As Filed with the Securities Exchange Commission on January 13, 2005

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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


                                   FORM 10-K/A


                                   (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, 2004
                                       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:

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

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]

<TABLE>
<S>                                                                               <C>
Approximate aggregate market value of common stock held by
non-affiliates of the registrant as of September 30, 2004                     $     294,000
Number of shares of common stock outstanding as of December 31, 2004             10,430,196
</TABLE>


DOCUMENTS INCORPORATED BY REFERENCE: None.


                                       1

<PAGE>


                                EXPLANATORY NOTE



This amendment to the Registrant's Annual Report on Form 10-K/A for the fiscal
year ended September 30, 2004 is being filed to include the audited financial
statements of Evans Systems, Inc. for the fiscal year ended September 30, 2004.
The financial statements were inadvertently omitted in the original filing.



                                       2
<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.

On November 18, 2002, the Company sold its inventory in its three remaining
operating convenience stores and leased the stores and store equipment to
outside operators, effectively discontinuing its Texas Convenience Store Segment
operations. Under the lease agreements, the Company executed fuel contracts with
these outside operators, thereby maintaining the fuel volumes. The results of
operations of the Texas Convenience Store segment were classified as
discontinued operations and prior periods were restated. In April 2004, the
Company reacquired control of 2 of the stores due to the inability of the
lessee's to make required payments and the lessee's inability to maintain the
stores and equipment in proper working order. After unsuccessful attempts to
re-lease the stores, management reopened the stores as company-owned stores
during late April 2004. In addition, in July 2004, the Company reacquired
control of the remaining store due to the lessee's inability to make required
payments and reopened the store as a company-owned store. Accordingly, the
Company has reestablished its Texas Convenience Store Segment and the prior
period results of operations of these stores previously reported as discontinued
operations have been reclassified and included in income from continuing
operations for all periods presented. As a result of these transactions, fiscal
2004 includes operations from April 2004 to September 30, 2004, fiscal 2003
includes operations from October 1, 2002 to November 18, 2002, and fiscal 2002
includes operations from October 1, 2001 to September 30, 2002.

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.


                                       3
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                  September 30,
                                                                                  -------------
                                                                         2004         2003           2002
                                                                         ----         ----           ----
<S>                                                                  <C>            <C>           <C>
Texas Convenience Stores

Revenues                                                             $    947       $    341      $  5,068

Operating income (loss)                                                  (238)            43          (335)

Environmental Operations

Revenues                                                             $    973       $  1,241      $  1,105

Operating income (loss)                                                    35            217            44

Unallocated General and Administrative Expenses                      $    (53)      $   (372)     $   (675)

Total Continuing Operations
Revenues                                                             $  1,920       $  1,582      $  6,173

Operating income (loss)                                                  (256)          (112)         (966)

Texas Petroleum Marketing*

Revenues                                                             $ 12,936       $ 17,536      $ 19,685

Operating income (loss)                                                  (516)          (472)       (1,595)

*Texas Petroleum Marketing operations ceased July 1, 2004
</TABLE>

Texas Convenience Store Operations
----------------------------------

On November 18, 2002, the Company sold its inventory in its three remaining
operating convenience stores and leased the stores and store equipment to
outside operators, effectively discontinuing its Texas Convenience Store Segment
operations. In late April 2004 and early July 2004, the Company reacquired
control of the stores due to the lessee's inability to make required payments
and reopened the stores as company-owned stores. Accordingly, the Company has
reestablished its Texas Convenience Store Segment and the prior period results
of operations of these stores previously reported as discontinued operations
have been reclassified and included in income from continuing operations for all
periods presented. As a result of these transactions, fiscal 2004 includes
operations from April 2004 to September 30, 2004, fiscal 2003 includes
operations from October 1, 2002 to November 18, 2002, and fiscal 2002 includes
operations from October 1, 2001 to September 30, 2002.

The following table sets forth the revenues of the Texas Convenience Store
segment (in thousands):

<TABLE>
<CAPTION>
                                                                                  September 30,
                                                                                  -------------
                                                                        2004          2003         2002
                                                                        ----          ----         ----
<S>                                                                   <C>           <C>           <C>
Motor fuel sales                                                      $  648        $  208        $2,737
Inside merchandise and other sales                                       299           134         2,331
                                                                      ------        ------        ------
  Total sales                                                         $  947        $  342        $5,068
                                                                      ======        ======        ======
Number of operating stores at year-end                                     3            --             8
                                                                      ======        ======        ======
</TABLE>

                                       4
<PAGE>

At September 30, 2004, the Company operated 3 convenience stores, featuring
self-service motor fuels and a variety of food and non-food merchandise. The
Company's stores are located in smaller communities throughout the gulf coast
region of Texas.

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.

Under current Texas law and the requirements of the TCEQ, on September 30, 2005,
funding for the TCEQ's reimbursement programs will terminate. All environmental
work on TCEQ approved reimbursement locations must be completed on or before
September 30, 2005 in order to be considered for reimbursement. All
reimbursement applications must be submitted prior to September 30, 2006 for
reimbursement. 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.

Star Co. reported revenues of $974,000, $1,241,000 and $1,105,000 in 2004, 2003
and 2002, which were almost entirely from contracts under the TCEQ reimbursement
programs.

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

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.

                                       5
<PAGE>

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

At September 30, 2004, the Company employed 40 people, none of whom are
represented by any collective bargaining organizations. The Company has had no
work stoppages, slow downs or strikes. Effective January 1, 2005, the remaining
7 employees from the former Petroleum Marketing Segment were terminated.

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.

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 17 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.

                                       6
<PAGE>


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, 2004, 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. The Company has accrued all prior years ad valorem taxes
at September 30, 2004.

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, 2004, 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, 2004.

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, 2002 through December 31, 2002               .14               .04
January 1, 2003 through March 31, 2003                  .08               .02
April 1, 2003 through June 30, 2003                     .13               .03
July 1, 2003 through September 30, 2003                 .08               .04
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

                                       7
<PAGE>

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                                            2004       2003        2002       2001        2000
---------------------                                            ----       ----        ----       ----        ----
<S>                                                           <C>        <C>         <C>       <C>         <C>
Revenues                                                      $ 1,920    $ 1,583     $ 6,173   $ 13,505    $ 26,723

Gross profit                                                      529        631       1,258      2,814       4,880

Operating income (loss)                                          (256)      (112)       (966)      (858)       (480)

Income (loss) from continuing operations                         (379)     1,697      (1,035)      (617)     (3,036)

Net income (loss)                                                (332)     1,225        (831)    (3,046)     (5,735)

Basic and diluted income (loss) from continuing
  operations per common share                                   (0.04)      0.17       (0.14)     (0.10)      (0.71)

Basic and diluted earnings (loss) per common share              (0.03)      0.12       (0.11)     (0.50)      (1.35)

Basic and diluted weighted average number common shares        10,157      9,846       7,588      6,134       4,263



Balance Sheet Data

Current assets                                                $ 1,289    $ 1,760     $ 2,194    $ 3,034     $ 6,516

Current liabilities                                             1,433      2,391       2,519     12,002      19,301


Current ratio                                                   .90:1      .87:1       .25:1      .34:1       .42:1

Total assets                                                    3,235      4,504       5,771     11,474      21,689

Long-term debt                                                  2,652      2,706       5,070        609         716

Total stockholders' equity (deficit)                             (850)      (593)     (1,818)    (1,137)      1,672
</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 three years in the period ended September 30, 2004, the Company has
recorded operating losses aggregating $1.33 million. In addition, the Company
had recorded operating losses from its Texas Petroleum Marketing segment, now
discontinued, aggregating $2.58 million during the three years in the period
ended September 30, 2004. At September 30, 2004, the Company has a working
capital deficit of $144,000 and a stockholders' deficit of $850,000.

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.

                                       8
<PAGE>

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.
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.

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.

                                       9
<PAGE>

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

2004 compared to 2003
---------------------

Consolidated revenues from continuing operations increased $337,000, or
approximately 21%, to $1,920,000 in the year ended September 30, 2004. The
increase is primarily attributable to the presentation of operations of the
Texas Convenience Store segment due to the reestablishment of that Segment in
April 2004. The Texas Convenience Store segment results of operations include
operations for the period from late April 2004 (2 stores) and early July 2004 (1
store) to September 30, 2004, and only the period from October 1, 2002 to
November 18, 2002 during 2003 as the stores were leased to outside operators and
the segment was discontinued from November 18, 2002 to April 2004. The Company
subsequently reacquired control of those stores. Revenues from the Environmental
segment decreased marginally.

Consolidated gross profit from continuing operations decreased $102,000, or
approximately 16%, to $529,000 in the year ended September 30, 2004. Gross
profit expressed as a percentage of revenues ("Gross Margin") decreased to
approximately 28% of sales in 2004 from approximately 40% of sales in 2002. The
decrease in gross margin in 2004 is mainly attributable to the higher profit
margin of the Environmental segment negatively impacted by the lower profit
margins of the Texas Convenience Store segment, which had increased operations
in 2004 over 2003.

Consolidated operating expenses increased $42,000, or approximately 6%, in 2004
to $785,000. The increase in operating expenses was mainly attributable to the
increased operations of the convenience store segment, which resulted in
employment personnel increases of $99,000. General, administrative and other
operating expenses cost cuts resulted in savings of $9,000. Those reductions
were affected by the gain on asset sales of $2,000 in 2004, as compared to a
loss of $48,000 in 2002.

Consolidated operating losses increased $144,000 to $256,000 in 2004 as compared
with a loss of $112,000 in 2003. Excluding the effect of gain (loss) of assets
sales on operating losses in 2004 and 2003, consolidated operating losses
increased $194,000 from $258,000 in 2004 to $64,000 in 2003.

Consolidated loss from continuing operations decreased to $379,000 in 2004 as
compared to a consolidated income from continuing operations of $1,697,000 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 in 2003 includes a gain on the sales of non-operating
assets of $1,653,000, rental income of $216,000 and other income of $74,000
offset by $134,000 in interest expense.

Consolidated net income (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 $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 $472,000 charge from discontinued operations of the Texas Petroleum
Marketing segment.

                                       10
<PAGE>

Texas Convenience Store Segment

The Company's stores are located in smaller communities throughout the gulf
coast region of Texas and feature self-service motor fuels and a variety of food
and non-food merchandise. During the year ended September 30, 2004, the Company
operated 2 convenience stores from the period April 2004 to September 30, 2004,
and 1 store from the period July 2004 to September 30, 2004. During the year
ended September 30, 2003, the Company operated 3 convenience stores from the
period October 1, 2002 to November 18, 2002, at which date the stores were
leased to outside operators. Accordingly, comparative analysis of the results of
operations of this segment between 2004 and 2003 will result in significant
fluctuations.

Total sales increased $605,000 in 2004 to $947,000 from $342,000 in 2003. Fuel
sales in 2004 were $648,000, as compared with $208,000 in 2003. Merchandise
sales increased to $299,000 in 2004 from $134,000 in 2003. Average selling price
per gallon increased in 2004 to approximately $1.62 per gallon, as compared with
$1.28 per gallon in 2003. The increase is due to nation wide cost increases in
2004 that raised selling prices per gallon.

Gross profit increased to $121,000 in 2004 as compared with $5,000 in 2003.
Gross Margin was approximately 13% and 1% in 2004 and 2003, respectively. Gross
margin in 2004 was more representative of the segments historical gross margins.
Merchandise Gross Margin increased in 2004, to approximately 35% of sales, as
compared to approximately 1% of sales in 2003. Fuel Gross Margin increased to
approximately 3% during 2004, as compared with approximately 1% during 2003.

Operating expenses during 2004 was $359,000 as compared with $294,000 in 2003,
an increase of $65,000 or approximately 22%.

The Convenience Store segment incurred an operating loss of $238,000 in 2004, as
compared with a loss of $289,000 in 2003.

Environmental Segment

EDCO Environmental (dba Star Co.) reported an operating profit of $35,000 in the
year ended September 30, 2004, as compared with $217,000 in 2003. Revenues from
environmental operations decreased $268,000 to $973,000 in 2004 as compared to
$1,241,000 in 2003. Gross profit for 2004 was $408,000 as compared to $626,000
in 2004, a decrease of $218,000. Gross Margin was approximately 42% and 50% in
2004 and 2003, respectively. The decrease is primarily attributable to decreased
contracts and revenues and increased costs in performing remediation services.
Operating expenses decreased $36,000, or approximately 9%, to $373,000 in 2004
as compared to $409,000 in 2003.

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.

Unallocated General and Administrative Expenses

Unallocated general and administrative expenses increased $13,000 in 2004 to
$53,000 as compared with $40,000 in 2003. The increase is due to increased costs
of providing general corporate services.

2003 compared to 2002
---------------------

Consolidated revenues from continuing operations decreased $4,590,000, or
approximately 74%, to $1,583,000 in the year ended September 30, 2003. The
decrease is primarily attributable to the presentation of operations of the


                                       11
<PAGE>

Texas Convenience Store segment due to the reestablishment of that Segment in
April 2004. The Texas Convenience Store segment results of operations include
operations for the entire year of fiscal 2002, and only the period from October
1, 2002 to November 18, 2002 during 2003 as the stores were leased to outside
operators and the segment was discontinued on November 18, 2002. The Company
subsequently reacquired control of those stores. Revenues from the Environmental
segment increased marginally.

Consolidated gross profit from continuing operations decreased $627,000, or
approximately 50%, to $631,000 in the year ended September 30, 2003. Gross
profit expressed as a percentage of revenues ("Gross Margin") increased to
approximately 40% of sales in 2003 from approximately 20% of sales in 2002. The
increase in gross margin in 2003 is mainly attributable to the higher profit
margin of the Environmental segment not negatively impacted by the lower profit
margins of the Texas Convenience Store segment, which had limited operations as
discussed above.

Consolidated operating expenses declined $1,481,000, or approximately 66%, in
2003 to $743,000. The decrease in operating expenses were mainly attributable to
the limited operations of the convenience store segment, which resulted in
employment personnel reductions of $663,000, and general, administrative and
other operating expense cost cuts of $620,000. The effects of those reductions
was enhanced by a decrease on the loss on asset sales of $48,000 in 2003, as
compared to a loss of $205,000 in 2002.

Consolidated operating losses decreased $854,000 to $112,000 in 2003 as compared
with a loss of $966,000 in 2002. Excluding the effect of gain (loss) of assets
sales on operating losses in 2003 and 2002, consolidated operating losses
decrease $697,000 to $64,000 in 2003 compared to $761,000 in 2002.

Consolidated income from continuing operations increased to $1,697,000 in 2003
as compared to a consolidated loss from continuing operations of $1,035,000 in
2002. Income from continuing operations in 2003 includes a gain on the sales of
non-operating assets of $1,653,000, rental income of $216,000 and other income
of $74,000 offset by $134,000 in interest expense. Loss from continuing
operations in 2002 includes $67,000 in interest expense and $9,000 in other
expenses offset by interest income of $7,000.

Consolidated net income (loss) increased $2,056,000 to a net income of
$1,225,000 in 2003 as compared to a net loss of $831,000 in 2002. Consolidated
net income in 2003 includes a $472,000 charge from discontinued operations of
the Texas Petroleum Marketing segment. Consolidated net loss in 2002 includes an
extraordinary gain of $1,799,000 on the Restructuring Transactions offset by a
$1,595,000 charge from discontinued operations of the Texas Petroleum Marketing
segment.

Texas Convenience Store Segment

The Company's stores are located in smaller communities throughout the gulf
coast region of Texas. During the year ended September 30, 2003, the Company
operated 3 convenience stores, featuring self-service motor fuels and a variety
of food and non-food merchandise from the period October 1, 2002 to November 18,
2002, at which date the stores were leased to outside operators. During the year
ended September 30, 2002, the Company operated the same 3 stores for the entire
fiscal year as well as 5 other stores that were either sold or leased to outside
operators during 2001. Accordingly, comparative analysis of the results of
operations of this segment between 2003 and 2002 will result in significant
fluctuations.

Total sales decreased $4,726,000 or approximately 93% in 2003 to $342,000 from
$5,068,000 in 2002. Fuel sales in 2003 were $208,000, as compared with
$2,737,000 in 2002. Merchandise sales decreased to $134,000 in 2003 from
$2,331,000 in 2002. Average selling price per gallon decreased in 2003 to
approximately $1.28 per gallon, as compared with $1.47 per gallon in 2002. The
decrease is due to nation wide cost decreases in 2003 that lowered selling
prices per gallon.

Gross profit declined to $5,000 in 2003 as compared with $864,000 in 2002. Gross
Margin in the Texas Convenience Store segment was approximately 1% and 17% in
2003 and 2002, respectively. Merchandise Gross Margin decreased in 2003, to
approximately 1% of sales, as compared to approximately 29% of sales in 2002.
Fuel Gross Margin decreased to approximately 1% during 2003, as compared with
approximately 7% during 2002.

                                       12
<PAGE>

Operating expenses during 2003 in the Texas Convenience Store segment was
$294,000 as compared with $1,199,000 in 2002, a decrease of $905,000 or
approximately 75%.

The Convenience Store segment incurred operating losses of $289,000 and $335,000
in 2003 and 2002, respectively.

Environmental Segment

EDCO Environmental (dba Star Co.) reported an operating profit of $217,000 in
the year ended September 30, 2003, as compared with $44,000 in 2002. Revenues
from environmental operations increased $136,000 to $1,241,000 in 2003 as
compared to $1,105,000 in 2002. Gross profit for 2003 was $626,000 as compared
to $394,000 in 2002, an increase of $232,000. The increase is primarily
attributable to Star Co. management's continued focus on controlling
non-reimbursable costs and streamlining operations as well as increasing
revenues through new environmental remediation contracts. Operating expenses
increased $59,000, or approximately 17%, to $409,000 in 2003 as compared to
$350,000 in 2002.

Unallocated General and Administrative Expenses

Unallocated general and administrative expenses declined $635,000 in 2003 to
$40,000 as compared with $675,000 in 2002. The decrease is due to management's
continued focus on reducing costs and overhead.

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

Cash and cash equivalents were $341,000 and $216,000 at September 30, 2004 and
2003, respectively. The Company had a net working capital deficit of $144,000 at
September 30, 2004, as compared with a deficit of $631,000 at September 30,
2003.

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.

Cash used by operating activities was $127,000 for the year ended September 30,
2003. During that period, cash provided from investing activities was $200,000,
which was comprised of capital expenditures of $75,000 and note receivable
issuances of $69,000 offset by proceeds from the sales of assets of $309,000 and
repayments of notes receivable of $35,000. Cash used by financing activities was
$348,000, which was comprised of proceeds of $43,000 from new debt borrowings,
offset by $311,000 in debt repayments and $80,000 in net payments under the line
of credit agreement.

As of September 30, 2004, the Company had an aggregate of approximately
$2,795,000 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 $87,000 at September 30, 2004.

Of the remaining principal outstanding aggregating an approximate $195,000,
approximately $112,000 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.

                                       13
<PAGE>

At September 30, 2004, 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 390,350 shares are reserved for vested stock options and 4,174,167
shares are reserved for warrants.

The Company intends to finance its working capital requirements through funds
from operations.

Recent Accounting Pronouncements
--------------------------------

In December 2003, the SEC issued SAB No. 104, Revenue Recognition, which
supersedes SAB 101, Revenue Recognition in Financial Statements. The adoption of
SAB 104 did not have a material impact on the Company's consolidated results of
operations or financial position. SAB 104 primarily rescinds the accounting
guidance contained in SAB 101 related to multiple-element revenue arrangements
that was superseded as a result of the issuance of Emerging Issues Task Force
("EITF") EITF 00-21, Accounting for Revenue Arrangements with Multiple
Deliverables. While the wording of SAB 104 has changed to reflect the issuance
of EITF 00-21, the revenue recognition principles of SAB 101 remain largely
unchanged by the issuance of SAB 104, which was effective upon issuance.

In December 2003, the FASB issued FIN 46R, a revision to FIN 46. FIN 46R
clarifies some of the provisions of FIN 46 and exempts certain entities from its
requirements. Entities that have adopted FIN 46 prior to this effective date can
continue to apply the provisions of FIN 46 until the effective date of FIN 46R,
which is the second quarter of fiscal 2005 for the Company. FIN 46R is not
expected to have a material impact on the Company's consolidated results of
operations or financial position.

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. Under current Texas law and the requirements of the
TCEQ, on September 30, 2005, funding for the TCEQ's reimbursement programs will
terminate. All environmental work on TCEQ approved reimbursement locations must
be completed on or before September 30, 2005 in order to be considered for
reimbursement. All reimbursement applications must be submitted prior to
September 30, 2006 for reimbursement. The TCEQ reimbursement funding program is
slated for discussion and possible extension during the 2005 Texas Legislative
session. 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.

                                       14
<PAGE>

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
----                                  --------                             ---
Thomas E. Cain                        Chairman of the Board                 49
Blair R. Couey                        Director and President                52
Randy Clapp                           Director                              50
Randal Dean Lewis                     Director                              61

The Company currently has 3 director positions unoccupied, including the
Secretary and Treasurer positions to the board of directors. The principal
occupation of each director and executive officer for at least the last five
years is set forth below:

Thomas E. Cain is President & CEO of Focus Capital Group LLC, which is a buyout,
and turnaround firm 50% owned by Focus Capital Group, Israel. He is also
Chairman of the Board for Frontstep distribution.com the acquisition corp for
Frontstep NASDAQ (FSTP), a $100M ERP software firm for the mid-market
manufacturing market. He currently serves Young Presidents Organization as
Chairman of the MIT/Sloan Presidents Seminar, Chairman of the Global Supply
Chain Conference and group leader for Harvard Business School Presidents
Education. Mr. Cain is also a Director for: Autom, the world's leader of church
goods; Chambers Belt Co. a leading manufacturer of designer leather accessories
for mass merchants; Landiscor, the world leader in aerial surveys; Poore
Brothers NASDAQ (SNAK), branded snack food manufacturer of intensely distinctive
products such as TGIFridays; Servus, Eastern Europe's leading supplier of POS's,
ATM's, large commercial system maintenance and support; WinHolt, leading
manufacturer of retail fixture. In 2001, Mr. Cain served as Chief Technology
Officer and Senior VP of Engineering for Interact Commerce, a $100M Software
Company that made ACT and SalesLogix until purchased by Sage. All product
development, globalization, customer/product support and delivery services
reported to him. He holds current Microsoft MCSE+I technical certifications and
a BS in mathematics from Arizona State University. In 1976, Mr. Cain formed
Distribution Architects that became one of North Americas largest and most
successful supply chain execution software companies. As President & CEO, he
merged it 23 years later with Symix Systems.

                                       15
<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.

Randal Dean Lewis, Ph.D has served as Dean of the College of Business
Administration at Sam Houston State University since 1996. He has progressed
through the academic ranks from instructor to professor of marketing during his
academic career. He has published numerous cases, held executive positions in
many community service organizations, and is currently a board member of a
global oil services corporation. During the 1980's, Dr. Lewis took leave from
academia and worked in the banking industry. In addition to his current
administrative duties, Dr. Lewis is active in numerous professional
organizations, consults with deans of business programs regarding AACSB
preparation, and serves on peer review teams.

Meetings and Committees of the Board of Directors

During the fiscal year ended September 30, 2004 ("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 2004. 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, 2004,
2003,and 2002, 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 the Fiscal 2004 (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. Mr. J.L. Evans,
Sr., former CEO and President, employment agreement terminated June 24, 2002.
His salary for 2002 was $150,000. In addition to the salary compensation for Mr.
Evans, he also received lease income of $25,500 in fiscal 2002 for the rental of
various properties used by the Company.

                                       16
<PAGE>

OPTION/SAR Grants in Last Fiscal Year

There were no Options/SARs granted during Fiscal 2004 to the Named Officers.

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        4,934,923                             47.1%

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.

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


                                       17
<PAGE>

"Management Agreement") with Mauritz & Couey, a Texas based general partnership
("MC") to provide certain managerial and operational services to the Company. At
September 30, 2004 and 2003, the Company owed MC approximately $14,043 and
$56,921, 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, 2004 and 2003, the Company owed MC $57,062 and $231,000,
respectively, which is included in accounts payables. As part of the disposal of
the Texas Petroleum Marketing segment, the Company was relieved of amounts owed
to MC under this agreement through July 1, 2004 aggregating $1,705,000. 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, 2004
and 2003, MC owed the Company approximately $65,573 and $6,211, respectively,
for freight on fuel the Company hauled for MC, which is included in accounts
receivable.

The Company senior debt holder is Cain, Smith & Strong, L.P. (CSS), whose
general partner is controlled by the wife of Thomas Cain, Chairman of the Board
of Directors. 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, 2004 and 2003.


Item 14. Principle Accounting Fees and Services

                                                     2004              2003
                                                     ----              ----
                  Audit fees                       $62,000           $65,000
                  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, 2004.

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 18.

II.       Reports on Form 8-K - The Company filed one report on Form 8-K filed
          July 9, 2004, under the Securities and Exchange Act of 1934 during the
          year ended September 30, 2004

                                       18
<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.
March 23, 2005
                                         /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/ Thomas E. Cain
-----------------------------------------------------
Thomas E. Cain
Chairman of the Board of Directors

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


                                       19
<PAGE>



INDEX TO EXHIBITS
-----------------
<TABLE>

     Exhibit                                                                                                      Sequential Page
     Number                              Description of Document                                                           Number
     ----------------------------------------------------------------------------------------------------------------------------
<S>            <C>

     3.1       Articles of Incorporation of the Company filed with the Texas Secretary of State on
               October 22, 19681. 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, 19921. 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.
</TABLE>
                                                 20
<PAGE>
<TABLE>
<S>            <C>
     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.

     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
</TABLE>

                                                 21
<PAGE>
<TABLE>
<S>            <C>
     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

     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

</TABLE>


                                       22
<PAGE>


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

<TABLE>
                                                                                               Page No.
                                                                                               --------
<S>                                                                                               <C>
Independent Auditor's Report                                                                       F-2

Consolidated Balance Sheets at September 30, 2004 and 2003                                         F-3

Consolidated Statements of Operations for the Years Ended
   September 30, 2004, 2003 and 2002                                                               F-4

Consolidated Statements of Cash Flows for the Years Ended
   September 30, 2004, 2003 and 2002                                                               F-5

Consolidated Statements of Stockholders' Equity (Deficit) for the
   Years Ended September 30, 2004, 2003 and 2002                                                   F-6

Notes to Consolidated Financial Statements                                                         F-7
</TABLE>




<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, 2004 and 2003 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,
2004. 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 auditing standards generally accepted
in the United States of America. 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 2004 and 2003 financial statements referred to above present
fairly, in all material respects, the financial position of Evans Systems, Inc.
and its subsidiaries at September 30, 2004 and 2003 and the results of its
operations and its cash flows for each of the three years in the period ended
September 30, 2004 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 16 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
December 31, 2004



                                      F-2
<PAGE>

Evans Systems, Inc.
Consolidated Balance Sheets
September 30, 2004 and 2003

<TABLE>
<CAPTION>
(in thousands)                                                                         2004               2003
                                                                                       ----               ----
                                     Assets
Current assets:
<S>                                                                                 <C>               <C>
   Cash and cash equivalents                                                        $    341          $    216
   Trade receivables, net of allowance for doubtful receivables
   Of $11,000 and $28,000, respectively                                                  509               831
   Inventory                                                                              83               371
   Costs and estimated earnings in excess of billings on
     uncompleted contracts                                                               178               172
   Prepaid expenses and other current assets                                              51               103
   Notes receivable, current portion                                                     127                67
                                                                                    --------          --------
     Total current assets                                                              1,289             1,760

   Property and equipment, net                                                         1,946             2,744
                                                                                    --------          --------

     Total assets                                                                   $  3,235          $  4,504
                                                                                    ========          ========

                   Liabilities and Stockholders' Equity (Deficit)

   Current liabilities
   Accounts payable and accrued expenses                                            $    567          $    895
   Accrued excise, property and other taxes payable                                      633               866
   Advances on line of credit                                                             --               399
   Current portion of long-term debt                                                     143               201
   Accrued interest                                                                       90                28
   Billings in excess of costs and estimated earnings on
     uncompleted contracts                                                                --                 2
                                                                                    --------          --------
     Total current liabilities                                                         1,433             2,391
   Long-term debt, net of current maturities                                           2,652             2,706
                                                                                    --------          --------
     Total liabilities                                                                 4,085             5,097

   Stockholders' equity (deficit)
   Common stock, $0.01 par value, 15,000,000 shares authorized,
     10,471,831 and 9,846,831 shares issued, respectively                                105                99
   Additional paid-in capital                                                         17,262            17,193
   Accumulated deficit                                                               (17,783)          (17,451)
   Treasury stock, 72,589 shares, at cost                                               (434)             (434)
                                                                                    --------          --------
     Total stockholders' deficit                                                        (850)             (593)
                                                                                    --------          --------

     Total liabilities and stockholders' equity                                     $  3,235          $  4,504
                                                                                    ========          ========
</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, 2004, 2003 and 2002

<TABLE>
<CAPTION>
(in thousands, except per share amounts)                                    2004             2003              2002
----------------------------------------                                    ----             ----              ----
<S>                                                                       <C>              <C>              <C>
Revenues:
      Convenience store revenues                                          $    947         $    342         $  5,068
      Environmental remediation revenues                                       973            1,241            1,105
                                                                          --------         --------         --------
          Total revenues                                                     1,920            1,583            6,173
   Cost of sales
      Convenience stores                                                       826              337            4,204
      Environmental remediation                                                565              615              711
                                                                          --------         --------         --------
          Total cost of sales                                                1,391              952            4,915
                                                                          --------         --------         --------
   Gross profit                                                                529              631            1,258
   Operating expenses
      Employment expenses                                                      378              279              942
      Other operating expenses                                                 145              173              395
      Other general and administrative expenses                                183              164              562
      Depreciation and amortization                                             81               79              120
      (Gain) loss on sale of assets                                             (2)              48              205
                                                                          --------         --------         --------
          Total operating expenses                                             785              743            2,224
                                                                          --------         --------         --------
   Operating loss                                                             (256)            (112)            (966)
   Other income (expense)
      Gain on sales of non-operating assets                                     --            1,653               --
      Interest income                                                           --               --                7
      Rental income, net                                                       123              216               --
      Interest expense                                                        (200)            (134)             (67)
      Other income (expense)                                                   (46)              74               (9)
                                                                          --------         --------         --------
          Total other income (expense)                                        (123)           1,809              (69)
                                                                          --------         --------         --------
   Income (loss) from continuing operations before income taxes               (379)           1,697           (1,035)

   Provision (benefit) from income taxes                                        --               --               --
                                                                          --------         --------         --------
   Income (loss) from continuing operations                                   (379)           1,697           (1,035)
   Discontinued operations
      Loss from Petroleum Marketing segment to July 1, 2004                   (516)            (472)          (1,595)
      Gain from disposal of Petroleum Marketing segment assets                 563               --               --
                                                                          --------         --------         --------
          Total discontinued operations                                         47             (472)          (1,595)

   Extraordinary gain on restructuring transactions                             --               --            1,799
                                                                          --------         --------         --------
   Net income (loss)                                                      $   (332)        $  1,225         $   (831)
                                                                          ========         ========         ========

   Basic and diluted earnings (loss) per common share:
      Continuing operations                                               $  (0.04)        $   0.17         $  (0.14)
      Discontinued operations                                                 0.01            (0.05)           (0.21)
      Extraordinary items                                                       --               --             0.24
                                                                          --------         --------         --------
      Earnings (loss) per common share                                    $  (0.03)        $   0.12         $  (0.11)
                                                                          ========         ========         ========
   Basic and diluted weighted average common shares outstanding             10,157            9,846            7,588
                                                                          ========         ========         ========
</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, 2004, 2003 and 2002

<TABLE>
<CAPTION>

(in thousands)                                                              2004              2003             2002
--------------                                                              ----              ----             ----
<S>                                                                      <C>              <C>              <C>
Cash flows from operating activities
    Net income (loss)                                                    $  (332)         $ 1,225          $  (831)
    Adjustments:
      Depreciation and amortization                                          200              237              510
      Settlement stock issuance expense (Note 13)                             75               --               --
      Note receivable bad debt write-off                                      18               --               --
      Gain on sale of non-operating assets                                    --           (1,653)              --
      Loss (gain) on sale of assets                                           (2)              48              205
      Gain on disposal of discontinued operations                           (563)              --               --
      Extraordinary gain on restructuring transactions                        --               --           (1,799)
      Changes in assets and liabilities:
      Receivables                                                           (328)              82               24
      Inventory                                                             (141)             136              581
      Prepaid expenses and other current assets                               52               (7)             174
      Costs and estimated earnings in excess of billings, net                 (8)            (101)             (69)
      Other assets                                                            --               30              152
      Accounts payable and accrued expenses                                1,206             (124)            (362)
                                                                         -------          -------          -------
      Net cash provided (used) by operating activities                       177             (127)          (1,415)

  Cash flows from investing activities:
      Issuance of notes receivable                                           (55)             (69)            (115)
      Repayment of notes receivable                                           65               35               --
      Capital expenditures                                                   (44)             (75)             (39)
      Proceeds from sale of property and equipment                            94              309            1,234
                                                                         -------          -------          -------
      Net cash provided (used) by investing activities                        60              200            1,080

   Cash flows from financing activities
      New borrowings                                                          42               43               --
      Net borrowings (reductions) under line of credit agreement              --              (80)             479
      Reduction of long-term debt                                           (154)            (311)            (407)
    Net proceeds from stock issuance                                          --               --              150
                                                                         -------          -------          -------
      Net cash provided (used) by financing activities                      (112)            (348)             222
                                                                         -------          -------          -------
   Net increase (decrease) in cash and cash equivalents                      125             (275)            (113)
   Cash and cash equivalents, beginning of year                              216              491              604
                                                                         -------          -------          -------
   Cash and cash equivalents, end of year                                $   341          $   216          $   491
                                                                         =======          =======          =======

   Supplemental disclosure of cash flow information:
    Cash paid for interest                                               $    84          $   116          $   445
                                                                         =======          =======          =======
    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, 2004, 2003 and 2002

<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, 2001                6,761,831    $       68    $   17,074    $  (17,845)    $     (434)    $   (1,137)

Stock options exercised                            --            --            --            --             --             --
Warrants exercised                                 --            --            --            --             --             --
Issuance of common stock                    3,085,000            31           119            --             --            150
Compensation expense recognized in
  connection with options granted                  --            --            --            --             --             --
Net loss for 2002                                  --            --            --          (831)            --           (831)
                                           ----------    ----------    ----------    ----------     ----------     ----------
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 (Note 13)            625,000             6            69            --             --             75
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)
                                           ==========    ==========    ==========    ==========     ==========     ==========
</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, 2004, 2003 and 2002


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 subsidiaries. All significant intercompany
     transactions 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, 2004, 2003 and 2002


     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,
     2004 and 2003.

     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,
                                          -------------------------------------
                                             2004          2003          2002
                                          -------------------------------------
     Net income (loss):
        As reported                       $ (332)         $ 1,225       $ (831)
        Pro forma                           (332)           1,225         (831)

     Basic and diluted loss per share
        As reported                      $ (0.03)         $ 0.12       $ (0.11)
        Pro forma                          (0.03)           0.12         (0.11)

     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, 2004, 2003 and 2002


     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 2004 and 2002
     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 2002 and 2003 financial
     statements to conform to the 2004 financial statement presentation. Such
     reclassifications had no effect on net income (loss) as previously
     reported.

2.   Texas Convenience Store Segment

     On November 18, 2002, the Company sold its inventory in its three remaining
     operating convenience stores and leased the stores and store equipment to
     outside operators, effectively discontinuing its Texas Convenience Store
     Segment operations. Under the lease agreements, the Company executed fuel
     contracts with these outside operators, thereby maintaining the fuel
     volumes. The results of operations of the Texas Convenience Store segment
     were classified as discontinued operations and prior periods were restated.
     In April 2004, the Company reacquired control of 2 of the stores due to the
     inability of the lessee's to make required payments and the lessee's
     inability to maintain the stores and equipment in proper working order.
     After unsuccessful attempts to re-lease the stores, management reopened the
     stores as company-owned stores during late April 2004. In addition, in July
     2004, the Company reacquired control of the remaining store due to the
     lessee's inability to make required payments and reopened the store as a
     company-owned store. Accordingly, the Company has reestablished its Texas
     Convenience Store Segment and the prior period results of operations of
     these stores previously reported as discontinued operations have been
     reclassified and included in income from continuing operations for all
     periods presented. As a result of these transactions, fiscal 2004 includes
     operations from April 2004 to September 30, 2004, fiscal 2003 includes
     operations from October 1, 2002 to November 18, 2002, and fiscal 2002
     includes operations from October 1, 2001 to September 30, 2002.


                                      F-9
<PAGE>

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


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,
     2004, 2003 and 2002 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                               2004*         2003         2002
                                                          ------------ ------------- -------------
<S>                                                        <C>          <C>             <C>
           Revenues                                        $  12,936    $  17,536       $ 19,685
                                                          ============ ============= =============
           Income (loss) from operations                   $    (516)   $    (472)      $ (1,595)
                                                          ============ ============= =============
           Gain on sale of discontinued operations         $     563    $       -       $      -
                                                          ============ ============= =============
           *Through July 1, 2004
</TABLE>

4.   Costs and Estimated Earnings on Uncompleted Contracts

     At September 30, 2004 and 2003, costs and estimated earnings on uncompleted
     contracts consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                                      2004           2003
                                                                      ----           ----

<S>                                                                    <C>            <C>
    Costs incurred to date on uncompleted contracts                   $ 189           $ 144
    Estimated earnings                                                   83              87
                                                                      -----           -----
                                                                        272             231
    Billings to date                                                    (94)            (61)
                                                                      -----           -----
         Total                                                        $ 178           $ 170
                                                                      =====           =====
</TABLE>

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

<TABLE>
<S>                                                                       <C>           <C>
           Costs and estimated earnings in excess of billings            $ 178          $ 172
           Billings in excess of costs and estimated earnings               --             (2)
                                                                         -----          -----
               Total                                                     $ 178          $ 170
                                                                         =====          =====
</TABLE>

     There were no material revisions in contract estimates during the years
     ended September 30, 2004 and 2003.

                                      F-10
<PAGE>

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


5.   Property and Equipment

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

                                                        2004          2003
                                                        ----          ----
     Land                                             $   608        $   782
     Buildings                                          1,364          2,100
     Equipment                                          3,044          3,606
     Transportation equipment                             435            503
     Office equipment                                      64             62
                                                      -------        -------
                                                        5,515          7,053
     Less - accumulated depreciation                   (3,569)        (4,309)
                                                      -------        -------
     Property and equipment, net                      $ 1,946        $ 2,744
                                                      =======        =======

     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
     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


                                      F-11
<PAGE>

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


     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.

     Year Ended September 30, 2002 Asset Sales
     -----------------------------------------
     During the first quarter of fiscal 2002, the Company sold various station
     and store equipment for total proceeds of $263,000. The net book value of
     the assets sold aggregated $283,000 and the Company recorded a net loss on
     the sales of $20,000. During the second quarter of fiscal 2002, the Company
     sold/retired various obsolete equipment and vehicles for total proceeds of
     $18,000. The net book value of the equipment sold/retired was approximately
     $41,000 and the Company recorded a loss of $23,000.

     In March 2002, the Company completed the sale of one company owed
     convenience store, including land, buildings, station equipment, store
     equipment and inventory, for total proceeds of $340,000. The net book value
     of the assets sold was approximately $179,000 and the Company recorded a
     $161,000 gain on the sale during the quarter.

     In February 2002, the lien holder of an Affiliated Resources note secured
     by a warehouse and land the Company received from Affiliated Resources by
     the Deed in Lieu of Foreclosure notified the Company that the land and
     warehouse would be foreclosed on and auctioned in March 2002. The net book
     value of the land and warehouse was approximately $471,000 and the
     remaining principle debt balance was $501,000 and the Company recorded a
     noncash gain of approximately $30,000.

     During the third quarter of fiscal 2002, the Company sold one company owned
     convenience store, including a building, station equipment, store equipment
     and inventory, for total proceeds of $126,000. The net book value of the
     assets sold was approximately$110,000 and the Company recorded a $16,000
     gain on the sale during the quarter. The Company also sold/retired various
     obsolete equipment and vehicles for total proceeds of $47,000. The net book
     value of the equipment sold/retired was approximately$49,000 and the
     Company recorded a loss of $2,000.

     During the fourth quarter of fiscal 2002, the Company sold three company
     owned convenience stores, including land, buildings, station equipment,
     store equipment and inventory, for total proceeds of approximately
     $453,000, inclusive of a note receivable for $112,000. The net book value


                                      F-12
<PAGE>

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


     of the assets sold was approximately $820,000 and the Company recorded a
     $367,000 loss on the sale during the quarter. The Company also sold/retired
     various obsolete equipment and vehicles for total proceeds of $47,000. The
     net book value of the equipment sold/retired was $49,252 and the Company
     recorded a loss of $2,252.

6.   Notes Receivable

     During the fourth quarter of 2004, the Company issued a zero interest note
     to an affiliated entity 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. 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, 2004, the
     Company was owed $34,820 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, 3004 and 2003, $900 and
     $2,000, respectively, was outstanding under this agreement. The Company
     also has an unsecured note receivable from an affiliated entity. At
     September 30, 2004 and 2003, the Company was owed $26,977.

     During 2003, the Company leased two company owned stores to third parties
     and sold the inventory at the stores valued at approximately $69,035. The
     Company issued a short term zero interest note for $38,335 for the purchase
     of inventory at one store. Terms of the note agreement call for periodic
     payments based on a $0.01 per gallon surcharge on normal fuel deliveries to
     the store. The remaining balance is due on or before December31, 2003. At
     September 30, 2004 and 2003, $-0- and $32,379, respectively, was owed under
     this agreement. The Company also issued a 6% note to another third party
     for $30,700 for the inventory at the second store. Terms of the note call
     for the monthly payment of principal and interest of $2,642 for 12 months.
     All outstanding principal and accrued interest is due on or before November
     1, 2003. At September 30, 2004 and 2003, $-0- and $5,245, respectively, was
     owed under this agreement.

7.   Operating Leases

     As of September 30, 2004, 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, 2004, the scheduled future
     minimum lease payments required under the terms of the operating leases in
     effect are (in thousands):

                Year ended September 30,
                ------------------------
                2005                                     $  30
                2006                                        29
                2007                                        16
                2008                                         2
                2009                                         -
                Thereafter                                   -
                                                        -------
                              Total                      $  77
                                                        =======

     The Company has 3 subleases. Minimum rentals to be received in the future
     under these noncancelable subleases totaled $122,000 as of September 30,
     2004.

                                      F-13
<PAGE>

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


8.   Line of Credit Agreement

     On July 23, 2002, the Company secured a $500,000 revolving line of credit
     with NewFirst National Bank secured by the Company's inventory, accounts
     receivable, certain property in Bay City, Texas and by the Company's common
     stock beneficially owned by Mauritz & Couey. Terms of the revolving line of
     credit call for an annual interest rate 7.75% with monthly interest
     payments beginning August 23, 2002 and all outstanding principal and
     accrued but unpaid interest due on or before July 23, 2003. In July 2003,
     the Bank extended the due date of the line of credit to November 22, 2003.
     Effective November 20, 2003, the Company and the Bank agreed to a second
     amendment to the line-of-credit agreement whereby the due date of the line
     of credit was extended to March 20, 2004. Effective July 1, 2004 and in
     connection with the Exxon/Chevron contract purchase, the outstanding
     balance of $399,000 was repaid by Mauritz & Couey (Note 5) and the
     Company's line of credit agreement was terminated. The Company has no
     further obligations under this line of credit.

9.   Long-Term Debt

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

<TABLE>
<CAPTION>
                                                                                             2004           2003
                                                                                         -------------- --------------
<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                    112            167
     Note payable to McLane Company, Inc., $3,717 due monthly for 12 months
       beginning November 22, 2002                                                                  20             31
     Note payable to Olsham Grundman Frome, $1,143 due monthly for
       10 months beginning December 22, 2002                                                         -              6
     Note payable to Jackson County, principal and interest of $1,100 due
       monthly for 24 months, beginning September 30, 2002                                           -             12
     Note payable to Conoco, $1,540 due monthly for 12 months beginning
       August 10, 2004                                                                              15              -
     Note payable to Victoria County, principal and interest of $2,000 due
       monthly until paid in full, beginning September 25, 2002                                      -             16
     Other                                                                                          48             75
                                                                                         -------------- -------------
     Total long-term debt                                                                        2,795          2,907
     Less - current maturities                                                                     143            201
                                                                                         -------------- -------------
       Total long-term debt, net of current maturities                                   $        2,652 $       2,706
                                                                                         ============== ==============
</TABLE>



                                      F-14
<PAGE>

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


     As of September 30, 2004, principal maturities of long-term debt are as
     follows (in thousands):

              Year ending September 30,
              -------------------------
              2005                                             $143
              2006                                               52
              2007                                            2,600
              2008                                                -
              2009                                                -
              Thereafter                                          -
                                                       -------------
                            Total                            $2,795
                                                       =============

     At September 30, 2004, 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, 2004.

     At September 30, 2004, the Company had accrued $86,668 in interest on the
     CSS note.

10.  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,
                                                                 ---------------------------------------------------
                                                                       2004            2003             2002
                                                                       ----            ----             ----
<S>                                                               <C>             <C>              <C>
 Pre-tax financial net income (loss)                                $(113)            $ 417             $(283)
 Permanent items                                                        1                --                43
                                                                    -----             -----             -----
 Adjusted pre-tax financial net loss                                 (112)              417              (240)
 Timing items
 Difference in book and tax depreciation                               32               (10)              (67)
 Difference in book and tax gain on sale of assets                     95               148               230
                                                                    -----             -----             -----
 Net difference in depreciable assets                                 127               138               163
 Difference in book and tax bad debt expense                           (6)               (6)              (11)
 Difference in other book and tax items, net                           --                --                (9)
                                                                    -----             -----             -----
  Total timing items                                                  121               132               143
                                                                    -----             -----             -----
 Taxable income (loss) before NOL and capital losses                    9               549               (97)
 Carryforward (utilization) of NOL and capital losses                  (9)             (549)               97
                                                                    -----             -----             -----
 Taxable income (loss)                                              $  --             $  --             $  --
                                                                    =====             =====             =====
</TABLE>


                                      F-15
<PAGE>

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


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

<TABLE>
                                                                                2004             2003
                                                                                ----             ----
<S>                                                                        <C>                   <C>
     Net deferred assets and liabilities
       Tax effect of differences in underlying carrying value of
        net assets for book and tax purposes                               $    (187)            (309)
       Bad debt allowance                                                          4                9
                                                                           ---------------- ----------------
           Total net deferred tax assets (liabilities)                          (183)            (300)
        Valuation allowance due to prior years net operating losses              183              300
                                                                           ---------------- ----------------
     Net deferred tax assets (liabilities)                                  $     -            $   -
                                                                           ================ ================
</TABLE>

     At September 30, 2004, the Company had regular tax net operating loss
     carryforwards from continuing operations aggregating approximately $15.9
     million available for federal income tax purposes that expire through 2023.
     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.

11.  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-16
<PAGE>

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


     September 30, 2004, 35,500 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:

<TABLE>
<CAPTION>
                                                                                  Weighted-
                                                                 Number of         average
                                                                   shares        option price
                                                               --------------- -----------------
<S>                                                                <C>                   <C>
       Outstanding at September 30, 2001                            970,600
       Expired in 2002                                             (580,250)             $ 1.67
                                                               ---------------
       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
                                                               ===============
</TABLE>

     Although 390,350 options are outstanding at September 30, 2004, only 12,600
     underlying common shares are registered under a plan. There were no options
     granted during 2004, 2003 and 2002.

     A summary of options outstanding and options exercisable at September 30,
     2004 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        $      -            4.66 years         $       -           12,600         $       -
             290,000            0.16            6.41 years              0.16          290,000              0.16
              87,750            3.24            0.46 years              3.24           87,750              3.24
     ---------------- --------------- --------------------- ----------------- ---------------- -----------------
             390,350        $   0.84            4.31 years         $    0.84          390,350         $    0.84
     ================ =============== ===================== ================= ================ =================
</TABLE>

     At September 30, 2004, 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 390,350 shares are reserved for
     vested stock options and 4,174,167 shares are reserved for Warrants.


                                      F-17
<PAGE>

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


12.  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, 2004 and 2003, the Company owed
     MC approximately $14,043 and $56,921, 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, 2004 and 2003, the Company owed MC $57,062 and
     $231,000, respectively, which is included in accounts payables. As part of
     the disposal of the Texas Petroleum Marketing segment, the Company was
     relieved of amounts owed to MC under this agreement through July 1, 2004
     aggregating $1,705,000. 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, 2004 and 2003, MC owed the Company
     approximately $65,573 and $6,211, respectively, for freight on fuel the
     Company hauled for MC, which is included in accounts receivable.

     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, 2004 and 2003.

13.  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, 2004, 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 11). In addition, Mr. J.L. Evans, Sr.
     agreed to forfeit 1/3 of his stock warrants (Note 11).

     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. The Company has accrued all prior years ad
     valorem taxes at September 30, 2004.


                                      F-18
<PAGE>

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


     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. Under current Texas law
     and the requirements of the TCEQ, on September 30, 2005, funding for the
     TCEQ's reimbursement programs will terminate. All environmental work on
     TCEQ approved reimbursement locations must be completed on or before
     September 30, 2005 in order to be considered for reimbursement. All
     reimbursement applications must be submitted prior to September 30, 2006
     for reimbursement. 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.

     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
     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.

14.  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 2004 and 2003.


                                      F-19
<PAGE>

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


15.  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, 2004, 2003 and 2002 (in thousands):

<TABLE>
<CAPTION>
                                                                           2004            2003               2002
                                                                           ----            ----               ----
<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          $    --          $    --
                                                                        =======          =======          =======
      Extinguishment of debts under restructuring transactions
         Extinguishment of current liabilities                          $    --          $    --          $ 4,347
         Extinguishment of notes payable                                     --               --            5,399
         Issuance of notes payable                                           --               --           (5,512)
         Conveyance of fixed assets, net                                     --               --           (2,300)
         Conveyance of inventory                                             --               --             (135)
                                                                        -------          -------          -------
          Gain on restructuring transactions                            $    --          $    --          $ 1,799
                                                                        =======          =======          =======
      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          $    --
                                                                        =======          =======          =======
      Foreclosure of former ChemWay warehouse
         Relief of assumed debt on foreclosed warehouse                 $    --          $    --          $   501
         Net book value of foreclosed warehouse                              --               --              471
                                                                        -------          -------          -------
          Gain on foreclosure of warehouse                              $    --          $    --          $    30
                                                                        =======          =======          =======
</TABLE>

                                      F-20
<PAGE>

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


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

     During the year ended September 30, 2004, the Company has recorded an
     operating loss from continuing operations of $379,000 and a net loss of
     $332,000 million. The Company has experience operating losses for each of
     the last 3 years aggregating $1,334,000. The Company also recorded
     operating losses from its Petroleum Marketing segment, now discontinued,
     aggregating $2.58 million during the three years in the period ended
     September 30, 2004. At September 30, 2004, the Company has a working
     capital deficit of $144,000 and a stockholders' deficit of $850,000.

     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.

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 Note 3, the Company discontinued its 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 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.


                                      F-21
<PAGE>

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


Information concerning the Company's business activities is summarized as
follows (in thousands):
<TABLE>
<CAPTION>
                                                    Texas       Environmental     Other
                                                 Convenience    Remediation     Reconciling    Consolidated
             Year ended                             Store         Services       items (1)         total
<S>                                                <C>            <C>            <C>              <C>
September 30, 2004:
   Revenues from external customer
   Motor fuel sales                                $   648        $    --        $    --          $   648
   Convenience store sales                             299             --             --              299
   Environmental remediation                            --            973             --              973
   Intersegment revenues                                --             --             --               --
                                                   -------        -------        -------          -------

       Total revenues                              $   947        $   973        $    --          $ 1,920
                                                   =======        =======        =======          =======

   Depreciation and amortization                        63             18             --               81
   Operating income (loss)                            (238)            35            (53)            (256)
   Segment assets                                    1,148            726          1,361            3,235
   Expenditures for property and equipment              19             20              5               44

September 30, 2003:
   Revenues from external customer
   Motor fuel sales                                $   208        $    --        $    --          $   208
   Convenience store sales                             134             --             --              134
   Environmental remediation                            --          1,241             --            1,241
   Intersegment revenues                                --             --             --               --
                                                   -------        -------        -------          -------

       Total revenues                              $   342        $ 1,241        $    --          $ 1,583
                                                   =======        =======        =======          =======

   Depreciation and amortization                        64             15             --               79
   Operating income (loss)                            (289)           217            (40)            (112)
   Segment assets                                    1,054            742          2,708            4,504
   Expenditures for property and equipment              --             --             75               75

September 30, 2002:
   Revenues from external customer
   Motor fuel sales                                $ 2,737        $    --        $    --          $ 2,737
   Convenience store sales                           2,331             --             --            2,331
   Environmental remediation                            --          1,105             --            1,105
   Intersegment revenues                                --             --             --               --
                                                   -------        -------        -------          -------

       Total revenues                              $ 5,068        $ 1,105        $    --          $ 6,173
                                                   =======        =======        =======          =======

   Depreciation and amortization                       105             15             --              120
   Operating income (loss)                            (335)            44           (675)            (966)
   Segment assets                                    1,484            672          3,615            5,771
   Expenditures for property and equipment              --             --             39               39
</TABLE>

(1)  Consists primarily of corporate overhead expenses and unallocated corporate
     assets. Corporate assets include discontinued operations, income tax assets
     and corporate property and equipment.



                                      F-22
<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,
                                                                          ------------------------

                                                                     2004           2003           2002
                                                                     ----           ----           ----
         <S>                                                        <C>            <C>           <C>
          Operating income (loss) for reportable segments           $  (203)       $   260       $  (291)
          Gain on sale of non-operating assets                           --          1,653            --
          Rental income                                                 123            216            --
          Interest expense                                             (200)          (134)          (67)
          Unallocated corporate expenses                                (53)          (372)         (675)
          Other, net                                                    (46)            74            (2)
                                                                    -------        -------       -------
          Total consolidated income (loss) from continuing
            operations before income taxes                          $  (379)       $ 1,697       $(1,035)
                                                                    =======        =======       =======
</TABLE>

18.      Quarterly Financial Data (Unaudited)

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

<TABLE>
<CAPTION>
     September 30, 2004
                                                           Q1             Q2          Q3             Q4
                                                        ------        ------       -------        ------
<S>                                                     <C>           <C>           <C>           <C>
          Revenue                                       $  165        $  312        $  538        $  905
          Gross profit                                      77            44           122            86
          Operating income (loss)                         (108)          (36)          (31)          (81)
          Income (loss) from continuing operations        (102)          (25)          (27)         (225)
          Gain (loss) from discontinued operations        (116)          (97)         (138)          398
          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)       $(0.02)
                 Discontinued operations                 (0.01)        (0.01)        (0.02)         0.04
                                                         -----         -----         -----         -----
                     Total                              $(0.02)       $(0.01)       $(0.02)        $0.02
                                                         =====         =====         =====         =====
</TABLE>
<TABLE>
     September 30, 2003
                                                          Q1             Q2             Q3           Q4
                                                        ------        -------        -------      ------
<S>                                                     <C>           <C>          <C>            <C>
          Revenue                                       $  609        $  276       $   263        $  435
          Gross profit                                     145           192           187           107
          Operating income (loss)                         (122)           (4)           (1)           15
          Income (loss) from continuing operations        (119)        1,765            35            16
          Loss from discontinued operations                (65)         (131)         (150)         (126)
          Net income (loss)                               (184)        1,634          (115)         (110)
          Basic and diluted loss per common share:
              Income (loss) per common share:
                 Continuing operations                  $(0.01)       $ 0.17       $  0.00        $ 0.00
                 Discontinued operations                 (0.01)        (0.01)        (0.01)        (0.01)
                                                        ------        ------        -------       ------
                     Total                              $(0.02)       $ 0.16       $ (0.01)       $(0.01)
                                                        ======        ======        =======       ======

</TABLE>

                                      F-23