As Filed with the Securities Exchange Commission on January 13, 2006

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                    FORM 10-K
                                   (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended September 30, 2005
                                       OR
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        Commission File Number: 000-21956

                               EVANS SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

                Texas                                 74-1613155
      (State or other jurisdiction                 (I.R.S. Employer
    of incorporation or organization)            Identification number)

             102 South Mechanic, P.O. Box 550, El Campo, Texas 77437
   (Address, including Zip Code, of registrant's principal executive offices)

                                 (979) 245-2424
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:

       Title of each class             Name of each exchange on which registered
       -------------------             -----------------------------------------
         Common Stock,                          NASDAQ-OTCBB Exchange
     par value $.01 per share

Indicate by check mark whether the Registrant 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 has been subject to such filing requirements
for the past 90 days. Yes [X] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [_] No [X]

Indicate by checkmark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]

Approximate aggregate market value of common stock held by
 non-affiliates of the registrant as of September 30, 2005            $  294,000
Number of shares of common stock outstanding as of December 31, 2005  10,430,196



DOCUMENTS INCORPORATED BY REFERENCE: None.

<PAGE>


                                     PART I
                                     ------

This Annual Report on Form 10-K contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created thereby. Investors are
cautioned that all forward-looking statements involve risks and uncertainty,
including without limitation, the ability of the Company to successfully
implement its turnaround strategy, changes in costs of raw materials, labor, and
employee benefits, as well as general market conditions, competition and
pricing. Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this Annual Report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as representation by the Company or any other person that
the objectives and plans of the Company will be achieved. In assessing
forward-looking statements included herein, readers are urged to carefully read
those statements. When used in the Annual Report on Form 10-K, the words
"estimate," "anticipate," "expect," "believe," and similar expressions are
intended to be forward-looking statements.

Item 1.  Business

Evans Systems Inc. and its subsidiaries, (dba MC Star and collectively referred
to herein as the "Company") operate 3 convenience stores selling gasoline,
merchandise and fast food to the motoring public, provides environmental
remediation services in southern Texas and provide freight deliver services of
petroleum products.

Recent Events
-------------
In December 2005, the Company sold its inventory in its remaining operating
convenience stores with the intent the stores and store equipment will be leased
to outside operators, effectively discontinuing its Texas Convenience Store
Segment operations. Accordingly, the results of operations of the Texas
Convenience Store segment have been classified as discontinued operations and
prior periods have been restated. The Company has not allocated interest expense
or general corporate overhead to discontinued operations. The Company is
currently searching for a lessee to lease and operate the convenience stores
owned by the Company.

In December 2005, Mr. Thomas Cain and Mr. Randall Dean Lewis resigned from the
Board of Directors of the Company.

On January 4, 2006, StarCo. Environmental Services, a subsidiary of the Company,
completed the purchase of all the assets of PSG Technical Services, Inc., a
drilling company, for $185,000. The purchase was financed by the seller under a
note agreement that calls for interest only payments from February 15, 2006 to
April 15, 2006 at 8% and then principal and interest payments of $2,623 per
month for 84 months with all unpaid principal and interest due on May 15, 2013.
The Company believes the addition of a drilling company will enhance StarCo.'s
overall business by providing a new revenue source.

On July 1, 2004, the Company entered into an agreement with Mauritz & Couey (MC)
whereby the Company conveyed its Exxon, Chevron and unbranded fuel distribution
contracts and certain petroleum marketing distribution assets, accounts
receivable and inventory to MC for relief of amounts owed to MC for fuel
purchases and management fees, the assumption of the Company's line of credit
obligation by MC and the issuance of a note receivable. As a result of the
transaction, the Company discontinued its petroleum marketing distribution
segment and effectively disposed of the segment's assets. See Discontinued
Operations discussion below. From July 1, 2004 until December 31, 2004, the
Company continued to deliver fuel products to MC customers and the Company was
reimbursed by MC at common carrier freight rates, resulting in an immaterial
impact to the Company's operations. Effective January 1, 2005, the remaining
employees of the Petroleum Marketing segment were terminated and the Company
ceased delivering fuel products as a common carrier.


                                     Page 2
<PAGE>


Operating results for each of the Company's segments follow (in thousands).

                                                      September 30,
                                         ---------------------------------------
                                            2005          2004          2003
                                         ---------------------------------------
Continuing Operations:
Environmental Operations
Revenues                                 $  1,019       $    973       $  1,241
Operating income (loss)                       (26)            27            217

Discontinued Operations*
Texas Convenience Stores
Revenues                                 $  2,376       $    947       $    341
Operating income (loss)                      (668)          (283)          (329)

Texas Petroleum Marketing**
Revenues                                 $      -       $ 12,936       $ 17,536
Operating income (loss)                         -           (516)          (472)

* Texas Convenience Stores operations ceased subsequent to September 30, 2005
**Texas Petroleum Marketing operations ceased July 1, 2004

Environmental Operations
------------------------

EDCO Environmental (dba Star Co) provides environmental assessment and
remediation services for the petroleum distribution industry in the southeast
Texas market area. Star Co currently focuses its efforts on the following
activities:

    Underground storage tank ("UST") removal       UST regulator upgrades
    Site assessments for regulatory agencies       UST repairs and maintenance
    Site clean up reimbursement

Star Co has provided environmental remediation services to customers ranging
from gasoline stations, convenience stores, public utilities, banks, major oil
companies, large industrial corporations, various small local enterprises and a
variety of governmental institutions and enterprises. The environmental
protection business is primarily the result of government mandate. In the
mid-1980's, the EPA initiated a program for the management of USTs throughout
the U.S. The EPA now requires stage II vapor recovery improvements at fuel
facilities rather than through on-board canisters in new motor vehicles.

A number of states, including Texas, have established remediation funds to
assist owners/operators in the clean up of leaking USTs. In Texas, this was
accomplished through the Groundwater Protection Act ("GPA"), which became
effective on September 1, 1989. The GPA, as amended, provides clean-up funds for
eligible expenses, less applicable deductibles. The fund is continually financed
by a fee assessed on motor fuels sold in the state. Financing programs secured
by assignments of rights to reimbursement by the Texas Commission on
Environmental Quality ("TCEQ") can be obtained for leaking petroleum storage
tank sites impacted by releases from USTs. For locations where contamination
already exists, the UST owner/operator must comply with TCEQ clean-up
regulations or risk fines of up to $10,000 per day and disqualification from the
benefits and funding of the GPA.


                                     Page 3
<PAGE>


On September 30, 2005, upon its scheduled termination date, funding for the
TCEQ's reimbursement program was extended by the Texas Legislature for an
additional 2 years. Management is currently monitoring the Texas legislature to
determine if this deadline will be extended and additional funds appropriated to
the TCEQ for the reimbursement programs. There can be no assurance that the
deadlines will be extended or that additional funds will be appropriated to the
TCEQ.

Star Co. reported revenues of $1,019, $973,000, and $1,241,000 in 2005, 2004 and
2003, which were almost entirely from contracts under the TCEQ reimbursement
programs.

Discontinued Operations
-----------------------

In December 2005, the Company sold its inventory in its remaining operating
convenience stores with the intent the stores and store equipment will be leased
to outside operators, effectively discontinuing its Texas Convenience Store
Segment operations. Accordingly, the results of operations of the Texas
Convenience Store segment have been classified as discontinued operations and
prior periods have been restated. The Company has not allocated interest expense
or general corporate overhead to discontinued operations. The Company is
currently searching for a lessee to lease and operate the convenience stores
owned by the Company.

On July 1, 2004, the Company entered into an agreement with Mauritz & Couey (MC)
whereby the Company conveyed its Exxon, Chevron and unbranded fuel distribution
contracts and certain petroleum marketing distribution assets, accounts
receivable and inventory with a net book value aggregating $1,629,000 to MC for
relief of amounts owed to MC for fuel purchases and management fees of
approximately $1,705,000, the assumption of the Company's line of credit
obligation by MC of $399,000 and the issuance of a note receivable of $88,000.
As a result of the transaction, the Company discontinued its petroleum marketing
distribution segment and effectively disposed of the segment's assets. The
results of operations of the Texas Petroleum Marketing segment have been
classified as discontinued operations and prior periods have been restated. The
Company has not allocated interest expense or general corporate overhead to
discontinued operations. The otherwise tax liability from this transaction is
offset by net operating loss carryforwards of the Company generated from
previous years losses. Accordingly, no provision has been recorded.

Employee Relations
------------------

At September 30, 2005, the Company employed 13 people, none of whom are
represented by any collective bargaining organizations. The Company has had no
work stoppages, slow downs or strikes.

Management considers its employee relations to be satisfactory.

Competition
-----------

All of the Company's business segments operate in a highly competitive
environment. The Company competes on the basis of price, service, and quality.
In addition, each of the respective business systems faces special competitive
factors. In all phases of operations, the Company encounters strong competition
from a number of companies, including some companies with significantly greater
resources than the Company. Many of these larger competitors employ financial
and personnel resources substantially in excess of those that are available to
the Company.

The convenience store industry is a retail service-oriented industry. It is
distinguished from other retail businesses by its emphasis on location and
convenience rather than price, and a commitment to customers who need to
purchase items quickly at extended hours. Convenience stores feature a wide
variety of items including groceries, dairy products, tobacco products,
beverages, and health and beauty aids. Many sell petroleum on a self-service
basis. Stores are generally designed with ample customer parking and quick
checkout procedures to maximize convenience as well as encourage impulse buying
of high margin items.


                                     Page 4
<PAGE>


The convenience store industry is highly competitive, fragmented, and
regionalized. It is characterized by a few large companies and many small
independent companies. Several competitors are substantially larger and have
greater resources than the Company. The Company's primary competitors include
Diamond Shamrock, RaceTrac, Thomas Petroleum, and E-Z Mart. The Company also
competes with other convenience stores, small supermarkets, grocery stores, and
major and independent gasoline distributors who have converted units to
convenience stores.

Star Co. is a full service environmental company. In the past, the remediation
industry was not highly competitive, but increasingly companies are entering the
environmental business. The remediation industry is characterized by a few large
companies, some medium sized companies such as Star Co., and many small
independent companies. Some competitors are larger and have greater resources
than Star Co. Star Co. competes primarily with engineering firms and private
contractors in addition to other environmental remediation companies.

The continued growth in the remediation service is dependent upon market
penetration, customer base, government regulations, funding, and legislative
changes. Star Co.'s growth in underground storage tank upgrading depends upon
its ability to work efficiently, meet price competition, and will be adversely
affected by restrictions upon reimbursements by the TCEQ.

Item 2.   Properties

The Company owns 16 commercial parcels of real estate in Texas. The properties
are comprised of convenience stores, service stations, plants and unimproved
sites suitable for retail development. It also leases another 3 retail locations
under operating lease agreements with varying terms and lives.

The Company's general offices are located in Bay City Texas in a 13,475 square
foot building. Adjacent to the offices are 14,784 square feet of additional
warehouse buildings together with bulk storage equipment, including 14 fuel
storage tanks and 20 lube oil and antifreeze tanks. These office buildings were
sold as part of the sale of the Texas Petroleum Marketing segment to MC. As part
of the sales agreement, the Company maintains use of the building at no cost
until either a formal lease agreement is entered into or the Company relocates
its offices.

Item 3.  Legal Proceedings

The Company is subject to litigation, primarily as a result of customer and
vendor claims, in the ordinary conduct of its operations. Except as described
below, as of September 30, 2005, the Company had no knowledge of any legal
proceedings, which, by themselves, or in the aggregate, would not be covered by
insurance or could be expected to have a material adverse effect on the Company.

During fiscal 2003, the Company was notified that a lawsuit was filed against
the Company and several or its current and former officers and directors on
behalf of purchasers of the Company's common stock. The petition alleged that
the Company received funds from a Private Placement transaction with Comsight
Holdings, Inc., whereby Comsight agreed to act as a placement agent for
accredited investors to purchase a minimum of 1,250,000 and a maximum of
3,750,000 shares of the Company's common stock in a private placement to
accredited investors at $0.40 per share. On August 17, 2000, the Company issued
1,437,500 shares of common stock for total consideration of $575,000, which
included 625,000 shares for the plaintiffs. The Plaintiff's alleged that they
never received their 625,000 common shares or a refund of the subscription
funds. In April 2004, the Company and the former and current directors agreed to
settle the lawsuit. Under the settlement agreement, the Company agreed to
reissue the original 625,000 common shares to the plaintiff as well as issue an
additional 625,000 shares to the plaintiff. In addition, Mr. J.L. Evans, Sr.
agreed to forfeit 1/3 of his stock warrants and one former director agreed to
directly compensate the plaintiff $25,000.

During fiscal 2003, Matagorda County, Victoria County, Jackson County and
Brazoria County filed tax suits against the Company for failure to pay prior
years ad valorem taxes aggregating approximately $629,000 at September 30, 2005.
The Company has accrued all prior year ad valorem taxes at September 30, 2005.
However, as these taxes remain unpaid, the counties can place liens on Company
properties securing these taxes, impose penalties and interest, and could
foreclose on those assets securing the taxes.



                                     Page 5
<PAGE>


Item 4.  Submission of Matters to a Vote of Security Holders

None.

                                     PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters

Stock Information

Traded On the NASDAQ Over The Counter Bulletin Board (OTCBB) Quotation System --
The Company's Common Stock, $.01 par value, is listed on the OTCBB exchange
under the Symbol "EVSI.OB". At September 30, 2005, there were approximately 112
shareholders of record. The Company has not paid any cash dividends, and the
Company currently has no plans to adopt a regular cash dividend.

The aggregate market value of the Company's voting stock held by non-affiliates
was approximately $294,000 on September 30, 2005.

The high and low price range for the last two years, based on the closing sales
price as reported by NASDAQ\OTCBB, are below:

Dates                                                     High            Low
-----                                                     ----            ---
October 1, 2003 through December 31, 2003                 .13             .05
January 1, 2004 through March 31, 2004                    .19             .07
April 1, 2004 through June 30, 2004                       .14             .06
July 1, 2004 through September 30, 2004                   .09             .04
October 1, 2004 through December 31, 2004                 .08             .03
January 1, 2005 through March 31, 2005                    .09             .06
April 1, 2005 through June 30, 2005                       .06             .04
July 1, 2005 through September 30, 2005                   .08             .04

Item 6.  Selected Financial Data

The following table sets forth certain selected financial data which should be
read in conjunction with the Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included herein. Amounts are in thousands, except per-share data.

<TABLE>
<CAPTION>
                                                                                     September 30,
                                                              ---------------------------------------------------------
Income Statement Data                                            2005        2004        2003        2002        2001
                                                              ---------------------------------------------------------
<S>                                                           <C>         <C>         <C>         <C>         <C>
Revenues                                                      $  1,019    $    973    $  1,241    $  1,124    $    962
Gross profit                                                       324         408         626         582         576
Operating income (loss)                                            (26)         27         217          44          27
Income (loss) from continuing operations                          (200)        (96)      2,026         (25)       (617)
Net income (loss)                                                 (868)       (332)      1,225        (831)     (3,046)
Basic and diluted income (loss) from continuing
  operations per common share                                    (0.02)      (0.01)       0.20           -       (0.10)
Basic and diluted earnings (loss) per common share               (0.08)      (0.03)       0.12       (0.11)      (0.50)
Basic and diluted weighted average number common shares         10,472      10,157       9,846       7,588       6,134
</TABLE>

                                     Page 6
<PAGE>


<TABLE>
<CAPTION>
Balance Sheet Data
<S>                                                           <C>         <C>         <C>         <C>         <C>
Current assets                                                $    806    $  1,289    $  1,760    $  2,194    $  3,034
Current liabilities                                              1,616       1,433       2,391       2,519      12,002
Current ratio                                                      .50:1       .90:1       .87:1       .25:1       .34:1
Total assets                                                     2,498       3,235       4,504       5,771      11,474
Long-term debt                                                   2,600       2,652       2,706       5,070         609
Total stockholders' equity (deficit)                            (1,718)       (850)       (593)     (1,818)     (1,137)
</TABLE>


Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following discussion of the Company's financial condition and results of
operations should be read in conjunction with the financial statements and notes
thereto appearing elsewhere in this document.

During the years ended September 30, 2005 and 2004, the Company has recorded net
losses aggregating $1.2 million. In addition, the Company had recorded operating
losses from its Texas Petroleum Marketing segment, discontinued in fiscal 2004,
aggregating $2.58 million during the three years in the period ended September
30, 2004. Further, the Texas convenience Store segment, now discontinued, had
recorded losses aggregating $1.28 million during the three years ended September
30, 2005. At September 30, 2005, the Company has a working capital deficit of
$810,000 and a stockholders' deficit of $1,718,000.

In December 1999, the Company received notification from NASDAQ stock exchange
that the Company was not in compliance with two requirements for continued
listing on the NASDAQ NMS: the Company did not hold an annual stockholders
meeting in 1998 and the market value of the public float in the Company's common
stock did not meet or exceed a minimum level of $5 million. The Company was
subsequently delisted by NASDAQ on February 17, 2000. The Company's common stock
is now traded on the over-the-counter bulletin board system maintained by
NASDAQ. The Company's ability to raise additional equity capital in the future
could be adversely affected with the Company's common stock no longer listed on
a national exchange.

The Environmental Segment has made a marginal profit over the years and
maintained a positive cash flow. Management intends to expand the Environmental
Segment by creating a Testing Division. The Company is currently exploring the
feasibility of acquiring through merger a company currently performing line,
tank, and soil testing. Financial institutions have become increasingly aware of
potential environmental hazards and the cost associated there with, on
properties they finance. The need for testing to determine if any pollution
exist on properties will continue for an unforeseeable time into the future. For
this reason management believes adding a testing segment will increase the
revenues and profitability of the Environmental Segment.

Management will continue to reduce debt and provide working capital through
funds from operations and the sale of non-income producing assets. There can be
no assurance that any of management's plans as described above will be
successfully implemented or that the Company will continue as a going concern.

Application of Critical Accounting Policies
We have identified the policies below as critical to our business operations and
the understanding of our results of operations. The impact and any associated
risks related to these policies on our business operations is discussed
throughout Management's Discussion and Analysis of Financial Condition and
Results of Operations when such policies affect our reported and expected
financial results.

In the ordinary course of business, we have made a number of estimates and
assumptions relating to the reporting of results of operations and financial
condition in the preparation of our financial statements in conformity with
accounting principles generally accepted in the United States. We base our
estimates on historical experience and on various other assumptions that we
believe are reasonable under the circum-stances. The results form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results could differ
significantly from those estimates under different assumptions and conditions.


                                     Page 7
<PAGE>

We believe that the following discussion addresses our most critical accounting
policies, which are those that are most important to the portrayal of our
financial condition and results of operations and require our most difficult,
subjective, and complex judgments, often as a result of the need to make
estimates about the effect of matters that are inherently uncertain.

    Revenue Recognition
    The Company's policy is to prepare its financial statements on the accrual
    basis of accounting in accordance with generally accepted accounting
    principles. Revenues from motor fuel sales to open dealer accounts are
    recognized when delivered. Revenues from motor fuel sales and retail sales
    at convenience stores are recognized when sold at the store. Expenses are
    recognized in the period in which they are incurred.

    Environmental segment revenue from fixed-price contracts is recognized using
    the percentage-of-completion method, measured by the percentage of cost
    incurred to date to estimated total cost at completion for each contract.
    Profit recognition is deferred on each contract until progress reaches a
    level of completion sufficient to establish the probable outcome. Provisions
    for estimated losses on uncompleted contracts are made in the period in
    which such losses are determined. Changes in job performance, job
    conditions, and estimated profitability that result in revisions to costs
    are recognized in the period in which the changes are determined. Because of
    the inherent uncertainties in estimating, it is at least reasonably possible
    that such changes will occur within the near term. There were no material
    changes to any estimates during the years ended September 30, 2005 and 2004.

    Inventories
    Substantially all inventories are products held for sale. Inventories of
    gas, diesel and other fuels, oil and grease, automotive products and
    accessories, chemical products and convenience store products utilize the
    first-in, first-out (FIFO) method of accounting and are stated at the lower
    of cost or market.

    For a more comprehensive list of our accounting policies, including those
    that involve varying degrees of judgment, see Note 1 of Notes to
    Consolidated Financial Statements.

Results of Operations
---------------------

2005 compared to 2004
---------------------
Consolidated revenues from continuing operations, now consisting of only the
environmental segment, increased $46,000, or approximately 5%, to $1,019,000 in
the year ended September 30, 2005. Consolidated gross profit from continuing
operations decreased $84,000, or approximately 21%, to $324,000 in the year
ended September 30, 2005. Gross profit expressed as a percentage of revenues
("Gross Margin") decreased to approximately 32% of sales in 2005 from
approximately 42% of sales in 2004. The decrease in gross margin in 2005 is
mainly attributable to increased construction costs incurred in 2005.

Consolidated operating expenses decreased $31,000, or approximately 8%, in 2005
to $350,000. The decrease in operating expenses was mainly attributable to a
reduction in general, administrative and other operating expenses cost cuts that
resulted in savings of $21,000 as well as reduced employment costs compared to
2004. Consolidated operating losses increased $53,000 to $26,000 in 2005 as
compared with an operating income of $27,000 in 2004. The increased loss was a
direct result of increased construction costs incurred in 2005.

Consolidated loss from continuing operations increased to $200,000 in 2005 as
compared to a consolidated loss from continuing operations of $96,000 in 2004.
Loss from continuing operations in 2005 includes $284,000 in interest charges,
primarily due to CSS, and $8,000 in other expenses offset by rent income of
$118,000. Loss from continuing operations in 2004 includes $200,000 in interest
expense and $46,000 in other expenses offset by rent income of $123,000.

Consolidated net loss increased $536,000 to a net loss of $868,000 in 2005 as
compared to a net loss of $332,000 in 2004. Consolidated net loss in 2005
includes a $668,000 loss from discontinued operations of the Texas Convenience
Store segment. Consolidated net loss in 2004 includes a $283,000 loss from
discontinued operations of the Texas Convenience Store segment, a $516,000 loss
from discontinued operations of the Texas Petroleum Marketing segment offset by
a gain on the disposal of the Texas Petroleum Marketing segment assets of
$563,000.


                                     Page 8
<PAGE>


Environmental Segment

The consolidated continuing operating income (loss) discussed above only include
the operations of the environmental segment as it is the only remaining segment
of the Company in operations.

Star Co. will continue to focus its attention on environmental remediation
projects that have been pre-approved for reimbursement by the TCEQ fund as well
as projects by private insurers. Management intends to expand the Environmental
Segment by creating a Testing Division. The Company is currently exploring the
feasibility of acquiring through merger a company currently performing line,
tank, and soil testing. Financial institutions have become increasingly aware of
potential environmental hazards and the cost associated there with, on
properties they finance. The need for testing to determine if any pollution
exist on properties will continue for an unforeseeable time into the future. For
this reason management believes adding a testing segment will increase the
revenues and profitability of the Environmental Segment.

2004 compared to 2003
---------------------
Consolidated revenues from continuing operations, now consisting of only the
environmental segment, decreased $268,000, or approximately 22%, to $973,000 in
the year ended September 30, 2004. The decrease was primarily due to a large
contract completed in 2003 that increased 2003 revenues above normal levels.
Consolidated gross profit from continuing operations decreased $218,000, or
approximately 34%, to $408,000 in the year ended September 30, 2004. Gross
profit expressed as a percentage of revenues ("Gross Margin") decreased to
approximately 42% of sales in 2004 from approximately 50% of sales in 2003. The
decrease in gross margin in 2004 is mainly attributable to increased
construction costs incurred in 2004, the impact of the larger contract in 2003
(discussed above) and continued decreasing margins over the past several years.

Consolidated operating expenses decreased $28,000, or approximately 7%, in 2004
to $381,000. The decrease in operating expenses was mainly attributable to a
reduction in general, administrative and other operating expenses cost cuts that
resulted in savings of $35,000. Consolidated operating income decreased $190,000
to $27,000 in 2004 as compared with an operating income of $217,000 in 2003. The
decreased in operating income was a direct result of increased construction
costs incurred in 2004, the impact of the 2003 job and overall decreased
margins.

Consolidated loss from continuing operations increased to $96,000 in 2004 as
compared to a consolidated income from continuing operations of $2,026,000 in
2003. Loss from continuing operations in 2004 includes $200,000 in interest
expense and $46,000 in other expenses offset by rent income of $123,000. Income
from continuing operations is 2003 includes a non-cash gain on the sale of
non-operating assets (primarily the fuel terminal) of $1,653,000, rental income
of $216,000, other income of $74,000 offset by interest charges of $134,000.

Consolidated net loss increased $1,557,000 to a net loss of $332,000 in 2004 as
compared to a net income of $1,225,000 in 2003. Consolidated net loss in 2004
includes a $283,000 loss from discontinued operations of the Texas Convenience
Store segment, a $516,000 loss from discontinued operations of the Texas
Petroleum Marketing segment offset by a gain on the disposal of the Texas
Petroleum Marketing segment assets of $563,000. Consolidated net income in 2003
includes a $329,000 loss from discontinued operations of the Texas Convenience
Store segment and a $472,000 loss from discontinued operations of the Texas
Petroleum Marketing segment. Excluding the non-cash gain on the sale of the
terminal facility to CSS in exchange for debt reductions, 2003 would reflect a
net loss of $428,000.

Environmental Segment

The consolidated continuing operating income (loss) discussed above only include
the operations of the environmental segment as it is the only remaining segment
of the Company in operations.


                                     Page 9
<PAGE>


Capital Resources and Liquidity
-------------------------------

Cash and cash equivalents were $186,000 and $341,000 at September 30, 2005 and
2004, respectively. The Company had a net working capital deficit of $810,000 at
September 30, 2005, as compared with a deficit of $144,000 at September 30,
2004.

Cash used by operating activities was $261,000 for the year ended September 30,
2005. During that period, cash provided from investing activities was $201,000,
which was comprised of capital expenditures of $3,000 and note receivable
issuances of $14,000 offset by proceeds from the sales of assets of $126,000 and
repayments of notes receivable of $92,000. Cash used by financing activities was
$95,000, which was comprised entirely of reductions of long-term debt.

Cash provided by operating activities was $177,000 for the year ended September
30, 2004. During that period, cash provided from investing activities was
$60,000, which was comprised of capital expenditures of $44,000 and note
receivable issuances of $55,000 offset by proceeds from the sales of assets of
$94,000 and repayments of notes receivable of $65,000. Cash used by financing
activities was $112,000, which was comprised of proceeds of $42,000 from new
debt borrowings offset by reductions of long-term debt of $154,000.

As of September 30, 2005, the Company had an aggregate of approximately
$2,700,000 in principal outstanding under various note agreements. Of this
total, one note dated June 24, 2002 for $2,600,000, payable to CSS, has amended
terms that call for payments of interest only at an annual rate of 10%
commencing December 1, 2003, with the principal balance and accrued but unpaid
interest due by December 24, 2007. Accrued and unpaid interest on this note was
approximately $240,000 at September 30, 2005.

Of the remaining principal outstanding aggregating an approximate $100,000,
approximately $52,000 is due to Travelers Express Co. under a forbearance note
agreement dated June 24, 2002 that calls for payment of principal and interest
over 36 months beginning June 22, 2003. Interest is calculated at prime plus 50
basis points. The remaining outstanding principal balance is due under various
terms to various third parties.

At September 30, 2005, the Company had an aggregate 10,471,831 shares of common
stock issued, with 10,430,196 issued and outstanding after consideration of
treasury stock. The Company is authorized to issue up to 15,000,000 shares of
common stock. Of the 4,569,804 shares of common stock available for issuance,
approximately 302,600 shares are reserved for vested stock options and 4,144,167
shares are reserved for warrants.

The Company intends to finance its working capital requirements through a
combination of funds from operations and rental income on convenience stores.

Contractual obligations as of September 30, 2005

<TABLE>
<CAPTION>
                                                            Payments due by period (in thousands)
                                                       ------------------------------------------------
                                                       Less than                              More than
                                           Total        1 year       1-3 years    3-5 years    5 years
                                           -----        ------       ---------    ---------    -------
Long-term debt obligations
--------------------------
<S>                                        <C>          <C>          <C>          <C>          <C>
  CSS note payable                         $2,600       $    -       $    -       $2,600       $    -
  Travelers note payable                       52           52            -            -            -
  McLane note payable                          10           10            -            -            -
  Other notes payable                          38           38            -            -            -
                                           ------       ------       ------       ------       ------
    Total long-term debt obligations       $2,700       $  143       $    -       $2,600       $    -

Operating lease obligations
---------------------------
  Convenience store leases                 $   47       $   29       $   18       $    -       $    -
                                           ------       ------       ------       ------       ------
    Total contractual obligations          $2,747       $  172       $   18       $2,600       $    -
                                           ======       ======       ======       ======       ======
</TABLE>

                                    Page 10
<PAGE>


Recent Accounting Pronouncements

In October 2005, the FASB issued FSP No. FAS 13-1, "Accounting for Rental Costs
Incurred during a Construction Period." FSP No. FAS 13-1 requires rental costs
associated with operating leases that are incurred during a construction period
to be recognized as rental expense. FSP FAS 13-1 is effective for reporting
periods beginning after December 15, 2005. The transition provisions of FSP No.
FAS 13-1 permit early adoption and retrospective application of the guidance.
FSP FAS 13-1is not expected to have a material impact on the Company's
consolidated results of operations or financial position.

In May 2005, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 154, "Accounting Changes and Error Corrections." SFAS No. 154
requires retrospective application to prior periods' financial statements of
changes in accounting principle, unless it is impracticable to determine either
the period-specific effects or the cumulative effect of the change. SFAS No. 154
requires that retrospective application of a change in accounting principle be
limited to the direct effects of the change, and that indirect effects of a
change in accounting principle, such as a change in non-discretionary
profit-sharing payments resulting from an accounting change, be recognized in
the period of the accounting change. SFAS No. 154 also requires that a change in
depreciation, amortization, or depletion method for long-lived, non-financial
assets be accounted for as a change in accounting estimate effected by a change
in accounting principle. SFAS 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005.
Early adoption is permitted for accounting changes and error corrections made in
fiscal years beginning after the date the statement was issued. The Company is
required to adopt the provisions of SFAS 154 beginning in fiscal year 2007.

In December 2004, the FASB issued SFAS No. 123R, "Share-based Payments." SFAS
No. 123R revises SFAS No. 123, "Accounting for Stock-Based Compensation," and
supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS
No. 123R applies to transactions in which an entity exchanges its equity
instruments for goods or services and also applies to liabilities an entity may
incur for goods or services that are based on the fair value of those equity
instruments. Under SFAS No. 123R, the Company will be required to select a
valuation technique, or option-pricing model that meets the criteria as stated
in the standard. Allowable valuation models include a binomial model and the
Black-Scholes model. The Company will adopt the provisions of SFAS No. 123R in
the first quarter of fiscal year 2006. The Company is in the process of
assessing the impact on the Company's results of operations from the adoption of
FAS 123R for its effect on prospective option grants. The adoption of SFAS No.
123R will require the Company to value unvested stock options granted prior to
its adoption of SFAS 123 under the fair value method and expense these amounts
in the income statement over the stock option's remaining vesting period. In
addition, SFAS No. 123R will require the Company to reflect the tax savings
resulting from tax deductions in excess of expense reflected in its financial
statements as a financing cash flow, which will impact the Company's future
reported cash flows from operating activities.

Item 7A.     Quantitative and Qualitative Disclosures about Market Risk

Factors Affecting the Company's Business and Prospects
There are numerous factors that affect the Company's business and the results of
its operations. These factors include general economic and business conditions;
the level of demand for products and services and the level and intensity of
competition in the convenience store and environmental remediation industry.

The convenience store industry is highly competitive, fragmented, and
regionalized. It is characterized by a few large companies and many small
independent companies. Several competitors are substantially larger and have
greater resources than the Company. The Company's stores compete with other
convenience stores, small supermarkets, grocery stores, and major and
independent gasoline distributors who have converted units to convenience
stores.

The Company's environmental subsidiary StarCo Enviroservices has provided
environmental remediation services to customers almost entirely through
reimbursement funding by the TCEQ, with a smaller percentage funded by private
companies and insurance. The TCEQ reimbursement funding program, originally set
to expire September 30, 2005, was extended during the 2005 Texas Legislative
session. Under current Texas law and the requirements of the TCEQ, on September
30, 2007, funding for the TCEQ's reimbursement programs will terminate. All


                                    Page 11
<PAGE>

environmental work on TCEQ approved reimbursement locations must be completed on
or before September 30, 2007 in order to be considered for reimbursement. All
reimbursement applications must be submitted prior to September 30, 2008 for
reimbursement. The termination of the TCEQ reimbursement program will have an
adverse impact on StarCo's ability to operate. Management is currently
monitoring the Texas legislature to determine if the deadline will be extended
and additional funds appropriated to the TCEQ for the reimbursement programs.
There can be no assurance that the deadlines will be extended or that additional
funds will be appropriated to the TCEQ.

Item 8. Financial Statements and Supplementary Data

The Consolidated Financial Statements of the Company included in this annual
report on Form 10-K are listed under Item 15, Exhibits, Financial Statement
Schedules and Reports on Form 8-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

Item 9A. Controls and Procedures

The management of the Company, with the participation of the Chief Executive
Officer and Acting Chief Financial Officer, has evaluated the effectiveness of
the Company's disclosure controls and procedures (as defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934) as of the end of the period covered
by this Report. Based on that evaluation, the Chief Executive Officer and Acting
Chief Financial Officer have concluded that the Company's disclosure controls
and procedures are effective in enabling the Company to record, process,
summarize, and report information required to be included in the Company's
periodic SEC filings within the required time period.

In addition, the management of the Company, with the participation of the
Company's Chief Executive Officer and Acting Chief Financial Officer, has
evaluated whether any change in the Company's internal control over financial
reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of
1934) occurred during the Company's fourth fiscal quarter. Based on that
evaluation, the Company's Chief Executive Officer and Acting Chief Financial
Officer have concluded that there has been no change in the Company's internal
control over financial reporting during the fourth fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.


                                    PART III


Items 10.     Directors and Executive Officers of the Registrant

The following table sets forth certain information with respect to the Company's
current directors and officers.

NAME                POSITION                            AGE
---------           --------                            ---
Blair R. Couey      Acting Chairman and President        53
Randy Clapp         Director                             51

In December 2005, Mr. Thomas Cain, former Chairman of the Board, and Mr. Randall
Dean Lewis, Director, resigned from the board of directors. The Company
currently has 6 director positions unoccupied, including the Secretary and
Treasurer positions to the board of directors. The Company is currently
attempting to fill the vacancies. The principal occupation of each director and
executive officer for at least the last five years is set forth below:


                                    Page 12
<PAGE>


Blair R. Couey is a lifelong resident of El Campo, Texas and has been the
managing partner of Mauritz and Couey Petroleum Marketing in El Campo, Texas
since 1988. Mr. Couey has been on the Texas Petroleum and convenience Store
Board of Directors, representing Region VII of Gulf Coast of Texas since 1999.
Mr. Couey has also served on the El Campo, Texas Chamber of Commerce, Economic
Development Board and City Development Corp and is a graduate of Sam Houston
Business School.

Randy M. Clapp is a partner in the Texas law firm of Duckett, Bouligny &
Collins, LLP. He practices primarily in the areas of Estate Planning, Products
Liability Defense, Commercial Litigation, Real Estate, Oil and Gas, and Business
Planning. Mr. Clapp is a member of the State Bar of Texas, the U.S. District
Court for the Southern and Eastern Districts of Texas and the U.S. Court of
Military Appeals. He was educated at Trinity University, the University of Texas
School of Law, and the Judge Advocate General's School of Law in the U.S. Army.
Mr. Clapp presently serves on the board of directors of New First National Bank
and MC. He has received numerous awards, and has served as president of the
following organizations: University of Houston Victoria President's Advisory
Council, Wharton County Junior College Board of Trustees, Northside Education
Center, Memorial Hospital El Campo, West Wharton County Hospital District Board
of Trustees, El Campo Economic Development Corporation, Wharton County Bar
Association, El Campo Rotary Club and El Campo Chamber of Commerce.

Meetings and Committees of the Board of Directors

During the fiscal year ended September 30, 2005 ("Fiscal 2004"), the Company's
Board of Directors formally met on 2 occasions. Each of the directors attended
(or participated by telephone) more than 75% of such meetings of the Board of
Directors during Fiscal 2005. The Board of Directors has no committees.

Compensation of Directors

Effective June 24, 2002, director compensation was restructured to be
performance based. All directors are reimbursed for their reasonable
out-of-pocket expenses incurred in connection with their duties to the Company.

Item 11.  Executive Compensation

The following sets forth, for the fiscal years ended September 30, 2005,
2004,and 2003, certain summary information concerning annual and long-term
compensation paid by the Company for services in all capacities to the current
and former Chief Executive Officer, and the other most highly compensated
executive officers of the Company at September 30, 2004 who received
compensation of at least $100,000 during Fiscal 2005 (collectively, the "Named
Officers").

No officers of the Company are currently under an employment agreement. Mr.
Blair Couey, President, Chief Executive Officer and Acting Chief Financial
Officer, receives his compensation through the management agreement by and
between the Company and Mauritz & Couey dated June 24, 2002.

OPTION/SAR Grants in Last Fiscal Year

There were no Options/SARs granted during Fiscal 2005 to the Named Officers.


                                    Page 13
<PAGE>


Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information concerning ownership of the Company's
Common Stock, as of September 30, 2004, by (i) each person who is known by the
Company to be the beneficial owner of more than five percent of the Common
Stock, (ii) each of the Company's directors, (iii) each Named Officer, and (iv)
all current directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
                                                                       Amount of     Nature of       Percent of
                         Name and address                              Ownership    Ownership (2)      Class
-------------------------------------------------------------------- ------------- --------------- --------------
<S>                                                                   <C>               <C>           <C>
Mauritz & Couey, P.O. Box 550, El Campo, TX 77437                      3,085,000         4             29.5%
Blair R. Couey, P.O. Box 550, El Campo, TX 77437                       3,085,000         5             29.5%
Randy Clapp, P.O. Box 550, El Campo, TX 77437                          3,085,000         6             29.5%
Cede & Co., Box 20, Bowling Green Station, New York, NY 10004          4,876,623                       46.6%
JP Morgan Chase Bank, P.O. Box 2258, Houston, TX 77252                 1,104,015                       10.5%
Thomas E. Cain, P.O. Box 550, El Campo, TX 77437                       4,000,000         7             38.2%
Cain, Smith & Strong, L.P.,                                            1,600,000         8             15.3%
All executive officers and directors as a group                        3,085,000                       29.5%
</TABLE>


     1.   Unless otherwise indicated, the address of each beneficial owner is
          c/o the Company, P.O. Box 550, El Campo, Texas 77437.
     2.   Beneficial ownership has been determined in accordance with Rule 13d-3
          under the Exchange Act ("Rule 13d-3") and unless otherwise indicated,
          represents shares of which the beneficial owner has sole voting and
          investment power.
     3.   The percentage of class is calculated in accordance with Rule 13d-3
          and assumes that the beneficial owner has exercised any options or
          other rights to subscribe which are execrable within sixty (60) days
          and that no other options or rights to subscribe have been exercised
          by anyone else.
     4.   Mauritz & Couey, a Texas General Partnership, is controlled by 8 Texas
          Corporations (Ross Couey Corporation, T.N & S.E. Mauritz Corporation,
          M.O.W. Corporation, Clapp Investments, Inc., Loli, Inc., Schiurring
          Interests, Inc, Coastal Commodities, Inc. and Maurco Corporation).
     5.   Includes 3,085,000 shares held by Mauritz & Couey, of which Blair
          Couey claims beneficial ownership.
     6.   Includes 3,085,000 shares held by Mauritz & Couey, of which Randy
          Clapp claims beneficial ownership.
     7.   Includes 2,400,000 warrant shares beneficially held by Thomas Cain and
          1,600,000 warrant shares held by Cain, Smith & Strong, L.P., of which
          Thomas Cain claims beneficial ownership.
     8.   Includes 1,600,000 warrant shares beneficially held by Cain, Smith &
          Strong, L.P., whose general partner is controlled by the wife of
          Thomas Cain.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and greater than ten percent
shareholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file.

The Company believes, based solely on review of copies of such forms furnished
to the Company, or written representations that no Form 3, 4, or 5's were
required, that all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with
during Fiscal 2004.



                                    Page 14
<PAGE>


Item 13. Certain Relationships and Related Transactions

Effective June 24, 2002 and in conjunction with the Restructuring Transactions,
the Company entered into a Management and Support Services Agreement (the
"Management Agreement") with Mauritz & Couey, a Texas based general partnership
("MC") to provide certain managerial and operational services to the Company. At
September 30, 2005 and 2004, the Company owed MC approximately $46,203 and
$14,043, respectively, for expenses incurred under this agreement, which is
included in accounts payables.

During fiscal 2002, the Company entered into an agreement with MC to purchase
fuel products under MC's fuel supply contracts at $0.005 above rack price. At
September 30, 2005 and 2004, the Company owed MC $278,173 and $57,062,
respectively, which is included in accounts payables. In addition, from time to
time, the Company will deliver fuel loads to MC customers and MC will deliver
fuel loads to the Company's customers. The Company and MC charged one another
freight only at common carrier rates. At September 30, 2005 and 2004, MC owed
the Company approximately $21,284 and $65,573, respectively, for freight on fuel
the Company hauled for MC, which is included in accounts receivable.

During fiscal 2005, the company environmental segment, StarCo, performed various
environmental remediation services for MC. At September 30, 2005, MC owed
StarCo. $48,488 for service rendered, which is included in accounts receivable.

At September 30, 2005, the Company owed Cain, Strong & Smith, L.P. ("CSS")
$2,600,000 under a note agreement (Note 8). As discussed in detail in Note 5,
during fiscal 2003, the Company conveyed its fuel terminal facility assets to
CSS for concessions by CSS, including the reduction of the note payable by
$1,900,000. The Company's Chairman of the Board, Mr. Thomas E. Cain, is married
to Mrs. Nancy Cain, a partner of CSS.

At September 30, 2005, the Company was owed $26,977 from CSS under note
receivable agreements for services provided to CSS.

From time to time the Company makes advances to individuals who are
shareholders, directors, officers and/or employees. Such advances are usually
unsecured and accrue interest. There were no advances outstanding at September
30, 2005 and 2004.

Item 14. Principle Accounting Fees and Services
                                                       2005              2004
                                                       ----              ----
                  Audit fees                         $42,000           $62,000
                  Audit-related fees                     -0-               -0-
                  Tax fees                             5,000             5,000
                  All other fees                         -0-               -0-

The Company currently does not have an audit committee. Therefore, the current
policy of the Board of Directors of the Company is to pre-approve all
professional services performed by the Company's independent accountants. The
Board of Directors pre-approved all such professional services for the year
ended September 30, 2005.

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

I.   The following financial statements, schedules and exhibits are filed as
     part of this report:

     (1) and (2) Financial Statements and Financial Statement Schedules -
               See Index to Consolidated Financial Statements on Page F-1.

     (3) Exhibits.
               See Index to Exhibits on sequential page 17.

II.  Reports on Form 8-K - The Company filed no reports on Form 8-K under the
     Securities and Exchange Act of 1934 during the year ended September 30,
     2005



                                    Page 15
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                        EVANS SYSTEMS, INC.
January 12, 2006
                                        /s/ Blair R. Couey
                                        ----------------------------------------
                                        Blair R. Couey
                                        President, Chief Executive Officer and
                                        Acting Chief Financial Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date(s) indicated:


/s/ Blair R. Couey
-------------------------------------------------
Blair R. Couey,
President, Chief Executive Officer and Acting
Chief Financial Officer

/s/ Randy M. Clapp
-------------------------------------------------
Randy M. Clapp
Director

                                    Page 16
<PAGE>


INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit                                                                         Sequential Page
Number                Description of Document                                            Number
-----------------------------------------------------------------------------------------------
<C>      <S>                                                                    <S>
3.1 .....Articles of Incorporation of the Company filed with the Texas
         Secretary of State on October 22, 1968(1). Filed with May 11,
         1993 filing of Form S-1 Registration #33-62684.
3.2 .....Certificate of Amendment to Articles of Incorporation of Evans
         Systems, Inc., filed with the Texas Secretary of State on
         September 21, 1992(1). Filed with May 11, 1993 filing of Form S-1
         Registration #33-62684.
3.3 .....Certificate Amendment of Articles of Incorporation of Evans
         Systems, Inc., filed with the Texas Secretary of State on April
         9, 1993. Filed with May 11, 1993 filing of Form S-1 Registration
         #33-62684.
3.4 .....By-Laws of the Company. Filed with May 11, 1993 filing of Form
         S-1 Registration #33-62684.
10.1 ....Phillips "66" Marketing Agreement dated October 21, 1986.
         Filed with May 11, 1993 filing of Form S-1 Registration #33-62684.
10.2 ....Amoco Lubricants Distributor Agreement dated June 21, 1990 and
         Schedule dated January 2, 1992. Filed with May 11, 1993 filing of
         Form S-1 Registration #33-62684.
10.3 ....Diamond Shamrock Storage Lease dated July 12, 1985.
         Filed with May 11, 1993 filing of Form S-1 Registration #33-62684.
10.4 ....Star Enterprise "Texaco" Marketing Agreement effective July 1, 1993.
         Filed with May 11, 1993 filing of Form S-1 Registration #33-62684.
10.5 ....Shell Lubricants Reseller Agreement effective January 1, 1992.
         Filed with May 11, 1993 filing of Form S-1 Registration #33-62684.
10.6 ....Texaco Lubricants agreement effective July 1, 1990.
         Filed with May 11, 1993 filing of Form S-1 Registration #33-62684.
10.7 ....Conoco Jobber Franchise Agreement effective April 1, 1990.
         Filed with May 11, 1993 filing of Form S-1 Registration #33-62684.
10.8 ....Mobil Marine Distributor Agreement effective June 3, 1992.
         Filed with May 11, 1993 filing of Form S-1 Registration #33-62684.
10.9 ....Form of Series B Warrants to Purchase Common Stock of Registrant.
         Filed with May 11, 1993 filing of Form S-1 Registration #33-62684.
10.10 ...Coastal Refinery & Marketing, Inc. Facilities Access Agreement,
         effective September 5, 1989. Filed with May 11, 1993 filing of
         Form S-1 Registration #33-62684.
10.11 ...FINA Lubricants Marketing Agreement dated February 1, 1989.
         Filed with May 11, 1993 filing of Form S-1 Registration #33-62684.
10.12 ...Texaco Terminating Agreement dated April 30, 1986.
         Filed with May 11, 1993 filing of Form S-1 Registration #33-62684.
10.13 ...Citgo Petroleum Distributor Franchise Agreement effective August
         1, 1992. Filed with May 11, 1993 filing of Form S-1 Registration
         #33-62684.
10.14 ...Incentive Stock Option Plan.   Filed with May 11, 1993 filing of
         Form S-1 Registration #33-62684.
10.15 ...Form of Incentive Stock Option Agreement.  Filed with May 11, 1993
         filing of Form S-1 Registration #33-62684.
10.16 ...Summary Plan Description of E.S.O.P.   Filed with May 11, 1993
         filing of Form S-1 Registration #33-62684.
10.17 ...Employment Contract with Bill R. Kincer, incorporated by
         reference from Exhibit 10.28 to the Company's Annual Report on
         Form 10-K for the year ended September 30, 1994.
10.18 ...Pruett Petroleum, Inc. and Koonce Petroleum Company, Inc. agreement
         dated October 4, 1994, incorporated by reference from Exhibit 10.29
         to the Company's Annual Report on Form 10-K for the year ended
         September 30, 1994.
10.19 ...Employment Agreement with Richard A. Goeggel, effective June 16,
         1998, incorporated by reference from Exhibit 10.19 to the
         Company's Annual Report on Form 10-K for the year ended September
         30, 1998.
</TABLE>

                                    Page 17
<PAGE>


10.20 ...Omitted.

10.21 ...Employment Agreement with J.L. Evans, Sr., effective April 6, 1998,
         incorporated by reference from Exhibit 10.21 to the Company's Annual
         Report on Form 10-K for the year ended September 30, 1998.
10.22 ...Stock Purchase Agreement dated as of October 30, 1998 by and
         among the Company, Synaptix Systems Corporation, a Colorado
         corporation, d.b.a. Affiliated Resources Corporation, and Way
         Energy, Inc., a Delaware corporation, incorporated by reference
         from Exhibit 10.22 to the Company's Annual Report on Form 10-K
         for the year ended September 30, 1998.
10.23 ...Amendment No. 1 to Stock Purchase Agreement, dated December 39,
         1998 by and among the Company, Synaptix Systems Corporation, a
         Colorado corporation, d.b.a. Affiliated Resources Corporation,
         and Way Energy, Inc., a Delaware corporation, incorporated by
         reference from Exhibit 10.23 to the Company's Annual Report on
         Form 10-K for the year ended September 30, 1998.
10.24 ...Loan Agreement between the Company and Texas Commerce Bank
         National Association, dated as of August 30, 1996, incorporated
         by reference from Exhibit 10.1 to the Company's Quarterly Report
         on Form 10-Q for the three months ended March 31, 1999.
10.25 ...Amendment to Loan Agreement dated August 4, 1997, incorporated by
         reference from Exhibit 10.2 to the Company's Quarterly Report on
         Form 10-Q for the three months ended March 31, 1999.
10.26 ...Amendment to Loan Agreement dated December 24, 1997, incorporated
         by reference from Exhibit 10.3 to the Company's Quarterly Report
         on Form 10-Q for the three months ended March 31, 1999.
10.27 ...Amendment to Loan Agreement dated April 23, 1998, incorporated by
         reference from Exhibit 10.4 to the Company's Quarterly Report on
         Form 10-Q for the three months ended March 31, 1999.
10.28 ...Amendment to Loan Agreement dated March 31, 1999, incorporated by
         reference from Exhibit 10.5 to the Company's Quarterly Report on
         Form 10-Q for the three months ended March 31, 1999.
10.29 ...Asset Purchase Agreement dated December 3, 1999, by and between TSC
         Services, Inc., Evans Systems, Inc., Diamond Mini Mart, Inc.,
         Evans Oil Co., EDCO, Inc., and Way Energy Systems, Inc. incorporated
         by reference from Exhibit 2.1 to the Company's Current Report on
         Form 8-K dated December 9, 1999.
10.30    Amendment to Loan Agreement dated June 30, 1999
10.31    Amendment to Loan Agreement dated August 31, 1999
10.32    Amendment to Loan Agreement dated November 30, 1999
10.33    Stipulated Judgment dated December 1, 2000 in the District Court of
         Matagorda, Texas, 130th Judicial District
10.34    Deed in Lieu of Foreclosure dated September 26, 2000 by and between
         ChemWay, Inc., Way Energy, Inc. and Evans Systems, Inc.
10.35    Earnest Money Contract (Convenience Stores) By and Between Evans
         Systems, Inc., Diamond Mini-Mart, Inc. and State Oil Company, LLC,
         incorporated by reference from Exhibit 10.35 to the Company's Quarterly
         Report on Form 10-Q for the three months ended March 31, 2002.
10.36    Amendment to Loan Agreement and Modification of Note, incorporated by
         reference from Exhibit 10.1 to the Company's Current Report on Form 8-K
         dated June 24, 2002
10.37    Notice of Entire Agreement, incorporated by reference from Exhibit 10.2
         to the Company's Current Report on Form 8-K dated June 24, 2002
10.38    Promissory Note, incorporated by reference from Exhibit 10.3 to the
         Company's Current Report on Form 8-K dated June 24, 2002
10.39    Release of Claims, incorporated by reference from Exhibit 10.4 to the
         Company's Current Report on Form 8-K dated June 24, 2002
10.40    Assignment of Notes and Liens, incorporated by reference from Exhibit
         10.5 to the Company's Current Report on Form 8-K dated June 24, 2002


                                    Page 18
<PAGE>


10.41    Form of Warrants issued to Cain, Smith & Strong II, L.P., Thomas E.
         Cain, J.L. Evans, Sr., and Travelers Express Co., incorporated by
         reference from Exhibit 10.6 to the Company's Current Report on Form 8-K
         dated June 24, 2002
10.42    Common Stock Purchase Agreement, incorporated by reference from
         Exhibit 10.7 to the Company's Current Report on Form 8-K dated
         June 24, 2002
10.43    Registration Rights Agreement, incorporated by reference from
         Exhibit 10.8 to the Company's Current Report on Form 8-K dated
         June 24, 2002
10.44    Evans Systems, Inc./J.L. Evans Agreement, incorporated by reference
         from Exhibit 10.9 to the Company's Current Report on Form 8-K dated
         June 24, 2002
10.45    Management and Support Services Agreement, incorporated by reference
         from Exhibit 10.10 to the Company's Current Report on Form 8-K dated
         June 24, 2002
*21.0    Subsidiaries of Registrant
*31      Certification of Blair R. Couey, Chief Executive Officer and Acting
         Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities
         Exchange Act of 1934
*32      Certification of Blair R. Couey, Chief Executive Officer and Acting
         Chief Financial Officer pursuant to 18 U.S.C. Section 1350

                                                                *Filed herewith.


                                    Page 19

<PAGE>


Evans Systems, Inc.
Index to Consolidated Financial Statements
September 30, 2005, 2004 and 2003
--------------------------------------------------------------------------------


                                                                        Page No.
                                                                        --------


Independent Auditor's Report                                              F-2

Consolidated Balance Sheets at September 30, 2005 and 2004                F-3

Consolidated Statements of Operations for the Years Ended
   September 30, 2005, 2004 and 2003                                      F-4

Consolidated Statements of Cash Flows for the Years Ended
   September 30, 2005, 2004 and 2003                                      F-5

Consolidated Statements of Stockholders' Equity (Deficit) for the
   Years Ended September 30, 2005, 2004 and 2003                          F-6

Notes to Consolidated Financial Statements                                F-7


                                       F-1
<PAGE>


                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders of
Evans Systems, Inc.

We have audited the accompanying consolidated balance sheets of Evans Systems,
Inc. and its subsidiaries ("the Company") at September 30, 2005 and 2004 and the
related consolidated statements of operations, stockholders' equity (deficit),
and cash flows for each of the three years in the period ended September 30,
2005. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the 2005 and 2004 financial statements referred to above present
fairly, in all material respects, the financial position of Evans Systems, Inc.
and its subsidiaries at September 30, 2005 and 2004 and the results of its
operations and its cash flows for each of the three years in the period ended
September 30, 2005 in conformity with accounting principles generally accepted
in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 15 to the
financial statements, the Company has suffered recurring losses from operations
and has a working capital deficiency that raise substantial doubt about its
ability to continue as a going concern. Management's plans regarding these
matters are described in Note 16. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


/s/ STEPHENSON & TRLICEK, P.C.


Wharton, Texas
January 11, 2006



                                       F-2
<PAGE>


Evans Systems, Inc.
Consolidated Balance Sheets
September 30, 2005 and 2004
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
(in thousands)                                                        2005            2004
                                                                      ----            ----
                                  Assets
<S>                                                                 <C>             <C>
Current assets:
 Cash and cash equivalents                                          $    186        $    341
 Trade receivables, net of allowance for doubtful receivables
  of $18,000 and $11,000, respectively                                   377             509
 Inventory                                                                60              83
 Costs and estimated earnings in excess of billings on
  uncompleted contracts                                                  115             178
 Prepaid expenses and other current assets                                19              51
 Notes receivable, current portion                                        49             127
                                                                    --------        --------
   Total current assets                                                  806           1,289
 Property and equipment, net                                           1,692           1,946
                                                                    --------        --------
   Total assets                                                     $  2,498        $  3,235
                                                                    ========        ========

           Liabilities and Stockholders' Equity (Deficit)
Current liabilities
 Accounts payable and accrued expenses                              $    642        $    567
 Accrued excise, property and other taxes payable                        630             633
 Advances on line of credit                                                -               -
 Current portion of long-term debt                                       100             143
 Accrued interest                                                        244              90
 Billings in excess of costs and estimated earnings on
  uncompleted contracts                                                    -               -
                                                                    --------        --------
   Total current liabilities                                           1,616           1,433
 Long-term debt, net of current maturities                             2,600           2,652
                                                                    --------        --------
   Total liabilities                                                   4,216           4,085

Stockholders' equity (deficit)
 Common stock, $0.01 par value, 15,000,000 shares authorized,
  10,471,831 shares issued, respectively                                 105             105
 Additional paid-in capital                                           17,262          17,262
 Accumulated deficit                                                 (18,651)        (17,783)
 Treasury stock, 72,589 shares, at cost                                 (434)           (434)
                                                                    --------        --------
   Total stockholders' deficit                                        (1,718)           (850)
                                                                    --------        --------
   Total liabilities and stockholders' equity                       $  2,498        $  3,235
                                                                    ========        ========
</TABLE>

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


                                       F-3
<PAGE>


Evans Systems, Inc.
Consolidated Statements of Operations
Years Ended September 30, 2005, 2004 and 2003
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
(in thousands, except per share amounts)                             2005            2004             2003
                                                                     ----            ----             ----
<S>                                                                <C>             <C>             <C>
Revenues:
   Environmental remediation revenues                              $  1,019        $    973        $  1,241
Cost of sales
   Environmental remediation                                            695             565             615
                                                                   --------        --------        --------
Gross profit                                                            324             408             626
Operating expenses
   Employment expenses                                                  211             224             218
   Other operating expenses                                              44              50              56
   Other general and administrative expenses                             76              91             120
   Depreciation and amortization                                         19              18              15
   (Gain) loss on sale of assets                                          -              (2)              -
                                                                   --------        --------        --------
       Total operating expenses                                         350             381             409
                                                                   --------        --------        --------
Operating loss                                                          (26)             27             217
Other income (expense)
   Gain on sales of non-operating assets                                  -               -           1,653
   Interest income                                                        -               -               -
   Rental income, net                                                   118             123             216
   Interest expense                                                    (284)           (200)           (134)
   Other income (expense)                                                (8)            (46)             74
                                                                   --------        --------        --------
       Total other income (expense)                                    (174)           (123)          1,809
                                                                   --------        --------        --------
Income (loss) from continuing operations before income taxes           (200)            (96)          2,026
Provision (benefit) from income taxes                                     -               -               -
                                                                   --------        --------        --------
Income (loss) from continuing operations                               (200)            (96)          2,026
Discontinued operations
   Loss from Convenience Store segment                                 (668)           (283)           (329)
   Loss from Petroleum Marketing segment to July 1, 2004                  -            (516)           (472)
   Gain from disposal of Petroleum Marketing segment assets               -             563               -
                                                                   --------        --------        --------
       Total discontinued operations                                   (668)           (236)           (801)
                                                                   --------        --------        --------
Net income (loss)                                                  $   (868)       $   (332)       $  1,225
                                                                   ========        ========        ========

Basic and diluted earnings (loss) per common share:
   Continuing operations                                           $  (0.02)       $  (0.01)       $   0.20
   Discontinued operations                                            (0.06)          (0.02)          (0.08)
                                                                   --------        --------        --------
   Earnings (loss) per common share                                $  (0.08)       $  (0.03)       $   0.12
                                                                   ========        ========        ========
Basic and diluted weighted average common shares outstanding         10,472          10,157           9,846
                                                                   ========        ========        ========
</TABLE>


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


                                      F-4
<PAGE>


Evans Systems, Inc.
Consolidated Statements of Cash Flows
Years Ended September 30, 2005, 2004 and 2003
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
(in thousands)                                                       2005          2004           2003
                                                                     ----          ----           ----
<S>                                                               <C>            <C>            <C>
Cash flows from operating activities
 Net income (loss)                                                $  (868)       $  (332)       $ 1,225
 Adjustments:
  Depreciation and amortization                                       149            200            237
  Settlement stock issuance expense (Note 12)                           -             75              -
  Note receivable bad debt write-off                                    -             18              -
  Gain on sale of non-operating assets                                  -              -         (1,653)
  Loss (gain) on sale of assets                                       (18)            (2)            48
  Gain on disposal of discontinued operations                           -           (563)             -
  Changes in assets and liabilities:
  Receivables                                                         132           (328)            82
  Inventory                                                            23           (141)           136
  Prepaid expenses and other current assets                            32             52             (7)
  Costs and estimated earnings in excess of billings, net              63             (8)          (101)
  Other assets                                                          -              -             30
  Accounts payable and accrued expenses                               226          1,206           (124)
                                                                  -------        -------        -------
    Net cash provided (used) by operating activities                 (261)           177           (127)
Cash flows from investing activities:
 Issuance of notes receivable                                         (14)           (55)           (69)
 Repayment of notes receivable                                         92             65             35
 Capital expenditures                                                  (3)           (44)           (75)
 Proceeds from sale of property and equipment                         126             94            309
                                                                  -------        -------        -------
    Net cash provided (used) by investing activities                  201             60            200
Cash flows from financing activities
 New borrowings                                                         -             42             43
 Net borrowings (reductions) under line of credit agreement             -              -            (80)
 Reduction of long-term debt                                          (95)          (154)          (311)
                                                                  -------        -------        -------
    Net cash provided (used) by financing activities                  (95)          (112)          (348)
                                                                  -------        -------        -------
Net increase (decrease) in cash and cash equivalents                 (155)           125           (275)
Cash and cash equivalents, beginning of year                          341            216            491
                                                                  -------        -------        -------
Cash and cash equivalents, end of year                            $   186        $   341        $   216
                                                                  =======        =======        =======
Supplemental disclosure of cash flow information:
 Cash paid for interest                                           $   130        $    84        $   116
                                                                  =======        =======        =======
 Cash paid for taxes                                              $     -        $     -        $     -
                                                                  =======        =======        =======
</TABLE>


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


                                      F-5
<PAGE>


Evans Systems, Inc.
Consolidated Statements of Stockholders' Equity
Years Ended September 30, 2005, 2004 and 2003
--------------------------------------------------------------------------------


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

                                           Common stock             Additional     Retained
                                     --------------------------      paid-in       earnings      Treasury
                                       Shares         Amount         Capital      (deficit)        stock          Total
                                       ------         ------         -------      ---------        -----          -----
<S>                                  <C>            <C>            <C>           <C>            <C>            <C>
Balance - September 30, 2002           9,846,831    $        99    $    17,193   $   (18,676)   $      (434)   $    (1,818)

Stock options exercised                                                                                                  -
Warrants exercised                                                                                                       -
Issuance of common stock                       -              -              -                                           -
Compensation expense recognized in
 connection with options granted                                             -                                           -
Net income for 2003                                                                    1,225                         1,225
                                     -----------    -----------    -----------   -----------    -----------    -----------
Balance - September 30, 2003           9,846,831             99         17,193       (17,451)          (434)          (593)

Stock options exercised                                                                                                  -
Warrants exercised                                                                                                       -
Issuance of common stock                 625,000              6             69                                           -
Compensation expense recognized in
 connection with options granted                                             -                                           -
Net loss for 2004                                                                       (332)                         (332)
                                     -----------    -----------    -----------   -----------    -----------    -----------
Balance - September 30, 2004          10,471,831            105         17,262       (17,783)          (434)          (850)

Stock options exercised                                                                                                  -
Warrants exercised                                                                                                       -
Issuance of common stock                       -              -              -                                           -
Compensation expense recognized in
 connection with options granted                                             -                                           -
Net loss for 2005                                                                       (868)                         (868)
                                     -----------    -----------    -----------   -----------    -----------    -----------
Balance - September 30, 2005          10,471,831    $       105    $    17,262   $   (18,651)   $      (434)   $    (1,718)
                                     ===========    ===========    ===========   ===========    ===========    ===========
</TABLE>


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

                                      F-6

<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

1.   Description of the Company and Summary of Significant Accounting Policies

     Business Operations
     Evans Systems, Inc. and its subsidiaries (dba MC Star and collectively
     referred to as the Company) are engaged in petroleum marketing, convenience
     store operations and environmental remediation services. The Company
     operates primarily along the Gulf Coast Regions of Texas.

     Principles of Consolidation
     The consolidated financial statements include the accounts of Evans
     Systems, Inc. and its wholly-owned and controlled majority-owned
     subsidiaries and have been prepared in accordance with standards of the
     Public Company Accounting Oversight Board. For purposes of consolidation,
     the Company includes all significant subsidiaries owned directly or
     indirectly with more than 50 percent of the voting rights held by the
     Company, and for which other shareholders do not possess the right to
     participate in significant management decisions. All significant
     intercompany transactions and balances have been eliminated.

     Basis of Accounting
     The Company's policy is to prepare its financial statements on the accrual
     basis of accounting in accordance with generally accepted accounting
     principles. Revenues from motor fuel sales to open dealer accounts are
     recognized when delivered. Revenues from motor fuel sales and retail sales
     at convenience stores are recognized when sold at the store. Expenses are
     recognized in the period in which they are incurred.

     Environmental segment revenue from fixed-price contracts is recognized
     using the percentage-of-completion method, measured by the percentage of
     cost incurred to date to estimated total cost at completion for each
     contract. Profit recognition is deferred on each contract until progress
     reaches a level of completion sufficient to establish the probable outcome.
     Provisions for estimated losses on uncompleted contracts are made in the
     period in which such losses are determined. Changes in job performance, job
     conditions, and estimated profitability that result in revisions to costs
     are recognized in the period in which the changes are determined. Because
     of the inherent uncertainties in estimating, it is at least reasonably
     possible that such changes will occur within the near term.

     The asset, "Costs and estimated earnings in excess of billing on
     uncompleted contracts" represents revenues recognized in excess of amounts
     billed. The liability, "Billings in excess of costs and estimated earnings
     on uncompleted contracts" represents billings in excess of revenues
     recognized.

     Cash and Cash Equivalents
     For purposes of the statements of cash flows, the Company considers all
     highly liquid investments with original maturities of three months or less
     to be cash equivalents. Cash and cash equivalents are stated at cost which
     approximates fair market value.

     Fair Value of Financial Instruments
     The Company has various financial instruments, including cash, trade
     receivables, accounts payable, accrued expenses, revolving credit
     facilities and notes payable. The carrying values of cash, trade
     receivables, accounts payable, accrued expenses and notes payable
     approximate current fair value. The revolving credit facility is at
     variable market rates.

     Inventories
     Substantially all inventories are products held for sale. Inventories of
     gas, diesel and other fuels, oil and grease, automotive products and
     accessories, chemical products and convenience store products utilize the
     first-in, first-out (FIFO) method of accounting and are stated at the lower
     of cost or market.

                                      F-7
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

     Property and Equipment
     Property and equipment is stated at cost and is depreciated utilizing the
     straight-line method of computing depreciation over their estimated useful
     lives. The cost of assets retired and the related accumulated depreciation
     are removed from the accounts and any gain or loss is included in the
     results of operations when incurred. Repairs and maintenance are charged to
     expense as incurred. Expenditures for major additions and replacements that
     extend the lives of assets are capitalized and depreciated over their
     remaining estimated useful lives. The Company depreciates assets over the
     following estimated useful lives:

         Buildings                          15-41 years
         Leasehold improvements             Life of lease, up to 31 years
         Equipment                          5 -15 years
         Transportation equipment           5 -10 years
         Office equipment                   3 - 7 years

     Impairment of Long-Lived Assets
     The Company periodically assesses the realizability of its long-lived
     assets and evaluates such assets for impairment whenever events or changes
     in circumstances indicate that the carrying amount of an asset may not be
     recoverable. Asset impairment is determined to exist if estimated future
     cash flows, undiscounted and without interest charges, are less than the
     carrying amount. There were no assets considered impaired at September 30,
     2005 and 2004.

     Stock-Based Compensation Plans
     The Company applies Accounting Principles Board Opinion No. 25, "Accounting
     for Stock Issued to Employees" (APB 25) and related interpretations in
     accounting for its plans. No stock-based employee compensation cost is
     reflected in net income, as all options granted under those plans had an
     exercise price equal to the market value of the underlying common stock on
     the date of grant. The following unaudited pro forma data table illustrates
     the effect on net income and earnings per share if the company had applied
     the fair value recognition provisions of FASB Statement No. 123, Accounting
     for Stock-Based Compensation, to stock-based employee compensation (in
     thousands):

                                               Year ended September 30,
                                          ---------------------------------
                                              2005       2004       2003
                                          ---------------------------------
     Net income (loss):
       As reported                        $    (868)   $  (332)   $   1,225
       Pro forma                               (868)      (332)       1,225
     Basic and diluted loss per share
       As reported                        $   (0.08)   $ (0.03)   $    0.13
       Pro forma                              (0.08)     (0.03)        0.13

     Concentration of Credit Risk
     The Company performs periodic evaluations of the relative credit standing
     of the financial institutions and investment funds that are considered in
     the Company's investment strategy. A majority of the Company's trade
     receivables are from retail gasoline stations and convenience stores.
     Management believes that its credit and collection policies mitigate the
     potential effect of a concentration of credit risk in its accounts
     receivable.

                                      F-8
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

     Income Taxes
     The Company and its subsidiaries file a consolidated federal income tax
     return. The Company recognizes income tax expense based on the liability
     method of accounting for income taxes. Deferred tax assets and liabilities
     are recognized for the income tax effect of temporary differences between
     the tax basis of assets and liabilities and their carrying values for
     financial reporting purposes. Deferred tax expense or benefit is the result
     of changes in deferred tax assets and liabilities during the period. The
     Company has recorded a valuation allowance, which reflects the estimated
     amount of deferred tax assets that more likely than not will be realized.

     Earnings (Loss) Per Share
     The Company reports both basic earnings per share, which is based on the
     weighted average number of common shares outstanding, and diluted earnings
     per share, which is based on the weighted average number of common shares
     as well as all potentially dilutive common shares outstanding. Stock
     options and warrants are the only potentially dilutive shares the Company
     has outstanding for the periods presented. Stock options and warrants were
     not included in the computation of diluted loss per share for 2005 and 2004
     since they would have resulted in a antidilutive effect on loss from
     continuing operations. Stock options and warrants were not included in the
     computation of diluted loss per share for 2003 as they would have resulted
     in a antidilutive effect as the exercise price exceeded the average market
     price per share during the year.

     Use of Estimates
     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities at
     the date of the financial statements and reported amounts of revenues and
     expenses during the reporting period. Actual results could differ from
     those estimates. Management believes that the estimates are reasonable.

     Reclassifications and Financial Statements Presented
     Certain reclassifications have been made to the 2003 and 2004 financial
     statements to conform to the 2005 financial statement presentation. Such
     reclassifications had no effect on net income (loss) as previously
     reported.

2.   Texas Convenience Store Segment

     Subsequent to year-end, the Company sold its inventory in its remaining
     operating convenience stores and leased the stores and store equipment to
     outside operators, effectively discontinuing its Texas Convenience Store
     Segment operations. Accordingly, the results of operations of the Texas
     Convenience Store segment have been classified as discontinued operations
     and prior periods have been restated. The Company has not allocated
     interest expense or general corporate overhead to discontinued operations.
     Summary operating results for the years ended September 30, 2005, 2004 and
     2003 are as follows (in thousands):

                                               2005       2004       2003
                                             -------    -------    -------
          Revenues                           $ 2,376    $   947    $   341
                                             =======    =======    =======
          Income (loss) from operations      $  (668)   $  (283)   $  (329)
                                             =======    =======    =======
         * Through November 18, 2002


                                      F-9
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

3.   Discontinued Operations - Texas Petroleum Marketing Segment

     On July 1, 2004, the Company entered into an agreement with Mauritz & Couey
     (MC) whereby the Company conveyed its Exxon, Chevron and unbranded fuel
     distribution contracts and certain petroleum marketing distribution assets,
     accounts receivable and inventory with a net book value aggregating
     $1,629,000 to MC for relief of amounts owed to MC for fuel purchases and
     management fees of approximately $1,705,000, the assumption of the
     Company's line of credit obligation by MC of $399,000 and the issuance of a
     note receivable of $88,000. As a result of the transaction, the Company
     discontinued its petroleum marketing distribution segment and effectively
     disposed of the segment's assets (Note 5).

     The results of operations of the Texas Petroleum Marketing segment have
     been classified as discontinued operations and prior periods have been
     restated. The Company has not allocated interest expense or general
     corporate overhead to discontinued operations. The otherwise tax liability
     from this transaction is offset by net operating loss carryforwards of the
     Company generated from previous years losses. Accordingly, no provision has
     been recorded. Summary operating results for the year ended September 30,
     2005, 2004 and 2003 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                      2005       2004*       2003
                                                    --------   --------    --------
<S>                                                 <C>        <C>         <C>
          Revenues                                  $      -   $ 12,936    $ 17,536
                                                    ========   ========    ========
          Income (loss) from operations             $      -   $   (516)   $   (472)
                                                    ========   ========    ========
          Gain on sale of discontinued operations   $      -   $    563    $      -
                                                    ========   ========    ========
           *Through July 1, 2004
</TABLE>

4.   Costs and Estimated Earnings on Uncompleted Contracts

     At September 30, 2005 and 2004, costs and estimated earnings on uncompleted
     contracts consisted of the following (in thousands):

                                                                 2005     2004
                                                                 ----     ----
     Costs incurred to date on uncompleted contracts            $ 174    $ 189
     Estimated earnings                                           104       83
                                                                -----    -----
                                                                  278      272
     Billings to date                                            (163)     (94)
                                                                -----    -----
          Total                                                 $ 115    $ 178
                                                                =====    =====

     Included in the accompanying consolidated balance sheets
     under the following captions:

          Costs and estimated earnings in excess of billings    $ 115    $ 178
          Billings in excess of costs and estimated earnings        -        -
                                                                -----    -----
                Total                                           $ 115    $ 178
                                                                =====    =====

     There were no material revisions in contract estimates during the years
     ended September 30, 2005 and 2004.


                                      F-10
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

5.   Property and Equipment

     Property and equipment consisted of the following at September 30 (in
     thousands):

                                                          2005       2004
                                                        -------    -------
     Land                                               $   548    $   608
     Buildings                                            1,289      1,364
     Equipment                                            2,989      3,044
     Transportation equipment                               435        435
     Office equipment                                        64         64
                                                        -------    -------
                                                          5,325      5,515
     Less - accumulated depreciation                     (3,633)    (3,569)
                                                        -------    -------
     Property and equipment, net                        $ 1,692    $ 1,946
                                                        =======    =======

     Year Ended September 30, 2005 Asset Sales
     -----------------------------------------
     During fiscal 2005, the Company sold 2 convenience store buildings, land
     and various store equipment with an aggregate net book value of
     approximately $109,000 for total proceeds of $126,000 and recorded a gain
     on the sale of assets of $18,000.

     Year Ended September 30, 2004 Asset Sales
     -----------------------------------------
     On July 1, 2004, the Company entered into an agreement with Mauritz & Couey
     (MC) whereby the Company conveyed its Exxon, Chevron and unbranded fuel
     distribution contracts and certain petroleum marketing distribution assets
     to MC for relief of amounts owed to MC for fuel purchases and management
     fees as well as the assumption of the Company's line of credit obligation
     by M&C. As a result of the transaction, the Company discontinued its
     petroleum marketing distribution segment and effectively disposed of the
     segment's assets (Note 3). Under the agreement, M&C agreed to relieve
     amounts owed by the Company aggregating approximately $1,705,000, assume
     the $399,000 outstanding balance on the Company's line of credit with a
     bank and issue the Company a short-term note receivable for approximately
     $88,000. In consideration, the Company agreed to convey its Exxon, Chevron
     and unbranded fuel accounts, convey certain equipment, buildings, and
     vehicles with a net book value of approximately $550,000, convey all trade
     accounts receivables from fuel customers of approximately $650,000 and
     convey all inventory on hand at cost of approximately $429,000. The Company
     recorded a gain on the disposal of the segment of approximately $563,000.

     At the date of conveyance and based on independent appraisals, the fair
     value of the equipment, buildings, and vehicles conveyed was approximately
     $953,000 and the fair value of the fuel distribution contracts was
     approximately $227,000.

     During fiscal 2004, the Company also sold various unused equipment,
     vehicles and buildings with an aggregate net book value of $91,000 for
     total proceeds of $94,000.

     Year Ended September 30, 2003 Asset Sales
     -----------------------------------------
     During fiscal 2003, the Company sold various equipment, vehicles and a
     leased store with an aggregate net book value of $270,000 for total
     proceeds of $105,000. The Company also sold a note receivable with a
     principle balance of approximately $83,000 and various vehicles and
     equipment with a net book value of $1,500 to Mauritz & Couey for relief of
     amounts owed to Mauritz & Couey for fuel purchases of approximately
     $203,500. The assets conveyed to Mauritz & Couey were appraised at


                                      F-11
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

     approximately $100,000 at the date of conveyance. The Company recorded a
     loss of $48,000 on these transactions during the year ended September 30,
     2003.

     On January 13, 2003, the Company assigned its ground lease with the Port of
     Bay City for the fuel terminal to CSS as well as conveyed the terminal
     facility assets, including all the tanks and structures at the Port of Bay
     City, to CSS for certain concessions by CSS. Those concessions included the
     agreement of CSS to waive interest on the Company's note payable to CSS
     until June 1, 2003, the agreement of CSS to reduce the principal amount due
     under the note payable by $1,900,000 from $4,500,000 to $2,600,000, the
     agreement of CSS to assume all property taxes on the terminal facility
     assets, and the agreement of CSS to timely perform all obligations of
     payment and performance of the Port of Bay City lease agreement. The
     Company had been obligated for monthly payments of $108 until September
     2006 under the ground lease. The terminal facility had not been in
     operation since fiscal 1997 and the Company had been unsuccessful in
     reopening the terminal due to working capital deficiencies.

     The aggregate net book value of the terminal facility assets at the date of
     conveyance was approximately $365,000 and the Company's last independent
     appraisal of the terminal facility, dated July 2001, estimated the fair
     market value of the terminal facility at approximately $2,000,000. The
     Company also had recorded property taxes payable of approximately $118,000
     on the terminal facility assets. Accordingly, in January 2003, the Company
     recorded the reduction of the note payable to CSS by $1,900,000, the
     reduction of property taxes payable by $118,000, the conveyance of the
     terminal facility assets of approximately $365,000, net, and a noncash gain
     on the sale of non-operating assets of $1,653,000.

6.   Notes Receivable

     During the fourth quarter of 2004, the Company issued a zero interest note
     to Mauritz & Couey in connection with the sale of the Exxon/Chevron
     contracts (Note 5) for $88,301. Terms of the note call for monthly payments
     of $0.02 per gallon sold under the contracts. During fiscal 2005, the note
     was paid in full. At September 30, 2004, the Company was owed $64,563 under
     this agreement.

     During 2004, the Company held merger discussions with Morco Testing, Inc.
     (Morco), an environmental emergency response and tank testing company.
     During the merger negotiations, the Company paid certain expenses for Morco
     that Morco has agreed to pay back under a note agreement that calls for a
     payment of $25,000 in November 2004 with the remaining balance plus accrued
     interest due on or before December 31, 2004. At September 30, 2005 and
     2004, the Company was owed $9,820 and 34,820, respectively, under this
     agreement.

     The Company has a note receivable from a customer under a workout plan. The
     note is a zero interest note. At September 30, 3005 and 2004, $0 and $900,
     respectively, was outstanding under this agreement. The Company also has an
     unsecured note receivable from CSS, its senior debt holder. At September
     30, 2005 and 2004, the Company was owed $26,977.

     During 2005, the Company sold inventory from a closed convenience store to
     a third party for $14,000, the book value of the inventory at the date of
     sale. The Company issued a short term zero interest note for $14,000 for
     the purchase of inventory. At September 30, 2005, $12,800 was owed under
     this agreement.


                                      F-12
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

7.   Operating Leases

     As of September 30, 2005, the Company leases three convenience store
     locations. The first store lease calls for monthly payments of $1,000 until
     August 1, 2006. The second store lease calls for monthly payments of $689
     until July 14, 2007. The third store lease calls for monthly payments of
     $800 until November 30, 2007. At September 30, 2005, the scheduled future
     minimum lease payments required under the terms of the operating leases in
     effect are (in thousands):

                Year ended September 30,
                ------------------------
                2006                                          $  29
                2007                                             16
                2008                                              2
                Thereafter                                        -
                                                              -----
                              Total                           $  47
                                                              =====

     The Company has 3 subleases. Minimum rentals to be received in the future
     under these noncancelable subleases totaled $72,000 as of September 30,
     2005.

8.   Long-Term Debt

     Long-term debt is summarized as follows at September 30 (in thousands):

<TABLE>
<CAPTION>
                                                                                   2005     2004
                                                                                   ----     ----
<S>                                                                               <C>      <C>
     Note payable to CSS, at 10%, payable on June 24, 2007 with interest due
       monthly beginning June 1, 2004 (as amended), secured by all property,
       equipment, receivables, inventory, common stock of subsidiaries and
       all other properties of the Company                                        $2,600   $2,600
     Note payable to Travelers, at prime plus 50 basis points,
       principal and interest due monthly for 36 months beginning June 22, 2003       52      112
     Note payable to McLane Company, Inc., $3,717 due monthly for 12 months
       beginning November 22, 2002                                                    10       20
     Note payable to Conoco, $1,540 due monthly for 12 months beginning
       August 10, 2004                                                                 -       15
     Other                                                                            38       48
                                                                                  ------   ------
     Total long-term debt                                                          2,700    2,907
     Less - current maturities                                                       100      201
                                                                                  ------   ------
       Total long-term debt, net of current maturities                            $2,600   $2,706
                                                                                  ======   ======
</TABLE>


                                      F-13
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

     As of September 30, 2005, principal maturities of long-term debt are as
     follows (in thousands):

              Year ending September 30,
              -------------------------
              2006                                                 $100
              2007                                                2,600
              2008                                                    -
              2009                                                    -
              2010                                                    -
              Thereafter                                              -
                                                                 ------
                            Total                                $2,700
                                                                 ======

     At September 30, 2005, the Company was in default under the McLane note for
     failing to make timely payments in full as stated in the agreements.
     Therefore, the Company has reflected that note as currently due at
     September 30, 2005.

     At September 30, 2005 and 2004, the Company had accrued $240,000 and
     $87,000, respectively, in interest on the CSS note.

9.   Income Taxes

     The difference between the tax effect of net income (loss) applied at the
     statutory federal income tax rates is as follows (in thousands):

<TABLE>
<CAPTION>
                                                            Year ended September 30,
                                                            ------------------------
                                                             2005     2004     2003
                                                             ----     ----     ----
<S>                                                         <C>      <C>      <C>
     Pre-tax financial net income (loss)                    $(295)   $(113)   $ 417
     Permanent items                                            -        -        -
                                                            -----    -----    -----
     Adjusted pre-tax financial net loss                     (295)    (113)     417
     Timing items
     Difference in book and tax depreciation                   34       32      (10)
     Difference in book and tax gain on sale of assets          7       95      148
                                                            -----    -----    -----
      Net difference in depreciable assets                     41      127      138
     Difference in book and tax bad debt expense                -       (6)      (6)
     Difference in other book and tax items, net                -        -        -
                                                            -----    -----    -----
      Total timing items                                       41      121      132
                                                            -----    -----    -----
     Taxable income (loss) before NOL and capital losses     (254)       9      549
     Carryforward (utilization) of NOL and capital losses     254       (9)    (549)
                                                            -----    -----    -----
     Taxable income (loss)                                  $   -    $   -    $   -
                                                            =====    =====    =====
</TABLE>


                                      F-14
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

     Deferred tax assets (liabilities) are comprised of the following (in
     thousands) at September 30:

<TABLE>
<CAPTION>
                                                                      2005     2004
                                                                      ----     ----
<S>                                                                  <C>      <C>
     Net deferred assets and liabilities
       Tax effect of differences in underlying carrying value of
         net assets for book and tax purposes                        $(142)   $(187)
       Bad debt allowance                                                4        4
                                                                     -----    -----
           Total net deferred tax assets (liabilities)                (138)    (183)
       Valuation allowance due to prior years net operating losses     138      183
                                                                     -----    -----
       Net deferred tax assets (liabilities)                         $   -    $   -
                                                                     =====    =====
</TABLE>

     At September 30, 2005, the Company had regular tax net operating loss
     carryforwards from continuing operations aggregating approximately $16.6
     million available for federal income tax purposes that expire through 2024.
     Changes in the Company's ownership, as defined under Section 382 of the
     Internal Revenue Code, could result in certain limitations on the annual
     amount of net operating losses that may be utilized.

10.  Common Stock

     On June 24, 2002 and concurrently with the Restructuring Transactions, the
     Company completed the private placement of 3,085,000 shares of common stock
     to Mauritz & Couey, a Texas-based general partnership ("MC"), in
     consideration for $150,000, which proceeds were used by the Company to fund
     the payment of delinquent fuels taxes. As part of the transaction, MC was
     granted certain piggyback and demand registration rights for the acquired
     shares.

     As part of the Restructuring Transactions, the Company cancelled the
     employment agreement of Mr. J.L. Evans, Sr., former CEO and President of
     the Company. In addition, the Company and Mr. Evans, Sr. mutually agreed to
     cancel all outstanding common stock options held by Mr. Evans, Sr.
     aggregating 575,000. Concurrently with the cancellation of Mr. Evans' stock
     options, the Company issued Mr. Evans, Sr. 175,000 shares of warrant stock
     of the Company at a price per share of $0.05, the then current market price
     per share of the Company's common stock. In April 2004 and as part of a
     settlement agreement (Note 13), Mr. Evans, Sr. agreed to forfeit 1/3 of his
     warrants, or 58,333 warrant stock shares, resulting in 116,667 shares of
     warrant stock outstanding at September 30, 2004.

     As part of the Restructuring Transactions and for payment of services
     rendered in facilitating the Restructuring Transactions, the Company issued
     warrants to purchase an aggregate of 4,000,000 shares of common stock of
     the Company at a price per share of $0.05, the then current market price
     per share of the Company's common stock, of which 2,400,000 were issued to
     Mr. Tom Cain, Chairman of the Board of the Company, and 1,600,000 were
     issued to Cain, Smith & Strong, L.P., the senior debt holder of the
     Company. The Company also granted the holders of these warrants certain
     piggyback and demand registration rights pursuant to the terms of a
     Registration Rights Agreement.

     In addition, the Company issued Travelers Express Co. ("Travelers")
     warrants to purchase 93,000 shares of common stock of the Company at a
     price per share of $0.05, the then current market price per share of the
     Company's common stock, as part of the forbearance agreement with
     Travelers. Under the terms of the Travelers Warrants, for every $2 the
     Company reduces the principal amount owed under the Travelers Note, 1 share
     of common stock subject to the Travelers Warrants shall expire. As of


                                      F-15
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

     September 30, 2005, 65,500 of these warrants had expired due to principal
     payments made on the note. The warrants are not exercisable by Travelers
     until such time as the market price of the Company's common stock exceeds
     $2.00 per share for a period of 180 consecutive trading days.

     On April 2, 2004, the Company issued 625,000 shares of common stock as part
     of a settlement agreement from a lawsuit filed against the Company and its
     former and current directors (Note 13). The Company recorded the issuance
     of the shares at the market price per share at the date of issuance of
     $0.12 per share. Accordingly, $75,000 has been recorded in other income
     (expense) on the accompanying consolidated statement of operations.

     A summary of the option activity under the various plans follows:

                                                            Weighted-
                                               Number of     average
                                                shares     option price
                                                ------     ------------
     Outstanding at September 30, 2002          390,350
     Expired in 2003                                  -      $      -
                                                -------
     Outstanding at September 30, 2003          390,350
     Expired in 2004                                  -      $      -
                                                -------
     Outstanding at September 30, 2004          390,350
     Expired in 2005                            (87,750)     $   3.31
                                                -------
     Outstanding at September 30, 2005          302,600
                                                =======

     Although 302,600 options are outstanding at September 30, 2005, only 12,600
     underlying common shares are registered under a plan. There were no options
     granted during 2005, 2004 and 2003.

     A summary of options outstanding and options exercisable at September 30,
     2005 is as follows:

<TABLE>
<CAPTION>
                                Weighted
                                Average         Weighted                   Weighted
       Options    Exercise     Remaining        Average      Options       Average
     Outstanding   Price    Contractual Life  Option Price  Exercisable  Option Price
     -----------  --------  ----------------  ------------  -----------  ------------
<S>       <C>     <C>             <C>         <C>                <C>     <C>
          12,600  $      -        3.66 years  $          -       12,600  $          -
         290,000      0.15        5.41 years          0.15      290,000          0.15
     -----------  --------  ----------------  ------------  -----------  ------------
         302,600  $   0.15        3.46 years  $       0.15      302,600  $       0.15
     ===========  ========  ================  ============  ===========  ============
</TABLE>


                                      F-16
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

A summary of options outstanding and options exercisable at September 30, 2005
is as follows:

                                Weighted
                                 Average        Weighted
      Warrants      Exercise    Remaining        Average        Warrants
     Outstanding     Price        Life        Warrant Price    Exercisable
     -----------    --------    ----------    -------------    -----------
       4,268,000    $   0.05    9.75 years    $        0.05      4,175,000

     At September 30, 2005, the Company had an aggregate 10,471,831 shares of
     common stock issued, with 10,430,196 issued and outstanding after
     consideration of treasury stock. The Company is authorized to issue up to
     15,000,000 shares of common stock. Of the 4,569,804 shares of common stock
     available for issuance, approximately 302,600 shares are reserved for
     vested stock options and 4,144,167 shares are reserved for Warrants.

11.  Related Party Transactions

     Effective June 24, 2002 and in conjunction with the Restructuring
     Transactions, the Company entered into a Management and Support Services
     Agreement (the "Management Agreement") with Mauritz & Couey, a Texas based
     general partnership ("MC") to provide certain managerial and operational
     services to the Company. At September 30, 2005 and 2004, the Company owed
     MC approximately $46,203 and $14,043, respectively, for expenses incurred
     under this agreement, which is included in accounts payables.

     During fiscal 2002, the Company entered into an agreement with MC to
     purchase fuel products under MC's fuel supply contracts at $0.005 above
     rack price. At September 30, 2005 and 2004, the Company owed MC $278,173
     and $57,062, respectively, which is included in accounts payables. In
     addition, from time to time, the Company will deliver fuel loads to MC
     customers and MC will deliver fuel loads to the Company's customers. The
     Company and MC charged one another freight only at common carrier rates. At
     September 30, 2005 and 2004, MC owed the Company approximately $21,284 and
     $65,573, respectively, for freight on fuel the Company hauled for MC, which
     is included in accounts receivable.

     During fiscal 2005, the company environmental segment, StarCo, performed
     various environmental remediation services for MC. At September 30, 2005,
     MC owed StarCo. $48,488 for service rendered, which is included in accounts
     receivable.

     At September 30, 2005, the Company owed Cain, Strong & Smith, L.P. ("CSS")
     $2,600,000 under a note agreement (Note 8). As discussed in detail in Note
     5, during fiscal 2003, the Company conveyed its fuel terminal facility
     assets to CSS for concessions by CSS, including the reduction of the note
     payable by $1,900,000. The Company's former Chairman of the Board, Mr.
     Thomas E. Cain, is married to Mrs. Nancy Cain, a partner of CSS.

     At September 30, 2005, the Company was owed $26,977 from CSS under note
     receivable agreements for services provided to CSS.

     From time to time the Company makes advances to individuals who are
     shareholders, directors, officers and/or employees. Such advances are
     usually unsecured and accrue interest. There were no advances outstanding
     at September 30, 2005 and 2004.


                                      F-17
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

12.  Contingent Liabilities

     Legal contingent liabilities
     The Company is subject to litigation, primarily as a result of customer
     claims, in the ordinary conduct of its operations. Except as described
     below, as of September 30, 2005, the Company had no knowledge of any legal
     proceedings, which, by themselves, or in the aggregate, would not be
     covered by insurance or could be expected to have a material adverse effect
     on the Company.

     During fiscal 2003, the Company was notified that a lawsuit was filed
     against the Company and several or its current and former officers and
     directors on behalf of purchasers of the Company's common stock. The
     petition alleged that the Company received funds from a Private Placement
     transaction with Comsight Holdings, Inc., whereby Comsight agreed to act as
     a placement agent for accredited investors to purchase a minimum of
     1,250,000 and a maximum of 3,750,000 shares of the Company's common stock
     in a private placement to accredited investors at $0.40 per share. On
     August 17, 2000, the Company issued 1,437,500 shares of common stock for
     total consideration of $575,000, which included 625,000 shares for the
     plaintiffs. The Plaintiff's alleged that they never received their 625,000
     common shares or a refund of the subscription funds. In April 2004, the
     Company and the former and current directors agreed to settle the lawsuit.
     Under the settlement agreement, the Company agreed to reissue the original
     625,000 common shares to the plaintiff as well as issue an additional
     625,000 shares to the plaintiff (Note 10). In addition, Mr. J.L. Evans, Sr.
     agreed to forfeit 1/3 of his stock warrants (Note 10).

     During fiscal 2003, Matagorda County, Victoria County, Jackson County and
     Brazoria County filed tax suits against the Company for failure to pay
     prior years ad valorem taxes aggregating approximately $629,000 at
     September 30, 2005. The Company has accrued all prior year ad valorem taxes
     at September 30, 2005. However, as these taxes remain unpaid, the counties
     can place liens on Company properties securing these taxes, impose
     penalties and interest, and could foreclose on those assets securing the
     taxes.

     Other contingent liabilities
     The environmental protection business is primarily the result of government
     mandate. A number of states, including Texas, have established remediation
     funds to assist owners/operators in the clean up of leaking underground
     storage tanks ("USTs"). In Texas, this was accomplished through the
     Groundwater Protection Act ("GPA"), which became effective on September 1,
     1989. The GPA, as amended, provides clean-up funds for eligible expenses,
     less applicable deductibles. Financing programs secured by assignments of
     rights to reimbursement by the Texas Commission on Environmental Quality
     ("TCEQ") can be obtained for leaking petroleum storage tank sites impacted
     by releases from USTs. The Company's environmental subsidiary EDCO
     Environmental, Inc. (dba StarCo Enviroservices, Inc. and referred to as
     StarCo) has provided environmental remediation services to customers almost
     entirely through reimbursement funding by the TCEQ. Management is
     continuously monitoring the Texas legislature to determine the availability
     of funds appropriated to the TCEQ for the reimbursement programs.

     On June 22, 2002 and as part of the Restructuring Transactions, the Company
     issued to JPMorgan Chase Bank a non-interest bearing $2,000,000 contingent
     note. Under the terms of the contingent note, the note is payable only upon
     the occurrence of each of the following conditions: (i) the closing bid
     price of the Company's common stock exceeds $5.00 for 180 consecutive
     trading days; (ii) the Company's debt to equity ratio shall be less than
     50%; (iii) the Company's revenue/debt ratio shall be less than 0.05, and
     (iv) the Company's interest burden coverage shall be greater than 20 times.
     Should all of these conditions be met, the note would have a maturity date
     of 5 years from the date such conditions are met. Should the payment


                                      F-18

<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

     conditions not be met by June 21, 2012, the note will be automatically null
     and void. The contingency note's purpose was for JPMorgan, for having made
     prior concessions to the Company, to participate in any financial windfall
     of the Company, should such an eventuality occur. It is management's
     opinion that it is very unlikely this note will become effective prior to
     the termination date.

13.  Employee Benefit Plans

     The Company established the ESI Employee Retirement Plan (the ESI Plan), a
     defined contribution benefit plan, effective July 1, 1997. On May 10, 2002,
     the Board of Directors of the Company voted to terminate the ESI Plan. As
     of May 10, 2002, no employee contributions were made to the ESI Plan. On
     December 27, 2002, all net assets of the ESI Plan aggregating $156,352 were
     transferred out of the ESI Plan to the New Plan. All accounts were
     transferred to the New Plan's service provider and all current employees of
     the Company were considered eligible to participate in the New Plan. The
     ESI Plan filed its final Form 5500 for the year ended December 31, 2002.

     In December 2002, the Company established a new 401(k) profit sharing plan
     for the remaining employees, the Mauritz & Couey 401(k) Profit Sharing Plan
     for MC Star (New Plan). Employees are eligible for participation in the
     plan upon attaining the age of 21 and completion of 1 year of service and
     1,000 hours or more of service. The Company contributes an amount equal to
     50% of employee voluntary contributions up to a maximum of 5% of the
     employee's compensation. There were no employee contributions made to the
     New Plan in 2005 and 2004.

14.  Statement of Cash Flows Supplemental Disclosure of Non-Cash Transactions

     The following schedule summarizes the Company's supplemental disclosure of
     non-cash transactions for the Consolidated Statements of Cash Flows for the
     years ended September 30, 2005, 2004 and 2003 (in thousands):

<TABLE>
<CAPTION>
                                                            2005         2004        2003
                                                            ----         ----        ----
<S>                                                        <C>         <C>          <C>
     Supplemental Disclosure of Non-Cash Transactions
       Sale of Petroleum Marketing segment (Note 3)
         Relief of accounts payable                        $     -     $ 1,705      $     -
         Relief of line of credit payable                        -         399            -
         Issuance of note receivable                             -          88            -
         Net book value of fixed assets sold                     -        (550)           -
         Conveyance of inventory                                 -        (429)           -
         Conveyance of accounts receivable                       -        (650)           -
                                                           -------     -------      -------
           Gain on sale of petroleum marketing segment     $     -     $   563      $     -
                                                           =======     =======      =======
       Sale of Non-Operating Assets (Note 5)
         Relief of debt to CSS                             $     -     $     -      $ 1,900
         Relief of property taxes                                -           -          118
         Conveyance of fixed assets, net                         -           -         (365)
                                                           -------     -------      -------
           Gain on sale of non-operating assets            $     -     $     -      $ 1,653
                                                           =======     =======      =======
</TABLE>


                                      F-19
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2005, 2004, 2003
--------------------------------------------------------------------------------

15.  Results of Operations, Liquidity and Management's Plans

     During the year ended September 30, 2005, the Company has recorded an
     operating loss from continuing operations of $200,000 and a net loss of
     $868,000 million. At September 30, 2005, the Company has a working capital
     deficit of $810,000 and a stockholders' deficit of $1,718,000.

     In December 1999, the Company received notification from Nasdaq stock
     exchange that the Company was not in compliance with two requirements for
     continued listing on the Nasdaq NMS: the Company did not hold an annual
     stockholders meeting in 1998 and the market value of the public float in
     the Company's common stock did not meet or exceed a minimum level of $5
     million. On February 17, 2000, the Company was delisted from the NASDAQ NMS
     for failing to meet two requirements for continued listing on the NASDAQ
     NMS. The Company's common stock is now traded on the over-the-counter
     bulletin board system maintained by Nasdaq. The Company's ability to raise
     additional equity capital in the future could be adversely affected with
     the Company's common stock no longer listed on a national exchange.

     The Environmental Segment has made a marginal profit over the years and
     maintained a positive cash flow. Management intends to expand the
     Environmental Segment by creating a Testing Division. The Company is
     currently exploring the feasibility of acquiring through merger a company
     currently performing line, tank, and soil testing. Financial institutions
     have become increasingly aware of potential environmental hazards and the
     cost associated there with, on properties they finance. The need for
     testing to determine if any pollution exist on properties will continue for
     an unforeseeable time into the future. For this reason management believes
     adding a testing segment will increase the revenues and profitability of
     the Environmental Segment.

     Management will continue to reduce debt and provide working capital through
     the sale of non-income producing assets. There can be no assurance that any
     of management's plans as described above will be successfully implemented
     or that the Company will continue as a going concern.

16.  Subsequent Events

     On January 4, 2006, StarCo Environmental Services, a subsidiary of the
     Company, completed the purchase of all the assets of PSG Technical
     Services, Inc., a drilling company, for $185,000. The purchase was financed
     by the seller under a note agreement that calls for interest only payments
     from February 15, 2006 to April 15, 2006 at 8% and then principal and
     interest payments of $2,623 per month for 84 months with all unpaid
     principal and interest due on May 15, 2013. The Company believes the
     addition of a drilling company will enhance StarCo.'s overall business by
     providing additional revenue sources. The purchase will be reflected in the
     Company's 2nd quarter of fiscal 2006.

17.  Segment Reporting

     Under SFAS 131, "Disclosure about Segments of an Enterprise and Related
     Information", the Company has two reportable segments: Texas convenience
     stores, and environmental remediation services. The Texas convenience
     stores segment features self-service motor fuels and a variety of food and
     nonfood merchandise in southeast Texas. The environmental remediation
     services segment serves the petroleum industry in the southeast Texas
     market area. As discussed in Notes 2 and 3, the Company discontinued its
     Convenience Store segment and Texas Petroleum Marketing segment, which sold
     motor fuels to the public through retail outlets in southeast Texas and
     supplies the Company's Texas convenience stores with motor fuels. Such
     operations have been reflected as discontinued operations and prior periods
     have been restated. The accounting policies of the segments are the same as


                                      F-20
<PAGE>

     those described in the summary of significant accounting policies. The
     Company evaluates performance based on operating income (loss).
     Intersegment sales and transfers are accounted for as if such sales or
     transfers were to third parties; that is, at current market prices.

     Information concerning the Company's business activities is summarized as
     follows (in thousands):

                                      Environmental    Other
                                       Remediation   Reconciling   Consolidated
            Year ended                  Services      items (1)       total
     September 30, 2005:
      Revenues from external
        customer
          Motor fuel sales              $     -        $     -       $     -
          Convenience store sales             -              -             -
          Environmental remediation       1,019              -         1,019
        Intersegment revenues                 -              -             -
                                        -------        -------       -------
            Total revenues              $ 1,019        $     -       $ 1,019
                                        =======        =======       =======
      Depreciation and amortization          19                           19
      Operating income (loss)               (26)             -           (26)
      Segment assets                        626          1,872         2,498
      Expenditures for property
        and equipment                         3              -             3

     September 30, 2004:
      Revenues from external
        customer
          Motor fuel sales              $     -        $     -       $     -
          Convenience store sales             -              -             -
          Environmental remediation         973              -           973
        Intersegment revenues                 -              -             -
                                        -------        -------       -------
            Total revenues              $   973        $     -       $   973
                                        =======        =======       =======

      Depreciation and amortization          18              -            18
      Operating income (loss)                27              -            27
      Segment assets                        726          2,509         3,235
      Expenditures for property
        and equipment                         -              -             -

     September 30, 2003:
      Revenues from external
        customer
          Motor fuel sales              $     -        $     -       $     -
          Convenience store sales             -              -             -
          Environmental remediation       1,241              -         1,241
        Intersegment revenues                 -              -             -
                                        -------        -------       -------
            Total revenues              $ 1,241        $     -       $ 1,241
                                        =======        =======       =======
      Depreciation and amortization          15              -            15
      Operating income (loss)               217              -           217
      Segment assets                        742          3,761         4,503
      Expenditures for property
        and equipment                         -              -             -



                                      F-21
<PAGE>


Evans Systems, Inc.
Notes to Consolidated Financial Statements
September 30, 2004, 2003 and 2002
--------------------------------------------------------------------------------

     A reconciliation of the Company's segment operating information to
     consolidated loss from continuing operations before income taxes is as
     follows (in thousands):

<TABLE>
<CAPTION>
                                                               Year ended September 30,
                                                               ------------------------
                                                            2005         2004         2003
                                                            ----         ----         ----
<S>                                                       <C>          <C>          <C>
     Operating income (loss) for reportable segments      $   (26)     $    27      $   217
     Gain on sale of non-operating assets                       -            -        1,653
     Rental income                                            118          123          216
     Interest expense                                        (284)        (200)        (134)
     Unallocated corporate expenses                             -            -            -
     Other, net                                                (8)         (46)          74
                                                          -------      -------      -------
     Total consolidated income (loss) from continuing
       operations before income taxes                     $  (200)     $   (96)     $ 2,026
                                                          =======      =======      =======
</TABLE>

18.  Quarterly Financial Data (Unaudited)

     Unaudited quarterly financial data is summarized below (in thousands,
     except per share amounts):

<TABLE>
<CAPTION>
     September 30, 2005
                                                     Q1            Q2            Q3            Q4
                                                  --------      --------      --------      --------
<S>                                               <C>           <C>           <C>           <C>
     Revenue                                      $    308      $    318      $    180      $    213
     Gross profit                                       74            62            72           116
     Operating income (loss)                           (33)          (22)          (15)           44
     Income (loss) from continuing operations          (87)          (68)          (56)           11
     Gain (loss) from discontinued operations         (180)         (163)         (310)          (15)
     Net income (loss)                                (267)         (231)         (366)           (4)
     Basic and diluted loss per common share:
         Income (loss) per common share:
            Continuing operations                 $  (0.01)     $  (0.01)     $  (0.01)     $   0.00
            Discontinued operations                  (0.02)        (0.01)        (0.02)         0.00
                                                  --------      --------      --------      --------
                Total                             $  (0.03)     $  (0.02)     $  (0.03)     $   0.00
                                                  ========      ========      ========      ========

     September 30, 2004
                                                     Q1            Q2            Q3            Q4
                                                  --------      --------      --------      --------
     Revenue                                      $    165      $    252      $    286      $    270
     Gross profit                                       77           100           166            65
     Operating income (loss)                           (59)           22            52            12
     Income (loss) from continuing operations          (42)           29            43          (126)
     Loss from discontinued operations                (176)         (151)         (208)          299
     Net income (loss)                                (218)         (122)         (165)          173
     Basic and diluted loss per common share:
         Income (loss) per common share:
            Continuing operations                 $  (0.01)     $   0.00      $   0.00      $  (0.01)
            Discontinued operations                  (0.01)        (0.01)        (0.02)         0.03
                                                  --------      --------      --------      --------
                Total                             $  (0.02)     $  (0.01)     $  (0.02)     $   0.02
                                                  ========      ========      ========      ========
</TABLE>

                                      F-22