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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                       ----------------------------------
                             WASHINGTON, D.C. 20549
                             ----------------------
                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                  ---------------------------------------------
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                     --------------------------------------

                 FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1999
                                           -----------------

                         Commission File No. 0-17882

                     GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

              Delaware                                  04-3051642
      (State of Incorporation)              (I.R.S. Employer Identification No.)

           320 NEEDHAM STREET, NEWTON UPPER FALLS, MASSACHUSETTS 02464
           -----------------------------------------------------------
            (Address of Principal Executive Offices)       (Zip Code)

       Registrant's telephone number, including area code: (617) 969-0050
                                                           --------------

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

                                      None

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

                               TITLE OF EACH CLASS
                               -------------------

                          Common stock, par value $.01

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                               Yes   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 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. [ ]

Number of Shares of Common Stock
outstanding at May 14, 1999                 4,125,018
                                            ---------

The aggregate market value of voting stock of the registrant held by
non-affiliates of the registrant (i.e., stockholders who are not directors or
officers of the registrant and are not otherwise persons who control or are
controlled by or under common control with the registrant) was $16,183,036 as of
May 14, 1999.

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

Portions of the Annual Report to Stockholders of the registrant for fiscal year
1999 are incorporated by reference in Part II. The registrant intends to file
with the Securities and Exchange Commission a definitive proxy statement for the
Company's 1999 Annual Meeting of Stockholders within 120 days of the end of the
fiscal year ended February 28, 1999. Certain portions of such definitive proxy
statement are incorporated by reference in Part III of this Form 10-K.

                  The Index to Exhibits is located on Page 20.






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                                     PART I

ITEM 1. BUSINESS
----------------

GENERAL

GZA GeoEnvironmental Technologies, Inc. ("GZA") provides geotechnical
engineering, environmental consulting, environmental remediation and information
management systems to industrial, commercial, financial, public service and
government clients. Our geotechnical services involve the evaluation of soil,
rock and groundwater conditions for the design and construction of buildings,
highways, tunnels, dams, piers and other structures. Our environmental services
range from the initial assessment and evaluation of contaminated sites to the
design, construction and operation of remediation systems to treat, control or
remove contamination. We design and implement environmental health and safety
information management systems, applications and networks focused on intranet
networking platforms. We provide drilling, laboratory and instrumentation
services in support of geotechnical and environmental activities. Through our
information systems division, we provide integrated environmental information
management services.

GZA's strategy is to provide a wide range of services from the identification of
a potential problem through the design and implementation of a solution.
However, we often enter into contracts requiring only one of our services. We
believe that our ability to combine environmental, geotechnical and information
services differentiates us from many of our competitors. Environmental problems
frequently involve soil and groundwater contamination. Often, geotechnical
expertise is essential in developing the best remedial solutions. Such solutions
may involve excavation and removal of contaminated soil and groundwater,
containment by subsurface and surface hydraulic barriers, and management of
groundwater flow through soil and rock. In such situations, GZA's geotechnical
and environmental personnel work together to evaluate and develop engineered
solutions to environmental problems. Our information systems provide clients
with the data and flexibility they need to measure their environmental and
health and safety information and to comply with complex regulations. Our broad
base of technical skills enables GZA to offer efficient solutions to clients'
problems.

We provide services to clients through our subsidiaries and affiliates. GZA
GeoEnvironmental, Inc. primarily performs consulting, environmental remediation,
geotechnical and information management services. GZA Drilling, Inc. primarily
performs drilling operations. Both companies are wholly owned subsidiaries of
GZA GeoEnvironmental Technologies, Inc. In New York, services are provided by
our affiliate, Goldberg-Zoino Associates of New York, P.C., doing business as
GZA GeoEnvironmental of New York, a professional corporation owned by officers,
directors and stockholders of GZA. Aquaterra Environmental Consultants Limited,
GZA's 50%-owned joint venture in the United Kingdom, provides environmental
services in Europe.

SERVICES

We provide services in four broad categories: geotechnical engineering,
environmental consulting, environmental restoration, and information management
services. A project may involve activities in more than one of these categories.





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GEOTECHNICAL ENGINEERING SERVICES

Our geotechnical engineers evaluate the properties of soil and rock to develop
recommendations and specifications for the design and construction of structures
and civil works projects. Our clients include engineers and architects,
construction firms, public agencies, real estate developers and property owners.

SOIL AND ROCK ENGINEERING. GZA provides engineering design and construction
monitoring services in connection with earthwork projects, braced excavations,
dewatering operations, slope stability, geosynthetic applications, and ground
improvement.

FOUNDATION ENGINEERING. GZA provides consultation concerning foundation design
and construction. To formulate our recommendations, we perform geological
studies, subsurface exploration and laboratory testing to determine the
engineering properties of subsurface materials and to identify related
engineering and construction issues.

DAMS. GZA provides consulting, design and inspection services in connection with
new construction and the rehabilitation of concrete and embankment dams, dikes
and levees.

MARINE FACILITIES. GZA provides specialized geotechnical engineering and
structural design for the construction of new shoreline and off-shore marine
facilities and the rehabilitation and remediation of existing facilities.

TUNNELS. GZA provides geotechnical engineering for the design and construction
of shafts, tunnels and underground chambers in soil and rock for mass transit
programs, utilities, water supply systems, storm water runoff management
systems, highways and other uses. Our services include geological investigations
and mapping, recommendations for structural design and construction, and
installation and monitoring of instrumentation.

TRENCHLESS CONSTRUCTION. GZA helps owners, engineers and contractors make
decisions regarding the use of trenchless construction for utility development
and other projects. Our services include equipment applicability evaluations,
subsidence evaluations and groundwater control assessment. On site work may
involve use of pipe jacking, microtunneling and directional drilling.

SERVICES TO CONTRACTORS. GZA assists construction companies with specialized
technical services that deal with design, safety, environmental and quality
control issues. Examples of these services include:

  -  Pile Driving Studies/Testing      -  Vibration/Noise Monitoring
  -  Earthwork Control                 -  Health and Safety Plans
  -  Cofferdam/Underpinning Design     -  Environmental Monitoring and Reporting
  -  Dewatering System Design          -  Materials Testing for Compliance

ENVIRONMENTAL CONSULTING SERVICES

We provide a wide variety of services relating to environmental issues. We seek
solutions that address regulatory requirements and are acceptable to clients in
terms of both cost and risk.

ENVIRONMENTAL MANAGEMENT AND REGULATORY COMPLIANCE SERVICES. GZA's services help
clients plan, coordinate and implement effective strategies to comply with
environmental and occupational health and safety regulations.




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Our services include:

  -  Compliance and Management         -  Strategic Planning
     Systems Audits                    -  ISO 14000 Services
  -  Regulatory Training               -  Permitting Assistance
  -  Occupational Health and Safety    -  Air Quality Engineering
  -  Wastewater Management             -  Pollution Prevention
  -  Stormwater and Solid and          -  Community Relations
     Hazardous Waste Management
  -  Raw Materials Storage and
     Management

ENVIRONMENTAL INVESTIGATIONS OF CONTAMINATED SITES AND FACILITIES. GZA performs
all aspects of environmental investigations for projects ranging from Superfund
sites to individual leaking underground storage tanks. Our services include:

  -  Hydrogeologic and Remedial Studies
  -  Facility Evaluation and Voluntary Corrective Actions
  -  Feasibility Studies and Remedial Design

RISK ASSESSMENT. GZA helps clients evaluate environmental data and quantify
potential risks posed to human or ecological receptors. Our services include:

  -  Human Health and Ecological Risk Assessment
  -  Development of Risk-Based Cleanup Levels

NATURAL RESOURCE EVALUATION AND PERMITTING. GZA identifies potential risks posed
to natural resources and develops solutions that are environmentally acceptable
and economically viable. Our environmental, geotechnical and civil engineering
services include:

  -  Water Resource Evaluation and     -  Wildlife and Aquatic Habitat
     Aquifer Protection                   Evaluation
  -  Erosion Control and Stormwater    -  Wetland Impact Assessment and
     Management                           Mitigation Design

PROPERTY TRANSFER STUDIES/ENVIRONMENTAL SITE ASSESSMENTS. GZA helps clients
assess risks associated with the purchase or management of real estate and
businesses. Our services include:

  -  Phase I and Phase II Environmental Site Assessments
  -  Property Condition Assessments

WATER RESOURCES ASSESSMENTS. GZA conducts water quality and benthic condition
surveys of reservoir and riverine systems, physical condition assessments for
dams and pumping networks associated with water supply facilities, and dredge
materials management investigations related to navigation channels.

SOLID WASTE MANAGEMENT SERVICES. GZA assists the owners and operators of
transfer stations and landfills in the siting, design, construction, operation,
maintenance, remediation, and closure of facilities. Services include:

  -  Feasibility/Siting Studies        -  Construction Management and Quality
  -  Environmental Impact Studies         Inspection/Testing
  -  Geologic and Hydrogeologic        -  Facility Operations Engineering
     Evaluations                       -  Closure/Post Closure Monitoring
  -  Permitting                        -  Environmental Remediation
  -  Facility Design/Build



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ENVIRONMENTAL RESTORATION SERVICES

GZA provides engineering, construction and construction management services to
help clients locate, identify and remediate environmental contamination. GZA
designs and implements its own restoration plan or constructs and operates
cleanup systems designed by others.

DESIGN AND CONSTRUCTION OF ENVIRONMENTAL TREATMENT SYSTEMS. GZA performs some or
all aspects of design, construction, installation, and start-up of remedial
treatment systems. GZA has designed, built and implemented systems for the
remediation of contaminated soil and groundwater using such methods as soil
stabilization/fixation, soil vapor extraction, counter-current aeration, carbon
adsorption, thermal desorption and bioremediation. GZA's systems may be remotely
managed using radio, dial-up and web-based information systems.

OPERATION AND MAINTENANCE SERVICES. GZA provides traditional and remote
telemetry-based operation and maintenance services for treatment systems as well
as performance evaluations, including periodic sampling and analyses of
contaminants to monitor cleanup progress.

DESIGN AND CONSTRUCTION OF CONTAINMENT SYSTEMS. GZA designs and constructs
containment systems, using a variety of techniques to physically isolate
contaminants from the surrounding environment.

HAZARDOUS MATERIALS MANAGEMENT. GZA acts as a general contractor on assignments
where the chosen remedial alternative is removal and off-site disposal of
hazardous or contaminated material. GZA oversees excavation, performs testing
and waste characterization, evaluates and monitors transportation and disposal
vendors, and assists with administration and regulatory compliance.

REMOVAL OR REPLACEMENT OF TANKS AND PIPING SYSTEMS. GZA provides underground
storage tank testing and assessment, regulatory compliance audit and planning
services and management of tank or piping upgrade, removal and installation.

ASBESTOS AND LEAD MANAGEMENT AND ABATEMENT. GZA provides a variety of services,
including asbestos survey and lead risk assessments, management of the abatement
process, air quality monitoring and development and periodic review of asbestos
management programs. Using qualified subcontractors, GZA will abate asbestos and
lead hazards as a prime contractor.

FACILITY CLOSURE AND RESTORATION. GZA provides integrated remediation services
to clients that are closing facilities and/or restoring contaminated sites for
redevelopment. Our services include environmental assessments, cost-benefit
analysis and remedial design and construction management. Our applications
include facility/equipment decontamination, decommissioning, demolition, as well
as lagoon and landfill closures and structure demolition. Projects can be
delivered via conventional owner, engineer, contractor relationships and
design-remediate project delivery mechanisms that include fixed price to closure
agreements.

INFORMATION MANAGEMENT SERVICES

Our Information Systems Division develops and delivers information management
solutions to clients, as well as administers our internal information management
strategy. This division complements and enhances our traditional role of
acquiring, accumulating and processing data, and presenting information to, or
on behalf of clients. The Information Systems Division's approach to information
management combines the latest information technology, computerized internal
information systems (intranets), the resources of the Internet, and sound
principles of the strategic use of information. GZA provides clients with
information-related services and systems that:



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-  enhance the client's ability to use data within its own organization and
   improve operational and management efficiency, particularly in the area of
   environmental and health and safety information management

-  reduce the cost of information management through a centralized enterprise
   approach using Internet/intranet technology

-  enhance communication between GZA and our client

-  enhance communication for our clients and their customers

Our products and services are primarily web-enabled applications that advance
our client's use of the Internet and intranets. Examples of these applications
include the following:

CUSTOMERLINK(SM) is a web-based application that allows clients to access
information concerning their projects that is maintained on GZA's systems.
Through CustomerLink(SM), clients enter a secure on-line environment where they
can access electronic file cabinets of project-specific information and
collaborate with their project teams. This allows clients to directly
participate in their projects from anywhere in the world.

INFOLINK(SM) is a web-based environmental information management system that
simplifies and streamlines environmental health and safety information
management reporting. InfoLink(SM) consists of easily customized applications
that are specific to a client's needs and priorities. InfoLink(SM) applications
include:

  -  MSDS Management                   -  Employee Training Management
  -  Safety/Health Incident Tracking   -  ISO 14000 Environmental Management
  -  Chemical Tracking and Reporting   -  Waste Minimization
  -  Regulatory Compliance Calendar    -  Air Emissions Tracking and Reporting

GEOGRAPHIC INFORMATION SYSTEMS AND APPLICATIONS (GIS) Geographic information
systems and applications technology links digital mapping with relational
databases. Our services include:

  -  Needs Assessment and Planning     -  Application Development
  -  Database Modeling and Design      -  Training and Support

The GIS technology provides the users with a visual image (i.e., a map of a
geographic area, a plant layout, etc.) for access to information about specific
points on the map. GZA's systems are designed to maintain data for:

  -  regulatory reporting/compliance in connection with landfill management and
     manufacturing plant environmental data management

  -  energy usage analysis and management

  -  municipal land management, resource planning, permit control, development
     planning, etc.

 SUPPORT SERVICES

To support its services to clients, GZA maintains a geotechnical instrumentation
group, an environmental laboratory, a geotechnical laboratory and drilling
operations. By providing these services, GZA controls quality and provides
faster results than could generally be obtained from outsourcing such services.

GEOTECHNICAL INSTRUMENTATION. GZA's Soil and Rock Instrumentation Division
("SRI") supports our geotechnical and environmental projects and provides
specialty geotechnical instrumentation and engineering services to the heavy
construction industry and other clients. SRI maintains an instrumentation
laboratory and a fabrication shop. On geotechnical projects, SRI designs,
installs and monitors instruments to observe excavation support systems,
tunnels, and deep foundations during construction. On environmental projects,
SRI performs automated pump tests to assess aquifer characteristics. SRI also
works with the Information Systems Division to develop web-based applications
and custom software to be used in data acquisition systems for dams and
construction projects in which rapid data collection and analysis are required.

LABORATORIES. GZA's Environmental Chemistry Laboratory analyzes soil, water, air
and waste samples in connection with our environmental studies. Mobile
laboratory and vibratory drill rigs provide field sampling and small diameter
well installation as well as on-site, real-time chemical screening and analyses.
GZA's geotechnical laboratory performs analyses to determine permeability,
strength, compressibility and other engineering properties





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of rock cores and soil samples. The geotechnical laboratory also measures
geomembrane seam strength as well as frictional resistance between geomembranes
and soils or other geosynthetics.

DRILLING. GZA performs drilling, sampling and installation of monitoring and
recovery wells. Drilling to obtain samples usually forms part of the subsurface
investigation phase of both environmental and geotechnical projects. The
drilling operation also provides dewatering and pump test support services,
grouting and specialty foundation construction.

JOINT VENTURE

AQUATERRA ENVIRONMENTAL CONSULTANTS LIMITED (U.K.)

In 1991, GZA entered into a joint venture with Carl Bro Group (U.K.) Limited to
form Aquaterra Environmental Consultants Limited. The stock of Aquaterra
Environmental Consultants Limited is owned equally by GZA and Carl Bro Group.
Aquaterra Environmental Consultants Limited, with offices in Leeds, London and
Edinburgh, provides services related to contaminated land and groundwater
remediation, environmental compliance of operating facilities and geotechnical
engineering. We are currently in discussions with Carl Bro Group concerning the
future of the joint venture, and it is uncertain whether, and on what terms, the
Aquaterra joint venture will continue.

CUSTOMERS

Our client base includes industrial companies, owners and operators of solid
waste landfills, real estate developers, architects and engineers, construction
firms, parties to property transfers and financings (lenders, law firms,
corporations and developers) and public agencies. We derive most of our revenues
from the private sector. During the past year, the private sector accounted for
approximately 82% of net revenues.

In fiscal year 1999, we were actively engaged in approximately 3,700 assignments
for approximately 1,700 clients. These assignments ranged from brief projects
such as environmental site assessments and geotechnical foundation evaluations
to long-term projects such as multi-year hazardous waste cleanups and
geotechnical infrastructure projects. Most of our assignments lasted less than
six months in duration. Management estimates that 38% of net revenues in fiscal
1999 were derived from projects for which net revenues were $50,000 or less. In
fiscal year 1999, no one customer accounted for more than 5% of our net
revenues.

BACKLOG

As of April 30, 1999, we had a backlog of orders we believed to be firm of
approximately $47 million. This includes estimated amounts under orders on a
time and materials, unit price, or other basis without a fixed price. The amount
represents gross revenues, including costs of services and materials
subcontracted to third parties. Backlog at April 30, 1999 excludes the value of
government contracts that have been awarded but have not yet been executed
and/or funded. It also excludes the value of contract options that have not yet
been exercised. As of April 30, 1998, we had a backlog of orders calculated on
same basis of approximately $26 million. Because work can be terminated by the
client at any time, there is no assurance that all the amounts included in
backlog will ultimately be realized, even if covered by written contracts or
task orders.

COMPETITION

The markets for environmental and geotechnical services have become increasingly
competitive. We compete with many different small local firms and large regional
and national firms having substantially greater financial and marketing
resources than we have. Competition in both the environmental and geotechnical
services markets is based primarily on quality, diversity of services,
geographic location, price and reputation. In some geographic markets, GZA
provides environmental engineering and consulting, geotechnical engineering
design and contractor




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support services. Some state and local statutes and regulations may inhibit our
ability to compete for construction work in areas at or near sites where we have
formerly provided engineering or design services. Management believes we are one
of a few firms that offers a combination of environmental consulting,
remediation, geotechnical engineering with integrated information management
services. Management believes that the ability to provide this range of services
enhances our competitive position in our market areas.

IMPACT OF ENVIRONMENTAL REGULATION

The business of GZA and its clients is subject to a wide range of overlapping
federal, state and local environmental laws and regulations. These laws and
regulations have helped to create a demand for many of our services. Changes in
environmental laws and regulations, in the regulatory climate generally, and in
the resources available to and priorities of the federal, state and local
agencies responsible for enforcement of environmental laws and regulations could
materially affect demand for our services.

Reductions of the budgets of the U.S. Environmental Protection Agency and
Department of Defense, ongoing legislative proposals to narrow the scope of some
federal statutes, and delays in the U.S. Environmental Protection Agency
legislation could result in reduced demand for our services. Conversely,
regulatory reform initiatives designed to shift responsibility for environmental
compliance and enforcement from government agencies to private parties could
create new opportunities for us. Such initiatives have been taken in
Massachusetts and Connecticut where supervision of the clean-up of contaminated
sites has for the most part been delegated by state regulatory officials to
"licensed site professionals" or "licensed environmental professionals" employed
by private entities. We employ a number of individuals qualified and licensed in
these and other states in which we provide services. Regulatory reform
initiatives may also reduce the cost of environmental cleanups and therefore may
encourage more private remediation projects. Whether such initiatives will lead
to an increased need for our services is uncertain. There can be no assurance
that changes in the regulatory climate and in environmental statutes and
regulations will not result in reduced demand for such services.

The principal statutes affecting our business and the markets it serves include
the following:

RESOURCE CONSERVATION AND RECOVERY ACT OF 1976. The Resource Conservation and
Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984,
establish a comprehensive regulatory scheme for the handling, transportation,
treatment, storage and disposal of hazardous waste. Although "cradle-to-grave"
responsibility for hazardous wastes rests with generators of the material, every
facility that treats, stores or disposes of specified minimum amounts of
hazardous waste must comply with specific operating, design, financial
responsibility and closure requirements. These requirements have contributed to
demand for our consulting services, permitting assistance, remedial design and
implementation and waste management services.

COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980.
The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,
addresses problems created by past handling and disposal of hazardous
substances. It requires the U.S. Environmental Protection Agency to identify
contaminated sites and to compel a wide array of "responsible parties" to pay
for necessary cleanup activities. The Comprehensive Environmental Response,
Compensation and Liability Act of 1980 also authorizes multiple damages and
penalties for non-compliance with the U.S. Environmental Protection Agency
orders and provides for the U.S. Environmental Protection Agency to perform
cleanup activities in appropriate circumstances. Our services include site
investigations, feasibility studies, development and implementation of
alternative remediation plans, oversight of contractors and support and expert
testimony for related litigation.

FEDERAL WATER POLLUTION CONTROL ACT OF 1972. The Federal Water Pollution Control
Act of 1972 establishes a system of standards, permits and enforcement
procedures for the discharge into water of pollutants from industrial





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and municipal sources. The law sets treatment standards for industries and
wastewater treatment plants. The law also regulates and requires permits for
development and construction activities involving wetlands and navigable waters.
We provide a range of services in connection with this regulatory scheme,
including regulatory permitting assessments, conceptual design planning,
wastewater pretreatment engineering, assistance with environmental impact
studies, reports and applications for environmental permits and construction
services.

CLEAN AIR ACT AMENDMENTS OF 1990. The Clean Air Act Amendments of 1990 consist
of major initiatives to attain and maintain national ambient air quality
standards. These standards ensure that new sources of potential atmospheric
emissions are equipped with appropriate pollution control technology and ensure
that emissions of hazardous air pollutants are controlled to the maximum extent
possible. The law requires a comprehensive operating permit program. We provide
a range of air quality services including emission inventories, preparation of
permit applications, and oversight of contractors.

OTHER REGULATIONS. In addition to federal environmental regulations, many states
and local authorities have enacted laws regulating activities affecting the
environment. Some of these laws impose differing, and sometimes stricter,
standards than their federal counterparts. Examples include a variety of
statutes related to "Brownfields" initiatives. Brownfields are abandoned or
underutilized properties where actual or perceived contamination may interfere
with redevelopment. Many states are encouraging reuse of such sites by
implementing regulations that establish clean-up standards based on current
risks and reasonably foreseeable future site use, rather than theoretical risks
and unlikely end uses. Some states also may provide covenants not to sue or
agreements that document the regulators' acceptance of the clean-up process.
Such covenants and agreements may be transferable with the property.

The national trend at the state and federal levels of risk-based cleanups of
contaminated properties may have a positive impact on the demand for our
services. We are working on a number of projects involving Brownfields sites,
providing services ranging from initial investigation through final
construction. We also are seeking investments in contaminated property to apply
our remediation experience to produce attractive financial returns. Through a
limited liability company or other affiliations with experienced property
developers, we are seeking premium returns with controlled risks.

POTENTIAL LIABILITY, RISK MANAGEMENT AND INSURANCE

Our professional environmental consulting, remediation design and geotechnical
engineering services, as well as our remedial construction, drilling and test
boring operations, involve risks of significant liability for environmental and
property damage, personal injury, economic loss, and costs, fines and penalties
assessed by regulatory agencies. Liability for environmental contamination and
for providing environmental services is a developing area of the law, and it is
difficult to assess accurately the potential risks to us.

Some statutes and judicial decisions impose strict liability on a party that
causes or contributes to the release of contaminants into the environment, even
if the party acted without negligence or fault. Under certain circumstances, a
government or private party might allege that our own analytical, consulting or
remedial activities subjected us to liability under various statutes or
regulations. Services by our environmental consultants as licensed site
professionals and licensed environmental professionals may expose us to
additional liability. In addition to our potential liability under statutes and
common law, we sometimes agree to indemnify clients for losses and expenses they
may incur as a result of our services. Some of these losses may not be covered
by our insurance.

Our information management services also pose risks associated primarily with
systems' security.





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We maintain comprehensive programs for risk management, health and safety
training and medical monitoring of field employees, quality assurance and
quality control and loss prevention. We seek to limit our liability to the
client and to require the client to indemnify us for costs and liabilities not
caused by our negligence or misconduct. However, not all contracts include these
provisions. There is no assurance that such provisions can be enforced or that
our clients will always have adequate financial resources to stand behind these
types of contractual promises.

We have a broad-range risk management and insurance program with large
commercial insurers. We maintain workers' compensation/employer's liability,
commercial general, automobile and umbrella liability coverage. This coverage is
written on an incident/occurrence basis. Our property is insured for loss or
damage. We also maintain environmental professional liability policies that
cover professional liability, contractor's environmental liability and completed
operations, with aggregate limits each of $5 million in excess of a deductible
of $500,000 per claim/ $1,000,000 in the annual aggregate written on a
claims-made/occurrence-type basis (respectively) for events since 1964. Shared
umbrella and follow-form excess liability coverage is secured in the amount of
$50,000,000 under one policy concurrent with the various underlying coverages.

The law concerning the extent of coverage available under liability insurance
policies in the context of environmental claims is unsettled and is likely to
remain unsettled in the foreseeable future. All of our policies permit
termination by the insurer without cause subject to a notice period. There is no
assurance that we will be able to maintain or replace our insurance policies,
that premiums will remain at levels that economically permit the maintenance of
such coverage, that all claims that may be asserted against us will be covered
by insurance or that such claims will not exceed the coverage limits.

EMPLOYEES

On April 30, 1999, we had 459 employees, including 384 technical personnel. Our
technical staff consists of civil and environmental engineers, geologists,
drillers and a number of specialists in such fields as hydrology, chemistry,
toxicology, biology and industrial hygiene. Management believes that our future
success depends in large part on its ability to attract and retain qualified
professional staff. The market for such professionals is competitive.

ITEM 2. PROPERTIES
------------------

Our corporate and administrative headquarters and one of our district offices,
are located in Newton Upper Falls, Massachusetts, where we occupy two buildings.
One of the buildings is approximately 42,000 square feet and has a lease that
extends through February 2001. During fiscal year 1999, we paid approximately
$714,000 in base rent for this facility. The other location in Newton Upper
Falls is for approximately 10,000 square feet. In fiscal year 1999, we paid
approximately $140,000 in base rent for this facility.

GZA leases 21 other principal facilities located in: Vernon, Connecticut;
Duluth, Georgia; Portland, Maine; Brockton, Massachusetts; West Newton,
Massachusetts; Worcester, Massachusetts; Livonia, Michigan; Grand Rapids,
Michigan; Manchester, New Hampshire; Wayne, New Jersey; Hammonton, New Jersey;
Buffalo, New York; New York City, New York; Rochester, New York; Monroe, North
Carolina; Coraopolis, Pennsylvania; Providence, Rhode Island; Dallas, Texas;
Rutland, Vermont; South Burlington, Vermont and Pewaukee, Wisconsin. These other
facilities have a combined square footage of approximately 103,000 square feet.
Aggregate base rent for all facilities leased by us (other than our facilities
in Newton Upper Falls) during fiscal year 1999 totaled approximately $1,105,000.
Lease terms expire at various times through January 31, 2004.

We believe that existing facilities are adequate to meet our current
requirements. We also believe that suitable additional or substitute space will
be available on reasonable terms as needed to accommodate expansion of
operations.





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In addition to its leasehold interests in real property, we also own computer
equipment, vehicles, drilling rigs, laboratory equipment and instrumentation,
remediation treatment equipment and other machinery, equipment and furniture.



ITEM 3. LEGAL PROCEEDINGS
-------------------------

We are party to several legal proceedings arising in the normal course of
business. Management believes that the outcome of these actions will not,
individually or in the aggregate, have a material adverse effect on the results
of operations or financial condition of GZA.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------

Not Applicable




                                       11
<PAGE>   12


                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------------------

The information appearing under the caption "Supplemental Information" in the
Annual Report to Stockholders of the Company for the fiscal year ended February
28, 1999, in the form included as Exhibit 13.1 to this annual report on Form
10-K, is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA
-------------------------------

The information appearing under the caption "Summary Financial Information" in
the 1999 Annual Report is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
        OF OPERATIONS
        -------------

The information appearing under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the 1999 Annual
Report is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

GZA does not hold derivative financial investments, derivative commodity
investments or other financial investments or engage in foreign currency hedging
or other transactions that expose us to material market risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
---------------------------------------------------

The information appearing under the captions "Consolidated Balance Sheets,"
"Consolidated Statements of Operations and Comprehensive Income," "Consolidated
Statements of Stockholders' Equity," "Consolidated Statements of Cash Flows,"
and "Notes to Consolidated Financial Statements" in the 1999 Annual Report is
incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-----------------------------------------------------------------------
        FINANCIAL DISCLOSURE
        --------------------

None

                                    PART III

ITEMS 10, 11, 12 AND 13. DIRECTORS AND EXECUTIVE  OFFICERS OF THE REGISTRANT;
-----------------------------------------------------------------------------
EXECUTIVE  COMPENSATION;  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND
-------------------------------------------------------------------------------
MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------

The information called for by Items 10, 11, 12 and 13 is incorporated by
reference to the definitive proxy statement relating to the Annual Meeting of
Stockholders of the Company to be held on July 13, 1999 (the "1999 Proxy
Statement"), to be filed with the Commission no later than 120 days after the
end of the fiscal year covered by this report.




                                       12
<PAGE>   13



                                     PART IV
                                     -------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
------------------------------------------------------------------------

(a)  Documents filed as part of the report:

     (1) The following consolidated financial statements of GZA GeoEnvironmental
         Technologies, Inc. and its Subsidiaries and Affiliate included in the
         1999 Annual Report are incorporated by reference in Item 8:

                 Report of Independent Accountants.

                 Consolidated Balance Sheets at February 28, 1999 and 1998.

                 Consolidated Statements of Operations and Comprehensive Income
                 for the fiscal years ended February 28, 1999, 1998 and 1997.

                 Consolidated Statements of Stockholders' Equity for the fiscal
                 years ended February 28, 1999, 1998 and 1997.

                 Consolidated Statements of Cash Flows for the fiscal years
                 ended February 28, 1999, 1998 and 1997.

                 Notes to Consolidated Financial Statements for the fiscal years
                 ended February 28, 1999, 1998 and 1997.

     (2) The following consolidated financial statement schedule of GZA
         GeoEnvironmental Technologies, Inc. and its Subsidiaries and Affiliate
         is included in this report:

         Report of Independent Accountants
                                                                       PAGE
                                                                       ----

         Schedule II     Valuation and Qualifying Accounts              19

     (3)   EXHIBITS.


EXHIBIT NO.   DESCRIPTION

3.1*          Restated Certificate of Incorporation of the Company

3.3*          Amended and Restated By-Laws of the Company

4.1*          Specimen certificate for the Common Stock of the Company

10.2*         Indenture of Lease dated September 5, 1984 and effective as of
              December 1, 1981, and First Amendment to Indenture of Leases,
              between GZA and Donald T. Goldberg and William S. Zoino, for the
              GEO Building, Newton Upper Falls, Massachusetts

10.6*         1989 Incentive Stock Option Plan of the Company

10.7*         1989 Non-Qualified Stock Option Plan of the Company





                                       13
<PAGE>   14


10.21*        Support Services Agreement among the Company, Goldberg-Zoino
              Associates of New York, P.C. and GZA, dated July 26, 1989

10.22***      Stockholders' Agreement among GZANY, Richard M. Simon and Joseph
              D. Guertin, Jr. dated May 1, 1996, together with related Powers of
              Attorney

10.23***      Voting Trust Agreement among the Company, GZANY, Messrs. Simon and
              Guertin, and Richard M. Simon, as Trustee, dated May 1, 1996

10.24***      Indemnification Agreement among the Company, GZA GeoEnvironmental,
              Inc. and Messrs. Simon and Guertin dated May 1, 1996

10.25*        Security Agreement between GZANY and the Company dated July
              26,1989

10.26*        Credit Agreement among the Company, GZANY and GZA dated July 26,
              1989

10.30**       Revolving Credit and Term Loan Agreement among Fleet Bank and the
              Company and its subsidiaries and affiliate dated February 28, 1994

10.34**       Amendment No. 1 to 1989 Incentive Stock Option Plan of the Company

10.35**       GZA 1995 Stock Incentive Plan

10.37**       Lease Agreement dated January 1, 1992 between GZRI Associates and
              GZA GeoEnvironmental, Inc. for the Providence, Rhode Island
              district office

10.38**       Lease Agreement dated March 1, 1992 between GZAIAT Associates and
              GZA Drilling, Inc. for the Brockton, Massachusetts facilities of
              GZA Drilling, Inc.

10.39**       Second Amendment dated December 11, 1991 to Indenture of Lease
              listed as Exhibit 10.2 hereto

10.40**       Form of Confidentiality, Non-Disclosure and Restrictive Covenant
              Agreement between the Company and, respectively, Donald T.
              Goldberg, Andrew P. Pajak, M. Joseph Celi, Richard M. Simon, John
              E. Ayres, William E. Hadge, Lawrence Feldman, Joseph P. Hehir,
              Joseph D. Guertin, Jr., and certain other employees

10.42**       Form of Group Life Insurance Plan for key employees; letter
              describing coverage levels

10.43**       Form of Indemnity Agreement between the Company and its respective
              directors

10.51+        Form of Assignment of Beneficial Interest between GZA
              GeoEnvironmental, Inc. ("Assignee") and, respectively, John E.
              Ayres, Joseph D. Guertin, Jr., and Steven J. Trettel
              ("Assignors"), dated June, 1996, to transfer each Assignor's one
              sixth (1/6) beneficial interest in the GZA Investment Associates
              Trust to Assignee

10.52+        Form of Assignment of Beneficial Interest and Indemnity Agreement
              between GZA GeoEnvironmental, Inc. ("Assignee") and Donald T.
              Goldberg ("Assignor"), dated June, 1996, to transfer Assignor's
              one sixth (1/6) beneficial interest in the GZA Investment
              Associates Trust to Assignee






                                       14
<PAGE>   15


10.53++       Second Loan Modification Agreement, dated as of August 7, 1997, to
              the Revolving Credit and Term Loan Agreement among Fleet Bank and
              the Company and its subsidiaries and affiliate included as Item
              10.30, including a Promissory Note dated August 7, 1997 and a form
              of Promissory Note.

10.54         GZA Restated 401(k) Profit Sharing Plan, effective as of
              January 1, 1998

10.55         Memorandum of Understanding, Transfer of Assets, Contract
              Obligations and Personnel From Raamot Associates, P.C. to GZA
              GeoEnvironmental of New York; Confidentiality, Non-disclosure and
              Restrictive Covenant Agreement between GZA and Tonis Raamot; Bill
              of Sale - Personal Good Will of Tonis Raamot, P.E.

13.1          Annual Report of Stockholders of the Company for the fiscal year
              ended February 28, 1999 (Portions Incorporated by reference only)

22.1          Subsidiaries of the Registrant

23.1          Consent of Independent Accountants

27.1          Financial Data Schedule

27.2++        Restated Financial Data Schedule for the fiscal year ended
              February 29, 1996

27.3++        Restated Financial Data Schedule for the fiscal year ended
              February 28, 1997

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

*     Incorporated by reference to the Company's Registration Statement on Form
      S-1, as amended (File No. 333-29369)

**    Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended February 28, 1995, as filed with the Commission on
      June 12, 1995.

***   Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended February 29, 1996, as filed with the Commission on
      May 24, 1996.

+     Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended February 28, 1997, as filed with the Commission on
      May 29, 1997.

++    Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended February 28, 1998, as filed with the Commission on
      May 29, 1998.

(b)  Reports on Form 8-K:  None.


















                                       15
<PAGE>   16



                                   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 in its
behalf by the undersigned, thereunto duly authorized.


                               GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.

Date:   May  26, 1999          /s/ ANDREW P. PAJAK
                               -----------------------
                               Andrew P. Pajak
                               Chief Executive 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 indicated.

SIGNATURE                      TITLE                           DATE
---------                      -----                           ----


/s/ ANDREW P. PAJAK                                            May 26, 1999
----------------------
Andrew P. Pajak                Chief Executive Officer and
                               Director (Principal Executive
                               Officer)


/s/ JOSEPH P. HEHIR                                            May 26, 1999
----------------------
Joseph P. Hehir                Chief Financial Officer
                               (Principal Financial and
                               Accounting Officer)


/s/ DONALD T. GOLDBERG                                         May 26, 1999
----------------------
Donald T. Goldberg             Director


/s/ M. JOSEPH CELI                                             May 26, 1999
----------------------
M. Joseph Celi                 Director


/s/ JOSEPH D. GUERTIN                                          May 26, 1999
----------------------
Joseph D. Guertin              Director







                                       16
<PAGE>   17







/s/ WILLIAM E. HADGE                                           May 26, 1999
-------------------------
William E. Hadge               Director


/s/ DR. LEWIS MANDELL                                          May 26, 1999
-------------------------
Dr. Lewis Mandell              Director


/s/ DR. THOMAS W. PHILBIN                                      May 26, 1999
-------------------------
Dr. Thomas W. Philbin          Director


/s/ TIMOTHY W. DEVITT                                          May 26, 1999
-------------------------
Timothy W. Devitt              Director


/s/ ROSE ANN GIORDANO                                          May 26, 1999
-------------------------
Rose Ann Giordano              Director


/s/ DAVID B. PERINI                                            May 26, 1999
-------------------------
David B. Perini                Director




                                       17
<PAGE>   18



                        REPORT OF INDEPENDENT ACCOUNTANTS
                         ON FINANCIAL STATEMENT SCHEDULE



To the Board of Directors and Stockholders of GZA GeoEnvironmental Technologies,
Inc.:

Our report on the consolidated financial statements of GZA GeoEnvironmental
Technologies, Inc. has been incorporated by reference in this Form 10-K. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page 19 of this
Form 10-K.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.


                                                      PRICEWATERHOUSECOOPERS LLP




Boston, Massachusetts
May 10, 1999



                                       18
<PAGE>   19





                                   SCHEDULE II




              GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
                        VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended February 28, 1997, 1998, and 1999

                                  Balance at  Charged to
                                   beginning  costs and               Balance at
         Description                of year    expenses  Write-offs  end of year
         -----------                -------    --------  ----------  -----------

Year ended February 28, 1997
 Allowance for doubtful accounts
 (deducted from accounts
 receivable) ...........           $774,000  $  525,000    $455,000   $  844,000


Year ended February 28, 1998
 Allowance for doubtful accounts
 (deducted from accounts
 receivable) ...........           $844,000  $  378,000    $323,000   $  899,000

Year ended February 28, 1999
 Allowance for doubtful accounts
 (deducted from accounts
 receivable) ...........           $899,000  $2,021,000    $262,000   $2,658,000



                                       19
<PAGE>   20



                                  EXHIBIT INDEX
                                  -------------
Exhibit
Number     Description                                                      Page
------     -----------                                                      ----

10.54      GZA Restated 401(k) Profit Sharing Plan, effective
           as of January 1, 1998

10.55      Memorandum of Understanding, Transfer of Assets,
           Contract Obligations and Personnel From Raamot
           Associates, P.C. to GZA GeoEnvironmental of New York;
           Confidentiality, Non-disclosure and Restrictive Covenant
           Agreement between GZA and Tonis Raamot; Bill of Sale -
           Personal Good Will of Tonis Raamot, P.E.

13.1       Annual Report to Stockholders of the Company for the
           fiscal year ended February 28, 1999 (Portions incorporated
           by reference only)

22.1       Subsidiaries of the Registrant

23.1       Consent of Independent Accountants

27.1       Financial Data Schedule




                                       20
<PAGE>   21


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following table sets forth, for the periods indicated, (i) the percentage
which certain items in the consolidated statements of operations of the Company
bear to net revenues, and (ii) the percentage increase (decrease) in the dollar
amount of such items from year to year.

<TABLE>
<CAPTION>

                                                                                               Year-to-Year
                                                        Percentage                              Percentage
                                                     of Net Revenues                        Increase (Decrease)
------------------------------------------------------------------------------------------------------------------
                                                        Year Ended                             Fiscal Years
------------------------------------------------------------------------------------------------------------------
                                        February 28,    February 28,    February 28,     1999 vs.         1998 vs.
                                           1999            1998            1997            1998             1997
------------------------------------------------------------------------------------------------------------------
<S>                                        <C>             <C>             <C>               <C>              <C>
Net revenues                               100%            100%            100%              7%               (1)%

Salaries and related costs                  71              71              73               7                (3)

General and administrative expenses         24              24              26               4                (8)

Income, before other income and taxes        5               5               1              16               220

Other income, net                            1               1               1             (13)               71

Provision for income taxes                   2               2               1              11               200

Net income                                   4               4               1              10               159


</TABLE>


GENERAL
GZA's gross revenues include the cost of services and materials subcontracted to
third parties and certain expenditures such as equipment purchases, laboratory
testing, use of our field and technical equipment, travel, telephone and
reproduction charges that, under the terms of our contracts, are billed to
clients, generally with an added service and handling charge. Net revenues
exclude the amount of such reimbursable costs and expenditures but include the
corresponding service and handling charges. Net revenues also include estimates
for loss contingencies for disputed contract and pending change order items.
Accordingly, we regard net revenues, which reflect services provided and
revenues earned directly by us, as the primary measure of our business growth.

Salaries and related costs include the cost of professional, clerical and
administrative salaries, and related costs such as taxes, insurance, Incentive
Compensation Plan bonuses, which are based on total company and individual
performance goals, and other fringe benefits. General and administrative
expenses include costs of marketing, professional development and training,
professional and general liability insurance, claims and legal proceedings,
occupancy, depreciation, amortization, and clerical and administrative overhead.

On December 31, 1998, we acquired the business assets of Tonis Raamot, PE and
the personal property of Raamot Associates, PC of New York, NY. Raamot
Associates is a Manhattan-based geotechnical and construction engineering firm,
with ongoing projects including high-rise buildings, industrial and
manufacturing facilities, waterfront structures, large dams and storage
reservoirs, railroads, highways, tunnels, and sewage treatment plants. The total
acquisition price was $500,000 which consisted of $50,000 for the furniture and
fixtures of Raamot Associates, $50,000 for a covenant not-to-compete by Mr.
Raamot, and other intangible assets totaling $400,000. We also secured the
services of the former employees of Raamot Associates, PC and sublet the
premises. The furniture and fixtures are depreciated over estimated useful lives
ranging from three to five years. The covenant not-to-compete is amortized over
three years, and the intangible assets are amortized over ten years. We paid
$200,000 in cash upon consummation of the transaction, and gave the seller a
$300,000 non-interest bearing note for the remaining purchase price. This note
becomes due on December 31, 1999.

FISCAL 1999 AND 1998 VERSUS PRIOR YEARS


                        1999 vs. 1998       1998 vs. 1997
                          Increase             Decrease         1997 Amount
                          --------             --------         -----------

Net Revenues.         $2,457,000 6.5%     ($360,000) (0.9%)     $38,211,000

The increase in fiscal 1999 net revenues is attributable to an increase in
demand for our services in the Northeast and Great Lakes Regions. The increase
was offset by decrease in demand for our services in the Southeast Region and
lower prices received for contracted billable hours of our technical staff.



                                       21
<PAGE>   22
The decrease in fiscal 1998 net revenues is attributable to our decision to
discontinue operations of the Phoenix, Arizona office in the second quarter of
fiscal 1998 and lower prices due to increasingly competitive market conditions
for geotechnical, environmental consulting and drilling services. The net
revenues decline was offset partially by an increase in billable hours of
technical staff for contracted activity in the Northeast Region.

                        1999 vs. 1998       1998 vs. 1997
                          Increase             Decrease         1997 Amount
                          --------             --------         -----------
Salaries and
Related Costs.        $1,786,000 6.6 %    ($801,000) (2.9%)     $27,782,000

Salaries and Related Costs. The increase in fiscal 1999 salaries and related
expenses is attributable to the increase in the number of full-time equivalent
professional and support staff employees, annual salary increases and Incentive
Compensation Plan bonuses. The salary and related costs increases were offset,
in part, by a net reduction in medical and workers' compensation insurance
expenses.

The decrease in fiscal 1998 salaries and related costs reflects reduced salary
and benefit costs as result of staffing and management restructuring efforts
which were initiated in fiscal 1997 and continued into fiscal 1998 and, to a
lesser extent, our decision to discontinue operations of the Phoenix office. The
salaries and related cost reductions were offset, in part, by an increase in
Incentive Compensation Plan bonus payments.

                        1999 vs. 1998       1998 vs. 1997
                          Increase             Decrease         1997 Amount
                          --------             --------         -----------
General and
Administrative
Expenses.             $  385,000 4.2%       ($804,000) (8.2%)   $ 9,864,000

General and Administrative Expenses. The increase in fiscal 1999 general and
administrative expenses is attributable primarily to higher business
development, professional development and training, placement and recruiting,
consulting, and bad debt expenses which were offset, in part, by reductions in
professional liability claims and legal expenses and the lower net cost for
technical equipment and small tools and Computer Automated Design (CAD)
services.

The decrease in fiscal 1998 general and administrative expenses reflects
approximately $222,000 in lower occupancy cost as result of lease cost
reductions associated with our decision to downsize operations in fiscal 1997
and the decision to discontinue operations of the Phoenix office in the second
quarter of fiscal 1998. In addition, fiscal 1997 reflects a goodwill write-down
of $400,000 for prior years' acquisitions and approximately $300,000 in closing
costs for the Gainesville drilling operation.


                        1999 vs. 1998       1998 vs. 1997
                          DECREASE             INCREASE         1997 AMOUNT
                          --------             --------         -----------

Other Income, Net.   ($   55,000) (12.5%)    $181,000 70.7%     $   256,000

The decrease in fiscal 1999 other income, net is due primarily to the reduction
of interest income as a result of the increase in the average number of days
outstanding for accounts receivable and administrative delays in billing and
collecting for several large construction contracts and an increase in interest
expense from financing the growth of the business throughout fiscal 1999
including payment of $1,972,000 in capital expenditures. The decrease in other
income, net was offset by an increase in our equity income from Aquaterra
Environmental Consultants Limited ("Aquaterra"), a 50% owned joint venture with
Carl Bro Group (UK) Ltd. We are currently in discussions with Carl Bro Group
concerning the future of the joint venture, and it is uncertain whether, and on
what terms, the Aquaterra joint venture will continue. Discontinuance of the
joint venture could result in a reduction of our other income and adversely
affect our ability to address opportunities in the European market.

The increase in fiscal 1998 other income, net is due primarily to an increase in
interest income, a reduction in borrowing cost and an increase in our equity
income from Aquaterra.

Provision for Income Taxes. The provision for income taxes reflects effective
tax rates for fiscal 1999, 1998, and 1997 of 39%, 39%, and 36%, respectively.
Differences from the 34% federal statutory rate resulted primarily from the
combined effect of the addition of provisions for state taxes (net of federal
tax benefit), tax-exempt interest income, and other non-deductible items.

Quarterly Fluctuations and Seasonality. Our results may fluctuate from quarter
to quarter due to such factors as weather, the timing of major contracts, the
mix of projects and the level of subcontracted services involved, the timing of
additions to our professional and support staff (who may require health and
safety training and technical and project management training and, therefore,
may initially charge clients a lower percentage of their time), and the opening
or closing of offices. Operating results for any one fiscal quarter may not be
indicative of the results that will be achieved in any subsequent quarter or for
the year.

Inflation. Management does not believe that inflation has had a significant
effect on our results of operations.

                                       22
<PAGE>   23



Future Operating Results. The volume of our services is affected by federal and
state government spending and changes in environmental regulations. In addition,
the industry is continuing to experience a period of consolidation, continuing
price competition and increasing salaries and demand for entry level and
experienced project managers. These trends are expected to continue.

Liquidity and Capital Resources. Cash used by operating activities was
$1,163,000 in fiscal 1999 compared with $3,265,000 provided by operations in
fiscal 1998. The $4,428,000 increase, in cash used, in fiscal 1999 is due
primarily to increases in accounts receivable and costs and estimated earnings
in excess of billings on uncompleted contracts. We are continuing to seek ways
to reduce delays in collection of accounts receivables particularly on large
projects where we are a third party subcontractor.

We made capital expenditures of $1,972,000 in fiscal 1999 and $1,232,000 in
1998. The increase in capital expenditures in fiscal 1999 reflects our
investments in revenue-producing information technology, testing and sampling
equipment, specialty drilling equipment rigs and accessories as well as
investments in computer technology to improve internal communications and to
address Year 2000 Compliance Program objectives.

GZA announced a 500,000 share buyback program during fiscal 1998 and had
purchased 500,000 shares at a cost of $2,442,000 as of February 28, 1999.

GZA has a Revolving Credit and Term Loan Agreement with Fleet Bank (the "Bank")
which provides for unsecured borrowings in the aggregate amount of $10,000,000.
The facility consists of a revolving credit line of $5,500,000 and a term loan
facility of $4,500,000. Revolving credit advances bear interest at the Bank's
floating base rate or, at our option, at LIBOR plus 200 basis points. Under the
terms of the line of credit, we are required to maintain a minimum net worth,
working capital, current ratio, quick ratio, tangible net worth and cash flow
coverage ratio. Term loans bear interest at the Bank's floating rate or, at our
option, at a fixed rate equal to the Bank's cost of funds plus 200 basis points.
At February 28, 1999, we had no borrowings under the revolving credit line and
no term loans.

GZA's cash and cash equivalents were $894,000 at the end of fiscal 1999 compared
with $4,594,000 at the end of fiscal 1998. Short-term investments were
$3,837,000 at the end of fiscal 1999 compared with $3,519,000 at the end of
fiscal 1998. These investments consist primarily of tax-exempt municipal bonds,
taxable U.S. Treasury Notes and other bonds and commercial paper.

Funding requirements for operations and for future growth are expected to be met
from existing cash and investments and funds generated from operations. We
believe that these sources will enable us to meet our cash requirements for at
least the next twelve months.

NEWLY ISSUED ACCOUNTING STANDARDS
In 1999, we adopted Financial Accounting Standards Board Statement No. 130,
"Reporting Comprehensive Income", which establishes standards for the reporting
and display of comprehensive income and its components.

In 1999, we adopted Financial Accounting Standards Board Statement No. 131,
"Disclosure about Segments of an Enterprise and Related Information." This
statement revised guidelines for determining an entity's operating segments and
the type of financial information to be disclosed. The adoption of this
statement had no impact on the financial statements as we have one operating
segment.

YEAR 2000
GZA has established a comprehensive Year 2000 compliance program (Y2K Program)
designed to (1) identify computer systems (hardware and software) and non-IT
equipment (telecommunications equipment, laboratory instruments, technical
equipment, etc.) that may fail to recognize or properly process dates after
January 1, 2000, (2) upgrade or replace non-compliant components, systems, and
software, and (3) evaluate the Year 2000 readiness of our critical suppliers and
service providers. The progress of the Y2K Program is as follows.

MISSION-CRITICAL BUSINESS SYSTEMS
We have completed the remediation of the primary business systems with the
appropriate Y2K fixes/upgrades deployed and tested. The following upgraded
(Y2K-ready) systems are currently in production use:



                                       23
<PAGE>   24


ACCOUNTING SYSTEM - Our accounting software has been updated to a later version
that reads any date with a two-digit year of 00 to 68 as a 21st century date and
any date with a two-digit year of 69 to 99 as a 20th century date. We believe
that the re-compiled software is fully Y2K-ready with respect to the handling
and processing of date information. The cost of the accounting software update
was approximately $2,000. Full verification and testing of the updated software
has been completed.

PAYROLL/HR SYSTEMS - Our payroll and human resource systems have been upgraded
from legacy DOS systems to ADP Payroll for Windows and ADP HR Perspective,
respectively. The cost of these upgrades, including new server hardware and
related equipment was approximately $30,000. The conversion of both the Payroll
and HR systems was complete as of December 31, 1998. Full verification and
testing of the new software was complete as of March 31, 1999.

COMPANY HEADQUARTER'S VOICE MAIL SYSTEM - The voice mail system that serves the
Newton Upper Falls, Massachusetts locations was replaced by a Y2K compliant
Octel Communications Model 200 Message Server at a cost of approximately
$30,000. We cut over to the new system on April 9, 1999. The Octel Model 200 has
been certified Y2K compliant by the vendor.

DESKTOP COMPUTING ENVIRONMENT (DESKTOP COMPUTERS, SERVERS AND NETWORK DEVICES)
We have completed a physical inventory and assessment of our computers and
computer-related hardware (PCs, servers and network components). With the
assistance of external consultants and the use of two Y2K assessment tools, we
have identified Y2K compliance problems with hardware (BIOS/RTC chips), software
applications, and data files (databases, spreadsheets, etc.). We are currently
in the process of planning client/server hardware, operating system software and
application upgrades/replacements to address the Y2K compliance issues. The
client/server remediation process is planned for completion on or before
September 30, 1999.

NON-IT EQUIPMENT
We have completed a physical inventory of our non-IT equipment. With the
assistance of an outside consultant, we have made significant progress in
assessing the Y2K status of various laboratory instruments and various pieces of
technical equipment. The assessment involves contact with the manufacturer of
each piece of equipment, by various means of inquiry, to determine compliance
status, test procedures and upgrade options. As of this report date, the
assessment is approximately 80 percent complete. Progress to date indicates that
most items checked are either compliant by design or do not rely on dates to
function or process data. To date, only two items have been found to be
non-compliant. An additional eight items may require a software upgrade
depending upon the software revision currently installed.

INSTALLED SYSTEMS (ENVIRONMENTAL MONITORING, TREATMENT AND PROCESS CONTROL
SYSTEMS)
We are conducting an inventory of environmental monitoring, treatment and
process control systems installed at client sites. Systems with electronic
controls that will be operating on and after January 1, 2000 are being assessed
for potential Year 2000 problems. We anticipate we will complete the Year 2000
assessment of our client active systems by June 30, 1999.

Although our contracts do not include Year 2000 warranties, the failure of such
installed systems to operate properly, after January 1, 2000, could lead to
disruption of our clients' business and substantial claims against us by our
clients. The nature and magnitude of the potential claims cannot be predicted at
this time. We will continue to evaluate the level of risk and nature of
uncertainties arising from potential Year 2000 non-compliance as we proceed with
our inventory and the Year 2000 assessment process. We will seek to cooperate
with our current and former clients to reduce the risk and impact of potential
date related failures in installed systems.

CRITICAL SUPPLIERS AND SERVICE PROVIDERS
We have solicited input from our key suppliers and service providers including
subcontractors, financial services firms (banks, insurance companies),
communications providers (telephone, dedicated data lines, internet service
providers), public utilities (electric, gas, water), service bureaus, and
benefits administrators regarding their Year 2000 status. We will determine
which, if any, pose a threat to the uninterrupted operation of our business in
the event that they experience system errors or failures. To date, approximately
50 percent of our key suppliers and service providers have responded to our
Y2K inquiry.

CONTINGENCY PLANNING
We have not developed Y2K contingency plans. Following (1) the internal
assessment, remediation and testing of all computer and non-IT equipment, and
(2) the evaluation of external dependencies, we will consider contingency
planning in areas where significant uncertainties remain.

ESTIMATED TOTAL COST
Although we expect that we will need to upgrade or replace various additional
computer systems, and possibly some non-IT equipment, we do not expect operating
costs or capital investments to be materially affected by Year 2000 related
expenditures. We estimate that operating and capital costs directly related to
our Y2K Program, through its completion, will range from $75,000 to $150,000 and
from $250,000 to $350,000, respectively. We plan to complete the remediation and
testing of all systems by September 30, 1999.



                                       24
<PAGE>   25



REPORT OF INDEPENDENT ACCOUNTANTS









To the Board of Directors and Stockholders of GZA GeoEnvironmental Technologies,
Inc. and Affiliate:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and comprehensive income, of stockholders'
equity, and of cash flows present fairly, in all material respects, the
financial position of GZA GeoEnvironmental Technologies, Inc. and its
subsidiaries and affiliate at February 28, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the period
ended February 28, 1999, in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.



                                                      PRICEWATERHOUSECOOPERS LLP


Boston, Massachusetts
May 10, 1999





                                       25
<PAGE>   26


CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

February 28, 1999 and  1998                                                           1999              1998
--------------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
<S>                                                                               <C>                   <C>
  Cash and cash equivalents                                                       $    894,000          $  4,594,000
  Available-for-sale securities                                                      3,837,000             3,519,000
  Accounts receivable, net                                                          13,503,000            11,423,000
  Costs and estimated earnings in excess of
      billings on uncompleted contracts, net                                         8,018,000             7,261,000
  Prepaid expenses and other current assets                                            149,000               133,000
  Deferred income taxes                                                              1,450,000             1,029,000
                                                                                  ------------          ------------
        Total current assets                                                        27,851,000            27,959,000
Property and equipment, net                                                          5,901,000             5,344,000
Other assets, net                                                                    1,505,000               918,000
                                                                                  ------------          ------------
Total assets                                                                      $ 35,257,000          $ 34,221,000
                                                                                  ============          ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable, trade                                                         $  4,776,000          $  4,373,000
  Accrued payroll and expenses                                                       3,900,000             4,283,000
  Billings in excess of costs and estimated earnings
    on uncompleted contracts                                                         1,313,000             1,835,000
  Income taxes payable                                                                 311,000               102,000
                                                                                  ------------          ------------
        Total current liabilities                                                   10,300,000            10,593,000
                                                                                  ------------          ------------
Deferred income taxes                                                                  816,000               742,000

Commitments and contingencies

STOCKHOLDERS' EQUITY:
  Preferred stock, $.01 par value; authorized - 1,000,000 shares
    issued and outstanding - none                                                           --                    --
  Common stock, $.01 par value; authorized - 14,000,000 shares;
    issued (including treasury shares) - 4,078,104 shares at
    February 28, 1999 and 4,027,440 shares at February 28, 1998                         41,000                40,000
  Capital in excess of par value                                                    14,650,000            14,430,000
  Accumulated other comprehensive income                                               (10,000)               (6,000)
  Retained earnings (includes $926,000 and $890,000 of retained
    earnings of the Company's consolidated affiliate at
    February 28, 1999 and 1998, respectively)                                       11,902,000            10,393,000
                                                                                  ------------          ------------
        Subtotal                                                                    26,583,000            24,857,000
  Less:  Common stock held in treasury, at cost
    (500,000 and 400,475 shares at February 28, 1999 and 1998,
    respectively)                                                                   (2,442,000)           (1,971,000)
                                                                                  ============          ============
  Total stockholders' equity                                                        24,141,000            22,886,000
                                                                                  ============          ============
  Total liabilities and stockholders' equity                                      $ 35,257,000          $ 34,221,000
                                                                                  ============          ============
</TABLE>


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





                                       26
<PAGE>   27





CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>

For the Years Ended February 28, 1999,  1998, and  1997                 1999                1998               1997
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                 <C>                 <C>
Revenues                                                            $ 60,653,000        $ 59,546,000        $ 59,340,000


Reimbursable expenses                                                 20,345,000          21,695,000          21,129,000
                                                                    ------------        ------------        ------------
         Net revenues                                                 40,308,000          37,851,000          38,211,000

Costs and expenses:
  Salaries and related costs                                          28,766,000          26,981,000          27,782,000

  General and administrative                                           9,444,000           9,060,000           9,864,000
                                                                    ------------        ------------        ------------
Income before other income and taxes                                   2,098,000           1,810,000             565,000
                                                                    ------------        ------------        ------------
Other income (expense):

  Interest income                                                        254,000             346,000             311,000

  Gain (loss) on sale of equipment, and other assets                       4,000              (6,000)             27,000

  Equity in net income of joint venture                                  175,000              97,000              28,000

  Interest expense                                                       (50,000)                 --            (110,000)
                                                                    ------------        ------------        ------------
  Total other income, net                                                383,000             437,000             256,000
                                                                    ------------        ------------        ------------
Income before provision for income taxes                               2,481,000           2,247,000             821,000

Provision for income taxes                                               972,000             877,000             292,000
                                                                    ------------        ------------        ------------
Net income                                                             1,509,000           1,370,000             529,000

Other comprehensive income - change in unrealized gains
  (losses) on securities                                                  (4,000)              1,000              10,000

Comprehensive income                                                $  1,505,000        $  1,371,000        $    539,000
                                                                    ------------        ------------        ------------
Per share amounts:

  Basic earnings per share                                          $        .42        $        .35        $        .13

  Basic weighted average shares                                        3,604,000           3,932,000           3,929,000

  Diluted earnings per share                                        $        .41        $        .34        $        .13

  Diluted weighted average shares                                      3,674,000           3,973,000           3,929,000
                                                                    ============        ============        ============

</TABLE>

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





                                       27
<PAGE>   28
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                    Common Stock                   Accumulated                 Treasury Stock
                                 ------------------   Capital in      Other                  ------------------         Total
                                 Number of     Par    Excess of   Comprehensive   Retained   Number of              Stockholders'
                                  Shares      Value   Par Value      Income       Earnings     Shares     Amount       Equity
                                 ---------    -----   ----------  -------------   --------   ---------    ------    -------------
<S>                              <C>         <C>      <C>           <C>         <C>    <C>   <C>         <C>          <C>
Balance
February 29, 1996                3,865,610  $39,000   $13,949,000   $(17,000)   $ 8,494,000                           $22,465,000
   Issuance of common stock         83,184       --       253,000                                                         253,000
   Change in unrealized
       losses on
       available-for-sale
       securities                                                     10,000                                               10,000
   Net income                                                                       529,000                               529,000
                                 ---------  -------   -----------   --------    -----------   -------   -----------   -----------
Balance
February 28, 1997                3,948,794   39,000    14,202,000     (7,000)     9,023,000                            23,257,000
   Issuance of common stock         78,646    1,000       228,000                                                         229,000
   Change in unrealized
       losses on
       available-for-sale
       securities                                                      1,000                                                1,000
   Net income                                                                     1,370,000                             1,370,000
   Buy back of treasury shares                                                                400,475   $(1,971,000)   (1,971,000)
                                 ---------  -------   -----------   --------    -----------   -------   -----------   -----------
Balance
February 28, 1998                4,027,440   40,000    14,430,000     (6,000)    10,393,000   400,475    (1,971,000)   22,886,000
   Issuance of common stock         50,664    1,000       220,000                                                         221,000
   Change in unrealized
       losses on
       available-for-sale
       securities                                                     (4,000)                                              (4,000)
   Net income                                                                     1,509,000                             1,509,000
   Buy back of treasury shares                                                                 99,525      (471,000)     (471,000)
                                 ---------  -------   -----------   --------    -----------   -------   -----------   -----------
Balance
February 28, 1999                4,078,104  $41,000   $14,650,000   $(10,000)   $11,902,000   500,000   $(2,442,000)  $24,141,000
                                 ---------  -------   -----------   --------    -----------   -------   -----------   -----------
</TABLE>



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






                                       28
<PAGE>   29

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
For the Years Ended  February 28, 1999,  1998 and  1997                          1999             1998             1997
-------------------------------------------------------                       -----------      -----------      -----------
<S>                                                                           <C>              <C>              <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                    $ 1,509,000      $ 1,370,000      $   529,000
Adjustments to reconcile net income to net cash provided by operating
activities:
      Depreciation and amortization                                             1,300,000        1,333,000        2,295,000
      (Gain) loss on sale of equipment, other assets                               (4,000)           6,000          (27,000)
      Equity in net income of joint venture                                      (175,000)         (97,000)         (28,000)
      Deferred (prepaid) income taxes                                            (347,000)         442,000         (461,000)
      Changes in assets and liabilities:
         Decrease (increase) in accounts receivable, net                       (2,080,000)       1,636,000        2,596,000
         Decrease (increase) in costs and estimated earnings in excess of
             billings on uncompleted contracts, net                            (1,279,000)        (739,000)         248,000
         Decrease (increase) in prepaid expenses and other current assets         (16,000)         238,000          114,000
         Decrease in refundable income taxes                                           --               --          138,000
         (Decrease) increase in accounts payable, trade                           103,000         (882,000)        (230,000)
         (Decrease) increase in accrued payroll and expenses                     (383,000)         219,000         (319,000)
         Increase (decrease) in income taxes payable                              209,000         (261,000)         363,000
                                                                              -----------      -----------      -----------
                  Net cash (used in) provided by operating activities          (1,163,000)       3,265,000        5,218,000
                                                                              -----------      -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase  in available-for-sale securities                                       (322,000)         (64,000)        (700,000)
Proceeds from disposal of equipment                                               155,000           82,000          216,000
Acquisition of property and equipment                                          (1,972,000)      (1,232,000)        (995,000)
(Increase) decrease in other assets                                              (148,000)          56,000         (108,000)
Decrease  in due from affiliates                                                       --               --          676,000
                                                                              -----------      -----------      -----------
                  Net cash used in investing activities                        (2,287,000)      (1,158,000)        (911,000)
                                                                              -----------      -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit                                                    8,830,000               --        3,542,000
Payments on line of credit                                                     (8,830,000)              --       (3,542,000)
Repayments of notes payable                                                            --               --         (990,000)
Repayments of long-term debt                                                           --               --       (2,659,000)
Proceeds from issuance of common stock, net                                       221,000          229,000          253,000
Acquisition of treasury stock                                                    (471,000)      (1,971,000)              --
                                                                              -----------      -----------      -----------
                  Net cash used in financing activities                          (250,000)      (1,742,000)      (3,396,000)
                                                                              -----------      -----------      -----------
Net increase (decrease) in cash and cash equivalents                           (3,700,000)         365,000          911,000
Cash and cash equivalents at beginning of year                                  4,594,000        4,229,000        3,318,000
                                                                              -----------      -----------      -----------
Cash and cash equivalents at end of year                                      $   894,000      $ 4,594,000      $ 4,229,000
                                                                              ===========      ===========      ===========
Supplemental disclosure of cash flow information:
      Interest  paid                                                          $    50,000      $        --      $   110,000
      Income taxes paid, net                                                  $ 1,110,000      $   696,000      $   248,000
Non cash investing activities:
      Note payable issued in connection with asset acquisition:               $   300,000      $        --      $        --

</TABLE>


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



                                       29
<PAGE>   30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GZA GeoEnvironmental Technologies, Inc. and subsidiaries and affiliate ("GZA")
prepares its financial statements in accordance with generally accepted
accounting principles and has adopted accounting policies and practices which
are generally accepted in the industries in which it operates. GZA, a
multi-disciplinary consulting firm, provides a wide range of environmental
consulting, remediation, geotechnical and information system services to
industrial, commercial, financial, public service, and government clients. The
following are our significant accounting policies.

Basis of Consolidation. The accompanying consolidated financial statements
include the accounts of GZA GeoEnvironmental Technologies, Inc. and its wholly
owned subsidiaries and affiliate. All material intercompany transactions and
balances have been eliminated.

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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from reported amounts that
reflect estimates that require the use of significant judgment by management.
Such amounts include, but are not limited to, allowances for doubtful accounts,
reserves for unbilled amounts and claims reserves.

Revenues and Cost Recognition. Revenue from engineering service contracts is
recognized as the services are provided. Revenue from long-term contracts is
generally recognized on the percentage-of-completion method. Under this method,
we recognize the proportion of the total profit anticipated from the contract
which the cost of the work completed bears to the estimated total cost of the
contractual work. For contracts which extend over more than one year, revisions
in cost and earnings estimates during the course of the work are reflected in
the period when the facts requiring the revision become known. Provisions for
estimated losses on uncompleted contracts are made in the period when it is
determined a loss may occur. For purposes of determining the percentage of
completion, contract costs include all material, labor, and indirect costs
related to contract performance. Contracts relating to government-funded
projects may include clauses under which the contract may be terminated for the
convenience of the government, or be subject to renegotiation at the request of
the government based upon certain contractual conditions. If such contracts are
terminated or renegotiated, we reflect any adjustments in the period they become
known.

Cash and Cash Equivalents. Cash and cash equivalents consist of cash on hand and
investments in fixed income securities with original maturity dates of three
months or less.

Concentration of Credit Risk. Financial instruments which potentially expose us
to concentrations of credit risk consist primarily of trade accounts receivable
and costs and estimated earnings in excess of billings on uncompleted contracts.
We have not experienced significant losses related to receivables from
individual customers or groups of customers in a particular industry or
geographic area. Due to these factors, no additional credit risk beyond amounts
provided for collection losses is believed present in our accounts receivable
and costs and estimated earnings in excess of billings on uncompleted contracts.

Available-for-Sale Securities. Available-for-sale securities, consisting
primarily of tax exempt municipal bonds, taxable U.S. treasury notes and other
bonds and commercial paper, with original maturity dates of three months or
more, are carried at fair value. We limit the amount of our investments in any
one entity to minimize exposure to loss. The securities are reported at fair
value, with unrealized gains and losses excluded from earnings and reported as a
component of comprehensive income, and therefore as an adjustment to
stockholders' equity.

Property, Equipment and Depreciation. Property and equipment are stated at cost.
Additions and improvements, unless of a relatively minor amount, are
capitalized. Expenditures for normal maintenance and repairs are charged to
expense as incurred. The cost and related accumulated depreciation of property
and equipment sold or otherwise disposed of are eliminated from the accounts and
the resulting gains or losses are reflected in income. Depreciation is provided
using various straight-line and accelerated methods over the estimated useful
lives of the individual assets, which range from three to ten years. Leasehold
improvements are amortized on a straight-line basis over the estimated useful
life of the improvement or the remaining life of the lease, whichever is
shorter.




                                       30

<PAGE>   31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Other Assets. Other assets consist principally of investments in unconsolidated
companies and the excess of cost over net assets acquired resulting from
acquisitions of businesses (goodwill). Amortization of these costs is computed
on a straight-line basis over the estimated useful life of other assets, ranging
from ten to twenty-five years. For the fiscal years ended February 28,
1999, 1998 and 1997, we recorded goodwill amortization expense of $29,000,
$19,000 and $439,000, respectively.

We periodically review the propriety of carrying amounts of our long-lived and
intangible assets, and periodically review the amortization periods, to
determine whether current events and circumstances warrant adjustments to the
carrying value or estimated useful lives. At each balance sheet date, management
evaluates whether there has been a permanent impairment in the value of such
assets by assessing the carrying value against anticipated future operating
results. Factors which management considers in performing the assessment include
past and projected operating results, trends and prospects. During fiscal 1997
we wrote off $400,000 of goodwill related to prior years' acquisitions.

Income Taxes. We account for income taxes pursuant to the Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," under which the
liability method is used to account for deferred income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.

Computation of Earnings Per Share. Basic earnings per share is computed using
the weighted average number of common shares outstanding during the period.
Diluted earnings per share is computed using the weighted average number of
common shares outstanding during the period, including the dilutive effect of
common stock equivalents. Stock options having an exercise price below the
average fair market value of our common stock during the fiscal year are deemed
to be a common stock equivalent.

Newly Issued Accounting Standards. In 1999, we adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income", which
establishes standards for the reporting and display of comprehensive income and
its components.

In 1999, we adopted Statement of Financial Accounting Standards No. 131,
"Disclosure about Segments of an Enterprise and Related Information." This
statement revised guidelines for determining an entity's operating segments and
the type of financial information to be disclosed. The adoption of this
statement had no impact on the financial statements as we have one operating
segment.

Reclassification. Certain reclassifications have been made to the prior years'
financial statements to conform to the current presentation.




                                       31
<PAGE>   32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. CONDENSED FINANCIAL INFORMATION OF AFFILIATE

The condensed financial information of GZA's affiliate, GZA GeoEnvironmental of
New York, at February 28, 1999 and 1998 and for each of the three years in the
period ended February 28, 1999 is as follows:


CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                         1999          1998
                                                      ----------     ----------
<S>                                                   <C>            <C>

Total assets                                          $1,961,000     $1,038,000
                                                      ==========     ==========
Total liabilities                                     $1,035,000     $  144,000
                                                      ----------     ----------
Total stockholders' equity                            $  926,000     $  890,000
                                                      ==========     ==========
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS
                                          1999           1998           1997
                                       ----------     ----------     ----------
<S>                                    <C>            <C>            <C>

Net revenues                           $1,509,000     $1,099,000     $1,227,000
                                       ----------     ----------     ----------
Net income (loss)                      $   36,000     $    4,000     $ (378,000)
                                       ==========     ==========     ==========

</TABLE>

Approximately $164,000, $198,000 and $235,000 of net revenues were billed to GZA
in fiscal 1999, 1998 and 1997, respectively.

NOTE 3. AVAILABLE-FOR-SALE SECURITIES

Unrealized losses on available-for-sale securities at February 28, 1999 and 1998
were approximately $10,000 and $6,000, respectively, net of deferred taxes. The
maturities of available-for-sale securities held at February 28, 1999 are as
follows:


Within one year                                                      $  452,000
From 1-5 years                                                        3,385,000
                                                                     ----------
Total                                                                $3,837,000

Certain of these available-for-sale securities have maturities in excess of one
year but are classified as current assets consistent with their use. Gross
realized gains and losses from available-for-sale securities were immaterial to
GZA's operating results.

NOTE 4. ACCOUNTS RECEIVABLE, NET
Accounts receivable consist of the following at February 28:

<TABLE>
<CAPTION>
                                                         1999            1998
                                                     -----------     -----------
<S>                                                  <C>             <C>

Accounts receivable, principally trade               $15,179,000     $11,410,000
Retainage                                                982,000         912,000
                                                     -----------     -----------
                                                      16,161,000      12,322,000
Less - Allowance for doubtful accounts                 2,658,000         899,000
                                                     -----------     -----------
                                                     $13,503,000     $11,423,000
                                                     ===========     ===========
</TABLE>

All amounts billed under retainage provisions of long-term contracts are
expected to be collected within one year of completion of the contracts.




                                       32
<PAGE>   33
NOTE 5. COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED
        CONTRACTS, NET

Costs and estimated earnings in excess of billings on uncompleted contracts,
net, which represent revenues earned but not billed under the terms of the
related contracts, are as follows, as of February 28:

<TABLE>
<CAPTION>
                                                         1999           1998
                                                      ----------     ----------
<S>                                                   <C>            <C>

Costs incurred on uncompleted contracts               $4,539,000     $4,168,000
Estimated earnings                                     3,479,000      3,093,000
                                                      ----------     ----------
                                                      $8,018,000     $7,261,000
                                                      ==========     ==========
</TABLE>

Included in unbilled costs and estimated earnings on uncompleted contracts are
reserves of $396,000 and $582,000 as of February 28, 1999 and 1998,
respectively, based on management's estimates of the contract values. Management
continuously evaluates and adjusts specific reserves based on progress of
contract negotiations and management's judgment of the ultimate contract value.
At the point when material changes are renegotiated or known, GZA reflects the
appropriate adjustments. Costs incurred on uncompleted contracts are typically
billed at the end of a two-week or four-week billing cycle.

NOTE 6. PROPERTY AND EQUIPMENT, NET

Property and equipment are stated at cost and consist of the following as of
February 28:

<TABLE>
<CAPTION>
                                                         1999            1998
                                                       ----------     ----------
<S>                                                    <C>            <C>

Machinery and equipment                               $ 3,619,000     $ 3,103,000
Laboratory and technical equipment                      3,254,000       3,448,000
Furniture, fixtures and computer equipment              7,232,000       7,387,000
Motor vehicles, rigs and trucks                           827,000         748,000
Leasehold improvements                                  2,408,000       2,495,000
                                                      -----------     -----------
                                                       17,340,000      17,181,000
Less - Accumulated depreciation and amortization       11,439,000      11,837,000
                                                      -----------     -----------
                                                       $5,901,000     $ 5,344,000
                                                      ===========     ===========
</TABLE>

Depreciation expense for the years ended February 28, 1999, 1998 and 1997 was
$1,289,000, $1,315,000 and $1,857,000, respectively.

NOTE 7. REVOLVING LINE OF CREDIT AND TERM LOAN FACILITY

GZA has entered into two financing arrangements with a financial institution
(the "Bank"). We have available an unsecured revolving line of credit under
which we can borrow up to $5,500,000 in a combination of cash and letters of
credit, with interest payable monthly at the Bank's Corporate Base Rate, as
defined, or the applicable LIBOR rate plus 200 basis points. Under the terms of
the line of credit, we are required to maintain a minimum net worth, working
capital, current ratio, quick ratio, tangible net worth and cash flow coverage
ratio. There were no borrowings under this revolving credit agreement at
February 28, 1999 and 1998. We had no letters of credit outstanding at February
28, 1999 or 1998.

GZA also has available a $4,500,000 term loan facility, providing for term
borrowings amortized through July 31, 2000 bearing interest at a variable rate
equal to the Bank's Corporate Base Rate, as defined, or a fixed rate over the
term of the loan. There were no borrowings under the term loan facility at
February 28, 1999 or 1998. The term loan facility requires maintenance of the
same ratios and financial covenants as the revolving line of credit.



                                       33
<PAGE>   34

NOTE 8. ACCRUED PAYROLL AND EXPENSES

Accrued payroll and expenses consist of the following at February 28:


<TABLE>
<CAPTION>
                                                             1999        1998
                                                         ----------   ----------
<S>                                                      <C>          <C>

Accrued payroll and related benefits                     $3,368,000   $3,230,000
Legal and claims reserves                                   266,000      675,000
Other                                                       266,000      378,000
                                                         ----------   ----------
                                                         $3,900,000   $4,283,000
                                                         ==========   ==========


NOTE 9. EARNINGS PER SHARE (EPS)

<CAPTION>
                                            For the Year Ended February 28, 1999
                                            ------------------------------------
                                                            Shares     Per share
                                              Income        (000s)      Amount
                                            ----------      ------     ---------
<S>                                         <C>             <C>          <C>

Basic EPS
Income available to common shareholders     $1,509,000      3,604        $ .42
                                            ----------      -----        -----
Effect of dilutive securities
    Stock options                                   --         70           --
                                            ----------      -----        -----
Diluted EPS
Income available to common shares and
    common share equivalents                $1,509,000      3,674        $ .41
                                            ==========      =====        =====


<CAPTION>
                                            For the Year Ended February 28, 1998
                                            ------------------------------------
                                                            Shares     Per share
                                              Income        (000s)      Amount
                                            ----------      ------     ---------
<S>                                         <C>             <C>          <C>

Basic EPS
Income available to common shareholders     $1,370,000      3,932        $ .35
                                            ----------      -----        -----
Effect of dilutive securities
    Stock options                                   --         41           --
                                            ----------      -----        -----
Diluted EPS
Income available to common shares and
    common share equivalents                $1,370,000      3,973        $ .34
                                            ==========      =====        =====


<CAPTION>
                                            For the Year Ended February 28, 1997
                                            ------------------------------------
                                                            Shares     Per share
                                              Income        (000s)      Amount
                                            ----------      ------     ---------
<S>                                         <C>             <C>          <C>

Basic and Diluted EPS
Income available to common shareholders     $  529,000      3,929        $ .13
                                            ==========      =====        =====


</TABLE>



                                       34

<PAGE>   35

NOTE 10. TREASURY STOCK

In 1997, the Board of Directors authorized the repurchase of up to 500,000
shares of GZA's common stock in the open market at prevailing prices. The amount
and timing of stock repurchases depend on market conditions, share price and
other factors. During the year ended February 28, 1999 and 1998, we repurchased
99,525 and 400,475 shares of common stock, at a cost of $471,000 and $1,971,000,
which includes transaction fees, respectively.

NOTE 11. STOCK OPTION AND EMPLOYEE STOCK PURCHASE PLAN

Under GZA's 1989 Incentive Stock Option Plan, as amended (the "Incentive Plan"),
options to purchase shares of common stock may be issued to key employees
including executive officers and directors who are employees. The Incentive Plan
is administered by our Board of Directors. Option prices may not be less than
fair market value on the date of grant and terms of options may not be more than
ten years. All Incentive Plan options are non-assignable and vest over a
five-year period. The Incentive Plan terminates on May 31, 1999 or when all
options issuable thereunder have been exercised.

The number of shares reserved for issuance under the Incentive Plan is 510,000
shares. During 1996 and 1997, the Board of Directors approved reductions, from
$5.70 to $5.25 and $5.25 to $3.50, respectively, in the exercise price of
outstanding options under the Incentive Plan. The reduced exercise prices were
not less than fair market value of our common stock on the date of the
reductions and therefore did not result in compensation expense charges.

Information related to the Incentive Plan is summarized as follows:


<TABLE>
<CAPTION>
                                             Incentive Stock Options Outstanding
                                             -----------------------------------
                                             Number of               Range of
                                              Shares             Exercise Prices
                                             ---------           ---------------
<S>                                          <C>                 <C>

Balance at February 29, 1996                  248,278            $5.25
Granted                                        89,200             3.50  -  5.25
Cancelled                                     (32,600)            3.50  -  5.25
                                             --------            --------------
Balance at February 28, 1997                  304,878             3.50
Granted                                        10,000             3.50
Cancelled                                     (18,200)            3.50
Exercised                                      (3,600)            3.50
                                             --------            --------------
Balance at February 28, 1998                  293,078             3.50
Granted                                         2,000             5.00
Cancelled                                     (16,200)            3.50
Exercised                                           0             3.50
                                             --------            --------------
Balance at February 28, 1999                  278,878            $3.50
                                             --------            --------------
</TABLE>


As of February 28, 1999, 1998 and 1997 options for 234,878 , 224,158 and 199,348
shares, with weighted-average exercise prices of $3.50, $3.50 and $3.50 (giving
effect to the option repricing in 1997) were exercisable. As of February 28,
1999 options to purchase 227,522 shares were available to be granted under the
Incentive Plan. The weighted-average remaining contractual life of the options
outstanding is 2.6 years.

Under GZA's 1989 Non-Qualified Stock Option Plan (the "Non-Qualified Plan"),
non-qualified stock options to purchase up to 15,000 shares of common stock may
be issued to key employees, executive officers and directors of GZA. The
Non-Qualified Plan is administered by our Board of Directors. All Non-Qualified
Plan options are non-assignable and vest over a five-year period. The
Non-Qualified Plan terminates on May 31, 1999 or when all options issuable
thereunder have been exercised.

During fiscal 1997, the Board of Directors approved a reduction, from $5.25 to
$3.50, in the exercise price of outstanding options under the Non-Qualified
Plan. The reduction of the exercise price of these options did not result in
compensation expense charges.

As of February 28, 1998, options to purchase 7,500 shares of common stock at an
exercise price of $3.50 per share were outstanding under the Non-Qualified Plan.
All such options were exercisable.

Under GZA's 1995 Stock Incentive Plan (the "Stock Plan"), we may grant certain
key employees, at no cost, shares of "restricted stock" of GZA in appreciation
of services. A condition of receipt of any award under the Stock Plan is that
the employee must either own,





                                       35
<PAGE>   36

or agree to acquire within one year, an equivalent number of shares. All shares
awarded under the Stock Plan vest over a five-year period. Unearned compensation
related to the award of restricted stock is recorded at the date of award based
on the fair market value of the shares against paid in capital, and is amortized
to expense over the applicable vesting period. The maximum number of shares that
may be granted under the Stock Plan is 200,000. Pursuant to the Plan, 4,432,
2,273, and 15,053 shares were issued to certain employees during fiscal years
ending 1999, 1998 and 1997, respectively.

We also maintain an employee stock purchase plan under which up to 220,000
shares of our common stock are available for purchase by our employees. Eligible
employees can purchase shares of the stock at the lower of 85% of the fair
market value of the stock on the first or last day of each six-month period
beginning on March 1 or September 1. Monies to purchase the shares are withheld
from an employee's pay through payroll deductions. Under the plan, 10,466,
11,102 and 12,998 shares were purchased during fiscal 1999, 1998 and 1997,
respectively.

GZA applies Accounting Principles Board Opinion No. 25 in accounting for our
stock option and employee stock purchase plans. Accordingly, no compensation
cost has been recognized for our stock option plans. Had compensation cost for
our stock-based compensation plans been determined based on the fair market
value at the grant dates as calculated in accordance with Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," our net
income and diluted net income per common share amounts would have been reduced.
Our pro forma net income amounts would have been $1,433,000, $1,304,000 and
$485,000 for the fiscal years ended February 28, 1999 and 1998 and 1997. Our pro
forma diluted net income per share would have been $0.39, $0.32, and $0.12 for
the fiscal years ended February 28, 1999 and 1998 and 1997, respectively.

The weighted-average fair value of options granted during 1999, 1998 and 1997
was $2.13, $1.47 and $1.47 per option, respectively. The fair value of these
options at date of grant was estimated using the Black-Scholes model with the
following assumptions for fiscal years 1999, 1998 and 1997: risk free interest
rates of 5.61%, 6.16% and 6.68%, respectively; dividend yields of 0%; volatility
factors of the expected market price of our common stock of 38%, 43% and 43%,
respectively; and a weighted average expected life of the options of five years.

NOTE 12.  PURCHASE OF OTHER ASSETS

On December 31, 1998, we acquired the business assets of Tonis Raamot, PE and
the personal property of Raamot Associates, PC of New York, NY. Raamot
Associates is a Manhattan-based geotechnical and construction engineering firm,
with ongoing projects including high-rise buildings, industrial and
manufacturing facilities, waterfront structures, large dams and storage
reservoirs, railroads, highways, tunnels, and sewage treatment plants. The total
acquisition price was $500,000 which consisted of $50,000 for the furniture and
fixtures of Raamot Associates, $50,000 for a covenant not-to-compete by Mr.
Raamot, and other intangible assets totaling $400,000. We also secured the
services of the former employees of Raamot Associates, PC and sublet the
premises. The furniture and fixtures are depreciated over estimated useful lives
ranging from three to five years. The covenant not-to-compete is amortized over
three years, and the intangible assets are amortized over ten years. We paid
$200,000 in cash upon consummation of the transaction, and gave the seller a
$300,000 non-interest bearing note for the remaining purchase price. This note
becomes due on December 31, 1999.





                                       36
<PAGE>   37
NOTE 13. INCOME TAXES

The provision for income taxes consisted of the following for fiscal years:

<TABLE>
<CAPTION>
                                               1999         1998         1997
                                            ----------    --------    ---------
<S>                                         <C>           <C>         <C>
Currently payable:
State                                       $  303,000    $109,000    $ 151,000
Federal                                      1,016,000     326,000      602,000
                                            ----------    --------    ---------
    Total  current                           1,319,000     435,000      753,000
                                            ----------    --------    ---------
Deferred (prepaid):
State                                          (83,000)     98,000     (121,000)
Federal                                       (264,000)    344,000     (340,000)
                                            ----------    --------    ---------
    Total deferred (prepaid)                  (347,000)    442,000     (461,000)
                                            ----------    --------    ---------
    Total provision for income taxes        $  972,000    $877,000    $ 292,000
                                            ==========    ========    =========
</TABLE>

Deferred income taxes are provided to account for temporary differences between
the financial reporting basis and income tax basis of GZA's assets and
liabilities using the liability method of accounting for income taxes. Deferred
taxes represent the future income tax effect of reported differences between the
book and tax bases of GZA's assets and liabilities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reconciliations of the U.S. federal statutory income tax rate to the effective
income tax rate are as follows for fiscal years:
<TABLE>
<CAPTION>
                                                       1999     1998      1997
                                                       ----     ----      ----
<S>                                                      <C>      <C>       <C>

U.S. federal statutory income tax rate                   34%      34%       34%
State and foreign income tax, net of
      federal income tax benefit                          6        6         3
Interest income exempt from federal tax                  --       --        (3)
Reduction of valuation allowance                         (1)      (1)       --
Non-deductible expenses                                  --       --         2
                                                       ----     ----      ----
         Effective income tax rate                       39%      39%       36%
                                                       ====     ====      ====
</TABLE>

GZA's net deferred tax asset at February 28, 1999 and 1998 consists of gross
deferred tax liabilities of $753,000 and $656,000 and deferred tax assets of
$1,763,000 and $1,339,000, respectively. GZA's net operating loss carryforwards
expire in fiscal 2010 through fiscal 2013. The components of GZA's net deferred
tax assets as of February 28, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                            1999        1998
                                                         ---------    ---------
<S>                                                      <C>          <C>
Cash versus accrual method of accounting                 $ 167,000    $ 164,000
Depreciation and amortization                              586,000      492,000
Net operating loss carryforwards                          (214,000)    (231,000)
Allowance for doubtful accounts                           (945,000)    (359,000)
Other accrued expenses                                    (604,000)    (749,000)
Valuation allowance                                        376,000      396,000
                                                         ---------    ---------
Total net deferred tax assets                            $(634,000)   $(287,000)
                                                         =========    =========

The components of GZA's deferred income tax provision (benefit) for the years
ended February 28, 1999 and 1998 are as follows:

<CAPTION>
                                                           1999         1998
                                                         ---------     --------
<S>                                                      <C>           <C>
Cash versus accrual method of accounting                 $   3,000     $ 24,000
Depreciation and amortization                               94,000      266,000
Net operating loss carryforwards                            17,000      (21,000)
Allowance for doubtful accounts                           (586,000)     (41,000)
Other accrued expenses                                     145,000      240,000
Valuation allowance                                        (20,000)     (26,000)
                                                         ---------     --------
Total deferred income tax provision (benefit)            $(347,000)    $442,000
                                                         =========     ========
</TABLE>




                                       37
<PAGE>   38

NOTE 14. RETIREMENT PLAN

GZA maintains a Profit Sharing Plan under Section 401(k) of the Internal Revenue
Code which covers all employees who meet minimum age and service requirements.
Annual Company contributions are determined by the Board of Directors. The year
end for the profit sharing plan is December 31. Amounts contributed by us under
the plan vest according to a seven-year vesting schedule. To participate in the
plan, an employee must contribute a minimum of 2% of his or her base salary, and
may contribute additional amounts. Participant contributions are fully vested at
all times. Our contributions to the plan were $660,000, $661,000, and $682,000
for fiscal 1999, 1998 and 1997, respectively. In fiscal 1999, 1998 and 1997, the
Board of Directors voted to make 25% of our contribution to the Plan in stock of
GZA. As a result, in fiscal years 1999, 1998 and 1997, respectively, 38,152,
32,445, and 58,064 shares of our stock (having a total fair value of
approximately $172,000, $165,000, and $171,000 on the date of contribution) were
contributed in addition to cash contributions of $488,000, $496,000, and
$511,000, respectively.

NOTE 15. RELATED PARTY TRANSACTIONS

GZA leases office space from certain stockholders and from entities owned by
certain stockholders and employees. Lease payments, net of sublease income, to
these entities totaled $868,000, $901,000, and $957,000 in fiscal 1999, 1998 and
1997, respectively.

GZA provides geotechnical design, instrumentation and other consulting services,
on a contracting and subcontracting basis, to a company and affiliated entity of
which director of GZA is Chairman of the Board of Directors. In fiscal 1999, we
billed an aggregate of $5,100,000 for services provided to this company and
affiliated entity.

NOTE 16. COMMITMENTS AND CONTINGENCIES
Lease Commitments. GZA leases certain facilities and equipment under the terms
of various noncancellable operating leases, including leases with related
parties described in Note 15. Lease terms generally range from two to five
years. Additionally, we lease certain equipment under operating leases.

Future minimum lease payments under noncancellable operating leases as of
February 28, 1999 are as follows:

<TABLE>
<C>                                                                  <C>

2000                                                                 $1,925,000
2001                                                                  1,648,000
2002                                                                    628,000
2003                                                                    406,000
2004                                                                    180,000
                                                                     ----------
Total minimum lease payments                                         $4,787,000
                                                                     ==========
</TABLE>

Rent expense charged to operations was $2,061,000, $2,137,000 and $2,312,000 in
fiscal 1999, 1998 and 1997, respectively.

Claims and Legal Proceedings. GZA is a party to several legal actions claiming
damages in connection with environmental remediation, environmental consulting,
and construction projects arising in the normal course of business. Management
believes that the outcomes of the legal actions to which it is a party will not,
in the aggregate, have a material adverse effect on the results of operations or
financial condition of GZA.

Our services involve risks of significant liability for environmental and
property damage, personal injury, economic loss, and costs assessed by
regulatory agencies for which insurance coverage or the contractual provisions
may apply. Claims may potentially be asserted against us under federal and state
statutes, common law, contractual indemnification agreements or otherwise.





                                       38
<PAGE>   39

SUPPLEMENTAL INFORMATION
PRICE RANGE OF COMMON STOCK (UNAUDITED)

GZA's common stock is traded in the over-the-counter market under the symbol
"GZEA" and is included in the National Association of Securities Dealers, Inc.
National Market System ("NASDAQ"). The following table sets forth the quarterly
range of high and low sale prices per share of GZA's common stock for fiscal
year 1999, as reported by NASDAQ.

<TABLE>
<CAPTION>

Fiscal 1999:                                                High          Low
                                                           ------       -------
<S>                                                        <C>         <C>

First Quarter                                              5 3/16         4 1/2
Second Quarter                                             5 3/16       4 11/16
Third Quarter                                               4 7/8         4 1/8
Fourth Quarter                                                  5             4

</TABLE>

As of May 14, 1999, GZA's common stock was held by 339 holders of record. GZA
has never paid cash dividends on its common stock, and does not intend to pay
cash dividends in the foreseeable future. GZA currently intends to retain any
future earnings to finance growth.

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>

Three months ended                                 2/28/99     11/30/98     8/31/98     5/31/98
                                                   -------     --------     -------     -------
<S>                                               <C>           <C>         <C>         <C>

In thousands except per share amounts
Revenues                                           $14,673      $17,146     $15,330     $13,504
Net revenues                                         9,516       10,674      10,517       9,601
Income (loss) before other income and tax             (41)          800         682         657
Net income                                              55          512         470         472
Basic earnings per share                           $   .02      $   .14     $   .13     $   .13
Diluted earnings per share                         $   .01      $   .14     $   .13     $   .13

<CAPTION>
Three months ended                                 2/28/98     11/30/97     8/31/97     5/31/97
                                                   -------     --------     -------     -------
<S>                                               <C>           <C>         <C>         <C>

In thousands except per share amounts
Revenues                                           $15,406      $15,900     $15,384     $12,856
Net revenues                                         9,011        9,686       9,565       9,589
Income before other income and tax                     157          747         398         508
Net income                                             221          503         280         366
Basic earnings per share                           $   .07      $   .12     $   .07     $   .09
Diluted earnings per share                         $   .06      $   .12     $   .07     $   .09

</TABLE>




                                       39

<PAGE>   40

CORPORATE INFORMATION

Directors and Executive Officers

Donald T. Goldberg
Chairman of the Board of Directors

Andrew P. Pajak
Director
President and
Chief Executive Officer

Joseph P. Hehir
Chief Financial Officer
Executive Vice President

M. Joseph Celi
Director
Executive Vice President
GZA GeoEnvironmental, Inc.

Joseph D. Guertin
Director
Senior Vice President
GZA GeoEnvironmental, Inc.

Timothy W. Devitt
Director

William E. Hadge
Director
Senior Vice President
GZA GeoEnvironmental, Inc.

Lewis Mandell
Director

Thomas W. Philbin
Director

John E. Ayres
Executive Vice President

Richard M. Simon
Secretary
Executive Vice President

STOCKHOLDER INFORMATION

Independent Accountants
PricewaterhouseCoopers LLP
Boston, Massachusetts

Counsel
Foley, Hoag & Eliot LLP
Boston, Massachusetts

Registrar and Transfer Agent
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Tel 212/936-5100

Common Stock Listing
The common stock of GZA GeoEnvironmental Technologies, Inc. is traded over the
counter in the NASDAQ national market quotation system under the symbol GZEA.


Annual Meeting
The Annual Meeting of Stockholders will be held at 10:00 a.m. on July 13, 1999
at the Sheraton Needham Hotel, 100 Cabot Street, Needham, Massachusetts

Stockholders Reports
A copy of the Company's Annual Report on Form 10-K, as filed with the Securities
and Exchange Commission, may be obtained without charge by writing to Investor
Relations, GZA GeoEnvironmental Technologies, Inc., 320 Needham Street, Newton
Upper Falls, Massachusetts 02464


Corporate Headquarters
GZA GeoEnvironmental
Technologies, Inc.
320 Needham Street
Newton Upper Falls
Massachusetts 02464
Tel 617/969-0050
Fax 617/969-0715


Operations
The Company conducts all its operations through its wholly owned subsidiaries
GZA GeoEnvironmental, Inc. (GZA) and GZA Remediation, Inc. (GZAR); and through
GZA's wholly owned subsidiary GZA Drilling, Inc.; through the Company's
affiliate Aquaterra Environmental Consultants Limited, a joint venture of the
Company and Carl Bro Group (UK) Ltd.; and through the Company's affiliate
Goldberg-Zoino Associates of New York, P.C. (doing business as GZA
GeoEnvironmental of New York), a New York professional service corporation
wholly owned by officers, directors, and stockholders of the Company. The
Company was incorporated in Delaware on May 5, 1989.



                                       40