Biodegradable omposite for food-service packaging

Santa Barbara, Calif. July 22, 1998 - EarthShell Corporation (NASDAQ: ERTH), the Santa Barbara, Calif. - based company that has developed a proprietary composite material that can be used to manufacture biodegradable food service packaging, has received the prestigious "Innovation in Real Materials Award" from the Innovations in Materials Conference. The Conference, under the direction of renowned materials researcher Rustum Roy of Pennsylvania State University, presented the award to the EarthShell development team at a banquet on Tuesday evening, July 21, in Washington, DC. Dr. Roy said that EarthShell had been chosen for the award because the EarthShell composite material is truly revolutionary, especially when compared to traditional materials used in food service packaging such as polysytrene and paperboard. "The EarthShell technology is an important innovation which has used the best in science to develop a remarkable material, with real world applications, such as an environmentally sound, alternative consumer products," said Dr. Roy. "This is just the type of breakthrough work; the best of the best - that we seek to highlight with the Innovation in Real Materials Award."

In a Life Cycle Inventory study comparing the over all system requirements forEarthShell and polystyrene packaging production, Franklin Associates Ltd. concluded that the EarthShell system required significantly less total energy than the polystyrene system, generated significantly less waste by volume in simulated wet compaction (conditions considered typical of actual landfilling), and produced substantially less greenhouse gas emissions. Additionally, when cracked or broken, EarthShell products will biodegrade in a composting environment and physically dissolve in water, the byproduct of which can be used as a beneficial soil conditioner. In terms of functionality, EarthShell hinged-lid containers, for example, have been shown to have outstanding temperature retention and sturdiness characteristics when compared to traditional food service packaging.

Receiving the award for development of the EarthShell technology are Simon Hodson, vice chairman and chief executive officer of EarthShell Corporation, Dr. Per Just Andersen, vice president of product engineering for E Khashoggi Industries (EKI - EarthShell's parent corporation), and Dr. Amitabha Kumar, a research scientist with EKI. "It is very gratifying to receive this award from such an esteemed group as the International Union of Materials Research Societies, especially during such an exciting time for the company," said Andersen, who has overseen development of the EarthShell material since the company's inception in 1992. "After years of hard work by a great number of people, we are in the position now where consumers can expect to see EarthShell packaging products in restaurants early next year."

As part of its plans to market products based on the EarthShell composite material, EarthShell Corporation, in conjunction with its first manufacturing partner Sweetheart Cup Company, Inc., is in the final stages of completing construction of the first fully commercial EarthShell plant in Owings Mills, Maryland. The Owings Mills site is on track to begin operation in the fourth quarter of 1998, with expected distribution of product in the first quarter of 1999. The EarthShell composite material is made from abundant, natural resources like limestone, potato starch and water, and is strongly protected by more than 100 patents and patents pending worldwide. "While other starch-based packaging materials do exist," Hodson said, "we believe the EarthShell composite has a much better environmental profile, provides excellent functionality, and is cost-effective in its use and application." Headquartered in Santa Barbara, California, EarthShell Corporation is a development stage company engaged in the licensing and commercialization of a proprietary composite material for the manufacture of disposable packaging for the food service industry, such as cups, plates, bowls, and hinged-lid containers. The new EarthShell composite material is made from commonly available raw materials including limestone, starch, natural fibers and functional coatings, and has superior functional as well as environmental characteristics when compared to traditional materials used for food service packaging, such as bleached paperboard or polystyrene.

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties of other factors which may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Prospectus and other documents filed by the Company with the Securities and Exchange Commission.