<Page>


                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                 --------------

                                    FORM 10-K

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


                    For the fiscal year ended March 31, 2002

                         Commission file number: 0-32789

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


                     Delaware                            87-0273300
   (State of incorporation or organization) (I.R.S. Employer Identification No.)

                               817 East Gate Drive
                         Mount Laurel, New Jersey 08054
          (Address of principal executive offices, including zip code)

                                 (856) 235-2121
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

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


                               Title of each class

                                  Common Stock,
                                $0.01 par value


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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

         As of June 28, 2002, the aggregate market value of the common stock of
the Registrant held by non-affiliates of the Registrant was approximately
$1,658,382.

         As of June 28, 2002, there were outstanding 7,080,498 shares of the
registrant's common stock.





<Page>




                                   EMTEC, INC.
                          2001 FORM 10-K ANNUAL REPORT

                                Table of Contents

<TABLE>
                                     PART I
<S>        <C>                                                                                                  <C>
Item 1.    Business...............................................................................................1
Item 2.    Properties.............................................................................................8
Item 3.    Legal Proceedings......................................................................................9
Item 4.    Submission of Matters to a Vote of Security Holders....................................................9

                                     PART II

Item 5.    Market for the Company's Common Equity and Related Stockholder Matters................................10
Item 6.    Selected Financial Data...............................................................................10
Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.................11
Item 7A.   Quantitative and Qualitative Information About Market Risk............................................22
Item 8.    Financial Statements and Supplementary Data...........................................................22
Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure..................22

                                    PART III

Item 10.   Directors and Executive Officers......................................................................23
Item 11.   Executive Compensation................................................................................25
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters........27
Item 13.   Certain Relationships and Related Transactions........................................................28

                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports  on Form 8-K.....................................29
</TABLE>


                                      -i-



<Page>



         References in this Annual Report to "we," "us," or "our" are to Emtec,
Inc. and its subsidiaries, unless the context specifies or requires otherwise.

Cautionary Statement Regarding Forward-Looking Statements

         You should carefully review the information contained in this Annual
Report and in other reports or documents that we file from time to time with the
Securities and Exchange Commission (the "SEC"). In this Annual Report, we state
our beliefs of future events and of our future financial performance. In some
cases, you can identify those so-called "forward-looking statements" by words
such as "may," "will," "should," expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative of those
words and other comparable words. You should be aware that those statements are
only our predictions. Actual events or results may differ materially. In
evaluating those statements, you should specifically consider various factors,
including the risks discussed in this Annual Report for the year ended March 31,
2002 and other reports or documents that we file from time to time with the SEC.
Those factors may cause our actual results to differ materially from any of our
forward-looking statements. All forward-looking statements attributable to us or
a person acting on our behalf are expressly qualified in their entirety by this
cautionary statement.

         Assumptions relating to budgeting, marketing, and other management
decisions are subjective in many respects and thus susceptible to
interpretations and periodic revisions based on actual experience and business
developments, the impact of which may cause us to alter our marketing, capital
expenditure, or other budgets, which may in turn affect our business, financial
position, results of operations, and cash flows.

                                      -ii-



<Page>






                                     PART I

Item 1.  Business

Introduction


         Emtec (OTC: ETEC) is a systems integrator focused on providing
technology solutions that enable our customers to effectively use and manage
their data to grow their businesses. Our areas of specialization in IT services
include remote network monitoring, help desk, network design, enterprise backup
and storage server consolidation, and network security. Emtec's solutions are
crafted to enable our customers to become more efficient and effective, thereby
giving them a competitive advantage.

         Named to the VARBusiness 500 list of top network integrators, value
added resellers, and consultants in the U.S. every year since 1995, Emtec
combines extensive experience in systems integration with premier technology
elements to provide its customers with sophisticated, streamlined, truly
comprehensive solutions.

         Over the past two decades, Emtec has built strong relationships with
leading manufacturers, such as Cisco, IBM, Microsoft, Sun Microsystems, and
Veritas, thereby enabling us to provide cutting-edge, scalable, reliable and
secure solutions. This, along with our background in information technology,
positions us as a premier, single-source provider of information systems, and
network solutions.

         Our customers are primarily Fortune 2000 companies, local and regional
government, and other large and mid-sized companies located principally in the
New York/New Jersey Metropolitan area and the Southeastern United States, with
annual revenues ranging from $50 million to $500 million. We service our
customer base from leased facilities in New Jersey, Connecticut, New York,
Georgia, and Florida.

         Historically, the most significant portion of our revenues has been
derived from our activities as a reseller of IT products, such as workstations,
servers, microcomputers, application software and networking and communications
equipment. In the fiscal years ended March 31, 2002, 2001 and 2000,
respectively, such reseller activities accounted, respectively, for 73.01%,
83.73%, and 86.58% of our total revenues. However, we are actively endeavoring
to increase the portion of our revenues that are derived from managed services
(remote network monitoring and our help desk) and IT consulting and professional
services. We anticipate that an increasing percentage of our future revenues
will be derived from such business.

         Prior to January 17, 2001, we were engaged in the oil and gas
exploration and development business under the name American Geological
Enterprises, Inc. At that time our principal asset, other than cash, was a 5.49%
working interest in a geothermal power unit. On January 17, 2001, we completed a
merger with Emtec, Inc., a privately held New Jersey corporation ("Emtec-NJ"),
which since 1980 had been engaged in the business of providing IT products and
services to the computer industry. Upon the merger we retained all of our
assets, subject to liabilities, and assumed all of the assets and liabilities of
Emtec-NJ. Although we have retained the lease in the geothermal power unit, we
have not yet decided whether to seek other opportunities in the gas and oil
field.




<Page>


         During the current fiscal year, we discontinued our e-business
services, which had included web self-service application programs and business
relationship management. We discontinued these services because we were
unsuccessful in selling these services to existing and potential customers.

         Our executive offices are located at 817 East Gate Drive, Mount Laurel,
New Jersey; telephone: (856) 235-2121. Our website is located at
www.emtecinc.com. The information on our website is not part of this Annual
Report.

Industry Background

         The broad market in which we compete is the provision of IT services.
This marketplace consists of traditional IT services such as hardware and
software procurement, life-cycle services, and network consulting, as well as
new and innovative Internet services such as web enablement, remote network
monitoring, help desk services, and information security.

         As the market for IT products has matured over the past several years,
price competition has intensified. That factor, combined with abbreviated
product lifecycles, has forced IT product manufacturers to pursue lower cost
manufacturing and distribution strategies. Resellers who were able to serve the
needs of corporate end users requiring diverse brands of products and related IT
services were initial beneficiaries of this heightened competition. More
recently, however, continuing competition and manufacturers' renewed efforts to
improve their cost structure have led to both consolidations and business
failures among resellers. Manufacturers have shifted from exclusive distribution
partners to "open sourcing" and some have begun direct selling efforts with a
view to capturing market share from resellers.

         At the same time that the market for IT products is consolidating, the
market for IT services and, in particular, managed services, is expanding. Many
companies have become increasingly dependent on the use of IT as a competitive
tool in today's business environment. The need to distribute and access data on
a real-time basis throughout an organization and between organizations has led
to the rapid growth in network computing infrastructures that connect numerous
and geographically dispersed end users through local and wide area networks.
This growth has been driven by the emergence of industry standard hardware,
software, and communications tools, as well as the significant improvement in
the performance, capacity, and utility of such network-based equipment and
applications.

         The decision-making process that confronts companies when planning,
selecting, and implementing IT infrastructure and services continue to grow more
complex. Organizations are continually faced with technology obsolescence and
must design new networks, upgrade, and migrate to new systems. As a result of
the rapid changes in IT products and the risks associated with the commitment of
large capital expenditures for products and services whose features and
perceived benefits are not within the day-to-day expertise of operating
management, many businesses increasingly are outsourcing some or all of their
network management and support functions and are seeking the expertise of
independent providers of IT products and services.

Our Strategy

         Our primary business objective is to become a leading single-source
provider of high quality and innovative IT products, services, and support. We
believe that by working with a single-source provider, business organizations
will be able to adapt more quickly to

                                      -2-



<Page>


technological changes and reduce their overall IT costs. To this end, we are
pursuing the following strategies:

     Expand Solution Offerings

     In order to make our services more valuable to customers and potential
customers, we acquired an established remote network operations center (NOC) and
help desk in January 2002. Together with our existing project management
offerings, these comprise a set of managed services that enable customers to
more effectively manage their IT infrastructure.

     Pursuing Strategic Acquisitions

       We will seek to expand our service offerings, to add to or enhance our
base of technical or sales personnel, and to nurture and expand client
relationships by means of acquisitions of companies whose businesses complement
our businesses and, in particular, our IT consulting services. We intend to
focus on companies with management teams that are willing to commit to their
continued long-term participation in our growth.

         On January 9, 2002, we acquired substantially all of the assets of
Devise Associates, Inc., an information technology consulting and managed
services organization located in New York City, Devise Associates, Inc., a
subsidiary of McLeodUSA, Inc. (Nasdaq: MCLD).

     Capitalizing on Existing Relationships

         We have invested in training and committed resources to obtain company
certifications from key industry manufacturers, and have entered into written
agreements with most of these manufacturers, such as Sun, IBM, CISCO, Microsoft,
Novell and Citrix. These agreements grant us a nonexclusive right to purchase
the manufacturer's hardware and license its software for our internal business
use and for commercial integration and resale. Typically, our agreements with
such manufacturers, such as those with Sun, IBM, CISCO, Microsoft, Novell and
Citrix, provide for a one-year term, renewable by the parties for additional
one-year terms and are terminable by either party on prior written notice
ranging from 30 to 45 days. They generally do not contain financial terms for
resale of the manufacturer's products, which terms are separately governed by
purchase orders.

         Moreover, we believe that our history of satisfying our larger
customers' IT product requirements will facilitate our efforts to successfully
market our broad range of managed services to this particular segment of our
client base.

Our Business

         IT Services

         Enterprise Infrastructure Solutions: We offer a full spectrum of IT
product acquisition and support services needed to support client/server
environments including product sourcing, network design & implementation,
technical support, server consolidation, and clustering and load balancing for
high availability.

         Managed Services: We manage customers' networks through the utilization
of outsourced help desk and network monitoring services, which allows
organizations to focus the majority of their efforts on their businesses - not
on managing their IT infrastructures.

                                      -3-



<Page>


         Data Management Solutions: We manage customers' business-critical data
through the implementation of storage and backup solutions that enhance the
reliability and performance of their networks.

         Network Security Solutions: We assures customers' infrastructure and
data are protected through the implementation of firewall, VPN, remote access
authentication, and virus detection technologies.

         Innovation Centers: Among our most important customer resources are the
Innovation Centers established at our Norcross, Georgia and Cranford, New Jersey
locations. These centers give our customers the ability to test the scalability
and suitability of a hardware and software configuration before investing in the
technology. Staffed by high-level certified engineers, the Innovation Centers
can simulate up to a 2,000-user load. The centers are equipped with high-end Sun
Microsystems'TM' servers, Sun Ray'TM' thin clients, Sun'TM' storage arrays, and
NT servers, as well as a wide array of software applications including Lotus
Notes/Domino, IBM's DB2 product family, Oracle, Veritas backup and storage
products.

         Lifecycle Management Services: Our lifecycle management services are
designed to provide customers with continuous availability of service and
support throughout the lifecycle of their IT investments, including the full
spectrum of IT product acquisition and support services needed to support server
environments. Our services include:

         Evaluation and prioritization of business objectives to determine the
         best course of action for our customers;

         Consultation with customers to identify the right IT products and
         services for their needs;

         Leveraging our vendor relationships to quickly source the right
         combination of products;

         Providing logistical support needed to deploy a major technology roll
         out;

         Offering assistance to reduce the overall operating cost of maintaining
         current technology through a private label lease program; and

         Providing continuous support to enable a client to improve end-user
         satisfaction, minimize downtime, and lower the total cost of ownership.

         Manufacturers Support Services Contracts: We offer manufacturer support
service contracts that provide our clients with extended technical support,
onsite hardware service and access to new software releases at a fixed price.
Most of revenue from this portion of our business comes from selling three
manufacturer's contracts: Sun Microsystems, Cisco, and Veritas

         Our IT services activities accounted for approximately 26.72%, 16.24%
and 13.42% of our total revenues for fiscal years 2002, 2001 and 2000,
respectively.

                                      -4-



<Page>


         IT Reseller

         IT Reseller: We are an authorized reseller of the products of many
leading IT manufacturers, such as 3Com, CISCO, Compaq, HP, IBM, Intel,
Microsoft, NEC, Veritas, Novell, and Sun. Such products include workstations,
servers, networking and communications equipment, enterprise computing products,
and application software. Our business depends in large part upon our ongoing
access to well established aggregators, in particular GE Access, Ingram Micro,
Inc. and Tech Data Corp. to enable us to acquire IT products at competitive
prices and on reasonable terms for resale to our customers.

         Through our alliances with GE Access, Ingram and Tech Data, we provide
our customers with competitive pricing and value-added services such as
electronic product ordering, product configuration, testing, warehousing, and
delivery. Our relationships with our aggregators allow us to minimize inventory
risk by ordering products primarily on an as-needed basis. We believe that in
most cases our ability to acquire products on a cost-plus basis affords us the
opportunity to avail ourselves of prices lower than those that could be obtained
independently from manufacturers or other vendors. We utilize electronic
ordering and pricing systems that provide real-time status checks on the
aggregators' inventories and maintain electronic data interchange links to other
suppliers, thereby enabling our sales team to schedule shipments more accurately
and to provide electronically-generated client price lists.

         In particular, we rely upon products manufactured and support services
provided by Sun, which accounted for 35%, 42% and 31% of our total revenues for
fiscal years 2002, 2001 and 2000, respectively.

         We have not entered into any long-term supply contracts with any of our
suppliers, as we purchase computers, computer systems, components, and parts on
a purchase order basis. Our agreements with GE Access, Ingram and Tech Data, who
collectively supplied approximately 79%, 80% and 43% of our resale products in
the fiscal years 2002, 2001 and 2000, respectively, may be terminated by such
companies at any time upon 30 days' prior written notice.

         We may receive manufacturer rebates resulting from equipment sales. In
addition, we receive volume discounts and other incentives from various
suppliers. Except for products in transit or products awaiting configuration at
our facility, we generally do not maintain large inventory balances. Our primary
vendors limit price protection to that provided by the manufacturer (generally
less than 30 days) and they restrict product returns, other than defective
returns, to a percentage (the percentage varies depending on the vendor and when
the return is made) of products purchased. Those returns must occur during a
defined period, at the lower of the invoiced price or the current price, subject
to the specific manufacturer's requirements and restrictions.

         Our IT reseller activities accounted for approximately 73.01%, 83.73%
and 86.58% of our total revenues for the fiscal years ended March 31, 2002, 2001
and 2000, respectively.

         Other Services

         K-12 Specialized Services for Student and Faculty Needs: We integrate
top-quality curriculum software and computer products into the classroom. We
have significant experience in building local area networks that link many
campuses together. We also provide district-wide

                                      -5-



<Page>


support and sustain Internet access to educational resources worldwide. We
tailor our array of services to make the best use of limited funds.

Marketing

         Our marketing efforts are focused on:

         Broadening our public image as a Managed Services and IT service
         provider;

         Promoting our new Managed Services offerings to current customers,
         prospects, partners, and investors;

         Maintaining a constant flow of marketing communications to increase and
         maintain our market presence;

         Driving prospects to our web site; and

         Increasing overall inquiries and sales from all sources.

         Our business development center is charged with sales lead generation.
We have developed a computer-based process by which a series of letters or
e-mails are sent to a prospective customer to provide initial information about
us before a sales call is made. The system executes strategies automatically and
prompts the sales representative when action is required. Because its
fundamental concept is to create multiple and frequent "touches" of the prospect
through letters, faxes, e-mails, and phone calls, multiple and frequent contacts
of prospective customers will be the basis of our marketing efforts. This
process will be supplemented with seminars and consulting- and services-oriented
direct mail.

         We have developed two proprietary software programs that tracks the
success of a number of our sales and marketing programs. One software package
manages the business development center process, while the other tracks the
progress of sales engagements ensuring that the correct process is followed. We
have discontinued using sales engagement software package. The business
development center software packaged is still utilized as a part of our
marketing strategy, and is also marketed to our customers as well.

Customers

         Our targeted customer base is companies with sales revenues of between
$50 and $500 million. Although we have approximately 150 customers, our two
largest customers, Gwinnett County School System (Georgia) and Tiffany &
Company, accounted, respectively, for approximately 13.85% and 9.32% of our
revenues for the year ended March 31, 2002. These same two customers accounted
for, respectively, approximately 10.23% and 6.64% of our revenues in fiscal year
2001 and for approximately 16.88% and 5.13% of our revenues in fiscal year 2000.
An additional eight customers, ING Financial Services Co., BellSouth
Corporation, Educational Testing Services, Mirant, Bally's Park Place Casinos,
Novo Nordisk, Cox Communications, and MBNA American Bank, collectively accounted
for 31.47%, 30.75% and 32.61% of our revenues for the years ended March 31,
2002, 2001 and 2000, respectively.

                                      -6-




<Page>


Intellectual Property

         We rely upon a combination of nondisclosure and other contractual
arrangements and trade secret, copyright, and trademark laws to protect our
proprietary rights and the proprietary rights of third parties from whom we
license intellectual property. We enter into confidentiality agreements with our
employees and limit distribution of proprietary information.

         Our business also includes the development of custom software
applications in connection with specific client engagements. Ownership of such
software is generally assigned to our client.

Competition

         The IT services industry is highly competitive. Our competitors
include:

         established computer product manufacturers (some of which supply
         products to us);

         distributors;

         computer resellers;

         systems integrators; and

         other IT service providers.

         Many computer product manufacturers also sell to customers through
their direct sales organizations and certain of them have announced their
intention to enhance such direct sales efforts. Many of our current and
potential competitors have longer operating histories and financial, sales,
marketing, technical, and other resources substantially greater than we do. As a
result, our competitors may be able to adapt more quickly to changes in client
needs or to devote greater resources than we can to the sales of IT products and
the provision of IT services. Such competitors could also attempt to increase
their presence in our markets by forming strategic alliances with our other
competitors or with our customers, offering new or improved products and
services to our customers or increasing their efforts to gain and retain market
share through competitive pricing. We have no ongoing written commitments by
customers to purchase products, and all product sales are made on a
purchase-order basis.

         We are also in direct competition with local, regional, and national
distributors of microcomputer products and related services as well as with
various IT consulting companies. These run the gamut from new dot com consulting
companies to the established consulting arms of nationwide accounting and
auditing firms. Several of these competitors offer most of the same basic
products as we do. We also encounter competition from microcomputer suppliers
that sell their products through direct sales forces, rather than through
resellers such as ourselves, and from manufacturers and distributors that
emphasize mail order and telemarketing sales techniques.

         The tri-state metropolitan Connecticut, New Jersey, and New York area
and parts of New England, which, on a revenue basis, accounted for 58.3%, 67.7%,
and 53.2% of our revenues

                                      -7-



<Page>


during the fiscal years 2002, 2001 and 2000, respectively, are particularly
characterized by highly discounted pricing on microcomputer products from
various sources.

         Depending on the customer, the principal areas of competition may
include price, pre-sale and post-sale technical support and service,
availability of inventory, and breadth of product line. We have an insignificant
market share of sales in the microcomputer industry and the service markets that
we serve. Most of our competitors at the regional and national levels are
substantially larger, have more personnel, have materially greater financial and
marketing resources, and operate within a larger geographic area than we do.

Employees

         As of June 28, 2002, we employed 166 individuals, including 39 sales,
marketing and related support personnel, 94 service and support employees, 21
operations and administration personnel, and 12 employees in accounting,
finance, and human resources. We believe that our ability to recruit and retain
highly skilled technical and other management personnel will be critical to our
ability to execute our business model and growth strategy. None of our employees
are represented by a labor union or are subject to a collective bargaining
agreement. We believe that our relations with our employees are good.

Item 2.  Properties

         We lease office space in seven locations. Our corporate headquarters
and principal operational facilities are currently located in Mount Laurel, New
Jersey. The following table contains certain information about each of our
leased facilities:

<TABLE>
<CAPTION>
                                                      Size
Address                                         (in square feet)      Monthly Rent             Expiration Date
-------                                          ---------------      ------------             ---------------
<S>                                                  <C>               <C>                    <C>
817 East Gate Drive                                  15,596            $14,166.37              March 31, 2004
Mount Laurel, NJ  08054

70 Jackson Drive                                     13,360             $9,575.00               June 30, 2004
Cranford, NJ  07016

2990 Gateway Drive, Suite 500                        17,102            $11,532.95              August 14, 2004
Norcross, GA 06855

7843 Bayberry Road                                    3,340             $1,753.50             February 28, 2005
Jacksonville, FL 32256

4995 LaCross Road, Suite 1300                         2,337             $3,462.37             June 30, 2004(1)
Charleston, SC  29406

880 Third Avenue, 12th                                7,635            $22,173.00             June 30, 2008(2)
New York, NY 10022

14 Strawberry Hill                                    2,000             $2,151.00             July 31, 2002(3)
Norwalk, CT  06855
</TABLE>

                                      -8-



<Page>



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

(1)  These premises were sublet at cost to the new owners of our South Carolina
     operation.

(2)  The Company assumed this lease on January 9, 2002 in connection with our
     acquisition of Devise Associates, Inc.

(3)  The Company is in negotiation with its landlord to renew this lease for an
     additional one-year term.



We believe these facilities will satisfy our anticipated needs for the
foreseeable future.

Item 3.  Legal Proceedings

         In 1999 we instituted an action against Dan. F. Williamson & Co. Inc.,
one of our customers, in the Court of Common Pleas, Greenville County, South
Carolina, for breach of contract in an amount approximating $50,000. The
defendant counterclaimed for damages in excess of $8.0 million, alleging that
our negligence corrupted its computer system. In October 2001, we settled this
litigation by agreeing to restore defendant's computer discs, which restoration
was completed in March 2002.

         In March 2002, Logical Business Solutions, Inc., one of our
competitors, instituted an action in the Circuit Court, Fourth Judicial Circuit,
in Duval County, Florida, against us and Cheryl Pullen, one of our employees,
alleging that we wrongfully interfered with its contractual relationship with
one of its customers. The amount of damages was not specified. The litigation is
currently in the discovery stage. We intend to vigorously defend against the
claim.

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

         None

                                      -9-



<Page>



                                     PART II

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

         Our common stock is quoted on the OTC Bulletin Board under the symbol
"ETEC." The following table sets forth the high and low closing prices of our
common stock for the periods indicated:

<TABLE>
<CAPTION>
Three Months Ended                           High          Low
------------------                           ----          ---
<S>                                         <C>          <C>
March 31, 2002                               $1.03        $0.60
December 31, 2001                             0.70         0.40
September 30, 2001                            0.54         0.35
June 30, 2001                                 0.47         0.28

March 31, 2001                                1.81         0.44

December 31, 2000                            $0.56        $0.44
September 30, 2000                            0.56         0.44
June 30, 2000                                  0.44         0.44
</TABLE>


         The above quotations represent prices between dealers and do not
include retail mark-ups, markdowns or commissions. They do not necessarily
represent actual transactions.

         As of June 28, 2002, there were 688 record holders of our common stock,
although we believe that beneficial holders approximate 800.

         We have never declared any dividends on our common stock and we have no
intention to do so in the foreseeable future.

Item 6.  Selected Financial Data

         The following selected consolidated financial data below should be read
in conjunction with our consolidated financial statements including the
accompanying notes and Management's Discussion and Analysis of Financial
Condition and Results of Operations, both elsewhere in this Report. The data as
of March 31, 2002 and 2001 and for each of the three years in the period ended
March 31, 2002 have been derived from, and should be read in conjunction with,
our audited consolidated financial statements and accompanying notes, which are
contained elsewhere in this Report. The data as of March 31, 2000, 1999, and
1998 and for each of the two years in the period ended March 31, 1999 have been
derived from our audited financial statements, which are not contained in this
Report.

                                      -10-



<Page>



<TABLE>
<CAPTION>
                                                                      YEAR ENDED MARCH 31,
                                                                      --------------------

                                           2002               2001              2000              1999             1998
                                     ------------------ ------------------ ---------------- ----------------- ---------------
<S>                                  <C>                 <C>                <C>              <C>               <C>
Net revenues                         $  69,601,406       $    92,602,735    $100,752,490     $ 91,683,046      $ 77,273,483

Income (loss) from continuing
  operations                         $     216,972       $    (1,257,825)   $    316,004     $    971,468      $    454,232

Income (loss) per common share
  from continuing operations
  (basic and diluted)                $        0.03       $         (0.22)   $       0.06     $       0.18      $       0.08

Total assets                         $  11,388,473       $    18,699,032    $ 21,401,172     $ 26,910,725      $ 15,488,303
</TABLE>

The Company had no long-term debt obligations or outstanding preferred stock
during the 5 years ended March 31, 2002. In addition, no dividends were paid to
common stockholders during the same period.

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

         Reference is made to the "Risk Factors" below for a discussion of
important factors that could cause actual results to differ from expectations
and any of our forward-looking statements contained herein. In addition, the
following discussion should be read in conjunction with our audited consolidated
financial statements as of and for the fiscal years ended March 31, 2002,and
2001.

Critical Accounting Policies

         Revenue Recognition

         The Company recognizes revenues based upon Staff Accounting Bulletin
#101 (SAB 101). SAB 101 states that revenue recognition cannot occur until the
earnings process is complete(evidenced), by an agreement between the company and
the customer, there has been delivery and acceptance, collectibility is
probable, and pricing is fixed and determinable. If significant obligations
remain after delivery, revenue is deferred until such obligations are fulfilled.
We had followed these principles of revenue recognition prior to the
implementation of SAB 101. Therefore, SAB 101 has had no impact on revenue
reporting. Procurement services represent sales of computer hardware and
prepackaged software. Revenue from consulting and support service contracts are
recognized ratably over the contract or service period. Revenues from
manufacturer support service contracts where the manufacturer is responsible for
fulfilling the service requirements of the customer are recognized immediately
at their contract date.

         Trade Receivables

         The Company provides an allowance for losses on trade receivables based
on a review of the current status of existing receivables and management's
evaluation of periodic aging of the accounts.

                                      -11-




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         Inventories

         Inventories are stated at the lower of cost (first-in, first-out) or
market. Cost is based on standard costs generated principally by the most recent
purchase prices. The Company provides an inventory reserve for obsolescence and
deterioration based on management's review of products and sales.

         Valuation of Long Lived Assets

         The Company evaluates its long-lived assets as prescribed by Statement
of Financial Accounting Standards No. 121 (SFAS No. 121) by measuring the
carrying amount of the assets against the estimated undiscounted future cash
flows associated with them. If such evaluations indicate that the future
undiscounted cash flows of certain long-lived assets are not sufficient to
recover the carrying value of such assets, the assets are adjusted to their fair
values.

         Income Taxes

         Income taxes are accounted for under an asset and liability approach
that requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been recognized in the
Company's financial statements or tax returns. In estimating future tax
consequences, the Company generally considers all expected future events other
than the enactment of changes in tax laws or rates. A valuation allowance is
recognized if, on weight of available evidence, it is more likely than not that
some portion or all the deferred tax assets will not be realized.

Results of Operations

Comparison of Years Ended March 31, 2002 and 2001

         Total Revenues

         Total revenues for the IT business decreased by 25.01% or $23.15
million, to $69.41 million for the year ended March 31, 2002, compared to $92.57
million for the year ended March 31, 2001. This decrease is mainly due to the
slow-down in the economy. Services and consulting revenue increased by 23.72%,
or $3.56 million, to $18.60 million for the year ended March 31, 2002 compared
to $15.03 million for the year ended March 31, 2001. This increase is mainly
attributable to an increase in our manufacturers support services contracts
revenues. Manufacturers support services contracts revenue increased by 62.25%,
or $3.16 million, to $8.24 million for the year ended March 31, 2002 compared to
$5.08 million for the year ended March 31, 2001. Product procurement revenues
decreased by 34.46%, or $26.72 million, to $50.81 million for the year ended
March 31, 2002. This decline in product procurement revenue is also mainly due
to the slow-down in the economy. In addition, some of our customers choosing to
procure their IT products directly from manufacturers and our continued focus on
growing our IT consulting and professional services have had a negative impact
on product revenues.

         Geothermal Revenues of $187,978 for the year ended March 31, 2002 are
consistent with the previous year's revenues.

                                      -12-




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         Gross Profit

         Our aggregate gross profit for IT business declined by 9.18%, or $1.00
million, to $9.94 million for the year ended March 31, 2002. This decrease is
mainly attributable to 25.01% decrease in our IT revenue due to the slow-down in
the economy. Measured as a percentage of net sales, our overall gross profit
margin increased to 14.32% of net sales for the year ended March 31, 2002 from
11.83% for the year ended March 31, 2001. This increase is mainly due to a
23.72%, or $3.56 million increase in our services and consulting revenues.

          Gross profit for product sales declined by 26.79%, or $2.19 million,
to $5.98 million for the year ended March 31, 2002 as compared with $8.17
million for the year ended March 31, 2001. This decrease is mainly attributable
to a 34.46% decrease in product revenue. Measured as a percentage of net product
sales, our gross profit margin attributable to product sales increased to 11.77%
for the year ended March 31, 2002 from 10.54% for the year ended March 31, 2001.

         Gross profit for service and consulting increased by 42.57%, or $1.18
million, to $3.96 million for the year ended March 31, 2002 as compared with
$2.78 million for the year ended March 31, 2001. This increase is mainly
attributable to higher utilization rates for our engineers as well as an
increase in the gross margin manufacturers support services contracts.
Manufacturers support services contracts gross margin increased by 77.76%, or
$748,000, to $1.71 million for the year ended March 31, 2002 as compared with
$962,000 for the year ended March 31, 2001. Also, measured as a percentage of
our gross margin attributable to services and consulting revenue increased to
21.30% of services and consulting revenue for the year ended March 31, 2002 from
18.48% for the year ended March 31, 2001.

         The geothermal gross profit of $124,895 for the year ended March 31,
2002 is consistent with the gross profit for comparable previous periods.

         Sales, General, and Administrative Expenses

         Sales, general, and administrative expenses decreased by 12.16%, or
$1.24 million, to $8.99 million for the year ended March 31, 2002. This decrease
is primarily a result of lower sales commission expenses due to decline in the
aggregate gross margin from IT business, termination of the management bonus
plan beginning January 2001, and lower bad-debt expense due to improved accounts
receivable collection performance.

         e-Business Costs

         e-Business costs for the year ended March 31, 2002 was $617,220, or
6.27% of total operating expenses, as compared with $1.30 million, or 10.58% of
total operating expenses for the year ended March 31, 2001. As of January 2002
we have discontinued our e-Business division that we started in January 2000.
This cost mainly included the building of a sales and consulting team of
approximately 8 employees, including training, certifying, marketing, and
advertising expenses.

         Other Income (Expense)

         Total other income (expense) for the year ended March 31, 2002 equaled
to $0, as compared to $24,108 for the year ended March 31, 2001. This relates
primarily to legal settlement income, net of costs, as well as a loss from the
disposition of marketable securities.

                                      -13-



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Legal settlement income net of cost is $170,993. This includes approximately
$355,000 in cash and marketable securities worth $176,000, less legal and other
operating expenses equal to approximately $355,000. Loss from the disposition of
marketable securities received in legal settlement equaled $146,885.

         Income Taxes

         Income tax expense of $ 5,632 was recorded for the year ended March 31,
2002. This amount included a deferred tax expense of $ 13,693 netted against a
current income tax benefit of $ 8,061. An income tax benefit of $ 75,029 was
recorded for the year ended March 31, 2001. This amount included a deferred tax
benefit of $ 86,765 netted against a current income tax expense of $ 11,736. The
$ 75,029 income tax benefit amount was allocated as a $ 73,059 benefit from
continuing operations and a $ 1,970 benefit from discontinued operations. A
valuation allowance of 90% of the amount of deferred tax assets was recorded at
March 31, 2002 and 2001.

         Loss from Discontinued Operations

         Loss from discontinued South Carolina operations, net of income taxes,
for the year ended March 31, 2001 equaled $63,649. The loss from discontinued
operations for the year ended March 31, 2001 was primarily due to lease
payments, contracted advertising expenses, and additional reserve for bad debt.

         Comparison of Years Ended March 31, 2001 and 2000

         Total Revenues

         Total revenues for the IT business decreased by 8.12%, or $8.18
million, to $92.55 million for the year ended March 31, 2001. Product
procurement revenues decreased by 11.12%, or $9.70 million, to $77.53 million
for the year ended March 31, 2001. This decline in product procurement revenue
is mainly due to our continued focus on our services and consulting
organization. Services and consulting revenue increased by 11.23%, or $1.52
million, to $15.03 million for the year ended March 31, 2001 compared to $13.51
million for the year ended March 31, 2000. This increase is mainly attributable
to increase in our manufacturers services support contract revenues.
Manufacturers services support contract revenues increased by 112.33%, or $2.68
million, to $5.08 million for the year ended March 31, 2001 compared to $2.39
million for the year ended March 31, 2000.

         Geothermal Revenues of $34,366 from the date of the merger are
consistent with the previous period's revenues for a comparable period.

         Gross Profit

         Our aggregate gross profit for IT procurement declined by 13.41%, or
$1.69 million, to $10.95 million for the year ended March 31, 2001. Measured as
a percentage of net sales, our overall gross profit margin also decreased to
11.83% of net sales for the year ended March 31, 2001 from 12.55% for the year
ended March 31, 2000. Due to continued downward pricing pressure on product
sales, gross profit margin attributable to product sales decreased to 10.54% for
the year ended March 31, 2001 from 10.68% for the year ended March 31, 2000. We
expect

                                      -14-



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that downward pricing pressure on products will persist due to the
continued commoditization of computer products.

         Gross margin attributable to services and consulting revenue decreased
to 18.48% of services and consulting revenue for the year ended March 31, 2001
from 24.62% for the year ended March 31, 2000. We believe this decline was due
primarily to lower utilization rates and the lack of Y2K revenue during the year
ended March 31, 2001.

         The geothermal gross profit of $24,102 from the date of the merger is
consistent with the revenues for comparable previous periods.

         Sales, General, and Administrative Expenses

         Sales, general, and administrative expenses decreased by 5.9%, or
$650,245, to $10.24 million for the year ended March 31, 2001. This decrease is
primarily a result of lower sales commission expenses as well as our efforts to
streamline many of our operational functions.

         e-Business Costs

         e-Business costs for the year ended March 31, 2001 was $1.30 million,
or 10.58% of total operating expenses. We started our e-Business division in
January 2000. This cost mainly includes the building of a sales and consulting
team of approximately 13 employees, including training, certifying, marketing,
and advertising expenses.

         Other Income (Expense)

         Total other income (expense) for the year ended March 31, 2001 of
$24,108 relates primarily to legal settlement income, net of costs, as well as a
loss from the disposition of marketable securities. Legal settlement income net
of cost is $170,993. This includes approximately $355,000 in cash and marketable
securities worth $176,000, less legal and other operating expenses equal to
approximately $355,000. Loss from the disposition of marketable securities
received in legal settlement equals $146,885.

         Income Taxes

         All income tax benefit of $75,029 was recorded for the year ended March
31, 2001. This amount included a deferred tax benefit of $86,765 netted against
a current income tax expense of $11,736. The $75,029 income tax benefit amount
was allocated as a $73,059 benefit from continuing operations and a $1,970
benefit from discontinued operations. A net current income tax benefit of
$64,311 was recorded for the year ended March 31, 2000. This amount was
allocated as a $326,318 expense charged to income from continuing operations and
a $390,629 benefit reducing the loss from discontinued operations. Valuation
allowances of 90% and 100% of the book value of deferred tax assets were
recorded at March 31, 2001 and 2000, respectively.

         Loss from Discontinued Operations

         Loss from discontinued operations, net of income taxes, for the year
ended March 31, 2001 equaled $63,649, as compared to $618,030 for the year ended
March 31, 2000. The loss from discontinued operations for the year ended March
31, 2001 was primarily due to lease payments, contracted advertising expenses,
and additional reserve for bad debt.


                                      -15-



<Page>


Recently Issued Accounting Standards

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101 "Revenue Recognition in Financial
Statements." This SAB summarizes certain of the SEC staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. Adoption of SAB No. 101 did not have a material effect on the
Company's results of operations.

         In July 2001, the Financial Accounting Standard Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 141, "Business
Combinations," which supersedes Accounting Principles Board (APB) Opinion No.
16. SFAS No. 141 requires all business combinations initiated after June 30,
2001 be accounted for under the purchase method. In addition, SFAS No. 141
establishes criteria for the recognition of intangible assets separately from
goodwill. The Company does not expect the adoption of SFAS No. 141 will have a
material effect on the Company's results of operations, financial position or
cash flow.

         Also in July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets," which supersedes APB Opinion No. 17. Under SFAS No. 142
goodwill and indefinite lived intangible assets will no longer be amortized, but
rather will be tested for impairment at least annually. In addition, the
amortization period of intangible assets with finite lives will no longer be
limited to 40 years. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001, which for the Company means the standard will be adopted on
April 1, 2002. The Company is currently assessing the impact of SFAS No. 142 on
its results of operations.

         The FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," in August 2001. SFAS No. 144, which addresses
financial accounting and reporting for the impairment of long-lived assets and
for long-lived assets to be disposed of, supercedes SFAS No. 121 and is
effective for fiscal years beginning after December 15, 2001. The Company has
adopted SFAS No. 144 effective at April 1, 2002 and is currently evaluating the
impact the adoption of the new accounting standards will have on its financial
condition and results of operations.



Liquidity and Capital Resources

         Cash and cash equivalents at March 31, 2002 of $1,552,666 decreased by
$545,532, from $2,098,198 at March 31, 2001. We are a net borrower;
consequently, we believe our cash and cash equivalents balance must be viewed
along with available balance on our line of credit.

         Since our inception, we have funded our operations primarily from
borrowings under our credit facility. On November 21, 2001, we entered into a
$10.0 million revolving credit facility with Fleet Capital Corporation, formerly
Summit Business Capital Corporation ("Fleet"). We simultaneously terminated our
prior financing agreement with IBM Credit Corporation ("IBM") by paying IBM an
aggregate of $2,270,636. Interest on outstanding loans under our revolving
credit facility with Fleet is charged monthly at a fluctuating rate per annum
equal to 0.25% above the Prime Rate and, at our option, interest on up to 50% of
the outstanding loans may be charged at LIBOR plus 2.75%. Our Fleet revolving
credit facility is collateralized by a lien upon and security interest in
substantially all of our assets. As our current credit facilities with two of
our primary trade vendors, GE Access, and Ingram Micro, were also collateralized
by substantially all of our assets, we, Fleet, GE Access and Ingram Micro, have
entered into intercreditor agreements, which provide that as regards to these
vendors, our obligations to Fleet are accorded priority. On November 21, 2001,
we also entered into a Wholesale Financing Security

                                      -16-




<Page>


Agreement with IBM. This credit facility, which is collateralized by a $750,000
letter of credit from Fleet in favor of IBM, affords us up to a like amount of
credit to purchase IBM products. On January 9, 2002, Fleet has also issued
$250,000 letter of credit in favor of Vandergrand Properties Co., L.P., our
landlord for New York City office as a security deposit for the building lease.
At March 31, 2001, we had no outstanding balance under the credit facility and
the unused line of credit available is $9.0 million with Fleet.

         Our lending agreement with Fleet contains financial covenants that
require us to maintain a minimum leverage ratio, minimum debt service coverage
ratio, minimum tangible net worth, and prohibits quarterly losses of more than
$150,000. As of March 31, 2002, the Company was not in compliance with tangible
net worth ratio, and the net profit(loss) requirement. Fleet has verbally
waived such non-compliance for fiscal year ended March 31, 2002 and is
finalizing covenants for the fiscal year ending March 31, 2003.

         At March 31, our credit facilities with our primary trade vendors, GE
Access, Ingram Micro, and Tech Data were as follows: 1) Credit Line with GE
Access was $4.5 million, no interest charged, and an outstanding balance of
$3.26 million. 2) Credit line with Ingram Micro was $800,000, at an 18% APR
interest rate and an outstanding balance of $679,002. 3) Credit line with Tech
Data was $1.5 million, no interest charged and an outstanding balance of
$842,399. Under these credit lines we are obligated to pay each invoice within
30 days from the date of such invoice.

         Capital expenditures of $294,843 and $372,834 during the years ended
March 31, 2002 and March 31, 2001, respectively, were primarily for the purchase
of computer equipment for internal use, as well as $162,000 of property and
equipment, which were acquired in our acquisition of Devise Associates, Inc. on
January 9, 2002. We anticipate our capital expenditures for fiscal year ending
March 31, 2003 will be approximately $400,000.

         The Company has no arrangements or other relationships with
unconsolidated entities or other persons that are reasonably likely to
materially affect liquidity or the availability of or requirements for capital
resources.

         We believe that our available funds, together with existing and
anticipated credit facilities, will be adequate to satisfy our current and
planned operations for at least the next 12 months.

Risk Factors

         We cannot assure you that we can successfully increase the portion of
our revenues derived from IT services. If we are unsuccessful our future results
may be adversely affected.

         Our transition from an emphasis on reselling IT products to an emphasis
on providing IT services has placed significant demands on our managerial,
administrative, and operational resources. Our ability to manage this transition
effectively is dependent upon our ability to develop and improve operational,
financial, and other internal systems, as well as our business development
capabilities, and to attract, train, retain, motivate, and manage our employees.
If we are unable to do so, our ability to effectively deliver and support our
services may be adversely affected. Further, our transitional efforts to access
higher-margin services and consulting revenues have resulted in reduced IT
product sales. If we successfully expand our IT

                                      -17-




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services offerings, periods of variability in utilization may continue to occur.
In addition, we are likely to incur greater technical training costs during such
periods. Historically, our IT reseller activities accounted for 73.01%, or
$50.81 million, of our total revenue of $69.60 million for the fiscal year ended
March 31, 2002, 83.73%, or $77.53 million, of our total revenue of $92.6 million
for the fiscal year ended March 31, 2001, and 86.58%, or $87.23 million, of our
total revenue of $100.75 million for the fiscal year ended March 31, 2000. In
contrast, our IT services activities accounted for approximately 26.72%, or
$18.60 million, 16.24%, or $15.03 million, and 13.42%, or $13.52 million, of our
total revenue for the fiscal years ended March 31, 2002, 2001 and 2000,
respectively

         Our new services have not achieved widespread client acceptance. If
they do not achieve market acceptance, our profit potential may be adversely
affected.

         While we have offered IT services to our customers since 1983, our
major emphasis on IT consulting and services began in 1995 and we started
focusing on our new managed services and network security during the fiscal year
2002.

         We have limited experience in developing, marketing, or providing these
services. We cannot assure you that we will be able to successfully market such
services to either new or existing customers, that our services will achieve
market acceptance, or that we will be able to effectively hire, integrate, and
manage additional technical personnel to enable us to perform these services to
our customers' expectations.

         Currently our recurring managed services revenues equal approximately
$18,000 a month.

         Our inability to maintain high personnel utilization rates may
adversely impact our profit potentiality.

         The most significant cost relating to the services component of our
business is personnel expense, which consists of salaries, benefits, and payroll
related expenses. Thus, the financial performance of our service business is
based primarily upon billing margins (billable hourly rates less the costs to us
of service personnel on an hourly basis) and utilization rates (billable hours
divided by paid hours). The future success of the services component of our
business will depend in large part upon our ability to maintain high utilization
rates at profitable billing margins. The competition for quality technical
personnel has continued to intensify, resulting in increased personnel costs.
This intense competition has caused our billing margins to be lower than they
might otherwise have been. Our utilization rates for service personnel likely
will also be adversely affected during periods of rapid and concentrated hiring.

         Our revenues and expenses are unpredictable. A decrease in revenues or
increase in expenses could materially adversely affect our operating results.

         Our operating results have been, and will continue to be, impacted by
changes in technical personnel billing and utilization rates. Moreover, we
expect that downward pricing pressure on certain of our products will persist
due to the continued commoditization of computer products. These products
include computer equipment such as desktops, laptops, printers and monitors
which currently comprise approximately 40% of our total product sales.

                                      -18-




<Page>



         Our operating results have been, and will continue to be, impacted by
changes in technical personnel billing and utilization rates. Further, there are
numerous other factors, which are not within our control that can contribute to
fluctuations in our operating results, including the following:

         patterns of capital spending by customers;

         the timing, size, and mix of product and service orders and deliveries;

         the timing and size of new projects, including projects for new
         customers; and

         changes in trends affecting outsourcing of IT services;

         We also believe that, to a limited degree, our business is seasonal
with a greater proportion of our product sales occurring in the second and
third quarter of our fiscal year due to the capital budgeting and spending
patterns of some of our larger customers. Operating results have been, and
may in the future also be, affected by the cost, timing, and other effects of
acquisitions, including the mix of product and service revenues of acquired
companies.

         Since our inception, we have funded our operations primarily from
borrowings under our credit facility. We are currently in default under our
credit facility, which could result in a demand for immediate repayment. Revised
terms of our indebtedness could materially limit our financial and operating
flexibility.

         Our lending agreement with Fleet contains financial covenants that
require us to maintain a minimum leverage ratio, minimum debt service coverage
ratio, minimum tangible net worth, and prohibits quarterly losses of more than
$150,000. As of March 31, 2002, the Company was not in compliance with tangible
net worth ratio, and the net profit(loss) requirement. Fleet has verbally waived
such non-compliance. We cannot state with any certainty the terms upon which
Fleet will waive such non-compliance.

         We do not have long-term commitments from any of our customers and our
product sales are on a purchase order basis. Our revenues are concentrated and a
loss of either one of our two top customers could materially affect our
operations and business.

         In general, there are no ongoing written commitments by customers to
purchase products from us. All product sales we make are on a purchase order
basis. Moreover, our client base is highly concentrated, with our two largest
customers, Gwinnett County School System (Georgia) and Tiffany & Company,
accounted, respectively, for approximately 13.85% and 9.32% of our revenues for
the year ended March 31, 2002. These same two customers accounted for,
respectively, approximately 10.23% and 6.64% of our revenues in fiscal year 2001
and for approximately 16.88% and 5.13% of our revenues in fiscal year 2000. An
additional eight customers, ING Financial Services Co., BellSouth Corporation,
Educational Testing Services, Mirant, Bally's Park Place Casinos, Novo Nordisk,
Cox Communications, and MBNA American Bank, collectively accounted for 31.47%,
30.75% and 32.61% of our revenues for the years ended March 31, 2002, 2001 and
2000, respectively. We anticipate that a substantial portion of our net revenues
and gross profits will continue to be derived from sales to a concentrated group
of customers. A loss of any of these customers, or a material decrease in the
value of the purchase orders from any other them could materially affect our
profitability.

                                      -19-




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         Further, most of our customers are located in area comprising the
tri-state metropolitan area of Connecticut, New Jersey, and New York and parts
of New England. Total revenue derived from in this area amounted to 58.3%,
67.7%, and 53.2% of our revenues during the fiscal years 2002, 2001 and 2000,
respectively. Adverse economic conditions affecting this region could have an
adverse effect on the financial condition of our customers located there, which,
in turn, could adversely impact our business and future growth.

         We may not be able to compete effectively in the highly competitive IT
services industry.

         The IT services business is highly competitive. Our competitors
include:

         established computer product manufacturers, some of which supply
         products to us;

         distributors;

         computer resellers;

         systems integrators; and

         other IT service providers.

         Many computer product manufacturers also sell to customers through
their direct sales organizations and certain of them have announced their
intentions to enhance such direct sales efforts. Many of our current and
potential competitors have longer operating histories and financial, sales,
marketing, technical, and other resources substantially greater than we do. As a
result, our competitors may be able to adapt more quickly to changes in client
needs or to devote greater resources than we can to the sales of IT products and
the provision of IT services and we may not have the resources to compete
effectively.

         We must maintain our status as an authorized reseller/service of IT
products. The loss on any one of such authorizations could have a material
adverse effect on our business and operations.

         We are materially dependent on our continued status as an approved
reseller of IT products and our continued authorization as an IT service
provider. Without such authorizations, we would be unable to provide the range
of products and services we currently offer, including warranty services, and
manufacturers support services contracts. Our resale agreements with
manufacturers generally are terminable by manufacturers upon 30 days' prior
written notice. The loss of one or more of such authorizations could have a
material adverse effect on our business and results of operations. In
particular, we rely upon products manufactured and support services provided by
Sun, which accounted for 35%, 42% and 31% of our of our total revenues for the
fiscal years 2002, 2001 and 2000, respectively.

         We have no long-term sales commitments from any of our suppliers. A
loss of any of our three principal suppliers would material adversely affect our
IT reseller business.

         Our IT reseller business depends on large part upon our access to
aggregators, in particular GE Access, Ingram and Tech Data, to supply us with
products at competitive prices and on reasonable terms for resale by us to our
customers. Our agreements with Ingram and



                                      -20-



<Page>


Tech Data may be terminated by such companies upon 30 days prior written notice.
Our agreement with GE Access is effective until February 28, 2003. After
February 28, 2003, our agreement with GE Access can be renewed or terminated by
either party. We cannot assure you that we will be able to continue to obtain
products from GE Access, Ingram and Tech Data or our other vendors at prices or
on terms acceptable to us, if at all.

         Our client engagements entail significant risks; a failure to meet a
client's expectations could materially adversely affect our reputation and
business.

         Many of our engagements involve projects that are critical to the
operations of our customers' businesses and provide benefits that may be
difficult to quantify. Our failure or inability to meet a client's expectations
in the performance of our services could result in a material adverse change to
the client's operations and therefore could give rise to claims against us or
damage our reputation, adversely affecting our business, results of operations,
and financial condition.

         Our ability to protect our intellectual property rights is
questionable. If we are unable to protect such rights, our financial condition
could be materially adversely affected.

         We rely upon a combination of nondisclosure and other contractual
arrangements and trade secret, copyright, and trademark laws to protect our
proprietary rights and the proprietary rights of third parties from whom we
license intellectual property. We enter into confidentiality agreements with our
employees and limit distribution of proprietary information. However, we cannot
assure you that the steps taken by us in this regard will be adequate to deter
misappropriation of proprietary information or that we will be able to detect
unauthorized use and take appropriate steps to enforce our intellectual property
rights. We are subject to the risk of litigation alleging infringement of
third-party intellectual property rights. Any such claims could require us to
spend significant sums in litigation, pay damages, develop non-infringing
intellectual property, or acquire licenses to the intellectual property that is
the subject of the alleged infringement. Our inability or failure to establish
rights or to protect our rights may have a material adverse effect on our
business, results of operations, and financial condition.

         We intend to expand our business through acquisitions of complementary
businesses. There is no certainty, however, that we will be successful in
acquiring any new businesses or that any such acquisitions will help us achieve
our strategic objectives.

         As a part of our business development strategy, we intend to pursue
acquisitions of IT product and service businesses in order to expand our service
offerings, to add to or enhance our base of technical or sales personnel, or to
provide desirable client relationships. The success of this strategy depends not
only upon our ability to acquire complementary businesses on a cost-effective
basis, but also upon our ability to integrate acquired operations into our
organization effectively, to retain and motivate key personnel, and to retain
customers of acquired firms. We cannot assure you that we will be able to
acquire or integrate such businesses successfully. Furthermore, we cannot assure
you that financing for any such acquisitions will be available on satisfactory
terms, or that we will be able to accomplish our strategic objectives as a
result of any such transaction or transactions. In addition, we expect to
compete for attractive acquisition candidates with other companies or investors
in the IT industry, which could have the effect of increasing the cost of
pursuing our acquisition strategy, or it could reduce the number of



                                      -21-



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attractive candidates to be acquired. Acquisitions also may involve a number of
specific risks, including:

         possible adverse short-term effects on our operating results;

         dependence on retaining key customers and personnel;

         diversion of management's attention;

         amortization of acquired intangible assets; and

         risks associated with unanticipated problems, liabilities, or
         contingencies.

Item 7A. Quantitative and Qualitative Information About Market Risk

         We do not engage in trading market risk sensitive instruments and do
not purchase hedging instruments or "other than trading" instruments that are
likely to expose us to market risk, whether interest rate, foreign currency
exchange, commodity price or equity price risk. We have issued no debt
instruments, entered into no forward or future contracts, purchased no options
and entered into no swaps. Our primary market risk exposures are those of
interest rate fluctuations. A change in interest rates would affect the rate at
which we could borrow funds under our revolving credit facility. Our average
balance on the line of credit for the past two years has been approximately
$4.10 million. Assuming no material increase or decrease in such balance, a one
percent change in the interest rate would change our interest expense by
approximately $41,000 annually.

Item 8.  Financial Statements and Supplementary Data

         Reference is made to Item 14(a)(i) herein.

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

         None

                                      -22-



<Page>


                                    PART III

Item 10. Directors and Executive Officers

         The following table sets forth certain information as to each of our
executive officers and directors:

<TABLE>
<CAPTION>
                                                                Positions and
 Name                                Age                    Offices Presently Held
 ----                                ---                    ----------------------
<S>                                   <C>
 John P. Howlett                      58       Chairman of the Board and President
 Ronald A. Seitz                      55       Executive Vice President and Director
 R. Frank Jerd                        60       Director
 George F. Raymond                    65       Director
 Sam Bhatt                            34       Vice President Finance & Operations and
                                               Treasurer
 Guy Fessenden                        45       Executive Vice President
</TABLE>


         John P. Howlett has been our President and Chairman since January 17,
2001 and President of Emtec-NJ since August, 1997 and Chairman of Emtec-NJ since
August, 1998. He has been a director of Emtec-NJ since October, 1996. Mr.
Howlett was the founder (in 1983) of Cranford, New Jersey-based Comprehensive
Business Systems, Inc. (CBSI). CBSI primarily provided microcomputer systems,
network integration, training, and data communications to mid-size and Fortune
1000 corporations. In October 1996, CBSI merged into Emtec-NJ. Prior to founding
CBSI, Mr. Howlett was with the AT&T Long Lines Division for twelve years. He
earned a Bachelor of Science degree in Electrical Engineering from Rose Hulman
Institute of Technology in Terre Haute, Indiana, and a Master of Business
Administration degree from Fairleigh Dickinson University in New Jersey. A
Vietnam veteran, Mr. Howlett served in the U.S. Army for four years.

         Ronald A. Seitz has been our Executive Vice-President and a director
since January 17, 2001 and Executive Vice President of Emtec-NJ since March,
1996. Prior to that he was the Chief Operating Officer of Emtec-NJ. He has been
a director of Emtec-NJ since April, 1995. Mr. Seitz was the founder (in 1980) of
Charleston, South Carolina-based Computer Source, Inc. (CSI). CSI primarily
provided microcomputer systems, network integration, and data communications to
mid-size and Fortune 1000 corporations. In April 1995, CSI merged with Landress
Information Systems of Mt. Laurel, New Jersey to become Emtec-NJ. Prior to
founding CSI, Mr. Seitz was employed for six years as an engineer with the U.S.
government in Washington, DC. He graduated from North Carolina State University
with a Bachelor of Science degree and from George Washington University with an
MBA in computer science. Mr. Seitz also holds a DMD degree from the Dental
School at the Medical University of South Carolina.

         R. Frank Jerd was appointed as a director upon the consummation of our
merger with Emtec-NJ. Mr. Jerd is, and has been, a securities analyst for
Montauk Capital in New York



                                      -23-



<Page>


since 1994. From 1992 to 1993, he was chief executive officer of Benesys, Inc.,
a medical software company. He was also CEO of Gandalf Systems Corporation from
1993 to 1994. Mr. Jerd earned a Bachelor of Science Degree in Mathematics at
Marshall University.

         George F. Raymond was elected as a director in August 2001. Mr. Raymond
has been retired from active employment since 1989. Since his retirement, he has
worked as a consultant to the information technology industry. In 1972, Mr.
Raymond founded Automatic Business Centers, Inc., a payroll process service
company and served as its president until its sale to Automatic Data Processing
in 1989. In 1965 he co-founded Computer Services Inc, a general purpose data
processing service company, which was purchased by Management Data Corp. in
1969. Mr. Raymond served as the president of Computer Services Inc. until 1972.
Prior thereto, Mr. Raymond was a management consultant with Touche Ross & Co.
from 1961 to 1965. Currently Mr. Raymond serves on the Board of directors of
eight companies, four of which are publicly traded.

         Sam Bhatt has been Vice President - Finance & Operations and Treasurer
of Emtec since January 17, 2001 and of Emtec-NJ since July 2000. Prior to that
and from July, 1997, he was Director of Accounting for Emtec-NJ. He also held
the positions at Emtec-NJ of Accounting Manager (from 1994 to July, 1997) and of
Senior Accountant (from 1992 to 1994). Mr. Bhatt holds a Bachelor of Science
Degree in business administration from Drexel University in Pennsylvania and a
Diploma in Hotel Management from the Institute of Hotel Management and Catering
Technology in Bombay, India.

         Guy Fessenden has been Executive Vice President of Emtec since January
2002. Mr. Fessenden joined Emtec from DIS Research, Ltd., which he founded in
1984 and where he was a Chief Executive Officer. Prior to founding DIS, Mr.
Fessenden was assistant to the CEO of WR Grace & Co., an international
conglomerate with holdings in number of industries, including shipping, food,
publishing and others. Mr. Fessenden earned a Bachelor of Science Degree in
Accounting and Master of Business Administration Degree at St. John's
University.

          During 2002, the Board of Directors met ten times. Each director
attended all of the meetings of the Board of Directors. The Board of Directors
has no audit committee or compensation committee. The Board of Directors as a
whole makes all such determinations and any director who as is an "interested"
party in a specific matter abstains from voting on such matter.

Compliance With Section 16(a) of The Securities Exchange Act Of 1934

         Section 16(a) of the Exchange Act requires our directors and executive
officers and persons who own beneficially more than 10% of our common stock to
file reports of ownership and changes in ownership of such common stock with the
Securities and Exchange Commission, and to file copies of such reports with us.
Based solely upon a review of the copies of such reports filed with the Company,
the Company believes that during the fiscal year ended March 31, 2002, such
reporting persons complied with the filing requirements of said Section 16(a),
except that Mr. Guy Fessenden was not timely in the filing of his Initial
Statement of Beneficial Ownership of Securities and Mr. James Fishkin was not
timely in the filing on one monthly report indicating that he was no longer
subject to Section 16



                                      -24-



<Page>


Item 11.

Executive Compensation

         The following table sets forth the aggregate compensation that we paid
for services rendered to us in all capacities during our fiscal years ended
March 31, 2002, 2001 and 2000 by our chief executive officer and by our only
other executive officers whose cash compensation exceeded $100,000 per year in
any such year.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                     Long Term Compensation
                                                                        -------------------------------------------------
                                 Annual Compensation                            Awards             Payouts
                               -------------------------                -----------------------    --------
                                                                                                     Long
                                                                       Restricted                    Term
     Name and       Fiscal                               Other Annual     Stock       Number of    Incentive  All Other
Principal Position   Year        Salary      Bonus       Compensation     Awards       Options      Payouts  Compensation
------------------   ----        ------      -----       ------------     ------       -------      -------  ------------
<S>                  <C>       <C>          <C>          <C>              <C>           <C>         <C>      <C>
John P. Howlett                                              --            --            --
  President and      2002      $ 204,000       --            --            --            --          --      $16,750(1)
  Chief Executive    2001      $ 200,000    $54,000          --            --            --          --      $13,724(1)
  Officer            2000      $ 169,245    $50,000          --            --            --          --

Ronald A. Seitz      2002      $ 204,000       --            --            --            --          --
  Executive Vice-    2001      $ 200,000    $54,000          --            --            --          --      $6,704(2)
  President          2000      $ 169,076    $50,000          --            --            --          --      $6,944(2)

Sam Bhatt
-Vice President                                                            --
-Finance &           2002      $114,545        --            --
Operations           2001      $95,983      $ 9,826          --            --                               $      -
</TABLE>
------------------
(1)  Reflects employer contributions for life insurance premiums and for
     disability insurance premiums.

(2)  Reflects employer contribution for life insurance premiums.

Stock Option Grants During Fiscal Year 2002

         None of the named executive officers listed in the Summary Compensation
Table were granted stock options during the fiscal year ended March 31, 2002.

         Set forth below is information with respect to unexercised options held
by our named executive officers to purchase our common stock

                 Aggregated Option Exercises in Fiscal Year 2002
                        and Fiscal Year End Option Values

<TABLE>
<CAPTION>

                                                            Number of Unexercised
                             Number of                  Securities Underlying Options        Value of Unexercised
                              Shares                           at March 31, 2002              In-the-Money Options
                            Acquired on       Value     -----------------------------      ----------------------------
Name                          Exercise       Realized   Exercisable    Unexercisable       Exercisable    Unexercisable
----                          --------       --------   -----------    -------------       -----------    -------------
<S>                           <C>           <C>          <C>          <C>                  <C>            <C>
John P. Howlett.........        --             $ 0                0                0          $ 0           $ 0
Ronald A. Seitz........         --             $ 0                0                0          $ 0           $ 0
Sam Bhatt...............        --             $ 0           10,825           10,175          $ 0           $ 0
</TABLE>

Compensation of Directors

         Non-employee directors receive annual compensation of $10,000.
Directors also receive stock options at the discretion of the Board.
Non-employee directors receive reimbursement of out-of-pocket expenses incurred
for each board meeting or committee meeting attended.



                                      -25-



<Page>


Compensation Committee Interlocks and Insider Participation

         Currently, there is no compensation committee. The members of the
entire board deliberate and decide compensation. Neither Mr. Jerd nor Mr.
Raymond is or has been an employee or an officer of our company. Mr. Howlett is
our Chairman, President and Chief Executive Officer, and Mr. Seitz is our
Executive Vice President.



                                      -26-



<Page>


Item 12. Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth, as of June, 2002, based on information
obtained from the persons named below, with respect to the beneficial ownership
of our common stock held by:

         each person known by us to be the owner of more than 5% of our
         outstanding shares;

         each director;

         each executive officer named in the Summary Compensation Table; and

         all executive officers and directors as a group.

<TABLE>
<CAPTION>
Name and Address of                                         Amount and Percentage of Beneficial
Beneficial Owner(1)                                                    Ownership(2)
----------------------------------                          -----------------------------------
<S>                                                            <C>                 <C>
John P. Howlett                                                1,400,910           19.78%
Ronald A. Seitz                                                  829,519(3)        11.72%
Sam Bhatt                                                         33,579             .47%
R. Frank Jerd                                                     45,000             .63%
George F. Raymond                                                 15,000             .21%
Tom Dresser                                                    1,029,774           14.54%
3505 S. Ocean Boulevard
Hollywood, FL 33019
Richard Landon                                                 1,029,774           14.54%
142 York Road
Delran, NJ 08075
Carla Seitz                                                      782,707(4)        11.05%
P.O. Box 2243
Mt. Pleasant, SC 29465
All executive officers and directors as a group (5             3,106,715           43.44%
persons)
</TABLE>
------------------

(1)  Each stockholder's address is c/o Emtec, 817 East Gate Drive, Mount Laurel,
     New Jersey, unless otherwise indicated.

(2)  As used herein, beneficial ownership means the sole or shared power to
     vote, or direct the voting of, a security, or the sole or shared power to
     invest or dispose, or direct the investment or disposition, of a security.
     Except as otherwise indicated, all persons named herein have (i) sole
     voting power and investment power with respect to their shares, except to
     the extent that authority is shared by spouses under applicable law and
     (ii) record and beneficial ownership with respect to their shares; also
     includes any shares issuable upon exercise of options or warrants that are
     currently exercisable or will become exercisable within 60 days of after
     the date of this proxy statement.

(3)  Excludes 782,707 shares owned by Carla Seitz, Mr. Seitz's spouse. Mr. Seitz
     disclaims any beneficial interest in these shares.



                                      -27-



<Page>


(4)  Excludes 829,519 shares owned by Ronald A. Seitz, Mrs. Seitz's spouse. Mrs.
     Seitz disclaims any beneficial ownership in these shares.


                      Equity Compensation Plan Information


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

                                       (a)                        (b)                              (c)
-------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                        <C>                           <C>
Equity compensation plans
   approved by security
         holders
-------------------------------------------------------------------------------------------------------------------

Equity compensation plans             381,328                    $0.96                         618,672
 not approved by security
         holders
-------------------------------------------------------------------------------------------------------------------

          Total                      381,328                     $0.96                         618,672
-------------------------------------------------------------------------------------------------------------------
</TABLE>

Item 13. Certain Relationships and Related Transactions

         At March 31, 2002 and 2001, we owed an aggregate of $19,000 to
relatives of our President. We made aggregate annual interest payments on the
loan of $2,280 during each of the fiscal years 2002 and 2001.

         There are no other relationships or related party transactions of a
nature required to be disclosed hereunder.


                                      -28-



<Page>


                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports and Reports of
         Form 8-K

         (a) Documents filed as part of this report:

         (i) Financial Statements

<TABLE>
<S>                                                                                                       <C>
Report of Independent Public Accountants..................................................................
Consolidated Balance Sheets as of March 31, 2002 and 2001.................................................
Consolidated Statements of Operations for the Fiscal Years Ended March 2002, 2001 and 2000................
Consolidated Statements of Shareholders' Equity for the Fiscal Years Ended March 31, 2002, 2001
     and 2000.............................................................................................
Consolidated Statements of Cash Flows for the Years Ended March 2002, 2001 and 2000.......................

Notes to Consolidated Financial Statements................................................................
</TABLE>

         (ii) Financial Statement Schedules

              None

         (iii) Exhibits:

<TABLE>
<CAPTION>
Exhibit No.                                                   Description
-----------                                                   -----------
<S>                <C>
     2.1           Agreement and Plan of Merger and Reorganization dated as of December 14, 2000 between Registrant,
                   then known as American Geological Enterprises, Inc., and Emtec, Inc.(1)
     3.1           Certificate of Incorporation, as amended(2)
     3.2           Amended and Restated Bylaws(2)
     4.1           Certificate evidencing shares of common stock(2)
     4.2           1996 Stock Option Plan, as amended(2)
    10.1           Resale Agreement dated September 29, 1997 between Registrant and Ingram Micro, Inc.(2)
    10.2           Volume Purchase Agreement dated January 28, 1998 between Registrant and  Tech Data Corporation(2)

    10.3           Agreement of Lease dated April 1, 1992 between Registrant and Bell Atlantic Properties, Inc., as
                   amended, for Mt. Laurel, New Jersey facility(2)
    10.4           Lease Agreement dated May 5, 1993 between registrant and Central Cranford Associates, for
                   Cranford, New Jersey facility(2)
    10.5           Lease Agreement dated July 7, 1994 between Registrant and Connecticut General Life Insurance
                   Company, as amended, for Norcross, Georgia facility(2)
    10.6           Lease Agreement dated August 8, 1995 between Registrant and Charleston Rivergate Associates I, as
                   amended, for Charleston, South Carolina facility(2)
</TABLE>


                                      -29-



<Page>

<TABLE>
<CAPTION>
Exhibit No.                                                   Description
-----------                                                   -----------
<S>                <C>
    10.7           Lease Agreement dated July 21, 2000 between Registrant and Strawberry Hill Associates, for
                   Norwalk, Connecticut facility(2)
    10.8           Microsoft Certified Partner Agreement, dated December 20,2000, between Microsoft and Registrant(3)
    10.9           IBM Business Partner Agreement, dated May 31, 2000, between International Business Machines
                   Corporation and Registrant(3)
    10.10          Letter Agreement, dated April 24, 2001, between Novell Inc. and Registrant(3)
    10.11          Citrix Solutions Network Gold Renewal Membership Agreement, dated April 30, 2001, between Citrix
                   Systems, Inc. and Registrant(3)
    10.12          U.S. Systems Integrator Agreement, dated December 22, 1999, between Cisco System, Inc. and
                   Registrant.(3)
    10.13          Sun Microsystem, Inc. Channel Agreement, dated February 1, 2000, between Sun Microsystems, Inc.
                   and Emtec, Inc. .(6)

    10.14          Loan and Security Agreement, dated November 21, 2001, by and between Fleet Capital Corporation
                   and Registrant.(4)
    10.15          Agreement for Wholesale Financing, dated November 21, 2001, by and between IBM Credit Corporation
                   and Registrant.(4)
    10.16          Subordination Agreement, dated as of the 21st day of November, 2001, among Registrant, MRA
                   Systems, Inc. dba GE Access and Fleet Capital Corporation.(4)

    10.17          Intercreditor Agreement, dated as of November 21, 2001, between Fleet Capital Corporation and
                   Ingram Micro Inc. and accepted by Registrant.(4)
    10.18          Asset Acquisition Agreement dated December 5, 2001 by and between Devise Associates, Inc. and
                   Registrant.(5)
    10.19          Lease Agreement dated January 9, 2002 between Registrant and  Vandergrand Properties Co., L.P.,
                   for New York, New York facility.
    10.20          Lease Agreement dated March 1, 2002 between Registrant and G. F. Florida Operating Alpha, Inc.,,
                   for Jacksonville, Florida facility.
    21             Subsidiaries(2)
</TABLE>
------------------
(1)  Previously filed as an exhibit to Registrant's Current Report on Form 8K
     dated January 17, 2001, filed on January 31, 2001, and incorporated herein
     by reference.

(2)  Previously filed as an exhibit to Registrant's Registration Statement on
     Form 10 filed on May 21, 2001, and incorporated herein by reference.

(3)  Previously filed as an exhibit to Amendment No. 1 to Registration Statement
     on Form 10, filed on July 12, and incorporated herein by reference.

(4)  Previously filed as an exhibit to Registrant's Current Report on Form 8K
     dated November 21, 2001, filed on November 26, 2001, and incorporated
     herein by reference.

(5)  Previously filed as an exhibit to Registrant's Current Report on Form 8K
     dated December 5, 2001, filed on December 20, 2001, and incorporated herein
     by reference.

                                      -30-



<Page>


(6)  Previously filed as an exhibit to Registrant's Form 10-K dated March 31,
     2001, filed on July 12, 2001, and incorporated herein by reference.



         (b)  Reports on Form 8-K filed during the quarter ended March 31,
2002:

          Form 8-K/A filed on March 15, 2002, required by Item 7(b) of the Form
8-K, Financial Statements of Business Acquired and Pro Forma Financial
Information.

                                      -31-



<Page>



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:   July 1, 2002

                               EMTEC, INC.



                               By:  /s/ John P. Howlett
                                    -----------------------------------
                                        John P. Howlett
                                        Chairman President and Chief
                                        Executive Officer



         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
               Signature                                 Title                                  Date
               ---------                                 -----                                  ----
<S>                                      <C>                                                <C>
/s/ John P. Howlett                      Chairman, President and                           July 1, 2002
------------------------------------     Chief Executive Officer
            John P. Howlett

/s/ Sam Bhatt                            Vice President-Finance                            July 1, 2002
------------------------------------     and Operations
               Sam Bhatt                 (Principal Financial Officer)

/s/ Ronald A. Seitz                      Executive Vice President,                          July 1, 2002
------------------------------------     Director
            Ronald A. Seitz

/s/ Frank Jerd                           Director                                           July 1, 2002
------------------------------------
              Frank Jerd

/s/ George F. Raymond                    Director                                           July 1, 2002
------------------------------------
           George F. Raymond

</TABLE>






<PAGE>

                                   EMTEC, INC.
                    YEARS ENDED MARCH 31, 2002, 2001 AND 2000




                                    CONTENTS


<TABLE>
<CAPTION>


                                                           Page(s)
                                                           -------
<S>                                                           <C>
INDEPENDENT AUDITORS' REPORT                                  F-1


CONSOLIDATED FINANCIAL STATEMENTS


Balance Sheets                                              F-2 & F-3


Statements of Operations                                      F-4


Statements of Shareholders' Equity                            F-5


Statements of Cash Flows                                      F-6


Notes to Consolidated Financial Statements                  F-7 - F-20
</TABLE>






<PAGE>



                      INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Shareholders of
Emtec, Inc.
817 Eastgate Drive
Mount Laurel, NJ 08054


        We have audited the accompanying consolidated balance sheets of Emtec,
Inc. as of March 31, 2002 and 2001 and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended March 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits 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 Emtec, Inc.
at March 31, 2002 and 2001, and the results of its operations and its cash flows
for each of the three years in the period ended March 31, 2002 in conformity
with accounting principles generally accepted in the United States of America.




                                   /s/  BARATZ & ASSOCIATES, P.A.

Marlton, New Jersey
May 27, 2002



                                      F-1





<PAGE>







                                   EMTEC, INC.
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2002 AND 2001



<TABLE>
<CAPTION>
                                                        2002            2001
                                                        ----            ----
<S>                                                 <C>              <C>
    Assets

Current Assets

Cash and cash equivalents                           $ 1,552,666      $ 2,098,198
Marketable securities                                      -             292,346
Receivables:
  Trade, net                                          6,288,425       12,828,456
  Others                                                296,529          433,580
Inventories                                           1,089,950        1,019,715
Prepaid expenses                                        388,307          296,939
Deferred tax assets                                      26,491           44,290
                                                    -----------      -----------

    Total Current Assets                              9,642,368       17,013,524

Property and equipment, net                             703,940          919,110

Investment in geothermal power unit,
  less accumulated amortization
  of $302,407 and $277,571                              581,612          549,626
Deferred tax assets                                      42,936           41,061

Other assets                                            417,617          175,711
                                                    -----------      -----------


    Total Assets                                    $11,388,473      $18,699,032
                                                    ===========      ===========

</TABLE>

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



                                      F-2





<PAGE>


                                   EMTEC, INC.
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2002 AND 2001


<TABLE>
<CAPTION>
                                                        2002           2001
                                                        ----           ----
<S>                                               <C>             <C>
    Liabilities and Shareholders' Equity

Current Liabilities

Line of credit                                     $       -        $ 6,535,405
Due to related party                                     19,000          19,000
Accounts payable                                      6,609,837       7,284,625
Customer deposits                                       245,387         203,202
Accrued liabilities                                     764,282       1,025,643
Deferred revenues                                       840,413         899,352
                                                   ------------    ------------

    Total Current Liabilities                         8,478,919      15,967,227

Deferred revenue                                        799,472         841,922

Deferred tax liability                                   60,124          62,355
                                                   ------------    ------------

    Total Liabilities                                 9,338,515      16,871,504
                                                   ------------    ------------


Shareholders' Equity

Common stock, $.01 par value; 25,000,000
  shares authorized; 7,080,498 shares issued
  and outstanding at March 31, 2002 and 2001             70,805          70,805
Additional paid-in capital                            2,210,805       2,210,805
Accumulated deficit                                    (231,652)       (448,624)
Accumulated other comprehensive (loss) income              -             (5,458)
                                                   ------------    ------------

    Total Shareholders' Equity                        2,049,958       1,827,528
                                                   ------------    ------------


    Total Liabilities and
      Shareholders' Equity                          $11,388,473     $18,699,032
                                                   ============    ============

</TABLE>


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

                                      F-3





<PAGE>


                                   EMTEC, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    YEARS ENDED MARCH 31, 2002, 2001 AND 2000


<TABLE>
<CAPTION>

                                              2002           2001           2000
                                              ----           ----           ----
<S>                                       <C>            <C>            <C>
Revenues:
   Procurement services                    $50,813,243    $77,533,872    $87,235,968
   Service and consulting                   18,600,185     15,034,497     13,516,522
   Geothermal                                  187,978         34,366          -
                                           -----------    -----------    -----------

      Total Revenues                        69,601,406     92,602,735    100,752,490
                                           -----------    -----------    -----------

Cost of Revenues:
   Procurement services                     44,832,526     69,365,115     77,921,447
   Service and consulting                   14,638,667     12,255,785     10,188,181
   Geothermal                                   63,083         10,264          -
                                           -----------    -----------    -----------


      Total Cost of Revenues                59,534,276     81,631,164     88,109,628
                                           -----------    -----------    -----------

Gross Profit:
   Procurement services                      5,980,717      8,168,757      9,314,521
   Service and consulting                    3,961,518      2,778,712      3,328,341
   Geothermal                                  124,895         24,102          -
                                           -----------    -----------    -----------

       Total Gross Profit                   10,067,130     10,971,571     12,642,862
                                           -----------    -----------    -----------

Operating Expenses:
   Selling, general and
    administrative                           8,995,255     10,240,596     10,890,841
   Termination costs                            21,746         90,000         74,480
   Interest                                    210,305        692,227        679,286
   E-Business costs                            617,220      1,303,740        355,933
                                           -----------    -----------    -----------

       Total Operating Expenses              9,844,526     12,326,563     12,000,540
                                           -----------    -----------    -----------

Income (Loss) From Continuing Operations
   Before Other Income And Income
   Tax (Expense) Benefit                       222,604     (1,354,992)       642,322

Other income-litigation settlement               -             24,108          -

Income tax (expense) benefit                    (5,632)        73,059       (326,318)
                                           -----------    -----------    -----------

Income (Loss) From Continuing Operations,
   net of income taxes                         216,972     (1,257,825)       316,004

Loss from discontinued operations,
   net of income taxes                           -            (63,649)      (618,030)
Loss from sale of discontinued
   operations, net of income taxes               -              -               (971)
                                           -----------    -----------    -----------

Net Income (Loss)                          $   216,972    $(1,321,474)   $  (302,997)
                                           ===========    ===========    ===========

Income (Loss) Per Share From Continuing
   Operations {Basic And Diluted}               $0.03       $(0.22)         $0.06

Net Income (Loss) Per Share
   {Basic And Diluted}                          $0.03       $(0.23)        $(0.06)

Weighted Average Number Of Shares
  Outstanding:
  Basic                                      7,080,498      5,679,700     5,503,284
  Diluted                                    7,081,398      5,679,700     5,503,284

</TABLE>

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


                                      F-4





<PAGE>



                                   EMTEC, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                    YEARS ENDED MARCH 31, 2002, 2001 AND 2000

<TABLE>
<CAPTION>


                                                              (Accumulated
                                                  Additional    Deficit)        Accumulated     Total
                              Common Stock        Paid-In       Retained        Comprehensive   Shareholders'
                            Shares      Amount    Capital       Earnings        (Loss) Income   Equity
                            ------      ------    ---------    ------------     -------------   --------------

<S>                        <C>         <C>       <C>            <C>                <C>           <C>

Balance, April 1, 1999     5,563,563    $55,636   $1,375,535     $1,175,847        $      -       $2,607,018
                                                                                                  ----------


Net loss for the year                                              (302,997)                        (302,997)


Unrealized gain on
  marketable securities                                                               1,776            1,776
                                                                                                 -----------

Total Comprehensive
  Loss                                                                                              (301,221)
                                                                                                 -----------

Acquisition of
  treasury stock           (234,062)     (2,341)     (60,659)                                        (63,000)
                          ---------     -------   ----------    -----------        --------      -----------


Balance, March 31, 2000   5,329,501      53,295    1,314,876        872,850           1,776        2,242,797
                                                                                                 -----------


Stock issued in
  reverse acquisition     1,750,997      17,510      895,929                                         913,439
                                                                                                 -----------


Net loss for the year                                            (1,321,474)                      (1,321,474)


Unrealized loss on
  marketable securities                                                              (7,234)          (7,234)
                          ---------     -------   ----------    -----------        --------      -----------

Total Comprehensive
  Loss                                                                                            (1,328,708)
                                                                                                 -----------


Balance, March 31, 2001   7,080,498      70,805    2,210,805       (448,624)         (5,458)       1,827,528
                                                                                                 -----------

Net income for the year                                             216,972                          216,972


Unrealized gain on
  marketable securities                                                               5,458            5,458
                          ---------     -------   ----------    -----------        --------      -----------

Total Comprehensive
  Income                                                                                             222,430
                                                                                                 -----------


Balance, March 31, 2002   7,080,498     $70,805   $2,210,805    $  (231,652)       $             $ 2,049,958
                          =========     =======   ==========    ===========        =======       ===========

</TABLE>

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


                                      F-5





<PAGE>


                                   EMTEC, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEARS ENDED MARCH 31, 2002, 2001 AND 2000


<TABLE>
<CAPTION>

                                                      2002             2001               2000
                                                      ----             ----               ----
<S>                                               <C>               <C>               <C>

Cash Flows From Operating Activities

Net income (loss) for the year                    $   216,972       $(1,321,474)      $  (302,997)

Adjustments to Reconcile Net Income
  (Loss) To Net Cash Provided By (Used
  In) Operating Activities
---------------------------
Depreciation and amortization                         548,007           422,256           387,061
Loss on sale of discontinued operations                                    -                  971

Changes In Operating Assets and
  Liabilities
Decrease (increase) in marketable securities          292,346             7,189            (7,086)
Decrease in receivables                             6,677,082         4,775,110         6,223,281
(Increase) decrease in inventories                    (70,235)           71,748          (137,146)
(Increase) decrease in prepaid expenses               (88,537)          162,819          (327,207)
Decrease (increase) in other assets                     5,289            (2,313)            5,832
Decrease (increase) in deferred tax assets             13,693           (86,765)             -
(Decrease) in accounts payable                       (674,788)         (958,818)       (7,154,251)
Decrease in income taxes payable                         -                 -              (10,555)
Increase (decrease) in customer deposits               42,185          (154,798)         (276,000)
Decrease in accrued liabilities                      (261,361)         (123,469)         (759,151)
(Decrease) increase in deferred revenues             (101,389)         (251,871)          498,698
                                                  -----------       -----------       -----------

Net Cash Provided By (Used In)
  Operating Activities                              6,599,264         2,539,614        (1,858,550)
                                                  -----------       -----------       -----------

Cash Flows From Investing Activities
Purchases of equipment                               (142,624)         (338,045)         (824,280)
Proceeds from sale of equipment                          -                 -               43,710
Additional investment in geothermal unit              (56,822)
Acquisition of a business segment                    (409,945)             -                 -
                                                  -----------       -----------       -----------

Net Cash Used In Investing Activities                (609,391)         (338,045)         (780,570)
                                                  -----------       -----------       -----------

Cash Flows From Financing Activities
Net (decrease) increase in line of credit          (6,535,405)       (1,775,336)        2,555,927
Purchase of treasury stock                               -                 -              (63,000)
Cash acquired in reverse acquisition                     -              985,552              -
                                                  -----------       -----------       -----------

Net Cash (Used In)  Provided By
  Financing Activities                             (6,535,405)         (789,784)        2,492,927
                                                  -----------       -----------       -----------

Net (Decrease) Increase in
Cash and Cash Equivalents                            (545,532)        1,411,785          (146,193)
                                                                                      -----------

Beginning Cash and Cash Equivalents                 2,098,198           686,413           832,606
                                                  -----------       -----------       -----------


Ending Cash and Cash Equivalents                  $ 1,552,666       $ 2,098,198       $   686,413
                                                  ===========       ===========       ===========
</TABLE>

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


                                      F-6





<PAGE>

                                   EMTEC, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       YEARS ENDED MARCH 31, 2002 AND 2001







1.  Organization and Summary of Significant Accounting Policies

        Organization

        Emtec (OTC: ETEC) is a systems integrator focused on providing
        technology solutions that enable our customers to effectively use and
        manage their data to grow their businesses. Our areas of specialization
        in IT services include remote network monitoring, help desk, network
        design, enterprise backup and storage server consolidation, and network
        security. Emtec's solutions are crafted to enable our customers to
        become more efficient and effective, thereby giving them a competitive
        advantage. Our customers are primarily fortune 2000 and other large and
        mid-sized companies located principally in the New York/New Jersey
        Metropolitan area and the Southeastern United States, with annual
        revenues ranging from $50 million to $500 million. We service our
        customer base from leased facilities in New Jersey, Connecticut, New
        York, Georgia, and Florida.

       The Company, was formed on April 1, 1995, as a result of the 1995 and
       1996 mergers of three information technology companies that were
       originally founded between 1980 and 1983.

       Principles of Consolidation

       The consolidated financial statements include the accounts of the issuer
       and its wholly owned subsidiary as described in Note 2 (Acquisitions).

        Use of Estimates

        The preparation of financial statements in conformity with generally
        accepted accounting principles requires management to make estimates and
        assumptions that affect the reported amounts of assets and liabilities
        and disclosure of contingent assets and liabilities at the date of the
        financial statements and the reported amounts of revenues and expenses
        during the reporting period. Actual results may differ from those
        estimates.

        Revenue Recognition

        The Company recognizes revenues based upon Staff Accounting Bulletin
        #101 (SAB 101). SAB 101 states that revenue recognition cannot occur
        until the earnings process is complete, evidenced by an agreement
        between the Company and the customer, there has been delivery and
        acceptance, collectibility is probable, and pricing is fixed and
        determinable. If significant obligations remain after delivery, revenue
        is deferred until such obligations are fulfilled. The Company had
        followed these principles of revenue recognition prior to the
        implementation of SAB 101. Therefore, SAB 101 has had no impact on
        revenue reporting. Procurement services represent sales of computer
        hardware and prepackaged software. Revenue from consulting and support
        service contracts are recognized ratably over the contract or service
        period. Revenues from manufacturer support service contracts where the
        manufacturer is responsible for fulfilling the service requirements of
        the customer are recognized immediately at their contract date.


                                      F-7





<PAGE>

        Cash Equivalents

        Cash equivalents include items almost as liquid as cash with maturity
        periods of three months or less when purchased. The carrying amount of
        cash and cash equivalents approximates fair value.

        Trade Receivables

        The Company provides an allowance for losses on trade receivables based
        on a review of the current status of existing receivables and
        management's evaluation of periodic aging of the accounts.

        Other Receivables

        Other receivables represent rebates, price protection receivables and
        amounts due from vendors for purchase returns made in the ordinary
        course of business.

        Concentration of Credit Risk

        The Company provides its services to a wide variety of commercial,
        governmental and institutional customers. Financial instruments which
        potentially subject the Company to concentrations of credit risk are
        cash (and cash equivalents) and trade receivables. The Company performs
        ongoing credit evaluations of its customers' financial condition and,
        generally, does not require collateral from its customers. The Company
        has not experienced significant credit losses. The Company maintains
        deposit accounts with reputable financial institutions; at times, such
        deposits may exceed Federal Depository Insurance Limits.

        Marketable Securities

        Marketable securities consist of investments in equity securities. The
        Company classifies all of its investments in securities as
        "available-for-sale". Available-for-sale securities are recorded at fair
        value. Unrealized holding gains and losses, net of the related tax
        effect, on available-for-sale securities are excluded from income and
        reported as accumulated other comprehensive income in stockholders'
        equity until realized.

        Inventories

        Inventories are stated at the lower of cost (first-in, first-out) or
        market. Cost is based on standard costs generated principally by the
        most recent purchase prices. The Company provides an inventory reserve
        for obsolescence and deterioration based on management's review of
        products and sales.

        Property and Equipment

        Property and equipment are stated at original cost. Depreciation and
        amortization for financial accounting purposes are computed using the
        straight line method over the estimated lives of the respective assets.
        Accelerated methods of depreciation are used for tax purposes. Property
        and equipment along with their components are as follows:



                                      F-8





<PAGE>


<TABLE>
<CAPTION>

                                               Original Cost     Estimated Life
                                               -------------     --------------

                                          March 2002   March 2001     (Years)
                                          ----------   ----------     -------
<S>                                      <C>          <C>                <C>

        Computer equipment               $ 2,510,613  $ 2,303,162        3
        Office equipment                     143,432      143,432        5
        Furniture and fixtures               292,355      244,294        5
        Leasehold improvements               147,248      107,917        5
        Vehicles                              66,745       66,745        2
                                         -----------  -----------

        Total Property and Equipment     $ 3,160,393  $ 2,865,550

            Less: accumulated depreciation
              and amortization            (2,456,453)  (1,946,440)
                                         -----------  -----------

        Net book value                   $   703,940  $   919,110
                                         ===========  ===========

</TABLE>

        Maintenance and repair costs are charged to expense as incurred. The
        cost and accumulated depreciation relating to property and equipment
        retired or otherwise disposed of are eliminated from the accounts and
        any resulting gains or losses are credited or charged to income.

        Valuation of Long Lived Assets

        The Company evaluates its long lived assets as prescribed by Statement
        of Financial Accounting Standards No. 121 (SFAS No. 121) by measuring
        the carrying amount of the assets against the estimated undiscounted
        future cash flows associated with them. If such evaluations indicate
        that the future undiscounted cash flows of certain long lived assets are
        not sufficient to recover the carrying value of such assets, the assets
        are adjusted to their fair values.

        Income Taxes

        Income taxes are accounted for under an asset and liability approach
        that requires the recognition of deferred tax assets and liabilities for
        the expected future tax consequences of events that have been recognized
        in the Company's financial statements or tax returns. In estimating
        future tax consequences, the Company generally considers all expected
        future events other than the enactment of changes in tax laws or rates.
        A valuation allowance is recognized if, on weight of available evidence,
        it is more likely than not that some portion or all the deferred tax
        assets will not be realized.

        Advertising Costs

        Advertising and marketing costs are charged to expense as incurred.
        Advertising and marketing expenses for the years ended March 31, 2002,
        2001 and 2000 were $306,271, $617,265 and $426,605 respectively.

        Stock-Based Compensation

        Statement of Financial Accounting Standards No. 123, "Accounting for
        Stock-Based Compensation," (SFAS No. 123) encourages, but does not
        require companies to record compensation cost for stock-based employee
        compensation plans at fair value. The Company has chosen to continue to
        account for employer stock-based compensation utilizing the intrinsic
        value method prescribed in Accounting Principles Board Opinion No. 25,
        "Accounting for Stock Issued to Employees".




                                      F-9





<PAGE>

        Accordingly, compensation cost for stock options issued to employees is
        measured as the excess, if any, of the quoted market price of the
        Company stock at the date of grant over the amount an employee must pay
        to acquire the stock. SFAS No. 123 requires companies that continue to
        follow APB No. 25 to provide a pro forma disclosure of the impact of
        applying the fair value method of SFAS No. 123. (See Note 10)

        Earnings (Loss) Per Share

        Basic earnings (loss) per share are computed by dividing net earnings
        (loss) by the weighted average shares outstanding during the reporting
        period. Diluted earnings (loss) per share are computed similar to basic
        earnings (loss) per share except that the weighted average shares
        outstanding are increased to include additional shares from the assumed
        exercise of stock options, if dilutive.

       Reclassifications

        Certain reclassifications have been made to prior years balances in
        order to conform to current presentations.

       Recent Accounting Pronouncements

        The Financial Accounting Standards Board ("FASB") recently issued
        Statement of Financial Accounting Standard No. 141 ("SFAS 141"),
        "Business Combinations", and Statement of Financial Accounting Standard
        NO. 142 ("SFAS No. 142"), "Goodwill and Intangible Assets". SFAS No. 141
        is effective for all business combinations completed after June 30,
        2001. SFAS No. 142 is effective for fiscal years beginning after
        December 15, 2001. However, certain provisions of SFAS 142 apply to
        goodwill and other intangible assets acquired between July 1, 2001 and
        the effective date of SFAS 142. Major provisions of these Statements are
        as follows:

        1)  All business combinations initiated after June 30, 2001 must use the
            purchase method of accounting. The pooling of interest method of
            accounting is prohibited except for transactions initiated before
            July 1, 2001.

        2)  Intangible assets acquired in a business combination must be
            recorded separately from goodwill if they arise from contractual or
            other legal rights or are separable from the acquired entity and can
            be sold, transferred, licensed, rented, or exchanged, either
            individually or as part of a related contract, asset, or liability.

        3)  Goodwill, as well as intangible assets with indefinite lives,
            acquired after June 30, 2001, will not be amortized. Effective with
            the adoption of SFAS 142, all previously recognized goodwill and
            intangible assets with indefinite lives will no longer be subject to
            amortization.

        4)  Effective with the adoption of SFAS 142, goodwill and intangible
            assets with indefinite lives will be tested for impairment annually
            and whenever there is an impairment indicator.

        5)  All acquired goodwill must be assigned to reporting units for
            purposes of impairment testing and segment reporting.



                                      F-10




<PAGE>



       Goodwill, net of accumulated amortization, amounted to $371,777 at March
       31, 2002 and is classified as other assets on the balance sheet. Goodwill
       acquired before June 30, 2001 has previously been amortized at
       approximately $19,000 annually.

       The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal
       of Long-Lived Assets," in August 2001. SFAS No. 144, which addresses
       financial accounting and reporting for the impairment of long-lived
       assets and for long-lived assets to be disposed of, supercedes SFAS No.
       121 and is effective for fiscal years beginning after December 15, 2001.

       The Company has adopted SFAS No. 142 and SFAS No. 144 effective at April
       1, 2002 and is currently evaluating the impact the adoption of the new
       accounting standards will have on its financial condition and results of
       operations.

2.     Acquisitions

       At January 9, 2002, the Company acquired substantially all of the assets
       of Devise Associates, Inc., an information technology consulting and
       managed services organization located in New York City. The Company paid
       an aggregate price of $355,051 in cash to be allocated under the purchase
       method as follows:

<TABLE>
          <S>                           <C>
              Goodwill                    $200,000
              Equipment                    152,220
              Prepaid Expenses               2,831
                                          --------

              Aggregate Purchase Price    $355,051
                                          ========
</TABLE>

       At January 17, 2001, Emtec, Inc., a New Jersey corporation (the Company)
       was acquired by American Geological Enterprises, Inc. (AGE) through an
       exchange of stock at a ratio of .9753 shares of AGE stock for 1 share of
       Company stock whereas AGE issued stock to the shareholders of the Company
       in exchange for stock representing 100% of the outstanding shares of the
       Company. Pursuant to the acquisition agreement, AGE changed its name to
       Emtec, Inc. and a majority of the directors and officers of the former
       AGE resigned in favor of the directors and officers of the Company. In
       addition, Emtec, Inc. (formerly AGE) increased its authorized
       capitalizaton from 2,500,000 to 25,000,000 shares of common stock.
       Immediately after the transaction, the stock ownership of Emtec, Inc.
       {formerly AGE} was as follows:

<TABLE>
<CAPTION>

                                                    Shares     Percent
                                                    ------     -------

<S>                                               <C>            <C>
         Former shareholders of the Company       5,329,501      75.3

         Original shareholders of AGE             1,380,997      19.5
           (including public owners)

         Transaction brokers                        370,000       5.2
                                                  ---------     -----

         Total                                    7,080,498     100.0
                                                  =========     =====

</TABLE>

        Because the former shareholders of the Company acquired control of
        Emtec, Inc.{formerly AGE}, the transaction is considered a "reverse
        acquisition" by the Company for accounting purposes. The Company is
        treated as the accounting acquirer of Emtec, Inc. {formerly AGE}, the
        legal acquirer. For accounting purposes, the acquisition has been
        treated as an acquisition of Emtec, Inc. (formerly AGE) by Emtec. Inc.,
        a New Jersey Corporation (the Company) and as a recapitalization of the
        Company. The historical financial statements of the Company are those of
        Emtec, Inc., a New Jersey corporation.



                                      F-11





<PAGE>


       The historical shareholders' equity of the Company prior to the reverse
       acquisition has been retroactively restated for the equivalent number of
       shares received in the transaction after giving effect to the difference
       in par value between the issuer's and acquirer's stock. Net income (loss)
       per share has also been restated to reflect the number of equivalent
       shares received by the former shareholders of Emtec, Inc. a New Jersey
       corporation.

3.  Inventories

        The components of inventories at March 31, are as follows:

<TABLE>
<CAPTION>

                                           2002         2001
                                           ----         ----
     <S>                                   <C>          <C>
       Hardware, software and
         accessories                   $1,390,790   $1,265,569
       Service parts                      150,875      145,330
                                       ----------   ----------
                                        1,541,665    1,410,899
       Less inventory reserve             451,715      391,184
                                       ----------   ----------

                                       $1,089,950   $1,019,715
                                       ==========   ==========

</TABLE>

        Appropriate consideration has been given to deterioration, obsolescence
        and other factors in evaluating net realizable value.

4.      Financing Arrangements

       On November 21, 2001, the Company terminated its prior credit facility
       and entered into a three year, $10 million revolving credit facility with
       Fleet Capital Corporation, formerly Summit Business Capital Corporation
       ("Fleet") whereas the Company may borrow on 85% of its eligible trade
       receivables at a floating annual rate of .25% above prime. The interest
       rate at March 31, 2002 and 2001 was 5.00% and 8.50%, respectively. The
       Fleet revolving credit facility is collateralized by a lien upon and
       security interest in substantially all of the Company assets. Since
       current credit facilities with two of the Company's primary trade
       vendors, (GE Access, and Ingram Micro.), were also collateralized by
       substantially all Company assets, Fleet, GE Access and Ingram Micro, have
       entered into inter-creditor agreements, which provide that as regards to
       these vendors, debt obligations to Fleet are accorded priority. The
       lending agreement contains financial covenants that require the Company
       to maintain a maximum leverage ratio, a minimum debt ratio, a minimum
       tangible net worth ratio and minimum results of operations. The Company
       was in default of the financial covenants at March 31, 2002. The Company
       has two letters of credit totaling $1 million assigned as security
       deposits issued against their line of credit. At March 31, 2002, the
       Company had $9 million available under the terms of the agreement.
       Weighted average interest rates on the borrowings were 8.43%, 9.72% and
       9.08% for the years ended March 31, 2002, 2001 and 2000, respectively.

5.      Income Tax (Expense) Benefit

       Deferred income taxes reflect the net tax effects of (a) temporary
       differences between carrying amounts of assets and liabilities for
       financial reporting purposes and the amounts used for income tax
       purposes, and (b) net operating loss carryforwards (when available).
       Income tax (expense) benefit consisted of the following for the years
       ended March 31:


                                      F-12





<PAGE>

<TABLE>
<CAPTION>
                                              2002            2001           2000
                                              ----            ----           ----
<S>                                          <C>             <C>           <C>
             Continuing Operations

                  Current taxes
                    Federal                  $21,143         $(9,627)      $(298,722)
                    State and local          (13,082)         (1,289)        (27,596)
                                           ---------       ---------       ---------
                                               8,061         (10,916)       (326,318)



                  Deferred taxes
                    Federal                  (10,827)         68,035            -
                    State and local           (2,866)         15,940            -
                                           ---------       ---------       ---------
                                              (5,632)         73,059        (326,318)
                                           ---------       ---------       ---------
             Discontinued Operations

                  Current taxes
                    Federal                                     -            347,053
                    State and local                             (820)         43,576
                                           ---------       ---------       ---------
                                                                (820)        390,629

                  Deferred taxes
                    Federal                                    2,259            -
                    State and local                              531            -
                                             -------         -------         -------
                                                               1,970         390,629

             Net Income Tax (Expense)

               Benefit                       $(5,632)        $75,029         $64,311
                                             =======         =======         =======

</TABLE>


        Reconciliation Of the U.S. statutory income tax rate to our effective
        tax rate is as follows:

<TABLE>
<CAPTION>

                                                  2002            2001            2000
                                                  ----            ----            ----

<S>                                             <C>             <C>             <C>
Expected (tax) benefit at statutory rates       $(73,225)      $ 474,811        $124,884
Effect of state taxes, net                       (15,883)         14,362          15,980
Valuation allowances                              92,158        (397,878)        (53,075)
Permanent differences                             (8,682)        (16,266)        (23,478)
                                               ---------       ---------        --------

Actual Income Tax Expense/(Benefit)             $ (5,632)      $  75,029        $ 64,311
                                               =========       =========        ========

</TABLE>

        Significant items comprising the Company's deferred tax assets and
        liability at March 31, are as follows:

<TABLE>
<CAPTION>
                                                        2002          2001
                                                        ----          ----
<S>                                                  <C>              <C>

      Deferred Tax Assets

Differences between book and tax basis:
  Trade receivables                                  $  60,950        $ 181,815
  Inventories                                          190,305          196,744
  Property and equipment                                17,140           (3,959)
  Accrued liabilities                                   13,655           28,718
  Others                                                  -              35,263
  Net Operating loss carryforwards                     412,222          414,933
                                                     ---------        ---------
                                                       694,272          853,514

Less Valuation Allowance                              (624,845)        (768,163)
                                                     ---------        ---------

Net Deferred Tax Assets                                 69,427           85,351

Deferred Tax Liability

Differences between book and tax basis:
  Investment in geothermal
    power unit                                         (60,124)         (62,355)
</TABLE>




                                      F-13





<PAGE>



        At March 31, 2002 and 2001 the Company recorded a valuation allowance
        against its deferred tax assets, reducing those assets to amounts which
        are more likely than not to be realized. Federal and state net operating
        loss carryforwards approximated $927,000 and $1,077,000 respectively at
        March 31, 2002. Federal net operating loss carryforwrds expire in 2021;
        state net operating loss carryforwards expire at various years through
        2008.

6.      Related Party Transactions

        At March 31, 2002 and 2001 the Company owed $19,000 to a Company
        officer's relative. Except for quarterly interest payments there was no
        other loan activity during the two year period. Interest paid on the
        loan was $2,280 for each of the three years ended March 31, 2002.

7.  Major Customers

        Two major customers approximated 23%, 17% and 34% of the Company's net
        sales in the years 2002, 2001 and 2000 respectively. Major customer
        sales by locations are as follows:

<TABLE>
<CAPTION>

                        % Of Total Revenues              Locations
                        -------------------              ---------
               <S>                                   <C>
                                14%                  Education - Atlanta, GA
                                 9%                  Cranford, NJ
                                ---

               2002             23%
               ----             ===

                                10%                  Education - Atlanta, GA
                                 7%                  Atlanta, GA
                                ---

               2001             17%
               ----             ===

                                17%                  Education - Atlanta, GA
                                17%                  Atlanta, GA
                                ---

               2000             34%
               ----             ===

</TABLE>

        While the Company believes its relationship with these customers will
        continue, there can be no assurance that sales to these customers will
        continue at all or at the same level.

8.       Fair Value of Financial Instruments

        The following methods and assumptions were used to estimate fair value
        of financial instruments at balance sheet date:

           Short-term financial instruments (cash equivalents, receivables,
           payables, customer deposit and accrued liabilities) - cost
           approximates fair value because of the short maturity period.

           Line of credit - cost approximates fair value because of the short
           interest-reset period.

9.      401(k) Plan

        The Company sponsors a 401(k) plan for all employees with at least 6
        months of service and who are at least 20 years of age. Eligible
        employees may contribute 2% to 15% of their annual compensation to the
        plan. The Company matches 25% of the first 6% of employee plan
        contributions and may contribute additional amounts at the Company's
        discretion. Participants are vested 20% for each year of service and are
        fully vested after 6 years. Company contributions to the plan were
        $84,707, $95,374, and $103,087 for the years ended March 31, 2002, 2001
        and 2000, respectively.



                                      F-14





<PAGE>


10.    Stock Option Plan

       The Company's 1996 Stock Option Plan (the Plan) (amended in 1999)
       authorizes the granting of stock options to directors and eligible
       employees. The Company has reserved 1,000,000 shares of its common stock
       for issuance under the Plan at prices not less than 100% of the fair
       value of the Company's common stock on the date of grant (110% in the
       case of shareholders owning more than 10% of the Company's common stock).
       Options vest at the rate of 25% per year commencing on the first
       anniversary of, and expire at the earliest of 5 years after the date of
       grant, three months from date of retirement, or upon date of other
       termination of employment. The Company used the minimum value option
       pricing model as prescribed by SFAS No. 123 to determine the impact of
       applying the fair value method required by SFAS No. 123 prior to going
       public at January 17, 2001. The Black-Scholes option pricing model has
       been used to determine the fair value of options granted during the year
       ended March 31, 2002. Except for 30,000 options granted in November 2001,
       all other stock options granted during the three years ended March 31,
       2002 were determined to have a fair value of zero. The exercise price of
       these options were set at $ 1 per share, an amount substantially in
       excess of the fair value of the underlying stock at dates of grant. The
       30,000 options granted at November 2001 with an exercise price of $.55
       resulted in pro forma compensation cost, net of income taxes of $8,934
       computed under Black-Scholes. Earnings per share amounts (rounded to the
       nearest cent) on a SFAS 123 proforma basis equal the per share amounts
       reported in the statement of operations for the year ended March 31,
       2002. No options granted during the three year period have been exercised
       as of March 31, 2002. Option activity is summarized as follows:

<TABLE>
         <S>                                                 <C>
          Options outstanding - April 1, 1999                   570,874

          For the year ended March 31, 2000:

          Options granted                                        29,250
          Options exercised                                        -
          Options forfeited or expired                         (176,042)
                                                               --------

          Options outstanding - March 31, 2000                  424,082

          For the year ended March 31, 2001:

          Options granted                                       226,907
          Options exercised                                        -
          Options forfeited or expired                         (185,730)
                                                                -------

          Options outstanding - March 31, 2001                  465,259

          For the year ended March 31, 2002:

          Options granted                                        82,746
          Options exercised                                        -
          Options forfeited or expired                         (166,677)
                                                                -------

          Options outstanding - March 31, 2002                  381,328
                                                                =======

</TABLE>



                                      F-15





<PAGE>

11.    Termination Costs

       Termination costs of $21,746 (2002), $90,000 (2001) and $74,480 (2000)
       were paid to former Company executives.

12.    Commitments and Contingencies

       Leases:

       The Company leases warehouse and office facilities, vehicles and certain
       office equipment under noncancellable operating leases. Future minimum
       lease payments under such leases are as follows:

<TABLE>
<CAPTION>

            Fiscal Years
            ------------
          <S>                      <C>
               2003                  $  805,208
               2004                     818,466
               2005                     382,956
               2006                     283,258
               Thereafter               650,216
                                      ---------

               Total                 $2,940,104
                                     ==========
</TABLE>

       Aggregate rent expense for the three years ended March 31, 2002,
       approximated $822,000, $855,000 and $792,000.

       Litigation:

       In a previous year Emtec Inc. instituted litigation against two companies
       (defendants) that were in discussions with Emtec about a possible merger.
       The complaint in the action charged the two companies for breach of
       contract, interference with business relationships and misappropriation
       of trade secrets. The parties settled the litigation in June 2000. Under
       terms of the settlement, the Company received a $350,000 cash payment and
       333,116 shares of the defendant's common stock. Costs related to the
       litigation and realized losses on disposition of the common stock reduced
       net income from the litigation settlement to $24,108.

        In 1999 Emtec, Inc. instituted litigation against a company (defendant)
        for breach of contract action in an amount approximating $50,000. The
        defendant stated a counter claim in excess of $8 million for damages
        resulting from Emtec's alleged negligence, causing the defendant's
        computer system to become corrupted and unavailable. The parties reached
        a settlement by agreeing that the Company would restore the defendant's
        computer system. Restored disks were delivered to the defendant at March
        26, 2002. Under the settlement, the defendant was required to file a
        complaint within 45 days if dissatisfied with the restoration. No such
        complaint was filed.

        In March 2002, a lawsuit was filed against the Company by a competitor
        seeking damages of an unspecified amount. The competitor is alleging
        that the Company illegally interfered with customer relationships of the
        competitor. At this time, the outcome of this litigation cannot be
        determined. The lawsuit is currently in the discovery phase.

13.     Supplemental Cash Flow Information

        Cash paid for interest and income taxes were as follows:

<TABLE>
<CAPTION>
                                   2002          2001         2000
                                   ----          ----         ----

            <S>                 <C>           <C>          <C>
            Interest            $ 246,287     $ 705,473    $ 731,723
            Income Taxes        $  13,082     $  11,231    $ 168,030
</TABLE>




                                      F-16





<PAGE>


        Noncash investing and financing activities were restricted to the
        issuance of common stock in the reverse acquisition as described in Note
        1.

14.    Discontinued Operations

       During fiscal 2000, the Company completed the sale of assets of it's two
       South Carolina locations (Greenville and Charleston) to a company formed
       by some of it's prior employees. The Company incurred a loss of $971, net
       of an income tax benefit of $613 on the disposition of the assets.
       Financial information with respect to the discontinued operations is
       summarized as follows:

<TABLE>
<CAPTION>

                                           2002         2001         2000
                                           ----         ----         ----
         <S>                             <C>        <C>          <C>
         Net revenues                   $    -      $  7,017     $ 7,606,953

         Cost of revenues                    -        10,014       6,551,899
                                        --------    --------     -----------

         Gross (loss) profit                 -       ( 2,997)      1,055,054

         Operating expenses                  -        62,622       2,063,100
                                        --------    --------     -----------

         Loss before income taxes            -       (65,619)     (1,008,046)

         Income tax benefit                  -         1,970         390,016
                                        --------    --------     -----------

         Net Loss from
          Discontinued Operations       $    -      $(63,649)    $  (618,030)
                                        ========    ========     ===========

</TABLE>

15.    Segment Information

       The Company has organized business segments based upon branch office
       locations in the Mid-Atlantic and Southeastern United States. These
       branch office locations offer similar business information systems
       services. The e-business solutions segment that was started in fiscal
       2000 at the Atlanta, GA and Mt. Laurel, NJ locations was discontinued
       during the fourth quarter 2002. The e-business unit had been focused on
       marketing internet business solutions.

       The Company has adopted Statement of Financial Accounting Standards No.
       131 "Disclosures about Segments of an Enterprise and Related
       Information"(SFAS No. 131). Operating segments are defined by SFAS No.
       131 as components of an enterprise about which separate financial
       information is available and evaluated regularly by the chief operating
       decision maker in deciding how to allocate resources and in assessing
       performance. Emtec's chief operating decision maker is the Chief
       Executive Officer of the Company. Reportable operating segments include
       the individual branch offices as outlined below and the educational,
       e-business, and geothermal units. The educational unit services schools
       (kindergarten through 12th grade). The branch offices in Greenville and
       Charleston, South Carolina which discontinued operations in fiscal 2000
       as described in Note 14 have been combined as one reportable segment. The
       accounting policies of the segments are the same as those described in
       Note 1. The Company had no intersegment revenues for the three year
       period ended March 31, 2002. Corporate overhead is allocated to segments
       based upon a combination of revenues earned and the number of employees
       attributable to each segment. The Company maintains segment level
       accounting for accounts receivable, inventory, and property and
       equipment. All other assets are accounted for at the corporate level. The
       following is financial information relating to the operating segments:


                                      F-17





<PAGE>


<TABLE>
<CAPTION>
                                                          Years Ended March 31:
                                              ----------------------------------------------
                                               2002                2001                2000
                                               ----                ----                ----
<S>                                      <C>                 <C>                 <C>
  External Sales
  Mt. Laurel, NJ                         $   9,603,667       $  17,791,016       $  19,480,769
  Cranford, NJ                              27,631,177          41,960,532          29,003,759
  Atlanta, GA                               16,753,524          19,691,550          29,521,736
  Norwalk, CT                                2,633,750           2,326,671           5,125,806
  Education-Atlanta                         11,850,177          10,798,600          17,620,420
  e-Business                                      -                   -                   -
  New York City                                941,133                -                   -
  Geothermal                                   187,978              34,366                -
                                         -------------       -------------       -------------

      Total External Sales               $  69,601,406       $  92,602,735       $ 100,752,490
                                         =============       =============       =============

  Interest Expense
  Mt. Laurel, NJ                         $      27,907       $     129,073       $     109,029
  Cranford, NJ                                  90,976             288,094             188,810
  Atlanta, GA                                   52,036             147,969             156,318
  Norwalk, CT                                   11,318              29,126              35,273
  Education-Atlanta                             27,783              70,463             177,104
  e-Business                                      -                   -                   -
  New York City                                    327                -                   -
  Geothermal                                      -                   -                   -
                                         -------------       -------------       -------------
  Allocated Interest Expense                   210,347             664,725             666,534
  Over/Under Allocated
    Interest Expense                               (42)             27,502              12,752
                                         -------------       -------------       -------------

      Total Interest Expense             $     210,305       $     692,227       $     679,286
                                         =============       =============       =============

  Depreciation and Amortization
  Mt. Laurel, NJ                         $      22,183       $      46,868       $      92,585
  Cranford, NJ                                  59,869              78,234              95,028
  Atlanta, GA                                  103,463             135,790              77,927
  Norwalk, CT                                   11,056               8,150               1,397
  Education-Atlanta                              3,411               2,748               1,223
  e-Business                                     8,671                -                   -
  New York City                                 18,580                -                   -
  Geothermal                                    24,833               4,936                -
                                         -------------       -------------       -------------
  Allocated Depreciation
    and Amortization                           252,066             276,726             268,160
  Unallocated Depreciation
    and Amortization                           295,941             145,530              85,598
                                         -------------       -------------       -------------

      Total Depreciation
        and Amortization                 $     548,007       $     422,256       $     353,758
                                         =============       =============       =============

  Operating Income/(Loss)
  Mt. Laurel, NJ                         $    (497,658)      $    (669,097)      $      70,729
  Cranford, NJ                                 634,506             795,794             (61,993)
  Atlanta, GA                                 (314,437)           (326,249)           (374,670)
  Norwalk, CT                                 (401,676)           (503,807)           (140,350)
  Education-Atlanta                          1,460,783             699,749           1,211,918
  e-Business                                  (617,220)         (1,303,740)           (355,933)
  New York City                               (124,624)               -                   -
  Geothermal                                    83,802               6,808                -
                                         -------------       -------------       -------------
  Net Segment Operating
    Income/(Loss)                              223,476          (1,300,542)            349,701
  (Under) Over Allocated
    Corporate Expenses                            (872)            (30,342)            292,621
                                         -------------       -------------       -------------

  Income/(Loss) From Continuing
    Operations Before Income
    Tax (Expense) Benefit                $     222,604       $  (1,330,884)      $     642,322
                                                                                 -------------

  Income Tax (Expense) Benefit-
    Continuing Operations                       (5,632)             73,059            (326,318)
                                         -------------       -------------       -------------

  Income (Loss) From Continuing
    Operations, net of income taxes      $     216,972       $  (1,257,825)      $     316,004
                                         =============       =============       =============
</TABLE>




                                      F-18





<PAGE>


<TABLE>
CAPTION>

       Identifiable Assets:

         As of March 31:                      2002            2001
                                              ----            ----

<S>                                      <C>             <C>
       Mt. Laurel, NJ                     $ 1,049,822     $ 2,691,963
       Cranford, NJ                         3,295,755       7,690,440
       Atlanta, GA                          1,596,677       2,239,838
       Norwalk, CT                             41,448         433,860
       Education-Atlanta                      650,857       1,401,107
       New York City                          785,169           -
       Geothermal                             581,612         549,626
                                          -----------     -----------

       Identifiable Assets From
         Continuing Operations              8,001,340      15,006,834

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

       Total Identifiable Assets            8,001,340      15,006,834
       Corporate And Other Assets           3,387,133       3,692,198
                                          -----------     -----------

       Total Assets                       $11,388,473     $18,699,032
                                          ===========     ===========

</TABLE>


16.    Investment in Geothermal Power Unit

       The investment in Geothermal Power Unit (Unit), acquired in the reverse
       acquisition described in Note 2, represents a 5.49% working interest in
       the Roosevelt Hot Springs geothermal power unit. An agreement is in place
       to sell all of the steam from the Unit through 2023 to PacifiCorp, which
       has constructed the Blundell power plant to utilize the steam. This
       agreement, entered into in 1993, included an advance payment. The
       remaining unamortized deferred revenue attributable to the 1993 advance
       payment in the amount of $799,472 is reported as a non-current liability
       at March 31, 2002 and will be recognized into income ratably through
       2023. PacifiCorp pays the Company for operating and maintenance services
       and a reimbursement of royalties for one lease that is included in the
       Unit. The Company pays its proportionate share of operating and
       maintenance expenses to the operator of the Unit.

17.    Quarterly Financial Information - (Unaudited)

<TABLE>
<CAPTION>
                                  First            Second           Third              Fourth                 Total
                                  Quarter          Quarter          Quarter            Quarter                Year
                                  -------          -------          -------            -------                -----
                                                           2002
<S>                           <C>               <C>                <C>                <C>                <C>
Revenues                      $ 19,548,127      $ 17,430,872       $ 20,530,201       $ 12,092,206       $ 69,601,406
Gross Profit                     2,754,588         2,422,672          2,775,043          2,114,827         10,067,130
Net Income (Loss)             $    271,318      $    157,023       $     29,380       $   (240,749)      $    216,972
Per share:
 {Basic and Diluted}          $        .04      $        .02       $        .00       $       (.03)      $        .03


                                                           2001

Revenues                      $ 27,430,305      $ 22,454,658       $ 21,203,768       $ 21,514,004       $ 92,602,735
Gross Profit                     3,080,493         2,825,177          2,619,209          2,446,692         10,971,571
Net Income (Loss)             $    271,058      $   (186,434)      $   (760,100)      $   (645,998)      $ (1,321,474)
Per share:
 {Basic and Diluted}          $        .05      $       (.03)      $       (.14)      $       (.10)      $       (.23)
</TABLE>


                                      F-19





<PAGE>



18.    Accounts Receivable and Inventory Allowances

       The following table provides information regarding accounts receivable
       and inventory valuation allowance activity for the three years ended
       March 31, 2002.

<TABLE>
<CAPTION>

                                                  Allowances
                                                  ----------

                                               Accounts
                                               Receivable    Inventory
                                               ----------    ---------
<S>                                            <C>           <C>
       Balance, April 1, 1999                   $ 209,397   $ 147,590

       Charged to costs and expenses              430,947     260,387

       Write-offs                                (272,287)   (232,490)
                                                ---------   ---------

       Balance, March 31, 2000                    368,057     175,487

       Charged to costs and expenses              276,198     344,918
       Write-offs                                (211,365)   (129,222)
                                                ---------   ---------

       Balance, March 31, 2001                  $ 432,890   $ 391,183

       Charged to costs and expenses               55,917      76,062
       Write-offs                                (336,205)    (15,530)
                                                ---------   ---------

       Balance, March 31, 2002                  $ 152,602   $ 451,715
                                                =========   =========


</TABLE>



                                      F-20



                            STATEMENT OF DIFFERENCES
                            ------------------------
The trademark symbol shall be expressed as...............................'TM'