SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

[ ]  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 INCORPORATED

                 (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)

         35 East Grassy Sprain Road, Suite 200, Yonkers, New York 10710
         (Address of principal executive offices)              (Zip code)

         Issuer's telephone number, including area code: (914) 787-3500

         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)


     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 [ ]

     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-KSB.

     The issuer's revenues for its most recent fiscal year were $15,257,352.


<PAGE>

     As of February 28, 2003, the aggregate market value of the issuer's common
equity held by non-affiliates was $3,283,119, based on the closing price of
$0.75 for its common stock on The Nasdaq SmallCap Market on February 28, 2003.
5,308,826 shares of the issuer's common stock were outstanding as of February
28, 2003.

                       DOCUMENTS INCORPORATED BY REFERENCE

Issuer's definitive proxy statement for its 2003 annual meeting of stockholders
is incorporated into Part III of this Form 10-KSB.

Transitional Small Business Disclosure Formats (check one): Yes [ ]   No [X]


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                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS.

GENERAL

     We provide on-campus postsecondary college education, presently through
Interboro Institute, Inc. Interboro is a two-year college that offers degree
programs leading to the Associate of Occupational Studies degree and has a main
campus in mid-town Manhattan and an extension center in Flushing, New York. In
addition, Interboro opened two new college sites on September 30, 2002. One is
in the Washington Heights section of Manhattan, New York City, and the other is
in Yonkers, New York. We acquired Interboro in January 2000.

     On September 30, 2002, the board of directors of ICTS, Inc. decided to
discontinue ICTS' operations. In October 2002, ICTS was sold. As a result, ICTS'
revenue, cost of sales and related expenses have been reclassified in the
consolidated statement of operations and shown separately as a net amount under
the captions "Loss from discontinued operations" and "Loss from disposal of
discontinued operations" for 2001 and 2002.

     Our multi-point video conferencing technology and services are being used
on a very limited basis to support an existing customer.

     EVCI was organized in March 1997. We completed an underwritten initial
public offering of our common stock in the first quarter of 1999. Our principal
executive offices are located at 35 East Grassy Sprain Road, Suite 200, Yonkers,
New York 10710 and our telephone number is (914) 787-3500.

     See "Forward-looking Statements and Risk Factors" below.

DEMAND FOR CAREER EDUCATION

     There is a growing demand for postsecondary education. According to
information we have obtained from the National Center for Educational
Statistics:

     o    the annual attendance in postsecondary degree granting schools is
          expected to increase to 17.7 million by 2012, a 15% increase over
          2000.

     o    the number of students attending two-year schools is expected to
          increase 19% percent in the same period.

     o    from 1970 to 1999, two-year schools increased their market share by
          13% to 44% of the students attending degree-granting postsecondary
          schools.

     We think there are three primary reasons for an increasing demand for
career-oriented education.

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     RECOGNITION OF NEED FOR TRAINING AND PROFESSIONAL DEVELOPMENT EDUCATION

     Increasingly, individuals recognize that knowledge, training and
professional development are essential to acquiring, maintaining and advancing
their employment and, consequently, their standard of living.

     Rapid and continuing technological advances require entry level workers to
have training and education beyond high school.

     The Bureau of Labor Statistics estimates that jobs requiring an associate
degree will increase 32% between 2000 and 2010.

     We believe that enrollment for postsecondary campus-based schools increases
during economic slow downs because individuals have greater motivation and time
to enhance their academic and professional qualifications or re-train in order
to compete for jobs.

     AVAILABILITY OF TUITION GRANTS AND LOANS

     Corporate, federal and state tuition assistance programs are available to
pay for higher education tuition costs. These are almost exclusively in the form
of grants and/or subsidized and unsubsidized loans.

     Almost all of Interboro's students fund their tuition through federal Pell
grants and New York State Tuition Assistance Program (TAP) grants. In addition,
Interboro participates in the Federal College Work Study program, which allows a
limited number of students to receive additional aid by working for Interboro.
Interboro also receives funds from the Federal Supplemental Education
Opportunity Grant program, which provides some Interboro students additional
grants to meet college costs. Interboro allows some of its students to pay
tuition over time that is not covered by Pell or TAP grants. However, Interboro
does not participate in any loan programs.

     THE RISING COST OF PUBLIC AND PRIVATE COLLEGES AND UNIVERSITIES

     We believe tuition costs will continue to rise at both public and private
colleges faster than the rate of inflation. Tuition in New York public colleges
could increase by approximately 25% to 30% in the fall of 2003. At Interboro,
tuition is approximately $4,000 per semester, which is lower than most private
colleges and can be funded through full TAP and Pell grants at their current
levels. This gives students, who otherwise could not afford a college education,
the opportunity to obtain an Associate in Occupational Studies Degree without
college loans.

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:

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     o    business administration: accounting and management

     o    ophthalmic dispensing

     o    paralegal studies

     o    office technologies: executive assistant, legal office assistant and
          medical office assistant

     o    security services and management

     We see a growing demand by employers for individuals possessing
career-oriented skills, in the degree majors and academic concentrations offered
by Interboro, to fill entry-level and advanced positions. We believe our
experience and expertise in these areas enables us to differentiate ourselves
from most of our competitors and to effectively tailor our marketing plans. At
the same time our curriculum design prepares students who want to transfer to a
bachelor degree college. A number of bachelor degree colleges have entered into
articulation agreements with Interboro under which they will accept credits that
translate to their curriculum in approved bachelor degree programs.

     PROVIDE A QUALITY AND CARING EDUCATIONAL EXPERIENCE

     Most of our faculty members have direct work experience in the subjects
they teach. Interboro's full-time faculty members are particularly effective in
providing any necessary remedial education.

     We offer a flexible schedule of day and evening classes. Our college
operates year-round. We encourage personal interaction between our students,
faculty, administration and staff. We offer a variety of support programs
including intensive tutoring, on-campus advising, mentoring and internship
programs.

     IMPROVE STUDENT RETENTION

     Improving student retention is essential to the continuing success of
Interboro. The retention process starts from the initial enrollment and
continues through the completion of a student's academic program. As in many
associate degree schools, a substantial portion of Interboro's students never
finish their degree programs for personal, financial or academic reasons. This
is particularly true at Interboro because it primarily serves economically
disadvantaged students in minority communities, most of whom do not have a high
school diploma. Interboro believes increases in revenue and profitability can be
achieved through modest improvements in student retention rates. It generally
has been more cost-effective for us to retain students than to recruit new
students

     We are proud of the progress of our student retention programs since we
acquired Interboro. We consider student retention the responsibility of the
entire college personnel. Interboro personnel typically work to establish
personal relationships with students. We strive to set realistic goals for our
students. For example, students generally receive a telephone call from a school
counselor or faculty member if they miss classes. We group many students into
cohorts for their classes, tests and support services. Professors, counselors
and advisors work with students to meet particular academic needs.

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<PAGE>

     MAINTAIN CUTTING EDGE PROGRAMS

     We also strive to meet the changing needs of our students and their
potential employers. Interboro regularly evaluates its program offerings,
considers revisions to existing courses and programs and develops new curricula
and tests based upon its evaluations. As part of our accreditation process,
Interboro recently completed a successful peer review of 35 of its courses by
faculty at 20 colleges and universities.

GROWTH STRATEGY

     We currently expect to grow by expanding Interboro's existing college sites
at their current locations. In the future, with appropriate New York State
Education Department approval, we plan to open additional Interboro sites. We do
not expect to grow by acquiring other schools in 2003 because we do not expect
to have the financial resources to pay for them. However, we continue to seek
opportunities to acquire other schools.

     ENHANCE GROWTH AT EXISTING COLLEGE SITES

     We have learned that successfully recruiting students for enrollment at
Interboro is largely dependent on marketing and effectively utilizing community
resources. By targeting certain media and using aggressive community enrollment
campaigns, we have been able to exceed our enrollment projections at Interboro.
We believe this is in significant part due to the specific target market for
Interboro students and our entrepreneurial strategies.

     OPENING ADDITIONAL SITES

     The success of Interboro's Flushing extension center and our new college
sites in Washington Heights and Yonkers encourages us to continue to open new
Interboro sites in the future to the extent regulators permit. We believe that
convenience is a strong factor considered by our students when selecting a
school. Additional sites increase our enrollment capacity and allow us to more
effectively leverage our infrastructure and our extensive investment in
curricula. They also increase our name recognition and reputation. We accepted
the New York State Education Department's recommendation that we not open any
additional sites before Interboro's fall 2003 semester, and then only after
receiving the Department's approval in order to enhance Interboro's application
for full accreditation.

INTERBORO INSTITUTE

     The Associate of Occupational Studies Degree can be obtained at Interboro
in:

     o    business administration

     o    office technologies

     o    ophthalmic dispensing

     o    paralegal studies

     o    security services and management.

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<PAGE>

     Interboro has spring, summer and fall semesters. Recognizing the demand for
Interboro's college offerings in communities with economically disadvantaged
minority populations, we opened new college sites in Washington Heights and
Yonkers, New York in 2002. We also increased our existing classroom capacity by
leasing additional space for classrooms at our mid-town Manhattan campus and
renovating our Flushing extension center.

     Our approximately $4,000 per semester tuition rate is very competitive with
similar private institutions but, like many proprietary institutions, is
somewhat higher than public institutions, such as community colleges and state
universities. However, we believe the tuition gap is narrowing between public
and proprietary institutions with which Interboro completes.

     Approximately 92% of tuition payments to Interboro in 2002 consisted of
Pell and TAP grant funds. In general, for students who receive full financial
aid, approximately 55% of the students' tuition is covered by TAP grants and 45%
of tuition is funded by Pell grants.

     There are approximately 1,800 full-time students enrolled at Interboro for
the 2003 spring semester. Our current per semester capacity is about 1,250
students in Manhattan, 550 in Flushing, 350 in Washington Heights and 100 in
Yonkers. We plan to lease additional space as enrollment increases.

     Some of our significant 2002 accomplishments at Interboro include:

     o    strengthening Interboro's academic programs by raising the academic
          standards in English and mathematics, strengthening the qualifications
          of existing faculty and hiring more qualified new full-time and
          adjunct instructors, and continuing to upgrade our library system and
          computer labs.

     o    increasing enrollments each semester over comparable 2001 semesters.
          For the full year, full-time student enrollment increased by 66% in
          2002, to 4,110 from 2,475 in 2001.

     o    enrolling 175 full-time students at our new Washington Heights site
          and 47 full-time students at our new Yonkers site in the fall 2002
          semester.

     o    increasing student retention each semester over comparable 2001
          semesters by strengthening our existing programs and adding new
          retention programs.

     o    obtaining extension center status for our Flushing site.

     o    converting our secretarial degree program to an office technologies
          degree program by adding instruction in computer and other office
          technologies. The new program trains a student to become an executive
          assistant, legal office assistant or medical office assistant.

     o    graduating in June 2002, the largest class in Interboro's recent
          history.

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<PAGE>

     o    having the New York State Board of Regents restore Interboro's
          authority to confer the Associate in Occupational Studies Degree.

     Interboro's plans for 2003 include:

     o    Meeting all the requirements for full accreditation by the New York
          State Board of Regents.

     o    Obtaining a change of scope from the New York State Education
          Department for our Washington Heights and Yonkers sites so that
          Interboro will be able to offer more than 50% of its degree programs
          at each of those sites.

     o    Obtaining extension center status from the New York State Education
          Department for the Washington Heights site.

     o    Acquiring additional space and personnel at existing sites as we grow
          enrollments.

     o    Continuing to strengthen Interboro's academic programs and the
          qualifications of its existing faculty, hiring more qualified new
          full-time and adjunct instructors, and further upgrading its library
          systems and computer labs.

     o    Increasing enrollments each semester over comparable 2002 semesters.

     o    Continuing to strengthen retention rates through current and new
          retention programs.

     o    Receiving approval to offer Associate in Applied Sciences (AAS)
          degrees in addition to the AOS degrees now offered by Interboro. We
          are awaiting approval of our request for AAS degree authority in
          computer networking and programming from the New York State Education
          Department. We do not anticipate approval until we receive our full
          accreditation from the Department. AAS degrees carry a higher
          percentage of liberal arts and sciences and are more easily accepted
          for transfer to baccalaureate schools than the AOS degree.

     o    Continuing the process of securing Middle States Association
          accreditation which, if obtained, will enhance Interboro's academic
          standing and enable it to recruit in additional markets. The process
          could take more than five years.

     o    Continuing to seek American Bar Association approval for our paralegal
          program.

MARKETING

         We employ a variety of advertising techniques to generate qualified
leads of potential students for our college sites. Depending on the target
market, we use subway and bus ads, newspapers, radio, e-mail blasts, direct
mail, cable television and the yellow pages. The effectiveness of our
advertising campaigns greatly depends on the placement and timing of ads and
following up with timely and accurate lead tracking. We also work with community
based organizations and school districts in promoting Interboro to prospective
students. Each college site is responsible for tracking its leads and converting
them to enrollments. Our lead tracking capability generally allows us to
identify leads generated by specific media and adjust our marketing to focus on
the most cost-effective lead sources. Word of mouth from our current students
and graduates is the most effective means of recruiting new students.

                                       8
<PAGE>

GOVERNMENT REGULATION OF PROPRIETARY SCHOOLS

     Interboro is subject to extensive regulation by governmental agencies,
particularly under the federal Higher Education Act of 1965 (HEA), and related
regulations issued by the U.S. Department of Education (DOE). The HEA subjects
participants to significant regulatory scrutiny in the form of numerous
standards that schools must satisfy in order to participate in the various
federal student financial aid programs under Title IV of the HEA. 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.

     ACCREDITATION. Accreditation provides the basis for:

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

     o    qualification to participate in Title IV programs.

     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 is probationary. We believe the Board of Regents will
grant Interboro full accreditation during 2003.

     The New York State Education Department, through the Board of Regents,
requires periodic registration and approval of all degree programs. All
Interboro degree programs were reregistered in February 2002 for a period of
three years. TAP funds are only available to students enrolled in registered
programs. Interboro's Associate of Occupational Sciences degree in Ophthalmic
Dispensing is also accredited by the Commission of Opticianry. The Commission's
accreditation was last issued in March 1999 for a six-year period. Accreditation
by the American Bar Association for Interboro's paralegal program is currently
pending.

     PELL GRANTS. Title IV has grant, loan and work programs. Interboro is not
participating in any loan program. The DOE awards federal financial aid under
the Pell grant program on the basis of the student's financial need. This is
generally defined as the difference between the cost of attendance and the
amount a student can reasonably contribute to that cost.

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<PAGE>

     Under the Pell grant program, Interboro is subject to frequent compliance
and financial reviews and detailed oversight and must comply with a complex
framework of laws and regulations. Factors that could affect Interboro's
participation in the Pell grant program include:

     o    Interboro could lose its eligibility to participate in Title IV if it
          receives in excess of 90% of its cash basis revenue from Title IV
          programs for tuition, fees and institutional charges. For 2002,
          approximately 37% of Interboro's revenue was derived from Title IV
          funding.

     o    Interboro cannot pay any commission, bonus, or other incentive
          payment, based directly or indirectly on success in securing
          enrollments or financial aid, to any person or entity engaged in any
          student recruitment, admission or financial aid awarding activity.
          Interboro believes that its current compensation plans comply with HEA
          standards.

     o    Interboro's participation in Title IV is based, in part, on satisfying
          administrative capability requirements. Interboro must demonstrate
          that it complies with Title IV regulations, has capable and sufficient
          personal 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    Interboro's administration of Title IV funds is audited annually by
          our independent auditors. The resulting audit report is submitted to
          the DOE. If it is determined that Interboro improperly disbursed Title
          IV funds or violated a provision of the HEA, it could be required to
          repay such funds and might be assessed an administrative fine.
          Interboro 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    Violations of Title IV requirements could also subject Interboro to
          other civil and criminal penalties including loss of Title IV
          eligibility.

     o    In the event a student withdraws and does not complete his or her
          program, Interboro's tuition refund policy must meet the requirements
          of the DOE. For example, the DOE requires Interboro to return to the
          Pell program a portion of the Title IV funds disbursed to it if a
          student withdraws prior to completion of more than 60% of a semester.
          The return must be made within 30 days after Interboro determines the
          student has withdrawn.

     o    Interboro must satisfy certain numeric standards of financial
          responsibility and is evaluated for compliance with minimum financial
          standards established by the DOE. 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 Interboro does not meet any one of the
          standards of financial responsibility, it is nonetheless entitled to
          participate in the Title IV programs if it can demonstrate to the DOE
          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 condition on participation in Title IV
          programs.

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     Interboro has policies and procedures that are designed to assure its
compliance with Title IV regulations. Its 2001 Pell audit confirmed Interboro's
compliance with Title IV regulations. Interboro's 2002 Pell audit is in progress
and is expected by its management to confirm Interboro's continuing compliance.

     TAP GRANTS. TAP is an entitlement program based on family income that
provided grants to almost all of Interboro's 2002 students. 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. This year the
governor has recommended changes that could materially affect TAP grants.
Interboro is working aggressively with other colleges to oppose any changes in
TAP that could negatively impact the educational opportunities of economically
disadvantaged students.

     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 the school are basically the same as the Pell
academic requirements.

     TAP funds disbursed to Interboro subsequent to academic year 1992 are still
subject to audit as are future disbursements. The remaining portion of the
purchase price payable by EVCI for Interboro would be reduced to the extent of
any disallowance under TAP or Pell with respect to periods prior to January 14,
2000.

     Factors that could affect Interboro's participation in TAP include:

     o    Interboro must timely disburse financial aid funds due to students.

     o    Interboro cannot certify ineligible students to receive TAP grants.

     o    Interboro must provide a copy of any draft and final audit report,
          final determination, and notices of disciplinary action which are
          issued or brought by any State, federal or accrediting agency and are
          relevant to the administration of, or eligibility of students for,
          financial aid programs administered by New York State Higher Education
          Services Corporation.

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

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<PAGE>

     CHANGE OF OWNERSHIP OR CONTROL

     PELL PROGRAM. A change in control of an institution eligible for Title IV
funds can affect the institution's eligibility to participate in Title IV
programs. In order to maintain eligibility the institution must reestablish its
state authorization and accreditation and satisfy DOE's requirements to be
recertified by the DOE as an eligible institution under new ownership.

     A school, which undergoes a change of ownership resulting in a change of
control, including Interboro, must be reviewed and recertified for participation
in the Title IV programs under its new ownership. If a school is recertified
following a change of ownership, it will be on a provisional basis. During the
time an institution is provisionally certified, it 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.

     Interboro initially received its temporary certification that became a
provisional certification on April 4, 2000. Subsequently the DOE renewed
Interboro's provisional certification through December 31, 2004.

     Because we are a publicly traded corporation, DOE regulations provide that
a change of control of EVCI occurs under either of two standards.

     First, it occurs if a person acquires ownership and control that requires
us to file a Form 8-K with the Securities and Exchange Commission disclosing a
change of control. Second, a change of control 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.

     TAP. The Board of Regents defines a change of ownership or control as
including a merger or consolidation with any corporation; a sale, lease,
exchange or other disposition of all or substantially all of the assets of an
institution; and the transfer of controlling interest of a corporation's stock.
A change of control under the definition of either the DOE or Board of Regents
would require Interboro to reaffirm its state authorization or accreditation.

     OPENING ADDITIONAL COLLEGE SITES AND ADDING EDUCATIONAL PROGRAMS

     The HEA generally requires that proprietary schools be fully operational
for two years before applying to participate in Title IV programs. However, a
school that is certified to participate in Title IV programs may establish an
additional location and apply to participate in Title IV programs at that
location immediately, if such additional location satisfies all other applicable
eligibility requirements including approval by the state licensing agency and
accrediting agency. The New York State Education Department is Interboro's
licensing and accrediting agency.

     Generally, a school 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 school already offers programs at
that level. Also, a school 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 school and the program meets minimum length requirements. If a school
erroneously determines that an educational program is eligible for Title IV
programs, the school would likely be liable for repayment of the Title IV funds
provided to students in that educational program.

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     The New York State Education Department has requirements that may affect
Interboro's ability to open a new site, expand the capacity of, or acquire, an
existing site, establish an additional location proximate to an existing site or
begin offering a new educational program.

COMPETITION AMONG COLLEGES AND UNIVERSITIES

     Interboro competes with other colleges and universities for students. The
post-secondary education market is highly fragmented and competitive. Interboro
often competes with traditional public and private two-year and four-year
colleges and universities, non-accredited career schools, and other proprietary
schools, including those that offer distance learning programs and on-site
courses of study similar to those of Interboro.

     Interboro's accreditation and, therefore, eligibility for Pell and TAP
funds gives it a competitive advantage in its target market over non-accredited
career schools and colleges.

     Interboro also has a competitive advantage because it accepts students
under federal ability to benefit regulations. These students are not high school
graduates. Many schools only accept high school graduates or the equivalent. To
accept students who are not high school graduates, Interboro must demonstrate
that the student has the "ability to benefit" from Interboro's programs,
principally through the student's achievement of a minimum score on a test
approved by the DOE and independently administered in accordance with DOE rules.

     Interboro also competes based upon the quality of its educational programs,
its reputation in the business community, the cost of its programs, and the
location of its sites.

OUR VIDEO ENHANCED COMMUNICATIONS SERVICES DIVISION

     In 2002, our multi-point video conferencing technology and services were
being used on a limited basis to support an existing customer. Our ability to
grow these services has been impeded by the limited cash resources we have
allocated to it. We are, however, considering various alternatives for the
future. These include a sale or discontinuation of the division.

EMPLOYEES

     As of December 31, 2002, we had 150 full-time employees, 58 adjunct faculty
and 29 part-time time employees. In the last quarter of 2002, 83 full-time
Interboro employees joined Local 153 of the Office and Professional Employees
International Union. The negotiations of a union contract with Local 153
commenced in February 2003.

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FORWARD-LOOKING STATEMENTS AND RISK FACTORS

     Statements and financial discussion and analysis by our management
contained in this 10-KSB 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 occur, 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.

OUR HISTORY OF NET LOSSES MAY CONTINUE IF WE CANNOT GENERATE MORE REVENUE THAN
OUR EXPENSES AND ANY EXTRAORDINARY CHARGES.

     Our net revenue and net loss for the year ended December 31, 2001 was
$9,945,000 and $8,837,000. Our accumulated deficit at December 31, 2001 was
$31,478,000. Our net revenue and net loss for the year ended December 31, 2002
was $15,257,000 and $2,005,000. Our accumulated deficit at December 31, 2002 was
$33,731,000. Although for 2002 we had income from operations of $487,000 and a
loss from discontinued operations of $2,203,000, in the future we may not be
able to generate enough revenue to offset our expenses and have net income and
positive earnings per share.

OUR ABILITY TO OPERATE AND GROW MAY DEPEND ON OUR ABILITY TO OBTAIN SUBSTANTIAL
ADDITIONAL FINANCING.

     We believe we will generate sufficient cash from operations during 2003 to
satisfy all of our operating needs and to pay the principal and interest of
approximately $990,000 due September 23, 2003, under our note payable to our
Series B preferred holders as well as approximately $360,000 we have accrued to
pay a portion of the purchase price for Interboro that is due by April 10, 2003.
Payment of the approximately $990,000 is secured by a pledge of Interboro's
stock and a lien on all of Interboro's assets.

     We will require additional cash in 2003 for one or more of the following:

     o    to pay up to $1,820,000 of undeclared dividends that we may be
          required to pay upon the automatic conversion of our Series B
          preferred into our common stock, commencing September 22, 2003. We
          believe there are significant questions regarding our obligation to
          pay these undeclared dividends that are discussed in Item 6 below
          under "Liquidity and Capital Resources - Series B preferred."

     o    to pay any significant amount of the Interboro purchase price, that
          exceeds the $360,000 we have accrued for payment in 2003, as a result
          of the resolution of the arbitration and court proceedings with the
          former owner of Interboro that are discussed in Item 3 of this report.
          In addition, we may need cash, starting in May, to cover EVCI expenses
          that cannot be paid using Interboro's cash because of the limits of a
          restraining order issued in the court proceeding.

     o    to pay $300,000 of the $550,000 that Rosenthal & Rosenthal Inc. could
          declare to be immediately due if our common stock is delisted from
          Nasdaq. The remaining $250,000 would be paid using the $250,000 we
          have pledged to collateralize this payment.

                                       14
<PAGE>

     o    to pay any other amounts that we may not have the cash for if there
          are delays or cutbacks in Pell or TAP grant disbursements, which would
          seriously impair our ability to pay obligations we are budgeting for
          payment in 2003 using cash generated from our operations.


     We have no bank lines of credit or any other externally available sources
of cash. Our success in the past in raising capital may not be repeated.

     From our inception in March 1997 through December 31, 2002, we have
received net proceeds from offerings of our debt and equity securities of
approximately $36,250,000. In 2002, we completed three private placements in
which we received gross proceeds of $1,672,000 and net proceeds of approximately
$1,571,000. It was extremely difficult for us to raise money in 2002. Our common
stock price, our Series B preferred stock, the possibility that our common stock
may be delisted from Nasdaq and investor reluctance, generally, make it even
more difficult for us to obtain financing in 2003, especially from the sale of
our equity.

     If our cash requirements exceed our resources, we may be forced to
significantly curtail our operations, seek an arrangement with our creditors or
take other measures in order to survive.

INTERBORO INSTITUTE IS SUBJECT TO EXTENSIVE FEDERAL AND NEW YORK STATE
REGULATION BECAUSE IT RECEIVES SUBSTANTIAL FEDERAL AND STATE FUNDS IN ORDER TO
OPERATE.

     Interboro's participation in the Pell and TAP grant programs subjects it to
frequent reviews and detailed oversight and requires it to comply with complex
laws and regulations. Approximately $6.7 million in Pell funds and $9.9 million
in TAP funds was provided to Interboro students during 2002, including a TAP
prepayment of approximately $1.8 million for the spring 2003 semester. Our
failure to comply with existing regulations or significant changes in Federal or
New York State regulations governing Pell or TAP grants could have a material
adverse effect on Interboro.

     The regulations, standards and policies of the regulatory agencies
frequently change. Changes or new interpretations could have material
consequences for Interboro's ability to operate and grow, including with respect
to its accreditation, permissible activities, receipt of Pell and TAP grants and
costs of doing business.

     In 2003 Interboro does not expect to grow at the same rate as it did in
2002 because it agreed to accept the New York State Department of Education's
recommendation that it not open any new sites until at least the fall of 2003
and then only after receiving the Department's approval.

CHANGES IN THE AMOUNT OR TIMING OF TAP PROGRAM DISBURSEMENTS COULD MATERIALLY
IMPEDE INTERBORO'S ABILITY TO OPERATE.

     The 2002-2003 New York State budget provided that up to 30% of TAP
prepayments for the 2003 spring semester could be withheld until August 2003. In
December 2002, TAP withheld $620,000, or 26%, of prepayments for Interboro's
spring 2003 semester. We could be mistaken in our belief that this deferral will
not have a material negative impact on our cash position.

                                       15
<PAGE>

     With the governor's encouragement, the New York State legislature is
considering modifying TAP in connection with its passage of the 2003-2004
budget. Facing a substantial budget deficit, in his State of the State address,
Governor Pataki proposed to the legislature that one-third of all TAP awards be
deferred until a student graduates. If a student does not graduate, then the
deferred funds will be forfeited. The overwhelming majority of Interboro's
students do not graduate. Accordingly, the adoption of this proposal by the
state legislature would have a material adverse effect on Interboro.

     Although the governor's proposal suggests that student loans would be
available to pay the difference, the terms, and, therefore, the potential impact
on Interboro, are not known by us. Because of our concern about the impact of
potential student default rates on eligibility for Pell grants, Interboro does
not participate in the Pell loan program. Accordingly, we do not know whether a
TAP loan program would lessen the adverse impact on Interboro of a deferral or
cutback in TAP grants.

CHANGES IN THE AMOUNT OR TIMING OF PELL PROGRAM DISBURSEMENTS COULD MATERIALLY
IMPEDE INTERBORO'S ABILITY TO OPERATE.

     Title IV must be reauthorized by congress every six years. It is currently
authorized through 2003. Congress also reviews appropriations for Title IV
programs annually. Mounting budget deficits could negatively affect Congress'
deliberations regarding the reauthorization beyond 2003 or future annual
reviews. Any significant decreases in the amount or timing of revenue we receive
through the Pell program could have a material adverse effect on Interboro.
Additionally, legislative or regulatory actions may increase Interboro's
administrative costs and require Interboro to modify its practices in a material
adverse manner.

FUTURE DELAYS IN THE APPROVAL OF THE NEW YORK STATE BUDGET THAT INCLUDES TAP
FUNDING COULD ADVERSELY AFFECT INTERBORO'S OPERATIONS.

     In 2002, approximately $830,000 of TAP funds we would ordinarily have
received in April and May were not paid to Interboro until July and August
because approval of the New York State budget was delayed. We were able to
bridge the temporary cash shortfall with funds received from private placements.
If we have a similar shortfall in the future, we may not have required cash
reserves or availability from outside sources. Accordingly, Interboro's
operations could be adversely affected.

TERRORIST ACTIVITY, OR THE THREAT OF IT, IN NEW YORK CITY COULD ADVERSELY AFFECT
INTERBORO.

     All of Interboro'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
operations, enrollments and retention rates could be adversely impacted.

                                       16
<PAGE>

INTERBORO INSTITUTE'S PRIOR PROBLEMS WITH REGULATORS COULD REOCCUR AND ADVERSELY
AFFECT ITS OPERATIONS.

     Prior to our acquiring Interboro, TAP administrators disallowed
approximately $4,800,000 of grants previously disbursed to Interboro for
academic years 1989/1990 through 1991/1992. After protracted litigation,
Interboro was required to repay approximately $5,850,000, including $1,050,000
of interest, to the New York State Higher Education Services Corporation. The
entire amount has been fully paid and all but approximately $700,000 was paid
prior to our purchase of Interboro. However, funds disbursed to Interboro
subsequent to academic year 1992 are still subject to audit by TAP
administrators as are future disbursements. We have recourse against the former
owner of Interboro for disallowances relating to periods prior to January 14,
2000, only to the extent of any unpaid purchase price for Interboro. Interboro
cannot predict if any future disallowances might occur as a result of
additional TAP audits. Interboro believes it is operating in compliance with
current TAP rules.

THE IMPACT OF UNIONIZATION OF CERTAIN INTERBORO EMPLOYEES IS NOT KNOWN.

     Negotiations with Local 153 of the Office and Professional Employees
International Union commenced in February. Accordingly, the incremental labor
cost to Interboro resulting from unionizing Interboro's full-time clerical and
administrative staff is uncertain. The annual salary and benefit cost, as of
December 31, 2002, for the 83 employees who joined Local 153 was approximately
$2,130,000. If Interboro is unable to conclude a contract that it believes
allows 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.

EVCI AND INTERBORO DEPEND ON KEY MANAGEMENT PERSONNEL TO OPERATE AND GROW.

     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 and chief executive officer of Interboro, are essential to our
operations and growth. The loss of the services of Drs. Buntzman or McGrath
could materially adversely affect us. We maintain insurance on the life of Dr.
Buntzman in the amount of $2 million. We have employment agreements, expiring
December 31, 2005, with each of Dr. Buntzman and Dr. McGrath.

LITIGATION AGAINST US BY REGULATORY AGENCIES OR OTHER PARTIES COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

     From time to time, we may be subject to investigations, claims of
non-compliance, or lawsuits by governmental agencies or 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.

                                       17
<PAGE>

     We are currently involved in a dispute with Bruce R. Kalish, the former
owner of Interboro, that is described under "Item 3. Legal Proceedings" of this
report. The approximately $1,600,000 we have accrued as of December 31, 2002,
for Mr. Kalish as current and long-term liabilities may not be sufficient, and
we may not have the cash, to pay what is ultimately determined to be owed to
him.

     We could become embroiled in litigation with holders of our Series B
preferred stock over issues we discuss in Item 6 of this report under the
caption "Liquidity and Capital Resources."

A CHANGE OF CONTROL OF EVCI COULD ADVERSELY AFFECT INTERBORO'S PARTICIPATION IN
PELL AND TAP.

     A change of control is defined by DOE and Board of Regents regulations.
Under DOE regulations, it 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.

     If a change of control were to occur in the future, Interboro would have to
be reviewed and recertified for participation in Pell and its accreditation
would have to be reaffirmed by the Board of Regents. If Interboro then had full
accreditation, the change of control would return it to a provisional
accreditation status. That status subjects Interboro to more scrutiny by the New
York State Education Department, including by means of additional reporting
requirements, greater restrictions on expansion activities and the Regents
retaining authority to award degrees for Interboro.

     Our Series B preferred holders could claim that the 9.99% cap on their
beneficial ownership does not apply to the automatic conversion of their shares
into our common stock. If successful, as a group they could own up to 42% of our
outstanding common stock, assuming no additional increases in our 5,308,826
shares currently outstanding.

INTERBORO'S FAILURE TO EFFECTIVELY OPEN AND OPERATE NEW COLLEGE SITES COULD
ADVERSELY AFFECT OUR BUSINESS.

     Opening additional college sites requires Interboro to use its cash for new
personnel, capital expenditures, marketing expenses and other startup costs. To
open a new college site, it is also required to obtain appropriate federal and
accrediting agency approvals. Our failure to effectively locate, open and manage
the operations, or to obtain authorization to participate in the federal and
state financial aid programs, of newly established sites could have a material
adverse effect on those and Interboro's other sites. Interboro may never be able
to equal or exceed its 2002 growth rate.

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.

                                       18
<PAGE>

FAILURE TO EFFECTIVELY MANAGE OUR GROWTH COULD HURT OUR BUSINESS.

     We want to continue to grow to the extent our resources and regulators will
permit. This will probably strain our management, operations, employees and
resources. Accordingly, we may be unable to effectively manage our expanding
operations or achieve significant growth on a profitable basis.

IN A PROLONGED ECONOMIC DOWNTURN, IT COULD BECOME MORE DIFFICULT FOR US TO
OPERATE AND GROW.

     We believe that Interboro should do well in a continuing recession because
it has done well thus far and similar schools have historically been able to
succeed during a recession. However, other than the current one, we have had no
experience operating our business during a recession.

IF OUR COMMON STOCK IS DELISTED FROM NASDAQ, THE LIQUIDITY OF OUR COMMON STOCK
AND OUR ABILITY TO RAISE ADDITIONAL CAPITAL AND MAKE ACQUISITIONS COULD BE
ADVERSELY AFFECTED.

     In 2001, our common stock was nearly delisted from the Nasdaq SmallCap
Market because we were not in compliance with the continued listing requirements
of a minimum of $2.5 million of stockholders' equity and a minimum bid price of
$1.00. After protracted and expensive negotiations with our Series B preferred
stockholders, we were able to reclassify our Series B preferred stock as
permanent equity. This resulted in an increase in stockholders equity by more
than $12.4 million. Our stock price rebounded and was more than $1.00 for a
period of time. However, our stock has been trading less than $1.00 and we
received notice from Nasdaq advising us that unless the closing bid price of our
common stock is at least $1.00 for a minimum of 10 consecutive trading days by
May 27, 2003, it will begin the process to delist our common stock.

     Even if the closing bid price of our common stock is least $1.00 as
required by Nasdaq, it could again drop below $1.00 or we may not be able to
satisfy the minimum stockholders' equity requirement in the future, including as
a result of the payment of up to $1,820,000 in undeclared dividends on our
Series B preferred.

     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 a 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 less attractive
          to potential sources of financing and as a currency to pay for
          acquisitions by us.

                                       19
<PAGE>

OUR MANAGEMENT AND A PRINCIPAL STOCKHOLDER, BY ACTING TOGETHER, CAN PROBABLY
CONTROL OUR BUSINESS AND POLICIES WITHOUT THE APPROVAL OF OTHER STOCKHOLDERS.

     Our officers and directors as a group, and DEWI Investments Limited, can
vote more than 27.4% of our currently outstanding common stock. This is probably
sufficient to control the outcome of any stockholder vote except where the vote
of our Series B preferred stock is required on matters that include:

     o    any increase or decrease in our authorized capital stock

     o    the sale of all or substantially all of our assets or the assets of
          any of our subsidiaries

     o    any merger involving us or any of our subsidiaries.

     As a result of voting agreements, expiring December 31, 2005, that our
chairman has with our chief executive officer and chief financial officer and
his spouse, our chairman currently has the power to direct the vote of
approximately 18% of our outstanding common stock. This may be sufficient for
Dr. Buntzman to alone control the outcome of any stockholder vote not requiring
the vote of holders of our Series B preferred stock.

ACTUAL OR POTENTIAL FUTURE SALES OF SHARES OF OUR COMMON STOCK BY EXISTING
STOCKHOLDERS COULD HAVE AN ADVERSE EFFECT ON MARKET PRICE OF OUR COMMON STOCK
AND OUR ABILITY TO OBTAIN ADDITIONAL FINANCING.

     As of February 28, 2003, the following shares are eligible for sale under
Rule 144 or current S-3 or S-8 registration statements:

     o    shares issuable upon exercise of warrants:
          o    475,000 shares at $1.05 per share
          o    50,000 shares at $1.50 per share
          o    806,609 shares at $1.00 to $3.00 per share
          o    41,500 shares at $4.00 to $6.00 per share
          o    997,223 shares at $12.00 to $25.00 per share

     o    shares issuable upon exercise of employee and outside director stock
          options:
          o    575,000 shares at $1.00 to $1.06 per share
          o    79,940 shares at $1.20 to $1.57 per share
          o    100,000 shares at $7.00 per share

     o    2,480,916 shares upon the conversion of our Series B preferred stock
          at $5.24 per share, subject to reset in September 2003.

     Commencing in the last week of September 2003, our Series B preferred will
automatically convert into shares of our common stock at the lower of $6.75 and
the then current market price of our common stock, but not lower than $3.375.

     There are four holders of our Series B preferred. Amaranth Trading LLC owns
$10 million of Series B preferred that is currently convertible into 1,647,446
shares of our common stock. Three holders own $3 million of Series B preferred
that is currently convertible into 494,234 shares of our common stock. A
provision of our Series B preferred prohibits any Series B holder, or group of
holders acting together,

                                       20
<PAGE>

from converting so many shares of its Series B preferred as would result in such
holder or group owning more than 9.99% of our outstanding common stock. This
provision is intended to prevent a holder or group from becoming subject to
Section 16(b) of the Securities Exchange Act of 1934 by virtue of being the
beneficial owner of more than 10% of our outstanding common stock. We believe
our Series B preferred holders may claim that this 9.99% limitation does not
apply to the automatic conversion of their shares. While we believe such a claim
is without merit, we also believe that conversion and dividend issues relating
to our Series B preferred are materially depressing our common stock price.

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.

     In addition to the actual or potential future sales of our common stock,
our share price also could be affected by a number of factors, including:

     o    actual or anticipated fluctuations in our operating results or net
          results

     o    changes in expectations as to our future financial performance or
          changes in financial estimates of securities analysts

     o    increased competition including from local, regional and national
          schools, or well-known colleges, universities and professional
          training organizations

     o    the operating and stock price performance of other comparable
          companies

     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 postsecondary institutions

     o    additional financings

     In addition, 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 LAW, OUR CERTIFICATE OF INCORPORATION AND BY-LAWS AND AGREEMENTS
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.

                                       21
<PAGE>

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

     While our Series B preferred stock remains outstanding:

     o    Series B preferred stockholders can require redemption of their shares
          if our board authorizes a transaction resulting in change of control
          of us.

     o    Series B preferred stockholders must consent to transactions that, in
          addition to those referred to above, include:

          o    paying dividends on our common stock

          o    incurring indebtedness in excess of $15,000,000

          o    incurring indebtedness of more than $2,000,000 that is senior to
               our $910,000 note payable to the Series B holders in September
               2003

     We recently amended our by-laws to prohibit stockholders from calling, or
proposing any business at, a special meeting of stockholders. The amendments
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.

     To strengthen the effectiveness of these by-law provisions, at our next
annual meeting of stockholders we intend to propose an amendment to our
certificate of incorporation that will prohibit our stockholders from taking
action by written content in lieu of a stockholders meeting.

     In addition, we have change of control agreements with each of our
chairman, chief executive officer and president 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 and holders of our Series B
preferred can defeat a takeover of us that could be beneficial to non-management
stockholders.

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.

                                       22
<PAGE>

     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 2.      DESCRIPTION OF PROPERTY.

     The following table sets forth information about our facilities, all of
which are leased and are adequate for our current operations.

                           APPPROXIMATE
LOCATION                    SQUARE FEET   PURPOSE
--------                    -----------   -------

Yonkers, New York               2,200     EVCI's corporate and administrative
                                          offices
New York, New York             28,000     Interboro's mid Manhattan main campus
New York, New York              2,000     Interboro's admissions department
Flushing, New York             11,000     Interboro's Flushing extension center
Washington Heights, New York    7,440     Interboro's Washington Heights site
Yonkers, New York              10,000     Interboro's Yonkers site


ITEM 3.      LEGAL PROCEEDINGS.

     In July, 2002, the former owner of Interboro, Bruce R. Kalisch, filed a
demand for arbitration against Interboro Institute, Inc., Interboro Holding,
Inc. and EVCI before JAMS in New York City claiming that Interboro currently
owes him an amount that exceeds, by approximately $600,000, the $1,597,000 that

                                       23
<PAGE>

we have accrued as current and long term liabilities as of December 31, 2002. As
a basis for his claims, Mr. Kalisch asserts that the management fees charged by
EVCI to Interboro in 2000 and 2001 are improper and adversely affect the amount
and ability to pay him what he is owed. EVCI charged management fees of $720,000
in 2000 and $1,152,000 in 2001. Mr. Kalisch also claims that any management fees
charged by EVCI to Interboro after 2001 are improper.

     In October, Mr. Kalisch filed an order to show cause requesting the New
York Supreme Court, New York County, to force EVCI to participate in the
arbitration and to enjoin EVCI from taking any management fee from Interboro.
The Court has referred the matter to a Special Referee and temporarily
restrained all transfers of funds from Interboro to EVCI, except with the
Court's permission. As a condition of this restraint, Mr. Kalisch posted a bond
of $324,000.

     The defendants believe Mr. Kalisch's claims are without merit and are
vigorously opposing them.

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

     Not applicable.

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Our common stock is quoted on The Nasdaq SmallCap 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 2001 and 2002

     2001                          HIGH                    LOW
     ----                          ----                    ---
     First Quarter                 4.375                   .813
     Second Quarter                2.250                   .260
     Third Quarter                 1.360                   .290
     Fourth Quarter                2.200                  1.420

     2002
     First Quarter                 2.000                  1.340
     Second Quarter                1.750                   .900
     Third Quarter                 1.450                   .810
     Fourth Quarter                1.060                   .490

     As of February 28, 2003, the number of EVCI's stockholders of record was 62
and the number of beneficial owners of its common stock was approximately 1,000.

     We have never declared or paid any cash dividends on our common stock. We
currently anticipate retaining any future earnings to finance internal growth
and potential acquisitions.

     We cannot pay any dividends on our common stock unless we have paid all
cumulative dividends and set aside enough money to pay the next dividend due on
our Series B preferred. Cash dividends are payable semi-annually on our Series B
preferred, as and when declared by our Board. Our Board did not declare the
December 31, 2001 dividend of $249,315 and the $910,000 dividend for 2002 on our
Series B preferred. We may be required to pay up to $1,820,000 of undeclared
dividends on our Series B Preferred upon its automatic conversion into our
common stock, commencing September 22, 2003, subject to governing provisions of
the Series B preferred and applicable law.

                                       24
<PAGE>

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS.

     The following information should be read in conjunction with the financial
statements and notes thereto included in this report for the year ended December
31, 2002. All numbers that have been rounded are approximate. Excluded from the
discussion are all costs related to the discontinuation of our activities
related to ICTS. References in the discussion to EVCI mean our general corporate
and/or video enhanced communication activities, as the context requires.

CRITICAL ACCOUNTING POLICIES

     Our discussion and analysis of our financial condition and the results of
our operations are based upon our consolidated financial statements and the data
used to prepare them. Our consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America. On an ongoing basis we re-evaluate our judgments and estimates
including those related to accounts receivable, goodwill, fixed assets, deferred
revenue, income taxes, accruals, litigation and contingencies. We base our
estimates and judgments on our historical experience, knowledge of current
additions and our beliefs of what could occur in the future considering
available information. Actual results may differ from these estimates under
different assumptions or conditions. Our estimates are guided by observing the
following critical accounting policies.

     FULL-TIME STUDENT AND STUDENT COURSE REGISTRATIONS

     We use the following methodology to determine the number of full-time
students and student course registrations that are referred to below. For each
semester, we take a headcount of Interboro's enrollees. We assume that 90% of
this head count are full-time students who will be pay tuition for the semester.
The resulting number of students is what we refer to as full-time students based
on headcount. Interboro's full-time students take an average of five courses.
Accordingly, we multiply five times our assumed number of full-time students to
determine the total number of student course registrations.

     REVENUE RECOGNITION

     Revenue is recognized ratably over the semester and we have three semesters
per year: fall, spring and summer. The fall semester generally starts the second
week of September, the Spring semester generally begins the second week of
January and the summer semester generally begins the first week of May. Our
courses are 15 weeks long and the revenue per semester will therefore be
reported over two quarters. To the extent not recognized, because it has not
been earned by us, revenue is classified on our balance sheet under current
liabilities as deferred revenue.

                                       25
<PAGE>

     ACCOUNTS RECEIVABLE

     INTERBORO. Most of Interboro's students receive TAP and Pell grants for
tuition and related fees. The maximum aid a student can receive from New York
State under TAP is $2,500 per semester. The maximum federal aid a student can
receive from the Pell program is $2,000 per semester. For 2002, Interboro
students qualifying for aid received an average of $2,413 in TAP grants and
$1,630 in Pell grants. In 2002, approximately 91% of Interboro's net revenue
consisted of TAP and Pell grants. Our students are responsible for the portion
of their tuition that is not paid with TAP and Pell funds.

     Pell and TAP funds are received by us, with respect to each new semester,
when students satisfy specific criteria that include:

     o    New York residency (for TAP grants).

     o    high school diploma or GED or, demonstrating through testing, the
          ability to benefit from Interboro's course offerings

     o    matriculation into a program leading to a degree

     o    satisfactory attendance

     o    for continuing students, meeting progress and pursuit standards during
          the prior semester

     Up to 20% of Pell funds is generally received by us after 50% of the
semester is completed. Generally, we receive the balance before the end of the
semester.

     Up to 40% of TAP funds is generally received by us prior to the start of
the semester, as a prepayment based on prior roster certification. At least 75%
of TAP funds are generally received by us prior to the start of the next
semester and the balance is substantially collected over the next 2 to 3 months.
This is premised on the New York State budget being passed on time. However, as
a result of a TAP change approved in the New York State 2002-2003 budget, TAP
has deferred payment, to not later than August 2003, of $630,000 (out of a total
of $2,382,000) that would otherwise have been part of the spring 2003 semester's
prepayment.

     PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost using the straight-line method
over the estimated useful life of the assets. The furniture, fixtures,
computers, equipment, capitalized equipment, computer software and leasehold
improvements are depreciated over periods ranging from three to five years.

     COST OF SALES

     Interboro's cost of sales primarily consists of the salary costs of
academic, administrative and staff personnel such as deans, instructors,
recruiters and library staff. It also includes costs such as carfare for
students, testing, and vaccination costs.

                                       26
<PAGE>

     MARKETING COSTS

     Generally, marketing costs are expensed as incurred. However, costs of
brochures and related materials are expensed over the duration of the course to
which they relate.

OPERATIONAL OVERVIEW

     TRANSITION YEAR

     2002 was a period of significant transition for us, primarily because we
had our first full year of income from continuing operations and discontinued
the operations of ICTS:

<TABLE>
<CAPTION>
                                                                       YEAR ENDED        YEAR ENDED
                                                                   DECEMBER 31, 2002  DECEMBER 31, 2001
                                                                   -----------------  -----------------
<S>                                                                    <C>            <C>
Income/(loss) from operations                                          $    487,269   $ (3,009,867)
Net interest income/(expense)                                               (94,810)       115,330
Provision for income taxes                                                  195,000        106,000
                                                                       ------------   ------------
Income/(loss) from continuing operations                                    197,459     (3,000,537)
Loss from discontinued operations                                        (2,202,641)    (5,836,682)
                                                                       ------------   ------------
Net  loss                                                                (2,005,182)    (8,837,219)
Accreted value of warrants and transaction costs - Series B                (239,176)      (239,176)
Dividends on preferred stock-Series C                                        (6,253)
Accreted value of warrants and transaction costs - Series C                  (3,081)       (16,664)
Waived dividends on preferred stock                                                       (910,000)
Undeclared dividends on preferred stock                                    (910,000)
                                                                       ------------   ------------
Net loss available to common stockholders                              $ (3,163,692)  $(10,003,059)
                                                                       ============   ============

Basic and diluted earnings (loss) per common share from
continuing operations before the effect of warrants,
transaction costs and dividends                                        $       0.04   $      (0.67)
Basic and diluted loss per common share from discontinued
operations                                                                    (0.45)         (1.30)
Basic and diluted loss per common share from warrants, transaction
costs and dividends                                                           (0.24)         (0.26)
                                                                       ------------   ------------
Basic and diluted loss per common share                                $      (0.65)  $      (2.23)
                                                                       ============   ============
</TABLE>


2002 COMPARED TO 2001

     Net revenue for 2002 increased 53%, or $5,312,000, to $15,257,000 from
$9,945,000 for 2001, because Interboro's full-time student enrollment rose by
66% to 4,110 from 2,475 in 2001. Net revenue includes the revenue attributable
to our enhanced video communications activities of $137,000 in 2002 and $207,000
in 2001. Each of Interboro's sites contributed to the net revenue increase:
Manhattan $1,861,000, Flushing $2,833,000, Washington Heights $507,000 and
Yonkers $183,000. Interboro's current capacity is 6,750 full-time students per
year, or 2,250 for each of its three semesters. In the fall 2001 semester,
Interboro's full-time enrollment was at 78% of capacity. For the spring semester
of 2003 Interboro's full-time enrollment is currently at approximately 80% of
capacity. We do not expect Interboro to increase its revenues in 2003 beyond
what its present college sites will allow.

                                       27
<PAGE>

     Other income increases by $87,000, to $177,000 for 2002 from $90,000 for
2001, resulted from application fees and miscellaneous items charged to
Interboro's additional students.

     Interest income decreased by $125,000 to $12,000 for 2002 from $137,000 for
2001 because we used more cash to fund Interboro's growth and ICTS's cash
deficits.

     Cost of sales increased by 30%, or $829,000, to $3,629,000 for 2002 from
$2,800,000 for 2001. As a percentage of our net revenue, cost of sales declined
to 23% for 2002 from 29% for 2001. The increase results mostly from an increase
from 70 to 129 in full- and part-time personnel. The 129 personnel include 13
who joined Local 153. At December 31, 2002, the annual cost of sales
attributable to these 13 employees was approximately $460,000, excluding
approximately $70,000, which we include under general, selling and
administrative expense. The incremental cost to Interboro under an agreement
with Local 153 will not be known until the negotiation of that agreement, which
recently began, is completed.

     Selling, general and administrative expense declined as a percentage of net
revenue to 73% for 2002 from 102% for 2001. Components of these expense items
are discussed below:

     Salaries and benefits increased by 6%, or $288,000, to $5,233,000 for 2002
from $4,945,000 for 2001. This increase results mostly from an Interboro payroll
increase of $952,000 to $3,481,000 that was offset by an EVCI payroll decrease
of $664,000 to $1,752,000. The Interboro increase resulted from the addition of
20 general and administrative personnel and annual and merit increases. Included
in Interboro's payroll are 70 employees who joined Local 153. At December 31,
2002, the annual salaries and benefits cost of these 70 employees was
approximately $2,600,000. The EVCI decrease resulted from reductions in staff of
12, from 21 in 2001 and 9 in 2002. The EVCI staff reductions resulted from the
discontinuation of EVCI's ISDN-related activities and the curtailment of EVCI's
video enhanced communications activities.

     Marketing, brochures and student registration costs increased by $648,000,
or 98%, to $1,316,000 for 2002 from $667,000 for 2001. All of these costs are
attributable to Interboro and are mostly for newspaper, radio and subway
advertising. Approximately $145,000 of the increase is directly attributable to
the opening of Interboro's Washington Heights and Yonkers sites. The increase
also includes $371,000 of general advertising that is intended to benefit all
four Interboro sites. As a percentage of our net revenue, these costs were 9%
for 2002, as compared to 7% for 2001. Interboro is budgeting approximately
$1,800,000 in 2003 for marketing and related costs.

     Professional fees and consulting fees decreased to $895,000 for 2002 from
$1,010,000 for 2001. A significant part of the reduction results from lower
legal and accounting fees relating to potential and completed acquisitions and
financings, our Series B preferred stock and maintaining our Nasdaq listing. We
also reduced our computer consulting costs in connection with the
discontinuation of our ISDN-related activities and the curtailment of our video
enhanced communications activities. Factors that could affect our 2003
professional fees include efforts to maintain our Nasdaq listing, issues
relating to the automatic conversion of our Series B preferred stock and legal
proceedings with the previous owner of Interboro.

                                       28
<PAGE>

     Depreciation and amortization increased to $600,000 for 2002 from $465,000
for 2001, primarily as a result of leasehold improvements made and computer
equipment purchased to support Interboro's growth.

     Other expenses increased by $99,000 to $3,256,000 for 2002 from $3,157,000
for 2001. The increase consists of additional expenses at Interboro of $593,000
that were offset by EVCI expense reductions of $494,000. About half of the
increase at Interboro is for rent of additional space. The reductions at EVCI
are primarily due to reductions in rent, travel and meals expense, telephone,
and computer costs. As a percentage of our net revenue, other expenses were 21%
in 2002 as compared to 32% for 2001.

     The loss from discontinued operations of $2,203,000 in 2002 relates to
ICTS, Inc.

     On September 30,2002, the board of directors of ICTS decided to discontinue
ICTS' operations. It had become apparent that ICTS sales targets could not be
met for the foreseeable future and EVCI was not willing to continue funding
ICTS' cash deficits. Interboro Holding, Inc. sold the stock of ICTS on October
21, 2002, in a transaction that was reported in our Form 8-K, filed November 5,
2002. ICTS' revenue, cost of sales and related expenses have been reclassified
in our consolidated statement of operations and shown separately as a net amount
under the captions "Loss from discontinued operations" and "Loss from disposal
of discontinued operations" for 2002 and 2001. ICTS' sales for 2002 and 2001
were $5,600,000 and $4,647,000. We acquired ICTS in July 2001.

     In 2001, EVCI stopped delivering synchronous courses using ISDN lines
because this activity was unprofitable. As a result, revenue, cost of sales and
related expenses of this activity have been reclassified in our consolidated
statement of operations and shown separately as a net amount under the caption
"Loss from discontinued operations" for 2001. Sales for 2001 from our ISDN
discontinued operations were $204,000.

     Net loss for 2002 was $2,005,000 compared to $8,837,000 for 2001, an 77%
decrease. The following table describes the components of this net loss:

                                               2002           2001
                                               ----           ----

Interboro profit                            $ 1,197,000   $   166,000
EVCI corporate overhead and video enhanced
communications costs                           (999,000)   (3,166,000)
EVCI loss from discontinued operations                     (5,263,000)
ICTS loss from discontinued operations       (2,203,000)     (574,000)
                                            -----------   -----------
Net loss                                    $(2,005,000)  $(8,837,000)
                                            ===========   ===========

SEASONALITY

     Interboro's revenue varies seasonally as a result of changes in the level
of its student enrollment.

                                       29
<PAGE>

     Interboro traditionally has experienced a greater seasonal increase in
enrollments for the fall semester over the spring semester. However, due to our
expansion and progress in increasing retention of Interboro students, we are
experiencing record enrollment for the spring semester. Although we have a
summer semester at Interboro and we encourage year-round attendance at all
schools, enrollment during the summer is significantly lower than the remainder
of the year. As a result of these factors, total student enrollment and net
revenue are typically highest in our fourth and first quarters, which include
October through March.

LIQUIDITY AND CAPITAL RESOURCES

     OPERATING ACTIVITIES

     Cash provided from operating activities increased to $292,000 by $3,992,000
in 2002 from a negative of $3,700,000 in 2001. The increase consists of
$2,267,000 of reductions in our net loss, after adjusting for non-cash items of
$3,416,000, including $2,775,000 attributable to the disposal of discontinued
operations. The balance of the increase consists of $576,000 attributable to a
net increase in current assets. The primary reasons for these changes in the
uses of cash are:

     o    EVCI's discontinuance in 2001 of its delivery of synchronized courses
          using ISDN

     o    Interboro's opening in 2002 of a new college site in each of
          Washington Heights and Yonkers, N.Y.

     o    our closing and disposal of ICTS in 2002

     INVESTING ACTIVITIES

     Cash used in investing activities increased by $1,050,000 to $1,349,000 in
2002 from $299,000 in 2001. The increase use of funds relate to:

     o    $760,000 of capital expenditures for the opening of our new sites in
          Washington Heights and Yonkers, a new admissions office on 54th street
          in Manhattan and upgrading our computer equipment in Manhattan

     o    $207,000 to pay the previous shareholder of Interboro

     o    $288,000 for certificates of deposit to support two letters of credit
          totaling $288,000

     FINANCING ACTIVITIES

     Net cash provided by financing activities increased by $1,329,000 to
$1,337,000 in 2002 from $8,000 in 2001. The increase consists of $1,421,000 of
net proceeds from three private placements

     o    $426,000 from additional issuances to accredited investors of Series C
          preferred stock and five-year warrants to purchase 77,879 shares, at
          $1.52 per share. The entire series was converted, in 2002, into
          409,870 shares of our common stock, at $1.52 per share.

                                       30
<PAGE>

     o    $525,000 from the issuance to Rosenthal & Rosenthal, Inc. of a
          $550,000 secured promissory and three-year warrants to purchase 50,000
          shares of our common stock at $1.50 per share.

     o    $470,000 form the issuance to accredited investors of convertible
          promissory notes, that were converted into 475,000 shares of our
          common stock, at $1.05 per share, and warrants, expiring in March
          2005, to purchase 475,000 shares at $1.05 per share.

     Offsetting this increase were payments on our capital leases of $59,000 and
purchases of 37,400 shares of our common stock for $66,000 in the open market at
prices ranging from $1.58 and $1.82, or an average of $1.76 per share.

     SERIES B PREFERRED

     We do not know how much, if any, of the up to $1,820,000 of undeclared
dividends on our Series B preferred stock we will be required to accrue and pay
in 2003 as a result of its conversion into our common stock prior to, or as a
result of, its automatic conversion commencing September 22, 2003.

     The governing provisions of our certificate of incorporation provide that
accrued and unpaid dividends are payable when the Series B preferred holders
surrender their certificates for conversion into the number of shares of our
common stock issuable upon conversion. Another provision prohibits any Series B
holder, or group of holders acting together, from converting so many shares of
its Series B preferred as would result in such holder becoming subject to
Section 16(b) of the Securities Exchange Act of 1934 by virtue of being the
beneficial owner of more than 10% of our outstanding common stock. In addition,
we are subject to provisions of Delaware law regarding the declaration and
payment of dividends solely out of our surplus or net profits. We believe there
are significant questions regarding the rights of the Series B holders to shares
of our common stock and to dividends upon the automatic conversion of their
shares.

     Accordingly, these questions may or may not be resolved prior to December
31, 2003.

     2003 LIQUIDITY

     Based on current plans and assumptions relating to our current operations,
we anticipate that cash flow from our operations will be sufficient to satisfy
our operating cash requirements at least until December 31, 2003. These
requirements include payment of principal and accrued interest of approximately
$990,000 under our promissory note payable to our Series B preferred holders on
September 22, 2003, and approximately $360,000 due as payment of additional
purchase price to the former owner of Interboro.

                                       31
<PAGE>

     However, we believe our cash from operations will only be able to pay a
portion of the undeclared dividends on our Series B preferred, if any, that we
are required to accrue and pay in 2003 and that we could pay the balance of
these dividends using our cash from operations in 2004.

     Furthermore, we believe EVCI should receive Court approval to obtain
sufficient cash for its operations from Interboro because EVCI's cash
requirements mostly relate to services rendered and expenses paid for the
benefit of Interboro.

     However, our ability to satisfy our cash requirements in 2003 depends on
whether and to the extent our current assumptions regarding our cash position
are affected by the risk factors discussed in Item 1 of this report, including
with respect to any deferral or cutback in Pell or TAP funding and the current
restraining order that prevents EVCI from obtaining any cash from Interboro
without the Court's approval. Accordingly, we are actively seeking additional
financing.

ITEM 7.   FINANCIAL STATEMENTS.

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

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURES.

     Not applicable.


                                       32
<PAGE>

                                    PART III

     Items 9, 10, and 12 are incorporated by reference to our definitive proxy
statement for our 2003 annual meeting of stockholders.

     ITEM 11. The following table sets forth, as of December 31, 2002,
information regarding options under our 1998 incentive plan and our 2001
non-qualified stock option plan and warrants and options issued under two
individual compensation arrangements. Only the 1998 incentive plan was approved
by our stockholders. All of the options and warrants are for the purchase of our
common stock.

                      EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                                      Number of
                                                   securities to be  Weighted average         Number of securities
                                                     issued upon      exercise price        remaining available for
                                                     exercise of      of outstanding        future issuances under
                                                     outstanding         options,          equity compensation plans
                                                  options, warrants    warrants and          (excluding securities
                 Plan Category                        and rights          rights           reflected in column (a))
                 -------------                    ----------------   ---------------       ------------------------

                                                         (a)                  (b)                     (c)
<S>                                                    <C>                   <C>                    <C>
Equity compensation plans approved by security         579,940               $1.04                  264,560
holders
Equity compensation plans not approved by              225,000               3.78                   175,000
security holders
Total                                                  804,940               1.80                   439,560
</TABLE>


     Our 2001 non-qualified stock option plan is briefly described in Note 12 of
our consolidated financial statements for the year ended December 31, 2002. The
two compensation arrangements consist of currently exercisable warrants to
purchase 50,000 shares at $1.50 per share until July 2005, that were issued to a
lender in 2002, and currently exercisable options that were issued to a former
consultant to purchase 100,000 shares at $7.00 per share until March 3, 2005.

ITEM 13.  EXHIBITS 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.

3.1(a)[3] --   Certificate of Amendment to Certificate of Incorporation of the
               Registrant.

3.2       --   Amended and Restated By-Laws of the Registrant.

                                       33
<PAGE>

3.3[1]    --   Certificate of Merger of Educational Video Conferencing, Inc. (a
               New York Corporation) into the Registrant (a Delaware
               Corporation).

3.4[1]    --   Certificate of Correction of the Certificate of Incorporation of
               the Registrant.

3.5[8]    --   Certificate Eliminating Reference to Series A 7.5% Convertible
               Preferred Stock from the Certificate of Incorporation of the
               Registrant.

3.6[8]    --   Certificate of Designations of Series B 7% Convertible Preferred
               Stock of the Registrant.

3.6(a)[8] --   Certificate of Correction of Certificate of Designations of the
               Series B 7% Convertible Preferred of the Registrant.

3.6(b)[13]--   Certificate of Amendment of Certificate of Incorporation of the
               Registrant.

3.7[14]   --   Certificate of Designations of Series C 8% Convertible Preferred
               Stock of the Registrant.

3.8       --   Certificate of Correction of the Certificate of Incorporation of
               the Registrant.

4.1[1]    --   Form of Common Stock Purchase Warrant issued to investors in
               private placements and for services provided in connection with
               such private placements.

4.2[1]    --   Tayside Common Stock Purchase Warrant.

4.3[2]    --   Adelphi Common Stock Purchase Warrant.

4.4[2]    --   Form of Representative's Warrant Agreement (including Form of
               Representative's Warrant).

4.5[2]    --   Form of Common Stock Certificate.

4.6[4]    --   Warrant Agreement, dated January 14, 2000, between the Registrant
               and Bruce R. Kalisch.

4.7[7]    --   Warrant Agreement, dated April 18, 2000, between the Registrant
               and Peter J. Solomon Company Limited.

4.8[5]    --   Common Stock Purchase Warrant, dated February 3, 2000, issued to
               The Shaar Fund Ltd.

4.9[5]    --   Form of Finders' Warrant (relating to the issuance of warrants to
               purchase 3,870 shares of the Registrant's common stock).

                                       34
<PAGE>

4.10[8]   --   Form of Common Stock Purchase Warrant issued to purchasers of the
               Registrant's Series B 7% Convertible Preferred Stock.

4.11[10]  --   Form of Warrant issued to each seller of shares of ICTS, Inc.

4.12[14]  --   Form of Common Stock Purchase Warrant issued to purchasers of the
               Registrant's Series C 8% Convertible Preferred Stock.

4.13[15]  --   Warrant to purchase 50,000 shares of Common Stock of the
               Registrant issued to Rosenthal & Rosenthal, Inc. on July 12,
               2002.

4.17[15]  --   Form of Convertible Promissory Note due July 15, 2003, the
               originals of which were issued in July 2002 to accredited
               investors.

4.15[15]  --   Form of Common Stock Purchase Warrant issued in connection with
               the issuance of the Registrant's Convertible Promissory Notes due
               July 15, 2003.

10.1[3]   --   Lease Agreement between the Registrant and Realty Co. (doing
               business as Royal Realty), dated December 15, 1998.

10.2      --   Employment Agreement between the Registrant and Dr. Arol I.
               Buntzman, dated January 1, 2003.

10.3      --   Employment Agreement between the Registrant and Dr. John J.
               McGrath, dated January 1, 2003.

10.4      --   Employment Agreement between the Registrant and Richard
               Goldenberg, dated January 1, 2003.

10.5[17]  --   Amended and Restated 1998 Incentive Stock Option Plan of the
               Registrant.

10.6[12]  --   2001 Non-Qualified Stock Option Plan.

10.7      --   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.

10.8[1]   --   Form of Indemnification Agreement.

10.9      --   Agreement between Arol I. Buntzman and Richard and Bonnie
               Goldenberg, dated January 1, 2003.

10.10     --   Agreement between Arol I. Buntzman and John J. McGrath, dated
               January 1, 2003.

10.11[4]  --   Stock Purchase Agreement, dated January 14, 2000, among Bruce R.
               Kalisch, Interboro Holding, Inc. and Interboro Institute, Inc.

                                       35
<PAGE>

10.12[8]  --   Form of Series B Stock Purchase Agreement.

10.13[8]  --   Amended and Restated Registration Rights Agreements, dated
               September 27, 2000, among Paloma Strategic Fund L.P. ("Paloma"),
               Seneca Capital International, Ltd. ("Seneca Ltd."), Seneca
               Capital, L.P. ("Seneca L.P."), Merced Partners Limited
               Partnership ("Merced"), Lakeshore International, Ltd.
               ("Lakeshore") and the Registrant.

10.14[8]  --   Amended and Restated Co-Sale Agreement, dated September 29, 2000,
               among Dr. Arol I. Buntzman, the Registrant, Paloma, Seneca Ltd.,
               Seneca L.P., Merced and Lakeshore.

10.15[10] --   Stock Purchase Agreement dated June 29, 2001 among Amee Devine,
               Taylor Devine, Louis Vescio and Margaret Vescio, ICTS, Inc.,
               Interboro Holding, Inc. and the Registrant.

10.16[10] --   Form of Letter Agreement dated as of June 29, 2001 pursuant to
               which David Vescio and Robert Vescio each sold 20,000 shares of
               ICTS, Inc. to Interboro Holding, Inc.

10.17[10] --   Letter Agreement dated as of July 1, 2001 among Amee Devine,
               Taylor Devine, Louis Vescio and Margaret Vescio, Interboro
               Holding, Inc. and the Registrant.

10.18[10] --   Stock Purchase Agreement dated as of July 2, 2001, effective July
               1, 2001, among Infrastructure & Environmental Private Equity Fund
               III, Environmental & Information Technology Private Equity Fund
               III and the Productivity Fund, L.P., Interboro Holding, Inc. and
               the Registrant.

10.19[11] --   Letter agreement dated August 17, 2001 among EVCI and Amaranth
               Trading LLC, Seneca Capital International, Ltd., Seneca Capital,
               L.P., Merced Partners Limited Partnership and Lakeshore
               International, Ltd. excluding Exhibits A and A-1, which, as
               executed, are Exhibits 10.18 and 10.19 below.

10.20[11] --   Secured Promissory Note dated August 17, 2001 among the
               Registrant and Amaranth Trading LLC, Seneca Capital
               International, Ltd., Seneca Capital, L.P., Merced Partners
               Limited Partnership and Lakeshore International, Ltd.

10.21[11] --   Escrow Agreement dated August 17, 2001 among the Registrant,
               Amaranth Trading LLC, Seneca Capital International, Ltd., Seneca
               Capital, L.P., Merced Partners Limited Partnership and Lakeshore
               International, Ltd. and Fischbein Badillo Wagner Harding.

10.22[14] --   Form of Subscription and Registration Rights Agreement for Series
               C preferred purchases.

                                       36
<PAGE>

10.23[15] --   Promissory Note for $550,000, dated July 12, 2002, and payable by
               the Registrant to Rosenthal & Rosenthal, Inc.

10.24[15] --   Guarantee by Interboro Institute, Inc., dated July 12, 2002, of
               the Registrant's $550,000 Promissory Note payable to Rosenthal &
               Rosenthal, Inc.

10.25[15] --   Form of the Registrant's Subscription and Registration Rights
               Agreement relating to the Registrant's Convertible Promissory
               Notes due July 15, 2003 and Common Stock Purchase Warrants issued
               with such Notes.

10.26[16] --   Stock Purchase Agreement dated October 16, 2002, between
               Interboro Holding Inc. and Digital Workforce Development Centers
               Inc.

10.27[16] --   Letter dated October 21, 2002 from Interboro Holding, Inc. to
               Ziad Kahn, Chairman and Chief Executive Officer of Digital
               Workforce Development Centers Inc.

10.28 [18]--   Lease Agreement between the Registrant and 444 Realty Company,
               dated July 27, 1983, as amended by agreements dated June 20,
               1988, June 1, 1992 and February 1, 1993.

10.29 [18]--   Lease Agreement between the Registrant and JUYI, Inc.,
               dated January 26, 2001.

23.1      --   Consent of Goldstein Golub Kessler LLP

99.1      --   Certification of Chief Executive Officer and Chief Financial
               Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
               2002.

99.2      --   Certification of Chief Executive Officer and Chief Financial
               Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
               2002.

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

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

[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 March 31, 1999.

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

                                       37
<PAGE>

[5]  Incorporated by reference to the Registrant's Form 8-K dated February 3,
     2000.

[6]  Incorporated by reference to the Registrant's Form 10-KSB for the year
     ended December 31, 1999.

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

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

[9]  Incorporated by reference to the Registrant's Registration Statement on
     Form S-3, filed October 30, 2000, Registration No. 333-48934.

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

[11] Incorporated by reference to the Registrant's Form 10-QSB for the quarter
     ended June 30, 2001.

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

[13] Incorporated by reference to the Registrant's Form 10-QSB for the quarter
     ended September 30, 2001.

[14] Incorporated by reference to the Registrant's Form 10-KSB for the year
     ended December 31, 2001.

[15] Incorporated by reference to the Registrant's Form 10-QSB for the quarter
     ended June 30, 2002.

[16] Incorporated by reference to the Registrant's Form 8-K dated October 21,
     2002.

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

[18] To be filed by amendment or as an exhibit to a subsequent report.

ITEM 14.  CONTROLS AND PROCEDURES.

     Our management, including our chief executive officer and president and our
chief financial officer, have conducted an evaluation of the effectiveness of
our disclosure controls and procedures (as defined in Rule 13a-14(c) under the
Securities Exchange Act of 1934) as of a date within 90 days prior to the filing
date of this report. Based upon that evaluation, our chief executive officer and
president and our chief financial officer have concluded that our disclosure
controls and procedures are effective for timely gathering, analyzing and
disclosing the information we are required to disclose in our reports filed
under the Exchange Act. There have been no significant changes made in our
internal controls or in other factors that could significantly affect our
internal controls subsequent to that evaluation date.

                                       38
<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 Incorporated

Date: March 28, 2003              By:  /s/  DR. JOHN J. MCGRATH
                                       ---------------------------------------
                                       Dr. John J. McGrath
                                       Chief Executive Officer and President

     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 28, 2003
----------------------------------------------------
Dr. Arol I. Buntzman
Chairman of the Board

/S/  DR. JOHN J. MCGRATH                                March 28, 2003
----------------------------------------------------
Dr. John J. McGrath
Chief Executive Officer and President and Director

/S/  RICHARD GOLDENBERG                                 March 28, 2003
----------------------------------------------------
Richard Goldenberg
Chief Financial Officer, Secretary and Director
(Principal Financial and Accounting Officer)

/S/  ROYCE N. FLIPPIN, JR.                              March 28, 2003
----------------------------------------------------
Royce N. Flippin, Jr.
Director

/S/  PHILIP M. GETTER                                   March 28, 2003
----------------------------------------------------
Philip M. Getter
Director

/S/  DR. DONALD GRUNEWALD                               March 28, 2003
----------------------------------------------------
Dr. Donald Grunewald
Director

/S/  ELIE HOUSMAN                                       March 28, 2003
----------------------------------------------------
Elie Housman
Director

                                       39
<PAGE>












EVCI CAREER COLLEGES INCORPORATED
 AND SUBSIDIARIES
(formerly Educational Video Conferencing, Inc.)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002













<PAGE>

               EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                 (formerly Educational Video Conferencing, Inc.)


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









INDEPENDENT AUDITOR'S REPORT                                               F-2


CONSOLIDATED FINANCIAL STATEMENTS:

   Balance Sheet as of December 31, 2002 and 2001                          F-3
   Statement of Operations for the Years Ended
     December 31, 2002 and 2001                                            F-4
   Statement of Stockholders' Equity for the Years
     Ended December 31, 2002 and 2001                                      F-5
   Statement of Cash Flows for the Years Ended
     December 31, 2002 and 2001                                            F-6
   Notes to Consolidated Financial Statements                       F-7 - F-22




                                                                             F-1
<PAGE>










INDEPENDENT AUDITOR'S REPORT




To the Board of Directors
EVCI Career Colleges Incorporated


We have audited the accompanying consolidated balance sheets of EVCI Career
Colleges Incorporated ("EVCI") and Subsidiaries (formerly Educational Video
Conferencing, Inc.) as of December 31, 2002 and 2001, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of EVCI Career
Colleges Incorporated and Subsidiaries (formerly Educational Video
Conferencing, Inc.) as of December 31, 2002 and 2001, and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.




GOLDSTEIN GOLUB KESSLER LLP
New York, New York

February 3, 2003


                                                                             F-2
<PAGE>
                             EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                                      CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------

DECEMBER 31,                                            2002            2001
--------------------------------------------------------------------------------

ASSETS

Current Assets:
Cash and cash equivalents                           $ 2,622,485     $ 2,342,282
Student accounts receivable, less allowance
  for doubtful accounts of $50,000                    1,644,364       1,403,501
Accounts receivable, other                                    -          34,585
Note receivable                                         100,000               -
Prepaid expenses and other current assets                45,310         105,091
Assets held for resale                                        -         261,000
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                  4,412,159       4,146,459

Property and Equipment - net                          1,711,252       1,020,569

Restricted Certificates of Deposit                      288,175               -

Intangible Asset                                         36,694          30,244

Goodwill                                              2,257,289       1,429,211

Deferred Income Tax Asset, net of valuation
 allowance of $4,220,000 and $4,200,000,
 respectively                                                 -               -

Other Assets                                            228,739         186,100

Assets from Discontinued Operations                           -       6,240,763
--------------------------------------------------------------------------------
TOTAL ASSETS                                        $ 8,934,308     $13,053,346
================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable and accrued expenses               $ 1,194,804       $ 715,059
Accrued purchase price payable for Interboro
  Institute, Inc.                                       360,000         206,000
Deferred tuition revenue                              1,875,507       1,252,300
Current portion of capital lease obligation              78,008          18,107
Current portion of notes payable                        963,309               -
--------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                             4,471,628       2,191,466

Capital Lease Obligation, net of current portion        141,739           8,419
Accrued Purchase Price Payable for Interboro
  Institute, Inc., net of current portion             1,237,331         745,994
Notes Payable, net of current portion                   496,691         910,000
Liabilities from Discontinued Operations                 64,956       5,556,010
--------------------------------------------------------------------------------
TOTAL LIABILITIES                                     6,412,345       9,411,889
--------------------------------------------------------------------------------

Commitments and Contingencies

Stockholders' Equity:
Preferred stock - $.0001 par value;
  authorized 1,000,000 shares:
  Series B 7% Convertible Preferred Stock - $100
  stated value; 200,000 shares designated
  Series B; issued and outstanding 130,000 shares    12,820,618      12,581,442
  Series C 8% Convertible Preferred Stock
  - $100 stated value; 20,000 shares
  designated Series C; issued and
  outstanding -0- and 1,300 shares, respectively              -         130,000
Common stock - $.0001 par value; authorized
  20,000,000 shares, issued 5,308,826
  and 4,492,961 shares, respectively;
  outstanding  5,308,826 and                                532             450
  4,440,996 shares, respectively
  Additional paid-in capital                         23,432,295      22,489,935
  Accumulated deficit                               (33,731,482)    (31,477,790)
  Treasury stock - at cost; -0- and 51,965
    shares, respectively                                      -         (82,580)

--------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY                                  2,521,963       3,641,457
--------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 8,934,308     $13,053,346
================================================================================
                                  See Notes to Consolidated Financial Statements


                                                                             F-3
<PAGE>

                             EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                            CONSOLIDATED STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------



YEAR ENDED DECEMBER 31,                             2002                2001
------------------------------------------------------------------------------

Net revenue                                           $15,257,352   $ 9,944,611
Other income                                              176,588        89,795
--------------------------------------------------------------------------------
Total revenue                                          15,433,940    10,034,406
--------------------------------------------------------------------------------

Operating expenses:
  Cost of sales                                         3,628,641     2,800,315
  Selling, general and administrative                  11,299,130    10,243,958
  Noncash consulting services                              18,900             -
--------------------------------------------------------------------------------
Total operating expenses                               14,946,671    13,044,273
--------------------------------------------------------------------------------

Income (loss) from operations                             487,269    (3,009,867)

Other income (expense):
  Interest and financing costs                           (107,130)      (21,893)
  Interest income                                          12,320       137,223

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

Income (loss) from continuing operations                  392,459    (2,894,537)

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

Discontinued operations:
  Loss from discontinued operations                      (640,064)   (1,524,220)
  Loss from disposal of discontinued operations        (1,562,577)   (4,312,462)

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

Loss from discontinued operations                      (2,202,641)   (5,836,682)

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

Loss before provision for income taxes                 (1,810,182)   (8,731,219)

Provision for income taxes                                195,000       106,000

--------------------------------------------------------------------------------
Net loss                                               (2,005,182)   (8,837,219)

Dividends on preferred stock - Series C                    (6,253)            -
Accreted value of warrants and transaction
  costs - Series B                                       (239,176)     (239,176)
Accreted value of warrants - Series C                      (3,081)      (16,664)
Waived dividends on preferred stock - Series B                  -      (910,000)
Undeclared dividends on preferred stock - Series B       (910,000)            -
--------------------------------------------------------------------------------
Net loss available to common stockholders             $(3,163,692) $(10,003,059)
================================================================================
Basic and diluted loss per common share from
  continuing operations                                   $ (0.20)      $ (0.93)
================================================================================
Basic and diluted loss per common share from
  discontinued operations                                 $ (0.45)      $ (1.30)
================================================================================
Basic and diluted loss per common share                   $ (0.65)      $ (2.23)
================================================================================
Weighted-average number of common shares outstanding    4,874,903     4,485,333
================================================================================

                                  See Notes to Consolidated Financial Statements


                                                                             F-4
<PAGE>
                             EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                                  PREFERRED STOCK
                                          COMMON STOCK           SERIES B
                                             NUMBER                         NUMBER
                                           OF SHARES     AMOUNT           OF SHARES      AMOUNT
-------------------------------------------------------------------------------------------------

<S>                                       <C>         <C>             <C>            <C>
Balance at December 31, 2000              4,492,961   $        450           --            --

Reclassification of Series B
preferred stock to permanent
equity                                         --                        130,000   $ 12,342,266

Accreted value of warrants and
transaction costs - Series B                   --             --             --         239,176

Warrants issued in connection
with acquisition of ICTS, Inc.                 --             --             --            --

Waived dividends on  Series B
preferred stock converted                      --             --             --            --
 to note payable

Issuance of preferred stock
Series C                                       --             --             --            --

Allocated value of warrants
issued with Series C                           --             --             --            --

Purchase of treasury shares,
at cost; 51,965 shares                         --             --             --            --

Net loss                                       --             --             --            --
-------------------------------------------------------------------------------------------------

Balance at December 31, 2001              4,492,961            450        130,000    12,581,442

Purchase of treasury shares,
at cost; 37,400 shares                         --             --             --            --

Issuance of preferred stock
Series C                                       --             --             --            --

Allocated value of warrants
issued with Series C                           --             --             --            --

Accreted value of warrants and
transaction costs - Series B                   --             --             --         239,176

Dividends on preferred stock Series C          --             --             --            --

Conversion of Series C preferred
stock into common stock                     409,870             41           --            --

Issuance of common stock for services        18,000              2           --            --

Allocated value of warrants issued
with convertible notes                         --             --             --            --

Conversion of convertible notes
into common stock                           475,000             48           --            --

Interest on convertible notes
paid in common stock                          2,360           --             --            --

Issuance of warrants                           --             --             --            --

Treasury stock retired                      (89,365)            (9)          --            --

Net loss                                       --             --             --            --

-------------------------------------------------------------------------------------------------
Balance at December 31, 2002              5,308,826   $        532        130,000  $ 12,820,618
=================================================================================================

<CAPTION>
                                                 PREFERRED STOCK         TREASURY
                                                     SERIES C              STOCK       ADDITIONAL
                                             NUMBER                                      PAID-IN      ACCUMULATED    STOCKHOLDERS
                                            OF SHARES          AMOUNT      AMOUNT        CAPITAL          DEBT          EQUITY
----------------------------------------------------------------------------------------------------------------------------------

<S>                                      <C>               <C>            <C>          <C>            <C>            <C>
Balance at December 31, 2000                       --             --            --     $ 22,370,380   $(21,474,731)  $    896,099

Reclassification of Series B
preferred stock to permanent
equity                                             --             --            --             --                      12,342,266

Accreted value of warrants and
transaction costs - Series B                       --             --            --             --         (239,176)          --

Warrants issued in connection
with acquisition of ICTS, Inc.                     --             --            --          123,000           --          123,000

Waived dividends on  Series B
preferred stock converted                          --             --            --             --         (910,000)      (910,000)
 to note payable

Issuance of preferred stock
Series C                                          1,300   $    130,000          --          (20,109)          --          109,891

Allocated value of warrants
issued with Series C                               --             --            --           16,664        (16,664)          --

Purchase of treasury shares,
at cost; 51,965 shares                             --             --    $    (82,580)          --             --          (82,580)

Net loss                                           --             --            --             --       (8,837,219)    (8,837,219)
-----------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 2001                      1,300        130,000       (82,580)    22,489,935    (31,477,790)     3,641,457

Purchase of treasury shares,
at cost; 37,400 shares                             --             --         (65,889)          --             --          (65,889)

Issuance of preferred stock
Series C                                          4,930        493,000          --          (67,236)          --          425,764

Allocated value of warrants
issued with Series C                               --             --            --            3,081         (3,081)          --

Accreted value of warrants and
transaction costs - Series B                       --             --            --             --         (239,176)          --

Dividends on preferred stock Series C              --             --            --             --           (6,253)        (6,253)

Conversion of Series C preferred
stock into common stock                          (6,230)      (623,000)         --          622,959           --             --

Issuance of common stock for services              --             --            --           18,898           --           18,900

Allocated value of warrants issued
with convertible notes                             --             --                         22,619           --           22,619

Conversion of convertible notes
into common stock                                                 --                       485,703                        485,703

Interest on convertible notes
paid in common stock                               --             --            --            2,296           --            2,296

Issuance of warrants                               --             --            --            2,500           --            2,500

Treasury stock retired                             --             --         148,469       (148,460)          --             --

Net loss                                           --             --            --             --       (2,005,182)    (2,005,182)
-----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2002                       --          $ - 0 -       $ - 0 -   $ 23,432,295   $(33,731,482)  $  2,521,963
===================================================================================================================================
</TABLE>

                                  See Notes to Consolidated Financial Statements

                                                                             F-5
<PAGE>


                             EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                            CONSOLIDATED STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                           2002          2001
----------------------------------------------------------------------------------------
<S>                                                           <C>           <C>
Cash flows from operating activities:
  Net loss                                                    $(2,005,182)  $(8,837,219)
  Adjustments to reconcile net loss to
  net cash provided by (used in) operating
  activities:
    Loss on disposal of discontinued operations                 1,562,577     4,312,462
    Depreciation                                                  565,585       111,486
    Loss on disposal of assets                                      9,865          --
    Amortization of goodwill                                         --         318,281
    Amortization of intangibles                                    18,550        10,079
    Allowance for doubtful accounts                                  --        (200,000)
    Shares issued for consulting services                          18,900          --
    Noncash interest and finance charges and services              27,415          --
    Changes in operating assets and liabilities,
      net of effects of acquisitions:
    (Increase) decrease in accounts receivable                   (240,863)      278,500
    Decrease in accounts receivable, other                         34,585       270,049
    (Increase) decrease in prepaid expenses and
      other current assets                                         59,781       (93,581)
    Increase in other assets                                      (42,639)     (141,019)
    Increase (decrease) in accounts payable and
      accrued expenses                                            479,745       (78,407)
    Decrease in deferred tuition revenue                          623,207     1,252,300
    Decrease in accrued costs related to
      discontinued operations                                        --           --
    Decrease in assets and liabilities from
      discontinued operations                                    (819,120)     (902,866)

----------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES                                              292,406    (3,699,935)
----------------------------------------------------------------------------------------

Cash flows from investing activities:
  Purchases of property and equipment                            (759,716)     (347,510)
  Proceeds from sale of property and equipment                       --          49,000
  Proceeds from sale of assets held for resale                      6,323          --
  Investment in restricted certificates of deposit               (288,175)         --
  Cash advanced for notes receivable                             (100,000)         --
  Payments on accrued purchase price payable                     (207,741)         --
----------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                          (1,349,309)     (298,510)
----------------------------------------------------------------------------------------

Cash flows from financing activities:
  Principal payments on capital lease obligation                  (58,519)      (19,518)
  Net proceeds from issuance of preferred stock Series C          425,764       109,891
  Net proceeds from issuance of convertible promissory notes      485,750          --
  Net proceeds from note payable                                  550,000          --
  Purchase of treasury stock                                      (65,889)      (82,580)
----------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                       1,337,106         7,793
----------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents              280,203    (3,990,652)

Cash and cash equivalents at beginning of year                  2,342,282     6,332,934
----------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                      $ 2,622,485   $ 2,342,282
========================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

  Cash paid during the year for:
    Interest                                                  $    79,715   $    71,830
========================================================================================
    Income taxes                                              $    64,291   $   149,475
========================================================================================





SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:

  Property and equipment transferred from held
    for resale to operations                                  $   244,812          --
========================================================================================
  Capital lease obligations incurred                          $   251,740          --
========================================================================================
  Conversion of Series C to common stock                      $   498,750          --
========================================================================================
  Issuance of common stock in lieu of
    interest on convertible promissory notes                  $     2,296          --
========================================================================================
  Conversion of Series B dividends to
    note payable                                              $      --         910,000
========================================================================================
  Warrants issued in connection with
    acquisition of ICTS, Inc.                                        --     $   123,000
========================================================================================
  Increase in intangible asset                                $    25,000   $    13,388
========================================================================================
  Increase in goodwill                                        $   828,078   $   265,230
========================================================================================
  Increase in accrued purchase price payable                  $   853,078   $   278,618
========================================================================================
  Accrued dividends on Series C preferred                     $     6,253          --
========================================================================================
  Issuance of warrants                                        $     2,500          --
========================================================================================
  Conversion of convertible promissory notes                  $   485,750          --
========================================================================================
</TABLE>

                                  See Notes to Consolidated Financial Statements

                                                                             F-6

<PAGE>





                             EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



1.   PRINCIPAL BUSINESS ACTIVITY
     AND SUMMARY OF SIGNIFICANT
     ACCOUNTING POLICIES:

          EVCI Career Colleges Incorporated ("EVCI") (formerly Educational Video
          Conferencing, Inc.) was formed on March 4, 1997. EVCI provides
          on-campus education through the operations of Interboro Institute,
          Inc. ("Interboro"), a two-year college with sites in Manhattan,
          Flushing, Washington Heights and Yonkers, New York.

          The accompanying consolidated financial statements include the
          accounts of EVCI and its wholly owned subsidiary, Interboro Holding,
          Inc., and its wholly owned subsidiary, Interboro Institute, Inc.
          (collectively referred to as the "Company"). All intercompany accounts
          and transactions have been eliminated in consolidation.

          In July 2001, the Company's board of directors reached a decision to
          stop delivering synchronized courses using ISDN lines because this
          activity was unprofitable (see Note 3).

          In July 2001, Interboro Holding, Inc. acquired all the outstanding
          common stock of ICTS, Inc. ("ICTS"). The acquisition was accounted for
          under the purchase method of accounting.

          In September 2002, the board of directors of ICTS decided to
          discontinue ICTS's operations (see Note 3).

          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 nondiscounted cash flow analyses to determine if an
          impairment exists.


                                                                             F-7
<PAGE>

                             EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


          The Company recognizes income ratably over the semester in which
          courses are given. The courses are generally offered in 15-week
          periods. Deferred revenue represents tuition and fees received but not
          yet earned.

          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. Student accounts receivable are primarily due from
          students who were awarded financial aid.

          Interboro participates in federal and state financial aid programs
          (Title IV Programs, NYS TAP, etc.). Almost all of the students
          attending Interboro rely on these federal and state financial aid
          programs to meet their tuition needs. Changes in the programs may have
          a direct impact on Interboro.

          Property and equipment is 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 term of the lease.

          Based on the borrowing rates currently available to the Company for
          loans with similar terms and average maturities, the fair value of the
          notes receivable and payable approximate the carrying amounts.

          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 in the accompanying consolidated statement of
          operations. The cost of brochures is capitalized and amortized over
          the semester to which the specific courses relate. Advertising
          expenses approximated $1,316,000 and $1,324,000 for the years ended
          December 31, 2002 and 2001, respectively. Approximately $553,000 and
          $667,000 is included in discontinued operations for the years ended
          December 31, 2002 and 2001, respectively.

          The Company employs the liability method of accounting for income
          taxes pursuant to Statement of Financial Accounting Standards ("SFAS")
          No. 109, under which 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. Potential
          common shares have not been included in the computation of diluted EPS
          since the effect would be antidilutive.

          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 loss and net loss per
          common share would approximate the pro forma amounts shown in the
          following table:


                                                                             F-8
<PAGE>

                             EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


Year ended December 31,                         2002                   2001
----------------------------------------------------------------------------

Reported net loss                        $(2,005,182)           $(8,837,219)

Deduct: Total stock-based employee
 compensation expense determined
 under fair-value-based method for
 all awards, net of related tax effects      564,957                559,385

----------------------------------------------------------------------------
Pro forma net loss                       $(2,570,139)           $(9,396,604)
============================================================================

Reported net loss per common share       $      (.65)           $     (2.23)
============================================================================

Pro forma net loss per common share      $      (.82)           $     (2.35)
============================================================================


          The fair value of options granted (which is amortized to expense 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
          136% in 2002 and 2001, risk-free interest rates ranging from 3.08% to
          4.14% and an expected life of 3 to 5 years from the date of vesting.

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

2.   ACQUISITIONS:

          On January 14, 2000, the Company acquired the outstanding shares of
          Interboro for $672,500 plus 50% of earnings before interest, taxes,
          depreciation and amortization ("EBITDA") for the three years ending
          December 31, 2001, 2002 and 2003. Payment of Interboro's purchase
          price is contingent upon there being EBITDA, as defined. Additionally,
          during the year ended December 31, 2001, accrued purchase price
          payable has been reduced by approximately $137,000 for certain
          adjustments of undisclosed liabilities, as defined. See Note 6 for
          details on the related goodwill.

          In June 2002, the Seller brought an action against Interboro and is
          disputing the amount due to him (see Note 11).


                                                                             F-9
<PAGE>

                             EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



Accrued purchase price payable for Interboro consists of the following:


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

December 31,                                         2002         2001
------------------------------------------------------------------------

Accrued purchase price payable at beginning
 of year                                       $  951,994     $673,376
Additional purchase price based on 50%
 of EBITDA, as defined                            853,078      278,618
------------------------------------------------------------------------
                                                1,805,072      951,994

Less payments                                     207,741           -0-
------------------------------------------------------------------------

Accrued purchase price at end of year           1,597,331      951,994
Less current portion                              360,000      206,000
------------------------------------------------------------------------
      ACCRUED PURCHASE PRICE PAYABLE, NET
        OF CURRENT PORTION                     $1,237,331     $745,994
========================================================================


          Effective July 1, 2001, Interboro Holding, Inc. acquired the
          outstanding shares of ICTS for warrants to purchase 700,000 shares of
          EVCI's common stock (500,000 shares at $1.00 per share and 200,000
          shares at $3.00 per share) valued at $123,000. The acquisition was
          accounted for under the purchase method of accounting and,
          accordingly, the results of operations are included in the financial
          statements as of the date of the acquisition, and the assets and
          liabilities were recorded based upon the fair values at the date of
          the acquisition. EVCI acquired assets with a fair value of
          approximately $2,000,000, and assumed liabilities of approximately
          $6,500,000. EVCI incurred approximately $377,000 in professional fees
          and other costs related to the acquisition.

          In connection with the acquisition of ICTS, EVCI recorded
          approximately $5,000,000 in goodwill. As disclosed in Note 3, ICTS was
          disposed of during 2002.


3.   DISCONTINUED OPERATIONS:

          In July 2001, EVCI's board of directors decided to stop delivering
          synchronized courses using ISDN lines because this activity was
          unprofitable. Accordingly, the Company has reflected the closing of
          this segment as a discontinued operation in the accompanying
          consolidated financial statements. As a result, revenue, cost of sales
          and related expenses have been reclassified in the consolidated
          statement of operations and shown separately as a net amount under the
          caption loss from discontinued operations for all periods presented.
          Accordingly, the Company recorded a loss from discontinued operations
          totaling $950,587 for the year ended December 31, 2001. Net revenue
          from the discontinued segment was $-0- and $203,880 for the years
          ended December 31, 2002 and 2001, respectively. The Company recorded a
          loss on the disposal of discontinued operations amounting to
          $4,312,462, including $100,000 in severance payments, $200,000 in
          discontinued rental agreements, $100,000 in uncollectible receivables
          and $3,912,462 in abandoned equipment and software for the year ended
          December 31, 2001.


                                                                            F-10
<PAGE>

                             EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



          In connection with discontinuation of this segment, the Company had
          identified certain assets as saleable and expected to dispose of these
          items in 2002. These assets, amounting to $261,000, were recorded at
          their net realizable value at December 31, 2001. During 2002, all
          items have been either disposed or transferred to other of the
          Company's operations.

          In September 2002, the board of directors of ICTS decided to
          discontinue ICTS's operations. It became apparent that ICTS sales
          targets could not be met for the foreseeable future and EVCI was not
          willing to continue funding ICTS's cash deficits, after having
          advanced approximately $2,200,000 to ICTS. Additionally, in October
          2002, Interboro Holding, Inc. sold all of the outstanding shares of
          ICTS to an unrelated third party for $1. The Company has also agreed
          to provide debtor-in-possession financing of $100,000, as defined. The
          Company is seeking the return of this $100,000 because ICTS did not
          become a debtor-in-possession. As a result, ICTS revenue, cost of
          sales and related expenses have been reclassified in the consolidated
          statement of operations and shown separately as a net amount under the
          caption loss from discontinued operations for all periods presented.
          The Company recorded a loss on disposal of discontinued operations
          related to ICTS of $1,562,577.

          Net revenue from the discontinued component was $5,599,169 and
          $4,647,102 for the years ended December 31, 2002 and 2001,
          respectively.


4.   NOTE RECEIVABLE:

          In September 2002, the Company advanced $100,000 to JAI, Inc. ("JAI"),
          a provider of an integrated suite of software solutions for global
          direct selling companies, in exchange for a promissory note. The note
          matures September 20, 2003, bears interest at 8% per annum and is
          convertible into shares of JAI common stock. The Company also received
          warrants to purchase 25,000 or 30,000 shares, as defined, of JAI's
          common stock at $1.00 per share, subject to adjustment. No value has
          been assigned to these warrants. In addition, the Company has granted
          JAI the right to market EVCI's e-learning content. Additionally, if
          JAI purchases more than $2,000,000 of EVCI's e-learning content by
          September 30, 2003, the Company will issue warrants to purchase EVCI's
          common stock, as defined. Through December 31, 2002, JAI has not
          purchased any e-learning content from the Company.


                                                                            F-11
<PAGE>

                             EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



5.   PROPERTY AND EQUIPMENT:

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


December 31,                             2002            2001      Useful Life
-------------------------------------------------------------------------------
Furniture and fixtures             $  483,521      $  412,702          7 years
Office computers                      880,553         580,494     3 to 5 years
Video teaching equipment              282,399         192,806          5 years
Automobile                             22,233          22,233          5 years
Leasehold improvements                923,635         379,578    Term of lease
Equipment acquired under
 capital lease                        329,918          78,178          5 years
-------------------------------------------------------------------------------
                                    2,922,259       1,665,991
-------------------------------------------------------------------------------

Less accumulated depreciation and
  amortization:
  Equipment acquired under
   capital lease                       87,069          39,089
  Other                             1,123,938         606,333
-------------------------------------------------------------------------------
                                    1,211,007         645,422
-------------------------------------------------------------------------------
                                   $1,711,252      $1,020,569
===============================================================================


6.   GOODWILL AND OTHER INTANGIBLE ASSETS:

          In July 2001, the Financial Accounting Standards Board ("FASB") issued
          SFAS Nos. 141 and 142, BUSINESS COMBINATIONS and GOODWILL AND OTHER
          INTANGIBLES, respectively. SFAS No. 141 requires all business
          combinations initiated after June 30, 2001 to be accounted for using
          the purchase method. Under SFAS No. 142, goodwill is no longer subject
          to amortization over its estimated useful life. Rather, goodwill is
          subject to at least an annual assessment for impairment by applying a
          fair-value-based test. Additionally, an acquired intangible asset
          should be separately recognized if the benefit of the intangible asset
          is obtained through contractual or other legal rights, or if the
          intangible asset can be sold, transferred, licensed, rented or
          exchanged, regardless of the acquirer's intent to do so. The Company
          has adopted SFAS No. 142 as of January 2002 and recorded a one-time
          noncash charge of $232,378 to reduce the carrying value of goodwill on
          ICTS.


                                                                            F-12
<PAGE>

                              EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



          Presented below is a summary of goodwill activity:

          Balance at December 31, 2000                        $ 1,322,653
          Goodwill acquired - Interboro                           265,230
          Goodwill acquired - ICTS                              4,962,011
          Amortization of goodwill - Interboro                   (158,672)
          Amortization of goodwill - ICTS                        (159,609)
          ----------------------------------------------------------------
          Balance at December 31, 2001                          6,231,613

          Goodwill acquired - Interboro                           828,078
          Goodwill included in the loss on disposal of ICTS    (4,802,403)

          ----------------------------------------------------------------
          Balance at December 31, 2002                        $ 2,257,288
          ================================================================


          Intangible assets consist of noncompete agreements amounting to
          $72,057 with accumulated amortization of $35,363 at December 31, 2002.
          Noncompete agreements are being amortized over a period of five years.

          SFAS No. 142 requires the disclosure of net income and earnings per
          share on a pro forma basis by reversing the goodwill amortized in the
          periods presented. Such pro forma disclosures are required in the
          period of adoption and thereafter until all periods presented reflect
          goodwill accounted for in connection with SFAS No. 142. Had SFAS No.
          142 been in effect prior to January 1, 2002, the Company's results of
          operations would have been as follows:

                              Year ended December 31, 2001
          --------------------------------------------------------------------

          Reported net loss                                      $(8,837,219)
          Addback goodwill amortization                              318,281
          --------------------------------------------------------------------
          Adjusted net loss                                      $(8,518,938)
          ====================================================================

          Basic and diluted loss per share available to
          common shareholders:
            Reported net loss per share                               $(2.23)
            Addback goodwill amortization                                .07
          --------------------------------------------------------------------
          Adjusted net loss per share                                 $(2.16)
          ====================================================================


                                                                            F-13
<PAGE>

                              EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



7.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

          Accounts payable and accrued expenses consist of the following:

          December 31,                                  2002               2001
          ---------------------------------------------------------------------

          Accounts payable                       $   496,309           $146,411
          Accrued salaries and benefits              212,000            100,000
          Accrued marketing and advertising          129,388            169,439
          Accrued professional fees                   30,000            196,739
          State and local taxes payable               82,344            -
          Student refunds payable                     95,000             70,000
          Accrued other                              149,763             32,470
          ----------------------------------------------------------------------
                                                  $1,194,804           $715,059
          ======================================================================


8.  OBLIGATIONS UNDER CAPITAL LEASES:

          The Company leases office and computer equipment under capital leases
          expiring at various dates through 2005. The leases require monthly
          payments of principal and interest imputed at rates ranging from 13%
          to 25% per annum.

          Minimum future obligations under these leases are as follows:

          Year ending December 31,

                     2003                                            $112,178
                     2004                                             104,067
                     2005                                              48,952
          --------------------------------------------------------------------
                                                                      265,197
          Less amount representing interest                            45,450
          --------------------------------------------------------------------
                                                                      219,747
          Less current portion                                         78,008

          --------------------------------------------------------------------
                                                                     $141,739
          ====================================================================


9.  INCOME TAXES:

          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 at December 31, 2002 as follows:

          Year ended December 31,                     2002                 2001
          ----------------------------------------------------------------------

          Net operating losses                 $ 4,290,000          $ 4,200,000
          Temporary differences                    (70,000)                -
          Less valuation allowance              (4,220,000)          (4,200,000)
          ----------------------------------------------------------------------
                                               $   -0-              $    -0-
          ======================================================================


                                                                            F-14
<PAGE>

                              EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



          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,                     2002                 2001
          ----------------------------------------------------------------------

          Federal statutory rate                       (34)%               (34)%
          State income taxes of Interboro               10                   1
          Increase in valuation allowance               34                  34
          ----------------------------------------------------------------------
                                                        10 %                 1%
          ======================================================================


          As of December 31, 2002, the Company had net operating loss
          carryforwards available to offset future taxable income of
          approximately $28,600,000 which expire in various years through 2022.
          Between October 1997 and August 1998, EVCI completed private offerings
          of securities. In February 1999, EVCI had an IPO of its securities.
          Under Section 382 of the Internal Revenue Code, these activities
          effect an ownership change and thus may severely limit, on an annual
          basis, the Company's ability to utilize its net operating loss
          carryforwards. The Company uses the lowest marginal U.S. corporate tax
          of 15% to determine deferred tax amounts and the related valuation
          allowance because the Company had no federal taxable earnings through
          December 31, 2002.


10.  NOTES PAYABLE:

          As disclosed in Note 12, in August 2001, the Series B preferred
          shareholders consented to an amendment of EVCI's certificate of
          incorporation, which permitted the Company to reclassify the Series B
          stock as permanent equity. Additionally, under the agreement, the
          Series B preferred shareholders waived their right to receive payment
          of undeclared dividends on their shares of $910,000. In consideration,
          the Company issued a 5% interest-bearing promissory note in the amount
          of $910,000. The promissory note is payable on September 22, 2003 and
          is secured by the common stock of Interboro. Additionally, Interboro
          has guaranteed payment of the note and has secured its guarantee by
          granting a first lien on its assets that is subordinate to specified
          creditors.

          In July 2002, the Company received proceeds of $498,750 from the
          issuance of 4% convertible promissory notes and warrants to purchase
          475,000 shares of EVCI's common stock. In September 2002, all of the
          outstanding notes were converted into 475,000 shares of the Company's
          common stock at $1.05 per share, the fair value on the date of
          issuance. The warrants are exercisable, until March 2005 at $1.05 per
          share, subject to adjustment as defined. A value of $22,619 has been
          allocated to the warrants and recognized as additional interest
          expense on the notes. In addition, 2,360 shares of the Company's
          common stock were issued in lieu of cash as interest on the notes. The
          costs related to this transaction amounted to $13,000.

          In July 2002, the Company received proceeds of $550,000 in exchange
          for a secured promissory note due July 12, 2005 bearing interest at
          10% per annum and warrants to purchase 50,000 shares of the Company's

                                                                            F-15
<PAGE>

                              EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



          common stock at $1.50 per share, subject to adjustment as defined. The
          note is secured by a $250,000 standby letter of credit, which is
          collateralized by a $250,000 restricted certificate of deposit and
          guaranteed by Interboro. The note is payable in 23 monthly
          installments of principal and interest aggregating $13,043 commencing
          July 2003 and a final payment of the outstanding principal balance and
          accrued interest. A value of $2,500 has been allocated to the warrants
          and recognized as additional interest expense. The note contains a
          covenant indicating that the note will become due upon demand should
          the Company be delisted from Nasdaq.

          Aggregate maturities of long-term debt are as follows:

           Year ending December 31,

                      2003                                          $   963,309
                      2004                                              111,889
                      2005                                              384,802
           ---------------------------------------------------------------------

                                                                      1,460,000

           Less current portion                                         963,309
           ---------------------------------------------------------------------
                                                                    $   496,691
           =====================================================================


11.  COMMITMENTS AND CONTINGENCIES:

          The Company leases office space and classrooms under noncancelable
          operating leases which expire in January 2007. 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,

                     2003                               $1,292,168
                     2004                                  827,175
                     2005                                  744,646
                     2006                                  113,405
                     2007                                    9,481

          ---------------------------------------------------------
                                                        $2,986,875
          =========================================================

          Rent expense charged to operations for the years ended December 31,
          2002 and 2001 amounted to approximately $1,427,000 and $1,577,000,
          respectively. Approximately $443,000 and $313,000 is included in
          discontinued operations for the years ended December 31, 2002 and
          2001, respectively.

          The Company has employment agreements with the three executive
          officers of the Company and an officer of Interboro which provide for
          compensation and


                                                                            F-16
<PAGE>

                              EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



          other benefits as defined in the agreements. The agreements provide
          for aggregate annual compensation of approximately $885,000, $891,000
          and $783,000 for the years ended December 31, 2003, 2004 and 2005,
          respectively. Aggregate compensation under these agreements, including
          management's discretionary bonus, approximates $746,000 and $660,000
          for the years ending December 31, 2002 and 2001, respectively.

          Tuition Assistance Program ("TAP") funds received through the academic
          grant years 1992 have been audited. Subsequent and future funds
          received are still subject to audit. At this time, it is not possible
          to determine the periods which will be audited or any adjustments
          which might be necessary as a result.

          The seller of Interboro (the "Seller") is disputing the amount of
          purchase price payable to him and has commenced an ancillary
          proceeding in the Supreme Court in New York County. The entire claim
          centers on the allocation to Interboro by EVCI of a management fee,
          the effect of which is to reduce the amount due to the Seller under
          the purchase agreement. The management fee covers costs incurred at
          the parent level which relate directly to the operations of Interboro
          to support its growth, strategic management and the opening of new
          sites. During October 2002, the Court issued a Temporary Restraining
          Order restraining Interboro from making any transfers to EVCI outside
          the ordinary course of business. In February 2003, the Court issued an
          Order referring the matter to a Special Referee and temporarily
          restraining all transfers from Interboro to EVCI, except with court
          permission, or unless EVCI could provide proof of the maintenance of a
          bank account balance of $3,600,000, but conditioned that increased
          restraint on the posting by the Seller of $324,000 undertaking within
          seven days. The Seller has posted the bond. The Seller's most
          favorable demand is to be paid the sum of $3,600,000, with $600,000 to
          be paid upon agreement and the balance to paid over four years. Under
          the original agreement, the Seller would receive 50% of Interboro's
          2003 EBIDA, as defined, as additional purchase price. The Company's
          management believes that the management fees are appropriate and the
          likelihood of an adverse outcome is unlikely and would not have a
          material effect on the Company's financial position.


12.  STOCKHOLDERS' EQUITY:


          In October 1998, the board of directors of EVCI adopted an incentive
          stock plan, as amended in December 2002, in 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,
          nonemployee directors and others. The option price cannot be less than
          the fair market value of the shares of the incentive stock options 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, 2002, there are 589,940 options
          outstanding under this plan.


                                                                            F-17
<PAGE>

                              EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



          In May 2001, the board of directors adopted a nonqualified stock
          option plan in which 250,000 shares of common stock are reserved for
          future issuance through May 2003. The plan provides for grants of
          nonqualified stock options to employees and nonemployee directors. The
          exercise price of the options is the average closing price of the
          common stock on Nasdaq for the five trading days prior to the grant of
          the option. Options vest and become fully exercisable 90 days after
          the grant. At December 31, 2002, there are 65,000 options outstanding
          under this plan.

          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, as defined. 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 will be 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. In September 2001, the conversion
          price was reset to $6.75 in accordance with the provisions of the
          Series B preferred that required the reset to the lower of the initial
          conversion price and the current market price, but not less than 50%
          of the initial conversion price. On December 31, 2001, in connection
          with the issuance of the Series C preferred stock, the conversion
          price was again reset to $6.62 in accordance with the dilution
          provisions of the Series B preferred. On September 5, 2002, the
          conversion price was again reset to $5.24 in accordance with the
          dilution provisions of the Series B preferred. In September 2003, the
          conversion price will reset to the lower of $6.75 and the then current
          market price of the common stock, but not lower than $3.375.

          In August 2001, the Series B preferred shareholders consented to an
          amendment of EVCI's certificate of incorporation, which permitted the
          Company to reclassify the Series B stock as permanent equity.
          Additionally, under the agreement, the Series B preferred shareholders
          waived their right to receive payment of undeclared dividends on their
          shares of $910,000. In consideration, the Company issued a 5%
          interest-bearing promissory note in the amount of $910,000. The
          promissory note is payable on September 22, 2003 and is secured by the
          common stock of Interboro. Additionally, Interboro has guaranteed
          payment of the note and has secured its guarantee by granting a first
          lien on its assets that is subordinate to specified creditors.

          As permitted by the terms of the Series B preferred, the board of
          directors of EVCI did not declare the annual dividends of $910,000 due
          on September 22, 2002. Additionally, the Company did not declare the
          quarterly dividend of $249,315 which was payable December 31, 2002. At
          December 31, 2002, cumulative undeclared dividends amounted to
          $1,159,315. The holders of the Series B preferred stock have alleged
          that the undeclared dividend of $249,315 is due to them as of December
          31, 2001. The Company's management believes that under the controlling
          legal authority, no dividend is due to the Series B holders unless the
          Company's board declares a dividend.


                                                                            F-18
<PAGE>

                              EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



          In September 2001, the board of directors authorized the purchase of
          up to 5% of the issued and outstanding common stock of EVCI at the
          prevailing market prices on the open market. Through 2002, the Company
          has repurchased 89,365 shares of its common stock at a cost of
          $148,469. In December 2002, the board of directors authorized the
          retirement of all treasury stock which was then included as part of
          the shares reserved for grants under the Company's 1998 incentive
          plan.

          In November 2001, the Company designated 20,000 shares of authorized
          preferred stock as Series C 8% Convertible Preferred Stock. The
          preferred stock was sold in units. Each unit consists of 250 shares of
          preferred stock and one warrant. Between November 2001 and April 2002,
          the Company received gross proceeds of $623,000 from the issuance of
          25 units consisting of 6,230 shares of Series C preferred stock and
          five-year warrants to purchase 77,879 shares of common stock at $1.52
          per share. A value of $19,745 was assigned to the warrants. The
          transaction costs of this private placement were approximately
          $87,000. The value of the warrants has been recognized as a deemed
          dividend to the Series C preferred shareholders.

          In July 2002, the Company received proceeds of $498,750 from the
          issuance of 4% convertible promissory notes and attached warrants to
          purchase 475,000 shares of EVCI's common stock. In September 2002, all
          of the outstanding notes were converted into 475,000 shares of the
          Company's common stock at $1.05 per share, the fair value on the date
          of issuance. The warrants are exercisable until March 2005 at $1.05
          per share. A value of $22,619 has been allocated to the warrants and
          recognized as additional interest expense on the notes. In addition,
          2,360 shares of the Company's common stock were issued in lieu of cash
          as interest on the notes. The costs related to this transaction were
          approximately $13,000.


                                                                            F-19
<PAGE>

                              EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



          The following table represents the warrants outstanding as of December
          31, 2002 and 2001:

                             Exercise           Warrants Outstanding
                             Price per              December 31,
          Expiration Date     Warrant           2002              2001
          -----------------------------------------------------------------
          June 2002          $ 2.00            -                       500
          August 2002          4.00            -                     2,000
          October 2002         4.00            -                   100,000
          October 2002        20.00            -                    50,000
          December 2002        4.00            -                    17,000
          January 2003         6.00            88,252               88,252
          February 2003        6.00            37,500               37,500
          February 2003       21.27            40,000               40,000
          April 2003           6.00             4,000                4,000
          August 2003         12.00            25,000               25,000
          September 2003      20.25           722,223              722,223
          February 2004       17.50             5,000                5,000
          February 2004       19.80           120,000              120,000
          February 2004       20.00            10,000               10,000
          February 2004       22.50             7,500                7,500
          February 2004       25.00             7,500                7,500
          February 2005        5.44            37,500               37,500
          March 2005           1.05           475,000               -
          July 2005            1.50            50,000               -
          January 2006        25.00            25,000               25,000
          May 2006            12.00            50,000               50,000
          June 2006            1.00           500,000              500,000
          June 2006            3.00           200,000              200,000
          December 2006        1.52            -                    29,852
          February 2007        2.00             6,230               -
          April 2007          16.09            25,000               25,000
          April 2007           2.00            77,879               -
          June 2007            1.52            22,500               -
          -----------------------------------------------------------------
                                            2,536,084            2,103,827
          =================================================================



                                                                            F-20
<PAGE>


                              EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



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

                                                 Weighted-             Weighted-
                                                  average               average
             Exercise                            Exercise    Options   Exercise
          Price Range                   Options    Price   Exercisable   Price
          ----------------------------------------------------------------------

          Balance at December 31, 2000  445,250    $13.22     156,332     $9.33
          Granted                       234,750     -        -             -
          Canceled                     (249,000)    -        -             -
          ----------------------------------------------------------------------

          Balance at December 31, 2001  431,000      8.06     319,499      7.07
          Granted                       639,440     -         -            -
          Canceled                     (315,500)    -         -            -

          ----------------------------------------------------------------------
          Balance at December 31, 2002  754,940     $1.82     675,000     $1.89
          ======================================================================


          The following table summarizes information for options currently
          outstanding and exercisable at December 31, 2002:

                          OPTIONS OUTSTANDING               OPTIONS EXERCISABLE
                 --------------------------------------    ---------------------
                               Weighted-     Weighted-                 Weighted-
                                average       average                   average
   Exercise                    Remaining     Exercise                  Exercise
Price Range        Number        Life          Price        Number       Price
--------------------------------------------------------------------------------

$   1.00 - $1.06   575,000      4.43 years     $1.00         575,000       $1.00
    1.20 -  1.57    79,940      4.41 years      1.27         -              -
    7.00           100,000      3.00 years      7.00         100,000        7.00

--------------------------------------------------------------------------------
$  1.00 - $7.00    754,940      4.24 years     $1.82         675,000       $1.89
================================================================================


                                                                            F-21
<PAGE>


                              EVCI CAREER COLLEGES INCORPORATED AND SUBSIDIARIES
                                 (formerly Educational Video Conferencing, Inc.)

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



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


          Year ended December 31,                          2002         2001
          ------------------------------------------------------------------

          Fair value of each option granted            $    .57     $    .72
          ------------------------------------------------------------------

          Total number of options granted               639,400      234,750

          ------------------------------------------------------------------
               TOTAL FAIR VALUE OF ALL OPTIONS GRANTED $365,696     $168,316
          ==================================================================

          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 incentive 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-22

<PAGE>

EXHIBIT NO.*                   DESCRIPTION OF EXHIBIT

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

3.1(a)[3] --   Certificate of Amendment to Certificate of Incorporation of the
               Registrant.

3.2       --   Amended and Restated By-Laws of the Registrant.

3.3[1]    --   Certificate of Merger of Educational Video Conferencing, Inc. (a
               New York Corporation) into the Registrant (a Delaware
               Corporation).

3.4[1]    --   Certificate of Correction of the Certificate of Incorporation of
               the Registrant.

3.5[8]    --   Certificate Eliminating Reference to Series A 7.5% Convertible
               Preferred Stock from the Certificate of Incorporation of the
               Registrant.

3.6[8]    --   Certificate of Designations of Series B 7% Convertible Preferred
               Stock of the Registrant.

3.6(a)[8] --   Certificate of Correction of Certificate of Designations of the
               Series B 7% Convertible Preferred of the Registrant.

3.6(b)[13]--   Certificate of Amendment of Certificate of Incorporation of the
               Registrant.

3.7[14]   --   Certificate of Designations of Series C 8% Convertible Preferred
               Stock of the Registrant.

3.8       --   Certificate of Correction of the Certificate of Incorporation of
               the Registrant.

4.1[1]    --   Form of Common Stock Purchase Warrant issued to investors in
               private placements and for services provided in connection with
               such private placements.

4.2[1]    --   Tayside Common Stock Purchase Warrant.

4.3[2]    --   Adelphi Common Stock Purchase Warrant.

4.4[2]    --   Form of Representative's Warrant Agreement (including Form of
               Representative's Warrant).

4.5[2]    --   Form of Common Stock Certificate.

4.6[4]    --   Warrant Agreement, dated January 14, 2000, between the Registrant
               and Bruce R. Kalisch.

                                       1
<PAGE>

4.7[7]    --   Warrant Agreement, dated April 18, 2000, between the Registrant
               and Peter J. Solomon Company Limited.

4.8[5]    --   Common Stock Purchase Warrant, dated February 3, 2000, issued to
               The Shaar Fund Ltd.

4.9[5]    --   Form of Finders' Warrant (relating to the issuance of warrants to
               purchase 3,870 shares of the Registrant's common stock).

4.10[8]   --   Form of Common Stock Purchase Warrant issued to purchasers of the
               Registrant's Series B 7% Convertible Preferred Stock.

4.11[10]  --   Form of Warrant issued to each seller of shares of ICTS, Inc.

4.12[14]  --   Form of Common Stock Purchase Warrant issued to purchasers of the
               Registrant's Series C 8% Convertible Preferred Stock.

4.13[15]  --   Warrant to purchase 50,000 shares of Common Stock of the
               Registrant issued to Rosenthal & Rosenthal, Inc. on July 12,
               2002.

4.17[15]  --   Form of Convertible Promissory Note due July 15, 2003, the
               originals of which were issued in July 2002 to accredited
               investors.

4.15[15]  --   Form of Common Stock Purchase Warrant issued in connection with
               the issuance of the Registrant's Convertible Promissory Notes due
               July 15, 2003.

10.1[3]   --   Lease Agreement between the Registrant and Realty Co. (doing
               business as Royal Realty), dated December 15, 1998.

10.2      --   Employment Agreement between the Registrant and Dr. Arol I.
               Buntzman, dated January 1, 2003.

10.3      --   Employment Agreement between the Registrant and Dr. John J.
               McGrath, dated January 1, 2003.

10.4      --   Employment Agreement between the Registrant and Richard
               Goldenberg, dated January 1, 2003.

10.5[17]  --   Amended and Restated 1998 Incentive Stock Option Plan of the
               Registrant.

10.6[12]  --   2001 Non-Qualified Stock Option Plan.

10.7      --   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.

10.8[1]   --   Form of Indemnification Agreement.

                                       2
<PAGE>

10.9      --   Agreement between Arol I. Buntzman and Richard and Bonnie
               Goldenberg, dated January 1, 2003.

10.10     --   Agreement between Arol I. Buntzman and John J. McGrath, dated
               January 1, 2003.

10.11[4]  --   Stock Purchase Agreement, dated January 14, 2000, among Bruce R.
               Kalisch, Interboro Holding, Inc. and Interboro Institute, Inc.

10.12[8]  --   Form of Series B Stock Purchase Agreement.

10.13[8]  --   Amended and Restated Registration Rights Agreements, dated
               September 27, 2000, among Paloma Strategic Fund L.P. ("Paloma"),
               Seneca Capital International, Ltd. ("Seneca Ltd."), Seneca
               Capital, L.P. ("Seneca L.P."), Merced Partners Limited
               Partnership ("Merced"), Lakeshore International, Ltd.
               ("Lakeshore") and the Registrant.

10.14[8]  --   Amended and Restated Co-Sale Agreement, dated September 29, 2000,
               among Dr. Arol I. Buntzman, the Registrant, Paloma, Seneca Ltd.,
               Seneca L.P., Merced and Lakeshore.

10.15[10] --   Stock Purchase Agreement dated June 29, 2001 among Amee Devine,
               Taylor Devine, Louis Vescio and Margaret Vescio, ICTS, Inc.,
               Interboro Holding, Inc. and the Registrant.

10.16[10] --   Form of Letter Agreement dated as of June 29, 2001 pursuant to
               which David Vescio and Robert Vescio each sold 20,000 shares of
               ICTS, Inc. to Interboro Holding, Inc.

10.17[10] --   Letter Agreement dated as of July 1, 2001 among Amee Devine,
               Taylor Devine, Louis Vescio and Margaret Vescio, Interboro
               Holding, Inc. and the Registrant.

10.18[10] --   Stock Purchase Agreement dated as of July 2, 2001, effective July
               1, 2001, among Infrastructure & Environmental Private Equity Fund
               III, Environmental & Information Technology Private Equity Fund
               III and the Productivity Fund, L.P., Interboro Holding, Inc. and
               the Registrant.

10.19[11] --   Letter agreement dated August 17, 2001 among EVCI and Amaranth
               Trading LLC, Seneca Capital International, Ltd., Seneca Capital,
               L.P., Merced Partners Limited Partnership and Lakeshore
               International, Ltd. excluding Exhibits A and A-1, which, as
               executed, are Exhibits 10.18 and 10.19 below.

10.20[11] --   Secured Promissory Note dated August 17, 2001 among the
               Registrant and Amaranth Trading LLC, Seneca Capital
               International, Ltd., Seneca Capital, L.P., Merced Partners
               Limited Partnership and Lakeshore International, Ltd.

                                       3
<PAGE>

10.21[11] --   Escrow Agreement dated August 17, 2001 among the Registrant,
               Amaranth Trading LLC, Seneca Capital International, Ltd., Seneca
               Capital, L.P., Merced Partners Limited Partnership and Lakeshore
               International, Ltd. and Fischbein Badillo Wagner Harding.

10.22[14] --   Form of Subscription and Registration Rights Agreement for Series
               C preferred purchases.

10.23[15] --   Promissory Note for $550,000, dated July 12, 2002, and payable by
               the Registrant to Rosenthal & Rosenthal, Inc.

10.24[15] --   Guarantee by Interboro Institute, Inc., dated July 12, 2002, of
               the Registrant's $550,000 Promissory Note payable to Rosenthal &
               Rosenthal, Inc.

10.25[15] --   Form of the Registrant's Subscription and Registration Rights
               Agreement relating to the Registrant's Convertible Promissory
               Notes due July 15, 2003 and Common Stock Purchase Warrants issued
               with such Notes.

10.26[16] --   Stock Purchase Agreement dated October 16, 2002, between
               Interboro Holding Inc. and Digital Workforce Development Centers
               Inc.

10.27[16] --   Letter dated October 21, 2002 from Interboro Holding, Inc. to
               Ziad Kahn, Chairman and Chief Executive Officer of Digital
               Workforce Development Centers Inc.

10.28[18] --   Lease Agreement between the Registrant and 444 Realty Company,
               dated July 27, 1983, as amended by agreements dated June 20,
               1988, June 1, 1992 and February 1, 1993.

10.29 [18]--   Lease Agreement between the Registrant and JUYI, Inc.,
               dated January 26, 2001.

23.1      --   Consent of Goldstein Golub Kessler LLP

99.1      --   Certification of Chief Executive Officer and Chief Financial
               Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
               2002.

99.2      --   Certification of Chief Executive Officer and Chief Financial
               Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
               2002.

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

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

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

                                       5
<PAGE>

[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 March 31, 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 February 3,
     2000.

[6]  Incorporated by reference to the Registrant's Form 10-KSB for the year
     ended December 31, 1999.

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

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

[9]  Incorporated by reference to the Registrant's Registration Statement on
     Form S-3, filed October 30, 2000, Registration No. 333-48934.

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

[11] Incorporated by reference to the Registrant's Form 10-QSB for the quarter
     ended June 30, 2001.

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

[13] Incorporated by reference to the Registrant's Form 10-QSB for the quarter
     ended September 30, 2001.

[14] Incorporated by reference to the Registrant's Form 10-KSB for the year
     ended December 31, 2001.

[15] Incorporated by reference to the Registrant's Form 10-QSB for the quarter
     ended June 30, 2002.

[16] Incorporated by reference to the Registrant's Form 8-K dated October 21,
     2002.

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

[18] To be filed by amendment or as an exhibit to a subsequent report.