<PAGE>

                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the quarterly period ended August 25,2000

                                       OR

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

     For the transition period from _______ to _______

Commission File No. 1-10655

                       ENVIRONMENTAL TECTONICS CORPORATION
             -------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Pennsylvania                                   23-1714256
--------------------------------                    -------------------
  (State or other jurisdiction                         (IRS Employer
of incorporation or organization                    Identification No.)

                           COUNTY LINE INDUSTRIAL PARK
                         SOUTHAMPTON, PENNSYLVANIA 18966
                    ----------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (215) 355-9100
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant (1) has 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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days.

                 Yes    X             No
                     -------             -------

     The number of shares outstanding of the registrant's common stock as of
October 3, 2000 is: 7,099,246



                                       1

<PAGE>



                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                       Environmental Tectonics Corporation
                         Consolidated Income Statements
                                   (unaudited)

<TABLE>
<CAPTION>

                                      Three months ended:             Six months ended:
                                  ---------------------------   ---------------------------
                                   August 25,    August 27,     August 25,     August 27,
                                      2000           1999          2000           1999
                                  ------------   ------------   ------------  ------------
                                     (thousands, except share and per share information)
<S>                                <C>            <C>            <C>           <C>
Net sales                           $ 6,994        $ 8,279        $14,151        $16,574
Cost of goods sold                    4,316          5,456          8,118         10,477
                                    -------        -------        -------        -------

Gross profit                          2,678          2,823          6,033          6,097
                                    -------        -------        -------        -------

Operating expenses:
Selling and administrative            1,887          1,732          3,545          3,458
Research and development                309            375            484            497
                                    -------        -------        -------        -------
                                      2,196          2,107          4,029          3,955
                                    -------        -------        -------        -------
Operating income                        482            716          2,004          2,142
                                    -------        -------        -------        -------

Other expenses:
Interest expense                        211            166            403            343
Other, net                               25             28              4             46
                                    -------        -------        -------        -------
                                        236            194            407            389
                                    -------        -------        -------        -------
Income before income taxes              246            522          1,597          1,753
Provision for income taxes              106            182            573            614
                                    -------        -------        -------        -------
Income before minority interest         140            340          1,024          1,139
Income (loss) attributable to
  minority interest                      22            (32)            24            (67)
                                    -------        -------        -------        -------
Net income                          $   118        $   372        $ 1,000        $ 1,206
                                    =======        =======        =======        =======

Per share information:
Income available to common
  shareholders                      $   118        $   372        $ 1,000        $ 1,040
Income per share:  basic            $  0.02        $  0.05        $  0.14        $  0.16
Income per share:  diluted          $  0.02        $  0.05        $  0.13        $  0.14
Number of shares:  basic          7,097,000      6,855,000      7,071,000      6,675,000
Number of shares:  diluted        7,532,000      7,523,000      7,533,000      7,253,000

</TABLE>

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


                                       2
<PAGE>



                       Environmental Tectonics Corporation
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>


                                                                  August 25,   February 25,
                                                                     2000          2000
                                                                  ----------   ------------
                                                                  Unaudited
                                                                   (amounts in thousands,
                                                                   except share information)
<S>                                                              <C>              <C>

                Assets
Current assets:
  Cash and cash equivalents                                        $ 1,219       $ 1,725
  Cash equivalents restricted for letters of credit                  1,394            32
  Accounts receivable, net                                          14,641        10,771
  Costs and estimated earnings in excess of billings on
    uncompleted long-term contracts                                  9,758         8,878
  Inventories                                                        5,556         3,904
  Deferred tax asset                                                   689           689
  Prepaid expenses and other current assets                            381           482
                                                                   -------       -------
                                                                    33,638        26,481
Property, plant and equipment, at cost, net of accumulated
  depreciation of $8,270 at August 25, 2000 and $8,004 at
  Feb. 25, 2000                                                      3,399         3,300
Software development costs, net of accumulated amortization of
  $5,519 at August 25, 2000 and $5,215 at February 25, 2000            875         1,096
Other assets                                                           899         1,020
                                                                   -------       -------
    Total assets                                                   $38,811       $31,897
                                                                   =======       =======
       Liabilities and Stockholders' Equity
                 Liabilities
Current liabilities:
  Current portion of long-term bonds                               $   307       $   78
  Accounts payable - trade                                             925        1,830
  Billings in excess of costs and estimated earnings on
    uncompleted long-term contracts                                  3,807        3,282
  Customer deposits                                                  2,989        2,935
  Accrued income taxes                                                 687          455
  Accrued liabilities                                                1,418        1,595
                                                                   -------      -------
    Total current liabilities                                       10,133       10,175
                                                                   -------      -------

Long-term debt, less current portion:
  Credit facility payable to banks                                   4,403        4,093
  Long-Term Bonds, net                                               5,077            -
  Subordinated debt                                                    350          350
  Other                                                                  -           12
                                                                   -------      -------
                                                                     9,830        4,455
                                                                   -------      -------
Deferred income taxes                                                  652          652
                                                                   -------      -------
    Total liabilities                                               20,615       15,282
                                                                   -------      -------

Minority interest                                                      396          370
                                                                   -------      -------

              Stockholders' Equity
Common stock; $.05 par value; 20,000,000 shares authorized;
  7,097,446 and 6,864,280 issued and outstanding at
  August 25, 2000 and February 25, 2000, respectively                  355          343
Capital contributed in excess of par value of common stock           6,465        5,832
Foreign currency exchange adjustment                                  (152)         (62)
Retained earnings                                                   11,132       10,132
                                                                   -------      -------
    Total stockholders' equity                                      17,800       16,245
                                                                   -------      -------
Total liabilities and stockholders' equity                         $38,811      $31,897
                                                                   =======      =======
</TABLE>

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

                                       3
<PAGE>


                       Environmental Tectonics Corporation
                      Consolidated Statements of Cash Flows
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                      Six months ended
                                                                  August 25,     August 27,
                                                                    2000           1999
                                                                ------------   ------------
                                                                   (amounts in thousands)
<S>                                                               <C>            <C>
Cash flows from operating activities:
  Net income                                                      $ 1,000        $ 1,206
  Adjustments to reconcile net income to net cash (used)
    provided by operating activities:
    Depreciation and amortization                                     678            777
    Provision for losses on accounts receivable and inventories        47             45
    Minority interest                                                 (26)           (67)
    Changes in operating assets and liabilities:
      Accounts receivable                                          (3,867)          (919)
      Costs and estimated earnings in excess of billings on
        uncompleted long-term contracts                              (880)         1,121
      Inventories                                                  (1,702)        (1,976)
      Prepaid expenses and other assets                                65             (6)
      Other assets                                                     66           (213)
      Accounts payable                                               (905)           130
      Billings in excess of costs and estimated earnings on
        uncompleted long-term contracts                               525         (1,461)
      Customer deposits                                                54           (355)
      Accrued income taxes                                            232            (66)
      Other accrued liabilities                                      (198)            (2)
      Payments under settlement agreements                            (60)           (60)
                                                                  -------        -------
Net cash used in operating activities                              (4,971)        (1,846)
                                                                  -------        -------

Cash flows from investing activities:
  Acquisition of equipment                                           (365)          (134)
  Capitalized software development costs                              (83)          (237)
  Purchase of subsidiary, net                                         142              -
                                                                  -------         ------
Net cash used in investing activities                                (306)          (371)
                                                                  -------         ------

Cash flows from financing activities:
  Net borrowings  under credit facility                               310              -
  Proceeds from long-term bonds                                     5,470              -
  Deferred financing costs                                           (175)             -
  Payment of dividends on preferred stock                               -            (38)
  Increase in cash equivalents restricted for letters of
    credit                                                         (1,362)             -
  Proceeds from issuance of common stock/warrants                     633             85
  Capital leases/other                                                (15)           (65)
                                                                 --------       --------
Net cash provided (used) by financing activities                    4,861            (18)
                                                                ---------       --------

Effect of exchange rate changes on cash                               (90)          (120)
Net decrease in cash and cash equivalents                           ( 506)        (2,355)
Cash and cash equivalents at beginning of period                    1,725          5,344
                                                                  -------       --------
Cash and cash equivalents at end of period                        $ 1,219       $  2,989
                                                                  =======       ========

Supplemental schedule of cash flow information:
  Interest paid                                                       253            240
  Income taxes paid                                                   312            678
Supplemental information on noncash operating and investing
  activities:
  During the six month period ended August 27,1999, the Company
    transferred a net of $216 from inventory to property, plant
    and equipment.
</TABLE>

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

                                       4
<PAGE>



                       Environmental Tectonics Corporation
                   Notes to Consolidated Financial Statements
  (amounts in dollars, except where noted and share and per share information)

1.  Basis of Presentation

     The accompanying consolidated financial statements include the accounts of
Environmental Tectonics Corporation ("ETC" or the "Company"), its wholly-owned
subsidiaries ETC International Corporation, Entertainment Technology
Corporation, and ETC Europe, and its majority-owned subsidiary ETC-PZL Aerospace
Industries, Ltd. ("ETC-PZL").

     The accompanying consolidated financial statements have been prepared by
Environmental Tectonics Corporation, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and reflect all
adjustments which, in the opinion of management, are necessary for a fair
statement of the results for the interim periods presented. All such adjustments
are of a normal recurring nature.

     Certain information in footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted pursuant to such rules and regulations and the
financial results for the period presented may not be indicative of the full
year's results, although the Company believes the disclosures are adequate to
make the information presented not misleading. These financial statements should
be read in conjunction with the financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended February
25, 2000. Certain reclassifications have been made to the 1999 financial
statements to conform with the 2000 presentation.

2.  Earnings per Share

     Basic earnings per share excludes dilution and is computed by dividing
income available to common shareholders by the weighted average common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised and converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. The following table
demonstrates the components of basic and diluted earning per share for the three
and six month periods ended August 25, 2000 and August 27, 1999. All earnings
per share and share amounts have been restated to reflect a 2 for 1 stock split
effective May 28, 1999.

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                (amounts in thousands, except
                                               share and per share information)
                                      Three months ended:             Six months ended:
                                  ---------------------------------------------------------
                                    August 25,     August 27,     August 25,     August 27,
                                      2000           1999           2000           1999
                                  ------------   ------------   ------------   ------------
<S>                                 <C>             <C>            <C>           <C>
Net income                              $118           $372         $1,000         $1,206
Less preferred stock dividends             -              -              -            (38)
Less accretion of preferred stock          -              -              -           (128)
                                   ---------      ---------     ----------     ----------

Income available to common
  stockholders                          $118           $372         $1,000         $1,040
                                   =========      =========      =========      =========

Basic earnings per share:
  Weighted average shares          7,097,000      6,855,000      7,071,000      6,675,000
  Per share amount                     $0.02          $0.05          $0.14          $0.16
                                   =========      =========      =========      =========

Diluted earnings per share:
  Weighted average shares          7,097,000      6,855,000      7,071,000      6,675,000
  Effect of dilutive  securities:
    Stock options                    120,000        189,000        162,000        169,000
    Stock warrants                   315,000        479,000        300,000        409,000
                                   ---------      ---------      ---------      ---------
                                   7,532,000      7,523,000      7,533,000      7,253,000
  Per share amount                     $0.02          $0.05          $0.13          $0.14
                                   =========      =========      =========      =========

</TABLE>


3.  Accounts Receivable

     The components of accounts receivable are as follows:

<TABLE>
<CAPTION>


                                                                  August 25,   February 25,
                                                                    2000           2000
                                                                ------------   ------------
                                                                   (amounts in thousands)
<S>                                                               <C>            <C>
U.S. Government receivables billed and unbilled contract
  costs subject to negotiation                                     $ 5,818        $ 5,145
U.S. commercial receivables billed                                   4,159          1,395
International receivables billed and unbilled contract costs
  subject to negotiation                                             5,028          4,598
                                                                   -------        -------
                                                                    15,005         11,138
Less allowance for doubtful accounts                                  (364)          (367)
                                                                    ------        --------
                                                                   $14,641       $ 10,771
                                                                   =======       ========
</TABLE>

U.S. Government receivables billed and unbilled contract costs subject to
negotiation:

     Unbilled contract costs subject to negotiation represent claims made or to
be made against the U.S. Government under a contract for a centrifuge. These
costs were recorded beginning in fiscal year 1994, including $1,148,000 recorded
during the first quarter of fiscal 2001. The Company has recorded claims,
amounting to $3,898,000 to the extent of contract costs incurred, and accounts
receivable of $1,649,000 representing the balance due under the contract. Claim


                                       6
<PAGE>

costs have been incurred in connection with U.S. Government caused delays,
errors in specifications and designs, and other unanticipated causes and may not
be received in full during fiscal 2001. In accordance with generally accepted
accounting principles, revenue recorded by the Company from a claim does not
exceed the incurred contract costs related to the claim. The Company currently
has approximately $12,000,000 in claims filed with the U.S. Government
(including the aforementioned recorded claim and accounts receivable balances),
which are subject to negotiation and audit by the U.S. Government. The U.S.
Government has responded to the claims with either denials or deemed denials
that the Company has appealed. In May 2000, the Company and the U.S. Government
reached an agreement in principle which would have included resolution of all
U.S. Navy claims on a global basis and contracted additional work on the
centrifuge. In July 2000, the Company received notice that the Navy, citing an
inability to obtain the requisite approvals and thus the necessary funding to
effect the settlement, was rescinding the agreement.

International receivables and unbilled contract costs subject to negotiation

     International receivables billed includes $900,000 related to a certain
contract with the Royal Thai Air Force.

     In October 1993, the Company was notified by the Royal Thai Air Force
("RTAF") that the RTAF was terminating a certain $4,600,000 simulator contract
with the Company. Although the Company had performed in excess of 90% of the
contract, the RTAF alleged a failure to completely perform. In connection with
this termination, the RTAF made a call on a $229,000 performance bond, as well
as a draw on an approximately $1,100,000 advance payment letter of credit. Work
under this contract had stopped while under arbitration, but on October 1, 1996,
the Thai Trade Arbitration Counsel rendered its decision under which the
contract was reinstated in full and the Company was given a period of nine
months to complete the remainder of the work. Except as noted in the award, the
rights and obligations of the parties remained as per the original contract
including the potential invoking of penalties or termination of the contract for
delay. On December 22, 1997, the Company successfully performed acceptance
testing and the unit passed with no discrepancy reports. Although the contract
was not completed in the time allotted, the Company has requested an extension
on the completion time due to various extenuating circumstances, including
allowable "force majeure" events, one of which was a delay in obtaining an

                                       7

<PAGE>

export license to ship parts required to complete the trainers. The balance due
on the contract is still under review and at this point the Company is not able
to determine what, if any, impact the extended completion period will have upon
the receipt of final payment. However, the Company continues to pursue recovery.

     Unbilled contract costs subject to negotiation represent claims made or to
be made against an international customer for three contracts covering 1994 to
the present. Claims aggregating $2,703,000 have been recorded, including
$1,093,000 in the current quarter. (This additional claim receivable, and
corresponding claims revenue, was completely offset by a decrease in contract
value and corresponding contract revenue to adjust the unbilled balance on two
of these contracts for a foreign exchange loss as these contracts are
denominated in British pound sterling.). Claim costs have been incurred in
connection with customer caused delays, errors in specifications and designs,
and other out-of-scope items, and may not be received in full during fiscal
2001. In accordance with generally accepted accounting principles, revenue
recorded by the Company from a claim does not exceed the incurred contract costs
related to the claim. The Company is currently updating and finalizing these
claims and also has begun legal proceedings in the United Kingdom against the
customer. As a related item, during the third quarter of fiscal 2000, the
aforementioned international customer, citing failure to deliver product within
contract terms, assessed liquidated damages totalling approximately $1,600,000
on two contracts currently in progress. The Company disputes the basis for these
liquidated damages and plans to contest them vigorously. However, following
generally accepted accounting principles, the Company has reduced contract
values by approximately $1,600,000 and corresponding revenue recognition by
$1,573,000.

4.  Inventories

     Inventories are valued at the lower of cost or market using the first in,
first out (FIFO) method and consist of the following (net of reserves):


                                  August 25,      February 25,
                                    2000             2000
                                ------------     -------------
                                     (amounts in thousands)
Raw materials                     $  296             $  343
Work in Process                    5,260              3,561
                                  ------             ------
                                  $5,556             $3,904


                                      8

<PAGE>


5. Stockholders' Equity

     The components of stockholders' equity at February 25, 2000 and August 25,
2000 were as follows:

<TABLE>
<CAPTION>
                                    (amounts in thousands, except share information)

                               Common Stock                  Accumulated
                            ------------------   Additional  other comp.  Retained
                              Shares    Amount     Capital     income     Earnings    Total
                            ---------   ------   ----------   --------   --------   --------
<S>                          <C>        <C>       <C>         <C>          <C>       <C>
Balance, February 25,
  2000                      6,864,280    $343      $5,832      $ (62)     $10,132   $16,245

Net income for six
  month period ended
  August 25, 2000                   -       -           -          -        1,000     1,000
Other conprehensive loss            -       -           -         (90)          -       (90)
                             --------    ----      ------     -------     -------    ------
Total comprehensive income          -       -           -         (90)          -       910
Shares issued in con-
  nection with conver-
  sion of
  warrants                    212,866      10         508                               518
Shares issued in con-
  nection with employee
  stock option plans           20,300       2         125           -           -       127
                             --------   -----      ------     -------    --------    ------
Balance at August 25,
  2000                      7,097,446    $355      $6,465       $(152)    $11,132   $17,800
                            =========    ====      ======       =====     =======   =======
</TABLE>


6.  Business Segment Presentation:

     The Company primarily manufactures under contract various types of
high-technology equipment which it has designed and developed. The Company
considers its business activities to be divided into two segments: Aircrew
Training Systems (ATS) and Industrial Simulation. The ATS business segment
produces devices which create and monitor the physiological effects of motion,
including spatial disorientation and centrifugal forces for the medical,
training, research and entertainment markets. The Industrial Simulation business
segment produces chambers that create environments that are used for
sterilization, research, and medical applications. The following segment
information reflects the accrual basis of accounting:

                                       9
<PAGE>

                                                Industrial
                                     ATS        Simulation     Total
                                  ----------   -----------  ----------
                                         (amounts in thousands)

Three months ended
  August 25, 2000
-------------------
Net Sales                         $ 4,927        $2,067      $  6,994
Interest Expense                      146            26           172
Deprec. And Amort.                    220           122           342
Operating Income                      709             6           715
Income Tax Prov.                      197            (7)          190
Identifiable Assets                25,466         5,364        30,864
Expend. For Seg. Assets               239            50           289

Three months ended
  August 27, 1999
-------------------
Net Sales                          $6,250        $2,029       $ 7,759
Interest Expense                      105            17           122
Deprec. And Amort.                    259            99           358
Operating Income                    1,076            50         1,126
Income Tax Prov.                      340            12           352
Identifiable Assets                21,964         3,516        25,480
Expend. For Seg. Assets               154            25           179

Reconciliation to                    2000         1999
consolidated amounts                -----         -----
   Segment operating income         $ 715       $ 1,126
   Less interest expense             (172)         (122)
   Less income taxes                 (190)         (352)
                                    -----       -------
Total profit for segments           $ 353       $   652

Corporate home off. exps.            (233)         (410)
Interest and other exps.              (64)          (72)
Income tax benefit                     84           170
Minority interest                     (22)           32
                                    -----       -------
Net income                          $ 118       $   372
                                    =====       =======

                                                Industrial
                                     ATS        Simulation    Total
                                  ----------   -----------  ----------
                                         (amounts in thousands)
Six months ended
  August 25, 2000
-------------------
Net Sales                         $10,703        $3,448       $14,151
Interest Expense                      265            59           324
Deprec. And Amort.                    462           216           678
Operating Income                    2,686          (253)        2,433
Income Tax Prov.                      847          (109)          738
Identifiable Assets                25,466         5,364        30,830
Expend. For Seg. Assets               421            92           513


Six months ended
  August 27, 1999
-------------------
Net Sales                        $ 13,116        $3,458       $16,574
Interest Expense                      220            42           262
Deprec. And Amort.                    607           170           777
Operating Income                    2,750           114         2,864
Income Tax Prov.                      886            26           912
Identifiable Assets                21,964         3,516        25,480
Expend. For Seg. Assets               269            53           322

Reconciliation to consol. amts:     2000           1999
                                   -----          -----
   Segment operating income      $  2,433       $ 2,864
   Less interest expense             (324)         (262)
   Less income taxes                 (738)         (912)
                                 --------       -------
Total profit for segments        $  1,371       $ 1,690

Corporate home off. exps.            (429)         (723)
Interest and other exps.              (83)         (127)
Income tax benefit                    165           299
Minority interest                     (24)           67
                                 --------       -------
Net income                       $  1,000       $ 1,206
                                 ========       =======

                                       10
<PAGE>

     Segment operating income (loss) consists of net sales less applicable costs
and expenses related to those revenues. Unallocated general corporate expenses
and other miscellaneous fees have been excluded from total profit for segments.
General corporate are primarily central administrative office expenses including
executive salaries, stockholder expenses and legal and accounting fees. Other
miscellaneous expenses include banking and letter of credit fees. Property,
plant and equipment are not identified with specific business segments as these
are common resources shared by all segments.

     Approximately 50.0% of sales totaling $3,539,000 in the second quarter of
fiscal 2001 were made to two international and one domestic customer primarily
in the ATS segment. Approximately 48.9% of sales totaling $4,052,000 in the
second quarter of fiscal 2000 were made to two domestic and one international
customer in the ATS segment.

     Approximately 45.4% of sales totaling $6,421,000 in the six months ended
August 25, 2000, were made to two international and one domestic customer
primarily in the ATS area. Approximately 43.9% of sales in the six months ended
August 25, 1999, were made to two international customers primarily in the ATS
segment.

     Included in the segment information for the second quarter of fiscal 2001
are export sales of $ 3,148,000. Of this amount, there are sales to commercial
or government accounts in Great Britain of $863,000, Nigeria of $881,000, and
Poland of $740,000. Sales to the US government and its agencies aggregate
$111,000 for the period.

     Included in the segment information for the second quarter of fiscal 2000
are export sales of 4,154,000. Of this amount, there are sales to government
accounts in Great Britain of $1,692,000. Sales to the US government and its
agencies aggregate $282,000 for the period.

     Included in the segment information for the six months ended August
25, 2000, are export sales of $6,394,000. Of this amount, there are sales to
commercial or government accounts in Great Britain of $1,858,000 and Nigeria of
$1,527,000. Sales to the US government and its agencies aggregate $1,573,000 for
the period.

     Included in the segment information for the six months ended August 27,
1999, are export sales of $10,156,000. Of this amount, there are sales to
commercial or government accounts in Great Britain of $3,088,000 and Nigeria of
$4,190,000. Sales to the US government and its agencies aggregate $500,000 for
the period.

7. Subsequent Events

   On September 9, 2000, the company purchased the assets of the "Pro-Pilot"
flight simulation game for $400,000 cash. The Company plans to develop a next
generation "Pro-Pilot 2000"tm game which will be marketed through the internet.
Also, this software is expected to be integrated into our General Aviation
Trainer product for commercial application.

   On September 27, 2000, the Company purchased another 30% ownership in ETC-PZL
for $300,000 cash. With this purchase, the Company's ownership increases to 95%.

8.  Derivative Instruments and Hedging Activity

     In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, " Accounting and
Derivative Instruments and Hedging Activity." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments imbedded in other contracts and for Hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
as fair value. If certain conditions are met, a derivative may be specifically
designated as a hedge. The accounting for changes in the fair value of a
derivative (gains and losses) depends on the intended use of the derivative and
resulting designation. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. Earlier application is permitted
only as of the beginning of any fiscal quarter. The Company is currently
reviewing the provisions of SFAS No. 133.


                                       11

<PAGE>



Item 2.  Management's Discussion and Analysis of Results of
         Operations and Financial Condition
    (amounts in dollars, except where noted and share and per share amounts)

Results of Operations
Three months ended August 25, 2000 compared to August 27, 1999.

     The Company had net income of $118,000, or $.02 per share (diluted), versus
net income of $372,000 or $.05 per share (diluted), for the corresponding second
quarter of fiscal 2000. Sales for the quarter were $6,994,000, a decrease of
$1,285,000 or 15.5%, over the corresponding prior period. The primary
contributors to the sales decrease were international contracts for the
Company's Aircrew Training Systems. Partial offsets were an increase in domestic
Sterilizer work, Environmental Systems projects, and a 45.0% increase in the
entertainment business unit. Overall, domestic sales were down $108,000, or 2.8%
from the prior period, and represented 53.4% of the Company's total sales, up
from 46.4% a year ago. International sales were down $1,007,000 or 24.2%, and
represented 45.0% of total sales, down from 50.2% in the prior period.

     Gross profit dollars were down $145,000 from the prior period, reflecting
the lower sales level, although the rate as a percentage of sales was up 4.2
percentage points to 38.3%. Rate increases were evidenced in all product
categories except Sterilizers. ATS performance in the prior peroid included a
series of new products under development which experienced low margins as
compared to current projects in process.

     Selling and administrative expenses increased $156,000 or 8.9%. This
reflected additional hiring, commissions and claims legal expenses domestically
and local expenses for the Company's ETC Europe subsidiary acquired in March,
2000.

     Research and development expenses were down from the prior period
reflecting reduced product development primarily in the Company's entertainment
area.

     Interest and other fees were up $42,000 or 21.6% reflecting increased
borrowings albeit at a lower rate.

     The Company's tax rate approximated the statutory rate for both periods.

                                       12
<PAGE>

Results of Operations
Six months ended August 25,2000 compared to August 27, 1999.

     The Company had net income of $1,000,000, or $.13 per share (diluted),
versus net income of $1,206,000, or $.14 per share (diluted), for the
corresponding period of fiscal 2000. Sales for the six months were $14,151,000,
a decrease of $2,423,000 or 14.6% over the corresponding prior period. The
primary contributor to the sales decrease was international contracts for the
Company's Aircrew Training Systems. A partial offset was increased domestic
sales for entertainment products and the Chicago O'Hare Airport simulation
project and increased government claims revenue of $1,148,000.

     Overall, domestic sales were up $1,150,000 or 22.8% over the prior period,
and represented 43.7% of the Company's total sales, up from 30.4% a year ago.
Government sales, reflecting the aforementioned claims revenue, were up
$1,072,000 or 214.0% over the prior period, and represented 11.1% of total
sales, up from 3.0% in the prior period.

     Gross profit decreased $64,000, or 1.0% as the sales decrease was mostly
offset by an increase in the rate as a percentage of sales of 5.8 percentage
points. As a percentage of sales, gross profit was 42.6%, compared to 36.8% for
the same period a year ago. The primary contributor to this increase in rate was
the claims revenue booked in the second quarter of this year.

     Selling and administrative expenses increased $87,000, or 2.5%, reflecting
additional expenses in the Company's Polish subsidiary and the addition of local
expenses for the Company's ETC Europe subsidiary acquired in March, 2000.

     Research and development expenses were down slightly between the periods as
additional software work in the Company's Turkish subsidiary in the current
period offset reduced entertainment project development in the prior period.

     Interest and other fees were up $18,000 or 4.6% from the prior period
reflecting increased interest charges on higher borrowings.

     The Company's tax rate approximated the statutory rate in both periods.


                                       13
<PAGE>

Liquidity and Capital Resources

     During the six month period ended August 25,2000, the Company used
$4,971,000 for operating activities. This was primarily a result of an increase
in accounts receivable and inventories, an increase in costs and estimated
earnings in excess of billings on uncompleted long-term contracts, and a
decrease in accounts payable. Positive cash was generated by net income,
non-cash expenses, and an increase in billings in excess of costs and estimated
earnings on uncompleted long-term contracts. Versus last year's corresponding
period, net cash used in operating activities reflected a decrease of $3,125,000
as the prior period included higher billing activity.

     Investment activities consisted of purchases for capital equipment,
capitalized software, and the net cash impact of buying ETC Europe.

     Financing activities consisted of cash from the issuance of long-term bonds
and cash from the issuance of stock partially offset by an increase in
restricted cash. On February 25, 2000, the Company signed an amendment to its
revolving credit agreement originally entered into on March 27,1997, which
increased its credit facility to $15,000,000 and extended its expiration date to
August 31, 2001.(Subsequent to fiscal quarter end, the Company's main lender
agreed to extend this agreement for an additional year.) Terms and conditions of
the amendment remained essentially the same as the original agreement.
Substantially all of the Company's short term financing is provided by this
bank. On March 15, 2000, the Company issued approximately $5,500,000 of
unregistered taxable variable rate demand/fixed rate revenue bonds (Series of
2000). Net proceeds from these bonds were used to repay a $4,100,000 advance
taken on the Company's revolving credit facility and to finance construction of
an addition to the Company's main plant in Southampton, Pa. The bonds are
secured by a $5,600,000 irrevocable direct pay letter of credit issued by the
Company's main lender which expires on March 15, 2005 and which is secured by
all assets of the Company. The bonds carry a maturity date of April 1, 2020,
bear a variable interest rate which adjusts each week to a rate required to
remarket the bonds at full principal value (currently at 6.6% on September 28,
2000) with a cap of 17%, and are subject to mandatory redemption of $275,000 per
year for 19 years and $245,000 for the 20th year.

     The Company's sales backlog at August 25, 2000, and February 25, 2000, for
work to be performed and revenue to be recognized under written agreements after
such dates was approximately $39,383,000 and $44,146,000, respectively. In
addition, the Company's training and maintenance contracts backlog at August 25,
2000, and February 25,2000, for work to be performed and revenue to be
recognized after that date under written agreements was approximately $1,017,000
and $1,288,000, respectively.


                                       14
<PAGE>


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

     This report contains certain 'forward-looking statements' including,
without limitation, statements containing the words "believes", "anticipates",
intends", "expects", and words of similar import relating to the Company's
operations. There are important factors that could cause actual results to
differ materially from those indicated by such forward-looking statements
including contract delays and cancellations, political unrest in customer
countries, general economic conditions and the risk factors detailed from time
to time in ETC's periodic reports and registration statements filed with the
Securities and Exchange Commission, including, without limitation, ETC's Annual
Report on Form 10-K for the fiscal year ended February 25, 2000.










                                       15


<PAGE>



                           Part II - OTHER INFORMATION

Item 1.  Legal Proceedings
         none

Item 2.  Changes in Securities

     The constituent instruments defining the rights of the holders of any class
of securities were not modified nor were the rights evidenced by any class of
registered securities materially limited or qualified during the period covered
by this report.

Item 3.  Defaults Upon Senior Securities

     No defaults occurred during the period covered in this report.

Item 4.  Submission of Matters to Vote of Security Holders
         none

Item 5.  Other Information
         None

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits:

         3.1  Articles of Incorporation (Incorporated herein by reference to
              Exhibit 3.1 to the Registrant's Annual Report on Form 10-KSB for
              the fiscal year ended February 28, 1997).

         3.2  Bylaws (Incorporated herein by reference to Exhibit 3(ii) to the
              Registrant's Annual Report on Form 10-K for the fiscal year ended
              February 25, 1994).


         Exhibit 27 - Financial Data Schedule

     (b) Reports on Form 8-K
         None








                                       16

<PAGE>



                            Signatures

     Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

Date:  October 10, 2000          ENVIRONMENTAL TECTONICS CORPORATION

                                 (Registrant)

                                 By:/s/Duane Deaner
                                    --------------------------------
                                    Duane Deaner,
                                    Chief Financial Officer
                                    (authorized officer and
                                    principal financial officer)







                                       17
<PAGE>



                                  EXHIBIT INDEX

 3.1  Articles of Incorporation (Incorporated herein by reference to Exhibit 3.1
      to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended
      February 28, 1997).

 3.2  Bylaws (Incorporated herein by reference to Exhibit 3(ii) to the
      Registrant's Annual Report on Form 10-K for the fiscal year ended
      February 25, 1994).

27    Financial Data Schedule









                                       18