UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X]   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934 for the fiscal year ended December 31, 2005

|_|   Transition Report under Section 13 of 15(d) of the Securities Exchange Act
      of 1934

For the transition period from ___________ to __________

                         Commission file number 1-14827

                       EVCI Career Colleges Holding Corp.

                 (Name of small business issuer in its charter)

             Delaware                                   06-1488212
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)

           1 Van Der Donck Street, 2nd Floor, Yonkers, New York 10701
               (Address of principal executive offices) (Zip code)

         Issuer's telephone number, including area code: (914) 623-0700

         Securities registered under Section 12(b) of the Exchange Act:

 Title of each class                  Name of each exchange on which registered
 common stock,                                   Boston Stock Exchange
 $.0001 par value per share

         Securities registered under Section 12(g) of the Exchange Act:
                                  common stock,
                           $.0001 par value per share
                                (Title of class)

      Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes |_| No |X|.

      Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|

      Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 |_|

<PAGE>

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will 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-KSB
or any amendment to this form 10-K. |_|

      Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Act (check
one).

<TABLE>
<S>                                    <C>                               <C>
Large accelerated filer |_|            Accelerated filer |X|             Non-accelerated filer |_|
</TABLE>

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

      The aggregate market value of the issuer's common equity held by
non-affiliates was $77,827,258 the closing price of $6.30 for its common stock
on The NASDAQ Capital Market on June 30, 2005.

      As of March 28, 2006, 12,640,700 shares of the issuer's common stock were
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Issuer's definitive proxy statement for its 2006 annual meeting of
stockholders is incorporated into Part III of this Form 10-K. Yes |X| No |_|

<PAGE>

                       EVCI CAREER COLLEGES HOLDING CORP.

                                    Form 10-K

                          Year Ended December 31, 2005

                                TABLE OF CONTENTS

                                     PART I
<TABLE>
<CAPTION>
Item                                                                                   Page
----                                                                                   ----
<S>                                                                                    <C>
1.       Description of Business                                                          1
                      General                                                             1
                      About EVCI                                                          2
                      Significant Developments                                            2
                      Target Market                                                       4
                      Availability of Grants and Loans                                    5
                      Tuition                                                             6
                      2005 and Spring 2006 Enrollments                                    6
                      Our Operating Strategy                                              7
                      Our Growth Strategy                                                11
                      Marketing                                                          11
                      Accreditation                                                      12
                      Government Regulation of Proprietary Schools                       13
                      Competition                                                        16
                      Employees                                                          17
1A.                   Risk Factors                                                       18
1B.                   Unresolved Staff Comments                                          33
2.       Description of Property                                                         34
3.       Legal Proceedings                                                               35
4.       Submission of Matters to a Vote of Security Holders                             35

                                     PART II

5.       Market for Common Equity, Related Stockholder
                  Matters and Small Business Issuer Purchases of Equity
                  Securities                                                             36
6.       Selected Financial Data                                                         37
7.       Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                    38
              7A. Quantitative and Qualitative Disclosures About
                  Market Risk                                                            51
8.       Financial Statements                                                            51
9.       Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosures                                   51
               9A. Controls and Procedures                                               52
</TABLE>

<PAGE>

                                TABLE OF CONTENTS
                                   (Continued)

<TABLE>
<CAPTION>
Item                                                                                   Page
----                                                                                   ----
<S>                                                                                    <C>
            9B. Other Information                                                        58

                                    PART III
              9, 10, 11, 12 and 14                                                       58
             13.   Exhibits, List and Reports on Form 8-K                                58

             SIGNATURES                                                                  68
</TABLE>

<PAGE>

                                     PART I

Item 1.    Description of Business.

General

      EVCI Career Colleges Holding Corp. provides on-campus career college
education through its subsidiaries. Interboro Institute, Inc. ("Interboro"),
Technical Career Institutes, Inc. ("TCI"), and Pennsylvania School of Business,
Inc. ("PSB"). Unless the context requires otherwise, references below to EVCI in
discussions about the operations of its colleges, are to those colleges,
collectively. EVCI as a separate entity, is neither accredited nor licensed to
operate any college and, accordingly, is solely a holding company.

      Interboro. Interboro offers college degree programs leading to the
Associate in Occupational Studies degree and Associate in Applied Sciences
degree. It has a main campus in mid-town Manhattan and an extension center in
Flushing, New York and in the Washington Heights section of Manhattan, New York.
Interboro also has a college site in Yonkers, New York that, starting with the
spring 2006 semester, is not accepting new students until either the New York
State Education Department ("SED") approves Yonkers as an extension center in
the future, or enrollment does not exceed approximately 35 full-time students.
Each of these sites has an annex that became operational for the fall semester
2004. Interboro opened additional annexes in Flushing and Washington Heights at
the beginning of the fall 2005 semester. Interboro is accredited by the New York
State Board of Regents. We acquired Interboro in January 2000. Approximately 76%
of our 2005 net revenue was generated by Interboro. Interboro's 2006 spring
semester enrollment is approximately 3,000 students.

      TCI. We acquired TCI on September 16, 2005. TCI offers two-year Associate
Degree programs and certificate programs, with an emphasis on technology. The
main campus is on 31st Street in Manhattan, diagonally across from Penn Station,
and is supported by a nearby annex. TCI is accredited by the New York State
Board of Regents. In addition, TCI was recently awarded regional accreditation
by the Middle States Commission on Higher Education, which must approve TCI's
change of control to EVCI. The Middle States is located at 3624 Market Street,
Philadelphia, PA 19104-3680. TCI's 2006 spring semester enrollment is
approximately 3,000 students.

      PSB. We acquired PSB in January 2005. PSB offers two Associate in
Specialized Business Degree programs and two diploma programs in information
technology as well as three recently authorized business diploma programs. As
permitted by the Pennsylvania State Education Department, after six months of
teaching the three business diploma programs, PSB can seek authorization to
award the Associate in Special Business Degree for those programs. PSB is
accredited by the Accrediting Commission of Career Schools and Colleges of
Technology. PSB relocated to downtown Allentown, Pennsylvania in May 2005. PSB's
2006 spring semester enrollment is approximately 160 students.


                                       1
<PAGE>

About EVCI

      EVCI was organized in March 1997. We completed an underwritten initial
public offering of our common stock in the first quarter of 1999. In February
2004, we relocated our principal executive offices to 1 Van Der Donck Street,
2nd Floor, Yonkers, New York 10701. In August 2004, we changed our name to EVCI
Career Colleges Holding Corp. Our telephone number is (914) 623-0700. Our code
of ethics is available on our Internet website at www.evcinc.com. Click on
"About Us" and then on "Our Business Conduct Policies."

Significant Developments

      Our acquisition of TCI in September 2005 and events following our receipt
in October 2005 of compliance review reports relating to Interboro
(collectively, the "Draft Report") from SED are the most significant 2005
developments affecting our business.

      Acquisition of TCI

      After protracted negotiations, we bought TCI for reasons that include:

      o     TCI's excellent reputation as a two year technical college.

      o     TCI's location at 31st Street and Eighth Avenue in Manhattan,
            diagonally across from Penn Station, affords students, faculty and
            administrators easy access to TCI by mass transportation.

      o     TCI's primary target market is students from economically
            disadvantaged backgrounds who are living in the New York
            metropolitan area.

      o     The opportunity to reverse a trend of declining enrollments at TCI.

      o     The purchase price of $16 million in cash.

      o     The ability to finance the acquisition using $16 million of new bank
            borrowings.

      Draft Report from SED

      A brief summary of events relating to the Draft Report and Interboro's
responses follows:

      o     On October 19, 2005, EVCI announced receipt of, and summarized, the
            Draft Report. The Draft Report included findings, recommendations
            and determinations related to increasing admissions standards and
            improving academic standards and taking other measures to improve
            persistence and graduation rates. One of the proposed determinations
            by SED was to deny extension center status for EVCI's Yonkers site.
            In addition, the Draft Report alleged there were irregularities in
            Interboro's admissions practices.


                                       2
<PAGE>

      o     In response to those allegations of admissions irregularities, the
            Audit Committee of EVCI's Board of Directors engaged Ritzert &
            Leyton, P.C., a law firm with substantial experience in conducting
            internal investigations, to assist the Audit Committee in an
            extensive internal investigation.

      o     A report of the investigation was submitted to SED by Ritzert &
            Leyton, P.C. by letter dated November 21, 2005. In summary, the
            internal investigation concluded there were isolated irregularities
            committed by one tester and, probably, by one financial aid
            representative as well as markings on some test booklets, from prior
            usage, that should have been erased. However, the investigators
            concluded that none of the irregularities were systemic or known to
            exist or encouraged by executive management. The report also
            concluded that Interboro management and staff maintain a commitment
            to compliance with laws and regulations governing the proprietary
            school industry.

      o     In the remainder of Interboro's initial response to the Draft
            Report, Interboro agreed to accept most of the recommendations made
            by SED in the Draft Report.

      o     On December 5, 2005, EVCI announced that SED had denied extension
            center status for Interboro's Yonkers site and was requiring
            Interboro to downsize its enrollment at all its locations in
            accordance with a plan that had to be submitted by Interboro to SED.

      o     On January 13, 2006, EVCI announced that SED had imposed enrollment
            caps on students enrolled for the first time at Interboro during the
            spring 2006 through spring 2007 semesters. The caps limit initial
            first-time enrollment and first-time enrollment after approximately
            the third week of the semester as follows:

                                      Initial       After approximately 3 Weeks*
                                      -------       ----------------------------
            Spring 2006                 900                   850
            Summer 2006                 900                   850
            Fall 2006                 1,080                 1,000
            Spring 2007               1,080                 1,000

            ---------------------------
              *  Caps are approximate to allow for differences in purge rates.
                 It takes approximately three weeks to purge students whose
                 attendance is unsatisfactory.

      o     The enrollment caps are tied to an SED expectation that at least 65%
            of Interboro students who are first enrolled at Interboro for either
            the spring 2006 or summer 2006 semesters will persist to their
            second semester of attendance at Interboro. After monitoring by SED
            with site visits in the spring and summer of 2006, SED may determine
            that adjustments to the enrollment caps are appropriate. During
            Interboro's spring 2007 semester, SED will determine what continuing
            enrollment caps, if any, are necessary.


                                       3
<PAGE>

      o     On February 3, 2006, EVCI announced that SED had requested Interboro
            and TCI to develop teach out plans for their students. This SED
            action was in response to a Regents Advisory Council on
            Postsecondary Accreditation recommendation that was based on
            concerns about Interboro's and EVCI's financial viability,
            notwithstanding the fact that the Regents Advisory Council did not
            have (nor did it request from EVCI) financial information regarding
            EVCI or Interboro that we believe is reasonably necessary to assess
            EVCI's financial viability. If, in the future SED determined it was
            necessary to close either or both schools, teach out plans would
            give students the opportunity to complete their course of study at
            other colleges. The EVCI announcement noted that Johanna-Duncan
            Poitier, Deputy Commissioner of SED's Office of Higher Education,
            was quoted in a recent New York Times article that the request for
            teach out plans "does not mean we expect to be closing them down,
            but there should be a plan because of the large number of students."

      o     EVCI submitted to SED Interboro's Institutional Effectiveness Plan,
            on February 22, 2006. By letter, dated March 13, 2006, SED advised
            EVCI of the following about the Plan: "in general, it satisfactorily
            addresses both the registration standards in Commissioner's
            Regulations and the findings and recommendations based on the
            Department's review in the spring 2005." The letter indicated that
            the effectiveness of specific components of the Plan "in promoting
            and assessing intended changes will be determined through careful
            internal and Department reviews." SED's letter directed
            effectiveness assessments to focus on contributions being made to
            "increased persistence and graduation rates."

      o     By letter to EVCI, dated March 14, 2006, SED itemized the documents
            that constitute the full final report of SED's review process that
            began with two site reviews in the spring 2005. The letter and those
            documents are filed as exhibits to this report. SED's letter advised
            that the information in Interboro's final response, dated February
            3, 2006, to the Draft Report regarding measures taken and planned
            "appear to be appropriate." The SED letter "extends the registration
            of Interboro's programs in accordance with the Commissioner's
            Regulations and Department practice for renewal." It also advised
            that SED is expecting additional information regarding the scope of
            implementation and on outcomes, noting that SED wants improvements
            in performance with respect to "(1) admission of students who have a
            reasonable prospect of academic success in the context of the
            institution's services and programs; and (2) a record of student
            persistence and serious achievement at the college level."

Target Market

      EVCI has chosen to concentrate its student recruiting efforts principally
on a specific niche, minority students that come from economically disadvantaged
backgrounds. A large percentage of the students in EVCI's target market do not
have a high school diploma or a general equivalency diploma (GED), and thus have
few educational opportunities available to them. However, they can evidence
their ability to perform college level work and be accepted to an EVCI college
by passing a federally-approved ability to benefit ("ATB") examination and by
demonstrating through interviews and other means that they appear to have the
necessary time, motivation and commitment to succeed at college.


                                       4
<PAGE>

      The substantial need and demand for the educational opportunities for ATB
students are largely due to the fact that approximately 50% of the students that
start in the New York City public school system do not graduate with a high
school diploma. In addition, there is a large and growing market of legal
immigrants lacking an American high school education or GED who may qualify for
admission to EVCI's colleges.

      Interboro believes its total student body consists of a higher percentage
of ATB students than almost all other colleges or universities that receive Pell
and TAP grants.

      Since its spring 2004 semester, TCI steadily increased its ATB student
population to approximately 50% of new enrollees. However, it is implementing
plans to attract a greater percentage of high school graduates than ATB
students.

      The PSB target market is demographically similar to the Interboro/ TCI
target market.

Availability of Tuition Grants and Loans

      Federal and state financial aid programs are available to pay for most of
the EVCI colleges' tuition costs. These are almost exclusively in the form of
need based grants and/or subsidized and unsubsidized loans.

      Almost all Interboro and TCI students fund a majority of their tuition
through federal Pell and Supplemental Educational Opportunity Grants (SEOG),
pursuant to Title IV of the Higher Education Act, and New York State Tuition
Assistance Program ("TAP") grants. The maximum grants per student are: Pell,
$2,025 and TAP, $2,500. During a single academic year the maximums are Pell,
$4,050 and TAP $5,000. Students can currently receive $7,500 in TAP funds for
three semesters in one academic year. However, this entitlement may be modified
by the New York State Legislature.

      Interboro and TCI also participate in the Title IV Federal Work Study
program, which allows a limited number of students to receive additional aid by
working while attending college.

      Some EVCI students pay over a period of time the portion, if any, of their
tuition and other costs, that are not covered by Pell, TAP or other grants.
Students who demonstrate exceptional need or have other extenuating
circumstances are sometimes given grants.

      TCI is the only EVCI college that participates in Title IV loan programs.
Approximately 25% of TCI's revenue for its fall 2005 semester was from the
proceeds of Title IV loans to TCI students. TCI's default rates have been less
than 3% for the past five years, well below the Title IV limit of 25% for each
of three years and 40% for one year. EVCI believes TCI has a very aggressive
default prevention program. While not required, TCI returns first semester loans
to lenders for those students who withdraw and fail to return the following
semester. Additionally, TCI returns the proceeds from loans made to its first
semester ATB and GED students to the DOE when those students complete a term but
do not meet its persistence criteria. EVCI and TCI believe that the risk of
higher loan default rates is significantly greater with ATB borrowers.


                                       5
<PAGE>

      Since it was acquired by EVCI, Interboro has chosen not to participate in
any federal Title IV loan programs because of concerns over loan default rates
that could potentially jeopardize its ability to participate in any Title IV
programs. It is, however, considering participation in Title IV loan programs in
the future.

      Some PSB students are eligible to fund their tuition through grants
awarded by the Pennsylvania Higher Education Assistance Agency ("PHEAA"). A
maximum of $3,500 in state grants can be obtained per award year. The grant
application deadline is May 1st for students currently enrolled and August 1st
for new students who have not received grants for the prior year.

Tuition

      Interboro's tuition is $4,300 per semester for most programs of study and
$4,400 for its Ophthalmic Dispensing program. This is lower than most all
private colleges and universities. Interboro's tuition can be funded through
full TAP and Pell grant levels totaling $4,525 per semester. Interboro students
who qualify for Pell and TAP grants that exceed Interboro's tuition generally
have the excess grant funds available to help pay for their books and
transportation.

      For 2005, Interboro students qualifying for financial aid received an
average of $1,815 in Pell grants and $ 2,255 in TAP grants, or a total averaging
$4,070 per semester. This total constitutes approximately 94% of Interboro's
tuition revenue for 2005.

      TCI's tuition per semester is currently $4,595 and will increase to $4,695
commencing the summer 2006 semester. TCI semester fees range from $125 to $250
and books and supplies range from $200 to $800, averaging $500. Approximately
62% of TCI's tuition revenue for its fall 2005 semester was from the proceeds of
Pell and TAP grants. However, TCI students need additional financial assistance
to pay their educational costs. This is mostly obtained from Title IV loans.

      PSB's tuition varies by program and enrollment status and currently
averages $3,600.

2005 and Spring 2006 Enrollments

      Full-time student enrollments increased each semester at our colleges over
the same semester of 2004:

                               Spring                Summer              Fall
                               ------                ------              ----

           2005                 3,700                 2,650              7,600*

           2004                 2,800                 1,975              3,900

        ---------------------------
        * Includes 2,994 TCI students.


                                       6
<PAGE>

      Spring 2006 enrollments are approximately as follows:

      Interboro has approximately 3,000 students including 640 new students; TCI
has approximately 3,000 students including 981 new students and PSB has 160
students including 53 new students. Interboro started the spring 2006 semester
with approximately 825 new students. Interboro believes its initial enrollments
for spring 2006 were negatively impacted by the adverse publicity relating to
the Draft Report, impact on employee morale and productivity of the Draft Report
and the internal investigation of Interboro's admissions practices and
distraction of management who worked on the responses to the Draft Report
including meetings with SED personnel. The damage to Interboro's reputation from
adverse publicity could negatively impact Interboro's ability to reach the SED
enrollment caps and its persistence and graduation goals.

Our Operating Strategy

      Key components of our operating strategy follow:

      Focus on career based academic curricula with transfer options

      Interboro offers educational programs principally in the following career
related areas of academic study:

      o     business administration: accounting and management

      o     paralegal studies

      o     computer technology: networking

      o     ophthalmic dispensing

      o     office technologies: medical office assistant and executive
            assistant

      o     security services and management

      TCI offers educational programs principally in the following career
related areas of academic study:

      o     Business and new media technology includes programs in business
            administration, accounting, digital media arts, office technology
            (general and medical) and computerized accounting systems
            technology.

      o     Computer and electronics technology includes technology programs in
            networking, electronic security systems, electronic engineering and
            rail electronics

      o     Climate control technology includes technology programs in HVAC and
            refrigeration

      Management sees a growing demand by employers for individuals possessing
career-oriented skills, in the degree majors and academic concentrations offered
at our colleges. We believe the experience and expertise of EVCI's colleges in
career oriented college education enables them to more effectively tailor their
marketing plans and to differentiate theirs from most of their competitors.


                                       7
<PAGE>

      Our curricula prepare students who want to transfer to four-year,
degree-granting colleges. A number of baccalaureate colleges have entered into
formal articulation agreements with Interboro and TCI under which they will
accept a student's full associate degree credits or a percentage of their
credits that translate to their curriculum. Many more colleges accept the
academic credits of Interboro and TCI transfer students without formal
articulation agreements.

      Provide a quality and caring educational experience

      Many EVCI college faculty members teaching career-based courses have
direct work experience in the areas they teach. Typically, full-time faculty
members at Interboro are hired after they have proven their effectiveness as
adjunct instructors at Interboro.

      Most students who start at Interboro and approximately 50% of TCI's new
students since its summer 2005 semester do not have high school diplomas or a
GED. They also face the daily challenges endemic to those who are economically
disadvantaged. Interboro and TCI expect their faculty to recognize and be
sensitive to the special needs of their students. EVCI believes its faculty is
particularly adept at working with students, and gaining their confidence and
trust to assist them in the remediation and developmental process necessary for
them to succeed academically.

      EVCI faculty, administration and staff work to establish close
relationships with students. Our colleges strive to set realistic goals for
their students while maintaining academic integrity. Students generally receive
a telephone call from a faculty member or a staff member if they miss class.
Professors and advisors work with students to meet particular academic needs.
Our colleges offer a variety of support programs including intensive tutoring,
mentoring and internship programs. Students can get referrals from our college
staff to outside service agencies in order to help them meet personal challenges
and stay in college.

      Improve student retention and graduation rates

      Improving student retention is essential to the continuing success of our
students and is one of our greatest challenges and opportunities. The retention
process starts from the initial enrollment and continues through graduation. As
is true throughout the country for economically disadvantaged students, a large
number of our students do not finish their degree programs for personal,
financial or academic reasons. We recognize that our ability to retain students
until graduation is an important indicator of success and that modest
improvements in retention rates can result in meaningful increases in revenue
and profitability.

      Interboro has increased its graduation rates, for students graduating
within three years, since EVCI acquired Interboro in January 2000, from less
than 10% for its 1998 cohort to approximately 18% for its 2002 cohort. Interboro
has hired full-time remediation and developmental specialists whose sole job is
to work, in and outside the classroom, with students, faculty and tutors in
order to provide students with the skill sets required for them to succeed in
college. Interboro remains committed to the goal of achieving the three year
graduation rate of 25%, that was set by the Board of Regents, before Interboro's
accreditation expires on September 30, 2008.


                                       8
<PAGE>

      Interboro has implemented the following additional measures in its effort
to meets SED's expectation that at least 65 percent of Interboro's students who
are first enrolled at Interboro for either its spring 2006 or summer 2006
semesters will persist to their second semester of attendance at Interboro:

      o     The college is being more selective of its ATB applicants to which
            it grants admission.

      o     Late registration is limited to one week.

      o     Students registered late are block scheduled and tutored by
            remediation specialists. Tutors also help them catch up.

      o     Students with poor attendance are being purged.

      o     Teachers are being assigned approximately 10-12 students at the
            beginning of the semester to monitor their progress and provide
            intensive assistance to them.

      o     Progress of new students is being continuously evaluated and direct
            intervention is aggressively occurring throughout the college.

      o     Interboro's faculty is being evaluated more often by Interboro's
            academic administration, especially with respect to further
            improving retention while maintaining academic integrity

      o     There is a committee that is reviewing curriculum to further enhance
            academics while getting a greater number of students to improve
            academic performance.

      o     Ways to attract more high school graduates to Interboro are under
            consideration.

      o     The pass point has been increased by Interboro on the reading
            portion of the federally approved ability to benefit test as reading
            strength correlates most strongly with subsequent academic
            performance.

      o     The number of full-time faculty, and the ratio of full-time faculty
            to students, have been strengthened continuously over the past four
            years.

      o     The libraries have been moved into larger space and their
            collections greatly increased. The librarians are increasingly
            pro-active in helping students gain information literacy skills.

      o     The skills of the tutors in the Academic Resource Centers have been
            upgraded through a national training and certification program.


                                       9
<PAGE>

      o     New Counseling Centers have been opened on the campuses to assist
            students cope with non-academic challenges and issues which might
            interfere with academic performance.

      Maintain academic integrity and create cutting edge programs

      Each of our colleges strives to meet the changing needs of its students
and their potential employers. We regularly evaluate our academic programs,
consider revisions to existing courses and programs and develop new curricula
and tests based upon evaluations. In addition, our colleges create flexible
schedules to accommodate the needs of their students.

      Focus on placement of graduates

      Of the 428 Interboro students who requested placement assistance from its
June 2005 graduating class, 332 (78%) were placed in employment or enrolled for
further education, with 284 (66%) placed in employment in their field of study
or enrolled for further education.

<TABLE>
<CAPTION>
                                           No. of             Placed or
   Degree Program                         Graduates            Enrolled               Placed in Field
   --------------                         ---------            --------               ---------------
<S>                                           <C>                <C>                       <C>
Bus Adm-Accounting                            56                 35/63%                    33/59%
Bus Adm-Management                            177               142/80%                    120/68%
Office Technologies                           64                 49/77%                    39/61%
Ophthalmic Dispensing                         27                 24/89%                    22/81%
Paralegal Studies                             76                 63/83%                    56/74%
Security Services & Management                28                 19/68%                    14/50%
                                              ---               -------                    -------
Total                                         428               332/78%                    284/66%
                                              ===               =======                    =======
</TABLE>

      As of February 2006, TCI's placement statistics, for its graduates during
the following three academic semesters were:

<TABLE>
<CAPTION>
                  Division                  No. of Graduates          No. Seeking Placement*         Placed or Enrolled
                  --------                  ----------------          ----------------------         ------------------
<S>                                                 <C>                          <C>                          <C>
      August 2004-May 2005
      --------------------
      Business                                      247                          148                          110/74%
      New Media                                      62                           34                           31/91%
      HVAC/FMT                                      158                           88                           69/78%
      Electronics                                   351                          213                          119/56%
                                                    ---                          ---                          -------
      Total                                         818                          483                          329/68%
                                                    ===                          ===                          =======
</TABLE>

      ---------------------------------
      * With TCI's assistance.


                                       10
<PAGE>

Our Growth Strategy

      Enrollments

      EVCI expects that the future enrollment growth of our colleges will
generally be in line with rates of other public companies owning for-profit
schools if, and after, the SED enrollment caps are removed for Interboro.

      New sites

      With the requisite approval, our colleges will, in the future, open new
college sites in communities with economically disadvantaged populations that
recognize the need for their programs. We believe that convenience is a strong
factor considered by our students when selecting a college. Besides increasing
enrollment capacity, new sites allow our colleges to more effectively leverage
their infrastructure and their investment in curricula. They also increase their
name recognition and reputation. Interboro does not expect to open additional
sites for the foreseeable future.

      Acquisitions

      With the substantial improvements in our financial condition and operating
results in 2004, acquisitions again became an integral part of our growth
strategy in 2005. We acquired PSB in January 2005 and TCI on September 16, 2005.

      In making those acquisitions, we were guided by the following strategy. We
sought to acquire fully operational, or licenses to operate, for-profit,
career-oriented colleges. We sought colleges that have sound management,
functional operations and quality educational degree programs. We sought
colleges that will benefit from our management experience and operating
strengths and will allow us to increase their enrollment, revenue and
profitability while further strengthening academic programs. Our first priority
was to acquire fully operational colleges that can serve the same target market
as Interboro serves.

      We do not expect to be making any additional acquisitions for the
foreseeable future.

Marketing

      Our colleges employ a variety of marketing and advertising techniques to
generate qualified leads of potential students. They primarily use newspaper and
subway ads, telemarketing, direct mail and community events. The effectiveness
of their marketing and advertising campaigns greatly depend on the message,
placement and timing of ads as well as following up with timely and accurate
lead tracking. Effectiveness also depends on the rate of conversion of leads to
enrollments. Our colleges also work with community based organizations and
school districts in promoting their programs to prospective students.

      TCI is also marketing its academic programs to high schools. TCI faculty
members are visiting high schools to encourage guidance counselors to recommend
TCI's degree programs and to talk about TCI's excellent reputation.


                                       11
<PAGE>

      Each college is responsible for converting leads to enrollments. Our
colleges' lead tracking capability generally allows them to identify leads
generated by specific media and adjust their marketing to focus on the most
cost-effective lead sources. Referrals from our students and graduates are the
most effective means of recruiting new students.

Accreditation

      Accreditation provides the basis for:

      o     the recognition and acceptance by other higher education
            institutions, employers and governmental entities of the degrees and
            credits earned by students

      o     qualification to participate in Title IV programs, including Pell
            grants, and New York TAP grants and Pennsylvania PHEAA grants

      Interboro is accredited by the New York State Board of Regents. As a
result of the change in control that occurred when we acquired Interboro in
January 2000, its accreditation was probationary until 2003 when the Board of
Regents took Interboro off probation and granted it accreditation for the five
years ending September 30, 2008. The Commission on Opticianry also accredits
Interboro's AOS degree in Ophthalmic Dispensing. The American Bar Association
has approved Interboro's Paralegal Studies Program.

      TCI is also accredited by the New York State Board of Regents. As a result
of EVCI's acquisition of TCI,the Regent's Advisory Council of Postsecondary
Accreditation has recommended that TCI's accreditation be extended from May 21,
2006 to May 21, 2007 in order to permit SED to schedule a second peer review
visit in the fall of 2006 to assess the change of ownership and changes made to
TCI's administration since the acquisition. In addition, TCI's Electronics
Engineering Technology program is accredited by the Technology Accreditation
Commission of the Accreditation Board for Engineering and Technology.

      TCI is also regionally accredited by the Middle States Commission on
Higher Education, located at 3624 Market Street, Philadelphia, PA 19104-3680.
However, Middle States must approve the change of ownership of TCI to EVCI as a
condition to the accreditation remaining effective. TCI, EVCI and Middle States
are fully cooperating with one another to resolve Middle States concerns
regarding the influence of EVCI over TCI with respect to governance and
finances. If Middle States does not approve the change of ownership, it will be
more difficult for TCI to increase the number of its new students that are high
school graduates. Middle States accreditation is highly respected by high school
guidance counselors.

      PSB is accredited by the Accrediting Commission of Career Schools and
Colleges of Technology ("ACCSCT"). PSB received a five year renewal of its
ACCSCT accreditation effective August 2004. PSB is licensed by the Pennsylvania
State Board of Private Licensed Schools and is approved by the Pennsylvania
Department of Education to grant the Associate in Specialized Business Degree.


                                       12
<PAGE>

Government Regulation of Proprietary Schools

      Our colleges are subject to extensive regulation and oversight by
governmental agencies that administer Title IV and TAP, by SED, the New York
Board of Regents the State of Pennsylvania and by their other accrediting
agencies. As a result, they must comply with a complex framework of laws and
regulations and are subjected to frequent compliance and financial reviews and
detailed oversight.

      SED requires periodic approval and registration of all degree programs.
TAP funds are only available to students enrolled in registered programs. All
Interboro degree programs are approved and registered by SED. All TCI degree and
certificate programs are approved and registered by SED.

      Title IV

      Pell is one of the federal student financial aid programs that is
authorized by Title IV of the federal Higher Education Act of 1965 ("HEA"), and
related regulations issued by the U.S. Department of Education ("DOE").
Participants in Title IV programs are subjected to significant regulatory
scrutiny in the form of numerous standards they must satisfy. These include
obtaining and maintaining authorization by appropriate state and accrediting
agencies.

      Under the HEA, regulatory authority is divided among:

      o     the federal government, which acts through the DOE

      o     the accrediting agencies recognized by the DOE

      o     state higher education regulatory bodies

      The HEA regulations must be complied with on an institutional basis. The
regulations define an institution as a main campus and its additional locations,
if any. If any location violates these regulations, the college could lose its
Title IV eligibility or suffer financial liabilities, greater scrutiny and/or
limitations on its participation in Title IV programs. Financial liabilities may
include returning funds to the DOE, posting a letter of credit as well as civil
and criminal penalties.

      Factors that could affect an EVCI college's participation in the Title IV
programs include:

      o     A college cannot receive in excess of 90% of its cash basis revenue
            from Title IV programs for tuition, fees and institutional charges.
            Interboro and TCI each derive substantially less than 90% of their
            revenue from Title IV funds. PSB derived approximately 88% of its
            revenue in 2005 from Title IV funds. Management expects PSB to
            decrease its percentage of revenue from Title IV funds in the
            future, as a result of a significant increase in PHEAA grants.


                                       13
<PAGE>

      o     A college cannot pay any commission, bonus, or other incentive
            payment, based directly or indirectly on success in securing new
            student enrollments or financial aid, to any person or entity
            engaged in any domestic student recruitment, admission or financial
            aid awarding activity.

      o     Participation in Title IV is based, in part, on satisfying
            administrative capability requirements. A college must demonstrate
            that it complies with Title IV regulations, has capable and
            sufficient personnel to administer its Title IV program and advise
            students about financial aid, satisfactorily measures its students'
            academic progress, and timely submits all reports and financial
            statements as required by DOE.

      o     Independent auditors annually audit each of our college's
            administration of Title IV funds. The resulting audit report is
            submitted to the DOE. If it is determined that a college improperly
            disbursed Title IV funds or violated a provision of the HEA, it
            could be required to repay a portion of such funds and might be
            assessed an administrative fine. A college could also become subject
            to heightened monitoring or transfer from the advance system of
            payment to the reimbursement system, under which it must disburse
            its own funds to students and document the student's eligibility for
            Title IV funds before receiving funds from the DOE.

      o     In the event a student withdraws or stops attending and does not
            complete an academic program during a semester, the college's
            tuition refund policy must meet the requirements of the DOE. For
            example, it must return a prorata portion of the Title IV funds
            received by a college if a student withdraws prior to completion of
            60% of a semester.

      o     Each college must satisfy DOE numeric standards of financial
            responsibility. Compliance with these standards is evaluated for
            purposes of recertification to participate in Title IV and also
            annually after submission of audited financial statements to the
            DOE. If the DOE determines the college does not meet the standards
            of financial responsibility, it can continue to participate in the
            Title IV programs if it can demonstrate that it is financially
            responsible on an alternative basis. Alternatives include posting a
            letter of credit in favor of the DOE and possibly accepting other
            conditions on participation in Title IV programs.

      EVCI's colleges have policies and procedures that are designed to assure
its compliance with Title IV regulations. Since Interboro was acquired by EVCI,
compliance reports of its oversight of federal funds have not resulted in
material deficiencies. No material deficiencies have been found in TCI's
compliance reports for the last ten years.

      TAP grants

      The TAP grant program is part of the New York State budget. Each year the
governor makes budget recommendations to the New York State Senate and Assembly.
The governor's position on TAP under his proposed 2006-2007 budget is described
below in a risk factor captioned "Changes in the amount or timing of TAP
disbursements could materially impede EVCI's ability to operate." As in prior
years, we are working to oppose any changes in TAP that could negatively impact
the educational opportunities of Interboro's and TCI's students.


                                       14
<PAGE>

      Each student seeking a TAP grant must be a U.S. citizen or permanent
resident and must meet New York State residency requirements.

      TAP academic requirements for Interboro and TCI are basically the same as
the Pell academic requirements.

      Factors that could affect a college's participation in TAP include:

      o     The college must timely disburse financial aid funds due to
            students.

      o     The college cannot certify ineligible students to receive TAP
            grants.

      o     The college must have and comply with an acceptable tuition refund
            policy.

      o     SED must continue to register the programs of the college.

      o     The college must continue to be accredited by a regional or national
            accrediting agency recognized by U.S. Secretary of Education.

      Change of ownership or control

      Title IV. A change in control of a college can affect its eligibility to
participate in Title IV programs. After a change in control, the college must
re-establish its state authorization and accreditation and satisfy DOE's
requirements to be recertified by the DOE as an eligible institution under new
ownership.

      If a college is recertified following a change of control, it will be on a
provisional basis. While provisionally certified, the college may be subject to
closer review by the DOE and to summary adverse action for violations of Title
IV program requirements. Provisional certification does not otherwise limit an
institution's access to Title IV Program funds.

      Following its acquisition by EVCI, Interboro initially received its
temporary certification that became a provisional certification on April 4,
2000. Interboro has continued to be provisionally certified because of default
rates on loans made under Title IV prior to our acquisition of Interboro in
January 2000. In 2006, Interboro expects that it should no longer be
provisionally certified as a result of those loan default rates.

      Following TCI's acquisition by EVCI, TCI's temporary certification became
a provisional certification on March 8, 2006 that expires June 30, 2008.

      Following PSB's acquisition by EVCI, PSB's temporary certification became
a provisional certification on April 25, 2005 that expires December 31, 2007.

      Because EVCI is a publicly traded corporation, DOE regulations provide
that a change of control of EVCI, and, therefore, each of our colleges, occurs
under either of the following two standards:


                                       15
<PAGE>

      o     It occurs if a person acquires ownership and control that requires
            EVCI to file a Form 8-K with the Securities and Exchange Commission
            disclosing a change of control.

      o     It occurs if an existing stockholder (other than an institutional
            investor) ceases to be a controlling stockholder. A controlling
            stockholder is someone who holds or controls by agreement 25% or
            more of the total outstanding voting stock and more shares of voting
            stock than any other stockholder. EVCI does not have a controlling
            stockholder under this definition.

      New York. According to the New York Board of Regents, a change of
ownership or control includes a merger or consolidation with any corporation; a
sale, lease, exchange or other disposition of all or substantially all of the
assets of a college; and the transfer of controlling interest of a college's
stock. As a result, the college is considered in a transitional status, usually
for up to two years. During that time SED will generally not approve any new
initiatives by the college such as new programs or extension centers. This
status also subjects the college to more scrutiny by SED, including additional
reporting requirements, and the Board of Regents retaining authority to award
degrees to graduating students. The retention by the Board of Regents of degree
granting authority results in a greater level of scrutiny for each degree and
may delay the awarding of degrees. TCI expects this status to cease on or before
September, 2007.

      Opening new college sites and adding educational college programs

      The HEA generally requires that proprietary colleges be fully operational
for two years before applying to participate in Title IV programs. However, a
college that is certified to participate in Title IV programs may establish a
new site and apply to participate in Title IV programs at that site immediately,
if such new site satisfies all other applicable eligibility requirements,
including approval by the college's state licensing agency and its accrediting
agency.

      Generally, a college that is eligible to participate in Title IV programs
may add a new educational program without DOE approval if that new program leads
to an associate level or higher degree and the college already offers programs
at that level. Also, a college may generally add a new program that prepares
students for gainful employment in the same or related occupation as an
educational program that has previously been designated as an eligible program
at that college and the program meets minimum length requirements. If a college
erroneously determines that an educational program is eligible for Title IV
programs, the college would likely be liable for repayment of the Title IV funds
provided to students in that educational program. New educational programs
require approval from the New York State Board of Regents.

Competition

      Interboro's business model subjects it to limited direct competition. A
key component of this model is its focus on a target market of ATB students. The
challenges of educating ATB students and the availability to most of our
students of Title IV and TAP grants that cover the full cost of their tuition is
also a key component of Interboro's business model.


                                       16
<PAGE>

      TCI competes with other associate degree colleges that offer technical
programs primarily on the basis of its location, reputation and course
offerings.

      Most of our for-profit public competitors have substantially greater
financial and other resources than we do. In general, they have not acquired
colleges that principally serve our target market. We mostly compete with
private colleges in the New York Metropolitan area.

      We have competitive advantages over potential new entrants into the
post-secondary education market. They will face significant barriers to entry
that include:

      o     the Title IV requirement that proprietary and vocational
            post-secondary institutions be fully operational for two years
            before applying to participate in Title IV programs

      o     the time it takes to obtain accreditation

      o     the considerable expense of start-up operations

      o     the difficulty of achieving acceptable margins with a low tuition
            rate that is competitive with our colleges

      o     for those existing colleges or universities that need to participate
            in Title IV loan programs, the risk of losing eligibility to
            participate in any Title IV program because loan default rates
            exceed permissible limits. Because of their financial circumstances,
            students from our target market are more likely to default,
            especially if they are ATB students.

      Changes in the regulatory environment have stimulated consolidation in the
postsecondary education industry. Regulations adopted in recent years have
tightened standards for educational content, established stricter standards for
student loan default rates, required intensified scrutiny by state education
agencies and accrediting agencies and created more stringent standards for the
evaluation of an institution's financial responsibility and administrative
capability. As a result, some career-oriented schools have been forced to sell
out or close because they lacked the necessary skill and resources to keep up
with these changes. The opportunity for us to acquire Interboro arose because
its former management was unable to satisfy the New York State regulators.

Employees

      As of December 31, 2005, we had 569 full-time employees, 222 part-time
adjunct faculty and 58 other part-time employees.

      Out of a total of approximately 234 full-time Interboro administrative
employees, 143 are members of Local 153 of the Office & Professional Employees
International Union. The governing union contract expires August 31, 2006.


                                       17
<PAGE>

      In 2005, Local 153 was recognized by Interboro as the exclusive bargaining
agent for Interboro's faculty which, as of December 31, 2005, totaled 205
members. The negotiations with Local 153 for a union contract for Interboro's
faculty commenced in February 2006.

      Approximately 78% of TCI's employees are unionized under contracts with
Local 2110 of the United Auto Workers-AFL-CIO. The union represents full-time
and adjunct faculty, laboratory technicians and maintenance, office, clerical
and admissions personnel under contracts expiring in October 2007.

Item 1A.  Risk Factors

      Statements and financial discussion and analysis by our management
contained in this 10-K that are not historical facts are forward-looking
statements. They reflect management's current views with respect to future
events and, accordingly, are subject to certain assumptions, risks and
uncertainties, including the risk factors discussed below. If any of the
following or other risks actually occurs, or should our assumptions prove
incorrect, actual results may vary materially from those anticipated by those
forward-looking statements. Furthermore, our business, financial condition and
results of operations could be materially and adversely affected.

A failure by any of our colleges to comply with extensive federal and state
regulations could have a material adverse impact on its ability to operate and
grow.

      We derived approximately 93% of our 2005 net revenue from federal and
state grants and loans. Participation in the federal and state grant and loan
programs subject Interboro, TCI and PSB to frequent reviews and detailed
oversight. Each of our colleges must comply with complex laws and regulations,
including with respect to its accreditation, operations, growth and change of
its or EVCI's corporate structure. The regulations, standards and policies of
the regulatory agencies frequently change and are subject to political and other
pressures. We believe that, in addition to Interboro's rapid growth, the
resulting increase in its share of TAP funds, was a significant factor in SED's
decision to issue the Draft Report and then place enrollment caps on Interboro's
new student enrollment. We also believe that, SED's decision was motivated by
concerns about the ability of Interboro ATB students to persist and graduate at
percentage rates deemed appropriate by SED even though Interboro's graduation
rates significantly exceed the average three year graduation rates for African
American and Hispanic minority students at other associate degree colleges in
New York State and nationwide.

      As is clear from Interboro's recent experiences with SED, an alleged
failure to comply with existing or new requirements resulting from changes in
standards or new interpretations has already and, in the future, could
materially and adversely affect EVCI. Some of the specific significant
regulatory risks are described in risk factors below.

Adverse changes in the rules governing, or the amount or timing of, TAP
disbursements could materially impede Interboro's and TCI's ability to operate.

      There could be changes in TAP statutes that deny or decrease the amount of
TAP grants by various means that include changing eligibility requirements or by
requiring Interboro and TCI to materially increase their administrative costs
and practices relating to TAP. Those changes could have a material adverse
impact on our revenue, margins and ability to continue in business using our
current business models.


                                       18
<PAGE>

      The executive and legislative debate each year over the New York State
budget usually includes controversy over TAP. We cannot predict what will happen
each budget year because the issues relating to TAP are highly political in
nature.

      New York's Governor Pataki has been proposing to change TAP requirements
for the past few years in a manner that would be materially adverse to us.
However, the actual changes made by the New York State Legislature in the past
few years have not been materially adverse to Interboro or TCI. As of March 30,
2006, the Legislature had voted on accepting, rejecting or modifying the
Governor's proposals and forwarded them to the Governor. The Governor can accept
or veto amendments to his proposed budget. The budget must ultimately be
approved by the Legislature. In summary, the Governor's 2006-2007 budget
proposals and the Legislature's counterproposals are as follows:

      o     Post-secondary institutions would "pre-finance" TAP awards provided
            to first-time TAP applicants who are admitted without a high school
            diploma. TAP would reimburse a student, plus interest, only after
            the student successfully completed 24 credit hours. This
            particularly targets ATB and GED students. Status: Rejected by the
            Legislature. Colleges admitting ATB students would have to use an
            "independently administered and evaluated ATB test" as defined by
            the Commissioner of Education. Interboro already outsources its ATB
            testing.

      o     TAP's eligibility requirement of "full-time study" would be raised
            from 12 to 15 credits per semester to "ensure students complete
            their degree programs before exhausting their 8 semesters of TAP
            eligibility." Partial awards of 80% would, however, be available to
            students registered for 12 - 14 credits. Status: Rejected by the
            Legislature.

      o     Higher performance standards would be imposed to demonstrate
            progress toward completion, including accrued credits and minimum
            grade point averages. Status: Rejected by the Legislature.

      o     Students who default on federal and other educational loans would
            not receive TAP. Status: Rejected by the Legislature.

      o     TAP eligibility for "accelerated study" (three consecutive
            semesters) would be restricted to individuals who have obtained 30
            credit hours in the preceding two semesters. Status: Amended by the
            Legislature to reduce the 30 credit requirement to 24 credits,
            effective for students first entering college after July 1, 2006.
            Students at TCI and Interboro would be affected by this requirement.

      In addition, budgetary issues have caused delays in TAP disbursements. TAP
payments relating to Interboro's and TCI's spring semesters that would otherwise
be made during the period from the last week of December through May were, or
are being, deferred:


                                       19
<PAGE>

      o     In December 2004, TAP advised that a total of approximately $3.8
            million of payments payable for Interboro's and TCI's spring 2005
            semesters would be deferred until August 1, 2005. This deferral
            turned out to be less, as Interboro and TCI received the following
            approximate payments of their deferred amounts:

                                   Interboro                               TCI
                                   ---------                               ---
              March                $1,100,000                         $430,000
              June                 $1,200,000                          280,000
              July                    400,000                          390,000

      o     In December 2005, TAP advised that a total of approximately $3.8
            million of payments payable for Interboro's and TCI's spring 2006
            semester is being deferred until August 1, 2006. Approximately $2.5
            million of these deferrals was paid on March 31, 2006. Whether or
            not any portion of the remainder of these deferrals are paid earlier
            depends, in part, on the state's cash flow situation throughout the
            state fiscal year.

      Additional total payments of approximately $2.3 million for Interboro's
and TCI's spring semester will be deferred until October 2006 under TAP
regulations relating to TAP payments for a third term within the same academic
year. This deferral is not related to the New York State budget.

      Past TAP deferrals have not adversely affected our ability to operate or
grow. We could be mistaken in our belief that the current deferrals will not
adversely affect our ability to operate or our ability to remain in compliance
with the financial covenants of our bank agreement. Furthermore, future
deferrals could adversely affect our operations and growth.

We do not expect that Interboro or EVCI will be profitable in 2006.

      As a result of the SED caps on Interboro's enrollment, we currently
anticipate that Interboro's net revenue for 2006 will decline by more than 20%
as compared to its 2005 net revenue. After giving effect to anticipated results
of TCI and PSB and additional Interboro capital and operating costs necessary to
comply with SED directives, we are currently projecting that EVCI will incur a
net loss in 2006 of approximately $2.3 million and will have negative cash flow
of approximately $2.3 million. Approximately $700,000 of this projected net loss
relates to the amendment of our bank credit agreement, including approximately
$450,000 of accelerated amortization of deferred financing costs.
Notwithstanding, we are currently projecting that EVCI will have sufficient cash
resources to fund this net loss and negative cash flow.

      Our results might be materially worse than projected, including because
Interboro's enrollments are below the permitted caps, as happened in the spring
2006 semester, Interboro's costs of implementing directives are higher than
anticipated, or there are unforeseen circumstances. If that occurs, we will need
the continued cooperation of our bank and may need to attempt to refinance our
bank debt, raise additional equity capital or sell or close one or more of our
colleges under circumstances that could be materially adverse to EVCI.


                                       20
<PAGE>

Interboro may be subject to even more severe action by SED if it is not able to
achieve the 65% persistence rate required by SED or to implement other required
changes at Interboro to SED's satisfaction.

      SED is requiring that Interboro limit the number of new enrollments it may
accept for its spring 2006 through spring 2007 semesters. These caps are tied to
an SED expectation that at least 65% of Interboro students who are first
enrolled at Interboro for either its spring 2006 or summer 2006 semesters will
persist to their second semester of attendance at Interboro. While Interboro has
implemented strategies that it believes will permit it to achieve the 65% rate,
its past persistence rates are an indication of the very significant challenge
facing the college.

      The number of new students (after at least three weeks of the semester)
for Interboro's spring, summer and fall 2005 semesters were approximately 1,650,
1,250 and 1,950 respectively. Approximately 42% of new Interboro students who
started in the spring 2005 semester persisted to a second semester. Persistence
rates for new students who start at Interboro in the fall semester have been
generally greater than new students who start in a spring or summer semester.
For example, approximately 50% of Interboro's new students in the fall 2004
semester persisted to the spring 2005 semester.

      Furthermore, adverse publicity about Interboro could significantly impede
Interboro's efforts to retain students and attract new students.

      SED plans to conduct visits to Interboro's sites in the spring and summer
2006 to assess its progress in implementing the requirements and recommendations
set forth in SED's report dated December 2, 2005, reaching the 65% persistence
rate, limiting enrollments as required by the enrollment caps and outsourcing
ATB testing. Afterward, SED may determine that adjustments to the restrictions
may be appropriate. SED has advised it will determine what continued enrollment
restrictions are necessary, if any, during Interboro's spring 2007 semester. If
SED is not satisfied with Interboro's progress it could seek to require
Interboro to close or impose requirements and limitations that would make it
more difficult for Interboro to return to profitability or that would limit its
profitability.

Adverse changes in the rules governing, or the amount or timing of, Pell program
disbursements could materially impede our college's ability to operate.

      Title IV must be reauthorized by congress every six years. Parts of the
Act were reauthorized in 2005; however, remaining issues are currently being
reviewed by Congress. Congress also reviews appropriations for Title IV programs
annually. Congress has not increased the maximum Pell award for several years
and is not expected to do so for the coming fiscal year.

      Any significant decreases in the amount or timing of revenue received
through the Pell program would have a material adverse effect on our colleges.
Additionally, legislative or regulatory actions may materially increase our
colleges' administrative costs and require them to modify their practices in a
material adverse manner.


                                       21
<PAGE>

Title IV program reviews of any EVCI college could result in it being required
to make material refunds of Title IV funds and EVCI being required to reduce its
operating income by the amount of those refunds.

      Schools participating in Title IV programs are routinely reviewed by DOE
personnel to determine their compliance with Title IV regulations.

      Since January 2005, a routine program review has been conducted by the DOE
of Interboro's compliance with respect to approximately $30 million of Title IV
grants made to Interboro students during Interboro's academic years 2002/ 2003,
2003/ 2004 and 2004/ 2005. On March 28, 2005, the U.S. Department of Education
conducted an additional day of file review. Based upon discussions at that time
with representatives of the DOE, we believed that the Title IV reviewers were
going to review more files before submitting a draft report to us. As of March
17, 2006 the DOE had not requested more files. Accordingly, we cannot predict
with certainty whether the DOE will ask for additional files or, if it does, the
extent of the DOE's further review. We also cannot predict when we will receive
the reviewer's draft written report or the timing and amount of Title IV
refunds, if any, Interboro will be required to make to the DOE. Furthermore, we
do not know whether the compliance review by SED will trigger an additional
review by the DOE.

      TCI's last Title IV program review began in 1999 and has not formally
concluded. However, TCI has been advised orally by the DOE that the program
review will be closed shortly without any liability to TCI.

      We cannot predict when another Title IV program review will occur or what
effect it will have on our results of operations and liquidity or on our ability
to operate and grow.

A future TAP audit could result in Interboro or TCI being required to make
material refunds of TAP grants and EVCI being required to reduce its operating
income by the full amount of those refunds.

      The Office of the New York State Comptroller periodically conducts routine
audits of colleges and universities that participate in TAP. The principle
purpose of an audit is to determine whether a college complies with rules and
regulations in certifying the TAP eligibility of its students.

      In March 2005, Interboro received the final report from the Comptroller
that details the reasons for disallowances of $903,150 resulting from the TAP
audit commenced in February 2004 of Interboro's three academic years ended June
30, 2001, 2002 and 2003. The total amount of TAP grants made to Interboro
students during the period covered by the TAP audit was approximately
$21,000,000.

      TCI's last TAP audit covered three academic years ended June 30, 2000,
2001 and 2002, started in June 2003, concluded in March 2004 and required TCI to
pay disallowances of $19,554. The total amount of TAP grants made to TCI
students during the period covered by the TAP audit was approximately
$39,000,000.


                                       22
<PAGE>

      We believe that there is a correlation between the amount and rate of a
school's growth and the likelihood of a TAP audit. Furthermore, the likelihood
of a TAP audit of Interboro and TCI may have increased as a result of the Draft
Report to Interboro. Even though HESC has publicly stated that a routine TAP
audit is normally scheduled every three to four years, we cannot predict when
another TAP audit will occur. We also cannot predict what affect a future TAP
audit will have on our results of operations and liquidity or on our ability to
operate and grow.

Changes in Ability to Benefit regulations could materially and adversely affect
Interboro's and TCI's ability to operate and grow.

      ATB students comprise approximately 94% of Interboro's current enrollment
and approximately 34% of TCI's current enrollment. They are students who entered
Interboro or TCI without a high school diploma or a GED because they achieved a
minimum score, or a higher score set by the college, on a test approved by the
DOE that demonstrates that they have the "ability to benefit" from a college's
program of study.

      There is a long-standing debate over the extent to which taxpayer money
should be spent educating ATB students. It is a politically charged issue that
most greatly affects African-American and Hispanic students dealing with the
challenges endemic to poverty. Governor Pataki's budget proposal to require
colleges to finance student tuition until 24 credits have been earned by the
student specifically targets ATB students. If that specific proposal passes and
is in the final budget, or if other current laws governing TAP were to be
changed to materially limit Interboro's and TCI's ability to enroll ATB students
or the availability of financial aid to ATB students, Interboro and TCI may not
be able to continue in business unless they are able to quickly convert their
business models to accommodate any material change. Even if Interboro and TCI
were successful, in the interim EVCI's financial condition and results of
operations would, most likely, be materially and adversely affected. TCI's plans
to recruit more high school graduates, so that it is less dependent on ATB
students, may not be successful.

Our failure to repay amounts outstanding under our amended and restated credit
agreement when due could have a materially adverse effect on our business and
financial position.

      Under our amended and restated credit agreement ($15,000,000 million
outstanding at December 31, 2005), we are required to pay interest monthly and
to make quarterly principal payments that increase from $500,000 to $625,000
until July 31, 2007 when all accrued and unpaid interest and principal of
$10,375,000 are due and payable. If we default under the agreement, this due
date could be accelerated by the bank. We presently intend to seek to refinance
the principal balance due prior to its final maturity date. We also intend to
pursue other strategies that could provide us with funds to pay this debt,
including the sale of equity or the sale of one or more of our schools. However,
we may not succeed in the securing additional financing needed to repay our bank
debt.


                                       23
<PAGE>

Over the longer term, we expect enrollments at, and earnings of, our colleges to
grow at a much slower rate than they have since we acquired Interboro.

      Interboro's aggressive growth has attracted significant attention and has
resulted in higher regulatory scrutiny and media coverage, all of which has had
a material adverse affect on EVCI and its stock price.

      Interboro's compounded annual growth rate of enrollments through 2005 of
approximately 42% since it was acquired by EVCI in January 2000, substantially
exceeds industry averages. This fact and the fact that approximately 92% of
Interboro's student population is comprised of ATB students greatly increased
Interboro's visibility, not only in its target market, but also to regulators
and the media.

      Higher visibility translates into greater scrutiny, especially in view of
the recent overabundance of adverse publicity concerning public companies owning
for profit-career colleges. Greater scrutiny increases the likelihood that
regulators will seek to limit a college's growth. It also increases the
likelihood that the media may seek to discredit a college's business model and
conduct of its business, as has been the case with the Draft Report and ensuing
events.

      Accordingly, subject to contractions in enrollments at Interboro while SED
enrollment caps remain, we expect to limit the aggregate internal growth of
enrollments at our colleges to rates that are more in line with the average
internal growth rates at colleges owned by public companies. We believe that is
currently between 10% to 15% per year. However, this expectation does not in any
way constitute guidance for any period.

If Interboro is unable to improve its persistence and graduation rates to levels
SED deems acceptable, the Board of Regents may deny or adversely condition
Interboro's reaccredidation.

      If Interboro does not succeed in reaching a 25% graduation rate for
students attending Interboro for three years, the New York Board of Regents
could deny or onerously condition Interboro's reaccredidation in September 2008.
In addition, SED could continue to limit significantly Interboro's growth
throughout the period prior to reaccredidation because it believes Interboro is
not effectively implementing improvements or that the improvements, even if
implemented, cannot accomplish what SED deems necessary. One or more of these
risks could occur even though we believe there are no specific requirements in
the governing law or regulations that Interboro achieve a 25% graduation rate.

      However, we believe the following is a legal requirement:

      A college awarding an associate degree that has a graduation rate below
the mean associate degree graduation rate reported by all colleges in New York
State accredited by SED,

      o     must show an improvement over the preceding year of at least 3% or


                                       24
<PAGE>

      o     must prepare and submit a plan to improve graduation rates that
            includes strategies and time lines to achieve at least the mean, or
            a 3% annual improvement within two years.

      Interboro will not be able to continue to operate if the Board of Regents
does not renew Interboro's accreditation when it expires and if Interboro is
unable to obtain accreditation from another accrediting agency before then that
is acceptable to the U.S. and New York State Departments of Education. Interboro
will also not be able to operate if the Board of Regents decides to revoke
Interboro's accreditation before reaccreditation in 2008 and force execution of
teach out plans. In an attempt to ameliorate this risk, while enhancing
Interboro's national reputation, Interboro is applying for national
accreditation by the Accrediting Council of Independent Colleges and Schools.
However, the approval of its application is not assured.

If SED continues to deny Interboro's Yonkers site extension center status for a
protracted period of time, Interboro's ability to continue operations in Yonkers
could be materially and adversely affected.

      SED has required Interboro to limit enrollment at its Yonkers site to
substantially less than its current enrollment of approximately 165 students by
not accepting new students. The Yonkers site may continue to serve its
continuing students. If Yonkers is never approved as an extension center, it
would eventually be limited to enrolling approximately 35 students. That level
of enrollment would force Interboro to close the site unless it could implement
strategies to reduce or absorb (by using the site for administrative or other
purposes) its fixed costs of operating the site.

The capital and operating costs of implementing agreements with SED, in response
to SED's recommendations, could significantly exceed the estimates we have made
to date.

      SED could require Interboro to make further changes to Interboro's
operations beyond those Interboro has agreed to in its response to the Draft
Report. Furthermore, we could be wrong in our current estimates because of
unanticipated costs. In either event, the costs to Interboro of complying with
the final SED report could significantly exceed the $400,000 of capital costs
during the next 12 months and $1,000,000 of additional operating costs for 2006
that we have estimated thus far.

Our margins may continue to erode if the maximum federal and state grants and
loans do not increase over time.

      As we have grown, we have, until recently, been able to improve our
margins through economies of scale and other operating efficiencies. As a result
of Interboro new student enrollment caps through the spring 2007 semester,
increases in costs at Interboro and TCI's higher cost structure, EVCI's margins
are expected to be significantly lower (and negative in 2006) for the
foreseeable future. Approximately 93% of Interboro's net revenue, and 62% of
TCI's net revenue, consisted of TAP and Pell grants in 2005. The maximum Pell
award per semester has risen from $1,150 for the academic year 1994/ 1995 to its
current level of $2,025. Since academic year 2000/ 2001, the maximum semester
Pell award has been:


                                       25
<PAGE>

        2000/ 2001                                  $1,650
        2001/ 2002                                   1,875
        2002/ 2003                                   2,000
        2003/ 2004                                   2,025
        2004/ 2005                                   2,025
        2005/2006                                    2,025

      The maximum TAP award per semester has been $2,500 since April 2000 and
was $2,062 from 1994 through April 2000.

      Interboro's tuition is set at a level that permits approximately 85% of
its students to pay their full tuition, fees and book costs out of their Pell
and TAP grants. A TCI first-time student can pay approximately 85% of the
student's tuition, fees and books with full TAP and Pell awards.

      If the maximum available Pell and TAP grants do not continue to exceed
Interboro's tuition and fees, Interboro's margins would erode further unless the
gap is covered by participating in Title IV loan programs. Since we acquired
Interboro, the college has avoided participating in any Title IV loan programs
because it did not want to risk losing eligibility to participate in the Pell
grant program as a result of its students exceeding permissible Title IV loan
repayment default rates.

      If TCI's cost structure requires additional increases in its tuition
without a concurrent and similar dollar amount increases in Pell and TAP grant
amounts, its margins will erode unless its students obtain larger Title IV
loans. As a result, TCI's Title IV loan default rate may increase, or its
competitive position to attract students be diminished.

The seasonality of our enrollments produces significant variations in our
results from quarter to quarter.

      Our revenue varies seasonally as a result of changes in student
enrollment. Total student enrollment and net revenue are typically highest in
our fourth and first quarters, which include October through March. As a result,
our second and third quarters have not been profitable prior to our 2003 third
quarter in which we had net income of $79,000. In 2004, we lost $585,000 in our
second quarter and $1,180,000 in our third quarter. In 2005, we had a profit of
$320,000 in our second quarter and a loss of $1,493,000 in our third quarter.
Furthermore, while for a full fiscal year, changes in enrollments directly
relate to changes in revenue, enrollments for academic semesters do not have the
same direct relationship to revenues for any particular fiscal quarter. Our
schools' semesters are 15 weeks long and revenue per semester is, therefore,
reported over two quarters.


                                       26
<PAGE>

If our common stock is delisted from Nasdaq, the liquidity of our common stock
and our ability to raise additional capital when we may need it most could be
adversely affected.

      Nasdaq rules require us to maintain a minimum closing bid price for our
common stock of $1.00 per share. If our common stock trades for 30 consecutive
business days below the applicable minimum closing bid price requirement, Nasdaq
will send a deficiency notice to us, advising that we have 180 calendar days to
regain compliance with the minimum bid price. We must then maintain compliance
for a minimum of 10 consecutive business days. Under certain circumstances,
Nasdaq may require maintenance of a $1.00 minimum bid price for more than 10
days.

      Thereafter, we can receive an additional 180-day compliance period if we
meet all initial inclusion requirements for the Nasdaq Capital Market, except
for the bid price requirement. If we do not demonstrate compliance within the
requisite compliance period, we will be issued a delisting letter, which we may
appeal at that time.

      If our common stock is delisted from Nasdaq, trading would thereafter be
conducted in the over-the-counter market on the "electronic bulletin board" or
in the "pink sheets." As a consequence:

      o     the liquidity of our common stock would be impaired, not only in the
            number of shares that could be bought and sold and lower prices for
            them, but also through delays in the timing of transactions and
            reduction in security analysts' and the news media's coverage of us.

      o     these trading factors would also make our common stock materially
            less attractive to potential sources of financing that we may
            require in connection with a refinancing or repayment of our bank
            debt.

Actual or threatened legal proceedings against us or any of our colleges by
regulatory agencies or private parties could have a material adverse effect on
our business.

      Pending lawsuits resulting from the Draft Report and ensuing events are
described in this report under the caption "Legal Proceedings."

      From time to time, we may be subject to investigations, claims of
non-compliance, or lawsuits by governmental agencies or other third parties,
which may allege statutory violations, regulatory infractions, or common law
causes of action. If the results of the investigations are unfavorable to us or
if we are unable to successfully defend against third-party lawsuits, we may be
required to pay money damages or be subject to fines, penalties, injunctions,
loss of financial aid eligibility, or other censure that could have a materially
adverse effect on our business. Even if we adequately address the issues raised
by an agency investigation or successfully defend a third-party lawsuit, we may
have to devote significant money and management resources to address these
issues. This could also materially hurt our business.


                                       27
<PAGE>

The loss of the services of key management personnel of EVCI or Interboro, could
have a material adverse effect on our operations and growth.

      The efforts of Dr. Arol I. Buntzman, chairman of EVCI and chairman and
chancellor of Interboro, and Dr. John J. McGrath, chief executive officer and
president of EVCI, chief executive officer and vice chairman of Interboro and
co-chairman of TCI, and chief executive officer and president of PSB, are
essential to our operations and growth. The loss of the services of Drs.
Buntzman or McGrath would materially adversely affect us. We maintain insurance
for EVCI's benefit on the life of Dr. Buntzman in the amount of $2.0 million and
on the life of Dr. McGrath in the amount of $750,000. We plan to obtain
additional insurance on the life of Dr. McGrath. We have an employment agreement
with Dr. Buntzman expiring December 31, 2007 and an employment agreement with
Dr. McGrath expiring December 31, 2008.

Our business and results could materially suffer if we improperly balance or
divert resources from our operations to making acquisitions or if we make
acquisitions that do not meet our expectations.

      In the future, when our financial and other resources permit, we expect to
seek additional acquisitions, especially accredited colleges. We may choose not
to purchase a college after we conduct our due diligence and negotiate terms.
Our acquisition of TCI took more than a year to complete as a result of
protracted negotiations and due diligence. From this and other experiences, we
know that it takes significant time and resources to identify and acquire
suitable acquisition candidates. In retrospect, we may find that the expenditure
of time, money and other resources may have been better made to manage existing
operations. Furthermore, the quarter in which we decide not to complete an
acquisition will be adversely impacted by the expenses incurred on the
acquisition. Whereas, if an acquisition is completed, the acquisition expenses
are capitalized and become part of the purchase price.

      If we do make acquisitions, potential hurdles to our successfully
integrating the acquisition include:

      o     an inability to increase enrollments, particularly if the college
            has had declining enrollments

      o     possible loss of key employees

      o     an inability to integrate the acquisition because of differences in
            vision, management style, work ethic or other causes

      o     difficulties in integrating academic, administrative and financial
            systems, including technology of the acquired company with ours

      o     diversion of our management resources or otherwise stretching our
            resources too thin


                                       28
<PAGE>

      o     adverse effects on our operating results as a result of lower
            operating margins of the acquired company

      o     unanticipated business or regulatory uncertainties or liabilities

      o     an inability to fund operations of the acquired company

      o     breaches of representations or warranties by the seller of the
            acquired company for which we do not have adequate recourse

      o     underestimation of capital needs

      o     failure to develop or implement a viable business plan, including
            with respect to managing Title IV loans that are needed to support
            tuition

      o     an inability to continue a school's participation in financial aid
            programs as a result of regulatory change in control provisions

      o     an inability to effectively deal with unions

      o     difficulties in maintaining accreditation and program registration

      The acquisition of PSB had an adverse effect on our 2005 operating results
because of delays and expenses incurred in relocating PSB and obtaining new
enrollments at its new location.

The impact of unionization of Interboro's faculty is not known.

      Negotiations are underway with Local 153 of the Office and Professional
Employees International Union of a contract covering Interboro's full-time and
part-time faculty. The contract with Local 153 covering Interboro's full-time
administrative employees expires August 31, 2006. Accordingly, the incremental
labor cost to Interboro resulting from unionizing Interboro's faculty and
renegotiating the union contract with Interboro's full-time administrative staff
is uncertain. If Interboro is unable to conclude contracts that it believes
allow it to cost-effectively and efficiently operate Interboro, then Local 153
may call a strike or a work slow down. A strike or slow down could materially
impact Interboro's ability to recruit and service its students while it
continues and, potentially, for a period after a strike or slow down ends. A
protracted strike or slow down would have a material adverse effect on
Interboro.


                                       29
<PAGE>

If the operation of a college's computer system is adversely affected by
computer viruses that are not recognized by available anti-virus software, or
for any other reason, its ability to operate could be severely impaired.

      Interboro's computers were inoperable for one week at the beginning of the
fall 2004 semester as the result of a virus that could not be stopped initially
by existing anti-virus software. While Interboro was able to continue to operate
during this period without any material adverse effect, this may not be the case
in the future. Furthermore, our computers could be affected by other problems in
the future that could adversely affect our operations.

Terrorist activity, or the threat of it, in the New York Metropolitan area could
adversely affect Interboro and TCI.

      All of Interboro's and TCI's sites are located in or near New York City.
If New York City is again a target or threatened target of terrorists,
Interboro's and TCI's operations, enrollments and retention rates could be
adversely impacted.

Interboro's inability to foster and maintain relationships with community
organizations in the communities where its college sites are located could
adversely affect those sites.

      A college site may require the support of the community-based
organizations that serve the minority populace from which the site seeks to
recruit and retain economically disadvantaged students. Local politics and
rivalries can jeopardize Interboro's relationships with these organizations.
Changes in our relationships with community-based organizations or other events
beyond Interboro's control might adversely affect the operations and growth of
an existing site.

A change of control of EVCI could adversely affect our college's receipt of Pell
and TAP funds.

      Under DOE regulations, a change in control includes a stockholder becoming
and ceasing to be a controlling stockholder. A controlling stockholder is
someone who holds or controls by agreement 25% or more of EVCI's voting stock
and more voting stock than any other EVCI stockholder. Under the DOE
definitions, EVCI does not now have a controlling stockholder. Under TAP
regulations, a change of control includes the transfer of controlling interest
in EVCI. A significant acquisition or disposition of our common stock may be
beyond our control.

      After a change of control, our cash flow could be adversely affected by
the withholding of significant portions of grant funds until the change of
control is reaffirmed, if at all. A change of control could take several months.
If not reaffirmed, our colleges would lose their ability to participate in the
Pell, TAP and PHEAA programs and would not be able to continue operating.

Future changes in ownership of our common stock could substantially limit the
utilization of our net operating loss carryforwards.

      Complex regulations under Section 382 of the Internal Revenue Code govern
the determination of whether one or more changes of ownership of EVCI's common
stock will result in limitations on EVCI's ability to offset taxable income
against its approximately $21.5 million of available net operating loss
carryforwards. Sales of EVCI's common stock by EVCI and persons defined as 5%
holders under Section 382 regulations must be monitored by us so we can
determine whether ownership changes have occurred that result in limitations on
our net operating losses (NOL) utilization. We have no control over sales by 5%
holders. Our effective cost of raising capital may be affected by these
regulations.


                                       30
<PAGE>

Actual or potential future sales of shares of our common stock by management
could have an adverse effect on the market price of our common stock.

      Sales of our common stock from time to time by management may cause the
marketplace to think the seller is not confident about our prospects. This may
be so even if the reason is otherwise and is stated publicly. A rise of our
stock price increases the likelihood that directors and officers will sell
shares of our common stock. Our share price has ranged greatly since we went
public and may be very volatile in the future.

         Since our public offering in February 1999, the market price of our
common stock has ranged between $0.26 and $40.94. Our share price rose to a high
of $11.05 the day of our press release reporting our 2004 preliminary results
and subsequently declined to $7.70 within a week after our press release
reporting our spring 2005 record enrollment growth. Following our announcement,
on October 19, 2005, of our receipt of the Draft Report and an ongoing internal
investigation, our stock price declined from $5.53 to $2.45 by October 20, 2005.

      Our share price also could be affected by a number of other factors,
including:

      o     exceeding or not meeting expectations for our semester enrollment
            numbers and our quarterly or yearly operating results

      o     regulatory developments that affect our cash flow or ability to open
            or expand sites

      o     an ongoing Pell program review or a TAP audit

      o     allegations, even if untrue, that a college failed to comply with
            regulations relating to TAP or Title IV, its accreditation by the
            Board of Regents or corporate compliance with Sarbanes-Oxley or
            other securities laws

      o     exceeding or not meeting expectations for our semester enrollment
            numbers and our quarterly or yearly operating results

      o     trading by investors that are more interested in quarterly versus
            long-term results

      o     changes in securities analysts' expectations as to our future
            performance

      o     adverse media coverage of our colleges or other for profit-schools
            owned by public companies

      o     increased competition in our target market


                                       31
<PAGE>

      o     the operating and stock price performance of other comparable
            companies, including as a result of fraud allegations or
            Congressional investigations relating to their operations

      o     general stock market or economic conditions, including as a result
            of uncertainty about, or the occurrence of, war or terrorism

      o     sales of our stock by our management or others pursuant to a
            prospectus or otherwise

      o     acquisitions of other colleges

      o     additional financings

      Furthermore, the stock market in general has experienced volatility that
often has been unrelated to the operating performance of particular companies.
These broad market and industry fluctuations may adversely affect the trading
price of our common stock regardless of our actual operating performance.

Provisions of laws or regulations, our certificate of incorporation and by-laws
and agreements with our executive officers could discourage takeover attempts
and other investments in our common stock.

      We are subject to a provision of Delaware law that prohibits a party that
has acquired 15% or more of our common stock, without our board's approval, from
causing a business combination (as defined) involving EVCI or its subsidiaries
unless approved by our board and two-thirds of our common stock held by our
other stockholders.

      The adverse regulatory effect of a change of ownership of EVCI's common
stock resulting in a change of control could discourage bids for our outstanding
shares at a premium or otherwise.

      The effects of the classified board provisions of our certificate of
incorporation are explained in the next risk factor.

      Our by-laws prohibit stockholders from calling, or proposing any business
at, a special meeting of stockholders. Our by-laws also require a stockholder to
give us substantial advance notice of any business to be proposed by the
stockholder at an annual meeting, including nominees for election as directors.

      In addition, we have change of control agreements with each of our
chairman, chief executive officer and president, general counsel, and chief
financial officer that require substantial payments to them in the event their
employment is terminated, except for cause, following a change of control of
EVCI.

      These provisions are intended to encourage persons seeking control of EVCI
to engage in negotiations with our board rather than initiate a hostile
takeover. They could also have the effect of entrenching management that resists
an acquisition a majority of our stockholders might think is good. Accordingly,
they could also limit the price that other investors might be willing to pay for
our common stock because they believe our management can defeat a takeover of us
that could be beneficial to non-management stockholders.


                                       32
<PAGE>

Our classified board limits stockholder voting for election and removal of
directors.

      Our board of directors is divided into three classes. The directors in
each class are elected for three-year terms when their class stands for election
at a stockholders meeting. This staggering of director terms protects directors
from being removed from office by anyone engaged in a proxy contest for control
of the board and dilutes the ability of stockholders to influence corporate
governance policies. Furthermore, our directors can only be removed, with or
without cause, by the holders of 66 2/3% of the shares entitled to vote at an
election of directors.

      The effect of these provisions is to make it difficult for any stockholder
to take control of our board of directors in a proxy contest that is not waged
with respect to two of our annual stockholder meetings.

Indemnification and limitation of liability of our officers and directors may
insulate them from accountability to stockholders at substantial cost to us.

      Our certificate of incorporation and by-laws include provisions whereby
our officers and directors are to be indemnified against liabilities to the
fullest extent permissible under Delaware law. Our certificate of incorporation
also limits a director's liability for monetary damages for breach of fiduciary
duty, including gross negligence. In addition, we have agreed to advance the
legal expenses of our officers and directors who are required to defend against
claims. These provisions and agreements may have the effect of reducing the
likelihood of suits against directors and officers even though such suits, if
successful, might benefit EVCI and its stockholders. Furthermore, we may be
adversely affected by paying the cost of settlement and damage awards against
directors and officers.

Item 1B. Unresolved Staff Comments.

      Not applicable.


                                       33
<PAGE>

Item 2. Description of Property.

      Interboro has ten sites, including six annexes. TCI has a main campus and
an annex. PSB has a main campus. All our colleges' facilities are leased. The
following table sets forth the location, approximate square footage, lease
expiration date and use of each principal site and each annex exceeding 2000
square feet used by Interboro, TCI, PSB and EVCI:

<TABLE>
<CAPTION>
        Location                               Square Footage         Expiration Date(1)       Use
        --------                               --------------         ------------------       ---
<S>                                                <C>                 <C>                   <C>
        Interboro
        Mid-town                                   39,000                  1/31/2014         Main campus
        New York, NY

        8th Avenue NY                              13,500              8/31/15 3rd & 4th     Annex
                                                                       floor and 9/30/11
                                                                           2nd floor
        Flushing, NY                               11,700                 12/31/2010         Extension center

        Flushing, NY                               10,100                  6/30/2025         Annex
        Washington Heights, NY                      7,400                  7/31/2012         Extension center

        Washington Heights, NY                      3,700                  7/31/2014         Annex

        Yonkers, NY                                 8,000                  4/15/2013         Site

        Yonkers, NY                                                        8/31/2014         Annex
                                                    6,000

        TCI
        31st Street, NY                            109,000                 6/30/2013         Main campus

        8th Avenue, NY                             19,000                  5/31/2008         Annex
        PSB
        Allentown, PA                              15,000                  5/31/2010         Main campus

        EVCI
        Yonkers, NY                                 2,400                 10/31/2013         Corporate and
                                                                                             administrative offices
</TABLE>

      ----------------------------------
      (1) Includes renewals at Interboro's option.


                                       34
<PAGE>

Item 3. Legal Proceedings.

      Securities Class Actions.

      On December 6, 2005, Glauser v. EVCI Career Colleges Holding Corp., et
al., was filed in the United States District Court for the Southern District of
New York against EVCI and certain of its current directors and officers. On
behalf of himself and purportedly on behalf of a class of EVCI's investors who
purchased EVCI's publicly traded securities between November 14, 2003 and
October 19, 2005, plaintiff alleges violations of Section 10(b) of the
Securities Exchange Act of 1934, Rule 10b-5 promulgated under the Exchange Act,
and Section 20(a) of the Exchange Act in connection with various public
statements made by EVCI and seeks an order that the action may proceed as a
class action and an award of compensatory damages in favor of plaintiff and the
other purported class members in an unspecified amount, together with interest
and reimbursement of costs and expenses of the litigation. To date, five
follow-on actions have been filed in the same court alleging substantially
similar claims, except that some of these follow-on actions allege a class
period from August 14, 2003 to December 5, 2005. On February 6, 2006, motions
were filed for the consolidation of the six securities class actions filed
against EVCI and for appointment of a lead plaintiff. Those motions are still
pending. EVCI and the other defendants believe these lawsuits have no merit and
intend to defend themselves vigorously.

      Stockholder Derivative Action.

      On March 2, 2006, Ferre v. McGrath, et al., Case No. 06CV1684, a
stockholder derivative lawsuit, was filed in the United States District Court
for the Southern District of New York, against certain officers and the
directors of EVCI. The derivative lawsuit also named EVCI as a nominal
defendant, against which no recovery is sought. The derivative complaint
generally alleges that the defendants breached their fiduciary duties owed to
EVCI by reason of their positions as officers and directors of EVCI. The
complaint alleges that the defendants failed to oversee Interboro Institute
("Interboro") and the admissions practices at Interboro, sold EVCI stock while
in possession of adverse non-public information, and authorized or permitted
false statements to be disseminated to the public. The defendants believe this
lawsuit has no merit and intend to defend themselves vigorously.

      Delaware Books and Records Action.

      On March 8, 2006, Shamji v. EVCI Career Colleges Holding Corp., C.A. No.
1986-N, was filed in Delaware Chancery Court. Plaintiff seeks access to EVCI's
books and records under Delaware law. EVCI believes this lawsuit has no merit
and intends to defend itself vigorously.

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

      Not applicable.


                                       35
<PAGE>

                                     Part II

Item 5. Market for Common Equity, Related Stockholder Matters and Small
        Business Issuer Purchases of Equity Securities.

      Our common stock is quoted on The NASDAQ Small Cap Market and the Boston
Stock Exchange under the symbol "EVCI". The following table sets forth the high
and low sales prices, of our common stock, as reported by NASDAQ, for each
quarter of 2005and 2004.

        2004                              High                    Low
        ----                              ----                    ---

        First Quarter                    12.82                   5.20
        Second Quarter                   14.77                   8.50
        Third Quarter                    11.00                   5.75
        Fourth Quarter                   10.74                   5.55

        2005
        ----
        First Quarter                    11.05                   6.34
        Second Quarter                    7.76                   4.75
        Third Quarter                     7.00                   6.14
        Fourth Quarter                    6.64                   1.50

      As of March 10, 2005, the number of EVCI's stockholders of record was 29
and the number of beneficial owners of its common stock was approximately 2,300.

      We have never declared or paid any cash dividends on our common stock. We
currently have no restrictions on the payment of dividends on our common stock.
However, we anticipate retaining any future earnings to finance internal growth
and potential acquisitions.


                                       36
<PAGE>

Item 6.  Selected Financial Data.

<TABLE>
<CAPTION>
                                                                          Years ended December 31,
                                                   2005             2004             2003            2002               2001
                                               ------------     ------------     ------------     ------------     --------------
<S>                                            <C>              <C>              <C>              <C>              <C>
Statement of operations data
Total revenue                                  $ 50,741,564     $ 33,069,973     $ 20,237,728     $ 15,433,940     $   10,034,406
Operating expenses                               49,705,327       29,425,882       18,603,202       14,946,671         13,044,273
Income (loss) from operations
                                                  1,036,237        3,644,091        1,634,526          487,269         (3,009,867)
Other income (expense)                             (371,270)        (152,479)        (114,626)         (94,810)           115,330
Loss from discontinued operations
                                                         --               --               --       (2,202,641)        (5,836,682)
Net income (loss)                                   360,967        6,253,612        3,379,900       (2,005,182)        (8,837,219)
Accreted value of warrants and transaction
costs - Series B
                                                         --               --         (179,382)        (239,176)          (239,176)
Dividends on preferred stock - Series B
                                                         --               --         (630,333)        (910,000)          (910,000)
Dividends on preferred stock - Series C
                                                         --               --               --           (6,253)                --
Accreted value of warrants - Series C
                                                         --               --               --           (3,081)           (16,664)
Net income (loss) available to common
stockholders
                                               $    360,967     $  6,253,612     $  2,570,185     $ (3,163,092)    $  (10,003,059)
                                               ============     ============     ============     ============     ==============

Net income per common share
  Basic
    Continuing Operations                      $       0.03     $       0.53     $       0.35     $      (0.20)    $        (0.93)
    Discontinued Operations                              --               --               --                               (1.30)
                                               ------------     ------------     ------------     ------------     --------------
                                                                                                                            (0.45)
                                               $       0.03     $       0.53     $       0.35     $       0.65     $        (2.23)
                                               ============     ============     ============     ============     ==============
  Diluted
    Continuing  Operations                     $       0.03     $       0.50     $       0.31     $      (0.20)    $        (0.93)
    Discontinued Operations                              --               --               --            (0.45)             (1.30)
                                               ------------     ------------     ------------     ------------     --------------
                                                       0.03             0.50             0.31            (0.65)             (2.23)
                                               ============     ============     ============     ============     ==============
    Dividends per share                        $         --     $         --                $     $         --     $           --
</TABLE>

<TABLE>
<CAPTION>
                                             2005           2004           2003          2002             2001
                                         ------------   ------------   ------------   ------------   --------------
<S>                                       <C>            <C>            <C>            <C>            <C>
Balance sheet data
Total current assets                      $16,554,987    $16,657,437    $ 5,430,892    $ 4,412,159    $ 4,146,459
Total assets                               49,986,477     31,337,972     13,309,328      8,934,308     13,053,346
Long-term debt, net of current portion     10,841,743        871,855      2,823,389      1,875,761      1,664,413
Total stockholders' equity                $25,363,077    $23,894,225    $ 7,014,764    $ 2,521,963    $ 3,641,457
</TABLE>


                                       37
<PAGE>

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

Critical Accounting Policies

      The following accounting policies are important to understanding our
financial condition and results of operations and should be read as an integral
part of the discussion and analysis of the results of our operations and
financial position. For additional accounting policies see note 1 to our
consolidated financial statements, "Principal Business Activity and Summary of
Accounting Policies."

      Revenue Recognition

      We recognize revenue ratably over each semester on a daily basis. Each
semester has 14 weeks, or 70 days, of classroom instruction. Final examinations
are given in the 15th week of the semester. Each week of classroom instruction
during the semester includes five days of revenue recognition. The first and
last days of Interboro's and TCI's three academic semesters usually vary from
year to year and do not coincide with the first and last days of EVCI's calendar
quarters. As a result, increases in enrollment do not directly relate to
increases in its revenue for the first, second or third quarters. However,
increases in enrollment for all of the three semesters included in a calendar
year directly relate to increases in revenue for that calendar year. Revenue, to
the extent it has not been earned, is classified on our balance sheet under
current liabilities as deferred revenue. Our net revenue and related receivables
are reduced for student refunds of tuitions.

      Student accounts receivable

      Student accounts receivable are reported at their outstanding unpaid
balances reduced by an allowance for doubtful accounts. We estimate doubtful
accounts based on historical bad debts and factors related to specific students.
We write off accounts receivable against the allowance when a balance is
determined to be uncollectible.

      Estimates

      The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires the use
of estimates by management. Actual results could differ from these estimates.

      Goodwill and other intangible assets

      Goodwill represents the excess of cost of an acquired entity over the
net of the amounts assigned to net assets acquired and liabilities assumed. We
account for its goodwill and other intangible assets in accordance with
statements on Financial Accounting Standards ("SFAS") No. 142, Goodwill and
Other Intangible Assets which requires the Company to test goodwill and other
intangible assets for impairment annually or whenever events or changes in
circumstances indicate that the carrying value of an asset exceeds its implied
fair value.


                                       38
<PAGE>

      Marketing

      Costs incurred for producing and communicating advertising are expensed as
incurred and included in selling, general and administrative expenses. However,
most of the revenue attributable to new enrollments results from marketing
undertaken and expensed prior to the semester in which the new enrollees first
attend. The following table indicates each approximate period when marketing
costs are incurred and the semester to which they relate:

         Semester                   Period
         --------                   ------

         June through September     Fall
         October through January    Spring
         February through May       Summer

      SFAS No. 123R

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123R, "Share-Based
Payment," which establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or services. A key
provision of this statement is the requirement of a public entity to measure the
cost of employee services received in exchange for an award of equity
instruments (including stock options) based on the grant-date fair value of the
award. That cost will be recognized over the period during which an employee is
required to provide service in exchange for the award (i.e., the requisite
service period or vesting period). This standard became effective for the
Company on January 1, 2006. EVCI adopted SFAS No. 123R beginning in the first
quarter of 2006.

      Income taxes

      We employ the liability method of accounting for income taxes pursuant to
Statement of Financial Accounting Standards ("SFAS") No. 109. Under this method,
recorded deferred income taxes reflect the tax consequences on future years of
temporary differences (differences between the tax basis of assets and
liabilities and their financial amounts at year-end). We provide a valuation
allowance that reduces deferred tax assets to their net realizable value.

Overview

      This overview is a brief summary of certain aspects of our business.

      Niche market

      Our colleges operate in a niche market since we primarily target and
recruit students who, at Interboro and TCI, will qualify for Pell and TAP grants
and at PSB will qualify for Pell and PHEAA. Those grants cover a large portion
of their tuition at our colleges and are made based on a student's financial
need. Accordingly, our target market is the economically disadvantaged in
minority communities. During 2005, TAP grants represented 42%, and Pell grants
represented 46% of our revenue. Other Title IV grant programs are available to
cover a portion of our students' tuition and other college costs. To cover most
of the gap between the amount of available Pell and TAP grants and the cost of
attending TCI, its students can obtain Title IV loans. Approximately 25% of
TCI's revenue for its fall 2005 semester was from the proceeds of Title IV
loans.


                                       39
<PAGE>

      The Title IV grants and loans, TAP grants, and PHEAA grants received by
our students subject our colleges to frequent regulatory reviews and detailed
regulatory oversight by federal and state agencies. The Interboro Draft SED
Report and ensuing events had a material adverse affect on our business in 2005.
Caps imposed by SED on new student enrollment of Interboro will adversely affect
our revenue and, together with additional costs required to comply with other
SED directives, are expected by us to result in a net loss of more than $1.5
million and negative cash flow of more than $2.0 million in 2006. However, we
believe we have sufficient cash resources to fund this net loss and negative
cash flow.

      Enrollments

      Our colleges have spring, summer and fall semesters with day, afternoon
and evening classes. Full-time student enrollment for 2005 increased 61% to
13,950 from 8,675 in 2004. Full-time enrollment for 2004 increased 65% to 8,675
from 5,250 in 2003. Full-time student enrollment in 2005 includes approximately
3,000 and 100 students attending TCI and PSB respectively. TCI and PSB were
acquired during 2005 and student enrollments are included in our totals
beginning with the fall 2005 semester. There are approximately 6,150 full-time
students enrolled at our colleges for the 2006 spring semester. In computing
enrollment numbers, two part-time students are counted as one full-time student.
The following table compares 2005, 2004 and 2003 full-time enrollments by
semester:

                              2005           2004          2003
                             ------         -----          -----

        Spring                3,700         2,800          1,850
        Summer                2,650         1,975          1,100
        Fall                  7,600         3,900          2,300
                             ------         -----          -----
                             13,950         8,675          5,250
                             ======         =====          =====

      The SED enrollment caps at Interboro are tied to an SED expectation that
at least 65% of students who are first enrolled for either of its spring 2006 or
summer 2006 semesters will persist to their second semester of attendance.


                                       40
<PAGE>

      The caps limit initial new student enrollment and new student enrollment
after approximately the third week of the semester, as follows:

                                                         After Approximately
                                Initial Enrollment            3 Weeks*
                                ------------------            --------

        Spring 2006                      900                      850
        Summer 2006                      900                      850
        Fall 2006                      1,080                    1,000
        Spring 2007                    1,080                    1,000

      ----------------------
      * Caps are approximate to allow for differences in purge rates. It
      takes approximately three weeks to purge students whose attendance is
      unsatisfactory.

      Capacity

      Growth in registration at our colleges is limited by the capacity of the
facilities in which our colleges operate. Total capacity can be reached if there
is full registration for all courses for morning, afternoon and evening courses
at all of our instructional locations. To date we have not achieved total
capacity and we believe that we are not likely to do so in the foreseeable
future. A number of items act to constrain our capacity, such as under
utilization of our facilities in the afternoon as well as on Fridays and
weekends, and SED caps on new student enrollments at Interboro.

      Seasonality

      Our revenue varies seasonally as a result of changes in student
enrollment. Total student enrollment and net revenue are typically highest in
our fourth and first quarters, which include October through March. As a result,
our second and third quarters have not been profitable prior to our 2003 third
quarter in which we had net income of $79,000. In 2004, we lost $585,000 in our
second quarter and $1,180,000 in our third quarter. In 2005, we had a profit of
$320,000 in our second quarter and a loss of $1,493,000 in our third quarter.
Furthermore, while for a full fiscal year, changes in enrollments directly
relate to changes in revenue, enrollments for academic semesters do not have the
same direct relationship to revenues for any particular fiscal quarter. Our
schools' courses are 15 weeks long and revenue per semester is, therefore,
reported over two quarters.

      Billing and collections

      Student accounts receivable consists of tuition earned, but not yet paid
by state grants and Title IV aid or by students who are allowed to pay in
installments the portion of their tuition and fees that are not covered by state
grants and Title IV aid.

      Accounts receivable are recorded as we bill students. Bills for tuition
are generally sent four weeks after the start of the semester. Interboro does
not bill tuition for students that have enrolled but have not attended class for
each course at least twice.


                                       41
<PAGE>

      Up to 90% of a semester's total federal aid is generally received by our
colleges prior to the completion of the semester and the balance is usually paid
to our colleges within 30 days after the semester ends. The collection of Title
IV funds for continuing students can begin at the beginning of the semester. For
new students, Interboro starts collecting Title IV funds after they have
completed 60% of the semester.

      Students who drop out or stop attending before 60% of the semester is
complete cannot get full federal aid. Their federal aid entitlement is prorated
based on the time they actually attended. We refund to the DOE that part of
federal aid that we have received but are not entitled to as a result of
students' early withdrawal.

      In order to be eligible for TAP, among other requirements, a student must
be taking at least 12 semester hours during the semester. As the semester
progresses and we determine our students' eligibility for TAP, we certify or
decertify students. This process applies to new students as well as continuing
students. The majority of TAP funds received in payment of tuition for a
semester is generally received by us prior to the start of the next semester and
the balance is usually substantially collected over the next two to three
months. This collection rate assumes the New York State budget is passed on time
without adversely affecting TAP.

      Cost of revenue

      Cost of revenue mostly consists of salaries of academic, administrative
and staff personnel such as deans, instructors, admissions personnel, and
library staff. It also includes student transportation allowance, testing and
vaccination costs, graduation costs and optical eye glass expenses.

      Other Salaries and all benefits

      These costs are included in selling, general and administrative expense.
All employee costs that are not included in cost of sales are included in this
category, including benefit costs for all of our employees.

      Acquisitions

      The discussion of our results below includes the revenue and costs of TCI
and PSB from the dates we acquired them through December 31, 2005. PSB was
acquired on January 11, 2005 and TCI was acquired on September 16, 2005.


                                       42
<PAGE>

Year ended December 31, 2005 Compared to Year ended December 31, 2004

      The following table summarizes our operating results as a percentage of
our total revenue for 2005 as compared to 2004:

<TABLE>
<CAPTION>
                                                                                  Year ended December 31,
                                                                                      2005       2004
                                                                                     -----      -----
<S>                                                                                  <C>        <C>
          Total revenue                                                              100.0%     100.0%

          Cost of revenue                                                             31.4       25.5
          Selling, general and administrative expenses                                66.6       60.5
          Loss on settlement of tuition disallowance                                    --        3.0
                                                                                     -----      -----
          Total operating expenses                                                    98.0       89.0
          Other income(expense)                                                       (0.7)      (0.5)
          Income before provision for (benefit from) income taxes                      1.3      (10.6)
                                                                                     -----      -----
          Net income                                                                   0.7%      18.9%
                                                                                     =====      =====
</TABLE>

      Total revenue for 2005 increased 53.4% or $17,671,000 to $50,741,000 from
$33,070,000 in 2004. Each of our colleges contributed to the increase in
revenue. Revenue at Interboro increased by $5,603,000. Revenue from our colleges
acquired during 2005 amounted to $11,881,000 at TCI and $187,000 at PSB. In
2006, revenue at Interboro will be adversely impacted by the enrollment caps
imposed by SED as discussed above. We expect that this decline in revenue at
Interboro will be more than offset by increases in revenue from our schools
acquired during 2005, TCI and PSB.

      Full time enrollments rose by 60.8% to 13,950 students during the spring,
summer and fall semesters of 2005 as compared to 8,675 during 2004. Enrollment
at TCI was approximately 3,000 and enrollment at PSB was approximately 100. The
TCI and PSB enrollments were solely for fall 2005. Enrollment at Interboro will
be limited in 2006 and in the spring semester of 2007 by the caps placed by SED
on the enrollment of new students.

      Deferred revenue of $3,348,000 at December 31, 2005 consists of advanced
TAP payments made to Interboro and TCI for the spring 2006 semester and will be
recognized in the first and second quarters of 2006.

      Our colleges offered partial grants totaling approximately $1,559,000 to
approximately 2,900 students during 2005.

      Our colleges sometimes make internal loans to eligible students to cover
any shortfall in the student's ability to pay tuition, after applying state and
federal grants. TCI offers its students Title IV loans and its most recent DOE
official cohort default rate is approximately 1.3% for 2003 and its DOE draft
rate is 2.6% for 2004, but could increase as a result of the increase in numbers
of ATB students admitted by TCI since spring 2005. Interboro and PSB do not
currently participate in Title IV loan programs.


                                       43
<PAGE>

      Cost of revenue increased by $7,488,000 to $15,950,000 for the year ended
December 31, 2005 as compared to $8,462,000 for 2004. Cost of revenue increased
primarily due to increases in salaries and wages for Interboro instructors,
recruiters and advisers as well as the cost of revenue incurred by TCI of
$4,090,000 and by PSB of $145,000. As a percentage of total revenue, we expect
cost of revenue to increase in 2006 due to our agreement with SED to increase
certain faculty and other personnel at Interboro, as well as the higher faculty
cost structure at TCI.

      Personnel included in cost of revenue at December 31, 2005, consisted of
the following:

                                December 31, 2005

                                             Interboro  TCI    PSB    Total
                                             ---------  ---    ---    -----
          Adjunct instructors                    127     92      3    222
          Full-time instructors                   78     78      1    160
          Tutors and Testers                      44      6     --     50
          Admissions staff                        44     43      6     91
          Deans and staff                         10     25      1     20
          Academic advisors                       19      6     --     35
          Librarians                              11      5     --     16
                                                 ---    ---     --    ---
          Total                                  333    255     11    599
                                                 ===    ===     ==    ===

      Our instructors include developmental specialists who provide additional
instruction in our continuing effort to increase student retention and
graduation rates at Interboro.

      The following table sets forth our selling, general and administrative
expenses, as a percentage of our total revenue for 2005 and 2004:

                                           Year ended December 31,
                                           -----------------------
                                                2005     2004
                                                ----     ----

          Salaries and benefits                 25.4%    29.2%
          Marketing                             10.1      9.0
          Depreciation                           4.1      3.1
          Professional and consulting fees       4.5      2.2
          Non cash compensation                  0.8      1.2
          Other expenses                        21.6     15.8
                                                ----     ----
          Total                                 66.5%    60.5%
                                                ====     ====

      Salaries and benefits increased by $3,394,000 to $12,908,000 during 2005
from $9,614,000 for the comparable period a year ago. Security personnel
salaries at Interboro decreased by $115,000 (from $225,000 in 2004) in
connection with the outsourcing of these services in 2005. Salaries and benefits
include $1,829,000 at TCI and $428,000 at PSB. All employee costs that are not
included in cost of revenue are included in this category, including benefit
costs and payroll taxes for all employees. While we expect that these costs will
increase in 2006 due to having the full year of operations at TCI and PSB, we
anticipate some reduction in staff positions at Interboro resulting from the SED
caps on its enrollments. As a percentage of our 2006 revenue, we expect these
costs to increase in 2006, but not as significantly as our faculty costs.


                                       44
<PAGE>

      Marketing costs increased by 70.9% or $2,118,000 to $5,105,000 in 2005 as
compared to $2,987,000 for 2004. Included in marketing costs in 2005 are TCI
costs of $950,000 and PSB costs of $327,000. Marketing costs at Interboro
increased by $841,000 which is consistent with increase in enrollment. Marketing
consists primarily of print and other media advertising costs used to attract
new students and will generally increase or decrease in proportion to the change
in new enrollees.

      Professional fees increased by 218.5% or $1,580,000 to $2,303,000 in 2005
as compared to $723,000 for 2004. This increase is primarily due to
approximately $500,000 in consulting fees in connection with complying with the
internal control reporting requirements of the Sarbanes Oxley Act of 2002 as
well as approximately $400,000 in legal and other consulting costs incurred in
connection with the internal investigation with respect to Interboro conducted
by our Audit Committee. We anticipate that we will have additional expense
exceeding $500,000 in the first quarter of 2006 relating to our compliance with
the Sarbanes Oxley Act of 2002.

      Non cash compensation charges remained virtually unchanged at
approximately $400,000 in each of 2005 and 2004. This cost relates to the
expensing of the value of options granted to three of our executive officers
which is being charged to operations over the vesting period. As a result of our
adoption of SFAS 123R, effective January 1, 2006, all stock and option grants
will be valued and result in a charge to operations over the vesting period of
the grants.

      Depreciation and amortization increased by 106.5% or $1,078,000 to
$2,090,000 for 2005 from $1,012,000 for 2004. This increase is due primarily to
additional amortization on leasehold improvements made at our Interboro
locations as well as depreciation and amortization from TCI of $262,000 and PSB
of $79,000.


                                       45
<PAGE>

      Other expenses included in selling, general and administrative expenses,
increased by $5,701,000 or 108.7% to $10,945,000 from $5,244,000 in 2004.
Approximately 86% of other expenses consisted of the following:

                                      2005          2004
                                   ----------    ----------

       Rent and utilities          $4,422,000    $2,398,000
       Security                     1,049,000       129,000
       Insurance                      576,000       426,000
       Supplies                       422,000       381,000
       Telephone                      771,000       594,000
       Equipment rental               370,000       216,000
       Travel and entertainment       203,000       237,000
       Bad debts*                   1,257,000            --
       Taxes                          356,000       124,000
                                   ----------    ----------
       Total**                     $9,426,000    $4,505,000
                                   ==========    ==========

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

      *     Includes approximately $800,000 in accounts deemed uncollectible at
            TCI.

      **    Total other expenses in 2005 include $2,533,000 and $202,000 from
            TCI and PSB, respectively.

      Loss on settlement of tuition disallowance of $978,000 in 2004 pertains to
disallowances resulting from a TAP audit. The audit began in February 2004.
After protracted negotiations with the auditors from the office of the New York
State Comptroller, in December 2004, we were advised that the total of the
disallowances would be $903,000. In March 2005, Interboro received the final
report that details the reasons for the amount of the disallowances. After
receipt of an invoice from HESC, Interboro paid $903,000. The remaining, $75,000
of the tuition disallowances constitutes accrued refunds of Pell grants related
to certain causes of the TAP disallowances. The amount due was paid to the DOE
in January 2005.

      A routine program review is currently being conducted by the DOE of
Interboro students' eligibility for Title IV grants of approximately $30 million
during Interboro's academic years 2002/2003, 2003/2004, and 2004/2005. We cannot
estimate the amount of refunds that Interboro will make to the DOE because of
the protracted period of time since the review started.

      Other income (expense) increased primarily due to interest and financing
costs incurred in connection new bank debt recorded as a result of the TCI
acquisition. As the result of the amendment of our bank loan agreement, the
interest rate on our bank debt has increased to the bank's prime rate plus 3%.

      Income tax expense for 2005 was $304,000 as compared with an income tax
benefit of $2,762,000 in 2004. The expense in 2005 relates primarily to state
and local taxes due on our earnings. Our federal income tax benefits are derived
from our historical losses from discontinued operations. We have carryforward
losses that will offset our federal and certain state taxable income in future
years. This has resulted in a deferred tax asset recorded on our books. Due to
the uncertainty of the utilization of all of the net operating losses, we have
recorded a valuation allowance against the deferred tax asset.


                                       46
<PAGE>

      As a combined result of the factors discussed above, net income decreased
by $5,893,000 to $361,000 for 2005 as compared to a net income of $6,254,000 for
2004.

      We are estimating a net loss of approximately $2,300,000 for 2006.
Approximately $700,000 of this estimated net loss relates to the amendment of
our bank credit agreement, including approximately $450,000 of accelerated
amortization of deferred financing costs. This estimate assumes Interboro will
be able to enroll the maximum number of new students permitted by the SED caps
for 2006 and that Interboro will incur additional capital costs of $400,000 and
operating costs of $1,000,000 relating to its compliance with other SED
directives.

Year Ended December 31, 2004 Compared to Year Ended 2003

      The following table summarizes our operating results as a percentage of
revenue for 2004 and 2003.

                                                     Year Ended December 31,
                                                           2004    2003
                                                          -----    -----
       Revenue:
          Net revenue                                      98.9     98.4
       Other income                                         1.1      1.6
                                                          -----    -----
       Total revenue                                      100.0    100.0
                                                          -----    =====
       Operating expenses:
          Cost of revenue                                  25.5     27.6
          Selling, general and administrative expenses     60.5     64.3
       Loss on settlement of tuition disallowance           3.0       --
                                                          -----    -----
       Total operating expenses                            89.0     91.9
                                                          -----    -----
       Income from operations                              11.0      8.1
                                                          -----    -----
       Other expense, net                                   0.5      0.6
                                                          -----    -----
       Benefit for income taxes                             8.4      9.2
                                                          -----    -----
       Net income                                          18.9     16.7
                                                          -----    -----
       Net income available to common stockholders         18.9     12.7
                                                          =====    =====

      Net revenue for 2004 increased 64%, or $12,806,000, to $32,718,000 from
$19,912,000 for 2003, because Interboro's full-time student enrollment rose by
64% to 8,675 from 5,250 in 2003. Each of Interboro's sites contributed to the
net revenue increase: Manhattan $7,478,000, Flushing $1,553,000, Washington
Heights $2,519,000 and Yonkers $1,350,000. These increases are net of a $94,000
decrease at EVCI.


                                       47
<PAGE>

      For the spring semester of 2004 Interboro's full-time enrollment was at
97% of its capacity of 3,100 students. With the availability of four new annexes
for the fall 2004, Interboro was operating at 78% of its capacity of 5,000
students. In addition to increasing capacity for the fall 2004 semester,
Interboro increased its tuition by $200 per semester. This increase resulted in
approximately $780,000 of additional revenue for the fall 2004 semester.

      Other income increased by $27,000 to $352,000 for 2004 from $325,000 for
2003, as a direct result of Interboro's enrollment increases. Other income is
comprised of application fees for our students and commissions from third-party
book sales. Book sales commissions increased approximately $100,000 to $180,000
in 2004. This increase was offset by the elimination of Interboro's $35 student
application fee in the fall of 2004.

      Cost of revenue increased by $2,876,000 to $8,462,000 for 2004 from
$5,586,000 for 2003. Most of the increase is attributable to an increase during
the year from 172 to 289 in full and part-time personnel that are included in
cost of revenue. Salaries made up 96% of the cost of revenue in 2004 and 92% of
the cost of revenue in 2003. The balance for each of 2004 and 2003 was primarily
made up of costs for student transportation, graduation ceremonies, student
vaccinations and Interboro's ophthalmic laboratory. The number of personnel by
job descriptions that are included in cost of revenue are:

      The number of personnel by job descriptions, that are included in cost of
revenue are:

                                       2004*   2003*
                                       ----    ----

       Adjunct instructors             150     76
       Full time instructors            42     32
       Tutors, testers and advisors    132     30
       Admissions staff                 40     28
       Dean and staff                    9      6
                                       ---    ---
       Librarians                      373    172
                                       ===    ===

      --------------------
      * During the fall semester

      The following table sets forth our selling, general and administrative
expense items as a percentage of our total revenue for 2004 and 2003:

                                        2004    2003
                                        ----    ----

       Salaries and benefits            29.2    31.7
       Marketing                         9.0     9.4
       Depreciation and amortization     3.1     4.3
       Other expenses                   17.1    17.8
       Professional fees                 2.2     4.3

      Salaries and benefits increased by 67% or $3,854,000 to $9,614,000 for
2004 from $5,760,000 for 2003. As a percentage of our revenue, salaries and
benefits increased because the cost of the additional administrative and
clerical employees was proportionately more than the increase in revenues
resulting from our enrollment growth. In September 2004, Interboro
administrative and clerical staff received a salary increase of approximately
6%. The table below summarizes changes in salaries and wages:


                                       48
<PAGE>

                               2004          2003
                            ----------    ----------

       Wages                $6,873,000    $4,124,000
       Bonuses                 550,000       250,000
       Employee benefits       836,000       499,000
       Payroll taxes         1,355,000       887,000
                            ----------    ----------
       Total                $9,614,000    $5,760,000
                            ==========    ==========

      Marketing costs increased by $1,078,000 or 56% to $2,987,000 for 2004 from
$1,909,000 for 2003. These costs were mostly for newspaper and subway ads,
telemarketing, and direct mail and community events.

      Professional fees and consulting fees decreased by $154,000 to $723,000
for 2004, from $877,000 for 2003. The decrease mostly related to savings in
legal costs for SEC and general corporate counseling as a result of the addition
of EVCI's general counsel on January 1, 2004 and savings in labor cost related
to the negotiation of the union agreement with Local 153 in 2003. Offsetting the
decreases were increases in director's fees, accounting and tax services, and
legal costs for the arbitration with the former owner of Interboro and for annex
leases.

      Depreciation and amortization increased by $135,000 to $1,012,000 for 2004
from $877,000 for 2003, primarily as a result of leasehold improvements made and
computer equipment purchased to support Interboro's growth.

      As a result of Interboro's growth, other expenses, included in selling,
general and administrative expense, increased by $1,672,000 to $5,244,000 for
2004 from $3,572,000 for 2003. Approximately 88% of other expenses consisted of
the following:

                                         2004           2003
                                      ----------    ----------
       Rent and utilities*            $2,398,000    $1,620,000
       Insurance                         426,000       405,000
       Telephone and internet            594,000       359,000
       Supplies                          401,000       237,000
       Equipment rental                  217,000       208,000
       Travel and entertainment          237,000       163,000
       Outside security services         129,000            --
       Investor relations                110,000       106,000
       Sales and real estate taxes       110,000        64,000
                                      ----------    ----------
       Total                          $4,622,000    $3,162,000
                                      ==========    ==========

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

      *     The 2004 rent increase consisted of $744,000 for new space and
            $34,000 for rent escalations.


                                       49
<PAGE>

      Benefit for income taxes increased by $902,000 to $2,762,000 in 2004 from
$1,860,000 in 2003. The following table summarizes the calculation:

                                                    2004          2003
                                                 ----------    ----------
       Federal tax benefit                       $3,482,000    $2,000,000
       State taxes due                              720,000       140,000
                                                 ----------    ----------
       Benefit for income taxes                  $2,762,000    $1,860,000
                                                 ==========    ==========

      Our federal income tax benefits are derived from our historical losses
from discontinued operations. We have carryforward losses that will offset our
federal taxable income in future years. This resulted in a deferred tax asset
recorded on our books. Due to the uncertainty of being able to utilize all of
the net operating losses, we have recorded a valuation allowance against the
deferred tax asset. As we became more profitable, we have reduced the valuation
allowance against the deferred tax asset as it became more likely than not that
we would be able to utilize the net operating losses. The decrease in the
valuation allowance resulted in a federal income tax benefit of $2,000,000 in
2003 and $3,482,000 in 2004.

      Net income available to common stockholders for 2004 was $6,254,000 as
compared to $2,570,000 for 2003. Our net income available to common stockholders
in 2003 was decreased by $810,000 for the accreted value of warrants and
transaction costs and undeclared preferred stock dividends. These charges
related to our Series B preferred stock and, accordingly, did not recur in 2004.

Financial Condition, Liquidity and Capital Resources

      We generated approximately $4,565,000 from our operating activities during
2005. In addition, we expended approximately $2,700,000 on purchases of property
and equipment and expended $15,626,000 to acquire TCI and PSB. In addition, we
were required to make $1,089,000 in deposits primarily in connection with
capital improvements required under the terms of our lease at Interboro's main
campus in Manhattan. At December 31, 2005, we had cash and cash equivalents of
approximately $9,273,000 and working capital of $3,572,000. We believe that our
present working capital, available credit facilities and cash balances will be
sufficient to meet our cash needs through the end of 2006.

      The terms of our $15,000,000 amended and restated collateralized credit
facility are summarized in Note 9 to our Consolidated Financial Statements. The
credit agreement requires, among other things, the maintenance of several
financial covenants and ratios including, senior funded debt to EBITDA, minimum
EBITDA and fixed charge coverage. On March 31, 2006, the Amended and Restated
Credit Agreement waived prior defaults and financial covenants for the remaining
term were reset. The term loan and revolving line mature on July 1, 2007.

      Our commitments for capital expenditures include approximately $900,000 to
make improvements as required under the lease at Interboro's main campus
described above. In addition, we expect to spend approximately $400,000 during
2006 in connection with improvements agreed to under the SED compliance letter
described above and we expect to spend approximately $600,000 in capital
improvements at TCI as agreed to with TCI's accrediting agency.


                                       50
<PAGE>

      The following table presents our expected cash requirements for
contractual obligation outstanding as of December 31, 2005:

<TABLE>
<CAPTION>
                                                Payments due by period
                                               (in thousands of dollars)
                                            Less than    1-3        4-5      More than
                                  Total     One year    Years      years     5 years
                                 -------    --------   -------    -------    -------
<S>                              <C>        <C>        <C>        <C>        <C>
       Line of Credit            $ 2,000    $ 2,000    $    --    $    --    $    --
       Long-term debt             13,000      2,625     10,375         --         --
       Capital leases                867        357        510         --         --
       Operating leases           49,811      5,947     17,453     10,770     15,641
                                 -------    -------    -------    -------    -------
       Total contractual cash
       obligations               $65,678    $10,929    $28,338    $10,770    $15,641
                                 -------    -------    -------    -------    -------
</TABLE>

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

      Market risk is the risk of loss to future earnings, to fair values or to
future cash flows that may result from the changes in the price of financial
instruments. EVCI is exposed to financial market risks, principally due to
changes in interest rates. We have used derivative financial instruments to
protect against interest rate fluctuation. Exposure to market risks related to
operating activities is managed through our regular operating and financing
activities.

      Interest Rate Risk

      We hold our cash and cash equivalents in high quality, short-term,
accounts. Consequently, the fair value of our cash and cash equivalents would
not be significantly impacted by either a 100 basis point increase or decrease
in interest rates due to the short-term nature of our portfolio. Our credit
facility bears interest at variable rates, and the fair value of this instrument
is not significantly affected by changes in market interest rates. A 100 basis
point increase in interest rates would have increased net interest expense for
2005 by approximately $40,000.

                                     PART II

                                OTHER INFORMATION

Item 8. Financial Statements.

      The financial information required by this item is set forth beginning on
page F-1.


                                       51
<PAGE>

                       EVCI CAREER COLLEGES HOLDING CORP.
                                AND SUBSIDIARIES

                       CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 2005

<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

<TABLE>
<S>                                                                                          <C>
Report of Independent Registered Public Accounting Firm                                         F-2

Consolidated Financial Statements:

   Balance Sheets as of December 31, 2005 and 2004                                              F-3
   Statements of Income for the Years Ended December 31, 2005, 2004, and 2003                   F-4
   Statements of Stockholders' Equity for the Years Ended December 31, 2005, 2004 and 2003      F-5
   Statements of Cash Flows for the Years Ended December 31, 2005 and 2004 and 2003             F-6
   Notes to Consolidated Financial Statements                                                F-7 - F-21
</TABLE>


                                      F-1
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
EVCI Career Colleges Holding Corp.

We have audited the accompanying consolidated balance sheets of EVCI Career
Colleges Holding Corp. ("EVCI") and Subsidiaries as of December 31, 2005 and
2004, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
2005. These financial statements are the responsibility of EVCI's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of EVCI Career Colleges
Holding Corp. and Subsidiaries as of December 31, 2005 and 2004, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2005 in conformity with United States generally
accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Company's
internal control over financial reporting as of December 31, 2005, based on
criteria established in Internal Control--Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our
report dated March 6, 2006 expressed an adverse opinion thereon.

GOLDSTEIN GOLUB KESSLER LLP
New York, New York

March 6, 2006 except for Note 9, as to which
         the date is March 31, 2006
         and the last paragraph of Note 10,
         as to which the date is March 8, 2006


                                      F-2
<PAGE>

              EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                             December 31,     December 31,
                                                                             ------------     ------------
                                                                                    2005             2004
----------------------------------------------------------------------------------------------------------
<S>                                                                          <C>              <C>
ASSETS

Current assets:
        Cash and cash equivalents                                            $  9,273,206     $ 10,504,308
        Student accounts receivable, less allowance for doubtful accounts
          of $2,449,488 and $105,000, respectively                              6,125,927        6,015,719
        Other receivables                                                         284,021               --
        Prepaid income taxes                                                       93,629               --
        Prepaid expenses and other current assets                                 778,204          137,410
----------------------------------------------------------------------------------------------------------
                Total current assets                                           16,554,987       16,657,437

Property and Equipment - net                                                    6,789,683        4,733,185
Intangible assets                                                              12,832,881               --
Goodwill                                                                        5,072,375        3,914,624
Deferred income tax asset, net of valuation allowance
of $2,037,500 and $1,827,500, respectively                                      5,557,500        5,557,500
Other assets                                                                    3,179,051          475,226
----------------------------------------------------------------------------------------------------------
                Total Assets                                                 $ 49,986,477     $ 31,337,972
==========================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
        Revolving credit line                                                  $2,000,000               --
        Accounts payable and accrued expenses                                   4,629,163     $  3,046,707
        Income taxes payable                                                           --          329,729
        Deferred tuition revenue                                                3,347,608        1,834,510
        Current portion of capital lease obligation                               311,821          275,329
        Current portion of notes payable                                        2,625,000          318,907
----------------------------------------------------------------------------------------------------------
                Total current liabilities                                      12,913,592        5,805,182

Capital lease obligation, net of current portion                                  466,743          585,337

Notes payable, net of current portion                                          10,375,000          286,518

Deferred rent                                                                     868,065          766,710
----------------------------------------------------------------------------------------------------------
                Total liabilities                                              24,623,400        7,443,747
----------------------------------------------------------------------------------------------------------

Stockholders' Equity:
        Preferred stock - $.0001 par value; authorized
        1,000,000 shares: none issued and outstanding                                  --               --
        Common stock - $.0001 par value; authorized 20,000,000
        shares; issued and outstanding 12,432,867 and 12,329,603
        shares, respectively                                                        1,264            1,254
        Additional paid-in capital                                             51,030,320       49,922,445
        Accumulated deficit                                                   (25,668,507)     (26,029,474)
----------------------------------------------------------------------------------------------------------
                Stockholders' equity                                           25,363,077       23,894,225
----------------------------------------------------------------------------------------------------------
                Total Liabilities and Stockholders' Equity                   $ 49,986,477     $ 31,337,972
==========================================================================================================
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       F-3
<PAGE>

              EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
Year ended December 31,                                              2005             2004             2003
------------------------------------------------------------------------------------------------------------
<S>                                                          <C>              <C>              <C>
Net revenue                                                  $ 50,401,280     $ 32,718,087     $ 19,912,423
Other income                                                      340,284          351,886          325,305
------------------------------------------------------------------------------------------------------------
Total revenue                                                  50,741,564       33,069,973       20,237,728
------------------------------------------------------------------------------------------------------------
Operating expenses:
   Cost of revenue                                             15,950,138        8,419,788        4,928,275
   Selling, general and administrative                         33,755,189       20,027,894       13,674,927
   Loss on settlement of tuition disallowance                                      978,200               --
------------------------------------------------------------------------------------------------------------
Total operating expenses                                       49,705,327       29,425,882       18,603,202
------------------------------------------------------------------------------------------------------------
Income from operations                                          1,036,237        3,644,091        1,634,526
Other income (expense):
   Interest and financing costs                                  (515,730)        (225,992)        (138,038)
   Interest income                                                144,460           73,513           23,412
------------------------------------------------------------------------------------------------------------
Income before provision/(benefit) for income taxes                664,967        3,491,612        1,519,900
Provision/(benefit) for income taxes                              304,000       (2,762,000)      (1,860,000)
------------------------------------------------------------------------------------------------------------
Net income                                                        360,967        6,253,612        3,379,900
Accreted value of warrants and transaction costs-Series B              --               --         (179,382)
Dividends on preferred stock-Series B                                  --               --         (630,333)
------------------------------------------------------------------------------------------------------------
Net income available to common stockholders                  $    360,967     $  6,253,612     $  2,570,185
============================================================================================================
Income per common share:
Basic                                                        $       0.03     $       0.53     $       0.35
                                                             ==============================================
Diluted                                                      $       0.03     $       0.50     $       0.31
                                                             ==============================================
Weighted average of common shares outstanding:
Basic                                                          12,417,422       11,883,695        7,360,649
                                                             ==============================================
Diluted                                                        12,903,941       12,518,450        8,265,176
                                                             ==============================================
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-4
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                   Preferred Stock
                                             Common Stock             Series B
                                                                                       Additional
                                         Number               Number                    Paid-in       Accumulated     Stockholders'
                                      of Shares    Amount  of Shares        Amount      Capital         Deficit          Equity
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>        <C>       <C>           <C>              <C>              <C>
Balance at December 31, 2002          5,308,826   $   532    130,000   $12,820,618   $ 23,432,295     $(33,731,482)    $  2,521,963

Accreted value of warrants and
 transaction costs - Series B                                              179,382                        (179,382)
Exercise of warrants and options        709,012        73                                 874,698                           874,771
Conversion of preferred stock
 Series B into common stock           3,550,244       355   (130,000)  (13,000,000)    12,999,645
Issuance of common stock                943,396        94                               1,999,906                         2,000,000
Series B settlement received net
 of expenses incurred in
 connection with the Series B
 conversion                                                                                (9,748)                           (9,748)
Cashless exercise of warrants           350,974        36                                     (36)
Dividends declared and paid on
 preferred stock Series B                                                                               (1,752,122)      (1,752,122)
Net income                                                                                               3,379,900        3,379,900
-----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2003         10,862,452     1,090                              39,296,760     $(32,283,086)       7,014,764

Issuance of common stock              1,038,962       104                               9,349,481                         9,349,585
Exercise of options and warrants        353,859        53                                 869,843                           869,896
Cashless exercise of  warrants           74,330         7                                      (7)
Non cash compensation charges                                                             406,368                           406,368
Net income                                                                                               6,253,612        6,253,612
-----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2004         12,329,603     1,254                              49,922,445      (26,029,474)      23,894,225

Exercise of options and warrants        103,264        10                                 703,907                           703,917
Non cash compensation charges                                                             403,968                           403,968
Net income                                                                                                 360,967          360,967
-----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2005         12,432,867   $ 1,264                            $ 51,030,320     $(25,668,507)    $ 25,363,077
===================================================================================================================================
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-5
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                              Year Ended December 31,
                                                                                         2005             2004             2003
<S>                                                                              <C>              <C>              <C>
Cash flows from operating activities:
  Net income                                                                     $    360,967     $  6,253,612     $  3,379,900
  Adjustments to reconcile net income to net cash provided by (used in)
  operating activities:
    Depreciation and amortization                                                   2,090,546        1,011,866          877,349
    Bad debt expense                                                                1,256,802           55,000               --
    Non cash compensation expense                                                     403,968          406,368               --
    Deferred income taxes                                                                  --       (3,557,500)      (2,000,000)
  Changes in operating assets and liabilities; net of effects of acquisition:              --               --               --
   (Increase)/decrease in students accounts receivable                             12,950,102       (3,355,301)      (1,071,054)
   (Increase)/decreae in prepaid expenses and other current assets                     79,106          (34,043)         (21,363)
   (Increase)/decrease in other assets                                                 13,120         (171,128)          25,333
   Increase/(decrease) in accounts payable and accrued expenses                    (1,960,181)       2,270,980         (346,627)
   Increase in income taxes payable/(prepaid income taxes)                           (423,358)         257,279               --
   Increase/(decrease) in deferred tuition revenue                                (10,373,042)         826,889         (867,886)
   Increase in deferred rent                                                          101,355          766,710
  Decrease in assets and liabilities and discontinued operations                                            --          (64,956)
------------------------------------------------------------------------------------------------------------------------------------
      Net cash provided by (used in) operating activities                           4,499,385        4,730,732          (89,304)
------------------------------------------------------------------------------------------------------------------------------------

  Cash flows from investing activities:
    Purchases of property and equipment                                            (2,701,157)      (2,492,059)        (649,410)
    Deposits required                                                              (1,088,506)              --               --
    Investment in restricted  certificates of deposit                                      --               --           (3,177)
    Release  in  restricted certificates of deposit                                        --          259,210               --
    Repayment of notes receivable                                                          --           90,000           10,000
    Payments on accrued purchase price payable                                             --       (2,909,666)        (345,000)
    Cash paid on acquisitions, net of cash received of $1,176,709                 (15,561,042)              --
------------------------------------------------------------------------------------------------------------------------------------
      Net cash used in investing activities                                       (19,350,705)      (5,052,515)        (987,587)
------------------------------------------------------------------------------------------------------------------------------------

  Cash flows from financing activities:
    Principal payments on capital lease obligation                                   (673,213)      (1,075,719)        (121,591)
    Principal payment on notes payable                                               (605,425)        (839,778)              --
    Repayment of promissory notes payable                                                  --               --          (28,261)
    Net proceeds from note payable bank                                                    --               --          923,464
    Repayment of note payable-Series B holders                                             --               --         (910,000)
    Proceeds from issuance of debt                                                 15,000,000               --
    Payment of deferred financing costs                                              (805,061)              --
    Proceeds from issuance of common stock                                                 --        9,349,585        2,000,000
    Proceeds from exercise of options and warrants                                    703,917          869,896          874,771
    Dividends paid on Series B preferred stock                                             --               --       (1,752,122)
    Expenses incurred upon conversion of Series B preferred stock                          --               --           (9,748)

------------------------------------------------------------------------------------------------------------------------------------
      Net cash provided by financing activities                                    13,620,218        8,303,984          976,513
------------------------------------------------------------------------------------------------------------------------------------

  Net increase (decrease) in cash and cash equivalents                             (1,231,102)       7,982,201         (100,378)

  Cash and cash equivalents at beginning of year                                   10,504,308        2,522,107        2,622,485

------------------------------------------------------------------------------------------------------------------------------------
  Cash and cash equivalents at end of year                                       $  9,273,206     $ 10,504,308     $  2,522,107
====================================================================================================================================

         Supplemental disclosures of cash flow information:                                --

  Cash paid during the period for:
    Interest                                                                     $    148,967     $    225,992          143,239
====================================================================================================================================
    Income taxes                                                                 $    759,332     $    604,546     $    146,445
====================================================================================================================================

         Supplemental schedule of noncash investing and financing activities:

  Capital lease obligations incurred in the acquisition of equipment             $    591,111     $  1,538,387     $    299,843
====================================================================================================================================

Increase in goodwill                                                             $  1,157,751          314,102     $  1,343,233
                                                                                 ===================================================
Increase in accrued purchase price payable                                       $         --          314,102     $  1,343,233
                                                                                 ===================================================
The Company purchased all of the outstanding stock of Pennsylvania
School of Business, Inc. and Technical Career Institutes, Inc.
for an aggregate purchase price of $16,737,000 In conjunction with the
acquisition, liabilities were assumed as follows:
                                                                                 ===================================================

    Fair value of assets acquired                                                $ 32,166,000     $         --               --
    Cash paid for acquisitions                                                   $ 16,740,000     $         --               --
                                                                                 --------------------------------------------------
    Liabilities assumed                                                          $ 15,426,000     $         --               --
====================================================================================================================================
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-6
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

EVCI Career Colleges Holding Corp. ("EVCI") provides on-campus education through
the operations of Interboro Institute, Inc. ("Interboro"), Technical Career
Institutes, Inc. ("TCI"), and Pennsylvania School of Business, Inc. ("PSB").

In August 2004, EVCI changed its name to EVCI Career Colleges Holding Corp.

The accompanying consolidated financial statements include the accounts of EVCI
and its wholly owned subsidiaries (collectively referred to as the "Company" or
"We"). The operation of Technical Career Institutes, Inc. ("TCI") and
Pennsylvania School of Business ("PSB") are included from the date of
acquisition. All intercompany accounts and transactions have been eliminated in
consolidation.

The Company considers all highly liquid instruments purchased with a maturity of
three months or less to be cash equivalents.

The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. It has not experienced any losses in such
accounts.

The Company reviews long-lived assets and identified intangibles for impairment
whenever events or changes in circumstances indicate that the carrying value of
an asset may not be fully recoverable. The Company performs discounted cash flow
analyses to determine if an impairment exists.

The Company recognizes revenue ratably over each semester on a daily basis.
Generally, each semester has 14 weeks, or 70 days, of classroom instruction.
Final examinations are given in the 15th week of the semester. Each week of
classroom instruction during the semester includes five days of revenue
recognition. Net revenue and related receivables are reduced for student refunds
of tuition.

Almost all of our colleges' students fund their tuition through Pell grants,
pursuant to the Title IV of the Higher Education Act, other federal programs and
New York State Tuition Assistance Program (TAP) grants. In addition, we
participate in the Title IV Federal College Work Study program, which allows a
limited number of students to receive additional aid by working in college. Our
colleges also receive funds from the Title IV Supplemental Education Opportunity
Grant program, which provides some students additional grants to meet college
costs. We allow students to pay over time the portion, if any, of tuition, that
is not covered by grants. Students who cannot afford to pay over time are
sometimes given tuition grants. Interboro has chosen not to participate in any
Title IV loan programs. TCI does participate in Title IV loan programs. Changes
in Title IV or TAP programs may have a direct impact on our colleges.

Accounts receivable are reported at their outstanding unpaid principal balances
reduced by an allowance for doubtful accounts. The Company estimates doubtful
accounts based on historical bad debts and factors related to specific students.
The Company writes off accounts receivable against the allowance when a balance
is determined to be uncollectible.

The fair value of financial instruments is the amount at which the instrument
could be exchanged in a current transaction between willing partners. The
carrying amount of all financial instruments classified as a current asset
consisting primarily of student accounts receivable, or current liability
consisting primarily of accounts payable, are deemed to approximate fair value
because of the short maturity of those instruments. The carrying amount of our
long-term debt is deemed to approximate its fair value due to the market based
interest rate on the debt.


                                      F-7
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and equipment are recorded at cost. Depreciation is provided for by the
straight-line method over the estimated useful lives of the property and
equipment. Amortization of leasehold improvements is provided for by the
straight-line method over the lesser of the life of the asset or term of the
lease.

Goodwill represents the excess of cost of an acquired entity over the net of the
amounts assigned to net assets acquired and liabilities assumed. The Company
accounts for its goodwill in accordance with statements on Financial Accounting
Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets which requires
the Company to test goodwill for impairment annually or whenever events or
changes in circumstances indicate that the carrying value of an asset exceeds
its implied fair value.

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires the use of estimates
by management. Actual results could differ from these estimates.

Costs incurred for producing and communicating advertising are expensed as
incurred and included in selling, general and administrative expenses.
Advertising expenses approximated $5,105,000, $2,987,000 and $1,894,000 for the
years ended December 31, 2005, 2004, and 2003, respectively.

The Company employs the liability method of accounting for income taxes pursuant
to Statement of Financial Accounting Standards ("SFAS") No. 109. Under this
method, recorded deferred income taxes reflect the tax consequences on future
years of temporary differences (differences between the tax basis of assets and
liabilities and their financial amounts at year-end). The Company provides a
valuation allowance that reduces deferred tax assets to their net realizable
value.

SFAS No. 128, Earnings per Share, requires dual presentation of basic earnings
per share ("EPS") and diluted EPS on the face of all statements for all entities
with complex capital structures. Basic EPS is computed as net earnings divided
by the weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur from common shares
issuable through stock-based compensation including stock options, restricted
stock awards, warrants and other convertible securities.

The Company has elected, in accordance with the provisions of SFAS No. 123, to
apply the current accounting rules under APB Opinion No. 25 and related
interpretations in accounting for stock options and, accordingly, is presenting
the disclosure-only information as required by SFAS No. 123. If the Company had
elected to recognize compensation cost based on the fair value of the options
granted at the grant date as prescribed by SFAS No. 123, the Company's net
income and net income per common share would approximate the pro forma amounts
shown in the following table:


                                      F-8
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Year ended December 31,                                          2005             2004               2003
-----------------------------------------------------------------------------------------------------------
<S>                                                         <C>             <C>                <C>
Reported net income available to common
stockholders                                                $ 360,967       $6,253,612         $3,379,900
Add:  Stock-based employee compensation
expense included in recorded net income,
net of related tax effects                                    403,968          406,368                 --

Deduct: Total stock-based employee
compensation expense determined
under fair-value-based method for
all awards, net of related tax effects                     (1,138,205)      (1,723,883)          (106,422)

-----------------------------------------------------------------------------------------------------------
Pro forma net income (loss) available
to common stockholders                                    $  (373,270)      $4,936,097         $3,273,478
===========================================================================================================

Reported net income per common share:
  Basic                                                       $  0.03           $ 0.53             $ 0.35
  Diluted                                                     $  0.03           $ 0.50             $ 0.32

Pro forma net income (loss) per common share:
  Basic                                                       $ (0.03)          $ 0.42             $ 0.33
  Diluted                                                     $ (0.03)          $ 0.39             $ 0.30
===========================================================================================================
</TABLE>

The fair value of options granted (which is amortized over the option vesting
period in determining the pro forma impact) is estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions: no
dividend yield, volatility of 62% in 2005 and 136% in each of 2004 and 2003,
risk-free interest rates ranging from 3.08% to 4.14% and an expected life of
three to five years from the date of vesting.

In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123R, "Share-Based
Payment," which establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or services. A key
provision of this statement is the requirement of a public entity to measure the
cost of employee services received in exchange for an award of equity
instruments (including stock options) based on the grant-date fair value of the
award. That cost will be recognized over the period during which an employee is
required to provide service in exchange for the award (i.e., the requisite
service period or vesting period). The Company will adopt SFAS No. 123R
beginning in the first quarter of 2006. The table above reflects the estimated
impact that such a change in accounting treatment would have had on the
Company's net income and net income per share if it had been in effect during
the years ended December 31, 2005, 2004 and 2003.

Management does not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have a material
effect on the accompanying consolidated financial statements.

Certain prior year amounts have reclassified, where appropriate, to conform to
the current year presentation.

2. ACQUISITIONS

We have acquired either fully operational or licensed to operate for-profit
career-oriented colleges that have sound management, functional operations and
serve the same target market as our existing college.

Pennsylvania School of Business, Inc.

On January 11, 2005, we acquired for $670,000 all of the outstanding shares of
Information Computer Systems, Inc., which subsequently changed its name to
Pennsylvania School of Business, Inc. Approximately $640,000 of the purchase
price has been allocated to the school's authority to operate under state law
and by its accrediting agency. This amount is reflected on our balance sheet as
an intangible asset and is being amortized on a straight line basis over five
years. Amortization expense, which began in September 2005 upon commencement of
operations, for the year ended December 31, 2005 was $40,031. Amortization
expense will be approximately $160,000 in each of 2006, 2007 and 2008 and
$120,000 in 2009.


                                      F-9
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Technical Career Institutes, Inc.

On September 16, 2005, EVCI acquired all of the outstanding common shares of
TCI. The results of TCI's operations have been included in the consolidated
financial statements since that date. The consideration for the acquisition
consisted of $16,067,000 of cash including transaction costs plus the assumption
of $15,426,000 of liabilities. Payment of the purchase price was derived from
$14,220,000 of proceeds from a new credit facility as well as cash from our
current balances.

The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition. The fair values of assets
acquired were obtained through a third-party valuation.

At September 16, 2005

Current assets                   $16,468,000
Property and equipment               546,000
Intangible assets                 12,440,000
Goodwill                           1,157,000
Other assets                         882,000
                                 -----------
     Total assets acquired        31,493,000
                                 -----------
Current liabilities               15,363,000
Other liabilities                     63,000
                                 -----------
     Total liabilities assumed    15,426,000
                                 -----------
     Net assets acquired         $16,067,000
                                 ===========

Of the $12,440,000 of acquired intangible assets, $10,200,000 was assigned to
the TCI trade name that is not subject to amortization. The remaining identified
intangibles (consisting of curriculum, Middle States accreditation and student
lists) of $2,240,000 have a weighted average useful life of three years. The
remaining unidentified intangible assets of $1,157,000 was assigned to goodwill.
Amortization expense relating to the identified intangibles amounted to $208,055
for the year ended December 31, 2005. All of the intangible assets are expected
to be deductible for tax purposes.

Amortization expense for the next five years is expected to be as follows:

December 31,
             2006        $713,333
             2007         713,333
             2008         519,861
             2009          50,000
             2010          35,417

The following unaudited summarized pro forma consolidated results of operations
for the years ended December 31, 2005 and 2004 assume that the TCI acquisition
occurred on January 1, 2005 and 2004 and reflect the historical operations of
the purchased business adjusted for higher interest and amortization of deferred
financing costs on borrowings, and increased amortization, net of applicable
income taxes, resulting from the acquisition:


                                      F-10
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                        Year ended December 31,
                                        -----------------------
                                         2005             2004
                                         ----             ----
Revenue                               $ 74,218,000    $67,080,000
                                      ============    ===========
Net income (loss)                         (128,000)     6,366,000
                                      ============    ===========
Diluted net income (loss) per share   $      (0.01)   $      0.51
                                      ============    ===========

The pro forma results of operations are not necessarily indicative of the actual
results that would have occurred had the acquisitions been made at the beginning
of the periods, or of results which may occur in the future.

3. PROPERTY AND EQUOPMENT

Property and equipment, at cost, consists of the following:

December 31,                               2005         2004
-                                          ----         ----

Furniture and fixtures              $ 1,232,249   $   837,618   3 to 5 years
Telephone systems, office
  computers and software              4,114,168     2,560,861   3 to 5 years
Library                                 597,372       350,658      5 years
Leasehold improvements                4,234,468     2,690,675   Term of lease
Equipment acquired under
  capital lease                       1,154,230     1,052,419      5 years
--------------------------------------------------------------------------------
                                     11,332,487     7,492,231
--------------------------------------------------------------------------------

Less accumulated depreciation and
  amortization:
Equipment acquired under
  capital lease                         327,032       256,472
Other                                 4,215,772     2,502,574
--------------------------------------------------------------------------------
                                      4,542,804     2,759,046
--------------------------------------------------------------------------------

                                    $ 6,789,683   $ 4,733,185
================================================================================

Depreciation and amortization expense relating to fixed assets for the years
ended December 31, 2005, 2004 and 2003 amounted to $1,783,759, $1,011,868, and
$877,346, respectively.

4. GOODWILL

Presented below is a summary of goodwill activity relating to acquisition of
Interboro and TCI:

Balance at December 31, 2002                                          $2,257,289
Interboro EBITDA calculation                                           1,343,233

Balance at December 31, 2003                                           3,600,522
Arbitration adjustments                                                  314,102

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

Balance at December 31, 2004                                          $3,914,624
TCI acquisition (note 2)                                               1,157,751
                                                                      ----------
Balance at December 31, 2005                                          $5,072,375
                                                                      ==========


                                      F-11
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. OTHER ASSETS

Other assets constist of the following:

December 31                                                    2005         2004
--------------------------------------------------------------------------------

Deposits                                                 $2,232,454   $  373,084
Deferred financing costs, net                               746,359           --
Other  (none in excess of 5% of other assets)               200,238      102,142
--------------------------------------------------------------------------------
                                                         $3,179,051   $  475,226
================================================================================

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

December 31,                                                   2005         2004
--------------------------------------------------------------------------------

Accounts payable                                         $1,888,241   $  495,826
Accrued salaries and benefits                             1,538,663      661,011
Accrued bonus payable                                            --      550,000
Accrued professional fees                                   229,503           --
TAP and Pell Audit refunds payable                               --      978,400
Student refunds payable                                     696,546      251,470
Other (none in excess of 5% of accounts payable
and accrued expenses)                                       276,210      110,000
--------------------------------------------------------------------------------
                                                         $4,629,163   $3,046,707
================================================================================

7. OBLIGATIONS UNDER CAPITAL LEASES

The Company leases office and computer equipment under capital leases expiring
at various dates through 2009. The leases require monthly payments of principal
and interest imputed at rates ranging from 7.4% to 12.4% per annum.

Minimum future obligations under these leases are as follows:

Year ending December 31,

        2006                                                    $  365,795
        2007                                                       353,879
        2008                                                       121,173
        2009                                                        26,137
--------------------------------------------------------------------------------
                                                                   866,984
Less amount representing interest                                  (88,420)
Less current portion                                              (311,821)
--------------------------------------------------------------------------------
                                                                 $ 466,743
================================================================================


                                      F-12
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. INCOME TAXES

The provision for income taxes consists of:

Year ended December 31,                      2005           2004           2003
--------------------------------------------------------------------------------
Current:
  Federal                             $    48,000    $        --    $        --
  State and local                         256,000        720,500        140,000
--------------------------------------------------------------------------------
Total current                         $   304,000    $   720,500    $   140,000
Deferred income tax benefit                           (3,482,500)    (2,000,000)
--------------------------------------------------------------------------------
                                      $   304,000    $(2,762,000)   $(1,860,000)
================================================================================

The Company recorded a deferred income tax asset for the tax effect of net
operating loss carryforwards and temporary differences. In recognition of the
uncertainty regarding the ultimate amount of income tax benefits to be derived,
the Company has recorded a valuation allowance as follows:

December 31,                                               2005            2004
--------------------------------------------------------------------------------
Net operating losses                                $ 7,668,000     $ 7,385,000
Deferred rent                                           375,000              --
Allowance for doubtful accounts                         658,000              --
Prepaid expense                                        (231,000)             --
Depreciation                                           (911,000)             --
Other, net                                               36,000              --
--------------------------------------------------------------------------------
                                                      7,595,000       7,385,000
Less valuation allowance                             (2,037,500)     (1,827,500)
--------------------------------------------------------------------------------
                                                    $ 5,557,500     $ 5,557,500
================================================================================

The provision (benefit) for income taxes differs from the amount computed using
the federal statutory rate of 34% as a result of the following:

Year ended December 31,                                 2005     2004     2003
--------------------------------------------------------------------------------
Federal statutory rate                                    34%      34%      34%
Permanent difference                                       1       --        9
State and local income taxes of Interboro                 28        9       --
Prior year underaccrual                                   --        5       --
Federal amt taxes                                          5       --       --

Change in valuation allowance                            (22)    (127)    (162)
--------------------------------------------------------------------------------
                                                          46%     (79%)   (119%)

As of December 31, 2005, the Company had net operating loss carryforwards
available to offset future taxable income of approximately $21,300,000, which
expire in various years through 2022. Subsequent issuances of common stock in
capital raising activities may effect an ownership change, as described under
Section 382 of the Internal Revenue Code, that could limit, on an annual basis,
the Company's ability to utilize such net operating losses.


                                      F-13
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. NOTES PAYABLE

Our principal credit facility is a $15,000,000 collateralized borrowing
agreement, with a bank, which was originally entered into on September 16, 2005
and was amended and restated on March 31, 2006. This facility includes a
revolving line of credit of up to $2,000,000 and a $13,000,000 term loan. The
facility is secured by substantially all of our assets and matures on July 1,
2007.

On December 31, 2005, our outstanding borrowings under the facility were
$15,000,000 consisting of $2,000,000 under the revolving credit line and
$13,000,000 under the term loan.

The term loan requires quarterly principal payments as follows:

      o     $500,000 per quarter, 12/31/05 - 9/30/06 (the 12/31/05 payment was
            paid on 1/3/06)

      o     $625,000 per quarter, 12/31/06 - 3/31/07

The revised agreement requires mandatory payments of 50% of excess cash flow (as
defined). Interest is computed, at prime plus 3.00%. The previous agreement
computed interest at the Company's option at either prime plus 2.00% or LIBOR
plus 3.25%. The weighted average interest rate on the loans outstanding at
December 31, 2005 was 7.8%.

The credit agreement contains certain financial covenants and restrictions on
the payment of dividends. The Company was in default on certain financial
covenants as of December 31, 2005. On March 31, 2006, the amended and restated
agreement, waived prior defaults and financial covenants for the remaining term
were reset.

Maturities of the term portion of this debt are as follows:

                          Year ended December 31,
                          -----------------------
               Total               2006                 2007
               -----               ----                 ----
            $13,000,000         $2,625,000          $10,375,000

In connection with entering into the original credit agreement we incurred
$805,000 of financing costs and fees which are included with other assets in the
accompanying balance sheet. These costs are being amortized on the straight line
basis over the remaining life of the term loan. For the year ended December 31,
2005, amortization expense amounted to $58,702. As a result of the amended and
restated agreement entered into on March 31, 2006 the accelerated maturity date
of the term loan will result higher amortization charges in 2006 and 2007.

The Company has entered into an interest rate cap agreement on one half of its
floating rate debt obligation. Under the agreement, the maximum interest rate on
$6,500,000 of the debt will be 5.25%. The agreement expires on December 31,
2007. The Company records the agreement at fair value, with unrealized gains or
losses included in income (loss). The fair value of the cap at December 31, 2005
was $10,066 and is included in other assets. During 2005, the change in fair
market value amounting to approximately $42,000 was charged to interest and
financing costs in connection with this cap. Any amounts due from the
counterparty are subject to credit risk in the event of counterparty
nonperformance.

At December 31, 2004, we owed $605,425 in a note payable to a bank. The note
bore interest at 6% and was payable in monthly installments of principal and
interest aggregating $30,462. The outstanding balance was repaid on September
16, 2005.


                                      F-14
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. COMMITMENTS AND CONTINGENCIES

The Company leases office space and classrooms under non-cancelable operating
leases which expire at varying times through June 2025. Renewal options have
not been included in the table below. The leases are subject to escalations for
increases in the Company's share of increases in real estate taxes and other
expenses.

Minimum future obligations under these leases are as follows:

Year ending December 31,

     2006                                             $  5,947,000
     2007                                                6,006,000
     2008                                                5,872,000
     2009                                                5,711,000
     2010                                                5,694,000
  Thereafter                                            20,850,000
--------------------------------------------------------------------------------
                                                      $ 50,080,000
================================================================================

Rent expenses (including utilities) charged to operations for the years ended
December 31, 2005, 2004 and 2003 amounted to approximately $4,422,000,
$2,398,000, and $1,620,000, respectively.

The leases provide for rent abatements and/or scheduled increases in base rent.
Rent expense is charged to operations ratably over the term of the leases. This
results in deferred rent payable which represents cumulative rent expense
charged to operations from inception of these leases in excess of required lease
payments.

TCI is regionally accredited by the Middle States Commission on Higher
Education. Middle States must approve the change of ownership in TCI to EVCI as
a condition of the accreditation remaining effective.

The Company has employment agreements with the certain executive officers of the
Company and its subsidiaries. The agreements provide for aggregate annual base
compensation of approximately $1,602,000, $1,612,000 and $930,000 for the years
ended December 31, 2006, 2007 and 2008, respectively. Aggregate compensation
under these agreements, including discretionary bonuses, was approximately
$1,354,000 and $1,692,000 and $1,120,000 for the years ended December 31, 2005,
2004, and 2003, respectively.

In connection with the purchase of TCI, the Company assumed commitments to
retain certain executive employees at TCI through September 16, 2006. The
aggregate commitment under these agreements was approximately $500,000 at
December 31, 2005.

Our colleges are subject to extensive regulation and oversight by governmental
agencies that administer Title IV and TAP, by the New York State Education
Department and the New York Board of Regents and by other accrediting agencies.
As a result, they must comply with a complex framework of laws and regulations
and are subjected to frequent compliance and financial reviews and detailed
oversight.

The entitlement to grants under Pell and TAP programs is routinely audited.
During 2004, Interboro had a TAP audit that covered the three academic years
ended June 30, 2001, 2002 and 2003. In 2004 the Company had accrued
approximately $903,000 for TAP disallowances. The Company also accrued an
additional $75,000 for PELL refunds that relate to certain causes for the TAP
disallowances. Both amounts were paid during 2005. Subsequent periods are still
subject to audit.


                                      F-15
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Between July 2002 and August 2004 the Company was a defendant in an arbitration
brought by the former owner of Interboro. The Company prevailed in full on the
central issue of the arbitration. This was a claim that EVCI's excessive and
improper allocations of its overhead to Interboro during 2002 resulted in EVCI's
calculation of a lower EBITDA for those years and, therefore, a lower purchase
price for Interboro. The arbitrator also ruled that 2003 EBITDA was outside the
scope of the arbitration.

On a collateral issue, the arbitrator held the Company was not entitled to
reduce the purchase price by approximately $138,000 for its claimed breach of
representation and warranty. The arbitrator also awarded attorneys fees of
approximately $46,000 to the plaintiff's attorney and $128,000 of interest.

The Company paid the former owner of Interboro in full with the exception of
approximately $952,000 which it delivered into escrow. The escrowed amount was
released to the former owner in March 2006 with no additional payments by the
Company.

Securities Class Actions. On December 6, 2005, Glauser v. EVCI Career Colleges
Holding Corp., et al., was filed in the United States District Court for the
Southern District of New York against EVCI and certain of its current directors
and officers. On behalf of himself and purportedly on behalf of a class of
EVCI's investors who purchased EVCI's publicly traded securities between
November 14, 2003 and October 19, 2005, plaintiff alleges violations of Section
10(b) of the Securities Exchange Act of 1934, Rule 10b-5 promulgated under the
Exchange Act, and Section 20(a) of the Exchange Act in connection with various
public statements made by EVCI and seeks an order that the action may proceed as
a class action and an award of compensatory damages in favor of plaintiff and
the other purported class members in an unspecified amount, together with
interest and reimbursement of costs and expenses of the litigation. To date,
five follow-on actions have been filed in the same court alleging substantially
similar claims, except that some of these follow-on actions allege a class
period from August 14, 2003 to December 5, 2005. On February 6, 2006, motions
were filed for the consolidation of the six securities class actions filed
against EVCI and for appointment of a lead plaintiff. Those motions are still
pending. EVCI and the other defendants believe these lawsuits have no merit and
intend to defend themselves vigorously.

Stockholder Derivative Action. On March 2, 2006, Ferre v. McGrath, et al., Case
No. 06CV1684, a stockholder derivative lawsuit, was filed in the United States
District Court for the Southern District of New York, against certain officers
and the directors of EVCI. The derivative lawsuit also named EVCI as a nominal
defendant, against which no recovery is sought. The derivative complaint
generally alleges that the defendants breached their fiduciary duties owed to
EVCI by reason of their positions as officers and directors of EVCI. The
complaint alleges that the defendants failed to oversee Interboro Institute
("Interboro") and the admissions practices at Interboro, sold EVCI stock while
in possession of adverse non-public information, and authorized or permitted
false statements to be disseminated to the public. The defendants believe this
lawsuit has no merit and intend to defend themselves vigorously.


                                      F-16
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Delaware Books and Records Action. On March 8, 2006, Shamji v. EVCI Career
Colleges Holding Corp., C.A. No. 1986-N, was filed in Delaware Chancery Court.
Plaintiff seeks access to EVCI's books and records under Delaware law. EVCI
believes this lawsuit has no merit and intends to defend itself vigorously.

11. RETIREMENT PLANS

The Company has a number of defined contribution plans covering eligible
employees. The company makes matching contributions at its discretion and in
accordance with the terms of union contracts for certain employees. The Company
has the right to make additional discretionary contributions. No additional
discretionary contributions were made in 2005, 2004 and 2003. Contributions made
in 2005, 2004 and 2003 were $235,617, $131,207 and $50,001, respectively.

12. STOCKHOLDERS' EQUITY:

In October 1998, the board of directors of EVCI adopted an incentive stock plan,
amended in December 2002, under which 844,500 shares of common stock have been
reserved for future issuance through September 30, 2008. The plan provides for
grants of incentive stock options, nonqualified stock options and shares of
common stock to employees, non-employees, directors and others. The option price
is determined by the administrator of the plan but cannot be less than the fair
market value at the date of grant of the shares underlying incentive stock
options. Vesting of options and stock awards and certain other conditions are
determined by the plan administrator, which is EVCI's board of directors or a
committee of the board. At December 31, 2005, there are 844,500 options
outstanding under this plan.

As an inducement to become an officer and employee of EVCI, in January 2004, the
Board of Directors granted to EVCI's general counsel and vice president for
corporate affairs five-year nonqualified stock options to purchase 90,000 shares
of EVCI's common stock at $4.70 per share. The options vest in two equal annual
installments commencing December 31, 2004. The market value of EVCI's common
stock on the grant date was $5.66. Accordingly, the Company will be recording a
charge to operations for $86,400 over the vesting period, of which $43,200 was
changed to operations in each of 2005 and 2004.

In July 2004, stockholders of EVCI adopted the 2004 incentive stock plan, under
which 1,200,000 shares of common stock have been reserved for future issuance,
except that no incentive stock option may be granted after July 27, 2014. The
plan provides for grants of incentive stock options, nonqualified stock options,
shares of common stock and awards based on the value of EVCI's common stock to
employees, non-employee directors and consultants. The option price cannot be
less than the fair market value of EVCI's shares at the date of grant. Vesting
of options and stock awards and certain other conditions are determined by, or a
committee appointed by, the board of directors. At December 31, 2005, there are
1,199,268 options outstanding under this plan.

In July 2004, EVCI's stockholders approved the grant of five-year nonqualified
stock options to EVCI's chairman, chief executive officer and president and
chief financial officer to purchase a total of 181,131 shares of common stock at
$4.70 per share. The options vest in three equal annual installments commencing
November 11, 2004. The market value of EVCI's common stock on the grant date was
$10.70. Accordingly, the Company is recording a charge to operations for
$1,089,504 over the vesting period, of which 360,768 and $363,368 was charged to
operations in 2005 and 2004, respectively.


                                      F-17
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In September 2000, the Company designated 200,000 shares of authorized preferred
stock as Series B 7% Convertible Preferred Stock and received gross proceeds of
$13,000,000 from the issuance of 130,000 shares of Series B preferred stock and
three-year warrants to purchase 722,223 shares of common stock at $20.25 per
share, subject to adjustment. A value of $400,000 was assigned to the warrants.
The transaction costs of this private placement were approximately $320,000. The
$400,000 assigned value to the warrants and the transaction costs of
approximately $320,000 were recognized as a deemed dividend to the preferred
shareholders over three years.

The Series B preferred stock was initially convertible into shares of common
stock at $13.50 per share, subject to adjustment and reset provisions. The
conversion price was reset to $3.375 in September 2003.

The Series B preferred shares were converted into common stock as follows:

                            Face         Preferred      Common       Conversion
     Date                  Amount          Shares       Shares          Price
--------------------------------------------------------------------------------
May 13, 2003            $ 2,500,000        25,000       477,100   $        5.240
July 1, 2003                360,000         3,600        68,700            5.240
September 27, 2003        2,000,000        20,000       592,593            3.375
September 29, 2003        1,000,000        10,000       296,297            3.375
October 2003              7,140,000        71,400     2,115,554            3.375
--------------------------------------------------------------------------------
                        $13,000,000       130,000     3,550,244
================================================================================

In March 2004, EVCI issued 1,038,962 shares of its common stock to institutional
investors for $10 million, or $9.625 per share. The transaction costs were
approximately $650,000, which includes fees paid to a placement agent of
$600,000 in cash and five-year warrants to purchase 62,338 shares of EVCI's
common stock at $14.338 per share.

In August 2005 restricted stock was granted to two key executives if certain
performance incentives were reached. At December 31, 2005 the incentives were
not reached and the restricted stock was forfeited.

The following table represents warrants outstanding as of December 31, 2005 and
2004:

                                                            Shares Underlying
                                      Exercise             Warrants Outstanding
                                     Price per                  December 31,
Expiration Date                                            2005             2004
--------------------------------------------------------------------------------
January 2006*                            25.00           25,000           25,000
May 2006                                 12.00           50,000           50,000
June 2006                                 3.00           93,333           93,333
April 2007                               16.09           25,000           25,000
September 2008                            2.25           45,000           45,000
March 2009                              14.338           62,338           62,338
--------------------------------------------------------------------------------
                                                        300,671          300,671
================================================================================

* Expired unexercised


                                      F-18
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Presented below is a summary of stock option activity for the periods shown:

<TABLE>
<CAPTION>
                                     Options Outstanding        Options Exercisable
                                     -------------------        -------------------
                                                Weighted-                  Weighted-
                                      Shares     average          Shares    average
 Exercise                         Underlying    Exercise      Underlying   Exercise
Price Range                          Options       Price         Options      Price
-----------------------------------------------------------------------------------
<S>                                  <C>           <C>           <C>          <C>
Balance at January 1, 2003           754,940       $1.82         675,000      $1.89
Granted                              265,500        1.63              --         --
Exercised                               (983)       1.20              --         --
Canceled                             (76,790)       1.03              --         --
-----------------------------------------------------------------------------------
Balance at December 31, 2003         942,667        1.83         632,325       1.96
Granted                              594,037        7.18              --         --
Exercised                            (40,516)       1.16              --         --
Canceled                              (5,001)       1.20              --         --
-----------------------------------------------------------------------------------
Balance at December 31, 2004       1,491,187        3.96       1,042,420      $3.84
Granted                              630,000        8.17              --         --
Exercised                           (103,264)       6.82              --         --
-----------------------------------------------------------------------------------
Balance at December 31, 2005       2,017,923       $5.11       1,199,268      $3.65
===================================================================================
</TABLE>

The following table summarizes information for options currently outstanding and
exercisable at December 31, 2005:

<TABLE>
<CAPTION>
                                           Options Outstanding                                      Options Exercisable
                                           -------------------                                      -------------------
                                                Weighted-               Weighted-                                 Weighted-
                            Shares               average                 average                Shares             average
    Exercise              Underlying            Remaining               Exercise              Underlying          Exercise
 Price Range                Options               Life                    Price                 Options             Price
------------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>              <C>                      <C>                       <C>               <C>
 $0.70 - $1.06               726,167          2.35 years               $  .990                   666,833           $0.99
  1.20 -  1.57                40,220          3.55 years                 1.307                    40,220            1.33
  4.70                       307,964          3.63 years                 4.700                   235,309            4.70
  6.935                      100,000          3.75 years                 6.935                    33,334            7.00
  7.78                        30,000          9.17 years                 7.780                    10,000            7.78
  8.185                      600,000          4.17 years                 8.185                        --              --
 10.715                      213,572          4.32 years                10.715                   213,572           10.715
------------------------------------------------------------------------------------------------------------------------------------
 $0.70 - $10.715          2,017,923           3.49 years               $ 5.130                 1,199,268           $3.682
====================================================================================================================================
</TABLE>

The weighted-average fair value of options granted is as follows:

<TABLE>
<CAPTION>
Year ended December 31,                            2005            2004            2003
---------------------------------------------------------------------------------------
<S>                                          <C>             <C>             <C>
Fair value of each option granted            $    8.166      $     7.28      $     1.08
---------------------------------------------------------------------------------------
Total shares underlying options granted         630,000         584,703         265,500
---------------------------------------------------------------------------------------
Total fair value of all options granted      $5,110,000      $4,256,240      $  287,091
=======================================================================================
</TABLE>

In accordance with SFAS No. 123, the weighted-average fair value of stock
options granted is required to be based on a theoretical statistical model using
the preceding Black-Scholes assumptions. In actuality, because EVCI's stock
options do not trade on a secondary exchange, employees can receive no value or
derive any benefit from holding stock options under these plans without an
increase in the market price of EVCI. Such an increase in stock price would
benefit all stockholders commensurately.


                                      F-19
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. EARNINGS PER SHARE:

A reconciliation of shares used in calculating basic and diluted earnings per
share is as follows:

<TABLE>
<CAPTION>
Year ended December 31,                           2005            2004            2003
--------------------------------------------------------------------------------------
<S>                                         <C>             <C>              <C>
Basic                                       12,417,422      11,883,695       7,360,649
Effect of assumed exercise of employee
stock options, net of tax effects              412,586         425,370         275,454
Effect of assumed exercise of warrants          73,933         209,385         629,073
--------------------------------------------------------------------------------------
Diluted                                     12,903,941      12,518,450       8,265,176
======================================================================================
</TABLE>

Outstanding options and warrants to purchase common stock that were antidilutive
were not included in the computation of diluted earnings per share were as
follows:

 Year ended December 31,                    2005            2004            2003
--------------------------------------------------------------------------------
Number of                                943,572         534,896         145,000
Number of warrants                       162,338         162,338         482,500
--------------------------------------------------------------------------------
                                       1,105,910         697,234         727,500
================================================================================

14. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

                Quarter ($ in thousands except per share amounts)

<TABLE>
<CAPTION>
2005                                  First        Second          Third         Fourth
<S>                                <C>           <C>            <C>            <C>
Total revenue                      $ 10,195      $  9,655       $ 10,100       $ 20,792
Income (loss) from operations           895           468         (1,578)         1,251
Net income (loss)                       667           320         (1,493)           867
Net income (loss) per share
Basic                                  0.05          0.03          (0.12)          0.07
Diluted                                0.05          0.03          (0.12)          0.07

2004
Total revenue                      $  8,488      $  5,833       $  6,509       $ 12,240
Income (loss) from operations         2,514          (644)        (1,331)         3,105
Net income (loss)                     2,094          (585)        (1,180)         5,925
Net income (loss) per share
Basic                                  0.19         (0.05)         (0.10)          0.48
Diluted                                0.18         (0.05)         (0.10)          0.48
</TABLE>


                                      F-20
<PAGE>

               EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. REGULATORY REVIEW

On October 19, 2005, EVCI announced that it had received a draft report of a
compliance review of Interboro Institute undertaken by the New York State
Education Department ("SED").

The draft report assessed Interboro's compliance with the laws, rules and
regulations governing degree granting institutions in New York State as the
result of Interboro's application to SED for approval of its Yonkers site as an
extension center and its rapid growth in enrollment. The draft report included
assertions of irregularities in Interboro's admissions practices. EVCI's audit
committee engaged Ritzert & Leyton, P.C., a firm with substantial experience in
conducting internal investigations, to assist it in conducting an extensive
investigation of admissions practices at Interboro.

The investigation determined that there is no basis to conclude that executive
management was aware of the violations alleged and that there is no evidence to
conclude that EVCI management directed, encouraged or ignored any of the alleged
conduct. It also concluded that Interboro management and staff maintain a
commitment to compliance with all applicable regulations governing the
proprietary school industry at both the state and federal levels.

In response to the SED, the Company committed to making a number of changes and
enhancements at Interboro, including outsourcing its testing function. We
currently estimate that the capital cost of implementing these changes will be
approximately $400,000. We also currently estimate that the annual increase in
operating costs attributable to these agreements will be approximately $
1,000,000 beginning in 2006.

On January 13, 2006, we announced that we had received a letter from the New
York State Education Department ("SED") relating to the ongoing compliance
review of Interboro that includes limits on the number of first-time enrollments
Interboro may accept for its spring 2006 through spring 2007 semesters. The
enrollment caps are tied to an SED expectation that at least 65 percent of
Interboro students who are first enrolled at Interboro for either of its spring
2006 or summer 2006 semesters will persist to their second semester of
attendance at Interboro.

The caps which are approximate to allow for difference in drop out rates limit
initial first-time enrollment and first-time enrollment after the third week of
the semester as follows:

                                                                 After 3
                                                    Initial        Weeks
                                                    -------        ------
Spring 2006                                             900          850
Summer 2006                                             900          850
Fall 2006                                             1,080        1,000
Spring 2007                                           1,080        1,000


                                      F-21
<PAGE>

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

      Not applicable.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

      Our management, with the participation of our Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of our disclosure controls
and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end
of the period covered by this report. Based on the evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that, as a result of
the material weaknesses in internal control over financial reporting with
respect to the control environment, revenue and receivables, cash management and
property plant and equipment, as discussed below, our disclosure controls and
procedures were not effective as of December 31, 2005.

Management's Report on Internal Control over Financial Reporting

      Management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rule 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934. Internal control over
financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP. Internal control over financial
reporting includes those policies and procedures that : 1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; 2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts
and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and 3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.

      Because of its inherent limitations, a system of internal control over
financial reporting can provide only reasonable assurance and may not prevent or
detect material misstatements. Further, because of changes in conditions,
effectiveness of internal controls over financial reporting may vary over time.

      Management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2005. In making its assessment,
management used the criteria set forth in Internal Control -- Integrated
Framework issued by the Committee of Sponsoring Organizations ("COSO") of the
Treadway Commission. A "material weakness" is a control deficiency (within the
meaning of Public Company Accounting Oversight Board Auditing Standard No. 2),
or combination of control deficiencies, that results in there being more than a
remote likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected on a timely basis by
employees in the normal course of their assigned functions.

      We have excluded TCI and PSB from our assessment of internal controls over
financial reporting as of December 31, 2005. PSB, acquired in January 2005, was
excluded because it was not deemed to be a material acquisition with total
revenue of less than $200,000 and a loss of approximately $1,000,000.
Additionally, PSB did not enroll any students until the fall semester.


                                       52
<PAGE>

      TCI was acquired on September 16, 2005. However, we concluded that there
was not sufficient time to conduct an assessment of TCI's internal controls over
financial reporting. TCI and PSB are wholly-owned subsidiaries of EVCI that
represent 42.72 and 2.4%, respectively of the consolidated total assets and
23.4% and 0.03%, respectively, of the consolidated revenue as of and for the
year ended December 31, 2005.

      As of December 31, 2005, management identified material weaknesses as
follows:

      Control Environment

      We did not maintain an effective internal control over financial reporting
related to our entity level control environment. Specifically, the charter for
our audit committee states that we have an internal audit function when we do
not have an internal audit function. We maintain an internal compliance function
primarily to ensure compliance with government financial aid regulations. We
found that management's communication to employees of relevant internal
controls, such as the availability and use of the ethics hotline, did not appear
to be effective. Additionally, our internal control documentation and testing
process was delayed for a number of reasons which resulted in inadequate time to
complete the documentation and testing process prior to year end and still
provide enough time to remediate identified significant deficiencies and
material weaknesses.

      Revenue and Student Accounts Receivable

      We lacked adequate controls over user access security for the automated
system that provides the basis for billing, revenue recognition and receivable
reporting. In addition, the controls in place over student financial aid files,
intended to insure completeness and internal authorization, were not designed
effectively. We also lacked a proper documentation process over student
withdrawals.

      During the fourth quarter, we outsourced the testing process for student
eligibility. Since this control was implemented late in the year, testing of the
operational effectiveness of this control could not be completed.

      Our process for estimating revenue recognized and collectability of
receivables is not adequately documented which could result inappropriate
fluctuations in reporting for interim financial periods.

      Cash Management

      We have a lack of segregation of duties in the accounting and finance area
in that certain personnel have the ability to initiate, approve and execute
online and offline banking activities.


                                       53
<PAGE>

      Property Plant and Equipment

      We lack controls over fixed assets in that there is no documented process
for monitoring the authorization of capital expenditures. In addition, fixed
asset documentation does not include a detailed listing of assets and no
periodic physical inventory of fixed assets has taken place.

      Changes in Internal Control Over Financial Reporting

      There was no change in internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred
during the period covered by this report that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

      As a result of the identification of the material weaknesses described
above, we conducted and completed a review of our accounting practices. In
addition, with respect to the specific material weaknesses identified, we plan
the following changes:

      Control Environment - We will amend the audit committee charter to reflect
the lack of an internal audit function. Periodic internal control reviews will
be performed by a qualified and experienced individual to evaluate the
effectiveness of the internal control environment. In addition, management will
again and regularly communicate to all employees the availability of the ethics
hotline.

      Revenue and Student Accounts Receivable - Due to inherent software
limitations, we will design required compensating controls to mitigate risks of
unauthorized access to our student accounting management system.

      We have undertaken an internal file review (starting with spring 2006 and
working backwards through the 2005 semesters) of our student records to identify
and file any missing records and authorizations and streamline the process for
maintaining complete files. Additionally, we have purchased a document scanning
system to ensure required documents are maintained and readily accessible.

      We are in the process of documenting policies and procedures to enhance
the methodology considering controls and risks when creating estimates and
determining collectibility of receivables.

      Cash Management - We will segregate individuals with incompatible
responsibilities over the cash management process. Additionally, we are in the
initial stages of changing the banks where our operating accounts are maintained
and we expect to set up company wide authorization limits and approvals on
transactions as a part of the new bank account structure. Transactions over
certain set amounts will require independent authorization prior to execution by
the bank.

      Property Plant and Equipment -We are in the process of implementing an
integrated fixed asset system to be utilized during the second quarter of 2006.


                                       54
<PAGE>

      Management's assessment of the effectiveness of our internal control over
financial reporting as of December 31, 2005 has been audited by Goldstein, Golub
and Kessler LLP ("GGK"), an independent registered public accounting firm, as
stated in their report, which appears following this report.

                                       /s/ Dr. John J. McGrath
                                       -----------------------
                                       Dr. John J. McGrath
                                       Chief Executive Officer and President

                                       /s/ Joseph Looney
                                       -----------------
                                       Joseph Looney
                                       Chief Financial Officer

      REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

      We have audited management's assessment, included in Management's "Report
of Internal Control Over Financial Reporting" appearing under Item 9A, that EVCI
Career Colleges Holding Corp. did not maintain effective internal control over
financial reporting as of December 31, 2005, because the Company did not
maintain effective controls over the Company's entity level control environment,
financial reporting-revenue and receivables, cash management and property, plant
and equipment, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company's management is responsible for maintaining
effective internal controls over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting. Our
responsibility is to express opinions on management's assessment and on the
effectiveness of the Company's internal control over financial reporting based
on our audit.

      We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective
internal controls over financial reporting were maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

      A company's internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the
Company: (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of the financial statements in accordance with
generally accepted accounting principles, and the receipts and expenditures of
the Company are being made in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the Company's assets that could have a material effect on the financial
statements.


                                       55
<PAGE>

      Because of its inherent limitations, internal controls over financial
reporting may not prevent or detect misstatements. Also, projection of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with policies and procedures may deteriorate.

      A material weakness is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. The following material weaknesses have been identified and included
in management's assessments:

      Control Environment

      As of December 31, 2005, the Company did not maintain effective controls
over their entity level control environment. Management did not effectively
implement and monitor internal controls unique to their industry. There are
identified deficiencies in segregation of duties in several of the Company's
processes. The audit committee charter also states the Company has an internal
audit function, when, in fact, an internal audit function does not exist.
Management was not effective in communicating relevant internal controls to
employees, such as the availability and use of the ethics hotline, a tool that
can be useful in the early detection of unethical acts. Management identified
these conditions but could not fully execute their Sarbanes Oxley Section 404
readiness program in a timely manner. As a result, management lacked the
sufficient time to fully remediate identified significant deficiencies and
material weaknesses.

      Financial Reporting-Revenue and Receivables

      As of December 31, 2005, the Company did not maintain effective controls
over revenue and receivables. The Company lacks adequate controls over user
access security for their student management accounting system that provides the
basis for billing, revenue recognition and receivables reporting. Additionally,
the Company's control over the review of student financial grant files to ensure
completeness and internal authorization are not designed effectively. The
Company also does not have a documented process and related controls to identify
student withdrawals that could result in overstating or understating revenue and
receivables and impact the timeliness of refunds to both grant agencies and
students.

      During the fourth quarter, the Company outsourced a key process for
determining student eligibility such as administering a qualifying test to
students not having the requisite credentials for admission. Due to the timing
of the implementation of this control, testing of the operational effectiveness
could not be completed.


                                       56
<PAGE>

      The methodology for creating estimates for revenue and collectability of
receivables is not adequately documented. Additionally, there is inadequate
support for factors used in the estimates. This could result in distortions in
period-to-period financial reporting.

Cash Management

      As of December 31, 2005, the Company did not maintain effective controls
over Cash Management. There is a lack of segregation of duties for on-line
banking transactions. Specifically, personnel have the ability to initiate,
approve, execute and reconcile banking transfers. This could result in
unauthorized use of company funds.

Property, Plant and Equipment

      As of December 31, 2005, the Company did not maintain effective controls
over Property, Plant and Equipment. Specifically, there is the absence of a
documented process for monitoring capital expenditures which could result in
unauthorized capital purchases and debt compliance violations. In addition,
there is no detailed listing of fixed assets and no periodic physical
confirmation of existence and valuation of the assets. This could result in
financial statement misstatement and undetected theft of assets.

      The material weaknesses described above were considered in determining the
nature, timing, and extent of audit tests applied in our audit of the 2005
financial statements, and this report does not affect our report dated March 6,
2006 except for Note 9, as to which the date is March 31, 2006 and the last
paragraph of Note 10, as to which the date is March 8, 2006, on those financial
statements.

      As described in Management's Report on Internal Control Over Financial
Reporting, management has excluded Technical Career Institutes, Inc. (TCI) and
Pennsylvania School of Business, Inc. (PSB) from its assessment of internal
controls over financial reporting as of December 31, 2005. We have also excluded
TCI and PSB from our audit of internal control over financial reporting. PSB
acquired in January 2005 was excluded because it was not deemed to be a material
acquisition with total revenues less than $200,000 and a loss of approximately
$1,000, 000. Additionally, PSB did not enroll any students until the fall
semester.

      TCI was acquired on September 16, 2005 however; management concluded that
there was not sufficient time to conduct an assessment of TCI's internal
controls over financial reporting. TCI and PSB are wholly owned subsidiaries of
the Company that represent 42.7% and 2.4%, respectively of the consolidated
total assets and 23.4% and 0.03%, respectively, of the consolidated revenue as
of and for the year ended December 31, 2005.

      In our opinion, management's assessment that EVCI Career Colleges Holding
Corp. did not maintain effective internal control over financial reporting as of
December 31, 2005, is fairly stated, in all material respects, based on criteria
established in Internal Control - Integrated Framework issued by COSO.


                                       57
<PAGE>

      We do not express an opinion or any other form of assurance on
management's statements referring to their remediation plans for addressing
identified deficiencies.

New York, New York                              /s/ Goldstein Golub Kessler LLP
March 6, 2006

Item 9B. Other Information.

      Not applicable.

                                    PART III

      Items 9, 10, 11, 12 and 14 are incorporated by reference to our definitive
proxy statement for our 2005 annual meeting of stockholders.

Item 13. Exhibits, List and Reports on Form 8-K.

(a) The following exhibits are filed as part of this report.

Exhibit No.*    Description of Exhibit
------------    ----------------------

3.1[1] --       Certificate of Incorporation of the Registrant.

3.2[1] --       Certificate of Merger of Educational Video Conferencing, Inc.
                (a New York Corporation) into the Registrant (a Delaware
                Corporation).

3.3[1] --       Certificate of Correction of the Certificate of Incorporation
                of the Registrant.

3.4[3] --       Certificate of Amendment, dated February 22, 1999, to
                Certificate of Incorporation of the Registrant.

3.5[23] --      Amended and Restated By-Laws of the Registrant.

3.6[5]--        Certificate Eliminating Reference to Series A 7.5% Convertible
                Preferred Stock from the Certificate of Incorporation of the
                Registrant.

3.7[16] --      Certificate of Amendment, dated May 23, 2002, to Certificate
                of Incorporation of the Registrant.

3.8[5] --       Certificate Eliminating Reference to Series B 7% Convertible
                Preferred Stock from the Certificate of Incorporation of the
                Registrant.

3.9[5] --       Certificate Eliminating Reference to Series C 8% Convertible
                Preferred Stock from the Certificate of Incorporation of the
                Registrant.

3.10[20] --     Certificate of Amendment, filed August 9, 2004, to
                Certificate of Incorporation of the Registrant.


                                       58
<PAGE>

4.2[2] --       Form of Common Stock certificate.

4.3[4] --       Warrant Agreement, dated January 14, 2000, between the
                Registrant and Bruce. R. Kalisch.

4.4[6] --       Warrant Agreement, dated April 18, 2000, between the Registrant
                and Peter J. Solomon Company Limited.

4.5[7] --       Form of Warrant issued to each seller of shares of ICTS, Inc.

4.6[14] --      Common Stock Purchase Warrant issued in September 2003, to
                purchase 45,000 shares of the Registrant's common stock.

4.7[17] --      Common Stock Purchase Warrant issued to placement agent on
                March 29, 2004.

10.1[28] --     Amended and Restated Employment Agreement between the
                Registrant and Dr. Arol I. Buntzman, dated August 12, 2005.

10.2[28] --     Amended and Restated Employment Agreement between the
                Registrant and Dr. John J. McGrath, dated August 12, 2005.

10.3(a)[9] --   Employment Agreement between the Registrant and Richard
                Goldenberg, dated January 1, 2003.

10.3(b)[23] --  Letter agreement, dated June 30, 2005, amending Employment
                Agreement between the Registrant and Richard Goldenberg dated
                January 1, 2003.

10.4[10] --     Amended and Restated 1998 Incentive Stock Option Plan of the
                Registrant.

10.5[11] --     2001 Non-Qualified Stock Option Plan.

10.6[9] --      Form of Change in Control Agreement used for agreements the
                Registrant has with each of Dr. Arol I. Buntzman, Dr. John J.
                McGrath, and Richard Goldenberg, dated February 11, 2003.

10.7[1] --      Form of Indemnification Agreement. [Used for each director and
                executive officer of the Registrant.]

10.8[4] --      Stock Purchase Agreement, dated January 14, 2000, among Bruce
                R. Kalisch, Interboro Holding, Inc. and Interboro Institute,
                Inc.

10.9[12] --     Lease Agreement between 444 Realty Company and Interboro
                Institute, Inc. dated July 27, 1983, as amended by agreements
                dated September 20, 1988, September 1, 1992, and February 1,
                1993.


                                       59
<PAGE>

10.10[12] --    Lease Agreement between Interboro Institute, Inc. and JUYI,
                Inc., dated January 26, 2001.

10.11[8] --     Promissory Note for $1,000,000, dated August 4, 2003, payable
                by Interboro Institute, Inc. to North Fork Bank.

10.12[8] --     Form of the Registrant's Subscription and Registration Rights
                Agreement relating to the Registrant's August 1, 2003 issuance
                of common stock and warrants.

10.13[13] --    Settlement Agreement, made October 3, 2003, between Amaranth
                Trading L.L.C. and the Registrant.

10.14[13] --    Form of Share Claim Purchase and Registration Rights
                Agreement between the Registrant and each investor acquiring a
                portion of the Amaranth Trading L.L.C.'s rights to claims to
                shares of EVCI's common stock upon conversion of Series B
                Preferred shares.

10.15[14] --    Third Amendment and Lease Extension Agreement, made as of
                August 1, 2003, between 444 Realty Company, L.L.C. and Interboro
                Institute, Inc.

10.16[15] --    Ownership and Registration Rights Agreement, dated November
                11, 2003, between the Registrant and JLF Partners I, L.P., JLF
                Partners II, L.P. and JLF Offshore Fund.

10.17(a)[16]--  Employment Agreement between the Registrant and Joseph D.
                Alperin dated January 1, 2004.

10.17(b)[23]--  Letter agreement, dated June 30, 2005, amending
                Employment Agreement between the Registrant and Joseph D.
                Alperin dated January 1, 2004.

10.18[16] --    Option Agreement between the Registrant and Joseph D.
                Alperin dated January 1, 2004.

10.19[16] --    Change of control letter agreement between the Registrant
                and Joseph D. Alperin dated January 1, 2004.

10.20[16] --    Agreement, made February 28, 2004, between Interboro
                Institute, Inc. and OPEIU Local 153, AFL-CIO.

10.21[17] --    Securities Purchase Agreement, dated March 29, 2004, by and
                among the Registrant and each buyer named in the Schedule of
                Buyers.

10.22[17] --    Registration Rights Agreement, dated March 29, 2004, by and
                among the Registrant and each buyer named in the Schedule of
                Buyers.


                                       60
<PAGE>

10.23[18] --    Ownership and Registration Rights Agreement, dated April 2,
                2004, by and among the Registrant and six funds managed by
                Wellington Management Company, LLP.

10.24[19] --    2004 Amended and Restated Incentive Stock Plan

10.25[20] --    Form of Stock Option Agreement (Nonqualified Stock Option)

10.26[20] --    Form of Stock Option Agreement (Nonqualified Stock Option)
                covering option grants to executive officers that were approved
                at the Registrant's July 27, 2004 stockholders meeting.

10.27[21] --    Lease made November 17, 2003 between Spruce Spires
                Associates, LP, and Interboro Institute, Inc.

10.28(a)[22] -- Sublease for Premises at 37-02 Main Street, Flushing, NY
                11354, dated March 28, 2005, between Genking, LLC and Interboro
                Institute, Inc. with Exhibit A and letter agreement, dated April
                15, 2005, amending such sublease.

10.28(b)[22] -- Consent to Sublease, dated April 22, 2005, among Mehran
                Enterprises Ltd., Futurama Home Furniture of Queens, Inc.,
                Genking, LLC and Interboro Institute, Inc.

10.28(c)[22] -- Sublease, dated March 30, 2004, between Futurama Home
                Furniture of Queens, Inc. and Genking, LLC.

10.28(d)[22] -- Agreement of Lease, dated March 6, 2001, between Mehran
                Enterprise Ltd. and Futurama Home Furniture of Queens, Inc.

10.29[24] --    Stock Purchase Agreement, dated June 30, 2005, among EVCI
                Career Colleges Holding Corp., Technical Career Institutes,
                Inc., East Coast Training Services of Delaware, Inc., East Coast
                Capital Corp. and North American Training Services, Inc., with
                Exhibits (Schedules will be provided supplementally to the
                Securities and Exchange Commission upon request).

10.30(a)[25] -- Loft Lease dated as of September 1, 2004 between Getty
                Square Partners LLC and Interboro Institute, Inc.

10.30(b)[25] -- Letter agreement dated August 18, 2004 between Getty
                Square Partners LLC and Interboro Institute, Inc.

10.30(c)[25] -- First Amendment to Lease dated as of July 14, 2005
                between Getty Square Partners LLC and Interboro Institute, Inc.

10.31[28] --    2004 Amended and Restated Incentive Stock Plan Restricted
                Stock Award Agreement, dated August 12, 2005, between the
                Registrant and Dr. Arol I. Buntzman.


                                       61
<PAGE>

10.32[28] --    2004 Amended and Restated Incentive Stock Plan Restricted
                Stock Award Agreement, dated August 12, 2005, between the
                Registrant and Dr. John J. McGrath.

10.33(a)[26] -- Credit Agreement, dated as of September 16, 2005, among
                the Registrant, the Guarantors from time-to-time parties
                thereto, the lenders from time-to-time parties thereto and
                Harris N.A.

10.33(b)[28] -- First Amendment to Credit Agreement , dated as of
                November 10, 2005, between the Registrant and Harris, N.A.

10.34[26] --    Security Agreement, dated as of September 16, 2005, among
                EVCI and other Debtors and Harris N.A.

10.35[26] --    Trademark Collateral Agreement, dated September 16, 2005,
                between Technical Career Institutes, Inc. and Harris N.A.

10.36[27] --    Employment Agreement, dated as of September 29, 2005,
                between EVCI and Joseph J. Looney.

10.37[27] --    Change of control letter agreement, dated September 29,
                2005, between EVCI and Joseph J. Looney.

10.38[28] --    Lease Agreement between Brill & Sharma Equities and
                Pennsylvania School of Business for a term commencing June 1,
                2005.

10.39(a)[28] -- Net Lease, dated as of December 19, 1997, between
                Overtime Properties LLC and Technical Career Institutes, Inc.

10.39(b)[28]    First Amendment of Lease dated as of October 1, 2002
                between Overtime Properties, LLC and -- Technical Career
                Institutes, Inc.

10.40(a)[28] -- Lease, dated October 11, 1994, between F.H.E.A.
                Associates and Technical Career Institutes, Inc.

10.40(b)[28] -- First Amendment of Lease, dated January 20, 1995, between
                F.H.E.A. Associates and Technical Career Institutes, Inc.

10.40(c)[28] -- Second Modification and Extension of Lease Agreement,
                dated April 15, 2005, between Eighth Avenue Limited Liability
                Company and Technical Career Institutes, Inc.


                                       62
<PAGE>

10.41(a)[28] -- Collective Bargaining Agreement between Technical Career
                Institutes, Inc. and T.O.P. Local 2110 UAW, AFL-CIO, effective
                October 10, 1992- October 9, 1995, and covering office clerical
                employees.

10.41(b)[28] -- Memorandum of Agreement, dated October 10, 1995, between
                T.O.P. Local 2110 UAW-AFL-CIO and Technical Career Institutes,
                Inc., amending collective bargaining agreement between the
                parties covering office and clerical employees, which was
                effective October 10, 1992- October 9, 1995.

10.41(c)[28] -- Memorandum of Agreement, dated October ____, 1998,
                between T.O.P. Local 2110 UAW-AFL-CIO and Technical Career
                Institutes, Inc., amending collective bargaining agreement
                between the parties covering office clerical employees, which
                was effective from October 10, 1995 through October 9, 1998.

10.41(d)[28] -- Collective Bargaining Agreement between Technical Career
                Institutes, Inc. and T.O.P. Local 2110 UAW-AFL-CIO effective
                October 10, 1998-October 9, 2001, covering instructors,
                laboratory technicians and maintenance persons (This agreement
                amends and restates the prior collective bargaining agreements
                with the instructors, laboratory technicians and maintenance
                employees.)

10.41(e)[28] -- Memorandum of Agreement, dated October 10, 2001, between
                T.O.P. Local 2110 UAW-AFL-CIO and Technical Career Institutes,
                Inc., amending (A) collective bargaining agreement between the
                parties covering instructors, laboratory technicians and
                maintenance employees and (B) collective bargaining agreement
                between the parties covering office clerical employees, each
                such prior agreement effective October 10, 1998 through October
                9, 2001.

10.41(f)[28] -- Memorandum of Agreement, dated October 10, 2004, between
                T.O.P. Local 2110 UAW-AFL-CIO and Technical Career Institutes,
                Inc., amending (A) collective bargaining agreement between the
                parties covering instructors, laboratory technicians and
                maintenance employees and (B) collective bargaining agreement
                between the parties covering office clerical employees, each
                such agreement effective October 10, 2001 through October 9,
                2004.

10.42[29] --    Letter agreement, dated March 1, 2006, between the
                Registrant and Dr. John J. McGrath.

10.43[29] --    Form of Restricted Stock Award Agreement for the restricted
                stock awards to Dr. John J. McGrath, Dr. Arol I. Buntzman and
                Joseph J. Looney, without Annexes A and B.

10.44[29] --    Employment Agreement, dated March 1, 2006, between the
                Registrant and Joseph D. Alperin.

10.45[29] --    Restricted Stock Award Agreement, dated March 1, 2006,
                between the Registrant and Joseph D. Alperin, without Annex A.


                                       63
<PAGE>

10.46** --      Amended and Restated Credit Agreement dated as of September
                16, 2005, amended and restated as of March 31, 2006, among EVCI
                Career Colleges Holding Corp., the Guarantors from time to time
                parties hereto, and Harris N.A. as lender. (Schedules will be
                provided supplementally to the Securities and Exchange
                Commission upon request.)

21** --         Subsidiaries of the Registrant.

23.1** --       Consent of Goldstein Golub Kessler LLP.

31.1** --       Certification of Chief Executive Officer required by Rule
                13a-14(a) under the Exchange Act.

31.2** --       Certification of Chief Financial Officer required by Rule
                13a-14(a) under the Exchange Act.

32.1** --       Certification of Chief Executive Officer pursuant to 18 U.S.C.
                Section 1350, as adopted pursuant to Section 906 of
                Sarbanes-Oxley Act of 2002.

32.2** --       Certification of Chief Financial Officer pursuant to 18 U.S.C.
                Section 1350, as adopted pursuant to Section 906 of
                Sarbanes-Oxley Act of 2002.

99.1[21] --     Text of final report, dated March 7, 2005, detailing the
                calculation of the TAP disallowances resulting from the TAP
                audit of the 2000-01 through 2002-03 academic years of Interboro
                Institute, Inc.

99.2[24] --     Press Release dated June 30, 2005 related to the announcement
                of Exhibit 10.29(a) of this report.

99.3[27] --     Press release dated October 3, 2005 and captioned "EVCI
                Career Colleges Hires Joseph J. Looney to serve as Chief
                Financial Officer."

99.4[28] --     Press Release dated October 19, 2005 and captioned "EVCI
                Career Colleges Receives Draft Report of Compliance Review of
                Interboro Institute."

99.5[30] --     Unaudited financial statements of Technical Career
                Institutes, Inc. as of June 30, 2005 and for the nine months
                ended June 30, 2005 and 2004, and the notes related thereto.

99.6[30] --     Audited financial statements of Technical Career Institutes,
                Inc. as of September 30, 2004 and 2003 and for each of the years
                in the three-year period ended September 30, 2004 and the notes
                related thereto.

99.7[30] --     Unaudited pro forma financial information for the year ended
                December 31, 2004 and the nine months ended September 30, 2005
                and the notes related thereto.


                                       64
<PAGE>

99.8[31] --     Press release dated December 5, 2005 and captioned "EVCI
                Career Colleges Receives Final Report of Compliance Review of
                Interboro Institute."

99.9[31] --     Draft Report of Compliance Review of Interboro Institute
                dated October 7, 2005.

99.10[31] --    Response of Interboro Institute Inc., dated November 3,
                2005, to two draft reports from the State Education Department
                of New York.

99.11[31] --    Letter dated November 23, 2005 from Stephen H. Adolphus,
                President of Interboro Institute, to Joseph P. Frey, Assistant
                Commissioner- Office of Quality Assurance, New York State
                Education Department outlining Interboro Institute's revised
                admissions screening procedures.

99.12[31] --    Letter dated November 21, 2005 from Steven M. Gombos of
                Ritzert & Leyton to Joseph P. Frey, Assistant Commissioner, The
                State Education Department outlining the results of the
                independent investigation for the Audit Committee of the Board
                of Directors of EVCI Career Colleges Holding Corp.

99.13[31] --    Letter dated December 2, 2005 from Joseph P. Frey, Assistant
                Commissioner- Office of Quality Assurance, the State Education
                Department of New York including attachment titled "State
                Education Department Analysis of Interboro Institute's Response
                to the Draft Report."

99.14[32] --    Press release dated January 13, 2006 and captioned "EVCI
                Career Colleges Reports New Student Caps for Interboro's Spring
                2006 Through Spring 2007 Semesters."

99.15[32] --    Letter dated December 19, 2005 with enclosures from the
                registrant to Joseph P. Frey, Assistant Commissioner.

99.16[32] --    Letter dated December 23, 2005 from Johanna Duncan-Poitier,
                Deputy Commissioner, to the registrant.

99.17[32] --    Letter dated January 4, 2006 with enclosure from the
                registrant to Johanna Duncan-Poitier, Deputy Commissioner.

99.18[32] --    Letter dated January 11, 2006 from Johanna Duncan-Poitier,
                Deputy Commissioner, to the registrant.

99.19[33] --    Response of Interboro Institute to the December 2, 2005
                Report from the New York State Education Department.


                                       65
<PAGE>

99.20[33] --    Letter dated February 2, 2006 from the New York State
                Education Department to EVCI.

99.21** --      Interboro Institute's Comprehensive Institutional
                Effectiveness Plan with transmittal letter from the registrant
                dated February 22, 2006.

99.22** --      Letter dated March 13, 2006 from the New York State Education
                Department to the Registrant.

99.23** --      Letter dated March 14, 2006 from the New York State Education
                Department to the Registrant.

99.24** --      Interboro Institute's Mid-Point Self Study dated March 28,
                2006 (without attachments with transmittal letter from the
                Registrant dated March 30, 2006.

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

*     Numbers inside brackets indicate documents from which exhibits have been
      incorporated by reference.

**    Filed herewith.

[1]   Incorporated by reference to the Registrant's Registration Statement on
      Form SB-2, filed October 23, 1998, Registration No. 333-66085.

[2]   Incorporated by reference to Amendment No. 4, dated February 10, 1999, to
      the Registrant's Form SB-2, Registration No. 333-66085.

[3]   Incorporated by reference to Registrant's Form 10-QSB for the quarter
      ended September 30, 1999.

[4]   Incorporated by reference to the Registrant's Form 8-K dated January 14,
      2000.

[5]   Incorporated by reference to the Registrant's Form 8-K dated October 6,
      2000.

[6]   Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended September 30, 2000.

[7]   Incorporated by reference to the Registrant's Form 8-K dated July 1, 2001.

[8]   Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended September 30, 2003.

[9]   Incorporated by reference to the Registrant's Form 10-KSB for the year
      ended December 31, 2002.

[10]  Incorporated by reference to the Registrant's Registration Statement on
      Form S-8 filed December 31, 2002, Registration No. 333-102310.

[11]  Incorporated by reference to the Registrant's Registration Statement on
      Form S-8 filed October 23, 2001, Registration No. 333-72080.

[12]  Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended September 30, 2003.

[13]  Incorporated by reference to the Registrant's Form 8-K dated October 10,
      2003.

[14]  Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended September 30, 2003.

[15]  Incorporated by reference to Amendment No. 1 to the Registrant's
      Registration Statement on Form S-3, filed December 4, 2003, Registration
      No. 333-110567.

[16]  Incorporated by reference to the Registrant's Form 10-KSB/A for the year
      ended December 31, 2003.

[17]  Incorporated by reference to the Registrant's Form 8-K dated March 29,
      2004.


                                       66
<PAGE>

[18]  Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended June 30, 2004.

[19]  Incorporated by reference to the Registrant's definitive Proxy Statement
      dated May 2, 2005.

[20]  Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended September 30, 2004.

[21]  Incorporated by reference to the Registrant's Form 10-KSB for the year
      ended December 31, 2004.

[22]  Incorporated by reference to the Registrant's Form 8-K dated March 7,
      2005.

[23]  Incorporated by reference to the Registrant's Form 10-Q for the quarter
      ended March 31, 2005.

[24]  Incorporated by reference to the Registrant's Form 8-K dated July 1, 2005.

[25]  Incorporated by reference to the Registrant's Form 8-K dated July 18,
      2005.

[26]  Incorporated by reference to the Registrant's Form 8-K dated September 16,
      2005.

[27]  Incorporated by reference to the Registrant's Form 8-K dated September 29,
      2005.

[28]  Incorporated by reference to the Registrant's Form 10-Q for the quarter
      ended September 30, 2005.

[29]  Incorporated by reference to the Registrant's Form 8-K dated March 1,
      2006.

[30]  Incorporated by reference to the Registrant's Form 8-K/A dated September
      16, 2005.

[31]  Incorporated by reference to the Registrant's Form 8-K dated December 5,
      2005.

[32]  Incorporated by reference to the Registrant's Form 8-K dated January 12,
      2006.

[33]  Incorporated by reference to the Registrant's Form 8-K dated February 3,
      2006.

                                       67
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                               EVCI CAREER COLLEGES HOLDING CORP.

Date:  March 31, 2006          By: /s/  Dr. John J. McGrath
                                   -------------------------
                                   Dr. John J. McGrath
                                   Chief Executive Officer and President

                               By: /s/  Joseph J. Looney
                                   -------------------------
                                   Dr. Joseph J. Looney, Chief Financial Officer
                                   Principal Financial and Accounting Officer

      In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Signature                                                           Date
---------                                                           ----

/s/  Dr. Arol I. Buntzman                                     March 31, 2006
------------------------------------
Dr. Arol I. Buntzman
Chairman of the Board

/s/  Dr. John J. McGrath                                      March 31, 2006
------------------------------------
Dr. John J. McGrath
Chief Executive Officer and President and Director

/s/  Richard Goldenberg                                       March 31, 2006
------------------------------------
Richard Goldenberg
Chief Financial Officer and Director
(Principal Financial and Accounting Officer)

/s/  Royce Flippin, Jr.                                       March 31, 2006
------------------------------------
Royce N. Flippin, Jr.
Director

/s/  Philip M. Getter                                         March 31, 2006
------------------------------------
Philip M. Getter
Director

/s/  Donald Grunewald                                         March 31, 2006
------------------------------------
Donald Grunewald
Director

/s/  Elie  Housman                                            March 31, 2006
------------------------------------
Elie Housman
Director


                                       68
<PAGE>

                                  EXHIBIT INDEX

      The following exhibits are filed as part of this report.

Exhibit No.*    Description of Exhibit
------------    ----------------------

3.1[1] --       Certificate of Incorporation of the Registrant.

3.2[1] --       Certificate of Merger of Educational Video Conferencing, Inc.
                (a New York Corporation) into the Registrant (a Delaware
                Corporation).

3.3[1] --       Certificate of Correction of the Certificate of Incorporation
                of the Registrant.

3.4[3] --       Certificate of Amendment, dated February 22, 1999, to
                Certificate of Incorporation of the Registrant.

3.5[23] --      Amended and Restated By-Laws of the Registrant.

3.6[5] --       Certificate Eliminating Reference to Series A 7.5% Convertible
                Preferred Stock from the Certificate of Incorporation of the
                Registrant.

3.7[16] --      Certificate of Amendment, dated May 23, 2002, to Certificate
                of Incorporation of the Registrant.

3.8[5] --       Certificate Eliminating Reference to Series B 7% Convertible
                Preferred Stock from the Certificate of Incorporation of the
                Registrant.

3.9[5] --       Certificate Eliminating Reference to Series C 8% Convertible
                Preferred Stock from the Certificate of Incorporation of the
                Registrant.

3.10[20] --     Certificate of Amendment, filed August 9, 2004, to
                Certificate of Incorporation of the Registrant.

4.2[2] --       Form of Common Stock certificate.

4.3[4] --       Warrant Agreement, dated January 14, 2000, between the
                Registrant and Bruce. R. Kalisch.

4.4[6] --       Warrant Agreement, dated April 18, 2000, between the Registrant
                and Peter J. Solomon Company Limited.

4.5[7] --       Form of Warrant issued to each seller of shares of ICTS, Inc.

4.6[14] --      Common Stock Purchase Warrant issued in September 2003, to
                purchase 45,000 shares of the Registrant's common stock.

4.7[17] --      Common Stock Purchase Warrant issued to placement agent on
                March 29, 2004.

10.1[28] --     Amended and Restated Employment Agreement between the
                Registrant and Dr. Arol I. Buntzman, dated August 12, 2005.

<PAGE>

10.2[28] --     Amended and Restated Employment Agreement between the
                Registrant and Dr. John J. McGrath, dated August 12, 2005.

10.3(a)[9] --   Employment Agreement between the Registrant and Richard
                Goldenberg, dated January 1, 2003.

10.3(b)[23] --  Letter agreement, dated June 30, 2005, amending Employment
                Agreement between the Registrant and Richard Goldenberg dated
                January 1, 2003.

10.4[10] --     Amended and Restated 1998 Incentive Stock Option Plan of the
                Registrant.

10.5[11] --     2001 Non-Qualified Stock Option Plan.

10.6[9] --      Form of Change in Control Agreement used for agreements the
                Registrant has with each of Dr. Arol I. Buntzman, Dr. John J.
                McGrath, and Richard Goldenberg, dated February 11, 2003.

10.7[1] --      Form of Indemnification Agreement. [Used for each director and
                executive officer of the Registrant.]

10.8[4] --      Stock Purchase Agreement, dated January 14, 2000, among Bruce
                R. Kalisch, Interboro Holding, Inc. and Interboro Institute,
                Inc.

10.9[12] --     Lease Agreement between 444 Realty Company and Interboro
                Institute, Inc. dated July 27, 1983, as amended by agreements
                dated September 20, 1988, September 1, 1992, and February 1,
                1993.

10.10[12] --    Lease Agreement between Interboro Institute, Inc. and JUYI,
                Inc., dated January 26, 2001.

10.11[8] --     Promissory Note for $1,000,000, dated August 4, 2003, payable
                by Interboro Institute, Inc. to North Fork Bank.

10.12[8] --     Form of the Registrant's Subscription and Registration Rights
                Agreement relating to the Registrant's August 1, 2003 issuance
                of common stock and warrants.

10.13[13] --    Settlement Agreement, made October 3, 2003, between Amaranth
                Trading L.L.C. and the Registrant.

10.14[13] --    Form of Share Claim Purchase and Registration Rights
                Agreement between the Registrant and each investor acquiring a
                portion of the Amaranth Trading L.L.C.'s rights to claims to
                shares of EVCI's common stock upon conversion of Series B
                Preferred shares.

10.15[14] --    Third Amendment and Lease Extension Agreement, made as of
                August 1, 2003, between 444 Realty Company, L.L.C. and Interboro
                Institute, Inc.

10.16[15] --    Ownership and Registration Rights Agreement, dated November
                11, 2003, between the Registrant and JLF Partners I, L.P., JLF
                Partners II, L.P. and JLF Offshore Fund.

10.17(a)[16]--  Employment Agreement between the Registrant and Joseph D.
                Alperin dated January 1, 2004.

<PAGE>

10.17(b)[23]--  Letter agreement, dated June 30, 2005, amending
                Employment Agreement between the Registrant and Joseph D.
                Alperin dated January 1, 2004.

10.18[16] --    Option Agreement between the Registrant and Joseph D.
                Alperin dated January 1, 2004.

10.19[16] --    Change of control letter agreement between the Registrant
                and Joseph D. Alperin dated January 1, 2004.

10.20[16] --    Agreement, made February 28, 2004, between Interboro
                Institute, Inc. and OPEIU Local 153, AFL-CIO.

10.21[17] --    Securities Purchase Agreement, dated March 29, 2004, by and
                among the Registrant and each buyer named in the Schedule of
                Buyers.

10.22[17] --    Registration Rights Agreement, dated March 29, 2004, by and
                among the Registrant and each buyer named in the Schedule of
                Buyers.

10.23[18] --    Ownership and Registration Rights Agreement, dated April 2,
                2004, by and among the Registrant and six funds managed by
                Wellington Management Company, LLP.

10.24[19] --    2004 Amended and Restated Incentive Stock Plan

10.25[20] --    Form of Stock Option Agreement (Nonqualified Stock Option)

10.26[20] --    Form of Stock Option Agreement (Nonqualified Stock Option)
                covering option grants to executive officers that were approved
                at the Registrant's July 27, 2004 stockholders meeting.

10.27[21] --    Lease made November 17, 2003 between Spruce Spires
                Associates, LP, and Interboro Institute, Inc.

10.28(a)[22] -- Sublease for Premises at 37-02 Main Street, Flushing, NY
                11354, dated March 28, 2005, between Genking, LLC and Interboro
                Institute, Inc. with Exhibit A and letter agreement, dated April
                15, 2005, amending such sublease.

10.28(b)[22] -- Consent to Sublease, dated April 22, 2005, among Mehran
                Enterprises Ltd., Futurama Home Furniture of Queens, Inc.,
                Genking, LLC and Interboro Institute, Inc.

10.28(c)[22] -- Sublease, dated March 30, 2004, between Futurama Home
                Furniture of Queens, Inc. and Genking, LLC.

10.28(d)[22] -- Agreement of Lease, dated March 6, 2001, between Mehran
                Enterprise Ltd. and Futurama Home Furniture of Queens, Inc.

10.29[24] --    Stock Purchase Agreement, dated June 30, 2005, among EVCI
                Career Colleges Holding Corp., Technical Career Institutes,
                Inc., East Coast Training Services of Delaware, Inc., East Coast
                Capital Corp. and North American Training Services, Inc., with
                Exhibits (Schedules will be provided supplementally to the
                Securities and Exchange Commission upon request).

<PAGE>

10.30(a)[25] -- Loft Lease dated as of September 1, 2004 between Getty
                Square Partners LLC and Interboro Institute, Inc.

10.30(b)[25] -- Letter agreement dated August 18, 2004 between Getty
                Square Partners LLC and Interboro Institute, Inc.

10.30(c)[25] -- First Amendment to Lease dated as of July 14, 2005
                between Getty Square Partners LLC and Interboro Institute, Inc.

10.31[28] --    2004 Amended and Restated Incentive Stock Plan Restricted
                Stock Award Agreement, dated August 12, 2005, between the
                Registrant and Dr. Arol I. Buntzman.

10.32[28] --    2004 Amended and Restated Incentive Stock Plan Restricted
                Stock Award Agreement, dated August 12, 2005, between the
                Registrant and Dr. John J. McGrath.

10.33(a)[26] -- Credit Agreement, dated as of September 16, 2005, among
                the Registrant, the Guarantors from time-to-time parties
                thereto, the lenders from time-to-time parties thereto and
                Harris N.A.

10.33(b)[28] -- First Amendment to Credit Agreement , dated as of
                November 10, 2005, between the Registrant and Harris, N.A.

10.34[26] --    Security Agreement, dated as of September 16, 2005, among
                EVCI and other Debtors and Harris N.A.

10.35[26] --    Trademark Collateral Agreement, dated September 16, 2005,
                between Technical Career Institutes, Inc. and Harris N.A.

10.36[27] --    Employment Agreement, dated as of September 29, 2005,
                between EVCI and Joseph J. Looney.

10.37[27] --    Change of control letter agreement, dated September 29,
                2005, between EVCI and Joseph J. Looney.

10.38[28] --    Lease Agreement between Brill & Sharma Equities and
                Pennsylvania School of Business for a term commencing June 1,
                2005.

10.39(a)[28] -- Net Lease, dated as of December 19, 1997, between
                Overtime Properties LLC and Technical Career Institutes, Inc.

10.39(b)[28]    First Amendment of Lease dated as of October 1, 2002
                between Overtime Properties, LLC and -- Technical Career
                Institutes, Inc.

10.40(a)[28] -- Lease, dated October 11, 1994, between F.H.E.A.
                Associates and Technical Career Institutes, Inc.

<PAGE>

10.40(b)[28] -- First Amendment of Lease, dated January 20, 1995, between
                F.H.E.A. Associates and Technical Career Institutes, Inc.

10.40(c)[28] -- Second Modification and Extension of Lease Agreement,
                dated April 15, 2005, between Eighth Avenue Limited Liability
                Company and Technical Career Institutes, Inc.

10.41(a)[28] -- Collective Bargaining Agreement between Technical Career
                Institutes, Inc. and T.O.P. Local 2110 UAW, AFL-CIO, effective
                October 10, 1992- October 9, 1995, and covering office clerical
                employees.

10.41(b)[28] -- Memorandum of Agreement, dated October 10, 1995, between
                T.O.P. Local 2110 UAW-AFL-CIO and Technical Career Institutes,
                Inc., amending collective bargaining agreement between the
                parties covering office and clerical employees, which was
                effective October 10, 1992- October 9, 1995.

10.41(c)[28] -- Memorandum of Agreement, dated October ____, 1998,
                between T.O.P. Local 2110 UAW-AFL-CIO and Technical Career
                Institutes, Inc., amending collective bargaining agreement
                between the parties covering office clerical employees, which
                was effective from October 10, 1995 through October 9, 1998.

10.41(d)[28] -- Collective Bargaining Agreement between Technical Career
                Institutes, Inc. and T.O.P. Local 2110 UAW-AFL-CIO effective
                October 10, 1998-October 9, 2001, covering instructors,
                laboratory technicians and maintenance persons (This agreement
                amends and restates the prior collective bargaining agreements
                with the instructors, laboratory technicians and maintenance
                employees.)

10.41(e)[28] -- Memorandum of Agreement, dated October 10, 2001, between
                T.O.P. Local 2110 UAW-AFL-CIO and Technical Career Institutes,
                Inc., amending (A) collective bargaining agreement between the
                parties covering instructors, laboratory technicians and
                maintenance employees and (B) collective bargaining agreement
                between the parties covering office clerical employees, each
                such prior agreement effective October 10, 1998 through October
                9, 2001.

10.41(f)[28] -- Memorandum of Agreement, dated October 10, 2004, between
                T.O.P. Local 2110 UAW-AFL-CIO and Technical Career Institutes,
                Inc., amending (A) collective bargaining agreement between the
                parties covering instructors, laboratory technicians and
                maintenance employees and (B) collective bargaining agreement
                between the parties covering office clerical employees, each
                such agreement effective October 10, 2001 through October 9,
                2004.

10.42[29] --    Letter agreement, dated March 1, 2006, between the
                Registrant and Dr. John J. McGrath.

10.43[29] --    Form of Restricted Stock Award Agreement for the restricted
                stock awards to Dr. John J. McGrath, Dr. Arol I. Buntzman and
                Joseph J. Looney, without Annexes A and B.

10.44[29] --    Employment Agreement, dated March 1, 2006, between the
                Registrant and Joseph D. Alperin.

10.45[29] --    Restricted Stock Award Agreement, dated March 1, 2006,
                between the Registrant and Joseph D. Alperin, without Annex A.

<PAGE>

10.46** --      Amended and Restated Credit Agreement dated as of September
                16, 2005, amended and restated as of March 31, 2006, among EVCI
                Career Colleges Holding Corp., the Guarantors from time to time
                parties hereto, and Harris N.A. as lender. (Schedules will be
                provided supplementally to the Securities and Exchange
                Commission upon request.)

21** --         Subsidiaries of the Registrant.

23.1** --       Consent of Goldstein Golub Kessler LLP.

31.1** --       Certification of Chief Executive Officer required by Rule
                13a-14(a) under the Exchange Act.

31.2** --       Certification of Chief Financial Officer required by Rule
                13a-14(a) under the Exchange Act.

32.1** --       Certification of Chief Executive Officer pursuant to 18 U.S.C.
                Section 1350, as adopted pursuant to Section 906 of
                Sarbanes-Oxley Act of 2002.

32.2** --       Certification of Chief Financial Officer pursuant to 18 U.S.C.
                Section 1350, as adopted pursuant to Section 906 of
                Sarbanes-Oxley Act of 2002.

99.1[21] --     Text of final report, dated March 7, 2005, detailing the
                calculation of the TAP disallowances resulting from the TAP
                audit of the 2000-01 through 2002-03 academic years of Interboro
                Institute, Inc.

99.2[24] --     Press Release dated June 30, 2005 related to the announcement
                of Exhibit 10.29(a) of this report.

99.3[27] --     Press release dated October 3, 2005 and captioned "EVCI
                Career Colleges Hires Joseph J. Looney to serve as Chief
                Financial Officer."

99.4[28] --     Press Release dated October 19, 2005 and captioned "EVCI
                Career Colleges Receives Draft Report of Compliance Review of
                Interboro Institute."

99.5[30] --     Unaudited financial statements of Technical Career
                Institutes, Inc. as of June 30, 2005 and for the nine months
                ended June 30, 2005 and 2004, and the notes related thereto.

99.6[30] --     Audited financial statements of Technical Career Institutes,
                Inc. as of September 30, 2004 and 2003 and for each of the years
                in the three-year period ended September 30, 2004 and the notes
                related thereto.

99.7[30] --     Unaudited pro forma financial information for the year ended
                December 31, 2004 and the nine months ended September 30, 2005
                and the notes related thereto.

99.8[31] --     Press release dated December 5, 2005 and captioned "EVCI
                Career Colleges Receives Final Report of Compliance Review of
                Interboro Institute."

99.9[31] --     Draft Report of Compliance Review of Interboro Institute
                dated October 7, 2005.

<PAGE>

99.10[31] --    Response of Interboro Institute Inc., dated November 3,
                2005, to two draft reports from the State Education Department
                of New York.

99.11[31] --    Letter dated November 23, 2005 from Stephen H. Adolphus,
                President of Interboro Institute, to Joseph P. Frey, Assistant
                Commissioner- Office of Quality Assurance, New York State
                Education Department outlining Interboro Institute's revised
                admissions screening procedures.

99.12[31] --    Letter dated November 21, 2005 from Steven M. Gombos of
                Ritzert & Leyton to Joseph P. Frey, Assistant Commissioner, The
                State Education Department outlining the results of the
                independent investigation for the Audit Committee of the Board
                of Directors of EVCI Career Colleges Holding Corp.

99.13[31] --    Letter dated December 2, 2005 from Joseph P. Frey, Assistant
                Commissioner- Office of Quality Assurance, the State Education
                Department of New York including attachment titled "State
                Education Department Analysis of Interboro Institute's Response
                to the Draft Report."

99.14[32] --    Press release dated January 13, 2006 and captioned "EVCI
                Career Colleges Reports New Student Caps for Interboro's Spring
                2006 Through Spring 2007 Semesters."

99.15[32] --    Letter dated December 19, 2005 with enclosures from the
                registrant to Joseph P. Frey, Assistant Commissioner.

99.16[32] --    Letter dated December 23, 2005 from Johanna Duncan-Poitier,
                Deputy Commissioner, to the registrant.

99.17[32] --    Letter dated January 4, 2006 with enclosure from the
                registrant to Johanna Duncan-Poitier, Deputy Commissioner.

99.18[32] --    Letter dated January 11, 2006 from Johanna Duncan-Poitier,
                Deputy Commissioner, to the registrant.

99.19[33] --    Response of Interboro Institute to the December 2, 2005
                Report from the New York State Education Department.

99.20[33] --    Letter dated February 2, 2006 from the New York State
                Education Department to EVCI.

99.21** --      Interboro Institute's Comprehensive Institutional
                Effectiveness Plan with transmittal letter from the registrant
                dated February 22, 2006.

99.22** --      Letter dated March 13, 2006 from the New York State Education
                Department to the Registrant.

99.23** --      Letter dated March 14, 2006 from the New York State Education
                Department to the Registrant.

99.24** --      Interboro Institute's Mid-Point Self Study dated March 28,
                2006 (without attachments with transmittal letter from the
                Registrant dated March 30, 2006.

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

*     Numbers inside brackets indicate documents from which exhibits have been
      incorporated by reference.

<PAGE>

**    Filed herewith.

[1]   Incorporated by reference to the Registrant's Registration Statement on
      Form SB-2, filed October 23, 1998, Registration No. 333-66085.

[2]   Incorporated by reference to Amendment No. 4, dated February 10, 1999, to
      the Registrant's Form SB-2, Registration No. 333-66085.

[3]   Incorporated by reference to Registrant's Form 10-QSB for the quarter
      ended September 30, 1999.

[4]   Incorporated by reference to the Registrant's Form 8-K dated January 14,
      2000.

[5]   Incorporated by reference to the Registrant's Form 8-K dated October 6,
      2000.

[6]   Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended September 30, 2000.

[7]   Incorporated by reference to the Registrant's Form 8-K dated July 1, 2001.

[8]   Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended September 30, 2003.

[9]   Incorporated by reference to the Registrant's Form 10-KSB for the year
      ended December 31, 2002.

[10]  Incorporated by reference to the Registrant's Registration Statement on
      Form S-8 filed December 31, 2002, Registration No. 333-102310.

[11]  Incorporated by reference to the Registrant's Registration Statement on
      Form S-8 filed October 23, 2001, Registration No. 333-72080.

[12]  Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended September 30, 2003.

[13]  Incorporated by reference to the Registrant's Form 8-K dated October 10,
      2003.

[14]  Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended September 30, 2003.

[15]  Incorporated by reference to Amendment No. 1 to the Registrant's
      Registration Statement on Form S-3, filed December 4, 2003, Registration
      No. 333-110567.

[16]  Incorporated by reference to the Registrant's Form 10-KSB/A for the year
      ended December 31, 2003.

[17]  Incorporated by reference to the Registrant's Form 8-K dated March 29,
      2004.

[18]  Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended June 30, 2004.

[19]  Incorporated by reference to the Registrant's definitive Proxy Statement
      dated May 2, 2005.

[20]  Incorporated by reference to the Registrant's Form 10-QSB for the quarter
      ended September 30, 2004.

[21]  Incorporated by reference to the Registrant's Form 10-KSB for the year
      ended December 31, 2004.

[22]  Incorporated by reference to the Registrant's Form 8-K dated March 7,
      2005.

[23]  Incorporated by reference to the Registrant's Form 10-Q for the quarter
      ended March 31, 2005.

[24]  Incorporated by reference to the Registrant's Form 8-K dated July 1, 2005.

[25]  Incorporated by reference to the Registrant's Form 8-K dated July 18,
      2005.

[26]  Incorporated by reference to the Registrant's Form 8-K dated September 16,
      2005.

[27]  Incorporated by reference to the Registrant's Form 8-K dated September 29,
      2005.

[28]  Incorporated by reference to the Registrant's Form 10-Q for the quarter
      ended September 30, 2005.

[29]  Incorporated by reference to the Registrant's Form 8-K dated March 1,
      2006.

[30]  Incorporated by reference to the Registrant's Form 8-K/A dated September
      16, 2005.

[31]  Incorporated by reference to the Registrant's Form 8-K dated December 5,
      2005.

[32]  Incorporated by reference to the Registrant's Form 8-K dated January 12,
      2006.

[33]  Incorporated by reference to the Registrant's Form 8-K dated February 3,
      2006.