stock options granted by  
ITI and exercisable within 60 days of June 1, 1995.                   
(13) Less than one percent.                                                     
(14) Includes 4,600 shares jointly owned with Gail Gorham, Mr. Gorham's wife,   
    and 5,750 shares held by an employee benefit plan on behalf of Mr. Gorham,
    in each case issuable pursuant to the Merger in exchange for shares of IMA
Class A Common Stock so held.                                         
(15) Includes 47,500 shares issuable upon exercise of stock options granted by  
     ITI and exercisable within 60 days of June 1, 1995, 40,364 shares held by a
   general partnership whose managing partner is James D. Krugman and 33,300
   shares, as to which Mr. Krugman holds shared voting and investment power,
held by a general partnership in which Mr. Krugman's mother has an    
interest.                                                             
(16) Includes 16,650 shares issuable upon exercise of stock options granted by  
ITI and exercisable within 60 days of June 1, 1995.                   
(17) Includes 50,000 shares issuable upon exercise of stock options granted by  
ITI and exercisable within 60 days of June 1, 1995.                   
(18) As a result of consummation of the Merger, an additional 250,000 shares    
  issuable upon exercise of currently outstanding stock options granted by
     ITI to Mr. Richard will become exercisable. See "The Merger -- Interests of
Certain Persons in the Merger and Related Transactions" above.        
(19) Includes 25,250 shares issuable upon exercise of stock options granted by  
ITI and exercisable within 60 days of June 1, 1995.                   
(20) Represents shares issuable upon exercise of stock options granted by ITI   
and exercisable within 60 days of June 1, 1995.                       
(21) Includes 31,000 shares issuable upon stock options granted by ITI and      
exercisable within 60 days of June 1, 1995.                           
(22) Includes 613,997 shares issuable upon exercise of stock options granted by 
ITI and exercisable within 60 days of June 1, 1995 and currently      
exercisable warrants held by Hanseatic.                               

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BUSINESS OF IMA 

GENERAL                                                                         

 IMA applies various trenchless and other technologies to solve problems
requiring rehabilitation, new construction and improvement of pipeline systems, 
including sewers, industrial waste lines, water lines, slurry lines and oil     
field and industrial process pipelines. IMA's trenchless technologies require   
little or no excavation and eliminate the need to replace a deteriorating pipe. 
IMA believes its trenchless technologies offer significant advantages over      
traditional methods including, in certain applications, reduced cost, faster    
installation, increased pipeline system life, minimal disruption of traffic and 
commercial activity and reduced environmental impact. IMA's rehabilitation and  
new construction customers principally include municipalities and state         
agencies.                                                                       

 Rehabilitation revenues, primarily derived from the Insituform Process,
accounted for approximately 68% of IMA's fiscal 1994 contract revenues. IMA,    
together with its subsidiaries (including subsidiaries of Enviroq), are licensed
to provide the Insituform technology in all or a portion of 22 states, Puerto   
Rico and the U.S. Virgin Islands. See "The Merger -- Basic Terms of Merger      
Agreement -- Cooperation Agreement" above for a description of the moratorium on
assertion of rights in dispute, including with respect to the Insituform        
licenses of Enviroq's subsidiaries, as a result of the consummation of the      
Enviroq Acquisition without ITI's consent. A subsidiary of IMA acquired in the  
Enviroq Acquisition owns a 42.5% general partnership interest in Midsouth       
Partners which is an Insituform licensee for a territory which covers all or a  
portion of three additional states. One of the partners in such partnership has 
initiated an arbitration proceeding alleging an event of default by such        
subsidiary. See "Business of ITI -- Investments" above.                         

   IMA also is the exclusive North American licensee of Ashimori proprietary
pipeline rehabilitation technologies ("Ashimori Products"). As such, IMA        
utilizes the PALTEM-HL system of rehabilitating pressure pipes. IMA is actively 
pursuing development of its Ashimori Products business, including regulatory    
approval to apply the technology for potable water line repair and              
rehabilitation.                                                                 

 In addition to its pipeline system rehabilitation methods, IMA utilizes
trenchless technologies to construct tunnels ranging from four to ten feet in   
diameter through a variety of soils and provides the Tite Liner process, a      
method of inserting a corrosive and abrasive-resistant lining in oil field,     
mining and industrial process pipelines.                                        

   Since 1968, IMA's Affholder, Inc. subsidiary has offered a broad range of
traditional pipe rehabilitation and construction services, including tunneling, 
point repairs, shaft work and pipe cleaning. IMA became a sub-licensee for the  
Insituform Process in December 1982 and began to perform significant Insituform 
Process operations during fiscal 1984. Since 1982, IMA's Insituform licensed    
territories have been expanded on six occasions, including the Enviroq          
Acquisition. In 1992, IMA acquired the license for Ashimori Products.           

  Unless the context otherwise indicates, "IMA," as used herein, refers to
IMA and its subsidiaries.                                                       

For certain financial information concerning foreign and domestic     
operations and export sales of IMA, see Note N of the Notes to IMA's            
Consolidated Financial Statements included elsewhere in this Joint Proxy        
Statement/Prospectus.                                                           

ENVIROQ ACQUISITION                                                             

On April 18, 1995, IMA completed its acquisition of the pipeline      
rehabilitation business of Enviroq, including Enviroq's Insituform Process      
business which is conducted by its Insituform Southeast, Inc. subsidiary.       
Insituform Southeast, Inc. operates in a licensed territory consisting of       
Alabama, Florida, Georgia, North Carolina and South Carolina. It also owns 42.5%
of Midsouth Partners, which is the licensee of the Insituform Process in        
Tennessee, most of Kentucky and northern Mississippi. For its fiscal year ended 
March 1995, Enviroq reported pipeline system rehabilitation revenues of $20.3   
million.                                                                        

   Under the terms of the transaction, all assets and liabilities related to
Enviroq's interest in Synox Corporation (a development stage company which is   
engaged in the business of developing and testing a                             

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process for the treatment of municipal wastewater "sludge"), and its ownership  
interest in Sprayroq Corporation (a development stage company which offers a    
spray-applied resinous product used in rehabilitation of manholes, among other  
applications) were transferred to a newly organized subsidiary, the stock of    
which was distributed to Enviroq's stockholders immediately prior to the        
transaction with IMA. In addition, Enviroq transferred $500,000 cash and the    
currently undeveloped portion of the real estate which it owns in Jacksonville, 
Florida to the corporation spun-off.                                            

    Pursuant to the transaction, IMA paid $15.25 million cash. In addition, it
has issued a $3.0 million five-year subordinated promissory note in             
consideration for a covenant not to compete and entered into an agreement for   
consulting services providing for IMA's payment of $1.0 million over five years.

See "Business of ITI -- Investments" for a description of Midsouth    
Partners, "The Merger -- Basic Terms of Merger Agreement -- Cooperation         
Agreement" for a description of the moratorium on rights in dispute, including  
with respect to the Insituform licenses of Enviroq's subsidiaries, as a result  
of the consummation of the Enviroq Acquisition without ITI's consent, and       
"Business of ITI -- Investments" above for information concerning arbitration   
proceedings initiated by one of the partners of Midsouth Partners, alleging an  
event of default by the Enviroq subsidiary partner thereto, and regarding       
demands made for payment under the Subordinated Enviroq Note.                   

TECHNOLOGIES                                                                    

IMA's products generally can be categorized into three groups of      
technologies -- pipeline rehabilitation, tunneling and corrosion and abrasion   
protection. During the nine months ended June 30, 1995 and the past three fiscal
years, the percentage of IMA's contract revenues contributed by each of these   
groups was as follows:                                                          

                                                        [Enlarge/Download Table]

                                              NINE MONTHS                                       
                                                 ENDED                                          
                                               JUNE 30,                                         
                                                 1995      FISCAL 1994  FISCAL 1993  FISCAL 1992
                                              -----------  -----------  -----------  -----------
                                                                                                
Pipeline system rehabilitation...............     53.2%        68.1%        73.2%        62.6%  
Corrosion and abrasion protection............     29.5         18.8         17.2         14.4   
Tunneling....................................     17.3         13.1          9.6         23.0   
                                                 -----        -----        -----        -----   
                                                 100.0%       100.0%       100.0%       100.0%  
                                                 =====        =====        =====        =====   

Pipeline System Rehabilitation                                              

  Insituform Process.  IMA became a licensee for the Insituform Process in
December 1982. IMA's Insituform licensed territory (including territories       
acquired in the Enviroq Acquisition) includes all or a portion of 22 states,    
Puerto Rico and the U.S. Virgin Islands. See "The Merger -- Basic Terms of      
Merger Agreement -- Cooperation Agreement" above for a description of the       
moratorium on assertion of rights in dispute as a result of the consummation of 
the Enviroq Acquisition without ITI's consent. A subsidiary of IMA acquired in  
the Enviroq Acquisition owns a 42.5% general partnership interest in Midsouth   
Partners, which is the Insituform licensee in all or a portion of three         
additional states. See "Business of ITI -- Investments" above. IMA offers the   
Insituform Process pursuant to license agreements with a subsidiary of ITI.     

For a description of the Insituform Process, see "Business of         
ITI -- Trenchless Rehabilitation Processes -- The Insituform Process" above.    

IMA pays a royalty to ITI, based on contract revenues. IMA also has   
purchased substantially all of its Insitutube requirements from ITI. IMA has    
announced the planned construction of a manufacturing facility in the St. Louis,
Missouri area, which is intended primarily to perform certain manufacturing     
processes in fabricating Ashimori Products but which also would have the        
capability to produce Insitutubes. See "The Merger -- Basic Terms of the Merger 
Agreement" for a description of covenants governing construction while the      
Merger Agreement is in effect.                                                  

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Ashimori Products.  IMA has the exclusive license to offer Ashimori   
Products, including the PALTEM-HL system, in substantially all of North America 
and the exclusive right in the territory to utilize, manufacture and sell       
materials and proprietary rehabilitation technologies of Ashimori, for use in   
pipeline rehabilitation. At this time, the Ashimori Products licensed to IMA are
in various stages of development. IMA is actively engaged in research and       
development activities relative to certain of these products. See "-- Research  
and Development" below.                                                         

The PALTEM-HL system is a patented process for rehabilitating pressure
pipes. The system utilizes a woven polyester hose with an elastomer coating     
called a "PAL-Liner," which is custom-manufactured to the dimensions of the pipe
to be rehabilitated. Prior to installation, the PAL-Liner hose is filled with an
epoxy resin. Compressed air or other suitable means is then used to invert and  
propel the PAL-Liner through the pipe from an access pit. After the PAL-Liner   
reaches a receiving pit, the resin hardens and causes the PAL-Liner to adhere to
the host pipe, with a smooth, pressure resistant lining on the inside surface of
the pipe. The process was originally developed for use in the gas distribution  
industry. IMA believes, however, that the PALTEM-HL system is suitable for a    
range of other industrial applications as well. In addition, PALTEM products are
being used to rehabilitate potable water lines in Europe and NSF approval for   
PALTEM has been sought in the United States.                                    

In addition to the PALTEM-HL system, IMA has acquired the rights to   
utilize, manufacture and sell the following development stage Ashimori Products:
(i) the PALTEM-Apollo system -- a patent pending process for point repair by    
pulling a specially designed robot together with Apollo-Liner into the pipe,    
inflating and light-curing the liner to form a new rigid pipe at the spot to be 
repaired, including a system for forming a new pipe at a joint of the lateral   
and the pipe and reconnecting the lateral; (ii) the PALTEM-Frepp system -- a    
patent pending process for restoration of pipes by pulling a partially folded   
Frepp-Liner into the pipe and reforming it to form a new pipe within the pipe;  
(iii) PALTEM-March products, non-woven fiber tubes with a seamless coating used 
in pipeline rehabilitation; and (iv) the PALTEM-SZ system -- a patented process 
for restoration of sewer pipes by pulling SZ-Liner into the pipe, inflating, and
forming a new rigid pipe within the pipe utilizing heat curing resin applied to 
the liner.                                                                      

   Other.  As part of its strategy of offering a broad range of solutions to
pipeline system problems, IMA also offers the NuPipe Process, licensed from a   
subsidiary of ITI, the Sprayroq system of spray-applied resin for pipeline      
repair and various more traditional pipe rehabilitation services, including     
shaft work, pipe threading and pipe cleaning.                                   

Tunneling                                                                   

     Tunneling is a trenchless, subterranean construction process that generally
is utilized for the construction of pipeline systems. IMA constructs four- to   
ten-foot diameter tunnels into which pipes are inserted. IMA operates two       
large-diameter and two small-diameter tunneling machines. One of IMA's large    
diameter tunneling machines, acquired in September 1990, is a state-of-the-art, 
earth-pressure-balanced tunneling machine. By virtue of its ability to tunnel   
without de-watering the surrounding soils, this machine reduces costs, reduces  
risks of subsidence and improves competitiveness. IMA believes that its         
tunneling operations also strengthen IMA's relationships with its customers by  
positioning IMA as a problem solver for pipeline systems, and enhance its       
capabilities to perform large-diameter installations of the Insituform Process. 

Corrosion and Abrasion Protection                                           

In March 1991, IMA acquired substantially all of the assets of United 
Pipeline Systems USA, Inc. and, pursuant to this acquisition, IMA began offering
the Tite Liner Process. In October 1991, IMA acquired United Pipeline Systems   
Inc. of Edmonton, Alberta, Canada, which also utilized the Tite Liner Process.  
The Tite Liner Process is a method of lining pipelines with a corrosion and     
abrasion resistant pipe in order to substantially extend system life. Oil field,
natural gas distribution lines and certain industrial process systems typically 
utilize steel pipe which is subjected to highly corrosive fluids and gases.     
Slurry lines used in mining operations are subjected to highly abrasive flows.  
The Tite Liner Process utilizes a polyethylene liner which is                   

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diameter-reduced in a roller box and then pulled through a steel pipe. When the 
pulling tension is released, the liner expands to create a tight fit against the
host pipe's inner wall.                                                         

     During fiscal 1994, IMA commenced operations in Latin America by organizing
a majority-owned subsidiary, United Sistema De Tuberias Ltda. ("United-Chile"). 
United Chile's first project was as subcontractor to install Tite Liner to      
improve a mining pipeline in Chile. Subsequently, United Chile obtained another 
contract in Chile to act as general contractor in the construction of a new     
pipeline system for a mining operation. Although revenues from IMA's general    
contractor activities tend to be higher than when it acts as subcontractor,     
profit margins on general contractor projects typically will be lower.          

RESEARCH AND DEVELOPMENT                                                        

During fiscal 1994, 1993 and 1992, IMA expended $652,000, $61,000 and 
$289,000, respectively, on research and development activities and, during the  
nine months ended June 30, 1995, expended $768,000 on such activities. Such     
expenditures related principally to developing IMA's installation capabilities  
for, and the commercial viability of, its licensed technologies.                

Much of IMA's research and development activities are conducted in    
cooperation with suppliers of proprietary technologies. During fiscal 1994, IMA 
undertook a demonstration project in conjunction with the Gas Research Institute
(an association of natural gas utilities) and a major natural gas utility to    
determine the suitability of PALTEM hose linings for seismic protection. As a   
result of such demonstration project, IMA has determined that its PALTEM        
rehabilitation process will meet seismic specifications for natural gas pipes.  

CUSTOMERS                                                                       

    Municipalities and state agencies comprised approximately 75%, 79% and 78%
of IMA's contract revenues in fiscal 1994, 1993, and 1992, respectively. A      
significant portion of IMA's business is from repeat customers.                 

    Of the 513 projects in fiscal 1994, 40% were Insituform projects performed
in IMA's Insituform licensed territory. Of the 325 customers served in that     
fiscal year, the five customers accounting for more than 5% of contract revenues
were as follows:                                                                

                                                        [Enlarge/Download Table]

                                                     NUMBER OF     TOTAL      PERCENT OF 
                     CUSTOMER                        PROJECTS     REVENUE    ANNUAL TOTAL
---------------------------------------------------  ---------  -----------  ------------
                                                                                         
Metropolitan St. Louis Sewer District..............      19     $14,314,000      19.0%   
City of Riverview..................................       2       6,406,000       8.5    
Northeast Ohio Regional Sewer District.............       1       4,648,000       6.2    
Dallas Water Utilities.............................       3       4,213,000       5.6    
Minera Escondida...................................       2       3,740,000       5.0    
                                                         --                              
                                                                -----------     -----    
                                                         27     $33,321,000      44.3%   
                                                     ========    ==========  =========   

The foregoing data reflects direct and indirect customer relationships.         

Municipality and state agency projects comprised approximately 96% of 
Insituform Southeast, Inc.'s and NuPipe Southeast, Inc.'s combined contract     
revenues in the fiscal year ended March 1995. Of the 71 customers served by such
corporations during such fiscal year, customers accounting for more than 5% of  
combined contract revenues were Miami-Dade Water & Sewer Authority with one     
project which accounted for revenues of $3.9 million, or 19.1% of total annual  
revenues, and the City of Atlanta, with two projects accounting for total       
revenues of $1.4 million, or 6.8% of total revenues.                            

    Although municipal and state agency projects represented approximately 75%
of IMA's business in fiscal 1994, management of IMA believes that commercial,   
industrial and other markets offer significant opportunities. The Insituform    
Process may be advantageous to industry because of minimization of plant        
downtime and disruption, and because Insitupipe's corrosion-resistant           
characteristics can be customized to resist acids and caustics. In these cases, 
management believes that the process could be a viable alternative to           
conventional                                                                    

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industrial pipe repair or replacement. Customers for the Tite Liner Process are 
oil field, mining and industrial process construction contractors and operators.
IMA markets its PALTEM products principally to natural gas distribution and     
transmission companies, although the PALTEM systems are suitable for other      
industrial applications as well. IMA's tunneling customers generally consist of 
the same type of municipalities and state agencies as its Insituform customers. 

MARKETING                                                                       

     IMA's strategy is to proactively market the application of its technologies
directly to customers and engineers, with a view toward having its technologies 
permitted or required in bid specifications. IMA has attempted to build         
long-term relationships with its customers for the utilization of IMA's         
expanding product line. IMA currently has 28 salespersons located in various    
locations. Establishing the relationships required to generate business in a    
particular locality often has taken three to four years, and a key component of 
IMA's marketing program has been and will continue to be educating customers and
potential customers about the advantages of IMA's technologies.                 

IMA OPERATIONS                                                                  

 IMA is headquartered in the St. Louis, Missouri area and has operations
facilities in: St. Louis; Denver; Dallas; Houston; Wichita; Owosso, Michigan;   
Tampa, Florida; Ft. Lauderdale, Florida; Atlanta, Georgia; Birmingham, Alabama; 
Durango, Colorado; Jacksonville, Florida; Grand Prairie, Texas; Puerto Rico;    
Edmonton, Alberta; and Antofagasta, Chile. The field operations are organized   
into 42 field installation and construction crews.                              

Each Insituform crew is typically equipped with a high pressure water 
cleaning unit, a boiler, a refrigeration truck, a television van with two       
Insitucutters, other support trucks and vans, and pumping and safety equipment. 
IMA estimates the cost to equip an Insituform field installation crew to be     
approximately $550,000. The field crews are based throughout the licensed       
territory and are dispatched to the job site, where they remain until the job is
completed. Materials and supplies are either sent to the job site from one of   
IMA's operations facilities or sent directly from the manufacturer. IMA         
manufactures the Insitutube for its Caribbean operations in its Puerto Rico     
facility and also manufactures small diameter Insitutubes at its headquarters   
facility.                                                                       

    Each PALTEM crew is typically equipped with a turning truck, resin mixers,
pulling machine and other supporting trucks and equipment. IMA estimates the    
cost to equip a PALTEM field installation crew to be approximately $350,000.    

     A Tite Liner installation crew is typically equipped with a wire line unit,
roller boxes, fusion machines, spool trailer, picker trucks and other supporting
trucks and equipment. IMA estimates the cost to equip a Tite Liner field        
installation crew to be approximately $550,000.                                 

   IMA incurs substantial costs in establishing new field installation crews
and in training new operations personnel. IMA utilizes a field training program 
for its new operations personnel by having these individuals work with          
established crews under the supervision of experienced operations personnel for 
varying periods of time. New field installation crews are generally staffed with
experienced personnel from IMA's existing field installation crews. During      
fiscal 1994, IMA expended approximately $6.5 million to enhance equipment for   
existing crews and equip new crews for installation and new construction        
purposes.                                                                       

   IMA's tunneling operations typically involve contracts in the range of $3
million to $12 million, obtained through competitive bidding. Tunneling jobs    
generally require from six to 24 months for completion. The tunneling crew first
digs a work shaft and then constructs the tunnel, installs pipe in the new      
tunnel and backfills the newly constructed pipeline with grout.                 

IMA operates a project-oriented business which frequently involves    
fixed-price contracts. As a result of unforeseen conditions or events related to
IMA's various operations, IMA may underestimate costs, resulting in a reduction 
in profits or an actual loss. IMA may also be adversely affected by the unknowns
associated with subsurface operations, cold weather, rain, flooding and water   
table conditions.                                                               

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LICENSE AGREEMENTS AND PATENTS                                                  

Insituform and NuPipe Processes                                             

IMA has been granted the rights to utilize the patents, trademarks and
know-how related to the Insituform Process and the NuPipe Process for Missouri, 
Kansas, Colorado, Oklahoma, Nebraska, Minnesota, Arkansas, North Dakota, South  
Dakota, Utah, Wyoming, Michigan, Puerto Rico and the U.S. Virgin Islands, and   
for portions of Texas, Illinois, Iowa, Montana and Wisconsin, pursuant to       
license agreements. The Insituform license agreements (the "IMA License         
Agreements") require IMA to pay the licensor a royalty of 8% (9% in the case of 
Puerto Rico and the U.S. Virgin Islands) of gross contract revenues and also    
provide for the payment of minimum annual royalties. Effective as of December   
1990, in the event IMA has, for any year, produced to the licensor an acceptable
plan for marketing and sales penetration, minimum royalties otherwise           
established for such year will not apply, subject to ITI's approval of          
performance standards established with respect to the Insituform Process and the
NuPipe Process.                                                                 

    Insituform Southeast, Inc. and NuPipe Southeast, Inc., which were acquired
by IMA in the Enviroq Acquisition, have been granted the rights to utilize the  
Insituform Process and the NuPipe Process for Alabama, Florida, Georgia, North  
Carolina and South Carolina. A subsidiary of Insituform Southeast, Inc. also    
owns a 42.5% general partner interest in Midsouth Partners, which is the        
Insituform licensee for Tennessee, most of Kentucky and northern Mississippi.   
The Instituform licenses acquired in the Enviroq Acquisition contain similar    
terms to the IMA License Agreements. As a result of IMA's effecting the Enviroq 
Acquisition without ITI's consent, ITI instituted the Declaratory Action        
relative to the Insituform Southeast and NuPipe Southeast license agreements.   
See "Business of ITI -- Legal Proceedings" above for information concerning such
proceedings and "The Merger -- Basic Terms of Merger Agreement -- Cooperation   
Agreement" above for a description of the moratorium on assertion of rights in  
dispute as a result of the consummation of the Enviroq Acquisition without ITI's
consent. In addition, a subsidiary of Insituform East, which is a partner in    
Midsouth Partners, has commenced an arbitration proceeding alleging that the    
execution of the Enviroq Agreement created an event of default under the        
partnership agreement of Midsouth Partners. See "Business of ITI -- Investments"
above.                                                                          

The IMA License Agreements extend for the life of the last of the     
underlying patent rights, including any improvements or modifications extending 
such life. Accordingly, the IMA License Agreements would expire in 2013, based  
upon the latest patent filings, although two important method patents for       
Insituform (one of which covers material aspects of the inversion process)      
expired in 1994. The IMA License Agreements may be terminated by IMA upon two   
calendar quarters' written notice to the licensor and by the licensor upon      
certain events of default by IMA, such as failure to pay royalties.             

  Under the IMA License Agreements, IMA has the right to use 54 Insituform
United States patents. For additional information concerning the Insituform and 
NuPipe patents, see "Business of ITI -- Patents" above. There can be no         
assurance that the validity of the patents will not be successfully challenged  
or that they are sufficient to afford protection against another company        
utilizing a process similar to the Insituform or NuPipe process.                

    Any information concerning improvements or modifications to the Insituform
Process developed by IMA or its employees must be reported to the licensor and  
become the licensor's property. The licensor is required to disseminate all such
information to its licensees, including IMA, without any additional royalty     
therefor. The IMA License Agreements reserve to the licensor the right to       
approve IMA's suppliers and the specifications of equipment and materials not   
purchased directly from the licensor. Although the IMA License Agreements       
contain no requirement that IMA purchase materials from the licensor, IMA has   
entered into a supply agreement with ITI for Insitutubes and related products   
utilized in the Insituform process, which is automatically renewable on a       
year-to-year basis unless notice of termination is provided by either party six 
months prior to expiration. The agreement provides for IMA to purchase at least 
60% of its requirements from ITI and requires ITI to limit annual price         
increases to the greater of 6% or the rate of inflation (or greater if supported
by abnormal costs to ITI).                                                      

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   The IMA License Agreements also provide for IMA to pay a 12% surcharge in
addition to the royalty in the event of use of the Insituform Process by IMA in 
territories licensed to others (except that the surcharge will be 8% with       
respect to installations in such territories in which the Insituform licensee is
obligated for a similar surcharge at the lower rate). The amount of this        
surcharge may be increased by the licensor from time to time to reflect the     
costs of market development. The IMA License Agreements exclude the right to use
the process in the repair of pipelines, tunnels or passageways transmitting     
hazardous gases.                                                                

     In connection with IMA's November 1992 acquisition of licenses for Ashimori
Products, ITI has communicated to IMA its concerns described above under "The   
Merger -- Background" and "Business of ITI -- Licensing Operations -- Insituform
License Agreements" above. IMA has advised ITI that it has fulfilled and will   
continue to fulfill all of its commitments to ITI and does not intend to utilize
any of ITI's trademarks in violation of the rights previously granted to IMA.   
IMA has reported its belief that the concerns raised by ITI are substantially   
similar to the publicly announced concerns expressed to ITI by IGL with respect 
to the NuPipe Process prior to the IGL Acquisition.                             

Ashimori Products                                                           

  Pursuant to a license agreement with Ashimori, as amended (the "Ashimori
License"), IMA has been granted the exclusive rights to use the patents,        
trademarks and know-how related to the Ashimori Products for all of North       
America, including the rights to manufacture and sell Ashimori Products. In     
connection with the Ashimori License, IMA paid an initial license fee of        
$200,000 and is obligated to pay royalties of 6% on PALTEM-HL and March         
installations and 7% on installations of other licensed Ashimori Products. The  
Ashimori License includes various minimum and maximum levels of royalties in    
specified periods during the term of the agreement. The Ashimori License        
provides that the parties will enter into a separate agreement for IMA to       
license the Tite Liner Process to Ashimori for installations in Japan.          

The Ashimori License extends for an initial term of 15 years, and     
automatically is renewed for successive one-year terms, unless IMA gives notice 
of non-renewal of at least 90 days prior to the end of a term. In addition, the 
Ashimori License is subject to termination in the event of specified defaults.  

BACKLOG                                                                         

    As of June 30, 1995 and 1994, IMA's aggregate backlog by business type was
as follows (in millions):                                                       

                                                                [Download Table]

                                                                 JUNE 30,     
                                                             -----------------
                                                             1995        1994 
                                                             -----       -----
                                                                              
Pipeline system rehabilitation.............................  $40.3       $21.8
Tunneling..................................................   17.3        12.0
Corrosion and abrasion protection..........................    7.6        14.7
                                                             -----       -----
                                                             $65.2       $48.5
                                                             =====       =====

  At June 30, 1995, the backlog reported by IMA included $8.3 in contracts
attributable to Insituform Southeast, Inc. and NuPipe Southeast, Inc., which    
were acquired in April 1995. IMA anticipates that substantially all backlog at  
June 30, 1995 will be completed in the immediately succeeding twelve months.    
Historically, the composition of IMA's revenues and backlog by major customers  
has varied materially from year-to-year due to size and timing of particular    
projects and the availability of funding. IMA's contracts with governmental     
agencies may be amended or terminated at the convenience of such agencies. IMA  
believes that its relationships with its significant customers are excellent.   

SEASONALITY                                                                     

   IMA's business may be affected by various climatic seasons throughout its
license territories, as well as by the fiscal years and budgetary processes of  
IMA's governmental customers.                                                   

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EMPLOYEES                                                                       

   At June 1, 1995, IMA employed approximately 707 persons, including 102 in
management and administration, 27 in sales and 463 in operations. Of the        
operations employees, 120 are covered by collective bargaining agreements.      
Management of IMA believes that IMA's relations with its employees are          
satisfactory.                                                                   

SUPPLIERS                                                                       

IMA's materials and equipment, including resins, are available from a 
variety of suppliers. Currently, IMA purchases substantially all its Insitutube 
requirements from ITI pursuant to a manufacturing supply agreement. IMA also    
manufactures limited amounts of Insitutubes at its Puerto Rico facility and     
small diameter Insitutubes at its headquarters facilities. IMA has not          
experienced any difficulty in obtaining adequate supplies of Insitutubes.       
Management of IMA believes that there are a limited number of other sources     
available. If IMA were unable to obtain Insitutubes from ITI, IMA might be      
adversely affected on a short-term basis. During 1994, IMA announced plans to   
construct a manufacturing facility in the St. Louis, Missouri area which would  
have the capacity to manufacture Insitutubes. See "The Merger -- Basic Terms of 
Merger Agreement" above for a description of covenants governing construction   
while the Merger Agreement is in effect.                                        

   IMA is required by contract to purchase all its thermoplastic folded pipe
used for the NuPipe process from NuPipe, Inc., a wholly-owned subsidiary of ITI.

  IMA currently purchases the PAL-Liner it uses from Ashimori. IMA expects
that it (or ITI, subsequent to consummation of the Merger) will perform the     
coating function necessary in manufacturing PAL-Liner for substantially all its 
requirements at some future time. Longer-term, IMA expects to weave the lining  
material to further vertically integrate its PAL-Liner operations.              

REGULATIONS AND BONDING                                                         

IMA is subject to various local, state and federal laws, regulations, 
ordinances, building code specifications and permit requirements. IMA's         
operations facilities are subject to state and federal environmental protection 
regulations. IMA is also subject to fire regulations relating to the storage,   
handling and transporting of flammable materials.                               

    IMA believes that it is in material compliance with environmental laws and
regulations applicable to it. IMA does not anticipate any material impediments  
to its business arising from existing or anticipated future regulations or      
requirements.                                                                   

   IMA is required to carry insurance and bonding in connection with certain
projects. IMA has arranged bonding capacity for bid, performance and payment    
bonds with limits of $125 million in the aggregate. Typically, the cost of a    
performance bond is approximately 1% of the contract value.                     

PROPERTIES                                                                      

   IMA owns its headquarters and operations building in St. Louis, Missouri.
The construction of the original facility was completed in 1987 and an addition 
was completed in 1993. The building is located on 2.5 acres and contains        
approximately 17,000 square feet of office space and approximately 21,000 square
feet of operations space. In July 1993, the facility was severely damaged by    
flooding and all activities that were performed at this facility were relocated 
to various leased premises. IMA reoccupied the renovated facility during fiscal 
1994.                                                                           

     IMA owns a building in Owosso, Michigan, which is situated on approximately
4.0 acres and contains approximately 2,000 square feet of office space and      
approximately 19,500 square feet of operations space. IMA also owns a newly     
constructed building in Denver, Colorado, which is located on approximately 2.5 
acres of land and contains approximately 8,000 square feet of operations space  
and a small amount of office space. IMA occupied this facility as of October    
1990. IMA also owns a 9,000 square foot building located on                     

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3.8 acres in Grand Prairie, Texas. IMA leases an operations and manufacturing   
facility in Gurabo, Puerto Rico, which consists of approximately 16,800 square  
feet.                                                                           

     IMA owns its facility in Jacksonville, Florida which contains approximately
25,000 square feet of office and operations space and is situated on            
approximately 8.6 acres.                                                        

  In October 1993, IMA's United States Tite Liner Process operations moved
into a newly constructed building in Durango, Colorado. The building is located 
on 4.0 acres and contains approximately 12,000 square feet of operations space. 
In connection with its Canadian Tite Liner Process operations, IMA leases an    
office and operations facility in Edmonton, Alberta which has approximately     
4,400 square feet of office space and 10,900 square feet of operations space.   

     In April 1994, IMA purchased a marketing and operation facility in Wichita,
Kansas. The facility is located on approximately 2.1 acres of land and contains 
4,125 square feet of office space and approximately 10,000 square feet of       
operations space.                                                               

  IMA also owns approximately 2.3 acres of land across the street from its
headquarters, on which its former headquarters and operations facility was      
located. The building was severely damaged by the flooding in July 1993 and has 
been demolished.                                                                

     IMA has granted mortgages on its headquarters facilities and its facilities
in Durango, Colorado and Grand Prairie, Texas to secure its bank debt. In       
addition, IMA acquired Insituform Southeast, Inc., which owns the Jacksonville, 
Florida facility subject to a mortgage which secures certain indebtedness under 
an industrial revenue bond financing.                                           

   During April 1995, IMA commenced construction of a manufacturing facility
to produce materials used for proprietary rehabilitation technologies, including
those licensed under its agreement with Ashimori. IMA acquired approximately 5.4
acres of land adjacent to its headquarters building in fiscal 1994 for the      
construction of the facility. Prior to the execution of the Merger Agreement,   
construction activities had progressed to site excavation, completion of the    
foundation and erection of a portion of the structural steel. As a result of the
Merger Agreement, IMA and ITI have discussed the possible relocation of the     
planned manufacturing processes. As of the date hereof, construction activities 
have been suspended and IMA has not determined whether, in view of the covenants
contained in and consents required under the Merger Agreement, to complete      
construction of the building for use as a manufacturing facility or as an office
and operations facility or whether to seek to dispose of the property. See "The 
Merger Agreement -- Basic Terms of Merger Agreement" above.                     

IMA believes that its facilities generally are in good condition,     
well-maintained and suitable for their anticipated uses.                        

LEGAL PROCEEDINGS                                                               

     Pursuant to citations issued December 15, 1993, the Occupational Safety and
Health Administration, Kansas City Area Office ("OSHA"), alleged that IMA and   
its subsidiaries violated certain provisions of the Occupational Safety and     
Health Act of 1970 in connection with rehabilitation activities in Kansas City, 
Missouri in June 1993. The allegations relate to an accident in which one of the
employees of an IMA subsidiary was swept away and drowned in a flash flood      
resulting from a sudden and torrential thunderstorm. OSHA alleges that the      
subsidiary's safety procedures were inadequate and has assessed penalties       
aggregating approximately $1 million. IMA believes that OSHA's allegations      
neither accurately reflect the facts and circumstances of the accident nor      
accurately characterize IMA's strong safety program and commitment to its safety
program. IMA cooperated fully with OSHA in its investigation and does not       
believe that the allegations were warranted. To avoid the costs and             
uncertainties of defending the citations in adversarial proceedings, IMA settled
this claim in July 1995 by agreeing to pay OSHA an aggregate of $325,000 in     
equal semi-annual installments through January 1997.                            

Pursuant to a complaint filed August 1, 1995, New Enviroq initiated an
action in the Circuit Court of Jefferson County, Alabama, for a judgment on the 
Subordinated Enviroq Note issued in connection with the                         

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Enviroq Acquisition. New Enviroq claims that IMA is in default under the        
Subordinated Enviroq Note. IMA denies liability and intends to vigorously defend
the suit and pursue claims against New Enviroq arising out of the Enviroq       
Acquisition, including New Enviroq's obligations under the Enviroq Agreement. In
IMA's opinion, the ultimate resolution of this litigation will not have a       
material adverse effect upon IMA's financial condition or results of operations.

    IMA is also subject to a lawsuit and arbitration proceeding arising out of
the Enviroq Acquisition. See "Business of ITI -- Legal Proceedings" and         
"-- Investments" above.                                                         

    IMA is involved in certain additional litigation incidental to the conduct
of its business and affairs. IMA does not believe that the outcome of any       
additional litigation to which it is a party will have a material adverse effect
on its financial condition or results of operations.                            

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MANAGEMENT OF IMA 

    The directors and executive officers of IMA, and their respective ages and
positions with IMA, are as follows:                                             

                                                        [Enlarge/Download Table]

                NAME                   AGE                 POSITION WITH IMA               
-------------------------------------  ---  -----------------------------------------------
                                                                                           
Jerome Kalishman.....................  67   Chairman of the Board; Director                
Robert W. Affholder..................  59   President; Director                            
Lee M. Liberman......................  73   Director                                       
Alvin J. Siteman.....................  66   Director                                       
Robert M. Leopold....................  68   Director                                       
Joseph F. Olson......................  50   Vice President -- Finance and Administration,  
                                            Secretary                                      
James L. Tadtman.....................  50   Vice President -- Rehabilitation               

  For information concerning Messrs. Kalishman, Affholder and Siteman, see
"Election of ITI Directors" above.                                              

  Lee M. Liberman has served as a director of IMA since 1987. Mr. Liberman
has served as Chairman Emeritus of Laclede Gas Company, a regulated public      
utility, since 1994. Prior to such time, he served as Chairman of the Board of  
Laclede Gas Company for more than five years. Mr. Liberman serves as a director 
of the following publicly-held companies: Detroit Tool Industries, Boatmen's    
Bancshares, Inc., Angelica Corporation, CPI Corporation, Falcon Products, Inc.  
and Interco Incorporated.                                                       

 Robert M. Leopold has served as a director of IMA since its founding in
1983. Mr. Leopold has served as President of Huguenot Associates, Inc., a       
financial and business consulting firm, for more than five years. Mr. Leopold   
served as Chief Executive Officer of ITI from November 1986 to March 1989. From 
November 1986 until October 1987 he served as Chairman of ITI and he was Vice   
Chairman of ITI from 1982 until November 1986. Mr. Leopold serves as a director 
of Infodata Systems Inc.                                                        

  Joseph F. Olson has been Vice President -- Finance and Administration of
IMA since 1985 and Secretary of IMA since 1986.                                 

James L. Tadtman has served as Vice President -- Rehabilitation of IMA
since January 1995. From 1988 until such time, he served as West Region Manager 
of IMA.                                                                         

DIRECTOR COMPENSATION                                                           

Directors of IMA are paid an annual fee of $5,000 plus $1,000 for each
board meeting attended and are reimbursed for their expenses in attending board 
and committee meetings. Directors (other than the members of the IMA Stock      
Option Committee) also are eligible to be granted stock options.                

Robert M. Leopold, Lee M. Liberman and Alvin J. Siteman hold options  
granted under the IMA Stock Option Plan covering, respectively, 13,660 shares of
IMA Class A Common Stock (at exercise prices ranging from $4.12 to $11.25 per   
share), 33,335 shares (at exercise prices ranging from $3.00 to $11.25 per      
share), and 33,335 shares (at exercise prices ranging from $3.00 to $11.25 per  
share). Such exercise prices represent the fair market value of the IMA Class A 
Common Stock on the date of grant of such options.                              

    Mr. Leopold provides certain business and financial consulting services to
IMA. During fiscal 1994, IMA paid Mr. Leopold $165,000 for consulting and       
advisory fees and reimbursed him for $45,207 of related out-of-pocket expenses. 
IMA believes that the terms of the consulting arrangement with Mr. Leopold are  
no less favorable than could be obtained from third parties.                    

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EXECUTIVE COMPENSATION                                                          

Summary Compensation Table.  The following table sets forth the cash  
compensation paid to IMA's chief executive officer and each of IMA's other      
executive officers whose total salary and bonus exceeded $100,000 during the    
fiscal year ended September 30, 1994:                                           

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                            LONG TERM                   
                                                                           COMPENSATION                 
                                                             ANNUAL        ------------                 
                                                          COMPENSATION      SECURITIES                  
                  NAME AND                    FISCAL   ------------------   UNDERLYING      ALL OTHER   
             PRINCIPAL POSITION                YEAR     SALARY     BONUS    OPTIONS(#)   COMPENSATION(2)
--------------------------------------------  -------  --------   -------  ------------  ---------------
                                                                                                        
Jerome Kalishman............................    1994   $225,000   $    --         --         $    --    
  Chairman, Chief Executive Officer             1993    225,000    37,500         --           7,000    
                                                1992    225,000    75,000         --          12,705    
Robert W. Affholder.........................    1994    225,000        --         --              --    
  Vice Chairman                                 1993    225,000    37,500         --           7,000    
                                                1992    225,000    75,000         --          12,705    
                                                                                                  --    
E. Randolph Jayne II(1).....................    1994    215,625        --         --              --    
  President                                                                                             
Joseph F. Olson.............................    1994    107,917        --         --              --    
  Vice President -- Finance and                 1993    105,000     2,000         --           3,400    
  Administration, Secretary                     1992    101,250    24,000      6,667           5,082    

---------------                                                                 
(1) Mr. Jayne resigned as an officer, director and employee of IMA in September 
1994.                                                                   

 Year-End Option Table.  The following table set forth information as of
September 30, 1994 with respect to stock options held by the executive officers 
named in the Summary Compensation Table:                                        

FISCAL YEAR-END OPTION VALUES 

                                                        [Enlarge/Download Table]

                                                      NUMBER OF SECURITIES                                 
                                                     UNDERLYING UNEXERCISED        VALUE OF UNEXERCISED    
                                                           OPTIONS AT              IN-THE-MONEY OPTIONS    
                                                       FISCAL YEAR-END(#)             AT YEAR-END(1)       
                                                   ---------------------------  ---------------------------
                      NAME                         EXERCISABLE   UNEXERCISABLE  EXERCISABLE   UNEXERCISABLE
-------------------------------------------------  -----------   -------------  -----------   -------------
                                                                                                           
Jerome Kalishman.................................         --            --             --            --    
Robert W. Affholder..............................         --            --             --            --    
E. Randolph Jayne II.............................     20,000            --             --            --    
Joseph F. Olson..................................     24,001         2,667        $83,337            --    

---------------                                                                 
(1) Calculated on the basis of the fair market value of the underlying          
 securities at the exercise date or at year-end, as the case may be, minus
the exercise price.                                                     

SEVERANCE AGREEMENT                                                             

    E. Randolph Jayne II resigned as President and a director of IMA effective
September 15, 1994. In connection with such resignation, IMA and Mr. Jayne      
entered into an agreement (the "Severance Agreement") dated September 15, 1994, 
which sets forth the terms and conditions of the termination of Mr. Jayne's     
employment agreement with IMA. Pursuant to the Severance Agreement, IMA agreed  
to continue to pay annual base salary of $125,000 per year and provide health   
insurance for Mr. Jayne and his family for the twelve-month period immediately  
following the date of the Severance Agreement. In addition, IMA agreed to pay   
Mr. Jayne the aggregate sum of $100,000 in twelve equal monthly installments    
through September 1995. Mr. Jayne continues to be subject to an agreement not to
compete with IMA's business for three years after termination of employment and 
an obligation to preserve the confidentiality of IMA's confidential information.

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

  IMA's Compensation Committee consists of Messrs. Kalishman, Liberman and
Siteman.                                                                        

    Mr. Kalishman is Chairman of the Board and Chief Executive Officer of IMA.
Commencing with fiscal 1994, John Kalishman, who is the son of Jerome and Nancy 
F. Kalishman, has provided certain business and marketing consulting services to
IMA. During fiscal 1994, IMA paid John Kalishman $82,000 for consulting and     
advisory fees and reimbursed him for $9,026 of related expenses. No such        
payments in excess of $60,000 were made during fiscal 1992 and 1993.            

 Mr. Siteman is the largest shareholder and Chairman of the Board of the
parent of Mark Twain, and Mr. Liberman is a director of the parent of Boatmen's.
At June 1, 1995, IMA's term loan facility with such banks established in April  
1995 was in the aggregate principal amount of $15.25 million ($5.0 to Mark Twain
and $10.25 to Boatmen's). IMA also maintains a $20 million line of credit with  
Mark Twain and Boatmen's (which was further increased to $23 million in         
September 1995), $11.675 million of which was outstanding on May 31, 1995.      
During fiscal 1994, 1993 and 1992, IMA paid $272,414, $145,333 and $96,643,     
respectively, in interest on a prior credit facility maintained with Mark       
Twain.                                                                          

     During fiscal 1992, IMA made rental payments aggregating $75,106 to A-Y-K-E
Partnership, a partnership of which Mr. Kalishman and Robert W. Affholder,      
President of IMA, are partners, for the use of tunneling equipment owned by such
partnership. No such payments were made during fiscal 1993 and 1994 in excess of
$60,000 for either such year.                                                   

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SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT OF IMA 

    The following table sets forth certain information as of June 1, 1995 with
respect to the number of shares of IMA Class A Common Stock and IMA Class B     
Common Stock beneficially owned by: (i) each person known by IMA to own         
beneficially more than 5% of the outstanding shares of either such class; (ii)  
each director of IMA; (iii) each executive officer of IMA; and (iv) all         
directors and executive officers of IMA as a group.                             

                                                        [Enlarge/Download Table]

                                                       SHARES OF IMA            SHARES OF IMA     
                                                    CLASS A COMMON STOCK     CLASS B COMMON STOCK 
                                                  BENEFICIALLY OWNED(1)(2)  BENEFICIALLY OWNED(1) 
                                                  ------------------------  ----------------------
                                                  NUMBER OF       PERCENT   NUMBER OF     PERCENT 
                BENEFICIAL OWNER                   SHARES         OF CLASS   SHARES       OF CLASS
------------------------------------------------  ---------       --------  ---------     --------
                                                                                                  
Jerome Kalishman and Nancy F. Kalishman                                                           
  17988 Edison Avenue                                                                             
  Chesterfield, Missouri 63005-3700.............    907,447(3)      10.9%   1,895,021(4)    76.6% 
Robert W. Affholder                                                                               
  17988 Edison Avenue                                                                             
  Chesterfield, Missouri 63005-3700.............    665,968          8.0      471,300       19.1  
Robert M. Leopold...............................     13,334(5)       (6)           --         --  
Lee M. Liberman.................................     37,934(7)       (6)           --         --  
Alvin J. Siteman................................    166,832(8)       2.0           --         --  
Joseph F. Olson.................................     24,134(9)       (6)           --         --  
James L. Tadtman................................     15,667(10)      (6)           --         --  
All executive officers and directors as a group                                                   
  (seven persons)(11)...........................  1,831,316         21.9    2,366,321       95.7  

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

(1) Except as otherwise indicated, all of such shares are owned with sole     
voting and investment power.                                          
(2) Does not include the shares of IMA Class A Common Stock issuable upon     
    conversion of shares of IMA Class B Common Stock indicated as beneficially
owned by such stockholder. Each share of IMA Class B Common Stock is  
     convertible into one share of IMA Class A Common Stock at the option of the
holder.                                                               
 (3) Represents: (i) 135,781 shares held by Mr. and Mrs. Kalishman as tenants by
  the entirety; (ii) 600,000 shares owned of record by Xanadu Investments,
L.P. (the general partners of which are The Jerome Kalishman Revocable
Trust, of which Mr. Kalishman is trustee, and The Nancy F. Kalishman  
   Revocable Trust, of which Mrs. Kalishman is trustee), (iii) 71,666 shares
    held by Mr. Kalishman, as trustee of the Jerome and Nancy Kalishman Family
Fund, and (iv) 100,000 shares held by Mr. Kalishman, as trustee of the
Jerome and Nancy Kalishman Irrevocable Grandchildren's Trust. Mrs.    
Kalishman disclaims beneficial ownership of the shares referenced in  
clauses (iii) and (iv) of the immediately preceding sentence.         
(4) Represents shares owned of record by Xanadu Investments, L.P.             
(5) Includes 5,334 shares issuable upon exercise of stock options granted by  
IMA and exercisable within 60 days of June 1, 1995.                   
(6) Less than one percent.                                                    
(7) Represents 5,666 shares held by Mr. Liberman, 1,000 shares held by Mr.    
   Liberman as trustee of a trust, 600 shares held by Mr. Liberman's spouse,
    as to which Mr. Liberman disclaims beneficial ownership, and 30,668 shares
issuable upon exercise of stock options granted by IMA and exercisable
within 60 days of June 1, 1995.                                       
(8) Represents 130,332 shares held by Mr. Siteman, as trustee of the Alvin J. 
  Siteman Revocable Trust, 5,832 shares held by Mr. Siteman, as trustee of
    four trusts for the benefit of members of his immediate family, and 30,668
shares issuable upon exercise of stock options granted by IMA and     
exercisable within 60 days of June 1, 1995.                           

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(9) Includes 24,001 shares issuable upon exercise of stock options granted by 
IMA and exercisable within 60 days of June 1, 1995.                   
(10) Represents 15,667 shares issuable upon exercise of stock options granted by
IMA and exercisable within 60 days of June 1, 1995.                   
(11) Includes the above-referenced forms of beneficial ownership.               

DESCRIPTION OF ITI CAPITAL STOCK

  The authorized capital stock of ITI consists of 25,000,000 shares of ITI
Common Stock and 2,000,000 shares of ITI Preferred Stock. As of August 30, 1995,
there were 14,609,804 shares of ITI Common Stock outstanding, held of record by 
1,842 holders. As of such date, no shares of ITI Preferred Stock were           
outstanding and no shares of capital stock were held in the treasury of ITI. The
following summary of certain provisions of ITI's capital stock describes all    
material provisions of, but does not purport to be complete and is subject to   
and qualified in its entirety by, the ITI Charter and ITI's By-Laws that are    
included or incorporated by reference as exhibits to the Registration Statement 
of which this Joint Proxy Statement/Prospectus forms a part and by the          
provisions of applicable law.                                                   

COMMON STOCK                                                                    

     Holders of shares of ITI Common Stock are entitled to one vote per share on
all matters to be voted upon by the stockholders. Subject to the prior rights of
the holders of ITI Preferred Stock, holders of ITI Common Stock are entitled to 
receive dividends when, as and if declared by the Board of Directors of ITI from
funds legally available therefor, and to share ratably in the assets of ITI     
legally available for distribution to the stockholders in the event of          
liquidation or dissolution. The ITI Common Stock has no preemptive rights and no
subscription or redemption privileges. The ITI Common Stock does not have       
cumulative voting rights, which means the holder or holders of more than half of
the shares voting for the election of directors can elect all the directors then
being elected, less the number, if any, elected by the holders of any series of 
ITI Preferred Stock. All the outstanding shares of ITI Common Stock are, and the
shares to be issued in the Merger when issued will be, fully paid and not liable
for further call or assessment.                                                 

PREFERRED STOCK                                                                 

ITI's Board of Directors has the authority by resolution, without any 
action of stockholders, to issue from time to time up to 2,000,000 shares of ITI
Preferred Stock in one or more series with such terms and designations as the   
Board of Directors of ITI may fix, including dividend rates, redemption rights, 
conversion rights, liquidation preferences and voting rights. The Board of      
Directors of ITI may designate that the holders of one or more series of ITI    
Preferred Stock shall be entitled as a series to elect one director and the     
Board of Directors of ITI may at its discretion grant the holders of one or more
series of ITI Preferred Stock the right to elect additional directors in the    
event that dividends on such series are in arrears.                             

The authority possessed by the Board of Directors of ITI to issue ITI 
Preferred Stock could potentially be used to discourage attempts by others to   
obtain control of ITI through merger, tender offer, proxy, consent or otherwise 
by making such attempts more difficult to achieve or more costly. The Board of  
Directors of ITI may issue ITI Preferred Stock without stockholder approval, and
with voting and conversion rights which could adversely affect the voting power 
of holders of the ITI Common Stock. There are no agreements or understandings   
for the issuance of ITI Preferred Stock, and the Board of Directors of ITI has  
no present intention to issue ITI Preferred Stock, nor is it aware of any       
pending or proposed transactions that would be affected by such issuance.       

DELAWARE LAW AND CERTAIN CHARTER PROVISIONS                                     

    ITI is subject to the provisions of Section 203 of the General Corporation
Law of Delaware. In general, this statute prohibits a publicly-held Delaware    
corporation from engaging in a "business combination" with an "interested       
stockholder" for a period of three years after the date of the transactions in  
which the person becomes an interested stockholder, unless the business         
combination is approved in a prescribed manner. An                              

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"interested stockholder" is a person who, together with affiliates and          
associates, owns (or within the prior three years did own) 15% or more of the   
corporation's voting stock.                                                     

ITI has included in its Certificate of Incorporation provisions to    
eliminate the personal liability of its directors for monetary damages resulting
from breaches of their fiduciary duty to the extent permitted by the Delaware   
General Corporation Law and to indemnify its directors and officers to the      
fullest extent permitted by Section 145 of the Delaware General Corporation Law.

ANTI-TAKEOVER PROVISIONS                                                        

    Classified Board of Directors.  As more fully described under "Election of
ITI Directors" above, the ITI Charter provides for its Board of Directors to be 
divided into three classes of directors serving staggered three-year terms. As a
result, approximately one-third of the Board of Directors of ITI will be elected
each year. The classified board could, accordingly, have the effect of extending
the time required to change a majority of the Board of Directors to two annual  
meetings of stockholders, instead of one. Since it would take a third party     
longer to obtain control of the Board of Directors, the classified board may    
deter certain mergers, tender offers or other future takeover attempts which    
some or a majority of stockholders may deem to be in their best interests.      

   Special Meetings of Stockholders.  The ITI Charter provides that, subject
to the rights of the holders of any class or series of ITI Preferred Stock set  
forth in the ITI Charter, the certificate of designation relating to such class 
or series of ITI Preferred Stock, or as otherwise required by law, any          
stockholder action may be taken only at a meeting of stockholders. The          
affirmative vote of the holders of at least 80% of the capital stock entitled to
vote for the election of directors is required to amend, repeal or adopt any    
provision inconsistent with such arrangement. These provisions may make it more 
difficult for stockholders to take action opposed by ITI's Board of Directors.  

TRANSFER AGENT AND REGISTRAR                                                    

   The transfer agent and registrar for ITI's Common Stock is American Stock
Transfer & Trust Company.                                                       

COMPARATIVE RIGHTS OF STOCKHOLDERS OF 
ITI AND IMA 

The rights of the stockholders of both IMA and ITI are governed by the
provisions of Delaware law as well as each of their respective Certificates of  
Incorporation and By-Laws. If the Merger is consummated, the stockholders of IMA
will become stockholders of ITI and their rights will be governed by the ITI    
Charter and ITI's By-Laws. The following is a summary discussion of the most    
material differences between the rights of stockholders of IMA and ITI. This    
summary is not intended to be a complete description of all of the differences  
between the rights of stockholders of ITI and IMA and is qualified in its       
entirety by reference to the Delaware General Corporation Law (the "Delaware    
Law") and the governing corporate instruments of ITI and IMA referred to above. 

RIGHTS OF HOLDERS OF COMMON STOCK                                               

IMA has issued and outstanding shares of IMA Class A Common Stock and 
shares of IMA Class B Common Stock. Each share of IMA Class A Common Stock is   
identical in all respects to each share of IMA Class B Common Stock, except that
(i) no cash dividend may be declared or paid on shares of IMA Class B Common    
Stock unless, simultaneously therewith or prior thereto, there is or has been   
declared or paid (as the case may be) a cash dividend on each share of IMA Class
A Common Stock of at least 110% of the per share dividend on IMA Class B Common 
Stock, (ii) in the election of directors, holders of IMA Class B Common Stock,  
voting as a separate class, are entitled to elect 55% of the IMA Board of       
Directors (rounded up to the nearest whole number), and the holders of IMA Class
A Common Stock, voting as a separate class, are entitled to elect the remaining 
directors, (iii) no IMA Class A director can be removed from office, except by  
vote of the holders of IMA Class A Common Stock, and no IMA Class B director can
be removed from office,                                                         

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except by vote of the holders of IMA Class B Common Stock, (iv) in the event of 
liquidation or dissolution of IMA prior to January 1, 1997, the holders of IMA  
Class A Common Stock are entitled to receive, out of assets legally available   
for distribution to the common stockholders, an aggregate amount equal to $8.00 
per share before any amount is paid to holders of IMA Class B Common Stock, (v) 
each share of IMA Class B Common Stock is convertible by the holder into one    
share of IMA Class A Common Stock at any time, and (vi) in the event of any     
merger, consolidation, sale of substantially all the IMA's assets or IMA's      
entering into certain business combinations (such as the Merger), holders of the
IMA Class A Common Stock must be offered consideration per share of at least    
equal value as the highest price paid or to be paid to any holder of IMA Class B
Common Stock in connection with such transaction.                               

    ITI has authorized, issued and outstanding just one class of shares of ITI
Common Stock.                                                                   

CLASSIFIED BOARD OF DIRECTORS                                                   

   Under the Delaware Law, the certificate of incorporation of a company may
provide that the Board of Directors may be divided into one or more classes,    
with directors in such classes having staggered terms. IMA's Certificate of     
Incorporation does not provide for a classified board of directors. Under IMA's 
Certificate of Incorporation and By-Laws, each director holds office until the  
next annual meeting of stockholders or until his successor shall have been      
elected and qualified or until his prior resignation, removal from office or    
death.                                                                          

The ITI Charter provides for a classified board of directors serving  
staggered three-year terms. As described under "The Merger -- Management of ITI 
Following Consummation of the Merger" above, at the Effective Time the Board of 
Directors of ITI will be divided into the Merger Class I Directors, the Merger  
Class II Directors and the Merger Class III Directors, initially consisting of, 
respectively, four directors, four directors and five directors. The Merger     
Class I Directors will hold office until the annual meeting of stockholders in  
1996, the Merger Class II Directors will hold office until the annual meeting of
stockholders in 1997 and the Merger Class III Directors will hold office until  
the annual meeting of stockholders in 1998; and, in each case, until their      
successors are duly elected and qualified, or until their resignation, removal  
from office or death. As a result, one class of directors will be elected at    
each annual meeting of stockholders with the remaining classes continuing their 
respective terms.                                                               

CHANGE IN NUMBER OF DIRECTORS                                                   

   Under the Delaware Law, the number of directors of a company is fixed by,
or in the manner provided in, the by-laws, unless the certificate of            
incorporation fixes the number of directors, in which case a change in the      
number of directors may be made only by amendment of the certification of       
incorporation. IMA's By-Laws provide that the number of directors may be no less
than two nor more than nine, as may be fixed by resolution of the Board of      
Directors. Such provisions of IMA's By-Laws may be modified by the affirmative  
vote of a majority of the members of the IMA Board of Directors or as otherwise 
permitted under the Delaware Law, which allows amendment, alteration or repeal  
of the By-Laws by stockholders representing a majority of the issued and        
outstanding shares entitled to vote.                                            

    The ITI Charter provides that the number of directors comprising the Board
shall be no less than six nor more than 15, the exact number to be specified in 
ITI's By-Laws. At the Effective Time, ITI's By-Laws will provide for a Board of 
Directors of 13 members. Such provisions of ITI's By-Laws, subsequent to the    
Effective Time, will be subject to amendment only by a vote of at least 80% of  
the members of the Board of Directors of ITI or by a vote of stockholders       
representing a majority of the shares issued and outstanding and entitled to    
vote.                                                                           

REMOVAL OF DIRECTORS                                                            

     Under the Delaware Law, a director of a company may be removed from office,
with or without cause, by the holders of a majority of the shares then entitled 
to vote at an election of directors, unless otherwise specified in a company's  
certificate of incorporation. If the board of directors is classified, however, 
a director may be removed by a vote of stockholders only for cause, unless      
otherwise specified in a company's certificate of incorporation.                

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    IMA's Certificate of Incorporation does not provide for a classified board
of directors and, accordingly, IMA's directors may be removed with or without   
cause. As described above under "-- Common Stock Classification," IMA's         
Certificate of Incorporation provides that no IMA Class A director can be       
removed from office, except by vote of the holders of IMA Class A Common Stock, 
and no IMA Class B director can be removed from office, except by vote of the   
holders of IMA Class B Common Stock.                                            

  ITI's Board of Directors is classified. The ITI Charter does not contain
any provisions regarding the removal of directors. Accordingly, directors may be
removed only for cause. Although the definition of "cause" has not been clearly 
established under Delaware Law, courts in various states have found "cause" to  
include malfeasance while in office, gross misconduct or neglect, false or      
fraudulent misrepresentations inducing the directors' appointment, willful      
conversion of corporate funds, breach of the obligation to make full disclosure,
incompetency, gross inefficiency and moral turpitude.                           

FILLING VACANCIES ON THE BOARD OF DIRECTORS                                     

     As permitted under the Delaware Law, IMA's By-Laws provide that any vacancy
on the Board of Directors of IMA or any newly-created directorship resulting    
from an increase in the number of persons to comprise the board may be filled by
the affirmative vote of a majority of the surviving or remaining directors then 
in office, even though fewer than a quorum are present.                         

ITI's By-Laws provide that the filling of vacancies on ITI's Board of 
Directors will be made in accordance with the ITI Charter. The ITI Charter      
provides that vacancies resulting from newly-created directorships shall be     
filled by the affirmative vote of a majority of the directors then in office or 
such greater affirmative vote of directors as may be specified in ITI's By-Laws,
provided a quorum is present; and, at the Effective Time, will provide that     
other vacancies will be filled by the affirmative vote of a majority of the     
directors then in office in accordance with the Merger Agreement. See "The      
Merger -- The Board Vacancy Amendment" above. Under the Delaware Law, if at the 
time of filling any vacancy on the Board of Directors or newly-created          
directorship the directors then in office constitute less than a majority of the
entire Board of Directors as constituted immediately prior to any such increase,
the Delaware Court of Chancery may, upon application of any stockholder or      
stockholders holding at least 10% of the total number of shares at the time     
outstanding having the right to vote for such directors, order an election to be
held to fill any such vacancies or newly-created directorships or to replace the
directors chosen by the directors then in office.                               

SPECIAL STOCKHOLDER MEETINGS                                                    

   Under Delaware Law, a special meeting of stockholders of a company may be
called only by the board of directors or such person or persons as may be       
authorized by the certificate of incorporation or by-laws. IMA's By-Laws provide
that a special meeting of stockholders may be called by the Board of Directors, 
President or by the holders of shares representing at least a majority of all   
outstanding shares entitled to vote at the meeting.                             

     At the Effective Time, ITI's By-Laws will provide that a special meeting of
stockholders may be called by the Chairman of the Board, President or the Board 
of Directors and shall be called by the President at the request of holders of  
not less than 50% of the outstanding shares entitled to vote at the meeting.    

STOCKHOLDER ACTION WITHOUT A MEETING                                            

Under the Delaware Law, unless otherwise provided in a company's      
certificate of incorporation, any action required or permitted to be taken at   
any meeting of stockholders may instead be taken without a meeting, without     
prior notice and a vote, if a written consent setting forth the action taken is 
signed by holders of outstanding stock having at least the number of votes that 
would be required to authorize such action at a meeting of stockholders at which
all shares entitled to vote thereon were present and voting and a prompt notice 
of the action so taken is provided to those stockholders who have not consented 
in writing. IMA's Certificate of Incorporation and By-Laws permits stockholder  
action by written consent.                                                      

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The ITI Charter provides that all actions required to be taken by the 
stockholders of ITI shall be taken solely at a duly called annual or special    
meeting of stockholders and prohibits stockholder action by written consent.    
Such provisions may only be amended with the affirmative vote of the holders of 
at least 80% of the outstanding shares entitled to vote thereon.                

ADJOURNMENT OF MEETINGS 

   In the event sufficient votes in favor of approving the Merger Agreement,
the proposed Capitalization Amendment and the proposed Board Vacancy Amendment  
are not received by the time scheduled for the ITI Meeting, the Board of        
Directors of ITI intends to recommend that the ITI Meeting be adjourned to      
permit the further solicitation of proxies. A resolution will be proposed at the
ITI Meeting authorizing the Board of Directors of ITI, at its discretion, to    
adjourn the ITI Meeting for the purpose of further soliciting proxies, if       
necessary, to obtain a sufficient number of votes in favor of approving the     
Merger Agreement, the proposed Capitalization Amendment and the proposed Board  
Vacancy Amendment. The proposal to authorize the Board of Directors of ITI to   
adjourn the ITI Meeting in order to permit the further solicitation of proxies, 
if necessary, must be approved by an affirmative vote of holders of a majority  
of the outstanding shares of ITI Common Stock present in person or represented  
by proxy and entitled to vote at the ITI Meeting. The Board of Directors of ITI 
believes that such proposal is in the best interests of ITI and the ITI         
Stockholders and recommends that the ITI Stockholders vote FOR approval of such 
proposal.                                                                       

  In the event sufficient votes in favor of approving the Merger Agreement
are not received by the time scheduled for the IMA Meeting, the Board of        
Directors of IMA intends to recommend that the IMA Meeting be adjourned to      
permit the further solicitation of proxies. A resolution will be proposed at the
IMA Meeting authorizing the Board of Directors of IMA, at its discretion, to    
adjourn the IMA Meeting for the purpose of further soliciting proxies, if       
necessary, to obtain a sufficient number of votes in favor of approving the     
Merger Agreement. The proposal to authorize the Board of Directors of IMA to    
adjourn the IMA Meeting in order to permit the further solicitation of proxies, 
if necessary, must be approved by an affirmative vote of holders of a majority  
of the shares of IMA Class A Common Stock and IMA Class B Common Stock present  
in person or represented by proxy and entitled to vote at the IMA Meeting voting
together as one class. The Board of Directors of IMA believes that such proposal
is in the best interests of IMA and the IMA Stockholders and recommends that the
IMA Stockholders vote FOR approval of such proposal.                            

LEGAL MATTERS 

     The validity of the ITI Common Stock offered hereby will be passed upon for
ITI by Krugman, Chapnick & Grimshaw, Saddle Brook, New Jersey. James D. Krugman,
a partner of Krugman, Chapnick & Grimshaw, is a director and Chairman of the    
Board of ITI, and Howard Kailes, a partner of such firm, is Secretary of ITI.   
Mr. Krugman owns 10,000 shares of ITI Common Stock; is managing partner of a    
partnership which owns 40,364 shares of ITI Common Stock (in 5,046 shares of    
which Mr. Krugman has a beneficial interest); has shared voting and investment  
power over 33,300 shares of ITI Common Stock held by a general partnership in   
which his mother has an interest; and has the right to acquire 95,000 additional
shares which are issuable upon the exercise of options granted by ITI. See      
"Election of ITI Directors" and "Security Ownership of Principal Stockholders   
and Management of ITI" above. Certain tax consequences of the Merger will be    
passed upon for IMA by Thompson & Mitchell, St. Louis, Missouri.                

EXPERTS 

    The consolidated financial statements of ITI and its subsidiaries included
in this Joint Proxy Statement/Prospectus and in the Registration Statement have 
been audited by BDO Seidman, LLP, independent certified public accountants, to  
the extent and for the periods set forth in their reports appearing elsewhere   
herein, and are included herein in reliance upon such reports given upon the    
authority of said firm as experts in accounting and auditing.                   

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The consolidated financial statements of IMA and subsidiaries as of   
September 30, 1994 and 1993, and for each of the years in the three-year period 
ended September 30, 1994, have been included in this Joint Proxy                
Statement/Prospectus and in the Registration Statement in reliance upon the     
report of KPMG Peat Marwick LLP, independent certified public accountants,      
appearing elsewhere herein, and upon the authority of said firm as experts in   
accounting and auditing.                                                        

The consolidated financial statements of Enviroq and its subsidiaries 
(renamed IMA Merger Sub, Inc.) as of March 25, 1995 and March 26, 1994 and for  
the two-year period ended March 25, 1995 included in this Joint Proxy           
Statement/Prospectus and in the Registration Statement have been audited by     
Deloitte & Touche LLP, independent auditors, as stated in their report herein,  
and have been so included in reliance upon the report of such firm given upon   
their authority as experts in accounting and auditing.                          

The combined financial statements of Gelco and its affiliates as of   
December 31, 1993 and 1992 have been audited by Aldrich, Kilbride and Tatone,   
independent certified public accountants, to the extent and for the periods set 
forth in their report appearing elsewhere herein, and are included herein in    
reliance upon such report given upon the authority of said firm as experts in   
accounting and auditing.                                                        

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INDEX TO FINANCIAL STATEMENTS 

                                                        [Enlarge/Download Table]

                                                                                        PAGE
                                                                                        ----
                                                                                            
FINANCIAL STATEMENTS OF ITI:                                                                
Report of Independent Certified Public Accountants....................................  F-1 
Consolidated Balance Sheets, December 31, 1994 and 1993...............................  F-2 
Consolidated Statements of Operations for each of the three years in the period ended       
  December 31, 1994...................................................................  F-4 
Consolidated Statements of Stockholders' Equity for each of the three years in the          
  period ended December 31, 1994......................................................  F-5 
Consolidated Statements of Cash Flows for each of the three years in the period ended       
  December 31, 1994...................................................................  F-6 
Summary of Accounting Policies........................................................  F-8 
Notes to Consolidated Financial Statements............................................  F-11
Consolidated Balance Sheets as of June 30, 1995 (unaudited) and December 31, 1994.....  F-30
Consolidated Statements of Operations for the six months ended June 30, 1995 and 1994       
  (unaudited).........................................................................  F-32
Consolidated Statements of Cash Flows for the six months ended June 30, 1995 and 1994       
  (unaudited).........................................................................  F-33
Notes to Consolidated Financial Statements (unaudited)................................  F-35
FINANCIAL STATEMENTS OF IMA:                                                                
Independent Auditors' Report..........................................................  F-41
Consolidated Balance Sheets as of September 30, 1994 and 1993.........................  F-42
Consolidated Statements of Income for the years ended September 30, 1994, 1993 and          
  1992................................................................................  F-44
Consolidated Statements of Changes in Stockholders' Equity for the years ended              
  September 30, 1994, 1993 and 1992...................................................  F-45
Consolidated Statements of Cash Flows for the years ended September 30, 1994, 1993 and      
  1992................................................................................  F-46
Notes to Consolidated Financial Statements............................................  F-47
Consolidated Balance Sheets as of June 30, 1995 (unaudited) and September 30, 1994....  F-56
Consolidated Statements of Income for the nine months ended June 30, 1995 and 1994          
  (unaudited).........................................................................  F-58
Consolidated Statements of Cash Flows for the nine months ended June 30, 1995 and 1994      
  (unaudited).........................................................................  F-59
Notes to Consolidated Financial Statements (unaudited)................................  F-60
FINANCIAL STATEMENTS OF ENVIROQ:                                                            
Independent Auditors' Report..........................................................  F-64
Consolidated Balance Sheets as of March 25, 1995 and March 26, 1994...................  F-65
Consolidated Statements of Operations for the years ended March 25, 1995 and March 26,      
  1994................................................................................  F-66
Consolidated Statements of Stockholders' Equity for the years ended March 25, 1995 and      
  March 26, 1994......................................................................  F-67
Consolidated Statements of Cash Flows for the years ended March 25, 1995 and March 26,      
  1994................................................................................  F-68
Notes to Consolidated Financial Statements............................................  F-69

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                                                        [Enlarge/Download Table]

                                                                                       PAGE
                                                                                       ----
                                                                                           
FINANCIAL STATEMENTS OF GELCO                                                              
  INSITUFORM/NUPIPE ENTITIES:                                                              
Independent Auditors' Report.......................................................... F-80
Combined Balance Sheets as of December 31, 1993 and 1992.............................. F-81
Combined Statements of Income for the years ended December 31, 1993 and 1992.......... F-82
Combined Statements of Equity for the years ended December 31, 1993 and 1992.......... F-83
Combined Statements of Cash Flows for the years ended December 31, 1993 and 1992...... F-84
Notes to Combined Financial Statements................................................ F-85
Combined Balance Sheets as of June 30, 1994 (unaudited) and December 31, 1993......... F-94
Combined Statements of Income for the six months ended June 30, 1994 and 1993              
  (unaudited)......................................................................... F-95
Combined Statements of Equity for the six months ended June 30, 1994 and 1993              
  (unaudited)......................................................................... F-96
Combined Statements of Cash Flows for the six months ended June 30, 1994 and 1993          
  (unaudited)......................................................................... F-97
Notes to Combined Financial Statements (unaudited).................................... F-98

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of                                   
Insituform Technologies, Inc.                                                   

    We have audited the accompanying consolidated balance sheets of Insituform
Technologies, Inc. and subsidiaries as of December 31, 1994 and 1993, and the   
related consolidated statements of operations, stockholders' equity, and cash   
flows for each of the three years in the period ended December 31, 1994. 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Insituform  
Technologies, Inc. and subsidiaries at December 31, 1994 and 1993, and the      
results of their operations and their cash flows for each of the three years in 
the period ended December 31, 1994, in conformity with generally accepted       
accounting principles.                                                          

                    BDO SEIDMAN, LLP

Memphis, Tennessee                                                              
March 9, 1995                                                                   

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INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                            DECEMBER 31,     
                                                                        ---------------------
                                                                          1994         1993  
                                                                        --------     --------
                                                                           (IN THOUSANDS,    
                                                                          EXCEPT PER SHARE   
                                                                              AMOUNTS)       
                                                                                             
                              ASSETS                                                         
CURRENT                                                                                      
  Cash and cash equivalents, restricted $3,836 and $4,082 (Note 20).... $ 16,635     $ 15,662
  Investments in securities (Note 2)...................................    1,107          401
  Receivables (Note 3).................................................   35,243       26,126
  Costs and estimated earnings in excess of billings (Note 4)..........    6,422        3,474
  Inventories (Note 5).................................................    7,029        6,622
  Deferred income taxes (Note 17)......................................    2,807        1,919
  Prepaid expenses and miscellaneous...................................    2,496        2,733
                                                                        --------     --------
          TOTAL CURRENT ASSETS.........................................   71,739       56,937
                                                                        --------     --------
PROPERTY AND EQUIPMENT, less accumulated depreciation and amortization                       
  (Notes 6, 9 and 11)..................................................   29,809       24,377
                                                                        --------     --------
OTHER ASSETS                                                                                 
  Costs in excess of net assets of businesses acquired, less                                 
     accumulated amortization of $3,838 and $2,126 (Note 1)............   49,995       36,538
  Patents and patent applications, less accumulated amortization of                          
     $1,909 and $1,553.................................................    5,606        5,180
  Investments in licensees and affiliated companies (Note 7)...........    2,033        1,978
  Deferred income taxes (Note 17)......................................    1,417        1,361
  Miscellaneous (Note 8)...............................................    1,895        2,804
                                                                        --------     --------
          TOTAL OTHER ASSETS...........................................   60,946       47,861
                                                                        --------     --------
                                                                        $162,494     $129,175
                                                                        ========     ========

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INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                            DECEMBER 31,      
                                                                        --------------------- 
                                                                          1994         1993   
                                                                        --------     -------- 
                                                                           (IN THOUSANDS,     
                                                                        EXCEPT SHARE AMOUNTS) 
                                                                                              
                 LIABILITIES AND STOCKHOLDERS' EQUITY                                         
CURRENT LIABILITIES                                                                           
  Notes payable to banks (Note 9)...................................... $    277     $    467 
  Accounts payable and accruals (Note 10)..............................   22,760       18,689 
  Income taxes payable (Note 17).......................................    3,801        1,766 
  Deferred income taxes (Note 17)......................................      524          432 
  Current maturities of long-term debt (Note 11).......................   11,572        6,679 
                                                                        --------     -------- 
          TOTAL CURRENT LIABILITIES....................................   38,934       28,033 
LONG-TERM DEBT, less current maturities (Note 11)......................   47,347       36,297 
DEFERRED INCOME TAXES (Note 17)........................................      937          433 
                                                                        --------     -------- 
          TOTAL LIABILITIES............................................   87,218       64,763 
                                                                        --------     -------- 
MINORITY INTERESTS.....................................................    1,352          860 
                                                                        --------     -------- 
REDEEMABLE PREFERRED STOCK (Note 12)...................................       --          157 
                                                                        --------     -------- 
COMMITMENTS AND CONTINGENCIES (Notes 9, 12, 15, and 20)                                       
COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY (Note 13):                                        
  Preferred stock, undesignated, $.10 par -- shares authorized                                
     1,800,000; none outstanding.......................................       --           -- 
  Common stock, $.01 par -- shares authorized 25,000,000; shares                              
     outstanding 14,346,005 and 14,244,585.............................      143          142 
  Additional paid-in capital...........................................   44,937       43,680 
  Retained earnings (Notes 9 and 11)...................................   33,300       24,675 
                                                                        --------     -------- 
                                                                          78,380       68,497 
  Cumulative foreign currency translation adjustments..................   (1,270)      (1,478)
  Unrealized holding gains on investments available-for-sale (Note                            
     2)................................................................      438           -- 
  Notes receivable from affiliates (Note 14)...........................   (3,624)      (3,624)
                                                                        --------     -------- 
          TOTAL COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY............   73,924       63,395 
                                                                        --------     -------- 
                                                                        $162,494     $129,175 
                                                                        ========     ======== 

See accompanying summary of accounting policies and notes to consolidated 
financial statements. 

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INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS 

                                                        [Enlarge/Download Table]

                                                                 YEAR ENDED DECEMBER 31,       
                                                            ---------------------------------- 
                                                              1994         1993         1992   
                                                            --------     --------     -------- 
                                                             (IN THOUSANDS, EXCEPT PER SHARE   
                                                            AMOUNTS)                           
                                                                                               
REVENUES (Notes 15 and 19)                                                                     
  Net sales................................................ $ 28,265     $ 27,080     $ 29,909 
  Royalties and license fees...............................   10,272       10,475       12,414 
  Construction contracts...................................  109,710       62,953       53,236 
                                                            --------     --------     -------- 
Total revenues.............................................  148,247      100,508       95,559 
                                                            --------     --------     -------- 
OPERATING COSTS AND EXPENSES                                                                   
  Cost of sales............................................   17,174       15,039       18,593 
  Royalty expense (Note 15)................................      223          281          352 
  Cost of construction contracts...........................   77,232       44,746       40,776 
  Selling, administrative and general......................   33,560       27,672       21,982 
  Research and development.................................    1,509        2,718        4,349 
  Merger and restructuring costs (Note 1)..................       --         (981)      14,572 
                                                            --------     --------     -------- 
Operating costs and expenses...............................  129,698       89,475      100,624 
                                                            --------     --------     -------- 
Operating income (loss)....................................   18,549       11,033       (5,065)
OTHER INCOME (EXPENSE)                                                                         
  Interest expense.........................................   (3,152)      (1,351)        (236)
  Other (Note 16)..........................................      712          840        3,104 
                                                            --------     --------     -------- 
Other income (expense).....................................   (2,440)        (511)       2,868 
                                                            --------     --------     -------- 
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES ON                                       
  INCOME...................................................   16,109       10,522       (2,197)
TAXES ON INCOME (Note 17)..................................    6,140        3,314        4,223 
MINORITY INTERESTS.........................................     (584)        (408)        (248)
EQUITY IN EARNINGS OF AFFILIATED COMPANIES (Note 7)........      409          460          997 
                                                            --------     --------     -------- 
INCOME (LOSS) FROM CONTINUING OPERATIONS...................    9,794        7,260       (5,671)
LOSS FROM DISCONTINUED OPERATIONS (Note 8).................   (1,164)      (2,465)        (540)
                                                            --------     --------     -------- 
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING                                           
  CHANGE...................................................    8,630        4,795       (6,211)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (Note 17)...........       --          218           -- 
                                                            --------     --------     -------- 
NET INCOME (LOSS).......................................... $  8,630     $  5,013     $ (6,211)
                                                            ========     ========     ======== 
EARNINGS (LOSS) PER SHARE OF COMMON STOCK AND COMMON STOCK                                     
  EQUIVALENTS                                                                                  
  Income from continuing operations........................ $    .68     $    .51     $   (.41)
  Discontinued operations..................................     (.08)        (.17)        (.04)
  Cumulative effect of accounting change...................       --          .02           -- 
                                                            --------     --------     -------- 
  Net income (loss)........................................ $    .60     $    .35     $   (.45)
                                                            ========     ========     ======== 

See accompanying summary of accounting policies and notes to consolidated 
financial statements. 

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INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 

                                                        [Enlarge/Download Table]

                                                                                                                        TOTAL     
                                                                              CUMULATIVE                                COMMON    
                                                                               FOREIGN     UNREALIZED      NOTES      STOCK AND   
                             COMMON STOCK     ADDITIONAL                       CURRENCY      HOLDING    RECEIVABLE      OTHER     
                          ------------------   PAID-IN    RETAINED TREASURY  TRANSLATION    GAINS ON       FROM      STOCKHOLDERS'
                          NO. SHARES  AMOUNT   CAPITAL    EARNINGS  STOCK    ADJUSTMENTS   INVESTMENTS  AFFILIATES      EQUITY    
                          ----------  ------  ----------  -------  --------  ------------  -----------  -----------  ------------ 
                                                           (IN THOUSANDS, EXCEPT SHARE AMOUNTS)                                   
                                                                                                                                  
BALANCE, December 31,                                                                                                             
  1991................... 13,794,808   $138    $ 37,823   $25,885   $ (123)    $  3,029     $      --     $(3,437)     $ 63,315   
Net loss for the year....         --     --          --    (6,211)      --           --            --          --        (6,211)  
Issuance of common stock                                                                                                          
  upon exercise of                                                                                                                
  options................    133,324      1       1,227        --       --           --            --          --         1,228   
Tax benefit related to                                                                                                            
  exercise of stock                                                                                                               
  options................         --     --         784        --       --           --            --          --           784   
Issuance of affiliate                                                                                                             
  note receivable (Note                                                                                                           
  14)....................         --     --          --        --       --           --            --        (187)         (187)  
Retirement of treasury                                                                                                            
  stock..................     (5,000)    --        (123)       --      123           --            --          --            --   
Dividends paid on                                                                                                                 
  redeemable preferred                                                                                                            
  stock..................         --     --          --        (3)      --           --            --          --            (3)  
Translation                                                                                                                       
  adjustments............         --     --          --        --       --       (4,431)           --          --        (4,431)  
                          ----------  ------  ----------  -------  --------  ------------  -----------  -----------  ------------ 
BALANCE, December 31,                                                                                                             
  1992................... 13,923,132    139      39,711    19,671       --       (1,402)           --      (3,624)       54,495   
Net income for the                                                                                                                
  year...................         --     --          --     5,013       --           --            --          --         5,013   
Issuance of common stock                                                                                                          
  upon exercise of                                                                                                                
  options................    281,357      3       2,212        --       --           --            --          --         2,215   
Stock issued in                                                                                                                   
  conjunction with                                                                                                                
  acquisition (Notes 1                                                                                                            
  and 10)................     40,096     --         500        --       --           --            --          --           500   
Warrants issued with                                                                                                              
  subordinated debt (Note                                                                                                         
  13)....................         --     --         413        --       --           --            --          --           413   
Tax benefit related to                                                                                                            
  exercise of stock                                                                                                               
  options................         --     --         844        --       --           --            --          --           844   
Other....................         --     --          --        (9)      --          (76)           --          --           (85)  
                          ----------  ------  ----------  -------  --------  ------------  -----------  -----------  ------------ 
BALANCE, December 31,                                                                                                             
  1993................... 14,244,585    142      43,680    24,675       --       (1,478)           --      (3,624)       63,395   
Net income for the                                                                                                                
  year...................         --     --          --     8,630       --           --            --          --         8,630   
Issuance of common stock                                                                                                          
  upon exercise of                                                                                                                
  options................     30,448     --         174        --       --           --            --          --           174   
Stock issued in                                                                                                                   
  conjunction with                                                                                                                
  acquisition (Notes 1                                                                                                            
  and 10)................     70,972      1         999        --       --           --            --          --         1,000   
Tax benefit related to                                                                                                            
  exercise of stock                                                                                                               
  options................         --     --          84        --       --           --            --          --            84   
Other....................         --     --          --        (5)      --          208           438          --           641   
                          ----------  ------  ----------  -------  --------  ------------  -----------  -----------  ------------ 
BALANCE, December 31,                                                                                                             
  1994................... 14,346,005   $143    $ 44,937   $33,300   $   --     $ (1,270)    $     438     $(3,624)     $ 73,924   
                          ==========  ======= =========   ======== ========  ============  ==========   ==========   ===========  

See accompanying summary of accounting policies and notes to consolidated 
financial statements. 

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INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                  YEAR ENDED DECEMBER 31,      
                                                             --------------------------------- 
                                                              1994         1993         1992   
                                                             -------     --------     -------- 
                                                                      (IN THOUSANDS)           
                                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES                                                           
  Income (loss) from continuing operations.................. $ 9,794     $  7,260     $ (5,671)
  Adjustments to reconcile net income (loss) to net cash                                       
     provided (used) by operating activities:                                                  
     Minority interest in net income........................     584          408          248 
     Provision for restructuring costs......................      --         (981)       4,905 
     Depreciation and amortization..........................   7,516        6,304        3,957 
     Loss on investments sold...............................      --           --          161 
     Miscellaneous..........................................     311          114          206 
     Deferred income taxes..................................    (615)      (1,714)         (99)
     Loss (gain) on sale of fixed assets....................     258           79         (127)
     Undistributed earnings of affiliated companies.........    (409)        (460)        (997)
     Changes in operating assets and liabilities, net of                                       
       effect of businesses purchased (Note 1):                                                
       Receivables..........................................  (9,887)         162           83 
       Inventories..........................................     369         (307)        (696)
       Prepaid expenses and miscellaneous...................     382        1,251          (79)
       Miscellaneous other assets...........................     (59)         911         (414)
       Accounts payable and accruals........................   2,322       (7,257)         863 
       Income taxes payable.................................   4,267         (504)      (1,704)
                                                             -------     --------     -------- 
Net cash provided by continuing operations..................  14,833        5,266          636 
                                                             -------     --------     -------- 
Net cash used by discontinued operations....................     (99)        (940)        (492)
                                                             -------     --------     -------- 
Net cash provided by operating activities...................  14,734        4,326          144 
                                                             -------     --------     -------- 
CASH FLOWS FROM INVESTING ACTIVITIES                                                           
  Capital expenditures......................................  (9,019)      (5,272)      (6,073)
  Investments in licensees and affiliated companies.........     407          231         (105)
  Purchase of patents and applications......................    (811)        (332)        (489)
  Purchases of businesses, net of cash acquired (Note 1)....  (9,379)     (32,588)      (9,849)
  Proceeds on disposal of property and equipment............   1,242          540          360 
  Miscellaneous other.......................................      --           --          115 
                                                             -------     --------     -------- 
Net cash used by investing activities....................... (17,560)     (37,421)     (16,041)
                                                             -------     --------     -------- 

                                                                                     Continued 

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INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                   YEAR ENDED DECEMBER 31,      
                                                              --------------------------------- 
                                                               1994         1993         1992   
                                                              -------     --------     -------- 
                                                                       (IN THOUSANDS)           
                                                                                                
CASH FLOWS FROM FINANCING ACTIVITIES                                                            
  Proceeds from issuance of common stock....................  $   174     $  2,215     $  1,228 
  Proceeds from long-term debt..............................    9,828       35,430           -- 
  Redemption of redeemable preferred stock..................     (228)          --           -- 
  Dividends paid by subsidiary to minority interests........     (150)         (91)        (140)
  Principal payments on long-term debt......................   (5,846)      (2,637)      (1,330)
  Increase (decrease) in short-term borrowings..............     (213)         125      (13,211)
                                                              -------     --------     -------- 
Net cash provided (used) by financing activities............    3,565       35,042      (13,453)
                                                              -------     --------     -------- 
EFFECT OF EXCHANGE RATE CHANGES ON CASH.....................      234         (154)      (2,172)
                                                              -------     --------     -------- 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FOR THE                                    
  YEAR......................................................      973        1,793      (31,522)
CASH AND CASH EQUIVALENTS, beginning of year................   15,662       13,869       45,391 
                                                              -------     --------     -------- 
CASH AND CASH EQUIVALENTS, end of year......................  $16,635     $ 15,662     $ 13,869 
                                                              =======     ========     ======== 
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:                                             
CASH PAID DURING THE YEAR FOR                                                                   
  Interest (net of amount capitalized)......................  $ 3,197     $  1,602     $    519 
  Income taxes..............................................    1,601        2,039        6,053 
NON-CASH INVESTING AND FINANCING ACTIVITIES                                                     
  Deferred consideration for patents acquired...............       --           --          150 
  Additional paid-in capital increased by reduction in                                          
     income taxes payable for tax benefit arising from                                          
     exercise of stock options..............................       84          844          784 
  Deferred consideration for businesses acquired (Note 1)...   11,850        1,000        2,800 
  Common stock issued in connection with purchase of                                            
     business (Note 1)......................................    1,000          500           -- 

See accompanying summary of accounting policies and notes to consolidated 
financial statements. 

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INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

SUMMARY OF ACCOUNTING POLICIES

INDUSTRY INFORMATION                                                            

    Insituform Technologies, Inc. (the "Company" or "ITI") provides techniques
for the reconstruction of deteriorated pipelines and manholes utilizing         
trenchless, no dig processes, including the Insituform(R) Process and the       
NuPipe(R) Process, worldwide through licensees or its subsidiaries. The Company 
sells the materials used in these processes to many of its licensees.           

PRINCIPLES OF CONSOLIDATION                                                     

   The consolidated financial statements include the accounts of the Company
and its majority-owned subsidiaries, including a 51% owned subsidiary,          
Insituform Linings, Plc., a United Kingdom company. All material intercompany   
balances, transactions and stockholdings are eliminated.                        

ACQUISITIONS AND MERGERS                                                        

   The accounts and operations of businesses acquired in exchange for common
stock, and which were accounted for as poolings-of-interests, are included in   
the financial statements as if they had always been subsidiaries.               

    The net assets of businesses acquired and accounted for using the purchase
method of accounting are recorded at their fair value at the acquisition date,  
and the financial statements include their operations only from that date. Any  
excess of acquisition costs over the fair value of net assets acquired is       
included in the balance sheet as "Costs in excess of net assets of businesses   
acquired."                                                                      

TAXES ON INCOME                                                                 

    Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS  
109"). Under FAS 109, the Company provides for estimated income taxes payable or
refundable on current year income tax returns as well as the estimated future   
tax effects attributable to temporary differences and carryforwards, based upon 
enacted tax laws and tax rates. The Company considers the amount of any deferred
tax asset valuation allowances on an individual subsidiary basis, considering   
historical and projected earnings. Deferred tax assets and liabilities are      
classified based upon an analysis of each taxing jurisdiction.                  

     U.S. and foreign income taxes are not provided on undistributed earnings of
foreign subsidiaries where it is the Company's intention to indefinitely        
reinvest such earnings in the subsidiary's operations and not to transfer them  
in a taxable transaction.                                                       

FOREIGN CURRENCY TRANSLATION                                                    

     Results of operations for foreign entities are translated using the average
exchange rates during the period. Assets and liabilities are translated to U.S. 
dollars using the exchange rates in effect at the balance sheet date, and the   
related translation adjustments are reported as a separate component of         
stockholders' equity.                                                           

CASH AND CASH EQUIVALENTS                                                       

   For purposes of the statements of cash flows, the Company classifies cash
on hand and in savings, money market, certificates of deposit, and checking     
accounts, as well as other highly liquid debt securities with original          
maturities of 90 days or less, as cash equivalents.                             

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SUMMARY OF ACCOUNTING POLICIES -- (CONTINUED) 

INVESTMENTS                                                                     

    Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments  
in Debt and Equity Securities" ("FAS 115"). Under FAS 115, the Company has      
classified investments in equity securities that have readily determinable fair 
values and all investments in debt securities as available-for-sale. These      
investments are reported at fair value, with unrealized gains and losses        
excluded from earnings and reported in a separate component of stockholders'    
equity.                                                                         

For years prior to 1994, the Company accounted for investments in     
marketable securities in accordance with the requirements of Statement of       
Financial Accounting Standards No. 12, "Accounting for Certain Marketable       
Securities" ("FAS 12").                                                         

 Corporate investments are carried on the equity method if the Company's
ownership interest is 20% and greater, but not exceeding 50%. Investments in    
partnerships for which the Company's ownership interest is no greater than 50%  
are accounted for on the equity method. For those investments accounted for on  
the equity method, intercompany profits and losses are eliminated.              

INVENTORIES                                                                     

Inventories are valued at the lower of cost (first-in, first-out) or  
market. Maintenance and office supplies are not inventoried.                    

PROPERTY, EQUIPMENT, DEPRECIATION AND AMORTIZATION                              

     Property and equipment are stated at cost. Depreciation and amortization on
property and equipment are computed using the straight-line method for financial
reporting purposes over the following estimated useful lives:                   

                                                                [Download Table]

                                                               YEARS
                                                               -----
                                                                    
Land improvements............................................     20
Buildings and improvements...................................  10-40
Machinery and equipment......................................   4-10
Furniture and fixtures.......................................   3-10
Autos and trucks.............................................   3-10

   For income tax purposes, depreciation and amortization are computed using
accelerated methods over the estimated useful lives.                            

INTANGIBLES                                                                     

  The Company amortizes any excess of cost of businesses acquired over the
fair value of the net assets at dates of acquisition over periods not in excess 
of 25 years on the straight-line basis.                                         

     Patent costs are amortized on a straight-line basis over 17 years. Existing
patents acquired are amortized on a straight-line basis over the shorter of 17  
years or the remaining life of the respective patent.                           

    Noncompete agreements are amortized on a straight-line basis over the term
of the applicable agreements.                                                   

The Company's management continually evaluates the market coverage and
earnings capacity of its acquirees and its patented processes to determine if   
the unamortized balances can be recovered from their undiscounted future cash   
flows.                                                                          

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SUMMARY OF ACCOUNTING POLICIES -- (CONTINUED) 

ROYALTY REVENUES AND LICENSE FEES                                               

     Royalty revenues are accrued as earned in accordance with the provisions of
the license agreements and are recorded based upon reports submitted by the     
licensees. License fees are recognized as revenues when all material services   
have been substantially performed.                                              

CONSTRUCTION AND INSTALLATION REVENUES                                          

Construction and installation revenues are recognized using the       
percentage-of-completion method. Contract costs include all direct material and 
labor costs and those indirect costs related to contract performance, such as   
indirect labor, supplies, tools and equipment costs. Changes in estimated total 
contract costs are recognized in the period they are determined. Where a        
contract loss is forecast, the full amount of the anticipated loss is recognized
in the period the loss is determined.                                           

STOCK OPTIONS                                                                   

 Stock options are typically granted to certain officers, directors, and
employees at the prevailing market price on the date of the grant. The Company  
generally makes no charge to earnings with respect to these options. Proceeds   
from the sale of common stock issued under these options are credited to common 
stock and additional paid-in capital at the time the options are exercised.     

   With respect to non-qualified stock options, the Company recognizes a tax
benefit upon exercise in an amount equal to the difference between the exercise 
price and the fair market value of the common stock. With respect to incentive  
stock options, tax benefits arising from disqualifying dispositions are         
generally recognized at the time of disposition. Tax benefits related to stock  
options are credited to additional paid-in capital.                             

RETIREMENT PLANS                                                                

The Company provides a non-contributory profit sharing/voluntary      
contributory 401(k) plan which covers substantially all domestic employees. The 
Company's policy is to annually fund the retirement plan costs accrued for that 
year.                                                                           

EARNINGS PER SHARE                                                              

     Earnings per share are computed on the basis of the weighted average number
of common equivalent shares outstanding during each year and include the common 
and common equivalent shares issued in acquisitions of businesses accounted for 
as a pooling-of-interests as if such shares had been outstanding in all periods.

Earnings per share has been computed using 14,413,985, 14,329,880 and 
13,883,526 shares in 1994, 1993 and 1992, respectively, which represents the    
weighted average number of common and common equivalent shares required to be   
recognized during the respective periods. Common stock equivalents were not     
considered in the 1992 calculation as the effect would be anti-dilutive.        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  BUSINESS ACQUISITIONS                                                       

     During the three-year period ended December 31, 1994, the Company completed
acquisitions of four of its domestic licensees, as follows:                     

Gelco Companies                                                       

 On October 21, 1994, the Company acquired all of the outstanding common
stock of Gelco Services, Inc., Gelco NuPipe, Inc., GelTech Constructors, Inc.   
and Mar-Tech Insituform Ltd. (the "Gelco companies"), the Company's licensees of
the Insituform and NuPipe processes in Oregon, Washington, Idaho, Alaska,       
Hawaii, Guam, northern California and northern Nevada, portions of Montana and  
British Columbia. In addition, the Company acquired related assets of an        
affiliated company. The purchase price of $18,000,000 was paid $9,000,000 in    
cash, together with promissory notes aggregating $9,000,000 due on the first and
second anniversaries of the closing date. In addition, the Company issued       
promissory notes aggregating $2,850,000, representing net current liabilities   
(as defined) of the acquired Gelco companies to related parties and a portion of
working capital at closing.                                                     

Insituform Midwest, Inc.                                              

    On July 26, 1993, the Company acquired the common stock and related assets
of Insituform Midwest, Inc. ("Midwest"), its licensee in Indiana and portions of
Illinois, Iowa and Wisconsin. The base purchase price of $14.5 million          
(including $750,000 in payment of a five-year non-competition agreement from the
sellers), was paid $14,000,000 in cash together with 40,096 unregistered shares 
of the Company's Class A common stock, $.01 par value ("Common Stock"). Further,
during 1994 the sellers received contingent consideration in the amount of      
70,972 additional shares of Common Stock, based on the obtainment of 1993 gross 
contracts, as defined. The contingent consideration (valued at $1,000,000) was  
accounted for in 1993 as costs in excess of assets acquired.                    

Naylor Industries, Inc.                                               

On July 14, 1993, the Company completed the acquisition of Naylor     
Industries, Inc. ("Naylor") for a cash purchase price of $23,550,000, including 
transaction costs. Naylor is the parent of Insituform Gulf South, Inc. ("IGS"), 
the Company's licensee in Louisiana and portions of Texas and Mississippi.      

H.T. Schneider, Inc.                                                  

    On December 31, 1992, the Company acquired all of the outstanding stock of
H.T.Schneider, Inc. ("HTS"), the parent of Insituform of New England, Inc.      
("INE") and NuPipe New England, Inc., the Company's licensees in New England,   
for $3,000,000 in cash and $2,800,000 in deferred purchase consideration (see   
Note 11). The Company also (i) delivered to the seller $1,000,000, in cash, for 
a three-year non-competition commitment, (ii) discharged outstanding bank debt  
and stockholder loans and (iii) paid $200,000 to an affiliate of the seller for 
certain real estate used in INE's operations.                                   

Each of these acquisitions have been accounted for using the purchase 
method of accounting. Except as otherwise described, these acquisitions have    
been funded primarily from the proceeds of the Company's credit facility with   
Third National Bank in Nashville, and from working capital and the issuance of  
subordinated and purchase-money debt.                                           

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

   The excess of the purchase price over the estimated fair value of the net
assets acquired is being amortized over 25 years on the straight-line basis.    
Allocation of the purchase prices of these acquisitions is summarized as follows
(in thousands):                                                                 

                                                        [Enlarge/Download Table]

                                                                      ALLOCATED TO                  
                                                    ------------------------------------------------
                                                                                           COST IN  
                                           TOTAL                 PROPERTY                 EXCESS OF 
                                          PURCHASE  WORKING        AND         OTHER      NET ASSETS
                                           PRICE    CAPITAL     EQUIPMENT      ASSETS      ACQUIRED 
                                          --------  -------     ----------     ------     ----------
                                                                                                    
Year ended December 31, 1994:                                                                       
  Gelco Companies........................ $ 21,613  $2,209        $3,003       $1,349      $ 15,052 
Year ended December 31, 1993:                                                                       
  Naylor.................................   23,550   5,664         3,058         (247)       15,075 
  Midwest................................   15,790   2,533         3,096           84        10,077 
Year ended December 31, 1992:                                                                       
  HTS....................................    7,166     180           863          682         5,441 

  The following table presents summarized consolidated unaudited pro forma
results of operations for 1994, 1993 and 1992 as if the Gelco acquisition had   
occurred at the beginning of 1993 and the Naylor, Midwest and HTS acquisitions  
had occurred at the beginning of 1992. These pro forma results are provided for 
comparative purposes only and do not purport to be indicative of the results    
which would have been obtained if these acquisitions had been effected on the   
dates indicated or which may be obtained in the future.                         

                                                        [Enlarge/Download Table]

                                                                 YEAR ENDED DECEMBER 31,       
                                                            ---------------------------------- 
                                                              1994         1993         1992   
                                                            --------     --------     -------- 
                                                             (IN THOUSANDS, EXCEPT PER SHARE   
                                                                         AMOUNTS)              
                                                                                               
Total revenues............................................. $164,078     $129,741     $135,067 
Income (loss) from continuing operations...................   10,957        5,946       (6,122)
Income (loss) from continuing operations per common and                                        
  common equivalent share..................................      .76          .41         (.44)

Insituform Group Limited                                              

    On December 9, 1992, the Company, through its wholly-owned subsidiary, INA
Acquisition Corp., completed the acquisition (the "IGL Acquisition") of         
Insituform Group Limited ("IGL"), in which the Company issued an aggregate of   
5,859,181 shares of Common Stock to prior holders of IGL's ordinary shares      
(other than the Company).                                                       

   The IGL Acquisition has been accounted for using the pooling-of-interests
method of accounting, and accordingly, the accompanying consolidated financial  
statements give retroactive effect to the acquisition, as if the companies had  
always operated as a single entity.                                             

     Costs related to the IGL Acquisition of $9,667,000 were charged to expense,
primarily during the fourth quarter of 1992. (See Note 17 for information       
regarding the related impact on taxes on income.) The Company also recorded a   
pre-tax charge of $4,905,000 for restructuring costs for asset-related          
writeoffs, lease termination provisions and personnel related costs in the      
fourth quarter of 1992.                                                         

2.  SECURITIES AVAILABLE-FOR-SALE                                               

     Effective January 1, 1994, the Company adopted FAS 115. The adoption of FAS
115 changes the Company's method of accounting for investments in equity        
securities from the lower of cost or market method                              

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

previously used under FAS 12 to a fair value approach, with the unrealized      
holding gains and losses reported, net of income taxes, as a separate component 
of stockholders' equity. The effect of this accounting change at January 1, 1994
was to recognize as a separate component of stockholders' equity an unrealized  
holding gain, net of tax effect, of $495,000. The cost of these investments is  
$401,000. Except for this adjustment, the application of this statement had no  
material effect on the 1994 consolidated financial statements.                  

    Investments in securities available-for-sale consist principally of a 7.6%
investment in ENVIROQ Corporation, the parent of the Company's licensee in the  
southeastern United States.                                                     

3.  RECEIVABLES                                                                 

Receivables consist of the following (in thousands):                  

                                                        [Enlarge/Download Table]

                                                                     DECEMBER 31,    
                                                                  -------------------
                                                                   1994        1993  
                                                                  -------     -------
                                                                                     
Trade, less allowance for possible losses of $638 and $495....... $29,002     $19,805
Retainage under construction contracts (Note 4)..................   6,167       4,248
Refundable income taxes..........................................      74       2,073
                                                                  -------     -------
Receivables...................................................... $35,243     $26,126
                                                                  =======     =======

    Activity in the allowance for possible losses is summarized as follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED DECEMBER 31,  
                                                            ------------------------- 
                                                            1994      1993      1992  
                                                            -----     -----     ----- 
                                                                                      
Balance, at beginning of period............................ $ 495     $ 456     $ 702 
Charged to expense.........................................   575       106       259 
Increase resulting from business acquisitions..............    --       212        36 
Uncollected balances written off, net of recoveries........  (432)     (279)     (541)
                                                            -----     -----     ----- 
Balance, at end of period.................................. $ 638     $ 495     $ 456 
                                                            =====     =====     ===== 

4.  COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS                       

Costs and estimated earnings on uncompleted contracts consist of the  
following (in thousands):                                                       

                                                        [Enlarge/Download Table]

                                                                     DECEMBER 31,      
                                                                 --------------------- 
                                                                   1994         1993   
                                                                 --------     -------- 
                                                                                       
Costs incurred on uncompleted contracts........................  $ 44,388     $ 18,355 
Estimated earnings.............................................    14,409        9,269 
                                                                 --------     -------- 
                                                                   58,797       27,624 
Less billings to date..........................................   (53,487)     (24,496)
                                                                 --------     -------- 
                                                                 $  5,310     $  3,128 
                                                                 ========     ======== 
Included in the accompanying balance sheets under the following                        
  captions:                                                                            
  Costs and estimated earnings in excess of billings...........  $  6,422     $  3,474 
  Billings in excess of costs and estimated earnings on                                
     uncompleted contracts (see Note 10).......................    (1,112)        (346)
                                                                 --------     -------- 
                                                                 $  5,310     $  3,128 
                                                                 ========     ======== 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

5.  INVENTORIES                                                                 

Inventories are summarized as follows (in thousands):                 

                                                        [Enlarge/Download Table]

                                                                    DECEMBER 31,     
                                                                ---------------------
                                                                  1994         1993  
                                                                --------     --------
                                                                                     
Finished products.............................................. $    765     $    996
Work-in-process................................................      418          690
Construction materials.........................................    3,153        1,433
Raw materials..................................................    2,693        3,503
                                                                --------     --------
Inventories.................................................... $  7,029     $  6,622
                                                                ========     ========

6.  PROPERTY AND EQUIPMENT                                                      

Property and equipment consists of the following (in thousands):      

                                                        [Enlarge/Download Table]

                                                                    DECEMBER 31,      
                                                                --------------------- 
                                                                  1994         1993   
                                                                --------     -------- 
                                                                                      
Land and land improvements..................................... $  1,249     $  1,376 
Buildings and improvements.....................................    7,887        7,732 
Machinery and equipment........................................   28,544       22,104 
Furniture and fixtures.........................................    3,969        3,417 
Autos and trucks...............................................    3,026        2,550 
Construction in progress.......................................    1,809          700 
                                                                --------     -------- 
                                                                  46,484       37,879 
Less accumulated depreciation..................................  (16,675)     (13,502)
                                                                --------     -------- 
Net property and equipment..................................... $ 29,809     $ 24,377 
                                                                ========     ======== 

7.  INVESTMENTS IN LICENSEES AND AFFILIATED COMPANIES                           

Investments in licensees and affiliated companies, all of which are   
accounted for on the equity method, consist of the following (in thousands):    

                                                        [Enlarge/Download Table]

                                                                              DECEMBER 31,   
                                                                            -----------------
                                                                             1994       1993 
                                                                            ------     ------
                                                                                             
Partnership interests:                                                                       
  Midsouth Partners (15%).................................................. $  466     $  319
  Enhansco Joint Venture (50%).............................................    383        625
Corporations:                                                                                
  Insituform Brochier Rohrsanierungstechnik GmbH (33%).....................    823        899
  KA-TE Insituform AG (50%)................................................    244        120
  N.V. K -- Insituform S.A. (50%)..........................................    117         15
                                                                            ------     ------
Investments in licensees and affiliated companies.......................... $2,033     $1,978
                                                                            ======     ======

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

     Summary unaudited combined financial data of the companies accounted for on
the equity method are as follows (in thousands):                                

                                                        [Enlarge/Download Table]

                                                                1994     1993     1992  
                                                               -------  -------  -------
                                                                                        
Current assets................................................ $13,226  $12,858  $11,766
Noncurrent assets.............................................   4,176    3,603    7,534
                                                               -------  -------  -------
Total assets..................................................  17,402   16,461   19,300
                                                               -------  -------  -------
Current liabilities...........................................  10,388   10,696    8,763
Noncurrent liabilities........................................     527      369      132
                                                               -------  -------  -------
Total liabilities.............................................  10,915   11,065    8,895
                                                               -------  -------  -------
Net assets.................................................... $ 6,487  $ 5,396  $10,405
                                                               =======  =======  =======
Revenues...................................................... $42,745  $32,904  $38,284
                                                               =======  =======  =======
Gross profit.................................................. $14,102  $11,688  $14,456
                                                               =======  =======  =======
Net income.................................................... $ 1,602  $ 1,336  $ 3,690
                                                               =======  =======  =======
Company's interest:                                                                     
  Share in net assets......................................... $ 1,799  $ 1,563  $ 1,836
                                                               =======  =======  =======
  Share in net income......................................... $   409  $   460  $   997
                                                               =======  =======  =======

Enhansco Joint Venture                                                

    In March 1995, the Company sold its interest in the Enhansco Joint Venture
to its partner for $400,000, one-half of which is due three years after closing.

8.  DISCONTINUED OPERATIONS                                                     

On December 30, 1993, the Company adopted a plan to discontinue the   
operation of its division engaged in the off-site rehabilitation of downhole    
tubulars for the oil and gas industry. The Company was unable to sell the       
business during 1994. As a result, the Company has decided to liquidate the     
division's assets, and during the fourth quarter a provision was made to write  
down the assets to their estimated liquidation values and accrue the estimated  
costs of closing the operation.                                                 

  The loss from discontinued operations includes the following amounts (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                     YEAR ENDED DECEMBER 31,    
                                                                  ----------------------------- 
                                                                   1994        1993       1992  
                                                                  -------     -------     ----- 
                                                                                                
Loss from operations (less applicable income tax benefits of $0,                                
  $592, and $278)...............................................  $    --     $(1,145)    $(540)
Estimated loss on disposal, including a provision of $1,427 and                                 
  $585, respectively, for losses during the phase-out period                                    
  (less applicable income tax benefits of $627 and $680)........   (1,164)     (1,320)       -- 
                                                                  -------     -------     ----- 
                                                                  $(1,164)    $(2,465)    $(540)
                                                                  =======     =======     ===== 

 The division's revenues for the years ended December 31, 1994, 1993 and
1992 were $1,137,000, $1,889,000 and $216,000, respectively. The assets and     
liabilities of the discontinued operations have been                            

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

reclassified on the balance sheet and principally consist of property and       
equipment, patents, inventory and accrued losses during the phase-out period. At
December 31, 1993, net assets of discontinued operations of $566,000 are        
included in miscellaneous other assets. Net liabilities of $500,000 at December 
31, 1994 are included in accounts payable and accruals.                         

9.  LINES OF CREDIT                                                             

     IGL Canada and its subsidiary, Neptune Coring, Ltd., have obtained lines of
credit facilities aggregating C$3,900,000 (US$2,780,000) with Alberta Treasury  
Branches ("ATB") which bear interest at ATB's prime rate (8.0% at December 31,  
1994) plus 1/2%, are available through August 1995, and are collateralized by an
interest in the assets of IGL Canada (totaling C$17,079,000 [US$12,176,000] at  
December 31, 1994). Outstanding balances under the lines were C$389,000         
(US$277,000) at December 31, 1994. No balance was outstanding at December 31,   
1993.                                                                           

    Insituform Permaline Ltd. ("Permaline") has a line of credit and overdraft
facility of L700,000 (US$1,095,000) with National Westminster Bank Plc          
("NatWest") which bears interest at NatWest's base rate (6.25% at December 31,  
1994) plus 2.0%, is available through January 1995, and is secured by           
Permaline's real property and the Company's guarantee. At December 31, 1994, no 
amounts were outstanding under this facility.                                   

Insituform Japan KK ("Japan") also has a line of credit facility of   
Y80,000,000 (US$832,000) with Fuji Bank which bears interest at Fuji Bank's base
rate (3.50% at December 31, 1994) and is available through December 1995. At    
December 31, 1994, no amounts were outstanding under this facility.             

10.  ACCOUNTS PAYABLE AND ACCRUALS                                              

Accounts payable and accruals consist of (in thousands):              

                                                        [Enlarge/Download Table]

                                                                             DECEMBER 31,    
                                                                          -------------------
                                                                           1994        1993  
                                                                          -------     -------
                                                                                             
Accounts payable -- trade................................................ $ 8,699     $ 8,353
Compensation.............................................................   2,887       1,119
Accrual for pending litigation and claims (Note 20)......................   1,941       2,082
Billings in excess of costs and earnings (Note 4)........................   1,112         346
Bank overdrafts..........................................................   1,020         482
Warranty accrual.........................................................     925         356
Restructuring (Note 1)...................................................     685       1,365
Contingent consideration to former owners (Note 1).......................      --       1,000
Miscellaneous (Note 8)...................................................   5,491       3,586
                                                                          -------     -------
Accounts payable and accruals............................................ $22,760     $18,689
                                                                          =======     =======

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

11.  LONG-TERM DEBT                                                             

Long-term debt consists of the following (in thousands):              

                                                        [Enlarge/Download Table]

                                                                              DECEMBER 31,     
                                                                          -------------------- 
                                                                            1994        1993   
                                                                          --------     ------- 
                                                                                               
Long-term debt:                                                                                
  Third National Bank credit facility...................................  $ 35,211     $30,000 
  8.5% senior subordinated note, payable in $1,000,000 installments                            
     annually each July 1998 through 2001, with the entire remaining                           
     balance due in July 2002 with interest quarterly (net of                                  
     unamortized discount of $329 and $388).............................     4,671       4,612 
  Industrial revenue bond, payments ranging from $75,000 to $170,000                           
     through January 2004, with interest at 90% of prime (prime was 8.5%                       
     at December 31, 1994)..............................................     3,941       4,306 
  Industrial development bond, quarterly principal payments ranging from                       
     $21,000 to $51,000 through January 2003, with interest at                                 
     approximately 79% of prime (prime was 8.5% at December 31, 1994)...     1,107       1,203 
Deferred purchase consideration:                                                               
  Promissory notes to former shareholders, payable $5,000,000 in October                       
     1995 with balance due October 1996, interest payable quarterly at                         
     lesser of prime (currently 8.5%) or LIBOR + 2.75%, secured by                             
     pledge of assets of the acquired companies.........................     9,000          -- 
  Promissory notes payable to affiliates of former shareholders of Gelco                       
     companies, payable in two equal installments in October 1996 and                          
     1997, with interest payable quarterly at lesser of prime or LIBOR +                       
     2.75%..............................................................     2,850          -- 
  Obligation, secured by stand-by letter of credit, due December 31,                           
     1994, with interest at prime.......................................     1,050       1,050 
  Other notes...........................................................     1,089       1,805 
                                                                          --------     ------- 
                                                                            58,919      42,976 
Less current maturities.................................................   (11,572)     (6,679)
                                                                          --------     ------- 
Long-term debt..........................................................  $ 47,347     $36,297 
                                                                          ========     ======= 

  In July 1993, the Company obtained from Third National a credit facility
initially providing for advances of up to $30,000,000. Borrowings under this    
facility bear interest, payable quarterly at the lesser of (i) Third National's 
prime rate (8.5% at December 31, 1994) or (ii) 2.75% above the 30-day adjusted  
London Inter-Bank Offer Rate ("LIBOR") (or subsequent to December 31, 1994, at  
2.25% above LIBOR if the Company maintains certain financial ratios). Quarterly 
principal payments of $1,072,000 are required with the remaining principal due  
December 31, 1997. This facility is guaranteed by certain of the Company's      
domestic subsidiaries and was utilized to fund the acquisitions of Naylor and   
Midwest (see Note 1).                                                           

  In August 1994, the Third National Bank agreement was amended to provide
for an increase in the facility of up to $12,000,000 (as later reduced).        
Borrowings under this increased facility bear interest, payable monthly through 
August 1995 and, thereafter, together with each principal payment, in accordance
with the same terms as the $30,000,000 facility. Additional quarterly principal 
payments of $339,000 are required to commence in September 1995. This increased 
facility was utilized to fund the acquisition of the Gelco companies (see Note  
1).                                                                             

Under the terms of the Third National Bank agreement, the Company is  
required to comply with covenants restricting the distribution of dividends,    
purchase of additional investments, and incurrence of additional debt.          
Essentially all of the Company's retained earnings at December 31, 1994 are     
restricted under such covenants.                                                

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

     The 8.5% senior subordinated note is subordinated in right to the Company's
bank and other institutional financing and to deferred consideration incurred in
connection with business acquisitions. As discussed in Note 13, warrants to     
purchase 350,877 unregistered shares of Common Stock were also issued to the    
lender. The note is prepayable at the Company's option after July 1995, at      
premiums until July 1998 ranging from 3% to 1% of the amount prepaid, and is    
subject to defeasance in certain circumstances. The subordinated note also      
restricts the Company's ability to pay dividends and repurchase outstanding     
common stock.                                                                   

   The industrial revenue bond may be called by the holder, an institutional
purchaser, in 1999 or each year thereafter until maturity. Property and         
equipment with a net book value of approximately $3,500,000 is pledged to       
collateralize these bonds. These bonds also restrict the Company's ability to   
pay dividends.                                                                  

    Principal payments required to be made for each of the next five years and
thereafter are summarized as follows (in thousands):                            

                                                                [Download Table]

      YEAR ENDING                                           
      DECEMBER 31,                                  AMOUNT  
---------------------                               ------- 
                                                            
1995.............................................   $11,572 
1996.............................................    11,915 
1997.............................................    27,064 
1998.............................................     1,546 
1999.............................................       603 
After 1999.......................................     6,219 
                                                     -------
Total............................................   $58,919 
                                                     =======

12.  REDEEMABLE PREFERRED STOCK                                                 

The Board of Directors has designated 200,000 shares of the Company's 
preferred stock as Series C cumulative, non-voting preferred stock. Each share  
carries a semi-annual dividend rate of $5.40 and is redeemable five years after 
issuance for $200 per share, plus any accrued but unpaid dividends. In October  
1994, all outstanding shares were redeemed and retired (see Note 15). At        
December 31, 1994, no shares of Series C preferred stock were outstanding.      

13.  COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY                                

The Company has granted stock options to certain officers, directors, 
employees and other stockholders. The exercise price is typically the fair      
market value on the date the option is granted. Options generally expire up to  
five years from the date of grant. Options to purchase 300,000 shares, issued to
the Company's chief executive officer, are exercisable 50,000 at the date of    
grant and the remainder commencing three years from the grant date.             

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Changes in options outstanding are summarized as follows:             

                                                        [Enlarge/Download Table]

                                                                        OPTION PRICE 
                                                                         PER SHARE   
                                                            SHARES           $       
                                                          ----------   --------------
                                                                                     
BALANCE, December 31, 1991...............................  1,017,716   2.875-19.125  
Granted..................................................    176,490   9.23 -10.36   
Exercised................................................   (133,324)  3.625-19.125  
Cancelled................................................   (133,977)  3.625-19.125  
                                                          ----------   --------------
BALANCE, December 31, 1992...............................    926,905   2.875-19.125  
Granted..................................................    712,885   9.68 -25.00   
Exercised................................................   (281,357)  3.625-19.125  
Cancelled................................................    (29,935)  3.625-25.00   
                                                          ----------   --------------
BALANCE, December 31, 1993...............................  1,328,498   2.875-25.00   
Granted..................................................    187,600   13.31-14.125  
Exercised................................................    (30,448)  3.625- 8.125  
Cancelled................................................   (199,900)  2.875-25.00   
                                                          ----------   --------------
BALANCE, December 31, 1994...............................  1,285,750   3.625-25.00   
                                                           =========   ============  

At December 31, 1994, 2,259,627 shares of Common Stock were reserved  
pursuant to stock options and warrants. Options for 898,071 shares were         
currently exercisable.                                                          

In July 1993, the Company issued to Hanseatic Corporation warrants to 
purchase 350,877 unregistered shares of Common Stock in connection with the     
issuance of subordinated debt (see Note 11). The warrants are exercisable at    
$14.25 per share and expire on July 26, 1998. Paul Biddelman, a director of the 
Company, is Treasurer of Hanseatic.                                             

14.  NOTES RECEIVABLE FROM AFFILIATES                                           

On July 3, 1992, ITI, Ringwood Limited ("Ringwood"), Parkwood Limited 
("Parkwood") and Douglas K. Chick and Brian Chandler entered into an agreement  
whereby Messrs. Chick and Chandler and Ringwood executed a secured non-recourse 
promissory note in the amount of $3,624,000 which bears interest at Citibank's  
prime rate plus 2 1/2% (11.0% at December 31, 1994) and is due July 3, 1995. As 
security for the note, Ringwood and Messrs. Chick and Chandler have pledged to  
ITI 255,801 shares of ITI's stock beneficially owned by them. Messrs. Chandler  
and Chick are directors of ITI.                                                 

15.  LICENSEES                                                                  

The Company markets the Insituform Process and the NuPipe Process in  
selected territories by utilization of licensees.                               

  The Insituform Process license agreements require royalty payments based
upon 5% to 9% (generally 8% in the U.S.) of the gross contract price, as        
defined, often with varying minimum annual royalties. In the event any domestic 
licensee has, for any year, produced to the Company an acceptable plan for      
marketing and sales penetration, minimum royalties otherwise established for    
such year may be waived, subject to the achievement of performance objectives   
established with respect to the utilization of the Company's trenchless         
rehabilitation processes.                                                       

In addition to an initial license fee, the NuPipe Process license     
agreements require continuing royalty payments based upon 6.75% to 8% of the    
gross contract price, as defined.                                               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

     The former stockholders of NuPipe, Inc. were entitled to receive 35% of the
royalty income collected by the Company in connection with the NuPipe technology
acquired by the Company in 1988. In March 1995, the Company exercised an option,
granted in October 1994, to acquire such parties' interest in such payments in  
exchange for issuance of the Company's promissory notes aggregating $1,000,000. 
The notes are payable in quarterly installments over three years and bear       
interest at 5.4% per annum.                                                     

16.  OTHER INCOME (EXPENSE)                                                     

Other income (expense) is comprised of the following (in thousands):  

                                                        [Enlarge/Download Table]

                                                                    YEAR ENDED DECEMBER 31,  
                                                                   --------------------------
                                                                   1994      1993       1992 
                                                                   -----     -----     ------
                                                                                             
Investment income................................................. $ 959     $ 824     $1,925
Foreign currency transaction gain.................................    97        58        924
Costs associated with abandoned common stock offering.............    --      (276)        --
Miscellaneous.....................................................  (344)      234        255
                                                                   -----     -----     ------
                                                                   $ 712     $ 840     $3,104
                                                                   =====     =====     ======

17.  TAXES ON INCOME                                                            

     Effective January 1, 1993, the Company adopted FAS 109. As permitted by FAS
109, the Company has elected to not restate prior periods' consolidated         
financial statements. Except for the cumulative effect of the accounting change 
of $218,000, or $.02 per share, the application of this statement had no        
material effect on the 1993 results of operations.                              

   Deferred federal income taxes are not provided on the unremitted earnings
of foreign subsidiaries since it has been the practice and is the intention of  
the Company to continue to reinvest these earnings in the business outside the  
United States. The cumulative amount of unremitted foreign earnings at December 
31, 1994 was approximately $6,900,000. It is not practicable to estimate the    
amount of the unrecognized deferred tax liability on such earnings.             

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Net deferred tax assets consisted of the following (in thousands) at  
December 31:                                                                    

                                                        [Enlarge/Download Table]

                                                                           1994      1993   
                                                                          -------   ------- 
                                                                                            
Deferred income tax assets:                                                                 
  Net operating loss carryforwards....................................... $ 4,924   $ 5,097 
  Foreign tax credit carryforwards.......................................   1,397       680 
  Accrued compensation...................................................     594       123 
  Inventory valuation....................................................     241       139 
  Accrual for pending litigation and claims..............................     738       791 
  Estimated loss on disposal of discontinued operation...................     880       680 
  Warranty accrual.......................................................     433        72 
  Other..................................................................     254       196 
                                                                          -------   ------- 
Gross deferred income tax assets.........................................   9,461     7,778 
Valuation allowance......................................................  (3,404)   (2,335)
                                                                          -------   ------- 
Total deferred income tax assets.........................................   6,057     5,443 
                                                                          -------   ------- 
Deferred income tax liabilities:                                                            
  Depreciation...........................................................  (2,445)   (2,206)
  Deferred revenue.......................................................    (431)     (502)
  Unrealized holding gains on investments, available-for-sale............    (268)       -- 
  Other..................................................................    (150)     (320)
                                                                          -------   ------- 
Total deferred income tax liabilities....................................  (3,294)   (3,028)
                                                                          -------   ------- 
Net deferred income tax assets........................................... $ 2,763   $ 2,415 
                                                                          =======   ======= 

Income (loss) from continuing operations before taxes on income is as 
follows (in thousands):                                                         

                                                        [Enlarge/Download Table]

                                                                   YEAR ENDED DECEMBER 31,     
                                                               ------------------------------- 
                                                                1994        1993        1992   
                                                               -------     -------     ------- 
                                                                                               
Domestic...................................................... $15,096     $11,280     $ 2,610 
Foreign.......................................................   1,013        (758)     (4,807)
                                                               -------     -------     ------- 
Totals........................................................ $16,109     $10,522     $(2,197)
                                                               =======     =======     ======= 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

  Provisions for taxes on income from continuing operations consist of the
following components (in thousands):                                            

                                                        [Enlarge/Download Table]

                                                                    YEAR ENDED DECEMBER 31,    
                                                                  ---------------------------- 
                                                                   1994       1993       1992  
                                                                  ------     ------     ------ 
                                                                                               
Current:                                                                                       
  Federal........................................................ $4,887     $2,024     $1,800 
  Foreign........................................................    914      1,226      1,582 
  State..........................................................    670        254        156 
                                                                  ------     ------     ------ 
                                                                   6,471      3,504      3,538 
                                                                  ------     ------     ------ 
Current tax benefit related                                                                    
  to exercise of stock options...................................     84        844        784 
                                                                  ------     ------     ------ 
Deferred:                                                                                      
  Federal........................................................   (454)      (473)       310 
  Foreign........................................................    127       (162)      (386)
  State..........................................................    (88)        24        (23)
  Adjustments to beginning of year valuation allowance...........     --       (423)        -- 
                                                                  ------     ------     ------ 
                                                                    (415)    (1,034)       (99)
                                                                  ------     ------     ------ 
Total taxes on income............................................ $6,140     $3,314     $4,223 
                                                                  ======     ======     ====== 

  The effective tax rate was different than the U.S. federal statutory tax
rate. The following summary reconciles taxes at the maximum U.S. federal        
statutory tax rate with the effective rates:                                    

                                                        [Enlarge/Download Table]

                                                                      YEAR ENDED DECEMBER 31,   
                                                                     -------------------------  
                                                                     1994     1993      1992    
                                                                     ----     ----     -------  
                                                                                                
Income taxes at U.S. federal statutory tax rate..................... 34.0%    34.0%       34.0% 
Increase (decrease) in taxes resulting from:                                                    
  State income taxes, net of federal income tax benefit.............  2.4      2.3        (6.5) 
  Effect of foreign income taxed at foreign rates...................  0.1     (0.8)        9.3  
  Tax amortization of intangibles................................... (4.9)    (7.2)         --  
  Tax benefit not currently recognizable on losses of                                           
     subsidiaries...................................................  0.8      3.1       (66.5) 
  Merger costs capitalized for tax purposes.........................   --       --      (148.4) 
  Merger-related taxes..............................................   --       --       (16.4) 
  Utilization of net operating losses...............................   --     (4.0)       14.3  
  Other items.......................................................  5.7      4.1       (12.0) 
                                                                     ----     ----     -------  
Total taxes on income............................................... 38.1%    31.5%     (192.2)%
                                                                     ====     ====     =======  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

 Certain of the Company's subsidiaries have available tax operating loss
carryforwards utilizable to the extent of such subsidiaries' future taxable     
income as follows:                                                              

                                                        [Enlarge/Download Table]

                                                                                       EXPIRATION
                      SUBSIDIARY                         JURISDICTION                     DATE   
-------------------------------------------------------  ------------      AMOUNT      ----------
                                                                       --------------            
                                                                       (IN THOUSANDS)            
                                                                                                 
Insituform California, Inc. ...........................   US               $1,938         1995 to
                                                                                             1999
H.T. Schneider, Inc. ..................................   US               $1,206            2007
NuPipe, Ltd. ..........................................   UK               $4,776      Indefinite
Insituform Permaline Limited...........................   UK               $3,276      Indefinite
Insituform Technologies Ltd. ..........................   UK               $1,108      Indefinite
Insituform Technical Services, Ltd. ...................   UK               $  925      Indefinite
Insituform Overseas Limited............................   UK               $  155      Indefinite
Drain 2000 Ltd. .......................................   UK               $   51      Indefinite
IGL Canada Limited.....................................   Canada           $  683         1997 to
                                                                                             2000
Mar-Tech Insituform Ltd. ..............................   Canada           $   69            1999

18.  MAJOR CUSTOMER                                                             

    In 1994, the City of Houston, Texas accounted for 11.6% of total revenues.
No customer provided 10% of the Company's revenues in 1993 or 1992.             

19.  SEGMENT AND GEOGRAPHIC INFORMATION                                         

The Company's continuing operations include the following reportable  
segments:                                                                       

"Pipeline Technology" -- includes licensing, selling and servicing    
trenchless, onsite pipeline reconstruction technology and products.             

"Construction" -- includes the installation of trenchless pipeline    
reconstruction materials as well as nontrenchless pipeline construction.        

Operating profit (loss) by business segment and by geographic area are
defined as revenues less operating costs and expenses. Income and expense not   
allocated to business segments or geographic areas include investment income and
corporate expenses.                                                             

    Identifiable assets are those assets used exclusively in the operations of
each business segment or geographic area, or which are allocated, when used     
jointly. Corporate assets are principally comprised of cash equivalents and     
investments.                                                                    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

 Financial information by industry segment is as follows (in thousands):

                                                        [Enlarge/Download Table]

                                                                   YEAR ENDED DECEMBER 31,      
                                                              --------------------------------- 
                                                                1994         1993        1992   
                                                              --------     --------     ------- 
                                                                                                
PIPELINE TECHNOLOGY                                                                             
  Revenues:                                                                                     
     Unaffiliated companies.................................  $ 38,537     $ 37,555     $42,323 
     Intersegment...........................................    27,895       17,224       7,908 
                                                              --------     --------     ------- 
  Total revenues............................................    66,432       54,779      50,231 
                                                              --------     --------     ------- 
  Operating income..........................................    25,582       17,066       4,317 
  Identifiable assets.......................................    25,020       27,195      32,542 
  Capital expenditures......................................       950          709       1,069 
  Depreciation and amortization.............................     1,465        1,387       2,036 
CONSTRUCTION                                                                                    
  Revenues..................................................  $109,710     $ 62,953     $53,236 
  Operating income (loss)...................................     1,289       (2,003)       (534)
  Identifiable assets.......................................   116,699       84,862      41,091 
  Capital expenditures......................................     7,981        4,011       4,168 
  Depreciation and amortization.............................     5,656        4,295       1,299 
ELIMINATIONS AND CORPORATE ITEMS                                                                
  Revenues..................................................  $(27,895)    $(17,224)    $(7,908)
  Operating loss............................................    (8,322)      (4,030)     (8,848)
  Identifiable assets.......................................    20,775       17,118      13,746 
  Capital expenditures......................................        88          552         836 
  Depreciation and amortization.............................       395          622         622 
CONSOLIDATED                                                                                    
  Revenues..................................................  $148,247     $100,508     $95,559 
  Operating income (loss)...................................    18,549       11,033      (5,065)
  Identifiable assets.......................................   162,494      129,175      87,379 
  Capital expenditures......................................     9,019        5,272       6,073 
  Depreciation and amortization.............................     7,516        6,304       3,957 
Financial information by geographic area is as follows (in thousands):                          

                                                        [Enlarge/Download Table]

                                                                  YEAR ENDED DECEMBER 31,     
                                                             ---------------------------------
                                                               1994         1993        1992  
                                                             --------     --------     -------
                                                                                              
UNITED STATES                                                                                 
  Revenues:                                                                                   
     Unaffiliated companies................................. $104,061     $ 61,325     $39,216
     Between geographic areas...............................   23,476       11,830       6,974
                                                             --------     --------     -------
  Total revenues............................................  127,537       73,155      46,190
                                                             --------     --------     -------
  Operating income..........................................   16,782       12,476       6,258
  Identifiable assets.......................................  130,658       98,453      41,576

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                                                        [Enlarge/Download Table]

                                                                 YEAR ENDED DECEMBER 31,       
                                                            ---------------------------------- 
                                                              1994         1993         1992   
                                                            --------     --------     -------- 
                                                                                               
CANADA                                                                                         
  Revenues:                                                                                    
     Unaffiliated companies................................ $ 19,934     $ 18,915     $ 30,457 
     Between geographic areas..............................    1,190          967           92 
                                                            --------     --------     -------- 
  Total revenues...........................................   21,124       19,882       30,549 
                                                            --------     --------     -------- 
  Operating income.........................................      496          492          120 
  Identifiable assets......................................   13,521       11,798       13,604 
EUROPE, ASIA AND AUSTRALIA                                                                     
  Revenues:                                                                                    
     Unaffiliated companies................................ $ 24,252     $ 20,268     $ 25,886 
     Between geographic areas..............................    3,063        4,427          842 
                                                            --------     --------     -------- 
  Total revenues...........................................   27,315       24,695       26,728 
                                                            --------     --------     -------- 
  Operating income (loss)..................................    9,883        2,095       (2,595)
  Identifiable assets......................................   13,438       13,533       21,068 
ELIMINATIONS AND CORPORATE ITEMS                                                               
  Revenues:                                                                                    
     Between geographic areas.............................. $(27,729)    $(17,224)    $ (7,908)
  Operating loss...........................................   (8,612)      (4,030)      (8,848)
  Identifiable assets......................................    4,877        5,391       11,131 
CONSOLIDATED                                                                                   
  Revenues................................................. $148,247     $100,508     $ 95,559 
  Operating income (loss)..................................   18,549       11,033       (5,065)
  Identifiable assets......................................  162,494      129,175       87,379 

20.  COMMITMENTS AND CONTINGENCIES                                              

A.  LEASES                                                            

 The Company leases a number of its administrative operations facilities
under noncancellable operating leases expiring at various dates through 2020. In
addition, the Company also leases certain construction and automotive equipment 
on a multi-year, monthly, or daily basis. Rent expense under all operating      
leases for 1994, 1993 and 1992 was $3,326,000, $1,599,000 and $2,002,000,       
respectively.                                                                   

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    At December 31, 1994, the future minimum lease payments required under the
noncancellable operating leases were as follows (in thousands):                 

                                                                [Download Table]

                                                     MINIMUM 
                                                      LEASE  
YEAR ENDING DECEMBER 31,                             PAYMENTS
------------------------                             --------
                                                             
     1995........................................    $ 2,167 
     1996........................................      1,905 
     1997........................................      1,622 
     1998........................................      1,285 
     1999........................................      1,023 
     After 1999..................................      8,040 
                                                     ------- 
     Total.......................................    $16,042 
                                                     ======= 

B.  EMPLOYMENT AGREEMENTS                                             

    The Company and certain of its subsidiaries have employment contracts with
various officers with remaining terms ranging from six months to four years at  
amounts approximating their current levels of compensation. The companies'      
minimum aggregate commitment at December 31, 1994 under such contracts is       
approximately $3,647,000.                                                       

C.  LITIGATION                                                        

A shareholder of the Company has filed an action in the United States 
District Court for the Western District of Tennessee against the Company and one
former and one current officer alleging various misstatements and omissions,    
relating to, among other things, acquisition and restructuring costs arising    
from the IGL Acquisition in December 1992, in public disclosures by the Company 
during the period from October 28, 1992 to May 12, 1993 in violation of, among  
other things, Rule 10b-5 under the Securities Exchange Act of 1934. The         
plaintiff seeks to maintain the action as a class action on behalf of all       
purchasers of the Company's Common Stock during such period and to recoup       
damages in an unspecified amount. On September 30, 1994, the court ruled on the 
Company's motion to dismiss the first amended complaint, granting in part and   
denying in part the Company's motion. The Court further granted plaintiffs leave
to amend their complaint insofar as defective from a pleading perspective. The  
Company has filed an answer to the complaint as so amended, denying its material
allegations. Plaintiff's motion for class certification has been fully briefed  
and the motion is pending before the court. The court has entered a scheduling  
order which establishes a trial date in November 1995. Plaintiff's counsel has  
recently tendered a settlement proposal entailing a sum which could be material 
to the Company's consolidated financial statements. Although the Company has    
rejected the proposal, settlement discussions are continuing. While it is not   
possible to render an opinion as to the outcome of this litigation or its effect
on the Company's consolidated financial statements, and notwithstanding the     
Company's consideration of a settlement of the litigation upon reasonable       
financial terms, the Company continues to believe that, it has defenses to the  
plaintiff's claim that are well grounded in fact and law, and, based upon such  
belief, does not currently anticipate any material adverse effect from this     
litigation on the financial position of the Company.                            

Prior to its acquisition by the Company, Naylor sold all of the common
stock of Naylor Industrial Services, Inc. ("NISI"), which provided industrial   
cleaning services to refineries and chemical and petrochemical manufacturing    
plants. As part of such sale, Naylor agreed to indemnify the purchaser for      
certain pending or threatened litigation claims that were known to Naylor as of 
the date of sale. Among other matters, NISI is one of approximately 181         
defendants in approximately 3,029 plaintiff cases, collectively known as the    
Lone Star Steel litigation, pending in Morris County, Texas, in which plaintiffs
allege                                                                          

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

unspecified damages against defendants, who supplied services or products to    
Lone Star Steel over a period in excess of 40 years, arising from the alleged   
exposure of Lone Star's workers to toxic and hazardous circumstances.           

     Naylor, among approximately 210 other parties, has been served with a third
party complaint by McDermott, Inc. ("McDermott") in a class action filed by more
than 1,200 plaintiffs (on behalf of a potential class of over 8,000 plaintiffs) 
against 84 defendants, including McDermott. Plaintiffs seek damages resulting   
from alleged exposure to an escape of hazardous substances from an oil          
reclamation facility. McDermott's third party complaints seek, among other      
things, clean-up costs under the Comprehensive Environmental Response,          
Compensation and Liability Act and tort contribution and indemnity. Based on    
available facts, it appears that McDermott has substantial defenses to          
plaintiff's claims, and it is probable that Naylor's exposure is limited to a   
pro rata or proportionate share of McDermott's liability, if any.               

    The financial statements include the estimated amounts of liabilities that
are likely to be incurred from these and various other pending Naylor litigation
and claims.                                                                     

    The Company is involved in certain additional litigation incidental to the
conduct of its business. In the Company's opinion, none of these proceedings    
will have a material adverse effect on the Company's financial position or      
results of operations.                                                          

D.  RETIREMENT PLANS                                                  

The Company and certain domestic subsidiaries maintain profit         
sharing/401(k) plans which cover substantially all eligible domestic employees. 
Company profit sharing contributions are discretionary. Under the terms of its  
401(k) features, the Plan also provides for the Company to contribute 50% of the
participating employee's contribution, subject to limitation. Certain recently  
acquired domestic subsidiaries have continued to maintain their pre-existing    
profit sharing plans until such time as their employees can be added to the     
Company's Plan. Total contributions to the domestic plans were $715,000,        
$535,000 and $321,000 for the years ended December 31, 1994, 1993 and 1992,     
respectively.                                                                   

  In addition, certain foreign subsidiaries maintain various other defined
contribution retirement plans. Company contributions to such plans for the years
ended December 31, 1994, 1993 and 1992 were $125,000, $197,000 and $225,000,    
respectively.                                                                   

E.  OTHER                                                             

   Guarantees have been issued by the Company in support of its subsidiaries
as described in the following paragraphs.                                       

 Naylor has outstanding letter of credit commitments totaling $2,700,000
from Texas Commerce Bank to its insurance carriers. Cash equivalents totaling   
$2,877,000 are pledged to secure these commitments at December 31, 1994.        

At December 31, 1994, Insituform Permaline has outstanding performance
bonds aggregating L204,264 (US$320,000).                                        

In November 1991, the Company, through its subsidiary, Pipe Rehab     
International, Inc., acquired certain patents and patent applications from      
Plastic Lining Systems, Inc. ("PLS"). Under terms of the purchase agreement, as 
amended in April 1994, subsequent to an initial grace period, the Company agreed
to pay PLS amounts ranging from 10% to 15% of royalties imposed on the Company's
licensees for certain uses of the technology purchased under the agreement and  
5% to 10% of initial license fees for use of the assets purchased. The Company  
incurred no royalty expense under this agreement in 1994, 1993 or 1992.         
Subsequent to such grace period, payments will also be made to PLS based on the 
footage, or diameter inch per linear foot, of pipe lined using the purchased    
technology at graduated rates ranging from $.04 to $.20, and                    

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INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

3% to 5% of net sales of certain product manufactured by the Company in each    
case for 15 years or the expiration of the patents, whichever is later.         

21.  ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS                              

    For financial instruments bearing a variable interest rate, it is presumed
that recorded book values are reasonable estimates of fair value. For all other 
financial instruments, the following methods and assumptions                    
are used to estimate fair values:                                               

CASH AND CASH EQUIVALENTS, RECEIVABLES, ACCOUNTS PAYABLE AND ACCRUED  
EXPENSES -- Recorded book values are a reasonable estimate of fair value.       

INVESTMENTS IN SECURITIES -- Quoted market prices for the specific    
instruments owned, or for similar securities, are used to determine estimated   
fair value.                                                                     

 LONG-TERM DEBT -- Current market values for debt instruments with fixed
interest rates are estimated based on borrowing rates currently available to the
Company for loans with similar terms. At December 31, 1994, the estimated fair  
value of debt instruments with fixed interest rates was approximately $4,200,000
as compared with carrying value of such instruments of $4,671,000.              

The remaining assets and liabilities of the Company are not considered
financial instruments and have not been valued differently than is customary    
under historical cost accounting.                                               

22.  SUBSEQUENT EVENTS                                                          

On February 16, 1995, the Company acquired 66% of the common stock of 
Insituform France, S.A., a newly formed subsidiary of its former French         
licensee, for FF7,400,000 (US$1,463,000).                                       

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INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

23.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)                              

                                                        [Enlarge/Download Table]

                                                   1ST         2ND         3RD         4TH   
                                                 -------     -------     -------     ------- 
                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)    
                                                                                             
Year ended December 31, 1994:                                                                
  Revenues                                       $30,481     $31,802     $40,947     $45,017 
  Gross profit                                    11,249      11,638      15,068      15,663 
  Income from continuing operations                1,471       2,172       3,619       2,532 
  Loss from discontinued operations (Note 8)          --          --          --      (1,164)
  Net income                                       1,471       2,172       3,619       1,368 
  Earnings per share of common stock and common                                              
     stock equivalents:                                                                      
     Income from continuing operations               .10         .15         .25         .18 
     Loss from discontinued operations                --          --          --        (.08)
     Net income                                      .10         .15         .25         .10 
Year ended December 31, 1993:                                                                
  Revenues                                        16,078      20,778      32,198      31,454 
  Gross profit                                     7,898       8,542      13,603      10,399 
  Income from continuing operations                2,614       1,409       2,953         284 
  Loss from discontinued operations (Note 8)        (380)       (336)       (253)     (1,496)
  Cumulative effect of accounting change             218          --          --          -- 
  Net income (loss)                                2,452       1,073       2,700      (1,212)
  Earnings per share of common stock and common                                              
     stock equivalents:                                                                      
     Income from continuing operations               .18         .10         .21         .02 
     Loss from discontinued operations              (.03)       (.02)       (.02)       (.11)
     Cumulative effect of accounting change          .02          --          --          -- 
     Net income (loss)                               .17         .08         .19        (.09)

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INSITUFORM TECHNOLOGIES, INC. 

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]


                                                                 JUNE 30, 1995     DECEMBER 31, 1994 
                                                                 ------------      ------------------
                                                                  (UNAUDITED)                        
                                                                             (IN THOUSANDS)          
                                                                                                     
                            ASSETS                                                                   
CURRENT                                                                                              
  Cash and cash equivalents, restricted $1,390 and $3,836......    $  10,553           $  16,635     
  Investments in securities....................................            1               1,107     
  Receivables (Note 4).........................................       34,936              35,243     
  Costs and estimated earnings in excess of billings...........        9,482               6,422     
  Inventories (Note 5).........................................        8,197               7,029     
  Deferred income taxes........................................        2,256               2,807     
  Prepaid expenses and miscellaneous (Note 12).................        5,477               2,496     
                                                                   ---------           ----------    
TOTAL CURRENT ASSETS...........................................       70,902              71,739     
                                                                   ---------           ----------    

PROPERTY AND EQUIPMENT, less accumulated depreciation and                                            
  amortization (Note 6)........................................       30,646              29,809     
                                                                   ----------         -----------    
OTHER ASSETS                                                                                         
  Investments in licensees and associated companies (Note 2)...        1,940               2,033     
  Patents and patent applications, less accumulated                                                  
     amortization of $2,062 and $1,909.........................        5,780               5,606     
  Cost in excess of net assets of businesses acquired, less                                          
     accumulated amortization of $5,014 and $3,838 (Notes 2 and                                      
     3)........................................................       50,326              49,995     
  Deferred income taxes........................................        1,586               1,417     
  Miscellaneous................................................        3,640               1,895     
                                                                   ---------           ---------     
TOTAL OTHER ASSETS.............................................       63,272              60,946     
                                                                   ---------           ---------     
                                                                   $ 164,820           $ 162,494     
                                                                   =========           =========     

See accompanying notes to consolidated financial statements.

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INSITUFORM TECHNOLOGIES, INC. 

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]


                                                           JUNE 30, 1995     DECEMBER 31, 1994
                                                           -------------     -----------------
                                                           (UNAUDITED)                        

                                                                  (IN THOUSANDS, EXCEPT       
                                                                     SHARE AMOUNTS)           
                                                                                              

                             LIABILITIES AND STOCKHOLDERS' EQUITY                             
CURRENT LIABILITIES                                                                           
  Notes payable to banks.................................    $     880           $     277    
  Accounts payable and accruals (Note 8).................       20,636              22,760    
  Income taxes payable (Note 9)..........................        1,945               3,801    
  Deferred income taxes..................................          536                 524    
  Current maturities of long-term debt (Note 10).........        6,405              11,572    
                                                             ---------           ---------    
TOTAL CURRENT LIABILITIES................................       30,402              38,934    
Long-term debt, less current maturities (Note 10)........       53,131              47,347    
Deferred income taxes....................................        1,073                 937    
                                                             ---------           ---------    
TOTAL LIABILITIES........................................       84,606              87,218    
                                                             ---------           ---------    
Commitments and contingencies (Notes 10, 11 and 12)                                           
Minority interests.......................................        2,345               1,352    
                                                             ---------           ---------    
COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY                                                   
  Preferred stock, $.10 par -- shares authorized                                              
     2,000,000; none outstanding.........................            0                   0    
  Common stock, $.01 par -- shares authorized 25,000,000;                                     
     shares outstanding 14,437,657 and 14,346,005........          144                 143    
  Additional paid-in capital.............................       45,867              44,937    
  Retained earnings (Note 10)............................       36,295              33,300    
                                                             ---------           ---------    
                                                                82,306              78,380    
  Cumulative foreign currency translation adjustments....         (813)             (1,270)   
  Unrealized holding gains on investments                                                     
     available-for-sale (Note 2).........................            0                 438    
  Notes receivable from affiliates (Note 7)..............       (3,624)             (3,624)   
                                                             ---------           ---------    
TOTAL COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY........       77,869              73,924    
                                                             ---------           ---------    
                                                             $ 164,820           $ 162,494    
                                                             =========           =========    

See accompanying notes to consolidated financial statements.

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INSITUFORM TECHNOLOGIES, INC. 

CONSOLIDATED STATEMENTS OF OPERATIONS 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                         FOR THE SIX MONTHS   
                                                                           ENDED JUNE 30,     
                                                                        --------------------- 
                                                                         1995          1994   
                                                                        -------       ------- 
                                                                        (IN THOUSANDS, EXCEPT 
                                                                        PER SHARE AMOUNTS)    
                                                                                              
REVENUES:                                                                                     
  Net sales............................................................ $13,165       $14,311 
  Royalties and license fees...........................................   5,761         5,337 
  Construction contracts...............................................  64,520        42,635 
                                                                        -------       ------- 
TOTAL REVENUES.........................................................  83,446        62,283 
                                                                        -------       ------- 
OPERATING COSTS AND EXPENSES:                                                                 
  Cost of sales........................................................   8,464         8,636 
  Royalty expense (Note 10)............................................     106            89 
  Cost of construction contracts.......................................  44,673        30,671 
  Selling, administrative and general..................................  17,254        13,448 
  Strategic marketing and product development..........................   3,315         2,964 
                                                                        -------       ------- 
TOTAL OPERATING COSTS AND EXPENSES.....................................  73,812        55,808 
                                                                        -------       ------- 
OPERATING INCOME.......................................................   9,634         6,475 
OTHER INCOME (EXPENSE)                                                                        
  Litigation settlement (Note 11)......................................  (3,598)            0 
  Realized gain on disposal of investment (Note 2).....................     755             0 
  Other expense........................................................  (1,940)         (853)
                                                                        -------       ------- 
TOTAL OTHER EXPENSE....................................................  (4,783)         (853)
                                                                        -------       ------- 
INCOME BEFORE TAXES ON INCOME..........................................   4,851         5,622 
TAXES ON INCOME (NOTE 9)...............................................   1,911         2,035 
                                                                        -------       ------- 
INCOME BEFORE MINORITY INTERESTS AND EQUITY IN EARNINGS OF AFFILIATED                         
  COMPANIES............................................................   2,940         3,587 
MINORITY INTERESTS.....................................................    (260)         (216)
EQUITY IN EARNINGS OF AFFILIATED COMPANIES.............................     315           272 
                                                                        -------       ------- 
NET INCOME............................................................. $ 2,995       $ 3,643 
                                                                        =======       ======= 
EARNINGS PER SHARE OF COMMON STOCK AND COMMON STOCK EQUIVALENTS (NOTE                         
  2):                                                                                         
  NET INCOME........................................................... $  0.21       $  0.25 
                                                                        =======       ======= 
  WEIGHTED AVERAGE COMMON AND COMMON                                                          
     EQUIVALENT SHARES OUTSTANDING.....................................  14,442        14,412 
                                                                        =======       ======= 

See accompanying notes to consolidated financial statements.

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INSITUFORM TECHNOLOGIES, INC. 

CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                         FOR THE SIX MONTHS   
                                                                           ENDED JUNE 30,     
                                                                        --------------------- 
                                                                         1995          1994   
                                                                        -------       ------- 
                                                                           (IN THOUSANDS)     
                                                                                              
CASH FLOWS FROM OPERATING ACTIVITIES                                                          
NET INCOME............................................................. $ 2,995       $ 3,643 
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED (USED) BY                                
  OPERATING ACTIVITIES:                                                                       
  Depreciation and amortization........................................   3,893         3,708 
  Provision for losses on accounts receivable..........................     (45)          (89)
  Undistributed earnings of affiliated companies.......................    (315)         (272)
  Loss on disposals of property and equipment..........................     217           173 
  Gain on disposals of investments.....................................    (772)            0 
  Minority interest in net income......................................     261           216 
  Royalties paid with redeemable preferred stock.......................       0            41 
  Deferred income taxes................................................      92          (260)
  Translation adjustments..............................................     457           273 
CHANGES IN OPERATING ASSETS AND LIABILITIES (NET OF EFFECT OF                                 
  BUSINESSES PURCHASED):                                                                      
  Receivables..........................................................  (1,118)       (2,304)
  Inventories..........................................................  (1,168)         (496)
  Prepaid expenses and miscellaneous...................................  (1,921)         (674)
  Miscellaneous other assets...........................................  (1,060)          241 
  Accounts payable and accruals........................................  (1,887)       (1,290)
  Income taxes payable.................................................  (2,511)        3,240 
                                                                        -------       ------- 
NET CASH PROVIDED (USED) BY CONTINUING OPERATIONS......................  (2,882)        6,150 
                                                                        -------       ------- 
NET CASH USED BY DISCONTINUED OPERATIONS...............................     (85)         (426)
                                                                        -------       ------- 
NET CASH PROVIDED (USED) BY OPERATIONS.................................  (2,967)        5,724 
                                                                        -------       ------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                         
  Capital expenditures.................................................  (2,695)       (3,190)
  Proceeds on disposal of property and equipment.......................     365           136 
  Investments in licensees/affiliated companies........................     443           284 
  Patents and patent applications......................................    (338)         (392)
  Purchase of businesses, net of cash acquired (Note 3)................  (1,431)            0 
                                                                        -------       ------- 
NET CASH USED BY INVESTING ACTIVITIES..................................  (3,656)       (3,162)
                                                                        -------       ------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                         
  Proceeds from issuance of common stock...............................     649            32 
  Increase in short-term borrowings....................................     597            48 
  Net repayments of long-term debt.....................................    (647)       (2,539)
  Dividends paid by subsidiary to minority interests...................    (156)         (147)
                                                                        -------       ------- 
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES.......................     443        (2,606)
                                                                        -------       ------- 
Effect of exchange rates changes on cash...............................      98           175 
                                                                        -------       ------- 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FOR THE PERIOD....  (6,082)          131 
                                                                        -------       ------- 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.........................  16,635        15,662 
                                                                        -------       ------- 
CASH AND CASH EQUIVALENTS, END OF PERIOD............................... $10,553       $15,793 
                                                                        =======       ======= 
                                                                                  (Continued) 

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INSITUFORM TECHNOLOGIES, INC. 

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                         FOR THE SIX MONTHS   
                                                                           ENDED JUNE 30,     
                                                                        --------------------- 
                                                                         1995          1994   
                                                                        -------       ------- 
                                                                           (IN THOUSANDS)     
                                                                                              
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:                                           
CASH PAID (RECEIVED) DURING THE SIX MONTHS ENDED JUNE 30, FOR:                                
  Interest............................................................. $ 2,549       $ 1,463 
  Income taxes.........................................................   3,990          (985)
NON-CASH INVESTING AND FINANCING ACTIVITIES                                                   
  Additional paid-in capital increased by a reduction in income taxes                         
     payable for tax benefit arising from exercise of stock options.... $   282       $    25 
  Common stock issued in connection with purchase of business (Note                           
     3)................................................................       0         1,000 
  Deferred consideration in connection with royalty termination                               
     agreement (Note 10)...............................................   1,000             0 

See accompanying notes to consolidated financial statements.

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INSITUFORM TECHNOLOGIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) 
JUNE 30, 1995 

   1. In the opinion of the Company, the accompanying consolidated financial
statements contain all adjustments (consisting of only normal recurring         
accruals) necessary to present fairly the financial position as of June 30, 1995
(unaudited) and the unaudited results of operations and cash flows for the six  
months ended June 30, 1995 and 1994. The financial statements have been prepared
in accordance with the requirements of Form 10-Q and consequently do not include
all the disclosures normally made in an Annual Report on Form 10-K. Accordingly,
the consolidated financial statements included herein should be reviewed in     
conjunction with the financial statements and the footnotes thereto set forth   
elsewhere in this Joint Proxy Statement/Prospectus.                             

  Reclassifications of prior period amounts have been made to conform with
current period presentation.                                                    

   The results of operations for the six months ended June 30, 1995 and 1994
are not necessarily indicative of the results to be expected for the full year. 

2. The consolidated financial statements include the accounts of the  
Company and its majority-owned subsidiaries, including a 51% owned subsidiary,  
Insituform Linings Plc, a United Kingdom company, and a two-thirds owned        
subsidiary, Insituform France S.A. All material intercompany balances,          
transactions, and stockholdings are eliminated.                                 

    The net assets of businesses purchased are recorded at their fair value at
the acquisition date and the financial statements include their operations only 
from that date. Any excess of acquisition costs over the fair value of net      
assets acquired is included in the balance sheet as "Costs in excess of net     
assets of businesses acquired."                                                 

   The Company classifies investments in equity securities that have readily
determinable fair values and all investments in debt securities as              
available-for-sale. These investments are reported at fair value, with          
unrealized gains and loss excluded from earnings and reported in a separate     
component of stockholders' equity. In April 1995, the Company realized a gain on
the disposal of its investment in Enviroq Corporation (renamed IMA Merger Sub,  
Inc.; "Enviroq") of approximately $.8 million, as a result of the acquisition   
(the "Enviroq Acquisition") of the pipeline rehabilitation business of Enviroq  
by Insituform Mid-America, Inc. ("IMA").                                        

     Corporate investments are carried at cost if ownership is less than 20% and
on the equity method if the Company's ownership interest is 20% and greater, but
not exceeding 50%. Investments in partnerships for which the Company's ownership
interest is no greater than 50% are accounted for on the equity method.         
Intercompany profits and losses are eliminated for those investments carried on 
the equity method.                                                              

Construction and installation revenues are recognized using the       
percentage-of-completion method. Contract costs include all direct material and 
labor costs and those indirect costs related to contract performance, such as   
indirect labor, supplies, tools and equipment costs. Changes in estimated total 
contract costs are recognized in the period they are determined. Where a        
contract loss is forecast, the full amount of the anticipated loss is recognized
in the period the loss is determined.                                           

Earnings per share have been computed based upon the weighted average 
number of common shares and common equivalent shares outstanding during the     
respective periods. Common equivalent shares include shares from the assumed    
exercise of common stock options.                                               

    3. On October 21, 1994, the Company acquired all of the outstanding common
stock of Gelco Services, Inc., Gelco NuPipe, Inc., GelTech Constructors, Inc.   
and Mar-Tech Insituform Ltd. (collectively, the "Gelco companies"), the         
Company's licensees of the Insituform and NuPipe processes in Oregon,           
Washington, Idaho, Alaska, Hawaii, Guam, northern California and northern       
Nevada, portions of Montana and British Columbia. In addition, the Company      
acquired related assets of an affiliated company. The purchase price of         

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INSITUFORM TECHNOLOGIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
(UNAUDITED) 

$18,000,000 was paid $9,000,000 in cash, together with promissory notes         
aggregating $9,000,000 due on the first and second anniversaries of the closing 
date. In addition, the Company issued promissory notes aggregating $2,850,000,  
representing net current liabilities (as defined) of the acquired Gelco         
companies to related parties and a portion of working capital at closing.       

  The following table presents summarized consolidated unaudited pro forma
results of operations for the six months ended June 30, 1994 as if the          
acquisition of the Gelco companies had occurred at the beginning of the year.   
These pro forma results are provided for comparative purposes only and do not   
purport to be indicative of the results which would have been obtained if these 
acquisitions had been effected on the date indicated or which may be obtained in
the future (in thousands):                                                      

                                                                [Download Table]
                                                            
Total revenues.....................................  $70,569
Income from continuing operations..................    4,255
Income from continuing operations per common and            
  common equivalent share..........................     0.30

   On February 16, 1995, the Company acquired two-thirds of the common stock
of Insituform France S.A., a newly-formed subsidiary of its former French       
licensee, for FF7,400,000 (US$1,431,000). The purchase price was funded by the  
Company's debt facility with Third National Bank in Nashville (see Note 10).    

4. Receivables consist of the following (in thousands):               

                                                        [Enlarge/Download Table]

                                                               JUNE 30,  DECEMBER 31,
                                                                 1995        1994    
                                                               --------  ------------
                                                                                     
Trade, less allowance for possible losses of $593 and $638.... $ 28,224    $ 29,002  
Retainage under construction contracts........................    5,034       6,167  
Refundable income taxes.......................................    1,678          74  
                                                               --------  ------------
                                                               $ 34,936    $ 35,243  
                                                                =======  ==========  

   5. Inventories are valued at the lower of cost or market. Maintenance and
office supplies are not inventoried. Inventories are summarized as follows (in  
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                              JUNE 30,   DECEMBER 31,
                                                                1995         1994    
                                                              ---------  ------------
                                                                                     
Finished goods...............................................  $   659      $  765   
Work-in-process..............................................      578         418   
Construction materials.......................................    4,030       3,153   
Raw materials................................................    2,930       2,693   
                                                              ---------  ------------
                                                               $ 8,197      $7,029   
                                                               =======   ==========  

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INSITUFORM TECHNOLOGIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
(UNAUDITED) 

6. Property and equipment consists of the following (in thousands):   

                                                        [Enlarge/Download Table]

                                                              JUNE 30,    DECEMBER 31,
                                                                1995          1994    
                                                              ---------   ------------
                                                                                      
Land and land improvements................................... $   1,196     $  1,249  
Buildings....................................................     8,068        7,887  
Machinery and equipment......................................    31,758       28,544  
Furniture and fixtures.......................................     4,434        3,969  
Autos and trucks.............................................     3,270        3,026  
Construction in progress.....................................     1,852        1,809  
                                                              ---------   ------------
                                                                 50,578       46,484  
Less: Accumulated depreciation...............................   (19,932)     (16,675) 
                                                              ---------   ------------
                                                              $  30,646     $ 29,809  
                                                               ========   ==========  

7. On July 3, 1992, Ringwood Limited ("Ringwood"), Parkwood Limited   
("Parkwood"), and Douglas Chick and Brian Chandler entered into an agreement    
whereby Messrs. Chick and Chandler and Ringwood executed a secured non-recourse 
promissory note in the amount of $3,624,000 which bears interest at Citibank's  
prime rate plus 2 1/2% and originally was due July 3, 1995. As security for the 
note, Ringwood and Messrs. Chick and Chandler have pledged to the Company       
255,801 shares of the Company's stock beneficially owned by them. Parkwood,     
Ringwood and Messrs. Chandler and Chick are principal stockholders of the       
Company, and Messrs. Chandler and Chick are directors of the Company. On May 21,
1995, the Company extended the maturity date of the note to July 3, 1996        
pursuant to prior authorization by its Board of Directors.                      

8. On December 30, 1993, the Company adopted a plan to discontinue the
operations of its division engaged in the off-site rehabilitation of downhole   
tubulars for the oil and gas industry. The Company was unable to sell the       
business during 1994. As a result, the Company decided to liquidate the         
division's assets, and during the fourth quarter of 1994 recorded a provision to
write down the assets to their estimated liquidation values and accrue the      
estimated costs of closing the operation. As of June 30, 1995, all assets       
related to discontinued operations had been written off and/or liquidated       
leaving a reserve for estimated remaining costs of $414,000 in accounts payable 
and accruals.                                                                   

9. Provision for federal and state income taxes in the consolidated   
statements of income are made up of the following components (in thousands) for 
the six months ended June 30, 1995 and 1994, respectively:                      

                                                        [Enlarge/Download Table]

                                                                        JUNE 30,      
                                                                    ----------------- 
                                                                     1995       1994  
                                                                    ------     ------ 
                                                                                      
Current:                                                                              
  Federal.......................................................... $  892     $1,260 
  Foreign..........................................................    823        846 
  State............................................................     80        189 
                                                                    ------     ------ 
                                                                     1,795      2,295 
                                                                    ------     ------ 
Deferred:                                                                             
  Federal.......................................................... $  232     $ (129)
  Foreign..........................................................   (116)      (131)
  State............................................................     --         -- 
                                                                    ------     ------ 
                                                                       116       (260)
                                                                    ------     ------ 
Total taxes on income.............................................. $1,911     $2,035 
                                                                    ======     ====== 

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INSITUFORM TECHNOLOGIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
(UNAUDITED) 

     The effective tax rate on income before taxes for the six months ended June
30, 1995 and 1994 was different than the United States ("U.S.") federal         
statutory tax rate. The following summary reconciles taxes at the U.S. federal  
statutory tax rate with the actual taxes (in thousands) and the effective rate: 

                                                        [Enlarge/Download Table]

                                                                1995                1994       
                                                         ------------------  ------------------
                                                         AMOUNT     PERCENT  AMOUNT     PERCENT
                                                         ------     -------  ------     -------
                                                                                               
Taxes on income at U.S. federal statutory rate.......... $1,649       34.0%  $1,911       34.0%
Increase (decrease) in taxes resulting from:                                                   
  State income taxes, net of federal income tax                                                
     benefit............................................     49        1.0      125        2.2 
  Effect of foreign income taxed at foreign rates.......     36        0.7      (47)      (0.8)
  Tax amortization of intangibles.......................   (257)      (5.3)    (252)      (4.5)
  Tax benefit not currently recognizable on losses of                                          
     subsidiaries.......................................    201        4.1      167        3.0 
  Utilization of net operating losses and other                                                
     carryforwards......................................     --         --     (121)      (2.2)
  Amortization of goodwill, not allowed for tax                                                
     purposes...........................................    270        5.6      279        5.0 
  Other items...........................................    (37)     (0.7)      (27)      (0.5)
                                                         ------     -------  ------     -------
Total taxes on income................................... $1,911       39.4%  $2,035       36.2%
                                                         ======      =====   ======      ===== 

10. The Company has outstanding borrowings of $35.5 million under its 
credit agreement with Third National Bank in Nashville entered into in July     
1993, which initially provided for advances of up to $30 million and was amended
in August 1994 to provide for an additional $12 million (as subsequently        
reduced) so as to aggregate up to $42 million. On June 7, 1995, the Company     
further amended and restated the facility providing for additional credit,      
available for two years on a revolving basis, in the amount, together with the  
existing facility, aggregating up to $50 million, the additional amounts to be  
utilized for working capital and expansion of the Company's business. The       
amended facility provides that all new advances, together with all existing     
indebtedness, are due in June 2000, subject to earlier installments after June  
1997 based on a five-year amortization schedule for the existing and additional 
indebtedness. Under the revised arrangements, interest on all existing and      
additional indebtedness would be payable quarterly at a rate selected monthly by
the Company as either the bank's prime rate, plus a margin up to .25% in the    
event certain financial ratios are not maintained, or a 30-day adjusted LIBOR   
rate, plus a margin ranging from 1.75% to 2.25 %, depending on maintenance of   
certain financial ratios. The facility obligates the Company to comply with     
certain financial ratios and restrictive covenants that, among other things,    
limit the ability of the Company and its subsidiaries to incur further          
indebtedness, pay dividends, make loans and encumber their properties, and      
requires guarantees of certain domestic subsidiaries.                           

 In July 1993, in order to complete the financing for the acquisition of
Insituform Midwest, the Company also issued an 8.5% senior subordinated note,   
subordinated in right to the Company's bank and other institutional financing   
and to deferred consideration incurred in connection with business acquisitions.
Warrants to purchase 350,877 unregistered shares of the Company's Common Stock  
were also issued to the lender. The note is prepayable at the Company's option  
after July 1995, at premiums until July 1998 ranging from 3% to 1% of the amount
prepaid, and is subject to defeasance in certain circumstances. The subordinated
note also restricts the Company's ability to pay dividends and repurchase       
outstanding common stock.                                                       

The Company's subsidiaries, IGL Canada Limited, Insituform Permaline  
Limited, Insituform France S.A., and Insituform Japan KK, also maintain certain 
revolving line of credit facilities. The aggregate amount outstanding under     
these facilities was $880,000 at June 30, 1995.                                 

As of December 31, 1994, the former stockholders of NuPipe, Inc. were 
entitled to receive 35% of the royalty income collected by the Company in       
connection with the NuPipe technology acquired by the Company in 1988. In March 
1995, the Company exercised an option, granted in October 1994, to acquire such 

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INSITUFORM TECHNOLOGIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
(UNAUDITED) 

parties' interest in such payments in exchange for issuance of the Company's    
promissory notes aggregating $1,000,000. The notes are payable in quarterly     
installments over three years and bear interest at 5.4% per annum.              

  11. On May 23, 1995, the Company, notwithstanding its belief that it has
defenses to plaintiff's claim that are well grounded in fact and law, entered   
into a memorandum of understanding to settle the previously disclosed           
stockholder class action against the Company in the United States District Court
for the Western District of Tennessee (Neil Weinberg, on behalf of himself and  
all others similarly situated, Plaintiffs. v. Insituform Technologies, Inc., et 
al., Defendants), alleging various misstatements and omissions relating to,     
among other things, acquisition and restructuring costs arising from the        
acquisition of Insituform Group Limited in December 1992, in public disclosures 
by the Company during the period from October 28, 1992 to May 12, 1993 in       
violation, among other things, of Rule 10b-5. Under the settlement, which has   
been evidenced by a stipulation of settlement and remains subject to court      
approval and other customary conditions, the Company would make a cash payment  
to class members in the amount of $3.2 million (which the Company has deposited 
into escrow) and issue to class members 30,000 shares of the Company's class A  
common stock, which resulted in an after-tax charge against 1995 second quarter 
net income of approximately $2.2 million.                                       

The Company is a party to an action in Tennessee Chancery Court       
(subsequently removed by defendants to federal district court) against certain  
of its licensees, captioned Insituform North America Corp. and NuPipe, Inc. v.  
Insituform Southeast, Inc., NuPipe Southeast, Inc., Enviroq Corporation and     
Insituform Mid-America, Inc. seeking a declaratory judgment confirming its      
action in declining to grant its consent as requested by Enviroq, under the     
various Insituform(R) and NuPipe(R) license agreements with Enviroq's           
affiliates, in connection with the transactions contemplated by the agreement   
dated November 2, 1994 entered into by Enviroq with IMA. The Company has agreed 
with Enviroq and IMA that, unless the Company's agreement with IMA is terminated
(see Note 12), neither party will take any further action in such suit to assert
any rights in dispute as a result of the consummation of the Enviroq Acquisition
without the Company's consent, except for certain procedural steps to preserve  
the respective rights of the parties.                                           

     Prior to its acquisition by the Company, Naylor Industries, Inc. ("Naylor")
sold all of the common stock of Naylor Industrial Services, Inc., ("NISI"),     
which provided industrial cleaning services to refineries and chemical and      
petrochemical manufacturing plants. As part of such sale, Naylor agreed to      
indemnify the purchaser for certain pending or threatened litigation claims that
were known to Naylor as of the date of sale. Among other matters, NISI has been 
one of approximately 181 defendants in approximately 3,029 plaintiff cases,     
collectively known as the Lone Star Steel litigation, pending in Morris County, 
Texas, in which plaintiffs allege unspecified damages against defendants, who   
supplied services or products to Lone Star Steel over a period in excess of 40  
years, arising from the alleged exposure of Lone Star's workers to toxic and    
hazardous circumstances. ITI has been advised that NISI utilized non-toxic      
detergents performing its cleaning services during an eight-year period ending  
in 1987. Although, it has not been possible to assess likely jury verdicts at   
such an early stage in the proceedings or any allocation of the amount of any   
such verdict, Naylor's position has been that there is no substantial medical   
evidence connecting NISI to plaintiffs' alleged injuries. In August 1995, the   
court entered an order that dismissed the lawsuit against Naylor without        
prejudice of plaintiffs to refile such claims in connection with plaintiffs'    
failure to connect NISI to such injuries.                                       

     Naylor, among approximately 210 other parties, has been served with a third
party complaint by McDermott, Inc. ("McDermott") in a class action filed by more
than 1,200 plaintiffs (on behalf of a potential class of over 8,000 plaintiffs) 
against 84 defendants, including McDermott. Plaintiffs seek damages resulting   
from alleged exposure to an escape of hazardous substances from an oil          
reclamation facility. McDermott's third party complaints seek, among other      
things, clean-up costs under the Comprehensive Environmental                    

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INSITUFORM TECHNOLOGIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
(UNAUDITED) 

Response, Compensation and Liability Act ("CERCLA") and tort contribution and   
indemnity. By court order, all defendants and third party defendants were deemed
to have cross-claimed and counter-claimed against the others for contribution   
under CERCLA. Naylor has entered into a settlement agreement which, subject to  
court approval, would settle all claims for personal injuries, property         
diminution, mental anguish and other injuries which were asserted or which could
have been asserted against Naylor, for the amount of $50,000. The claims        
asserted under CERCLA would remain outstanding, and it is probable that Naylor's
exposure is limited to a pro rata or proportionate share of all defendants' and 
third party defendants' liability, if any.                                      

    The financial statements include the estimated amounts of liabilities that
are likely to be incurred from these and various other pending Naylor litigation
and claims.                                                                     

    The Company is involved in certain additional litigation incidental to the
conduct of its business. In the Company's opinion, none of these proceedings    
will have a material adverse effect on the Company's financial position and     
results of operations.                                                          

 12. On May 23, 1995, the Company, ITI Acquisition Corp., a wholly-owned
subsidiary of the Company ("ITI Sub"), and IMA executed an Agreement and Plan of
Merger dated such date (the "Merger Agreement") which provides for the merger   
(the "Merger") into IMA of ITI Sub, as a result of which IMA would become a     
wholly-owned subsidiary of the Company.                                         

 Pursuant to the Merger, at the Effective Time (as defined in the Merger
Agreement) holders of the class A common stock, $.01 par value (the "IMA Class A
Common Stock"), of IMA will receive 1.15 shares of the class A common stock,    
$.01 par value, of the Company for each share of IMA Class A Common Stock held. 
Holders of the class B common stock, $.01 par value (the "IMA Class B Common    
Stock"), of IMA have agreed to convert their shares into IMA Class A Common     
Stock on a share-for-share basis in connection with the transaction.            

    Consummation of the Merger and the transactions contemplated by the Merger
Agreement are subject to, among other things, approval by the stockholders of   
both the Company and IMA, registration under the Securities Act of 1933 of the  
shares of the Company's Class A Common Stock to be issued in the Merger, receipt
of a legal opinion that the Merger will qualify as a tax-free reorganization,   
confirmation that the Merger will qualify for pooling-of-interests accounting   
treatment, and other customary conditions.                                      

  The Company has deferred approximately $0.8 million of expenses incurred
through June 30, 1995 related to the transaction, which will be expensed in the 
quarter in which the transaction is completed. The Company anticipates that the 
total amount of expenses, exclusive of reorganization provisions, related to the
transaction (including amounts deferred through June 30, 1995) will be          
approximately $6.5 million, $3.8 million of which the Company estimates will be 
incurred by it and $2.7 million of which IMA estimates will be incurred by it.  

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INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders                                         
Insituform Mid-America, Inc.                                                    

    We have audited the accompanying consolidated balance sheets of Insituform
Mid-America, Inc. and subsidiaries as of September 30, 1994 and 1993, and the   
related consolidated statements of income, changes in stockholders' equity, and 
cash flows for each of the years in the three-year period ended September 30,   
1994. 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 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Insituform  
Mid-America, Inc. and subsidiaries as of September 30, 1994 and 1993, and the   
results of their operations and their cash flows for each of the years in the   
three-year period ended September 30, 1994, in conformity with generally        
accepted accounting principles.                                                 

                         KPMG PEAT MARWICK LLP

St. Louis, Missouri                                                             
November 15, 1994                                                               

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INSITUFORM MID-AMERICA, INC.

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                           SEPTEMBER 30        
                                                                    ---------------------------
                                                                       1994            1993    
                                                                    -----------     -----------
                                                                                               
ASSETS                                                                                         
CURRENT ASSETS                                                                                 
  Cash and cash equivalents.......................................  $ 3,111,664     $ 2,088,966
  Accounts receivable, including retained amounts of $2,876,514 in                             
     1994 and $3,075,456 in 1993..................................   15,770,080      15,448,035
  Costs and estimated earnings in excess of billings on                                        
     uncompleted contracts........................................    8,419,956       4,155,413
  Insurance claim receivable......................................           --       3,003,511
  Inventory.......................................................    2,938,463       1,586,789
  Prepaid and refundable income taxes.............................      521,272         846,513
  Prepaid expenses and other current assets.......................    2,782,654       1,124,566
                                                                    -----------     -----------
       TOTAL CURRENT ASSETS.......................................   33,544,089      28,253,793
                                                                    -----------     -----------
PROPERTY AND EQUIPMENT                                                                         
  Land............................................................      675,486         608,414
  Buildings and improvements......................................    4,877,630       2,602,231
  Machinery and equipment.........................................   23,962,374      17,900,068
  Furniture and fixtures..........................................    2,560,483         657,889
  Construction-in-progress........................................    1,949,898       3,095,481
                                                                    -----------     -----------
                                                                     34,025,871      24,864,083
Less accumulated depreciation.....................................   12,018,479       9,196,683
                                                                    -----------     -----------
       TOTAL PROPERTY AND EQUIPMENT...............................   22,007,392      15,667,400
                                                                    -----------     -----------
OTHER ASSETS                                                                                   
  Sub-license costs, net of accumulated amortization of $421,526                               
     in 1994 and $340,384 in 1993.................................    1,770,546       1,851,688
  Excess of cost over fair value of net assets acquired, net of                                
     accumulated amortization of $396,140 in 1994 and $258,469 in                              
     1993.........................................................    2,141,353       2,279,024
  Deferred non-compete expense, net of accumulated amortization of                             
     $502,561 in 1994 and $350,004 in 1993........................      923,046       1,075,603
  Patent cost, net of accumulated amortization of $943,863 in 1994                             
     and $628,256 in 1993.........................................    3,492,509       3,808,116
                                                                    -----------     -----------
       TOTAL OTHER ASSETS.........................................    8,327,454       9,014,431
                                                                    -----------     -----------
                                                                    $63,878,935     $52,935,624
                                                                     ==========      ==========

                                                                     (Continued)

See notes to consolidated financial statements. 

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INSITUFORM MID-AMERICA, INC.

CONSOLIDATED BALANCE SHEETS -- (CONTINUED)

                                                        [Enlarge/Download Table]

                                                                          SEPTEMBER 30         
                                                                   --------------------------- 
                                                                      1994            1993     
                                                                   -----------     ----------- 
                                                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY                                                           
CURRENT LIABILITIES                                                                            
  Note payable to bank............................................ $ 6,460,214     $ 5,028,000 
  Accounts payable................................................   8,181,616       5,268,904 
  Accrued income taxes............................................     411,249          15,050 
  Accrued expenses................................................   6,810,141       4,961,529 
  Billings in excess of costs and estimated earnings on                                        
     uncompleted contracts........................................      63,071         473,226 
  Deferred income taxes...........................................          --         872,067 
                                                                   -----------     ----------- 
       TOTAL CURRENT LIABILITIES..................................  21,926,291      16,618,776 
                                                                   -----------     ----------- 
LONG-TERM LIABILITIES                                                                          
  Deferred income taxes...........................................   1,217,641              -- 
  Minority interest...............................................     575,501              -- 
  Other...........................................................     283,748              -- 
                                                                   -----------     ----------- 
       TOTAL LONG-TERM LIABILITIES................................   2,076,890              -- 
                                                                   -----------     ----------- 
COMMITMENTS AND CONTINGENT LIABILITIES                                                         
STOCKHOLDERS' EQUITY                                                                           
  Preferred stock -- $.01 par value, 500,000 shares authorized,                                
     none issued or outstanding...................................          --              -- 
  Common stock:                                                                                
     Class A -- $.01 par value, 13,000,000 shares authorized,                                  
      8,279,342 and 8,278,340 shares issued and outstanding in                                 
      1994 and 1993, respectively (liquidation preference $8.00                                
      per share)..................................................      82,793          82,783 
     Class B -- convertible, $.01 par value, 6,000,000 shares                                  
      authorized, 2,472,985 shares issued and outstanding in 1994                              
      and 1993....................................................      24,730          24,730 
  Additional paid-in capital......................................  18,333,959      18,324,450 
  Retained earnings...............................................  21,765,402      18,189,985 
  Cumulative foreign currency translation adjustment..............    (331,130)       (305,100)
                                                                   -----------     ----------- 
       TOTAL STOCKHOLDERS' EQUITY.................................  39,875,754      36,316,848 
                                                                   -----------     ----------- 
                                                                   $63,878,935     $52,935,624 
                                                                    ==========      ========== 

See notes to consolidated financial statements. 

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INSITUFORM MID-AMERICA, INC.

CONSOLIDATED STATEMENTS OF INCOME 

                                                        [Enlarge/Download Table]

                                                              YEARS ENDED SEPTEMBER 30         
                                                       --------------------------------------- 
                                                          1994          1993          1992     
                                                       -----------   -----------   ----------- 
                                                                                               
Contract revenues..................................... $75,279,329   $60,085,786   $66,689,904 
Cost of contracts.....................................  54,472,300    43,546,991    45,396,191 
                                                       -----------   -----------   ----------- 
   GROSS PROFIT.......................................  20,807,029    16,538,795    21,293,713 
                                                       -----------   -----------   ----------- 
Operating expenses:                                                                            
   General and administrative expenses................   7,779,777     6,875,287     6,169,243 
   Selling expenses...................................   3,170,447     3,601,807     2,577,521 
   Research and development expenses..................     652,166        60,867       288,834 
                                                       -----------   -----------   ----------- 
                                                        11,602,390    10,537,961     9,035,598 
                                                       -----------   -----------   ----------- 
   INCOME FROM OPERATIONS.............................   9,204,639     6,000,834    12,258,115 
                                                       -----------   -----------   ----------- 
Other income (expense):                                                                        
   Interest income....................................     131,218        69,860        59,212 
   Interest expense...................................    (324,422)     (174,138)     (136,363)
   Joint venture income...............................     164,298       194,224       244,892 
   Other net..........................................    (211,991)     (369,070)     (306,883)
                                                       -----------   -----------   ----------- 
                                                          (240,897)     (279,124)     (139,142)
                                                       -----------   -----------   ----------- 
   INCOME BEFORE INCOME TAXES AND MINORITY INTEREST...   8,963,742     5,721,710    12,118,973 
Provision for income taxes............................   3,734,824     2,314,070     4,443,039 
                                                       -----------   -----------   ----------- 
   INCOME BEFORE MINORITY INTEREST....................   5,228,918     3,407,640     7,675,934 
Minority interest in income of consolidated                                                    
   subsidiary.........................................    (179,867)           --            -- 
                                                       -----------   -----------   ----------- 
   NET INCOME......................................... $ 5,049,051   $ 3,407,640   $ 7,675,934 
                                                        ==========    ==========    ========== 
   EARNINGS PER SHARE.................................        $.45          $.31          $.70 

See notes to consolidated financial statements. 

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INSITUFORM MID-AMERICA, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                                        [Enlarge/Download Table]

                                               COMMON STOCK                                                                    
                                 -----------------------------------------                            CUMULATIVE               
                                                                                                       FOREIGN                 
                                       CLASS A               CLASS B        ADDITIONAL                 CURRENCY                
                                 -------------------   -------------------    PAID-IN     RETAINED    TRANSLATION              
                                  SHARES     AMOUNT     SHARES     AMOUNT     CAPITAL     EARNINGS    ADJUSTMENT      TOTAL    
                                 ---------   -------   ---------   -------  -----------  -----------  ----------   ----------- 
                                                                                                                               
BALANCE AT SEPTEMBER 30, 1991... 8,240,465   $61,805   2,472,988   $18,548  $18,141,776  $ 9,715,431  $      --    $27,937,560 
  Exercise of stock options.....    18,134       136          --        --       80,354           --         --         80,490 
  Dividend to common                                                                                                           
    stockholders................        --        --          --        --           --   (1,101,335)        --     (1,101,335)
  Net income....................        --        --          --        --           --    7,675,934         --      7,675,934 
  Foreign currency translation                                                                                                 
    adjustment..................        --        --          --        --           --           --   (145,675 )     (145,675)
                                 ---------   -------   ---------   -------  -----------  -----------  ----------   ----------- 
BALANCE AT SEPTEMBER 30, 1992... 8,258,599    61,941   2,472,988    18,548   18,222,130   16,290,030   (145,675 )   34,446,974 
  Exercise of stock options.....    20,027       200          --        --      102,320           --         --        102,520 
  Four-for-three stock split....        --    20,645          --     6,182           --      (26,827)        --             -- 
  Fractional share payout.......      (286)       (3)         (3)       --           --       (7,450)        --         (7,453)
  Dividend to common                                                                                                           
    stockholders................        --        --          --        --           --   (1,473,408)        --     (1,473,408)
  Net income....................        --        --          --        --           --    3,407,640         --      3,407,640 
  Foreign currency translation                                                                                                 
    adjustment..................        --        --          --        --           --           --   (159,425 )     (159,425)
                                 ---------   -------   ---------   -------  -----------  -----------  ----------   ----------- 
BALANCE AT SEPTEMBER 30, 1993... 8,278,340    82,783   2,472,985    24,730   18,324,450   18,189,985   (305,100 )   36,316,848 
  Exercise of stock options.....     1,002        10          --        --        9,509           --         --          9,519 
  Dividend to common                                                                                                           
    stockholders................        --        --          --        --           --   (1,473,634)        --     (1,473,634)
  Net income....................        --        --          --        --           --    5,049,051         --      5,049,051 
  Foreign currency translation                                                                                                 
    adjustment..................        --        --          --        --           --           --    (26,030 )      (26,030)
                                 ---------   -------   ---------   -------  -----------  -----------  ----------   ----------- 
BALANCE AT SEPTEMBER 30, 1994... 8,279,342   $82,793   2,472,985   $24,730  $18,333,959  $21,765,402  $(331,130 )  $39,875,754 
                                  ========   =======    ========   =======   ==========   ==========  ==========    ========== 

See notes to consolidated financial statements. 

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INSITUFORM MID-AMERICA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                              YEARS ENDED SEPTEMBER 30           
                                                     ------------------------------------------- 
                                                        1994            1993            1992     
                                                     -----------     -----------     ----------- 
                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:                                                            
  Net income........................................ $ 5,049,051     $ 3,407,640     $ 7,675,934 
  Adjustments to reconcile net income to net cash:                                               
     Change in assets and liabilities, net of                                                    
       effects of acquisitions:                                                                  
       Increase in accounts receivable..............    (322,045)     (1,510,375)     (3,339,766)
       Decrease (increase) in costs and estimated                                                
          earnings in excess of billings on                                                      
          uncompleted contracts.....................  (4,264,543)      2,690,735      (2,108,271)
       Decrease in insurance claim receivable.......   3,003,511              --              -- 
       Increase in inventory........................  (1,351,674)       (980,734)       (490,439)
       Decrease (increase) in refundable income                                                  
          taxes.....................................     387,285        (637,648)       (208,865)
       Decrease (increase) in prepaid expenses and                                               
          other current assets......................  (1,658,088)        (54,547)        235,976 
       Increase in accounts payable.................   2,912,712       1,094,731         752,889 
       Increase (decrease) in accrued income                                                     
          taxes.....................................     396,199        (370,577)       (446,569)
       Increase (decrease) in accrued expenses......   1,848,612        (306,095)        650,145 
       Increase (decrease) in billings in excess of                                              
          costs and estimated earnings on                                                        
          uncompleted contracts.....................    (410,155)        421,503          51,723 
     Depreciation...................................   3,258,781       2,673,114       2,101,881 
     Amortization...................................     686,977         601,818         552,052 
     Loss (gain) on sale of property and                                                         
       equipment....................................       8,933          10,621         (12,916)
     Deferred income tax provision..................     283,531         136,638         327,317 
     Minority interest in income of consolidated                                                 
       subsidiary...................................     575,501              --              -- 
     Other..........................................     283,748              --              -- 
                                                     -----------     -----------     ----------- 
          NET CASH PROVIDED BY OPERATING                                                         
            ACTIVITIES..............................  10,688,336       7,176,824       5,741,091 
                                                     -----------     -----------     ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                            
  Increase in short-term bank borrowings............   1,432,214       3,971,000       1,057,000 
  Retirement of long-term debt......................          --        (359,768)        (88,011)
  Dividends paid to common stockholders.............  (1,473,634)     (1,473,408)     (1,101,335)
  Proceeds from exercise of stock options...........       9,519         102,520          80,490 
  Other.............................................          --          (7,453)             -- 
                                                     -----------     -----------     ----------- 
          NET CASH PROVIDED BY (USED IN) FINANCING                                               
            ACTIVITIES..............................     (31,901)      2,232,891         (51,856)
                                                     -----------     -----------     ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                            
  Additions to property and equipment...............  (9,915,506)     (5,348,757)     (3,524,715)
  Sub-license cost..................................          --              --         (19,928)
  Patent cost.......................................          --         (10,638)       (297,854)
  Deferred non-compete cost.........................          --              --         (40,500)
  Proceeds from sale of property and equipment......     307,799         395,814          49,442 
  Acquisitions of businesses........................          --      (3,689,635)     (5,030,041)
  Other, net........................................          --         174,813        (174,815)
                                                     -----------     -----------     ----------- 
          NET CASH USED IN INVESTING ACTIVITIES.....  (9,607,707)     (8,478,403)     (9,038,411)
                                                     -----------     -----------     ----------- 
Effect of exchange rate changes on cash.............     (26,030)       (159,425)         50,651 
                                                     -----------     -----------     ----------- 
Net increase (decrease) in cash and cash                                                         
  equivalents.......................................   1,022,698         771,887      (3,298,525)
Cash and cash equivalents, beginning of year........   2,088,966       1,317,079       4,615,604 
                                                     -----------     -----------     ----------- 
Cash and cash equivalents, end of year.............. $ 3,111,664     $ 2,088,966     $ 1,317,079 
                                                      ==========      ==========      ========== 

See notes to consolidated financial statements. 

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                            

     Principles of Consolidation:  The consolidated financial statements include
the accounts of Insituform Mid-America, Inc. and its majority owned             
subsidiaries. All significant intercompany accounts and transactions are        
eliminated in consolidation. Except as otherwise indicated herein, references to
the "Company" are to Insituform Mid-America, Inc. and its subsidiaries.         

  Company's Activities:  The Company utilizes various trenchless and other
technologies for rehabilitation, new construction and improvement of pipeline   
systems, including sewers, gas lines, industrial waste lines, water line and oil
field, mining and industrial process pipelines. The Company's trenchless        
technologies require little or no excavation and eliminate the need to replace  
deteriorating pipe. The work typically is performed under fixed-price contracts.

Revenue and Cost Recognition:  The Company recognizes revenue from    
contracts using the percentage of completion method of accounting. Percentage of
completion is generally measured by the percentage of direct costs incurred for 
work completed to total estimated direct costs for each contract (cost-to-cost  
method). Project costs include direct and indirect labor, materials, equipment  
usage, subcontracts, royalties and other miscellaneous costs directly associated
with a project. Provisions for estimated losses on uncompleted contracts are    
made in the period in which such losses are determined. Claims are included in  
revenues when realization is probable and the amount can be reliably estimated. 

Accounts Receivable:  The Company regularly reviews its collection    
experience and does not believe an allowance for doubtful accounts is necessary.

    Inventory:  Inventory is stated at the lower of cost (first-in, first-out)
or market. The majority of inventory represents raw materials used in the       
installation processes.                                                         

Prepaid Expenses and Other Current Assets:  Prepaid expenses and other
current assets at September 30, 1994 and 1993 were as follows:                  

                                                                [Download Table]

                                                        1994          1993   
                                                      ---------     ---------
                                                                             
Prepaid construction costs.........................  $1,115,040     $ 356,786
Prepaid value added tax............................     446,380            --
Prepaid expenses...................................     329,254       108,090
Equity in joint venture............................      98,902       174,604
Other..............................................     793,078       485,086
                                                     ----------    ----------
                                                     $2,782,654    $1,124,566
                                                     ==========    ==========

Property and Equipment:  Property and equipment are recorded at cost. 
Depreciation is provided using the straight-line method over the estimated      
useful lives of the respective assets. Estimated useful lives are five to 40    
years for buildings and improvements and three to 15 years for other depreciable
assets.                                                                         

   Intangible Assets:  The cost of sub-license agreements is being amortized
using the straight-line method over their estimated useful lives of five to 30  
years. The excess of cost over the fair value of assets acquired is being       
amortized using the straight-line method over their estimated useful lives of 15
to 30 years. The cost of deferred non-compete contracts is being amortized using
the straight-line method over a five year period. The cost of patents is being  
amortized using the straight-line method over their approximate useful lives,   
not to exceed their statutory life.                                             

   Income Taxes:  In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109, Accounting for      
Income Taxes (Statement 109). Statement 109 requires a change from the deferred 
method of accounting for income taxes of APB Opinion 11 to the asset and        
liability method of accounting for income taxes. Under the asset and liability  
method of Statement 109 deferred tax assets and liabilities are recognized for  
the future tax consequences attributable to differences                         

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

between the financial statement carrying amounts of existing assets and         
liabilities and their respective tax bases. Deferred tax assets and liabilities 
are measured using enacted tax rates expected to apply to taxable income in the 
years in which those temporary differences are expected to be recovered or      
settled. Under Statement 109, the effect on deferred tax assets and liabilities 
of a change in tax rates is recognized in income in the period that includes the
enactment date.                                                                 

Effective October 1, 1993, the Company adopted Statement 109. The     
cumulative effect of that change in the method of accounting for income taxes   
was immaterial to the 1994 consolidated statements of income.                   

    Pursuant to the deferred method under APB Opinion 11, which was applied in
fiscal 1993 and prior years, deferred income taxes are recognized for income and
expense items that are reported in different years for financial reporting      
purposes and income tax purposes using the tax rate applicable for the year of  
the calculation. Under the deferred method, deferred taxes are not adjusted for 
subsequent changes in tax rates.                                                

     Pension Expense:  The Company contributes to various multi-employer pension
plans covering a majority of its construction craft employees. Pension expense  
is recorded when accrued, based on terms specified in union agreements. Pension 
expense charged to construction costs was $355,981, $227,407 and $231,647 for   
the years ended September 30, 1994, 1993 and 1992, respectively. The actuarial  
present value of vested and non-vested accumulated benefits, net assets         
available for benefits and assumed rates of return are not practicable to       
determine.                                                                      

Research and Development Expenses:  The Company expenses research and 
development costs in the year incurred. Such costs include the cost of          
developing new installation processes for its licensed technologies.            

    Accrued Expenses:  Accrued expenses at September 30, 1994 and 1993 were as
follows:                                                                        

                                                                [Download Table]

                                                      1994            1993   
                                                    ---------       ---------
                                                                             
Construction costs................................ $5,394,840      $2,415,756
Other.............................................  1,401,523       2,248,642
Accrued bonuses...................................     13,778         297,131
                                                   ----------      ----------
                                                   $6,810,141      $4,961,529
                                                   ==========      ==========

  Foreign Currency Translation:  In accordance with Statement of Financial
Accounting Standards No. 52, Foreign Currency Translation, the assets and       
liabilities denominated in foreign currency are translated into U.S. dollars at 
the rate of exchange existing at year-end and revenues and expenses are         
translated at the average monthly exchange rates. Transaction gains (losses)    
included in income before taxes for the years ended September 30, 1994, 1993 and
1992 were $(9,642), $34,183 and $41,681, respectively.                          

    Warranties:  The Company's warranties of labor and material generally vary
from one to three years after the work is completed, based on contract bid      
specifications or negotiated terms. The Company has not recognized any warranty 
expense because it has not experienced, and does not anticipate, any significant
post-installation warranty claims.                                              

Cash Equivalents:  For purposes of the consolidated statements of cash
flows, the Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.                        

    Related Party Transactions:  During 1994, 1993 and 1992, a director of the
Company was paid approximately $208,000, $209,000 and $219,000, respectively,   
for consulting services and related expenses.                                   

During 1994, the son of the Chairman of the Company and principal     
stockholder was paid approximately $91,000 for consulting services and related  
expenses.                                                                       

    The Company's unsecured bank line of credit arrangement is maintained with
a bank where a director of the Company is Chairman and a majority stockholder.  

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Reclassification:  Certain amounts reported in prior years have been  
reclassified to conform with current year presentation.                         

NOTE B -- ACQUISITIONS                                                          

   On November 12, 1992, the Company acquired from Ashimori Industry Company
Ltd. of Osaka, Japan (Ashimori) the exclusive license to offer the PALTEM-HL(R) 
and PALTEM-SZ(R) systems of pipeline rehabilitation in substantially all of     
North America and the exclusive right in the territory to utilize and sell      
materials manufactured by Ashimori for use in pipeline rehabilitation. The      
Company also acquired substantially all of the operating assets of Pipeline     
Rehabilitation Systems of Denver, Colorado, a company then engaged in the       
business of rehabilitation and improving pipelines in twelve states using the   
PALTEM-HL system. In connection with the transactions, which were accounted for 
as a purchase, the Company paid approximately $3,690,000 for equipment and      
inventory having a fair market value of approximately $2,090,000 and recorded   
$1,600,000 in excess of cost over fair value of net assets acquired.            

On October 15, 1991, the Company, through a wholly-owned subsidiary,  
acquired United Pipeline Systems Inc. (UPSI) of Edmonton, Alberta, Canada. UPSI 
offers the Tite Liner process of lining oil field and industrial process        
pipelines in Canada and internationally, except in the United States. In        
connection with the acquisition, the Company acquired all the outstanding stock 
of United Corrosion Corporation (UCC), the parent of UPSI, from the 19 former   
stockholders of UCC.                                                            

    In connection with the transaction, which was accounted for as a purchase,
the Company paid Canadian $5,670,000 cash (or approximately U.S. $5,030,000)    
plus a promissory note in principal amount of Canadian $1,526,560 (or           
approximately U.S. $1,335,740). UCC's assets unrelated to the business of UPSI  
were sold to a corporation organized by UCC's former stockholders and the       
Company's promissory note was canceled in such transaction. In this transaction,
the Company acquired property and equipment with a fair market value of         
$1,020,000, patents with a fair market value of $4,127,000, and a working       
capital deficit of $117,000.                                                    

    The consolidated statements of income include the acquired operations from
the respective dates of acquisition. Unaudited pro forma results of operations, 
assuming the UPSI acquisition had occurred as of October 1, 1991 and the PALTEM 
acquisition had occurred as of October 1, 1992, are as follows:                 

                                                                [Download Table]

                                                       1993           1992   
                                                    ----------     ----------
                                                                             
Contract revenues................................. $60,303,122    $69,189,268
Net income........................................   3,372,857      7,171,266
Earnings per share................................         .31            .66

     This pro forma information does not purport to be indicative of the results
that actually would have been obtained if the operations had been combined      
during the periods presented and is not intended to be a projection of future   
results.                                                                        

NOTE C -- EARNINGS PER SHARE                                                    

   Earnings per share is based upon the weighted average number of shares of
Class A and Class B common stock outstanding.                                   

 Stock options were considered common stock equivalents for earnings per
share purposes for all years presented.                                         

The weighted average number of common shares outstanding used in      
determining earnings per share for the years ended September 30, 1994, 1993 and 
1992 was 11,101,593, 11,019,144 and 10,934,519, respectively.                   

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

NOTE D -- CONTRACTS-IN-PROGRESS                                                 

    The following table summarizes the billing status of uncompleted contracts
at September 30:                                                                

                                                                [Download Table]

                                                        1994           1993   
                                                    -----------    -----------
                                                                              
Contract costs incurred to date...................  $21,030,395    $30,712,251
Estimated gross profits earned to date............    2,954,195     10,014,675
                                                    -----------    -----------
Contract revenues earned to date..................   23,984,590     40,726,926
Less actual billings to date......................   15,627,705     37,044,739
                                                    -----------    -----------
Excess of revenues earned over billings to date...  $ 8,356,885    $ 3,682,187
                                                    ===========    ===========

    The excess of revenues earned over actual billings to date was included in
the accompanying balance sheets at September 30 as:                             

                                                                [Download Table]

                                                        1994          1993    
                                                      ---------     --------- 
                                                                              
Costs and estimated earnings in excess of billings   $8,419,956    $4,155,413 
  on uncompleted contracts..........................                          
Billings in excess of costs and estimated earnings      (63,071)     (473,226)
  on uncompleted contracts..........................                          
                                                     ----------    ---------- 
                                                     $8,356,885    $3,682,187 
                                                     ==========    ========== 

  Claims included in revenues for the fiscal year ended September 30, 1993
were $1.3 million. No claims were included in revenues for the fiscal year ended
September 30, 1994.                                                             

NOTE E -- SHORT-TERM BORROWINGS                                                 

     The following table summarizes bank borrowings for the years 1994, 1993 and
1992, which were available under a line of credit arrangement.                  

                                                        [Enlarge/Download Table]

                                                          1994         1993         1992     
                                                        ---------    ---------    ---------  
                                                                                             
Balance at end of year................................. $6,460,214   $5,028,000   $1,057,000 
Interest rate at end of year...........................       7.75%        6.00%        6.00%
Maximum amount outstanding during year................. $6,753,000   $5,028,000   $6,366,052 
Average amount outstanding during year................. $4,187,071   $2,535,869   $1,604,661 
Weighted average interest rate during year.............       6.60%        6.00%        6.45%

    The Company paid interest associated with all borrowings in 1994, 1993 and
1992 of $272,414, $145,433 and $96,643, respectively.                           

At September 30, 1994, the Company had available for working capital  
purposes a $10,000,000 unsecured bank line of credit arrangement, including     
letters of credit. The arrangement provides for borrowings at the prime rate    
(7.75% at September 30, 1994) with interest payable monthly and no compensating 
balance requirements. At September 30, 1994, letters of credit in the aggregate 
amount of $2,605,301 were outstanding. The amount available under this agreement
at September 30, 1994 was $934,485. Subsequent to September 30, 1994, the       
Company increased its unsecured bank line of credit arrangement to $13,000,000, 
which expires in December 1994. The Company has the ability and intent to renew 
this arrangement.                                                               

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

NOTE F -- INCOME TAXES                                                          

    The components of income before income taxes and minority interest were as
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                         1994        1993         1992    
                                                       ---------   ---------   ---------- 
                                                                                          
Domestic operations................................... $7,612,176  $5,383,399  $ 9,925,102
Foreign operations....................................  1,351,566     338,311    2,193,871
                                                       ----------  ----------  -----------
                                                       $8,963,742  $5,721,710  $12,118,973
                                                        =========   =========   ==========

The provision for income taxes was comprised of the following:        

                                                        [Enlarge/Download Table]

                                                          1994        1993        1992    
                                                        ---------   ---------   --------- 
                                                                                          
Current:                                                                                  
     Federal........................................... $2,239,476  $1,578,000  $3,041,000
     State.............................................    519,219     318,903     374,643
     Foreign...........................................    692,598     280,529     669,744
                                                        ----------  ----------  ----------
                                                         3,451,293   2,177,432   4,085,387
                                                        ----------  ----------  ----------
Deferred:                                                                                 
     Federal...........................................    285,724     125,000     176,000
     State.............................................     50,993       1,711      22,000
     Foreign...........................................   (53,186)       9,927     159,652
                                                        ----------  ----------  ----------
                                                           283,531     136,638     357,652
                                                        ----------  ----------  ----------
                                                        $3,734,824  $2,314,070  $4,443,039
                                                        ==========  ==========  ==========

     Effective October 1, 1993, the Company adopted Statement 109. Statement 109
requires a change from the deferred method of accounting for income taxes under 
APB Opinion No. 11 to the asset and liability method of accounting for income   
taxes. Under the asset and liability method of Statement 109, deferred tax      
assets and liabilities are recognized for the estimated future tax consequences 
attributable to differences between the financial statement carrying amounts of 
existing assets and liabilities and their respective tax bases. Deferred tax    
assets and liabilities are measured using enacted tax rates in effect for the   
year in which those temporary differences are expected to be recovered or       
settled. The cumulative effect of this change in accounting for income taxes was
immaterial to the consolidated financial statements of the Company. The Company 
has not reflected a valuation allowance against its deferred tax assets.        

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at September   
30, 1994 were as follows:                                                       

                                                                [Download Table]
                                                                             
DEFERRED TAX ASSETS:                                                         
     Employee benefits consisting principally of health,                     
       welfare and compensated absences........................   $   29,836 
     Uniform inventory capitalization..........................      111,625 
     Foreign tax credit carry-forward..........................      108,583 
     Uncompleted contract adjustment...........................        9,426 
                                                                  ---------- 
          Total gross deferred tax assets......................      259,470 
                                                                  ---------- 
DEFERRED TAX LIABILITIES:                                                    
     Property and equipment, licenses and patents, principally               
       due to differences in depreciation and amortization.....   (1,326,224)
     State income taxes........................................      (88,843)
                                                                  ---------- 
          Total gross deferred tax liabilities.................   (1,415,067)
                                                                  ---------- 
          Net deferred tax liability...........................  $(1,155,597)
                                                                  ========== 

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

For the years ended September 30, 1993 and 1992, deferred income tax  
expense of $136,638 and $357,652, respectively, resulted from timing differences
in the recognition of income and expense for income tax and financial reporting 
purposes. The sources and tax effects of those timing differences are presented 
below:                                                                          

                                                                [Download Table]

                                                           1993         1992   
                                                         --------     -------- 
                                                                               
Depreciation and amortization..........................  $174,919     $432,169 
Uniform inventory capitalization.......................   (52,334)     (56,288)
Other, net.............................................    14,053      (18,229)
                                                         --------     -------- 
                                                         $136,638     $357,652 
                                                         ========     ======== 

A reconciliation between the provision for income taxes and the amount
computed by applying the statutory Federal income tax rate of 34% to income     
before income taxes is as follows:                                              

                                                        [Enlarge/Download Table]

                                                          1994         1993         1992     
                                                        ---------    ---------    ---------  
                                                                                             
Provision for income taxes at statutory Federal rate...  $3,047,672  $1,945,381   $4,120,450 
State and local taxes, net of Federal benefit..........    376,340      211,605      260,700 
Foreign operations with tax rates lower than Federal       (62,026)      (4,435)    (177,664)
  rate.................................................                                      
Other foreign operations...............................    241,904      179,590      275,980 
Other, net.............................................    130,934      (18,071)     (36,427)
                                                        ----------   ----------   ---------- 
                                                        $3,734,824   $2,314,070   $4,443,039 
                                                        ==========   ==========   ========== 

     The cumulative amount of undistributed earnings of foreign subsidiaries for
which U.S. Federal income taxes have not been provided were approximately       
$1,304,000 at September 30, 1994.                                               

    The Company paid income taxes of $2,633,844, $3,202,146 and $4,587,861 for
1994, 1993 and 1992, respectively.                                              

NOTE G -- LEASES                                                                

   The Company has entered into various noncancelable operating leases for a
building, equipment and automobiles ranging over periods from two to ten years. 
Certain expenses applicable to the leases including taxes, insurance and repairs
and maintenance, are also payable by the Company.                               

  Rent expense under long-term operating leases was $737,464, $706,345 and
$703,286 for 1994, 1993 and 1992, respectively.                                 

   Future minimum payments under noncancelable operating leases with initial
or remaining terms of one year or more consisted of the following at September  
30, 1994:                                                                       

                                                                [Download Table]
                                                                    
1995....................................................   $ 680,557
1996....................................................     434,226
1997....................................................     205,530
1998....................................................      36,097
1999....................................................       3,173
                                                          ----------
                                                          $1,359,583
                                                          ==========

NOTE H -- COMMITMENTS                                                           

The Company has obtained the use of certain patent rights and know-how
relative to methods, apparatuses and materials used in the Insituform and NuPipe
processes of rehabilitation of sewers and pipe                                  

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

through license agreements with subsidiaries of Insituform Technologies, Inc.   
Under the terms of its license agreements for the Insituform process, the       
Company must pay royalty fees from 8% to 9% of Insituform gross contract        
revenues, less deductions for certain preparatory and finishing costs. Under the
terms of its license agreement for NuPipe, the Company must pay royalty fees    
equal to 6.75% of NuPipe gross contract revenues. Each of the license agreements
for Insituform and NuPipe extends for the life of the licensed patent rights    
(each of which expires in 2011) and is cancelable either by the licensee upon   
written notice or by the licensor upon nonpayment of royalties or certain other 
events, as specified in the agreements.                                         

   Pursuant to a License Agreement with Ashimori (the "PALTEM License"), the
Company has been granted the exclusive rights to use the patents, trademarks and
know-how related to the PALTEM-HL system (for all of North America) and         
PALTEM-SZ system (for all of the North America except the states of Connecticut,
Maine, Maryland, Massachusetts, Rhode Island, Vermont and Virginia in the United
States). In connection with the PALTEM License, the Company is obligated to pay 
royalties of 6% on PALTEM-HL installations and 7% on PALTEM-SZ installations.   
The PALTEM License also provides that if the Company does not purchase specified
minimum amounts of PAL-Liner during periods specified in the agreement, the     
PALTEM License could be changed to a non-exclusive basis and, if such minimum   
purchases continue not to be met, the agreement could be terminated. The PALTEM 
License provides that the parties will enter into a separate supply agreement   
for materials used in PALTEM system installations, and a separate cross-license 
agreement for Ashimori's Apollo system of point repair and the Tite Liner       
system.                                                                         

The PALTEM License extends for an initial term of 15 years as to the  
PALTEM-HL system and for an initial term ending December 31, 1994 for the       
PALTEM-SZ system, provided, however, that the parties have agreed to make a good
faith effort to agree prior to such date to an extension of the PALTEM-SZ       
license. In addition, the PALTEM License is subject to termination in the event 
of specified defaults.                                                          

NOTE I -- COMMON STOCK                                                          

  Except in elections of directors, the holders of the Class A and Class B
common stock vote together as a singe class, with each share of Class A common  
stock entitled to one vote and each share of Class B common stock entitled to   
one vote. The holders of Class B common stock are entitled to elect 55% of the  
members of the Board of Directors (rounded up to the nearest whole number) and  
the holders of Class A common stock are entitled to elect the remainder.        

   The holders of Class A common stock are entitled to a cash dividend in an
amount equal to at least 110% of any cash dividend paid on Class B common stock.
The holders of Class A common stock also are entitled to a liquidation          
preference equal to the initial public offering price per share of $8.00, before
any liquidating distribution on Class B common stock prior to January 1, 1997.  
Each share of Class B common stock is convertible by the holder into one share  
of Class A common stock at any time. If the number of shares of Class B common  
stock outstanding is less than 12-1/2% of the aggregate number of outstanding   
shares of both classes of common stock, then all Class B common stock shall be  
automatically converted into Class A common stock. Holders of Class A common    
stock have no conversion rights.                                                

NOTE J -- SIGNIFICANT CUSTOMERS                                                 

  Revenues from major customers (including direct and indirect contracts),
representing at least 10% of total annual contract revenues, were as follows for
the years ended September 30:                                                   

                                                        [Enlarge/Download Table]

                                                        1994         1993         1992    
                                                     ----------   ----------   ---------- 
                                                                                          
Metropolitan St. Louis Sewer District............... $14,314,000  $11,665,000  $ 9,643,000
City of Houston, Texas..............................         --           --    11,308,000
                                                      ----------   ----------   ----------
                                                     $14,314,000  $11,665,000  $20,951,000
                                                      ==========   ==========   ==========

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

NOTE K -- STOCK OPTION PLAN                                                     

     During 1986, the Company established the Insituform Mid-America, Inc. Stock
Option Plan (Plan) which, as amended, provides for the granting to employees,   
officers and directors of the Company options to purchase a maximum of 1,000,000
shares of Class A common stock. The Plan provides for granting of incentive     
stock options and non-qualified stock options.                                  

    All options granted under the Plan must have an exercise price of not less
than 100% of the fair market value of the Class A common stock on the date of   
grant. In lieu of exercise, the optionee may request payment of a stock         
appreciation right measured as of the date of the request, subject to approval  
by the Stock Option Committee. Changes in the number of shares subject to       
options for the years ended September 30 are summarized as follows:             

                                                        [Enlarge/Download Table]

                                                       1994                   1993                   1992         
                                               ---------------------  ---------------------  ---------------------
                                                            SHARES                 SHARES                 SHARES  
                                               AVERAGE      SUBJECT   AVERAGE      SUBJECT   AVERAGE      SUBJECT 
                                                PRICE      TO OPTION   PRICE      TO OPTION   PRICE      TO OPTION
                                               -------     ---------  -------     ---------  -------     ---------
                                                                                                                  
Beginning of year............................. $ 9.00       350,580   $ 7.83       271,780   $ 4.82       169,287 
Options granted...............................  13.14        29,400    11.50       100,000    11.25       120,626 
Options exercised.............................   9.50        (1,002)    5.38       (20,027)    4.50       (18,133)
Options cancelled.............................  10.39        (5,070)   11.25        (1,173)      --            -- 
                                                           ---------              ---------              ---------
End of year...................................   9.31       373,908     9.00       350,580     7.83       271,780 
                                               =======     =========  =======     =========  =======     =========
Exercisable at year-end.......................              226,888                174,603                159,653 

   There was no expense recorded with respect to the Plan for 1994, 1993 and
1992.                                                                           

NOTE L -- PROFIT-SHARING PLAN                                                   

    The Company maintains a profit-sharing plan for employees not covered by a
collective bargaining agreement. Employer contributions are discretionary and   
may be made from current or accumulated net profits at the discretion of the    
Company's Board of Directors. The Company did not record any profit-sharing     
expense for 1994. For 1993 and 1992, the Company recorded profit-sharing expense
of $200,000 and $230,000, respectively.                                         

NOTE M -- LITIGATION                                                            

The Company has been cited by the U.S. Occupational Safety and Health 
Administration (OSHA) for alleged violations of the Occupational Safety and     
Health Act of 1970 in connection with a jobsite accident. OSHA has assessed     
penalties aggregating approximately $1,000,000 arising out of the accident. The 
Company believes that OSHA's allegations neither accurately reflect the facts   
and circumstances of the accident nor accurately characterize the Company's     
strong safety program and commitment thereto. The Company also is involved in   
other litigation arising in the ordinary course of business. In the opinion of  
management, the amount of ultimate liability, if any, with respect to these     
actions (including the OSHA citation) will not materially affect the financial  
position of the Company.                                                        

NOTE N -- SEGMENT INFORMATION                                                   

     The Company's operations consist of a single business segment which applies
various trenchless technologies, principally the Insituform process, to solve   
problems requiring rehabilitation, new construction and improvement of pipeline 
systems including sewers, industrial waste lines, water lines and oil field,    
mining and industrial process pipelines.                                        

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Information concerning the Company's geographic segments for the years
ended September 30, was as follows:                                             

                                                        [Enlarge/Download Table]

                                                        1994         1993         1992    
                                                     ----------   ----------   ---------- 
                                                                                          
CONTRACT REVENUES:                                                                        
     United States.................................. $64,617,104  $54,652,542  $59,591,684
     Canada.........................................  7,201,951    5,621,272    7,053,206 
     Latin America..................................  3,740,233           --           -- 
     Other areas....................................         --       48,300      286,850 
     Eliminations...................................   (279,959)    (236,328)    (241,836)
                                                     ----------   ----------   ---------- 
                                                     $75,279,329  $60,085,786  $66,689,904
                                                     ==========   ==========   ========== 

                                                        [Enlarge/Download Table]

                                                        1994        1993         1992    
                                                     ----------  ----------   ---------- 
                                                                                         
INCOME FROM OPERATIONS:                                                                  
     United States.................................. $7,001,687  $4,924,332   $9,975,243 
     Canada.........................................  1,721,385   1,091,034    2,330,335 
     Latin America..................................    481,567          --           -- 
     Other areas....................................         --     (14,532)     (47,463)
                                                     ----------  ----------   ---------- 
                                                     $9,204,639  $6,000,834   $12,258,115
                                                     ==========  ==========   ========== 

                                                        [Enlarge/Download Table]

                                                        1994         1993         1992    
                                                     ----------   ----------   ---------- 
                                                                                          
IDENTIFIABLE ASSETS:                                                                      
     United States.................................. $55,745,124  $51,646,959  $43,930,662
     Canada.........................................  8,649,246    8,035,778    7,363,694 
     Latin America..................................  7,245,451           --           -- 
     Other areas....................................         --        4,800      161,420 
     Eliminations................................... (7,760,886)  (6,751,913)  (6,339,700)
                                                     ----------   ----------   ---------- 
                                                     $63,878,935  $52,935,624  $45,116,076
                                                     ==========   ==========   ========== 

NOTE O -- SUBSEQUENT EVENT                                                      

 In November 1994, the Company announced the proposed acquisition of the
pipeline rehabilitation business of ENVIROQ Corporation ("Enviroq"), including  
Enviroq's Insituform process business which is conducted by its Insituform      
Southeast, Inc. subsidiary. Insituform Southeast, Inc. operates in a licensed   
territory consisting of Alabama, Florida, Georgia, North Carolina and South     
Carolina. It also owns 42.5% of Midsouth Partners, which is the licensee of the 
Insituform process in Tennessee, most of Kentucky and northern Mississippi.     

 Under the terms of the proposed transaction, all assets and liabilities
related to Enviroq's interest in Synox Corporation (a development stage company 
which is engaged in the business of developing and testing a process for the    
treatment of municipal wastewater "sludge"), and its ownership interest in      
SPRAYROQ Corporation (a development stage company which offers a spray-applied  
resinous product used in rehabilitation of manholes, among other applications)  
will be transferred to a newly organized subsidiary, the stock of which will be 
distributed to Enviroq's stockholders, immediately prior to the transaction with
the Company. In addition, Enviroq will transfer $500,000 cash and the currently 
undeveloped portion of the real estate which it owns in Jacksonville, Florida to
the corporation to be spun-off.                                                 

Pursuant to the proposed transaction, which will be accounted for as a
purchase, the Company has agreed to pay $15.25 million cash. In addition, it has
agreed to issue a $3 million five-year subordinated promissory note in          
consideration for a covenant not to compete and enter into an agreement for     
consulting services providing for the Company's payment of $1 million over five 
years. Completion of the transaction is subject to customary closing conditions,
including approval by the stockholders of Enviroq.                              

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INSITUFORM MID-AMERICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]


                                                                                SEPTEMBER  
                                                                     JUNE 30        30     
                                                                      1995         1994    
                                                                   -----------  -----------
                                                                   (UNAUDITED)             
                                                                                           
ASSETS                                                                                     
CURRENT ASSETS                                                                             
  Cash and cash equivalents....................................... $ 2,924,814  $ 3,111,664
  Accounts receivable.............................................  16,857,017   15,770,080
  Costs and estimated earnings in excess of billings on                                    
     uncompleted contracts........................................  14,714,348    8,419,956
  Prepaid/refundable income taxes.................................     418,739      521,272
  Inventory.......................................................   5,376,083    2,938,463
  Prepaid expenses and other current assets.......................   4,485,481    2,782,654
                                                                   -----------  -----------
          TOTAL CURRENT ASSETS....................................  44,776,482   33,544,089
                                                                   -----------  -----------
PROPERTY AND EQUIPMENT............................................  51,116,101   34,025,871
Less accumulated depreciation.....................................  21,979,637   12,018,479
                                                                   -----------  -----------
          TOTAL PROPERTY AND EQUIPMENT............................  29,136,464   22,007,392
                                                                   -----------  -----------
LICENSE COSTS.....................................................   1,872,686    1,770,546
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED.............   6,303,878    2,141,353
DEFERRED NON-COMPETE EXPENSE......................................   3,669,200      923,046
PATENTS...........................................................   3,255,805    3,492,509
OTHER.............................................................   2,905,538           --
                                                                   -----------  -----------
          TOTAL OTHER ASSETS......................................  18,007,107    8,327,454
                                                                   -----------  -----------
                                                                   $91,920,053  $63,878,935
                                                                    ==========   ==========

                                                                                (Continued)

See notes to condensed consolidated financial statements. 

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INSITUFORM MID-AMERICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS -- (CONTINUED)

                                                        [Enlarge/Download Table]


                                                                                 SEPTEMBER   
                                                                     JUNE 30         30      
                                                                      1995          1994     
                                                                   -----------   ----------- 
                                                                   (UNAUDITED)               
                                                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY                                                         
CURRENT LIABILITIES                                                                          
  Notes payable to banks.......................................... $12,726,000   $ 6,460,214 
  Subordinated promissory note....................................   3,000,000            -- 
  Current portion of long-term debt...............................   1,529,528            -- 
  Accounts payable................................................   8,413,659     8,181,616 
  Dividends payable...............................................     157,282            -- 
  Accrued income taxes............................................     132,801       411,249 
  Accrued expenses................................................   4,963,449     6,810,141 
  Billings in excess of costs and estimated earnings on                                      
     uncompleted contracts........................................     140,939        63,071 
                                                                   -----------   ----------- 
          TOTAL CURRENT LIABILITIES...............................  31,063,658    21,926,291 
                                                                   -----------   ----------- 
LONG-TERM LIABILITIES                                                                        
  Long-term debt less current portion.............................  14,024,344            -- 
  Minority interest...............................................   1,390,902       575,501 
  Deferred income taxes...........................................   1,018,293     1,217,641 
  Other...........................................................     890,872       283,748 
                                                                   -----------   ----------- 
          TOTAL LONG-TERM LIABILITIES.............................  17,324,411     2,076,890 
                                                                   -----------   ----------- 
COMMITMENTS AND CONTINGENT LIABILITIES                                                       
STOCKHOLDERS' EQUITY                                                                         
  Preferred Stock -- $.01 par value, 500,000 shares authorized,                              
     none issued or outstanding...................................          --            -- 
  Common Stock:                                                                              
     Class A -- $.01 par value, 13,000,000 shares authorized,                                
      8,310,046 shares issued and outstanding at June 30, 1995,                              
      8,279,342 shares issued and outstanding at September 30,                               
      1994........................................................      83,100        82,793 
     Class B -- convertible $.01 par value, 6,000,000 shares                                 
      authorized, 2,472,985 shares issued and outstanding.........      24,730        24,730 
  Additional paid-in capital......................................  18,564,514    18,333,959 
  Retained earnings...............................................  25,245,279    21,765,402 
  Cumulative translation adjustments..............................    (385,639)     (331,130)
                                                                   -----------   ----------- 
          TOTAL STOCKHOLDERS' EQUITY..............................  43,531,984    39,875,754 
                                                                   -----------   ----------- 
                                                                   $91,920,053   $63,878,935 
                                                                    ==========    ========== 

See notes to condensed consolidated financial statements. 

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INSITUFORM MID-AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                    NINE MONTHS ENDED      
                                                                                         JUNE 30           
                                                                               --------------------------- 
                                                                                  1995            1994     
                                                                               -----------     ----------- 
                                                                                                           
Contract revenues............................................................. $77,611,419     $54,292,881 
Cost of contract revenues.....................................................  57,270,715      39,182,517 
                                                                               -----------     ----------- 
Gross profit..................................................................  20,340,704      15,110,364 
Costs and expenses:                                                                                        
  General and administrative expenses.........................................   7,856,049       6,323,656 
  Selling expenses............................................................   2,523,701       2,353,575 
  Research and development expenses...........................................     768,054          37,782 
                                                                               -----------     ----------- 
                                                                                11,147,804       8,715,013 
                                                                               -----------     ----------- 
Income from operations........................................................   9,192,900       6,395,351 
Interest income...............................................................     100,528          43,475 
Interest expense..............................................................    (782,679)       (182,773)
Joint venture income..........................................................     385,011         143,865 
Other expense.................................................................    (153,308)       (248,500)
                                                                               -----------     ----------- 
Income before income taxes and minority interest..............................   8,742,452       6,151,418 
Provision for income taxes....................................................   2,972,435       2,337,539 
                                                                               -----------     ----------- 
Income before minority interest...............................................   5,770,017       3,813,879 
Minority interest in income of consolidated subsidiary........................    (814,501)        (70,981)
                                                                               -----------     ----------- 
Net income.................................................................... $ 4,955,516     $ 3,742,898 
                                                                                ==========      ========== 
Net income per common share...................................................        $.45            $.34 
                                                                                      ====            ==== 

See notes to condensed consolidated financial statements. 

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INSITUFORM MID-AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                       NINE MONTHS ENDED       
                                                                            JUNE 30            
                                                                  ---------------------------- 
                                                                      1995            1994     
                                                                  ------------     ----------- 
                                                                                               
Cash flows from operating activities:                                                          
  Net income..................................................... $  4,955,516     $ 3,742,898 
  Adjustments to reconcile net income to net cash:                                             
     Decrease in accounts receivable.............................    1,249,920       2,254,370 
     Increase in costs and estimated earnings in excess of                                     
       billings on uncompleted contracts.........................   (4,490,518)     (2,683,917)
     Decrease in insurance claim receivable......................           --       3,003,511 
     Decrease in prepaid/refundable income taxes.................      215,213          52,793 
     Increase in inventory.......................................   (1,567,622)        (46,807)
     Increase in prepaid expenses and other current assets.......     (898,876)       (906,063)
     Increase (decrease) in accounts payable.....................     (689,959)        719,009 
     Increase in dividends payable...............................      157,282              -- 
     Increase (decrease) in accrued income taxes.................     (278,448)        177,982 
     Decrease in accrued expenses................................   (3,348,045)       (572,487)
     Increase (decrease) in billings in excess of costs and                                    
       estimated earnings on uncompleted contracts...............       77,868        (419,084)
     Depreciation................................................    3,548,053       2,224,429 
     Amortization................................................      686,692         502,091 
     Gain on sale of property and equipment......................       (7,158)         (3,877)
     Deferred income tax provision...............................     (199,348)         (6,095)
     Minority interest in income of consolidated subsidiary......      815,401          70,981 
     Other, net..................................................     (497,088)             -- 
                                                                  ------------     ----------- 
          Net cash provided (used) by operating activities.......     (271,117)      8,109,734 
                                                                  ------------     ----------- 
Cash flows from financing activities:                                                          
  Increase (decrease) in notes payable to banks..................    6,815,333      (1,015,000)
  Increase in long-term debt.....................................   15,250,000              -- 
  Repayment of current portion of long-term debt.................     (151,310)             -- 
  Increase in subordinated promissory note.......................    3,000,000              -- 
  Dividends paid to common stockholders..........................   (1,475,639)     (1,473,629)
  Proceeds from exercise of stock options........................      230,862           9,519 
  Proceeds from minority interest participation..................           --         400,000 
                                                                  ------------     ----------- 
          Net cash provided (used) by financing activities.......   23,669,246      (2,079,110)
                                                                  ------------     ----------- 
Cash flows from investing activities:                                                          
  Additions to property and equipment............................   (5,342,721)     (5,671,136)
  Proceeds from sale of property and equipment...................      162,251         233,758 
  Acquisition of business........................................  (18,250,000)             -- 
  Increase in license costs......................................     (100,000)             -- 
                                                                  ------------     ----------- 
          Net cash used by investing activities..................  (23,530,470)     (5,437,378)
                                                                  ------------     ----------- 
Effect of exchange rate changes on cash..........................      (54,509)        (82,003)
                                                                  ------------     ----------- 
Net increase (decrease) in cash and cash equivalents.............     (186,850)        511,243 
Cash and cash equivalents at September 30........................    3,111,664       2,088,966 
                                                                  ------------     ----------- 
Cash and cash equivalents at June 30............................. $  2,924,814     $ 2,600,209 
                                                                  ============     =========== 
Supplemental cash flow information:                                                            
  Interest paid.................................................. $    405,138     $   181,972 
  Income taxes paid..............................................    3,068,084       2,256,650 

See notes to condensed consolidated financial statements. 

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) 

1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                 

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for   
interim financial information and with the instructions to Form 10-Q and Rule   
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete 
financial statements. In the opinion of management, all adjustments (consisting 
of normally recurring accruals) considered necessary for a fair presentation    
have been included. For further information, refer to the consolidated financial
statements and footnotes thereto included elsewhere in this Joint Proxy         
Statement/Prospectus for the fiscal year ended September 30, 1994.              

Operating results for the nine months ended June 30, 1995 are not     
necessarily indicative of the results that may be expected for the fiscal year  
ending September 30, 1995.                                                      

2.  COMPUTATION OF INCOME PER SHARE                                             

Net income per common share was computed by dividing net income by the
weighted average number of common shares and common share equivalents           
outstanding during the period.                                                  

                                                        [Enlarge/Download Table]

                                                                 NINE MONTHS ENDED     
                                                                      JUNE 30,         
                                                             --------------------------
                                                                1995           1994    
                                                             -----------    -----------
                                                                                       
Weighted average number shares outstanding..................  11,088,223     11,117,438

3.  LEGAL PROCEEDINGS                                                           

     By letters, dated April 4, 1995, Insituform North America Corp. and NuPipe,
Inc., subsidiaries of Insituform Technologies, Inc. ("ITI"), notified Insituform
Southeast, Inc. and NuPipe Southeast Corporation, then subsidiaries of Enviroq  
Corporation ("Enviroq"), that the ITI subsidiaries refused to grant their       
consent under the Insituform and NuPipe license agreements with the subsidiaries
of Enviroq to the transactions contemplated by the acquisition agreement under  
which the Company acquired the pipeline rehabilitation business of Enviroq. On  
April 4, 1995, Insituform North America Corp. and NuPipe, Inc. (collectively,   
the "ITI Plaintiffs") filed a Complaint for Declaratory Relief (the "Declaratory
Action") against Insituform Southeast, Inc., NuPipe Southeast Corporation,      
Enviroq and the Company in the Chancery Court for the Thirtieth Judicial        
District at Memphis, Shelby County, Tennessee. In the Declaratory Action, the   
ITI Plaintiffs are seeking a declaratory judgment that they were within their   
rights to refuse to consent under Insituform and NuPipe license agreements with 
subsidiaries of Enviroq, to the transactions contemplated by the acquisition    
agreement, and that they possess all legal rights under such agreements arising 
out of the failure by the respective licensees to obtain such consent. The      
defendants have caused the Declaratory Action to be removed to Federal District 
Court for the Western District of Tennessee. Pursuant to agreements between the 
parties to the Declaratory Action, the proceedings have been stayed by Court    
order until the earlier to occur of the completion of the proposed merger (the  
"Merger") with ITI Acquisition Corp., as a result of which the Company would    
become a wholly-owned subsidiary of ITI (see Note 6), or January 31, 1996. The  
parties also have agreed to take no further legal action with respect to the ITI
Plaintiffs' failure to grant consent, in the Declaratory Action or otherwise,   
through the earlier to occur of the Merger or the termination of the related    
Agreement and Plan of Merger prior to the Merger.                               

    Insitu, Inc. ("Insitu"), one of the three partners in MidSouth Partners, a
Tennessee general partnership, has filed a demand for arbitration claiming that 
E-MidSouth, Inc. ("E-MidSouth"), another partner in MidSouth Partners and a     
wholly-owned subsidiary of Insituform Southeast, Inc. (an indirect wholly-owned 
subsidiary of the Company), has breached the partnership agreement by Enviroq's 
entering into the                                                               

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
(UNAUDITED) 

acquisition agreement with the Company. E-MidSouth denies that it has breached  
the partnership agreement. The arbitration proceeding has been stayed until     
October 2, 1995 by consent of the parties.                                      

     Pursuant to citations issued December 15, 1993, the Occupational Safety and
Health Administration, Kansas City Area Office ("OSHA"), alleged that the       
Company and its subsidiaries violated certain provisions of the Occupational    
Safety and Health Act of 1970 in connection with rehabilitation activities in   
Kansas City, Missouri in June 1993. The allegations related to an accident in   
which one of the employees of a Company subsidiary was swept away and drowned in
a flash flood resulting from a sudden and torrential thunderstorm. OSHA alleged 
that the subsidiary's safety procedures were inadequate and assessed penalties  
aggregating approximately $1 million. The Company believes that OSHA's          
allegations neither accurately reflected the facts and circumstances of the     
accident nor accurately characterized the Company's strong safety program and   
commitment thereto. The Company cooperated fully with OSHA in its investigation 
and does not believe that the allegations were warranted. To avoid the costs and
uncertainties of defending the citations in adversarial proceedings, the Company
settled this claim in July 1995 by agreeing to pay OSHA an aggregate of $325,000
in equal semi-annual installments through January 1997.                         

Pursuant to a complaint filed August 1, 1995, Enviroq Corporation     
(formerly, New Enviroq Corporation; "New Enviroq") initiated an action in the   
Circuit Court of Jefferson County, Alabama, for a judgment on the $3.0 million  
Subordinated Promissory Note (the "Subordinated Note") issued in connection with
the Company's acquisition of Insituform Southeast, Inc. and related corporations
in April 1995 (the "Enviroq Acquisition"). New Enviroq claims that the Company  
is in default under the Subordinated Note. The Company denies liability and     
intends to vigorously defend the suit and pursue claims against New Enviroq     
arising out of the Enviroq Acquisition, including New Enviroq's obligations     
under the acquisition agreement. In the Company's opinion, the ultimate         
resolution of this litigation will not have a material adverse effect upon the  
Company's financial condition or results of operations.                         

4. LONG-TERM DEBT                                                               

As of June 30, 1995, the Company was in default under the tangible net
worth covenants in its term loan agreement, for which the lenders have granted a
waiver. The Company's lenders also have waived the event of default arising out 
of developments with respect to the Company's $3.0 million Subordinated Note as 
described in Note 7.                                                            

5. ACQUISITION                                                                  

  On April 18, 1995, the Company completed the acquisition of the pipeline
rehabilitation business of Enviroq, including Enviroq's Insituform process      
business which is conducted by its Insituform Southeast, Inc. subsidiary.       
Insituform Southeast, Inc. operates in a licensed territory consisting of       
Alabama, Florida, Georgia, North Carolina and South Carolina. It indirectly also
owns 42.5% of Midsouth Partners, which is the licensee of the Insituform process
in Tennessee, most of Kentucky and northern Mississippi.                        

   Under the terms of the transaction, all assets and liabilities related to
Enviroq's interest in Synox Corporation (a development stage company which is   
engaged in the business of developing and testing a process for the treatment of
municipal wastewater "sludge"), and its ownership in SPRAYROQ Corporation (a    
development stage company which offers a spray-applied resinous product used in 
rehabilitation of manholes, among other applications) were transferred to a     
newly organized subsidiary, the stock of which was distributed to Enviroq's     
stockholders immediately prior to the transaction with the Company. In addition,
Enviroq transferred $500,000 cash and the undeveloped portion of real estate    
which it owned in Jacksonville, Florida to the corporation spun-off.            

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
(UNAUDITED) 

Pursuant to the transaction, which was accounted for as a purchase of 
stock, the Company paid $15.25 million cash and issued a $3.0 million five-year 
subordinated promissory note in consideration for a covenant not to compete and 
entered into an agreement for consulting services providing for the Company's   
payment of $1 million over five years. See Note 7 for information regarding     
demands made for payment under the Subordinated Note.                           

The condensed consolidated statements of income include the Enviroq   
operations from the dates the respective stock was acquired. Unaudited pro forma
results of operations, assuming the above-described acquisition had occurred at 
October 1, 1993 are as follows:                                                 

                                                        [Enlarge/Download Table]

                                                                         NINE MONTHS ENDED    
                                                                             JUNE 30,         
                                                                     -------------------------
                                                                        1995          1994    
                                                                     -----------   -----------
                                                                                              
Contract revenues................................................... $89,663,163   $70,849,130
Net income..........................................................   4,272,540     3,902,226
Earnings per share..................................................        $.39          $.35

     This pro forma information does not purport to be indicative of the results
that actually would have been obtained if the operations had been combined as of
October 1, 1993, and is not intended to be a projection of future results.      

See Note 3 for a description of the moratorium on rights in dispute,  
including with respect to the Insituform licenses of Enviroq's subsidiaries as a
result of the consummation of the transaction without ITI's consent and         
information concerning arbitration proceedings initiated by one of the partners 
of MidSouth Partners alleging an event of default by the Enviroq subsidiary     
partner thereto.                                                                

6. MERGER AGREEMENT                                                             

   The Company has entered into an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of May 23, 1995, by and among the Company, Insituform     
Technologies, Inc. ("ITI"), and ITI Acquisition Corp. ("ITI Sub"), a            
wholly-owned subsidiary of ITI, providing for the merger of ITI Sub into the    
Company, as a result of which the Company would become a wholly-owned subsidiary
of ITI. Pursuant to the terms of the Merger Agreement, holders of the Class A   
Common Stock of the Company would be entitled to receive 1.15 shares of Class A 
Common Stock of ITI ("ITI Stock") for each share of the Company's Class A Common
Stock held. In connection with the Merger, the holders of the Company's Class B 
Common Stock have agreed to convert their shares into Class A Common Stock on a 
share-for-share basis immediately prior to the consummation of the Merger.      

     It is anticipated that the Merger will constitute a tax-free reorganization
under federal income tax laws and, accordingly, holders of IMA Class A Common   
Stock would not recognize taxable gain or loss upon their receipt of ITI Stock  
in the Merger. In addition, it is anticipated that the Merger would be accounted
for using the pooling-of-interests method of accounting.                        

Consummation of the Merger is subject to customary closing conditions,
including approval by the respective stockholders of the Company and ITI.       
Pending completion of the Merger, the Company and ITI agreed to certain         
covenants relating to the operation of their respective businesses. The Merger  
Agreement also provides that it may be terminated prior to closing under certain
circumstances, including if the closing has not occurred by January 31, 1996.   

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INSITUFORM MID-AMERICA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
(UNAUDITED) 

7. SUBSEQUENT EVENT                                                             

By letter, dated July 14, 1995, counsel for New Enviroq alleged that a
default had occurred with respect to the payment of the interest due to New     
Enviroq on June 30, 1995 under the Subordinated Note in the principal amount of 
$3.0 million issued by the Company in April 1995 in connection with the         
acquisition described in Note 5. New Enviroq demanded payment of such interest  
installment and purported to declare the entire principal due and payable. The  
Company advised New Enviroq that such purported acceleration was improper and   
directed New Enviroq to withdraw it. On August 1, 1995, New Enviroq filed a     
lawsuit against the Company in the Circuit Court of Jefferson County, Alabama,  
seeking a judgment in respect of the Company's alleged default under the        
Subordinated Note.                                                              

   The Company believes it is not in default under the Subordinated Note and
intends to vigorously defend the lawsuit and pursue claims against New Enviroq  
arising out of the Enviroq Acquisition, including New Enviroq's obligations     
under the acquisition agreement. The Company's senior lenders have waived the   
event of default under the Company's principal financing agreements which       
otherwise would have occurred as a result of New Enviroq's actions in respect of
the Subordinated Note. The Company is seeking to negotiate a mutually acceptable
resolution regarding the status of the Subordinated Note. Pending such          
resolution, the Company classified the obligation as a current liability in the 
accompanying balance sheet. In the Company's opinion, the ultimate resolution   
thereof will not have a material adverse effect upon the Company's financial    
condition or results of operations.                                             

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INDEPENDENT AUDITORS' REPORT

IMA Merger Sub, Inc. and Subsidiary                                             

 We have audited the accompanying consolidated balance sheets of Enviroq
Corporation and subsidiaries (renamed IMA Merger Sub, Inc.) as of March 25, 1995
and March 26, 1994, and the related consolidated statements of operations,      
stockholders' equity, and cash flows for each of the two years in the period    
ended March 25, 1995. 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 consolidated financial position of Enviroq           
Corporation and subsidiaries as of March 25, 1995 and March 26, 1994, and the   
results of their operations and their cash flows for each of the two years in   
the period ended March 25, 1995 in conformity with generally accepted accounting
principles.                                                                     

As discussed in Note 1, to the consolidated financial statements, the 
Company discontinued the operations of two of its subsidiaries; Synox           
Corporation and Sprayroq, Inc. and spun off their related assets, together with 
certain other assets, to a newly formed company on April 18, 1995. The loss from
operations of these subsidiaries is included in income from discontinued        
operations in the accompanying consolidated financial statements. In addition on
April 18, 1995, the Company sold all of its common stock to Insituform          
Mid-America, Inc.                                                               

    As discussed in Note 16, the Company is involved in certain litigation and
arbitration proceedings in connection with the merger with Insituform           
Mid-America, Inc. regarding certain aspects of its Insituform and NuPipe        
licensing agreements and the partnership agreement of Midsouth Partners. The    
ultimate outcome of these litigation and arbitration proceedings cannot         
presently be determined. Accordingly, no provision for any loss that may result 
upon resolution of these matters has been made in the accompanying consolidated 
financial statements.                                                           

Deloitte & Touche LLP                                                           
Jacksonville, Florida                                                           
June 9, 1995                                                                    

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ENVIROQ CORPORATION 

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                              MARCH 1995    MARCH 1994  
                                                                              -----------   ----------- 
                                                                                                        
                                                ASSETS                                                  
Current assets:                                                                                         
  Cash and cash equivalents.................................................  $   621,477   $   218,806 
  Contracts receivable (net of allowance for doubtful accounts of $0).......    3,671,831     3,315,651 
  Marketable securities (at amortized cost which approximates market                                    
    value)..................................................................      203,083       360,485 
  Inventories...............................................................      960,716       876,083 
  Costs and estimated earnings in excess of related billings................      966,245     1,751,194 
  Receivables from related parties..........................................       15,978        86,358 
  Income taxes receivable...................................................      112,998               
  Prepaid expenses and other assets.........................................      219,316       259,876 
                                                                              -----------   ----------- 
                                                                                6,771,644     6,868,453 
                                                                              -----------   ----------- 
Investment and other assets:                                                                            
  Investments in and advances to affiliate..................................    1,322,529       913,808 
  Receivable from New Enviroq...............................................      344,162               
  Deferred income taxes.....................................................      131,806       170,332 
  Other assets..............................................................      987,852     1,024,802 
                                                                              -----------   ----------- 
                                                                                2,786,349     2,108,942 
                                                                              -----------   ----------- 
Property, plant and equipment, at cost:                                                                 
  Land......................................................................      252,789       252,789 
  Buildings.................................................................    2,589,081     2,523,441 
  Construction equipment....................................................    5,543,573     5,608,100 
  Other equipment and vehicles..............................................    2,448,462     1,985,306 
  Construction in process...................................................      182,952        89,069 
                                                                              -----------   ----------- 
                                                                               11,016,857    10,458,705 
  Less accumulated depreciation.............................................   (6,595,047)   (6,549,775)
                                                                              -----------   ----------- 
                                                                                4,421,810     3,908,930 
                                                                              -----------   ----------- 
Net assets of discontinued operations.......................................    1,943,227     2,718,767 
                                                                              -----------   ----------- 
                                                                              $15,923,030   $15,605,092 
                                                                              ===========   =========== 
                                  LIABILITIES AND STOCKHOLDERS' EQUITY                                  
Current liabilities:                                                                                    
  Note payable..............................................................  $     1,000   $     1,000 
  Accounts payable and accrued expenses.....................................    2,071,227     1,226,867 
  Salaries, wages and related taxes.........................................      251,252       275,044 
  Billings in excess of costs and estimated earnings........................                     34,706 
  Due to related parties....................................................      696,726       914,295 
  Income taxes payable......................................................                     74,106 
  Current portion of long-term debt and capital leases......................      126,115       121,663 
                                                                              -----------   ----------- 
                                                                                3,146,320     2,647,681 
Long-term debt and capital leases...........................................      339,401       465,515 
Deferred compensation.......................................................      560,783       412,498 
                                                                              -----------   ----------- 
                                                                                4,046,504     3,525,694 
                                                                              -----------   ----------- 
Commitments and contingencies (Notes 4, 7 and 16)                                                       
Stockholders' Equity:                                                                                   
  Class C preferred stock -- $1 par value; authorized 1,000,000 shares, none                            
    issued or outstanding                                                                               
  Common stock -- $.44 par value; authorized 15,000,000 shares, issued                                  
    4,916,791 shares........................................................    2,163,388     2,163,388 
  Additional paid-in capital................................................    9,700,619    10,178,748 
  Retained earnings (deficit)...............................................      134,311      (140,946)
                                                                              -----------   ----------- 
                                                                               11,998,318    12,201,190 
  Less treasury stock at cost, 51,404 shares................................     (121,792)     (121,792)
                                                                              -----------   ----------- 
                                                                               11,876,526    12,079,398 
                                                                              -----------   ----------- 
                                                                              $15,923,030   $15,605,092 
                                                                              ===========   =========== 

See Accompanying Notes to Consolidated Financial Statements.

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ENVIROQ CORPORATION 

CONSOLIDATED STATEMENTS OF OPERATIONS 

                                                        [Enlarge/Download Table]

                                                                           YEARS ENDED         
                                                                   --------------------------- 
                                                                   MARCH 1995      MARCH 1994  
                                                                   -----------     ----------- 
                                                                                               
Revenues.......................................................... $21,263,498     $22,015,031 
Cost of revenues..................................................  17,252,236      17,903,924 
                                                                   -----------     ----------- 
  Gross profit....................................................   4,011,262       4,111,107 
Selling, general and administrative expenses......................   2,868,240       2,657,907 
                                                                   -----------     ----------- 
  Income from operations..........................................   1,143,022       1,453,200 
                                                                   -----------     ----------- 
Other income:                                                                                  
  Equity in income of affiliate...................................     531,971         150,254 
  Interest........................................................      78,897          57,042 
  Other...........................................................     208,342         138,050 
                                                                   -----------     ----------- 
                                                                       819,210         345,346 
                                                                   -----------     ----------- 
Other expense:                                                                                 
  Interest........................................................      85,299          57,437 
  Other...........................................................      45,268          48,159 
                                                                   -----------     ----------- 
                                                                       130,567         105,596 
                                                                   -----------     ----------- 
Income from continuing operations before income taxes.............   1,831,665       1,692,950 
Income tax provision..............................................    (794,000)       (671,000)
                                                                   -----------     ----------- 
Income from continuing operations.................................   1,037,665       1,021,950 
Discontinued operations (Note 1):                                                              
  Loss from operations of discontinued subsidiaries Synox and                                  
     Sprayroq (less applicable income tax benefit of $272,000 and                              
     $265,000)....................................................    (762,408)       (647,206)
                                                                   -----------     ----------- 
Net income........................................................ $   275,257     $   374,744 
                                                                    ==========      ========== 

See Accompanying Notes to Consolidated Financial Statements.

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ENVIROQ CORPORATION 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
YEARS ENDED MARCH 1995 AND 1994 

                                                        [Enlarge/Download Table]

                                  COMMON STOCK                                                                  
                                ($.44 PAR VALUE)     ADDITIONAL    RETAINED      TREASURY STOCK                 
                             ----------------------    PAID-IN     EARNINGS    ------------------               
                              SHARES       AMOUNT      CAPITAL     (DEFICIT)   SHARES    AMOUNT        TOTAL    
                             ---------   ----------  -----------   ---------   ------   ---------   ----------- 
                                                                                                                
Balance March 27, 1993...... 4,871,791   $2,143,588  $10,072,923   $(515,690)  51,404   $(121,792)  $11,579,029 
Net income..................                                         374,744                            374,744 
Issuance of common stock....    45,000       19,800      105,825                                        125,625 
                             ---------   ----------  -----------   ---------   ------   ---------   ----------- 
Balance March 26, 1994...... 4,916,791    2,163,388   10,178,748    (140,946)  51,404    (121,792)   12,079,398 
Net income..................                                         275,257                            275,257 
Organization costs of Synox                                                                                     
  and Sprayroq..............                            (478,129)                                      (478,129)
                             ---------   ----------  -----------   ---------   ------   ---------   ----------- 
Balance March 25, 1995...... 4,916,791   $2,163,388  $ 9,700,619   $ 134,311   51,404   $(121,792)  $11,876,526 
                             =========   ==========  ============  ==========  ======   ==========  ============

See Accompanying Notes to Consolidated Financial Statements.

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ENVIROQ CORPORATION 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                            YEARS ENDED         
                                                                    --------------------------- 
                                                                    MARCH 1995      MARCH 1994  
                                                                    -----------     ----------- 
                                                                                                
CASH FLOWS FROM OPERATING ACTIVITIES:                                                           
Net income........................................................  $   275,257     $   374,744 
Adjustments to reconcile net income as adjusted to net cash                                     
  provided by operating activities:                                                             
  Depreciation....................................................      975,922       1,099,004 
  Amortization....................................................      193,908         142,018 
  Gain on disposal of fixed assets................................      (74,059)        (36,638)
  Gain on disposal of securities..................................       (1,500)         (3,145)
  Decrease in deferred income taxes...............................       38,526          69,008 
  Equity in income of affiliates..................................     (531,971)       (150,254)
  Increase in contracts receivable................................     (356,180)     (1,182,237)
  (Increase) decrease in income taxes receivable..................     (112,998)         96,414 
  Receivable from New Enviroq.....................................     (344,162)                
  Decrease (increase) in receivable from related parties..........       70,380         (47,523)
  Increase in inventories.........................................      (84,633)       (139,905)
  Decrease (increase) in costs and estimated earnings in excess of                              
     related billings.............................................      784,949      (1,027,533)
  Decrease (increase) in prepaid expenses and other current                                     
     assets.......................................................       40,560        (207,088)
  Increase in other assets........................................     (156,958)       (262,847)
  Increase in accounts payable and accrued expenses...............      809,526          16,211 
  (Decrease) increase in salaries, wages and related taxes........      (23,792)        160,063 
  Decrease in billings in excess of costs and estimated                                         
     earnings.....................................................      (34,706)        (37,294)
  (Decrease) increase in due to related parties...................     (182,735)        726,826 
  (Decrease) increase in income taxes payable.....................      (74,106)         74,106 
  Increase in deferred compensation...............................      148,285          62,923 
  Discontinued operations -- non cash charges and working                                       
     capital changes..............................................      285,358         233,920 
                                                                    -----------     ----------- 
Net cash provided by (used in) operating activities...............    1,644,871         (39,227)
                                                                    -----------     ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                           
Purchases of marketable securities................................   (8,870,000)     (3,500,000)
Sales of marketable securities....................................    9,028,902       4,504,668 
Proceeds from sale of equipment...................................      129,613          38,781 
Additions to property, plant and equipment........................   (1,544,356)       (856,603)
Distribution of Midsouth Partnership Capital......................      123,250                 
Cash provided by (used in) discontinued segment...................      500,362         (62,817)
                                                                    -----------     ----------- 
Net cash (used in) provided by investing activities...............     (632,229)        124,029 
                                                                    -----------     ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                           
Payments on obligations under capital leases......................      (52,698)        (39,331)
Payments on long-term debt........................................      (68,964)        (68,966)
Issuance of additional common stock...............................                       84,375 
                                                                    -----------     ----------- 
Net cash used in financing activities.............................     (121,662)        (23,922)
                                                                    -----------     ----------- 
  Net increase in cash and cash equivalents.......................      890,980          60,880 
  Cash and cash equivalents at beginning of year..................      235,666         174,786 
                                                                    -----------     ----------- 
  Cash and cash equivalents at end of year........................  $ 1,126,646     $   235,666 
                                                                     ==========      ========== 

See Accompanying Notes to Consolidated Financial Statements.

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 1995 AND 1994 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

A. GENERAL INFORMATION                                                      

Pursuant to a Merger Agreement, dated November 2, 1994, by and among  
Enviroq Corporation ("Enviroq"), Insituform Mid-America, Inc. ("IMA") and IMA   
Acquisition Corp. ("Acquisition Corp."), on April 18, 1995, Acquisition Corp.   
acquired the common stock of and merged into Enviroq which changed its name to  
IMA Acquisition Corp. and, together with its wholly-owned subsidiaries,         
Insituform Southeast, Inc., Enviroq Services, Inc. (which subsequently changed  
its name to ISE Services, Inc.), E-Midsouth, Inc. and NuPipe Southeast, Inc.    
became subsidiaries of IMA. Immediately prior to the merger, the net assets of  
Synox Corporation ("Synox"), a wholly-owned subsidiary of Enviroq, and Sprayroq,
Inc. ("Sprayroq"), a 50% owned subsidiary of Enviroq, approximately 11 acres of 
unimproved land and $500,000 in cash were transferred to New Enviroq, a newly   
formed public company, at their respective book values and all of the shares of 
New Enviroq were spun off by Enviroq to its shareholders. Each share of common  
stock of Enviroq issued and outstanding was converted into a right to receive a 
cash payment equal to the pro rata portion of the merger consideration of       
$15,250,000.                                                                    

    The consolidated financial statements of the Company have been restated to
reflect Synox and Sprayroq as discontinued operations. Summarized financial     
information for the discontinued operations as of and for the years ended March 
1995 and 1994 is as follows:                                                    

                                                        [Enlarge/Download Table]

                                                                         1995          1994    
                                                                      -----------   ---------- 
                                                                                               
Balance Sheet Data:                                                                            
Assets                                                                                         
  Current Assets                                                                               
     Cash and cash equivalents....................................... $   505,169   $   16,860 
     Marketable securities...........................................                  500,000 
     Other current assets............................................     171,709      261,430 
                                                                      -----------   ---------- 
                                                                          676,878      778,290 
  Other Noncurrent Assets............................................     722,211      807,555 
  Net Property, Plant and Equipment..................................   1,153,873    1,247,538 
                                                                      -----------   ---------- 
Total Assets.........................................................   2,552,962    2,833,383 
                                                                      -----------   ---------- 
Liabilities                                                                                    
  Current Liabilities................................................      45,902       77,531 
  Noncurrent Liabilities.............................................     563,833       37,085 
                                                                      -----------   ---------- 
Total Liabilities....................................................     609,735      114,616 
                                                                      -----------   ---------- 
Net Assets of Discontinued Operations................................ $ 1,943,227   $2,718,767 
                                                                       ==========    ========= 
Discontinued Loss Data:                                                                        
Related Party Revenues............................................... $   173,523   $  142,796 
Other Revenues.......................................................      43,110       78,322 
                                                                      -----------   ---------- 
Total Revenues.......................................................     216,633      221,118 
                                                                      -----------   ---------- 
Loss Before Income Taxes.............................................  (1,034,408)    (912,206)
Income Tax Benefit...................................................     272,000      265,000 
                                                                      -----------   ---------- 
Net Loss............................................................. $  (762,408)  $ (647,206)
                                                                       ==========    ========= 

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
YEARS ENDED MARCH 1995 AND 1994 

The Merger Agreement provides that New Enviroq will be responsible to 
reimburse Enviroq/IMA and pay all transaction costs incurred by Enviroq in      
connection with the negotiation and consummation of the Merger Agreement. These 
costs include:                                                                  

- Registration of New Enviroq shares,                                 

- Preparation and filing of Enviroq's Proxy Statement, and            

   - All related professional fees and expenses and printing costs including
the investment banking fees associated with the fairness opinion. 

B. BASIS OF PRESENTATION                                                    

Principles of Consolidation                                           

The consolidated financial statements include the accounts of Enviroq 
Corporation, its wholly-owned subsidiaries, and its 50% owned subsidiary,       
Sprayroq, Inc. Sprayroq, Inc. is included on a consolidated basis because the   
Company has a majority voting interest of the stock of Sprayroq, Inc. As        
previously disclosed, the accounts of Synox and Sprayroq are disclosed as       
discontinued operations in the consolidated financial statements. All           
significant intercompany transactions are eliminated. The equity method of      
accounting is used for the Company's investment in its unconsolidated affiliate.

Allocated Revenues and Expenses                                       

   Certain subsidiaries of Enviroq purchased chemical products from Sprayroq
in order to fulfill requirements of outside contracts. The revenues earned from 
these outside contracts were allocated to Sprayroq based on the fair value of   
the products. Revenues allocated to Sprayroq were approximately $174,000 and    
$143,000 in 1995 and 1994. In addition, a pro-rata share of general and         
administrative corporate costs incurred by Enviroq have been allocated to Synox 
and Sprayroq based upon estimated time expended by corporate employees, services
performed by outside vendors and usage of various corporate materials related to
the operations of Synox and Sprayroq. General and administrative expenses       
allocated to Synox and Sprayroq were approximately $219,000 in 1995 and 1994.   
Management believes the above stated allocations of revenues and expenses were  
made on a reasonable basis; however, they do not necessarily reflect the results
of operations which would have occurred had Synox and Sprayroq been independent 
entities nor are they necessarily indicative of future revenues or expenses.    

C. FISCAL YEAR                                                              

     Enviroq's fiscal year ends on the last Saturday in March. Fiscal years 1995
and 1994 consisted of 52 weeks.                                                 

D. ENVIROQ'S BUSINESS AND OPERATING CYCLE                                   

Enviroq is engaged in the business of pipeline, sewer and conduit     
reconstruction, repair and rehabilitation using a process that provides a       
continuous, jointless tube with little or no excavation under normal conditions.
Enviroq has the exclusive licensee for the Insituform and NuPipe processes in   
Alabama, Florida, Georgia, North Carolina, and South Carolina, and in addition, 
own 42.5% of Midsouth Partners, a general partnership which is the exclusive    
licensee of the Insituform and NuPipe processes in Tennessee, most of Kentucky, 
and northern Mississippi.                                                       

The work is performed under cost-plus-fee and fixed-priced contracts, 
primarily with state and local government agencies. Because such contracts do   
not extend beyond one year, the accompanying balance sheets are presented on a  
classified basis.                                                               

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
YEARS ENDED MARCH 1995 AND 1994 

E. REVENUE AND COST RECOGNITION                                             

Revenues from construction contracts are recognized on the            
percentage-of-completion method, measured by the percentage of costs incurred to
total estimated costs for each contract (cost-to-cost method). This method is   
used because management considers costs incurred to be the best available       
measure of progress on these contracts. Revenues from cost-plus-fee contracts   
are recognized on the basis of costs incurred during the period plus the fee    
earned, measured by the cost-to-cost method.                                    

Contract costs include all direct material and labor costs and those  
indirect costs related to contract performance, such as indirect labor,         
supplies, tools, repairs and depreciation. Selling, general and administrative  
costs are charged to expense as incurred. Changes in job performance, conditions
and estimated profitability may result in subsequent revisions to costs and     
income. When possible, such revisions are recognized in the period that the     
related contract revenues and costs are recorded. Otherwise, they are recognized
in the period in which the revisions are determined. The asset, "Costs and      
estimated earnings in excess of related billings", represents revenues          
recognized in excess of amounts billed. The liability, "Billings in excess of   
costs and estimated earnings", represents billings in excess of revenues        
recognized.                                                                     

F. CASH AND CASH EQUIVALENTS                                                

    Enviroq considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents except for certain short
term state and municipal bond funds.                                            

G. INVENTORIES                                                              

  Inventories, consisting of raw materials and supplies, are valued at the
lower of cost (first-in, first-out method) or market.                           

H. MARKETABLE SECURITIES                                                    

   Marketable securities consist primarily of state and municipal tax exempt
bonds and bond funds of various maturities carried at amortized cost which      
approximates market value. These investments are subject to market risk         
associated with fixed income securities. Enviroq classifies all debt and        
marketable equity securities in one or more of the following three categories:  
(1) Held-to-Maturity; (2) Available-for-Sale; and (3) Trading. Enviroq considers
all securities to be available-for-sale securities. Realized gains and losses on
these securities are determined on a specific identification basis. There were  
no unrealized holding gains or losses at March 1995 and 1994.                   

I. INVESTMENT IN AND ADVANCES TO AFFILIATE                                  

Enviroq's investment in Midsouth Partners, a general partnership, is  
accounted for by the equity method. Under the terms of the partnership          
agreement, Enviroq has a 42.5% interest in the partnership's profits or losses. 

J. INTANGIBLES                                                              

    Costs incurred for certain sub-license agreements are being amortized over
a 12 year period using the straight-line method.                                

    Organizational costs for NuPipe Southeast, Inc. and Enviroq Services, Inc.
are being amortized over a three year period using the straight-line method.    

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
YEARS ENDED MARCH 1995 AND 1994 

    Enviroq purchased a license agreement from NU-PIPE, Inc. in December 1990.
This agreement provides NuPipe Southeast, Inc. exclusive process rights within  
its territory and use of copyrighted information. This cost is being amortized  
over the life of the agreement (15 years) using the straight-line method.       

    The excess of Enviroq's basis in Synox over the underlying net asset value
is being amortized over a 15 year period using the straight-line method.        

Management periodically evaluates the likelihood of impairment of its 
intangible assets based upon anticipated future cash flows.                     

K. PROPERTY, PLANT AND EQUIPMENT                                            

   Depreciation is provided principally on the straight-line method over the
following estimated useful lives of the assets:                                 

                                                                [Download Table]

                                                               YEARS  
                                                              --------
                                                                      
Buildings...................................................   5 to 40
Construction equipment......................................   2 to 15
Other equipment and vehicles................................   2 to  7

Repairs and maintenance costs are charged to expense as incurred.     

L. CAPITALIZATION OF INTEREST                                               

   Interest incurred on major capital expenditures is capitalized during the
period of construction. Capitalized interest was $14,357 and $3,664 for the     
years ended March 1995 and 1994, respectively.                                  

M. RESEARCH AND DEVELOPMENT COSTS                                           

Research and development costs are expensed as incurred. For the years
ended March 1995 and 1994 such costs relating to continuing operations were     
$69,295 and $47,320, respectively.                                              

N. INCOME TAXES                                                             

   Enviroq Corporation files consolidated federal income tax returns. Income
tax expense (benefit) is allocated to each member of the consolidated group on  
the basis of their respective taxable income or loss included in the            
consolidated income tax returns. Enviroq utilizes an asset and liability        
approach to financial accounting for income taxes. Under this method deferred   
tax assets and liabilities are recognized based on differences between financial
statement and tax basis of assets and liabilities using presently enacted tax   
rates.                                                                          

In 1995 and 1994, deferred income taxes are provided for the temporary
differences between the financial reporting basis and the tax basis of Enviroq  
assets and liabilities.                                                         

O. PRODUCT WARRANTIES                                                       

    Enviroq generally warrants that its products meet contract specifications.
Such warranties cover materials and workmanship and are generally effective for 
a period of one year from date of contract completion. Liability for warranty   
claims is accrued when management determines that a specific liability exists   
and the amount can be reasonably estimated.                                     

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
YEARS ENDED MARCH 1995 AND 1994 

P. RECLASSIFICATIONS                                                        

     Certain reclassifications have been made to the 1994 consolidated financial
statements to conform with the presentation adopted for 1995.                   

2. CONTRACTS RECEIVABLE                                                         

    Substantially all the contracts are with governmental units located within
Enviroq's geographic territory. Contracts receivable are as follows:            

                                                                [Download Table]

                                                             MARCH 1995  MARCH 1994
                                                             ----------  ----------
                                                                                   
Completed contracts......................................... $  826,556  $1,077,604
Contracts in process........................................  2,100,609   1,960,791
Retained....................................................    744,666     277,256
                                                             ----------  ----------
                                                             $3,671,831  $3,315,651
                                                             ==========  ==========

3. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS                        

                                                        [Enlarge/Download Table]

                                                           MARCH 1995    MARCH 1994  
                                                           -----------   ----------- 
                                                                                     
Costs on uncompleted contracts............................ $ 5,424,974   $ 4,848,507 
Estimated earnings........................................     452,204     1,366,433 
                                                           -----------   ----------- 
                                                             5,877,178     6,214,940 
Less billings to date.....................................  (4,910,933)   (4,498,452)
                                                           -----------   ----------- 
                                                           $   966,245   $ 1,716,488 
                                                           ===========   =========== 

Included in the accompanying consolidated balance sheets under the    
following captions:                                                             

                                                                [Download Table]

                                                           MARCH 1995   MARCH 1994  
                                                           -----------  ----------- 
                                                                                    
Costs and estimated earnings in excess of billings........ $   966,245  $ 1,751,194 
Billings in excess of costs and estimated earnings........                  (34,706)
                                                              --------   ---------- 
                                                           $   966,245  $ 1,716,488 
                                                              ========   ========== 

4. INVESTMENT IN AND ADVANCES TO AFFILIATE                                      

   The Midsouth Partners partnership agreement requires each partner to fund
additional capital contributions as may be necessary for operations of the      
partnership in proportion to their respective interests. In addition, Enviroq   
and one other partner are each obligated to loan up to $250,000 to Midsouth     
Partners for operating capital. As of March 1995, Enviroq had no loans          
outstanding under this agreement. During the year ended March 1995, Midsouth    
Partners distributed $290,000 to its owners. Enviroq's portion of this          
distribution                                                                    

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
YEARS ENDED MARCH 1995 AND 1994 

was $123,250. Summary information for Midsouth Partners as of March 1995 and    
1994 and for the twelve month periods then ended is as follows:                 

                                                        [Enlarge/Download Table]

                                                                1995         1994    
                                                             (UNAUDITED)  (UNAUDITED)
                                                             ----------   ---------- 
                                                                                     
Current assets.............................................. $2,545,224   $2,026,386 
Long-term assets............................................  1,293,161      971,842 
                                                             ----------   ---------- 
Total assets................................................ $3,838,385   $2,998,228 
                                                             ==========   ========== 
Current liabilities......................................... $  691,335   $  765,582 
Long-term liabilities.......................................     35,218       82,510 
                                                             ----------   ---------- 
Total liabilities........................................... $  726,553   $  848,092 
                                                             ==========   ========== 
Partnership equity.......................................... $3,111,832   $2,150,136 
                                                             ==========   ========== 
Revenues.................................................... $7,857,190   $6,357,515 
                                                             ==========   ========== 
Gross profit................................................ $2,227,243   $1,479,577 
                                                             ==========   ========== 
Net income.................................................. $1,251,696   $  352,855 
                                                             ==========   ========== 
Enviroq's interest:                                                                  
  Share of cumulative undistributed partnership income...... $1,322,529   $  913,808 
                                                             ==========   ========== 

5. LONG-TERM DEBT AND CAPITAL LEASES                                            

                                                                [Download Table]

                                                              MARCH 1995  MARCH 1994
                                                              ----------  ----------
                                                                                    
Mortgage obligation under industrial development bond........  $396,551    $465,516 
Less current portion.........................................   (68,966)    (68,965)
                                                               --------    -------- 
                                                               $327,585    $396,551 
                                                               ========    ======== 

   In December 1985, Enviroq received proceeds of $965,145 from the issuance
of a $1,000,000 Industrial Development Bond (the "Bond") by the City of         
Jacksonville, Florida and financed by Barnett Bank of Jacksonville, N.A. (the   
"Bank"). Principal is due in 174 equal monthly installments of $5,747 beginning 
July 1986 plus interest. Interest is computed at a rate of 91.7% of the Bank's  
base lending rate. The Bank's base lending rate was 9% at March 1995. The       
obligation is redeemable at the Bank's option, every five years beginning       
December 1, 1988 or upon occurrence of a tax violation as defined in the        
agreements. The obligation is secured by a first mortgage and a first security  
interest in substantially all of Enviroq's real and personal properties at March
1995.                                                                           

Restrictive covenants include: restrictions on the sale or transfer of
project assets, change in entities, material adverse change in financial        
condition or operations, the subordination of all notes payable to stockholders,
affiliates or related parties, limitations on additional funded debt, permitting
total debt not to exceed 3 times net worth (including subordinated debt),       
maintaining net worth (including subordinated debt) of not less than $2,000,000,
maintaining cash flow available for debt service at 1.5 times annual debt       
service for all funded debt before dividends may be paid, and maintaining a     
current ratio of at least 1.3-to-1.                                             

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
YEARS ENDED MARCH 1995 AND 1994 

Aggregate long-term debt maturities subsequent to March 1995 are as   
follows:                                                                        

                                                                [Download Table]

MARCH                                                               
-----                                                               
                                                                    
1996......................................................  $ 68,966
1997......................................................    68,966
1998......................................................    68,966
1999......................................................    68,966
2000......................................................    68,966
Thereafter................................................    51,721
                                                            --------
                                                            $396,551
                                                            ========

    Enviroq acquired some of its vehicles subject to leasing arrangements that
qualify for capitalization. The net book value of leased vehicles at March 25,  
1995 is approximately $64,000.                                                  

Future minimum rental payments for obligations under capital leases at
March 25, 1995 are as follows:                                                  

                                                                [Download Table]
                                                                     
1996......................................................  $ 60,662 
1997......................................................    11,956 
                                                            -------- 
          Total...........................................    72,618 
          Less interest...................................    (3,653)
                                                            -------- 
          Total principal portion.........................  $ 68,965 
                                                            ======== 

At March 25, 1995, Enviroq had available two bank lines of credit     
aggregating $2,500,000 which terminated effective with the merger.              

6. INCOME TAXES                                                                 

 The provision for income taxes from continuing operations for the years
ended March 1995 and 1994 includes the following:                               

                                                                [Download Table]

                                                                  1995      1994  
                                                                --------  --------
                                                                                  
Current........................................................ $755,000  $602,000
Deferred.......................................................   39,000    69,000
                                                                --------  --------
Income tax provision........................................... $794,000  $671,000
                                                                ========  ========

The differences between the provision for income taxes from continuing
operations and income taxes computed using the Federal statutory rate for the   
years ended March 1995 and 1994 are as follows:                                 

                                                                [Download Table]

                                                                  1995      1994  
                                                                --------  --------
                                                                                  
Taxes computed at Federal statutory rate....................... $623,000  $576,000
State income taxes, net of Federal tax benefit.................   76,000    61,000
Nondeductible expenses.........................................   95,000    34,000
                                                                --------  --------
                                                                $794,000  $671,000
                                                                ========  ========

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
YEARS ENDED MARCH 1995 AND 1994 

The types of temporary differences and their related tax effects which
create deferred taxes at March 1995 and 1994 are summarized as follows:         

                                                                [Download Table]

                                                                 1995        1994   
                                                               ---------   -------- 
                                                                                    
Assets:                                                                             
  Deferred compensation....................................... $ 209,172   $156,733 
  Other.......................................................    73,802     61,732 
                                                               ---------   -------- 
          Total assets........................................   282,974    218,465 
                                                               ---------   -------- 
Liabilities:                                                                        
  Equity in Midsouth Partners.................................   (92,632)   (48,133)
  Other.......................................................   (58,536)           
                                                               ---------   -------- 
          Total liabilities...................................  (151,168)   (48,133)
                                                               ---------   -------- 
          Net deferred tax asset.............................. $ 131,806   $170,332 
                                                               =========   ======== 

7. COMMITMENTS                                                                  

   Enviroq leases certain vehicles and equipment used in its operations on a
month-to-month basis. Total rent expense for all operating leases for the years 
ended March 1995 and 1994 was approximately $207,000 and $212,000 respectively. 
These amounts do not include equipment rented on a day-to-day basis.            

   Under the terms of its sublicense agreements, Enviroq is obligated to pay
the licensor royalties of 8% of contract revenue, excluding certain preparatory 
and finishing work. These agreements require the payment of minimum royalties of
approximately $448,000 per year as of March 1995; extend for the life of the    
underlying patents and are cancelable, either by the licensee upon written      
notice, or by the licensor upon nonpayment of royalties or certain other events 
as defined.                                                                     

Pursuant to a supplement to the Sublicense Agreement dated December 1,
1990, future minimum royalties may be waived by the licensor if the licensor    
approves Enviroq's marketing and sales plan with respect to licensed processes. 
The Company has submitted such a plan which has been approved for the 1995      
royalty year.                                                                   

8. RELATED PARTY TRANSACTIONS                                                   

 Substantially all of Enviroq's insurance is purchased through Assurance
Agency, Inc., an affiliate of SCE, Incorporated ("SCE"), a principal stockholder
of Enviroq until April 18, 1995. Enviroq leases warehouse space from Sullivan,  
Long and Hagerty ("SLH") (the parent of SCE). The lease term is one year,       
renewable annually, and requires monthly payments of $1,750. Enviroq also       
purchased marketing promotion and related services from Market Potential,       
Incorporated, which is owned by a party associated with SCE.                    

   Enviroq purchased Insitutube, NuPipe and related products from Insituform
Technologies, Inc. ("ITI") which was a stockholder of Enviroq until April 18,   
1995.                                                                           

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
YEARS ENDED MARCH 1995 AND 1994 

   Total expenditures by Enviroq to the above affiliates for the years ended
March 1995 and 1994 were approximately as follows:                              

                                                        [Enlarge/Download Table]

                                                                 1995         1994    
                                                              -----------  ---------- 
                                                                                      
ITI.........................................................  $ 4,560,000  $4,223,000 
SCE and affiliates..........................................    1,063,000   1,053,000 
SLH.........................................................       27,000      27,000 
                                                              -----------  ---------- 
                                                                5,650,000   5,303,000 
Capitalized expenditures....................................                  (41,000)
                                                              -----------  ---------- 
Amounts charged to cost of revenues and selling, general and                          
  administrative............................................  $ 5,650,000  $5,262,000 
                                                                =========   ========= 

For the years ended March 1995 and 1994 Enviroq provided $17,000 and  
$71,000, respectively, of operational support and contract related services to  
Midsouth Partners. For the years ended March 1995 and 1994, Midsouth Partners   
provided operational support to Enviroq of $15,000 and $298,000, respectively.  

Due to related parties is comprised of the following:                 

                                                                [Download Table]

                                                                1995         1994   
                                                             -----------  ----------
                                                                                    
Royalties payable to licensors.............................. $   360,000  $  341,000
Inventory purchases payable to ITI..........................     257,000     395,000
Insurance payable to Assurance Agency, Inc..................      50,000     111,000
Inventory purchases payable to Sprayroq.....................      22,000      35,000
Payables to SCE and SLH.....................................       8,000            
Payable to Midsouth Partners................................                  32,000
                                                             -----------  ----------
                                                             $   697,000  $  914,000
                                                               =========   =========

9. RETIREMENT PLAN                                                              

     Enviroq has a Retirement Plan (the "Plan") for its employees, which remains
in effect with the IMA merger, which allows participants to make contributions  
by salary reduction pursuant to Section 401(K) of the Internal Revenue Code. The
Board of Directors approved Enviroq contributions to the Plan for the year ended
March 1995 and 1994 of $43,268 and $40,096, respectively, for allocation to     
eligible participant individual accounts. Participants under the Plan are fully 
vested within one year for Enviroq contributions.                               

10. STATEMENT OF CASH FLOWS                                                     

    Supplemental disclosure of cash flow information for the years ended March
1995 and 1994 follows:                                                          

                                                                [Download Table]

                                                                   1995       1994  
                                                                 ---------  --------
                                                                                    
Cash paid for:                                                                      
  Interest...................................................... $  38,681  $ 61,355
  Income taxes.................................................. $ 483,323  $ 89,130

 Non-cash investing transactions for 1995 include the write-off of fully
depreciated property, plant and equipment of $930,650. Non-cash financing       
transactions for 1995 include the accrual of organization costs of approximately
$478,000 with a corresponding reduction in additional paid-in capital.          

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
YEARS ENDED MARCH 1995 AND 1994 

  Non-cash investing and financing transactions for 1994 includes $161,000
related to assets acquired under capital leases and the issuance of 15,000      
shares of common stock valued at $41,250 related to a previous acquisition      
described in Note 14.                                                           

11. PRINCIPAL CUSTOMER INFORMATION                                              

    Revenues from major customers (those providing over 10% of total revenues)
were $2,880,000 and $2,975,000 (Miami/Dade County, Florida) for fiscal years    
1995 and 1994, and $3,866,000 (Cobb County, Georgia) for fiscal year 1994.      

12. STOCK OPTION PLANS                                                          

In August 1986, Enviroq adopted an incentive stock option plan and a  
non-qualified stock option plan. As of March 1994, options to purchase 491,060  
shares of Enviroq common stock were outstanding. The IMA merger consideration   
cash payment of $15,250,000 included payment to stock option holders under both 
plans with stock options having an exercise price of less than the merger       
consideration price of $3.13 per share. As of April 18, 1995, the IMA merger    
date, holders of options to purchase 143,500 shares with exercise prices ranging
from $2.125 to $2.9167 were paid the difference between the merger consideration
price per share of $3.13 and the applicable exercise price per share which      
totalled approximately $46,000. In addition, on April 18, 1995, options to      
purchase 38,000 shares were exercised at exercise prices ranging from $3.1875 to
$3.5063. Stock options to purchase 209,384 shares of common stock with exercise 
prices in excess of $3.13 per share were terminated effective with the merger.  
The remaining options to purchase 100,176 shares of Enviroq common stock        
expired.                                                                        

13. DEFERRED COMPENSATION BENEFITS                                              

Enviroq established non-qualified deferred compensation agreements, as
amended, for certain employees providing for fixed annual benefits ranging from 
$10,000 to $100,000 payable over a period of 10 years in event of death, full   
disability or retirement at age 65. These deferred compensation agreements      
remain in effect subsequent to the merger with IMA on April 18, 1995.           

   Benefits will be funded by life insurance contracts purchased by Enviroq.
The cost of these benefits is being charged to expense and accrued using a      
present value method over the expected terms of employment. The charge to       
expense in continuing operations for the years ended March 1995 and 1994 was    
$231,842 and $93,640, respectively. Enviroq (IMA subsequent to April 18, 1995)  
reserves the right to terminate these agreements.                               

14. PURCHASE OF C&L WATERPROOFING, INC.                                         

   On January 2, 1991, Enviroq purchased substantially all the assets of C&L
Waterproofing, Inc., a manhole reconstruction company for $320,000. The         
transaction was accounted for by the purchase method. Results of this business  
from January 2, 1991 are included in the accompanying consolidated financial    
statements.                                                                     

 Because of a contingent purchase price provision, Enviroq issued 15,000
shares of common stock to the seller in fiscal year 1994. The fair value of the 
stock issued is accounted for as an additional cost of the acquired business.   

15. OFFICERS INDEMNIFICATION TRUST                                              

Enviroq (IMA subsequent to April 18, 1995) maintains a trust fund to  
indemnify officers and directors in the event legal proceedings are undertaken  
against the officers or directors as a result of actions on behalf of           

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ENVIROQ CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 
YEARS ENDED MARCH 1995 AND 1994 

Enviroq. Trust investments are United States Treasury notes and bonds with      
varying maturity dates. Trust assets may only be used upon approval of the Board
of Directors and for the uses specified in the trust agreement. The trust       
balance as of March 1995 and 1994 was $354,745 and $334,568, respectively.      

16. LEGAL PROCEEDINGS                                                           

  Enviroq is involved in certain litigation and arbitration proceedings in
connection with the IMA merger regarding certain aspects of its Insituform and  
NuPipe licensing agreements and the partnership agreement of Midsouth Partners. 
The principal issues involve the failure by Insituform North America Corp. and  
NuPipe, Inc., subsidiaries of Insituform Technologies, Inc. ("ITI"), to grant   
consent under their respective licenses, and of a partner of Midsouth Partners, 
owned by Insituform East, to grant consent under the governing partnership      
agreement, to the transactions under the merger agreement between IMA and       
Enviroq. ITI, IMA and Enviroq have entered into various agreements to take no   
further legal action regarding such issues pending consummation of the          
transactions proposed between ITI and IMA or termination of such arrangements.  
Management is unable at this time to determine the effect, which could be       
material, of the ultimate outcome of these litigation and arbitration           
proceedings. Accordingly, no provision for any loss that may result upon        
resolution of these matters has been made in these consolidated financial       
statements.                                                                     

17. SUBSEQUENT EVENTS                                                           

   In addition to the Enviroq merger into IMA on April 18, 1995, ITI and IMA
on May 23, 1995 entered into a definitive agreement which provides for the      
merger into IMA of a subsidiary of ITI formed for that purpose, as a result of  
which IMA would become a wholly-owned subsidiary of ITI. The ITI and IMA merger 
transaction is conditional upon obtaining certain approvals and other conditions
being met.                                                                      

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INDEPENDENT AUDITORS' REPORT

To the Stockholders                                                             
Gelco Insituform/NuPipe Entities                                                
Salem, Oregon                                                                   

We have audited the accompanying combined balance sheets of Gelco     
Insituform/NuPipe Entities as of December 31, 1993 and 1992, and the related    
combined statements of income, equity, and cash flows for the years then ended. 
These combined financial statements are the responsibility of the Entities'     
management. Our responsibility is to express an opinion on these combined       
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 audits to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence   
supporting the amounts and disclosures in the combined financial statements. An 
audit also includes assessing the accounting principles used and significant    
estimates made by management, as well as evaluating the overall combined        
financial statement presentation. We believe that our audits provide a          
reasonable basis for our opinion.                                               

In our opinion, the accompanying combined financial statements present
fairly, in all material respects, the financial position of Gelco               
Insituform/NuPipe Entities as of December 31, 1993 and 1992, and the results of 
their operations and their cash flows for the years then ended, in conformity   
with generally accepted accounting principles.                                  

                              ALDRICH, KILBRIDE & TATONE

March 7, 1994 (except for Note 13, which is dated August 24, 1994)              
Salem, Oregon                                                                   

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GELCO INSITUFORM/NUPIPE ENTITIES

COMBINED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                           DECEMBER 31,        
                                                                     ------------------------- 
                                                                        1993           1992    
                                                                     ----------     ---------- 
                                                                                               
ASSETS                                                                                         
CURRENT ASSETS:                                                                                
  Cash.............................................................. $       --     $  154,961 
                                                                     ----------     ---------- 
  Receivables:                                                                                 
     Trade, less allowance for doubtful accounts of zero............  3,490,385      3,291,180 
     Retainage......................................................    378,139        521,691 
     Other..........................................................      6,845             -- 
     Related party (Note 2).........................................      2,769         16,332 
     Notes, related party (Note 2)..................................    256,000             -- 
                                                                     ----------     ---------- 
       Total receivables............................................  4,134,138      3,829,203 
  Inventories (Notes 1 and 6).......................................    686,927        458,691 
  Prepaid expenses..................................................     62,142         21,213 
  Costs and earnings in excess of billings (Note 11)................    280,477        200,731 
                                                                     ----------     ---------- 
       TOTAL CURRENT ASSETS.........................................  5,163,684      4,664,799 
PROPERTY AND EQUIPMENT, NET (NOTES 1, 3 AND 6)......................  3,260,656      2,611,564 
OTHER...............................................................     24,900         36,900 
                                                                     ----------     ---------- 
                                                                     $8,449,240     $7,313,263 
                                                                      =========      ========= 
LIABILITIES AND STOCKHOLDERS' EQUITY                                                           
CURRENT LIABILITIES:                                                                           
  Bank overdraft.................................................... $   26,008     $       -- 
  Bank lines of credit (Note 6).....................................    204,001        102,835 
  Payables:                                                                                    
     Trade..........................................................    727,584        371,459 
     Related party (Note 2).........................................    602,773        614,369 
     Retainage......................................................      4,691             -- 
  Accrued expenses (Note 8).........................................    603,682        682,004 
  Billings in excess of costs and estimated earnings (Note 11)......    287,842         15,274 
  Current portion of long-term debt (Note 7)........................     33,232         11,696 
  Notes and advances, related party (Note 2)........................  2,243,373      1,750,000 
                                                                     ----------     ---------- 
       TOTAL CURRENT LIABILITIES....................................  4,733,186      3,547,637 
                                                                     ----------     ---------- 
LONG-TERM DEBT, NET OF CURRENT PORTION (NOTE 7).....................    129,686             -- 
                                                                     ----------     ---------- 
MINORITY INTEREST IN SUBSIDIARIES (NOTE 1)..........................     87,953         91,290 
                                                                     ----------     ---------- 
COMMITMENTS AND CONTINGENCIES (NOTES 6, 9, 10 AND 14)                                          
STOCKHOLDERS' EQUITY:                                                                          
  Common stock (Note 1).............................................    315,875        315,875 
  Contributed capital...............................................  1,195,182      1,495,161 
  Cumulative foreign currency translation adjustments (Note 1)......    (27,411)       (22,735)
  Retained earnings (Note 1)........................................  2,014,769      1,886,035 
                                                                     ----------     ---------- 
       TOTAL STOCKHOLDERS' EQUITY...................................  3,498,415      3,674,336 
                                                                     ----------     ---------- 
                                                                     $8,449,240     $7,313,263 
                                                                      =========      ========= 

The accompanying notes are an integral part of the combined financial 
statements. 

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GELCO INSITUFORM/NUPIPE ENTITIES

COMBINED STATEMENTS OF INCOME 

                                                        [Enlarge/Download Table]

                                                                    YEARS ENDED DECEMBER 31,   
                                                                   --------------------------- 
                                                                      1993            1992     
                                                                   -----------     ----------- 
                                                                                               
CONSTRUCTION REVENUES (NOTE 12)................................... $17,688,948     $21,038,781 
CONSTRUCTION COSTS (NOTES 2 AND 11)...............................  11,308,664      12,363,916 
                                                                   -----------     ----------- 
     Gross profit.................................................   6,380,284       8,674,865 
GENERAL AND ADMINISTRATIVE EXPENSES (NOTE 2)......................   5,411,868       4,516,224 
                                                                   -----------     ----------- 
     Income from operations.......................................     968,416       4,158,641 
                                                                   -----------     ----------- 
OTHER INCOME (EXPENSE):                                                                        
  Interest........................................................     (86,095)        (11,933)
  Miscellaneous...................................................      47,472          26,157 
                                                                   -----------     ----------- 
     Total other income (expense).................................     (38,623)         14,224 
                                                                   -----------     ----------- 
     Income before minority interest in subsidiaries..............     929,793       4,172,865 
MINORITY INTEREST IN INCOME OF SUBSIDIARIES.......................      (1,059)        (58,296)
                                                                   -----------     ----------- 
     Net income................................................... $   928,734     $ 4,114,569 
                                                                   ===========     =========== 
PRO FORMA INCOME TAXES:                                                                        
  Income before income taxes...................................... $   929,793     $ 4,172,865 
  Pro forma income taxes (Notes 1 and 5)..........................     308,534       1,580,879 
                                                                   -----------     ----------- 
     Pro forma net income......................................... $   621,259     $ 2,591,986 
                                                                   ===========     =========== 

The accompanying notes are an integral part of the combined financial 
statements. 

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COMBINED STATEMENTS OF EQUITY 

                                                        [Enlarge/Download Table]

                                                  YEARS ENDED DECEMBER 31, 1993 AND 1992              
                                      --------------------------------------------------------------- 
                                                                            CUMULATIVE                
                                                                              FOREIGN                 
                                                                             CURRENCY                 
                                       COMMON    CONTRIBUTED   RETAINED     TRANSLATION               
                                       STOCK      CAPITAL      EARNINGS     ADJUSTMENTS      TOTAL    
                                      --------   ----------   -----------   -----------   ----------- 
                                                                                                      
BALANCES, December 31, 1991.......... $315,875   $1,003,185   $ 2,452,528    $  14,090    $ 3,785,678 
  Distributions......................       --           --    (4,681,062)          --     (4,681,062)
  Contributions......................       --      491,976            --           --        491,976 
  Translation adjustments............       --           --            --      (36,825)       (36,825)
  Net income for the year............       --           --     4,114,569           --      4,114,569 
                                      --------   ----------   -----------   -----------   ----------- 
BALANCES, December 31, 1992..........  315,875    1,495,161     1,886,035      (22,735)     3,674,336 
  Distributions......................       --     (299,979)     (800,000)          --     (1,099,979)
  Translation adjustments............       --           --            --       (4,676)        (4,676)
  Net income for the year............       --           --       928,734           --        928,734 
                                      --------   ----------   -----------   -----------   ----------- 
BALANCES, December 31, 1993.......... $315,875   $1,195,182   $ 2,014,769    $ (27,411)   $ 3,498,415 
                                      ========    =========    ==========    =========     ========== 

The accompanying notes are an integral part of the combined financial 
statements. 

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GELCO INSITUFORM/NUPIPE ENTITIES

COMBINED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                    YEARS ENDED DECEMBER 31,   
                                                                   --------------------------- 
                                                                      1993            1992     
                                                                   -----------     ----------- 
                                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES:                                                          
  Net income...................................................... $   928,734     $ 4,114,569 
  Adjustments to reconcile net income to net cash provided by                                  
     operating activities:                                                                     
     Depreciation and amortization................................   1,032,753         817,070 
     (Gain) on sale of assets.....................................          --         (10,662)
     Currency translation.........................................       9,474          (2,612)
     Minority interest in income of subsidiaries..................       1,059          58,296 
     Changes in operating assets and liabilities:                                              
       (Increase) in receivables..................................     (48,935)     (1,779,092)
       (Increase) decrease in prepaid expenses....................     (40,929)         26,106 
       (Increase) decrease in inventories.........................    (228,236)          3,616 
       Increase in accounts payable and accrued expenses..........     270,898         470,869 
       (Increase) decrease in underbillings.......................     (79,746)         39,252 
       Increase in overbillings...................................     272,568           1,944 
                                                                   -----------     ----------- 
          Net cash provided by operating activities...............   2,117,640       3,739,356 
                                                                   -----------     ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                          
  Purchase of property and equipment..............................  (1,688,391)       (841,756)
  Proceeds from sale of equipment.................................          --          21,205 
  Net loans to related parties....................................    (562,627)       (245,899)
                                                                   -----------     ----------- 
          Net cash used by investing activities...................  (2,251,018)     (1,066,450)
                                                                   -----------     ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                          
  Advances on bank lines of credit................................     101,166         102,835 
  Proceeds from long-term debt....................................     162,918              -- 
  Distributions to stockholders...................................    (299,979)     (2,879,562)
  Contributions from stockholders.................................          --         238,667 
  Principal payments on debt......................................     (11,696)        (13,612)
                                                                   -----------     ----------- 
          Net cash used by financing activities...................     (47,591)     (2,551,672)
                                                                   -----------     ----------- 
          Net increase (decrease) in cash.........................    (180,969)        121,234 
CASH, BEGINNING OF YEAR...........................................     154,961          33,727 
                                                                   -----------     ----------- 
CASH, END OF YEAR................................................. $   (26,008)    $   154,961 
                                                                   ===========     =========== 
SUPPLEMENTAL INFORMATION:                                                                      
  Cash paid for interest.......................................... $    86,095     $    11,933 
                                                                   ===========     =========== 
  Noncash investing and financing activities for 1993:                                         

                                                        [Enlarge/Download Table]

                                                                 DISTRIBUTIONS  CONTRIBUTIONS
                                                                 -----------    -----------  
                                                                                             
Total........................................................... $(1,099,979)   $        --  
Noncash equity transfers by reduction of intercompany debt......     800,000             --  
                                                                 -----------      ---------  
        Cash (distributed)...................................... $  (299,979)   $        --  
                                                                 ===========      =========  
Noncash investing and financing activities for 1992:                                         
Total........................................................... $(4,681,062)   $   491,976  
Noncash equity transfers by reduction of intercompany debt......   1,801,500       (253,309) 
                                                                 -----------      ---------  
        Cash (distributed) contributed.......................... $(2,879,562)   $   238,667  
                                                                 ===========      =========  

The accompanying notes are an integral part of the combined financial 
statements. 

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NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1993 AND 1992

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES                               

PRINCIPLES OF COMBINATION                                                   

These combined financial statements include Gelco Services, Inc. (an  
S-Corporation), Geltech Constructors, Inc. (an S-Corporation), Mar-Tech         
Insituform, Ltd. (a Canadian Corporation), Gelco Nu-Pipe, Inc. (an              
S-Corporation), Gelco Insituform West (a Partnership) for 1992, and certain     
assets owned by Gelco Corporation (an S-Corporation) (the "Gelco                
Insituform/NuPipe Entities"). The Gelco Insituform/NuPipe Entities are part of a
group of companies jointly owned by James Monaghan and Richard Beck, and        
represent principally the operations of the Insituform and NuPipe processes of  
pipeline repair and reconstruction. In August 1994, the Entities' stockholders  
entered into a letter of intent with Insituform Technologies, Inc. whereby      
Insituform Technologies, Inc. is to purchase the Gelco Insituform/NuPipe        
Entities.                                                                       

     Therefore, these financial statements have been prepared as if the Entities
had operated as a single group since their respective dates of organization, and
have been accounted for as a combination of companies under common control at   
historical book values. All significant intercompany balances and transactions  
have been eliminated.                                                           

  Gelco Insituform West was dissolved, and its assets distributed to Gelco
Services, Inc. as of December 31, 1992.                                         

BUSINESS ACTIVITIES                                                         

Gelco Services, Inc., Geltech Constructors, Inc., Mar-Tech Insituform,
Ltd., Gelco NuPipe, Inc., and Gelco Insituform West for 1992, are engaged       
primarily in the reconstruction and repair of underground pipelines for public, 
private and governmental clients through the use of the Insituform and NuPipe   
processes. The Entities grant credit to their customers who are located         
primarily in Oregon, Washington, Alaska, Idaho, Montana, California, Nevada,    
Hawaii and British Columbia.                                                    

OWNERSHIP AND MINORITY INTEREST                                             

The Gelco Insituform/NuPipe Entities, with the exception of Mar-Tech  
Insituform, Ltd. and Gelco Insituform West, are owned 66.67% by James Monaghan  
and 33.33% by Richard Beck. Mar-Tech Insituform, Ltd. is owned 73% by Gelco     
Services, Inc., and 27% by an unrelated party. Gelco Insituform West was owned  
66.67% by Bemo, Inc. and 33.33% by Gelco Services, Inc. Bemo, Inc. is owned by  
James Monaghan (66.67%) and Richard Beck (33.33%).                              

REVENUE RECOGNITION                                                         

Revenue is recognized using the percentage-of-completion method of    
accounting and takes into account the cost and estimated earnings and revenue to
date on contracts not yet completed.                                            

The amount of revenue recognized is that portion of the total contract
price that cost incurred to date bears to anticipated final total cost, based on
current estimates of cost to complete.                                          

Contract costs include all direct labor and related payroll benefits, 
materials, and equipment costs.                                                 

As long-term contracts extend over one or more accounting periods,    
revisions in cost and earnings estimated during the course of the work are      
reflected in the accounting period in which the facts which require the revision
become known.                                                                   

  At the time a loss on a contract becomes known, the entire amount of the
estimated ultimate loss is recognized in the financial statements.              

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
DECEMBER 31, 1993 AND 1992

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES -- (CONTINUED)                

REVENUE RECOGNITION -- (CONTINUED)                                          

Contracts which are substantially complete are considered closed for  
financial statement purposes.                                                   

  The current asset, "costs and estimated earnings in excess of billings,"
represents revenues recognized in excess of amounts billed (underbillings). The 
current liability, "billings in excess of costs and estimated earnings,"        
represents billings in excess of revenues recognized (overbillings).            

INVENTORIES                                                                 

   Inventories consist of materials and supplies and are stated at the lower
of cost or market (first-in, first-out).                                        

PROPERTY AND EQUIPMENT                                                      

     Property and equipment are stated at cost. Depreciation is calculated using
the straight-line and declining balance methods. Estimated useful lives are as  
follows:                                                                        

                                                                [Download Table]

                                                                       YEARS
                                                                       -----
                                                                            
Leasehold improvements...............................................   5-31
Construction equipment...............................................   3-7 
Office furniture and equipment.......................................   3-7 

    Maintenance and repairs are charged to expense when incurred. Renewals and
betterments are capitalized. Upon the sale or other disposition of equipment,   
the original cost and accumulated depreciation are eliminated from the accounts,
and gains and losses are recognized currently.                                  

CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENTS                         

 Assets and liabilities of foreign subsidiaries are translated into U.S.
Dollars at the exchange rates in effect at the balance sheet date. Revenues and 
expenses are translated at average rates for the period. The cumulative         
translation adjustments are recorded as a separate component of stockholders'   
equity.                                                                         

COMMON STOCK                                                                

   The common stock of the corporations at December 31, 1993 and 1992, is as
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                                            SHARES   
                                                                SHARES    ISSUED AND 
                                                   PAR VALUE  AUTHORIZED  OUTSTANDING
                                                   ---------  ----------  -----------
                                                                                     
Gelco Services, Inc. .............................    None         5,000     3,075   
Geltech Constructors, Inc. .......................    None           500        75   
Gelco Nu-Pipe, Inc. ..............................   $   1         5,000       900   
Mar-Tech Insituform, Ltd. ........................    None     1,000,050       253   

INCOME TAXES                                                                

"S" CORPORATIONS                                                      

    The stockholders of Gelco Services, Inc., Gelco Nu-Pipe, Inc., and Geltech
Constructors, Inc., have elected to be taxed under the provisions of Subchapter 
S of the Internal Revenue Code. Under those provisions, the Companies do not pay
corporate income taxes on their taxable income. Instead, the                    

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
DECEMBER 31, 1993 AND 1992

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES -- (CONTINUED)                

stockholders are generally individually liable for income taxes on their        
respective shares of each company's taxable income (see Note 5). Retained       
earnings consists of $1,027,995 of earnings prior to the Subchapter S elections.
The remainder is attributable to undistributed earnings under the provisions of 
Subchapter S.                                                                   

CANADIAN CORPORATION                                                        

Mar-Tech Insituform, Ltd. is a corporation taxable under Canadian law.
Canadian taxes on income, if any, are paid at the corporate level. There were no
material timing differences in reporting revenues and expenses for financial    
statement and tax reporting purposes. As of June 30, 1993 (Mar-Tech's tax year),
the Company had net tax operating loss (NOL) carryforwards of approximately     
C$109,177 (U.S.$82,472) available to offset its future income tax liability. The
NOL carryforwards begin to expire in the year 2000.                             

(2)  RELATED PARTY TRANSACTIONS                                                 

   Gelco Services, Inc., Geltech Constructors, Inc., Gelco Nu-Pipe, Inc. and
Mar-Tech Insituform, Ltd. are part of a group of companies owned by James       
Monaghan and Richard Beck. Related party transactions with entities which are   
not included in these combined financial statements at December 31 are as       
follows:                                                                        

                                                                [Download Table]

                                                                1993        1992   
                                                             ----------  ----------
                                                                                   
Accounts receivable......................................... $    2,769  $   16,332
Notes receivable............................................    256,000          --
Notes payable and advances..................................  2,243,373   1,750,000
Accounts payable............................................    602,773     614,369

    Transactions with related parties not included in the Entities' operations
during the year ended December 31 are as follows:                               

                                                                [Download Table]

                                                                1993        1992   
                                                             ----------  ----------
                                                                                   
Construction revenues....................................... $   20,784  $   88,989
Interest expense............................................     68,980          --
Subcontracts and purchases..................................    653,044     413,894
Equipment operating costs...................................  1,760,528   1,362,256
Management and administration...............................  2,739,023   1,490,359
Marketing...................................................    714,933     663,728

The Entities have entered into operating leases with Bemo, Inc. and JR
Investment, related parties, for facilities located in Sacramento, California   
and Salem, Oregon (see Note 14).                                                

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
DECEMBER 31, 1993 AND 1992

(3)  PROPERTY AND EQUIPMENT                                                     

Property and equipment consists of the following (see Note 1):        

                                                        [Enlarge/Download Table]

                                                              1993          1992     
                                                           -----------   ----------- 
                                                                                     
Construction equipment.................................... $ 6,410,553   $ 4,847,666 
Office furniture and equipment............................     203,186       108,109 
Leasehold improvements....................................     218,391       217,700 
                                                            ----------    ---------- 
                                                             6,832,130     5,173,475 
Less accumulated depreciation.............................  (3,571,474)   (2,561,911)
                                                            ----------    ---------- 
                                                           $ 3,260,656   $ 2,611,564 
                                                            ==========    ========== 

(4)  SUB-LICENSE AGREEMENTS                                                     

  Gelco Services, Inc. holds a sub-license agreement with Insituform North
America Corp. Mar-Tech Insituform, Ltd. holds a sub-license agreement with IGL  
Canada, Ltd. Gelco Nu-Pipe, Inc. holds a license agreement with NuPipe, Inc.    
These agreements allow them exclusive non-transferable rights and licenses to   
the Insituform and NuPipe process throughout their stated territories. Under the
agreements, Gelco Services, Inc. and Gelco Nu-Pipe, Inc. are required to        
maintain a tangible net worth, in the aggregate of at least $2,000,000. In      
addition, Gelco Services, Inc., Gelco Nu-Pipe, Inc., and Mar-Tech Insituform,   
Ltd. are responsible for generating minimum royalty payments each year, adjusted
for construction cost index fluctuations. The royalties are paid quarterly and  
are equal to 8% of the gross contract price for Insituform work, and 6.75% for  
NuPipe work. Royalty expense was $731,577 for the year ended December 31, 1993  
($883,321 in 1992). The license and sub-license agreements may be terminated by 
Gelco Services, Inc., Gelco Nu-Pipe, Inc., and Mar-Tech Insituform, Ltd. at any 
time by written notice to the sub-licensor or licensor six months in advance of 
the effective date.                                                             

(5)  PRO FORMA INCOME TAXES                                                     

  Income (loss) before income taxes for domestic and foreign operations is
summarized at December 31 as follows:                                           

                                                                [Download Table]

                                                                1993       1992    
                                                              --------  ---------- 
                                                                                   
Domestic..................................................... $926,912  $4,190,346 
Foreign......................................................    2,881     (17,481)
                                                              --------  ---------- 
                                                              $929,793  $4,172,865 
                                                              ========  ========== 

   Pro forma income tax provisions have been calculated using the accounting
principles of SFAS Statement No. 109, Accounting for Income Taxes, which        
requires an asset and liability approach to financial                           

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
DECEMBER 31, 1993 AND 1992

(5)  PRO FORMA INCOME TAXES -- (CONTINUED)                                      

accounting and reporting for income taxes. Had the Entities been subject to     
corporate income taxes, the deferred income tax liability and the related       
provision would have consisted of the following:                                

                                                                [Download Table]

                                                                1993        1992   
                                                              --------   ----------
                                                                                   
Pro forma deferred income tax liability...................... $215,000   $  260,000
                                                              ========   ==========
Pro forma provision for income taxes:                                              
  Current income taxes payable:                                                    
     Federal................................................. $292,701   $1,305,745
     State...................................................   60,833      245,134
                                                              --------   ----------
                                                               353,534    1,550,879
Pro forma deferred income tax increase (decrease)............  (45,000)      30,000
                                                              --------   ----------
     Pro forma income tax expense............................ $308,534   $1,580,879
                                                              ========   ==========

The deferred income taxes provided above are related to temporary     
differences in reporting income for financial statements and corporate income   
tax purposes arising from differences in depreciation methods.                  

(6)  BANK LINES OF CREDIT                                                       

 Gelco Services, Inc. and Geltech Constructors, Inc. are guarantors on a
$2,900,000 bank revolving line of credit, and a $1,000,000 equipment line of    
credit for long-term equipment financing on behalf of Gelco Corporation, a      
related entity, and are authorized to guarantee additional Gelco Corporation    
borrowings to an aggregate of $5,000,000. The operating line is secured by      
inventories, receivables, and work-in-process. The equipment line is secured by 
specified equipment. Bank advances on the line of credit are payable on demand  
or, if no demand is made, on May 5, 1994. Both carry an interest rate of .25%   
over the bank's basic commercial lending rate. The amount advanced on the       
revolving line of credit at December 31, 1993 was $156,000 (zero at December 31,
1992). The equipment line was unused at December 31, 1993 and 1992. The         
revolving line of credit is also personally guaranteed by James Monaghan and    
Richard Beck.                                                                   

    Mar-Tech Insituform, Ltd. has a C$400,000 (U.S.$302,160) revolving line of
credit, payable on demand, with interest at prime plus 1%. The line is secured  
by accounts receivable and inventories. The amount advanced on the revolving    
line of credit was U.S.$204,001 at December 31, 1993 (U.S.$102,835 at December  
31, 1992).                                                                      

     Mar-Tech Insituform Ltd. also has a C$250,000 (U.S.$188,850) line of credit
for long-term financing of equipment purchases. The equipment line carries an   
interest rate of prime plus 1.5%, and is secured by equipment. The amount       
advanced on the equipment line was U.S.$162,918 at December 31, 1993 (zero at   
December 31, 1992). Both lines of credit are guaranteed by Gelco Services, Inc. 
and are personally guaranteed by Robert Innis, President of Mar-Tech Insituform,
Ltd.                                                                            

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
DECEMBER 31, 1993 AND 1992

(7)  LONG-TERM DEBT                                                             

                                                                [Download Table]

                                                                   1993     1992  
                                                                 --------  -------
                                                                                  
Long-term debt consists of the following:                                         
15.4% note payable in monthly installments of $345 including                      
  interest, secured by telecommunications equipment, maturing                     
  May 1993...................................................... $     --  $ 1,660
13% note payable in monthly installments of $1,297 including                      
  interest, secured by construction equipment, maturing May                       
  1993..........................................................       --   10,036
Note payable to bank in monthly installments of $2,769 plus                       
  interest at prime plus 1.5%, secured by equipment.............  162,918       --
                                                                 --------  -------
                                                                  162,918   11,696
Less current portion............................................   33,232   11,696
                                                                 --------  -------
                                                                 $129,686  $    --
                                                                 ========  =======

The following is a summary of future principal payments:              

                                                                [Download Table]
                                                                                   
1995....................................................................... $33,232
1996.......................................................................  33,232
1997.......................................................................  33,232
1998.......................................................................  33,232
Thereafter.................................................................  29,990

(8)  ACCRUED EXPENSES                                                           

Accrued expenses consist of the following:                            

                                                                [Download Table]

                                                                  1993      1992  
                                                                --------  --------
                                                                                  
State excise taxes (Note 13)................................... $336,125  $273,983
Accrued royalties payable......................................  173,087   203,952
Other accrued expenses.........................................   94,470   204,069
                                                                --------  --------
                                                                $603,682  $682,004
                                                                ========  ========

(9)  PROFIT-SHARING AND PENSION PLAN                                            

(A)  PROFIT-SHARING PLAN                                                    

Gelco Services, Inc. and Geltech Constructors, Inc. sponsor a         
noncontributory profit-sharing plan, covering substantially all full-time       
employees, provided they meet certain eligibility requirements. The Companies'  
contributions are discretionary and can range from zero to 15%. Contributions to
the profit-sharing plan in 1993 were $95,596 ($113,694 in 1992).                

(B)  PENSION PLAN                                                           

DESCRIPTION OF PLAN                                                   

   In addition, the Companies are sponsors, together with related companies,
of the Gelco Multiple Employer Defined Benefit Pension and Retirement Plan (the 
Plan) for hourly field employees who meet certain service requirements. The Plan
also includes death and disability benefits.                                    

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
DECEMBER 31, 1993 AND 1992

(9)  PROFIT-SHARING AND PENSION PLAN -- (CONTINUED)                             

PLAN TERMINATION                                                      

   The Companies have elected to discontinue their contributions to the Plan
and have expressed an intent to terminate the Plan. The accrued benefits of the 
Plan were frozen as of March 15, 1992.                                          

In the event the Plan terminates, the net assets of the Plan will be  
allocated as prescribed by ERISA and its related regulations. The sufficiency of
the Plan's net assets, and the level of benefits guaranteed by the Pension      
Benefit Guaranty Corporation (PBGC), will determine whether the participants    
receive their accumulated benefits should the Plan terminate.                   

PLAN STATUS                                                           

    The Internal Revenue Service has not determined that the Plan is qualified
and that the trust established under the Plan is tax-exempt, under the          
appropriate sections of the Code. The Plan Administrator and the Plan's tax     
counsel believe that the Plan is currently designed and being operated in       
compliance with the applicable requirements of the Code. Therefore, they believe
that the Plan was qualified and the related trust was tax-exempt as of December 
31, 1993.                                                                       

LITIGATION                                                            

     The Plan has filed suit against the Women Construction Owners & Executives,
U.S.A. (WCOE) and various fiduciaries with respect to the WCOE Multiple Employer
Retirement Income Trust and Plan in the amount of $100,000, for recovery of     
contributions to the WCOE Plan that dissipated as plan expenses.                

  Based upon the opinion of the Plan's counsel, the suit could result in a
settlement or award by the Court in favor of the Plan. At this time no estimate 
can be made as to the time or the amount, if any, of ultimate recovery.         

FUNDING                                                               

   As of December 31, 1993, the total actuarial present value of accumulated
vested benefits was $223,045, compared to Plan assets of $359,426. Accumulated  
vested benefits at December 31, 1992 were $177,077, compared to Plan assets of  
$354,064.                                                                       

(10)  GENERAL INDEMNITY AGREEMENT                                               

 Gelco Services, Inc. and Geltech Constructors, Inc. have entered into a
general indemnity agreement for the purpose of bonding various construction     
jobs, including jobs performed by other commonly controlled companies, and are  
jointly and severally liable thereunder. James Monaghan and Richard Beck, as    
individuals, are personally liable thereunder.                                  

(11)  COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS                     

                                                        [Enlarge/Download Table]

                                                              1993          1992     
                                                           -----------   ----------- 
                                                                                     
Costs incurred on uncompleted contracts................... $ 3,735,740   $   820,771 
Estimated earnings........................................   1,571,724       540,339 
                                                           -----------   ----------- 
                                                             5,307,464     1,361,110 
Less billings to date.....................................  (5,314,829)   (1,175,653)
                                                           -----------   ----------- 
                                                           $    (7,365)  $   185,457 
                                                            ==========    ========== 

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
DECEMBER 31, 1993 AND 1992

(11)  COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS -- (CONTINUED)      

  Included in the accompanying combined balance sheets under the following
captions:                                                                       

                                                        [Enlarge/Download Table]

                                                              1993          1992     
                                                           -----------   ----------- 
                                                                                     
Costs and earnings in excess of billings.................. $   280,477   $   200,731 
Billings in excess of costs and estimated earnings........    (287,842)      (15,274)
                                                           -----------   ----------- 
                                                           $    (7,365)  $   185,457 
                                                            ==========    ========== 

(12)  CONSTRUCTION REVENUES                                                     

Customers who accounted for 10% or more of total revenues for the year
ended December 31 consisted of the following:                                   

                                                                [Download Table]

                                                                1993        1992   
                                                             ----------  ----------
                                                                                   
City and County of Honolulu................................. $       --  $6,058,095
                                                              =========   =========

(13)  RESTATEMENT AND SUBSEQUENT EVENT                                          

  The Gelco Insituform/NuPipe Entities have not previously issued combined
financial statements; rather, their financial position and results of operations
were previously included in the combined financial statements of a larger group 
of companies owned by Messrs. Monaghan and Beck, the "Gelco Entities."          

Subsequent to the issuance of the Gelco Entities' combined financial  
statements, management became aware that certain state excise taxes, in the     
amount of $116,989 for 1993, and $219,139 for 1992, were not included. The      
inclusion of these items in the accompanying combined financial statements has  
the effect of increasing current liabilities by $284,950 at December 31, 1993   
($219,139 in 1992), and decreasing net income for 1993 and 1992 by $65,811 and  
$219,138, respectively.                                                         

     In August of 1994, Messrs. Monaghan and Beck signed a letter of intent with
Insituform Technologies, Inc. for the sale of the Gelco Insituform/NuPipe       
Entities and related assets used in these operations. The Entities and assets   
involved are more fully described in Note 1.                                    

(14)  COMMITMENTS AND CONTINGENCY                                               

Mar-Tech Insituform, Ltd. is currently involved in a dispute with the 
Canadian Department of Revenue and Taxation regarding certain adjustments for   
1987 and 1988. Mar-Tech Insituform, Ltd. contests the proposed adjustments, and 
currently has an appeal held in abeyance pending a decision by the Canadian     
Federal Tax Court of Appeal in a similar case. The amount of proposed adjustment
is C$39,899 (U.S.$30,139), plus interest.                                       

   The Entities have entered into operating leases for facilities located in
Salem, Oregon, Sacramento, California, and Kent, Washington. The Sacramento     
facilities lease with Bemo, Inc., a related party, was for 15 years at $10,500  
per month, and was renegotiated to $12,950 per month for 15 years effective     
January 1, 1994. The Salem facilities lease is effective January 1, 1994 at     
$10,500 per month for 15 years, with JR Investment, a related party. The Kent   
facilities lease is for $2,750 per month for the two years ending September 1,  
1995.                                                                           

  Rental expense related to these leases amounted to $158,000 ($122,220 in
1992).                                                                          

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
DECEMBER 31, 1993 AND 1992

(14)  COMMITMENTS AND CONTINGENCY -- (CONTINUED)                                
     Following is a summary of the noncancellable operating lease commitments at
December 31, 1993:                                                              

                                                                [Download Table]
                                                            
1994..............................................  $314,400
1995..............................................   303,400
1996..............................................   281,400
1997..............................................   281,400
1998..............................................   281,400

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COMBINED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                      JUNE 30,    DECEMBER 31, 
                                                                        1994          1993     
                                                                     ----------   ------------ 
                                                                     (UNAUDITED)               
                                                                                               
ASSETS                                                                                         
CURRENT ASSETS:                                                                                
  Cash.............................................................. $   21,734     $       -- 
                                                                     ----------     ---------- 
  Receivables:                                                                                 
     Trade, less allowance for doubtful accounts of zero............  3,674,597      3,490,385 
     Retainage......................................................    496,493        378,139 
     Other..........................................................      4,092          6,845 
     Related party (Note 2).........................................      1,344          2,769 
     Notes, related party (Note 2)..................................         --        256,000 
                                                                     ----------     ---------- 
          Total receivables.........................................  4,176,526      4,134,138 
  Inventories (Notes 1 and 6).......................................    626,641        686,927 
  Prepaid expenses..................................................     54,757         62,142 
  Costs and earnings in excess of billings (Note 11)................  1,425,966        280,477 
                                                                     ----------     ---------- 
          TOTAL CURRENT ASSETS......................................  6,305,624      5,163,684 
                                                                     ----------     ---------- 
PROPERTY AND EQUIPMENT, NET (NOTES 1, 3 AND 6)......................  2,908,512      3,260,656 
                                                                     ----------     ---------- 
OTHER...............................................................     87,142         24,900 
                                                                     ----------     ---------- 
                                                                     $9,301,278     $8,449,240 
                                                                      =========      ========= 
LIABILITIES AND STOCKHOLDERS' EQUITY                                                           
CURRENT LIABILITIES:                                                                           
  Bank overdraft.................................................... $       --     $   26,008 
  Bank lines of credit (Note 6).....................................    131,635        204,001 
  Payables:                                                                                    
     Trade..........................................................    655,890        727,584 
     Related party (Note 2).........................................    359,562        602,773 
     Retainage......................................................         --          4,691 
  Accrued expenses (Note 8).........................................  1,272,865        603,682 
  Billings in excess of costs and estimated earnings (Note 11)......    567,971        287,842 
  Current portion of long-term debt (Note 7)........................     67,192         33,232 
  Notes and advances, related party (Note 2)........................  1,489,718      2,243,373 
                                                                     ----------     ---------- 
          TOTAL CURRENT LIABILITIES.................................  4,544,833      4,733,186 
                                                                     ----------     ---------- 
LONG-TERM DEBT, NET OF CURRENT PORTION (NOTE 7).....................    211,144        129,686 
                                                                     ----------     ---------- 
MINORITY INTEREST IN SUBSIDIARIES (NOTE 1)..........................     57,471         87,953 
                                                                     ----------     ---------- 
COMMITMENTS AND CONTINGENCIES (NOTES 6, 9, 10, 13 AND 14)                                      
STOCKHOLDERS' EQUITY:                                                                          
  Common stock (Note 1).............................................    315,875        315,875 
  Contributed capital...............................................    993,400      1,195,182 
  Cumulative foreign currency translation adjustments (Note 1)......    (36,598)       (27,411)
  Retained earnings (Note 1)........................................  3,215,153      2,014,769 
                                                                     ----------     ---------- 
          TOTAL STOCKHOLDERS' EQUITY................................  4,487,830      3,498,415 
                                                                     ----------     ---------- 
                                                                     $9,301,278     $8,449,240 
                                                                      =========      ========= 

The accompanying notes are an integral part of the combined financial 
statements. 

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COMBINED STATEMENTS OF INCOME -- UNAUDITED

                                                        [Enlarge/Download Table]

                                                                          SIX MONTHS ENDED        
                                                                              JUNE 30,            
                                                                   -------------------------------
                                                                       1994              1993     
                                                                   -------------    ------------- 
                                                                                                  
CONSTRUCTION REVENUES (NOTE 12)...................................  $10,485,342      $6,735,550   
CONSTRUCTION COSTS (NOTES 2 AND 11)...............................    6,889,303       4,450,262   
                                                                    -----------      ----------   
     Gross profit.................................................    3,596,039       2,285,288   
GENERAL AND ADMINISTRATIVE EXPENSES (NOTE 2)......................    2,459,163       2,528,095   
                                                                    -----------      ----------   
     Income (loss) from operations................................    1,136,876        (242,807)  
                                                                    -----------      ----------   
OTHER INCOME (EXPENSE):                                                                           
  Interest........................................................      (78,686)        (51,617)  
  Miscellaneous...................................................       40,314          64,548   
                                                                    -----------      ----------   
     Total other income (expense).................................      (38,372)         12,931   
                                                                    -----------      ----------   
     Income (loss) before income taxes and minority interest in                                   
      subsidiaries................................................    1,098,504        (229,876)  
PROVISION FOR FOREIGN INCOME TAX BENEFIT (NOTE 1).................       74,776              --   
                                                                    -----------      ----------   
     Net income (loss) before minority interest in subsidiaries...    1,173,280        (229,876)  
MINORITY INTEREST IN LOSS OF SUBSIDIARIES.........................       27,104           8,602   
                                                                    -----------      ----------   
     Net income (loss)............................................  $ 1,200,384      $ (221,274)  
                                                                    ===========      ==========   
PRO FORMA INCOME TAXES:                                                                           
  Income (loss) before taxes......................................  $ 1,098,504      $ (229,876)  
  Pro forma income tax (expense) benefit (Notes 1 and 5)..........     (412,524)         66,000   
                                                                     -----------       ---------- 
     Pro forma net income (loss)..................................  $   685,980      $ (163,876)  
                                                                     ===========       ========== 

The accompanying notes are an integral part of the combined financial 
statements. 

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COMBINED STATEMENTS OF EQUITY -- UNAUDITED

                                                        [Enlarge/Download Table]

                                                   SIX MONTHS ENDED JUNE 30, 1994 AND 1993             
                                        -------------------------------------------------------------- 
                                                                              CUMULATIVE               
                                                                                FOREIGN                
                                                                               CURRENCY                
                                         COMMON    CONTRIBUTED    RETAINED    TRANSLATION              
                                         STOCK       CAPITAL      EARNINGS    ADJUSTMENTS     TOTAL    
                                        --------   -----------   ----------   -----------   ---------- 
                                                                                                       
BALANCES, December 31, 1992............ $315,875   $ 1,495,161   $1,886,035    $ (22,735)   $3,674,336 
  Distributions........................       --      (150,868)          --           --      (150,868)
  Translation adjustments..............       --            --           --       (4,674)       (4,674)
  Net loss.............................       --            --     (221,274)          --      (221,274)
                                        --------    ----------   ----------     --------    ---------- 
BALANCES, June 30, 1993................ $315,875   $ 1,344,293   $1,664,761    $ (27,409)   $3,297,520 
                                        ========    ==========   ==========     ========    ========== 
BALANCES, December 31, 1993............ $315,875   $ 1,195,182   $2,014,769    $ (27,411)   $3,498,415 
  Distributions........................       --      (201,782)          --           --      (201,782)
  Translation adjustments..............       --            --           --       (9,187)       (9,187)
  Net income...........................       --            --    1,200,384           --     1,200,384 
                                        --------    ----------   ----------     --------    ---------- 
BALANCES, June 30, 1994................ $315,875   $   993,400   $3,215,153    $ (36,598)   $4,487,830 
                                        ========    ==========   ==========     ========    ========== 

The accompanying notes are an integral part of the combined financial 
statements. 

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COMBINED STATEMENTS OF CASH FLOWS -- UNAUDITED

                                                        [Enlarge/Download Table]

                                                                        SIX MONTHS ENDED       
                                                                            JUNE 30,           
                                                                   --------------------------- 
                                                                      1994            1993     
                                                                   -----------     ----------- 
                                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES:                                                          
  Net income (loss)............................................... $ 1,200,384     $  (221,274)
  Adjustments to reconcile net income (loss) to net cash provided                              
     by operating activities:                                                                  
     Depreciation and amortization................................     606,863         793,505 
     Increase in other assets.....................................     (68,242)             -- 
     Translation adjustments......................................     (12,563)        (16,348)
     Minority interest in loss of subsidiaries....................     (27,104)         (8,602)
     Changes in operating assets and liabilities:                                              
       (Increase) decrease in receivables.........................    (298,388)      1,044,636 
       (Increase) decrease in prepaid expenses....................       7,385        (286,278)
       (Increase) decrease in inventories.........................      60,286         (43,836)
       Increase (decrease) in accounts payable and accrued                                     
        expenses..................................................     349,587        (302,816)
       (Increase) in underbillings................................  (1,145,489)       (498,914)
       Increase (decrease) in overbillings........................     280,129         (15,274)
                                                                   -----------     ----------- 
          Net cash provided by operating activities...............     952,848         444,799 
                                                                   -----------     ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                          
  Purchase of property and equipment..............................    (248,721)       (904,288)
  Net loans to related parties....................................    (497,655)        133,639 
                                                                   -----------     ----------- 
          Net cash used by investing activities...................    (746,376)       (770,649)
                                                                   -----------     ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                          
  (Payments) advances on bank lines of credit.....................     (72,366)        144,631 
  Proceeds from long-term debt....................................     148,650         162,918 
  Distributions to stockholders...................................    (201,782)       (150,868)
  Principal payments on debt......................................     (33,232)             -- 
                                                                   -----------     ----------- 
          Net cash provided (used) by financing activities........    (158,730)        156,681 
                                                                   -----------     ----------- 
          Net increase (decrease) in cash.........................      47,742        (169,169)
CASH, BEGINNING OF PERIOD.........................................     (26,008)        118,506 
                                                                   -----------     ----------- 
CASH, END OF PERIOD............................................... $    21,734     $   (50,663)
                                                                   ===========     =========== 
SUPPLEMENTAL INFORMATION:                                                                      
  Cash paid for interest.......................................... $    78,686     $    51,617 
                                                                   ===========     =========== 

The accompanying notes are an integral part of the combined financial 
statements. 

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NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 1994 (UNAUDITED) AND DECEMBER 31, 1993 

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES                               

PRINCIPLES OF COMBINATION                                                   

These combined financial statements include Gelco Services, Inc. (an  
S-Corporation), Geltech Constructors, Inc. (an S-Corporation), Mar-Tech         
Insituform, Ltd. (a Canadian Corporation), Gelco Nu-Pipe, Inc. (an              
S-Corporation), and certain assets owned by Gelco Corporation (an S-Corporation)
(the "Gelco Insituform/NuPipe Entities"). The Gelco Insituform/NuPipe Entities  
are part of a group of companies jointly owned by James Monaghan and Richard    
Beck, and which principally represent the operations of the Insituform and      
NuPipe processes of pipeline repair and reconstruction. In August 1994, the     
Entities' stockholders entered into a letter of intent with Insituform          
Technologies, Inc. whereby Insituform Technologies, Inc. is to purchase the     
Gelco Insituform/NuPipe Entities and certain assets leased to those entities by 
related companies.                                                              

     Therefore, these combined financial statements have been prepared as if the
Entities had operated as a single group since their respective dates of         
organization, and have been accounted for as a combination of companies under   
common control at historical book values. All significant intercompany balances 
and transactions have been eliminated.                                          

  The accompanying combined interim financial statements are unaudited but
contain, in the opinion of management, all adjustments (consisting of only      
normal recurring accruals) necessary to present fairly the financial position as
of June 30, 1994 (unaudited), and the unaudited results of operations and cash  
flows for the six months ended June 30, 1994 and 1993, and are not necessarily  
indicative of the results to be expected for the full year.                     

BUSINESS ACTIVITIES                                                         

Gelco Services, Inc., Geltech Constructors, Inc., Mar-Tech Insituform,
Ltd., and Gelco Nu-Pipe, Inc., are engaged primarily in the reconstruction and  
repair of underground pipelines for public, private and governmental clients    
through the use of the Insituform and NuPipe processes. The Entities grant      
credit to their customers who are located primarily in Oregon, Washington,      
Alaska, Idaho, Montana, California, Nevada, Hawaii and British Columbia.        

OWNERSHIP AND MINORITY INTEREST                                             

 The Entities, with the exception of Mar-Tech Insituform Ltd., are owned
66.67% by James Monaghan and 33.33% by Richard Beck. Mar-Tech Insituform, Ltd.  
is owned 73% by Gelco Services, Inc., and 27% by an unrelated party.            

REVENUE RECOGNITION                                                             

Revenue is recognized using the percentage-of-completion method of    
accounting and takes into account the cost and estimated earnings and revenue to
date on contracts not yet completed.                                            

The amount of revenue recognized is that portion of the total contract
price that cost incurred to date bears to anticipated final total cost, based on
current estimates of cost to complete.                                          

Contract costs include all direct labor and related payroll benefits, 
materials, and equipment costs.                                                 

     As long-term contracts extend over one or more years, revisions in cost and
earnings estimated during the course of the work are reflected in the accounting
period in which the facts which require the revision become known.              

  At the time a loss on a contract becomes known, the entire amount of the
estimated ultimate loss is recognized in the financial statements.              

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
JUNE 30, 1994 (UNAUDITED) AND DECEMBER 31, 1993 

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES -- (CONTINUED)                

REVENUE RECOGNITION -- (CONTINUED)                                              

Contracts which are substantially complete are considered closed for  
financial statement purposes.                                                   

  The current asset, "costs and estimated earnings in excess of billings,"
represents revenues recognized in excess of amounts billed (underbillings). The 
current liability, "billings in excess of costs and estimated earnings,"        
represents billings in excess of revenues recognized (overbillings).            

INVENTORIES                                                                 

   Inventories consist of materials and supplies and are stated at the lower
of cost or market (first-in, first-out).                                        

PROPERTY AND EQUIPMENT                                                      

     Property and equipment are stated at cost. Depreciation is calculated using
the straight-line and declining balance methods. Estimated useful lives are as  
follows:                                                                        

                                                                [Download Table]

                                                                        YEARS
                                                                        -----
                                                                             
Leasehold improvements...............................................    5-31
Construction equipment...............................................    3-7 
Office furniture and equipment.......................................    3-7 

    Maintenance and repairs are charged to expense when incurred. Renewals and
betterments are capitalized. Upon the sale or other disposition of equipment,   
the original cost and accumulated depreciation are eliminated from the accounts,
and gains and losses are recognized currently.                                  

CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENTS                         

 Assets and liabilities of foreign subsidiaries are translated into U.S.
Dollars at the exchange rates in effect at the balance sheet date. Revenues and 
expenses are translated at average rates for the period. The cumulative         
translation adjustments are recorded as a separate component of stockholders'   
equity.                                                                         

COMMON STOCK                                                                

     The common stock of the corporations at June 30, 1994 and December 31, 1993
is as follows:                                                                  

                                                        [Enlarge/Download Table]

                                                                                    SHARES   
                                                                        SHARES    ISSUED AND 
                                                           PAR VALUE  AUTHORIZED  OUTSTANDING
                                                           ---------  ----------  -----------
                                                                                             
Gelco Services, Inc.......................................    None         5,000     3,075   
Geltech Constructors, Inc.................................    None           500        75   
Gelco Nu-Pipe, Inc........................................   $   1         5,000       900   
Mar-Tech Insituform, Ltd..................................    None     1,000,050       253   

INCOME TAXES                                                                

"S" CORPORATIONS                                                      

    The stockholders of Gelco Services, Inc., Gelco Nu-Pipe, Inc., and Geltech
Constructors, Inc., have elected to be taxed under the provisions of Subchapter 
S of the Internal Revenue Code. Under those                                     

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
JUNE 30, 1994 (UNAUDITED) AND DECEMBER 31, 1993 

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES -- (CONTINUED)                

provisions, the Companies do not pay corporate income taxes on their taxable    
income. Instead, the stockholders are individually liable for income taxes on   
their respective shares of each company's taxable income (see Note 5). Retained 
earnings consists of $1,027,995 of earnings prior to the Subchapter S elections.
The remainder is attributable to undistributed earnings under the provisions of 
Subchapter S.                                                                   

CANADIAN CORPORATION                                                  

Mar-Tech Insituform, Ltd. is a corporation taxable under Canadian law.
Canadian taxes on income, if any, are paid at the corporate level. There were no
material timing differences in reporting revenues and expenses for financial    
statement and tax reporting purposes. As of June 30, 1994 (Mar-Tech's tax year),
the Company has net tax operating loss (NOL) carryforwards of approximately     
C$185,676 (U.S.$140,260) available to offset its future income tax liability.   
The NOL carryforwards begin to expire in the year 2000.                         

(2)  RELATED PARTY TRANSACTIONS                                                 

    Gelco Services, Inc., Geltech Constructors, Inc., Gelco Nu-Pipe, Inc., and
Mar-Tech Insituform, Ltd. are part of a group of companies owned by James       
Monaghan and Richard Beck. Related party transactions with entities which are   
not included in these combined financial statements at June 30, 1994 and        
December 31, 1993 are as follows:                                               

                                                                [Download Table]

                                                             JUNE 30,   DECEMBER 31,
                                                               1994         1993    
                                                            ----------  ------------
                                                                                    
Accounts receivable........................................ $    1,344   $    2,769 
Notes receivable...........................................         --      256,000 
Notes payable and advances.................................  1,489,718    2,243,373 
Accounts payable...........................................    359,562      602,773 

Transactions with related parties which are not included in the Gelco 
Insituform/NuPipe Entities' operations for the six months ended June 30 are as  
follows:                                                                        

                                                                [Download Table]

                                                                  1994       1993   
                                                                --------  ----------
                                                                                    
Construction revenues.......................................... $ 14,616  $       --
Interest expense...............................................   42,841      31,173
Subcontracts and purchases.....................................  272,143      89,171
Equipment operating costs......................................  389,811     579,936
Management and administration..................................  748,733   1,450,819
Marketing......................................................   77,314     313,524

The Entities have entered into operating leases with Bemo, Inc. and JR
Investment, related parties, for facilities located in Sacramento, California   
and Salem, Oregon (see Note 14).                                                

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
JUNE 30, 1994 (UNAUDITED) AND DECEMBER 31, 1993 

(3)  PROPERTY AND EQUIPMENT                                                     

Property and equipment consists of the following (see Note 1):        

                                                        [Enlarge/Download Table]

                                                               JUNE 30,    DECEMBER 31,
                                                                 1994          1993    
                                                              ----------   ------------
                                                                                       
Construction equipment....................................... $6,557,482    $6,410,053 
Office furniture and equipment...............................    184,936       203,686 
Leasehold improvements.......................................    228,238       218,391 
                                                              ----------   ------------
                                                               6,970,656     6,832,130 
Less accumulated depreciation................................ (4,062,144)   (3,571,474)
                                                              ----------   ------------
                                                              $2,908,512    $3,260,656 
                                                               =========    ========== 

(4)  SUB-LICENSE AGREEMENTS                                                     

  Gelco Services, Inc. holds a sub-license agreement with Insituform North
America Corp. Mar-Tech Insituform, Ltd. holds a sub-license agreement with IGL  
Canada, Ltd. Gelco Nu-Pipe, Inc. holds a license agreement with NuPipe, Inc.    
These agreements allow them exclusive non-transferable rights and licenses to   
the Insituform and NuPipe process throughout their stated territories. Under the
agreements, Gelco Services, Inc. and Gelco Nu-Pipe, Inc. are required to        
maintain a tangible net worth, in the aggregate of at least $2,000,000. In      
addition, Gelco Services, Inc., Gelco Nu-Pipe, Inc. and Mar-Tech Insituform,    
Ltd. are responsible for generating minimum royalty payments each year, adjusted
for construction cost index fluctuations. The royalties are paid quarterly and  
are equal to 8% of the gross contract price for Insituform work, and 6.75% for  
NuPipe work. Royalty expense was $487,255 for the period ended June 30, 1994    
($215,180 in 1993). The license and sub-license agreements may be terminated by 
Gelco Services, Inc., Gelco Nu-Pipe, Inc., and Mar-Tech Insituform, Ltd. at any 
time by written notice to the sub-licensor or licensor six months in advance of 
the effective date.                                                             

(5)  PRO FORMA INCOME TAXES                                                     

   Pro forma income tax provisions have been calculated using the accounting
principles of SFAS Statement No. 109, Accounting for Income Taxes, which        
requires an asset and liability approach to financial accounting and reporting  
for income taxes. Had the domestic Entities been subject to corporate income    
taxes, the deferred income tax liability and the related provision would have   
consisted of the following:                                                     

                                                                [Download Table]

                                                             JUNE 30,   DECEMBER 31,
                                                               1994         1993    
                                                            ----------  ------------
                                                                                    
Pro forma domestic deferred federal and state income tax                            
  liability................................................ $  275,000   $  215,000 
                                                            ==========    ========= 

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
JUNE 30, 1994 (UNAUDITED) AND DECEMBER 31, 1993 

(5)  PRO FORMA INCOME TAXES -- (CONTINUED)                                      

Income (loss) before income taxes for the six months ended June 30 for
domestic and foreign operations is summarized as follows:                       

                                                        [Enlarge/Download Table]

                                                               1994          1993    
                                                            ----------   ------------
                                                                                     
Domestic................................................... $1,274,125    $ (170,801)
Foreign....................................................   (175,621)      (59,075)
                                                            ----------     --------- 
                                                            $1,098,504    $ (229,876)
                                                            ==========     ========= 
Pro forma provision for income taxes                                                 
  Current income taxes (payable) refund:                                             
     Federal............................................... $ (353,800)   $   42,500 
     State.................................................    (73,500)        8,500 
                                                            ----------     --------- 
                                                              (427,300)       51,000 
Pro forma deferred income tax (increase) decrease in                                 
  federal and state tax liability..........................    (60,000)       15,000 
Foreign income tax benefit.................................     74,776            -- 
                                                            ----------     --------- 
Pro forma income tax (expense) benefit..................... $ (412,524)   $   66,000 
                                                            ==========     ========= 

     The domestic deferred income tax liability provided is related to temporary
differences in reporting income for financial statements and corporate income   
tax purposes arising from differences in depreciation methods. The estimated    
deferred tax asset is a result of foreign net operating loss carryforwards, and 
is included in other assets at June 30, 1994 (Note 1). The June 30, 1993        
effective tax rate varies from the expected rate because of foreign losses.     

(6)  BANK LINES OF CREDIT                                                       

 Gelco Services, Inc. and Geltech Constructors, Inc. are guarantors on a
$2,900,000 bank revolving line of credit, and a $1,000,000 equipment line of    
credit for long-term equipment financing on behalf of Gelco Corporation, a      
related entity, and are authorized to guarantee additional Gelco Corporation    
borrowings to an aggregate of $5,000,000. The operating line is secured by      
inventories, receivables and work-in-progress. The equipment line is secured by 
specified equipment. Bank advances on the line of credit are payable on demand  
or, if no demand is made, on May 5, 1995. Both carry an interest rate of .25%   
over the bank's basic commercial lending rate. The amount advanced on the       
revolving line of credit was zero at June 30, 1994 ($156,000 as of December 31, 
1993). The equipment line was unused at June 30, 1994 and December 31, 1993. The
revolving line of credit is personally guaranteed by James Monaghan and Richard 
Beck.                                                                           

    At June 30, 1994, Mar-Tech Insituform, Ltd. has a C$250,000 (U.S.$181,600)
revolving line of credit, payable on demand, with interest at prime plus 1%. The
line is secured by accounts receivable and inventories. The amount advanced on  
the revolving line of credit was U.S.$131,635 at June 30, 1994 (U.S.$204,001 at 
December 31, 1993). Mar-Tech Insituform, Ltd. also had a C$250,000              
(U.S.$181,600) line of credit for long-term financing of equipment purchases at 
December 31, 1993. The amount advanced on the equipment line was U.S.$162,918 at
December 31, 1993. The equipment line carried an interest rate of prime plus    
1.5%, and was secured by equipment. The equipment line of credit was            
discontinued in June 1994. Both lines of credit are guaranteed by Gelco         
Services, Inc. and are personally guaranteed by Robert Innis, President of      
Mar-Tech Insituform, Ltd.                                                       

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
JUNE 30, 1994 (UNAUDITED) AND DECEMBER 31, 1993 

(7)  LONG-TERM DEBT                                                             

                                                                [Download Table]

                                                              JUNE 30,  DECEMBER 31,
                                                                1994        1993    
                                                              --------  ------------
                                                                                    
Note payable to bank in monthly installments of $2,663,                             
  increasing to $7,264 in June 1995, plus interest at prime                         
  plus 1.5%. Secured by equipment............................ $278,336    $162,918  
Less current portion.........................................   67,192      33,232  
                                                              --------    --------  
                                                              $211,144    $129,686  
                                                              ========    ========  

The following is a summary of future principal payments:              

                                                                [Download Table]
                                                            
1995...............................................  $67,192
1996...............................................   87,168
1997...............................................   87,168
1998...............................................   36,808

(8)  ACCRUED EXPENSES                                                           

Accrued expenses consist of the following:                            

                                                                [Download Table]

                                                             JUNE 30,   DECEMBER 31,
                                                               1994         1993    
                                                            ----------  ------------
                                                                                    
State excise taxes......................................... $  370,765    $336,125  
Accrued royalties payable..................................    340,490     173,087  
Accrued wages payable......................................    287,387          --  
Other accrued expenses.....................................    274,223      94,470  
                                                            ----------  ------------
                                                            $1,272,865    $603,682  
                                                             =========  ==========  

(9)  PROFIT-SHARING AND PENSION PLAN                                            

(A)  PROFIT-SHARING PLAN                                                    

Gelco Services, Inc. and Geltech Constructors, Inc. sponsor a         
noncontributory profit-sharing plan, covering substantially all full-time       
employees, provided they meet certain eligibility requirements. The Companies'  
contributions are discretionary and can range from zero to 15%. No contributions
had been made to the profit-sharing plan during the six months ended June 30,   
1994 and 1993.                                                                  

(B)  PENSION PLAN                                                           

DESCRIPTION OF PLAN                                                   

   In addition, the Companies are sponsors, together with related companies,
of the Gelco Multiple Employer Defined Benefit Pension and Retirement Plan (the 
Plan) for hourly field employees who meet certain service requirements. The Plan
also includes death and disability benefits.                                    

PLAN TERMINATION                                                      

   The Companies have elected to discontinue their contributions to the Plan
and have expressed an intent to terminate the Plan. The accrued benefits of the 
Plan were frozen as of March 15, 1992.                                          

In the event the Plan terminates, the net assets of the Plan will be  
allocated as prescribed by ERISA and its related regulations. The sufficiency of
the Plan's net assets, and the level of benefits guaranteed by the              

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
JUNE 30, 1994 (UNAUDITED) AND DECEMBER 31, 1993 

(9)  PROFIT-SHARING AND PENSION PLAN -- (CONTINUED)                             

Pension Benefit Guaranty Corporation (PBGC), will determine whether the         
participants receive their accumulated benefits should the Plan terminate.      

PLAN STATUS                                                           

    The Internal Revenue Service has not determined that the Plan is qualified
and that the trust established under the Plan is tax-exempt, under the          
appropriate sections of the Code. The Plan Administrator and the Plan's tax     
counsel believe that the Plan is currently designed and being operated in       
compliance with the applicable requirements of the Code. Therefore, they believe
that the Plan was qualified and the related trust was tax-exempt as of December 
31, 1993.                                                                       

LITIGATION                                                            

     The Plan has filed suit against the Women Construction Owners & Executives,
U.S.A. (WCOE) and various fiduciaries with respect to the WCOE Multiple Employer
Retirement Income Trust and Plan in the amount of $100,000, for recovery of     
contributions to the WCOE Plan that dissipated as plan expenses.                

  Based upon the opinion of the Plan's counsel, the suit could result in a
settlement or award by the Court in favor of the Plan. At this time no estimate 
can be made as to the time or the amount, if any, of ultimate recovery.         

FUNDING                                                               

   As of December 31, 1993, the total actuarial present value of accumulated
vested benefits was $223,045, compared to Plan assets of $359,426.              

(10)  GENERAL INDEMNITY AGREEMENT                                               

 Gelco Services, Inc. and Geltech Constructors, Inc. have entered into a
general indemnity agreement for the purpose of bonding various construction     
jobs, including jobs performed by other commonly controlled companies, and are  
jointly and severally liable thereunder. James Monaghan and Richard Beck, as    
individuals, are personally liable thereunder.                                  

(11)  COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS                     

                                                        [Enlarge/Download Table]

                                                              JUNE 30,     DECEMBER 31, 
                                                                1994           1993     
                                                            ------------   ------------ 
                                                                                        
Costs incurred on uncompleted contracts.................... $  7,474,864   $  3,735,740 
Estimated earnings.........................................    5,695,860      1,571,724 
                                                            ------------   ------------ 
                                                              13,170,724      5,307,464 
Less billings to date......................................  (12,312,729)    (5,314,829)
                                                            ------------   ------------ 
                                                            $    857,995   $     (7,365)
                                                             ===========     ========== 

  Included in the accompanying combined balance sheets under the following
captions:                                                                       

                                                        [Enlarge/Download Table]
                                                                                        
Costs and earnings in excess of billings................... $  1,425,966   $    280,477 
Billings in excess of costs and estimated earnings.........     (567,971)      (287,842)
                                                            ------------   ------------ 
                                                            $    857,995   $     (7,365)
                                                             ===========     ========== 

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NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 
JUNE 30, 1994 (UNAUDITED) AND DECEMBER 31, 1993 

(12)  CONSTRUCTION REVENUES                                                     

   Construction revenues in excess of 10% of total revenues consisted of the
following for the six months ended June 30:                                     

                                                                [Download Table]

                                                         1994           1993   
                                                      ----------     ----------
                                                                               
County of Maui......................................  $1,569,405     $       --
                                                       =========      =========

(13)  RESTATEMENT AND SUBSEQUENT EVENT                                          

  The Gelco Insituform/NuPipe Entities have not previously issued combined
financial statements; rather, their financial position and results of operations
were previously included in the combined financial statements of a larger group 
of companies owned by Messrs. Monaghan and Beck, the "Gelco Entities."          

     In August of 1994, Messrs. Monaghan and Beck signed a letter of intent with
Insituform Technologies, Inc. for the sale of the Gelco Insituform/NuPipe       
Entities and certain assets used in these operations. The Companies and assets  
involved are more fully described in Note 1.                                    

Subsequent to the issuance of the Gelco Entities combined financial   
statements, management became aware that certain state excise taxes in the      
amount of $116,989 for 1993, and $219,139 for 1992, were not included. The      
inclusion of these items in the accompanying combined financial statements has  
the effect of increasing current liabilities by $284,950 at December 31, 1993,  
and decreasing net income by approximately $45,150 for the six months ended June
30, 1993.                                                                       

(14)  CONTINGENCY AND COMMITMENTS                                               

Mar-Tech Insituform, Ltd. is currently involved in a dispute with the 
Canadian Department of Revenue and Taxation regarding certain adjustments for   
1987 and 1988. Mar-Tech Insituform, Ltd. contests the proposed adjustments, and 
currently has an appeal held in abeyance pending a decision by the Canadian     
Federal Tax Court of Appeal in a similar case. The amount of the proposed       
adjustments is C$39,899 (U.S.$30,139), plus interest.                           

   The Entities have entered into operating leases for facilities located in
Salem, Oregon, Sacramento, California, and Kent, Washington. The Sacramento     
facilities lease with Bemo, Inc., a related party, was for 15 years at $10,500  
per month, and was renegotiated to $12,950 per month for 15 years effective     
January 1, 1994. The Salem facilities lease is effective January 1, 1994 at     
$10,500 per month for 15 years, with JR Investment, a related party. The Kent   
facilities lease is for $2,750 per month for the two years ending September 1,  
1995.                                                                           

     Rental expense related to these leases amounted to $157,200 and $78,750 for
June 30, 1994 and 1993, respectively.                                           

     Following is a summary of the noncancellable operating lease commitments at
June 30, 1994:                                                                  

                                                                [Download Table]
                                                            
1995..............................................  $314,400
1996..............................................   286,900
1997..............................................   281,400
1998..............................................   281,400
1999..............................................   281,400

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                                                                         ANNEX A
--------------------------------------------------------------------------------

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

AGREEMENT AND PLAN OF MERGER

DATED AS OF MAY 23, 1995
AMONG 

INSITUFORM TECHNOLOGIES, INC.,
ITI ACQUISITION CORP. 
AND 
INSITUFORM MID-AMERICA, INC.
--------------------------------------------------------------- 

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                                                                                    ----
                                                                                        
ARTICLE I    THE MERGER............................................................   1 
     1.1     The Merger............................................................   1 
     1.2     Effect of Merger......................................................   2 
     1.3     Certificate of Incorporation and By-Laws..............................   2 
     1.4     Effective Time of Merger..............................................   2 
     1.5     IMA Directors and Officers............................................   2 
     1.6     Taking of Necessary Action; Further Action............................   2 
ARTICLE II   CONVERSION OF SHARES..................................................   3 
     2.1     Acquisition Sub Common Stock..........................................   3 
     2.2     IMA Common Stock......................................................   3 
     2.3     Options to Purchase Shares of IMA Common Stock........................   3 
     2.4     ITI Common Stock......................................................   4 
ARTICLE III  DISSENTING SHARES; EXCHANGE OF CERTIFICATES...........................   4 
     3.1     Dissenting Shares.....................................................   4 
     3.2     Exchange of Shares....................................................   4 
     3.3     Dividends and Other Distributions.....................................   5 
     3.4     IMA Stock Transfer Ledger.............................................   5 
     3.5     Termination of Exchange Agency........................................   6 
ARTICLE IV   CLOSING...............................................................   6 
     4.1     Time and Place of Closing.............................................   6 
     4.2     Certificate of Merger.................................................   6 
ARTICLE V    REPRESENTATIONS AND WARRANTIES OF IMA.................................   7 
     5.1     Incorporation.........................................................   7 
     5.2     Authorization.........................................................   7 
     5.3     Conflicts.............................................................   7 
     5.4     Capitalization........................................................   8 
     5.5     Subsidiaries..........................................................   8 
     5.6     Securities Filings....................................................   9 
     5.7     Financial Statements..................................................   9 
     5.8     Absence of Undisclosed Liabilities....................................  10 
     5.9     Absence of Certain Changes............................................  11 
     5.10    Pooling...............................................................  11 
     5.11    Taxes.................................................................  12 
     5.12    Title.................................................................  12 
     5.13    Real Estate and Leases................................................  12 
     5.14    Contractual and Other Obligations.....................................  13 
     5.15    Compensation..........................................................  14 
     5.16    Employee Benefit Plans................................................  14 
     5.17    Labor Relations.......................................................  16 
     5.18    Interests of Insiders.................................................  16 
     5.19    Insurance.............................................................  16 
     5.20    Intellectual Property.................................................  16 
     5.21    Disputes and Litigation...............................................  17 
     5.22    Licenses; Franchises; Rights..........................................  17 
     5.23    Brokers and Finders...................................................  18 
ARTICLE VI   REPRESENTATIONS AND WARRANTIES                                             
             OF ITI AND ACQUISITION SUB............................................  18 
     6.1     Incorporation.........................................................  18 
     6.2     Authorization.........................................................  18 

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     6.3      Conflicts.............................................................  19 
     6.4      Capitalization........................................................  19 
     6.5      Securities Filings....................................................  19 
     6.6      Financial Statements..................................................  20 
     6.7      Absence of Undisclosed Liabilities....................................  20 
     6.8      Absence of Certain Changes............................................  20 
     6.9      Pooling...............................................................  20 
     6.10     Interests of Insiders.................................................  20 
     6.11     Disputes and Litigation...............................................  21 
     6.12     Brokers or Finders....................................................  21 
ARTICLE VII   CERTAIN COVENANTS.....................................................  21 
     7.1      IMA Stockholders' Meeting.............................................  21 
     7.2      ITI Stockholders' Meeting.............................................  21 
     7.3      ITI Board of Directors................................................  22 
     7.4      ITI Officers..........................................................  22 
     7.5      Registration Statement; Proxy Statement...............................  22 
     7.6      HSR Act; Other Governmental and Judicial Filings......................  23 
     7.7      Conduct of Business of IMA............................................  23 
     7.8      IMA Capitalization....................................................  25 
     7.9      Interim Financial Statements; Audited Enviroq Statements..............  25 
     7.10     Conduct of Business of ITI; ITI Capitalization........................  26 
     7.11     Due Diligence; SEC Filings............................................  27 
     7.12     Notification of Certain Matters.......................................  27 
     7.13     Accounting and Tax Treatment..........................................  28 
     7.14     Forbearance...........................................................  28 
     7.15     Restructuring Transactions............................................  28 
     7.16     Indemnification.......................................................  29 
     7.17     Registration Rights...................................................  29 
     7.18     Additional Agreements.................................................  30 
ARTICLE VIII  PUBLICITY.............................................................  30 
     8.1      Publicity.............................................................  30 
ARTICLE IX    CONDITIONS TO OBLIGATIONS OF EACH PARTY...............................  30 
     9.1      Hart-Scott-Rodino Antitrust Improvements Act..........................  30 
     9.2      Merger Approval.......................................................  30 
     9.3      Amendments to ITI's Certificate of Incorporation......................  31 
     9.4      Amendments to ITI's By-Laws...........................................  31 
     9.5      Effectiveness of Registration Statement...............................  31 
     9.6      Pooling-of-Interests..................................................  31 
     9.7      Conversion of IMA Class B Common Stock................................  31 
     9.8      No Prohibition on Consummation........................................  31 
     9.9      Tax Opinion...........................................................  31 
     9.10     ITI Board; Officers...................................................  31 
ARTICLE X     CONDITIONS TO OBLIGATIONS OF IMA......................................  32 
    10.1      Opinion of Counsel for ITI and Acquisition Sub........................  32 
    10.2      Representations; Warranties; Covenants................................  32 
    10.3      Certified Resolutions.................................................  32 
    10.4      Kalishman and Affholder Agreements....................................  32 
    10.5      Fairness Opinion......................................................  32 
    10.6      Letter of ITI's Accountants...........................................  32 
    10.7      Director Indemnification Agreements...................................  32 

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                                                                                      PAGE
                                                                                      ----
                                                                                          
   10.8        Litigation............................................................  33 
   10.9        Other Certificates....................................................  33 
ARTICLE XI     CONDITIONS TO OBLIGATIONS OF ITI AND ACQUISITION SUB..................  33 
   11.1        Opinion of Counsel for IMA............................................  33 
   11.2        Representations; Warranties; Covenants................................  33 
   11.3        Certified Resolutions; Capitalization.................................  33 
   11.4        Affiliate Undertakings................................................  34 
   11.5        Kalishman and Affholder Agreements....................................  34 
   11.6        Dissenters' Rights....................................................  34 
   11.7        Third Party Consents..................................................  34 
   11.8        Resignations..........................................................  34 
   11.9        Fairness Opinion......................................................  34 
   11.10       Letter of Accountants for IMA and Enviroq.............................  34 
   11.11       A-Y-K-E Equipment.....................................................  35 
   11.12       Litigation............................................................  35 
   11.13       Other Certificates....................................................  35 
ARTICLE XII    TERMINATION...........................................................  35 
   12.1        Termination...........................................................  35 
   12.2        Effect of Termination.................................................  36 
ARTICLE XIII   MISCELLANEOUS.........................................................  36 
   13.1        Notices...............................................................  36 
   13.2        Survival of Representations...........................................  37 
   13.3        Cooperation Agreement.................................................  37 
   13.4        Entire Agreement......................................................  37 
   13.5        Modification..........................................................  37 
   13.6        Further Action........................................................  37 
   13.7        Expenses..............................................................  37 
   13.8        Governing Law.........................................................  37 
   13.9        Captions..............................................................  37 
   13.10       Accounting Terms......................................................  38 
   13.11       Specific Performance..................................................  38 
   13.12       Assignment............................................................  38 
   13.13       No Third Party Beneficiary............................................  38 
   13.14       Partial Invalidity....................................................  38 
   13.15       Counterparts..........................................................  38 
Schedule 5.3   --  IMA Third Party Consents                                               
Schedule 5.5   --  Subsidiaries                                                           
Schedule 5.8   --  Certain IMA Liabilities                                                
Schedule 5.9   --  Certain IMA Changes since December 31, 1994                            
Schedule 5.11  --  Tax Deficiencies                                                       
Schedule 5.12  --  Exceptions to Title                                                    
Schedule 5.13  --  Real Estate                                                            
Schedule 5.14  --  Certain Contracts and Agreements                                       
Schedule 5.15  --  Key Employees                                                          
Schedule 5.16  --  Employee Benefit Plans                                                 
Schedule 5.18  --  IMA Related Party Transactions                                         
Schedule 5.19  --  Insurance and Bonding Arrangements                                     
Schedule 5.20  --  Intellectual Property                                                  
Schedule 5.21  --  IMA Litigation                                                         
Schedule 5.22  --  State Contractor Permits                                               

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                                                                [Download Table]
                                                                  
Schedule 6.3   --  ITI Third Party Consents                       
Schedule 6.4   --  ITI Stock Commitments                          
Schedule 6.7   --  Certain ITI Liabilities                        
Schedule 6.8   --  Certain ITI Changes since December 31, 1994    
Schedule 6.10  --  ITI Related Party Transactions                 
Schedule 6.11  --  ITI Litigation                                 
Schedule 7.7   --  Conduct of IMA Business                        
Schedule 7.8   --  IMA Dividends                                  
Schedule 7.10  --  Conduct of ITI Business                        
Exhibit A      --  Agreement of Merger                            
Exhibit B      --  Pooling Letter                                 
Exhibit C-1    --  KPMG Peat Marwick Comfort Letter               
Exhibit C-2    --  Deloitte & Touche Comfort Letter               
Exhibit D      --  BDO Seidman Comfort Letter                     
Exhibit E      --  Amendments to ITI Certificate of Incorporation 
Exhibit F      --  Amendments to ITI By-Laws                      
Exhibit G      --  Conversion Letter                              
Exhibit H      --  Opinion of Messrs. Krugman, Chapnick & Grimshaw
Exhibit I      --  Opinion of Messrs. Thompson & Mitchell         
Exhibit J      --  Rule 145 Letter                                
Exhibit K      --  Affholder Agreement                            
Exhibit L      --  Kalishman Agreements                           

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INDEX OF DEFINED TERMS

                                                        [Enlarge/Download Table]
                                                                                        
Acquisition Sub......................................................... Recitals       
Acquisition Sub Common Stock............................................ Recitals       
Affiliate Agreement..................................................... Section 11.4   
Agreement............................................................... Recitals       
Benefit Plans........................................................... Section 5.16   
business day............................................................ Section 4.1    
Certificate of Merger................................................... Section 1.4    
Class I Directors....................................................... Section 7.3    
Class II Directors...................................................... Section 7.3    
Class III Directors..................................................... Section 7.3    
Closing................................................................. Section 4.1    
Closing Date............................................................ Section 4.1    
Code.................................................................... Section 2.3    
Confidentiality Agreement............................................... Section 7.11(c)
Constituent Corporations................................................ Recitals       
Cooperation Agreement................................................... Section 13.3   
Defined Benefit Plans................................................... Section 5.15   
Demand Registration..................................................... Section 7.17(b)
Dissenting Shares....................................................... Section 3.1(a) 
Effective Time.......................................................... Section 1.4    
ERISA................................................................... Section 5.15   
Environmental Laws...................................................... Section 5.22(c)
Enviroq................................................................. Section 5.6    
Enviroq Audited Financial Statements.................................... Section 5.7(b) 
Enviroq Form 10-K....................................................... Section 5.6    
Enviroq Form 10-Q....................................................... Section 5.6    
Enviroq Interim Financial Statements.................................... Section 5.7(d) 
Enviroq Pro Forma Financial Statements.................................. Section 5.7(e) 
Enviroq Proxy Statement................................................. Section 5.6    
Exchange Act............................................................ Section 5.3    
Exchange Agent.......................................................... Section 3.2(a) 
GCL..................................................................... Section 1.1    
Group................................................................... Section 7.3    
HSR Act................................................................. Section 5.3    
IGL Group............................................................... Section 7.3    
IMA..................................................................... Recitals       
IMA Agreements.......................................................... Section 5.14(a)
IMA Audited Financial Statements........................................ Section 5.7(a) 
IMA Financial Statements................................................ Section 5.7(c) 
IMA Group............................................................... Section 7.3    
IMA Interim Financial Statements........................................ Section 5.7(c) 
IMA's business or condition............................................. Section 5.4    
IMA Preferred Stock..................................................... Recitals       
IMA Convertible Preferred Stock......................................... Recitals       
IMA Class A Convertible Preferred Stock................................. Recitals       
IMA Class A Common Stock................................................ Recitals       
IMA Class B Common Stock................................................ Recitals       
IMA Common Stock........................................................ Recitals       
IMA Form 10-K........................................................... Section 5.6    
IMA Form 10-Q........................................................... Section 5.6    
IMA Option Plan......................................................... Section 2.3(a) 

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                                                        [Enlarge/Download Table]
                                                                                            
IMA Options............................................................. Section 2.3(a)     
IMA SEC Documents....................................................... Section 5.6        
INA Group............................................................... Section 7.3        
Incidental Registration................................................. Section 7.17(b)(ii)
Insider................................................................. Section 5.14(a)    
Insituform Process...................................................... Section 5.19       
Intellectual Property................................................... Section 5.20       
ITI..................................................................... Recitals           
ITI Audited Financial Statements........................................ Section 6.6(a)     
ITI Interim Financial Statements........................................ Section 6.6(b)     
ITI Form 10-K........................................................... Section 6.5        
ITI Form 10-Q........................................................... Section 6.5        
ITI Common Stock........................................................ Section 2.2(a)     
ITI Preferred Stock..................................................... Section 6.4        
ITI SEC Documents....................................................... Section 6.5        
Joint Proxy Statement................................................... Section 7.5(b)     
Lien.................................................................... Section 5.9        
Material Adverse Effect................................................. Section 5.1(b)     
Merger.................................................................. Recitals           
Multiemployer Plans..................................................... Section 5.16       
NuPipe Process.......................................................... Section 5.20       
PBGC.................................................................... Section 5.16       
Plan of Merger.......................................................... Section 4.1        
Prior Registration Rights Agreement..................................... Section 7.17(b)    
Registrable Securities.................................................. Section 7.17(b)(i) 
Registration Rights Agreement........................................... Section 7.17(a)    
Registration Statement.................................................. Section 7.5(a)     
Removal Pleadings....................................................... Section 13.3       
Stockholder............................................................. Section 7.17(a)    
Subsidiary.............................................................. Section 5.1(b)     
Subsidiary.............................................................. Section 5.5        
SEC..................................................................... Section 2.3(c)     
Securities Act.......................................................... Section 3.2(c)     
Surviving Corporation................................................... Section 1.1        
Term.................................................................... Section 7.3        

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER dated as of this 23rd day of May, 1995   
(hereinafter referred to as this "Agreement"), by and among INSITUFORM          
TECHNOLOGIES, INC., a corporation organized and existing under the laws of the  
State of Delaware (hereinafter referred to as "ITI"), ITI ACQUISITION CORP., a  
corporation organized and existing under the laws of the State of Delaware and a
wholly-owned subsidiary of ITI (hereinafter referred to as "Acquisition Sub"),  
and INSITUFORM MID-AMERICA, INC., a corporation organized and existing under the
laws of the State of Delaware (hereinafter referred to as "IMA"; and, together  
with Acquisition Sub, as the "Constituent Corporations").                       

WITNESSETH: 

   WHEREAS, IMA, together with its Subsidiaries (as hereinafter defined), is
primarily engaged in the application of trenchless and other technologies to the
rehabilitation, construction and improvement of pipeline systems, and is a      
licensee of the Insituform(R) Process (as more particularly hereinafter         
described, the "Insituform Process") and the NuPipe(R) Process (as more         
particularly hereinafter described, the "NuPipe Process"), in those states and  
other territories covered by license agreements extended by, respectively,      
Insituform North America Corp. and NuPipe, Inc., both wholly-owned subsidiaries 
of ITI; and                                                                     

  WHEREAS, IMA, pursuant to its certificate of incorporation (filed in the
office of the Secretary of State of the State of Delaware on December 22, 1983, 
as subsequently amended on, respectively, January 6 and February 8, 1984,       
November 6, 1985 and December 10, 1986), has an authorized capital stock        
consisting of: 500,000 shares of preferred stock, $.01 par value (hereinafter   
referred to as the "IMA Preferred Stock"), none of which are presently issued   
and outstanding; 10,000 shares of convertible preferred stock, $100 par value   
(hereinafter referred to as the "IMA Convertible Preferred Stock"), none of     
which are presently issued and outstanding; 500 shares of class A convertible   
preferred stock, $1,000 par value (hereinafter referred to as the "IMA Class A  
Convertible Preferred Stock"), none of which are presently issued and           
outstanding; 13,000,000 shares of class A common stock, $.01 par value          
(hereinafter referred to as the "IMA Class A Common Stock"), of which 8,282,676 
shares are presently issued and outstanding, and 6,000,000 shares of class B    
common stock, $.01 par value (hereinafter referred to as the "IMA Class B Common
Stock", and together with the IMA Class A Common Stock, the "IMA Common Stock"),
of which 2,472,985 shares are presently issued and outstanding; and             

     WHEREAS, Acquisition Sub has been duly organized as a corporation under the
laws of the State of Delaware, and, pursuant to its certificate of incorporation
(filed in the office of the Secretary of State of the State of Delaware on March
16, 1995), has an authorized capital stock consisting of 10,000 shares of common
stock, $.01 par value (hereinafter referred to as the "Acquisition Sub Common   
Stock"), of which 1,000 shares are issued and outstanding and held by ITI; and  

WHEREAS, the respective Boards of Directors of the Constituent        
Corporations, and of ITI, deem it advisable and in the best interests of such   
corporations and their stockholders, respectively, that Acquisition Sub be      
merged into and with IMA (hereinafter referred to as the "Merger"), in          
accordance with the terms and conditions hereinafter set forth, so that IMA     
shall become a subsidiary of ITI;                                               

 NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereby agree as follows:                     

ARTICLE I 

THE MERGER

1.1  The Merger.                                                      

 At the Effective Time (as hereinafter defined), in accordance with this
Agreement and the Delaware General Corporation Law (hereinafter referred to as  
the "GCL"), Acquisition Sub shall be merged into and with IMA, the separate     
corporate existence of Acquisition Sub shall cease and IMA shall continue as the

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surviving corporation, governed by the laws of the State of Delaware, under the 
corporate name it possesses immediately prior to the Effective Time. IMA, from  
and after the Effective Time, is hereinafter sometimes referred to as the       
"Surviving Corporation".                                                        

1.2  Effect of Merger.                                                

      (a) At the Effective Time, the Surviving Corporation shall possess all
the rights, privileges, immunities and franchises, as well as of a public as of 
a private nature, of the Constituent Corporations. All of the rights,           
privileges, immunities and franchises, and all property, real and personal, and 
all debts due on whatever account to each of the Constituent Corporations, shall
be taken and deemed to be transferred to and vested in the Surviving Corporation
without further act or deed; and all of the property, rights, privileges,       
immunities, powers, franchises and all and every other interest of each of the  
Constituent Corporations thereafter shall be vested as effectively and fully in 
the Surviving Corporation as they were in each of the Constituent Corporations. 

        (b) The Surviving Corporation shall be responsible and liable for all of
the liabilities, obligations and penalties of each of the Constituent           
Corporations; provided, however, that the liabilities, obligations and penalties
of the Constituent Corporations shall not be affected by the Merger, and that   
the rights of the creditors of the Constituent Corporations, or any liens upon  
the property of the Constituent Corporations shall not be impaired by the       
Merger, and any claim existing or action or proceeding, civil or criminal,      
pending by or against the Constituent Corporations may be prosecuted to judgment
as if the Merger had not taken place, or the Surviving Corporation may be       
proceeded against or substituted in the place of the Constituent Corporations.  

1.3  Certificate of Incorporation and By-Laws.                        

The certificate of incorporation and by-laws of IMA, as in effect     
immediately prior to the Effective Time, shall be the certificate of            
incorporation and by-laws of the Surviving Corporation and thereafter shall     
continue to be its certificate of incorporation and by-laws until changed as    
provided therein and under the laws of the State of Delaware. The first annual  
meeting of the stockholders of the Surviving Corporation held after the         
Effective Time shall be the next annual meeting of stockholders provided for in 
the by-laws of IMA.                                                             

1.4  Effective Time of Merger.                                        

     The Merger shall become effective at the time of filing of a certificate of
merger with respect to the Merger (hereinafter referred to as the "Certificate  
of Merger") in the office of the Secretary of State of the State of Delaware, as
required by the GCL. Such time is herein referred to as the "Effective Time".   

1.5  IMA Directors and Officers.                                      

     At the Effective Time and until their successors have been duly elected and
have qualified, the Board of Directors of the Surviving Corporation shall       
consist of three members, and the members of the Board of Directors of          
Acquisition Sub shall become the directors of the Surviving Corporation; and at 
the Effective Time and until their successors have been duly elected and have   
qualified, the officers of Acquisition Sub shall become the officers of the     
Surviving Corporation.                                                          

1.6  Taking of Necessary Action; Further Action.                      

IMA, ITI and Acquisition Sub, respectively, shall take all such lawful
action as may be necessary or appropriate in order to effectuate the            
transactions contemplated by this Agreement. In case at any time after the      
Effective Time, any further action is necessary or desirable to carry out the   
purposes of this Agreement and to vest the Surviving Corporation with full title
to all assets, rights, privileges, powers, immunities, purposes and franchises  
of either of the Constituent Corporations, the officers and directors of such   
corporation shall take all such lawful and necessary action.                    

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ARTICLE II

CONVERSION OF SHARES

    The manner and basis of converting in the Merger the outstanding shares of
IMA Common Stock and Acquisition Sub Common Stock into shares of the capital    
stock of the Surviving Corporation are as follows:                              

2.1  Acquisition Sub Common Stock.                                    

   Each share of the 1,000 shares of Acquisition Sub Common Stock issued and
outstanding immediately prior to the Effective Time shall, by virtue of the     
Merger and without any action by the holder thereof, be deemed cancelled and    
converted into and shall represent the right to receive one share of the class A
common stock, $.01 par value, of the Surviving Corporation.                     

2.2  IMA Common Stock.                                                

 (a) Each share of IMA Class A Common Stock issued and outstanding
immediately prior to the Effective Time (including, without limitation, all     
shares of IMA Class A Common Stock issued upon conversion of the IMA Class B    
Common Stock as hereinafter provided, but other than Dissenting Shares [as      
defined and to the extent provided in Section 3.1 hereof], if any), shall, by   
virtue of the Merger and without any action by the holder thereof, be deemed    
cancelled and converted into and shall represent the right to receive 1.15      
shares of the class A common stock, $.01 par value (hereinafter referred to as  
the "ITI Common Stock"), of ITI.                                                

        (b) Solely to avoid the expense and inconvenience to ITI and Acquisition
Sub, and not as separately bargained for consideration, no fractional shares of 
ITI Common Stock shall be issued in the Merger and no dividend, stock split or  
interest shall relate to any such fractional shares, and such fractional shares 
shall not entitle the owner thereof to any rights of a security holder. In lieu 
of issuing certificates for fractional shares of ITI Common Stock, the Exchange 
Agent (as hereinafter defined) shall, on behalf of all holders of such          
fractional shares, on or before the tenth day following the Effective Time,     
aggregate all such fractional shares and sell the resulting shares of ITI Common
Stock for the accounts of holders of such respective fractional shares, and such
holders shall thereafter be entitled to receive on a pro rata basis the net     
proceeds of the sale thereof, without interest thereon, upon the surrender of   
all of such holder's certificates for exchange pursuant to Section 3.2 hereof.  

2.3  Options to Purchase Shares of IMA Common Stock.                  

 (a) All options (hereinafter referred to as the "IMA Options") to
acquire IMA Class A Common Stock outstanding, whether or not exercisable at the 
Effective Time, under the Insituform Mid-America, Inc. Stock Option Plan        
(hereinafter referred to as the "IMA Option Plan"), shall remain outstanding    
following the Effective Time. At the Effective Time, the IMA Options shall, by  
virtue of the Merger and without any further action on the part of IMA or the   
holder thereof, be assumed by ITI in such manner that ITI: (i) is a corporation 
"assuming a stock option in a transaction to which Section 424(a) applies"      
within the meaning of Section 424 of the United States Internal Revenue Code of 
1986, as amended (hereinafter referred to as the "Code"); or (ii) to the extent 
that Section 424 of the Code does not apply to any such IMA Options, would be   
such a corporation were Section 424 of the Code applicable to such IMA Options. 
From and after the Effective Time, all references to IMA in the IMA Stock Option
Plan and the applicable stock option agreements issued thereunder shall be      
deemed to refer to ITI, except that each reference to the name of such plan     
therein (or any predecessor thereof) shall be deemed a reference to the         
"Insituform Mid-America, Inc. Stock Option Plan", and provided that each        
reference to the "Stock Option Committee" or "Committee" therein shall be deemed
a reference to ITI's Compensation Committee. Each IMA Option assumed by ITI     
shall be exercisable upon the same terms and conditions as under the IMA Stock  
Option Plan and the applicable option agreement issued thereunder, except that: 

          (A) each such IMA Option shall be exercisable for that whole
   number of shares of ITI Common Stock (rounded to the nearest whole share)
     into which the number of shares of IMA Class A Common Stock subject to such
 IMA Option immediately prior to the Effective Time would be convertible
   under Section 2.2 hereof if such shares were outstanding at the Effective
Time; and                                                             

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              (B) the option price per share of ITI Class A Common Stock shall
 be an amount equal to the quotient obtained by dividing (x) the product
    obtained by multiplying the exercise price per share of IMA Class A Common
Stock subject to such IMA Option in effect immediately prior to the   
    Effective Time by the number of shares of IMA Class A Common Stock subject
   to such option immediately prior to the Effective Time, by (y) the number
of shares of ITI Common Stock covered by the option as so assumed (the
option price as so determined being rounded upward to the nearest full
cent).                                                                

No payment or adjustment shall be made for fractional shares which otherwise    
would be issuable upon exercise of any IMA Option assumed as aforesaid.         

     (b) The assumption of IMA Options pursuant hereto shall not confer on
any holder thereof any additional benefits which such holder did not have       
immediately prior to the Effective Time, result in any acceleration of any      
vesting or exercise schedule for any IMA Option, or release any holder of any   
IMA Option of any obligations or restrictions applicable to his option or the   
shares obtainable upon exercise of such option. At the Effective Time, the IMA  
Option Plan shall, by virtue of the Merger and without any further action on the
part of IMA, be deemed terminated, except for the rights of the holders of      
outstanding IMA Options subject to the terms and provisions hereinbefore set    
forth, and no further options shall be granted thereunder.                      

  (c) As soon as practicable following the Effective Time, ITI shall
prepare and file with the Securities and Exchange Commission (hereinafter       
referred to as the "SEC"), a registration statement on Form S-8 under the       
Securities Act of 1933, as amended (hereinafter referred to as the "Securities  
Act"), with respect to the shares of ITI Common Stock deliverable by ITI upon   
exercise of the IMA Options, as so assumed.                                     

2.4  ITI Common Stock.                                                

    The Merger shall effect no change in any shares of ITI Common Stock issued
by ITI prior to the Effective Time.                                             

ARTICLE III 

DISSENTING SHARES;
EXCHANGE OF CERTIFICATES

3.1  Dissenting Shares.                                               

   Notwithstanding anything in this Agreement to the contrary, shares of IMA
Common Stock which are issued and outstanding immediately prior to the Effective
Time and which are held by stockholders who have not voted such shares in favor 
of the Merger and, if entitled to elect to demand the appraisal of such shares  
pursuant to Section 262 of the GCL, shall have delivered a written demand for   
payment of the fair value of such shares within the time and in the manner      
provided in said Section 262 (herein referred to as "Dissenting Shares") shall  
not be converted into or be exchangeable for the right to receive the           
consideration provided in Article II of this Agreement,unless and until such    
holder shall have failed to perfect or shall have effectively withdrawn or lost 
his right to appraisal and payment under the GCL. If any such holder shall have 
so failed to perfect or shall have effectively withdrawn or lost such right,    
such holder's shares of IMA Common Stock shall thereupon be deemed to have been 
converted into and to have become exchangeable for, at the Effective Time, the  
right to receive the consideration therefor specified under Article II hereof,  
without any interest thereon.                                                   

3.2  Exchange of Shares.                                              

(a) Prior to the Effective Time, Acquisition Sub shall designate
American Stock Transfer & Trust Company, or, at its election, a bank or trust   
company or similar entity, reasonably satisfactory to IMA, which is authorized  
to exercise corporate trust or stock powers, to act as the exchange agent       
(hereinafter referred to as the "Exchange Agent") in the Merger. Promptly after 
the Effective Time, ITI shall cause the delivery to the Exchange Agent of       
certificates evidencing the shares of ITI Common Stock contemplated to be issued
by Section 2.2 hereof.                                                          

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    (b) As soon as practicable after the Effective Time, but in no event
later than 15 business days after the Effective Time, the Exchange Agent shall  
send a notice and transmittal form to each holder of a certificate theretofore  
evidencing shares of IMA Common Stock, advising such holders of the terms of the
exchange effected by the Merger and the procedure for surrendering to the       
Exchange Agent (who may appoint forwarding agents with the approval of ITI) such
record holder's certificate(s) evidencing IMA Common Stock for exchange for     
certificates evidencing shares of ITI Common Stock. Each holder of a certificate
theretofore evidencing shares of IMA Common Stock, upon surrender of the same to
the Exchange Agent in accordance with such transmittal form, shall be entitled  
to receive, in exchange for such certificate, a certificate evidencing the      
number of full shares of ITI Common Stock for which the shares of IMA Common    
Stock theretofore represented by the certificate so surrendered shall have been 
exchanged pursuant to Section 2.2 hereof and the cash in lieu of fractional     
shares hereinabove contemplated, and the certificate so surrendered shall       
forthwith be cancelled.                                                         

     (c) If any certificate evidencing shares of ITI Common Stock is to be
issued in a name other than that in which the certificate surrendered in        
exchange therefor is registered, or if any payment of cash is to be made to a   
person other than the person in whose name such certificate is registered, it   
shall be a condition of the issuance thereof or such payment, as the case may   
be, that the certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and that the person requesting such exchange (i) pay
to the Exchange Agent any transfer or other taxes required by reason of the     
issuance of a certificate for shares of ITI Common Stock in any name other than 
that of, and payment of cash to a person other than, the registered holder of   
the certificate surrendered or (ii) establish to the satisfaction of the        
Exchange Agent that such transfer or other taxes have been paid or are not      
applicable. Certificates representing shares of ITI Common Stock issued to IMA  
"affiliates", within the meaning of Rule 145 under the Securities Act, shall    
bear the legend referred to in Paragraph (a)(ii) of Section 11.4 hereof.        

      (d) In the event any certificate representing any shares of IMA Common
Stock shall have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such certificate to be lost, stolen or      
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or  
destroyed certificate the consideration payable in exchange therefor pursuant to
Article II. The Exchange Agent or the Surviving Corporation may, in its         
discretion and as a condition precedent to the issuance thereof, require the    
owner of such lost, stolen or destroyed certificate to give the Exchange Agent a
bond in such reasonable sum as it may direct as indemnity against any claim that
may be made against the Surviving Corporation with respect to the certificate   
alleged to have been lost, stolen or destroyed.                                 

3.3  Dividends and Other Distributions.                               

  No dividends or other distributions to holders of ITI Common Stock as of
any date subsequent to the Effective Time shall be paid to the holders of       
outstanding certificates formerly representing shares of IMA Common Stock until 
such certificates are so surrendered. Subject to the effect, if any, of         
applicable law upon surrender of certificates evidencing shares of IMA Common   
Stock, there shall be paid to the record holders of ITI Common Stock issued in  
exchange therefor (i) the amount of dividends or other distributions with a     
record date for payment after the Effective Time that have theretofore been paid
with respect to full shares of ITI Common Stock as of any date subsequent to the
Effective Time which have not yet been paid to a public official pursuant to    
abandoned property laws and (ii) at the appropriate payment date, the amount of 
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender. No interest shall
be payable with respect to the payment of such dividends or other distributions 
on surrender of outstanding certificates. Notwithstanding the foregoing, neither
ITI, Acquisition Sub, the Exchange Agent nor any other party hereto shall be    
responsible or liable to any holder of shares of IMA Common Stock for any ITI   
Common Stock, or dividends or distributions thereon or cash, including cash in  
lieu of fractional share interests, delivered to any public official pursuant to
applicable escheat laws.                                                        

3.4  IMA Stock Transfer Ledger.                                       

    At the Effective Time, it shall be deemed that the stock transfer books of
IMA are closed, and no transfer of IMA Common Stock on the books of IMA shall   
thereafter be made or consummated. Until surrendered                            

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and exchanged in accordance with the provisions of Section 3.2 hereof, the      
outstanding certificates evidencing shares of IMA Common Stock immediately prior
to the Effective Time shall, from and after the Effective Time, be deemed for   
all corporate purposes to evidence the right to receive the number of shares of 
ITI Common Stock, together with cash in lieu of fractional shares, into which   
the shares of IMA Common Stock theretofore evidenced by such certificate or     
certificates shall have been so converted, together with any dividends or other 
distributions thereon pursuant to Section 3.3 hereof, as though such surrender  
and exchange had taken place.                                                   

3.5  Termination of Exchange Agency.                                  

     Any portion of the shares of ITI Common Stock or cash in lieu of fractional
shares, which remains undistributed to the holders of IMA Common Stock for one  
year after the Effective Time shall be delivered to ITI, upon demand, and any   
holders of IMA Common Stock who have not theretofore complied with this Article 
III shall thereafter look only to ITI for the shares of ITI Common Stock, any   
cash in lieu of fractional shares of ITI Common Stock to which they are entitled
pursuant to Paragraph (b) of Section 2.2 hereof and any dividends or other      
distributions with respect to ITI Common Stock to which they are entitled       
pursuant to Section 3.3. Any portion of such remaining shares or cash unclaimed 
by holders of IMA Common Stock as of a date which is immediately prior to such  
time as such shares or amounts would otherwise escheat to or become property of 
any governmental entity shall, to the extent permitted by applicable law, become
the property of ITI free and clear of any claims or interest of any person      
previously entitled thereto.                                                    

ARTICLE IV

CLOSING 

4.1  Time and Place of Closing.                                       

   IMA, ITI and Acquisition Sub shall regularly communicate and consult with
each other with respect to the fulfillment of the various conditions to the     
obligations under this Agreement of the parties hereto. The exchange of         
certificates, opinions and other documents contemplated by this Agreement       
(hereinafter referred to as the "Closing") shall be held at the offices of      
Messrs. Krugman, Chapnick & Grimshaw, Park 80 West-Plaza Two, Saddle Brook, New 
Jersey 07663, at 10:00 A.M., local time, at such time and date (hereinafter     
referred to as the "Closing Date") as the parties may determine, such date to   
fall within ten business days after the satisfaction or waiver of the last of   
the conditions set forth in Articles IX, X and XI hereof to be satisfied or     
waived (other than conditions with respect to actions the parties shall take at 
the Closing), and provided that ITI may delay the Closing for up to 15 business 
days after the date on which the Closing would otherwise occur as aforesaid in  
order to effectuate the restructurings contemplated by Section 7.15 hereof, or  
such other time and date as may be agreed upon by the parties hereto. For       
purposes of this Agreement, "business day" shall mean any day on which the      
principal offices of the SEC in Washington, D.C. are open to accept filings, or,
in the case of determining a date when any payment is due, any day on which     
banks are not required or authorized to close in the City of New York.          

4.2  Certificate of Merger.                                           

In the event that, at or prior to the Closing, none of the parties has
exercised any right it may have to terminate this Agreement, and no condition to
the obligations of the parties exists that is not waived, the parties shall, on 
the Closing Date, execute the agreement of merger, in the form attached hereto  
as Exhibit A (hereinafter referred to as the "Plan of Merger"), appropriately   
completed, and, as soon thereafter as is practicable cause an appropriate       
Certificate of Merger to be executed by the Constituent Corporations and filed  
with the Secretary of State of the State of Delaware in accordance with the GCL.

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ARTICLE V 

REPRESENTATIONS AND WARRANTIES OF IMA 

IMA represents, warrants and covenants that:                          

5.1  Incorporation.                                                   

      (a) IMA is duly organized, validly existing and in good standing under
the laws of the State of Delaware and has full corporate power and authority to 
own or hold under lease the assets and properties which it owns or holds under  
lease, to conduct its business as currently conducted, to perform all its       
obligations under the agreements to which it is a party, including, without     
limitation, this Agreement, and to consummate the Merger. IMA is in good        
standing in each other jurisdiction wherein the failure so to qualify,          
individually or in the aggregate, would have a Material Adverse Effect (as      
hereinafter defined). The copies of IMA's certificate of incorporation and      
by-laws, each as currently in effect, which have been delivered to ITI and      
Acquisition Sub by IMA are complete and correct.                                

(b) For purposes of this Agreement:                             

              (i) "Material Adverse Effect" with respect to a party shall mean
any change in, or effect on such party or any subsidiary thereof (as  
 hereinafter defined) which is, or with reasonable probability might be,
     materially adverse to the business, properties, operations, income, assets,
prospects or condition, financial or otherwise of such party and its  
     subsidiaries, taken as a whole; and the term "Material Adverse Effect" used
without a specific reference to a party shall mean a Material Adverse 
Effect with respect to IMA and its Subsidiaries, taken as a whole; and

            (ii) each reference to a "subsidiary" or "subsidiaries" of any
 person means any corporation, partnership, joint venture or other legal
   entity of which such person (either alone or through or together with any
     other subsidiary), owns, directly or indirectly, more than 50% of the stock
 or other equity interests the holder of which are generally entitled to
    vote for the election of the board of directors or other governing body of
such corporation or other legal entity.                               

5.2  Authorization.                                                   

     The execution and delivery of this Agreement, the performance by IMA of its
covenants and agreements hereunder and the consummation by IMA of the           
transactions contemplated hereby have been duly authorized by all necessary     
corporate action of IMA, other than the approval of the holders of IMA Common   
Stock contemplated under Section 7.1 hereof. When executed and delivered by IMA,
this Agreement shall constitute the valid and legally binding obligation of IMA,
enforceable against IMA in accordance with its terms, except as may be limited  
by bankruptcy, insolvency or other laws affecting generally the enforceability  
of creditors' rights and by limitations on the availability of equitable        
remedies.                                                                       

5.3  Conflicts.                                                       

    Neither the execution and delivery of this Agreement, nor the consummation
of the transactions contemplated herein, will violate any provision of IMA's    
certificate of incorporation or by-laws, as currently in effect, or, subject to 
approval of this Agreement by the holders of IMA Common Stock as contemplated   
under Section 7.1 hereof and compliance with the regulatory requirements        
hereinafter specified in this Section 5.3, any law, rule, regulation, writ,     
judgment, injunction, decree, determination, award or other order of any court, 
government or governmental agency or instrumentality, domestic or foreign,      
binding upon IMA or any of its Subsidiaries or, except as set forth on Schedule 
5.3(A) attached hereto and other than any such conflicts, breaches, creation,   
imposition or termination which would not have a Material Adverse Effect,       
conflict with or result in any breach of any of the terms of or the creation or 
imposition of any mortgage, deed of trust, pledge, lien, security interest or   
other charge or encumbrance of any nature pursuant to, or create any cause for  
termination under, the terms of any contract or agreement to which IMA or any   
Subsidiary is a party or by which IMA or any Subsidiary or any of their         
respective properties or assets is bound. Other than the approval of this       
Agreement by the holders of IMA Common Stock contemplated under Section 7.1     
hereof and except for compliance with the requirements of the federal           
Hart-Scott-Rodino Antitrust Improvements Act of 1976,                           

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as amended (hereinafter referred to as the "HSR Act"), the Securities Act, with 
respect to the Registration Statement (as hereinafter defined), the securities  
or blue sky laws of the various states, the federal Securities Exchange Act of  
1934, as amended (hereinafter referred to as the "Exchange Act"), with respect  
to the Joint Proxy Statement (as hereinafter defined), and except as set forth  
on Schedule 5.3(A) and (C) and any such consents, approvals, authorizations,    
filings or registrations with or notices to any such person or entity other than
any governmental agency or instrumentality the failure to effectuate which would
not have a Material Adverse Effect, no consents, approvals or authorizations, or
registrations with any governmental agency or authority or any other person or  
entity and, except as set forth on Schedule 5.3(B), filings with or notices to  
any such person or entity, are required in connection with the execution and    
delivery of this Agreement by IMA or the consummation by IMA of the transactions
contemplated hereby.                                                            

5.4  Capitalization.                                                  

The authorized capital stock of IMA consists of 500,000 shares of IMA 
Preferred Stock, none of which are issued and outstanding, 10,000 shares of IMA 
Convertible Preferred Stock, none of which are issued and outstanding, 500      
shares of IMA Class A Convertible Preferred Stock, none of which are issued and 
outstanding on the date hereof, 13,000,000 shares of IMA Class A Common Stock,  
of which 8,282,676 shares are issued and outstanding, and 6,000,000 shares of   
IMA Class B Common Stock, of which 2,472,985 shares are issued and outstanding  
on the date hereof. No shares of any class or series of the capital stock of IMA
are held as treasury stock. All of the outstanding shares of IMA Common Stock   
are, and all outstanding shares of IMA Class A Common Stock issuable upon       
exercise of IMA Options will be, duly authorized, validly issued and fully paid 
and non-assessable, issued without violation of the preemptive rights of any    
person. There are no subscriptions, warrants, options, calls, commitments by or 
agreements to which IMA is bound relating to the issuance, conversion, or       
purchase of any shares of IMA Common Stock, or any other capital stock of IMA,  
except for the IMA Options granted by IMA pursuant to the IMA Option Plan,      
covering an aggregate of 365,040 shares of IMA Class A Common Stock on the date 
hereof, and except for this Agreement. IMA has delivered to ITI and Acquisition 
Sub true and complete copies of each form of certificate or agreement evidencing
options granted and outstanding under the IMA Option Plan. IMA is not a party to
any agreement or arrangement relating to the voting or control of any of its    
capital stock, or obligating IMA, directly or indirectly, to sell any assets in 
a transaction which is not in the ordinary course or which is otherwise material
to the businesses, financial condition, results of operations or prospects of   
IMA and its Subsidiaries, taken as a whole (hereinafter referred to as "IMA's   
business or condition"), except for this Agreement. IMA has no currently        
outstanding obligations to register any securities under the Securities Act,    
under any arrangements that would require any such registration as a result of  
this agreement or the transactions contemplated hereby or under any arrangements
that would permit any party to such arrangements other than IMA to require IMA  
to file a registration statement under the Securities Act.                      

5.5  Subsidiaries.                                                    

 Schedule 5.5(1), (2) and (3) annexed hereto sets forth the name of each
corporation, partnership, joint venture, business trust or other legal entity in
which IMA, directly or indirectly, beneficially or legally owns or holds any    
capital stock or other proprietary interest (herein referred to, individually,  
as a "Subsidiary" and, collectively, as the "Subsidiaries"), the jurisdiction of
its incorporation or formation, and IMA's direct or indirect ownership thereof. 
Neither IMA nor any Subsidiary, directly or indirectly, beneficially or legally 
owns or holds any capital stock of ITI. Each corporate Subsidiary is a          
corporation duly organized and in good standing under the laws of the           
jurisdiction of its incorporation, and has full corporate power and authority to
own or hold under lease the assets and properties which it owns or holds under  
lease and to perform all its obligations under the agreements to which it is a  
party and to conduct such Subsidiary's business. Each Subsidiary consisting of a
joint venture, partnership, or limited liability partnership is duly organized, 
validly existing and, in the case of any limited liability partnership, in good 
standing as such entity under the laws of the jurisdiction of its formation, and
has full partnership authority to own or hold under lease the assets or         
properties which it owns or holds under lease and to perform all of its         
obligations under the agreements to which it is a party and to conduct such     
Subsidiary's business. Each Subsidiary is in good standing in each other        
jurisdiction wherein the failure so to qualify would, individually or in the    
aggregate, have a Material Adverse Effect. All of the outstanding shares of the 
capital stock of each Subsidiary are so owned and are duly                      

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authorized and validly issued, fully paid and non-assessable, issued without    
violation of the preemptive rights of any person, and, except as identified on  
Schedule 5.5(4), are owned free and clear of any mortgages, deeds of trust,     
pledges, liens, security interests or any charges or encumbrances of any nature.
Except as set forth in Schedule 5.5(5), no shares of capital stock or other     
proprietary interest of any Subsidiary is subject to any option, call,          
commitment or other agreement of any nature, and there are no subscriptions,    
warrants, options, calls, commitments by or agreements to which IMA or any      
Subsidiary is bound relating to the issuance or purchase of any shares of       
capital stock of any Subsidiary. Except for partnership and joint venture       
arrangements as set forth on Schedule 5.5(2) and (3), neither IMA nor any       
Subsidiary is party to any agreement or arrangement relating to the voting or   
control of any capital stock of any Subsidiary, or obligating IMA or any        
Subsidiary to sell any assets of any Subsidiary in a transaction which is not in
the ordinary course or which is otherwise material to IMA's business or         
condition. The copies of the certificates of incorporation and by-laws, or other
instruments of formation, as currently in effect, of each such Subsidiary, which
have been delivered or made available to ITI by IMA are complete and correct.   

5.6  Securities Filings.                                              

     IMA and each Subsidiary have made all filings with the SEC that it has been
required to make under the Securities Act, and the rules and regulations        
promulgated thereunder, and the Exchange Act, and the rules and regulations     
promulgated thereunder. IMA has provided to ITI and Acquisition Sub complete and
correct copies of all reports, registration statements, final prospectuses,     
definitive proxy statements and other filings made by IMA or any Subsidiary with
the SEC, including all exhibits to such filings, since October 1, 1989 (all such
documents that have been filed with the SEC, as amended, hereinafter referred to
as the "IMA SEC Documents"), including, without limitation, IMA's Annual Report 
on Form 10-K for the fiscal year ended September 30, 1994, as filed with the SEC
on January 3, 1995 (together with all documents incorporated therein by         
reference, hereinafter referred to as the "IMA Form 10-K"), and its Quarterly   
Report on Form 10-Q for the quarter ended March 31, 1995, as filed with the SEC 
on May 15, 1995 (hereinafter referred to as the "IMA Form 10-Q"), the Annual    
Report on Form 10-K for the fiscal year ended March 26, 1994 of IMA Merger Sub, 
Inc. (formerly, Enviroq Corporation; hereinafter referred to as "Enviroq"), as  
filed with the SEC on June 24, 1994 (together with all documents incorporated   
therein by reference, hereinafter referred to as the "Enviroq Form 10-K"),      
Enviroq's Quarterly Report on Form 10-Q for the quarter ended December 24, 1994,
as filed with the SEC on February 7, 1995 (hereinafter referred to as the       
"Enviroq Form 10-Q"), and Enviroq's Proxy Statement dated March 14, 1995        
(hereinafter referred to as the "Enviroq Proxy Statement"). The IMA SEC         
Documents comply in all material respects with the requirements of the          
Securities Act or the Exchange Act, as the case may be, and neither any of the  
IMA SEC Documents (as of the date of their respective filing with the SEC), or  
any information relating to IMA or any of its Subsidiaries contained in this    
Agreement or any schedule hereto, contains any untrue statement of a material   
fact or omits to state a material fact required to be stated therein or         
necessary to make the statements therein, in light of the circumstances under   
which they were made, not misleading.                                           

5.7  Financial Statements.                                            

   (a) The consolidated financial statements (hereinafter referred to,
collectively, as the "IMA Audited Financial Statements") of IMA and its         
consolidated subsidiaries contained or incorporated by reference in the IMA Form
10-K in response to "Item 8. Consolidated Financial Statements and Supplementary
Data", are true and correct and have been prepared in conformity with generally 
accepted accounting principles consistently applied throughout the periods to   
which such financial statements relate. The IMA Audited Financial Statements    
fully and fairly present, in conformity with such principles as so utilized, the
consolidated financial position and results of operations and cash flows of IMA 
and its consolidated subsidiaries, at the dates shown and for the periods       
therein specified, except as described therein.                                 

   (b) The consolidated financial statements (hereinafter referred to,
collectively, as the "Enviroq Audited Financial Statements") of Enviroq and its 
consolidated subsidiaries contained or incorporated by reference in the Enviroq 
Form 10-K in response to "Item 8. Consolidated Financial Statements and         
Supplementary Data", are true and correct and have been prepared in conformity  
with generally accepted accounting principles consistently applied throughout   
the periods to which such financial statements relate.                          

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     The Enviroq Audited Financial Statements fully and fairly present, in
conformity with such principles as so utilized, the consolidated financial      
position and results of operations and cash flows of Enviroq and its            
consolidated subsidiaries, at the dates shown and for the periods therein       
specified, except as described therein.                                         

     (c) The consolidated financial statements (hereinafter referred to as
the "IMA Interim Financial Statements", and, together with the IMA Audited      
Financial Statements, herein referred to as the "IMA Financial Statements") of  
IMA and its consolidated subsidiaries contained in the IMA Form 10-Q in response
to "Item 1. Financial Statements" are true and correct and have been prepared in
conformity with generally accepted accounting principles consistently applied   
throughout the periods to which such financial statements relate, except as     
permitted by Form 10-Q. The IMA Interim Financial Statements fully and fairly   
present the consolidated financial position and results of operations and cash  
flows of IMA and its consolidated subsidiaries, at the dates shown and for the  
periods therein specified, subject to normal year-end adjustments in accordance 
with generally accepted accounting principles and except as described therein.  

     (d) The consolidated financial statements (hereinafter referred to as
the "Enviroq Interim Financial Statements") of Enviroq and its consolidated     
subsidiaries contained in the Enviroq Form 10-Q in response to "Item 1.         
Financial Statements" are true and correct and have been prepared in conformity 
with generally accepted accounting principles consistently applied throughout   
the periods to which such financial statements relate, except as permitted by   
Form 10-Q. The Enviroq Interim Financial Statements fully and fairly present the
consolidated financial position and results of operations and cash flows of     
Enviroq and its consolidated subsidiaries, at the dates shown and for the       
periods therein specified, subject to normal year-end adjustments in accordance 
with generally accepted accounting principles and except as described therein.  

(e) The consolidated pro forma financial statements (hereinafter
referred to as the "Enviroq Pro Forma Financial Statements") of Enviroq and its 
consolidated subsidiaries contained in the Enviroq Proxy Statement are true and 
correct and have been prepared in all material respects in conformity with      
Article 11 of Regulation S-X promulgated by the SEC. The Enviroq Pro Forma      
Financial Statements fully and fairly present the consolidated financial        
position and results of operations of Enviroq and its consolidated subsidiaries,
at the dates shown and for the periods therein specified, after giving pro forma
effect to the transactions described therein.                                   

      (f) Each of IMA and each Subsidiary: (i) make and keep books, records,
and accounts, which, in reasonable detail, accurately and fairly reflect the    
transactions and dispositions of their respective assets; and (ii) maintain a   
system of internal accounting controls sufficient to provide reasonable         
assurances that (A) transactions are executed in accordance with management's   
general or specific authorization; (B) transactions are recorded as necessary   
(I) to permit preparation of financial statements in conformity with generally  
accepted accounting principles or any other criteria applicable to such         
statements, and (II) to maintain accountability for assets; (C) access to assets
is permitted only in accordance with management's general or specific           
authorization; and (D) the recorded accountability for assets is compared with  
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.                                                     

5.8  Absence of Undisclosed Liabilities.                              

  Except to the extent disclosed in the IMA Form 10-K or the IMA Form 10-Q
(in each case without reference to the exhibits thereto), or the Enviroq Pro    
Forma Financial Statements (after giving effect to the transactions described   
therein), or incurred after December 31, 1994 (or, in the case of Enviroq or its
subsidiaries, December 24, 1994) in the ordinary course of business and         
consistent with past practice, neither IMA, nor any of the Subsidiaries has any 
liabilities, whether accrued, absolute, contingent, or otherwise, whether due or
to become due and whether the amount thereof is readily ascertainable or not,   
other than liabilities which, individually or in the aggregate, would not have a
Material Adverse Effect, or any unrealized or anticipated losses from any       
unfavorable commitments or sales of products, other than those which,           
individually or in the aggregate, would not have a Material Adverse Effect, in  
each case under this Section 5.8 except as set forth in Schedule 5.8.           

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5.9  Absence of Certain Changes.                                      

Subsequent to December 31, 1994 (or, in the case of Enviroq or its    
subsidiaries, December 24, 1994), neither IMA nor any Subsidiary has:           

      (a) except as disclosed in Schedule 5.9 attached hereto, declared, set
aside or made any payment or distribution upon any capital stock or, directly or
indirectly, purchased, redeemed or otherwise acquired or disposed of any shares 
of capital stock;                                                               

     (b) except as disclosed in Schedule 5.9 attached hereto, incurred any
liability or obligation under agreements or otherwise, except current           
liabilities entered into or incurred in the ordinary course of business         
consistent with past practice; issued any notes or other corporate debt         
securities or paid or discharged any outstanding indebtedness, except in the    
ordinary course of business consistent with past practice; or, in a manner that 
would, individually or in the aggregate, have a Material Adverse Effect, waived 
any of its respective rights;                                                   

        (c) mortgaged, pledged or subjected to any Lien (as hereinafter defined)
any of its assets or properties; entered into any lease of real property or     
buildings; or, except in the ordinary course of business consistent with past   
practice, entered into any lease of machinery or equipment, or sold or          
transferred any tangible or intangible asset or property;                       

       (d) effected any increase in salary, wages or other compensation of any
kind, whether current or deferred, to any employee or agent, other than routine 
increases in the ordinary course of business consistent with past practice or as
was required from time to time by governmental legislation affecting wages      
(provided, however, that in no event was any such increase in compensation made 
with respect to any employee or agent earning in excess of $50,000 per annum,   
except as identified in Schedule 5.9); except as set forth in Schedule 5.9, made
any bonus, pension, option, deferred compensation, or retirement payment,       
severance, profit sharing, or like payment to any employee or agent, except as  
required by the terms of plans or arrangements existing prior to such date      
(provided, however, that in no event was any such payment made with respect to  
any employee or agent earning in excess of $50,000 per annum, except as         
identified in Schedule 5.9); or entered into any salary, wage, severance, or    
other compensation agreement with a term of one year or longer with any employee
or agent or made any contribution to any trust or plan for the benefit of any   
employee or agent, except as required by the terms of plans or arrangements     
existing prior to such date;                                                    

     (e) except as set forth in Schedule 5.9, entered into any transaction
other than in the ordinary course of business consistent with past practice,    
except in connection with the execution and performance of this Agreement and   
the transactions contemplated hereby;                                           

     (f) suffered any damage, destruction, or loss to any of its assets or
properties (whether or not covered by insurance) except for damage, destruction 
or loss occurring in the ordinary course of business which, individually or in  
the aggregate, would not have a Material Adverse Effect; or                     

(g) suffered any Material Adverse Effect;                       

and, since December 31, 1994 (or, in the case of Enviroq and its subsidiaries,  
December 24, 1994), there has been no condition, development or contingency     
which, so far as reasonably may be foreseen, may, individually or in the        
aggregate, have a Material Adverse Effect. For purposes of this Agreement, the  
term "Lien" shall be defined to mean any mortgage, deed of trust, security      
interest, pledge, lien, or other charge or encumbrance of any nature whatsoever 
except: (a) liens disclosed in the IMA Financial Statements; (b) liens for      
taxes, assessments, or governmental charges or levies not yet due and           
delinquent; and (c) liens consisting of zoning or planning restrictions,        
easements, permits, any other restrictions or limitations on the use of real    
property or irregularities in title thereto which do not materially detract from
the value of, or impair the use of, such property by IMA or any of its          
Subsidiaries.                                                                   

5.10  Pooling.                                                        

  As of the date hereof, there has not been any action taken by IMA or any
Subsidiary or affiliate under Rule 1-02 of Regulation S-X of the SEC that would 
prevent the Merger from being accounted for as a                                

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pooling-of-interests. Contemporaneously with the execution and delivery of this 
Agreement, IMA has delivered to ITI an executed letter agreement, substantially 
in the form of Exhibit B attached hereto (together with such changes therein as 
may reasonably have been requested by ITI or IMA, such reasonableness to be     
determined in good faith by BDO Seidman), from each such affiliate.             

5.11  Taxes.                                                          

IMA and each Subsidiary have filed or caused to be filed all foreign, 
federal, state, provincial, municipal and other tax returns, reports and        
declarations required to be filed by it so as to prevent any Lien of any nature 
on the assets or properties of IMA or any of the Subsidiaries, and have paid or 
shall pay all taxes which have been or shall become due with respect to the     
periods covered by said returns or pursuant to any assessment received by it in 
connection therewith. Except as set forth in Schedule 5.11, the Internal Revenue
Service has not examined the federal tax returns of IMA or any of the           
Subsidiaries for any period subsequent to September 30, 1993; and only periods  
subsequent to September 30, 1993 remain open for examination and assessment of  
additional federal income taxes. All assessments and charges (including         
penalties and interest, if any) related to periods ended on or before September 
30, 1994 have been paid by IMA and each Subsidiary, including any necessary     
adjustments with state and local tax authorities, and, except as set forth in   
Schedule 5.11, no deficiency in payment of any taxes for any period has been    
asserted by any taxing authority which remains unsettled at the date hereof.    
Adequate provision has been made in the IMA Financial Statements for the payment
of all then accrued and unpaid federal and other taxes of IMA and its           
Subsidiaries, whether or not yet due and payable and whether or not disputed by 
IMA. Neither IMA nor any Subsidiary has agreed to the extension of the statute  
of limitations with respect to any tax return for any open year.                

5.12  Title.                                                          

 IMA and its Subsidiaries have good and marketable title to all of their
respective assets and properties, in each case, except as set forth on Schedule 
5.12(1), (2), (3), (4) and (5), free and clear of all Liens. IMA and the        
Subsidiaries lease or own all properties and assets necessary for the operation 
of their respective businesses as presently conducted, and the assets and       
properties of IMA and its Subsidiaries include all of the assets, of every kind 
and nature, whether tangible or intangible, and wherever located, which are     
utilized by IMA or its Subsidiaries in the conduct of their respective          
businesses. Neither IMA nor its Subsidiaries have received notice of any        
violation of, or default under, any law, ordinance, order, regulation, or       
governmental or contractual requirement relating to the assets and properties of
IMA or its Subsidiaries which remains uncured or has not been dismissed, other  
than with respect to any violation which, individually or in the aggregate,     
would not have a Material Adverse Effect and other than as identified on        
Schedule 5.12(7). All leases and licenses pursuant to which IMA or the          
Subsidiaries lease or license personal and intangible property from others, are 
in good standing, valid and effective in accordance with their respective terms,
and there is not, under any of such leases or licenses, any existing default, or
event of default (or event which with notice or lapse of time, or both, would   
constitute a default, or would constitute a basis for a claim of force majeure  
or other claim of excusable delay or non-performance) caused, by IMA or any     
Subsidiary or, to the best of IMA's knowledge, any other party. All the tangible
personal property owned or leased by IMA or its Subsidiaries is in good         
operating condition and repair, subject only to ordinary wear and tear, and     
conforms in all respects to all applicable laws, ordinances, orders, regulations
or governmental or contractual requirements relating to their operation, except 
for any such non-conformity which, individually or in the aggregate, would not  
have a Material Adverse Effect.                                                 

5.13  Real Estate and Leases.                                         

        (a) Set forth in Schedule 5.13 attached hereto is a brief description of
every parcel of real estate owned by IMA or any Subsidiary (including, in each  
case, a description of the improvements and uses, the annual taxes payable and  
depreciation reserve of any improvements), and lease agreements (including, in  
each case, the annual rental payable and the expiration date, the cost and      
depreciation reserve of any leasehold improvements and a brief description of   
the property covered) under which IMA or any of its Subsidiaries is lessee of,  
or holds or operates, any real estate owned by any third party. Each of such    
leases and agreements is in full force and effect and constitutes a legal, valid
and binding obligation of the respective parties thereto.                       

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Neither IMA nor any Subsidiary is in default under any such lease or agreement, 
nor, to the best of the knowledge of IMA, is any other party to any such lease  
or agreement in default thereunder, and no event has occurred, or is alleged to 
have occurred, which constitutes, or with lapse of time or giving of notice or  
both would constitute, a default by IMA or any Subsidiary or, to the best of the
knowledge of IMA, any other party to any such lease or agreement, or a basis for
a claim of force majeure or other claim of excusable delay or non-performance   
thereunder by IMA or any Subsidiary or, to the best of the knowledge of IMA, any
other party, other than with respect to any default, event or claim which,      
individually or in the aggregate, would not have any Material Adverse Effect.   

   (b) IMA or a Subsidiary has good, clear and marketable title to the
properties set forth on Schedule 5.13 and all fixtures thereon in fee simple    
absolute, subject to no Liens (other than covenants, easements and restrictions 
of record which do not, individually or in the aggregate, materially impair the 
value or the present use of such properties and other than as set forth in      
Schedule 5.13). There is no option or right held by any third party to purchase 
any such properties or any part thereof, or any of the fixtures and equipment   
thereon. All buildings, driveways and other improvements on such properties,    
respectively, are within its boundary lines, and no improvements on adjoining   
properties extend across the boundary lines onto such properties.               

 (c) The foundation, floor and roof of the buildings and all other
structural and mechanical components of the properties owned or leased by IMA or
its Subsidiaries are sound and free of any structural, mechanical or other      
defect, and all heating, ventilating, air conditioning, electrical, plumbing and
other mechanical systems and equipment thereon are in good working order, in    
each case except for construction-in-progress and except insofar as would not,  
individually or in the aggregate, have a Material Adverse Effect. There are no  
condemnation or eminent domain proceedings pending or threatened with respect to
the properties owned or leased by IMA or any Subsidiary, all required           
certificates of occupancy and other government permits necessary to utilize such
properties as they are presently utilized have been obtained, and such          
properties, and the operation thereof, conform to all existing building, zoning,
and other laws and ordinances relating to their use or occupancy, in each case  
except insofar as would not, individually or in the aggregate, have a Material  
Adverse Effect.                                                                 

5.14  Contractual and Other Obligations.                              

       (a) As used in this Agreement, the term the "IMA Agreements" shall mean
all mortgages, indentures, notes, agreements, contracts, leases, licenses,      
franchises, obligations, instruments or other commitments, arrangements or      
understandings of any kind, whether written or oral, binding or non-binding, to 
which IMA or any of the Subsidiaries is a party or by which IMA or any of the   
Subsidiaries or any of their respective properties may be bound or affected,    
other than those which by their terms have expired prior to the date hereof.    
There is no IMA Agreement which is material to IMA's business or condition and  
which is not otherwise listed in the IMA Form 10-K or otherwise identified      
pursuant to the immediately succeeding sentence. Set forth or provided for on   
Schedule 5.14 attached hereto is a list, without regard to materiality, of each 
of the following IMA Agreements which is not otherwise listed in the IMA Form   
10-K: (i) any mortgage, indenture, note, or other instrument, agreement or      
arrangement for or relating to any borrowing of money by IMA or any Subsidiary, 
or any other installment obligation in excess, individually, of $100,000 per    
year; (ii) any guaranty, direct or indirect, by IMA or any Subsidiary of any    
obligation for borrowings or otherwise, excluding endorsements made for         
collection in the ordinary course of business and guaranties of construction    
performance bonds in the ordinary course of business disclosed on Schedule 5.19;
(iii) any IMA Agreement made other than in the ordinary course of its business  
or providing for the grant of any preferential rights to purchase or lease any  
assets of IMA or any Subsidiary, except for such agreements which, individually 
and in the aggregate, are not material to IMA's business or condition; (iv) any 
obligation to make payments, contingent or otherwise, arising out of the prior  
acquisition of the business, assets or stock of other companies; (v) any        
collective bargaining agreement with any trade or labor union; (vi) any IMA     
Agreement to which any officer or director of IMA or any stockholder (herein    
referred to collectively, as the "Insiders") of IMA beneficially owning (within 
the meaning of Section 13(d) of the Exchange Act) more than 5% of the           
outstanding shares of IMA Class A Common Stock, or any shares of IMA Class B    
Common Stock, is a party; (vii) any IMA Agreement containing noncompetition or  
other limitations restricting the conduct of the                                

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business of IMA or any Subsidiary; (viii) any license agreements to which IMA or
any Subsidiary is a party relating to any Intellectual Property (as hereinafter 
defined), other than the Insituform Process or the NuPipe Process; and (ix) any 
partnership, shareholder agreement, joint venture or similar agreement.         

 (b) No event has occurred, or, is alleged to have occurred, which
constitutes or with lapse of time or giving of notice or both, would constitute 
a default or a basis for a claim of force majeure or other claim of excusable   
delay or non-performance by IMA or any Subsidiary under any IMA Agreements,     
except for any such default or claim which, individually or in the aggregate,   
would not have a Material Adverse Effect. To the best of the knowledge of IMA,  
no party with whom IMA or any Subsidiary has any IMA Agreement is in default in 
the performance of any covenant or condition thereunder or has failed in        
performance thereunder by reason of a claim of force majeure or other claim of  
excusable delay or non-performance thereunder, except for any such default or   
claim which, individually or in the aggregate, would not have a Material Adverse
Effect.                                                                         

5.15  Compensation.                                                   

  Except as disclosed in the IMA Form 10-K (including, without limitation,
the proxy statement incorporated therein) or in Schedule 5.14 or Schedule       
5.15(2) attached hereto, neither IMA nor any Subsidiary has any agreement with  
any employee with regard to compensation, whether individually or collectively, 
except agreements terminable by IMA or any Subsidiary at will without penalty,  
or oral agreements terminable by IMA or a Subsidiary on not more than 30 days'  
notice without penalty, and set forth in Schedule 5.15 is a list of all         
employees of IMA and each Subsidiary other than hourly employees subject to     
collective bargaining agreements, entitled to receive annual compensation in    
excess of $50,000 and their respective positions and salaries. Except for those 
unions identified on Schedule 5.14 as parties to IMA Agreements, no union or    
other collective bargaining unit has been certified or recognized by IMA or any 
Subsidiary as representing any of their respective employees. Without reference 
to any plans or proposals of ITI (other than the execution, delivery and        
performance of this Agreement), neither IMA nor ITI will incur any liability    
with respect to any payment due or damage suffered by any employee of IMA or any
Subsidiary, including, but not limited to, any claims for severance, termination
benefits or similar claims, by virtue of the operation of the Merger and the    
transactions contemplated hereby.                                               

5.16  Employee Benefit Plans.                                         

 Except as listed and accurately described in Schedule 5.16, IMA and the
Subsidiaries do not maintain or sponsor and are not required to make            
contributions to any pension, profit-sharing, bonus, incentive, welfare, or     
other employee benefit plan. All pension, profit-sharing, bonus, incentive,     
welfare, or other employee benefit plans within the meaning of Section 3(3) of  
the Employee Retirement Income Security Act of 1974, as amended (hereinafter    
referred to as "ERISA"), in which the employees of IMA or its Subsidiaries      
participate, or with respect to which IMA or the Subsidiaries have any liability
or obligation (such plans and related trusts, insurance, and annuity contracts, 
funding media, and related agreements and arrangements, other than any          
"multiemployer plan" (within the meaning of section 3(37) or ERISA) being       
hereinafter referred to as the "Benefit Plans", and such multiemployer plans    
being hereinafter referred to as the "Multiemployer Plans") comply in form and  
as administered in all material respects with all requirements of the U.S.      
Department of Labor, the Internal Revenue Service and the Pension Benefit       
Guaranty Corp. (hereinafter referred to as "PBGC") promulgated under ERISA and  
with all other applicable law (including, without limitation, the health care   
continuation coverage requirements of Section 4980B of the Code). Neither IMA   
nor any of its Subsidiaries has taken or failed to take any action with respect 
to either the Benefit Plans or the Multiemployer Plans which might create any   
material liability on the part of IMA, any Subsidiary or ITI. Each "fiduciary"  
(within the meaning of section 3(21)(a) of ERISA) as to each Benefit Plan and,  
to the best of the knowledge of IMA, as to each Multiemployer Plan has complied 
in all material respects with the requirements of ERISA and all other applicable
law in respect of each such Plan. All required employer and employee            
contribution and premiums under the Benefit Plans and the Multiemployer Plans to
the date hereof have been paid, the respective fund or funds established under  
the Benefit Plans and the Multiemployer Plans are funded in accordance with all 
applicable laws and such plans, and no material past service funding liabilities
exist thereunder. IMA has furnished to ITI and Acquisition Sub copies of all    

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Benefit Plans, and of all documents relating thereto required by ITI, including,
without limitation, annual reports and financial statements with respect to such
Benefit Plans for all periods ended on a date subsequent to September 30, 1991  
during which IMA or any Subsidiary was a sponsor or participating employer in or
was required to make contributions to such Benefit Plans. Such financial        
statements are true and correct in all material respects, and none of the       
actuarial assumptions underlying such statements have changed since the         
respective dates thereof. In addition, as of the date hereof:                   

 (i) No Benefit Plan which is a "defined benefit plan" (within the
meaning of Section 3(35) of ERISA) (hereinafter referred to as the "Defined     
Benefit Plans") or, to the best of the knowledge of IMA, Multiemployer Plan has 
incurred an "accumulated funding deficiency" (within the meaning of section     
412(a) of the Code), whether or not waived, and there are no excise taxes due or
hereafter to become due, based upon current facts and circumstances, under      
section 4971 of the Code with respect to the funding of any Benefit Plan;       

        (ii) No "reportable event" (within the meaning of section 4043 of ERISA)
has occurred with respect to any Defined Benefit Plan or, to the best of the    
knowledge of IMA, any Multiemployer Plan; there have been no terminations of any
Defined Benefit Plan or, to the best of the knowledge of IMA, any Multiemployer 
Plan or any related trust; no such termination of any of the foregoing          
reasonably can be expected to occur, whether as a consequence of the execution  
and delivery of this Agreement, the consummation of the transactions            
contemplated herein, or otherwise;                                              

        (iii) Neither IMA nor any Subsidiary has withdrawn (partially or totally
within the meaning of ERISA) from any Benefit Plan or any Multiemployer Plan;   
and neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated herein will result in the withdrawal (partial or  
total within the meaning of ERISA) from any Benefit Plan or Multiemployer Plan, 
or in any withdrawal or other liability of any nature to IMA, any Subsidiary, or
ITI under any Benefit Plan or any Multiemployer Plan;                           

      (iv) No "prohibited transaction" (within the meaning of section 406 of
ERISA or section 4975(c) of the Code) has occurred with respect to any Benefit  
Plan or, to the best of the knowledge of IMA, any Multiemployer Plan;           

(v) There is no excess of the aggregate present value of accrued
benefits on a termination basis over the aggregate value of the assets of the   
Defined Benefit Plans, and no withdrawal liability of IMA and the Subsidiaries  
with respect to the Multiemployer Plans;                                        

(vi) There are no contributions which are, or hereafter will be,
required to have been made to trusts in connection with "defined contribution   
plans" (within the meaning of section 3(34) of ERISA) with respect to services  
rendered by employees of IMA or the Subsidiaries prior to the date hereof, and  
all PBGC premiums due on or before the date of this Agreement by IMA or any     
Subsidiary have been paid in full, including any late fees, interest and        
penalties;                                                                      

        (vii) Other than claims in the ordinary course for benefits with respect
to the Benefit Plans or the Multiemployer Plans, there are no actions, suits, or
claims pending with respect to any Benefit Plan or any Multiemployer Plan or any
circumstances known to IMA which might give rise to any such action, suit or    
claims; and there are presently no outstanding judgments, decrees or orders of  
any court or any government or administrative agency against or affecting any   
Benefit Plan, the assets of any Benefit Plan or any Benefit Plan fiduciary; and 

       (viii)  Other than the pension benefits payable under the Benefit Plans
and except as set forth on Schedule 5.16, neither IMA nor any Subsidiary is     
under any obligation to provide benefits or coverage under a Benefit Plan to    
retirees of IMA or any Subsidiary or other former employees of IMA or any       
Subsidiary (or the beneficiaries of such retirees or former employees),         
including but not limited to retiree health care coverage (except as may be     
mandated by the Consolidated Omnibus Budget Reconciliation Act of 1985).        

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5.17  Labor Relations.                                                

There are no controversies pending or threatened between IMA and any  
Subsidiary and any of their respective employees which, individually or in the  
aggregate, are reasonably likely to result in a Material Adverse Effect, and,   
there are no organizational efforts currently being made or threatened involving
any of such employees. IMA has complied with all laws relating to the employment
of labor, including without limitation, any provisions thereof relating to      
wages, hours, collective bargaining and the payment of social security and      
similar taxes, and is not liable for any arrearage of wages or any taxes or     
penalties for failure to comply with any of the foregoing, except for any such  
non-compliance or such amounts which, individually or in the aggregate, would   
not have a Material Adverse Effect.                                             

5.18  Interests of Insiders.                                          

Except pursuant to an IMA Agreement identified on Schedule 5.14(vi) or
Schedule 5.18, no Insider has, nor does any officer or director of any of the   
Subsidiaries have, any interest in any property, real or personal, tangible or  
intangible, used in or pertaining to the businesses engaged in by IMA or any    
Subsidiary, except for the legal rights of stockholders and except for rights   
under existing employee benefit plans described in Section 5.16 hereof. Except  
as set forth on Schedule 5.14(vi) or Schedule 5.18, no Insider owns, nor do any 
officers of directors of any Subsidiary own, directly or indirectly, any        
interest in, or is a director, officer or employee of, any business which is a  
competitor or significant supplier of IMA or any Subsidiary.                    

5.19  Insurance.                                                      

As of the date of this Agreement, IMA and its Subsidiaries maintain   
insurance policies, and bonding arrangements, covering all of their respective  
assets and properties, and in each case the various occurrences which may arise 
in connection with the operation of their respective businesses, except those   
occurrences which, individually or in the aggregate, would not have a Material  
Adverse Effect. Schedule 5.19 attached hereto accurately summarizes the         
principal terms of all such policies and bonding arrangements. Such policies and
bonding arrangements are in full force and effect, all premiums and other       
amounts due thereon have been paid, and IMA and the Subsidiaries have complied  
with the provisions of such policies and bonding arrangements. Such insurance   
and such bonding arrangements are of comparable amounts and coverage as that    
which companies engaged in similar businesses would maintain in accordance with 
good business practice. There are no notices of any pending or threatened       
terminations or premium increases with respect to any such policies or bonding  
arrangements, and such policies and bonding arrangements will not be modified as
a result of or terminate or lapse by reason of, the transactions contemplated by
this Agreement.                                                                 

5.20  Intellectual Property.                                          

     Other than the rights of IMA and its Subsidiaries, each as licensee, to the
subject matter (herein referred to as the "Insituform Process") under their     
respective license agreements with Insituform North America Corp., and the      
rights, of IMA and its Subsidiaries, as licensee, to the subject matter (herein 
referred to as the "NuPipe Process") under agreements with NuPipe, Inc., set    
forth in Schedule 5.20 attached hereto is a list and brief description of all of
IMA's and each Subsidiary's patents, invention disclosures, registered and      
common law trademarks, service marks, tradenames, copyrights, licenses and other
similar rights and applications for each of the foregoing (together with those  
rights under license relative to the Insituform Process and the NuPipe Process, 
hereinafter referred to as the "Intellectual Property"). IMA and its            
Subsidiaries, respectively, own all right, and title and interest in and to all 
such Intellectual Property, except as set forth in Schedule 5.20(1)(a) free and 
clear of all Liens. Neither IMA nor any of its Subsidiaries has, except as set  
forth in Schedule 5.20, granted any outstanding licenses or other rights, and   
has no obligations to grant licenses or other rights, under any such            
Intellectual Property. The Intellectual Property listed in Schedule 5.20,       
together with those rights under license relative to the Insituform Process and 
the NuPipe Process, respectively, are all such rights necessary to the operation
and the conduct of the business of IMA and its Subsidiaries as currently        
conducted; no adverse claims have been made, and no dispute has arisen, with    
respect to any of the said Intellectual Property (including without limitation  
those under license relative to the Insituform Process and the NuPipe Process,  
respectively); and the operations of IMA and each Subsidiary and the use by each
of the Intellectual Property identified on Schedule 5.20 would not involve      
infringement or                                                                 

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claimed infringement of any patent, trademark, servicemark, tradename,          
copyright, license or similar right, except for any such infringement which,    
individually or in the aggregate, would not have a Material Adverse Effect.     
Without limiting the generality of the foregoing or any other provision         
contained in this Agreement: the license identified under Schedule 5.20(3)(b) is
in full force and effect; no event has occurred, or is alleged to have occurred,
which constitutes or with lapse of time or giving of notice or both, would      
constitute a material default or a basis for a claim of force majeure or other  
material claim of excusable delay or non-performance by IMA under such license; 
to the best of the knowledge of IMA, no party to such license other than IMA is 
in default in any material respect in the performance of any covenant or        
condition thereunder or has failed in performance thereunder in any material    
respect by reason of a claim of force majeure or other claim of excusable delay 
or non-performance thereunder; and the execution and delivery of this Agreement 
and the consummation of the Merger will not adversely affect or otherwise impair
the ability of the Surviving Corporation fully to enjoy the benefits of such    
license. Except as set forth on Schedule 5.20(3)(a), no license or other right  
has in any manner been granted by IMA or any of its Subsidiaries which          
constrains IMA or any Subsidiary from utilizing or commercializing any patent,  
registered or common law trademark, service name, tradename, copyright, license 
or other similar right. To the best of the knowledge of IMA, and except as would
not have a Material Adverse Effect, neither IMA nor any Subsidiary has suffered 
any of its trade secrets, know-how or other confidential intellectual or        
intangible property rights utilized in connection with the Business to enter    
into the public domain.                                                         

5.21  Disputes and Litigation.                                        

    Except as described in the IMA Form 10-K or as set forth on Schedule 5.21,
there is no action, suit, proceeding, or claim, pending or threatened, and no   
investigation by any court or government or governmental agency or              
instrumentality, domestic or foreign, pending or threatened, against IMA or any 
of its Subsidiaries, before any court, government or governmental agency or     
instrumentality, domestic or foreign, nor is there any outstanding order, writ, 
judgment, stipulation, injunction, decree, determination, award, or other order 
of any court or government or governmental agency or instrumentality, domestic  
or foreign, against IMA or any of its Subsidiaries, except for any such matter  
which, individually or in the aggregate, would not have a Material Adverse      
Effect.                                                                         

5.22  Licenses; Franchises; Rights.                                   

        (a) Each of IMA and its Subsidiaries has (or has made timely application
for) all franchises, licenses, permits and other governmental and               
non-governmental approvals necessary to enable it to carry on its business as   
currently conducted, and the employees and agents of IMA and its Subsidiaries   
also have all such franchises, licenses, permits, governmental and other        
approvals required of them in carrying out their duties on behalf of IMA and the
Subsidiaries, except for such franchises, licenses, permits and other approvals 
the failure to hold which, individually or in the aggregate, would not have a   
Material Adverse Effect. All such franchises, licenses, permits, and            
governmental and other approvals are in full force and effect, there has been no
default or breach thereunder, and there is no pending or threatened proceeding  
under which any may be revoked, terminated or suspended, except insofar as would
not, individually or in the aggregate, have a Material Adverse Effect. The      
execution and delivery of this Agreement, and the consummation of the Merger,   
will not adversely affect or otherwise impair the ability of the Surviving      
Corporation fully to enjoy the benefits of any such franchises, licenses,       
permits or governmental and other approvals. Schedule 5.22 attached hereto      
identifies each permit, license and other approval required by any national,    
state, commonwealth, or territorial government (but not by any county,          
municipality or local authority) to be maintained by IMA or any Subsidiary in   
order to conduct its current construction operations. Neither IMA nor any       
Subsidiary has violated, or is alleged to have violated, any law, rule,         
regulation, judgment, stipulation, injunction, decree, determination, award or  
other order of any government, or governmental agency or instrumentality,       
domestic or foreign, binding upon IMA or any Subsidiary which violation,        
individually or in aggregate, would have a Material Adverse Effect.             

     (b) Without limiting the generality of the foregoing, neither IMA nor
any Subsidiary: (i) has filed any notice under any Environmental Law (as        
hereinafter defined) indicating past or present treatment, storage, or disposal 
of a hazardous waste or reporting a spill or release of a hazardous or toxic    
waste, substance                                                                

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        or constituent, or other substance into the environment, or (ii) has any
liability, contingent or otherwise, under any Environmental Law in connection   
with any release of any hazardous or toxic waste, substance or constituent, or  
other substance on property, now or formerly owned or leased by IMA or any of   
its Subsidiaries, which, individually or in the aggregate, would have a Material
Adverse Effect. No hazardous materials and no hazardous substances have been    
generated, treated, stored or disposed of or placed in violation of any         
Environmental Law on any property owned or leased by IMA or any Subsidiary or on
or into any waste disposal site owned or operated by a third party except for   
violations which, individually or in the aggregate, would not have a Material   
Adverse Effect.                                                                 

    (c) For purposes hereof, "Environmental Laws" shall mean any and all
federal, state or local laws, statutes, ordinances, rules, regulations, orders, 
or determinations of any federal, state or local governmental authority         
pertaining to health or the environment, including with limitations, the federal
Clean Air Act, as amended, Comprehensive Environmental Response, Compensation   
and Liability Act of 1980, as amended, Water Pollution Control Act, as amended, 
Occupational Safety and Health Act of 1970, as amended, Resource Conservation   
and Recovery Act of 1976, as amended, Safe Drinking Water Act, as amended, Toxic
Substances Control Act, as amended, Superfund Amendments and Reauthorization Act
of 1986, as amended, Hazardous Materials Transportation Act, as amended, and all
other environmental, conservation or protection laws.                           

5.23  Brokers and Finders.                                            

Neither IMA, nor any Subsidiary, nor any director, officer, agent or  
employee thereof has employed any broker or finder or has incurred or will incur
any broker's, finder's or similar fees, commissions or expenses, in each case in
connection with the transactions contemplated by this Agreement, except for a   
fee payable to Wertheim Schroder & Co. pursuant to a financial advisory         
agreement with IMA, a copy of which agreement and all amendments thereto has    
been furnished to ITI and Acquisition Sub prior to the date of this Agreement.  

ARTICLE VI

REPRESENTATIONS AND WARRANTIES
OF ITI AND ACQUISITION SUB

    ITI and Acquisition Sub hereby, jointly and severally, represent, warrant,
and covenant as follows:                                                        

6.1  Incorporation.                                                   

  Each of ITI and Acquisition Sub is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and has  
full corporate power and authority to own or hold under lease the assets and    
properties which it owns or holds under lease, to conduct its businesses as     
currently conducted, to perform all its obligations under the agreements to     
which it is a party, including, without limitation, this Agreement and to       
consummate the Merger. Each is in good standing in each other jurisdiction      
wherein the failure so to qualify, individually or in the aggregate, would have 
a Material Adverse Effect with respect to ITI.                                  

6.2  Authorization.                                                   

  The execution and delivery of this Agreement by each, the performance by
each of its covenants and agreements hereunder and the consummation by each of  
the transactions contemplated hereby have been duly authorized by all necessary 
corporate action of each, other than the approval of the holders of ITI Common  
Stock contemplated under Section 7.2 hereof. When executed and delivered by     
each, this Agreement, shall constitute their valid and legally binding          
obligations, respectively, enforceable against them in accordance with its      
terms, except as may be limited by bankruptcy, insolvency, or other laws        
affecting generally the enforceability of creditors' rights and by limitations  
on the availability of equitable remedies.                                      

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6.3  Conflicts.                                                       

    Neither the execution and delivery of this Agreement, nor the consummation
of the transactions contemplated herein, will violate any provision of its      
certificate of incorporation or of its by-laws, as currently in effect (but     
subject to the adoption of the amendments thereto contemplated by this          
Agreement), or, subject to approval of this Agreement by the holders of ITI     
Common Stock contemplated under Section 7.2 hereof and compliance with the      
regulatory requirements hereinafter specified in this Section 6.3, any law,     
rule, regulation, writ, judgment, injunction, decree, determination, award, or  
other order of any court, government or governmental agency or instrumentality, 
domestic or foreign, binding upon ITI or Acquisition Sub, or, except as set     
forth on Schedule 6.3 attached hereto and other than any such conflicts,        
breaches, creation, imposition or termination which would not have a Material   
Adverse Effect with respect to ITI, conflict with or result in any breach of any
of the terms of or constitute a default under or result in the termination of or
the creation or imposition of any mortgage, deed of trust, pledge, lien,        
security interest or other charge or encumbrance of any nature pursuant to the  
terms of any contract or agreement to which it is a party to or by which it or  
any of its assets and properties are bound. Other than the approval of this     
Agreement by the holders of ITI Common Stock as contemplated under Section 7.2  
hereof and except for compliance with the requirements of the HSR Act, the      
Securities Act, with respect to the Registration Statement, the securities and  
blue sky laws of the various states, the Exchange Act, with respect to the Proxy
Statement, and except as set forth on Schedule 6.3 and any such consents,       
approvals, authorizations, filings or registrations with or notices to any such 
person or entity other than any governmental agency or instrumentality the      
failure to effectuate which would not have a Material Adverse Effect with       
respect to ITI, no consents, approvals or authorizations, or filings or         
registrations with, or notices to, any governmental agency or authority or any  
other person or entity are required in connection with the execution and        
delivery of this Agreement by ITI or Acquisition Sub or the consummation by ITI 
or Acquisition Sub of the transactions contemplated hereby.                     

6.4  Capitalization.                                                  

The authorized capital stock of ITI consists of 2,000,000 shares of   
preferred stock, $.01 par value (hereinafter referred to as "ITI Preferred      
Stock"), none of which are issued and outstanding, and 25,000,000 shares of ITI 
Common Stock, of which 14,402,085 shares are issued and outstanding on the date 
hereof. The shares of ITI Common Stock to be issued to holders of IMA Common    
Stock in the Merger will, at the Effective Time, and the shares of ITI Common   
Stock to be issued upon exercise of IMA Options assumed by ITI in accordance    
with this Agreement will, upon exercise thereof in accordance with the terms    
thereof, be duly authorized, validly issued and fully paid and non-assessable,  
issued without violation of the preemptive rights of any person. There are no   
subscriptions, warrants, options, calls, commitments by or agreements to which  
ITI is bound on the date hereof relating to the issuance, conversion or purchase
of any shares of ITI Common Stock, or any other capital stock of ITI, except as 
set forth on Schedule 6.4 attached hereto and except for: (x) options granted by
ITI pursuant to option plans in effect on the date hereof and options granted to
ITI's President, covering an aggregate of 1,167,600 shares of ITI Common Stock  
on the date hereof, and (y) warrants to purchase an aggregate of 350,877 shares 
of ITI Common Stock issued contemporaneously with ITI's 8.5% Senior Subordinated
Note due July 26, 2002.                                                         

6.5  Securities Filings.                                              

    ITI and each Subsidiary has made all filings with the SEC that it has been
required to make under the Securities Act and the rules and regulations         
promulgated thereunder and the Exchange Act and the rules and regulations       
promulgated thereunder. ITI has provided to IMA a complete and correct copy of  
all reports, registration statements, final prospectuses, definitive proxy      
statements and other filings made by ITI or any Subsidiary with the SEC,        
including all exhibits to such filings, since January 1, 1990 (all such         
documents that have been filed with the SEC, as amended, hereinafter referred to
as the "ITI SEC Documents"), including, without limitation, ITI's Annual Report 
on Form 10-K for the fiscal year ended December 31, 1994, as filed with the SEC 
on March 31, 1995 (together with all documents incorporated therein by          
reference, hereinafter referred to as the "ITI Form 10-K") and its Quarterly    
Report on Form 10-Q for the quarter ended March 31, 1995, as filed with the SEC 
on May 15, 1995 (hereinafter referred to as the "ITI Form 10-Q"). The ITI SEC   
Documents comply in all material respects with the requirements of the          
Securities Act or the Exchange Act,                                             

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as the case may be, and neither the ITI SEC Documents (as of the date of filing 
with the SEC), nor any information relating to ITI or any of its subsidiaries   
contained in this Agreement or any schedule hereto, contains any untrue         
statement of a material fact or omits to state a material fact required to be   
stated therein or necessary to make the statements therein, in light of the     
circumstances under which they were made, not misleading.                       

6.6  Financial Statements.                                            

   (a) The consolidated financial statements (hereinafter referred to,
collectively, as the "ITI Audited Financial Statements") of ITI and its         
consolidated subsidiaries contained in the ITI Form 10-K in response to "Item 8.
Consolidated Financial Statements and Supplementary Data" are true and correct  
and have been prepared in conformity with generally accepted accounting         
principles consistently applied throughout the periods to which such financial  
statements relate. The ITI Audited Financial Statements fully and fairly        
present, in conformity with such principles as so utilized, the consolidated    
financial position and results of operations and cash flows of ITI and its      
consolidated subsidiaries, at the dates shown and for the periods therein       
specified, except as described therein.                                         

   (b) The consolidated financial statements (hereinafter referred to,
collectively, as the "ITI Interim Financial Statements") of ITI and its         
consolidated subsidiaries contained in the ITI Form 10-Q in response to "Item 1.
Financial Statements" are true and correct and have been prepared in conformity 
with generally accepted accounting principles consistently applied throughout   
the periods to which such financial statements relate, except as permitted by   
Form 10-Q. The ITI Interim Financial Statements fully and fairly present the    
consolidated financial position and results of operations and cash flows of ITI 
and its consolidated subsidiaries, at the dates shown and for the periods       
therein specified, subject to normal year-end adjustments in accordance with    
generally accepted accounting principles and except as described therein.       

6.7  Absence of Undisclosed Liabilities.                              

  Except to the extent disclosed in the ITI Form 10-K or the ITI Form 10-Q
(in each case without reference to the exhibits thereto) or incurred after      
December 31, 1994 in the ordinary course of business and consistent with past   
practice, neither ITI, nor any of its subsidiaries has any liabilities, whether 
accrued, absolute, contingent, or otherwise, whether due or to become due and   
whether the amount thereof is readily ascertainable or not, other than          
liabilities which, individually or in the aggregate, would not have a Material  
Adverse Effect, or any unrealized or anticipated losses from any unfavorable    
commitments or sales of products, other than those which, individually or in the
aggregate, would not have a Material Adverse Effect with respect to ITI, in each
case under this Section 6.7 except as set forth in Schedule 6.7.                

6.8  Absence of Certain Changes.                                      

     Except as set forth in Schedule 6.8:(i) subsequent to December 31, 1994 and
except as disclosed in the ITI Form 10-K or the ITI Form 10-Q, neither ITI nor  
any subsidiary has suffered any Material Adverse Effect with respect to ITI; and
(ii) since December 31, 1994 and except as disclosed in the ITI Form 10-K or the
ITI Form 10-Q, there has been no condition, development or contingency which, so
far as reasonably may be foreseen, may, individually or in the aggregate, have a
Material Adverse Effect with respect to ITI.                                    

6.9  Pooling.                                                         

  As of the date hereof, there has not been any action taken by ITI or any
subsidiaries or affiliates under Rule 1-02 of Regulation S-X of the SEC that    
would prevent the Merger from being accounted for as a pooling-of-interests.    
Contemporaneously with the execution and delivery of this Agreement, ITI has    
delivered to IMA an executed letter agreement, substantially in the form of     
Exhibit B attached hereto (together with such changes therein as may reasonably 
have been requested by IMA or ITI, such reasonableness to be determined in good 
faith by BDO Seidman), from each such affiliate.                                

6.10  Interests of Insiders.                                          

    Except as disclosed in the ITI Form 10-K (including the amendments thereto
and Schedule 6.10 attached hereto), as of the date hereof no officer or director
of ITI, nor any stockholder beneficially owning                                 

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(within the meaning of Section 13(d) of the Exchange Act) more than 5% of the   
outstanding shares of ITI Common Stock, has, nor does any officer or director of
any of ITI's subsidiaries have, any interest in any property, real or personal, 
tangible or intangible, used in or pertaining to the businesses engaged in by   
ITI or any subsidiary of ITI, except for the legal rights of stockholders and   
except for rights under existing employee benefit plans. As of the date hereof, 
no such party owns, directly or indirectly, any interest in, or is a director,  
officer or employee of, any business which is a competitor or significant       
supplier of ITI or any of its subsidiaries.                                     

6.11  Disputes and Litigation.                                        

 Except as described in the ITI Form 10-K or the ITI Form 10-Q or as set
forth in Schedule 6.11, there is no action, suit, proceeding, or claim, pending 
or threatened, and no investigation by any court or government or governmental  
agency or instrumentality, domestic or foreign, pending or threatened, against  
ITI or any of its subsidiaries, before any court, government or governmental    
agency or instrumentality, domestic or foreign, nor is there any outstanding    
order, writ, judgment, stipulation, injunction, decree, determination, award, or
other order of any court or government or governmental agency or                
instrumentality, domestic or foreign, against ITI, except for any such matter   
which, individually or in the aggregate, would not have a Material Adverse      
Effect with respect to ITI.                                                     

6.12  Brokers or Finders.                                             

Neither ITI nor Acquisition Sub, nor any director, officer, agent or  
employee thereof, has employed any broker or finder or has incurred or will     
incur any broker's, finder's or similar fees, commissions or expenses, in each  
case in connection with the transactions contemplated by this Agreement, except 
for a fee payable to Merrill Lynch & Co. pursuant to a financial advisory       
agreement with ITI, a copy of which agreement and all amendments thereto have   
been furnished to IMA prior to the date of this Agreement.                      

ARTICLE VII 

CERTAIN COVENANTS 

7.1  IMA Stockholders' Meeting.                                       

     IMA, acting through its Board of Directors, shall take all action necessary
in accordance with applicable law and its certificate of incorporation and      
by-laws, to convene as promptly as practicable a special meeting of the holders 
of shares of IMA Common Stock, to vote upon this Agreement, the Merger and the  
transactions contemplated hereby, and shall include in the Joint Proxy Statement
the recommendation (subject to the fiduciary duty of the Board of Directors     
under applicable law) of its Board of Directors that the holders of the shares  
of IMA Common Stock vote in favor of the adoption and approval of this          
Agreement, the Merger and the transactions contemplated hereby. IMA shall use   
its best efforts to solicit from such stockholders proxies in favor of such     
adoption and approval and shall take all other action necessary or, in the      
reasonable opinion of ITI, helpful to secure a favorable vote for the purpose of
voting on and approving this Agreement, the Merger and the transactions         
contemplated hereby. IMA shall adjourn such stockholders' meeting to a later    
date, at the reasonable request of ITI, if (i) the requisite vote of holders of 
the shares of IMA Common Stock has not been obtained; or (ii) ITI shall         
otherwise request an adjournment in order to attempt to increase the percentage 
of the vote in favor of the foregoing.                                          

7.2  ITI Stockholders' Meeting.                                       

ITI, acting through its Board of Directors, shall take all action     
necessary, in accordance with applicable law and its certificate of             
incorporation and by-laws, to convene as promptly as practicable an annual or   
special meeting of the holders of shares of ITI Common Stock, to vote upon this 
Agreement, the issuance of ITI Common Stock in the Merger and the transactions  
contemplated hereby, including, without limitation, an amendment to its         
certificate of incorporation so as to increase the authorized number of shares  
of ITI Class A Common Stock, and to modify provisions relating to its board of  
directors, as set forth under Section 9.3 hereof, and shall include in the Joint
Proxy Statement the recommendation (subject to the fiduciary duty of the Board  
of Directors under applicable law) of its Board of Directors that the holders of
ITI Common Stock                                                                

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vote in favor of such Agreement, issuance and transactions. ITI shall use its   
best efforts to solicit from such stockholders proxies in favor of such matters 
and shall take all other action necessary to secure a favorable vote.           

7.3  ITI Board of Directors.                                          

 ITI shall take such action as may be necessary so that the ITI Board of
Directors will be expanded as of the Effective Time and pursuant to ITI's       
certificate of incorporation, amended as contemplated under Section 9.3 hereof, 
and ITI's by-laws, amended as contemplated by Section 9.4 hereof, to include the
following persons: William Gorham, Alvin J. Siteman, Silas Spengler and Sheldon 
Weinig, for a one-year term expiring in 1996 (hereinafter referred to as "Class 
I Directors"); Robert W. Affholder, Paul A. Biddelman, Douglas K. Chick and     
Steven Roth, for a two-year term expiring in 1997 (hereinafter referred to as   
"Class II Directors"); and Brian Chandler, Jerome Kalishman, James D. Krugman,  
Jean-Paul Richard and Russell B. Wight, Jr., for a three-year term expiring in  
1998 (hereinafter referred to as "Class III Directors"). Other than Mr. Richard,
the directors shall be grouped as follows: (i) Messrs. Biddelman, Chandler,     
Chick, Krugman and Spengler shall be referred to as the "INA Group"; (ii)       
Messrs. Gorham, Roth, Weinig and Wight shall be referred to as the "IGL Group"; 
and Messrs. Affholder, Kalishman and Siteman shall be referred to as the "IMA   
Group" (each of the INA Group, the IGL Group and the IMA Group, hereinafter     
referred to as a "Group"). During the period from the Effective Time until      
December 9, 1998 (hereinafter referred to as the "Term"), ITI shall nominate and
recommend for re-election to the ITI Board of Directors, upon expiration of     
their terms, the Class I Directors, the Class II Directors and the Class III    
Directors. If during the Term any director resigns or is unable to serve for any
reason, such vacancy shall be filled with a designee chosen by the remaining    
members of that director's Group and thereafter ITI shall nominate and recommend
such designee for election to the ITI Board of Directors as provided in the     
previous sentence. The provisions of this paragraph (a) shall be deemed to      
restate and amend, and supersede, the provisions of Section 7.3 of the Agreement
dated as of July 3, 1992 among ITI, INA Acquisition Corp. and Insituform Group  
Limited.                                                                        

7.4  ITI Officers.                                                    

 ITI shall take such action as may be necessary so that Jerome Kalishman
shall be appointed to the office of Vice Chairman of the Board of ITI at the    
Effective Time in accordance with and subject to the provisions of the by-laws  
of ITI, amended as contemplated under Section 9.4 hereof.                       

7.5  Registration Statement; Proxy Statement.                         

      (a)  ITI shall (i) prepare and file with the SEC as soon as reasonably
practicable a Registration Statement on Form S-4 (or another appropriate form)  
under the Securities Act (herein referred to as the "Registration Statement"),  
and preliminary joint proxy materials which comply as to form with the          
requirements of the Exchange Act, with respect to the transactions contemplated 
by this Agreement, (ii) use its best efforts to have the Registration Statement 
declared effective by the SEC under the Securities Act and the preliminary joint
proxy materials cleared by the SEC under the Exchange Act as promptly as        
practicable, and (iii) take all such action as may be required under state blue 
sky or securities laws in connection with the transactions contemplated by this 
Agreement. IMA will promptly furnish ITI with all information (and shall update 
such information) concerning IMA and its Subsidiaries, and their respective     
businesses and affairs and IMA's designees to the ITI Board of Directors,       
including, without limitation, financial statements, financial statement        
schedules, and pro forma financial statements and information, which, in the    
reasonable judgment of ITI or its counsel, may be required or appropriate for   
inclusion in the Registration Statement, and shall cooperate with and assist ITI
in the preparation of all such materials.                                       

        (b)  Promptly after the Registration Statement (including the definitive
joint proxy material contained therein (herein referred to as the "Joint Proxy  
Statement")) becomes effective, IMA and ITI shall cause the Joint Proxy         
Statement to be mailed to their respective stockholders and, if necessary, after
the Joint Proxy Statement shall have been so mailed, promptly circulate amended,
supplemental or supplemented proxy material and, if required in connection      
therewith, resolicit proxies. Neither IMA nor ITI shall use any proxy material  
in connection with the meetings of their respective stockholders hereinabove    
referred without the prior approval of the other parties hereto, which approval 
shall not be unreasonably withheld.                                             

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      (c)  IMA and ITI each represents and warrants to the other that at the
time the Registration Statement and any post-effective amendment thereto becomes
effective, and the Joint Proxy Statement and any other related proxy soliciting 
material filed with the SEC is cleared, and at all times subsequent thereto up  
to and including the Effective Time, none of the information set forth therein  
with respect to (in the case of IMA), IMA, its directors, officers, stockholders
or any Subsidiary or (in the case of ITI) ITI, its directors, officers,         
stockholders or any of its subsidiaries will contain any untrue statement of a  
material fact or omit to state any material fact required to be stated therein  
or necessary in order to make the statements therein, in light of the           
circumstances under which they are made, not misleading.                        

     (d)  IMA shall cause to be delivered to ITI (i) a letter of KPMG Peat
Marwick LLP, IMA's independent auditors, and (ii) a letter of Deloitte & Touche,
Enviroq's independent auditors, each dated within two business days before the  
date as of which the Registration Statement becomes effective and addressed to  
ITI, in form and substance reasonably satisfactory to ITI, to the effect set    
forth on, respectively, Exhibit C-1 and Exhibit C-2 hereto.                     

    (e)  ITI shall cause to be delivered to IMA a letter of BDO Seidman,
ITI's independent auditors, dated within two business days before the date as of
which the Registration Statement becomes effective and addressed to IMA, in form
and substance reasonably satisfactory to IMA, to the effect set forth on Exhibit
D hereto.                                                                       

7.6  HSR Act; Other Governmental and Judicial Filings.                

    As soon as practicable after the date hereof, IMA, ITI and Acquisition Sub
will cooperate in the preparation and filing of all materials necessary or      
desirable to obtain the approval of the transactions contemplated hereby or the 
disclaimer of jurisdiction with respect thereto by any regulatory body or other 
governmental or judicial authority that has jurisdiction over the transactions  
contemplated hereby, including, without limitation, all filings, with the       
Federal Trade Commission and the U.S. Department of Justice required under the  
HSR Act.                                                                        

7.7  Conduct of Business of IMA.                                      

  IMA covenants and agrees that, except as consented to in writing by ITI,
from and after the date of this Agreement and until the Effective Time, IMA and 
each Subsidiary shall:                                                          

      (a)  Make no purchase, sale, or lease in respect of, nor introduce any
method of management or operation in respect of, its business or its assets and 
properties, except in a manner consistent with prior practice and as set forth  
in IMA's capital expenditure budget previously provided to ITI and except as set
forth in Schedule 7.7(1).                                                       

      (b)  Maintain, preserve, and in no way further encumber its assets and
properties other than in the ordinary course of business consistent with past   
practice after the date hereof, and not enter into any agreement to effectuate  
the foregoing after the Effective Time.                                         

(c)  Use its best efforts: (i) to preserve its present business 
organization intact, (ii) to keep available the services of the present         
employees assigned to it, and (iii) to preserve its present relationships with  
entities or persons having business dealings with IMA or any of the             
Subsidiaries, in each case except insofar as would not have a Material Adverse  
Effect.                                                                         

    (d)  Maintain its books and records in accordance with good business
practices, on a basis consistent with prior practice.                           

       (e)  Comply in all material respects with all laws, rules, regulations,
writs, statutes, ordinance, judgments, injunctions, decrees, determinations,    
awards, and other orders of every court, government and governmental agency and 
instrumentality, domestic or foreign, applicable to it and to the conduct of its
business and perform in all material respects all its obligations without       
default.                                                                        

       (f)  Not incur, or agree to incur, any indebtedness for money borrowed,
except in the ordinary course of business under its line of credit dated        
February 14, 1995 among IMA, The Boatmen's National Bank of St. Louis and Mark  
Twain Bank, subtracting therefrom the amount of $8.6 million set forth on the   

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foregoing budget and intended for use in the development referenced in          
Paragraph (q) of this Section 7.7, but adding thereto amounts utilized for such 
development to the extent permitted by said Paragraph (q); or issue any bond,   
debenture, note, or similar obligation, or any guarantee any obligation of any  
person or entity, except for guarantees of construction performance bonds in the
ordinary course of business.                                                    

   (g)  Not mortgage, pledge, or subject to Lien any of its assets and
properties, other than encumbrances in existence on the date hereof.            

     (h)  Not make any loans, advances or contributions to, or investments
in, or guarantees of, any other person (other than a wholly-owned subsidiary and
other than short-term investments in the ordinary course of business in         
obligations of the United States of America for which the full faith and credit 
of the United States of America is pledged to provide for the payment of        
principal and interest, or certificates of deposit issued by a commercial bank  
or banks having at least $100,000,000 in individual capital and surplus, and    
other than foreign currency hedging transactions in the ordinary course of      
business consistent with past practice); and without limiting the generality of 
the foregoing, not acquire any shares of ITI Common Stock.                      

  (i)  Maintain and pay all premiums with respect to all policies of
insurance relating to its business, and its assets and properties, as are       
presently held in its name and timely renew all such policies or substitute     
substantially similar coverage therefor.                                        

     (j)  Not make any change adverse to it in any material respect in the
terms of any IMA Agreement (nor, without the prior review thereof and consent   
thereto of ITI, which consent shall not unreasonably be withheld, enter into    
definitive arrangements implementing the matters described under Item (5) of    
Schedule 5.5), nor approve, amend or modify any IMA Agreement to which an       
Insider is a party.                                                             

    (k)  Not make any capital expenditure (including, without limitation
expenditures for property, plant and equipment) or appropriations or commitments
with respect thereto, except (subject to the provisions of Paragraph (q) of this
Section 7.7) to the extent of the total dollar amount and, to the extent        
indicated therein, at the times set forth in IMA's capital expenditure budget   
which has been previously furnished to ITI.                                     

      (l)  Not acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or substantial portion of the 
assets of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets outside the ordinary course of 
business consistent with past practice; or consummate or implement the          
transactions contemplated by Items (2)(b) and (c) of Schedule 5.5, or by Items  
(ix)(3) and (4) of Schedule 5.14, in each case without prior review and approval
of the terms thereof by ITI, which approval shall not unreasonably be withheld. 

     (m)  Not take any action described in Section 5.9(d) hereof except as
set forth in Schedule 7.7(2), nor amend, modify, supplement, or in any way      
change in any material respect any plan or arrangement established for the      
benefit of its employees.                                                       

(n)  Not enter into any license or sublicense agreement or other
arrangement conferring any rights to utilize any Intellectual Property the      
rights to which are held by IMA or any Subsidiary.                              

      (o)  Not settle or compromise any litigation involving the payment of,
or an agreement to pay over time an amount in cash, notes, or other property,   
except that IMA may in good faith obtain the release of any and all claims and  
potential claims described under Item (3) of Schedule 5.21 in exchange for a    
settlement not in excess of $400,000 without the consent of ITI, and, if in     
excess of such amount, with the consent of ITI, which consent shall not         
unreasonably be withheld; and except that IMA may in good faith obtain the      
release of any and all claims and potential claims described under Item (5) of  
Schedule 5.21 in exchange for a settlement not in excess of $750,000 without the
consent of ITI, and, if in excess of such amount with the consent of ITI, which 
consent shall not unreasonably be withheld.                                     

     (p)  Not pay, discharge or satisfy claims, liabilities or obligations
(absolute, accrued, contingent or otherwise and whether due or to become due)   
which involve payments or commitments to make payments exceeding $100,000 in the
aggregate, other than (A) liabilities or obligations incurred in the ordinary   
course of                                                                       

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business and consistent with past practice, and (B) scheduled repayments        
of current portions of and interest on long term indebtedness or repayments     
under existing revolving credit agreements.                                     

        (q)  Notwithstanding any other provision contained in this Agreement, or
the schedules hereto, to the contrary, not take any action in furtherance of the
utilization for commercial purposes of the development contemplated by Item (1) 
of Schedule 5.8 (and Items (e)(2) of Schedule 5.9 and (i)(10) of Schedule 5.14),
nor acquire nor install any equipment or machinery on any such property, nor    
take any action in furtherance of any loan arrangements contemplated by said    
schedules, without the prior consent of ITI in each case; it being understood   
and agreed that, without the consent of ITI: (i) IMA shall be permitted to      
complete construction of such facility in accordance with the plans contemplated
by the capital expenditure budget referenced in Section 7.7(f) without the      
contemplated tower and manufacturing equipment (and subject to the provisions   
regarding financing hereinabove set forth); and (ii) IMA shall be permitted to  
acquire (but not install) manufacturing equipment which it has ordered prior to 
the date hereof.                                                                

     (r)  Take any action or fail to take any action which would result in
any breach of any of its representations, warranties or covenants contained     
herein.                                                                         

7.8  IMA Capitalization.                                              

   Except as consented to in writing by ITI, from and after the date of this
Agreement and until the Effective Time:                                         

(a)  No change shall be made or proposed in the certificate of  
incorporation or by-laws, or (subject to Section 7.7(l)) partnership or joint   
venture agreement, or any other organic instrument of IMA or of any Subsidiary. 

    (b)  Neither IMA nor any Subsidiary shall: (i) issue, grant, sell or
encumber any shares of its capital stock, (ii) issue, grant, sell or encumber   
any security, option, warrant, put, call, subscription or other right of any    
kind, fixed or contingent, that directly or indirectly calls for the            
acquisition, issuance, sale, pledge or other disposition of any shares of       
capital stock or other equity interests of IMA or any Subsidiary (other than    
pursuant to the arrangements described under Item (5) of Schedule 5.5 or under  
item (1) of Schedule 7.8), (iii) enter into any agreement, commitment or        
understanding calling for any transaction referred to in clause (i) or (ii) of  
this Paragraph (b), or (iv) make any other changes in its equity capital        
structure except, in all such cases under this Paragraph (b), for the issuance  
of shares of IMA Common Stock upon exercise of the IMA Options, and conversion  
of shares of IMA Class B Common Stock, which are outstanding prior to the       
execution and delivery of this Agreement and pursuant to the present terms      
thereof and except for the issuance by a Subsidiary of shares to IMA or to a    
wholly-owned Subsidiary.                                                        

      (c)  Neither IMA nor any Subsidiary shall split, combine or reclassify
any shares of its capital stock, or (other than as set forth under item (2) of  
Schedule 7.8) declare, set aside or pay any dividend or other distribution      
(whether in cash, stock, securities, indebtedness, rights or property or any    
combination thereof) in respect of any shares of its capital stock or other     
equity interests, or redeem or otherwise acquire any shares of the capital stock
or other equity interests.                                                      

7.9  Interim Financial Statements; Audited Enviroq Statements.        

(a)  IMA shall deliver to ITI all regularly prepared audited and
unaudited consolidated and consolidating financial statements of IMA and its    
Subsidiaries, respectively, prepared after the date of this Agreement, in the   
format historically published or utilized internally, as the case may be, and   
any financial statements prepared for filing with the SEC, as soon as each is   
available. Without limiting the provisions of Section 7.7(l), the financial     
statements delivered by IMA to ITI shall include pro forma financial statements 
or information prepared to illustrate any merger or acquisition occurring       
subsequent to the most recent financial statement delivered before the Effective
Time.                                                                           

      (b)  To the extent not furnished pursuant to Paragraph (a) immediately
preceding, within 30 days after the end of each calendar month after the date of
this Agreement, IMA will deliver to ITI unaudited consolidated statements of    
income for such calendar month and the corresponding calendar month of the      
preceding fiscal year. All such financial statements shall be true and correct  
and prepared in accordance with                                                 

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generally accepted accounting principles consistently applied and shall         
fully and fairly present, in conformity with such principles as so utilized, the
consolidated financial position, results of operations and cash flows of IMA and
its consolidated subsidiaries as at the date or for the periods indicated (and  
shall be accompanied by a certificate of the chief financial or accounting      
officer of IMA to such effect), except as otherwise indicated in such statements
and subject to normal and recurring year-end audit adjustments which would not, 
individually or in the aggregate, have a Material Adverse Effect. All unaudited 
financial statements delivered pursuant to this Paragraph (b) shall be prepared 
on a basis consistent with the IMA Interim Financial Statements.                

   (c)  IMA shall prepare or cause the preparation of the consolidated
financial statements and financial statement schedules of Enviroq and its       
subsidiaries as of March 25, 1995 and March 26, 1994 and for the years ended,   
respectively, March 25, 1995, March 26, 1994 and March 27, 1993, as required to 
be filed by IMA pursuant to Form 8-K promulgated by the SEC in connection with  
the consummation of the transactions under the agreement dated November 2, 1994 
entered into by IMA and Enviroq among other parties. Such financial statements  
and schedules shall be true and correct and prepared in accordance with         
generally accepted accounting principles consistently applied and shall fully   
and fairly present, in conformity with such principles as so utilized, the      
consolidated financial position, results of operations and cash flows of Enviroq
and its consolidated subsidiaries as of the dates and for the periods indicated.
As promptly as practicable after the date hereof, IMA shall deliver to ITI such 
financial statements and related financial statement schedules, together with   
the audit reports of Deloitte & Touche with respect thereto. IMA shall furnish  
ITI with access to all computations, calculations and determinations made in    
preparing such financial statements and schedules and shall consult with ITI and
its auditors in the completion of such financial statements and schedules.      

7.10  Conduct of Business of ITI; ITI Capitalization.                 

        (a)  ITI covenants and agrees that, except as set forth on Schedule 7.10
attached hereto or consented to in writing by IMA, from and after the date of   
this Agreement and until the Effective Time, ITI and each subsidiary shall:     

      (i)  Make no purchase, sale, or lease in respect of, nor
     introduce any method of management or operation in respect of, its business
   or its assets and properties, except in a manner in all material respects
consistent with prior practice.                                       

              (ii)  Use its best efforts: (x) to preserve its present business
 organization intact, and (y) to preserve its present relationships with
entities or persons having business dealings with ITI or any of its   
subsidiaries, in each case except insofar as would not have a Material
Adverse Effect with respect to ITI.                                   

           (iii)  Maintain its books and records in accordance with good
business practices, on a basis consistent with prior practice.        

              (iv)  Maintain in all material respects the current character of
   the business of ITI and its subsidiaries, taken as a whole, other than as
contemplated under this Agreement and not enter into any agreement to 
effectuate the foregoing after the Effective Time.                    

       (b)  ITI shall not other than as set forth on Schedule 7.10, (i) issue,
grant, sell or encumber any shares of its capital stock, (ii) issue, grant, sell
or encumber any security, option, warrant, put, call, subscription or other     
right of any kind, fixed or contingent, that directly or indirectly calls for   
the acquisition, issuance, sale, pledge or other disposition of any shares of   
capital stock of ITI, (iii) enter into any agreement, commitment or             
understanding calling for any transaction referred to in clause (i) or (ii) of  
this Paragraph (b) or (iv) make any other changes in its equity capital         
structure, except, in all such cases under this Paragraph (b), for (1) issuances
or grants of options to purchase shares of ITI Common Stock pursuant to any     
option plan of ITI in effect on the date of this Agreement or pursuant to any   
options or warrants outstanding on the date of this Agreement or set forth on   
Schedule 7.10, and (2) any transaction or transactions relating directly or     
indirectly (through issuance, grant or sale of rights, warrants, options or     
otherwise) to the issuance of up to an aggregate number of shares of ITI Common 
Stock which would not, without reference to any transaction or transactions, or 
issuance, prior to the date of this Agreement, or any transaction or            
transactions described                                                          

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under clause (1) immediately preceding, require the filing of a Report          
on Form 10-C under the rules of the SEC.                                        

(c)  Except as consented to in writing by IMA or as set forth on
Schedule 7.10, ITI shall not split, combine or reclassify any shares of its     
capital stock, declare, set aside or pay any dividend or other distribution     
(whether in case, stock, securities, indebtedness, rights or property or any    
combination thereof) in respect of any shares of its capital stock or other     
equity interests, or redeem or otherwise acquire any shares of its capital stock
or other equity interests.                                                      

  (d)  ITI shall deliver prior communication to IMA of any agreement
proposed to be entered into after the date hereof with any beneficial owner (as 
defined pursuant to Section 13(d) of the Exchange Act) of more than 5% of the   
outstanding shares of ITI Common Stock, in each case other than the matters set 
forth on Schedule 7.10.                                                         

7.11  Due Diligence; SEC Filings.                                     

   (a)  IMA shall afford ITI and its officers, employees, accountants,
counsel and other authorized representatives reasonable access, during ordinary 
business hours, to its plants, properties, books and records, and those of its  
Subsidiaries, and shall use its best efforts to cause its representatives to,   
furnish to ITI such additional financial and operating data and other           
information as to its and its Subsidiaries' respective businesses and properties
as ITI may from time to time reasonably request. IMA shall furnish ITI with     
copies of all filings with the SEC by it or any Subsidiary subsequent to the    
date hereof, which shall be prepared in all material respects in accordance with
the rules and regulations promulgated by the SEC if any such filings are made   
prior to the Effective Time.                                                    

    (b)  ITI shall provide IMA and its officers, employees, accountants,
counsel and other authorized representatives such information concerning ITI and
its subsidiaries as may be reasonably necessary for IMA to ascertain the        
accuracy and completeness of the information furnished by ITI for inclusion in  
the Registration Statement and to verify the warranties and covenants of ITI    
herein contained. ITI shall furnish IMA with copies of all filings with the SEC 
subsequent to the date hereof, which shall be prepared in all material respects 
in accordance with the rules and regulations promulgated by the SEC if any such 
filings are made prior to the Effective Time.                                   

    (c)  All information provided to ITI or its representatives by or on
behalf of IMA or any Subsidiary, or to IMA or its representatives by or on      
behalf of ITI or any subsidiary of ITI, before or after the date of this        
Agreement in connection with the transactions contemplated by this Agreement    
shall, notwithstanding the absence of any other specific reference thereto, be  
governed by the Confidentiality Agreement dated June 30, 1994, as amended       
(hereinafter referred to as the "Confidentiality Agreement") executed by ITI and
IMA.                                                                            

7.12  Notification of Certain Matters.                                

    (a)  Between the date hereof and the Effective Time, each party will
give prompt notice in writing to the other parties, of: (i) the occurrence, or  
failure to occur, of any event, which occurrence or failure would be likely to  
cause any of its representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect from the date hereof to the        
Effective Time, (ii) any notice or other communication from any person alleging 
that the consent of such person is or may be required in connection with the    
transactions contemplated by this Agreement, (iii) any notice or other          
communication from any governmental or regulatory agency or authority in        
connection with the transactions contemplated by this Agreement, (iv) any       
actions, suits, claims, investigations or proceedings commenced or, to the best 
of its knowledge, threatened against the notifying party or any subsidiary or   
relating to or involving or otherwise affecting the notifying party or which    
relate to the consummation of the transactions contemplated by this Agreement,  
and (v) any material failure of the notifying party or any officer, director,   
employee or agent thereof to comply with or satisfy any covenant, condition or  
agreement to be complied with or satisfied by it hereunder.                     

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    (b)  IMA will (i) confer on a regular and frequent basis with one or
more designated representatives of ITI to report operational matters and to     
report the general status of ongoing operations, and (ii) notify ITI of any     
emergency or other change in the normal course of business or in the operation  
of the properties of IMA or any Subsidiary and of any governmental complaints,  
investigations or hearings (or communications indicating that the same may be   
contemplated) or adjudicatory proceedings involving any property of IMA or any  
Subsidiary, and will keep ITI fully informed of such events and permit ITI's    
representatives access to all materials prepared in connection therewith. ITI   
will notify IMA of any emergency or other change in the normal course of        
business, or in the operation of the properties of ITI or any subsidiary, and of
any governmental complaints, investigations or hearings (or communications      
indicating that the same may be contemplated) or adjudicatory proceedings       
involving any property of ITI or any subsidiary, in each case if such event     
would, individually or in the aggregate, have a Material Adverse Effect with    
respect to ITI, and will keep IMA fully informed of such events.                

      (c)  The giving of any such notice under this Section 7.12 shall in no
way change or modify the representations and warranties or the conditions to any
party's obligations contained herein or otherwise affect the remedies available 
to any party hereunder.                                                         

7.13  Accounting and Tax Treatment.                                   

    Each of the parties undertakes and agrees to use its best efforts to cause
the transactions contemplated by this Agreement and the Merger to qualify for   
pooling-of-interests accounting treatment under generally accepted accounting   
principles. None of the parties will take a position on their respective tax    
returns or elsewhere, nor take any action or fail to take any action, that is or
would be inconsistent with the treatment of the transactions contemplated by    
this Agreement and the Merger as a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code unless counsel to the party taking the
inconsistent position shall have advised such party that there is no basis for  
the party to do otherwise.                                                      

7.14  Forbearance.                                                    

 IMA agrees that, from and after the date hereof and until the Effective
Time, it shall not, and shall not permit any Subsidiary, or any officers,       
directors, employees, agents or representatives of IMA or of any Subsidiary to, 
directly or indirectly, initiate, solicit or encourage discussions, inquiries or
proposals, or participate in any negotiation or discussion for the purpose or   
with the intention of leading to any proposal, concerning any merger,           
consolidation or other business combination involving IMA or any Subsidiary or  
any acquisition of any equity interest in IMA or any Subsidiary, or a material  
portion of the assets of, IMA and its Subsidiaries, taken as a whole, or any    
similar transaction, or effectuate any such transaction, in each case, except   
for the Merger. Notwithstanding the foregoing, IMA may furnish information      
concerning its business, properties or assets, and may engage in negotiations   
and discussions in connection with such a transaction, if the Board of Directors
of IMA, based on the written opinion of counsel reasonably satisfactory to IMA, 
determines that the exercise of its fiduciary responsibilities requires that    
such information be furnished or such negotiations be commenced. IMA shall      
notify ITI immediately of any such inquiry (including the terms thereof and the 
person making such inquiry) which it may receive in respect of any possible such
transaction.                                                                    

7.15  Restructuring Transactions.                                     

Following the receipt of the approvals by IMA and ITI stockholders    
contemplated by Sections 7.1 and 7.2, respectively, IMA shall effect            
restructurings of IMA's Subsidiaries and transfers of the assets and liabilities
of IMA and its Subsidiaries that are requested by ITI; provided that, if so     
requested by IMA in connection with any particular transaction, ITI shall agree,
on a basis reasonably satisfactory to IMA, to indemnify IMA and its Subsidiaries
against any out-of-pocket costs and tax liabilities, arising out of such        
transaction if the transactions contemplated by this Agreement are not          
consummated. No such restructuring or other transfer of assets or liabilities   
shall be undertaken if such restructuring or transfer would, in the reasonable  
judgment of Messrs. Thompson & Mitchell (as reasonably concurred with by Messrs.
Krugman, Chapnick & Grimshaw), impede in any material respect Messrs. Thompson &
Mitchell's ability to render the tax opinion described in Section 9.9.          

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7.16  Indemnification.                                                

     From and after the Effective Time, ITI and the Surviving Corporation shall,
to the extent permitted by the GCL and other law, honor all obligations of IMA  
pursuant to Section 8(b) of IMA's certificate of incorporation, Article IX of   
its by-laws, and those indemnification agreements with directors set forth on   
Schedule 5.14, in each case in effect on the date hereof, which provide for     
indemnification of officers and directors of IMA with respect to events         
occurring prior to the Effective Time; it being acknowledged and agreed that no 
such provisions shall obligate ITI to procure or maintain any insurance         
coverage.                                                                       

7.17  Registration Rights.                                            

        (a)  Prior to the mailing of the Joint Proxy Statement, ITI will use its
best efforts to enter into a registration rights agreement (hereinafter referred
to as the "Registration Rights Agreement") with each person who signs an        
Affiliate Agreement (as hereinafter defined), other than those who, immediately 
following the consummation of the Merger, would own less than 1% of the         
outstanding shares of ITI Common Stock (hereinafter referred to, individually,  
as a "Stockholder" and, collectively, as the "Stockholders").                   

     (b)  The Registration Rights Agreement will provide for the following
registration rights and other provisions substantially similar to those         
provisions contained in the Registration Rights Agreement dated October 19, 1992
(hereinafter referred to as the "Prior Registration Rights Agreement") among    
ITI, Interstate Properties and the Ringwood Group named therein, and will become
effective on the date of the first publication of the operating results of ITI  
covering at least a 30-day period after the Merger has been consummated:        

         (i)  Demand Registration.  A Stockholder may make a written
    request for registration under the Securities Act (hereinafter referred to
as a "Demand Registration") of all or part of the shares of ITI Common
   Stock that it or its Affiliates beneficially own (hereinafter referred to
     as the "Registrable Securities"); provided, that ITI shall not be obligated
  (i) to effect more than one Demand Registration for each Stockholder and
   its Affiliates unless ITI qualifies and is entitled to use a Registration
    Statement on Form S-3 (in which case such Stockholder shall be entitled to
a total of three Demand Registrations), (ii) to effect a Demand       
 Registration for less than 500,000 shares of ITI Common Stock, (iii) to
 effect a Demand Registration if such written request is given after the
sixth anniversary of the consummation of the Merger, (iv) to effect a 
Demand Registration for any Registrable Securities if, in the written 
    opinion of counsel to ITI, such Registrable Securities could, within three
  months of the date of a Stockholder's request but based on the facts and
  circumstances known at the date of such request, be publicly offered and
  sold without registration under the Securities Act (and such Stockholder
   shall provide such information as counsel to ITI shall reasonably request
    in connection with such opinion) or (v) to effect a Demand Registration in
any other circumstances exempted from such requirement pursuant to the
   Prior Registration Rights Agreement. Such request will specify the number
of shares of Registrable Securities proposed to be sold and will also 
     specify the intended method of disposition thereof. A registration will not
count as a Demand Registration until it has become effective.         

       (ii)  Incidental Registration.  If ITI proposes to file a
    registration statement under the Securities Act (other than a Registration
Statement on Form S-4 of Form S-8) relating to an underwritten public 
     offering of shares of ITI Common Stock to be offered for its own account or
 the account of others at any time prior to the sixth anniversary of the
consummation of the Merger, and if the managing underwriter for such  
proposed offering advises ITI that the inclusion of some or all of the
   Registrable Securities in such registration statement would not interfere
  with the successful marketing of ITI Common Stock, ITI shall (i) provide
    written notice of the proposed offering to the Stockholders, setting forth
     a description of the intended method of distribution, and (ii) use its best
  efforts to register pursuant to such registration statement (hereinafter
 referred to as an "Incidental Registration") such number of Registrable
   Securities as shall be specified in a written request by each Stockholder
 made within 20 days after such written notice from ITI, subject to such
 limits as may have been set by ITI's Board of Directors or the managing
   underwriter on the number of Registrable Securities which may be included
 in the proposed offering; provided, however, that, for purposes of this
sentence, the use by ITI of its "best efforts" shall not require any  
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 distribute for its own account. ITI shall not be obligated to effect an
Incidental Registration for any Registrable Securities (x) if in the  
written opinion of counsel to ITI, such Registrable Securities could, 
     within three months of the date of a Stockholder's request but based on the
facts and circumstances known at the date of such request, be publicly
 offered and sold without registration under the Securities Act (and the
Stockholder shall provide such information as counsel to ITI shall    
 reasonably request in connection with such opinion) or (y) in any other
circumstances exempted from such requirement pursuant to the Prior    
Registration Rights Agreement.                                        

7.18  Additional Agreements.                                          

    Subject to the terms and conditions of this Agreement, each of the parties
hereto shall cooperate with one another and use its best efforts to complete in 
a timely manner the transactions contemplated by this Agreement, including (i)  
using its best efforts to comply with any and all applicable rules and          
regulations, and to send all notices to, make all declarations, filings and     
registrations with, and obtain all consents, authorizations, approvals and      
waivers from third parties and governmental and regulatory bodies required to   
consummate the transactions contemplated hereby or comply with any and all      
applicable rules and regulations governing such transactions, and (ii)          
furnishing the other parties with all information necessary or advisable for the
matters referred to in Sections 7.5 and 7.6 hereof and any other statements or  
applications made by or on behalf of any party to any governmental or regulatory
body in connection with the transactions contemplated by this Agreement.        

ARTICLE VIII

PUBLICITY 

8.1  Publicity.                                                       

   None of the parties hereto shall, nor shall any such party cause or allow
any affiliate, directly or indirectly, to issue any press release or otherwise  
make any public announcement or statement with respect to the matters           
contemplated hereby without the prior approval of all parties (which consent    
shall not be unreasonably withheld); provided that nothing herein shall prohibit
any party hereto or any of their affiliates from making any announcement or     
disclosure required to be made by it or them under applicable law if it or its  
affiliates determines in good faith that it is appropriate to do so and, if     
practicable, gives prior notice to the other parties hereto of such             
determination.                                                                  

ARTICLE IX

CONDITIONS TO OBLIGATIONS 
OF EACH PARTY 

   The obligations of each of ITI, Acquisition Sub and IMA to consummate the
Merger and the Closing are subject to the following conditions precedent, any or
all of which may be waived by such party at its sole discretion:                

9.1  Hart-Scott-Rodino Antitrust Improvements Act.                    

The waiting period (and any extensions thereof) applicable to the     
consummation of the transactions contemplated hereby required under the HSR Act 
shall have expired or been terminated.                                          

9.2  Merger Approval.                                                 

   This Agreement, the Merger and the transactions contemplated hereby shall
have been duly approved and adopted by the requisite vote of the respective     
stockholders of ITI and IMA in accordance with applicable law and the rules     
promulgated by the National Association of Securities Dealers, Inc.             

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9.3  Amendments to ITI's Certificate of Incorporation.                

     The amendments to ITI's certificate of incorporation which are contemplated
by Section 7.2, in the respective forms thereof attached hereto as Exhibit E-1  
and Exhibit E-2 shall have been approved by the requisite vote of ITI           
stockholders entitled to vote thereon and duly filed in accordance with the     
requirements of the GCL.                                                        

9.4  Amendments to ITI's By-Laws.                                     

The amendments to ITI's by-laws in the form thereof attached hereto as
Exhibit F shall have been adopted by the Board of Directors of ITI.             

9.5  Effectiveness of Registration Statement.                         

 Prior to the first date on which the Joint Proxy Statement is mailed to
stockholders, the SEC shall have declared the Registration Statement effective  
and, at or prior to the time required, any required approvals of state          
securities administrators shall have been obtained. At the Closing and the      
Effective Time, the Registration Statement shall be effective and no stop order 
suspending the effectiveness of the Registration Statement or similar           
restraining order shall have been threatened or initiated by the SEC or any     
state or foreign securities administrator.                                      

9.6  Pooling-of-Interests.                                            

ITI shall have received an opinion from BDO Seidman, dated the Closing
Date, in form and substance reasonably satisfactory to ITI and to IMA, to the   
effect that the transactions contemplated by this Agreement and the Merger will 
qualify for pooling-of-interests accounting treatment under generally accepted  
accounting principles.                                                          

9.7  Conversion of IMA Class B Common Stock.                          

    At or prior to the Effective Time, all of the shares of IMA Class B Common
Stock issued and outstanding immediately prior to the Effective Time shall have 
been converted into shares of IMA Class A Common Stock on a share for share     
basis in accordance with IMA's certificate of incorporation, as currently in    
effect; and, in furtherance thereof, each holder of shares of IMA Class B Common
Stock shall have executed and delivered to ITI and IMA a letter in the form of  
Exhibit G attached hereto (together with such changes therein as may reasonably 
be requested by ITI).                                                           

9.8  No Prohibition on Consummation.                                  

   No order, stay, judgment, injunction or decree shall have been issued and
be in effect by any court restraining or prohibiting the consummation of the    
transactions contemplated hereby. No statute, rule or regulation shall have been
promulgated or enacted by any foreign or United States federal or state         
government, governmental authority or governmental agency, which would prevent  
or make illegal the consummation of the transactions contemplated hereby,       
including the Merger.                                                           

9.9  Tax Opinion.                                                     

     IMA shall have received from Messrs. Thompson & Mitchell, an opinion, dated
the Closing Date, in form and substance reasonably satisfactory to IMA and to   
ITI and its counsel, to the effect that the Merger will be treated for federal  
income tax purposes as a reorganization within the meaning of Sections          
368(a)(1)(A) and 368(a)(2)(E) of the Code, and that ITI, Acquisition Sub and IMA
will each be a party to that reorganization within the meaning of Section 368(b)
of the Code.                                                                    

9.10  ITI Board; Officers.                                            

ITI's Board of Directors and its offices shall have been expanded and 
filled, respectively, as set forth under Sections 7.3 and 7.4 hereof.           

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ARTICLE X 

CONDITIONS TO OBLIGATIONS OF IMA

   The obligation of IMA to consummate the Merger and the Closing is subject
to the following additional conditions precedent, any or all of which may be    
waived by IMA at its sole discretion:                                           

10.1  Opinion of Counsel for ITI and Acquisition Sub.                 

     IMA shall have received an opinion of Messrs. Krugman, Chapnick & Grimshaw,
counsel for ITI and Acquisition Sub, dated the Closing Date, in form and        
substance reasonably satisfactory to IMA and its counsel, to the effect set     
forth in Exhibit H.                                                             

10.2  Representations; Warranties; Covenants.                         

    The representations and warranties of ITI and Acquisition Sub contained in
this Agreement shall be true and correct in all material respects at and as of  
the Closing Date with the same effect as though all such representations and    
warranties were made at and as of the Closing Date (except for representations  
and warranties which are as of a specific date or which relate to a specific    
period other than or not including the Closing Date, as the case may be, and    
except for changes therein contemplated or permitted by this Agreement and      
provided, however, that if any such representation or warranty is already       
qualified by materiality, for purposes of determining whether this condition has
been satisfied, such representation or warranty must be true and correct in all 
respects); and ITI and Acquisition Sub shall have complied with their respective
covenants contained under this Agreement in all material respects; and ITI and  
Acquisition Sub shall have delivered to IMA a certificate to that effect, dated 
the Closing Date, signed by its Chairman of the Board, its President and Chief  
Executive Officer or one of its Vice Presidents.                                

10.3  Certified Resolutions.                                          

IMA shall have received a certificate of the Secretary or an Assistant
Secretary of each of ITI and Acquisition Sub, in form and substance satisfactory
to IMA, with respect to the authorization by their respective boards of         
directors and stockholders of the execution and delivery of this Agreement and  
the consummation of the transactions contemplated herein, the number of         
authorized shares of the capital stock of ITI as of the Closing Date and the    
number of issued and outstanding shares of the capital stock of ITI, and the    
number of shares subject to outstanding options and warrants, convertible       
securities or similar obligations to issue capital stock, as of such date.      

10.4  Kalishman and Affholder Agreements.                             

    ITI shall have executed and delivered to Robert W. Affholder the agreement
in the form attached hereto as Exhibit K, and shall have executed and delivered 
to Jerome Kalishman the agreements in the respective forms attached hereto in   
Exhibit L, in each case dated the Closing Date.                                 

10.5  Fairness Opinion.                                               

 IMA shall have received from Wertheim Schroder & Co. Incorporated on or
prior to the date of mailing of the Joint Proxy Statement its opinion that the  
terms of the Merger are fair to the holders of IMA Common Stock from a financial
point of view, and such opinion shall not have been withdrawn between the date  
of its delivery and the Effective Time.                                         

10.6  Letter of ITI's Accountants.                                    

IMA shall have received a letter of BDO Seidman, ITI's independent    
auditors, dated the Closing Date, addressed to IMA, in form and substance       
reasonably satisfactory to IMA and counsel for IMA, making the statements       
required by Paragraph (e) of Section 7.5 on the basis of procedures set forth   
therein carried out by them not more than three business days prior to the      
Closing Date.                                                                   

10.7  Director Indemnification Agreements.                            

    ITI shall have executed to Jerome Kalishman, Robert W. Affholder and Alvin
J. Siteman its customary form of director indemnification agreement, in each    
case dated the Closing Date.                                                    

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10.8  Litigation.                                                     

    No action, suit or proceeding against any current director of IMA relating
to the consummation of any of the transactions contemplated in this Agreement,  
and seeking material damages in connection therewith, shall be pending or       
threatened which IMA, in good faith and with the advice of Messrs. Thompson &   
Mitchell, reasonably believes makes it undesirable to proceed with the          
consummation of the transactions contemplated hereby.                           

10.9  Other Certificates.                                             

     IMA shall have received such additional certificates, instruments and other
documents, in form and substance satisfactory to IMA and counsel for IMA, as IMA
shall have reasonably requested in connection with compliance with the          
conditions set forth in this Article X.                                         

ARTICLE XI

CONDITIONS TO OBLIGATIONS OF ITI AND ACQUISITION SUB

     The obligations of each of ITI and Acquisition Sub to consummate the Merger
and the Closing are subject to the following conditions precedent, any or all of
which may be waived by such party at its sole discretion:                       

11.1  Opinion of Counsel for IMA.                                     

    ITI shall have received an opinion of Messrs. Thompson & Mitchell, counsel
for IMA, dated the Closing Date, in form and substance reasonably satisfactory  
to ITI and its counsel to the effect set forth in Exhibit I.                    

11.2  Representations; Warranties; Covenants.                         

     The representations and warranties of IMA contained in this Agreement shall
be true and correct in all material respects at and as of the Closing Date with 
the same effect as through all such representations and warranties were made at 
and as of the Closing Date (except for representations and warranties which are 
as of a specific date or which relate to a specific period other than or not    
including the Closing Date, as the case may be, and except for changes therein  
contemplated or permitted by this Agreement, and provided, however, that if any 
such representation or warranty is already qualified by materiality, for        
purposes of determining whether this condition has been satisfied, such         
representation or warranty must be true and correct in all respects); and IMA   
shall have complied with all of its covenants contained in this Agreement in all
material respects; and IMA shall have delivered to ITI a certificate to that    
effect, dated the Closing Date, signed by its Chairman of the Board, its        
President or one of its Vice Presidents.                                        

11.3  Certified Resolutions; Capitalization.                          

 (a)  ITI shall have received a certificate of the Secretary or an
Assistant Secretary of IMA in form and substance satisfactory to ITI, with      
respect to the authorization by the board of directors and the stockholders of  
IMA of the execution and delivery of this Agreement and the consummation of the 
transactions contemplated herein, the number of authorized shares of the capital
stock of IMA as of the Closing Date and the number of issued and outstanding,   
fully paid and non-assessable shares of the capital stock of IMA as of such date
(which shall not include any shares other than the shares of IMA Class A Common 
Stock outstanding on the date hereof, the shares of IMA Class A Common Stock    
issued upon conversion of shares of IMA Class B Common Stock outstanding on the 
date hereof, and any shares of IMA Class A Common Stock issued upon exercise of 
IMA Options outstanding on the date hereof and exercisable prior to the         
Effective Time).                                                                

       (b)  ITI shall have received assurances, reasonably satisfactory to it,
that at and after the Effective Time, there shall not exist any security,       
option, warrant, right, put, call, subscription, agreement, commitment,         
understanding or claim of any kind, fixed or contingent (including the IMA      
Options), that directly or indirectly calls for IMA or (except as identified    
under Item (5) of Schedule 5.5) any of its Subsidiaries to acquire, issue,      
deliver or sell, or to cause to be acquired, issued, delivered or sold, any     
shares of the capital                                                           

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stock of or equity interest in IMA or any Subsidiary or obligating IMA or any   
Subsidiary to grant, extend or enter into any of the foregoing.                 

11.4  Affiliate Undertakings.                                         

(a)  ITI shall have received an agreement, in form and substance
reasonably satisfactory to it (herein referred to as an "Affiliate Agreement"), 
executed and delivered by each officer and director of IMA and each other holder
of securities of IMA who, in the opinion of counsel for ITI, after review of    
opinions of counsel for IMA, is or may be an "affiliate" of IMA within the      
meaning of Rule 145 under the Securities Act, to the effect set forth in Exhibit
J, stating that:                                                                

             (i)  no disposition shall be made by such "affiliate" of shares
     of ITI Common Stock, except in accordance with the applicable provisions of
the Securities Act and the rules and regulations thereunder; and      

               (ii) the certificates evidencing such shares received pursuant to
  the Merger shall bear a legend setting forth such restrictions in a form
satisfactory to ITI.                                                  

      (b)  ITI shall also have received from IMA or from the stockholders of
IMA, as the case may be, representations with respect to such other matters as  
ITI reasonably may require in order to be assured that the Merger will          
constitute a tax-free reorganization under Section 368 of the Code.             

11.5  Kalishman and Affholder Agreements.                             

   Robert W. Affholder shall have executed and delivered to ITI an agreement
in the form thereof contained in Exhibit K attached hereto, dated the Closing   
Date, and Jerome Kalishman shall have executed and delivered to ITI the         
agreements in the respective forms thereof attached hereto as Exhibit L attached
hereto, in each case dated the Closing Date.                                    

11.6  Dissenters' Rights.                                             

 The holders of not more than 5% of the outstanding shares of IMA Common
Stock shall, at the Closing Date, be entitled to demand payment of the fair     
value of their shares as dissenting shareholders.                               

11.7  Third Party Consents.                                           

All notices to, and declarations, filings and registrations with, and 
consents, authorizations, approvals and waivers from, governmental and          
regulatory bodies required to consummate the transactions contemplated hereby   
shall have been made or obtained, and all other notices, consents or waivers    
with respect to the transactions contemplated by this Agreement shall have been 
made or obtained.                                                               

11.8  Resignations.                                                   

     ITI shall have received the resignations of all such officers and directors
of IMA and each Subsidiary requested by it.                                     

11.9  Fairness Opinion.                                               

     ITI shall have received from Merrill Lynch & Co. on or prior to the date of
mailing of the Joint Proxy Statement its opinion that the terms of the Merger   
are fair to the holders of ITI Common Stock from a financial point of view, and 
such opinion shall not have been withdrawn between the date of its delivery and 
the Effective Time.                                                             

11.10  Letter of Accountants for IMA and Enviroq.                     

ITI shall have received a letter of KPMG Peat Marwick LLP, IMA's      
independent auditors, and Deloitte & Touche, L.L.P., Enviroq's independent      
auditors, each dated the Closing Date, addressed to ITI, in form and substance  
reasonably satisfactory to ITI and counsel for ITI, making the statements       
required by Paragraph (d) of Section 7.5, on the basis of procedures set forth  
therein carried out by them, respectively, not more than three business days    
prior to the Closing Date.                                                      

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11.11  A-Y-K-E Equipment.                                             

 IMA or Affholder, Inc. shall have entered into arrangements, reasonably
satisfactory to ITI, with respect to: (x) the purchase, at fair market value    
determined by an independent appraiser qualified in such matters and reasonably 
satisfactory to ITI, or (y) the long-term lease, at fair market rental rates    
determined by an appraiser as aforesaid, which at the option of ITI may be on a 
non-exclusive basis and from time to time, and terminable by IMA on the same or 
substantially similar basis as is contained in the arrangements currently in    
effect, or (z) the modification of the arrangements currently in effect pursuant
to terms reasonably satisfactory to ITI, in each case under clauses (x), (y) and
(z) immediately preceding with respect to such equipment covered by the         
Equipment Lease dated October 10, 1989, as from time to time supplemented,      
between Affholder, Inc. and A-Y-K-E Partnership and such other equipment, tools,
machinery, supplies and other properties owned or controlled by said partnership
and used, useable or useful in the business of IMA or any Subsidiary thereof, as
shall in each case be identified by ITI.                                        

11.12  Litigation.                                                    

No action, suit or proceeding against any party hereto relating to the
consummation of any of the transactions contemplated in this Agreement or any   
governmental action seeking to delay or enjoin any such transactions shall be   
pending or threatened and no investigation by any governmental or regulatory    
body shall have been commenced (and be pending), seeking to restrain or prohibit
(or questioning the validity or legality of) the consummation of the            
transactions contemplated by this Agreement, including the Merger, or seeking   
material damages in connection therewith which ITI, in good faith and with the  
advice of Messrs. Krugman, Chapnick & Grimshaw, reasonably believes makes it    
undesirable to proceed with the consummation of the transactions contemplated   
hereby.                                                                         

11.13  Other Certificates.                                            

     ITI shall have received such additional certificates, instruments and other
documents, in form and substance satisfactory to ITI and counsel for ITI, as it 
shall have reasonably requested in connection with the transactions contemplated
hereunder.                                                                      

ARTICLE XII 

TERMINATION 

12.1  Termination.                                                    

     This Agreement may be terminated and the Merger abandoned at any time prior
to the Effective Time, whether prior to or after approval by the stockholders of
either IMA or ITI, by the consent of all parties hereto, or by either IMA or ITI
if: (i) the other party shall have breached in any material respect any of its  
representations or warranties contained in this Agreement; (ii) any such        
representation or warranty shall not be correct or accurate in all material     
respects at and as of the Closing Date with the same effect as if made at such  
time (with such exceptions as are permitted by Sections 10.2 and 11.2,          
respectively); (iii) the other party shall have failed to comply in all material
respects with any of its covenants or agreements contained in this Agreement to 
be complied with or performed by it at or prior to the Closing; (iv) at the     
stockholders meeting (including any adjournment or postponement thereof) of the 
other party called pursuant to Section 7.1 or 7.2, as the case may be, or any   
successor meeting called for the same purpose, the requisite affirmative        
approval of the stockholders of the other party shall not have been obtained;   
(v) if a permanent injunction is entered, enforced or deemed applicable to this 
Agreement, or the Plan of Merger, which prohibits the consummation of the       
transactions contemplated hereby and thereby and all appeals of such injunction 
shall have been taken and shall have been unsuccessful; (vi) if any governmental
entity, the consent of which is a condition to the obligation of such party to  
consummate the transactions contemplated hereby, shall have determined not to   
grant its consent and all appeal of such determination shall have been taken and
shall have been unsuccessful; or (vii) the Closing shall not have occurred on or
prior to January 31, 1996.                                                      

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12.2  Effect of Termination.                                          

In the event of termination of this Agreement pursuant to Section 12.1
hereof, all rights of all parties hereto shall cease and terminate, except for  
such rights as any party may otherwise have for breach of contract (other than  
breaches which are not willful), including, without limitation, rights for any  
such breaches of any representations, warranties or covenants contained herein, 
and, provided that the provisions of this Section 12.2 and Sections 7.11(c),    
13.3, 13.7 and 13.8 shall survive any such termination.                         

ARTICLE XIII

MISCELLANEOUS 

13.1  Notices.                                                        

All notices, requests or instruction hereunder shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid or
by telecopy (or like transmission), as follows:                                 

(1) if to IMA:          

 17988 Edison Avenue
               Chesterfield, Missouri 63005-3700

 Attention: Chairman

 Fax: (314) 537-1214

with a copy to:   

  Thomas A. Litz, Esq.
 Thompson & Mitchell
   One Mercantile Center
       St. Louis, Missouri 63101

 Fax: (314) 342-1717

         (2) if to ITI or Acquisition Sub:

1770 Kirby Parkway
Suite 300         
      Memphis, Tennessee 38138

                      Attention: President and Chief Executive
         Officer

 Fax: (901) 759-7513

with a copy to:   

 Howard Kailes, Esq.
          Krugman, Chapnick & Grimshaw
       Park 80 West -- Plaza Two
            Saddle Brook, New Jersey 07663

 Fax: (201) 845-9627

Any of the above addresses may be changed at any time by notice given as        
provided above; provided, however, that any such notice of change of address    
shall be effective only upon receipt. All notices and other communications given
to any party hereto in accordance with the provisions hereof shall be deemed to 
have been given on the date of receipt, provided that any notice or other       
communication that is received other than during regular business hours of the  
recipient shall be deemed to have been given at the opening of business on the  
next business day of the recipient.                                             

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13.2  Survival of Representations.                                    

   The respective representations and warranties of the parties contained in
this Agreement shall not be deemed waived or otherwise affected by any          
investigation of any party. The representations, warranties, covenants and      
agreements of the parties hereto herein contained in Articles I, II and III and 
Sections 7.3, 7.16 and 7.17 of this Agreement shall survive the Effective Time. 
All other representations, warranties, covenants and agreements in and pursuant 
to this Agreement shall not survive the Effective Time.                         

13.3  Cooperation Agreement.                                          

The parties acknowledge and agree, on behalf of themselves and their  
subsidiaries, respectively, that: (x) ITI, IMA and Enviroq have entered into an 
Amended and Restated Cooperation Agreement dated April 28, 1995 (hereinafter    
referred to as the "Cooperation Agreement"); (y) the Cooperation Agreement shall
extend in full force and effect through the Effective Time or such earlier date 
as shall occur upon the termination of this Agreement; and (z) without limiting 
any provision contained in the Cooperation Agreement, neither the execution and 
delivery of this Agreement, nor the performance hereof, shall operate as a      
waiver of any right, power or privilege subject to the Cooperation Agreement,   
and none of such execution, performance nor delivery shall prejudice the rights 
of any party hereto with respect to the subject matter of the Cooperation       
Agreement.                                                                      

13.4  Entire Agreement.                                               

 This Agreement and the documents referred to herein (including, without
limitation, the Confidentiality Agreement and the Cooperation Agreement),       
together with the letter dated this date with respect to the Cooperation        
Agreement, contain the entire agreement between the parties hereto with respect 
to the transactions contemplated hereby, and supersede all prior understandings,
arrangements and agreements with respect to the subject matter hereof. No       
modification hereof shall be effective unless in writing and signed by the party
against which it is sought to be enforced.                                      

13.5  Modification.                                                   

     At any time prior to the Effective Time, the parties hereto may, by written
agreement, make any modification or amendment of this Agreement approved by     
their respective Boards of Directors; provided however, that the per share      
number of shares of ITI Common Stock to be received by holders of the IMA Common
Stock in the Merger, as set forth in Article II hereof, shall not be amended or 
modified without the approval of such holders at any time after such holders    
have approved this Agreement, and any and all such modifications and amendments 
shall conform to the requirements of the GCL.                                   

13.6  Further Action.                                                 

   Each of the parties hereto shall use such party's reasonable best efforts
to take such actions as may be necessary or reasonably requested by the other   
parties hereto to carry out and consummate the transactions contemplated by this
Agreement.                                                                      

13.7  Expenses.                                                       

Each of the parties hereto shall bear such party's own expenses in    
connection with this Agreement and the transactions contemplated hereby.        

13.8  Governing Law.                                                  

  This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware applicable in the case of agreements made and to  
be performed entirely within such State.                                        

13.9  Captions.                                                       

   The captions appearing herein are for the convenience of the parties only
and shall not be construed to affect the meaning of the provisions of this      
Agreement.                                                                      

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13.10  Accounting Terms.                                              

  All accounting terms used herein which are not expressly defined in this
Agreement shall have the respective meanings given to them in accordance with   
generally accepted accounting principles on the date hereof.                    

13.11  Specific Performance.                                          

     ITI, Acquisition Sub and IMA recognize that any breach of the terms of this
Agreement may give rise to irreparable harm for which money damages would not be
an adequate remedy, and accordingly agree that, in addition to other remedies,  
any nonbreaching party shall be entitled to an injunction or injunctions to     
prevent breaches of the provisions of this Agreement and to enforce the terms   
and provisions of this Agreement and the Plan of Merger by a decree of specific 
performance in any action instituted in any court of the United States or any   
state hereof having jurisdiction without the necessity of proving the inadequacy
as a remedy of money damages.                                                   

13.12  Assignment.                                                    

   This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and  
permitted assigns, but neither this Agreement nor any of the rights, interests, 
or obligations hereunder may be assigned by any of the parties hereto without   
the prior written consent of the other parties and any such attempted assignment
without consent shall be void.                                                  

13.13  No Third Party Beneficiary.                                    

   This Agreement is not intended, and shall not be construed, to confer any
rights or remedies hereunder upon any party other than the parties hereto and   
those parties designated as directors pursuant to Section 7.3 and those parties 
entitled to indemnification under Section 7.16, which parties shall be entitled 
to enforce their rights under such provisions to which they are entitled to     
benefits.                                                                       

13.14  Partial Invalidity.                                            

     Any term or provision of this Agreement that is invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable  
the remaining terms and provisions of this Agreement, or any such terms in any  
other jurisdiction. If any provision of this Agreement is so broad as to be     
unenforceable, such provision shall be interpreted to be only so broad as is    
enforceable.                                                                    

13.15  Counterparts.                                                  

This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.                                                                

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    IN WITNESS WHEREOF, this Agreement has duly executed by the parties hereto
as of the date first above written.                                             

                                                        [Enlarge/Download Table]
                                                                                            
ATTEST:                                        INSITUFORM MID-AMERICA, INC.                 

/s/  JOSEPH A. OLSON                           By /s/  JEROME KALISHMAN                     
---------------------------------------------     ------------------------------------------
Vice President-Finance and Administration         Chairman                                  

ATTEST:                                        INSITUFORM TECHNOLOGIES,INC.                 

/s/  HOWARD KAILES                             By /s/  JEAN-PAUL RICHARD                    
---------------------------------------------     ------------------------------------------
Secretary                                         President                                 

ATTEST:                                        ITI ACQUISITION CORP.                        

/s/  HOWARD KAILES                             By /s/  JEAN-PAUL RICHARD                    
---------------------------------------------     ------------------------------------------
Assistant Secretary                               President                                 

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                                                                       EXHIBIT A

AGREEMENT OF MERGER 

     This Agreement of Merger dated as of           , 1995 (hereinafter referred
to as the "Plan of Merger"), pursuant to Section 251 of the Delaware General    
Corporation Law, as amended (hereinafter referred to as the "GCL"), is entered  
into by and among INSITUFORM MID-AMERICA, INC., a corporation organized and     
existing under the laws of the State of Delaware (hereinafter referred to as    
"IMA"); ITI Acquisition Corp., a corporation organized and existing under the   
laws of the State of Delaware (hereinafter referred to as "Acquisition Sub"; IMA
and Acquisition Sub being hereinafter sometimes collectively referred to as the 
"Constituent Corporations"); and INSITUFORM TECHNOLOGIES, INC., a corporation   
organized and existing under the laws of the State of Delaware, as a third party
hereto (hereinafter referred to as "ITI").                                      

WITNESSETH: 

     WHEREAS, Acquisition Sub is a corporation duly organized and existing under
the laws of the State of Delaware, having been incorporated on March 16, 1995,  
and having an authorized capital stock of 10,000 shares of common stock, $.01   
par value (the "Acquisition Sub Common Stock"), of which 1,000 shares are issued
and outstanding and held by ITI; and                                            

     WHEREAS, IMA is a corporation duly organized and existing under the laws of
the State of Delaware, having been incorporated on December 22, 1983, and having
an authorized capital stock consisting of 500,000 shares of preferred stock,    
$.01 par value, none of which are presently issued and outstanding; 10,000      
shares of convertible preferred stock, $100 per value, none of which are        
presently issued and outstanding; 500 shares of class A convertible preferred   
stock, $1,000 per value, none of which are presently issued and outstanding;    
10,000,000 shares of class A common stock, $.01 par value (hereinafter referred 
to as the "IMA Class A Common Stock"), of which           shares are presently  
issued and outstanding; and 6,000,000 shares of class B common stock, $.01 par  
value, none of which are presently issued and outstanding; and                  

WHEREAS, the respective Boards of Directors of the parties deem it    
advisable and in the best interests of said corporations that Acquisition Sub be
merged (hereinafter referred to as the "Merger") with and into IMA as authorized
by the State of Delaware, under and pursuant to the terms and conditions        
hereinafter set forth, as a result of which IMA will become a wholly-owned      
subsidiary of ITI; and                                                          

WHEREAS, the respective Boards of Directors of Acquisition Sub and IMA
have, by resolutions duly adopted, approved and adopted this Plan of Merger; and

     WHEREAS, the respective Boards of Directors of Acquisition Sub and IMA have
directed that this Plan of Merger be submitted to a vote of their respective    
stockholders, and the respective stockholders of Acquisition Sub and IMA have,  
by resolutions duly adopted, approved and adopted this Plan of Merger;          

   NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for the purpose of setting forth the terms 
and conditions of said merger, the mode of carrying the same into effect, the   
manner and basis of converting the shares of Acquisition Sub into shares of the 
Surviving Corporation (as hereinafter defined), and the shares of IMA into      
shares of the class A common stock, $.01 par value (hereinafter referred to as  
the "ITI Common Stock"), of ITI, and such other details and provisions as are   
deemed necessary or advisable, the parties hereto have agreed and do hereby     
agree, subject to the conditions hereinafter set forth, as follows:             

ARTICLE I 

MERGER AND NAME OF SURVIVING CORPORATION

 At the Effective Time (as defined in Article VII hereof), in accordance
with the terms and provisions of this Agreement and in accordance with the GCL, 
Acquisition Sub shall be merged into and with IMA. As a result of the Merger,   
the separate corporate existence of Acquisition Sub shall cease and IMA shall   
continue                                                                        

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as the surviving corporation, governed by the laws of the State of Delaware,    
under the corporate name it possesses immediately prior to the Effective Time.  
IMA, from and after the Effective Time, is hereinafter sometimes referred to as 
the "Surviving Corporation".                                                    

ARTICLE II

TERMS AND CONDITIONS OF MERGER

    The terms and conditions of the Merger are (in addition to those set forth
elsewhere in this Plan of Merger) as follows:                                   

       (a)  At the Effective Time, the Surviving Corporation shall possess all
the rights, privileges, powers and franchises, as well as of a public or of a   
private nature, of the Constituent Corporations. All of the rights, privileges, 
powers and franchises, and all property, real and personal, and all debts due on
whatever account to each of the Constituent Corporations, shall be taken and    
deemed to be transferred to and vested in the Surviving Corporation without     
further act or deed; and all of the property, rights, privileges, powers,       
franchises and all and every other interest of each of the Constituent          
Corporations thereafter shall be vested as effectively and fully in the         
Surviving Corporation as they were in each of the Constituent Corporations.     

      (b)  The Surviving Corporation shall be responsible and liable for all
of the liabilities, obligations and penalties of each of the Constituent        
Corporations; provided, however, that the liabilities, obligations and penalties
of the Constituent Corporations shall not be affected by the Merger, and that   
the rights of the creditors of the Constituent Corporations, or any liens upon  
the property of the Constituent Corporations shall not be impaired by the       
Merger, and any claim existing or action or proceeding, civil or criminal,      
pending by or against the Constituent Corporations may be prosecuted to judgment
as if the Merger had not taken place, or the Surviving Corporation may be       
proceeded against or substituted in the place of the Constituent Corporations.  

    (c)  At the Effective Time and until their successors have been duly
elected and have qualified, the Board of Directors of the Surviving Corporation 
shall consist of James D. Krugman, Jean-Paul Richard and William A. Martin; and,
at the Effective Time and until their successors have been duly elected and have
qualified, the officers of the Surviving Corporation shall be as follows:       

                                                                [Download Table]

      NAME                                             OFFICE        
      ----                                             ------        
                                                                     
Jean-Paul Richard...................................   President     
William A. Martin...................................   Vice President
William A. Martin...................................   Secretary     

ARTICLE III 

CONVERSION OF SHARES

    The manner and basis of converting in the Merger the outstanding shares of
IMA Class A Common Stock and Acquisition Sub Common Stock into shares of the    
capital stock of the Surviving Corporation are as follows:                      

(a)  Each share of the Acquisition Sub Common Stock issued and  
outstanding immediately prior to the Effective Time shall, by virtue of the     
Merger and without any action by the holder thereof, be deemed cancelled and    
converted into and shall represent and be exchanged for the right to receive one
validly issued, fully-paid and non-assessable share of the class A common stock,
$.01 par value (hereinafter referred to as the "Surviving Common Stock"), of the
Surviving Corporation.                                                          

      (b)  Each share of the IMA Class A Common Stock issued and outstanding
immediately prior to the Effective Time (other than Dissenting Shares [as       
defined and to the extent provided in Paragraph (a) of Article IV hereof], if   
any) shall, by virtue of the Merger and without any action by the holder        
thereof, be                                                                     

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deemed cancelled and converted into and shall represent the right to receive    
1.15 shares of ITI Common Stock.                                                

(c)  Solely to avoid the expense and inconvenience to ITI and   
Acquisition Sub, and not as separately bargained for consideration, no          
fractional shares of ITI Common Stock shall be issued in the Merger and no      
dividend, stock split or interest shall relate to any such fractional shares,   
and such fractional shares shall not entitle the owner thereof to any rights of 
a security holder. In lieu of issuing certificates for fractional shares of ITI 
Common Stock, the Exchange Agent (as hereinafter defined) shall, on behalf of   
all holders of such fractional shares, on or before the tenth day following the 
Effective Time, aggregate all such fractional shares and sell the resulting     
shares of ITI Common Stock for the accounts of holders of such respective       
fractional shares, and such holders shall thereafter be entitled to receive on a
pro rata basis the net proceeds of the sale thereof, without interest thereon,  
upon the surrender of all of such holder's certificates for exchange pursuant to
the provisions hereinafter set forth.                                           

  (d)  All options (hereinafter referred to as the "IMA Options") to
acquire IMA Class A Common Stock outstanding, whether or not exercisable at the 
Effective Time, under the Insituform Mid-America, Inc. Stock Option Plan        
(hereinafter referred to as the "IMA Option Plan"), shall remain outstanding    
following the Effective Time. At the Effective Time, the IMA Options shall, by  
virtue of the Merger and without any further action on the part of IMA or the   
holder thereof, be assumed by ITI in such manner that ITI: (i) is a corporation 
"assuming a stock option in a transaction to which Section 424(a) applies"      
within the meaning of Section 424 of the United States Internal Revenue Code of 
1986, as amended; or (ii) to the extent that Section 424 of the Code does not   
apply to any such IMA Options, would be such a corporation were Section 424 of  
the Code applicable to such IMA Options. From and after the Effective Time, all 
references to IMA in the IMA Stock Option Plan and the applicable stock option  
agreements issued thereunder shall be deemed to refer to ITI, except that each  
reference to the name of such plan therein shall be deemed a reference to the   
"Insituform Mid-America, Inc. Stock Option Plan", and provided that each        
reference to the "Stock Option Committee" or "Committee" therein shall be deemed
a reference to ITI's Compensation Committee. Each IMA Option assumed by ITI     
shall be exercisable upon the same terms and conditions as under the IMA Stock  
Option Plan and the applicable option agreement issued thereunder, except that: 

       (A)  each such IMA Option shall be exercisable for that whole
  number of shares of ITI Common Stock (rounded to the nearest whole
  share) into which the number of shares of IMA Class A Common Stock
        subject to such IMA Option immediately prior to the Effective Time would
        be convertible under this Article III if such shares were outstanding at
the Effective Time; and                                         

         (B)  the option price per share of ITI Common Stock shall be an
 amount equal to the quotient obtained by dividing (x) the product
   obtained by multiplying the exercise price per share of IMA Class A
      Common Stock subject to such IMA Option in effect immediately prior to
      the Effective Time by the number of shares of IMA Class A Common Stock
      subject to such option immediately prior to the Effective Time, by (y)
    the number of shares of ITI Common Stock covered by the option as so
      assumed (the option price as so determined being rounded upward to the
nearest full cent).                                             

No payment or adjustment shall be made for fractional shares which otherwise    
would be issuable upon exercise of any IMA Option assumed as aforesaid.         

        (e)  The Merger shall effect no change in any shares of ITI Common Stock
issued by ITI prior to the Effective Time.                                      

ARTICLE IV

DISSENTING SHARES;
EXCHANGE OF CERTIFICATES

     (a)  Notwithstanding anything in this Plan of Merger to the contrary,
shares of IMA Common Stock which are issued and outstanding immediately prior to
the Effective Time and which are held by                                        

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stockholders who have not voted such shares in favor of the Merger and, if      
entitled to elect to demand the appraisal of such shares pursuant to Section 262
of the GCL, shall have delivered a written demand for payment of the fair value 
of such shares within the time and in the manner provided in Section 262 of the 
GCL (herein referred to as "Dissenting Shares") shall not be converted into or  
be exchangeable for the right to receive the consideration provided in Article  
III of this Plan of Merger, unless and until such holder shall have failed to   
perfect or shall have effectively withdrawn or lost his right to appraisal and  
payment under the GCL. If any such holder shall have so failed to perfect or    
shall have effectively withdrawn or lost such right, such holder's shares of IMA
Common Stock shall thereupon be deemed to have been converted into and to have  
become exchangeable for, at the Effective Time, the right to receive the        
consideration therefor specified under Article III hereof, without any interest 
thereon.                                                                        

 (b)  Prior to the Effective Time, Acquisition Sub shall designate
American Stock Transfer & Trust Company, or, at its election, a bank or trust   
company or similar entity, reasonably satisfactory to IMA, which is authorized  
to exercise corporate trust or stock powers, to act as the exchange agent       
(hereinafter referred to as the "Exchange Agent") in the Merger. Promptly after 
the Effective Time, ITI shall cause the delivery to the Exchange Agent of       
certificates evidencing the shares of ITI Common Stock contemplated to be issued
by Article III hereof.                                                          

     (c)  As soon as practicable after the Effective Time, but in no event
later than 15 business days after the Effective Time, the Exchange Agent shall  
send a notice and transmittal form to each holder of a certificate theretofore  
evidencing shares of IMA Class A Common Stock, advising such holders of the     
terms of the exchange effected by the Merger and the procedure for surrendering 
to the Exchange Agent (who may appoint forwarding agents with the approval of   
ITI) such record holder's certificate(s) evidencing IMA Class A Common Stock for
exchange for certificates evidencing shares of ITI Common Stock. Each holder of 
a certificate theretofore evidencing shares of IMA Class A Common Stock, upon   
surrender of the same to the Exchange Agent in accordance with such transmittal 
form, shall be entitled to receive, in exchange for such certificate, a         
certificate evidencing the number of full shares of ITI Common Stock for which  
the shares of IMA Class A Common Stock theretofore represented by the           
certificate so surrendered shall have been exchanged pursuant to Article III    
hereof and the cash in lieu of fractional shares hereinabove contemplated, and  
the certificate so surrendered shall forthwith be cancelled.                    

      (d)  If any certificate evidencing shares of ITI Common Stock is to be
issued in a name other than that in which the certificate surrendered in        
exchange therefor is registered, or if any payment of cash is to be made to a   
person other than the person in whose name such certificate is registered, it   
shall be a condition of the issuance thereof or such payment, as the case may   
be, that the certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and that the person requesting such exchange (i) pay
to the Exchange Agent any transfer or other taxes required by reason of the     
issuance of a certificate for shares of ITI Common Stock in any name other than 
that of, and payment of cash to a person other than, the registered holder of   
the certificate surrendered or (ii) establish to the satisfaction of the        
Exchange Agent that such transfer or other taxes have been paid or are not      
applicable. Certificates representing shares of ITI Common Stock issued to IMA  
"affiliates", within the meaning of Rule 145 under the Securities Act of 1933,  
as amended, shall bear a legend to the effect that no disposition shall be made 
by such "affiliate" of shares of ITI Common Stock, except in accordance with the
applicable provisions of said Act and the rules and regulations thereunder.     

        (e)  In the event any certificate representing any shares of IMA Class A
Common Stock shall have been lost, stolen or destroyed, upon the making of an   
affidavit of that fact by the person claiming such certificate to be lost,      
stolen or destroyed, the Exchange Agent shall issue in exchange for such lost,  
stolen or destroyed certificate the consideration payable in exchange therefor  
pursuant to Article III. The Exchange Agent or the Surviving Corporation may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate to give the Exchange Agent a
bond in such reasonable sum as it may direct as indemnity against any claim that
may be made against the Surviving Corporation with respect to the certificate   
alleged to have been lost, stolen or destroyed.                                 

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       (f)  No dividends or other distributions to holders of ITI Common Stock
as of any date subsequent to the Effective Time shall be paid to the holders of 
outstanding certificates formerly representing shares of IMA Class A Common     
Stock until such certificates are so surrendered. Subject to the effect, if any,
of applicable law upon surrender of certificates evidencing shares of IMA Class 
A Common Stock, there shall be paid to the record holders of ITI Common Stock   
issued in exchange therefor (i) the amount of dividends or other distributions  
with a record date for payment after the Effective Time that have theretofore   
been paid with respect to full shares of ITI Common Stock as of any date        
subsequent to the Effective Time which have not yet been paid to a public       
official pursuant to abandoned property laws and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after   
the Effective Time but prior to surrender and a payment date subsequent to      
surrender. No interest shall be payable with respect to the payment of such     
dividends or other distributions on surrender of outstanding certificates.      
Notwithstanding the foregoing, neither ITI, Acquisition Sub, the Exchange Agent 
nor any other party hereto shall be responsible or liable to any holder of      
shares of IMA Class A Common Stock for any ITI Common Stock, or dividends or    
distributions thereon or cash, including cash in lieu of fractional share       
interests, delivered to any public official pursuant to applicable escheat laws.

      (g)  At the Effective Time, it shall be deemed that the stock transfer
books of IMA are closed, and no transfer of IMA Class A Common Stock on the     
books of IMA shall thereafter be made or consummated. Until surrendered and     
exchanged in accordance with the provisions hereinabove set forth, the          
outstanding certificates evidencing shares of IMA Class A Common Stock          
immediately prior to the Effective Time shall, from and after the Effective     
Time, be deemed for all corporate purposes to evidence the right to receive the 
number of shares of ITI Common Stock, together with cash in lieu of fractional  
shares, into which the shares of IMA Class A Common Stock theretofore evidenced 
by such certificate or certificates shall have been so converted, together with 
any dividends or other distributions thereon pursuant to paragraph (f)          
immediately preceding, as though such surrender and exchange had taken place.   

     (h)  Any portion of the shares of ITI Common Stock or cash in lieu of
fractional shares, which remains undistributed to the holders of IMA Class A    
Common Stock for one year after the Effective Time shall be delivered to ITI,   
upon demand, and any holders of IMA Class A Common Stock who have not           
theretofore complied with the provisions herein set forth shall thereafter look 
only to ITI for the shares of ITI Common Stock, any cash in lieu of fractional  
shares of ITI Common Stock to which they are entitled pursuant to Article III   
hereof and any dividends or other distributions with respect to ITI Common Stock
to which they are entitled pursuant to paragraph (f) immediately preceding. Any 
portion of such remaining shares or cash unclaimed by holders of IMA Class A    
Common Stock as of a date which is immediately prior to such time as such shares
or amounts would otherwise escheat to or become property of any governmental    
entity shall, to the extent permitted by applicable law, become the property of 
ITI free and clear of any claims or interest of any person previously entitled  
thereto.                                                                        

ARTICLE V 

CERTIFICATE OF INCORPORATION AND BYLAWS 

     (a)  The certificate of incorporation of IMA as in effect immediately
prior to the Effective Time shall, at the Effective Time, be and constitute the 
certificate of incorporation of the Surviving Corporation until thereafter      
amended in accordance with the provisions thereof and applicable law.           

       (b)  The By-laws of IMA as in effect immediately prior to the Effective
Time shall, at the Effective Time, be and constitute the By-laws of the         
Surviving Corporation until thereafter amended in accordance with the provisions
thereof or applicable law.                                                      

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ARTICLE VI

OTHER PROVISIONS WITH RESPECT TO MERGER 

        (a)  For the convenience of the parties and to facilitate the filing and
recording of the Merger Agreement, any number of counterparts hereof may be     
executed, and each such counterpart shall be deemed to be an original           
instrument, but all such counterparts together shall constitute but one         
agreement.                                                                      

     (b)  The Merger Agreement and the legal relations between the parties
hereto shall be governed by and construed in accordance with the laws of the    
State of Delaware.                                                              

(c)  From time to time, as and when required by the Surviving   
Corporation or by its successors or assigns, there shall be executed and        
delivered on behalf of Acquisition Sub such deeds and other instruments, and    
there shall be taken or caused to be taken by it all such further and other     
action, as shall be appropriate, advisable or necessary in order to vest,       
perfect or confirm, of record or otherwise, in the Surviving Corporation the    
title to and possession of all property, interests, assets, rights, privileges, 
immunities, powers, franchises and authority of Acquisition Sub and otherwise to
carry out the purposes of this Merger Agreement, and the officers and directors 
of the Surviving Corporation are fully authorized in the name and on behalf of  
Acquisition Sub or otherwise, to take any and all such action and to execute and
deliver any and all such deeds and other instruments.                           

ARTICLE VII 

EFFECTIVE TIME

     The Merger shall become effective at the time of filing of a Certificate of
Merger with respect to the Merger, setting forth the information required, in   
the office of the Secretary of State of the State of Delaware, as required by   
the GCL. Such time is herein referred to as the "Effective Time."               

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   IN WITNESS WHEREOF, Acquisition Sub and IMA, ITI (as a third party), have
caused this Merger Agreement to be executed and delivered as of the date first  
above written.                                                                  

                                 INSITUFORM MID-AMERICA, INC.,
                          a Delaware corporation

      By
                                          --------------------------------------
                  Chairman

                                          --------------------------------------
                   Secretary

                          ITI ACQUISITION CORP.,
                          a Delaware corporation

      By
                                          --------------------------------------
                   President

                                          --------------------------------------
                   Secretary

                                  INSITUFORM TECHNOLOGIES, INC.,
                          a Delaware corporation

      By
                                          --------------------------------------
                   President

                                          --------------------------------------
                   Secretary

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                                                                       EXHIBIT B

                                                                          , 1995

Insituform Technologies, Inc.                                                   
1770 Kirby Parkway                                                              
Suite 300                                                                       
Memphis, Tennessee 38138                                                        

Insituform Mid-America, Inc.                                                    
17988 Edison Avenue                                                             
Chesterfield, Missouri 63005                                                    

Gentlemen:                                                                      

    In furtherance of the Agreement and Plan of Merger dated May 23, 1995 (the
"Agreement") among Insituform Technologies, Inc., a Delaware corporation (the   
"Company"), ITI Acquisition Corp., a Delaware corporation ("ITI Sub"), and      
Insituform Mid-America, Inc., a Delaware corporation ("IMA"), the undersigned   
hereby agrees that he or it will not sell, transfer, pledge, hypothecate or     
otherwise convey or dispose of or enter into any contract or arrangement for the
sale, transfer, pledge, hypothecation, conveyance or other disposition of any   
shares of Class A Common Stock, $.01 par value ("IMA Class A Common Stock"), of 
IMA, any shares of Class B Common Stock $.01 par value ("IMA Class B Common     
Stock"), of IMA, or any shares of Class A Common Stock, $.01 par value (the "ITI
Common Stock"), of the Company, owned by the undersigned from the date hereof   
until the earlier of (i) the termination of the Agreement or (ii) the date of   
the first publication of the operating results of the Company covering at least 
a 30-day period after the merger of IMA and ITI Sub has been consummated,       
without the prior written consent of the Company, except that the undersigned   
may convert any shares of IMA Class B Common Stock into shares of IMA Class A   
Common Stock prior to the consummation of the transactions contemplated by the  
Agreement.                                                                      

   In order to enable you to enforce the aforesaid covenant, the undersigned
hereby consents to placing stop-transfer orders with the transfer agents,       
respectively, of the IMA Class A Common Stock, with respect to any of the IMA   
Class A Common Stock registered in the name of the undersigned or beneficially  
owned by the undersigned, and with the transfer agent of the IMA Class B Common 
Stock, with respect to any of the IMA Class B Common Stock registered in the    
name of the undersigned or beneficially owned by the undersigned, and with the  
transfer agent of the ITI Common Stock, with respect to any of the ITI Common   
Stock registered in the name of the undersigned or beneficially owned by the    
undersigned.                                                                    

                                          ______________________________________

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                                                                     EXHIBIT C-1

    The letter to be delivered to ITI from IMA's independent auditors referred
to in Section 7.5(d) of the Agreement shall be in form and substance reasonably 
satisfactory to ITI and contain statements by such auditors to the effect that: 

    (1)  They are independent certified public accountants with respect to IMA
within the meaning of the Securities Act and the applicable published rules and 
regulations thereunder.                                                         

    (2)  In their opinion, the consolidated financial statements and financial
statement schedules audited by them and included or incorporated by reference in
the Registration Statement comply as to form in all material respects with the  
applicable accounting requirements of the Securities Act and the Exchange Act   
and the related published rules and regulations.                                

 (3)  They have read the minutes of meetings of the stockholders and the
boards of directors of IMA and its subsidiaries for the period from the date of 
the most recent financial statements of IMA included or incorporated by         
reference in the Registration Statement to such date not more than five business
days prior to the date when the Registration Statement becomes effective; they  
have carried out other procedures to a specified date not more than five        
business days prior to the date as of when the Registration Statement becomes   
effective, which do not constitute an audit in accordance with generally        
accepted accounting principles, as follows:                                     

       (a)  With respect to the periods covered by the unaudited financial
statements of IMA and its consolidated subsidiaries included or       
incorporated by reference in the Registration Statement, they have (i)
   performed the procedures specified by the American Institute of Certified
Public Accountants for a review of interim financial information as   
described in SAS No. 71, "Interim Financial Information," on the most 
recent unaudited condensed consolidated balance sheet, the unaudited  
  condensed consolidated statements of income and cash flows, and the most
   recent unaudited condensed consolidated statement of stockholders' equity
  included or incorporated by reference in the Registration Statement; and
(ii) inquired of certain officials of IMA who have responsibility for 
financial and accounting matters whether the unaudited condensed      
    consolidated financial statements referred to in 3(a)(i) comply as to form
     in all material respects with the applicable accounting requirements of the
 Securities Act and the Exchange Act and the related published rules and
regulations.                                                          

    (b)  With respect to the period from the date of the most recent
   financial statements of IMA and its consolidated subsidiaries included or
   incorporated by reference in the Registration Statement to the end of the
  next to last month prior to the calendar month in which the Registration
    Statement becomes effective, they have (i) read the unaudited consolidated
     financial statements of IMA and subsidiaries for each month of both (x) the
 current year for which available and (y) the corresponding month of the
  prior year, furnished to us by IMA, officials of IMA having advised them
that no such financial statements as of any date or for any subsequent
  period were available; and (ii) inquired of certain officials of IMA who
have responsibility for financial and accounting matters whether the  
unaudited consolidated financial statements referred to in 3(b)(i) are
stated on a basis substantially consistent with that of the audited   
    consolidated financial statements included or incorporated by reference in
the Registration Statement.                                           

(4)  Nothing came to their attention as a result of the foregoing     
procedures that caused them to believe that:                                    

       (a)  (i) any material modifications should be made to the unaudited
    condensed consolidated financial statements described in 3(a)(i), included
    or incorporated by reference in the Registration Statement, for them to be
  in conformity with generally accepted accounting principles; or (ii) the
    unaudited condensed consolidated financial statements described in 3(a)(i)
do not comply as to form in all material respects with the applicable 
    accounting requirements of the Securities Act and the Exchange Act and the
related published rules and regulations.                              

          (b)  (i) as of the end of the next to last month prior to the calendar
 month in which the Registration Statement becomes effective, there was,
except as set forth in such letter, any change in the                 

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    capital stock, increase in long-term debt, or decrease in consolidated net
 current assets or stockholders' equity of the consolidated companies as
compared with amounts shown in the most recent unaudited condensed    
    consolidated balance sheet of IMA included or incorporated by reference in
 the Registration Statement, or (ii) for the period from the date of the
   most recent balance sheet of IMA included or incorporated by reference in
  the Registration Statement to the end of the month immediately preceding
the date when the Registration Statement becomes effective, unless the
    Registration Statement becomes effective within the first 15 calendar days
  of a month, in which case the end of the next to last month prior to the
     calendar month in which the Registration Statement becomes effective, there
     were, except as set forth in such letter, any decreases, as compared to the
  corresponding period in the preceding year, in consolidated net contract
revenues or in the total or per-share amounts of income before        
    extraordinary items or of net income, except in all instances for changes,
increases, or decreases that the Registration Statement discloses have
occurred or may occur.                                                

     (5)  They have inquired of certain officials of IMA who have responsibility
for financial and accounting matters whether (a) at a date not more than five   
business days prior to the date as of when the Registration Statement becomes   
effective, there was any change in the capital stock, increase in long-term debt
or any decreases in consolidated net current assets or stockholders' equity of  
the consolidated companies as compared with amounts shown on most recent balance
sheet of IMA included or incorporated by reference in the Registration          
Statement, or (b) for the period from the date of the most recent consolidated  
balance sheet of IMA included or incorporated by reference in the Registration  
Statement to a date not more than five business days prior to the date as of    
when the Registration Statement becomes effective, there was any decrease, as   
compared with the corresponding period in the preceding year, in consolidated   
net contract revenues or in the total or per-share amounts of income before     
extraordinary items or of net income; and, on the basis of these inquiries and  
their reading of the minutes as described in (3), nothing came to their         
attention that caused them to believe that there was, except as set forth in    
such letter, any such change, increase, or decrease except in all instances for 
changes, increased, or decreases that the Registration Statement discloses have 
occurred or may occur.                                                          

 (6)  They have: (a) read the unaudited pro forma condensed consolidated
balance sheet, and the unaudited pro forma condensed consolidated statements of 
income included in the Registration Statement, and (b) inquired of certain      
officials of IMA and of ITI who have responsibility for financial and accounting
matters about (i) the basis for their determination of the pro forma            
adjustments, and (ii) whether the unaudited pro forma condensed consolidated    
financial statements comply as to form in all material respects with the        
applicable accounting requirements of Rule 11-02 of Regulation S-X; and (c)     
proved the arithmetic accuracy of the application of the pro forma adjustments  
to the historical amounts in the unaudited pro forma condensed consolidated     
financial statements; and nothing, except as set forth in such letter, came to  
their attention as a result of the procedures specified in this paragraph (6)   
that caused them to believe that the unaudited pro forma condensed consolidated 
financial statements included in the Registration Statement do not comply as to 
form in all material respects with the applicable accounting requirements of    
Rule 11-02 of Regulation S-X and that the pro forma adjustments have not been   
properly applied to the historical amounts in the compilation of those          
statements.                                                                     

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                                                                     EXHIBIT C-2

The letter to be delivered to ITI from Enviroq's independent auditors 
referred to in Section 7.5(d) of the Agreement shall be in form and substance   
reasonably satisfactory to ITI and contain statements by such auditors to the   
effect that:                                                                    

(1)  They are independent certified public accountants with respect to
Enviroq within the meaning of the Securities Act and the published rules and    
regulations thereunder.                                                         

    (2)  In their opinion, the consolidated financial statements and financial
statement schedules audited by them and included or incorporated by reference in
the Registration Statement comply as to form in all material respects with the  
applicable accounting requirements of the Securities Act and the Exchange Act   
and the related published rules and regulations.                                

 (3)  They have read the minutes of meetings of the stockholders and the
boards of directors of Enviroq and its subsidiaries for the period from the date
of the most recent financial statements of Enviroq included or incorporated by  
reference in the Registration Statement to such date not more than five business
days prior to the date when the Registration Statement becomes effective; they  
have carried out other procedures to a specified date not more than five        
business days prior to the date as of when the Registration Statement becomes   
effective, which do not constitute an audit in accordance with generally        
accepted accounting principles, as follows:                                     

       (a)  With respect to the periods covered by the unaudited financial
statements of Enviroq and its consolidated subsidiaries included or   
incorporated by reference in the Registration Statement, they have (i)
   performed the procedures specified by the American Institute of Certified
Public Accountants for a review of interim financial information as   
described in SAS No. 71, "Interim Financial Information," on the most 
recent unaudited condensed consolidated balance sheet, the unaudited  
  condensed consolidated statements of income and cash flows, and the most
   recent unaudited condensed consolidated statement of stockholders' equity
  included or incorporated by reference in the Registration Statement; and
   (ii) inquired of certain officials of Enviroq who have responsibility for
financial and accounting matters whether the unaudited condensed      
    consolidated financial statements referred to in 3(a)(i) comply as to form
     in all material respects with the applicable accounting requirements of the
 Securities Act and the Exchange Act and the related published rules and
regulations.                                                          

    (b)  With respect to the period from the date of the most recent
    financial statements of Enviroq and its consolidated subsidiaries included
  or incorporated by reference in the Registration Statement to the end of
    the period immediately preceding the date of the acquisition of Enviroq by
    IMA, they have (i) read the unaudited consolidated financial statements of
  Enviroq and subsidiaries for each month of both (x) the current year for
which available and (y) the corresponding month of the prior year,    
   furnished to us by Enviroq, officials of Enviroq having advised them that
  no such financial statements as of any date or for any subsequent period
    were available; and (ii) inquired of certain officials of Enviroq who have
   responsibility for financial and accounting matters whether the unaudited
  consolidated financial statements referred to in 3(b)(i) are stated on a
basis substantially consistent with that of the audited consolidated  
financial statements included or incorporated by reference in the     
Registration Statement.                                               

(4)  Nothing came to their attention as a result of the foregoing     
procedures that caused them to believe that:                                    

       (a)  (i) any material modifications should be made to the unaudited
    condensed consolidated financial statements described in 3(a)(i), included
    or incorporated by reference in the Registration Statement, for them to be
  in conformity with generally accepted accounting principles; or (ii) the
    unaudited condensed consolidated financial statements described in 3(a)(i)
do not comply as to form in all material respects with the applicable 
    accounting requirements of the Securities Act and the Exchange Act and the
related published rules and regulations.                              

  (b)  (i) as of the end of the period immediately preceding the
acquisition of Enviroq by IMA, there was, except as set forth in such 
 letter, any change in the capital stock, increase in long-term debt, or

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    decrease in consolidated net current assets or stockholders' equity of the
  consolidated companies as compared with amounts shown in the most recent
unaudited condensed consolidated balance sheet of Enviroq included or 
  incorporated by reference in the Registration Statement, or (ii) for the
   period from the date of the most recent balance sheet of Enviroq included
  or incorporated by reference in the Registration Statement to the end of
  the month immediately preceding the acquisition of Enviroq by IMA, there
     were, except as set forth in such letter, any decreases, as compared to the
  corresponding period in the preceding year, in consolidated net contract
revenues or in the total or per-share amounts of income before        
    extraordinary items or of net income, except in all instances for changes,
increases, or decreases that the Registration Statement discloses have
occurred.                                                             

 (5)  They have: (a) read the unaudited pro forma condensed consolidated
balance sheet, and the unaudited pro forma condensed consolidated statements of 
income included in the Registration Statement, and (b) inquired of certain      
officials of Enviroq, IMA and of ITI who have responsibility for financial and  
accounting matters about (i) the basis for their determination of the pro forma 
adjustments, and (ii) whether the unaudited pro forma condensed consolidated    
financial statements comply as to form in all material respects with the        
applicable accounting requirements of Rule 11-02 of Regulation S-X; and (c)     
proved the arithmetic accuracy of the application of the pro forma adjustments  
to the historical amounts in the unaudited pro forma condensed consolidated     
financial statements; and nothing, except as set forth in such letter, came to  
their attention as a result of the procedures specified in this paragraph (5)   
that caused them to believe that the unaudited pro forma condensed consolidated 
financial statements included in the Registration Statement do not comply as to 
form in all material respects with the applicable accounting requirements of    
Rule 11-02 of Regulation S-X and that the pro forma adjustments have not been   
properly applied to the historical amounts in the compilation of those          
statements.                                                                     

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                                                                       EXHIBIT D

    The letter to be delivered to IMA from ITI's independent auditors referred
to in Section 7.5(e) of the Agreement shall be in form and substance reasonably 
satisfactory to IMA and contain statements by such auditors to the effect that: 

    (1)  They are independent certified public accountants with respect to ITI
within the meaning of the Securities Act and the applicable published rules and 
regulations thereunder.                                                         

 (2)  In their opinion, the consolidated financial statements audited by
them and included or incorporated by reference in the Registration Statement    
comply as to form in all material respects with the applicable accounting       
requirements of the Securities Act and the Exchange Act and the related         
published rules and regulations.                                                

 (3)  They have read the minutes of meetings of the stockholders and the
boards of directors of ITI and its subsidiaries for the period from the date of 
the most recent financial statements of ITI included or incorporated by         
reference in the Registration Statement to such date not more than five business
days prior to the date when the Registration Statement becomes effective; they  
have carried out other procedures to a specified date not more than five        
business days prior to the date as of when the Registration Statement becomes   
effective, which do not constitute an audit in accordance with generally        
accepted accounting principles, as follows:                                     

       (a)  With respect to the periods covered by the unaudited financial
statements of ITI and its consolidated subsidiaries included or       
incorporated by reference in the Registration Statement, they have (i)
   performed the procedures specified by the American Institute of Certified
Public Accountants for a review of interim financial information as   
described in SAS No. 71, "Interim Financial Information," on the most 
recent unaudited condensed consolidated balance sheet, the unaudited  
  condensed consolidated statements of income and cash flows, and the most
   recent unaudited condensed consolidated statement of stockholders' equity
  included or incorporated by reference in the Registration Statement; and
(ii) inquired of certain officials of ITI who have responsibility for 
financial and accounting matters whether the unaudited condensed      
    consolidated financial statements referred to in 3(a)(i) comply as to form
     in all material respects with the applicable accounting requirements of the
 Securities Act and the Exchange Act and the related published rules and
regulations.                                                          

    (b)  With respect to the period from the date of the most recent
   financial statements of ITI and its consolidated subsidiaries included or
   incorporated by reference in the Registration Statement to the end of the
  next to last month prior to the calendar month in which the Registration
    Statement becomes effective, they have (i) read the unaudited consolidated
     financial statements of ITI and subsidiaries for each month of both (x) the
 current year for which available and (y) the corresponding month of the
    prior year, furnished to them by ITI, officials of ITI having advised them
that no such financial statements as of any date or for any subsequent
  period were available; and (ii) inquired of certain officials of ITI who
have responsibility for financial and accounting matters whether the  
unaudited consolidated financial statements referred to in 3(b)(i) are
stated on a basis substantially consistent with that of the audited   
    consolidated financial statements included or incorporated by reference in
the Registration Statement.                                           

(4)  Nothing came to their attention as a result of the foregoing     
procedures that caused them to believe that:                                    

       (a)  (i) any material modifications should be made to the unaudited
    condensed consolidated financial statements described in 3(a)(i), included
    or incorporated by reference in the Registration Statement, for them to be
  in conformity with generally accepted accounting principles; or (ii) the
    unaudited condensed consolidated financial statements described in 3(a)(i)
do not comply as to form in all material respects with the applicable 
    accounting requirements of the Securities Act and the Exchange Act and the
related published rules and regulations.                              

          (b)  (i) as of the end of the next to last month prior to the calendar
 month in which the Registration Statement becomes effective, there was,
except as set forth in such letter, any change in the                 

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    capital stock, increase in long-term debt, or decrease in consolidated net
 current assets or stockholders' equity of the consolidated companies as
compared with amounts shown in the most recent unaudited condensed    
    consolidated balance sheet of ITI included or incorporated by reference in
 the Registration Statement, or (ii) for the period from the date of the
   most recent balance sheet of ITI included or incorporated by reference in
  the Registration Statement to the end of the next to last month prior to
   the calendar month in which the Registration Statement becomes effective,
    there were, except as set forth in such letter, any decreases, as compared
to the corresponding period in the preceding year, in consolidated net
   sales or in the total or per-share amounts of income before extraordinary
    items or of net income, except in all instances for changes, increases, or
  decreases that the Registration Statement discloses have occurred or may
occur.                                                                

     (5)  They have inquired of certain officials of ITI who have responsibility
for financial and accounting matters whether (a) at a date not more than five   
business days prior to the date as of when the Registration Statement becomes   
effective, there was any change in the capital stock, increase in long-term debt
or any decreases in consolidated net current assets or stockholders' equity of  
the consolidated companies as compared with amounts shown on most recent balance
sheet of ITI included or incorporated by reference in the Registration          
Statement, or (b) for the period from the date of the most recent balance sheet 
of ITI included or incorporated by reference in the Registration Statement to a 
date not more than five business days prior to the date as of when the          
Registration Statement becomes effective, there was any decrease, as compared   
with the corresponding period in the preceding year, in consolidated net sales  
or in the total or per-share amounts of income before extraordinary items or of 
net income; and, on the basis of these inquiries and their reading of the       
minutes as described in (3), nothing came to their attention that caused them to
believe that there was, except as set forth in such letter, any such change,    
increase, or decrease except in all instances for changes, increased, or        
decreases that the Registration Statement discloses have occurred or may occur. 

 (6)  They have: (a) read the unaudited pro forma condensed consolidated
balance sheet, and the unaudited pro forma condensed consolidated statements of 
income included in the Registration Statement, and (b) inquired of certain      
officials of ITI and of IMA who have responsibility for financial and accounting
matters about (i) the basis for their determination of the pro forma            
adjustments, and (ii) whether the unaudited pro forma condensed consolidated    
financial statements comply as to form in all material respects with the        
applicable accounting requirements of Rule 11-02 of Regulation S-X; and (c)     
proved the arithmetic accuracy of the application of the pro forma adjustments  
to the historical amounts in the unaudited pro forma condensed consolidated     
financial statements; and nothing, except as set forth in such letter, came to  
their attention as a result of the procedures specified in this paragraph (6)   
that caused them to believe that the unaudited pro forma condensed consolidated 
financial statements included in the Registration Statement do not comply as to 
form in all material respects with the applicable accounting requirements of    
Rule 11-02 of Regulation S-X and that the pro forma adjustments have not been   
properly applied to the historical amounts in the compilation of those          
statements.                                                                     

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                                                                     EXHIBIT E-1

AMENDMENT TO ARTICLE FOURTH 
OF ITI'S
CERTIFICATE OF INCORPORATION

     The first paragraph of Article FOURTH of ITI's certificate of incorporation
shall be amended as follows:                                                    

          FOURTH: The corporation shall be authorized to issue forty-two million
     (42,000,000) shares consisting of forty million (40,000,000) Class A common
  shares, par value one cent ($.01) per share; and two million (2,000,000)
     Preferred shares, par value ten cents ($.10) per share ("Preferred Stock").

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                                                                     EXHIBIT E-2

AMENDMENT TO ARTICLE SIXTH OF 
ITI'S CERTIFICATE OF INCORPORATION

   The sixth sentence of paragraph (2) of Article SIXTH of ITI's certificate
of incorporation shall be amended as follows:                                   

"Vacancies, created from an increase in the size of the Board of
Directors, shall be filled by the affirmative vote of a majority
of the Board of Directors then in office, or such greater       
affirmative vote of directors as may be specified from time to  
time in the By-laws of the corporation, provided that a quorum  
is present, and any other vacancy occurring in the Board of     
Directors may be filled by a majority of the directors then in  
office, which appointments shall be made in accordance with     
Section 7.3 of the Agreement and Plan of Merger dated as of May 
23, 1995 among the corporation, ITI Acquisition Corp. and       
Insituform Mid-America, Inc."                                   

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                                                                       EXHIBIT F

AMENDMENTS TO ITI BY-LAWS 

 (i)  The first sentence of Section 2 of Article III shall be amended to
read as follows:                                                                

"The board of directors shall consist of thirteen directors."         

  (ii)  The first sentence of Section 1 of Article IV shall be deleted and
the following inserted in lieu thereof:                                         

     "The officers of the corporation shall be a chairman of the
board, a vice chairman of the board, a president, one or more   
senior vice presidents, one or more vice presidents, a secretary
and a treasurer, each of whom shall be elected by the           
directors."                                                     

   (iii)  Sections 4A and 5 of Article IV shall be deleted and the following
inserted in lieu thereof:                                                       

4A.  CHAIRMAN OF THE BOARD.                                           

   The Chairman of the Board shall preside, when present, at
all meetings of the Board of Directors and at all meetings of   
the stockholders and will perform such other duties as may be   
prescribed from time to time by the Board or these By-laws.     

4B.  VICE CHAIRMAN OF THE BOARD.                                      

     In the absence of the Chairman of the Board or in the event
of his death, inability or refusal to act, the Vice Chairman of 
the Board shall perform the duties of the Chairman of the Board 
and, when so acting, shall have all the powers of and be subject
to all the restrictions on the Chairman of the Board. The Vice  
Chairman of the Board shall perform such other duties as may be 
prescribed from time to time by the Board or these by-laws.     

5.  PRESIDENT.                                                        

   The President shall be the chief executive officer of the
corporation and, subject to the control of the Board of         
Directors, shall have general and active management of the      
business of the corporation, and shall see that all orders and  
resolutions of the Board and stockholders are carried into      
effect. He shall have the general authority to execute bonds,   
deeds and contracts, in the name of the corporation and affix   
the corporate seal thereto; to sign stock certificates; to cause
the employment or appointment of such employees and agents of   
the corporation as the proper conduct of operations may require,
and to fix their compensation, subject to the provisions of     
these By-laws; to remove or suspend any employee or agent who   
shall have been employed or appointed under his authority or    
under authority of an officer subordinate to him; and, in       
general, to exercise all the powers and authority usually       
appertaining to the chief executive officer of a corporation.   

     (iv)  Each reference to "chief executive officer" contained in Section 2 of
Article 1, Section 4 of Article 1, and Section 1 of Article VI shall be deleted.

(v)  The proviso contained in Article XI shall be amended to read as  
follows:                                                                        

"provided, further, however, that the size of the Board of      
Directors, as set forth in Section 2 of Article III, may only be
amended by a vote of at least 80% of the members of the Board of
Directors or by a vote of the stockholders, representing a      
majority of the shares issued and outstanding, at any annual    
stockholders' meeting or at any special stockholders' meeting." 

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                                                                       EXHIBIT G

                                                                          , 1995

Insituform Technologies, Inc.                                                   
1770 Kirby Parkway                                                              
Suite 300                                                                       
Memphis, Tennessee 38138                                                        

Insituform Mid-America, Inc.                                                    
17988 Edison Avenue                                                             
Chesterfield, Missouri 63005                                                    

Gentlemen:                                                                      

    In connection with the transactions contemplated by the Agreement and Plan
of Merger dated May 23, 1995 (the "Agreement") among Insituform Technologies,   
Inc., a Delaware corporation (the "Company"), ITI Acquisition Corp., a Delaware 
corporation ("ITI Sub"), and Insituform Mid-America, Inc., a Delaware           
corporation ("IMA"), the undersigned hereby agrees to convert or to cause the   
conversion of, immediately prior to the consummation of the transactions        
contemplated by the Agreement, each outstanding share of Class B Common Stock,  
$.01 par value ("Class B Common Stock"), of IMA, that may be beneficially owned 
by the undersigned into one share of Class A Common Stock, $.01 par value, of   
IMA in accordance with the terms of IMA's certificate of incorporation, as      
currently in effect.                                                            

     The undersigned represents and warrants to the Company that the undersigned
is the record and beneficial owner of        shares of Class B Common Stock. The
undersigned is not the record or beneficial owner of any other shares of Class B
Common Stock.                                                                   

In the event that the merger of IMA and ITI Sub contemplated by the   
Agreement is terminated this Agreement shall be null and void.                  

                                          ______________________________________

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                                                                       EXHIBIT H

    The opinion to be delivered to IMA from counsel to ITI and Acquisition Sub
referred to in Section 10.1 of the Agreement shall be in form and substance     
reasonably satisfactory to IMA and its counsel to the effect that:              

(i)  Each of ITI and Acquisition Sub is a corporation duly organized, 
validly existing and in good standing under the laws of the State of Delaware,  
and has full corporate power and authority to perform all its obligations under 
the Agreement and, in the case of Acquisition Sub, to consummate the Merger.    

     (ii)  The Agreement has been duly authorized, executed and delivered by ITI
and Acquisition Sub, and the consummation of the Merger has been duly approved  
by Acquisition Sub, and the Agreement constitutes the valid and legally binding 
obligation of ITI and Acquisition Sub enforceable against each in accordance    
with its terms, except as enforceability may be limited by bankruptcy,          
insolvency, or other laws affecting generally the enforceability of creditors'  
rights and by limitations on the availability of equitable remedies.            

    (iii)  The authorized capital stock of ITI consists of 2,000,000 shares of
ITI Preferred Stock and 40,000,000 shares of ITI Common Stock. When (a) the     
applicable provisions of the Securities Act and such "blue sky laws" or other   
state or foreign jurisdiction securities laws as may be applicable shall have   
been complied with, (b) the ITI Common Stock shall have been issued and         
delivered in accordance with the Agreement, and (c) the provisions of the GCL   
requiring the filing of the Certificate of Merger shall have been complied with,
the shares of ITI Common Stock to be issued to holders of IMA Common Stock in   
the Merger will, at the Effective Time, be duly authorized, validly issued and  
fully-paid and non-assessable, issued without violation of the preemptive rights
of any person.                                                                  

  (iv)  Upon the filing of the Certificate of Merger in the offices of the
Secretary of State of the State of Delaware, all filings required to made by ITI
or Acquisition Sub with, and all consents required to be obtained by ITI or     
Acquisition Sub from, any governmental and regulatory authorities in order for  
the Merger to become effective in accordance with this Agreement and the GCL    
will have been made or obtained.                                                

    (v)  Except for the matters set forth in such opinion and in the documents
theretofore delivered to IMA by ITI identified in such opinion, such counsel    
knows of no action, suit or proceeding which, individually or in the aggregate, 
materially would impair the ability of ITI or Acquisition Sub to fulfill its    
obligations under the Agreement.                                                

   The opinion referred to in Section 10.1 may, if in the opinion of counsel
for ITI and Acquisition Sub it is reasonable to rely thereon, be given in       
reliance upon opinions of counsel of jurisdictions other than the States of New 
Jersey and New York and the District of Columbia.                               

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                                                                       EXHIBIT I

The opinion to be delivered to ITI from counsel to IMA referred to in 
Section 11.1 of the Agreement shall be in form and substance reasonably         
satisfactory to ITI and its counsel to the effect that:                         

(i)  IMA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has full corporate power  
and authority to perform all its obligations under this Agreement and to        
consummate the Merger.                                                          

   (ii)  The Agreement has been duly authorized, executed and delivered, and
the consummation of the Merger has been duly approved, by IMA, and the Agreement
constitutes the valid and legally binding obligation of IMA enforceable against 
IMA in accordance with its terms, except as enforceability may be limited by    
bankruptcy, insolvency, or other laws affecting generally the enforceability of 
creditors' rights and by limitations on the availability of equitable remedies. 

  (iii)  The authorized capital stock of IMA consists of 500,000 shares of
IMA Preferred Stock, 10,000 shares of IMA Convertible Preferred Stock, 500      
shares of IMA Class A Convertible Preferred Stock, 13,000,000 shares of IMA     
Class A Common Stock and 6,000,000 shares of IMA Class B Common Stock. All of   
the outstanding shares of IMA Class A Common Stock outstanding immediately prior
to the Merger are duly authorized, validly issued and fully-paid and            
non-assessable, and were issued without violation of the preemptive rights of   
any person                                                                      

  (iv)  Upon the filing of the Certificate of Merger in the offices of the
Secretary of State of the State of Delaware, all filings required to made by IMA
with, and all consents required to be obtained by IMA from, any governmental and
regulatory authorities in order for the Merger to become effective in accordance
with the Agreement and the GCL will have been made or obtained.                 

    (v)  Except for the matters set forth in such opinion and in the documents
theretofore delivered to ITI by IMA identified in such opinion, such counsel    
knows of no action, suit or proceeding which, individually or in the aggregate, 
materially would impair the ability of IMA to fulfill its obligations under the 
Agreement.                                                                      

   The opinion referred to in Section 11.1 may, if in the opinion of counsel
for IMA it is reasonable to rely thereon, be given in reliance upon opinions of 
counsel of jurisdictions other than the States of Illinois and Missouri and the 
District of Columbia.                                                           

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                                                                       EXHIBIT J

                                                                           ,1995

Insituform Technologies, Inc.                                                   
1770 Kirby Parkway                                                              
Suite 300                                                                       
Memphis, Tennessee 38138                                                        

Gentlemen:                                                                      

    In connection with the transactions contemplated by the Agreement and Plan
of Merger dated as of May 23, 1995 (the "Agreement") among Insituform           
Technologies, Inc., a Delaware corporation (the "Company"), ITI Acquisition     
Corp., a Delaware corporation, and Insituform Mid-America, Inc., a Delaware     
corporation, the undersigned agrees that (i) the undersigned shall make no      
disposition of any shares of Class A Common Stock, $.01 par value ("Company     
Common Stock"), of the Company, that it receives pursuant to the Merger (as     
defined in the Agreement), except in accordance with the applicable provisions  
of the Securities Act of 1933, as amended, and the rules and regulations        
thereunder; and (ii) the certificates evidencing such shares received pursuant  
to the Merger shall bear a customary legend setting forth such restrictions.    

The undersigned represents that it has no present plan, intention, or 
arrangement to sell, transfer or otherwise dispose of any shares of Company     
Common Stock received pursuant to the Merger, and shall not change such         
intention or enter into any such arrangement, prior to the Effective Time (as   
defined in the Agreement).                                                      

                                          ______________________________________

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                                                                       EXHIBIT K

EMPLOYMENT AGREEMENT

AGREEMENT made this      day of           , 1995 between Robert W.    
Affholder, residing at                          (hereinafter referred to as the 
"Employee"), and Insituform Technologies, Inc., a corporation organized and     
existing under the laws of the State of Delaware (hereinafter referred to as the
"Corporation").                                                                 

W I T N E S S E T H:

   WHEREAS, the Corporation has entered into an Agreement and Plan of Merger
dated as of May 23, 1995 (hereinafter referred to as the "Merger Agreement")    
with Insituform Mid-America, Inc., a Delaware corporation (hereinafter referred 
to as "IMA"), and ITI Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of the Corporation (hereinafter referred to as "Acquisition Sub"),   
pursuant to the terms and subject to the conditions of which the Corporation has
agreed to the merger of Acquisition Sub into IMA, as a result of which IMA will 
become a wholly-owned subsidiary of the Corporation; and                        

   WHEREAS, it is a condition to the closing under the Merger Agreement that
the parties hereto execute and deliver this Agreement;                          

 NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, the Employee hereby agrees with the Corporation as follows:   

SECTION I 

    A.  The Corporation hereby agrees to employ the Employee, and the Employee
hereby agrees to be employed by the Corporation, for the Employment Term (as    
hereinafter defined) and upon the other terms and conditions set forth herein.  

B.  The Employee hereby agrees to serve the Corporation faithfully,   
diligently and to the best of his ability, under the direction of the board of  
directors and of the President of the Corporation, initially as principal       
operating officer for North American contracting operations of the Corporation, 
and thereafter in such other executive staff position as shall be designated by 
the President of the Corporation. The Employee shall render such services as the
Corporation may from time to time require of him, and shall devote all of his   
business time to the performance thereof; provided that, it shall not be a      
violation of this Paragraph B for the Employee to (i) serve on corporate, civic,
political or charitable boards or committees, or (ii) manage personal           
investments, so long as such activities do not significantly interfere with the 
performance of the Employee's responsibilities as an employee of the Corporation
in accordance with this Agreement or violate the Corporation's conflict of      
interest policy as in effect from time to time. The precise services and duties 
which the Employee is obligated to perform hereunder may from time to time be   
changed, amended, extended or curtailed by the President of the Corporation.    

     C.  The Employee shall render his services and perform his duties hereunder
at the principal offices of the Corporation or any Affiliate (as hereinafter    
defined), as determined by the Corporation, in the metropolitan St. Louis area; 
provided, however, that the Corporation may require the Employee to travel in   
the regular business of the Corporation and its Affiliates for such purposes and
periods as may be reasonable considering the duties and responsibilities of the 
Employee.                                                                       

SECTION II

    A.  Subject to the provisions of this Agreement hereinafter contained, for
purposes of this Agreement the period (herein referred to as the "Employment    
Term") of the Employee's obligations under Section I hereof shall commence on   
the date hereof and shall continue for a period of three years thereafter.      

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   B.  If the Employee shall, during the Employment Term fail to perform his
duties under this Agreement owing to illness or other incapacity which shall    
continue for a period of more than six months, the Corporation shall have the   
right to terminate the Employment Term as of a date to be specified in a notice 
to that effect, whereupon the Employee shall continue to receive his salary at  
the rate provided in Section III up to the last day of the Corporation's regular
payroll accounting period in which such termination shall take effect.          

 C.  The Employment Term may further be terminated, at the option of the
Corporation, upon ten days prior written notice, for "cause" (as hereinafter    
defined).                                                                       

  D.  In the event of the Employee's death during the Employment Term, the
Employment Term shall terminate immediately and the Employee's legal            
representatives shall be entitled to receive his salary at the rate provided in 
Section III up to the last day of the Corporation's regular payroll accounting  
period in which his death shall occur.                                          

SECTION III 

     A.  The Corporation hereby agrees to pay, and the Employee hereby agrees to
accept, as full compensation for the services to be rendered by him under       
Section I hereunder, an annual salary of $250,000, payable in equal installments
at the end of such regular payroll accounting periods as are established by the 
Corporation, or in such other installments upon which the parties hereto shall  
mutually agree.                                                                 

B.  The Corporation shall reimburse the Employee for reasonable and   
necessary expenses incurred by him on behalf of the Corporation in the          
performance of his duties hereunder during the Employment Term, provided that   
such expenses are adequately documented in accordance with the Corporation's    
then customary policies.                                                        

C.  During the Employment Term, the Employee shall be entitled to     
participate in all medical and other employee benefit plans, including vacation,
sick leave, and other fringe benefits, offered or provided by the Corporation to
employees similarly situated. Such benefits shall include, but not be limited   
to, the use of the automobile heretofore provided to him by IMA, for his        
activities hereunder (and with a reasonably similar replacement vehicle at the  
expiration of the lease therefor). During the Employment Term, the Corporation  
shall furnish to the Employee office facilities appropriate to his performance  
hereunder and secretarial assistance in connection therewith.                   

SECTION IV

  A.  The Employee shall hold in absolute secrecy and treat confidentially
all Confidential Material (as hereinafter defined), and not disclose, reproduce,
publish, distribute or by any other means disseminate, in whole or in part, any 
Confidential Material, except as shall be authorized by the Disclosing Party (as
hereinafter defined). The Employee shall not in any manner use for his benefit  
or for the benefit of others any Confidential Material, except as shall be      
authorized by the Disclosing Party.                                             

     B.  Subsequent to the date hereof and for a period (hereinafter referred to
as the "Covenant Term") expiring at the later of (x) two years after the        
termination or expiration of all service rendered by the Employee to the        
Corporation or any of its Affiliates, whether as employee, consultant, director 
or otherwise, unless any such termination shall be effectuated by the           
Corporation or any Affiliate without "cause", or (y) five years after the date  
of this Agreement, the Employee shall not engage, directly or indirectly,       
whether as principal, agent, distributor, representative, stockholder or        
otherwise, in any activities which are in any way competitive with the business 
conducted by the Corporation or any Affiliate thereof, within any territory in  
which the Corporation or any Affiliate, directly or indirectly, conducts such   
business.                                                                       

    C.  The Employee hereby assigns to the Corporation the entire right, title
and interest in and to any and all inventions, trade secrets, improvements,     
plans and specifications: (i) which he alone, or in conjunction with others, may
make, conceive or develop; and (ii) which relate to or derive from any subject  
matter or problem with respect to which the Employee shall have become informed 
by reason of his relations with the                                             

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Corporation or any Affiliate, or to any product or process involved in the      
business of the Corporation or any Affiliate.                                   

     D.  The Employee further agrees that he will promptly disclose fully to the
Corporation the aforesaid inventions, trade secrets, improvements, plans and    
specifications and will at any time render to the Corporation such reasonable   
cooperation and assistance (excluding financial assistance) as the Corporation  
may deem to be advisable in order to obtain copyrights or patents, as the case  
may be, on or otherwise perfect or defend the Corporation's rights in each such 
invention, trade secret, improvement, plan or specification, including, but not 
limited to, the execution of any and all applications for copyrights or patents,
assignments of copyrights or patents and other instruments in writing which the 
Corporation, its officers or attorneys may reasonably deem necessary or         
desirable, and the aforesaid obligation shall be binding on the assigns,        
executors, administrators and other legal representatives of the Receiving      
Party.                                                                          

    E.  For purposes of this Agreement: (i) "Confidential Material" shall mean
any and all information furnished to the Employee, whether before or after the  
date hereof, by the Corporation, any Affiliate, or any of their respective      
licensees, or any of their respective employees, directors, agents or           
representatives (each herein referred to as a "Disclosing Party"), or acquired, 
received, developed or learned by the Employee in the course of his relations   
with any Disclosing Party or relating to the business and affairs of the        
Corporation or any Affiliate, or any licensee thereof, or to any product or     
process involved in the business of the Corporation or any Affiliate, or the    
proprietary plans, policies, business or affairs of any Disclosing Party;       
provided, however, that the term "Confidential Material" shall not include      
information which:                                                              

      (x)  becomes or has become generally available to the public other
than as a result of a disclosure by the Employee;                     

        (y)  was available to the Employee on a non-confidential basis prior
to its disclosure to the Employee by the Disclosing Party; or         

      (z)  becomes available to the Employee on a non-confidential basis
     from a source other than the Disclosing Party, provided that such source is
not bound by a confidentiality agreement with the Disclosing Party;   

 (ii) "Affiliate" shall mean any person or entity directly or indirectly
controlled by the Corporation; and (iii) "cause" shall mean the Employee's      
neglect of duties, breach of his employment or other relationship with the      
Corporation , conflict of interest, or refusal to follow directives of the      
Corporation , in each case (if such matter is susceptible of correction) if not 
corrected within ten days after written notice thereof by the Corporation , to  
the Employee (or if such correction may not reasonably be completed within such 
period, if diligent efforts to effectuate such correction shall not have been   
initiated within such period and continued through and completed within 30 days 
of such notice); or conviction of a crime.                                      

   F.  In view of the irreparable harm and damage which would be incurred by
the Corporation or any Affiliate, or any other Disclosing Party, in the event of
any violation by the Employee of any of the provisions hereof, the Employee     
hereby consents and agrees that, if he violates any such provisions, the        
Corporation or any Affiliate, or (with respect to such secrecy or non-use       
obligations) such other Disclosing Party, shall be entitled to an injunction or 
similar equitable relief to be issued by any court of competent jurisdiction    
restraining the undersigned from committing or continuing any such violation.   

SECTION V 

The Employee hereby represents, warrants and covenants that:          

A.  He is duly authorized to execute and deliver this Agreement and to
perform his covenants and agreements hereunder. When executed and delivered by  
him, this Agreement shall constitute his valid and legally binding agreement    
enforceable against him in accordance with the terms hereof, except as may be   
limited by bankruptcy, insolvency or other laws affecting generally the         
enforceability of creditors' rights and by limitations on the availability of   
equitable remedies.                                                             

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B.  Neither the execution and delivery of this Agreement, nor the     
consummation of the transactions contemplated herein, will violate any law,     
rule, regulation, writ, judgment, injunction, decree, determination, award, or  
order of any court or governmental agency or instrumentality, domestic or       
foreign, or conflict with or result in any breach of any of the terms of or     
constitute a default under or result in the termination or for the creation of  
any mortgage, deed of trust, pledge, lien security interest or other charge or  
encumbrance of any nature pursuant to the terms of any contract or agreement to 
which he is a party or by which he or any of his assets or properties is bound. 

SECTION VI

    A.  All notices, requests, instructions or documents hereunder shall be in
writing and delivered personally or sent by registered or express mail, postage 
prepaid, as follows:                                                            

(i)  if to the Employee:  

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

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

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

With a copy to: 

 Thomas Litz, Esq.
   Thompson & Mitchell
     One Mercantile Center
         St. Louis, Missouri 63101

(ii)  to the Corporation:   

  1770 Kirby Parkway
Suite 300       
        Memphis, Tennessee 38138

with a copy to: 

   Howard Kailes, Esq.
           Krugman, Chapman & Grimshaw
         Park 80 West -- Plaza Two
              Saddle Brook, New Jersey 07663

or to such other address as either party may designate by written notice to the 
other party. If delivered personally, the date on which such notice, request,   
instruction or document is delivered shall be the date on which such delivery is
made, and if delivered by mail, the date on which deposited in the mail. Each   
notice, request, instruction or document shall bear the date on which it is     
delivered.                                                                      

B.  This Agreement is personal as to the Employee and shall not be    
assignable by the Employee. Subject to the foregoing, all of the terms and      
provisions of this Agreement shall be binding upon and shall inure to the       
benefit of and be enforceable by the parties hereto and their respective        
successors and assigns and legal representatives and (with respect to any       
secrecy or non-use obligations) any other Disclosing Party.                     

C.  This Agreement constitutes the complete understanding between the 
parties hereto with respect to the transactions contemplated herein, no         
statement, representation, warranty or covenant has been made by either party   
hereto except as expressly set forth herein and therein, and no modification    
hereof shall be effective unless in writing and signed by a party against which 
it is sought to be enforced.                                                    

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  D.  This Agreement shall be governed by and construed in accordance with
the laws of the State of Tennessee applicable in the case of agreements made and
to be performed entirely within such State.                                     

E.  It is the intention of the Employee and the Corporation that the  
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is 
sought, but that the unenforceability of any provisions of this Agreement shall 
not render unenforceable, or impair, the remainder of this Agreement.           
Accordingly, if any provision hereof is determined to be invalid or             
unenforceable, either in whole or in part, this Agreement shall be deemed       
amended to delete or modify, as necessary, the offending provision and to alter 
the remainder of this Agreement in order to render it valid and enforceable.    

    F.  This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which, taken together, shall constitute one and  
the same instrument.                                                            

  IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.                                      

                                 INSITUFORM TECHNOLOGIES, INC.

      By

                                          --------------------------------------
             EMPLOYEE:

                                          --------------------------------------
                       Robert W. Affholder

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                                                                     EXHIBIT L-1

AGREEMENT 

AGREEMENT made this        day of             , 1995 between Jerome   
Kalishman residing at                (hereinafter referred to as the "Vice      
Chairman"), and Insituform Technologies, Inc., a corporation organized and      
existing under the laws of the State of Delaware (hereinafter referred to as the
"Corporation").                                                                 

WITNESSETH: 

   WHEREAS, the Corporation has entered into an Agreement and Plan of Merger
dated as of May 23, 1995 (hereinafter referred to as the "Merger Agreement")    
with Insituform Mid-America, Inc., a Delaware corporation (hereinafter referred 
to as "IMA"), and ITI Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of the Corporation (hereinafter referred to as "Acquisition Sub"),   
pursuant to the terms and subject to the conditions of which the Corporation has
agreed to the merger of Acquisition Sub into IMA, as a result of which IMA will 
become a wholly-owned subsidiary of the Corporation; and                        

   WHEREAS, it is a condition to the closing under the Merger Agreement that
the parties hereto execute and deliver this Agreement;                          

 NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, the Vice Chairman hereby agrees with the Corporation as       
follows:                                                                        

SECTION I 

 During the Term (as hereinafter defined), ITI shall engage and the Vice
Chairman shall serve as Vice Chairman of the Board of Directors of the          
Corporation. The Corporation acknowledges that the duties to be performed by the
Vice Chairman under this Agreement do not require him to serve on a full-time   
basis and that the Vice Chairman will not be available to serve on a full-time  
basis.                                                                          

SECTION II

    A.  Subject to the provisions of this Agreement hereinafter contained, for
purposes of this Agreement the period (herein referred to as the "Term") of the 
Vice Chairman's obligations under Section I hereof shall commence on the date   
hereof and shall continue for a period expiring on December 9, 1998, or until   
such other date prior thereto on which the Vice Chairman's engagement terminates
pursuant hereto.                                                                

    B.  If the Vice Chairman shall, during the Term fail to perform his duties
under this Agreement owing to illness or other incapacity which shall continue  
for a period of more than six months, the Corporation shall have the right to   
terminate the Term as of a date to be specified in a notice to that effect,     
whereupon the Vice Chairman shall continue to receive his retainer at the rate  
provided in Section III up to the last day of the Corporation's regular payroll 
accounting period in which such termination shall take effect.                  

   C.  The Term may further be terminated, at the option of the Corporation,
upon ten days' prior written notice, for "cause" (as hereinafter defined).      

 D.  In the event of the Vice Chairman's death during the Term, the Term
shall terminate immediately and the Vice Chairman's legal representatives shall 
be entitled to receive his retainer at the rate provided in Section III up to   
the last day of the Corporation's regular payroll accounting period in which his
death shall occur.                                                              

    E.  The Vice Chairman shall have the right, upon at least 60 days' written
notice delivered to the Corporation, to terminate the Term.                     

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SECTION III 

A.  The Corporation hereby agrees to pay, and the Vice Chairman hereby
agrees to accept, as full compensation for the services to be rendered by him   
under Section I hereunder, an annual fee of $100,000, payable in equal          
installments at the end of such regular payroll accounting periods as are       
established by the Corporation, or in such other installments upon which the    
parties hereto shall mutually agree.                                            

  B.  The Corporation shall reimburse the Vice Chairman for reasonable and
necessary expenses incurred by him on behalf of the Corporation in the          
performance of his duties hereunder during the Term, provided that such expenses
are adequately documented in accordance with the Corporation's then customary   
policies. During the Term, the Vice Chairman shall, to the extent such plans    
permit coverage of the Vice Chairman thereunder in accordance with the terms    
thereof generally applicable, be entitled to participate at the Corporation's   
expense in the Corporation's group medical, life and accident insurance plans   
or, if not so eligible, the Vice Chairman shall receive from the Corporation, at
its expense, coverage substantially similar thereto. The Vice Chairman shall    
receive the use of the automobile heretofore provided to him by IMA, for his    
activities hereunder (and with a reasonably similar replacement vehicle at the  
expiration of the lease therefor). During the Term, the Corporation shall       
furnish to the Vice Chairman office facilities appropriate to his performance   
hereunder and secretarial assistance in connection therewith.                   

SECTION IV

A.  The Vice Chairman shall hold in absolute secrecy and treat        
confidentially all Confidential Material (as hereinafter defined), and not      
disclose, reproduce, publish, distribute or by any other means disseminate, in  
whole or in part, any Confidential Material, except as shall be authorized by   
the Disclosing Party (as hereinafter defined). The Vice Chairman shall not in   
any manner use for his benefit or for the benefit of others any Confidential    
Material, except as shall be authorized by the Disclosing Party.                

     B.  Subsequent to the date hereof and for a period (hereinafter referred to
as the "Covenant Term") expiring at the later of (x) two years after the        
termination or expiration of all service rendered by the Vice Chairman to the   
Corporation or any of its Affiliates (as hereinafter defined), whether as       
employee, consultant, director or otherwise, unless any such termination shall  
be effectuated by the Corporation or any Affiliate without "cause" (as          
hereinafter defined), or (y) five years after the date of this Agreement, the   
Vice Chairman shall not engage, directly or indirectly, whether as principal,   
agent, distributor, representative, stockholder or otherwise, in any activities 
which are in any way competitive with the business conducted by the Corporation 
or any Affiliate thereof, within any territory in which the Corporation or any  
Affiliate, directly or indirectly, conducts such business.                      

   C.  The Vice Chairman hereby assigns to the Corporation the entire right,
title and interest in and to any and all inventions, trade secrets,             
improvements, plans and specifications: (i) which he alone, or in conjunction   
with others, may make, conceive or develop; and (ii) which relate to or derive  
from any subject matter or problem with respect to which the Vice Chairman shall
have become informed by reason of his relations with the Corporation or any     
Affiliate, or to any product or process involved in the business of the         
Corporation or any Affiliate.                                                   

   D.  The Vice Chairman further agrees that he will promptly disclose fully
to the Corporation the aforesaid inventions, trade secrets, improvements, plans 
and specifications and will at any time render to the Corporation such          
reasonable cooperation and assistance (excluding financial assistance) as the   
Corporation may deem to be advisable in order to obtain copyrights or patents,  
as the case may be, on or otherwise perfect or defend the Corporation's rights  
in each such invention, trade secret, improvement, plan or specification,       
including, but not limited to, the execution of any and all applications for    
copyrights or patents, assignments of copyrights or patents and other           
instruments in writing which the Corporation, its officers or attorneys may     
reasonably deem necessary or desirable, and the aforesaid obligation shall be   
binding on the assigns, executors, administrators and other legal               
representatives of the Receiving Party.                                         

    E.  For purposes of this Agreement: (i) "Confidential Material" shall mean
any and all information furnished to the Vice Chairman, whether before or after 
the date hereof, by the Corporation, any Affiliate, or                          

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any of their respective licensees, or any of their respective employees,        
directors, agents or representatives (each herein referred to as a "Disclosing  
Party"), or acquired, received, developed or learned by the Vice Chairman in the
course of his relations with any Disclosing Party or relating to the business   
and affairs of the Corporation or any Affiliate, or any licensee thereof, or to 
any product or process involved in the business of the Corporation or any       
Affiliate, or the proprietary plans, policies, business or affairs of any       
Disclosing Party; provided, however, that the term "Confidential Material" shall
not include information which:                                                  

      (x)  becomes or has become generally available to the public other
than as a result of a disclosure by the Vice Chairman;                

       (y)  was available to the Vice Chairman on a non-confidential basis
  prior to its disclosure to the Vice Chairman by the Disclosing Party; or

     (z)  becomes available to the Vice Chairman on a non-confidential
 basis from a source other than the Disclosing Party, provided that such
source is not bound by a confidentiality agreement with the Disclosing
Party;                                                                

  (ii)  "Affiliate" shall mean any person or entity directly or indirectly
controlled by the Corporation; and (iii) "cause" shall mean the Vice Chairman's 
neglect of duties, breach of his engagement with the Corporation , conflict of  
interest, or refusal to follow directives of the Board of Directors of the      
Corporation, in each case (if such matter is susceptible of correction) if not  
corrected within ten days after written notice thereof by the Corporation to the
Vice Chairman (or if such correction may not reasonably be completed within such
period, if diligent efforts to effectuate such correction shall not have been   
initiated within such period and continued through and completed within 30 days 
of such notice); or conviction of a crime.                                      

   F.  In view of the irreparable harm and damage which would be incurred by
the Corporation or any Affiliate, or any other Disclosing Party, in the event of
any violation by the Vice Chairman of any of the provisions hereof, the Vice    
Chairman hereby consents and agrees that, if he violates any such provisions,   
the Corporation or any Affiliate, or (with respect to such secrecy or non-use   
obligations) such other Disclosing Party, shall be entitled to an injunction or 
similar equitable relief to be issued by any court of competent jurisdiction    
restraining the undersigned from committing or continuing any such violation.   

SECTION V 

The Vice Chairman hereby represents, warrants and covenants that:     

A.  He is duly authorized to execute and deliver this Agreement and to
perform his covenants and agreements hereunder. When executed and delivered by  
him, this Agreement shall constitute his valid and legally binding agreement    
enforceable against him in accordance with the terms hereof, except as may be   
limited by bankruptcy, insolvency or other laws affecting generally the         
enforceability of creditors' rights and by limitations on the availability of   
equitable remedies.                                                             

B.  Neither the execution and delivery of this Agreement, nor the     
consummation of the transactions contemplated herein, will violate any law,     
rule, regulation, writ, judgment, injunction, decree, determination, award, or  
order of any court or governmental agency or instrumentality, domestic or       
foreign, or conflict with or result in any breach of any of the terms of or     
constitute a default under or result in the termination or for the creation of  
any mortgage, deed of trust, pledge, lien security interest or other charge or  
encumbrance of any nature pursuant to the terms of any contract or agreement to 
which he is a party or by which he or any of his assets or properties is bound. 

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SECTION VI

    A.  All notices, requests, instructions or documents hereunder shall be in
writing and delivered personally or sent by registered or express mail, postage 
prepaid, as follows:                                                            

 (i)  if to the Vice Chairman:

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

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

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

with a copy to:   

Thomas Litz, Esq. 
 Thompson & Mitchell
   One Mercantile Center
       St. Louis, Missouri 63101

(ii)  to the Corporation:     

  1770 Kirby Parkway
Suite 300       
        Memphis, Tennessee 38138

with a copy to: 

   Howard Kailes, Esq.
           Krugman, Chapman & Grimshaw
         Park 80 West -- Plaza Two
              Saddle Brook, New Jersey 07663

or to such other address as either party may designate by written notice to the 
other party. If delivered personally, the date on which such notice, request,   
instruction or document is delivered shall be the date on which such delivery is
made, and if delivered by mail, the date on which deposited in the mail. Each   
notice, request, instruction or document shall bear the date on which it is     
delivered.                                                                      

 B.  This Agreement is personal as to the Vice Chairman and shall not be
assignable by the Vice Chairman. Subject to the foregoing, all of the terms and 
provisions of this Agreement shall be binding upon and shall inure to the       
benefit of and be enforceable by the parties hereto and their respective        
successors and assigns and legal representatives and (with respect to any       
secrecy or non-use obligations) any other Disclosing Party.                     

C.  This Agreement constitutes the complete understanding between the 
parties hereto with respect to the transactions contemplated herein, no         
statement, representation, warranty or covenant has been made by either party   
hereto except as expressly set forth herein and therein, and no modification    
hereof shall be effective unless in writing and signed by a party against which 
it is sought to be enforced.                                                    

  D.  This Agreement shall be governed by and construed in accordance with
the laws of the State of Tennessee applicable in the case of agreements made and
to be performed entirely within such State.                                     

   E.  It is the intention of the Vice Chairman and the Corporation that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is 
sought, but that the unenforceability of any provisions of this Agreement shall 
not render unenforceable, or impair, the remainder of this Agreement.           
Accordingly, if any provision hereof is determined to be invalid or             
unenforceable, either in whole or in part, this Agreement shall be deemed       

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amended to delete or modify, as necessary, the offending provision and to alter 
the remainder of this Agreement in order to render it valid and enforceable.    

    F.  This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which, taken together, shall constitute one and  
the same instrument.                                                            

  IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.                                      

                                 INSITUFORM TECHNOLOGIES, INC.

      By
                                          --------------------------------------
                          VICE CHAIRMAN:

                                          --------------------------------------
                          Jerome Kalishman

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                                                                     EXHIBIT L-2

CONSULTING AGREEMENT

   AGREEMENT made this      day of           , 1995 between Jerome Kalishman
residing at             (hereinafter referred to as the "Consultant"), and      
Insituform Technologies, Inc., a corporation organized and existing under the   
laws of the State of Delaware (hereinafter referred to as the "Corporation").   

W I T N E S S E T H:

   WHEREAS, the Corporation has entered into an Agreement and Plan of Merger
dated as of May 23, 1995 (hereinafter referred to as the "Merger Agreement")    
with Insituform Mid-America, Inc., a Delaware corporation (hereinafter referred 
to as "IMA"), and ITI Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of the Corporation (hereinafter referred to as "Acquisition Sub"),   
pursuant to the terms and subject to the conditions of which the Corporation has
agreed to the merger of Acquisition Sub into IMA, as a result of which IMA will 
become a wholly-owned subsidiary of the Corporation; and                        

   WHEREAS, it is a condition to the closing under the Merger Agreement that
the parties hereto execute and deliver this Agreement;                          

 NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, the Consultant hereby agrees with the Corporation as follows: 

SECTION I 

  A.  The Corporation hereby retains the Consultant to act as a consultant
and advisor to the Corporation in connection with its business, and the         
Consultant hereby agrees to act in such capacity, for the Consulting Term (as   
hereinafter defined) and upon the other terms and conditions set forth herein.  

B.  The Consultant hereby agrees to serve the Corporation faithfully, 
diligently and to the best of his ability under the direction of the board of   
directors and of the President of the Corporation. In connection with his duties
hereunder, the Consultant shall hold himself available, upon reasonable prior   
notice from the Corporation, to provide the Corporation with such services as   
the Corporation may from time to time reasonably require of him.                

SECTION II

    A.  Subject to the provisions of this Agreement hereinafter contained, for
purposes of this Agreement the period (herein referred to as the "Consulting    
Term") of the Consultant's obligations under Section I hereof shall commence on 
the date hereof and shall continue for a period of two years thereafter.        

     B.  If the Consultant shall, during the Consulting Term fail to perform his
duties under this Agreement owing to illness or other incapacity which shall    
continue for a period of more than six months, the Corporation shall have the   
right to terminate the Consulting Term as of a date to be specified in a notice 
to that effect, whereupon the Consultant shall continue to receive his retainer 
at the rate provided in Section III up to the last day of the month in which    
such termination shall take effect.                                             

 C.  The Consulting Term may further be terminated, at the option of the
Corporation, upon ten days' prior written notice, for "cause" (as hereinafter   
defined).                                                                       

    D.  In the event of the Consultant's death during the Consulting Term, the
Consulting Term shall terminate immediately and the Consultant's legal          
representatives shall be entitled to receive his retainer at the rate provided  
in Section III up to the last day of the month in which his death shall occur.  

 E.  The Consultant shall have the right, upon at least 60 days' written
notice delivered to the Corporation, to terminate the Consulting Term.          

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SECTION III 

    A.  The Corporation hereby agrees to pay, and the Consultant hereby agrees
to accept, as full compensation for the services to be rendered by him under    
Section I hereunder, an annual fee of $150,000, payable in substantially equal  
monthly installments in arrears, or in such other installments upon which the   
parties hereto shall mutually agree.                                            

B.  The Corporation shall reimburse the Consultant for reasonable and 
necessary expenses incurred by him on behalf of the Corporation in the          
performance of his duties hereunder during the Consulting Term, provided that   
such expenses are adequately documented in accordance with the Corporation's    
then customary policies. The Consultant shall receive the use of the automobile 
heretofore provided to him by IMA, for his activities hereunder (and with a     
reasonably similar replacement vehicle at the expiration of the lease therefor).
During the Consulting Term, the Corporation shall furnish to the Consultant     
office facilities appropriate to his performance hereunder and secretarial      
assistance in connection therewith.                                             

SECTION IV

    A.  The Consultant shall hold in absolute secrecy and treat confidentially
all Confidential Material (as hereinafter defined), and not disclose, reproduce,
publish, distribute or by any other means disseminate, in whole or in part, any 
Confidential Material, except as shall be authorized by the Disclosing Party (as
hereinafter defined). The Consultant shall not in any manner use for his benefit
or for the benefit of others any Confidential Material, except as shall be      
authorized by the Disclosing Party.                                             

     B.  Subsequent to the date hereof and for a period (hereinafter referred to
as the "Covenant Term") expiring at the later of (x) two years after the        
termination or expiration of all service rendered by the Consultant to the      
Corporation or any of its Affiliates (as hereinafter defined), whether as       
employee, consultant, director or otherwise, unless any such termination shall  
be effectuated by the Corporation or any Affiliate without "cause" (as          
hereinafter defined), or (y) five years after the date of this Agreement, the   
Consultant shall not engage, directly or indirectly, whether as principal,      
agent, distributor, representative, stockholder or otherwise, in any activities 
which are in any way competitive with the business conducted by the Corporation 
or any Affiliate thereof, within any territory in which the Corporation or any  
Affiliate, directly or indirectly, conducts such business.                      

C.  The Consultant hereby assigns to the Corporation the entire right,
title and interest in and to any and all inventions, trade secrets,             
improvements, plans and specifications: (i) which he alone, or in conjunction   
with others, may make, conceive or develop; and (ii) which relate to or derive  
from any subject matter or problem with respect to which the Consultant shall   
have become informed by reason of his relations with the Corporation or any     
Affiliate, or to any product or process involved in the business of the         
Corporation or any Affiliate.                                                   

   D.  The Consultant further agrees that he will promptly disclose fully to
the Corporation the aforesaid inventions, trade secrets, improvements, plans and
specifications and will at any time render to the Corporation such reasonable   
cooperation and assistance (excluding financial assistance) as the Corporation  
may deem to be advisable in order to obtain copyrights or patents, as the case  
may be, on or otherwise perfect or defend the Corporation's rights in each such 
invention, trade secret, improvement, plan or specification, including, but not 
limited to, the execution of any and all applications for copyrights or patents,
assignments of copyrights or patents and other instruments in writing which the 
Corporation, its officers or attorneys may reasonably deem necessary or         
desirable, and the aforesaid obligation shall be binding on the assigns,        
executors, administrators and other legal representatives of the Receiving      
Party.                                                                          

    E.  For purposes of this Agreement: (i) "Confidential Material" shall mean
any and all information furnished to the Consultant, whether before or after the
date hereof, by the Corporation, any Affiliate, or any of their respective      
licensees, or any of their respective employees, directors, agents or           
representatives (each herein referred to as a "Disclosing Party"), or acquired, 
received, developed or learned by the Consultant in the course of his relations 
with any Disclosing Party or relating to the business and affairs of the        
Corporation or any Affiliate, or any licensee thereof, or to any product or     
process involved in the business of the                                         

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Corporation or any Affiliate, or the proprietary plans, policies, business or   
affairs of any Disclosing Party; provided, however, that the term "Confidential 
Material" shall not include information which:                                  

      (x)  becomes or has become generally available to the public other
than as a result of a disclosure by the Consultant;                   

          (y)  was available to the Consultant on a non-confidential basis prior
to its disclosure to the Consultant by the Disclosing Party; or       

        (z)  becomes available to the Consultant on a non-confidential basis
     from a source other than the Disclosing Party, provided that such source is
not bound by a confidentiality agreement with the Disclosing Party;   

(ii)  "Affiliate" shall mean any person or entity directly or indirectly        
controlled by the Corporation; and (iii) "cause" shall mean the Consultant's    
neglect of duties, breach of his consulting or other relationship with the      
Corporation , conflict of interest, or refusal to follow directives of the      
Corporation, in each case (if such matter is susceptible of correction) if not  
corrected within ten days after written notice thereof by the Corporation to the
Consultant (or if such correction may not reasonably be completed within such   
period, if diligent efforts to effectuate such correction shall not have been   
initiated within such period and continued through and completed within 30 days 
of such notice); or conviction of a crime.                                      

   F.  In view of the irreparable harm and damage which would be incurred by
the Corporation or any Affiliate, or any other Disclosing Party, in the event of
any violation by the Consultant of any of the provisions hereof, the Consultant 
hereby consents and agrees that, if he violates any such provisions, the        
Corporation or any Affiliate, or (with respect to such secrecy or non-use       
obligations) such other Disclosing Party, shall be entitled to an injunction or 
similar equitable relief to be issued by any court of competent jurisdiction    
restraining the undersigned from committing or continuing any such violation.   

SECTION V 

The Consultant hereby represents, warrants and covenants that:        

A.  He is duly authorized to execute and deliver this Agreement and to
perform his covenants and agreements hereunder. When executed and delivered by  
him, this Agreement shall constitute his valid and legally binding agreement    
enforceable against him in accordance with the terms hereof, except as may be   
limited by bankruptcy, insolvency or other laws affecting generally the         
enforceability of creditors' rights and by limitations on the availability of   
equitable remedies.                                                             

B.  Neither the execution and delivery of this Agreement, nor the     
consummation of the transactions contemplated herein, will violate any law,     
rule, regulation, writ, judgment, injunction, decree, determination, award, or  
order of any court or governmental agency or instrumentality, domestic or       
foreign, or conflict with or result in any breach of any of the terms of or     
constitute a default under or result in the termination or for the creation of  
any mortgage, deed of trust, pledge, lien security interest or other charge or  
encumbrance of any nature pursuant to the terms of any contract or agreement to 
which he is a party or by which he or any of his assets or properties is bound. 

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SECTION VI

   A. All notices, requests, instructions or documents hereunder shall be in
writing and delivered personally or sent by registered or express mail, postage 
prepaid, as follows:                                                            

(i)  if to the Consultant:  

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

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

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

with a copy to:   

Thomas Litz, Esq. 
 Thompson & Mitchell
   One Mercantile Center
       St. Louis, Missouri 63101

(ii)  to the Corporation:     

1770 Kirby Parkway
Suite 300         
      Memphis, Tennessee 38138

with a copy to:   

 Howard Kailes, Esq.
         Krugman, Chapman & Grimshaw
       Park 80 West -- Plaza Two
            Saddle Brook, New Jersey 07663

or to such other address as either party may designate by written notice to the 
other party. If delivered personally, the date on which such notice, request,   
instruction or document is delivered shall be the date on which such delivery is
made, and if delivered by mail, the date on which deposited in the mail. Each   
notice, request, instruction or document shall bear the date on which it is     
delivered.                                                                      

B.  This Agreement is personal as to the Consultant and shall not be  
assignable by the Consultant. Subject to the foregoing, all of the terms and    
provisions of this Agreement shall be binding upon and shall inure to the       
benefit of and be enforceable by the parties hereto and their respective        
successors and assigns and legal representatives and (with respect to any       
secrecy or non-use obligations) any other Disclosing Party.                     

C.  This Agreement constitutes the complete understanding between the 
parties hereto with respect to the transactions contemplated herein, no         
statement, representation, warranty or covenant has been made by either party   
hereto except as expressly set forth herein and therein, and no modification    
hereof shall be effective unless in writing and signed by a party against which 
it is sought to be enforced.                                                    

  D.  This Agreement shall be governed by and construed in accordance with
the laws of the State of Tennessee applicable in the case of agreements made and
to be performed entirely within such State.                                     

E.  It is the intention of the Consultant and the Corporation that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is 
sought, but that the unenforceability of any provisions of this Agreement shall 
not render unenforceable, or impair, the remainder of this Agreement.           
Accordingly, if any provision hereof is determined to be invalid or             
unenforceable, either in whole or in part, this Agreement shall be deemed       
amended to delete or modify, as necessary, the offending provision and to alter 
the remainder of this Agreement in order to render it valid and enforceable.    

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    F.  This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which, taken together, shall constitute one and  
the same instrument.                                                            

  IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.                                      

     INSITUFORM TECHNOLOGIES, INC.

By                      
                             -----------------------------------------------

CONSULTANT:             

                          --------------------------------------------------
Jerome Kalishman        

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                                                                         ANNEX B

MERRILL LYNCH                                      Investment Banking Group     

                                            World Financial Center
                                 North Tower
                                                   New York, New York 10281-1330
                                  212 449 1000

                                                              September 15, 1995

Board of Directors                                                              
Insituform Technologies, Inc.                                                   
1770 Kirby Parkway -- Suite 300                                                 
Memphis, Tennessee 38138                                                        
Gentlemen:                                                                      

 Insituform Technologies, Inc. (the "Company"), ITI Acquisition Corp., a
wholly-owned subsidiary of the Company (the "ITI Sub"), and Insituform          
Mid-America, Inc. (the "Subject Company") have entered into an Agreement and    
Plan of Merger dated as of May 23, 1995 (the "Agreement") pursuant to which the 
Subject Company will be merged with ITI Sub in a transaction (the "Merger") in  
which each share of the Subject Company's class A common stock, par value $0.01 
per share (the "Shares"), will be converted into the right to receive 1.15      
shares of the class A common stock of the Company, par value $0.01 per share    
(the "Company Shares") subsequent to the conversion into Shares of all of the   
outstanding shares of the Subject Company's class B common stock, par value     
$0.01 per share. The Merger is subject, among other things, to approval by the  
shareholders of the Company.                                                    

     You have asked us whether, in our opinion, the proposed consideration to be
paid by the Company pursuant to the Merger is fair to the Company from a        
financial point of view.                                                        

  In arriving at the opinion set forth below, we have, among other things:

     (1) Reviewed the Subject Company's Annual Reports, Forms 10-K and
     related financial information for the five fiscal years ended September 30,
1994 and the Subject Company's Forms 10-Q and the related unaudited   
   financial information for the quarterly periods ending December 31, 1994,
March 31, 1995 and June 30, 1995;                                     

     (2) Reviewed the Company's Annual Reports, Forms 10-K and related
  financial information for the five fiscal years ended December 31, 1994,
     and the Company's Form 10-Q and the related unaudited financial information
for the quarterly periods ended March 31, 1995 and June 30, 1995;     

    (3) Reviewed certain information, including financial forecasts,
    relating to the business, earnings, cash flow, assets and prospects of the
     Subject Company and the Company, furnished to us by the Subject Company and
the Company, respectively.                                            

      (4) Conducted discussions with members of senior management of the
    Subject Company and the Company concerning their respective businesses and
prospects;                                                            

       (5) Reviewed certain information furnished to us by the Company and
conducted discussions with members of senior management of the Subject
    Company and the Company concerning potential synergies to be realized as a
result of the Merger;                                                 

          (6) Reviewed the historical market prices and trading activity for the
Shares and the Company Shares;                                        

      (7) Considered the pro forma effect of the merger on the Company's
 capitalization ratios and earnings, cash flow and book value per share;

(8) Reviewed the Agreement; and                             

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        (9) Reviewed such other financial studies and analyses and performed
  such other investigations and took into account such other matters as we
   deemed necessary including our assessment of general economic, market and
monetary conditions.                                                  

   In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Subject    
Company and the Company, and we have not independently verified such information
or undertaken an independent appraisal or evaluation of the assets or           
liabilities of the Subject Company or the Company. With respect to the financial
forecasts and estimates of operating efficiencies and potential synergies       
expected to result from the Merger furnished by the Subject Company and the     
Company, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Subject Company's or the 
Company's management as to the expected future financial performance of the     
Subject Company or the Company, as the case may be.                             

   On the basis of, and subject to the foregoing, we are of the opinion that
the proposed consideration to be paid by the Company pursuant to the Merger is  
fair to the Company from a financial point of view.                             

                     Very truly yours,

                                   MERRILL LYNCH, PIERCE, FENNER &
                          SMITH INCORPORATED

                      By s/ M.S. Koenche
                                          --------------------------------------
                           Managing Director
                                Investment Banking Group

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                                                                         ANNEX C

SCHRODER WERTHEIM & CO. INCORPORATED    

September 15, 1995

The Board of Directors                                                          
Insituform Mid-America, Inc.                                                    
17988 Edison Avenue                                                             
Chesterfield, MO 63005-3700                                                     

Members of the Board:                                                           

We understand that, pursuant to the terms and conditions set forth in the       
Agreement and Plan of Merger, dated as of May 23, 1995, among Insituform        
Technologies, Inc. ("ITT"), ITI Acquisition Corp. and Insituform Mid-America,   
Inc. ("IMA" or the "Company") (the "Merger Agreement"), IMA is contemplating a  
merger with ITI (the "Transaction"). Upon consummation of the Transaction, IMA  
will become a wholly-owned subsidiary of ITI.                                   

The terms of the Merger Agreement provide, among other things, that IMA's Class 
A and Class B Common Stockholders (collectively "IMA's Common Stockholders")    
would receive 1.15 shares of ITI Common Stock (the "Exchange Ratio") for each of
the 8,330,303 and 2,472,985 currently outstanding shares of IMA Class A and     
Class B Common Stock, respectively.                                             

You have requested that Schroder Wertheim & Co. Incorporated ("Schroder         
Wertheim") render an opinion (the "Opinion"), as investment bankers, as to the  
fairness, from a financial point of view, of the Exchange Ratio to be received  
by IMA's Common Stockholders. It is understood that (i) the Opinion shall be    
used by the Company solely in connection with its consideration of the          
Transaction and (ii) the Company will not furnish the Opinion or any other      
material prepared by Schroder Wertheim (including this letter) to any other     
person or persons or use or refer to the Opinion or this letter for any other   
purposes without Schroder Wertheim's prior written approval; provided, however, 
that the Company may publish the Opinion in its entirety in any proxy statement 
or similar documents distributed to its stockholders in connection with the     
Transaction.                                                                    

Schroder Wertheim, as part of its investment banking business, is continually   
engaged in the valuation of businesses and their securities in connection with  
mergers and acquisitions, negotiated underwritings, secondary distributions of  
listed and unlisted securities, private placements and valuations for estate,   
corporate and other purposes. Schroder Wertheim acted as financial advisor to   
IMA regarding the Company's negotiations with ITI.                              

In connection with the Opinion set forth herein, we have, among other things:   

(i)   reviewed the Agreement and Plan of Merger among ITI, ITI Acquisition Corp.
and IMA dated as of May 23, 1995;                                   

(ii)  reviewed the audited financial statements of the following entities: (a)  
   IMA for fiscal years ended September 30, 1990 through 1994, and (b) ITI
for fiscal years ended December 31, 1990 through 1994;              

(iii) reviewed the Form 10-Q for IMA for the three month period ended December  
     31, 1994 and 1993, the Form 10-Q for IMA for the three month period ended
 March 31, 1995 and 1994 and the Form 10-Q for IMA for the three month
period ended June 30, 1995 and 1994;                                

(iv)  reviewed the Form 10-Q for ITI for the three month period ended March 31, 
    1995 and 1994 and the Form 10-Q for ITI for the three month period ended
June 30, 1995 and 1994;                                             

(v)  reviewed the Form 8-K for IMA and ITI for the period January 1, 1994 to    
September 6, 1995;                                                    

(vi)  reviewed and discussed, with the management of IMA, certain financial     
    information prepared by management, including the historical results for
fiscal years 1990 through 1994, the results for the nine            

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    months ended June 30, 1995, IMA's projections for 1995 to 1999 and the
     current financial condition, earnings, assets and business prospects of
IMA;                                                              

(vii)  reviewed and discussed, with the management of ITI, certain financial    
      information prepared by management, including the historical results for
       fiscal years 1990 through 1994, the results for the six months ended June
    30, 1995, ITI's projections for 1995 to 1999 and the current financial
condition, earnings, assets and business prospects of ITI;        

(viii) performed a relative contribution analysis;                              

(ix)   performed various valuation analyses, as deemed appropriate, of IMA using
generally accepted analytical methodologies, including: (i) the   
    application of the public trading multiples of comparable companies to
 the financial results of IMA, (ii) the application of the multiples
    reflected in recent mergers and acquisitions for comparable businesses
to the financial results of IMA and (iii) a discounted cash flow  
analysis of IMA's financial forecasts;                            

(x)    reviewed IMA's and ITI's stock price performance and trading volume;     

(xi)   reviewed research reports and news articles concerning IMA and ITI; and  

(xii)  performed such other financial studies, analyses, inquiries and          
investigations as we deemed appropriate.                          

In rendering the Opinion, we have relied upon the accuracy and completeness of  
all information supplied or otherwise made available to us by IMA or ITI or     
obtained by us from other sources, and we have not assumed any responsibility   
for independently verifying such information, undertaken an independent         
appraisal of the assets or liabilities (contingent or otherwise) of IMA or ITI, 
or been furnished with any such appraisals. With respect to financial forecasts 
for IMA and ITI, we have been advised by both IMA and ITI, respectively, and we 
have assumed, without independent investigation, that they have been reasonably 
prepared and reflect the best currently available estimates and judgment as to  
the expected future financial performance of each company.                      

Our opinion, as set forth herein, relates to the relative values of IMA and ITI.
We are not expressing any opinion as to what the value of the ITI common stock  
actually will be when issued to IMA stockholders pursuant to the Transaction or 
the price at which ITI common stock will trade or otherwise be transferable     
subsequent to the Transaction.                                                  

The Opinion is necessarily based upon financial, economic, market and other     
conditions as they exist, and the information made available to us, as of the   
date hereof. We disclaim any undertaking or obligation to advise any person of  
any change in any fact or matter affecting the Opinion which may come or be     
brought to our attention after the date of the Opinion.                         

Our opinion is directed to the Board of Directors of IMA and does not constitute
a recommendation to any IMA Common Stockholder as to how such stockholder should
vote regarding the Transaction. The Opinion relates solely to the question of   
the fairness, from a financial point of view, to IMA's Common Stockholders of   
the Exchange Ratio. Further, we express no opinion herein as to the structure,  
terms or effect of any other aspect of the Transaction, including, without      
limitation, any effects resulting from any pending or threatened environmental  
regulatory action and/or litigation affecting ITI.                              

Based upon and subject to all the foregoing, we are of the opinion, as          
investment bankers, that as of the date hereof, the Exchange Ratio is fair, from
a financial point of view, to IMA's Common Stockholders.                        

                     Very truly yours,

                                        SCHRODER WERTHEIM & CO. INCORPORATED

                            By:  s/ Theodore I. Cook
                                            ------------------------------------

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                                                                         ANNEX D

AMENDED AND RESTATED
ARTICLE FOURTH
OF ITI CHARTER

 "FOURTH: The corporation shall be authorized to issue forty-two million
(42,000,000) shares, consisting of forty million (40,000,000) Class A Common    
shares, par value one cent ($0.01) per share; and two million (2,000,000)       
Preferred shares, par value ten cents ($0.10) per share ("Preferred Stock").    

The shares of Preferred Stock shall be issued in one or more series   
designated by the Board of Directors without further shareholder action and     
shall bear such terms and designation as the Board of Directors may fix,        
including dividend rates, redemption rights, conversion rights, liquidation     
preferences, voting rights (provided that the Board of Directors may designate  
that the holders of one or more series of Preferred Stock shall be entitled as a
series to elect one director and the Board of Directors may at its discretion   
grant the holders of one or more series of the corporation's shares of Preferred
Stock the right to elect additional directors in the event that dividends on    
such series shall be in arrears) and such other terms as the Board of Directors 
shall determine. Any shares of Preferred Stock reacquired by the corporation may
be reissued without further shareholder approval."                              

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                                                                         ANNEX E

AMENDED AND RESTATED
ARTICLE SIXTH 
OF ITI CHARTER

 "SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for further 
definition, limitation and regulation of the powers of the corporation and of   
its directors and shareholders:                                                 

        (1) The number of directors of the corporation shall be such as from
    time to time shall be fixed by, or in the manner provided in, the by-laws;
  provided, however, that the number of directors of the corporation shall
not be less than six (6) nor shall the number of directors of the     
corporation exceed fifteen (15). Election of directors need not be by 
ballot unless the by-laws so provide.                                 

      (2) Effective as of the Effective Date (as such term is defined in
that certain Agreement, dated July 3, 1992, among the corporation, INA
    Acquisition Corp. and Insituform Group Limited), as it may be amended from
     time to time (the "Acquisition Agreement"), the Board of Directors shall be
    divided into three classes, designated Class I, Class II and Class III, as
  nearly equal in number as possible. Members of all three classes will be
 appointed on the Effective Date by the Board of Directors in accordance
    with the terms of the Acquisition Agreement. The initial term of office of
    directors of Class I shall expire at the annual meeting of shareholders in
   1993; that of Class II shall expire at the annual meeting of shareholders
in 1994; and that of Class III shall expire at the annual meeting of  
 shareholders in 1995. At each succeeding annual meeting of shareholders
    beginning in 1993, successors to the class of directors whose term expires
   at that annual meeting shall be elected for a three-year term. Additional
  directorships resulting form an increase in number of directors shall be
     appointed among the classes as equally as possible. Vacancies, created from
   an increase in the size of the Board of Directors, shall be filled by the
     affirmative vote of a majority of the Board of Directors then in office, or
     such greater affirmative vote of directors as may be specified from time to
    time in the By-laws of the corporation, provided that a quorum is present,
    and any other vacancy occurring in the Board of Directors may be filled by
 a majority of the directors then in office, which appointments shall be
 made in accordance with Section 7.3 of the Agreement and Plan of Merger
   dated as of May 23, 1995 among the corporation, ITI Acquisition Corp. and
   Insituform Mid-America, Inc. Any additional director of any class elected
to fill a vacancy resulting from an increase in such class shall hold 
office for a term that shall coincide with the remaining term of that 
  class, but in no case will a decrease in the number of directors shorten
    the term of any incumbent director. A director shall hold office until the
annual meeting for the year in which his term expires and until his   
  successor shall be elected and shall qualify, subject, however, to prior
  death, resignation, retirement, disqualification or removal from office.
  Any director elected to fill a vacancy not resulting from an increase in
   the number of directors shall have the same remaining term as that of his
predecessor.                                                          

     Notwithstanding any provision of this Article SIXTH, whenever the
holders of any one or more series of Preferred Stock issued by the    
    corporation shall have the right, voting separately by class or series, to
elect directors at an annual or special meeting of shareholders or any
 class or series, the election, term of office, filling of vacancies and
     other features of such directorships shall be governed by the terms of this
  Certificate of Incorporation or the resolution or resolutions adopted by
the Board of Directors pursuant to Article FOURTH hereof applicable   
  thereto, and such directors so elected shall not be divided into classes
 pursuant to this Article SIXTH unless expressly provided by such terms.

          (3) The Board of Directors shall have power without the assent or vote
of the shareholders:                                                  

            (a) to make, alter, amend, change, add to or repeal the by-laws of
  the corporation; to fix and vary the amount to be reserved for any
   proper purpose; to authorize and cause to be executed mortgages and
 liens upon all or any part of the property of the corporation; to
determine the use and                                           

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       disposition of any surplus or net profits; and to fix the times for the
declaration and payment of dividends.                           

             (b) to determine from time to time whether, and to what extent, and
    at what times and places, and under what conditions the accounts and
      books of the corporation (other than the stock ledger) or any of them,
shall be open to the inspection of the shareholders.            

        (4) The directors at their discretion may submit any contract or act
  for approval or ratification at any annual meeting of shareholders or at
   any meeting of the shareholders called for the purpose of considering any
    such act or contract, and any contract or act that shall be approved or be
ratified by the vote of the holders of a majority of the stock of the 
    corporation which is represented in person or by proxy at such meeting and
    entitled to vote thereat (provided that a lawful quorum of shareholders be
   there represented in person or by proxy) shall be as valid and as binding
  upon the corporation and upon all the shareholders as though it had been
  approved or ratified by every shareholder of the corporation, whether or
    not the contract or act would otherwise be open to legal attack because of
directors' interest, or for any other reason.                         

    (5) In addition to the powers and authorities hereinbefore or by
   statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be 
exercised or done by the corporation; subject, nevertheless, to the   
 provisions of the statutes of Delaware, of this certificate, and to any
     by-laws from time to time made by the shareholders; provided, however, that
  no by-laws so made shall invalidate any prior act of the directors which
would have been valid if such by-law had not been made."              

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INSITUFORM TECHNOLOGIES, INC. 
CLASS A COMMON STOCK
P     The undersigned hereby (1) acknowledges receipt of the notice of the      
Annual Meeting of Stockholders of Insituform Technologies, Inc. (the    
"Company") to be held at The Hilton-Memphis East, 5069 Sanderlin Avenue,
R   Memphis, Tennessee on Thursday, October 12, 1995 at 10:00 A.M., local time, 
and the Joint Proxy Statement/Prospectus in connection therewith and    
(2) appoints James D. Krugman, William Gorham and Jean-Paul Richard and 
O   each of them his proxies with full power of substitution, for and in the    
 name, place and stead of the undersigned, to vote and act with respect to
 all of the shares of Class A Common Stock, $.01 par value, of the Company
X   standing in the name of the undersigned or with respect to which the        
undersigned is entitled to vote and act, at the meeting and at any      
 adjournment thereof, and the undersigned directs that this proxy be voted
Y   as follows:                                                                 

   (a) Proposal to approve an Agreement and Plan of Merger dated as of May 23,
       1995 (the "Merger Agreement") among the Company, ITI Acquisition Corp.,
       a Delaware corporation and wholly-owned subsidiary of the Company ("ITI
        Sub"), and Insituform Mid-America, Inc., a Delaware corporation ("IMA"),
     and the transactions contemplated thereby, providing for, among other
     things, the merger (the "Merger") into IMA of ITI Sub, as a result of
        which IMA would become a wholly-owned subsidiary of the Company, and the
      consummation of the transactions contemplated by the Merger Agreement,
        including the conversion of each share of Class A Common Stock, $.01 par
    value, of IMA into the right to receive 1.15 shares of Common Stock,
        $.01 par value, of the Company subsequent to conversion into IMA Class A
        Common Stock, in accordance with its terms, of all outstanding shares of
Class B Common Stock, $.01 par value, of IMA.                   

/ / FOR               / / AGAINST              / / ABSTAIN      

   (b) Proposal to approve an amendment of the Certificate of Incorporation of
     the Company, effective contemporaneously with the consummation of the
      Merger, to increase the number of authorized shares of Common Stock of
the Company from 25,000,000 shares to 40,000,000 shares.        

/ / FOR               / / AGAINST              / / ABSTAIN      

(c) Proposal to approve an amendment of the Certificate of Incorporation
        of the Company, effective contemporaneously with the consummation of the
      Merger, to provide for the filling of vacancies on the Company's Board
    of Directors as contemplated by Section 7.3 of the Merger Agreement.

/ / FOR               / / AGAINST              / / ABSTAIN      

(d) Election of Class III Directors:                                    

                                                                [Download Table]
                                                                                
/ / FOR all Class III nominees listed below   / / WITHHOLD AUTHORITY to vote for
    (except as marked to the contrary below).     all nominees listed below.    


     BRIAN CHANDLER, JAMES D. KRUGMAN, JEAN-PAUL RICHARD AND RUSSELL B. WIGHT,
       JR.

      (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE AS
       A CLASS III DIRECTOR, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED
       BELOW.)

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

  (e) Proposal to authorize the Board of Directors of the Company to adjourn
        the Annual Meeting of Stockholders to permit the further solicitation of
proxies, if necessary.                                          

/ / FOR               / / AGAINST              / / ABSTAIN      

    (Continued and to be signed on reverse side)

(Continued from other side) 

  (f) In the discretion of the proxies on any other matter that may properly
come before the meeting or any adjournment thereof.             

THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO        
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY    
REFERRED TO ON THE REVERSE SIDE.                                                

    If more than one of the proxies named above shall be present in person or by
substitute at the meeting or any adjournment thereof, all of the proxies so     
present and voting, either in person or by substitute, shall exercise all of the
proxies hereby given.                                                           

    The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all that
the proxies so present and voting, their substitutes or any of them, may        
lawfully do by virtue hereof.                                                   

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY

                      Dated:
                                                --------------------------------

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

                                               Please date this proxy and sign
                                               your name EXACTLY as it appears
                                                herein. Where there is more than
                                            one owner, each should sign.
                                            When signing as an attorney,
                                        administrator, executor,
                                               guardian or trustee, please add
                                               your title as such. If executed
                                           by a corporation, the proxy
                                          should be signed by a duly
                                   authorized officer.

                                               NO POSTAGE IS REQUIRED.

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INSITUFORM MID-AMERICA, INC.

CLASS A COMMON STOCK
P        The undersigned hereby (1) acknowledges receipt of the notice of the   
Special Meeting of Stockholders of Insituform Mid-America, Inc. (the  
    "Company") to be held at the Sheraton West Port Plaza Hotel, 900 West Port
R    Plaza, St. Louis, Missouri on Thursday, October 12, 1995 at 10:00 A.M.,    
local time, and the Joint Proxy Statement/Prospectus in connection    
     therewith and (2) appoints Jerome Kalishman, Robert W. Affholder and Joseph
O    F. Olson and each of them his proxies with full power of substitution, for 
   and in the name, place and stead of the undersigned, to vote and act with
  respect to all of the shares of Class A Common Stock, $.01 par value, of
X    the Company standing in the name of the undersigned or with respect to     
  which the undersigned is entitled to vote and act, at the meeting and at
 any adjournment thereof, and the undersigned directs that this proxy be
Y    voted as follows:                                                          

     (a) Proposal to approve an Agreement and Plan of Merger dated as of May 23,
1995 (the "Merger Agreement") among the Company, Insituform   
     Technologies, Inc., a Delaware company ("ITI"), and ITI Acquisition
        Corp., a Delaware corporation and wholly-owned subsidiary of ITI ("ITI
        Sub"), and the transactions contemplated thereby, providing for, among
         other things, the merger (the "Merger") into the Company of ITI Sub, as
         a result of which the Company would become a wholly-owned subsidiary of
   ITI, and the consummation of the transactions contemplated by the
     Merger Agreement, including the conversion of each share of Class A
        Common Stock, $.01 par value, of the Company into the right to receive
   1.15 shares of Common Stock, $.01 par value, of ITI subsequent to
         conversion into Class A Common Stock of the Company, in accordance with
        its terms, of all outstanding shares of Class B Common Stock, $.01 par
value, of the Company.                                        

/ /  FOR             / /  AGAINST             / /  ABSTAIN    

    (b) Proposal to authorize the Board of Directors of the Company to adjourn
        the Special Meeting of Stockholders to permit the further solicitation
of proxies, if necessary.                                     

/ /  FOR             / /  AGAINST             / /  ABSTAIN  

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

    (c) In the discretion of the proxies on any other matter that may properly
come before the meeting or any adjournment thereof.           

    (Continued and to be signed on reverse side)

(Continued from other side) 

THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO        
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY    
REFERRED TO ON THE REVERSE SIDE.                                                

    If more than one of the proxies named above shall be present in person or by
substitute at the meeting or any adjournment thereof, all of the proxies so     
present and voting, either in person or by substitute, shall exercise all of the
proxies hereby given.                                                           

    The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all that
the proxies so present and voting, their substitutes or any of them, may        
lawfully do by virtue hereof.                                                   

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY

                      Dated:
                                                --------------------------------

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

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

                                               Please date this proxy and sign
                                               your name EXACTLY as it appears
                                                herein. Where there is more than
                                            one owner, each should sign.
                                            When signing as an attorney,
                                        administrator, executor,
                                               guardian or trustee, please add
                                               your title as such. If executed
                                           by a corporation, the proxy
                                          should be signed by a duly
                                   authorized officer.

                                               NO POSTAGE IS REQUIRED.

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INSITUFORM MID-AMERICA, INC.

CLASS B COMMON STOCK
P        The undersigned hereby (1) acknowledges receipt of the notice of the   
Special Meeting of Stockholders of Insituform Mid-America, Inc. (the  
    "Company") to be held at the Sheraton West Port Plaza Hotel, 900 West Port
R    Plaza, St. Louis, Missouri on Thursday, October 12, 1995 at 10:00 A.M.,    
local time, and the Joint Proxy Statement/Prospectus in connection    
therewith and (2) appoints Jerome Kalishman, Robert W. Affholder and  
O    Joseph F. Olson and each of them his proxies with full power of            
   substitution, for and in the name, place and stead of the undersigned, to
 vote and act with respect to all of the shares of Class B Common Stock,
X    $.01 par value, of the Company standing in the name of the undersigned or  
   with respect to which the undersigned is entitled to vote and act, at the
  meeting and at any adjournment thereof, and the undersigned directs that
Y    this proxy be voted as follows:                                            

     (a) Proposal to approve an Agreement and Plan of Merger dated as of May 23,
1995 (the "Merger Agreement") among the Company, Insituform   
     Technologies, Inc., a Delaware company ("ITI"), and ITI Acquisition
        Corp., a Delaware corporation and wholly-owned subsidiary of ITI ("ITI
        Sub"), and the transactions contemplated thereby, providing for, among
         other things, the merger (the "Merger") into the Company of ITI Sub, as
         a result of which the Company would become a wholly-owned subsidiary of
   ITI, and the consummation of the transactions contemplated by the
     Merger Agreement, including the conversion of each share of Class B
        Common Stock, $.01 par value, of the Company into the right to receive
   1.15 shares of Common Stock, $.01 par value, of ITI subsequent to
         conversion into Class B Common Stock of the Company, in accordance with
        its terms, of all outstanding shares of Class B Common Stock, $.01 par
value, of the Company.                                        

/ /  FOR             / /  AGAINST             / /  ABSTAIN    

    (b) Proposal to authorize the Board of Directors of the Company to adjourn
        the Special Meeting of Stockholders to permit the further solicitation
of proxies, if necessary.                                     

/ /  FOR             / /  AGAINST             / /  ABSTAIN  

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

    (c) In the discretion of the proxies on any other matter that may properly
come before the meeting or any adjournment thereof.           

    (Continued and to be signed on reverse side)

(Continued from other side) 

THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO        
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY    
REFERRED TO ON THE REVERSE SIDE.                                                

    If more than one of the proxies named above shall be present in person or by
substitute at the meeting or any adjournment thereof, all of the proxies so     
present and voting, either in person or by substitute, shall exercise all of the
proxies hereby given.                                                           

    The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all that
the proxies so present and voting, their substitutes or any of them, may        
lawfully do by virtue hereof.                                                   

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY

                      Dated:
                                                --------------------------------

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

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

                                               Please date this proxy and sign
                                               your name EXACTLY as it appears
                                                herein. Where there is more than
                                            one owner, each should sign.
                                            When signing as an attorney,
                                        administrator, executor,
                                               guardian or trustee, please add
                                               your title as such. If executed
                                           by a corporation, the proxy
                                          should be signed by a duly
                                   authorized officer.

                                               NO POSTAGE IS REQUIRED.

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PART II 

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.                            

Under the provisions of Paragraph Seventh of the Certificate of       
Incorporation of ITI and Section 145 of the Delaware Law, ITI is required to    
indemnify a director or officer of ITI for expenses arising out of legal        
proceedings in which the director of officer became involved by reason of his   
position as a director or officer of ITI, if he acted in good faith and in a    
manner he reasonably believed to be in or not opposed to the best interests of  
ITI and, with respect to any criminal proceedings, if he had no reasonable cause
to believe his conduct was unlawful. In a proceeding to procure a judgment in   
ITI's favor, a director or officer may be indemnified for expenses incurred by  
him in connection with the defense or settlement of the suit if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of ITI, except that no indemnification shall be permitted without a   
court order in respect of any claim, issue, or matter as to which such director 
or officer shall have been adjudged to be liable for negligence or misconduct in
the performance of his duty to ITI. Indemnification of a director or officer as 
provided above, unless court-ordered, shall be made by ITI only upon a          
determination that indemnification is proper in a specific case because the     
conduct of such director or officer meets the standards set forth above. Such   
determination shall be made (i) by a vote of the majority of a quorum consisting
of directors who were not parties to the proceeding involved, (ii) by           
independent legal counsel in a written opinion or (iii) by the stockholders of  
ITI.                                                                            

Under agreements between ITI and each of the members of its Board of  
Directors, the foregoing indemnification provisions are supplemented as follows 
with respect to such persons: (i) indemnification is permitted in the event the 
director is wholly or partly successful; (ii) prompt payment of litigation      
expenses is provided in advance of indemnification, subject to repayment if it  
is subsequently determined that the director was not entitled to indemnification
for the expenses in question; (iii) prompt indemnification is provided unless a 
determination is made that the director has not met the applicable statutory    
standard; (iv) in the event of a change in control of ITI, a determination that 
indemnification is proper may be made solely by independent legal counsel, in   
which case the indemnitee will be presumed entitled to indemnification until    
such presumption is overcome by ITI; and (v) the director is permitted to       
petition a court or seek an award in arbitration with respect to his entitlement
to indemnification or advancement of expenses.                                  

    Those members of the Board of Directors of ITI (the "Prior IGL Directors")
who previously were directors of IGL are entitled to the benefits of the        
agreement dated July 3, 1992, as amended September 1, 1992 (the "IGL Acquisition
Agreement"), among ITI, INA Acquisition Corp. ("INA Sub") and IGL, pursuant to  
which INA Sub will (i) honor and assume all obligations of IGL pursuant to IGL's
Articles of Association and Memorandum of Association as in effect on July 3,   
1992 which provide for indemnification of directors of IGL with respect to      
events occurring prior to the effective date (the "Effective Date") of the      
acquisition of IGL by ITI, and (ii) use its best efforts to maintain liability  
insurance covering such persons with respect to acts or failures prior to the   
Effective Date, comparable in scope and amount to the liability insurance       
maintained in effect by IGL on July 3, 1992; provided, however, that if the cost
of such insurance exceeds $105,000 per year, INA Sub shall only be required to  
purchase the maximum amount of such insurance available for $105,000 per year.  
ITI has also agreed to indemnify the Prior IGL Directors in connection with     
certain actions taken as directors of IGL with respect to the liquidation of IGL
contemplated by the IGL Acquisition Agreement.                                  

In June 1988, the stockholders of ITI approved an amendment to its    
certificate of incorporation to add a provision which eliminates the personal   
liability of a director of ITI to ITI or to any of its stockholders for monetary
damages for a breach of his fiduciary duty as a director, except in the case    
where the director breached his duty of loyalty, failed to act in good faith,   
engaged in intentional misconduct or knowingly violated a law, authorized the   
payment of a dividend or approved a stock repurchase in violation of Delaware   
Law, or obtained an improper personal benefit; or except for acts or omissions  
occurring prior to June 17, 1988.                                               

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ITEM 21.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.                           

(a) Exhibits                                                          

  The Exhibits required to be filed as part of this Registration Statement
are listed in the attached Index to Exhibits.                                   

(b) Financial Statement Schedules.                                    

 No Financial Statement Schedules are filed as part of this Registration
Statement because they are not required or are not applicable or the required   
information is contained in the financial statements or notes thereto.          

ITEM 22.  UNDERTAKINGS.                                                         

(a) The undersigned Registrant hereby undertakes, except as otherwise 
specifically provided in the rules of the Securities and Exchange Commission    
promulgated under the Securities Act of 1933:                                   

     (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:      

           (i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;                                         

             (ii) To reflect in the prospectus any facts or events arising after
    the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the 
      aggregate, represent a fundamental change in the information set forth
 in the registration statement. Notwithstanding the foregoing, any
  increase or decrease in volume of securities offered (if the total
  dollar value of securities offered would not exceed that which was
       registered) and any deviation from the low or high end of the estimated
       maximum offering range may be reflected in the form of prospectus filed
     with the Commission pursuant to Rule 424(b) if, in the aggregate, the
      changes in volume and price represent no more than a 20% change in the
 maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;

            (iii) To include any material information with respect to the plan
      of distribution not previously disclosed in the registration statement
or any material change to such information in the Registration  
Statement.                                                      

     Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those  
paragraphs is contained in periodic reports filed with or furnished to the      
Commission by the Registrant pursuant to section 13 or section 15(d) of the     
Securities Exchange Act of 1934 that are incorporated by reference in the       
registration statement.                                                         

    (2) That, for the purpose of determining any liability under the
    Securities Act of 1933, each such post-effective amendment 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.                         

          (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the     
termination of the offering.                                          

     (b) (1) The undersigned Registrant hereby undertakes as follows: that prior
to ay public reoffering of the securities registered hereunder through use of a 
prospectus which is a part of this Registration Statement, by any person or     
party who is deemed to be an underwriter within the meaning of Rule 145(c), the 
issuer undertakes that such reoffering prospectus will contain the information  
called for by the applicable registration form with respect to reofferings by   
persons who may be deemed underwriters, in addition to the information called   
for by the other Items of the applicable form.                                  

         (2) The Registrant undertakes that every prospectus (i) that is filed
   pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and              

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   is used in connection with an offering of securities subject to Rule 415,
   will be filed as a part of an amendment to the Registration Statement and
will not be used until such amendment becomes effective, and that, for
 purposes of determining any liability under the Securities Act of 1933,
     each such post-effective amendment 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.                                                     

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

 (d) The undersigned Registrant hereby agrees to respond to requests for
information that is incorporated by reference into the prospectus pursuant to   
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other    
equally prompt means. This includes information contained in documents filed    
subsequent to the date of the registration statement through the date of        
responding to the request.                                                      

  (e) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the      
company being acquired involved therein, that was not the subject of and        
included in the registration statement when it became effective.                

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POWER OF ATTORNEY 

THE REGISTRANT AND EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY   
APPOINTS JAMES D. KRUGMAN, JEAN-PAUL RICHARD AND WILLIAM A. MARTIN AS           
ATTORNEYS-IN-FACT WITH FULL POWER OF SUBSTITUTION, SEVERALLY, TO EXECUTE IN     
THEIR RESPECTIVE NAMES AND ON BEHALF OF THE REGISTRANT AND EACH SUCH PERSON,    
INDIVIDUALLY AND IN EACH CAPACITY STATED BELOW, ONE OR MORE AMENDMENTS          
(INCLUDING POST-EFFECTIVE AMENDMENTS) TO THE REGISTRATION STATEMENT AS THE      
ATTORNEY-IN-FACT ACTING IN THE PREMISES DEEMS APPROPRIATE AND TO FILE ANY SUCH  
AMENDMENT TO THE REGISTRATION STATEMENT WITH THE SECURITIES AND EXCHANGE        
COMMISSION.                                                                     

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

SIGNATURES

    PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE   
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MEMPHIS, STATE OF        
TENNESSEE, ON THE 15TH DAY OF SEPTEMBER, 1995.                                  

                                 INSITUFORM TECHNOLOGIES, INC.

                                 By /s/      JEAN-PAUL RICHARD
                                             JEAN-PAUL RICHARD
                                             PRESIDENT AND CHIEF EXECUTIVE
                                               OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS      
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE    
CAPACITIES AND ON THE DATE INDICATED:                                           

                                                        [Enlarge/Download Table]

                SIGNATURE                                TITLE                     DATE        
------------------------------------------  ---------------------------------------------------
                                                                                               
         /s/ JEAN-PAUL RICHARD              Principal Executive Officer      September 15, 1995
                                              and Director                                     
------------------------------------------                                                     
            JEAN-PAUL RICHARD                                                                  

         /s/WILLIAM A. MARTIN               Principal Financial and          September 15, 1995
                                              Accounting Officer                               
------------------------------------------                                                     
            WILLIAM A. MARTIN                                                                  

         /s/ JAMES D. KRUGMAN               Director                         September 15, 1995
------------------------------------------                                                     
             JAMES D. KRUGMAN                                                                  

         /s/PAUL A. BIDDELMAN               Director                         September 15, 1995
------------------------------------------                                                     
            PAUL A. BIDDELMAN                                                                  

          /s/BRIAN CHANDLER                 Director                         September 15, 1995
------------------------------------------                                                     
              BRIAN CHANDLER                                                                   

         /s/ DOUGLAS K. CHICK               Director                         September 15, 1995
------------------------------------------                                                     
             DOUGLAS K. CHICK                                                                  

         /s/  WILLIAM GORHAM                Director                         September 15, 1995
------------------------------------------                                                     
              WILLIAM GORHAM                                                                   

         /s/  STEVEN ROTH                   Director                         September 15, 1995
------------------------------------------                                                     
               STEVEN ROTH                                                                     

           /s/SILAS SPENGLER                Director                         September 15, 1995
------------------------------------------                                                     
              SILAS SPENGLER                                                                   

          /s/ SHELDON WEINIG                Director                         September 15, 1995
------------------------------------------                                                     
              SHELDON WEINIG                                                                   

       /s/ RUSSELL B. WIGHT, JR.            Director                         September 15, 1995
------------------------------------------                                                     
          RUSSELL B. WIGHT, JR.                                                                

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INDEX TO EXHIBITS*

                                                        [Enlarge/Download Table]
                                                                                       
 2.1  --  Agreement and Plan of Merger dated as of May 23, 1995 among ITI, ITI         
          Acquisition Corp. and Insituform Mid-America, Inc. (included as Annex A to   
          the Joint Proxy Statement/Prospectus)                                        
                              ------------------------                                 
 3.1  --  Certificate of Incorporation of ITI, as amended                              
 3.2  --  By-laws of ITI, as amended (Incorporated by reference to Exhibit 3.2 to the  
          Annual Report on Form 10-K for the fiscal year ended December 31, 1994)      
                              ------------------------                                 
 5.1  --  Opinion of Krugman, Chapnick & Grimshaw                                      
 8.1  --  Opinion of Thompson & Mitchell                                               
                              ------------------------                                 
10.1  --  Agreement dated as of July 3, 1992, as amended as of September 1, 1992,      
          among ITI, INA Acquisition Corp. and Insituform Group Limited (Incorporated  
          by reference to Exhibit 2 to Registration Statement on Form S-4 No.          
          33-53772)                                                                    
10.2  --  Restated Merger Agreement and Plan of Reorganization dated as of November    
          28, 1988 among ITI, NP Acquisition Corp. and NU-PIPE, Inc. (Incorporated by  
          reference to Exhibit 2(a) to the Current Report on Form 8-K dated December   
          15, 1988), together with Agreement dated as of October 21, 1994 among ITI,   
          NuPipe, Inc., James D. Monaghan, Richard D. Beck and Campbell H. Steketee,   
          Jr. (Incorporated by reference to Exhibit 2(o) to the Current Report on      
          Form 8-K dated October 21, 1994)                                             
10.3  --  Restated Agreement of Purchase and Sale dated as of November 23, 1991        
          between PLS Acquisition Corp. and Plastic Lining Systems, Inc.               
          (Incorporated by reference to Exhibit 10.7 to the Annual Report on Form      
          10-K for the fiscal year ended December 31, 1991), and Letter Amendment      
          dated December 10, 1992, together with Amendment Agreement dated as of       
          April 1, 1994, and Amendment Agreement dated as of January 1, 1995, between  
          Pipe Rehab International, Inc. and Plastic Lining Systems, Inc.              
          (Incorporated by reference to Exhibit 10.4 to the Annual Report on Form      
          10-K for the fiscal year ended December 31, 1994)                            
10.4  --  Share Purchase Agreement dated as of November 10, 1992 among ITI,            
          Insituform Group Limited, IGL Canada Limited, Otto Babichuk, Gilbert         
          Brulotte, Kenneth Foster and David Iwaskow (Incorporated by reference to     
          Exhibit 5(a) to the Current Report on Form 8-K dated December 16, 1992)      
10.5  --  Agreement of Purchase and Sale dated as of December 18, 1992 among ITI,      
          Herbert T. Schneider, and H.T. Schneider, Inc. (Incorporated by reference    
          to Exhibit 5(a) to the Current Report on Form 8-K dated December 31, 1992),  
          together with Promissory Note dated December 31, 1992 executed by ITI to     
          Herbert T. Schneider (Incorporated by reference to Exhibit 5(b) to the       
          Current Report on Form 8-K dated December 31, 1992)                          
10.6  --  Acquisition Agreement dated as of May 7, 1993 among ITI, NII Acquisition     
          Corp. and Naylor Industries, Inc. (Incorporated by reference to Exhibit      
          2(a) to the Current Report on Form 8-K dated July 14, 1993)                  
10.7  --  Agreement dated October 31, 1992 between Naylor Industries, Inc. and Brand   
          Precision Services, Inc. (Incorporated by reference to Exhibit 10(d) to the  
          Quarterly Report on Form 10-Q dated June 30, 1993)                           

---------------                                                                 
* ITI's current, quarterly and annual reports are filed with the Securities and 
Exchange Commission under file no. 0-10786                                      

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10.8  --  Agreement of Purchase and Sale dated as of July 26, 1993 among ITI,          
          Insituform Midwest, Inc., Midwest Environment Services Corp. and the         
          stockholders of Insituform Midwest, Inc. and Midwest Environment Services    
          Corp. (Incorporated by reference to Exhibit 2(a) to the Current Report on    
          Form 8-K dated July 26, 1993)                                                
10.9  --  Agreement of Purchase and Sale dated as of October 21, 1994 among Gelco      
          Services, Inc., Gelco NuPipe, Inc., GelTech Constructors, Inc., Gelco        
          Corporation, Mar-Tech Insituform Ltd. and the stockholders thereof, ITI and  
          GCO Acquisition Corp. (Incorporated by reference to Exhibit 2(a) to the      
          Current Report on Form 8-K dated October 21, 1994), together with            
          Guaranteed Secured Promissory Notes (Acquisition Notes), each dated October  
          21, 1994, issued by GCO Acquisition Corp. to, respectively, James D.         
          Monaghan and Richard D. Beck, as Trustee of The Richard D. Beck Revocable    
          Trust (Incorporated by reference to Exhibits 2(b) and 2(c) to the Current    
          Report on Form 8-K dated October 21, 1994), and Supplemental Agreement       
          dated March 21, 1995 among ITI, GCO Acquisition Corp., James D. Monaghan,    
          Richard D. Beck, as Trustee of The Richard D. Beck Revocable Trust, D.       
          Robert Innis, J.R. Investments Co, and Pipe Recon Products Ltd., together    
          with modified Guaranteed Secured Promissory Notes (Affiliate Notes), each    
          dated as of October 21, 1994, issued by Gelco Services, Inc. to,             
          respectively, James D. Monaghan, Richard D. Beck, as Trustee of The Richard  
          D. Beck Revocable Trust, J.R. Investments Co., and Pipe Recon Products Ltd.  
          (Incorporated by reference to Exhibit 10.11 to the Annual Report on Form     
          10-K for the fiscal year ended December 31, 1994)                            
                              ------------------------                                 
10.11 --  Partnership Agreement dated December 23, 1985 among Insituform East, Inc.,   
          Insituform Southeast, Inc., and Insituform Mid-South Investments, Inc.       
          (Incorporated by reference to Exhibit 10.23 to the Annual Report on Form     
          10-K for the fiscal year ended December 31, 1990), together with amendment   
          dated March 12, 1990 (Incorporated by reference to Exhibit 10.24 to the      
          Annual Report on Form 10-K for the fiscal year ended December 31, 1990) and  
          amendment effective December 13, 1990 (Incorporated by reference to Exhibit  
          10.25 to the Annual Report on Form 10-K for the fiscal year ended December   
          31, 1990)                                                                    
10.12 --  Heads of Agreement among Insituform (UK) Limited, as successor to            
          Insituform Group Limited, Hans Brochier GmbH & Co. and Per Aarsleff A/S      
          (Incorporated by reference to Exhibit 10.10 to the Annual Report on Form     
          10-K for the fiscal year ended December 31, 1992)                            
                              ------------------------                                 
10.13 --  Lease dated September 8, 1980 between ITI and Bico Partners (Incorporated    
          by reference to Exhibit 11.2 of the Registration Statement on Form S-2 No.   
          2-72323)                                                                     
10.14 --  Lease dated April 27, 1990 between Allied Dunbar Assurance PLC and           
          Insituform (UK) Limited (Incorporated by reference to Exhibit 10.19 to the   
          Annual Report on Form 10-K for the fiscal year ended December 31, 1992)      
10.15 --  Lease dated March 1, 1993 between ITI and Westin Management Company, as      
          agent for Tennessee Forum, Inc. (Incorporated by reference to Exhibit 10.22  
          to the Annual Report on Form 10-K for the fiscal year ended December 31,     
          1992)                                                                        

---------------                                                                 
* ITI's current, quarterly and annual reports are filed with the Securities and 
Exchange Commission under file no. 0-10786                                      

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                                                        [Enlarge/Download Table]
                                                                                       
                              ------------------------                                 
10.16 --  Loan Agreement dated December 20, 1985, between ITI and The Industrial       
          Development Board of the City of Memphis and County of Shelby, Tennessee     
          (Incorporated by reference to Exhibit 10.4 to the Annual Report on Form      
          10-K for the fiscal year ended December 31, 1985), together with Promissory  
          Note dated December 20, 1985 executed by the Company to the Industrial       
          Development Board of the City of Memphis and County of Shelby, Tennessee     
          (Incorporated by reference to Exhibit 10.8 to the Annual Report on Form      
          10-K for the fiscal year ended December 31, 1987), Leasehold Deed of Trust   
          dated December 20, 1985 between ITI and R. Gratten Brown, Jr. (Incorporated  
          by reference to Exhibit 10.4.1 to the Annual Report on Form 10-K for the     
          fiscal year dated December 31, 1985) and Security Agreement dated December   
          20, 1985 between ITI and the Industrial Development Board of the City of     
          Memphis and County of Shelby, Tennessee (Incorporated by reference to        
          Exhibit 10.10 to the Annual Report on Form 10-K for the fiscal year ended    
          December 31, 1987)                                                           
10.17 --  Mortgage Debenture dated December 22, 1987 executed by Insituform Permaline  
          Limited to National Westminster Bank plc. (Incorporated by reference to      
          Exhibit 10.17 to the Annual Report on Form 10-K for the year ended December  
          31, 1993)                                                                    
10.18 --  Lease Agreement dated as of December 22, 1988 between ITI and Panola         
          County, Mississippi (Incorporated by reference to Exhibit 10.42 to the       
          Annual Report on Form 10-K for the fiscal year ended December 31, 1988),     
          together with First Amendment to Lease Agreement dated as of September 1,    
          1989 (Incorporated by reference to Exhibit 10.46 to the Annual Report on     
          Form 10-K for the fiscal year ended December 31, 1989), Second Amendment to  
          Lease Agreement dated as of January 1, 1992 (Incorporated by reference to    
          Exhibit 10.17 to the Annual Report on Form 10-K for the fiscal year ended    
          December 31, 1991), Third Amendment to Lease Agreement dated as of March 1,  
          1993 (Incorporated by reference to Exhibit 10.30 to the Annual Report on     
          Form 10-K for the fiscal year ended December 31, 1992), and Fourth           
          Amendment to Lease Agreement dated as of January 1, 1994 between ITI and     
          Panola County, Mississippi (Incorporated by reference to Exhibit 10.19 to    
          the Annual Report on Form 10-K for the year ended December 31, 1994)         
10.19 --  Guaranty Agreement dated as of December 22, 1988 between ITI and Third       
          National Bank in Nashville (Incorporated by reference to Exhibit 10.43 to    
          the Annual Report on Form 10-K for the fiscal year ended December 31,        
          1988), together with First Amendment to Guaranty Agreement dated as of       
          January 1, 1994 between ITI and Third National Bank in Nashville             
          (Incorporated by reference to Exhibit 10.21 to the Annual Report on Form     
          10-K for the year ended December 31, 1993)                                   
10.20 --  Indenture of the Trust dated as of December 22, 1988 between Third National  
          Bank in Nashville and Panola County, Mississippi (Incorporated by reference  
          to Exhibit 10.45 to the Annual Report on Form 10-K for the fiscal year       
          ended December 31, 1988), together with First Supplemental Trust Indenture   
          dated as of September 1, 1989 (Incorporated by reference to Exhibit 10.50    
          to the Annual Report on Form 10-K for fiscal year ended December 31, 1989),  
          Second Supplemental Trust Indenture dated as of January 1, 1992              

---------------                                                                 
* ITI's current, quarterly and annual reports are filed with the Securities and 
Exchange Commission under file no. 0-10786                                      

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          (Incorporated by reference to Exhibit 10.22 to the Annual Report on Form     
          10-K for the fiscal year ended December 31, 1991), Third Supplemental Trust  
          Indenture dated as of March 1, 1993 (Incorporated by reference to Exhibit    
          10.36 to the Annual Report on Form 10-K for the fiscal year ended December   
          31, 1992), and Fourth Supplemental Trust Indenture dated as of January 1,    
          1994 between Third National Bank in Nashville and Panola County,             
          Mississippi (Incorporated by reference to Exhibit 10.23 to the Annual        
          Report on Form 10-K for the year ended December 31, 1993)                    
10.21 --  Loan Agreement dated December 29, 1989 among IGL Canada Limited, Province    
          of Alberta Treasury Branches and Neptune Coring Limited (Incorporated by     
          reference to Exhibit 10.37 to the Annual Report on Form 10-K for the fiscal  
          year ended December 31, 1992), together with Continuing Demand Debenture     
          Fixed and Floating Charge dated December 29, 1989 executed by IGL Canada     
          Limited to Province of Alberta Treasury Branches, and Supplemental           
          Debenture dated December 16, 1991 (Incorporated by reference to Exhibit      
          10.38 to the Annual Report on Form 10-K for the fiscal year ended December   
          31, 1992)                                                                    
10.22 --  Amended and Restated Loan Agreement dated June 7, 1995 between ITI and       
          Third National Bank in Nashville (Incorporated by reference to Exhibit 5(a)  
          to the Current Report on Form 8-K dated June 7, 1995), together with         
          Consolidated, Amended and Restated Promissory Note dated June 7, 1995        
          executed by ITI to Third National Bank in Nashville (Incorporated by         
          reference to Exhibit 5(a) to the Current Report on                           
          Form 8-K dated June 7, 1995)                                                 
10.23 --  Purchase Agreement dated as of July 26, 1993 between ITI and Hanseatic       
          Corporation (Incorporated by reference to Exhibit 2(j) to the Current        
          Report on Form 8-K dated July 26, 1993), together with 8.5% Senior           
          Subordinated Note dated July 26, 1993 executed by ITI to Deltec Asset        
          Management Corporation, as custodian for Hanseatic Corporation               
          (Incorporated by reference to Exhibit 2(k) to the Current Report on Form     
          8-K dated July 26, 1993), Warrant Certificate dated July 26, 1993 executed   
          by ITI to Deltec Asset Management Corporation, as custodian for Hanseatic    
          Corporation (Incorporated by reference to Exhibit 2(l) to the Current        
          Report on Form 8-K dated July 26, 1993) and Registration Rights Agreement    
          dated July 26, 1993 between ITI and Hanseatic Corporation (Incorporated by   
          reference to Exhibit 2(n) to the Current Report on Form 8-K dated July 26,   
          1993)                                                                        
10.24 --  Memorandum of Understanding with respect to Neil Weinberg, on behalf of      
          himself and all others similarly situated, Plaintiffs, v. Insituform         
          Technologies, Inc., et al., Defendants (Incorporated by reference to         
          Exhibit 5(b) to the Current Report on Form 8-K dated May 23, 1995)           
                           ------------------------------                              
10.25 --  Termination Agreement dated October 15, 1993 between ITI and William C.      
          Willis, Jr. (Incorporated by reference to Exhibit 10.29 to the Annual        
          Report on Form 10-K for the year ended December 31, 1993)                    

---------------                                                                 
* ITI's current, quarterly and annual reports are filed with the Securities and 
Exchange Commission under file no. 0-10786                                      

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10.26 --  Stock Pledge Agreement dated July 3, 1992 among ITI, Ringwood Limited,          
          Brian Chandler and Douglas K. Chick (Incorporated by reference to Exhibit       
          5(i) to the Current Report on Form 8-K dated July 3, 1992), and Letter          
          Agreement dated July 3, 1992, among ITI, Parkwood Limited, as Trustee of        
          the Anthony Basmadjian "P" Settlement, Ringwood Limited, Brian Chandler and     
          Douglas K. Chick (Incorporated by reference to Exhibit 5(iii) to the            
          Current Report on Form 8-K dated July 3, 1992), as amended by Letter            
          Agreement dated as of August 6, 1992 (Incorporated by reference to Exhibit      
          5(b) to the Quarterly Report on Form 10-Q for the period ended June 30,         
          1992) and Agreement dated as of May 21, 1995 among Ringwood Limited, Brian      
          Chandler, Douglas K. Chick and Insituform Technologies, Inc., together with     
          Substitute Secured, Non-Recourse Promissory Note dated as of July 3, 1992       
          executed by Ringwood Limited to Insituform Technologies, Inc. (Incorporated     
          by reference to Exhibit 5(c) to the Current Report on Form 8-K dated May        
          23, 1995)                                                                       
10.27 --  Employment Agreement dated as of July 3, 1992, between ITI and James D.         
          Krugman (Incorporated by reference to Exhibit 10.53 of Registration             
          Statement on Form S-4 No. 33-53772)                                             
10.28 --  Registration Rights Agreement dated as of October 19, 1992 among ITI,           
          Interstate Properties, and the Ringwood Group consisting of Parkwood            
          Limited, as trustee of the Anthony Basmadjian "P" Settlement, Barford, as       
          trustee of the Anthony Basmadjian Settlement, Ringwood Limited, Brian           
          Chandler and Douglas K. Chick. (Incorporated by                                 
          reference to Exhibit 10.54 to the Registration Statement on Form S-4            
          No. 33-53772)                                                                   
10.29 --  Registration Rights Agreement dated as of September 1, 1995 among ITI,          
          Robert W. Affholder and Xanadu Investments, L.P.                                
10.30 --  Letter Agreement dated July 31, 1993 between ITI and R. William Pittman         
          (Incorporated by reference to Exhibit 10.34 to the Annual Report on Form        
          10-K for the year ended December 31, 1993)                                      
10.31 --  Letter Agreement dated September 27, 1993 between ITI and Jean-Paul Richard     
          (Incorporated by reference to Exhibit 10.35 to the Annual Report on Form        
          10-K for the year ended December 31, 1993)                                      
10.32 --  Letter Agreement dated October 29, 1993 between ITI and Anthony W. Hooper       
          (Incorporated by reference to Exhibit 10.36 to the Annual Report on Form        
          10-K for the year ended December 31, 1993)                                      
10.33 --  1983 Stock Option Plan of ITI (Incorporated by reference to Exhibit 10.48       
          to the Annual Report on Form 10-K for the fiscal year ended December 31,        
          1991)                                                                           
10.34 --  1992 Employee Stock Option Plan of ITI (Incorporated by reference to            
          Exhibit 10(a) to Quarterly Report on Form 10-Q for the quarter ended June       
          30, 1994)                                                                       
10.35 --  1992 Director Stock Option Plan of ITI (Incorporated by reference to            
          Exhibit 10.57 to Registration Statement on Form S-4 No. 33-53772)               
10.36 --  INA Acquisition Corp. Stock Option Plan (Incorporated by reference to           
          Exhibit 10.58 to Registration Statement on Form S-4 No. 33-53772)               
10.37 --  Form of Directors' Indemnification Agreement (Incorporated by reference to      
          Exhibit 10.47                                                                   
          to the Annual Report on Form 10-K for the fiscal year ended December 31, 1988)  
                           ------------------------------                                 

---------------                                                                 
* ITI's current, quarterly and annual reports are filed with the Securities and 
Exchange Commission under file no. 0-10786                                      

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INDEX TO EXHIBITS (CONTINUED)*

                                                        [Enlarge/Download Table]
                                                                                      
11    --  Computation of Earnings Per Common Share and Common Equivalent Share        
          (Incorporated by reference to Exhibit 11 to the Annual Report on Form 10-K  
          for the fiscal year ended December 31, 1994)                                
21    --  Subsidiaries of ITI                                                         
23.1  --  Consent of BDO Seidman, LLP                                                 
23.2  --  Consent of KPMG Peat Marwick LLP                                            
23.3  --  Consent of Deloitte & Touche LLP                                            
23.4  --  Consent of Aldrich Kilbride & Tatone                                        
23.5  --  Consent of Krugman, Chapnick & Grimshaw (contained in Exhibit 5.1)          
23.6  --  Consent of Thompson & Mitchell (contained in Exhibit 8.1).                  
23.7  --  Consent of Merrill, Lynch, Pierce, Fenner & Smith Incorporated              
23.8  --  Consent of Schroder Wertheim & Co. Incorporated.                            
24    --  Powers of Attorney (contained on page II-4).                                
99    --  Consents of Persons Named as Prospective Directors                          

---------------                                                                 
* ITI's current, quarterly and annual reports are filed with the Securities and 
Exchange Commission under file no. 0-10786                                      

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