<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

    [X]       Annual Report under Section 13 or 15(d) of the Securities Exchange
              Act of 1934 for the Fiscal Year Ended September 30, 2001

    [ ]       Transition Report Under Section 13 or 15(d) of the Securities
              Exchange Act of 1934 for the Transition Period
              from _________ to _________.

                         Commission File Number 0-20986
                                                -------

                                   EVTC, INC.
                                   ----------
                (Name of Registrant as Specified in Its Charter)

Delaware                                                       22-3005943
--------------------------------------------------------------------------------
(State or Other Jurisdiction of                             (I.R.S. Employer
Incorporation or Organization)                              Identification No.)

3125 Bolt Street
Fort Worth, Texas                                                76110
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                       (Zip Code)

                                 (817) 759-8900
                                 --------------
                (Issuer's Telephone Number, Including Area Code)

                    Securities registered under Section 12(b)
                     of the Securities Exchange Act of 1934:

                                                         Name of Each Exchange
Title of Each Class                                      On Which Registered
--------------------------------------------------------------------------------
                                NONE

                 Securities registered pursuant to Section 12(g)
                     of the Securities Exchange Act of 1934:

                     Common Stock, par value $.01 per share

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

    Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.[X]

    State the aggregate market value of the voting stock held by non-affiliates
of the registrant on January 4, 2002 computed by reference to the price at which
the stock was sold on that date: $3,026,519.

    The number of shares outstanding of the registrant's Common Stock, par value
$.01 per share (the "Common Stock"), as of January 14, 2002, was 7,635,475.

    Documents Incorporated by Reference: None


<PAGE>

                                   EVTC, INC.
                           ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS

<Table>
<Caption>
         ITEM                                                                       PAGE
         ----                                                                       ----
<S>             <C>                                                                <C>
           1.   Description of Business                                               3

           2.   Description of Property                                              14

           3.   Legal Proceedings                                                    14

           4.   Submission of Matters to a Vote of Security Holders                  14

           5.   Market for Common Equity and Related Stockholder Matters             15

           6.   Selected Financial Data                                              17

           7.   Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                                 18

           7a.  Quantitative and Qualitative Disclosures About Market Risk           24

           8.   Financial Statements                                                 25

           9.   Changes in and Disagreements with Accountants on
                 Accounting and Financial Disclosure                                 49

           10.  Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) Of the Exchange Act                  49

           11.  Executive Compensation                                               51

           12.  Security Ownership of Certain Beneficial Owners and Management       53

           13. Certain Relationships and Related Transactions                        53

           14.  Exhibits and Reports on Form 8-K                                     54
</Table>

                                       2

<PAGE>
ITEM 1.    DESCRIPTION OF BUSINESS

EVTC, Inc. (the "Company") was incorporated in 1989 under the name
"Environmental Technologies Corporation" under the laws of Delaware. In 1997,
the Company changed its corporate name to "EVTC, Inc." but continues to trade
and do business as "Environmental Technologies Corporation." EVTC, through its
wholly owned subsidiaries, engages in the marketing and sale of refrigerants,
refrigerant reclaiming services and recycling of fluorescent light ballasts and
lamps. The Company also manufactured and distributed refrigerant recycling and
recovery equipment prior to the discontinuation of such operations in July 1998
and the Company marketed interactive marketing and media to consumer services
via the Internet until its discontinuation in 2000.

The following table sets forth information relating to the approximate dollar
amounts and percentages of revenues derived from the Company's sales of
refrigerants and ballast recycling:

                           YEARS ENDED SEPTEMBER 30,
                                    (000'S)
<Table>
<Caption>
                             2001                2000                1999
                       ----------------    ----------------    ----------------
<S>                    <C>      <C>        <C>      <C>        <C>      <C>
Refrigerants           $29,481       90%   $32,474       90%   $34,897       90%
Ballast Recycling        3,456       10%     3,767       10%     3,835       10%
                       -------  -------    -------  -------    -------  -------
                       $32,937      100%   $36,241      100%   $38,732      100%
                       =======  =======    =======  =======    =======  =======
</Table>

                                  REFRIGERANTS

REFRIGERANT INDUSTRY BACKGROUND

In the mid 1980's, increasing concern about damage to the earth's stratospheric
ozone layer resulted in significant legislation governing production and use of
products containing Chlorofluorocarbons ("CFCs"). CFC refrigerants primarily
used include R-11, R-12, and R-502. In 1987, the United States became a
signatory to the Montreal Protocol on Substances that Deplete the Ozone Layer
(the "Montreal Protocol"), as amended in 1992, which requires its signatories to
reduce and ultimately eliminate production and consumption of certain ozone
depleting substances, including refrigerants. The Montreal Protocol has been
implemented in the United States through the Clean Air Act and the regulations
promulgated thereunder by the Environmental Protection Agency (EPA). Pursuant to
the Clean Air Act, which was amended in 1990 in response to additional evidence
linking the use of CFCs to damage to the earth's ozone layer, production of CFCs
ceased at the end of 1995. The Clean Air Act also requires the recovery or
recycling of all refrigerants used in automobile, residential and commercial air
conditioning and refrigeration systems.

While CFC production ceased in 1995, continued initiatives of government
agencies, primarily the EPA, have placed additional restrictions on other ozone
depleting and non-ozone depleting substances.

Hydrochlorflorocarbon refrigerants ("HCFCs") are also considered to be an ozone
depleting substance. However, their potential for ozone depletion is
substantially less than CFCs.

During the phaseout of CFCs, HCFCs are used as interim CFC substitutes. HCFC
refrigerants include R-22, R-123, R-124, R-401, and R-402. Due to HCFCs ozone
depletion potential, their production in the United States is scheduled to be
phased-out over the next 20 years. Several European countries and Canada have
already put stringent production and import caps on HCFCs. While no production
or import caps are currently in place in the United States, the Environmental
Protection Agency is closely monitoring production and importing of HCFCs into
the United States.

CFCs are also being replaced by hydrofluorocarbons ("HFCs"). HFCs do not deplete
the ozone and are recognized as the long-term replacement for CFCs and HCFCs.
Tetrafluoroethane, or R-134a, is currently the primary replacement for R-12, the
most common CFC refrigerant. Other HFCs include R-23, R-404, R-407, R-410,
R-507, and R-508. HFCs, while not ozone depleting, are considered to be a "green
house" gas that contributes to global warming. As a result current regulations
also require that they be reclaimed and recycled.

The Company, and most other companies in the industry, no longer has readily
available access to sources of newly manufactured CFC refrigerants. HCFC and HFC
virgin products are readily available to the Company and its competitors in the
industry. See "Suppliers" disclosure.

                                       3

<PAGE>

In general, working capital levels for the Company and industry-wide reflect the
highly seasonal nature of sales for refrigerants that are significantly related
to weather conditions. Sales of the Company's products generally precede warm
weather and continue through much of the warm weather months.

PRODUCTS AND SERVICES

REFRIGERANTS

Refrigerants are liquid compounds characterized by their ability to absorb heat
and vaporize at low temperatures that can be used in air conditioning and
refrigeration systems. Compounds such as R-12 and R-134a serve as refrigerants
through the principle of heat transfer by absorbing heat while in a liquid state
and releasing heat while in a gaseous state.

The most widely used commercial refrigerants are R-11, R-12, R-22, R-134a and
R-502. R-11 is primarily used in commercial air conditioning systems. R-12 and
R134a are the predominant refrigerants used in automobile air conditioning
systems. R-12 can also be used as a refrigerant in residential air conditioning
and refrigeration systems. R-22 is a refrigerant capable of providing extensive
cooling of large areas, making it suitable for use in residential and commercial
air conditioning. R-502 is used extensively as a refrigerant in commercial
refrigeration systems.

The Company's automotive line of refrigerants includes R-12, R-22 and R-134a and
is marketed under the Company's "Arctic Air" label to wholesalers and
distributors of automobile supplies for use by mechanics and technicians in
servicing automobile air conditioning systems.

The Company markets a complete line of reclaimed and virgin refrigerants to
HVAC/R wholesalers, mechanical contractors and large institutional and
government users of refrigerants.

The Company markets R-134a in spray cans under its customers' private labels for
use on dusting moisture-sensitive equipment, including personal computer
screens, cabinets, peripherals and photographic equipment.

The Clean Air Act mandated that automobile manufacturers develop new air
conditioning systems in vehicles using R-134a, a refrigerant that does not
contain ozone depleting CFCs, rather than R-12. The Company commenced marketing
R-134a in 1992 as a replacement for R-12 for new automobile air conditioning
systems.

The Company acquired Refrigerant Reclaim Services, Inc. ("RRSI") in February
1994 and Global Refrigerant Management, Inc. in February 1995 (collectively by
their d/b/a, "Full Circle, Inc."). Full Circle, Inc. provides services for the
recovery and reclamation of all refrigerants in response to the requirements of
the Clean Air Act, which strictly regulates the use and disposal of refrigerants
containing certain chemicals. The Company's recovery services consist of
removing used refrigerants from air conditioning and refrigeration systems and
transferring them into pressurized cylinders for collection. Its reclamation
services consist of "cleaning" refrigerants to remove impurities and
contaminants and returning them to purity standards set by the Air Conditioning
and Refrigerant Institute ("ARI"). Reclaimed refrigerants, unlike recycled
refrigerants, meet the same specifications as newly manufactured products. Full
Circle, Inc. markets its services to large users of refrigerants such as
wholesalers of air conditioning and refrigeration equipment, air conditioning
and refrigeration contractors and owners of air conditioned buildings and
refrigeration and cold storage facilities. Full Circle, Inc. also purchases used
refrigerants for reclamation and resale. Typically, refrigerant is purchased
from users choosing to retrofit or replace their CFC bearing equipment for
equipment using non-CFC refrigerants.

To further broaden the scope of its core business, the Company acquired
Refrigerant Management Services, Inc. ("RMS") of Phoenix, Arizona in May of
2000. RMS is a dominant refrigerant reclaimer and service provider in the
Southwestern portion of the United States, having developed and refined a
business model which incorporates custom built refrigerant service vehicles that
provide enhanced onsite refrigerant recovery and cylinder evacuation services to
the Heating, Ventilation, Air Conditioning and Refrigerant (" HVAC/R") industry.

This premium onsite service component greatly enhances the Company's ability to
offer complete and comprehensive refrigerant solutions programs to customers
across the country while mitigating, to a certain extent, pricing pressure
resulting from seasonality and commodity pricing. In addition, this local level
service will allow the Company's traditional sales force to expand into
longer-term, higher volume prospects such as national accounts, institutional,
governmental and larger corporate end-users, thus greatly increasing the market
share potential within the HVAC/R industry.

                                       4

<PAGE>

To further enhance the scope of its core business, the Company acquired the
remaining 50% interest of Liberty Technology International, Inc. ("LTI") which
resulted in 100% ownership of a refrigeration separation plant that provides a
cost effective and environmentally sound alternative to total destruction of
mixed refrigerants. LTI is one of the largest separation facilities in the
country.

SUPPLIERS

The Company is not dependent on any one source of refrigerant for its supply of
refrigerants. The Company does not maintain long-term supply agreements with its
suppliers.

The Company purchases used refrigerant from major HVAC wholesalers, mechanical
contractors, salvage operations, large industrial and institutional users of
refrigerant as well as brokers. The Company uses a network of wholesale HVAC
supply stores that serve as collection stations for used refrigerants. Onsite
recovery and cylinder evacuation services provide a key source of used
refrigerant with the acquisition of RMS.

The Company's operating results are in part dependent on its ability to obtain
sufficient quantities of domestic virgin (pure) and reclaimable refrigerants
from its suppliers. In the event that the Company is unable to obtain sufficient
quantities of refrigerants in the future, or resell reclaimed refrigerants at a
profit, the Company's financial condition and results of operations would be
adversely affected.

MARKETING AND SALES

Marketing programs are conducted through the efforts of Company sales personnel
and manufacturers sales representatives. The Company utilizes various marketing
methods, including direct mailings, trade publications, telemarketing, print
advertising, in-person solicitation, participation in trade shows and the
Internet (www.evtc.com).

The Company primarily markets its various reclaimed refrigerants and reclaiming
services directly to HVAC/R wholesalers, mechanical contractors and large
corporate, institutional and governmental users of refrigerants. The Company
also markets refrigerants to wholesale distributors of automotive suppliers
throughout the United States utilizing a network of commissioned sales
representatives. The Company's distributors then resell to automobile repair
shops, service stations and retail automotive supply stores.

Autozone, Inc. accounted for 11% of the company's annual net sales during fiscal
year 2001 and 10% during fiscal year 2000. No single customer accounted for more
than 10% of the Company's revenues during the year ended September 30, 1999.

The Company typically seeks to fill customer orders within two days of receipt.
Accordingly, at September 30, 2001, the Company had no material backlog for any
product line. In order to fill orders within the foregoing time frame, the
Company seeks to maintain a significant inventory of refrigerants, raw materials
and finished goods and solicits customers to place preseason order commitments
for their in season refrigerant needs.

COMPETITION

The markets for the Company's products are highly competitive. The Company
competes with numerous well-established companies that market refrigerants, many
of which possess substantially greater financial, marketing, personnel and other
resources than the Company. Such companies may more effectively compete for
reduced allocations of supplies of refrigerants and the marketing of
refrigerants intended to replace refrigerants containing ozone-depleting CFCs.

The Company believes that it competes on the basis of product availability and
customer service in the marketing and sale of refrigerants. The Company believes
that its refrigerant recovery and reclamation operation is one of the largest in
its industry. The Company believes that its wholesale distributors market other
products that compete with the Company's products.

GOVERNMENT REGULATION

In the mid 1980's, increasing concern about damage to the earth's ozone layer
caused by ozone depleting substances has resulted in significant legislation
governing production and use of products containing CFCs. In 1987, the United
States became a signatory to the Montreal Protocol, as amended in 1992, which
required its signatories to reduce and ultimately eliminate production and
consumption of certain ozone depleting substances. U.S. production of
refrigerant

                                       5

<PAGE>

products containing CFCs ceased at the end of 1995. The Montreal Protocol has
been implemented in the United States through the Clean Air Act and the
regulations promulgated thereunder by the EPA. The production and use of
refrigerants containing CFCs are subject to extensive, stringent and frequently
changing federal, state and local laws and substantial regulation under these
laws by governmental agencies, including the EPA, the United States Occupational
Safety and Health Administration and the United States Department of
Transportation.

Among other things, these regulatory authorities impose requirements which
regulate the handling, packaging, labeling, transportation and disposal of
hazardous and non-hazardous materials and the health and safety of workers, and
require the Company and, in certain instances, its employees, to obtain and
maintain licenses in connection with its operations. This extensive regulatory
framework imposes significant compliance burdens and risks on the Company.

The Company and its customers are subject to the requirements of the Clean Air
Act, and the regulations promulgated thereunder by the EPA, which make it
unlawful for any person in the course of maintaining, servicing, repairing, and
disposing of air conditioning or refrigeration equipment, to knowingly vent or
otherwise release or dispose of ozone depleting substances, and non-ozone
depleting substitutes, used as refrigerants.

Pursuant to the Clean Air Act, reclaimed refrigerant must satisfy the same
purity standards as newly manufactured refrigerants in accordance with standards
established by the ARI prior to resale to a person other than the owner of the
equipment from which it was recovered. The ARI and the EPA administer
certification programs pursuant to which applicants are certified to reclaim
refrigerants in compliance with ARI standards. Under such programs, the ARI
issues a certification for each refrigerant and conducts periodic inspections
and quality testing of reclaimed refrigerants.

The Company has obtained ARI certification for most refrigerants at its
reclamation facility, and is certified by the EPA. The Company is required to
submit periodic reports to the ARI and pay annual fees based on the number of
pounds of reclaimed refrigerants.

During 1996 and 1997, the EPA published proposed regulations, which, if enacted,
would require participation in third-party certification programs similar to the
ARI program. Such proposed regulations would also require laboratories designed
to test refrigerant purity to undergo a certification process. As of December
1999, the regulations had not been mandated and were under review. The Company
anticipates these regulations to pass and is prepared, if required, to obtain
EPA certification.

The Company is subject to regulations adopted by the United States Department of
Transportation ("DOT") which classify most refrigerants handled by the Company
as hazardous materials or substances and impose requirements for handling,
packaging, labeling and transporting refrigerants. The Company believes that it
is substantially in compliance with these regulations.

Amendments to existing statutes and regulations or adoption of new statutes and
regulations which affect the marketing and sale of refrigerants could require
the Company to continually adapt its methods of operations and/or discontinue
the sale of certain products at costs that could be substantial. There can be no
assurance that the Company will be able, for financial reasons or otherwise, to
adapt its operations to comply with applicable laws or regulations or obtain and
maintain applicable licenses, permits and approvals in the future. Failure to do
so could have a material adverse effect on the Company. The Company's
refrigerant operations require the handling, storage and transportation of
refrigerants, which are classified as hazardous substances under applicable
laws. See "Environmental Matters."


                                       6

<PAGE>

                            BALLAST & LAMP RECYCLING

INDUSTRY BACKGROUND

FulCircle Recyclers, Inc. (d/b/a Full Circle) recycles and disposes fluorescent
lighting ballasts of the type commonly found in office, industrial and
institutional buildings. Prior to 1985, ballasts were manufactured using
hazardous compounds, which created a need for special handling and disposal
procedures when replacing ballasts or removing them at the end of their useful
lives.

Polychlorinated biphenyls (commonly known as PCBs) were widely used before 1979
as insulators in electrical equipment such as capacitors, switches and voltage
regulators. Virtually all fluorescent light ballasts manufactured before 1979
contain PCBs. PCBs have been shown to cause cancer as well as reproductive and
developmental defects in laboratory animals. PCBs do not readily decompose when
released into the environment. Instead, they accumulate in plants and animals,
working their way up the food chain. Between 1979 and 1985, certain ballasts
were manufactured with di (2-ethylhexy) phthalate (DEHP) in place of PCBs. DEHP
has since been identified as a probable human carcinogen and is listed as a
hazardous substance under the Superfund laws; however, it is not a hazardous
waste under the Resource Conservation and Recovery Act (RCRA) when discarded
inside a ballast. Its use in ballast manufacturing has been discontinued.

Demand for Full Circle's services is triggered when facility owners replace
fluorescent light fixtures with more energy-efficient fixtures. In recent years,
lighting manufacturers have made dramatic improvements in the energy efficiency
of fluorescent lighting fixtures. Using electronic ballasts and new types of
fluorescent lamps, the new fixtures are able to achieve comparable illumination
with approximately 25 to 50% less electrical energy than required by older
fixtures. Consequently, some light fixture replacements have been motivated by
utility sponsored "Demand Side Management" (DSM) programs, where facility owners
are given economic incentives to install replacements.

BALLAST RECYCLING

Full Circle recycles and disposes of the hazardous wastes contained in used
ballasts. Full Circle has developed a unique "de-manufacturing" process that
efficiently separates the ballast into recyclable products and hazardous waste.
Both PCBs and DEHP are interchangeably de-manufactured using the same plant and
processes. As part of its service, Full Circle subcontracts with transportation
companies to pick up ballasts from customers. At the point of receipt, ballasts
have already been packaged in sealed drums and are ready for de-manufacturing.
The ballasts are transported by truck to the Full Circle facility in New York.
At the plant, drums of ballasts are weighed, stored and de-manufactured on its
processing lines.

The disposal process separates the components, recycles all materials that can
be economically recovered and repackages volume reduced hazardous elements for
safe destruction. Over 75% of the weight of a ballast is copper, steel and
aluminum, which is recovered and sold to scrap metals dealers. Only the PCB
contaminated materials are sent off-site to an incinerator of PCB waste or to a
chemical waste landfill, depending on the customer's preference.

Full Circle has PCB disposal contracts with two major companies, which
collectively control four PCB incinerators. The Company also has a PCB disposal
contract with two major PCB landfill operators.

LAMP RECYCLING

Full Circle also manages the disposal of fluorescent lamps, which are regulated
under The Universal Waste Rule. Management does not expect any adverse effect
from these regulations. Currently the company utilizes a national network of
"strategic alliances" for the processing of this material.

MARKETING AND SALES

In addition to Full Circle's New York operation, it has regional sales offices
located across the country. Most of the sales managers have significant prior
experience in selling hazardous waste disposal services or selling lighting
products. Sales managers are responsible for sales, marketing and customer
service in their respective territories.

Full Circle has extensive educational and promotional materials, which are
distributed through trade journals, targeted mailing campaigns and conferences.
Full Circle's sales personnel market at over 30 conferences and trade shows each
year. Full Circle also advertises in many magazines targeted at the lighting,
DSM, electric utility, facility management, waste disposal and environmental
remediation industries.

                                       7

<PAGE>

COMPETITION

The market for Full Circle's services is highly competitive. Full Circle
competes with numerous well-established companies which market ballast recycling
services. Full Circle believes that it competes on the basis of price,
reliability and reputation and that it is one of the largest companies in its
industry.

GOVERNMENT REGULATION

                                      TSCA

The Toxic Substance Control Act, or (TSCA) specifically directs EPA to regulate
the marking, disposal, manufacturing, processing, and distribution in commerce,
and use of Polychlorinated Biphenyl (PCBs). Since 1978, EPA has promulgated
numerous rules addressing all aspects of the lifecycle of PCBs.

Recent changes in federal regulations known as, The PCB MEGA Rule makes the
disposal of ballasts more stringent than before. The MEGA Rule preamble states
that a generator should either test these ballasts for PCB concentration or
assume the ballasts contain PCBs at greater than 50 ppm. Ballasts which contain
potting material that is contaminated with over 50 ppm (which is the regulatory
threshold) must be disposed of at a facility permitted for the Commercial
Storage of PCB waste by the Federal EPA. Presently, there are only four
facilities in the United States that have this approval including Full Circle.
The company believes that this relatively new regulation offers a distinct
competitive advantage.

                                     CERCLA

The Comprehensive Environmental Compliance and Liability Act of 1980, or CERCLA
(also known as the Superfund law) also regulates PCB's. Under this law any
release or even threat of release of a hazardous substance constitutes a "CERCLA
release", and requires immediate cleanup action and notification by all
Responsible Parties, as defined. As a result, discarding over 16 ballasts in a
landfill, which is equal to an aggregate of over one pound of PCB's, technically
creates a Superfund Liability because there is a threat that the ballasts could
rupture in the landfill and leak into the soil.

                                       UWR

The Universal Waste Rule (UWR) was adopted in May 1995 (40 CFR Part 273). At
that time, tires, pesticides and certain mercury containing devices were covered
under this law. On January 6, 2000, the EPA included fluorescent lamps in the
UWR. This rule is designed to reduce the amount of hazardous waste disposed of
in municipal solid waste, landfills, and encourages recycling and proper
disposal of fluorescent lamps. It also reduces the regulatory burden on
businesses that generate these wastes.

The company believes this new regulation will significantly increase the number
of lamps that are recycled each year, and increase the total market for this
service.

                                       8

<PAGE>
                                   THE COMPANY

RISK FACTORS

Except for the historical information contained herein, the matters discussed in
this section are forward-looking statements that involve risks and
uncertainties. The forward-looking statements in this section are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Actual results may differ materially due to a variety of factors,
including without limitation, the market and the pricing for direct marketing
Internet services, operating costs, the presence of competitors with greater
resources, the Company's need for liquidity, and other risks detailed from time
to time in the Company's reports filed with the Securities and Exchange
Commission.

On May 17, 1999 the Company received notification from the Nasdaq Listing
Qualifications Panel (the "Panel") informing the Company of the Panels decision
to move trading of the Company's common stock from the National Market to the
Nasdaq Small Cap Market, subject to successfully completing the required
application and review process. The Panel determined that the Company had
evidenced compliance with the minimum bid price requirement of $1.00 per share;
however, the Panel was of the opinion that the Company failed to present a
definitive plan which would enable it to evidence compliance with the $5,000,000
minimum market value of public float requirement for continued listing on the
Nasdaq National Market within a reasonable period of time. The Panel noted that
the Company appears to comply with all requirements for continued listing on The
Nasdaq Small Cap Market. The Company successfully completed the application and
review process, demonstrating compliance with all requirements for inclusion on
the Nasdaq SmallCap Market and effective with the open of business on May 20,
1999, the Company's common stock began trading on to the Nasdaq SmallCap Market.
Due to the average trading price over the prior 30 consecutive trading days, the
Company was notified on June 18, 2001 by NASDAQ that the Company would be
provided 90 calendar days to comply with the Small Cap Market rule requiring
that the bid price of the Company's common stock to be at least $1.00 for a
minimum of 10 consecutive trading days. If the Company is unable to comply with
the Rule the Company's securities is subject to delisting. NASDAQ suspended
enforcing this rule from mid-September until January 2, 2002. The Company has
not received written notification that its' securities are subject to delisting.
At the time of any notification, the Company may appeal the NASDAQ staff's
decision to a NASDAQ Listing Qualifications Panel. If the Company were to fail
to meet the requirements for continued listing it could have a materially
adverse effect on the price of the Company's common stock.

The Company finances its working capital requirements with The CIT
Group/Business Credit (CIT) through a $12.3 million long-term revolving credit
facility (the "Credit Facility"). As of September 30, 2001, $8.3 million was
outstanding under the Credit Facility. The Credit Facility is due in December
2002.

The Company was notified of a technical default by CIT on November 21, 2001 as
the result of an overadvance on the Credit Facility. The Company is currently
operating under a Forbearance Agreement, as amended, with CIT dated January 8,
2002. As part of the Forbearance Agreement, CIT agrees to forbear from
exercising any of its rights and remedies arising from or as a result of, the
default until the Forbearance Termination Date, January 22, 2002. If the Company
is in compliance with the terms of the Forbearance Agreement by January 22, 2002
the existing default is deemed waived. The terms of the Forbearance Agreement
provide for, among others, the repayment in full of the overadvance by January
23, 2002. The amount of the overadvance is approximately $185,000 as of January
14, 2002. This obligation is expected to be repaid from a $400,000 Subordinated
Loan commitment. The Company has a commitment for a $400,000 Subordinated Loan
at an interest rate of 10%, payable monthly, that will mature on January 31,
2004. As a condition of the commitment, the Company agrees to issue 500,000
5-year warrants at an exercise price of $1.00, with underlying common stock to
be registered by EVTC within 12 months. The funding of the Subordinated Loan
will be $200,000 on January 22, 2002 and $200,000 on February 12, 2002. If the
Company is not in compliance by the Forbearance Termination Date, the maturity
of the debt may be accelerated. If the Company is unable to comply with the
Forbearance Agreement and return to profitable operations, it may not be able to
continue as a going concern.

The Company has approximately one million pounds of mixed refrigerant at its
facilities. This mixed refrigerant is expected to be separated by the Liberty
operation as part of Full Circle. Liberty is currently in an updating phase and
management expects it to be fully operational by March 31, 2002. If Liberty does
not become operational there is a potentially large cost to dispose of the mixed
refrigerant with third parties.

                                       9

<PAGE>
RESEARCH AND DEVELOPMENT

The Company's management places emphasis on obtaining the technology and
developing the products to achieve superiority in its industry. However,
research and development costs to date have not been material.

During the fiscal year ended September 30, 1996, the Company entered into a 50%
joint venture with an unaffiliated company. The venture's name is Liberty
Technology International, Inc. ("LTI"). LTI developed and constructed a
refrigeration separation plant that provides a cost effective and
environmentally sound alternative to total destruction of mixed refrigerants. On
April 1, 2000, the Company acquired the remaining 50% interest in LTI. As a
result of this transaction, LTI became a wholly owned subsidiary of EVTC, which
changed its method of accounting for LTI from the equity method to the
consolidation method. At September 30, 1999, the Company had advanced/invested
approximately $0.4 million in LTI, which is included in other assets in the
accompanying consolidated balance sheets. LTI's operations commenced in January
of 1997. LTI is one of the largest refrigerant separation facilities in the
country. LTI is being updated and not currently operating as discussed above in
the Risk Factors.

During 1999, the Company reported the earnings and losses related to the
aforementioned venture under the equity method of accounting. Investment income
or loss is included in other income of the consolidated financial statements. To
date, the income related to this joint venture has not been material to the
Company's financial statements. The Company recorded an $85,392 investment loss
for the months prior to the acquisition (October 1999 - March 2000). Since the
remaining 50% interest was acquired on April 1, 2000, Liberty is accounted for
using the consolidation method in the September 30, 2000 and 2001 financial
statements.

QUALITY ASSURANCE & ENVIRONMENTAL COMPLIANCE

The Company utilizes in-house quality and regulatory compliance control
procedures. The Company maintains its own in-house analytical testing to assure
that reclaimed refrigerants comply with ARI purity standards and employs
portable testing equipment when performing on-site services to verify certain
quality specifications. The Company is dedicated to quality control and
regulatory compliance and provides extensive quality control and regulatory
compliance training to all operations personnel. In addition, management is
significantly involved in regulatory compliance efforts.

PROPRIETARY PROTECTION

The Company principally relies on a combination of trade secret laws and
employee and third party non-disclosure agreements to protect its products and
technology. However, such methods may not afford complete protection and there
can be no assurance that others will not independently develop such technologies
or, despite the precautions taken by the Company, obtain access to the Company's
know-how, concepts, ideas and documentation. Since the Company believes that
proprietary information is important to its business, failure to protect its
trade secrets could have a material adverse effect on the Company.

TRADEMARKS

The Company has several registered and/or pending trademarks that it uses to
market its products.

INSURANCE

The Company carries insurance coverage that it considers sufficient to protect
the Company's assets and operations. The Company currently maintains general
commercial liability insurance for claims up to $1.0 million per occurrence and
$2,000,000 in the aggregate. There can be no assurance that such insurance will
be sufficient to cover potential claims or that an adequate level of coverage
will be available in the future at a reasonable cost. The Company is
self-insured for product liability in connection with the marketing and sale of
its refrigerants and liquidation sales of recycling and recovery equipment. No
material losses have occurred.

The Company attempts to operate in a professional and prudent manner and to
reduce its liability risks through specific risk management efforts, including
employee training. Nevertheless, a partially or completely uninsured claim
against the Company, if successful and of sufficient magnitude, would have a
material adverse effect on the Company.

The refrigerant industry involves potentially significant risks of statutory and
common-law liability for environmental damage and personal injury. The Company,
and in certain instances, its officers, directors and employees, may be subject
to claims arising from the Company's on-site or off-site services, including the
improper release, spillage,

                                       10

<PAGE>
misuse or mishandling of refrigerants classified as hazardous or non-hazardous
substances or materials. The Company may be strictly liable for damages, which
could be substantial, regardless of whether it exercised due care and complied
with all relevant laws and regulations. The Company does not maintain
environmental impairment insurance. There can be no assurance that the Company
will not face claims resulting in substantial liability for which the Company is
uninsured, that hazardous substances or materials are not or will not be present
at the Company's facilities, or that the Company will not incur liability for
environmental impairment or personal injury (See "Legal Proceedings").

ENVIRONMENTAL MATTERS

The Company's refrigerant operations require the handling, storage and
transportation of refrigerants, which are classified as hazardous substances
under applicable laws. The Company does not maintain environmental impairment
insurance. There can be no assurance that the Company will not incur
environmental liability arising out of the use of hazardous substances. The use
of hazardous substances is subject to extensive federal, state and local law and
substantial regulation under these laws by governmental agencies, including the
EPA, the Occupational Safety and Health Administration, various state agencies
and county and local authorities acting in conjunction with federal and state
authorities. Among other things, these regulatory bodies impose requirements to
control air, soil and water pollution, to protect against occupational exposure
to such chemicals, including health and safety risks, and to require
notification or reporting of the storage, use and release of certain hazardous
chemicals and substances.

The Resource Conservation and Recovery Act of 1976 ("RCRA") requires that
facilities that treat, store or dispose of hazardous wastes comply with certain
operating standards. Before transportation and disposal of hazardous wastes
off-site, generators of such waste must package and label their shipments
consistent with detailed regulations and prepare a manifest identifying the
material and stating its destination. The transporter must deliver the hazardous
waste in accordance with the manifest to a facility with an appropriate RCRA
permit. Under RCRA, impurities removed from refrigerants consisting of oils
mixed with water and other contaminants are not presumed to be hazardous waste.
The Company believes that it is in substantial compliance with these
regulations.

The Emergency Planning and Community Right-to-Know Act of 1986 requires the
annual reporting of Emergency and Hazardous Chemical Inventories (Tier II
reports) to the various states in which the Company operates and to file annual
Toxic Chemical Release Inventory Forms with the EPA. The Company believes that
it is in substantial compliance with these regulations.

The Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), establishes liability for clean-up costs and environmental damages
to current and former facility owners and operators, as well as persons who
transport or arrange for transportation of hazardous substances. Almost all
states, including New York, have similar statutes regulating and handling and
storage of hazardous substances, hazardous wastes and non-hazardous wastes. Many
such statutes impose requirements, which are more stringent than their federal
counterparts. The Company could be subject to substantial liability under these
statutes to private parties and government entities, in some instances without
any fault, for fines, remediation costs and environmental damage, as a result of
the mishandling, release, or existence of any hazardous substances at any of its
facilities.

The Occupational Safety and Health Act of 1970 mandates requirements for safe
work places for employees and special procedures and measures for the handling
of certain hazardous and toxic substances. State laws, in certain circumstances,
mandate additional measures for facilities handling specified materials.

The Company believes that it is in substantial compliance with all material
federal, state and local laws and regulations governing its operations and has
obtained all material licenses and permits required for the operation of its
business. Amendments to statutes and regulations and/or the Company's expanded
level of operations in the future could require the Company to continually
modify or alter methods of operations at costs which could be substantial and
could subject the Company to increased regulation. There can be no assurance
that the Company will be able, for financial or other reasons, to comply with
applicable laws and regulations. Failure by the Company to comply with
applicable laws and regulations could subject the Company to civil remedies,
including fines and injunctions, as well as potential criminal sanctions, which
could have a material adverse effect on the Company.

EMPLOYEES

At September 30, 2001, the Company employed approximately 100 persons, including
its executive officers. The Company believes its employee relations are good.

                                       11

<PAGE>

ACQUISITIONS

During the fiscal year ended September 30, 2001, EVTC did not make any
acquisitions.

On December 28, 2001, EVTC executed a letter of intent with a group from
Houston, Texas for a $1 million investment in the common stock of EVTC as well
as the acquisition of the assets of Innovative Waste Technologies, Inc. (IWT) by
EVTC. The letter of intent is subject to a number of conditions including
shareholder approval and the execution of definitive documents.

The terms of the letter of intent reflect that the Company agrees to issue
fifteen million shares (15,000,000) of its restricted common stock to IWT in
exchange for $1,000,000 and certain assets. The Company also agrees to grant an
option to IWT for fifteen million shares at the strike price of $1.00 per share.
If the transaction is not consummated by January 31, 2002, the agreement is null
and void. A change in control will occur if the transaction is consummated. No
assurances can be given that the IWT transaction will consumate.

IWT is not currently an operating entity. The IWT assets to be acquired consist
primarily of technology, land, and marketable securities. Management believes
the value of the assets expected to be acquired are approximately $10,000,000;
however, no formal appraisal or valuation has been performed on the whole of the
assets to be acquired. Any costs and expenses associated with the start-up of
IWT's operation, both in the near term and in the future, are expected to be
funded by the issuance of additional debt or equity. A timetable for the
start-up for IWT has not been established at this time. The technology, when
operational will allow the Company to be competitive in the treatment and
recycling of marine and industrial waste.

Effective March 24, 2000, EVTC, through its wholly owned subsidiary,
e-solutions, acquired afreegift.com, Inc. As a result of this transaction,
e-solutions directly marketed business to consumer services through its
getafreegift.com web site. The total consideration paid for getafreegift.com at
the time of acquisition was approximately $1.0 million of which $0.8 million
advanced to e-solutions prior to the closing of the transaction and $0.2 million
was assumed in liabilities. In December 2000, the Company's Board of Directors
adopted a plan to discontinue the operations of e solutions Marketing, Inc. The
Company completed the plan to liquidate the tangible assets of this segment. The
plan to discontinue this segment is discussed in detail in Note 8 - Discontinued
Operations in the Notes to Consolidated Financial Statement section and in the
Dispositions section below.

On April 1, 2000, the Company acquired the remaining 50% interest in Liberty
Technologies International, Inc. ("Liberty") from Concorde Science and
Technology, Inc. ("Concorde"), its previous joint venture partner. As a result
of this transaction, Liberty became a wholly owned subsidiary of EVTC, which
changed its method of accounting for Liberty from the equity method to the
consolidation method. The acquisition of Liberty enhances the Company's ability
to separate mixed refrigerant, which will facilitate better margin potential and
provide additional streams of revenue, which reside outside of the normal
refrigerant market. The total consideration paid by EVTC for the remaining fifty
percent interest in Liberty was approximately $1.6 million. Of the $1.6 million
paid, $0.6 million was paid by issuing EVTC common stock, $0.4 million in loan
cash advances to the joint venture (which occurred in prior periods), and
approximately $0.6 million in assumed liabilities. Furthermore, the purchase
agreement contained a provision whereby the Company would be obligated to issue
additional shares to Concorde in the event that EVTC's common stock was trading
at a price lower than $5.00 per share at March 31, 2001. This acquisition was
considered a below market guarantee, as shares were trading at $12.75 on the day
the transaction was consummated. The value of the transaction did not change
from the original value assigned at the transaction date, the fair value of
shares issued unconditionally at the date of acquisition.

Effective May 5, 2000, the Company acquired all the common stock of Refrigerant
Management Services, Inc. ("RMS") of Phoenix, Arizona. By virtue of this
acquisition, EVTC acquired the dominant refrigerant reclaimer and service
provider in the southwestern portion of the United States. Total consideration
for the acquisition of RMS at the date of acquisition was approximately $2.5
million, of which approximately $0.5 million was paid in EVTC's common stock,
$1.4 million was paid in cash, and $0.6 million of liabilities were assumed by
the Company. The former shareholders of RMS have rights to additional contingent
consideration if they achieve certain financial objectives over the three-year
period following the closing date of the acquisition. The calculation and
settlement of the contingent consideration related to the acquisition of
Refrigerant Management Services, Inc. has been completed and no additional
consideration is due. EVTC recorded approximately $1.3 million in intangibles as
a result of this transaction, which was accounted for as a purchase.

                                       12

<PAGE>

DISPOSITIONS

RECYCLING AND RECOVERY EQUIPMENT BUSINESS SEGMENT

During July 1998, the Company's Board of Directors adopted a plan to discontinue
its Recycling and Recovery Equipment business segment. The Company has initiated
a liquidation program to sell all assets of the segment. Management intended for
the disposal of the segment to be completed by June 30, 1999 (the Phase-Out
Period), however during fiscal 1999 those estimates were revised to June 30,
2000. The Company had liquidation revenues of $0.6 and $1.2 million and incurred
direct costs of $0.3 million and $0.4 million for fiscal year 2000 and 1999,
respectively.

During fiscal 2000, in conjunction with the end of the phase-out period, the
Company elected to write down the remaining assets of its Recycling and Recovery
Equipment segment by approximately $0.4 million. The Company wrote down the
remaining assets to reflect the salvage value of such assets to effectively
complete the plan to discontinue the Recycling and Recovery Equipment segment,
which was adopted in 1998.

The Company had liquidation revenues of $0.4 million and incurred direct cost of
$0.2 million during fiscal 2001. At September 30, 2001 no assets remained
related to these operations.

e SOLUTIONS MARKETING, INC. BUSINESS SEGMENT

During December 2000, the Company's Board of Directors adopted a plan to
discontinue the operations of e solutions Marketing, Inc., its segment that
directly marketed business to consumer services via the Internet. The Company
initiated a plan to liquidate the tangible assets of this segment and settle
outstanding liabilities. Management intended to complete the disposal of the
segment within ninety days from the adoption of the liquidation plan. For
financial statement purposes, the Company accounted for this segment as
discontinued operations in fiscal year 2000.

In fiscal year 2000, losses on discontinued operations were $0.8 million. At
September 30, 2000, the remaining assets of e Solutions Marketing, which were
comprised of goodwill, gift inventory, web site development costs and certain
pieces of machinery and equipment were written down from $1.3 million to $0.0 to
reflect the estimated net realizable value of such assets.

During May and June 2001, e Solutions obtained favorable settlements with
vendors included in the "Liabilities of Discontinued Operations" as of September
30, 2000. The pre-settlement liabilities totaling $350,036 were settled for cash
payments totaling $109,313, netting a gain of $240,723 pretax in fiscal year
2001.

                                       13

<PAGE>
ITEM 2.     DESCRIPTION OF PROPERTY

During fiscal 2001 the Company occupied nine locations in the United States,
which are leased from third parties, with the two exceptions noted below. The
following summarizes the location, square footage of the building or leased
space, and use of each facility. The Company believes that these facilities are
adequate for its existing and near-term future needs and that its facilities are
adequate for its current and proximate future needs. The Company terminated
operations from the Chicago, IL, Phoenix, AZ, and Holland, MI locations
effective as of October 1, 2001 and closed the facilities. The cost associated
with terminating these leases and related expenses were accrued as of September
30, 2001.

<Table>
<Caption>
                      LOCATION            SQUARE FOOTAGE                  USE
                      --------            --------------                  ---
<S>                                       <C>                 <C>
                   Lakewood, NJ               21,000          Refrigerant packaging and
                                                              Distribution center

                   Bronx, NY                  13,500          Ballast recycling

                   Fort Worth, TX             60,000          Reclamation and refrigerant
                                                              storage facility; Executive
                                                              offices
                                                              (Replaced Hurst, TX
                                                              Facility)
                   Hurst, TX                  26,000          Reclamation and refrigerant
                                                              storage facility; Executive
                                                              offices
                                                              (Replaced by Bolt Street
                                                              facility in November 2000)

                   Chicago, IL                 9,375          Recovery, storage and
                                                              Distribution center
                                                              (location closed effective
                                                              10/01/01)

                   Orlando, FL                 3,640          Recovery, storage and
                                                              Distribution center

                   Kapolei, HI                 5,000          Recovery, storage and
                                                              Distribution center

                   Phoenix, AZ                 5,842          Recovery, storage and
                                                              Distribution
                                                              center (location closed
                                                              effective 10/01/01)

                   Holland, MI                 4,800          Manufacturing, recovery,
                                                              storage and Distribution
                                                              center (location closed
                                                              effective 10/01/01)
</Table>

The Company leases the 21,000 square foot building in Lakewood, NJ from George
Cannan, Sr., the Company's founder, Chairman and principal stockholder. The
Company pays a gross rental of $10,000 per month pursuant to a 5-year lease
agreement with George Cannan through December 31, 2004. The Company believes
that the terms of this lease are at least as favorable as it could obtain from
an unaffiliated third party. See Item 13 - Certain Relationships and Related
Party Transactions.

Additionally, the Company acquired the 60,000 square foot warehouse facility and
office space in Fort Worth, Texas in July 2000. The warehouse replaced the Hurst
location as its reclamation and refrigerant storage facility and corporate
headquarters. The Hurst lease expired December 31, 2000. This acquisition was
financed through a note payable to Heritage National Bank. See Note (5) - Note
Payable for details of the loan.

ITEM 3.  LEGAL PROCEEDINGS

The only legal proceeding pending against the Company or involving the Company
is a tax levy by the Internal Revenue Service ("IRS"). During fiscal 2000, the
IRS imposed an excise tax levy of $0.4 million relating to refrigerant imported
by the Company during fiscal year 1994. The Company is still negotiating the
settlement of the tax levy.

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

No matters were submitted to a vote of the Company's security holders during the
fourth quarter of the fiscal year covered by this report.

                                       14

<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock is quoted on the Nasdaq SmallCap Market System under
the symbol "EVTC". The following table sets forth, for the period since October
1, 1998, the high and low prices for the Common Stock as reported by NASDAQ. The
NASDAQ quotations represent quotations between dealers without adjustments for
retail markups, markdowns or commissions and may not necessarily represent
actual transactions.

<Table>
<Caption>
                      COMMON STOCK              HIGH        LOW
              ------------------------------    ----        ---
<S>                                           <C>        <C>
              YEAR ENDED SEPTEMBER 30, 2001

              First Quarter                   $ 3.5938   $  .4375


              Second Quarter                    1.8750      .7188


              Third Quarter                     1.1000      .6100


              Fourth Quarter                     .8300      .1800


              YEAR ENDED SEPTEMBER 30, 2000

              First Quarter                   $ 6.7188   $ 1.0313


              Second Quarter                   13.8750     2.5000


              Third Quarter                    15.2500     9.1250


              Fourth Quarter                   14.8750     2.2813
</Table>

As of September 30, 2001, there were 48 record holders of the Company's Common
Stock. The Company believes that there are in excess of 1,000 beneficial owners
of the Company's Common Stock.

On May 20,1999, the Company's securities began trading on the Nasdaq SmallCap
Market.

The Company has not paid any cash dividends on its Common Stock and does not
currently intend to declare or pay cash dividends in the foreseeable future. The
Company intends to retain any earnings that may be generated to provide funds
for the operation and expansion of its business.

During fiscal 2000, the Company sold shares of unregistered stock, which is
described in detail in Note 12 - Equity in the Notes to the Consolidated
Financial Statements section.

On July 20, 1999 the Company's board of directors authorized the Company to sell
792,800 shares of restricted Section 144 common stock to several private
investors. The Company entered into an agreement to sell the 792,800 shares of
its common stock to the private investors on August 9, 1999. In December 1999,
the Company received the cash payment for the subscription stock issued. The
Company used these funds for working capital and other general corporate
purposes.

On October 1, 1999 the Company's board of directors voted to sell and issue up
to one million shares of restricted Section 144 common stock to several private
investors for the sole purpose of providing working capital and short term
financing that would be required if the Company was successful in acquiring e
solutions Marketing, Inc. See Note 4 - Acquisition for additional information
regarding e solutions. The selling price of such stock was set at approximately
85% of the prior 5 days average closing price on October 1, 1999 or $1.00 per
share. In conjunction with the execution of the formal agreement to purchase e
solutions, the Company issued an aggregate of 750,000 shares for $750,000 (or
$1.00 per share). The funding from the stock sale occurred during March 2000.

In March 2000, the Company entered into an agreement with several investors to
issue 200,000 shares of the Company's unregistered common stock at a price of
$4.50 per share. The proceeds from such stock issuance were received in March
and April 2000 and used to fund ongoing working capital requirements associated
with the acquisitions of afreegift.com, Inc. and RMS.



                                       15
<PAGE>

In fiscal 2001, the Company issued an additional 174,690 shares of common stock
to Concorde Science and Technology. The shares were contingent shares related to
the acquisition of Concorde's 50% interest in Liberty Technologies. Their
issuance was contingent on the stock price, so that if the stock was below $5.00
per share then additional shares were issued as additional consideration. This
was a below market guarantee, as shares were trading at $12.75 on the day the
transaction was consummated. The value of the transaction did not change from
the original value assigned at the transaction date, the fair value of shares
issued unconditionally at the date of acquisition.

In addition, in fiscal 2001 the Company issued 16,500 shares if stock based on
employee's exercising options that were granted under the Company's Employee
Stock Option Plans.


                                       16
<PAGE>
ITEM 6.   SELECTED FINANCIAL DATA

Selected financial data is set forth below as of and for each of the five fiscal
years ended September 30th. This data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the audited financial statements and related notes thereto
included elsewhere in this Report.

<Table>
<Caption>
                                                                        YEARS ENDED SEPTEMBER 30,
                                                  -----------------------------------------------------------------
                                                      2001          2000        1999          1998          1997
                                                  ----------    ----------    ----------   ----------    ----------
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                               <C>           <C>           <C>          <C>           <C>
         STATEMENT OF OPERATIONS DATA:

         Net Sales                                $   32,937    $   36,241    $   38,732   $   38,483    $   55,097
         Income (Loss) From
              Continuing Operations                   (4,566)          130           470       (5,188)        3,261

         Income (Loss) From
             Continuing Operations Per Share
                    Basic                               (.61)          .02           .09        (1.04)         0.65

                    Diluted                             (.61)          .02           .09        (1.04)         0.64

         Gain(Loss) From
              Discontinued Operations                    393        (2,395)           --       (6,298)       (2,376)

         Gain(Loss) From
              Discontinued Operations Per Share
                    Basic                               0.06          (.36)           --        (1.26)         (.47)

                    Diluted                             0.06          (.34)           --        (1.26)         (.47)
</Table>

<Table>
<Caption>
                                                      SEPTEMBER 30,
                                    -----------------------------------------------------
             BALANCE SHEET DATA:     2001        2000       1999       1998       1997
                                    --------    --------   --------   --------   --------
<S>                                 <C>         <C>        <C>        <C>        <C>
        Working Capital (Deficit)   $ (1,198)   $  2,553   $  5,656   $  4,104   $ 14,893
        Total Assets                  21,216      24,902     21,950     23,561     37,546
        Total Debt                    10,479      10,244      9,742     11,992     13,500
        Total Shareholders'
         Equity                        5,228       9,412      8,378      7,110     18,595
</Table>

During July 1998, the Board of Directors adopted a plan to discontinue its
Recycling and Recovery Equipment Business and in December 2000, they approved a
plan to discontinue its Internet Marketing business sector. See Note 8 of Notes
to the Consolidated Financial Statements for additional information regarding
discontinued operations. The Statements of Operations Data above have been
recast to exclude such discontinued operations.



                                       17
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The statements contained herein which are not historical facts are forward
looking statements that involve risks and uncertainties, including but not
limited to, changes in the markets for refrigerants (including unfavorable
market conditions adversely affecting the demand for, and the price of,
refrigerants), regulatory and economic factors, increased competition, the
nature of supplier or customer arrangements which become available to the
Company in the future, adverse weather conditions, technological obsolescence
and potential environmental liability. The Company's actual results may differ
materially from the results discussed in any forward-looking statement.

The Company's fiscal year-end is September 30.

Management's discussion and analysis of the consolidated results of operations
and financial condition should be read in conjunction with the Consolidated
Financials and the related Notes.

The Company, as a result of the Board of Directors' decision on November 21,
2000, to discontinue the operations of e solutions marketing, Inc. has two
reportable operating segments: refrigerant and ballast recycling. The
refrigerant segment engages in the marketing and sales of refrigerant and
refrigerant related services as well as performing refrigerant reclaiming
services. The ballast recycling segment engages in the recycling and disposal of
fluorescent light ballasts and the brokering of fluorescent lamps for their
ultimate disposal.

QUARTERLY FINANCIAL INFORMATION
(in thousands, except per share data - unaudited)

<Table>
<Caption>
                                             DEC. 31      MAR. 31       JUN. 30      SEPT. 30       YEAR
                                           ----------    ----------    ----------   ----------    ----------
<S>                                        <C>           <C>           <C>          <C>           <C>
2001
    Revenue                                $    6,258    $    8,858    $   11,255   $    6,566    $   32,937
   Gross Profit                                 1,598         2,541         3,030        1,015         8,184
   Net Income (loss) before discontinued ops     (826)         (119)           15       (3,636)       (4,566)
        Basic (Loss) Earnings per share          (.11)         (.02)          .00         (.48)         (.61)
        Diluted (Loss) Earnings per share        (.11)         (.02)          .00         (.48)         (.61)
   Net Income (loss) after discontinued ops      (826)         (119)          177       (3,404)       (4,172)
        Basic (Loss) Earnings per share          (.11)         (.02)          .02         (.44)         (.55)
        Diluted (Loss) Earnings per share        (.11)         (.02)          .02         (.44)         (.55)
   Common stock price per share
        High                                     3.59          1.88          1.10          .83          3.59
        Low                                       .44           .72          0.61          .18           .18

2000
   Revenue                                      4,774         8,909        12,266       10,292        36,241
   Gross Profit                                 1,133         1,802         3,521        3,083         9,539
   Net Income (loss) before discontinued ops     (459)          126            56          (98)          130
         Basic (Loss) Earnings per share         (.08)          .02           .08          .00           .02
         Diluted (Loss) Earnings per share       (.08)          .02           .08          .00           .02
   Net Income (loss) after discontinued ops      (459)          126           561       (2,492)       (2,264)
         Basic (Loss) Earnings per share         (.08)          .02           .08         (.36)         (.34)
         Diluted (Loss) Earnings per share       (.08)          .02           .08         (.34)         (.32)
   Common stock per share
         High                                    6.72         13.88         15.25        14.88         15.25
         Low                                     1.03          2.50          9.13         2.28          1.03
</Table>

GOING CONCERN OPINION

     Our independent certified public accountants' report on our consolidated
financial statements for the year ended September 30, 2001 contains an
explanatory paragraph regarding our ability to continue as a going concern.
Among the factors cited by the accountants that raised substantial doubt to our
ability to continue as a going concern are continued recurring losses from
operations, negative working capital at September 30, 2001 and the Credit
Facility default and Forbearance Agreement currently in place. The accountants
state that our ability to continue as a going concern is subject to the
attainment of profitable operations and seeking additional funding through
various financing arrangements. We have developed a plan to achieve
profitability and allay doubts about our ability to continue as a going concern.
This plan includes: (1) completion of our reorganization plan that began in
fiscal 2001, (2) consummation of the IWT acquisition, as further discussed
below, and (3) issuance of additional debt and equity. At this time we have a
commitment for $400,000 of additional debt financing as also discussed below.




                                       18
<PAGE>

     YEAR ENDED SEPTEMBER 30, 2001 COMPARED TO YEAR ENDED SEPTEMBER 30, 2000

RESULTS OF CONTINUING OPERATIONS

REVENUE

Our Revenue was $32.9 million for the year ended September 30, 2001, a decrease
of $3.3 million or 9.1% from $36.2 million generated in fiscal year 2000.

Revenues generated from the sale of refrigerant were $29.5 million, a decrease
of $3.0 million or 9.2% from $32.5 million generated during the prior year. The
decrease in sales occurred primarily as a result of weaker demand and pricing
for one of our core refrigerants R-134a. This decrease in sales was offset by
incremental revenue of approximately $2.6 million resulting from the inclusion
of the operating results of RMS (which was acquired during 2000) combined with
increased sales of other refrigerants, particularly R-22. Ballast revenue for
the year ended September 30, 2001 was $3.4 million, a decrease of $0.3 million
from 2000.

GROSS PROFIT

Gross profit generated from sales were $8.2 million, a decrease by $1.4 million
or 14.7% compared to $9.5 million generated during fiscal year ended 2000. Total
gross profit as a percentage of sales decreased to 24.8% for the year ended
September 30, 2001 compared to 26.3% generated during the prior year.

Of the $1.4 million decrease, gross profits from the sales of refrigerant and
refrigerant related services decreased by $1.1 million during fiscal year 2001
to $7.0 million. This $1.1 million decrease in gross profit, resulted from
approximately $2.0 million decline from sales of refrigerants through the
Company's traditional channels and automotive division, and gross profit and
offset by a $.9 million increase in gross profit resulting from incremental
gross profit generated from the acquisition of RMS. A substantial portion of the
revenue generated from the existing RMS operations was service revenue, which
typically generates higher gross profits than traditional sales of refrigerant.
The higher than normal demand and price for R-12 offset the lower than normal
prices for R-22 and R-134a. The Company's ability to maintain its current level
of R-12, R-134a and R-22 sales for the foreseeable future will be dependent, to
a large extent, upon the availability of adequate sources of supply. The Company
is not dependent on any one source of refrigerant for its supply of these
refrigerants and historically has purchased from a number of manufactures and
suppliers. The Company's refrigerant reclamation and separation will continue to
serve as important sources of R-12, as well as other CFC and non-CFC
refrigerants.

Gross profit resulting from the processing of lamp ballasts during fiscal 2001
decreased by approximately $.3 million compared to fiscal 2000. The Company's
ballast division continues to shift its product mix away from PCB ballasts
toward the processing of fluorescent lamps and non-PCB lamp ballasts, both of
which, despite having longer life cycles than PCB ballasts, generate lower gross
profits.

SELLING, GENERAL & ADMINISTRATIVE

Selling, general and administrative ("SG&A") expenses for the year ended
September 30, 2001 were $11.4 million, an increase of $3.3 million or 40.7% from
$8.1 million incurred during the year ended September 30, 2000. Of the $3.3
million increase, $2.1 million resulted from the inclusion of both the RMS and
Liberty operations for a full year, as these entities were acquired during the
fiscal year 2000. In addition, the Company incurred approximately $0.5 million
in incremental SG&A expenses related to the restructuring of the Company's
marketing, distribution, and corporate organization and closure of leased
facilities. The Company's corporate expenses accounted for $.7 million of the
increased SG&A expense increase.

 In 1999, the Company's SG&A expenses contained a recovery of a receivable which
was recorded as a reduction to SG&A expense of $0.8 million. During 2000, the
Company recovered $0.2 million from such a receivable.

INTEREST EXPENSE

Interest expense for the year ended September 30, 2001 was $1.1 million, an
increase of $0.3 million or 30% percent from the prior year. The increase in
interest expense occurred primarily as a result of the Company incurring
additional term debt and entering into capital lease agreements to fund certain
capital investments.


                                       19
<PAGE>
OTHER (INCOME) EXPENSE, NET

Other income and expenses, net was a $0.1 million income for fiscal 2001
primarily consisting of $0.1 million of accrued interest income on other
non-current assets.

Other income and expenses, net was a $0.5 million expense for fiscal 2000
primarily consisting of a $0.4 million charge levied by the IRS, which related
to refrigerant that the Company imported during 1994. The $0.4 million charge
was combined with $0.1 million in other miscellaneous non-operating expenses.

RESULTS OF DISCONTINUED OPERATIONS

During December of 2000, the Company's Board of Directors adopted a plan to
discontinue e solutions Marketing, Inc., its business segment which directly
marketed business to consumer services via the Internet. The Company initiated a
plan to liquidate the tangible assets of this segment and settle the liabilities
of this discontinued operation during fiscal 2001. During May and June 2001, e
Solutions obtained favorable settlements with vendors included in the
"Liabilities of Discontinued Operations" as of September 30, 2000. The
pre-settlement liabilities totaling $350,036 were settled for cash payments
totaling $109,313, netting a gain of $240,723 pretax in fiscal year 2001.

For financial reporting purposes for fiscal 2000, management's decision to
discontinue e-solutions after yearend was presented in the fiscal 2000 financial
statements. The Company recorded a loss from discontinued operations of $0.8
million and loss on the disposal of the discontinued segment of $1.2 million for
fiscal 2000.

During July of 1998, the Company's Board of Directors adopted a plan to
discontinue its recycling and recovery equipment segment for which the Company
initiated a liquidation program to sell all assets of the segment. In July of
2000, the Company recognized a charge of $0.4 million to loss from discontinued
operations to write down the segment's remaining assets to its salvage value.
The Company had liquidation revenues of $0.4 million and incurred direct cost of
$0.2 million during fiscal 2001. At September 30, 2001 no assets remained
related to these operations.

     YEAR ENDED SEPTEMBER 30, 2000 COMPARED TO YEAR ENDED SEPTEMBER 30, 1999

RESULTS OF CONTINUING OPERATIONS

REVENUE

Our Revenue was $36.2 million for the year ended September 30, 2000, a decrease
of $2.5 million or 6.5% from $38.7 million generated in fiscal year 1999.

Revenues generated from the sale of refrigerant were $32.5 million, a decrease
of $2.4 million or 6.9% from $34.9 million generated during the prior year. The
decrease in sales occurred primarily as a result in weaker demand and pricing
for two of our core refrigerants, R-22 and R-134a. This decrease in sales was
offset slightly by incremental revenue resulting from the inclusion of the
operating results of both RMS and Liberty (which were acquired during 2000)
combined with increased sales of other refrigerants. Ballast revenue for the
year ended September 30, 2000 was $3.7 million, a decrease of $0.1 from 1999.

GROSS PROFIT

Gross profit generated from sales were $9.5 million, an increase by $3.1 million
or 48.4% compared to $6.4 million generated during fiscal year ended 1999. Total
gross profit as a percentage of sales increased to 26.3% for the year ended
September 30, 2000 compared to 16.4% generated during the prior year.

Of the $3.1 million increase in gross profit, approximately $1.2 million
occurred as a result of the inclusion of RMS and Liberty in the Company's
operations. The acquisition of RMS provides an additional channel of
distribution of refrigerant, recovery, and reclamation services into the HVAC/R
industry. Because the RMS business model provides value added services and
complete reclaiming and recovery solutions to its customer base, it realized
significantly higher margins than our traditional core refrigerant sales, which
in turn mitigates, to a certain extent, some of the Company's exposure to
volatile refrigerant pricing conditions. The remaining increase of $1.9 million
in gross profit occurred as a result of higher than normal demand and prices for
R-12 offset slightly by lower than normal prices of R-22 and R-134a. The
Company's ability to maintain its current level of R-12, R-134a and R-22 sales
for the foreseeable future will be dependent, to a large extent, upon the
availability of adequate sources of supply. The Company is not dependent on any
one source of refrigerant for its supply of these refrigerants and historically
has purchased from a number of manufactures and suppliers. The Company's
refrigerant reclamation and separation will continue to serve as important
sources of R-12, as well as other CFC and non-CFC refrigerants.


                                       20
<PAGE>

SELLING, GENERAL & ADMINISTRATIVE

Selling, general and administrative ("SG&A") expenses for the year ended
September 30, 2000 were $8.1 million, an increase of $2.8 million or 52.8% from
$5.3 million incurred during the year ended September 30, 1999. Of the $2.8
million increase, $1.7 million resulted from the inclusion of both the RMS and
Liberty operations, which were acquired during the fiscal year 2000. In
addition, the Company incurred approximately $0.3 million in incremental SG&A
expenses related to the due diligence and various capital raising efforts which
were performed in conjunction with the Company's proposed acquisitions of both
Mercury Technology International, L.P. and Mercury Waste Solutions, Inc. In
1999, the Company's SG&A expenses contained a recovery of a receivable which was
recorded as a reduction to SG&A expense of $0.8 million. During 2000, the
Company recovered $0.2 million from such a receivable.

INTEREST EXPENSE

Interest expense for the year ended September 30, 2000 was $0.8 million, a
decrease of $0.2 million or 20% percent from the prior year. The decrease
occurred primarily as a result of a decrease in the average balance of the
Company's revolving credit agreement offset slightly by an increase in interest
rates over the prior year and the assumption of certain debt associated with the
acquisitions of RMS and Liberty.

OTHER EXPENSE, NET

Other expense, net increased $0.6 million in 2000, to $0.5 million compared to
income of $0.1 million generated during the prior year. The increase during 2000
occurred primarily as a result of a $0.4 million charge levied by the IRS, which
related to refrigerant that the Company imported during 1994. The $0.4 million
charge is combined with $0.2 million in other miscellaneous non-operating
expenses. The prior year amount contained $0.1 million in interest income which
was not generated during fiscal year 2000 primarily because the Company changed
its cash management policy to encourage a quicker repayment of its revolving
credit facility.

RESULTS OF DISCONTINUED OPERATIONS

During December of 2000, the Company's Board of Directors adopted a plan to
discontinue e solutions Marketing, Inc., its business segment which directly
marketed business to consumer services via the Internet. The Company initiated a
plan to liquidate the tangible assets of this segment as it sought a strategic
alternative for the business concept. Management intended for the disposal of
the segment to be completed within ninety days from the adoption of the
liquidation plan. The Company recorded a loss from discontinued operations of
$0.8 million and loss on the disposal of the discontinued segment of $1.2
million. For financial reporting purposes, management's decision to discontinue
e-solutions after yearend was presented in the fiscal 2000 financial statements.

During July of 1998, the Company's Board of Directors adopted a plan to
discontinue its recycling and recovery equipment segment for which the Company
initiated a liquidation program to sell all assets of the segment. In July of
2000, the Company recognized a charge of $0.4 million to loss from discontinued
operations to write down the segment's remaining assets to its salvage value.

LIQUIDITY AND CAPITAL RESOURCES

The Company is able to fund its normal working capital requirements mainly
through operations or, when necessary, through utilization of its existing
credit facilities, and equity and debt transactions. During December 1999, the
Company entered into a three-year loan agreement with CIT, which provides for
borrowings under a $12.3 million credit facility. Under the terms of the CIT
Credit Facility, the credit facility bears an interest rate of the Prime lending
rate plus six tenths of one percent and is payable when the CIT Credit
Facility's three year term expires. The CIT Credit Facility is subject to
certain financial covenants based on the existing calculated borrowing base and
is secured by certain accounts receivable, inventory and property and equipment.

The Company was notified of a technical default by CIT on November 21, 2001 as
the result of an overadvance on the Credit Facility. The Company is currently
operating under a Forbearance Agreement with CIT dated January 8, 2002. As part
of the Forbearance Agreement, CIT agrees to forbear from exercising any of its
rights and remedies arising from or as a result of, the default until the
Forbearance Termination Date, January 22, 2002. If the Company is in compliance
with the terms of the Forbearance by January 22, 2002 the existing default is
deemed waived. The terms of the Forbearance Agreement provide for, among others,
the repayment in full of the overadvance by January 23, 2002. The amount of the
overadvance is approximately $185,000 as of January 14, 2002. This obligation is
expected to be repaid from a $400,000 Subordinated Loan commitment, as described
in the following paragraph. If the Company is not in compliance by the
Forbearance Termination Date, the maturity of the debt may be accelerated.

                                       21
<PAGE>

The Company has a commitment for a $400,000 Subordinated Loan at an interest
rate of 10%, payable monthly, that will mature on January 31, 2004. As a
condition of the commitment, the Company agrees to issue 500,000 5-year warrants
at an exercise price of $1.00, with underlying common stock to be registered by
EVTC within 12 months. The funding of the Subordinated Loan is expected to be
$200,000 on January 22, 2002 and $200,000 on February 12, 2002.

EVTC's cash and cash equivalents decreased by $0.1 million to $0.2 million at
September 30, 2001. The decrease occurred primarily as a result of cash used in
investing activities of $1.1 million offset by cash provided by financing
activities of $0.2 million and cash provided by operating activities of $0.8
million.

Net cash provided by operating activities from continuing operations of $0.4
million was comprised of $3.3 million provided by fluctuations in the working
capital accounts. The working capital accounts, accounts receivable and
inventory, declined by $1.7 million and $1.1 million, respectively, while
accounts payable and prepaid expenses increased by $0.6 million and $0.1
million, respectively. The $3.3 million provided by the fluctuations in the
working capital accounts was offset by the $4.6 million operating loss adjusted
by non-cash items of $1.7 million.

Net cash provided by discontinued operations was approximately $0.4 million and
related to the discontinued operations of the Company's business segment which
directly marketed business to consumer services via the internet of $0.2 million
and $0.2 million which related to discontinued operations of the Company's
recovery and recycling equipment business.

Net cash used in investing activities for fiscal 2001 was approximately $1.1
million. Of the $1.1 million, approximately $0.3 million were capital
improvements to the Company's new facility in Fort Worth, Texas and $1.4 million
related to new onsite service vehicles and other capital projects. These
expenditures were offset by cash provided by the change in other assets of $0.5
million, which included $0.6 million in payments offset by $0.1 million of
expenses on a long-term note receivable.

Net cash provided by financing activities for fiscal 2001 was approximately $0.2
million that primarily consisted of $0.5 million related to capital leases and
equipment financing offset by payments of $0.3 million on the other debt of the
Company.

On December 28, 2001, EVTC executed a letter of intent with a group from
Houston, Texas for a $1 million investment in the common stock of EVTC as well
as the acquisition of the assets of Innovative Waste Technologies, Inc. (IWT) by
EVTC. The letter of intent is subject to a number of conditions including
shareholder approval and the execution of definitive documents. The terms of the
letter of intent reflect that the Company agrees to issue fifteen million shares
(15,000,000) of its restricted common stock to IWT in exchange for $1,000,000
and certain assets. The Company also agrees to grant an option to IWT for
fifteen million shares at the strike price of $1.00 per share. If the
transaction is not consummated by January 31, 2002, the agreement is null and
void. A change in control will occur if the transaction is consummated. No
assurances can be given that the IWT transaction will consumate.

IWT is not currently an operating entity. The IWT assets to be acquired consist
primarily of technology, land, and marketable securities. Management believes
the value of the assets expected to be acquired are approximately $10,000,000;
however, no formal appraisal or valuation has been performed on the whole of the
assets to be acquired. Any costs and expenses associated with the start-up of
IWT's operation, both in the near term and in the future, are expected to be
funded by the issuance of additional debt or equity. A timetable for the
start-up for IWT has not been established at this time. The technology, when
operational will allow the Company to be competitive in the treatment and
recycling of marine and industrial waste.

Assets to be acquired from Innovative Waste Technologies, Inc., are estimated at
$10 million (unaudited) by management, including but not limited to the
following:

                                   (UNAUDITED)

a.       Process patent for use of Electro-Coagulation process, and its
         specific patent on cell design.
b.       Assignment of "non exclusive" Chemical Fixation and Encapsulation
         process.
c.       Assignment of "non exclusive" license for Vapex System which is used
         to recover rising vapors from underground storage tanks.
d.       Marketable securities valued at $250,000.

During December 2001, the Company entered into a consulting agreement in
exchange for consideration of options on 1,000,000 shares at an exercise price
of $0.11 per share.

Effective March 24, 2000, EVTC, through its wholly owned subsidiary,
e-solutions, acquired afreegift.com, Inc. As a result of this transaction,
e-solutions directly marketed business to consumer services through its
getafreegift!com web site. The web site hosted over twelve consumer brand and
service categories, each of which were anchored by national name brand sponsors.
In this permission based marketing initiative, each brand name sponsor provided
free gifts in exchange for their personal data profile. The total consideration
paid for getafreegift.com at the time of acquisition was approximately $0.9
million of which $0.8 million was paid in cash advances during fiscal year 2000
prior to closing and approximately $0.1 million in liabilities were assumed. In
addition, the former shareholders of afreegift.com, Inc. had an opportunity to
receive up to 8 million shares



                                       22
<PAGE>

of EVTC's common stock if they satisfy certain financial performance objectives
by April 2001. During December 2000, the Company's Board of Directors, citing
the notable increase in the cost of capital necessary to fund the ongoing
operations of this business segment adopted a plan to formally discontinue the
operations of e solutions marketing, Inc.

On April 1, 2000, the Company acquired the remaining 50% interest in Liberty
from Concorde Science and Technology, Inc. ("Concorde"), its previous joint
venture partner. As a result of this transaction, Liberty became a wholly owned
subsidiary of EVTC. The acquisition of Liberty enhances the Company's ability
separate refrigerant, which will facilitate better margin potential and
additional streams of revenue, which reside outside of the normal refrigerant
market. The total consideration paid by EVTC for the remaining fifty percent
interest in Liberty was approximately $1.6 million of which $0.6 million was
paid by issuing EVTC common stock, $0.4 million in cash advances to the joint
venture which occurred in prior periods, and approximately $0.6 million in
liabilities were assumed. Furthermore, the purchase agreement contained a
provision whereby the Company would be obligated to issue additional shares to
Concorde in the event that EVTC's common stock was trading at a price lower than
$5.00 per share at March 31, 2001. This was a below market guarantee, as shares
were trading at $12.75 on the day the transaction was consummated. The value of
the transaction did not change from the original value assigned at the
transaction date, the fair value of shares issued unconditionally at the date of
acquisition. The Liberty operation is being updated at this time. Management
expects the operations to be fully operational by March 31, 2002.

Effective May 5, 2000, the Company acquired all the common stock of Refrigerant
Management Services, Inc. ("RMS") of Phoenix, Arizona. By virtue of this
acquisition, EVTC acquired the dominant refrigerant reclaimer and service
provider in the southwestern portion of the United States. Total consideration
for the acquisition of RMS at the date of acquisition was approximately $2.5
million of which approximately $0.5 million was paid in EVTC's common stock,
$1.4 million was paid in cash, and $0.6 million of liabilities were assumed by
the Company. The former shareholders of RMS have rights to additional contingent
consideration if they achieve certain financial objectives over the three-year
period following the closing date of the acquisition. The calculation and
settlement of the contingent consideration related to the acquisition of
Refrigerant Management Services, Inc. has been completed and no additional
consideration is due.

As of September 30, 2001 the Company closed four full-service warehouse
operations. This action reflected a realignment in strategy for its distribution
and reclaim network by integrating its on-site service business model, utilizing
a fleet of refrigerant recovery trucks and public warehouse facilities, for all
its Full Circle subsidiary refrigerant operations. This was consistent with the
business strategy adopted with the acquisition of its RMS subsidiary made in
fiscal 2000. The warehouse operation closures will contain costs and expenses
and integrate a more efficient business-operating model. Each warehouse closure
was designed to eliminate duplicate operating activities that were more
efficiently preformed at its Fort Worth facility. This move was also designed to
take advantage of the under-utilized capacity of its warehouse and refrigerant
reclaim operations in Fort Worth. These closures and realignments will enhance
the Company's customer service and competitiveness.

SEASONALITY

The Company's operating results vary from period to period as a result of
weather conditions and the availability and price of refrigerant products
(virgin and reclaimable). The Company's business has historically been seasonal
in nature with peak sales of refrigerants occurring in the second and third
fiscal quarters. Accordingly, the first and fourth fiscal quarters of the
Company's operations have been characterized by inventory build-up and seasonal
operating losses resulting in periodic operating cash flow short falls, which in
the past necessitated loans from the Company's banks.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board finalized FASB Statements
No. 141, Business Combinations (SFAS 141), No. 142, Goodwill and Other
Intangible Assets (SFAS 142), No. 143, Accounting for Asset Retirement
Obligations (SFAS 143) and No. 144, Accounting for the Impairment of Disposal of
Long-Lived Assets (SFAS 144).

SFAS 141 requires the use of the purchase method of accounting and prohibits the
use of the pooling-of-interest method of accounting for business combinations
initiated after June 30, 2001. SFAS 141 also requires that the Company recognize
acquired intangible assets apart from goodwill if the acquired intangible assets
meet certain criteria. SFAS 141 applies to all business combinations completed
on or after July 1, 2001. It also requires, upon adoption of SFAS 142, that the
Company reclassifies the carrying amounts of certain intangible assets and
goodwill based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with in indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied by
the Company in the fiscal year beginning December 15, 2001 to all goodwill and
other intangible assets recognized at that date, regardless of when those assets
were initially recognized. Early application of SFAS 142 is permitted for
entities with fiscal years beginning after March 15, 2001, provided that the
first interim financial statements have not been issued previously.




                                       23
<PAGE>

SFAS 142 requires the Company to complete a transitional goodwill impairment
test six months from the date of adoption. The Company is also required to
reassess the useful lives of other intangible assets within the first interim
quarter after adoption of SFAS 142.

The Company's previous business combinations were accounted for using the
purchase method. As of September 30, 2001, the net carrying amount of goodwill
is $2.3 million. Goodwill amortization expense during the year ended September
30, 2001 was $276 thousand. The Company intends to complete the transitional
goodwill impairment test within six months from the date of adoption. Currently,
the Company is assessing but has not yet determined how the adoption of SFAS 141
and SFAS 142 will impact its financial position and results of operations.

SFAS 143 requires that the fair value for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made, and that the carrying amount of the asset, including
capitalized asset retirement costs, be tested for impairment. SFAS 143 is
effective for fiscal years beginning after June 15, 2002. Management does not
believe this statement will have a material effect on the Company's financial
position or results of operations.

SFAS 144 prescribes financial accounting and reporting for the impairment of
long-lived assets and for long-lived assets to be disposed of, and specifies
when to test a long-lived asset for recoverability. SFAS 144 is effective for
fiscal years beginning after December 15, 2001. Management does not believe this
statement will have a material effect on the Company's financial position or
results of operations.

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal market risks (i.e., the risk of loss arising from the adverse
changes in market rates and prices) to which the Company is exposed are interest
rates on the Company's debt and short-term investment portfolios. The Company
centrally manages its debt and investment portfolios considering investment
opportunities and risks, tax consequences and overall financing strategies. The
Company's investment portfolios consist of cash equivalents and short-term
marketable securities; accordingly, the carrying amounts approximate market
value. The Company's investments are not material to the financial position or
performance of the Company.

Assuming year-end 2001 variable rate debt and investment levels, a one-point
change in interest rates would impact net interest expense by less than
$100,000.


                                       24
<PAGE>




ITEM 8.  FINANCIAL STATEMENTS.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<Table>
<Caption>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                            <C>
      Independent Auditors' Reports - BDO Seidman, LLP                                                         26

      Consolidated Balance Sheets - as of
       September 30, 2001 and 2000                                                                             27

      Consolidated Statements of Operations and Comprehensive Income (Loss) -
       for each of the years ended September 30, 2001, 2000 and 1999                                           28

      Consolidated Statements of Stockholders' Equity - for each of the
        years ended September 30, 2001, 2000 and 1999                                                          29

      Consolidated Statements of Cash Flows -
       for each of the years ended September 30, 2001, 2000 and 1999                                           30

      Notes to Consolidated Financial Statements                                                               31

      Schedule II - Valuation and Qualifying
         Accounts                                                                                              47
</Table>




                                       25
<PAGE>





                          INDEPENDENT AUDITORS' REPORT




The Board of Directors
EVTC, Inc.
Fort Worth, Texas



We have audited the accompanying consolidated balance sheets of EVTC, Inc. and
subsidiaries as of September 30, 2001 and 2000, and the related consolidated
statements of operations and comprehensive income (loss), stockholders' equity,
and cash flows for each of the three years in the period ended September 30,
2001. In connection with our audits of the consolidated financial statements, we
also have audited the financial statement schedule listed in the accompanying
index. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule 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 EVTC, Inc. and
subsidiaries, as of September 30, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 2001, in conformity with accounting principles generally accepted
in the United States of America.

Also in our opinion, the 2001 and 2000 data in the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As shown in the consolidated
financial statements, the Company incurred a net loss of $4,172,451 during the
year ended September 30, 2001, and as of that date, the Company's current
liabilities exceeded its current assets by $1,198,138. The Company is also
currently operating under a Forbearance Agreement as discussed in Note 1 to the
consolidated financial statements. These factors, among others, as discussed in
Note 1 to the financial statements, raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.








BDO Seidman, LLP
Dallas, Texas
January 11, 2002




                                       26
<PAGE>



                           EVTC, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           SEPTEMBER 30, 2001 AND 2000


<Table>
<Caption>
                                                                              2001            2000
                                                                          ------------    ------------
<S>                                                                       <C>             <C>
                                     ASSETS

                   Current assets:
                   Cash and cash equivalents                              $    192,756    $    262,644
                   Marketable securities
                                                                                12,309          33,992
                   Accounts receivable, net of allowance of $617,536 in
                   2001 and $452,007 in 2000                                 5,363,638       7,085,873
                   Inventories                                               6,715,834       7,813,674
                   Prepaid expenses and other current assets                   670,782         588,608
                   Deferred income taxes                                            --         300,000
                   Assets of discontinued operations                                --         394,523
                                                                          ------------    ------------

                   Total current assets                                     12,955,319      16,479,314

                   Property and equipment, net                               5,604,527       5,013,941
                   Intangibles, less accumulated amortization                2,321,744       2,597,573
                   Other assets                                                334,150         810,879
                                                                          ------------    ------------

                   Total other assets                                        8,260,421       8,422,393
                                                                          ------------    ------------

                                                                          $ 21,215,740    $ 24,901,707
                                                                          ============    ============

                                    LIABILITIES AND STOCKHOLDERS'
                                               EQUITY

                   Current liabilities:
                   Current portion of long term debt                      $  8,645,107    $  8,679,977
                   Accounts payable - trade                                  3,660,207       2,603,059
                   Accrued liabilities                                       1,848,143       2,290,055
                   Liabilities of discontinued operations                           --         353,331
                                                                          ------------    ------------

                   Total current liabilities                                14,153,457      13,926,422

                   Long term debt                                            1,834,322              --
                                                                          ------------    ------------
                                                                                             1,563,596
                   Total liabilities                                        15,987,779      15,490,018
                                                                          ------------    ------------

                   Commitments and Contingencies

                   Stockholders' equity:
                   Preferred stock, $.01 par value.  Authorized
                    1,000,000 shares; none issued or outstanding
                                                                          ------------    ------------

                   Common stock, $.01 par value.  Authorized
                    25,000,000 shares; 7,635,475 shares issued
                    and outstanding in 2001 and 7,444,283 shares                76,355          74,443
                    were issued and outstanding in 2000

                   Additional paid-in capital                               15,443,869      15,435,375
                   Accumulated other comprehensive income
                                                                                12,309          33,992
                   Retained deficit
                                                                           (10,304,572)     (6,132,121)

                   Total stockholders' equity                                5,227,961       9,411,689
                                                                          ------------    ------------

                                                                          $ 21,215,740    $ 24,901,707
                                                                          ============    ============
</Table>

          See accompanying notes to consolidated financial statements.



                                       27
<PAGE>
                           EVTC, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

                  YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<Table>
<Caption>
                                                                      2001            2000            1999
                                                                   ------------    ------------    ------------
<S>                                                                <C>             <C>             <C>
                Net sales                                          $ 32,937,231    $ 36,240,901    $ 38,731,683
                Cost of sales                                        24,753,631      26,701,669      32,361,928
                                                                   ------------    ------------    ------------

                Gross profit                                          8,183,600       9,539,232       6,369,755

                Selling, general and administrative
                Expenses, including recovery of credit loss
                of $223,000 in 2000 and $820,000 in 1999             11,449,689       8,055,831       5,263,936
                                                                   ------------    ------------    ------------

                Operating income (loss)                              (3,266,089)      1,483,401       1,105,819

                Interest expense                                      1,085,979         834,412       1,014,677

                Other (income)expense, net                              (86,329)        518,931         (78,466)
                                                                   ------------    ------------    ------------
                Income (loss) from continuing operations
                Before income taxes                                  (4,265,739)        130,058         169,608


                Income tax expense (benefit)                            300,000              --        (300,000)
                                                                   ------------    ------------    ------------

                Income (loss) from continuing operations             (4,565,739)        130,058         469,608

                Discontinued operations:

                Loss from discontinued operations, net of Income
                taxes                                                        --        (750,576)             --


                Estimated gain(loss) on disposal of discontinued
                operations, net of tax                                  393,288      (1,644,350)             --
                                                                   ------------    ------------    ------------
                                                                        393,288      (2,394,926)             --

                Net income (loss)                                  $ (4,172,451)   $ (2,264,868)   $    469,608

                Other comprehensive income (loss), net of tax;
                Unrealized gain (loss) on securities                    (21,683)        (20,468)         54,460
                                                                   ------------    ------------    ------------
                Comprehensive income (loss)                        $ (4,194,134)   $ (2,285,336)   $    524,068
                                                                   ============    ============    ============

                Income (loss) per share
                Basic
                Continuing operations                              $       (.61)   $        .02    $        .09
                Discontinued operations
                                                                            .06            (.11)             --
                Loss on disposal                                             --            (.25)             --
                                                                   ------------    ------------    ------------
                                                                           (.55)           (.34)            .09
                Diluted
                Continuing operations                                      (.61)            .02             .09
                Discontinued operations                                     .06            (.11)             --
                Loss on disposal
                                                                             --            (.23)             --
                                                                   ------------    ------------    ------------
                                                                           (.55)           (.32)            .09
</Table>

           See accompanying notes to consolidated financial statements



                                       28
<PAGE>




                           EVTC, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999


<Table>
<Caption>
                                                                                             ACCUMULATED
                                        COMMON STOCK           ADDITIONAL      RETAINED          OTHER
                                ---------------------------     PAID-IN        EARNINGS      COMPREHENSIVE
                                   SHARES        AMOUNT         CAPITAL       (DEFICIT)          INCOME          TOTAL
                                ------------   ------------   ------------    ------------    ------------    ------------
<S>                            <C>            <C>             <C>             <C>             <C>             <C>
Balance at September 30, 1998      4,989,719   $     49,897   $ 11,396,532    $ (4,336,861)   $         --    $  7,109,568
                                ------------   ------------   ------------    ------------    ------------    ------------


Warrants issued to lender                 --             --        150,000              --              --         150,000
Subscription stock                   792,801          7,928        586,672              --              --         594,600
Unrealized gain on securities             --             --             --              --          54,460          54,460
Net income                                --             --             --         469,608              --         469,608
                                ------------   ------------   ------------    ------------    ------------    ------------
Balance at September 30, 1999      5,782,520         57,825     12,133,204      (3,867,253)         54,460       8,378,236
                                ------------   ------------   ------------    ------------    ------------    ------------

Proceeds from shares issued
for cash                             950,000          9,500      1,640,500              --              --       1,650,000
Proceeds from options and
warrants exercised                   580,916          5,809        608,917              --              --         614,726
Stock issued in acquisitions         130,847          1,309      1,052,754              --              --       1,054,063
Unrealized loss on securities             --             --             --              --         (20,468)        (20,468)
Net loss                                  --             --             --      (2,264,868)             --      (2,264,868)
                                ------------   ------------   ------------    ------------    ------------    ------------
Balance at September 30, 2000      7,444,283         74,443     15,435,375      (6,132,121)         33,992       9,411,689
                                ============   ============   ============    ============    ============    ============

Proceeds from options and
warrants exercised                    16,500            165         10,241              --              --          10,406
Stock issued in acquisitions         174,692          1,747         (1,747)             --              --              --
Unrealized loss on securities             --             --             --              --         (21,683)        (21,683)
Net loss                                  --             --             --      (4,172,451)             --      (4,172,451)
                                ------------   ------------   ------------    ------------    ------------    ------------
Balance at September 30, 2001      7,635,475   $     76,355   $ 15,443,869    $(10,304,572)   $     12,309    $  5,227,961
                                ============   ============   ============    ============    ============    ============

</Table>


          See accompanying notes to consolidated financial statements.


                                       29
<PAGE>
                           EVTC, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<Table>
<Caption>
                                                                        2001               2000               1999
                                                                     -----------        -----------        -----------

<S>                                                                  <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Income (loss) from continuing
  Operations                                                         $(4,565,739)       $   130,058        $   469,608
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
CASH PROVIDED BY
 OPERATING ACTIVITIES:
Depreciation and amortization                                          1,319,743            849,083            667,818
Deferred income taxes                                                    300,000                 --           (300,000)
Provision for bad debts                                                   56,442             77,080           (692,443)
(Gain) loss on sale of assets                                             50,936                 --             (3,660)
Issuance of stock warrants                                                    --                 --            150,000

CHANGES IN ASSETS AND LIABILITIES, NET OF BUSINESSES ACQUIRED:
Accounts receivable                                                    1,665,793           (235,128)        (1,638,605)
Income taxes receivable                                                       --             58,108          1,365,551
Inventories                                                            1,097,840           (747,121)           430,948
Prepaid expenses and other
  Assets                                                                (127,339)           194,702           (239,137)
Accounts payable and accrued liabilities                                 615,236            352,878           (457,350)
                                                                     -----------        -----------        -----------

Net cash provided by
   Continuing operations                                                 412,912            679,660           (247,270)

Net cash provided by (used in) discontinued operations                   434,480           (672,101)           325,710
                                                                     -----------        -----------        -----------

NET CASH PROVIDED BY
 OPERATING ACTIVITIES                                                    847,392              7,559             78,440
                                                                     -----------        -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment                                           13,708                 --              5,000
Capital expenditures                                                  (1,653,979)        (1,707,466)          (374,117)
Business acquisition payments                                                 --         (1,424,214)                --
Preacquisition advances to affiliates                                         --           (850,000)                --
Due from officer                                                              --            371,016           (171,016)
Change in investment in joint ventures and other
assets                                                                   476,729           (114,238)           359,932
                                                                     -----------        -----------        -----------

NET CASH USED IN INVESTING ACTIVITIES                                 (1,163,542)        (3,724,902)        (180, 201)
                                                                     -----------        -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments on revolving credit facility                              (32,145)        (1,288,964)        (2,250,000)
Proceeds from other debt                                                 558,311            350,000                 --
Payments of other debt                                                  (290,310)           (99,809)                --
Proceeds from subscription stocks                                             --            594,600                 --
Proceeds from common stock and options exercised                          10,406          2,264,726                 --
                                                                     -----------        -----------        -----------

NET CASH PROVIDED BY (USED IN)
 FINANCING ACTIVITIES                                                    246,262          1,820,553         (2,250,000)
                                                                     -----------        -----------        -----------

Net decrease in cash and cash equivalents                                (69,888)        (1,896,790)        (2,351,761)
Cash and cash equivalents at beginning of year                           262,644          2,159,434          4,511,195
                                                                     -----------        -----------        -----------
Cash and cash equivalents at end of year                             $   192,756        $   262,644        $ 2,159,434
                                                                     ===========        ===========        ===========
</Table>

           See accompanying notes to consolidated financial statements

                                       30
<PAGE>

                           EVTC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(1) NATURE OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
    POLICIES

    (a) DESCRIPTION OF BUSINESS AND GOING CONCERN

        EVTC, Inc. (the "Company") was incorporated under the name
        "Environmental Technologies Corporation" under the laws of Delaware. In
        1997, the Company changed its corporate name to "EVTC, Inc." but
        continues to trade and do business as "Environmental Technologies
        Corporation." The Company is primarily engaged in: the marketing and
        sale of refrigerants including dichlorofluoromethane (R-12) and
        tetrafluoroethane (R-134a) and refrigerant reclaiming and recycling of
        fluorescent light fixture ballasts and lamps (Ballast Recycling
        segment). In March 2000, the Company, through its wholly owned
        subsidiary, e-solutions, acquired afreegift.com, Inc. e solutions
        marketed business to consumer services through its getafreegift.com web
        site. However, subsequent to year-end fiscal year 2000, the Board of
        Directors approved a plan to discontinue this segment of their business
        and this segment was liquidated in fiscal 2001. The liquidation of the
        assets and disposition of the liabilities resulted in a pretax gain of
        $.2 million. This is discussed in detail in Note 8. In 1998, the Company
        discontinued its segment in the manufacturing and distribution of
        refrigerant recycling and recovery equipment for automotive and
        commercial use (see note 8 - Discontinued Operations).

        The Company's sales are highly seasonal in nature, as industry-wide
        refrigerant sales are related to weather temperatures, primarily in the
        warmer months. The Company's historical refrigerant sales have primarily
        come from the sale of R-12, a refrigerant that is a chlorofluorocarbon
        (CFC). As of January 1, 1996, however, CFC-based refrigerants can no
        longer be manufactured in the United States under current regulations.
        CFC replacement products, such as R-134a, are now readily available to
        the Company. Notwithstanding the cessation of a predictable manufactured
        supply of R-12, management believes it will have access to an adequate
        supply of R-12 through fiscal 2002. However, beyond fiscal 2002 the
        Company's access to R-12 is much less certain. Management believes
        R-134a sales will continue to offset the decline of R-12 sales in future
        periods.

        The Company's ability to maintain its current level of R-12, R-134a and
        other refrigerant sales for the foreseeable future will be dependent, to
        a large extent, upon the availability of adequate sources of supply. The
        Company is not dependent on any one source of refrigerants and
        historically has purchased from a number of manufacturers and suppliers.
        The Company's refrigerant reclaiming and separation activities will
        continue to serve as an important source of R-12, as well as other CFC
        and non-CFC refrigerants.

        The accompanying financial statements have been prepared on a going
        concern basis, which contemplates the realization of assets and
        satisfaction of liabilities in the normal course of business. As
        discussed in Note 5, the Company has significant borrowings that
        require, among other things, compliance with certain borrowing base
        covenants. In addition, as shown in the consolidated financial
        statements, the Company incurred net losses of $4,172,451 and has
        negative working capital of $1,198,138. These conditions give rise to
        substantial doubt about the Company's ability to continue as a going
        concern.

        As a result of over advances on the CIT Credit Facility, the Company is
        not in compliance with the related debt covenants regarding the CIT
        Credit Facility. The Company and CIT entered into a Forbearance
        Agreement, as amended, January 8, 2002. The Forbearance Agreement
        requires, among other things, repayment in full of the over advance by
        January 23, 2002, the Termination Date. Management expects to be in
        compliance with the terms and conditions of the Forbearance Agreement.
        The Company is exploring strategic opportunities including, but not
        limited to the IWT transaction discussed in Notes 4 and 13 and certain
        immediate debt financing as discussed in Note 13.

        A breach of any of the terms and conditions of the Forbearance
        Agreement or subsequent breaches of the CIT Credit Facility could
        result in the acceleration of the indebtedness. The Company's ability
        to continue as a going concern is dependent on profitable operations,
        consummation of certain acquisitions and debt and equity transactions,
        maintaining compliance with the CIT Credit Facility and refinancing of
        that agreement prior to its maturity in December 2002.



                                       31
<PAGE>
    (b) BASIS OF PRESENTATION

        The consolidated financial statements include the financial statements
        of EVTC, Inc. and its wholly owned subsidiaries. All significant
        intercompany balances and transactions have been eliminated in
        consolidation.

        The Company accounted for its 50% ownership interest in a joint venture
        using the equity method until April 1, 2000 when the Company acquired
        the remaining 50% interest in Liberty Technologies International, Inc.
        ("Liberty") from its joint venture partner. As a result of this
        transaction, Liberty became a wholly owned subsidiary of EVTC, which
        changed its method of accounting for Liberty from the equity method to
        the consolidation method.

    (c) CREDIT CONCENTRATION

        Financial instruments, which potentially subject the Company to
        concentrations of credit risk, consist of cash, cash equivalents and
        trade receivables. The Company considers such risk in placing its cash
        and cash equivalents in financial institutions and other instruments.
        Concentration of credit risk with respect to trade receivables is
        limited because of the large number of customers that make up the
        Company's customer base and their dispersion in various industries and
        across different geographies. The Company performs ongoing credit
        evaluations of its customers' financial condition. In fiscal year 2001,
        the Company had one customer that accounted for 11% of the total net
        sales and in fiscal year 2000 the Company had one customer that
        accounted for 10% of the total net sales. No single customer accounted
        for more than 10% of total net sales in fiscal 1999.

    (d) USE OF ESTIMATES

        In conformity with generally accepted accounting principles, management
        of the Company has made a number of estimates and assumptions relating
        to the reported amounts of assets and liabilities and the disclosure of
        contingent assets and liabilities and the reported amounts of revenues
        and expenses to prepare the Company's consolidated financial statements.
        Actual results could differ from these estimates.

    (e) REVENUE RECOGNITION

        Sales are generally recorded by the Company when products are shipped to
        customers or services performed. Revenue from sales of recyclable scrap
        materials is recognized when shipped. Products shipped on consignment to
        customers are not included in sales.

        Ballast recycling revenues are recognized by the Company upon the
        receipt and acceptance of waste material at its recycling facility in
        the Bronx, New York. Waste material disposal costs are accrued as the
        related revenues are recognized.

        During the fourth quarter of fiscal 1999, the Company recorded a
        recovery of $820,000 to the allowance for bad debts and accounts
        receivable related to a certain refrigerant product account receivable
        that was fully reserved for in 1998. Management revised its estimate of
        the collectibility based on subsequent cash received and estimated value
        of the underlying collateral. The recovery included cash payments,
        common stock shares assigned to the Company and security interests in
        real property. During fiscal year 2000, the Company recorded a $223,000
        reduction in Selling, General and Administrative expenses based on
        management's estimate of future recovery related to the receivable.

    (f) CASH EQUIVALENTS

        The Company considers all highly liquid investments purchased with
        original maturities of three months or less to be cash equivalents. Cash
        equivalents were $205,065 and $167,527 on September 30, 2001 and 2000,
        respectively, and consisted of short-term money market accounts.

    (g) INVENTORIES

        Inventories are stated at the lower of cost or market. Cost is
        determined using the average cost method.

    (h) PROPERTY AND EQUIPMENT

        Property and equipment are stated at cost. Depreciation is computed
        using the straight-line and declining balance methods over the estimated
        useful lives of the assets. Costs of maintenance and repairs are charged
        to expense when incurred.


                                       32
<PAGE>

    (i) INTANGIBLES

        Intangibles consist primarily of goodwill, which represents the excess
        of purchase price over fair value of net assets acquired, and is
        amortized on a straight-line basis over the expected periods to be
        benefited, generally 15 years. Accumulated goodwill amortization was
        $600,283 and $324,454 at September 30, 2001 and 2000, respectively.

        The Company assesses the recoverability of this intangible asset by
        determining whether the amortization of the goodwill balance over its
        remaining life can be recovered through undiscounted future operating
        cash flows of the acquired operation. The amount of goodwill impairment,
        if any, is measured based on projected discounted future operating cash
        flows using a discount rate reflecting the Company's average cost of
        funds. The assessment of the recoverability of goodwill will be impacted
        if estimated future operating cash flows are not achieved. During fiscal
        year 2001, the assessment of the recoverability of goodwill based on
        achieving estimated future operating cash flows did not reflect
        impairment. During fiscal year 2000, the goodwill associated with the
        discontinued operations of e-solutions Marketing, Inc. was written down
        to reflect the net realizable value. See Note 8 - Discontinued
        Operations for additional information.

    (j) INCOME TAXES

        Income taxes are accounted for using the asset and liability method.
        Deferred tax assets and liabilities are recognized for the future tax
        consequences attributable to differences between the carrying amounts of
        existing assets and liabilities and their respective tax bases and
        operating loss and tax credit carryforwards. Deferred tax assets and
        liabilities are measured using enacted tax rates expected to apply to
        taxable income in the years in which those temporary differences are
        expected to be recovered or settled. The effect on deferred tax assets
        and liabilities of a change in tax rates is recognized in income in the
        period that includes the enactment date. At September 30, 2001, the
        Company has net operating loss carryforwards for federal income tax
        purposes of $16,131,091 and did not record a deferred tax asset.

    (k) INCOME PER SHARE

        Basic earnings (loss) per share is computed by dividing income (loss)
        available to common stockholders by the weighted average number of
        common shares outstanding for the reporting period. Diluted earnings per
        share reflect the potential dilution that could occur if securities or
        other contracts to issue common stock were exercised or converted into
        common stock.

        The computations of basic and diluted earnings (loss) per share from
        continuing and discontinued operations for each year are based on the
        following numerators and denominators.

        The numerator for continuing operations is income (loss) from continuing
        operations. The numerator for discontinued operations is the aggregate
        of loss from discontinued operations, net of income taxes, and loss on
        disposal of discontinued operations.

        The denominator for continuing and discontinued operations is computed
        as follows:

<Table>
<Caption>
                                                            2001        2000        1999
                                                          ---------   ---------   ---------
<S>                                                       <C>         <C>         <C>
           Denominator for basic earnings per share-
                Weighted average shares                   7,521,446   6,673,703   4,989,719

           Effect of dilutive securities:
                Employee stock options                           --     396,725          --
                Warrants                                         --      42,780      89,150
                Subscription Stock                               --          --      69,788
                                                          ---------   ---------   ---------
           Dilutive potential common shares                      --     439,505     158,938

           Denominator for diluted earnings per share -
                Weighted-average shares and assumed
                Conversions                               7,521,446   7,113,208   5,148,657
                                                          =========   =========   =========
</Table>

        The following stock options and warrants are not included in the diluted
        earnings per share calculation since in each case the exercise price is
        greater than the average market price. No consideration has been given
        in the above calculation to stock options and warrants outstanding in
        2001, totaling approximately 302,000 shares, as their impact is
        anti-dilutive.

<Table>
<Caption>
                                                                   2001      2000      1999
                                                                  -------   -------   -------
<S>                                                              <C>        <C>       <C>
                                         Employee stock options        --   165,000    98,000
                                         Warrants                      --        --   300,000
</Table>

                                       33
<PAGE>

    (l) FAIR VALUE OF FINANCIAL INSTRUMENTS

        Cash equivalents, accounts receivable and accounts payable are reflected
        in the consolidated financial statements at their respective carrying
        values, which approximate fair values due to the short-term nature of
        these instruments. The carrying value of the Company's bank borrowings
        approximates fair value because such borrowings have variable rates of
        interest or rates that approximate current market rates.

    (m) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

        The Company reviews for impairment long-lived assets and certain
        identifiable intangibles whenever events or changes in circumstances
        indicate that the carrying amount of an asset may not be recoverable.
        Recoverability of assets to be held and used is measured by a comparison
        of the carrying amount of the assets to the future net cash flows
        expected to be generated by the asset. If such assets are considered to
        be impaired, the impairment to be recognized is measured by the amount
        by which the carrying amount of the assets exceeds the fair value of the
        assets. Assets to be disposed of are reported at the lower of the
        carrying amount or fair value less the cost to sell.

    (n) STOCK-BASED COMPENSATION

        The Company accounts for stock based compensation in accordance with
        SFAS 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 stock-based employee compensation
        using the intrinsic value method prescribed in Accounting Principles
        Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
        related interpretations. Accordingly, compensation cost for stock
        options is measured as the excess, if any, of the quoted market price at
        the date of the grant over the amount an employee must pay to acquire
        the stock. Because the Company grants options to employees at a price
        equal to or greater than 10% of the market price of the stock at the
        date, no compensation expense is recorded. The Company, as required, has
        provided pro forma disclosures of compensation expense as determined
        under the provisions of SFAS No. 123.

    (o) CONTINGENCIES

        Liabilities for loss contingencies, including environmental remediation
        costs, arising from claims, assessments, litigation, fines and penalties
        and other sources are recorded when it is probable that a liability has
        been incurred and the amount of the assessment and/or remediation can be
        reasonably estimated.

     (p) ACCOUNTING PRONOUNCEMENTS

        In June 2001, the Financial Accounting Standards Board finalized FASB
        Statements No. 141, Business Combinations (SFAS 141), No. 142, Goodwill
        and Other Intangible Assets (SFAS 142), No. 143, Accounting for Asset
        Retirement Obligations (SFAS 143) and No. 144, Accounting for the
        Impairment of Disposal of Long-Lived Assets (SFAS 144).

        SFAS 141 requires the use of the purchase method of accounting and
        prohibits the use of the pooling-of-interest method of accounting for
        business combinations initiated after June 30, 2001. SFAS 141 also
        requires that the Company recognize acquired intangible assets apart
        from goodwill if the acquired intangible assets meet certain criteria.
        SFAS 141 applies to all business combinations completed on or after July
        1, 2001. It also requires, upon adoption of SFAS 142, that the Company
        reclassifies the carrying amounts of certain intangible assets and
        goodwill based on the criteria in SFAS 141.

        SFAS 142 requires, among other things, that companies no longer amortize
        goodwill, but instead test goodwill for impairment at least annually. In
        addition, SFAS 142 requires that the Company identify reporting units
        for the purposes of assessing potential future impairments of goodwill,
        reassess the useful lives of other existing recognized intangible
        assets, and cease amortization of intangible assets with in indefinite
        useful life. An intangible asset with an indefinite useful life should
        be tested for impairment in accordance with the guidance in SFAS 142.
        SFAS 142 is required to be applied by the Company in the fiscal year
        beginning December 15, 2001 to all goodwill and other intangible assets
        recognized at that date, regardless of when those assets were initially
        recognized. Early application of SFAS 142 is permitted for entities with
        fiscal years beginning after March 15, 2001, provided that the first
        interim financial statements have not been issued previously. SFAS 142
        requires the Company to complete a transitional goodwill impairment test
        six months from the date of adoption. The Company is also required to
        reassess the useful lives of other intangible assets within the first
        interim quarter after adoption of SFAS 142.



                                       34
<PAGE>

        The Company's previous business combinations were accounted for using
        the purchase method. As of September 30, 2001, the net carrying amount
        of goodwill is $2.3 million. Goodwill amortization expense during the
        year ended September 30, 2001 was $0.3 million. The Company intends to
        complete the transitional goodwill impairment test within six months
        from the date of adoption. Currently, the Company is assessing but has
        not yet determined how the adoption of SFAS 141 and SFAS 142 will impact
        its financial position and results of operations.

        SFAS 143 requires that the fair value for an asset retirement obligation
        be recognized in the period in which it is incurred if a reasonable
        estimate of fair value can be made, and that the carrying amount of the
        asset, including capitalized asset retirement costs, be tested for
        impairment. SFAS 143 is effective for fiscal years beginning after June
        15, 2002. Management does not believe this statement will have a
        material effect on the Company's financial position or results of
        operations.

        SFAS 144 prescribes financial accounting and reporting for the
        impairment of long-lived assets and for long-lived assets to be disposed
        of, and specifies when to test a long-lived asset for recoverability.
        SFAS 144 is effective for fiscal years beginning after December 15,
        2001. Management does not believe this statement will have a material
        effect on the Company's financial position or results of operations.

(2) INVENTORIES

        Inventories at September 30, 2001 and 2000 consist of the following:

<Table>
<Caption>
                                              2001         2000
                                        ----------   ----------
<S>                                     <C>          <C>
                 Raw materials          $3,519,477   $3,264,126
                 Finished goods          3,196,357    4,549,548
                                        ----------   ----------
                    Total inventories   $6,715,834   $7,813,674
                                        ==========   ==========
</Table>

        Inventories are stated at the lower of cost or market. Cost is
determined using the average cost method.

(3) PROPERTY AND EQUIPMENT, NET

        Property and equipment at September 30, 2001 and 2000 is summarized as
follows:

<Table>
<Caption>
                                                                 DEPRECIABLE
                                                                    LIVES          2001              2000
                                                              ---------------   ------------    ------------
<S>                                                           <C>          <C>             <C>
                                      Machinery and equipment      2-10 years   $  5,497,702    $  5,166,400
                                      Buildings                      39 years      1,853,417       1,602,617
                                      Office equipment              2-5 years      1,408,111       1,265,884
                                      Vehicles                        5 years      2,120,234       1,257,591
                                      Leasehold improvements        2-5 years        159,276         209,977
                                                                                ------------    ------------
                                                                                  11,038,740       9,502,469
                                      Accumulated depreciation                    (5,434,213)     (4,488,528)
                                                                                ------------    ------------
                                                                                $  5,604,527    $  5,013,941
                                                                                ============    ============
</Table>

        Leasehold improvements are amortized over the shorter of the estimated
        useful life of the assets or the lease term.

(4) ACQUISITIONS

        During the fiscal year ended September 30, 2001, EVTC did not make any
        acquisitions.

        On December 28, 2001, EVTC executed a letter of intent with a group
        from Houston, Texas for a $1 million investment in the common stock of
        EVTC as well as the acquisition of the assets of Innovative Waste
        Technologies, Inc. (IWT). The letter of intent is subject to a number
        of conditions including shareholder approval and the execution of
        definitive documents. The terms of the letter of intent reflect that
        the Company agrees to issue fifteen million shares (15,000,000) of its
        restricted common stock to IWT in exchange for $1,000,000 and certain
        assets. The Company also agrees to grant an option to IWT for fifteen
        million shares at the strike price of $1.00 per share. If the
        transaction is not consummated by January 31, 2002, the agreement is
        null and void. A change in control will occur if the transaction is
        consummated. No assurances can be given that the IWT transaction will
        consummate.

        IWT is not currently an operating entity. The IWT assets to be acquired
        consist primarily of technology, land, and marketable securities.
        Management believes the value of the assets expected to be acquired are
        approximately $10,000,000; however, no formal appraisal or valuation
        has been performed on the whole of the assets to be acquired.


                                       35
<PAGE>

        Any costs and expenses associated with the start-up of IWT's operation,
        both in the near term and in the future, are expected to be funded by
        the issuance of additional debt or equity. A timetable for the start-up
        for IWT has not been established at this time. The technology, when
        operational will allow the Company to be competitive in the treatment
        and recycling of marine and industrial waste.

        During the year ended September 30, 2000, EVTC made a number of
        acquisitions that were accounted for using the purchase method of
        accounting. The consolidated financial statements include the operating
        results for each business from the date of acquisition. For each
        acquisition, the purchase price was allocated to the identifiable
        tangible and intangible assets. Excess amounts were allocated to
        goodwill and amortized on a straight-line basis over a period not to
        exceed 15 years.

        Effective March 24, 2000, EVTC, through its wholly owned subsidiary,
        e-solutions, acquired afreegift.com, Inc. As a result of this
        transaction, e-solutions directly marketed business-to-consumer services
        through its getafreegift.com web site. The total consideration paid for
        getafreegift.com at the time of acquisition was approximately $0.9
        million of which $0.8 million advanced to e-solutions prior to the
        closing of the transaction and $0.1 million was assumed in liabilities.
        In December 2000, the Company's Board of Directors adopted a plan to
        discontinue the operations of e solutions Marketing, Inc. The Company
        initialed a plan to liquidate the tangible assets of this segment as it
        seeks a strategic alternative for the business concept. Management
        intends to complete the disposal of the segment within ninety days from
        the adoption of the liquidation plan. The plan to discontinue this
        segment is discussed in detail in Note 8 - Discontinued Operations.

        On April 1, 2000, the Company acquired the remaining 50% interest in
        Liberty Technologies International, Inc. ("Liberty") from Concorde
        Science and Technology, Inc. ("Concorde"), its previous joint venture
        partner. For the six months ended March 31, 2000, the Company recorded
        an $0.09 million investment loss in Liberty. As a result of this
        transaction, Liberty became a wholly owned subsidiary of EVTC, which
        changed its method of accounting for Liberty from the equity method to
        the consolidation method. The acquisition of Liberty enhances the
        Company's ability to separate mixed refrigerant, which will facilitate
        better margin potential and provide additional streams of revenue, which
        reside outside of the normal refrigerant market. The total consideration
        paid by EVTC for the remaining fifty percent interest in Liberty was
        approximately $1.6 million. Of the $1.6 million paid, $0.6 million was
        paid by issuing 60,000 shares of EVTC common stock, $0.4 million in loan
        cash advances to the joint venture (which occurred in prior periods),
        and approximately $0.6 million in assumed liabilities. Furthermore, the
        purchase agreement contained a provision whereby the Company would be
        obligated to issue additional shares to Concorde in the event that
        EVTC's common stock was trading at a price lower than $5.00 per share at
        March 31, 2001. This was a below market guarantee, as shares were
        trading at $12.75 on the day the transaction was consummated. The value
        of the transaction did not change from the original value assigned at
        the transaction date, the fair value of shares issued unconditionally at
        the date of acquisition.

        Effective May 5, 2000, the Company acquired all the common stock of
        Refrigerant Management Services, Inc. ("RMS") of Phoenix, Arizona. By
        virtue of this acquisition, EVTC acquired the dominant refrigerant
        reclaimer and service provider in the southwestern portion of the United
        States. Total consideration for the acquisition of RMS at the date of
        acquisition was approximately $2.5 million, of which approximately $0.5
        million was paid by issuing 64,285 shares of EVTC's common stock, $1.4
        million was paid in cash, and $0.6 million of liabilities were assumed
        by the Company. The former shareholders of RMS have rights to additional
        contingent consideration if they achieve certain financial objectives
        over the three-year period following the closing date of the
        acquisition. The calculation and settlement of the contingent
        consideration related to the acquisition of Refrigerant Management
        Services, Inc. has been completed and no additional consideration is
        due. EVTC recorded approximately $1.3 million in intangibles as a result
        of this transaction.

        Pro forma results of operations are presented on an aggregate basis
        because, although pro forma effects are material to the financial
        statements on an aggregate basis, they do not materially impact the
        financial statements on an individual basis. Only the Liberty and RMS
        financial information was included in the pro forma schedule below.
        Since e-solutions Marketing, Inc. was discontinued, the related
        financial information was excluded from the schedule below. Pro forma
        revenue, net loss and loss per share information are presented for the
        following 12 months ended September 30, assuming these acquisitions
        occurred on October 1, 2000.

<Table>
<Caption>
                                      2000            1999
                                  ------------    ------------
<S>                               <C>             <C>
                 Revenue          $ 37,691,829    $ 41,126,336
                 Net Loss             (503,564)       (301,121)
                 Loss Per Share   $      (0.08)   $      (0.06)
</Table>



                                       36
<PAGE>

        The pro forma financial information does not purport to: (1) indicate
        what the combined results of operations would have been had the
        acquisitions occurred at the beginning of the periods presented, or (2)
        the results of operations that may be obtained in the future.
        Additionally, the pro forma financial information does not reflect any
        anticipated cost savings resulting from the integration of the combined
        companies' operations.

 (5)     LONG TERM DEBT

        The Company's revolving line of credit and other debt obligations
        consisted of the following as of:

<Table>
<Caption>
                                                        September 30, 2001   September 30, 2000
                                                        ------------------   ------------------
                <S>                                     <C>                  <C>
                Revolving Credit Agreement - CIT        $        8,294,938   $        8,327,083
                Note Payable - Heritage National Bank            1,192,322            1,247,299
                Capital Lease Obligations (Note 11)                591,775              213,275
                Equipment Term Note - CIT                          205,000              260,000
                Note Payable - One Source/CIT                      179,811                   --
                Note Payable - Navistar                             15,583               33,551
                Note Payable - Chase Bank                               --              126,333
                Note Payable - Concorde                                 --               36,032
                                                        ------------------   ------------------
                         Total Notes Payable                    10,479,429           10,243,573
                         Less Current Notes Payable              8,645,107            8,679,977
                                                        ------------------   ------------------
                         Long Term Notes Payable        $        1,834,322   $        1,563,596
                                                        ==================   ------------------
</Table>

        Note Payable  -  One Source / CIT Equipment Financing

        In December of 2000, the Company entered into a financing agreement with
        One Source Financial for refrigerant packaging equipment that was
        acquired. The financing agreement was subsequently assigned to the CIT
        Group/Equipment Financing, Inc. and collaterialized by the packaging
        equipment purchased. The original amount financed was $219,209 for 48
        months with 15 quarterly payments of $14,841 and a final quarter payment
        of $9,894 and a final payment of $41,000 on March 28, 2005. The
        equipment financing bears an interest rate of 9.75%.

        Note Payable - Chase Bank

        In December of 1999, the Company entered into an amended and restated
        promissory note with Chase Bank in the amount of $750,000. Under the
        terms of the agreement, the first payment of $371,000 was due on January
        31, 2000, with subsequent payments of $31,583 payable on a monthly basis
        beginning February 15, 2000 and ending January 15, 2001. The note was
        paid and debt retired in January 2001.

        CIT Credit Facility

        During December 1999, the Company entered into a three-year loan
        agreement with CIT, which provides for borrowings under a $12.3 million
        credit facility. Under the terms of the CIT Credit Facility, $12.0
        million of the credit facility bears an interest rate of the Prime
        lending rate plus six tenths of one percent (7.0% at September 30, 2001)
        and is payable when the CIT Credit Facility's three year term expires.
        However, since the Company uses the credit facility to fund its working
        capital needs, it classifies the CIT Credit Facility, in its entirety as
        a current liability. The CIT Credit Facility is subject to certain
        financial covenants based on the existing calculated borrowing base and
        is secured by certain accounts receivable, inventory and property and
        equipment. The remaining $0.3 million was secured against certain
        existing fixed assets, bearing interest at the same rate described above
        and is payable in equal installments over a sixty month period.
        Currently, the balance is $205,000, of which $60,000 is classified as
        current and the remaining $145,000 is classified as long-term debt.

        The Company was notified of a technical default by CIT on November 21,
        2001 as the result of an overadvance on the Credit Facility. The Company
        is currently operating under a Forbearance Agreement with CIT dated
        January 8, 2002. As part of the Forbearance Agreement, CIT agrees to
        forbear from exercising any of its rights and remedies arising from or
        as a result of, the default until the Forbearance Termination Date,
        January 22, 2002. If the Company is in compliance with the terms of the
        Forbearance by January 22, 2002 the existing default is deemed waived.
        The terms of the Forbearance Agreement provide for, among others, the
        repayment in full of the overadvance by January 23, 2002. The amount of
        the overadvance is approximately $185,000 as of January 14, 2002. This
        obligation is expected to be repaid from a $400,000 Subordinated Loan
        commitment as described in Note 13. If the Company is not in compliance
        by the Forbearance Termination Date, the maturity of the debt may be
        accelerated.


                                       37
<PAGE>
        Note Payable - Heritage National Bank

        Effective July 31, 2000, the Company acquired a warehouse facility and
        office space in Fort Worth, Texas. The total purchase price for the
        building was approximately $1.6 million, of which $0.3 million was paid
        immediately upon closing, the remainder of which was financed through a
        note payable to Heritage National Bank. The note bears interest at the
        Prime lending rate plus 1% (7.0% at September 30, 2001) and is payable
        in monthly installments of $6,944 plus interest over a fifteen year
        period. The note payable is secured by the warehouse facility and office
        space.

        Note Payable - Concorde

        In connection with the April 1, 2000 acquisition of the remaining fifty
        percent interest in Liberty, EVTC assumed an $87,121 note payable to
        Concorde. This note payable to Concorde bears interest at the Prime
        lending rate and was payable in twelve equal monthly installments, which
        concluded on March 1, 2001. The note payable to Concorde was secured by
        certain fixed assets acquired through Liberty. The note was paid and the
        debt retired in fiscal 2001.

        Note Payable - Navistar

        In connection with the May 1, 2000 RMS acquisition, the Company assumed
        a note payable in the amount of $40,575 payable to Navistar. The note
        payable to Navistar bears interest at a rate of nine and five tenths
        percent (9.5%), and is payable in equal monthly installments ending
        November 1, 2002. Two tank service trucks that were purchased by EVTC
        when it acquired RMS secure the note payable to Navistar.

        Capital Lease Obligations

        The Company has several non-cancelable commitments under capital leases,
        primarily RMS service trucks. Capital leases are discussed in detail in
        Note 11 - Commitments and Contingencies.

        The Company's revolving line of credit and other debt obligations mature
        as follows during the next five years:

<Table>
<Caption>
                        YEAR                 AMOUNT
                        ----                 ------
<S>                                      <C>
                        2002             $ 8,645,107
                        2003                 311,691
                        2004                 307,152
                        2005                 260,827
                        2006                 176,661
                        Thereafter           777,991
                                         -----------
                                Total    $10,479,429
</Table>

 (6)     CASH FLOWS

        Cash paid during fiscal 2001, 2000 and 1999 for interest and income
        taxes is as follows:

<Table>
<Caption>
                                              2001         2000         1999
                                           ----------   ----------   ----------
<S>                                        <C>          <C>          <C>
 SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION:
 Interest                                  $1,085,979   $  834,412   $1,014,677
                                           ==========   ==========   ==========
 Income taxes                                      --   $    6,309   $   25,014
                                           ==========   ==========   ==========

 SUPPLEMENTAL SCHEDULE OF NONCASH
 INVESTING AND FINANCING ACTIVITIES:
 Capital expenditures financed with debt           --   $1,250,000           --
                                           ==========   ==========   ==========

 Common stock issued in conjunction with
 acquisitions (see note 4)                         --   $1,054,063           --
                                           ==========   ==========   ==========
</Table>

        During fiscal 1999 the Company recorded a receivable for subscribed
        stock totaling $594,600. This amount was received in December 1999.
        Also, the Company recorded an unrealized loss of $21,683 in 2001 and an
        unrealized loss of $20,468 in 2000 while an unrealized gain on stock
        securities of $54,460 was recorded in 1999.


                                       38
<PAGE>

 (7)     INCOME TAXES

        Total income tax expense (benefit) for the years ended September 30,
        2001, 2000 and 1999 is allocated as follows:

<Table>
<Caption>
                                                                    2001         2000         1999
                                                                 ----------   ----------   ----------
<S>                                                              <C>          <C>          <C>
                           Loss(Income) from continuing
                           operations                            $  300,000   $       --   $ (300,000)

                           Discontinued operations - loss from
                                Discontinued operations                  --           --           --
                                                                 ----------   ----------   ----------
                                                                 $  300,000   $       --   $ (300,000)
                                                                 ==========   ==========   ==========
</Table>

        The components of income tax expense (benefit) from continuing
        operations for the years ended September 30, 2001, 2000 and 1999 are as
        follows:

<Table>
<Caption>
                                                       2001         2000          1999
                                                    ---------    ---------    ------------
<S>                                                 <C>         <C>           <C>
                           Current:
                              Federal               $      --    $      --    $         --
                              State                        --           --              --

                           Deferred:
                              Federal                 252,000           --        (252,000)
                              State                    48,000           --         (48,000)
                                                    ---------    ---------    ------------
                                                           --           --        (300,000)
                                                    ---------    ---------    ------------
                                                    $ 300,000    $      --    $   (300,000)
                                                    =========    =========    ============
</Table>

        Income tax expense (benefit) attributable to continuing operations for
        the years ended September 30, 2001, 2000 and 1999 differed from the
        expected income tax expense (computed by applying the U.S. Federal
        income tax rate to income (loss) from continuing operations before
        income taxes) as a result of the following:

<Table>
<Caption>
                                       2001            2000            1999
                                   ------------    ------------    ------------
<S>                                <C>             <C>             <C>
Computed "expected" income
    Tax expense (benefit)          $ (1,450,351)   $     44,220    $     57,667
State income taxes, net of
    Federal benefit                          --              --         (31,968)
Change in deferred tax net asset
    Valuation allowance               3,195,590        (107,575)       (378,532)
Other                                (1,445,239)         63,355          52,833
                                   ------------    ------------    ------------

                                   $    300,000    $   (300,000)   $ (1,005,858)
                                   ============    ============    ============
</Table>

        The temporary differences that give rise to a significant portion of
        deferred tax assets and liabilities (continuing and discontinued
        operations) as of September 30, 2001 and 2000 are as follows:


<Table>
<Caption>
                                                                  2001            2000
                                                              ------------    ------------
<S>                                                           <C>             <C>
Deferred tax assets:
    Allowance for bad debts                                   $    380,409    $    381,912

    Net operating loss carryforwards                             5,484,571       2,576,691

    Other                                                           62,960          20,460
                                                              ------------    ------------

           Gross deferred tax assets                             5,927,940       2,979,063
Valuation allowance                                             (5,743,777)     (2,548,187)
                                                              ------------    ------------

           Deferred tax assets - net of valuation allowance        184,163         430,876
                                                              ------------    ------------

Deferred tax liabilities - Plant & Equipment                       161,159         107,872
                           Other                                    23,004          23,004
                                                              ------------    ------------
Gross Deferred Tax Liabilities                                     184,163         130,876
                                                              ------------    ------------
           Net deferred tax assets                            $         --    $    300,000
                                                              ============    ============
</Table>

        The increase in the valuation allowance for deferred tax assets as of
        September 30, 2001 was $3,195,590. The decrease in the valuation
        allowance for deferred tax assets as of September 30, 2000 was $107,575.
        The net change in the total valuation allowance for the year ended
        September 30, 1999 was a decrease of $378,532. In assessing the
        realizability of deferred tax assets, management considers whether it is
        more likely than not, that some portion or all of the deferred tax
        assets will not be realized. The ultimate realization of deferred tax
        assets is dependent upon the generation of future taxable income during
        the periods in which those temporary differences become deductible.
        Management considers the scheduled reversal of deferred tax liabilities,
        projected future taxable income, and tax planning strategies in making
        this

                                       39
<PAGE>

        assessment. Based on the prior year loss and the unpredictable nature
        of the markets, the Company operates in, Management recorded a
        valuation allowance of $5,743,777 at September 30, 2001 for the portion
        of the deferred tax asset and Net Operating Losses not expected to be
        realized in fiscal 2002.

        At September 30, 2001, the Company has net operating loss carryforwards
        for federal income tax purposes of $16,131,091 that are available to
        offset future federal taxable income through 2021. If the IWT
        acquisition, as described in Note 4, is consummated it may result in a
        change in control which would limit the amount of the net operating loss
        carryforward available annually.

 (8)     DISCONTINUED OPERATIONS

        e SOLUTIONS MARKETING, INC. BUSINESS SEGMENT

        During December 2000, the Company's Board of Directors adopted a plan to
        discontinue the operations of e solutions Marketing, Inc., its segment
        that directly marketed business to consumer services via the Internet.
        The Company has initiated a plan to liquidate the tangible assets of
        this segment as it seeks a strategic alternative for the business
        concept. Management intends to complete the disposal of the segment
        within ninety days from the adoption of the liquidation plan. e
        solutions Marketing, Inc. was acquired in March 2000 and is discussed in
        Note 4 - Acquisitions.

        The Company has presented the accompanying fiscal year 2001 and 2000
        statements of operations to report the operating results of the e
        solutions Marketing, Inc. segment as discontinued operations.
        Furthermore, the consolidated balance sheets at September 30, 2001 and
        2000, has been presented to segregate the assets and liabilities of the
        discontinued operations.

<Table>
<Caption>
                                                                          2001           2000
                                                                       -----------   -----------
<S>                                                                    <C>           <C>
                    Revenue                                            $        --   $        --
                                                                       -----------   -----------

                    Gain(Loss) from discontinued operations            $       -0-   $   (750,576)
                    Estimated Gain(Loss) on Disposal of discontinued   $   240,723   $ (1,255,558)
                    Income tax benefit                                 $        --   $         --
                                                                       -----------   ------------
                    Gain(Loss) from discontinued operations            $   240,723   $ (2,006,134)
                                                                       ===========   ============
</Table>

        Assets and liabilities of the business to consumer marketing segment are
        as follows:

<Table>
<Caption>
                                                    2001        2000
                                                 ---------   ---------
<S>                                              <C>         <C>
                              Assets:            $      --   $  23,337
                                                 =========   =========

                              Liabilities:
                              Accounts payable   $      --   $ 353,331
                                                 =========   =========
</Table>

        At September 30, 2001 all assets of e solutions Marketing were
        liquidated and liabilities settled. During May and June 2001, e
        solutions obtained favorable settlements with vendors included in the
        "Liabilities of Discontinued Operations" as of September 30, 2000. The
        pre-settlement liabilities totaling $350,036 were settled for cash
        payments totaling $109,313, netting a gain of $240,723 pretax in fiscal
        year 2001.

        At September 30, 2000, the remaining non-cash assets of e solutions
        Marketing, which were comprised of goodwill, gift inventory, web site
        development costs and certain pieces of machinery and equipment were
        written down from $1.0 million to $0.0 to reflect the net realizable
        value of such assets.

        RECYCLING AND RECOVERY EQUIPMENT BUSINESS SEGMENT

        During July 1998, the Company's Board of Directors adopted a plan to
        discontinue its Recycling and Recovery Equipment business segment. The
        Company has initiated a liquidation program to sell all assets of the
        segment. Management intended for the disposal of the segment to be
        completed by June 30, 1999 (the Phase-Out Period), however during fiscal
        1999 those estimates were revised to June 30, 2000. In fiscal 1998, loss
        on discontinued operations included a $0.5 million charge for future
        operating results through the phase-out period and a write down of $4.8
        million to inventory, accounts receivable, leasehold improvements, and
        equipment to estimated net realizable values. In fiscal 1999, the
        Company had liquidation revenues of $1.2 million and incurred direct
        costs of $0.4 million. During July 2000, the Company wrote down the
        remaining assets by approximately $0.4 million to reflect the salvage
        value of such assets to effectively complete the plan to discontinue the
        Recycling and Recovery Equipment segment, which was adopted in 1998.


                                       40
<PAGE>
During fiscal 2001, the Company had net inventory liquidation revenues of
$152,565.


<Table>
<Caption>
                                                                        2001             2000             1999
                                                                    -------------   -------------    -------------
<S>                                                                 <C>             <C>              <C>
Revenues                                                            $     407,075   $     585,411    $   1,245,325
                                                                    =============   =============    =============

Gain (loss) before income taxes                                     $          --   $          --    $          --
Estimated Gain (Loss) on Disposal of discontinued operations        $     152,565   $    (388,792)
Income tax benefit                                                  $          --   $          --    $          --
                                                                    -------------   -------------    -------------

Gain (Loss) from discontinued operations                            $     152,565   $    (388,792)   $          --
                                                                    =============   =============    =============
</Table>



Assets and liabilities of the discontinued Recycling and Recovery Equipment
business segment are as follows:


<Table>
<Caption>
                                     2001             2000
                                 -------------   -------------
<S>                              <C>              <C>
Assets:
    Accounts receivable          $          --   $     116,676
    Inventories                             --         254,510
    Equipment and other                     --              --
                                 -------------   -------------
                                 $          --   $     371,186
                                 =============   =============
Liabilities:

    Accrued Liabilities                     --              --
                                 =============   =============
</Table>

(9) STOCK OPTIONS

    (a) EMPLOYEE

        The Company has three stock option plans (the Option Plans). Two of the
        plans reserve 500,000 shares each and the third plan reserves 1,000,000
        shares of common stock for issuance upon the exercise of options
        designated as either (a) incentive stock options (ISOs) under the
        Internal Revenue Code of 1986, as amended, or (b) non-qualified options.
        ISOs may be granted under the Option Plans to employees and officers of
        the Company. Nonqualified options may be granted to consultants,
        directors (whether or not they are employees), employees or officers of
        the Company. The options are exercisable for a period that ends five
        years from the date the options become exercisable.

        Transactions relating to the Option Plans for the years ended September
        30, 2001, 2000 and 1999 are summarized as follows:

<Table>
<Caption>
                                              2001                            2000                            1999
                                 -----------------------------   ------------------------------   ------------------------------
                                         WEIGHTED AVERAGE               WEIGHTED AVERAGE                 WEIGHTED AVERAGE
                                                    EXERCISE                        EXERCISE                        EXERCISE
                                     SHARES          PRICE          SHARES            PRICE           SHARES          PRICE
                                 -------------   -------------   -------------    -------------   -------------    -------------
<S>                              <C>             <C>             <C>              <C>             <C>              <C>
Outstanding at
    beginning of year                  918,337   $        5.33         547,500    $        1.55         283,500    $        7.15

Granted                                     --              --         748,500             6.29         491,500              .73

Exercised                              (16,500)            .63        (280,889)             .92              --               --
Forfeited                             (600,069)           6.62         (96,774)            4.31        (227,500)            6.69
                                 -------------   -------------   -------------    -------------   -------------    -------------

Outstanding at end of
    Year                               301,768            3.02         918,337    $        5.33         547,500    $        1.55
                                 =============   =============   =============    =============   =============    =============

Options exercisable at
    year end                           228,534   $        1.98         201,000    $        2.32         191,000    $        3.25
                                 =============   =============   =============    =============   =============    =============

Weighted average
    fair value of
    options granted
    during the year                              $          --                    $        6.05                    $         .60
                                                 =============                    =============                    =============
</Table>

        The fair value of each stock option granted is estimated on the grant
        date using the Black-Scholes option-pricing model with the following
        weighted average assumptions. Expected life of 5.0 years; expected
        volatility of 110% in 2000 and 70% in 1999; expected dividend yield of
        0%; and risk-free interest rate of 5.8% in 2000 and 5.88% in 1999. No
        options were granted during 2001.




                                       41
<PAGE>



                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued



<Table>
<Caption>
                                                     OPTIONS OUTSTANDING              OPTIONS EXERCISABLE
                                                     AT SEPTEMBER 30, 2001           AT SEPTEMBER 30, 2001
                                               -----------------------------       --------------------------
                                                WEIGHTED
                                                 AVERAGE           WEIGHTED                        WEIGHTED
           RANGE OF/OR                          REMAINING           AVERAGE                         AVERAGE
            EXERCISE             NUMBER        CONTRACTUAL         EXERCISE          NUMBER        EXERCISE
              PRICE           OUTSTANDING         LIFE               PRICE         EXERCISABLE      PRICE
         ---------------      -----------      -----------         ---------       -----------   ------------
<S>      <C>                  <C>              <C>                 <C>             <C>           <C>
          $ .50 -- $ 2.00        241,768          7.54             $    .85          201,867     $       .75
          $7.50 -- $13.00         60,000          7.75             $  11.74           26,667           11.25
                                 -------                                             -------     -----------
                                 301,768          7.58                 3.02          228,534     $      1.98
                                 =======                                             =======
</Table>


        The Company has adopted the disclosure only provisions of SFAS No. 123,
        "Accounting for Stock-Based Compensation," and applies APB Opinion No.
        25 in accounting for its plans and, accordingly, has not recognized
        compensation cost for stock option plans and stock purchase plans in its
        consolidated financial statements. Had the Company determined
        compensation cost based on the fair value at the grant date consistent
        with the provisions of SFAS No. 123, the Company's net income (loss)
        from continuing operations would have been changed to the pro forma
        amounts as indicated below (in thousands of dollars, except per share
        amounts):

<Table>
<Caption>
                                                    2001             2000             1999
                                                -------------    -------------    -------------
<S>                                             <C>              <C>              <C>
Net income (loss)
    As reported                                 $      (4,566)   $         130    $         470
    Pro forma                                          (4,711)            (778)             385
Diluted income (loss) per share:
    As reported                                 $        (.61)   $         .02    $         .09
    Pro forma                                            (.62)            (.11)             .07
</Table>


        The effects of applying SFAS No. 123 in the pro forma disclosure are not
        indicative of future results.

(B) NONEMPLOYEE

        On September 16, 1998 the Company executed an agreement with Colmen
        Capital Advisors, Inc. ("Colmen") to provide certain business
        improvement services to the Company over a one-year period ("Colmen
        Agreement"). Pursuant to the Colmen Agreement, services included, among
        others, establishing a strategic business plan, developing an annual
        operating plan, implementing day-to-day business and management
        accountability, formulating a corporate financing structure and
        implementing a strategic acquisitions and mergers program. Pursuant to
        the Colmen Agreement the Company paid Colmen $17,500 each month
        (subsequently increased in November 1998 to $30,000 each month) for
        these services, and was to grant Colmen options to acquire 500,000
        shares of common stock. In addition, the Company agreed to issue options
        to acquire 500,000 common shares six months and one day from the Colmen
        Agreement date. On June 28, 1999 the Company reached an agreement on the
        termination of the contract with Colmen. Under the agreement, the
        Company paid Colmen a termination fee of $330,000 and Colmen forfeited
        all options.

        On January 11, 1999 the Board of Directors passed a resolution to issue
        all outside Board members options for 5,000 shares of the Company's
        common stock for serving on the Company's Board of Directors.

(10) OPERATING SEGMENTS

        The Company has two operating reportable segments: refrigerant and
        ballast recycling. The refrigerant segment is engaged in the marketing
        and sale of refrigerants, as well as performing refrigerant reclaiming
        services. The ballast-recycling segment is engaged in the recycling and
        disposal of fluorescent lighting ballasts. Amounts under the Corporate
        caption are items not directly attributable to a segment or items not
        allocated to the operating segment in evaluating their performance.

        The accounting policies of the segment are the same as those described
        in the summary of significant accounting policies. The Company evaluates
        segment performance based on profit or loss from operations..

        There have been no intersegment sales for the years-ended September 30,
        2001, 2000 and 1999.

                                       42
<PAGE>

        The Company's reportable segments are strategic business units that
        offer different products and services. They are managed separately
        because each business requires different technology and marketing
        strategies.


<Table>
<Caption>
                                              REFRIGERANT         BALLAST
                                                PRODUCT          RECYCLING           CORPORATE       CONSOLIDATED
                                           ---------------    ---------------    ---------------    ---------------
<S>                                        <C>                <C>                <C>                <C>
YEAR ENDED SEPTEMBER 30, 2001:
    Revenues from external customers       $    29,480,906    $     3,456,325    $            --    $    32,937,231

   Interest income                                  74,359              1,802                 --             76,161

   Interest expense                                845,625             49,659            190,695          1,085,979

   Depreciation and
    amortization expense                         1,120,928             17,370            181,445          1,319,743

  Segment income (loss), before
   income taxes                                 (2,481,666)          (296,327)        (1,487,746)        (4,265,739)

  Segment assets                                17,379,671          1,584,527          2,251,542         21,215,740

  Expenditures for segment assets                1,403,179                 --            250,800          1,653,979

YEAR ENDED SEPTEMBER 30, 2000:
    Revenues from external customers       $    32,473,559    $     3,767,342    $            --    $    36,240,901

   Interest income                                  33,469              2,517              4,742             40,728

   Interest expense                                724,243             46,976             63,193            834,412

   Depreciation and
    amortization expense                           752,252             90,231              6,600            849,083

  Equity in the income of investees                     --                 --             85,392             85,392
   accounted for by the equity method

  Segment income (loss), before
   income taxes                                    749,674            151,487           (771,103)           130,058

  Segment assets                                20,621,180          1,464,287          2,421,717         24,507,184

  Expenditures for segment assets                1,318,881             35,968            352,617          1,707,466
</Table>


                                       43
<PAGE>



<Table>
<Caption>
                                                      REFRIGERANT       BALLAST
                                                        PRODUCT        RECYCLING       CORPORATE      CONSOLIDATED
                                                     -------------   -------------   -------------    -------------
<S>                                                  <C>             <C>             <C>              <C>
YEAR ENDED SEPTEMBER 30, 1999:

    Revenues from external customers                 $  34,896,973   $   3,834,710   $          --    $  38,731,683

   Interest income                                          92,841           4,282          30,973          128,096

   Interest expense                                             --              --       1,014,677        1,014,677

   Depreciation and
    amortization expense                                   556,734         111,084              --          667,818

  Equity in the income of
   investees accounted for by the equity method                 --              --          20,687           20,687

  Segment income (loss), before
   income taxes                                          1,857,460         210,042      (1,897,894)         169,608

  Segment assets                                        17,306,583       1,679,831       1,864,634       20,851,048

   Investment in equity method
    Investees                                                   --              --         402,604          402,604

  Expenditures for segment assets                          316,810          57,307              --          374,117
</Table>


RECONCILIATION OF CONSOLIDATED:

<Table>
<Caption>
ASSETS                                              2001             2000           1999
                                                -------------   -------------   -------------
<S>                                             <C>             <C>             <C>
    Total Assets for reportable segments        $  21,215,740   $  24,507,184   $  20,851,048
    Assets of discontinued operations                      --         394,523       1,098,760
                                                -------------   -------------   -------------
       Consolidated Assets                      $  21,215,740   $  24,901,707   $  21,949,808
                                                =============   =============   =============
</Table>


        With the exception of the reconciliations shown the above totals
        represent consolidated total amounts.

        All revenues and long-lived assets of the Company are attributable to
        and reside domestically.

        In 2001, one customer accounted for 11% of the Company's total
        consolidated revenues. In 2000, one customer accounted for 10% of the
        Company's total consolidated revenues. No individual or related group of
        customers accounted for more than 10% of the Company's total
        consolidated revenues in 1999.

(11) COMMITMENTS AND CONTINGENCIES

     (A) COMMITMENTS

        The Company leases its New Jersey office and warehouse facilities from
        its principal shareholder at an annual cost of $120,000 in fiscal 2001,
        2000 and 1999. The Company also leases other operating and office
        facilities pursuant to operating leases expiring through 2006. The
        Company has several non-cancelable commitments under capital leases,
        primarily RMS service trucks.

        The following is a schedule of future minimum rental payments under
        operating and capital leases:


<Table>
<Caption>
                                                             OPERATING         CAPITAL
                                                           -------------    -------------
<S>                                                        <C>              <C>
 2002                                                      $     388,263    $     153,852
 2003                                                            326,919          153,852
 2004                                                            192,868          153,852
 2005                                                             54,232          151,414
 2006                                                             32,423          121,026
 Thereafter                                                          -0-           22,089
                                                           -------------    -------------
Total minimum lease payments                               $     994,705          756,085
                                                           =============
 Less amount representing interest                                               (164,310)
                                                                            -------------
 Present value of net minimum lease payments                                $     591,775
                                                                            =============
</Table>



        Total rental expense was $766,048, $612,913 and $556,865 for the years
        ended September 30, 2001, 2000 and 1999, respectively. Rent expense for
        2001 includes the accrual of $263,860 for lease facility closures. The
        above table reflects all scheduled payments, including those for the
        closed facilities.



                                       44
<PAGE>

    (B) CONTINGENCIES

        The Company is involved in various claims and legal actions arising in
        the ordinary course of business. In the opinion of management, the
        ultimate disposition of these matters will not have a material adverse
        effect on the Company's consolidated financial position, results of
        operations or liquidity.

        The Company is self-insured for product liability in connection with the
        marketing and sale of its refrigerants. No material losses have occurred
        during the periods presented.

        Some of the Company's products and services are regulated by the Federal
        Clean Air Act (the Clean Air Act) and the regulations promulgated
        thereunder by the Environmental Protection Agency (EPA), as well as
        certain state environmental regulations. As such, the Company's business
        is affected by the requirements of the Clean Air Act, the EPA and other
        regulations and the degree of enforcement thereof.

        The Company's ballast recycling subsidiary has obtained approval from
        the EPA as a qualified recycler of waste materials. In connection
        therewith, the Company entered into an agreement with the EPA to set
        aside in a Closure Trust Fund, beginning in 1994, approximately $112,500
        (annually adjusted for inflation), which was payable over a three-year
        period in equal annual installments of $37,500. The purpose of this fund
        is to accumulate resources required to clean up the Company's recycling
        facility upon closure. As of September 30, 2001, the Company has fully
        funded this obligation. The Company does not expect any significant
        cleanup costs in connection with the closure of its facility.

        During fiscal 2000, the Internal Revenue Service (IRS) imposed an excise
        tax levy in regards to imported refrigerant in fiscal year 1994. While
        the Company disagrees with the levy imposed by the IRS, it has accrued
        the entire amount of $0.4 million and is currently negotiating a
        settlement.

        The Company has approximately one million pounds of mixed refrigerant at
        its facilities. This mixed refrigerant is expected to be separated by
        the Liberty operation as part of Full Circle. Liberty is currently in an
        updating phase and management expects it to be fully operational by
        March 31, 2002. If Liberty does not become operational there is a
        potentially large cost to dispose of the mixed refrigerant with third
        parties.

        The Company is operating under a Forbearance Agreement as described in
        Notes 1 and 5.

(12) EQUITY

        Common Stock

        In fiscal 2001, the Company issued an additional 174,690 shares of
        common stock to Concorde Science and Technology. The shares were
        contingent shares related to the acquisition of Concorde's 50% interest
        in Liberty Technologies. Their issuance was contingent on the stock
        price, so that if the stock was below $5.00 per share then additional
        shares were issued as additional consideration. This was a below market
        guarantee, as shares were trading at $12.75 on the day the transaction
        was consummated. The value of the transaction did not change from the
        original value assigned at the transaction date, the fair value of
        shares issued unconditionally at the date of acquisition.

        In addition, the Company issued 16,500 shares of stock base on
        employee's exercising options that were granted under the Company's
        Employee Stock Option Plans.

        In March 2000, the Company entered into an agreement with several
        investors to issue 200,000 shares of the Company's unregistered common
        stock at a price of $4.50 per share. The proceeds from such stock
        issuance were received in March and April 2000.

        On October 1, 1999 the Company's board of directors voted to sell and
        issue up to one million shares of restricted Section 144 common stock to
        several private investors for the sole purpose of providing working
        capital and short term financing that would be required if the Company
        was successful in acquiring e solutions Marketing, Inc. See Note 4 -
        Acquisition for additional information regarding e solutions. The
        selling price of such stock was set at approximately 85% of the prior 5
        days average closing price on October 1, 1999 or $1.00 per share. In
        conjunction with the execution of the formal agreement to purchase e
        solutions, the Company issued an aggregate of 750,000 shares for
        $750,000 (or $1.00 per share). The funding from the stock sale occurred
        during March 2000.

        On July 20, 1999 the Company's board of directors authorized the Company
        to sell 792,800 shares of restricted Section 144 common stock to a
        private investor. The Company entered into an agreement to sell the
        792,800 shares of its common stock to the private investor on August 9,
        1999. In December 1999, the Company received the cash payment


                                       45
<PAGE>

        for the subscription stock issued. The Company used these funds for
        working capital and other general corporate purposes.

        Warrants

        In fiscal 1999, the Company issued warrants to Chase Bank to purchase
        300,000 shares of the Company's common stock at a price of $1.40 per
        share. The Company registered the warrants on Form S-3 in January 2000.
        The Company received cash payment for the stock in March 2000.

(13) SUBSEQUENT EVENTS

        On December 28, 2001, EVTC executed a letter of intent with a group from
        Houston, Texas for a $1 million investment in the common stock of EVTC
        as well as the acquisition of the assets of Innovative Waste
        Technologies, Inc. (IWT) by EVTC. The letter of intent is subject to a
        number of conditions including shareholder approval and the execution of
        definitive documents.

        The terms of the letter of intent reflect that the Company agrees to
        issue fifteen million shares (15,000,000) of its restricted common stock
        to IWT in exchange for $1,000,000 and certain assets. The Company also
        agrees to grant an option to IWT for fifteen million shares at the
        strike price of $1.00 per share. If the transaction is not consummated
        by January 31, 2002, the agreement is null and void. A change in control
        will occur if the transaction is consummated. No assurances can be given
        that the IWT transaction will consummate.

        IWT is not currently an operating entity. The IWT assets to be acquired
        consist primarily of technology, land, and marketable securities.
        Management believes the value of the assets expected to be acquired are
        approximately $10,000,000; however, no formal appraisal or valuation has
        been performed on the whole of the assets to be acquired. Any costs and
        expenses associated with the start-up of IWT's operation, both in the
        near term and in the future, are expected to be funded by the issuance
        of additional debt or equity. A timetable for the start-up for IWT has
        not been established at this time. The technology, when operational will
        allow the Company to be competitive in the treatment and recycling of
        marine and industrial waste.

        Assets to be acquired from Innovative Waste Technologies, Inc., are
        estimated at $10 million (unaudited) by management, including but not
        limited to the following:

                                   (UNAUDITED)

        a.      Process patent for use of Electro-Coagulation process, and its
                specific patent on cell design.

        b.      Assignment of "non exclusive" Chemical Fixation and
                Encapsulation process.

        c.      Assignment of "non exclusive" license for Vapex System which is
                used to recover rising vapors from underground storage tanks.

        d.      Marketable securities valued at $250,000.


        The Company has a commitment for a $400,000 Subordinated Loan at an
        interest rate of 10%, payable monthly, that will mature on January 31,
        2004. As a condition of the commitment, the Company agrees to issue
        500,000 5-year warrants at an exercise price of $1.00, with underlying
        common stock to be registered by EVTC within 12 months. The funding of
        the Subordinated Loan will be $200,000 on January 22, 2002 and $200,000
        on February 12, 2002.

        During December 2001, the Company entered into a consulting agreement in
        exchange for consideration of options on 1,000,000 shares at an exercise
        price of $0.11 per share.




                                       46
<PAGE>




                                                                   SCHEDULE II


                          EVTC, INC. AND SUBSIDIARIES


                        VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999


<Table>
<Caption>
                                                           ADDITIONS          OTHER
                                         BEGINNING         CHARGED TO      ADDITIONS OR         ENDING
                                          BALANCE           EXPENSE        (DEDUCTIONS)         BALANCE
                                      ---------------   ---------------   ---------------    ---------------
<S>                                   <C>               <C>               <C>                <C>
Allowance for doubtful accounts:
    Continuing Operations:

   2001                               $     1,030,007   $       305,810   $      (140,281)   $     1,195,536

   2000                                     1,210,723            77,080          (257,796)         1,030,007

   1999                                     1,512,868           250,975          (553,120)         1,210,723

Discontinued Operations:

   2001                               $       518,130   $            --   $       518,130    $            --

   2000                                       417,895                --           100,235            518,130

   1999                                       418,695                --              (800)           417,895

Reserve for inventory obsolescence:
Continuing Operations:

   2001                               $            --   $            --   $            --    $            --

   2000                                            --                --                --                 --

   1999                                            --                --                --                 --

Discontinued Operations:

   2001                               $     4,049,418   $            --        (4,049,418)   $            --

   2000                                     3,760,861                --           288,557          4,049,418

   1999                                     5,876,344                --        (2,115,483)         3,760,861

Valuation allowance for deferred
tax asset:

   2001                               $     2,548,147   $       300,000   $     2,895,630    $     5,743,777

   2000                                     2,655,762                --          (107,575)         2,548,187

   1999                                     3,034,294                --          (378,532)         2,655,762
</Table>


                                       47
<PAGE>


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

         None




                                    PART III




ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The directors and executive officers of the Company as of September 30, 2001
were:

<Table>
<Caption>
                  NAME                    AGE            POSITION
           ------------------             ---         --------------
<S>                                       <C>         <C>
           George Cannan, Sr.             58          Chairman and Director

           Bobby G. Stephens              41          Chief Executive Officer

           Caroline Costante              39          Secretary

           John Stefiuk                   50          Director

           Robert J. Casper               58          Director

           Laurie G. Kahn(1)              47          Director

           Scott L. Sakoff                41          Director

           Edward A. Sakoff               70          Director
</Table>

(1)  Resigned from the Board of Directors on December 28,2001.

GEORGE CANNAN, SR. founded Environmental Materials Corp. ("EMC") a wholly-owned
subsidiary of the Company in 1975 and has been President, Chief Executive
Officer and a director of EMC since that time. Mr. Cannan founded the Company in
1989; was President and Chief Executive Officer until December 31, 1995; has
been Chairman of the Board and a director of the Company since 1989; and was
reappointed Chief Executive Officer in 1999 until May 2001. In July 1992, EMC
became a wholly owned subsidiary of the Company. Mr. Cannan has been responsible
for all phases of the Company's operations since its inception. Prior to
founding EMC, Mr. Cannan was a manufacturer's representative in the automotive
industry.

BOBBY G. STEPHENS , a Certified Public Accountant, has been a partner of Null
Lairson PC from 1996 to 1999 and most recently a partner of Bob Stephens and
Associates from 1999 to 2001. Mr. Stephens also earned the designations of
Certified Management Accountant in 1988 and Certified Valuation Analyst in 1998.
Mr. Stephens has owned and operated an Environmental Consulting firm that served
both the business community and governmental entities from 1995 to 1997. He has
also owned and operated a processing plant from 1997 to 1998 with product
distribution that covered the United States and overseas markets. Mr. Stephens
succeeded Mr. Cannan as the CEO of the Company in May 2001.

CAROLINE COSTANTE has been Secretary of the Company since its inception. Ms.
Costante has been employed by EMC since 1979 and is responsible for the overall
administration of the operations of EMC.

JOHN STEFIUK is the President of Federal Bronze Products, Inc. a metal servicing
center and representative agency based in Newark, New Jersey. Mr. Stefiuk joined
Federal Bronze in 1972 and became President in 1978. During his tenure at
Federal Bronze, he has held various managerial and operating positions.


                                       48
<PAGE>


ROBERT J. CASPER is the President and Chief Executive Officer of R.J. Casper &
Associates. Mr. Casper has held prior positions as Chairman, Midwestern National
Life Insurance Company, President of MC Equities, President/Chief Operating
Officer of U.S. Life Corporation and Executive Vice President of Home Life
Insurance Company. Mr. Casper's background encompasses over 30 years of
experience in the life insurance industry, with 25 years of executive level,
hands on management experience.

LAURIE G. KAHN is the founder and president of Media Staffing Network, Inc.
Media Staffing Network, Inc. was the first staffing company that caters
exclusively to media sales and associated departments for both temporary and
permanent hiring for the cable, interactive, print, radio and television
industries. Ms. Kahn has more than 20 years experience in media including sales,
management and director/executive roles within the radio industry. On December
28,2001 Ms. Kahn resigned from the Company's Board of Directors.

SCOTT L. SAKOFF is the President/CEO of afreegift.com. Prior to forming
afreegift.com, Mr. Sakoff founded and directed the growth of Access Media &
Marketing Services, Inc., a nationally recognized Media Management firm serving
Retail and Direct Response Marketers. Mr. Sakoff has developed
Advertising/Direct Marketing programs and consulted for clients such as Toshiba,
Sony, CBS TV, Telemundo (Spanish TV Network), Nationwide Auto Insurance and
leading National retailers such as Play It Again Sports and USA Baby. He has 20
years of hands on management and account development experience in the
Advertising/Marketing field.

EDWARD A.SAKOFF began his career as a United States Marine. After serving his
country, Mr. Sakoff embarked upon a 40-year career in the television and
marketing industries. Mr. Sakoff produced programs and commercials. He also
developed a direct mail program used in the automotive industry. Mr. Sakoff
served as Vice President of a jewelry manufacturing firm, handling all aspects
of marketing. In addition, Mr. Sakoff has served as a board member for numerous
companies.



                                       49
<PAGE>
INFORMATION CONCERNING BOARD

The Board of Directors met two times during the 2001 fiscal year.

The Board of Directors has an Audit Committee, a Compensation Committee, and
Executive Committee. The Audit Committee is responsible for reviewing the
Company's audited financial statements, meeting with the Company's independent
accountants to review the Company's internal controls and financial management
practices and examining all agreements or other transactions between the Company
and its directors and officers (other than those compensation functions assigned
to the Compensation Committee) to determine whether such agreements or
transactions are fair to the Company's shareholders. Members of the Audit
Committee are Messrs. Jack Stefiuk and Robert Casper.

The Compensation Committee is responsible for reviewing the compensation and
benefits of the Company's executive officers, making recommendations to the
Board of Directors concerning compensation and benefits for such executive
officers and administering the Company's stock option plans. Members of the
Compensation Committee are Messrs. Jack Stefiuk and Robert Casper.

The Executive Committee has the authority to act, between meetings of the full
Board of Directors, on any matter that might properly be brought before the
Board of Directors, subject to exceptions for certain major matters. Member of
the Executive Committee is Mr. George Cannan.

Directors of the Company receive no cash compensation for serving on the Board
of Directors, other than reimbursement of reasonable expenses incurred in
attending meetings. Directors receive stock options for 5,000 shares for serving
on the Board of Directors.

Officers of the Company are elected annually by the Board of Directors and hold
office at the discretion of the Board.

SECTION 16(a)

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers, directors, and holders of more than ten percent of
the Company's Common Stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission (the "Commission") and NASDAQ. Such
persons are required to furnish the Company with copies of all Section 16(a)
forms they file.

To the best knowledge of the Company, all filing requirements applicable to its
executive officers, directors, and greater than 10% beneficial owners were
complied with.

ITEM 11.  EXECUTIVE COMPENSATION.

The following table sets forth, compensation for the Company's Chairman and
Chief Executive Officer ("CEO") and each officer that earned over $100,000
during such years (the "Named Executives"):

<Table>
<Caption>
            NAME AND PRINCIPAL POSITION       YEAR  SALARY ($)  BONUS ($)   STOCK OPTIONS (SHARES)
            ---------------------------       ----  ----------- ---------   ----------------------
<S>                                           <C>   <C>         <C>         <C>
                George Cannan, Sr.
                      Chairman                 2001  $200,000      (1)              - 0 -
                                               2000  $200,000      (1)              - 0 -
                                               1999  $200,000      (1)             90,000

                Bobby G. Stephens(3)
                      Chief Executive          2001  $ 57,692      (1)              - 0 -

                David A. Keener(2)
                      President                2001  $181,730      (1)              - 0 -
                                               2000  $150,000      (1)            125,000
                                               1999  $123,077      (1)             45,000
</Table>


(1)  Represents less than 10% of the Executive's compensation.

(2)  Resigned in May 2001.

(3)  Employment began May 2001.


                                       50
<PAGE>


STOCK OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth stock options granted to the Chairman and Chief
Executive Officer ("CEO") and Named Executives as of September 30, 2001.

<Table>
<Caption>
         NUMBER OF OPTIONS       % OF TOTAL OPTIONS
      GRANTED IN FISCAL YEAR    GRANTED TO EMPLOYEES
         SEPTEMBER 30, 2001        IN FISCAL YEAR       EXERCISE   EXPIRATION   GRANT
NAME             (#)             SEPTEMBER 30, 2001     ($/SHARE)    DATE      VALUE $
----  ----------------------    ---------------------   ---------  ----------  -------
<S>   <C>                      <C>                     <C>         <C>         <C>
None
</Table>

OPTION EXERCISES DURING, AND STOCK OPTIONS HELD AT END OF FISCAL 2001

The following table indicates the total number and value of exercisable stock
options held by the Named Executives as of September 30, 2001.

<Table>
<Caption>
                                                                                      VALUE OF UNEXERCISED
                                              NUMBER OF UNEXERCISED                   IN-THE-MONEY OPTIONS
                                           OPTIONS AT FISCAL YEAR END                 AT FISCAL YEAR END(1)
                                           --------------------------                 ---------------------
                      NAME               EXERCISABLE         UNEXERCISABLE        EXERCISABLE        UNEXERCISABLE
                      ----               -----------         -------------        -----------        -------------
<S>                                     <C>                  <C>                  <C>                <C>
               George Cannan, Sr.          90,000                 -0-               $12,321            $   -0-
               David A. Keener (2)            -0-                 -0-                   -0-                -0-
</Table>

(1)  Based on the last sale price for the Company's Common Stock on September
     30, 2001 of $.37 per share, as reported by NASDAQ.

(2)  15,000 shares were exercised during fiscal 2001.

STOCK OPTION PLANS

The Company maintains stock option plans designated as the 1992 Stock Option
Plan (the "1992 Plan"), the 1996 Stock Option Plan (the "1996 Plan") and the
2000 Stock Option Plan (the "2000 Plan"). The 1992 and 1996 Plans each reserve
500,000 shares each for issuance, while the 2000 Plan reserves 1,000,000 shares
of the Company's Common Stock for issuance upon the exercise of options
designated as either (i) incentive stock options ("ISOs") under the Internal
Revenue Code of 1986, amended (the "Code") or (ii) non-qualified options.
Nonqualified options may be granted to consultants, directors (whether or not
they are employees), employees or officers of the Company. In certain
circumstances, the exercise of stock options may have an adverse effect on the
market price of the Company's Common Stock.

The purpose of the Option Plans is to encourage stock ownership by certain
directors, officers and employees of the Company and certain other people
instrumental to the success of the Company and give them a greater personal
interest in the success of the Company. The Option Plans are administered by the
Board of Directors. The Board, within the limitations of the Option Plans,
determines the persons to whom options will be granted, the number of shares to
be covered by each option, whether the options granted are intended to be ISOs,
the duration and rate of exercise of each option, the option purchase price per
share and the manner of exercise, the time, manner and form of payment upon
exercise of an option, and whether restrictions such as repurchase rights by the
Company are to be imposed on shares subject to options. ISOs granted under the
Option Plans may not be granted at a price less than the fair market value of
the Common Stock on the date of grant. Non-qualified options granted under the
Option Plans may not be granted at a price less than the fair market value of
the Common Stock on the date of grant. Options granted under the Option Plans
will expire not more than ten years from the date of grant (five years in the
case of ISOs granted to persons holding 10% or more of the voting stock of the
Company). Any options granted under the Option Plans are not transferable during
the optionee's lifetime but are transferable at death by will or by the laws of
descent and distribution.

EMPLOYMENT AGREEMENTS

There are no employment agreements with the Company's executives.


                                       51
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of September 30, 2001, the name and number of
shares of Common Stock held by each person known to the Company to own
beneficially more than five percent (5%) of the Company's Common Stock and the
number of shares owned by each director and executive officer of the Company and
all directors and executive officers as a group. Each of the following has an
address c/o Environmental Technologies Corp., 3125 Bolt Street, Fort Worth,
Texas, 76110. All shares are owned directly by the named person.

<Table>
<Caption>
                                            NUMBER OF
                     NAME                  SHARES OWNED       PERCENT OF CLASS(1)
                     ----                  ------------       -------------------
<S>                                        <C>                <C>
          George Cannan, Sr.                  630,943(2)              8.3%

          Caroline Costante                   127,761                 1.6%

          John Stefiuk                         76,000(3)              1.0%

          Robert Casper                        75,173(4)              1.0%

          Edward A. Sakoff                         --                   *

          Scott Sakoff                             --                   *

          Laura G. Kahn                            --                   *

          Bobby G. Stephens                        --                   *

          All Directors and Officers as
            a Group (4 persons)               909,877                11.9%
</Table>

----------

(1) A person is deemed to be the beneficial owner of securities that can be
    acquired by such person within 60 days from the date of this report upon the
    exercise of warrants or options. Each beneficial owner's percentage
    ownership is determined by assuming that options or warrants that are held
    by such person (but not those held by any other person) and which are
    exercisable within 60 days from the date of this report have been exercised.

(2) Includes 90,000 shares of Common Stock issuable upon the exercise of stock
    options (90,000 of which are presently exercisable).

(3) Includes 5,000 shares of Common Stock issuable upon the exercise of stock
    options, which are presently exercisable. (4) Includes 58,673 shares of
    Common Stock issued to Concorde Science and Technology, Inc.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company's automotive refrigerant packaging and distribution operations are
located in a 21,000 square foot building situated at 550 James Street, Lakewood,
New Jersey 08701. The building is leased at a rental of $10,000 per month from
George Cannan, Sr., the Company's founder, Chairman and principal stockholder,
pursuant to 5-year lease. The Company believes that the terms of such lease are
at least as favorable as those that it could obtain from a non-affiliated third
party. This lease will expire December 31, 2004.

As of September 30, 1999, the Company had a $371,016 note receivable from George
Cannan. This note receivable did bear an interest rate of 7% per annum and was
secured by the 21,000 square foot building located at 550 James Street in
Lakewood New Jersey. In January 2000, Mr. Cannan repaid the Company the note
receivable in full.


                                       52
<PAGE>

ITEM 14.         EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBIT      DESCRIPTION

       21.1      Subsidiaries of Registrant

       23.2      Consent of BDO Seidman, LLP


                                       53
<PAGE>

                                   SIGNATURES

Pursuant to the requirements 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, in the city of Fort Worth, State of
Texas on the 14th day of January, 2002.

                                        EVTC, INC.

                                        BY:    /s/ George Cannan, Sr.
                                               ----------------------------
                                               GEORGE CANNAN, SR., Chairman

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed by the following persons in the capacities and on the date
indicated:


<Table>
<Caption>
             SIGNATURE                                       TITLE                                         DATE
             ---------                                       -----                                         ----
<S>                                                <C>                                               <C>
     /s/ George Cannan, Sr.                         Chairman, Chief Executive Officer and
     -----------------------------------------      Director                                         January 14, 2002
     GEORGE CANNAN, SR.


     /s/ Bobby G. Stephens                          Chief Executive Officer                          January 14, 2002
     -----------------------------------------
     BOBBY G. STEPHENS


     /s/ John Stefiuk                               Director                                         January 14, 2002
     -----------------------------------------
     JOHN STEFIUK


     /s/ Robert Casper                              Director                                         January 14, 2002
     -----------------------------------------
     ROBERT CASPER


     /s/ Scott L. Sakoff                            Director                                         January 14, 2002
     -----------------------------------------
     SCOTT L. SAKOFF


     /s/ Edward A, Sakoff                           Director                                         January 14, 2002
     -----------------------------------------
     EDWARD SAKOFF
</Table>


                                       54
<PAGE>

                                INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT NO.             DESCRIPTION
-----------             -----------
<S>            <C>
  21.1          Subsidiaries of Registrant

  23.2          Consent of BDO Seidman, LLP
</Table>