<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q



                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                              For The Quarter Ended
                                  June 30, 2001


                         Commission file number: 0-32789

                                   EMTEC, INC.
               (Exact name of Registrant as specified in charter)

<TABLE>
<S>                                                                        <C>
         Delaware                                                             87-0273300
(State or other jurisdiction of                                             (I.R.S. Employer
incorporation or organization)                                           Identification Number)
</TABLE>

                               817 East Gate Drive
                          Mt. Laurel, New Jersey 08054
                    (Address of principal executive offices)

                                 (856) 235-2121
              (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 the past 90 days.
                         Yes |  |                   No |X|

The number of shares of Common Stock outstanding as of August 10, 2001 was
7,080,498.






<PAGE>


                                   EMTEC, INC.
                  FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2001

                                Table of Contents

<TABLE>
<S>                                                                                                             <C>
PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

           Consolidated Balance Sheets
           June 30, 2001 (Unaudited) and March 31, 2001.........................................................1-2

           Consolidated Statements of Operations
           Three months ended June 30, 2001 (Unaudited) and 2000 (Unaudited) .....................................3

           Consolidated Statements of Cash Flows
           Three months ended June 30, 2001 (Unaudited) and 2000 (Unaudited) .....................................4

           Notes to Consolidated Financial Statements
           Three months ended June 30, 2001 and 2000 (Unaudited) ...............................................5-9

Item 2 - Management's Discussion and Analysis of Financial
           Condition and Result of Operations ................................................................10-12

Item 3 - Quantitative and Qualitative Information About Market Risk .............................................12

</TABLE>





<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                                   EMTEC, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                  June 30,     March 31,
                                                    2001         2001
                                                (unaudited)

<S>                                           <C>           <C>
Assets

Current Assets

Cash and cash equivalents                     $    157,748  $  2,098,198
Marketable securities                                5,825       292,346
Receivables:
  Trade, less allowance
   for doubtful accounts                        11,444,183    12,828,456
  Others                                           330,121       433,580
Inventories, net of reserve                        996,471     1,019,715
Prepaid expenses                                   353,792       296,939

    Total Current Assets                        13,288,140    16,969,234

Net property and equipment                         831,204       919,110

Investment in geothermal power unit                543,588       549,626

Deferred tax asset                                  19,816        22,996

Other assets                                       171,190       175,711


    Total Assets                              $ 14,853,938  $ 18,636,677

</TABLE>

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




                                       1






<PAGE>


                                   EMTEC, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>






                                                  June 30,      March 31,
                                                    2001          2001
                                                (unaudited)

<S>                                            <C>           <C>
    Liabilities and Shareholders' Equity

Current Liabilities

Line of credit                                 $  4,727,922  $  6,535,405
Due to related party                                 19,000        19,000
Accounts payable                                  4,932,985     7,284,625
Income taxes payable                                  2,087         2,087
Customer deposits                                     -           203,202
Accrued liabilities                               1,047,017     1,023,556
Deferred revenues                                 1,186,230       899,352

    Total Current Liabilities                    11,915,240    15,967,227

Deferred revenue                                    831,310       841,922

    Total Liabilities                            12,746,550    16,809,149


Shareholders' Equity

Common stock, $.01 par value; 25,000,000
  shares authorized; 7,080,498 shares issued
  and outstanding                                    70,805        70,805
Additional paid-in capital                        2,210,805     2,210,805
Accumulated other comprehensive income (loss)         3,083   (     5,458)
Accumulated deficit                             (   177,306)  (   448,624)


    Total Shareholders' Equity                    2,107,388     1,827,528

    Total Liabilities and
      Shareholders' Equity                     $ 14,853,938  $ 18,636,677

</TABLE>

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



                                       2





<PAGE>


                                   EMTEC, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (unaudited)

<TABLE>
<CAPTION>

                                                            Three Months Ended:

                                                         June 30,       June 30,
                                                           2001           2000

<S>                                                    <C>             <C>
Revenues:

   Procurement services                                $ 14,545,543    $ 23,814,231
   Service and consulting                                 4,958,242       3,616,074
   Geothermal                                                44,342           -

      Total Revenues                                     19,548,127      27,430,305

Cost of Revenues:
   Procurement services                                  12,847,215      21,506,446
   Service and consulting                                 3,933,413       2,843,366
   Geothermal                                                12,911           -

      Total Cost of Revenues                             16,793,539      24,349,812

Gross Profit:
   Procurement services                                   1,698,328       2,307,785
   Service and consulting                                 1,024,829         772,708
   Geothermal                                                31,431           -

      Total Gross Profit                                  2,754,588       3,080,493

Operating Expenses:
   Selling, general and
    administrative                                        2,154,416       2,604,090
   Termination costs                                          -              39,000
   Interest                                                  92,258         157,167
   Startup costs, E-Business                                233,416         338,506

       Total Operating Expenses                           2,480,090       3,138,763

Income (Loss) From Continuing Operations
   Before Other Income And Income Tax Expense               274,498     (    58,270)

Other income- litigation settlement                           -             373,911

Income tax expense                                            3,180           -

Income From Continuing Operations,
   Net of Income Taxes                                      271,318         315,641

Loss from discontinued operations,
   net of income taxes                                        -         (    44,583)
Net Income                                             $    271,318    $    271,058

Income Per Share From Continuing Operations
  {Basic And Diluted}                                     $   0.04       $   0.06

Net Income Per Share {Basic And Diluted}                  $   0.04       $   0.05

Weighted Average Number Of Shares
  Outstanding {Basic And Diluted}                         7,080,498       5,329,501
</TABLE>


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




                                       3





<PAGE>


                                   EMTEC, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (unaudited)

<TABLE>
<CAPTION>

                                                    Three Months Ended:

                                                   June 30,     June 30,
                                                     2001         2000

<S>                                              <C>          <C>
Cash Flows From Operating Activities

Net income for the three months                  $   271,318  $   271,061

Adjustments to Reconcile Net Income To Net
  Cash Used In Operating Activities
Depreciation and amortization                        116,822       80,895

Changes In Operating Assets and Liabilities
Decrease (increase) in marketable securities         295,062   (  174,149)
Decrease in receivables                            1,487,732       65,035
Decrease (increase) in inventories                    23,244   (1,090,833)
(Increase) decrease in prepaid expenses           (   56,853)     157,330
Decrease in deferred tax asset                         3,180         -
Decrease in accounts payable                      (2,351,641)  (  143,000)
Decrease in customer deposits                     (  203,202)  (  358,000)
Increase in accrued liabilities                       23,461        3,497
Increase (decrease) in deferred revenue              276,266   (  155,188)

Net Cash Used In Operating Activities             (  114,611)  (1,343,352)

Cash Flows From Investing Activities

Purchases of equipment                            (   18,356)  (      413)

Cash Flows From Financing Activities

Net (decrease) increase in line of credit         (1,807,483)     745,553

Net Decrease in Cash and Cash Equivalents         (1,940,450)  (  598,212)


Beginning Cash and Cash Equivalents                2,098,198      686,413


Ending Cash and Cash Equivalents                 $   157,748  $    88,201
</TABLE>



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



                                       4





<PAGE>

                                   EMTEC, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    THREE MONTHS ENDED JUNE 30, 2001 AND 2000
                                   (unaudited)

     1. Basis of Presentation

The financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three months ended June 30, 2001 are not necessarily indicative
of the results that may be expected for the year ending March 31, 2002. For
further information, refer to the annual financial statements and footnotes
thereto included in Form 10-K.

     2. Reverse Acquisition

On January 17, 2001, Emtec, Inc., a New Jersey corporation (the Company) was
acquired by American Geological Enterprises, Inc. (AGE) through an exchange of
stock at a ratio of .9753 shares of AGE stock for 1 share of Company stock
whereas AGE issued stock to the shareholders of the Company in exchange for
stock representing 100% of the outstanding shares of the Company.  Pursuant
to the acquisition agreement, AGE changed its name to Emtec, Inc. and a majority
of the directors and officers of the former AGE resigned in favor of the
directors and officers of the Company.  In addition, Emtec, Inc. (formerly
AGE) increased its authorized capitalizaton from 2,500,000 to 25,000,000 shares
of common stock.  Emtec, Inc. intends to seek a listing of its common stock on
NASDAQ's Over-The-Counter Bulletin Board.  Immediately after the transaction,
the stock ownership of Emtec, Inc. {formerly AGE} was as follows:

<TABLE>
<CAPTION>

                                                    Shares     Percent

<S>                                               <C>           <C>
         Former shareholders of the Company       5,329,501      75.3

         Original shareholders of AGE             1,380,997      19.5
           (including public owners)

         Transaction brokers                        370,000       5.2

         Total                                    7,080,498     100.0
</TABLE>

Because the former shareholders of the Company acquired control of Emtec,
Inc. {formerly AGE}, the transaction is considered a "reverse acquisition" by
the Company for accounting purposes. The Company is treated as the accounting
acquirer of Emtec, Inc. {formerly AGE}, the legal acquirer. For accounting
purposes, the acquisition has been treated as an acquisition of Emtec, Inc.
(formerly AGE) by Emtec. Inc., a New Jersey Corporation (the Company) and as a
recapitalization of the Company. The historical financial statements of the
Company are those of Emtec, Inc., a New Jersey corporation.

The historical shareholders' equity of the Company prior to the reverse
acquisition has been retroactively restated for the equivalent number of shares
received in the transaction after giving effect to the difference in par value



                                       5





<PAGE>

between the issuer's and acquirer's stock. Income per share amounts have also
been restated to reflect the number of equivalent shares received by the former
shareholders of Emtec, Inc. a New Jersey corporation.


     3. Financing Agreements

The Company was in default of the financial covenants under its line of credit
at March 31, 2001. Although, a commitment has been obtained from the lender to
waive the defaults and amend the existing financing agreement as outlined in
Form 10-K for the year ended March 31, 2001, the Company is seeking alternative
financing. Management believes that the Company can obtain financing at a lower
cost than the new terms outlined in the proposed amended agreement. On August 9,
2001, the Company signed a letter of intent with a new lender under more
favorable terms. The Company expects that the new lender will complete their due
diligence by August 30, 2001 and issue a commitment letter shortly thereafter.


     4. Stock-Based Compensation

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," (SFAS No. 123) encourages, but does not require companies to
record compensation cost for stock-based employee compensation plans at fair
value. The Company has adopted Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB No. 25). APB No. 25 provides
that the compensation expense relative to the Company's employee stock options
is measured based on the intrinsic value of the stock option. SFAS No. 123
requires companies that continue to follow APB No. 25 to provide a pro forma
disclosure of the impact of applying the fair value method of SFAS No. 123.

All stock options granted for the three months ended June 30, 2001 and 2000 were
determined to have a fair value of zero. The exercise price of these options was
set at $ 1 per share, an amount in excess of 150% of the fair value of the
underlying stock. Therefore, no options granted during the three month periods
have been exercised as of June 30, 2001. A pro forma presentation of
compensation cost and earnings per share is not required due to the zero fair
value determination. At September 23, 1996, options to purchase 372,895 shares
were issued primarily to the founders of the Company at an exercise price of
$ .48 per share. At June 30, 2001, 166,227 of these founder options were
outstanding. Option activity is summarized in the following table.

<TABLE>
<S>                                                          <C>

       Options outstanding - April 1, 2001                    465,259

       For the three months ended June 30, 2001:

       Options granted                                         49,186
       Options exercised                                           0

       Options forfeited or expired                          (    450)

       Options outstanding - June 30, 2001                    513,995
</TABLE>


     5. Net Income (Loss) per Share

The net income (loss) per share and the income per share from continuing
operations computations have been made in accordance with Statement of Financial
Accounting Standards No. 128 "Earnings Per Share" (SFAS No. 128). These per







                                       6




<PAGE>

share computations use the weighted average number of shares outstanding during
the period. SFAS No. 128 requires a separate presentation of diluted income per
share from continuing operations and diluted net income per share for the
potential dilutive effect of securities such as stock options. The Company
maintains a stock option plan as discussed in Note 3. However, based upon the
pricing of the options in excess of the underlying value of the Company stock
during the three months ended June 30, 2001 and 2000, the stock options are
antidilutive. Therefore, there is no separate presentation of diluted net income
per share.


     6. Litigation

At June 2000, the Company settled the litigation against two companies
(defendants) that were in discussions with Emtec about a possible merger. The
complaint in the action charged the two companies for breach of contract,
interference with business relationships and misappropriation of trade secrets.
Under terms of the settlement, the Company received a $350,000 cash payment and
333,116 shares of the defendant's common stock. The Company recorded income of
$373,911 from this settlement for the three months ended June 30, 2000.
Additional costs related to the litigation and realized losses on disposition of
the defendant's common stock recorded in the second half of fiscal 2001 reduced
net income from the litigation settlement to $24,108 for the year ended March
31, 2001.

In 1999 Emtec, Inc. instituted litigation against a company (defendant) for
breach of contract action in an amount approximating $50,000. The defendant has
stated a counter claim in excess of $8 million for damages resulting from
Emtec's alleged negligence, causing the defendant's computer system to become
corrupted and unavailable. Damages will be contested by Emtec, as will
liability. At June 30, 2001, the case is in the discovery phase.

     7. Income Taxes

Income tax expense consisted of the following for the three months ended June
30, 2001 and 2000:

<TABLE>
<CAPTION>

                                     2001         2000
<S>                             <C>           <C>
      Continuing Operations

           Current taxes
             Federal             $    -      $     -
             State                    -            -
                                      -            -
           Deferred taxes
             State                   3,180         -
                                     3,180         -
      Discontinued Operations

           Current benefit
             Federal                  -            -
             State                    -            -
                                 $    -      $     -

      Net Income Tax Expense     $   3,180   $     -
</TABLE>




                                       7






<PAGE>

     8. Discontinued Operations

During fiscal 2000, the Company completed the sale of assets of its two South
Carolina locations (Greenville and Charleston) to a company formed by some of
its prior employees. The Company recorded an additional loss from discontinued
operations of $ 44,583 for the three months ended June 30, 2000. The loss is
primarily due to bad debt charges in excess of recorded allowances related to
trade receivables.



     9. Segment Information

         The following is financial information relating to the operating
segments:

<TABLE>
<CAPTION>

         Three months ended June 30:             2001              2000

<S>                                        <C>               <C>
         External Sales

         Mt. Laurel, NJ                    $   2,705,294     $   3,513,027
         Cranford, NJ                          8,108,140        14,619,515
         Atlanta, GA                           4,420,820         5,326,956
         Norwalk, CT                             752,190           935,943
         Education-Atlanta                     3,517,345         3,034,867
         Geothermal                               44,342             -

              Total External Sales         $  19,548,127     $  27,430,308

         Interest Expense

         Mt. Laurel, NJ                    $      11,828     $      21,589
         Cranford, NJ                             43,184            70,744
         Atlanta, GA                              22,627            35,903
         Norwalk, CT                               4,571             6,517
         Education-Atlanta                        10,206            19,912
         e-Business                                   65              -
         Geothermal                                 -                 -

         Allocated Interest Expense               92,481           154,665
         (Over) under allocation            (        223)            2,502

             Total Interest Expense        $      92,258     $     157,167

</TABLE>



                                       8






<PAGE>

<TABLE>
<S>                                        <C>                <C>

         Depreciation and Amortization

         Mt. Laurel, NJ                    $       9,000     $      15,900
         Cranford, NJ                             22,461            30,760
         Atlanta, GA                              28,152            14,312
         Norwalk, CT                               2,850             2,000
         Education-Atlanta                           150             1,400
         e-Business                                3,000              -
         Geothermal                                6,039              -

         Allocated Depreciation
           and Amortization                       71,652            64,372

         Unallocated amounts                      45,170            16,523

             Total Depreciation
               and Amortization            $     116,822      $     80,895

</TABLE>

<TABLE>
<CAPTION>

Three months ended June 30:                  2001              2000

<S>                                              <C>              <C>
Operating Profit/(Loss)
         Mt. Laurel, NJ                    $(     65,994)    $(   181,464)
         Cranford, NJ                            310,446          233,786
         Atlanta, GA                        (     63,349)          62,647
         Norwalk, CT                        (     46,820)     (     5,086)
         Education-Atlanta                       355,448          170,363
         e-Business                         (    233,416)     (   338,506)
         Geothermal                               18,191              -

         Net Segment Operating
           Profit (Loss)                         274,506      (    58,260)

         Under Allocated Corporate Expenses (      3,188)     (         7)

         Income (Loss) from Continuing
         Operations before Other Income
         and Income Tax Expense            $     271,318     $(    58,267)

<CAPTION>

Identifiable Assets:
                                               June 30,        March 31,
                                                 2001            2001

<S>                                              <C>              <C>
         Mt. Laurel, NJ                    $  1,496,528    $  2,691,963
         Cranford, NJ                         3,933,175       7,690,440
         Atlanta, GA                          3,067,044       2,239,838
         Norwalk, CT                            535,308         433,860
         Education-Atlanta                    3,658,663       1,401,107
         e-Business                              34,000            -
         Geothermal                             578,588         549,626

         Total Identifiable Assets           13,303,306      15,006,834
         Corporate And Other Assets           1,550,632       3,629,843

         Total Assets                      $ 14,853,938    $ 18,636,677
</TABLE>



                                       9






<PAGE>


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

         The following discussion and analysis should be read in conjunction
with, and is qualified in its entirety by, the unaudited financial statements,
including the notes thereto, appearing elsewhere in this quarterly report, 10-Q.

         A. Results of Operations

               a)   Three Months Ended June 30, 2001 Compared to Three Months
                    Ended June 30, 2000.

                              (1) Total Revenues

         Total revenues from the IT business decreased by 28.90%, or $7.92
million, to $19.50 million for three months ended June 30, 2001. Product
procurement revenues decreased by 38.92%, or $9.27 million, to $14.55 million
for three months ended June 30, 2001. This decline in product procurement
revenue is mainly due to the continued focus on our services and consulting
organization as well as a slow-down in the economy. Services and consulting
revenue increased by 37.12%, or $1.34 million, to $4.96 million for three months
ended June 30, 2001 compared to $3.62 million for three months ended June 30,
2000.

         Geothermal Revenues of $44,342 for three months ended June 30, 2001 are
consistent with the previous period's revenues for a comparable period.

                              (2) Gross Profit

         Our aggregate gross profit from the IT business declined by 11.60%, or
$357,336, to $2.72 million for three months ended June 30, 2001. This decrease
is mainly due to lower product procurement revenues. Measured as a percentage of
net sales, our overall gross profit margin increased to 13.96% for three months
ended June 30, 2001 from 11.23% for three months ended June 30, 2000.

         Gross profit margin attributable to product sales increased to 11.68%
for three months ended June 30, 2001 from 9.69% for three months ended June 30,
2000. This increase in product procurement gross margin is attributable to lower
cost of sales for products obtained from our vendors as well as lower inventory
write-offs during this period. Gross margin attributable to services and
consulting revenue decreased slightly to 20.67% of services and consulting
revenue for three months ended June 30, 2001 from 21.37% for three months ended
June 30, 2000. This decrease is mainly due to slightly lower utilization rates
within the service and consulting group.

         The geothermal gross profit of $31,431 for three months ended June 30,
2001 is consistent with the gross profit for comparable previous periods.

                              (3) Sales, General, and Administrative Expenses

         Sales, general, and administrative expenses decreased by 17.27%, or
$449,674, to $2.15 million for three months ended June 30, 2001 from $2.60
million for three months ended June 30, 2000. This decrease is primarily a
result of lower sales commission expenses as well as our continued efforts to
streamline many of our sales and operational functions.




                                       10






<PAGE>

                              (4) Interest Expense

         Interest expense decreased by 41.30%, or $65,000 to $92,000 for three
months ended June 30, 2001 from $157,000 for three months ended June 30, 2000.
This decrease is primarily a result of lower sales volume as well as our
continued efforts to streamline our accounts receivable credit policies and
collection functions.

                              (5) Startup Costs; e-Business

         Startup Costs; e-Business for three months ended June 30, 2001 was
$233K, or 9.41% of total operating expenses compared to $338K, or 10.78% of
total operating expense for three months ended June 30, 2000. This decrease is
due to mainly two reasons; 1) lower head count within the group, 2) generation
of $40,000 revenue from e-Business activities during three months ended June 30,
2001 as compared to $0 from three months ended June 30, 2000.

                              (6) Income Taxes

          Income tax expense of $3,180 was recorded for three months ended June
30, 2001.

         B. Liquidity and Capital Resources

         Cash and cash equivalents at June 30, 2001 of $157,748 decreased by
$1,940,450, from $2,098,198 at March 31, 2001. We are a net borrower, so our
cash and cash equivalents balance must be analyzed along with the balance on our
line of credit. Working capital at June 30, 2001, and March 31, 2001, was
$1,372,900 and $1,002,007, respectively.

         Since our inception, we have funded our operations primarily from
borrowings under our credit facility. On September 24, 1999, the Company and IBM
Credit Corporation ("IBM") executed an Inventory and Working Capital Financing
Agreement whereby IBM expanded the Company's credit facility to enable the
Company to borrow up to $15 million. Interest on the borrowings is charged
monthly at one half point above the current prime rate. The loan is secured by
substantially all of our assets. At June 30, 2001, we had $4.73 million
outstanding under the credit facility.

         Our lending agreement with IBM contains financial covenants that
require us to maintain a minimum current ratio, minimum total liabilities to net
tangible worth ratio, and minimum results of assets to current liabilities
ratio, and total liabilities to net tangible worth ratio. The Company and IBM
have been unable to reach an agreement on the revised terms of the credit
facility so we are seeking an alternate lender. We cannot state with any
certainty how successful the Company will be in finding an appropriate
replacement lender. The lending agreement with IBM may be renewed on September
23, 2001 for an additional one-year term, or terminated on that date, at the
option of either party.

         On August 9, 2001 the Company signed a letter of intent with Summit
Business Capital Corporation whereby SBCC will offer the Company a revolving
credit facility up to $11 million based on 85% of eligible accounts receivable.
The Company expects that SBCC will complete their due diligence and audit by
August 30, 2001 and will issue a commitment letter soon after that.

         We have open credit lines with our primary trade vendors such as Ingram
Micro and Tech Data. As of June 30, 2001, the credit line with Ingram Micro was
$4.5 million, an 18% APR interest rate and an outstanding balance of $1.30
million. As of June 30, 2001, the credit line with Tech Data was $1.5 million,
no interest charged and an outstanding balance of $1.13 million. Under both
credit lines we





                                       11






<PAGE>

are obligated to pay each invoice within 30 days from the date of such invoice.
We do not have written agreements with either Ingram Micro or Tech Data.

         Capital expenditures of $18,356 during three months ended June 30,
2001, were primarily for the purchase of computer equipment for internal use.

         We believe that our available funds, together with existing and
anticipated credit facilities, will be adequate to satisfy our current and
planned operations for at least the next 12 months.

Item 3.           Quantitative and Qualitative Information About Market Risk

         We do not engage in trading market risk sensitive instruments and do
not purchase hedging instruments or "other than trading" instruments that are
likely to expose us to market risk, whether interest rate, foreign currency
exchange, commodity price or equity price risk. We have issued no debt
instruments, entered into no forward or future contracts, purchased no options
and entered into no swaps. Our primary market risk exposures are those of
interest rate fluctuations. A change in interest rates would affect the rate at
which we could borrow funds under our revolving credit facility. Our average
balance on the line of credit for the past two years has been approximately
$7.40 million. Assuming no material increase or decrease in such balance, a one
percent change in the interest rate would change our interest expense by
approximately $74,000 annually.






                                       12







<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized


                               EMTEC, INC.

                               By:  /s/  JOHN P. HOWLETT
                                   ------------------------
                                         John P. Howlett
                                         Chairman, President, and Chief
                                         Executive Officer
                                         (Principal Executive Officer)


                               By:  /s/  SAM BHATT
                                   ----------------------
                                         Sam Bhatt
                                         Vice President - Finance and Operations
                                         (Principal Financial and
                                         Accounting Officer)

Date: August 14, 2001