MATERIAL CHANGE REPORT

Subsection 75(2) of the Securities Act (Ontario) and equivalent sections in the securities acts of each of the other provinces of Canada

1. Reporting Issuer

Krystal Bond Inc. 81 Kelfield Street, Unit #5 Toronto, ON M9W 5A3

2. Date of Material Change

July 10, 2000

3. Press Release

A Press Release was issued in Toronto, Ontario on July 11, 2000.

4. Summary of Material Change

Krystal Bond Inc. announced that it has completed the acquisition of Hamilton, Ontario-based Entac Inc., a privately held producer of proprietary organic, environmentally safe, liquid binder/sealant products.

5. Full Description of Material Change

Krystal Bond Inc. announced that it has completed the acquisition of Hamilton, Ontario-based Entac Inc., a privately held producer of proprietary organic, environmentally safe, liquid binder/sealant products.

Jim Griffiths, President of Krystal Bond, emphasized the positives of bringing the two companies together. “Entac’s active customer base is evidence of a strong and growing market for their environmentally sound binders and sealers.” He added that “given our progress in developing Krystal Bond’s products for the waste and building materials industries, we will now embark on an aggressive marketing roll-out for both product lines.”

Entac Inc. manufactures and sells binders from naturally occurring resins. These emulsions, effective in controlling dust, and in sealing stockpiles, mine tailings, road bases and landfill sites, are currently used by some of Canada’s largest manufacturing and mining companies. Other

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applications include coal fines and steel mill waste agglomeration, and all utilize Entac and Enviroseal products.

Griffiths elaborated with the fact that “the company will now be able to market a full range of organic and inorganic binders to address the operational and environmental challenges of the mining, steel, coal, waste, construction and building materials industries.”

Under the transaction, Krystal Bond is acquiring 100% of Entac Inc. for 2,733,334 common shares of Krystal Bond at CDN$0.30 per share (CDN $820,000) and a CDN $1 million, 3-year 5% convertible debenture in favour of Entac’s largest shareholder. The debenture is convertible into 666,667 common shares of Krystal Bond at $1.50 per share, and under certain conditions, Krystal Bond may call for the conversion if its shares trade at $1.75 per share. Additional consideration included the issuance of 666,667 one-half of one common share purchase warrants. Two Warrants entitle the holder to acquire one common share at a price equal to the weighted average price at which any common shares are issued, pursuant to any equity financing, during the six-month period immediately following the date of issue of the Warrants, in any event such price shall not be less than $0.30 per common share. In the event that no equity financing is completed by the Issuer during the six-month period immediately following the date of issue of the Warrants, then the exercise price shall be $0.30 per common share. The parties to the transaction are at arm’s length.

Entac’s binder technology has been successful in producing a family of stable and consistent organic emulsions using natural resins as the primary ingredient. An automated process ensures customers product quality, consistency and cost effectiveness. The organic origin and environmental transparency of Entac products offer significant advantages, making the company an increasingly preferred supplier for road stabilization, stockpile management and dust control applications. The product is non-water soluble, will not leach, has excellent binding capacity and remains in solution for application.

About Krystal Bond Inc.

Krystal Bond, a publicly held industrial binder producer based in Toronto and serving North American markets, owns the world-wide rights to a family of patented formulations of high performance inorganic industrial binder technologies. These formulations have unique binding and stabilization properties; high compressive strength; high early strength; high impermeability and resistance to chemical and salt attack; and low shrinkage and related cracking.

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6. Reliance on Subsection 75(3) of the Securities Act (Ontario)

Not applicable.

7. Omitted Information

Not applicable.

8. Senior Officer

For further information contact James Griffiths, President & CEO of Krystal Bond Inc.

9. Statement of Senior Officer

The foregoing accurately discloses the material change referred to herein.

DATED at Toronto, Ontario this 18th day of July, 2000.

KRYSTAL BOND INC.

Per: "James Griffiths" James Griffiths President & CEO