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, 1999

    [  ]      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.)


    121 South Norwood Drive
    Hurst, Texas                                                  76053
    ---------------------------------------------------------------------------
     (Address of Principal Executive Offices)                    (Zip Code)

                                 (817) 282-0022
                (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 December 22, 1999,  computed by reference to the price at
which the stock was sold on that date: $18,811,862.

    The number of shares outstanding of the registrant's Common Stock, par value
$.01 per share (the "Common Stock"), as of December 22, 1999, was 5,782,520.



<PAGE>

    Documents Incorporated by Reference: None



                                   EVTC, INC.
                           ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS

    Item                                                               Page

    1.   Description of Business                                         3

    2.   Description of Property                                        13

    3.   Legal Proceedings                                              13

    4.   Submission of Matters to a Vote of Security Holders            13

    5.   Market for Common Equity and Related Stockholder Matters       14

    6.   Selected Financial Data                                        15

    7.   Management's Discussion and Analysis of Financial
         Condition and Results of Operations                            16

    7a.  Quantitative and Qualitative Disclosures About Market Risk     20

    8.   Financial Statements                                           21

    9.   Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure                            44

   10.   Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) Of the Exchange Act              45

   11.   Executive Compensation                                         46

   12.   Security Ownership of Certain Beneficial Owners and
         Management                                                     48

   13.   Certain Relationships and Related Transactions                 49

   14.   Exhibits and Reports on Form 8-K                               50




<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."  The Company is
currently  engaged  in the  marketing  and  sale  of  refrigerants,  refrigerant
reclaiming  services and the recycling of fluorescent  light ballasts and lamps.
Subsequent to September 30, 1999,  the Company also entered into an agreement to
purchase  an  internet   marketing  firm.  The  Company  also  manufactured  and
distributed   refrigerant   recycling  and  recovery   equipment  prior  to  the
discontinuation  of such operations in July 1998 (see Notes to the  Consolidated
Financial Statements regarding discontinued operations).

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 services:

                            YEARS ENDED SEPTEMBER 30,
                                     (000'S)

                                 1999 1998 1997



Refrigerants          $34,897   90%    $34,482    90%    $50,606    92%
Ballast Recycling       3,835   10%      4,001    10%      4,491     8%
                       ------  ----     ------   ----     ------   ----

                      $38,732  100%    $38,483   100%    $55,097   100%
                      =======  ====     ======   ====     ======   ====


                                  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.

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.


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 has firm purchase  orders with several  suppliers to
meet the majority of their refrigerant needs in 2000.

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.

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

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.  The Company's  distributors  resell to
automobile repair shops, service stations and retail automotive supply stores.

Marketing  programs  are  conducted  through  the  efforts of the  Company's
executive   officers,   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.fcrefrigerant.com).

No single  customer  accounted for more than 10% of the  Company's  revenues
during the years ended September 30, 1999, 1998 or 1997.

The  Company  typically  seeks to fill  customer  orders  within two days of
receipt. Accordingly, at September 30, 1999, 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  which 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  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 has
initiated steps 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."


                            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 will be
regulated under The Universal Waste Rule on January 6, 2000. 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.  Many of the sales persons have  significant  prior
experience in selling  hazardous  waste  disposal  services or selling  lighting
products.  Sales  persons 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.

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 July 6, 1999, the EPA included  fluorescent  lamps in the UWR
(the law goes into effect January 6, 2000).  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 thus  increasing the total market for
this service.




<PAGE>



                                   THE COMPANY


CONSULTING AGREEMENT

In  September  1998,  the  Company  appointed  Colmen  Capital  Advisors,   Inc.
("Colmen") to provide executive  management,  investment  banking,  and advisory
services  on  an  exclusive   basis.   Colmen,   located  in  King  of  Prussia,
Pennsylvania,  is a  private  investment  banking  firm that  provides  advisory
services  in  business  turnarounds,   financing,  mergers,   acquisitions,  and
strategic  planning.  Under the terms of the  agreement,  Colmen  was  providing
investment banking and consulting services.

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,  Colmen forfeited all Company stock options previously granted
to them, Mr. Peter Colella,  Colmen's Managing Partner,  and Mr. James Hellauer,
its Executive Director, resigned from EVTC's Board of Directors and Mr. Hellauer
resigned as President and Chief  Executive  Officer of EVTC.  Mr. George Cannan,
EVTC's Chairman of the Board,  assumed Mr. Hellauer's  responsibilities as Chief
Executive Officer.


RISK FACTORS

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,  and expressed  confidence in the Company's  ability to
sustain  compliance  with those  requirements  over the long term,  particularly
given the Company's improved results from operations.  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.  The Company is confident of its ability to comply
with all  requirements  for  continued  listing on the Nasdaq  Small Cap Market,
however  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 has financed its working capital  requirements through operating
cash flow and a working  capital  revolving line of credit  obtained from a bank
(the "Credit  Facility").  As of September 30, 1999,  $9,742,380 was outstanding
under the Credit  Facility.  The Credit Facility was due on January 15, 1999. On
April 7, 1999 the  Company  received  a  Forbearance  Letter  and new short term
General  Loan and  Collateral  Agreement  from the bank.  Under the terms of the
Forbearance  Letter and General Loan Agreement,  the bank gave the Company until
August  31,  1999 to secure  long term  financing  from a  different  lender and
provided  additional  financing up to $1,500,000  subject to the Company meeting
specific pay down obligations,  loan covenants and issuance of stock warrants to
the bank.  On  September  14, 1999 the  Company  received a letter from the bank
agreeing  to  extend  the term of the note on a month to month  basis  while the
Company  completed its  refinancing.  At September 30, 1999,  the Company was in
negotiations  with  several  lenders  to  provide  the  Company  with  long term
financing. Subsequent to September 30, 1999, the Company secured and closed on a
three-year  $12,300,000  Long-Term  Revolving Credit Facility agreement with The
CIT Group/Business Credit.




<PAGE>



RESEARCH AND DEVELOPMENT

The Company's  management  places  emphasis on obtaining the  technology and
developing  the products to achieve  superiority  in its  industry.  The Company
employs a full-time chemist to administer such projects.  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. At
September  30,  1999,   1998  and  1997,   the  Company  has   advanced/invested
approximately $402,604,  $547,786 and $669,000,  respectively,  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.

The Company  reports the earnings and losses  related to the  aforementioned
ventures under the equity method of  accounting.  To date, the income related to
these  joint  ventures  have  not  been  material  to  the  Company's  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 laboratory
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  employs two full time  employees
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 which it considers  sufficient to protect
the Company's assets and operations.  The Company  currently  maintains  general
commercial  liability  insurance for claims up to $1,000,000  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, 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, 1999, the Company employed approximately 132 persons, including
its executive  officers.  None of the Company's  employees are  represented by a
union. The Company believes its employee relations are good.


ACQUISITION


On October 15, 1999, the Company announced that it had signed a letter of intent
to acquire  afreegift!com,  inc.,  ("afreegift")  an Oak Brook,  Illinois  based
internet direct marketing company.

On  December  22,  1999,  the  Company  entered  into an  Agreement  and Plan of
Reorganization (the "Agreement") with afreegift,  a Nevada  corporation,  Sakoff
Enterprises,  Inc., a Delaware  corporation  (the  "Shareholder"),  and Scott L.
Sakoff  ("Sakoff").  Under the Agreement,  afreegift will merge into e solutions
marketing, inc., a new wholly owned subsidiary formed by the Company in December
of 1999 ("e solutions") in exchange for common stock of the Company. The purpose
of the  merger is to  diversify  the  Company's  business  segments  and to take
advantage of the burgeoning e-commerce industry.  The transaction is intended to
qualify  as a  tax-free  reorganization  and will be  accounted  for  using  the
purchase method of accounting.

The consummation of the transactions contemplated by the Agreement is subject to
approval  by the  Company's  stockholders.  An annual  meeting of the  Company's
stockholders  will be called for  February  28,  2000 for the purpose of seeking
ratification  and approval of the  Agreement and the  transactions  contemplated
thereby. Subject to stockholder approval and satisfaction of certain pre-closing
conditions,  the Shareholder will be entitled to receive at the closing a number
of shares of the  Company's  common stock to be agreed upon prior to the closing
and the right to receive  additional  shares of the Company's  common stock (the
"Earn-Out   Shares")  upon   satisfaction  of  certain   financial   performance
objectives.  In no event  shall  the  number of shares  issued  at  closing  and
Earn-Out Shares exceed 8,000,000.

If the merger is  consummated,  the Company  expects to expand its board of
directors to seven members.  The Shareholder  will have the right to three seats
on the  Company's  board so long as the  subsidiary  meets  specified  financial
performance  objectives.  Also, at the closing of the merger,  Sakoff will enter
into an  employment  agreement  with e  solutions  under  which he will serve as
President and Chief Executive Officer of e solutions.  The employment  agreement
is for a term of 1 year.  The  Company  is  obligated  to renew  the  employment
agreement  for an  additional  one year term upon e  solutions  meeting  certain
performance goals.

Pending  shareholder  action on the  merger,  the Company is  obligated  to lend
$1,000,000 to afreegift at times specified in a funding agreement.  In exchange,
the Company will receive a note from afreegift secured by all of its assets. The
note is to be repaid in a year and bears interest at 9%.

The Company  intends to launch its first  permission  marketing  web site in the
Spring of 2000. The Company  expects to formally close on the transaction in the
quarter ending March 31, 2000.

For additional  information on this acquisition see the Company's current report
on Form 8K that will be filed with the Securities and Exchange  Commission on or
before January 6, 2000.

Except for the historical information contained herein, the matters discussed in
this Acquisition 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.



<PAGE>



ITEM 2.     DESCRIPTION OF PROPERTY.

The Company  occupies twelve  locations in the United States,  all of which,
with one exception,  are leased from third parties. 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.


                                     Square
              Location               Footage             Use
              --------               -------             ---

              Lakewood, NJ          21,000       Refrigerant packaging and
                                                 distribution center

              Bronx, NY             13,500       Ballast recycling

              Keller, TX            55,000       Refrigerant, recovery
                                                 equipment storage and
                                                 distribution center.

              Hurst, TX             26,000       Reclamation and refrigerant
                                                 storage facility; Executive
                                                 offices

              Houston, TX            1,500       Recovery, storage and
                                                 distribution center

              Chicago, IL           15,000       Recovery, storage and
                                                 distribution center

              Livermore, CA          8,700       Recovery, storage and
                                                 distribution center

              Orlando, FL            3,540       Recovery, storage and
                                                 distribution center

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

              Clearwater, FL,        2,000       Recovery, storage and
                                                 distribution center

              Louisville, KY         2,000       Recovery, storage and
                                                 distribution center

              Wheatridge, CO         2,000       Recovery, storage and
                                                 distribution center




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.



ITEM 3.  LEGAL PROCEEDINGS.

There are no legal  proceedings  pending  against the Company or  involving  the
Company  which,  if adversely  determined,  would  result in a material  adverse
effect on the Company.

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.



<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, 1997, 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.


                      COMMON STOCK                  HIGH          LOW
                      ------------                  ----          ---
               YEAR ENDED SEPTEMBER 30, 1999

               First Quarter                      $ 1 3/4      $   3/8

               Second Quarter                       1              1/4

               Third Quarter                        3 5/16         1/2

               Fourth Quarter                       2 1/16         7/8

               YEAR ENDED SEPTEMBER 30, 1998

               First Quarter                      $   5/8      $ 6

               Second Quarter                       7 1/4        5 5/8

               Third Quarter                        7 3/8        5 1/4

               Fourth Quarter                       5 5/8        1 1/4




As of September 30, 1999,  there were 39 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 is currently processing an application to again be listed on
the Nasdaq National Market System.

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.



<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 30, 1999.  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>

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


                                                                        Years Ended September 30,
                                                                        -------------------------
                                                      1999      1998        1997         1996       1995
                                                      ----      ----        ----         ----       ----
                                                             (In thousands, except per share data)

         STATEMENT OF OPERATIONS DATA:

         Net Sales                            $ 38,732      $  38, 483   $ 55,097    $ 31,657     $ 32,033
         Income (Loss) From
          Continuing Operations
                                                   470         (5,188)      3,261       2,640        2,337
         Income (Loss) From
          Continuing Operations Per Share
            Basic
                                                   .09          (1.04)       0.65        0.51         0.48
            Diluted
                                                   .09          (1.04)       0.64        0.50         0.47



                                                                        As of September 30,
                                                                        ------------------
                  BALANCE SHEET DATA:                1999      1998        1997         1996       1995
                                                     ----      ----        ----         ----       ----
                                                                          (In thousands)

         Working Capital                        $ 5,656      $  4,104      14,893    $ 15,538     $ 15,489
         Total Assets                            21,950        23,561      37,546      31,907       22,164
         Total Debt                               9,742        11,992      13,500       9,498        1,267
         Total Shareholders'
          Equity                                 $8,378        $7,110     $18,595    $ 19,064     $ 17,600




</TABLE>


During July 1998, the Company  adopted a plan to  discontinue  its Recycling and
Recovery Equipment Business.  See Note 8 of Notes to the Consolidated  Financial
Statements.  The Statements of Operations Data above have been recast to exclude
such discontinued operations.



<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.

RESULTS OF CONTINUING OPERATIONS

Year ended September 30, 1999 compared to year ended September 30, 1998:

Net sales for continuing  operations for the year ended  September 30, 1999 were
$38,731,683,  an  increase  of  $248,513  or .7%.  The  increase in net sales is
primarily attributed to the increase in sales of refrigerant products, resulting
from stronger demand for R-22 refrigerant and R-134a refrigerant. Although there
was a strong demand for R-134a, which is the primary replacement for R-12, sales
were significantly limited by the industry wide shortage of the product.  During
1999 its  suppliers  placed  the  Company  under a tight  allocation  of R-134a.
However,  the shortage of R-134a available for sale by the Company was partially
off set by the increase in the average selling price.  Sales of refrigerant R-12
continue to provide a significant  portion of the Company's  revenues,  although
its  relative  percentage  continues  to decline.  This decline in R-12 sales is
primarily  attributed to the  significant  increase in the demand for R-134a and
the Company's increasing emphasis on refrigerant  reclaiming and commercial HVAC
refrigerant  sales. 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 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. Additionally,  ballast-recycling sales decreased by 4.2% primarily
due to a decline in scrap  metal  revenues  caused by the  worldwide  decline in
scrap metal  pricing.  Revenues  from  ballast-recycling  services were slightly
higher for the year.

Cost of sales for continuing  operations  for the year ended  September 30, 1999
was $32,361,928, a decrease of 9.3% from the $35,669,958 reported in fiscal year
1998.  Continuing  operations costs of sales were 83.6% of continuing operations
revenues,  a decrease from 92.6% for fiscal year 1998. The decrease is primarily
attributable to sales of R-12, R-134a and R-22 at higher margins for fiscal year
1999.  Additionally,  cost of  sales  for  ballast  recycling  decreased  due to
improved productivity and increased ballast-recycling service margins. In fiscal
year 1998, the Company was forced to sell R-12 below cost to meet market-pricing
set by the automotive original equipment manufacturers.

Selling,  general and administrative  expenses related to continuing  operations
for 1999  decreased  to  $5,263,936,  a  decrease  of  $2,594,005  or 33.0% from
$7,857,941  reported in fiscal 1998. The decrease is primarily  attributable  to
the Company's cost reduction  program  initiated late in the first quarter that,
resulted in reduced marketing, distribution, and administrative expenses related
to it's refrigerant reclaiming subsidiary.  Additionally,  the Company's reserve
for bad debt as of  September  30, 1999 was reduced by $820,000 due to a partial
recovery on a trade  receivable  and a change in the  estimated  net  realizable
value of the note that was in default at September  30, 1998 and fully  reserved
in fiscal 1998.  Management revised its estimate of the collectibility  based on
subsequent  cash  received  of $500,000  and  estimated  value of  $320,000  for
underlying collateral.  The recovery included cash payments, common stock shares
assigned to the Company and security interests in real property.

Interest  expense in fiscal year 1999 was  $1,014,677,  a decrease of $73,564 or
6.8% from the prior year.  This is  primarily  attributed  to a  decreased  1999
average line of credit advance balance from 1998.

The Company  recognized income from continuing  operations of $469,608 for 1999,
an increase of  $5,657,349  over last years loss of  $5,187,741.  The  increased
profitability  was primarily  attributed to the Company's cost reduction program
resulting in reduced marketing,  distribution and administrative  expenses,  the
126%  improvement  in gross  margin,  the partial  recovery  of a certain  trade
receivable in the amount of $820,000, and the recognition of $300,000 in Federal
income tax benefit related to the Company's $7,784,601 federal tax net operating
loss  carryforward.  The  increase  in  profitability  was  offset by a $350,691
inventory  theft  at one of the  Company's  branch  locations  and  $474,751  in
payments to Colmen,  primarily  related to the  termination of their  consulting
contract and $194,091 in fees and charges paid to the  Company's  former bank to
extend the Credit Facility.

In July 1998, the Company's Board of Directors adopted a plan to discontinue its
recycling and recovery  equipment  segment.  The Company initiated a liquidation
program to sell all assets of the segment.  Management intended for the disposal
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 1999, the Company
had  liquidation  revenues of $ 1,245,325 and incurred direct costs of $425,366.
Based on the past years operations of the discontinued  segment,  management has
revised its net  realizable  values of assets at  $1,098,760  with direct  costs
estimated at $304,209 to continue the liquidation process through June 30, 2000.
The Company  did not incur any  additional  expenses or charges  during the year
ended  September  30,  1999  related to  discontinued  operations,  and based on
current  estimates,  the Company does not foresee incurring any material charges
related to the discontinuation of this segment in fiscal 2000.

Year ended September 30, 1998 compared to year ended September 30, 1997:

Net sales for continuing  operations for the year ended  September 30, 1998 were
$38,483,170,  a decrease of $16,613,784,  or 30.2%. The decrease in net sales is
primarily  attributed  to a 31.8%  decrease  in sales of  refrigerant  products,
resulting  from weak  demand  and  pricing  for  refrigerant  R-12 and other CFC
refrigerants.  The weak demand  during  fiscal year 1998 is primarily due to the
relatively  mild  climate in the  Western and  Northeast  portions of the United
States  during  summer of 1998 and customer  inventory  carry over from the mild
summer  of 1997.  The weak  demand  coupled  with the fact  that  several  large
automotive  original  equipment  manufacturers  were selling large quantities of
refrigerant  R-12 into the market  resulted in weak pricing  during  fiscal year
1998. Additionally,  ballast-recycling sales decreased 10.9%, primarily due to a
turnover in sales personnel.

Sales of  refrigerant  R-12  continue  to provide a  significant  portion of the
Company's revenues although its relative percentage is declining. The decline in
R-12 sales is primarily attributed to the significant increase in the demand for
R-134a,  the  replacement  for R-12,  and the Company's  increasing  emphasis on
refrigerant  reclaiming and commercial  refrigerant sales. The Company's ability
to maintain its current level of R-12 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 R-12 or R-134a  refrigerant  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 refrigerants.

Cost of sales for continuing  operations  for the year ended  September 30, 1998
was  $35,669,958,  a decrease of 16.7% from the  $42,841,492  reported in fiscal
year  1997.  Continuing  operations  costs of  sales  were  92.6% of  continuing
operations  revenues,  an increase from 77.8% for fiscal year 1997. The increase
is primarily  attributable to sales of refrigerant R-12 below cost during fiscal
year 1998. The Company was forced to sell R-12 below cost to meet market pricing
set by the automotive  original equipment  manufacturers.  In addition,  cost of
sales  was  impacted  by a  $600,000  lower  of  cost  or  market  writedown  on
refrigerant R-12 inventory at year-end.  The Company has substantially  enhanced
its access to low cost R-12 through its reclamation and separation,  and did not
have a reoccurrence of this problem in 1999.

Selling,  general, and administrative  expenses related to continuing operations
for 1998  increased  to  $7,857,941,  an  increase of  $1,960,230  or 33.2% from
$5,897,711  reported  in prior  year.  This  increase  resulted  from  reserving
approximately  $1,300,000 for potential bad debts,  $200,000 in increased  legal
fees and $183,000 related to the TTL investment.  The Company's  reserve for bad
debt was primarily  attributed to an allowance  placed on a note receivable that
was in default in the amount of  $1,236,000  at September 30, 1998. In addition,
the increase is attributed to sales and marketing  expenses  associated with the
expansion of the Company's reclaiming operations.

Interest  expense in fiscal year 1998 was $1,088,241,  an increase of $79,133 or
7.8% from prior year. This is primarily  attributed to an increased 1998 average
line of credit advance balance from 1997.

The Company recognized a loss from continuing operations of $5,187,741 for 1998.
The loss is primarily  attributed to the weak demand and pricing for refrigerant
R-12,  the lower cost or market write down of R-12,  write off of investment and
bad debts,  and increased legal fees, as mentioned  above.  The Company does not
anticipate  any of these items  recurring in future years.  In 1997, the Company
reported $3,261,384 in continuing operations income.

In July 1998, the Company's Board of Directors adopted a plan to discontinue its
recycling  and  recovery  equipment   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 as discussed
above. The Company recognized a loss from discontinued  operations of $1,024,840
in fiscal year 1998. The Company recognized a 1998 loss of $5,273,005 related to
the disposal of the  discontinued  segment.  The disposal loss is composed of an
approximate  $4,800,000  write down of  inventory  to net  realizable  value and
estimated Phase-Out Period costs.


LIQUIDITY AND CAPITAL RESOURCES

The Company had working  capital of $5,656,391 at September 30, 1999 compared to
$4,103,766  at September 30, 1998,  an increase of  $1,552,625.  The increase in
working capital is primarily attributable to the increase in accounts receivable
due to a 32%  increase in sales  during the fourth  quarter of 1999 versus sales
during the fourth quarter of 1998 and the partial  recovery of $820,000  related
to the trade receivable discussed above.

The  Company  relies on its bank debt as a source of funds for  operations.  The
Company has financed its working  capital  requirements  through  operating cash
flow and a working  capital  revolving line of credit  obtained from a bank (the
"Credit  Facility").  At September 30, 1999,  the amount  outstanding  under the
Credit  Facility was $9,742,380 a decrease of $2,250,000 from the line of credit
advance balance at September 30, 1998.  Borrowings  outstanding under the Credit
Facility bear interest at the bank's prime rate plus 1.5 %. The Credit  Facility
is secured by eligible accounts receivable,  eligible inventory and property and
equipment.

The  Credit  Facility  was due on  January  15,  1999.  On April 7, 1999 the
Company  received  a  Forbearance  Letter and new short  term  General  Loan and
Collateral  Agreement from the bank.  Under the terms of the Forbearance  Letter
and General Loan  agreement,  the bank gave the Company until August  31,1999 to
secure long term financing from a different lender and provided the Company with
additional  financing  of up to  $1,500,000,  subject  to  the  Company  meeting
specific pay down obligations,  loan covenants and issuance of stock warrants to
the bank.  On  September  14, 1999 the  Company  received a letter from the bank
agreeing  to  extend  the term of the note on a month to month  basis  while the
Company  completed its  refinancing.  At September 30, 1999,  the Company was in
negotiations  with  several  lenders  to  provide  the  Company  with  long term
financing.

Subsequent  to  September  30,  1999,  the  Company  secured and closed on a
three-year  $12,300,000  long-term  Revolving Credit Facility agreement with The
CIT Group/Business Credit. The CIT Credit Facility provides up to $12,300,000 in
financing based upon eligible accounts receivable, inventory and equipment ("CIT
Facility").  Borrowings  outstanding  under the CIT Facility bear interest at an
effective rate of prime plus .6%.

In connection with obtaining the CIT Facility, the Company incurred deferred
loan costs of $296,929 that will be  capitalized  and amortized over the life of
the CIT Facility.

As an incentive to the Company's  former bank to extend the Credit  Facility
and issue a formal  forbearance  agreement while the Company sought  alternative
financing, the Company agreed to pay the bank cash fees of $44,091 and issue the
bank  warrants to purchase  300,000  shares of the  Company's  common stock at a
price of $1.40 per share.  The Company has agreed to register  such  warrants on
Form S-3 with the Securities and Exchange Commission in January of 2000.

On July 28, 1999 the Company signed several stock subscription agreements to
sell and issue restricted Section 144 common stock to several private investors.
Proceeds from the sale of such stock will be used for working capital and to pay
down debt  outstanding  under the Credit  Facility.  Subsequent to September 30,
1999  the  entire  amounts  outstanding  under  such  subscription   agreements,
$594,600, was collected by the Company in December 1999.

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
afreegift.  The sell  price of such  stock was set at  approximately  85% of the
prior five-day average closing price at October 1, 1999 or $1.00 per share. With
the signing of the formal agreement to purchase afreegift, on December 22, 1999.
The Company is currently in the process of selling these shares.

Pending  shareholder  approval of the afreegift  merger discussed above, the
Company is obligated  to lend  $1,000,000  to afreegift at times  specified in a
funding agreement.  In exchange,  the Company will receive a note from afreegift
secured by all of its assets.  The note is to be repaid in a year and bears
interest at 9%.

Net cash used in operating  activities related to continuing  operations was
$247,270  for 1999 versus net cash  provided of  $4,846,191  for 1998.  Net cash
provided by operating activities related to discontinued operations was $325,710
for 1999 versus net cash used by discontinued operations of $799,412 in 1998.

Net cash used in continuing  operations investing activities was $180,201 in
1999 and $331,558 in 1998. Net cash used by  discontinued  operations  investing
activities  was $ - 0 - in fiscal year 1999 compared to $17,477 net cash used in
1998.

The net cash used in financing activities in 1999 of $2,250,000 reflects net
payments on the Credit Facility compared to $1,507,620 in payments on the Credit
Facility in 1998.

As of the date of this Report,  other than as set forth in this Report,  the
Company  has no material  commitments  for capital  expenditures,  research  and
development, or additional employees.


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.

YEAR 2000

The Company has assessed the potential  issues and costs associated with the
year 2000 and  believe  that it has  addressed  such  issues.  The  Company  has
implemented  revisions to effect year 2000  compliance of all its accounting and
operations  systems.  The Company has reviewed year 2000 compliance  issues with
its vendors, suppliers, and customers. At the present time, the Company believes
that  costs or  consequences  of  unforeseen  issues  would  not  result  in the
occurrence  of a  material  event or  uncertainty  reasonably  likely  to have a
material adverse effect on the Company.

RECENT ACCOUNTING PRONOUNCEMENTS

SFAS No. 130, "Reporting  Comprehensive  Income",  established standards for
reporting and display of  comprehensive  income,  its components and accumulated
balances.  Comprehensive  income is  defined to  include  all  changes in equity
except those resulting from  investments by owners and  distributions to owners.
Among other disclosures,  SFAS No. 130 requires that all items that are required
to  be  recognized   under  current   accounting   standards  as  components  of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements.

SFAS No. 130 is effective for  financial  statements  for periods  beginning
after December 15, 1997 and requires  comparative  information for earlier years
to be recast. The Company adopted this statement in fiscal year 1999.

In June 1997,  the FASB issued SFAS 131,  "Disclosure  about  Segments of an
Enterprise and Related Information".  In February 1998 the FASB issued SFAS 132,
"Employers'  Disclosures about Pensions and Other Post retirement Benefits." The
Company  adopted  these  statements  in  1999.  The  adoption  did  not  have  a
significant impact on the Company's financial statements.

In June 1998, the Financial  Accounting  Standards  Board (FASB) issued SFAS
No. 133, "Accounting for Derivative  Instruments and Hedging Activities",  which
establishes  accounting and reporting  standards for derivative  instruments and
hedging  activities.  It requires that an entity  recognize all  derivatives  as
either assets or liabilities in the balance sheet and measure those  instruments
at fair  value.  We do not  believe  this  will  have a  material  effect on the
operations.  Implementation  of this  standard has recently  been delayed by the
FASB for a 12- month period through the issuance of SFAS No 137. "Accounting for
Derivative  Instruments and Hedging  Activities - deferral of the effective date
of FASB  Statement No 133".  The Company will now adopt SFAS 133 as required for
its first quarterly filing of fiscal year 2001.


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 1999 variable rate debt and investment levels, a one-point
change  in  interest  rates  would  impact  net  interest  expense  by less than
$100,000.


<PAGE>


ITEM 8.  FINANCIAL STATEMENTS.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                           Page
                                                                           ----

Independent Auditors' Reports - BDO Seidman, LLP                            22

Independent Auditors' Report - KPMG, LLP                                    23

Consolidated Balance Sheets - as of
September 30, 1999 and 1998                                                 24

Consolidated Statements of Operations and Comprehensive Income (Loss) -
for each of the years ended September 30, 1999, 1998 and 1997               25

Consolidated Statements of Stockholders' Equity - for each of the
years ended September 30, 1999, 1998 and 1997                               26

Consolidated Statements of Cash Flows -
for each of the years ended September 30, 1999, 1998 and 1997               27

Notes to Consolidated Financial Statements                                  28

Schedule II - Valuation and Qualifying Accounts                             43




<PAGE>



                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
EVTC, Inc.
Hurst, Texas


We have audited the  accompanying  consolidated  balance sheet of EVTC, Inc. and
subsidiaries as of September 30, 1999, and the related  consolidated  statements
of operations and comprehensive  income (loss),  stockholders'  equity, and cash
flows for the year ended September 30, 1999. In connection with our audit 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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, 1999, and the results of their  operations and
their  cash flows for the year  ended  September  30,  1999 in  conformity  with
generally  accepted  accounting  principles.  Also in our  opinion,  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.








BDO Seidman, LLP
Dallas, Texas
December  8, 1999, except for
Notes 5 and 13, as to which the
date is  December 23, 1999




<PAGE>


                          INDEPENDENT AUDITORS' REPORT



The Board of Directors
EVTC, Inc.:


We have audited the  accompanying  consolidated  balance sheet of EVTC, Inc. and
subsidiaries as of September 30, 1998, and the related  consolidated  statements
of operations and comprehensive  income (loss),  stockholders'  equity, and cash
flows for each of the years in the two-year  period ended September 30, 1998. In
connection with our audits of the  consolidated  financial  statements,  we also
have audited the 1998 and 1997 data in the financial  statement  schedule listed
in the accompanying index. These consolidated 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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of EVTC,  Inc. and
subsidiaries  as of September 30, 1998, and the results of their  operations and
their cash flows for each of the years in the two-year  period  ended  September
30, 1998 in conformity with generally accepted  accounting  principles.  Also in
our opinion, the 1998 and 1997 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.



KPMG LLP


Dallas, Texas
January 5, 1999




<PAGE>


                          EVTC, INC. AND SUBSIDIARIES

                          Consolidated Balance Sheets

                          September 30, 1999 and 1998

<TABLE>
<CAPTION>

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


                                               ASSETS                                    1999             1998
                                               ------                                    ----             ----

                   Current assets:
                   Cash and cash equivalents                                        $2,159,434      $ 4,511,195
                   Marketable securities                                                54,460          -----
                   Accounts receivable, net of allowance of $820,425 in 1999 and
                   $1,512,868 in 1998                                                7,475,772        5,144,724
                   Income taxes receivable                                              58,108        1,423,659
                   Subscriptions Receivable                                            594,600          -----
                   Due from officer                                                      ----           200,000

                   Inventories                                                       6,805,492        7,236,440
                   Prepaid expenses and other current assets                           681,337          442,200
                   Deferred income taxes                                               300,000           -----
                   Assets of discontinued operations                                 1,098,760        1,596,948
                                                                                    -----------     ------------

                   Total current assets                                             19,227,963       20,555,166

                   Property and equipment, net                                       1,401,036        1,646,941
                   Goodwill, less accumulated amortization                             511,829          560,965
                   Investment in joint ventures and other assets                       437,964          797,896
                   Due from officer                                                    371,016           -----
                                                                                   ------------      -----------

                                                                                   $21,949,808     $ 23,560,968
                                                                                   ===========     =============


                                    LIABILITIES AND STOCKHOLDERS'
                                               EQUITY

                   Current liabilities:
                   Note payable to bank                                             $9,742,380     $ 11,992,380
                   Accounts payable - trade                                          2,387,771        2,338,740
                   Accrued liabilities                                               1,137,212        1,643,593
                   Liabilities of discontinued operations                              304,209          476,687
                                                                                    -------------   -------------

                   Total current liabilities                                        13,571,572        16,451,400
                                                                                    ----------      -------------

                   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
                    10,000,000 shares; 4,989,719 shares issued
                    and outstanding (includes 792,801 shares of
                    subscribed stock at September 30, 1999)                             57,825           49,897

                   Additional paid-in capital                                       12,133,204       11,396,532
                   Accumulated other comprehensive income                               54,460            ---
                    Deficit                                                         (3,867,253)      (4,336,861)
                                                                                    ------------    ------------

                   Total stockholders' equity                                        8,378,236        7,109,568
                                                                                    -------------    -----------

                                                                                    $21,949,808     $23,560,968
                                                                                    ===========     ===========


</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>

                                                                          EVTC, INC. AND SUBSIDIARIES

                                                     Consolidated Statements of Operations and Comprehensive Income (Loss)

                                                                Years ended September 30, 1999, 1998, and 1997


                                                                         1999             1998            1997
                                                                         ----             ----            ----
                    <S>                                                   <C>              <C>             <C>


                  Net sales                                         $38,731,683      $38,483.170    $55,096,954
                  Cost of sales                                      32,361,928       35,669,958     42,841,492
                                                                    -----------      -----------    -----------

                  Gross profit                                        6,369,755       2,813,212      12,255,462


                  Selling, general and administrative
                   Expenses, including recovery of credit loss
                   of $820,000 in 1999                                5,263,936       7,857,941       5,897,711
                                                                    -----------      -----------    -----------


                  Operating income (loss)                             1,105,819      (5,044,729)      6,357,751


                  Interest expense                                    1,014,677       1,088,241       1,009,108

                  Other (income) expense, net                           (78,466)         60,629         (28,741)
                                                                    -----------      -----------    -----------

                  Income (loss) from continuing operations
                   Before income taxes                                  169,608      (6,193,599)      5,377,384


                  Income tax expense (benefit)                         (300,000)     (1,005,858)     2,116,000
                                                                    -----------      ----------     ----------

                  Income (loss) from continuing operations              469,608      (5,187,741)     3,261,384


                  Discontinued equipment products operations:

                  Loss from discontinued operations, net of
                    income taxes                                        ------       (1,024,840)    (2,375,994)

                  Loss on disposal of discontinued
                   Operations                                           ------       (5,273,005)        ----
                                                                    -----------      -----------    ----------

                  Net income (loss)                                   $469,608     $(11,485,586)     $ 885,390
                                                                    -----------      ----------     ----------

                  Other comprehensive income, net of tax;
                    Unrealized gain on securities                       54,460           ----           ----

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

                  Comprehensive income (loss)                        $ 524,068    $(11,485,586)      $ 885,390
                                                                    ===========   =============     ==========

                  Income (loss) per share
                   Basic
                   Continuing operations                             $     .09     $     (1.04)      $    0.65
                   Discontinued operations                              ----             (1.26)          (0.47)
                                                                    -----------      ----------     ----------
                                                                     $     .09     $     (2.30)      $    0.18


                   Diluted
                    Continuing operations                            $     .09     $     (1.04)      $    0.64
                    Discontinued operations                             ----             (1.26)          (0.47)
                                                                    -----------      ----------     ----------
                                                                     $     .09     $     (2.30)      $    0.17


</TABLE>

           See accompanying notes to consolidated financial statements



<PAGE>

<TABLE>
<CAPTION>


                           EVTC, INC. AND SUBSIDIARIES

                 Consolidated Statements of Stockholders' Equity

                 Years ended September 30, 1999, 1998, and 1997



                                                                                                   ACCUMULATED
                                                                ADDITIONAL       RETAINED             OTHER
                                  COMMON STOCK                                                     COMPREHENSIVE
                             -----------------
                                                                PAID-IN          EARNINGS
                                   SHARES        AMOUNT         CAPITAL          (DEFICIT)         -------INCOME         TOTAL
                                   ------        ------         -------          ---------         -------------         -----
<S>                                 <C>           <C>            <C>               <C>                  <C>               <C>

Balance at September 30, 1996    5,153,411       51,534         12,749,053       $6,263,335        $-----------       $19,063,922
Proceeds from options exercised     47,833          478            373,970            --            -----------           374,448
  Proceeds from warrants
  exercised                         61,500          615            458,760            --            -----------           459,375
  Stock repurchase and
  retirement                      (273,025)       (2,730)        (2,185,251)          --            -----------        (2,187,981)
  Net income                     ----------      --------        -----------        885,390         -----------           885,390
                                 ==========      ========        ===========      ---------         ===========        -----------

Balance at September 30, 1997    4,989,719        49,897         11,396,532       7,148,725              ----          18,595,154
  Net loss                       ---------       --------        -----------    (11,485,586)             ----         (11,485,586)
                                 ---------       --------        -----------     -----------                          ------------

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

  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
                                 =========       ========        ===========    ============          ============    ============


</TABLE>

          See accompanying notes to consolidated financial statements.



<PAGE>

<TABLE>
<CAPTION>

                           EVTC, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                  Years ended September 30, 1999, 1998 and 1997





                                                                           1999              1998             1997
                                                                           ----              ----             ----
                            <S>                                            <C>               <C>              <C>

               Cash flows from operating activities:
                Income (loss) from continuing
                 Operations                                             $  469,608        $(5,187,741)     $3,261,384
               Adjustments to reconcile net income (loss) to net
               cash provided by (used in)
                Operating activities:
               Depreciation and amortization                               667,818            785,195         788,327
               Deferred income taxes                                      (300,000)           611,593        (439,300)
               Provision for bad debts                                    (692,443)         1,335,438           6,345
               Write-off of investment in joint venture                      ---              183,096            --
               (Gain) loss on sale of assets                                (3,660)           (40,692)        (15,003)
               Issuance of stock warrants                                  150,000               ---             --
               Changes in assets and liabilities:
               Accounts receivable                                      (1,638,605)        (1,210,740)     (1,907,056)
               Income taxes receivable                                   1,365,551         (1,423,659)           --
               Inventories                                                 430,948         10,057,035       1,595,136)
               Prepaid expenses and other current
                 Assets                                                   (239,137)            40,036        (185,041)
               Accounts payable and accrued liabilities                   (457,350)          (303,370)      1,159,638
                                                                       ------------       ------------     -----------
               Net cash provided by (used in)
                  Continuing operations                                   (247,270)         4,846,191       1,074,158
               Net cash provided by (used in) discontinued
               operations                                                                     ------
                                                                                             (799,412)
                                                                                             ---------

                                                                           325,710                        (1,092,915)
                                                                       ------------                       -----------
               Net cash provided by (used in)
                Operating activities                                        78,440          4,046,779        (18,757)
                                                                       ------------       ------------    -----------
    Cash flows from investing activities:
               Proceeds from sale of equipment                               5,000            ----            52,485
               Capital expenditures                                       (374,117)          (276,952)      (875,724)
               Due from officer                                           (171,016)          (100,000)      (100,000)
               Capital expenditures of discontinued operations                --              (17,477)       (51,684)
               Change in investment in joint ventures and other
               assets                                                        359,932           45,394       (276,281)
                                                                        ------------      ------------    -----------

               Net cash used in investing activities                        (180,201)        (349,035)    (1,251,204)
                                                                        ------------      ------------    -----------

               Cash flows from financing activities:
               Net change in current note payable to bank                 (2,250,000)      (1,507,620)     4,002,481
               Common stock repurchase and retirement                         ----              ----       2,187,981)
               Proceeds from exercise of common stock warrants                ----              ----         459,375
               Proceeds from common stock options exercised
               Net cash provided by (used in)                                 ----              ----         374,448
                Financing activities                                      (2,250,000)    (1,507,620)       2,648,323
                                                                          ----------     -----------       ---------
               Net increase (decrease) in cash and cash equivalents       (2,351,761)     2,190,124        1,378,362
               Cash and cash equivalents at beginning of year              4,511,195      2,321,071          942,709
                                                                           ---------     ----------        ---------
               Cash and cash equivalents at end of year                 $ 2,159,434      $4,511,195       $2,321,071
                                                                        ===========      ==========       ==========

</TABLE>


                     See accompanying notes to consolidated financial statements



<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

        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 fluorescent light
        fixture  ballasts and lamps (Ballast  Recycling  segment).  In 1998, the
        Company  discontinued its segment in the manufacture and distribution of
        refrigerant   recycling  and  recovery   equipment  for  automotive  and
        commercial use (see note 8).

        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  2000.  However,  beyond  fiscal 2000 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.

        During 1999 its suppliers placed the Company under a tight allocation of
        R-134a.  The  shortage of R-134a  available  for sale by the Company was
        partially  off set by the  increase  in the  average  selling  price  of
        R-134a. The shortage of R-134a during the period was a result of several
        R-134a plants closing and the strong  worldwide  demand for the product.
        The Company  believes that world wide production of R-134a in the future
        will be  sufficient  to fulfill  demand and prevent  significant  future
        shortages of the product.  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  Company's  note payable to a bank was $ 9,742,380 at September  30,
        1999. On April 7, 1999 the Company received a Forbearance Letter and new
        short term General Loan and Collateral  Agreement  from the bank.  Under
        the terms of the Forbearance Letter and General Loan agreement, the bank
        gave the Company  until  August 31,  1999 to secure long term  financing
        from  a  different  lender  and  provided  additional  financing  up  to
        $1,500,000 subject to the Company meeting specific pay down obligations,
        loan  covenants and issuance of stock warrants to the bank. On September
        14, 1999 the Company  received a letter from the bank agreeing to extend
        the  term of the  note on a month  to  month  basis  while  the  Company
        completed its refinancing.

        Subsequent to September 30, 1999, the Company has secured a three-year
        loan agreement with The CIT Group/Business Credit ("CIT") which provides
        a  $12,300,000 credit  facility at a rate  equivalent to the effective
        prime rate plus six tenths of one percent per annum. The CIT credit
        facility has various compliance  covenants  such as: the Company shall
        keep and maintain its books and  records in  accordance  with generally
        accepted  accounting principles, consistently applied; the Company will
        continue to have good and  marketable  title to all of the  Collateral
        free and  clear of all liens;  the  Company will  maintain  financially
        sound  and reputable casualty insurance with respect to the Collateral;
        etc. The compliance covenants do not include covenants related to
        specific financial ratios.




<PAGE>



                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


     (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  accounts for its 50% ownership  interest in a joint venture
        using the equity 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.  No single customer
        accounted  for more than 10% of total net sales in fiscal 1999,  1998 or
        1997.

    (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 are  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  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.

    (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  $1,244,649  and  $2,015,428 on September 30, 1999 and
        1998, 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.



<PAGE>



                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


    (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.


    (i)GOODWILL

        Goodwill,  which represents the excess of purchase price over fair value
        of net assets acquired,  is amortized on a straight-line  basis over the
        expected  periods  to be  benefited,  generally  15  years.  Accumulated
        goodwill  amortization  was $ 237,285 and $188,070 at September 30, 1999
        and 1998, 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.

    (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, 1999,  the
        Company has net  operating  loss  carryforwards  for federal  income tax
        purposes of  $7,784,601  and  recorded a $300,000 net deferred tax asset
        (as detailed in Note 7 to the Consolidated Financial Statements).

    (k) INCOME PER SHARE

        Basic  earnings  per share is computed by dividing  income  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 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.

<PAGE>


                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued



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


                                                1999        1998       1997
                                                ----        ----       ----

 Denominator for basic earnings per share-

    Weighted average shares                  4,989,719   4,989,719   5,040,398

 Effect of dilutive securities:
    Employee stock options                      --          --          29,973
    Warrants                                    89,150      --          10,506
    Subscription Stock                          69,788
                                             ---------

 Dilutive potential common shares              158,938      --          40,479


 Denominator for diluted earnings per
   share -

  Weighted-average shares and assumed
  Conversions                               5,148,657    4,989,719   5,080,877
                                            =========    =========   =========



     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.


                                              1999      1998       1997
                                              ----      ----       ----

               Employee stock options        98,000    283,500    62,000
                                                       0
               Warrants                     300,000      --       33,750



(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.

    (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 plus 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.





                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

    (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) RECENT ACCOUNTING PRONOUNCEMENTS

            SFAS  No.  130,  "Reporting   Comprehensive   Income",   established
        standards  for  reporting  and  display  of  comprehensive  income,  its
        components and accumulated balances.  Comprehensive income is defined to
        include all changes in equity except those resulting from investments by
        owners and distributions to owners.  Among other  disclosures,  SFAS No.
        130  requires  that all items that are required to be  recognized  under
        current  accounting  standards as components of comprehensive  income be
        reported  in a  financial  statement  that is  displayed  with  the same
        prominence as other financial statements.

            SFAS No. 130 is  effective  for  financial  statements  for  periods
        beginning after December 15, 1997 and requires  comparative  information
        for earlier years to be recast.  The Company  adopted this  statement in
        fiscal year 1999.

            In June 1997, the FASB issued SFAS 131,  "Disclosure  about Segments
        of an  Enterprise  and Related  Information".  In February 1998 the FASB
        issued SFAS 132,  "Employers'  Disclosures about Pensions and Other Post
        retirement  Benefits." The Company adopted these statements in 1999. The
        adoption did not have a significant  impact on the  Company's  financial
        statements.

            In June 1998, the Financial Accounting Standards Board (FASB) issued
        SFAS  No.  133,  "Accounting  for  Derivative  Instruments  and  Hedging
        Activities",  which establishes  accounting and reporting  standards for
        derivative  instruments  and hedging  activities.  It  requires  that an
        entity  recognize all derivatives as either assets or liabilities in the
        balance sheet and measure  those  instruments  at fair value.  We do not
        believe   this  will  have  a   material   effect  on  the   operations.
        Implementation  of this  standard has recently  been delayed by the FASB
        for a 12- month period through the issuance of SFAS No 137.  "Accounting
        for  Derivative  Instruments  and Hedging  Activities  - deferral of the
        effective  date of FASB  Statement  No 133".  The Company will now adopt
        SFAS 133 as required for its first quarterly filing of fiscal year 2001.


(2) INVENTORIES

            Inventories at September 30, 1999 and 1998 consist of the following:



                                                   1999         1998
                                                   ----         ----

                   Raw materials              $2,428,007      $3,644,095

                   Finished goods              4,377,485       3,592,345


                        Total inventories     $6,805,492      $7,236,440
                                              ==========      ==========

     Inventories  are stated at the lower of cost or market.  Cost is determined
using the average cost  method.  During the fourth  quarter of fiscal 1998,  the
Company  recorded a charge of  approximately  $600,000 to write down refrigerant
product inventories to estimated net realizable values.







<PAGE>



                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(3) PROPERTY AND EQUIPMENT, NET

        Property and  equipment at September  30, 1999 and 1998 is summarized as
follows:

                               DEPRECIABLE
                                 LIVES             1999              1998


          Machinery and
           equipment           2-10 years     $ 3,776,735         $3,600,437
          Office equipment     2-5 years          991,804            851,565
          Vehicles             5 years            231,188            183,449
          Leasehold
           improvements        2-5 years          174,910            170,067
                                               ----------          ---------

                                                5,174,637          4,805,518
          Accumulated                          (3,773,601)        (3,158,577)
           depreciation
                                              $ 1,401,036         $1,646,941
                                              ===========         ==========

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

(4) INVESTMENTS IN JOINT VENTURES AND LOANS TO OFFICERS

        During  fiscal  1995,  the  Company  entered  into a 50%  joint  venture
        (Transformation   Technologies,   Ltd.  (TTL))  with  two   unaffiliated
        individuals  to research  the  applicability  of  transforming  mixed or
        contaminated  refrigerants  (defined  as a hazardous  substance)  into a
        useful   by-product.   At   September   30,   1997,   the   Company  had
        advanced/invested  approximately  $183,000 in the TTL joint venture. The
        investment  was  written-off in the fourth quarter of fiscal 1998 as the
        Company  determined  there was  substantial  uncertainty  regarding  the
        realization of this investment.

        The  Company  entered  into  a 50%  joint  venture  (Liberty  Technology
        International,   Inc.  (LTI)),   with  an  unaffiliated   company.   LTI
        constructed   a   refrigeration   separation   plant  that  provides  an
        alternative to total destruction of mixed refrigerants.

        At September  30, 1999 and 1998,  the  Company's  investment  in LTI was
        approximately  $403,000 and  $548,000,  respectively.  LTI's  operations
        commenced in fiscal 1997.

        The Company's share of net income (loss) from the joint ventures was not
        material to the Company's  results from  operations for any of the years
        presented.

        Due from officer at September 30,1999 and 1998 represents advances to an
        executive officer of the Company. The  non-interest-bearing  advance was
        converted to an  interest-bearing,  secured  note (7% at  September  30,
        1999) during fiscal 1999.


<PAGE>


                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(5) NOTE PAYABLE

        At September 30, 1999 and 1998,  the note payable  consists of a secured
        line of credit in the aggregate  available  amount of $13,500,000 with a
        bank. The balances outstanding under the line of credit at September 30,
        1999 and 1998 were $9,742,380 and $11,992,380,  respectively.  In fiscal
        1999, borrowings bore interest at the bank's prime rate plus 1.5% (9.75%
        at September  30, 1999).  At September 30, 1999 the balance  outstanding
        under the line of credit was below eligible  security by $1,316,483.  In
        fiscal 1998,  borrowings bore interest at the bank's prime rate or LIBOR
        plus 1.75%.  Borrowings  outstanding  at September  30, 1998 were at the
        bank's  prime rate  (8.25%).  The line of credit was secured by eligible
        accounts receivable,  eligible inventory and property and equipment.  At
        September  30,  1998 the  balance  outstanding  under the line of credit
        exceeded  eligible  security by $192,583.  The line of credit was due on
        January 15, 1999. The Company  received a non-binding  verbal  agreement
        from the bank to  extend  the due date for 120 days.  In April  1999 the
        Company  received  a  Forbearance   Letter  and  new  General  Loan  and
        Collateral Agreement from the bank, which the Company executed. The loan
        agreement  provided  a limited  amount  of  additional  financing  up to
        $1,500,000 subject to the Company meeting specific pay down obligations,
        loan  covenants  and  issuance  of stock  warrants  to the  bank.  As an
        inducement  for the bank to extend  the  Credit  Facility  and issue the
        Company a formal Forbearance Letter while the Company sought alternative
        financing,  the Company  agreed to pay the bank cash fees of $44,091 and
        issue the bank  warrants to  purchase  300,000  shares of the  Company's
        common  stock at a price of $1.40 per share.  The  Company has agreed to
        register  such  warrants on Form S-3 with the  Securities  and  Exchange
        Commission in January of 2000.

        Subsequent to September  30, 1999,  the Company has secured a three-year
        loan  agreement with CIT which  provides a $12,300,000  credit  facility
        ("CIT credit facility") at a rate equivalent to the effective prime rate
        plus six tenths of one  percent  per annum.  The CIT credit  facility is
        secured by eligible accounts receivable, eligible inventory and property
        and equipment.


(6) CASH FLOWS

        Cash paid during  fiscal  1999,  1998 and 1997 for  interest  and income
taxes is as follows:

                                        1999           1998           1997
                                        ----           ----           ----

                      Interest       $1,014,677    $1,088,241     $1,011,233
                                     ==========    ==========     ==========

                      Income taxes   $  25,014    $   261,097     $1,045,584
                                     =========     ===========    ==========



     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 gain on stock securities of $54,460 in 1999.


(7) INCOME TAXES

     Total income tax expense  (benefit) for the years ended September
30, 1999, 1998 and 1997 is allocated as follows:


                                          1999           1998           1997
                                          ----           ----           ----

   Income from continuing operations  $ (300,000)    $(1,005,858)   $ 2,116,000

   Discontinued operations - loss
   from Discontinued operations             ---          ---         (1,219,000)
                                       ----------   ------------     -----------
                                        (300,000)     (1,005,858)       897,000
                                       ==========   ============     ===========





                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     The components of income tax expense  (benefit) from continuing operations
for the years ended September 30, 1999, 1998 and 1997 are as follows:


                                       1999           1998           1997
                                       ----           ----           ----


               Current:
                 Federal         $  ------        $ (1,677,451)   $2,129,300
                 State              ------              60,000       426,000
                                 ----------       ------------    -----------
                                    ------          (1,617,451)    2,555,300

               Deferred:

                 Federal          (252,000)            587,354      (434,900)
                 State             (48,000)             24,239        (4,400)
                                 ----------        -----------     ----------
                                 $(300,000)            611,593      (439,300)
                                 ----------        -----------     ----------

                                 $(300,000)        $(1,005,858)    2,116,000
                                 =========         ===========     =========

     Income tax expense (benefit)  attributable to continuing operations for the
years ended  September 30, 1999, 1998 and 1997 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:


                                       1999           1998           1997
                                       ----           ----           ----

    Computed "expected" income

     Tax expense (benefit)          $  57,667     $(2,105,823)    $1,828,311
     State income taxes, net of
      Federal benefit                 (31,968)         55,598        278,256
     Change in deferred tax net
      asset
      Valuation allowance            (378,532)        935,679           --
     Other                             52,833         108,688          9,433
                                    ----------     -----------     ----------
                                     (300,000)     (1,005,858)     $2,116,00
                                    ==========     ===========     ==========


<PAGE>


     The  temporary  differences  that give  rise to a  significant  portion  of
deferred tax assets and liabilities (continuing and discontinued  operations) as
of September 30, 1999 and 1998 are as follows:




         Deferred tax assets:

          Allowance for bad debts              $  381,912     $  656,731
          Inventory reserve                         ---        1,997,957
          Net operating loss carryforwards      2,646,764        272,777
          Plant and equipment                       ---           13,385
          Other                                    11,990        109,415
                                                ---------      ---------

           Gross deferred tax assets            3,040,666      3,050,265
          Valuation allowance                  (2,655,762)    (3,034,294)
                                               -----------    ----------
             Deferred tax assets - net
             of valutaion allowance               384,904         15,971
                                               -----------    ----------

             Deferred tax liabilities -
             Plant & Equipment                     61,900

               Other                               23,004         15,971
                                               -----------    ----------
             Gross Deferred Tax Liabilities        84,904         ----
                                               -----------    ----------
                 Net deferred tax assets          300,000         ----
                                               ===========    ==========


     Increase  in the  valuation  allowance  for 1998 is  allocated  $935,679 to
income tax benefit  from  continuing  operations  and  $2,098,615  to income tax
benefit from discontinued operations.






<PAGE>



                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

        The increase in the  valuation  allowance  for deferred tax assets as of
        September 30, 1999 was $2,655,762. 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 assessment.  Based on
        the prior year loss and the  unpredictable  nature of the  markets,  the
        Company  operates  in,  Management  recorded a  valuation  allowance  of
        $2,655,762  at  September  30, 1999 for the portion of the  deferred tax
        asset and Net  Operating  Losses not  expected  to be realized in fiscal
        2000.

        At September 30, 1999, the Company has net operating loss  carryforwards
        for federal  income tax  purposes of  $7,784,601which  are  available to
        offset future federal taxable income through 2019.

(8) DISCONTINUED OPERATIONS

        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  $477,000  charge  for  future
        operating  results  through  the  phase-out  period and a  writedown  of
        $4,796,000 to inventory,  accounts receivable,  leasehold  improvements,
        and equipment to estimated net  realizable  values.  In fiscal 1999, the
        Company had liquidation revenues of $1,245,325 and incurred direct costs
        of $425,366.

         The Company revised the estimate for completion of the Phase-Out period
        and accordingly, the operating results of the discontinued Recycling and
        Recovery Equipment business  operations,  including provisions for lease
        termination  costs,  employee  benefits and expenses during the extended
        Phase-Out  Period  through  June 30, 2000 were  revised to $304,209  and
        inventory,   accounts   receivable,   and  equipment  estimated  at  net
        realizable  values of $1,098,760.  These  estimates have been segregated
        from  continuing  operations and reported as a separate line item in the
        accompanying  consolidated statement of operations.  As shown below, the
        revenues from discontinued operations were completely offset by the cost
        of  operations  and change in  estimates  resulting in no income or loss
        from discontinued operations.

        Operating  results  (exclusive  of any  corporate  charges and  interest
        expense  and  the  aforementioned   provisions)  from  the  discontinued
        Recycling and Recovery Equipment segment are as follows:


                                        1999        1998          1997
                                        ----        ----          ----

              Revenues               $1,245,325   $ 1,435,350   $2,352,789
                                     ==========   ===========   ==========

              Loss before income
                taxes                $  ---       $(1,024,840)  (3,594,994)
              Income tax benefit     $  ---       $    ---      (1,219,000)
                                     ----------   ------------  -----------
              Loss from
              discontinued
               operations            $  ---       $(1,024,840) $(2,375,994)
                                     ==========   ===========   ==========


        During the fourth quarter of fiscal 1997, the Company  recorded a charge
        of  approximately  $1,600,000  to  write  down  recycling  and  recovery
        equipment inventories to estimated net realizable values.



<PAGE>


                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

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



                                               1999          1998
                                               ----          ----

         Assets:

           Accounts receivable               $209,122      $ 130,000
           Inventories                        877,121      1,436,948
           Equipment and other                 12,517         30,000
                                           ----------     ----------
                                           $1,098,760     $1,596,948
                                           ==========     ==========

         Liabilities:

           Accounts Payable                $ ----         $ 165,000
           Accrued Liabilities                304,209       311,687
                                           ----------     ---------
                                              304,209       476,687
                                           ==========     =========




(9) STOCK OPTIONS

    (a) EMPLOYEE

        The Company has two stock  option plans (the Option  Plans)  pursuant to
        which  500,000  shares of common stock for each plan have been  reserved
        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, 1999, 1998 and 1997 are summarized as follows:


<PAGE>

<TABLE>
<CAPTION>

                                                   1999                       1998                    1997
                                                   ----                       ----                    ----

                                       WEIGHTED AVERAGE EXCERCISE       WEIGHTED AVERAGE        WEIGHTED AVERAGE
                                                                            EXERCISE               EXERCISE

                                           SHARES       PRICE         SHARES       PRICE        SHARES       PRICE
                                           ------       -----         ------       -----        ------       -----
<S>                                         <C>          <C>           <C>          <C>          <C>          <C>

          Outstanding at
           beginning of year              283,500      $ 7.15         316,500      $7.56       370,000       $ 7.90
           Granted                        380,500         .76         100,000       5.10        76,000         7.63
           Exercised                         --           --            --           --        (47,833)        7.83
           Forfeited                     (227,500)       6.69        (133,000)      6.58       (81,667)        9.25
                                         ---------     ------        ---------      -----      --------      ------

          Outstanding at end of
            Year                          436,500        1.82         283,500       7.15       316,500         7.56
                                         ========      ======         ========      =====      =======       ======

          Options exercisable at
            year end                      101,000        5.59         160,500       8.03       204,668         7.35
                                         ========      ======         ========      =====      =======       ======

          Weighted average
           fair value of
           options granted
           during the year                             $ 0.60                       1.52                       1.70
                                                       ======                       =====                    ======


</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 70 % in 1999,
48% in 1998 and 17% in  1997;  expected  dividend  yield  of 0%;  and  risk-free
interest rate of 5.88 % in 1999, 4.25% in 1998 and 6.22% in 1997.



<PAGE>

<TABLE>
<CAPTION>





                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued



                                    OPTIONS OUTSTANDING                OPTIONS EXERCISABLE
                                    AT SEPTEMBER 30, 1999              AT SEPTEMBER 30, 1999
                                    ---------------------              ---------------------

                                 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>
$ 50-$2.00        380,500           9.44            $    .76          45,000          $ 1.33
  $6.00            15,000            .53                6.00          15,000            6.00
$7.50-$11.88       41,000           1.40               10.11          41,000           10.11
                 --------        --------           ---------        -------          -------
                  436,500           8.38                1.82         101,000            5.59
                 ========        ========           =========        =======          =======


</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) would have been changed to the pro forma amounts as indicated
below (in thousands of dollars, except per share amounts):


                                             1999      1998         1997
                                             ----      ----         ----

             Net income (loss):

                As reported                $ 470    $ (11,485)      $885

                Pro forma                    385      (11,581)       841

             Diluted income (loss) per share:

               As reported                 $ .09       $(2.30)      $.18

               Pro forma                     .07        (2.32)       .17


     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 all options  were
forfeited  by  Colmen.  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.

<PAGE>



                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(11)abOPERATING SEGMENTS

     The Company has two 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.  The  Company  does not
allocate the majority of interest expense, all corporate overhead and income tax
expense or benefit to individual segments in evaluating performance.

     There have been no  intersegment  sales for the years ended  September  30,
1999, 1998 and 1997.

     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          PRODUCT       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                ------         -------         20,687          20,687
   by the equity method

  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>

<PAGE>


                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


<TABLE>
<CAPTION>
                                     REFRIGERANT      BALLAST
                                     PRODUCT          PRODUCT       CORPORATE      CONSOLIDATED
                                     -----------      -------       ---------      ------------
<S>                                     <C>             <C>           <C>              <C>


Year ended September 30, 1998:
 Revenues from external customers      34,482,160     4,001,010        -------         38,483,170

 Interest income                           56,033      -------         (1,291)             54,742

 Interest expense                       -------        -------      1,088,241           1,088,241

 Depreciation and
  amortization expense                    651,152       134,043        -------            785,195

 Segment income (loss), before
  income taxes                         (4,472,781)      317,962    (2,038,780)         (6,193,599)


 Segment assets                        16,760,761     1,488,611     3,714,648          21,964,020

 Investment in equity method             -----           ------       547,786             547,786
  investees

 Expenditures for segment assets          207,116        69,836       ------              276,952

Year ended September 30, 1997:

 Revenues from external customers      50,605,971     4,490,983       -------          55,096,954

  Interest income                          37,357       ------        -------              37,357

  Interest expense                        -------       ------      1,009,108           1,009,108

  Depreciation  and
   Amortization expense                   657,287       131,040       -------             788,327

  Segment income (loss), before
   taxes                                6,283,153       418,050    (1,323,819)          5,377,384

  Segment assets                       26,739,72      1,485,291     1,554,622          29,779,640

  Investment in equity method            -------        ------        668,938             668,938
   investees

  Expenditures for segment assets        804,046         71,678        -------            875,724

Reconciliation of Consolidated:


      Assets                                1999                  1998                    1997
------------------------------------------------------------------------------------------------------------
Total Assets for reportable segments     $20,851,048            $21,964,020            $29,779,640
Assets of discontinued operations          1,098,760              1,596,948              7,766,309
                                         -----------            -----------            -----------
Consolidated Assets                      $21,949,808            $23,560,968            $37,545,949



</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.

        No individual or related group of customers  accounted for more than 10%
of the Company's total consolidated revenues.




                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(12)  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  1999,  1998 and
1997. The Company also leases other operating and office facilities  pursuant to
operating leases expiring through 2004.

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


                                 2000     $551,466
                                 2001      262,968
                                 2002      197,540
                                 2003      192,207
                                 2004       81,294
                                          --------
                                 Total  $1,285,475

        Total rental  expense was $556,865,  $606,708 and $534,015 for the years
ended September 30, 1999, 1998 and 1997, respectively.

    (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, 1999,  the Company has fully funded this  obligation.  The Company
does not expect any significant  cleanup costs in connection with the closure of
its facility.


                           EVTC, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(13) SUBSEQUENT EVENTS

     On July 20, 1999 the Company's board of directors authorized the Company to
enter into an agreement 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 for the subscription  stock
issued.  The Company  intends to use 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
afreegift,  as  discussed  below.  The  sell  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.  With the  signing  of the  formal  agreement  to  purchase
afreegift,  on December 22, 1999, the Company is in the process of selling these
shares.

     On November  18, 1999,  an appraisal  was  completed  of the  Lakewood,  NJ
property  that the Company  leases from Mr.  George  Cannan,  CEO and  principle
shareholder.  The appraisal  reported an appraisal  value in excess of $800,000.
Mr.  Cannan has offered the property for sale to the Company for  $871,000.  The
Company is currently in the process of obtaining a loan from a local bank in New
Jersey for approximately $500,000. The mortgage loan will be used in conjunction
with the forgiveness of the $371,016 note receivable from Mr. Cannan to purchase
the property.

     On December 22,  1999,  the Company  entered into an Agreement  and Plan of
Reorganization (the "Agreement") with afreegift.com,  Inc., a Nevada corporation
("afreegift"),   Sakoff   Enterprises,   Inc.,  a  Delaware   corporation   (the
"Shareholder"),  and Scott L. Sakoff ("Sakoff"). Under the Agreement,  afreegift
will merge into e  solutions  marketing,  inc.,  a new wholly  owned  subsidiary
formed by the Company in  December of 1999,  ("e  solutions"),  in exchange  for
common stock of the Company.  Afreegift is an Oak Brook, Illinois based internet
direct marketing  company.  The transaction is intended to qualify as a tax-free
reorganization   and  will  be  accounted  for  using  the  purchase  method  of
accounting.

     The  consummation  of the  transactions  contemplated  by the  Agreement is
subject to  approval by the  Company's  stockholders.  An annual  meeting of the
Company's  stockholders  will be called for February 28, 2000 for the purpose of
seeking  ratification  and  approval  of  the  Agreement  and  the  transactions
contemplated  thereby.  Subject to  stockholder  approval  and  satisfaction  of
certain pre-closing  conditions,  the Shareholder will be entitled to receive at
the closing a number of shares of the  Company's  common stock to be agreed upon
prior to the closing and the right to receive additional shares of the Company's
common stock (the  "Earn-Out  Shares") upon  satisfaction  of certain  financial
performance objectives. In no event shall the number of shares issued at closing
and Earn-Out Shares exceed 8,000,000.

     If the merger is  consummated,  the Company  expects to expand its board of
directors to seven members.  The Shareholder  will have the right to three seats
on the  Company's  board so long as the  subsidiary  meets  specified  financial
performance  objectives.  Also, at the closing of the merger,  Sakoff will enter
into an  employment  agreement  with e  solutions  under  which he will serve as
President and Chief Executive Officer of e solutions . The employment  agreement
is for a term of 1 year.  The  Company  is  obligated  to renew  the  employment
agreement  for an  additional  1-year  term  upon e  solutions  meeting  certain
performance goals.

     Pending  stockholder action on the merger, the Company is obligated to lend
$1,000,000 to afreegift at times specified in a funding agreement.  In exchange,
the Company will receive a note from afreegift secured by all of its assets. The
note is to be repaid in a year and bears interest at 9%.

     The Company  intends to launch its first  Permission  Marketing web site in
the Spring of 2000. The Company  expects to formally close on the transaction in
the quarter ending March 31, 2000.



<PAGE>

<TABLE>
<CAPTION>

                                                              SCHEDULE II
                           EVTC, INC. AND SUBSIDIARIES


                        Valuation and Qualifying Accounts

                  Years ended September 30, 1999, 1998 and 1997



                                                            OTHER
                                           BEGINNING        CHARGED TO          ADDITIONS OR          ENDING
                                           BALANCE          EXPENSE             (DEDUCTIONS)          BALANCE
                                           ---------        ----------          -------------         -------
<S>                                          <C>               <C>                  <C>                   <C>

   Allowance for doubtful accounts:

     Continuing Operations:

            1999                           $1,512,868         $  250,975        $  (943,418)        $ 820,425
            1998                              177,430          1,524,723           (189,285)        1,512,868
            1997                              171,085            170,659           (164,314)          177,430

    Discontinued Operations:

            1999                           $  418,695         $   --                   (800)         $417,895
            1998                              140,000            278,695                --            418,695
            1997                               20,000            120,000                --            140,000

  Reserve for inventory obsolescence:

     Continuing Operations:

            1999                           $   --             $    --           $       --           $  --
            1998                               --                  --                   --              --
            1997                               --                  --                   --              --

     Discontinued Operations:

            1999                          $ 5,876,344         $    --           $  2,115,483      $3,760,861
            1998                            1,185,000         4,796,005              104,661       5,876,344
            1997                               60,000         1,625,000              500,000       1,185,000

     Valuation allowance for deferred tax asset:

     Continuing operations:

            1999                         $   935,679          $   --            $   (378,532)     $  557,147
            1998                               --                 --                 935,679         935,679
            1997                               --                 --                    --              --

     Discontinued operations:

            1999                         $ 2,098,615         $    --            $       --        $2,098,615
            1998                               --                 --               2,098,615       2,098,615
                                               --                 --                    --              --
</TABLE>



<PAGE>




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

 On January 22, 1999 the Company  severed its  relationship  with its certifying
accountants,  KPMG, LLP ("KPMG"). The action was recommended and approved by the
audit committee of the Company.

KPMG's  reports on the  Company's  financial  statements  for the past two years
contained no adverse opinion or disclaimer of opinion,  and was not qualified as
to uncertainty, audit scope or accounting principles.

During  the most  recent  two  fiscal  years and any of the  subsequent  interim
periods  preceding  January 22, 1999,  there were no  disagreements  between the
Company and KPMG on any matters of accounting principles or practices, financial
statement disclosure,  or auditing scope or procedure,  which disagreements,  if
not  resolved  to the  satisfaction  of KPMG,  would  have  caused  it to make a
reference to the subject  matter of the  disagreements  in  connection  with its
reports on the financial statements for such years, except as follows:

There  was a  disagreement  with KPMG  concerning  the  amount of the  valuation
allowance for deferred tax assets at September 30, 1998.  Discussions took place
between KPMG and the audit committee of the Company. The dispute was resolved to
KPMG's  satisfaction  and a  valuation  allowance  of one  hundred  percent  was
recorded  on the books of the  Company.  KPMG has stated  that if the  valuation
allowance had not been recorded,  its report on the Company's 1998  consolidated
financial statements would have been modified.

On November 23, 1999, the Company  appointed BDO Seidman,  LLP as its certifying
accountants.  The action was  recommended and approved by the audit committee of
the Company.




<PAGE>




                                    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  30,1999
were:


      NAME                        AGE                  POSITION
      ----                        ---                  --------

 George Cannan, Sr.                56          Chairman, Chief Executive
                                                Officer and Director

 David Keener                      35          Chief Financial Officer

 Caroline Costante                 37          Secretary

 John Stefiuk                      48          Director

 John D. Mazzuto                   51          Director

 Robert J. Casper                  56          Director


     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. 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.

     DAVID A. KEENER joined the Company in 1998 as its Chief Financial  Officer.
Mr. Keener is a Certified Public Accountant.  Prior to joining the Company,  Mr.
Keener  was  President  of  Dual-Heat  LTD from  April  1996 to January of 1998;
Business Control Manager of Sensormatic  Electronics  Corporation from June 1994
to April 1996;  and Audit Manager with Deloitte & Touche,  LLP from January 1988
to May 1994.

     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.

    JOHN D. MAZZUTO is the President of Platinum Holdings,  a private investment
company.  Mr.  Mazzuto has held prior  positions  with Asian Oceanic  Group,  an
international  merchant bank where he served as President of the bank's New York
subsidiary and Group Managing Director of the parent company.  Prior to this, he
held the position of Managing Director of Corporate Finance for Chemical Bank.

     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.




<PAGE>


INFORMATION CONCERNING BOARD

    The Board of Directors met three times during the 1999 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. Members of
the Executive Committee are Messrs. George Cannan and John Mazzuto.

    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"):

                                                                    Stock
                                                                    Option
   Name and Principal Position       Year    Salary     Bonus ($)  (shares)
   ---------------------------       ----    ------     ---------  --------

   George Cannan, Sr.                1999    $200,000     (1)        -0-
    Chairman/CEO                     1998    $200,000     (1)        -0-
                                     1997    $200,000     (1)        -0-


   David A. Keener                   1999    $123,077     (1)      45,000
    Chief Finncial Officer           1998    $ 85,998                -0-


   James Hellauer(2)                 1999    $   -0-      (1)      45,000
    CEO/President



(1) Represents less than 10% of the Executive's compensation.
(2) Mr.  Hellauer  resigned in 1999.  Mr.  Hellauer's  salary was paid by Colmen
Capital Advisors from the monthly management fees paid by the Company to Colmen.




<PAGE>
<TABLE>
<CAPTION>


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, 1999.

                       NUMBER OF OPTIONS              % OF TOTAL OPTIONS
                  GRANTED AT FISCAL YEAR END         GRANTED TO EMPLOYEES
                       SEPTEMBER 30, 1999              IN FISCAL YEAR           EXERCISE EXPIRATION  GRANT
NAME                        (#)                       September 30, 1999    ($/SHARE)       DATE     VALUE $
------------------------------------------------------------------------------------------------------------
<S>                       <C>                                <C>               <C>           <C>       <C>

George Cannan, Sr.        0                                 0.0%             $0.000          ---         $0.00

David Keener            45,000                             11.8%              $0625                 $28,125.00

James Hellauer            0                                 0.0%             $0.000                      $0.00


</TABLE>


Option Exercises During, and Stock Options Held at End of Fiscal 1999

The following  table  indicates the total number and value of exercisable  stock
options held by the Named  Executives  as of September 30, 1999. No options were
exercised by the Named Executives in the fiscal year ended September 30, 1999:


<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>               <C>

  George Cannan, Sr.                 0                  0                 $ 0                 $ 0

  David Keener                       0              45,000                  0                50,850

  James Hellauer                     0                   0                  0                   0


</TABLE>


(1) Based on the last sale price for the Company's Common Stock on September 30,
1999 of $1.13 per share, as reported by NASDAQ.

Stock Option Plans

The Company  maintains  stock option plans  designated  as the 1992 Stock Option
Plan  (the  "1992  Plan")  and the 1996  Stock  Option  Plan (the  "1996  Plan")
collectively  the "Option  Plans"  pursuant to each of which  500,000  shares of
Common  Stock have been  reserved  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.




<PAGE>


EMPLOYMENT AGREEMENTS

    David Keener, the Company's Executive VP and CFO, is subject to the terms of
an  employment  agreement  whereby  Mr.  Keener is  entitled  to  receive a base
compensation of $120,000,  bonus and benefits  compensatory with other executive
officers of the Company.



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The  following  table sets forth,  as of September  30,  1999,  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., 121 S. Norwood Dr., Hurst, Texas
76053. All shares are owned directly by the named person.


                                         NUMBER OF
                    NAME                SHARES OWNED    PERCENT OF CLASS(1)
                    ----                ------------    -------------------

                George Cannan, Sr.       1,710,060             29.6%

                Caroline Costante          122,761 (2)          2.1%

                David Keener                63,000 (3)          1.1%

                John Stefiuk                65,000 (4)          1.1%

                Robert Casper               31,000 (5)          0.5%

                John Mazzuto                35,000 (6)          0.6%

            All Directors and Officers
                 as a Group (6 persons)  2,026,821             35.1%


----------

(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  40,000 shares of Common Stock  issuable upon the exercise of
    stock options (10,000 of which are presently exercisable).
(3) Includes 45,000 shares of Common Stock  issuable  upon the exercise of stock
    options  (none are presently exercisable).
(4) Includes  15,000 shares of Common Stock issuable upon the exercise of stock
    options, which are presently  exercisable.  (5)abIncludes 5,000 shares of
    Common Stock issuable upon the exercise of stock options, which are
    presently exercisable.
(6) Includes 35,000 shares of Common Stock  issuable upon the exercise of stock
    options, which are presently exercisable.



<PAGE>



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company's 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, which it could obtain from a non-affiliated third party.

As of September 30, 1999, the Company had a $371,016 note receivable from George
Cannan.  This note  receivable  bears interest at 7% per annum and is secured by
the 21,000  square foot  building  located at 550 James  Street in Lakewood  New
Jersey.  The Company plans to purchase the Lakewood,  New Jersey  facility for a
fair market value of $871,000, financed by a mortgage for approximately $500,000
and forgiveness of the note receivable due from George Cannan.



<PAGE>



ITEM 14.         EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBIT      DESCRIPTION



      21.1         Subsidiaries of Registrant

      23.1         Consent of KPMG LLP

      23.2        Consent of BDO Seidman, LLP

       27          Financial Data Schedule





<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 Hurst, State of Texas on
the 30th day of December, 1999.

                                        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:



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

  /s/George Cannan, Sr.    Chairman, Chief Executive Officer   December 30,1999
  GEORGE CANNAN, SR.       and Director

  /s/David Keener          Chief Financial Officer             December 30,1999
  DAVID KEENER

  /s/John Stefiuk          Director                            December 30,1999
  JOHN STEFIUK

  /s/John Mazzuto          Director                            December 30,1999
  JOHN MAZZUTO

  /s/Robert Casper         Director                            December 30,1999
  ROBERT CASPER









<PAGE>



                                INDEX TO EXHIBITS


            Exhibit No.         Description
            -----------         -----------

              21.1          Subsidiaries of Registrant

              23.1          Consent of KPMG LLP

              23.2          Consent of BDO Seidman, LLP

                27          Financial Data Schedule




<PAGE>


                     EXHIBIT 21.1 SUBSIDIARIES OF REGISTRANT

Effective December 30, 1999 the subsidiaries of the Company were:

      Environmental Materials Corp.
      Envirogroup Services, Inc.
      Refrigerant Reclaim Services, Inc.
      FulCircle Recyclers, Inc.
      E.M.C. Export Co., Inc.
      e solutions marketing, inc.



<PAGE>



                                                                Exhibit 23.1


                          INDEPENDENT AUDITORS' CONSENT

The Board of Directors
EVTC, Inc.:

We  consent  to  incorporation  by  reference  in  the  Registration   Statement
(No.333-8355)  on Form S-8 of EVTC,  Inc. of our report,  dated January 5, 1999,
relating to the  consolidated  balance  sheet of EVTC,  Inc. as of September 30,
1998 and the related  consolidated  statements of operations  and  comprehensive
income (loss), stockholders' equity, and cash flows for each of the years in the
two-year  period ended September 30, 1998, and 1998 and 1997 data in the related
financial  statement  schedule  which report  appears in the  September 30, 1999
annual report on Form 10K of EVTC, Inc.



KPMG, LLP



Dallas, Texas
December 30, 1999



<PAGE>


                                  Exhibit 23.2



                          INDEPENDENT AUDITORS' CONSENT

The Board of Directors
EVTC, Inc.:

We consent to  incorporation  by reference in the  Registration  Statement  (No.
333-8355) on Form S-8 of EVTC, Inc. of our report, dated December 8, 1999 except
for Notes 5 and 13, as to which the date is December 23,  1999,  relating to the
consolidated  balance sheet of EVTC,  Inc. and  subsidiaries as of September 30,
1999, and the related  consolidated  statements of operations and  comprehensive
income (loss), stockholders' equity, and cash flows for the year ended September
30, 1999, and related financial  statement  schedule which report appears in the
September 30, 1999 annual report on Form 10-K of EVTC, Inc.





                                            BDO Seidman, LLP



Dallas, Texas
December 30, 1999




<PAGE>