<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549-1004
                                       
                                   FORM 10-Q
        [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997

                                      OR

        [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                                       
                           ENVIROTEST SYSTEMS CORP.

         DELAWARE                   1-13241                06-0914220
         --------                   -------                ----------
(State or other jurisdiction     (Commission              (IRS Employer
    of incorporation)             File Number)         Identification Number)
                                       
                                       
                         ENVIROTEST TECHNOLOGIES, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                                       
           DELAWARE                              36-2680300
           --------                              ----------
(State or other jurisdiction          (I.R.S. Employer Identification
of incorporation or organization)                  Number)

                               246 SOBRANTE WAY
                       SUNNYVALE, CALIFORNIA 94086-4807
        (Address of principal executive offices, including zip code, of
                                 registrants)

                                (408) 774-6300
              (Registrants' telephone number, including area code)
   
   Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrants were required to file such reports), and (2)
have been subject to such filing requirements for the past 90 days.
YES   X   NO
    -----   -----

   Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                                                    Outstanding at
          Class of Common Stock                    December 31, 1997
          ---------------------                    -----------------
  Class A Common Stock, $0.01 par value            8,832,581 shares
  Class B Common Stock, $0.01 par value            1,249,749 shares
  Class C Common Stock, $0.01 par value            2,026,111 shares


                                      1

<PAGE>

                           ENVIROTEST SYSTEMS CORP.

                                     INDEX



                                                             PAGE NO.
                                                             --------
PART I.  FINANCIAL INFORMATION
   Item 1.  Financial Statements:

            Condensed Consolidated Balance Sheets:
            December 31, 1997 and September 30, 1997              3

            Condensed Consolidated Statements of Operations:
            three months ended December 31, 1997 and 1996         4

            Condensed Consolidated Statements of Cash Flows:
            three months ended December 31, 1997 and 1996         5

            Notes to Condensed Consolidated Financial Statements  6

   Item 2.  Management's Discussion and Analysis of
            Financial Condition and Results of Operations         9


PART II.   OTHER INFORMATION

   Item 1.  Legal Proceedings                                    12

   Item 6.  Exhibits and Reports on Form 8-K                     14


SIGNATURES                                                       15

EXHIBIT INDEX                                                    16

                                      2


<PAGE>

                         PART I. FINANCIAL INFORMATION
                         ITEM 1.  FINANCIAL STATEMENTS
                   ENVIROTEST SYSTEMS CORP. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                            (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                     December 31,  September 30,
                                                          1997           1997
                                                     ------------  -------------
<S>                                                  <C>           <C>
ASSETS                                               (Unaudited)
Current assets:
   Cash and cash equivalents                              $16,536       $18,685
   Available-for-sale securities                           51,643        40,955
   Contract receivables, net                                9,203        11,789
   Prepaid and other current assets                         6,504         5,911
                                                         --------      --------
        Total current assets                               83,886        77,340

Restricted cash                                            19,865        19,567
Property, plant, and equipment, net                       188,061       188,342
Assets held under capital lease, net                       44,217        44,564
Assets held for sale, net                                  16,094        21,482
Other assets                                               27,382        28,438
                                                         --------      --------
         Total assets                                    $379,505      $379,733
                                                         --------      --------
                                                         --------      --------

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Accounts payable                                        $2,795        $3,697
   Accrued expenses and other current liabilities          35,952        23,575
   Current portion of long-term debt and capital
      lease obligations                                     8,400        10,184
   Income taxes payable                                       224           338
                                                         --------      --------
         Total current liabilities                         47,371        37,794

Senior debt, net                                          274,264       274,531
Long-term debt, net                                        24,464        33,175
Other long-term liabilities and capital lease
 obligations                                               57,186        58,609
                                                         --------      --------
         Total liabilities                                403,285       404,109

Stockholders' deficit:
  Common stock                                                165           165
  Additional paid-in capital                               60,140        60,140
  Treasury stock, at cost                                (29,003)       (29,003)
  Cumulative currency translation adjustment                    4            43
  Unrealized loss on available-for-sale securities              -            (8)
  Accumulated deficit                                    (49,508)       (50,135)
                                                         --------      --------
                                                         (18,202)       (18,798)
  Predecessor carry-over basis                            (5,578)        (5,578)
                                                         --------      --------
         Total stockholders' deficit                     (23,780)       (24,376)
                                                         --------      --------
         Total liabilities and stockholders' deficit     $379,505      $379,733
                                                         --------      --------
                                                         --------      --------
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
                          financial statements.

                                     3

<PAGE>

                   ENVIROTEST SYSTEMS CORP. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                              December 31,
                                                            1997         1996
                                                          -------      --------
<S>                                                       <C>          <C>
                                                              (Unaudited)

Contract revenue                                          $36,937       $31,179
Costs of revenue                                           23,956        24,604
                                                          -------       -------
Gross profit                                               12,981         6,575

Operating costs and expenses:
   Selling, general and administrative                      4,108         4,294
   Amortization                                               597           672
                                                          -------       -------
   Income from operations                                   8,276         1,609

Other expense (income):
   Interest expense                                         8,811         9,548
   Interest income                                        (1,194)        (1,685)
   Other                                                       32           (80)
                                                          -------       -------
Income (loss) before income taxes                             627        (6,174)
      Income tax                                              -             -
                                                          -------       -------
Net Income (loss)                                            $627       ($6,174)
                                                          -------       -------
                                                          -------       -------



Net Income (loss) per share, basic                          $0.05        ($0.37)
                                                          -------       -------

Net Income (loss) per share, dilutive                       $0.05        ($0.37)
                                                          -------       -------

Basic earnings per share:
   Weighted average shares                                 12,108        16,620

Effect of dilutive securities:
   Common stock equivalents                                 1,561           -
                                                          -------       -------

Diluted earnings per share                                 13,669        16,620
                                                          -------       -------
                                                          -------       -------
</TABLE>

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

                                        4

<PAGE>

                   ENVIROTEST SYSTEMS CORP. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                December 31,
                                                            1997         1996
                                                         --------      --------
<S>                                                      <C>          <C>
                                                               (Unaudited)

Cash flows from operating activities:                      21,055         6,853
                                                        ---------      --------

Cash flows from investing activities:
 Maturities (Purchases) of available-for-sale
   securities, net                                        (10,688)         7,991
 Purchases of property, plant and equipment               (5,432)        (3,638)
 Proceeds from sales of property, plant and equipment       5,388           -
                                                        ---------      --------
Net cash provided by (used in) investing activities      (10,732)         4,353
                                                        ---------      --------

Cash flows from financing activities:
 Proceeds from sale of Pennsylvania receivable                  -        79,405
 Repayment of long term debt and capital leases          (12,130)        (2,110)
 Capitalization of loan fees                                    -          (190)
 Decrease (increase) in restricted cash                     (298)         1,997
                                                        ---------      --------
Net cash provided by (used in) financing activities      (12,428)        79,102
                                                        ---------      --------
Effect of exchange rate on cash                              (44)             5
                                                        ---------      --------
Net increase (decrease) in cash                           (2,149)        90,313
Cash and cash equivalents, beginning of period             18,685        53,104
                                                        ---------      --------
Cash and cash equivalents, end of period                  $16,536      $143,417
                                                        ---------      --------
                                                        ---------      --------
</TABLE>

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

                                   5

<PAGE>

                           ENVIROTEST SYSTEMS CORP.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.   BASIS OF PRESENTATION

     The condensed consolidated financial statements included herein have been
prepared by Envirotest Systems Corp. (the "Company"), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations.  In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
     
     The accompanying condensed consolidated financial statements should be
read in conjunction with the Company's audited consolidated financial
statements and related footnotes included in the Company's Annual Report on
Form 10-K for the year ended September 30, 1997, filed with the Securities and
Exchange Commission.
     
     Operating results for the interim periods shown in this report are not
necessarily indicative of the results to be expected for any other interim
period or the full fiscal year.

2.   AVAILABLE-FOR-SALE SECURITIES

     Available-for-sale securities primarily consist of corporate commercial
paper and certificates of deposit with original maturities beyond three months
and less than twelve months. These investments are carried at an amortized cost
that approximates fair value.

3.   PENNSYLVANIA SETTLEMENT

     On December 11, 1996, the Company sold its right to receive the two
remaining installment payments totaling $80.0 million (the "Receivables
Assets") in principal amount due under a settlement agreement with the
Commonwealth of Pennsylvania (the "Settlement Agreement") for approximately
$79.4 million.

     The transaction was effected through a sale of the Receivables Assets from
Envirotest Partners ("Partners"), a Pennsylvania general partnership owned by
Envirotest and Envirotest Technologies, Inc., to a newly formed wholly owned
subsidiary of the Company, ES Funding Corp. ("Funding").  Funding, in turn,
transferred the Receivables Assets to an affiliate of a Pennsylvania bank.
Funding and Partners provided certain representations in connection with the
transaction, including representations as to enforceability of the Settlement
Agreement against the Commonwealth, and agreed to repurchase the Receivables
Assets if Partners fails to comply with its obligations under the Settlement
Agreement.

     The Settlement Agreement requires the Company to use its best efforts to
dispose of the assets it acquired to perform vehicle emissions testing services
in Pennsylvania.  If the net proceeds received by the Company from the sale of
the assets is less than $55.0 million, Pennsylvania is obligated to pay the
Company fifty percent of the difference up to $11.0 million plus interest at 6%
from December 15, 1995 no later than July 31, 1998.  The amount of this
contingent payment was reduced from $15.0 million in an amendment to the
Settlement Agreement that permitted the Company to complete the sale of the
Receivable Assets.  Should the net proceeds from the sale of the real estate
and other program related assets exceed $55.0 million, the Company is obligated
to pay the Commonwealth 75% of the amount by which the net proceeds exceeds
$55.0 million.  Based upon the experience with recent sales of these assets and
the sufficiency of reserves, the Company is of the opinion that upon final
disposition of properties no additional loss will be recognized.

                                         6

<PAGE>

4.   LEGAL PROCEEDINGS

     STATE OF CONNECTICUT V. ENVIROTEST SYSTEMS CORP. Under the new contract
(the "Contract") entered into with the Company in April 1994, the State
unilaterally decided to continue the old testing procedure and phase in the
enhanced testing required by the new contract. Additionally, the Company was
unable to build two test facilities, one due to the State's inability to
provide the land the Contract required and the other due to the inability to
obtain zoning. As a result, the Company and the State of Connecticut were in
dispute concerning various financial issues related to the performance by each
of their respective obligations under the Contract. The State contended that
performance of the existing test, as distinct from the I/M240 procedure
specified in the Contract, resulted in substantial savings to Envirotest.
Envirotest complained to the State about additional costs incurred by
Envirotest when the State unilaterally changed the test requirements under the
Contract. In February 1996, the State issued a decision with respect to the
dispute pursuant to the Contract. The Commissioner's administrative decision 
awarded a minimum of $2.4 million to the State which continues to accrue 
damages until the facilities are built. The Company received the facsimile of 
the State's letter on February 9, 1996 and it received the certified copy of 
the letter on February 12, 1996. The Company, pursuant to the Contract, filed 
a demand for arbitration on March 11, 1996. The Company's demand for 
arbitration sought a declaration that the Company owed no money to the State 
and to further hold that the State owed Envirotest an unspecified amount of 
damages. On May 1, 1996, the State filed a lawsuit in State Superior Court in 
Hartford to enjoin the arbitration. The issue at dispute in the lawsuit is 
whether the thirty-day period within which to file for arbitration commences 
upon receipt of the decision by facsimile as the State contends, or upon 
receipt of a certified letter as the Company contends. The Court has 
scheduled a trial to hear this issue for April 8, 1998. The Company believes 
that it has valid defenses against the claims made by the State.

     GANZCORP INVESTMENTS, INC. V. ENVIROTEST SYSTEMS CORP. On September 26, 
1995 Ganzcorp Investments, Inc. d/b/a/ Mustang Dynamometer filed suit against 
Envirotest in U.S. District Court for the Northern District of Ohio. The suit 
alleged breach of contract and asked for damages in excess of $10.0 million. 
The suit was voluntarily dismissed on December 22, 1995 so that the parties 
could focus on settlement negotiations. No settlement was reached, and on 
October 8, 1997, the case was re-filed by Ganzcorp. The dispute relates to a 
1993 agreement between the parties for the supply of chassis dynamometers by 
Ganzcorp to the Company for its emission testing programs in Ohio, 
Connecticut, and Pennsylvania. When the Company's testing program with the 
State of Pennsylvania was canceled, the Company terminated its contract with 
Ganzcorp. That contract with Ganzcorp contained a "termination for 
convenience" clause under which Ganzcorp would be allowed to make a claim for 
certain costs incurred but such claim would be substantially below its stated 
claim of more than $10.0 million. Additionally, the Company has counterclaims 
against Ganzcorp for breach of contract and warranty obligations which it 
believes to be in excess of $7.9 million. On January 28, 1998, the Court 
granted the parties' Joint Motion for Stay Pending Professional Mediation, to 
permit the parties to attempt to settle their dispute through mediation 
before proceeding with the litigation. The Company believes that any judgment 
against the Company will not have a material adverse effect on its financial 
condition.

     R.W. GRANGER & SONS, INC. V. ENVIROTEST SYSTEMS CORP. Granger alleges a 
breach of contract by the Company arising out of the retrofitting of 19 
testing stations and the construction of seven new testing stations in 
Connecticut. The project began in 1994 and was completed in 1995. In 
September 1996, when Envirotest and Granger could not reach agreement on the 
amounts due and owing, Granger submitted a Demand for Arbitration with the 
regional office of the American Arbitration Association located in East 
Hartford, Connecticut. Granger's claim for compensation has fluctuated in 
amount since 1995. Granger's most recent demand was approximately $2.0 
million. On October 29, 1997, the first arbitration hearing commenced and on 
that date, Granger filed a motion with the arbitration board to amend its 
demand for arbitration to include a claim under the Connecticut Unfair Trade 
Practices Act ("CUTPA"). Liability under that Act would expose the Company to 
both punitive damages and attorney's fees.  On November 5, 1997, the Company 
filed a motion with the arbitration board in opposition to Granger's motion 
to amend its demand for arbitration. On November 6, 1997, the Company also 
filed an application for injunctive relief in State Superior Court in 
Hartford to enjoin Granger from amending its demand for arbitration.  On 
November 13, 1997, Granger removed its motion to amend its demand for 
arbitration. On December 29, 1997, Granger filed a complaint in State 
Superior Court in the Judicial District of Hartford/New Britain at New 
Britain which alleges that the Company's failure to pay sums allegedly due 
and owing under the contract reference above is an unfair trade practice 
under the CUTPA. The arbitration hearings have continued on various dates 
with the final arbitration hearings scheduled for March or April of 1998.  
The Company believes that it has valid defenses against the claims made by 
Granger, and it further believes that any judgment against the Company will 
not have a material adverse effect on its financial condition.

     DORE V. ENVIROTEST SYSTEMS, CORP. On March 5, 1997, Timothy Dore filed a
class action suit against the Company in the Denver District Court. Dore seeks
to assert claims on behalf of the class of all 

                                         7

<PAGE>


persons who, from January 2, 1995, to the present, paid to have a vehicle 
tested in the Company's metro Denver facilities. In his Amended Complaint, 
Dore alleges that Envirotest breached its contractual obligations to the 
class and negligently performed emission testing. The suit does not identify 
the monetary amount sought. On June 30, 1997, the Company filed a Motion to 
Dismiss the Amended Complaint. Dore cross-moved for summary judgment. On 
November 22, 1997, the court granted the Company's Motion to Dismiss the 
Amended Complaint. On January 6, 1998, Dore filed a Notice of Appeal in the 
State of Colorado Court of Appeals with respect to the trial court's order 
dismissing the Amended Complaint.

     In addition to the above, the Company is a party to various other legal
proceedings and claims in the ordinary course of business. Although the claims
cannot be estimated, in the opinion of management the resolution of these
matters will not have a material adverse effect on the Company's consolidated
financial position and results of operations.




                                         8

<PAGE>

                           ENVIROTEST SYSTEMS CORP.
ITEM 2.
                                       
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL
     
     The Company conducts its current operations directly and through its
principal wholly owned subsidiaries, Envirotest Technologies, Inc. ("ETI"),
Envirotest Illinois, Inc. ("EII"), Envirotest Wisconsin, Inc. and Systems
Control, Inc., a Washington corporation ("SC-WA").  The Company's British
Columbia, Canada operations are conducted through a British Columbia
partnership, Envirotest Canada, which is wholly-owned by the Company (through
its subsidiaries).
     
  Certain sections of this Form 10-Q, including "Management's Discussion and
Analysis of Financial Condition and Results of Operations", contain various
forward looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, which represent the Company's expectations or beliefs
concerning future events. The Company cautions that these statements are
further qualified by important factors that could cause actual results to
differ materially from those in the forward looking statements. Such factors
include, without limitation, general economic conditions, pending legislation
and the cyclical nature of the vehicle emission testing industry.  The forward
looking statements include, without limitation, the amounts of reserves
recognized, the amount of revenue that will be generated under a contract, the
total capital expenditure requirement of a program, statements regarding the
commencement of operations for a particular test site or of a particular
program, the number of annual tests, the types of I/M testing programs to be
adopted by states, regulatory and market changes, the growth in markets in
which the Company operates, the areas of potential growth that the Company has
identified, the value of contracts, renewals of contracts, amount spent in
enhancements and other maintenance capital expenditures, expected realizations
of backlog, the success of the remote sensing technology and its utilization in
the future, ultimate outcome of pending litigation and the Company's success in
foreign jurisdictions.

RESULTS OF OPERATIONS
     
     Contract revenues increased to $36.9 million in fiscal first quarter 1998
from $31.2 million in fiscal first quarter 1997, an increase of $5.7 million or
18.5%.  This increase is primarily attributable to additional revenues of $3.7
million generated by new or extended emissions and safety programs in Illinois,
Indiana and Connecticut and other net increase of $1.9 million from other
factors, including increased paid test volume and contractual fee increases.
     
     Gross profit increased to $13.0 million in fiscal first quarter 1998 from
$6.6 million in fiscal first quarter 1997, an increase of $6.4 million, or
97.4%.  As a percentage of contract revenues, gross profit increased to 35.1%
in fiscal first quarter 1998 from 21.1% in fiscal first quarter 1997, an
absolute increase of 14.0%.  This increase was primarily attributable to
contribution from new or extended programs and  increased paid tests.  Also,
margins improved from continued improvements in operational efficiencies and
the reduction in the deferred charge amortization.
     
     Selling, general and administrative ("SG&A") expenses were $4.1 million in
fiscal first quarter 1998 as compared to $4.3 million in fiscal first quarter
1997, a decrease of $0.2 million.  As a precentage of contract revenues, SG&A
expenses decreased to 11.1% in fiscal first quarter 1998 from 13.8% in fiscal
first quarter 1997, an absolute decrease of 2.7%.  This decrease as a
percentage of contract revenues is due to increase in contract revenues as
discussed above without associated increase in the SG&A expenses.
     
     Income from operations increased to $8.3 million in fiscal first quarter
1998 from $1.6 million in fiscal first quarter 1997, an increase of $6.7
million.  Income from operations as a percentage of contract 


                                         9

<PAGE>

revenues increased to 22.4% in fiscal first quarter 1998 from 5.2% in fiscal 
first quarter 1997, an absolute increase of 17.2%. This increase is primarily 
attributable to increases in revenue, improvements in gross profit margins, 
and reduction in SG&A and amortization expenses.
     
     Interest expense decreased to $8.8 million in fiscal first quarter 1998
from $9.5 million in fiscal first quarter 1997, a decrease of $0.7 million.
The decrease in interest expense  primarily resulted from the repurchase of
$50.0 million aggregate principal amount of the Company's 9 1/8% Senior Notes
completed in September 1997.
     
     Interest income decreased to $1.2 million in fiscal first quarter 1998
from $1.7 million in fiscal first quarter of 1997, a decrease of $0.5 million.
The decrease in interest income was primarily attributable to the lower levels
of interest bearing investments resulting from the Company's debt repurchase
and stock buyback for $79.0 million completed in September 1997.
     
     There was no income tax provision made on the pretax income in the fiscal
first quarter 1998 as the Company utilized the net operating losses for which a
valuation allowance was recorded in prior periods.  Similarly there was no
income tax credit on the pretax loss in the fiscal first quarter 1997 as a
result of recording a valuation allowance to fully reserve the net deferred tax
asset.
     
     Net income was $0.6 million in fiscal first quarter 1998 compared to a net
loss of $6.2 million in fiscal first quarter 1997, an increase of $6.8 million.

LIQUIDITY, CAPITAL RESOURCES AND COMMITMENTS
     
     Cash and cash equivalents, available-for-sale securities and restricted
cash increased to $88.0 million at December 31, 1997 from $79.2 million at
September 30, 1997.  The increase of $8.8 million was primarily a result of
approximately $21.1 million in cash provided by operations, including $13.5
million of customer advances, offset by the repayment of debt obligations of
$12.1 million.
     
     The Company's primary uses of cash are the funding of the Company's
capital expenditure requirements, payments on capital and operating leases,
principal and interest payments, and other working capital needs.  The
Company's capital and operating leases currently require minimum lease payments
of approximately $15.0 million in fiscal year 1998, decreasing to approximately
$10.6 million in the year 2000 and further decreasing thereafter as certain
leases are scheduled to expire.
     
     The Company's capital expenditures include maintenance capital
expenditures for existing facilities, and development and construction
expenditures for new emissions facilities.  The Company's development and
construction capital expenditures are dependent on the number of contracts it
is awarded, and are only incurred after the contract has been signed.  After
signing a contract, the Company may incur significant development and
construction expenditures, which the Company expects to finance with existing
cash resources, internally generated funds, additional borrowings and
alternative financing sources, including leasing alternatives.  It generally
takes one to two years after a contract has been signed for a program to begin
operations and generate revenues, depending on the size of the program.
     
     The Company's principal commitments at December 31, 1997 consist of
capital expenditure requirements for the completion of implementation of the
Illinois program estimated at $25.4 million, net of the $34.5 million in
payments from the state.  During fiscal 1998, the Company intends to spend
approximately $3.1 million in enhancements and other maintenance capital
expenditures.
     
     The Company believes that its existing cash resources, cash generated from
operations and alternative financing sources, including leasing alternatives,
will be sufficient to complete implementation of the Illinois program and to
meet its liquidity requirements for the foreseeable future.

                                         10

<PAGE>


RECENT ACCOUNTING PRONOUNCEMENTS

  In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
This Statement establishes standards for reporting and displaying comprehensive
income and its components in the consolidated financial statements. It does
not, however, require a specific format for the statement, but requires the
Company to display an amount representing total comprehensive income for the
period in that financial statement. This Statement is effective for the
Company's 1999 fiscal year.

  In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Statement establishes standards for
how public business enterprises are to report information about operating
segments in annual financial statements and requires those enterprises to
report selected information about operating segments in interim financial
reports issued to shareholders. This Statement is effective for the Company's
1999 fiscal year. The Company does not believe it currently has any separately
reportable segments.


                                         11

<PAGE>

                           ENVIROTEST SYSTEMS CORP.
                          PART II.  OTHER INFORMATION
                                       
ITEM 1.     LEGAL PROCEEDINGS

     STATE OF CONNECTICUT V. ENVIROTEST SYSTEMS CORP. Under the new contract
(the "Contract") entered into with the Company in April 1994, the State
unilaterally decided to continue the old testing procedure and phase in the
enhanced testing required by the new contract. Additionally, the Company was
unable to build two test facilities, one due to the State's inability to
provide the land the Contract required and the other due to the inability to
obtain zoning. As a result, the Company and the State of Connecticut were in
dispute concerning various financial issues related to the performance by each
of their respective obligations under the Contract. The State contended that
performance of the existing test, as distinct from the I/M240 procedure
specified in the Contract, resulted in substantial savings to Envirotest.
Envirotest complained to the State about additional costs incurred by
Envirotest when the State unilaterally changed the test requirements under the
Contract. In February 1996, the State issued a decision with respect to the
dispute pursuant to the Contract. The Commissioner's administrative decision 
awarded a minimum of $2.4 million to the State which continues to accrue 
damages until the facilities are built. The Company received the facsimile of 
the State's letter on February 9, 1996 and it received the certified copy of 
the letter on February 12, 1996. The Company, pursuant to the Contract, filed 
a demand for arbitration on March 11, 1996. The Company's demand for 
arbitration sought a declaration that the Company owed no money to the State 
and to further hold that the State owed Envirotest an unspecified amount of 
damages. On May 1, 1996, the State filed a lawsuit in State Superior Court in 
Hartford to enjoin the arbitration. The issue at dispute in the lawsuit is 
whether the thirty-day period within which to file for arbitration commences 
upon receipt of the decision by facsimile as the State contends, or upon 
receipt of a certified letter as the Company contends. The Court has 
scheduled a trial to hear this issue for April 8, 1998. The Company believes 
that it has valid defenses against the claims made by the State.

     GANZCORP INVESTMENTS, INC. V. ENVIROTEST SYSTEMS CORP. On September 26, 
1995 Ganzcorp Investments, Inc. d/b/a/ Mustang Dynamometer filed suit against 
Envirotest in U.S. District Court for the Northern District of Ohio. The suit 
alleged breach of contract and asked for damages in excess of $10.0 million. 
The suit was voluntarily dismissed on December 22, 1995 so that the parties 
could focus on settlement negotiations. No settlement was reached, and on 
October 8, 1997, the case was re-filed by Ganzcorp. The dispute relates to a 
1993 agreement between the parties for the supply of chassis dynamometers by 
Ganzcorp to the Company for its emission testing programs in Ohio, 
Connecticut, and Pennsylvania. When the Company's testing program with the 
State of Pennsylvania was canceled, the Company terminated its contract with 
Ganzcorp. That contract with Ganzcorp contained a "termination for 
convenience" clause under which Ganzcorp would be allowed to make a claim for 
certain costs incurred but such claim would be substantially below its stated 
claim of more than $10.0 million. Additionally, the Company has counterclaims 
against Ganzcorp for breach of contract and warranty obligations which it 
believes to be in excess of $7.9 million. On January 28, 1998, the Court 
granted the parties' Joint Motion for Stay Pending Professional Mediation, to 
permit the parties to attempt to settle their dispute through mediation 
before proceeding with the litigation. The Company believes that any judgment 
against the Company will not have a material adverse effect on its financial 
condition.

     R.W. GRANGER & SONS, INC. V. ENVIROTEST SYSTEMS CORP. Granger alleges a
breach of contract by the Company arising out of the retrofitting of 19 testing
stations and the construction of seven new testing stations in Connecticut. The
project began in 1994 and was completed in 1995. In September 1996, when
Envirotest and Granger could not reach agreement on the amounts due and owing,
Granger submitted a Demand for Arbitration with the regional office of the
American Arbitration Association located in East Hartford, Connecticut.
Granger's claim for compensation has fluctuated in amount since 1995. Granger's
most recent demand was approximately $2.0 million. On October 29, 1997, the
first arbitration hearing commenced and on that date, Granger filed a motion
with the arbitration board to amend its demand for arbitration to include a
claim under the Connecticut Unfair Trade Practices Act ("CUTPA"). Liability
under that Act would expose the Company to both punitive damages and attorney's
fees.  On November 5, 1997, the Company filed a motion with the arbitration
board in opposition to Granger's motion to amend its demand for arbitration.
On November 6, 1997, the Company also filed an application for injunctive 
relief in State Superior Court in Hartford to enjoin Granger from amending 
its demand for arbitration.  On November 13, 1997, Granger removed its motion 
to amend its demand for arbitration. On December 29, 1997, Granger filed a 
complaint in State Superior Court in the Judicial District of Hartford/New 
Britain at New Britain which alleges that the Company's failure to pay sums 
allegedly due and owing under the contract reference above is an unfair trade 
practice under the CUTPA. The arbitration hearings have continued on various 
dates with the final arbitration hearings scheduled for March or April of 
1998.  The Company believes that it has valid defenses against the claims 
made by Granger, and it further believes that any judgment against the Company 
will not have a material adverse effect on its financial condition.

     DORE V. ENVIROTEST SYSTEMS, CORP. On March 5, 1997, Timothy Dore filed a
class action suit against the Company in the Denver District Court. Dore seeks
to assert claims on behalf of the class of all 

                                         12

<PAGE>


persons who, from January 2, 1995, to the present, paid to have a vehicle 
tested in the Company's metro Denver facilities. In his Amended Complaint, 
Dore alleges that Envirotest breached its contractual obligations to the 
class and negligently performed emission testing. The suit does not identify 
the monetary amount sought. On June 30, 1997, the Company filed a Motion to 
Dismiss the Amended Complaint. Dore cross-moved for summary judgment. On 
November 22, 1997, the court granted the Company's Motion to Dismiss the 
Amended Complaint. On January 6, 1998, Dore filed a Notice of Appeal in the 
State of Colorado Court of Appeals with respect to the trial court's order 
dismissing the Amended Complaint.

     In addition to the above, the Company is a party to various other legal
proceedings and claims in the ordinary course of business. Although the claims
cannot be estimated, in the opinion of management the resolution of these
matters will not have a material adverse effect on the Company's consolidated
financial position and results of operations.




                                         13


<PAGE>

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K



     (a)  Exhibits
     
         (10.119) Separation, Release and Waiver Agreement made of the 30th day
         of September, 1997 by and between C. Michael Alston and Envirotest
         Systems Corp.

         (11) Statement of Computation of Income (Loss) Per Share

         (27) Financial Data Schedule
      
     (b)  Reports on Form 8-K

          1.   The Company filed a report on Form 8-K on October 31, 1997,
               reporting that $88,332,000 aggregate principal amount of its
               9 1/8% Senior Notes due 2001 were validly tendered in its 
               debt tender offer.


                                       14

<PAGE>

                                  SIGNATURES
   
   
   Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused their report to be signed on their behalf by the
undersigned thereunto duly authorized.
   
   

                              ENVIROTEST SYSTEMS CORP.
                              ----------------------------
                                   (Registrant)
                                       
                                       

                              ENVIROTEST TECHNOLOGIES, INC.
                              ----------------------------
                                    (Registrant)
                                       
                                       
                                       
                                       
                                       
                                       



Date: February 10, 1998        /s/ F. Robert Miller        
                             ----------------------------------------
                               F. Robert Miller
                               President and Chief Executive Officer



Date: February 10, 1998        /s/ Raj Modi
                             ----------------------------------------
                               Raj Modi
                               Vice President, Chief Financial Officer,
                               Treasurer and Assistant Secretary
                               (Principal Financial Officer)


                                      15

<PAGE>

                                       
                           ENVIROTEST SYSTEMS CORP.
                                       
                                       
                                 EXHIBIT INDEX
                                       
                                       



EXHIBIT
NUMBER:
-------
(10.119) Separation, Release and Waiver Agreement made 
         of the 30th day of September, 1997 by and between 
         C. Michael Alston and Envirotest Systems Corp.

(11)  Statement of Computation of Per Share Earnings        

(27)  Financial Data Schedule                               



                                         16