<PAGE>

                                  FORM 10-KSB

                   Annual report under Section 13 or 15(d) of
                      the Securities Exchange Act of 1934

                    For the fiscal year ended: May 31, 1999

                          WHITNEY AMERICAN CORPORATION
               (Exact name of registrant as specified in charter)

                                    DELAWARE
         (State or other jurisdiction of incorporation or organization)

                    0-22907                        84-1070022
            (Commission File Number)     (I.R.S. Employer Identification Number)

            8150 Leesburg Pike, Suite 1200, Vienna, Virginia  22182
                    (Address of Principal Executive Offices)

                                 (703) 893-0582
              (Registrant's telephone number, including area code)


     Securities registered under Section 12(b) of the Exchange Act:   NONE

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

                        Common Stock, $.00001 PAR VALUE


Check whether the issuer: (1) filed all reports required to be filed by Section
13 or15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report), and (2) has been
subject to such filing requirements for the past 90 days.

     Yes __________     No _____  X_____


Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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-KSB
or any amendment to this Form 10-KSB. [ ]

The registrant's revenue for its most recent fiscal year.   $ 13,514,743
                                                          --------------

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked prices of such common equity, was not
determinable.

At May 31, 1999, a total of 4,266,020 shares of common stock were outstanding.
<PAGE>

                                     PART I

Item 1.  Description of Business.

DEVELOPMENT OF THE BUSINESS

Whitney American Corporation (the "Company"), is a holding company which,
through its wholly-owned operating subsidiary, Kemron Environmental Services,
Inc., provides environmental investigation and engineering services;
environmental assessments; consulting and site remediation services; and
environmental testing and analytical services.

The Company was incorporated on June 18, 1987, under the laws of the State of
Delaware.  The Company's initial activities were directed towards the raising of
capital.  Pursuant to an Agreement and Plan of Reorganization, Industrial Waste
Processing, Inc., a Nevada corporation ("IWP"), was merged with and into the
Company on October 20, 1988 and subsequently changed its name to Industrial
Waste Processing, Inc.  On April 17, 1989, the Company's parental affiliate
Pacific Energy and Mining Company ("PEMC") reacquired all of the Company's
outstanding obligations.  The Company had been inactive from  April 1989 through
February 1998 with no significant assets.  In February 1997, the Company filed
with the Delaware Secretary of State a Certificate of Amended and Restated
Certificate of Incorporation that, among other things, changed the Company's
name back to Whitney American Corporation.

In keeping with the Company's strategic business plan, the Company, on March 10,
1998,  acquired Kemron Environmental Services, Inc.(Kemron).  Kemron was
acquired through a tax-free stock exchange agreement.  Kemron merged with and
into the Company, effectively changing the state of domicile of the Company as a
result of Kemron being the surviving corporation. Upon consummation of the Stock
Exchange Agreement, the stockholders of Kemron became the owners in the
aggregate of approximately 86% of the outstanding common stock of the Company.
Pursuant to the Stock Exchange Agreement, an additional 3,500,000 shares of
common stock, $.00001 par value, of the Company were issued in exchange for the
existing common stock of Kemron. The transaction was treated as a reverse
acquisition, recorded at historical cost under the purchase method.  Therefore,
the results of operations and other historical information of Kemron presented
in this report are those of the Company.

Concurrent with the reverse acquisition with and into Whitney, the Company
entered into a Stock Exchange Agreement with three additional entities:  Exeter
Group, Inc. ("Exeter"), Coastline International, Inc. ("Coastline"), and New
Horizons, Inc. ("New Horizons").  As a result of management differences and the
Company's lack of management control over these entities, the Company entered
into separate rescission agreements on October 19, 1998, April 26, 1998 and May
12, 1998, respectively, which collectively address the Company and Exeter,
Coastline and New Horizons agreements that involved the return of the respective
shares originally issued by the Company in connection with the failed mergers.
However, under terms of the settlement agreements, the Company was successful in
recovering all but 190,973 shares of common stock and stock options for 135,532
shares of common stock, originally issued in connection with the failed mergers.

BUSINESS OPERATIONS

The Company, through its wholly-owned subsidiary, provides a wide range of
environmental consulting and analytical services to the public and private
sectors.

Consulting and Engineering Services Group
-----------------------------------------

The Company, through its operating subsidiary, provides services under three
separate regional consulting offices located in Atlanta, Georgia; Marietta,
Ohio; and Vienna, Virginia.  Environmental consulting services are performed for
a wide variety of governmental and private-sector clients, predominantly in the
areas of water pollution control, and investigation and remediation of soils and
ground waters that have been contaminated with hazardous or non-hazardous
contaminants.  The consulting activities involve providing expert scientific,
engineering, and regulatory policy analyses to clients that are regulated
directly
<PAGE>

under various federal, state, and local environmental laws and regulations. The
remediation services involve providing design, fabrication, installation and
operations and maintenance of technologies to reduce the levels of contamination
in soils and ground waters.

Each regional office is responsible for the project management and ultimate
profitability of its operation.  Contracts are competitively bid and are on a
fixed price, time and materials, and cost reimbursable basis.  The length of
most contracts is less than one year; however, larger remediation and operation
and maintenance contracts may extend to two or three years for completion.

The consulting services group provides investigations and pre-acquisition audits
of environmentally contaminated waste sites such as disposal units,
manufacturing facilities, abandoned sites, and military bases covered under RCRA
and CERCLA regulations.   The related activities performed for investigations
include sampling and analysis of sediment for contamination; test borings to
evaluate geological conditions; installation, development, and sampling of
groundwater monitoring wells.  Site investigations and assessments ascertain
whether contamination exists and, if so, the consulting services will propose
the most cost effective solutions to mitigate this contamination.

The consulting services group has considerable experience in designing remedial
action plans that eliminate or reduce the release of hazardous contaminants into
the environment.  Remedial alternatives are analyzed for effective solutions
while remaining cost effective.  The consulting service's various alternatives
proven through successful site work include in-situ treatment, soil aeration and
bioremediation, groundwater air sparging, and soil vapor extraction.  These
alternatives can provide cost-effective and environmentally-sound solutions to
contamination problems without the need to take more extensive efforts of
excavation, pumping, and off-site disposal.

One of the principal consulting services provided is underground storage tank
(UST) testing, removal, investigation and remediation.  Contracts under which
the Company's operating subsidiary are currently performing include Fortune 100
companies and the State of Georgia under the state-funded Georgia UST Management
Program.

Other services provided through the Company's operating subsidiary include
asbestos services such as asbestos surveys, abatement design and abatement
monitoring programs.  Additional services include; lead based paint assessments,
monitoring, and remediation; wetland delineation and mapping, permitting,
functional value assessment, and mitigation/restoration; and ecological
investigations concerning the effects of effluents and land-disturbing
activities on aquatic biota.

Analytical Services
-------------------

The Company operates a comprehensive environmental laboratory equipped with
fully-automated, state-of-the-art instrumentation.  The laboratory, located in
Marietta, Ohio, performs services under unit based pricing which can be
contracted for individual job orders or  master service agreements.  The longer
duration projects are typically in support of an operation and maintenance phase
of contaminated sites that require monitoring of cleanup levels through all
stages of remediation.

Sample analysis conducted at the laboratory includes soil, water, biological
samples, sludge and waste.   The Company's laboratory operation has experience
in most standard methods for sample testing as defined through EPA, NIOSH, ASTM,
and APHA.  The services also extend to providing consultation and
recommendations in the design phase of any sampling project.


SUPPLIERS AND CUSTOMERS

The operating subsidiary purchases equipment and supplies for the laboratory
operation and consulting services.  The laboratory operation engages in the most
significant volume of purchase activity with vendors and suppliers.  Supplies
for the laboratory include kits for water/soil sample shipment, glassware, gases
such as Argon and Nitrogen, solvents such as deionized water, and general office
supplies.  Although
<PAGE>

the laboratory has maintained ongoing relations with various suppliers, there
are no dependencies with any individual vendors. Pricing is reevaluated on a
periodic basis and almost all supplies can be obtained through other suppliers
at competitive prices.

The consulting  services has teaming agreements with various subcontractors
based on the type of project work, qualifications and location of subcontractor,
and competitiveness of pricing.  The relationship with outside consulting
companies is based solely on the project work and as projects turnover, so will
the consulting service's subcontractor support.  There are no contractual
arrangements with subcontractors for which the Company's operating subsidiary
has long-term commitments.

The customers of the laboratory and consulting services include both private
sector clients and government or publicly funded entities.  In fiscal 1999, the
Company estimates that approximately 59% of its operating subsidiary's revenues
were derived from private sector clients and 41% from government contracts.

The primary clients that represent 60% of the Company's operating subsidiary's
sales include Union Carbide Corporation, Earth Tech, Landrum & Brown, State of
Georgia, Department of Energy, U.S. Air Force, and the U.S. Army Corp of
Engineers.


LICENSES

The Company, through its operating subsidiary, is licensed and/or certified in
all jurisdictions where required in order to conduct its operations.  In
addition, certain management and staff members are licensed and/or certified by
various governmental agencies as professional engineers, professional geologist,
subsurface evaluators, hazardous materials manager, remedial site manager,
asbestos supervisors, and asbestos inspectors.


INSURANCE

The Company's operating subsidiary maintains liability insurance for claims
arising from job performance for both consulting and analytical services.  The
policy, which provides a $1.0 million limit per claim and $2.0 million in the
aggregate, insures against both property damage and bodily injury arising from
contracting activities of the operating subsidiary.  The policy is written on an
"occurrence" basis which provides coverage for insured risks that occur during
the policy period, irrespective of when a claim is made.  Higher policy limits
of up to $7.0 million are available for individual projects.  The operating
subsidiary also provides worker's compensation insurance, at statutory limits,
which covers the employees of the Company's operating subsidiary engaged in
laboratory and field service activities.

Certain contracts of the Company's operating subsidiary require performance and
payment bonds for which bonding programs are maintained to satisfy these
requirements.

COMPETITIVE CONDITIONS

The environmental industry is highly competitive and includes both small firms
and large diversified firms, which have the financial, technical and marketing
capabilities to compete on a national level.  The industry is comprised of
dozens of large firms and several hundred small firms.  The small firms tend to
be more regionalized and concentrated to certain geographical locations.  Much
of the work awarded to the Company's operating subsidiary is the result of
competitive pricing, its reputation for quality, and work performance history.


REGULATORY MATTERS

There are relatively few federal, state or local regulations that are directly
applicable to the Company's operating subsidiary.  In general, the consulting
services group provides technical advice to clients who are
<PAGE>

directly affected by federal, state and local regulations. These services do,
however, include conducting investigations and preparing reports according to
federal and state guidance documents that have been developed under numerous
federal and state regulatory programs. The analytical services group must
conduct sample analyses based on certain regulatory standards and methods as
directed through client specifications. It is, therefore, imperative that the
Company's operating subsidiary keep abreast of changes under regulatory programs
as well as new promulgations.

In the course of conducting investigations of hazardous waste sites, the
consulting services group must comply with various federal and state regulations
regarding the shipping of hazardous materials and the disposition of potentially
hazardous investigation-derived wastes.  The shipping of hazardous materials
(generally soil and water samples from waste sites under investigation) is
governed by the Hazardous Materials Transportation Act of 1974 (HMTA), which
establishes rules for the packaging, marking, labeling, and acceptable condition
of hazardous materials offered for intrastate or interstate transportation, and
the Hazardous Materials Transportation Uniform Safety Act of 1990, which amended
HMTA with regard to, among other things, highway routing, shipping papers, and
training requirements.  Disposition of investigation-derived wastes may be
regulated under either the Toxic Substances Control Act (TSCA) if the wastes
contain polychlorinated biphenyls (PCBs), or the Resource Conservation and
Recovery Act (RCRA) if the wastes contain other hazardous materials.

Site remediation involves the actual handling of contaminated materials, and so
the consulting services group's remediation activities are subject to numerous
federal, state and local environmental regulations.  The regulations most often
applied to remediation sites are federal regulations promulgated under RCRA,
TSCA, the Clean Air Act (CAA), and the Clean Water Act (CWA), or the state-
designated counterparts to those federal regulations.  In general, remediation
technologies must be permitted under one or more of these laws.

All site investigation and remediation activities are governed by Occupational
Safety and Health Administration (OSHA) requirements.  These regulations set
forth requirements for engineering and administrative controls, work area
practices, proper supervision, training, medical surveillance, and
decontamination practices for worker and off-site protection.

The Company believes it is in compliance with all of the federal, state and
local statutes and regulations which affect its consulting and remediation
businesses.


EMPLOYEES

Through the acquisition of the operating subsidiary Kemron Environmental
Services, Inc., the Company now has 137 full-time employees, located at the
Vienna, Virginia, Marietta, Ohio, and Atlanta, Georgia offices.  This consists
of senior management, professional staff, scientists, chemists, field
technicians, and staff employees within the consulting services offices, the
laboratory, and the headquarters facility.  The staff employees include
accounting, administrative, sales and clerical personnel.

Exchange Act Registration

The company voluntarily filed with the Securities and Exchange Commission
("SEC") a registration statement on Form 8-A (file no. 0-22907) in order to
register the Company's common stock under Section 12(g) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), which became effective on
September 29, 1997.  The Company had previously filed with the SEC certain
annual, quarterly and other reports on a voluntary basis, but pursuant to that
Exchange Act registration, the Company now is required to file periodic reports
and other information with the SEC as required by the Exchange Act.

Item 2.  Description of Property

As of May 31, 1999, the Company, through its operating subsidiary, leases four
facilities and does not own any real estate.  The headquarters office is
combined with consulting office space in Vienna, VA (8500
<PAGE>

square feet), a portion of which is subleased to another tenant (2900 square
feet). The laboratory facility located in Marietta, OH represents the largest
portion of leased space (18,000 square feet). Other consulting offices are
located in Atlanta, GA (7500 square feet) and Marietta, OH (2000 square feet and
separate from laboratory facility).

Production equipment of the laboratory includes analytical instruments such as
gas chromatographs, high pressure liquid chromatographs, autosamplers, atomic
absorption spectrophotometers, and inductively coupled plasma instruments.  A
significant level of investment in the laboratory has taken place to secure
current technology and enhance computerization in the analytical processes.  The
more recent acquisitions of laboratory equipment have been transacted under
equipment lease arrangements.

The consulting offices are equipped with field vehicles, sampling devices, and
equipment for remediation processes such as air sparging and soil vapor
extraction.

Item 3.  Legal Proceedings

The Company has two separate lawsuits pending that involve employment practices.
The outcome of these lawsuits are currently unknown; however, management
believes it will prevail in its defense, and resolution of the matters will not
have an adverse effect on the financial statements.

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

None


                                    PART II

Item 5.  Market For Common Equity and Related Stockholder Matters.

Market Information

The Company's outstanding common shares were traded in extremely small volumes
during this reporting period.  The more recent trades have ranged in value from
$.07 to $.09 per share.  The Company's common stock is quoted "name only" in the
over-the-counter market under the symbol "WHAM" on the OTC Electronic Bulletin
Board operated by the National Association of Securities Dealers, Inc.  Although
some trading activity has occurred over the past reporting year, there is no
assurance that an active market ever will arise in the Company's shares.
<TABLE>
<CAPTION>
                       FISCAL 1999
                          HIGH      LOW
                       -----------  ----
<S>                    <C>          <C>
     First Quarter            5.75  0.62
     Second Quarter           1.03  0.07
     Third Quarter            0.10  0.06
     Fourth Quarter           0.07  0.07

</TABLE>

Holders

The Company's common stock is held of record by approximately 178 persons, which
does not include shares held in nominee or "street" name.

Dividends

The Company does not expect to pay cash dividends on its capital stock in the
foreseeable future.  Payment of dividends in the future will depend on the
Company's earnings and its cash requirements at that time.

Item 6.  Financial Statements.
<PAGE>

The following table reflects selected consolidated financial data for the
Company for the two fiscal years ended May 31, 1999 and 1998.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                                        For the Years Ending May 31,
---------------------------------------------------------------------------------------------------------
OPERATING DATA                                                           1999                 1998
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                   <C>
Contract revenues                                                         $   13,515           $   10,771
---------------------------------------------------------------------------------------------------------
Gross profit                                                                   3,950                2,792
---------------------------------------------------------------------------------------------------------
Income from operations                                                         1,170                  587
---------------------------------------------------------------------------------------------------------
Other income (expense)                                                          (170)                (475)
---------------------------------------------------------------------------------------------------------
Income before income taxes                                                     1,000                  112
---------------------------------------------------------------------------------------------------------
Net income                                                                     1,000                  112
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
COMMON SHARE DATA
---------------------------------------------------------------------------------------------------------
Net income per common share:
---------------------------------------------------------------------------------------------------------
     Basic                                                                      0.24                 0.03
---------------------------------------------------------------------------------------------------------
     Diluted                                                                    0.21                 0.03
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding
---------------------------------------------------------------------------------------------------------
      Basic                                                                    4,237                3,541
---------------------------------------------------------------------------------------------------------
      Diluted                                                                  4,685                3,646
---------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
---------------------------------------------------------------------------------------------------------
Working capital                                                           $    1,080           $      200
---------------------------------------------------------------------------------------------------------
Total assets                                                                   4,949                4,291
---------------------------------------------------------------------------------------------------------
Long-term obligations                                                            338                  287
---------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                     1,819                  816
---------------------------------------------------------------------------------------------------------
</TABLE>


Item 7.  Management's Discussion and Analysis

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


     FORWARD LOOKING STATEMENTS

This report contains forward-looking statements and information relating to the
Company that are based on the beliefs of its management as well as assumptions
made by and information currently available to its management.  When used in
this report, the words "anticipate", "believe", "estimate", "expect", "intend",
plan and similar expressions, as they relate to the Company or its management,
are intended to identify forward-looking statements.  These statements reflect
management's current view of the Company with respect to future events and are
subject to certain risks, uncertainties and assumptions.  Should any of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described in this
report as anticipated, estimated or expected.  The Company's realization of its
business aims will depend in the near future principally on the successful
completion of its acquisition of operations as discussed below.

WHITNEY AMERICAN CORPORATION

Whitney American Corporation (WHAM) was incorporated on June 18, 1987 under the
laws of the State of Delaware with the intended purpose of raising capital to
acquire business concerns.  Whitney American Corporation had not had any active
business operations since April 1989, other than occasionally searching for a
business to acquire, until the acquisition on March 10, 1998.  In keeping with
the Company's strategic
<PAGE>

business plan, the Company, on March 10, 1998 acquired Kemron Environmental
Services, Inc. (Kemron). The company was acquired through a tax-free stock
exchange agreement. Kemron, as the only operating entity of the Company, was
considered the surviving company.


  FINANCIAL CONDITION OF THE COMPANY AT MAY 31, 1999 VS MAY 31, 1998

As stated above, except for a brief interlude in 1988, Whitney American (the
Company) did not have any business operations or income since 1989, until it
acquired Kemron as noted above.  Therefore, the acquisition made Kemron the
surviving company. Consequently, most of the financial information and data
presented herein is the financial information and data pertaining to Kemron
Environmental Services, Inc., the wholly-owned subsidiary of the Company.

The financial condition of the Company improved considerably for the fiscal year
ended May 31, 1999 as compared to the prior fiscal year.  Total stockholders
equity increased 123% from $815,806 to $1,819,150 for the year ended May 31,
1999.  The current ratio increased to 1.40 for the year ended May 31, 1999 as
compared to 1.06 for the prior year.  Net income generated in the current fiscal
year was the main reason for the significantly improved financial position.  The
additional proceeds achieved from company profits have been applied towards the
repayment of debt.  The line of credit has decreased from $1,490,000 as of May
31, 1998 to $350,000 as of May 31, 1999.

Total assets increased by $658K while total liabilities decreased by $346K as of
May 31, 1999 as compared to May 31, 1998.  This is principally the result of
increased revenues, especially in the final quarter of fiscal year 1999, which
in turn generated increased client receivables as of May 31, 1999.  Total
accounts receivables were $439K higher as of May 31, 1999 compared to prior
year.  In addition, the company invested approximately $700K in new laboratory
instruments and field equipment.  After the depreciation provision, the net book
value of property and equipment has increased by $216K as of May 31, 1999.  The
company has secured lease and financing arrangements for most all equipment
acquisitions, thereby maintaining optimal credit availability.

These changes in financial condition improved the Company's credit position with
its senior lender, allowing the credit line to be renegotiated  to more
favorable terms on the borrowing rate.  The Company maintains a line of credit
of $1.8 million with the bank, secured by the Company's accounts receivable.
The line of credit has provided a significant source of the Company's cash
requirements.  The actual balance on the line of credit will fluctuate during
the period based on financing activities.  There are no significant working
capital requirements pending at May 31, 1999.  The Company's available line of
credit is expected to be sufficient to meet the Company's needs for the
foreseeable future.

     RESULT FROM OPERATIONS AT MAY 31, 1999 VS MAY 31, 1998

The Company continued to demonstrate strong operating performance during the
fiscal year ending May 31, 1999.  The gross revenue increased by $2.8 million, a
26% from the previous fiscal year, while income from operations increased by
$583,038, representing a 99% increase for the year ended May 31, 1999.  Net
income improved by a total of $887,243 for the year ended May 31, 1999, over
seven times the net income of $112,401 reported for the prior fiscal year.
Income per share increased from a $.03 per share in fiscal 1998 to $.24 per
share for the current fiscal year.

The Company's performance for the current fiscal year was very positive.  As
there is every indication that the environmental industry has stabilized, the
company continues to move towards penetrating additional markets and client
base.  The strong operating performance for the fiscal year ended May 31, 1999
was accomplished through several actions taken by management including, but not
limited to the following:

     (1)  Over the past two years, the Company has aggressively put forth a
          marketing plan to develop further diversification of existing client
          base, thereby minimizing any dependency on the Company's core clients.
          Fiscal year 1999 proved to be a successful achievement of this
          marketing effort, as new clients accounted for over $1M of sales for
          the consulting services


<PAGE>

          group and $640 thousand of sales for the laboratory. The most
          significant contracts awarded with new clients include Landrum & Brown
          for phase I/II studies at Cleveland Hopkins Airport and Laroche
          Industries for risk management plans at their various plan sites.

     (2)  The Company has made efforts to expand the service production capacity
          at the laboratory facility under three separate phases. The first
          phase has involved a significant investment in new laboratory
          instrumentation and robotic equipment, over $700,000 of purchased and
          leased equipment has been introduced to the facility in the past year
          to streamline processes and ensure the highest quality standards can
          be attained for the Company's laboratory clients. The second phase was
          the conversion of 1600 square feet of existing warehouse space into
          laboratory space. This buildout was completed in the Spring 1999 and
          has provided critical interim space requirements. These first two
          phases have combined to solve the problem of extending the lab's
          ceiling on service production capacity. Over the past two years, there
          have been time periods in which production capacity has become an
          issue as the lab continues to experience increased revenues and
          backlog.

          The third phase of the laboratory facility involves a proposed major
          expansion effort of 7500 square feet scheduled for completion in the
          Spring 2000. This added facility space will provide the laboratory
          enough capacity to increase to a $10M plus/annual revenue operation.

     (3)  Further reductions have been achieved in overhead expenses for the
          fiscal year ended May 31, 1999. Office space has been realigned for
          both the Atlanta and Vienna offices. The Atlanta office was relocated
          in October 1998 to a building better configured to the consulting
          group's space requirements. In addition, the Vienna office was
          successful in consolidating its office space and securing a tenant to
          sublease the excess space. The amount of overhead labor stemming from
          "bench time" has decreased because of the increased contract work for
          the consulting group which has increased labor utilization.

     (4)  Major enterprise-wide service agreements such as long distance phone
          service and professional liability insurance have been renegotiated
          during the fiscal year with additional rate reductions.

The encouraging operating performance of fiscal year 1999 is expected to
continue and the Company will be looking towards further sales expansion by
focusing on the primary services offered by the Company, while still devoting
attention and resources to the diversification strategy. Some of the following
accomplishments illustrate how the business goals are already being achieved:

     (1)  The laboratory has established itself as one of the premiere
          operations for analytical services under both the Army Corp and AFCEE
          programs. This has fostered expansion of the federal sector work for
          the laboratory both through existing contracts and through outside
          consultant contracts, supporting their federal contacts as a
          subcontractor. The sales growth experienced over the past fiscal year
          in the laboratory operation has been mostly linked to this federal
          sector market.

     (2)  Additional sites awarded under the Georgia Underground Storage Tank
          Program (GUST) contract along with the work involving the report
          reviews of other contractor's corrective action plans (CAP A and CAP B
          reports), providing additional $480 thousand of services under the
          GUST contract for fiscal year 1999.

     (3)  Establishment of projects with new clients that are anticipated to
          cultivate long term relationships with expanded environmental services
          such as risk management planning, health and safety audits/training,
          water resources, waste water treatment, and UIC permitting. New
          accounts for the Company include Larouche Industries, Heavy Duty
          Electric, ConAgra, Texaco, and Coca-Cola Enterprises.
<PAGE>

     Results Of Diversification Strategy

The Company, with the acquisition made in the fiscal year 1998, attempted to
begin implementing its long term strategy of identifying viable companies for
acquisition. The acquisition of Kemron provided the Company with a very
reputable company in the environmental market to serve as a platform for its
diversification strategy.

The Company has launched a new initiative by creating an Emerging Technologies
Division within Kemron. The mission of the new initiative is to identify
companies with new, innovative and emerging technologies and to assist those
companies to meet and/or comply with regulatory requirements which the
technologies may require and to also consult, advise and assist those companies
with the commercialization of the technologies. The Company already has secured
contracts from three companies with technologies in sludge reduction, waste odor
control and water purification and is under discussion with several other
companies with similar or related technologies. The Company hopes to be able to
provide services using these technologies.

     Discussion Of Material Items

     (i)   Short term and long term liquidity

The Company's short and long term liquidity continues to improve as a result of
the profits generated during the fiscal year 1999. Kemron's senior lender, just
subsequent to the year ended May 31, 1999, renewed Kemron's working line of
credit for a $1.8M borrowing capacity. Without lending for a line of credit, the
Company would be adversely affected.

     (ii)  Internal and external sources of liquidity

The only internal sources of liquidity available to the Company are the earnings
of it principal operating subsidiary, Kemron.  External resources may become
available depending on the success of the effort to raise equity capital.  The
Company has explored opportunities with outside investment groups for the
possibility of raising equity capital for the Company.  As of the reporting
date, the Company does not have any such agreements and cannot make any
predictions as to the success of this effort in the future.

     (iii) Material Commitments for Capital Expenditures and Expected Sources

The Company has approved the Marietta, Ohio facility expansion to consolidate
both the laboratory and consulting offices. The development plans are
preliminary but it is anticipated to involve approximately 12,500 square feet of
new office and warehouse space which will adjoin the current laboratory
facility. It is intended that this expansion effort will be financed through a
bank under a conventional mortgage with an estimated cost of approximately $600
thousand.

As discussed earlier, the company has already incurred significant capital
expenditures during fiscal year 1999 through purchases of laboratory equipment
and further automation of all regional offices. The capital expenditures shall
be limited over the forthcoming fiscal year, this will mostly entail the
replacement of equipment that may be taken out of service. Total budgeted
expenditures are not expected to exceed $250 thousand.

     (iv)  Known Trends, Events, or Uncertainties

The only known trends, events, or uncertainties that have had or that are
reasonably expected to have a material impact on the net sales or revenue or
income from continuing operations is the very positive rebound which the
environmental industry, as a whole, seems to be experiencing.  After four to
five volatile years experiencing considerable shutdowns, bankruptcies, mega
mergers and acquisitions, the industry seems to be stabilizing.  This is
particularly true in the environmental testing segment of the market.  The
Company anticipates that this trend will continue and that it will contribute
towards its
<PAGE>

projected 10% increase in total revenue during the fiscal year ending May 31,
2000 which management believes will result in an increase to net revenue.

     (v)   Significant elements of income or loss that do not arise from the
           Company's operations.

The fiscal year 1998 reported $249 thousand loss attributed to the failed merger
of other subsidiaries.  This was presented in the form of a note receivable
write-off of $170 thousand and charges relating to the failed merger equalling
$79 thousand.  However, there were no significant income or loss events to
report during fiscal year 1999.

     (vi)  Causes for Material Changes

There are no causes nor material changes in one or more line items of the
Company's financial statements between the periods ending May 31, 1999 and May
31, 1998.

     (vii) Seasonal Aspects

The environmental market as a whole may be subject to seasonal factors,
particularly harsh winters. Prolonged periods of cold temperatures impact the
ability to conduct field activities which then may reverberate throughout the
industry. While the engineering and consulting activities may be somewhat
affected, Kemron's laboratory operation is very susceptible to this factor.
Testing laboratories are volume sensitive operations with a substantial fixed
operating cost. Strategic marketing of clients located in geographic areas with
warm weather and careful planning are a prerequisite for profitable winter
months. Kemron's laboratory operation experienced a very positive 1999 and 1998
winter, unlike the harsh winter of 1997, which resulted in a much improved
fiscal 1999 performance by the laboratory.

YEAR 2000

The company is in process of upgrading its computer applications to ensure
functionality with respect to the Year 2000. The Year 2000 issue affects most
corporations and concerns the inability of information systems, primarily
computer software programs, to properly recognize and process date-sensitive
information relating to the Year 2000 and beyond. The Company believes it is
pursuing appropriate courses of action to identify and address Year 2000
readiness.

The principal operating functions that are dependent on information systems have
been identified, primarily the accounting system and operating systems that
support the laboratory instruments.  Most of the related information systems
have already been converted and tested for Year 2000 compliance.  Any remaining
Year 2000 initiatives are scheduled to be complete by mid-year 1999.

The Company is giving consideration to the status of compliance by third party
suppliers. Failure by third party suppliers to become Year 2000 compliant could
impact the Company's ability to obtain products or services as scheduled, which
could potentially result in delays in meeting clients orders. The Company has
undertaken initiatives to review the Year 2000 readiness of clients which are
material to the Company's business. Failure by material customers to become Year
2000 compliant could result in the company's inability to obtain or perform work
on a timely basis for such customers, leading to delays in receipt of revenue.

A formal contingency plan will not be formulated unless the Company identifies
specific areas where there is substantial risk of Year 2000 problems occurring,
and no such areas have been identified as of this date.


Item 8.  Changes in and Disagreements with Accountants or Accounting and
Financial Disclosure.
<PAGE>

On June 23, 1998, the Company engaged Reznick Fedder & Silverman P.C. to replace
Gelfond Hochstadt Pangburn & Co. as its independent auditors. This change was
necessary primarily as a result of logistical reasons with the Company's
headquarters relocation to Vienna, VA.

                                   PART III

Item 9  Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of The Exchange Act.

Identification of Directors and Executive Officers

Directors are elected for one-year terms or until the next annual meeting of
shareholders and until their successors are duly elected and qualified. Officers
hold office at the pleasure of the Board of Directors. The table below sets
forth the name, age, position and tenure of each director and executive officer.
Mr. Heishman, as secretary, is not considered "executive" officers. All
Directors have tenures effective since March 10, 1998 when each individual
assumed office following the Stock Exchange Agreement.

<TABLE>
<CAPTION>
                           Year
                           First
     Name                 Elected   Position Held and Tenure
     ----                 -------   ------------------------
    <S>                   <C>       <C>

     Juan J. Gutierrez     1998     Chairman, Chief Executive Officer, Director

     John M. Dwyer         1998     Vice President, Director

     Dave Vandenberg       1998     Vice President, Director

     John S. Heishman      1998     Secretary/Treasurer, Director
</TABLE>

Biographical Information

The following is a brief account of the business experience during at least the
past five years of each director and executive officer, including the principal
occupation and employment during that period.

JUAN J. GUTIERREZ, 57, is Chairman and CEO of the Company. He has been Chairman
and CEO of Kemron Environmental Services, Inc. since 1983, when he purchased
Kemron. He is also Chairman and CEO of InterAmerica Technologies, Inc., a
software development and systems integration company which he founded in 1971.
Both companies have enjoyed rankings on the list of the 500 largest Hispanic-
owned businesses compiled by Hispanic Business magazine. Mr. Gutierrez has
received numerous achievements and community awards, including being selected by
the U.S. Hispanic Chamber of Commerce as the 1984 Hispanic Businessman of the
Year, and receiving the 1994 Small Business Administration's Lifetime Minority
Business Achievement Award. He is a graduate of Pan American University at
Edinberg, Texas.

JOHN M. DWYER, 39, is a Director of the Company and a Vice President of Kemron.
Mr. Dwyer is responsible for the management and administration of Kemron's
Consulting and Engineering Division, including profit and loss performance, as
well as Kemron's marketing and business development. He has been with Kemron for
over 19 years and brings a wealth of experience and expertise in the
development, design, and execution of small and large scale environmental
programs involving hazardous waste, site investigations, remedial construction,
environmental assessments and permitting assistance services, as well as leaking
underground storage tanks. Mr. Dwyer holds an A.S. degree in computer and
electrical technology from the Southern Institute of Technology.

DAVID VANDENBERG, 43, is a Director of the Company, and a Vice President of
Kemron. He is a 1979 graduate of the University of Wisconsin with degrees in
Chemistry and Business. With 20 years of experience in the environmental field,
through the changes in legislation, market conditions and growth of the
environmental service industry. He has managed the growth of a 3 person
environmental laboratory to
<PAGE>

a staff of over 80 professionals, and today Kemron's Ohio Valley Laboratory is
one of the nation's largest, most respected environmental laboratories. Mr.
Vandenberg is responsible for the laboratory's sales and marketing strategies,
operation oversight and profit and loss performance.

JOHN S. HEISHMAN, 34, is the Secretary/Treasurer and a Director of the Company,
and is responsible for Finance and Contract Administration for the Company. He
has over 12 years of finance and accounting experience in both commercial and
federal contracting. Mr. Heishman joined Kemron's management team in 1996 and
has brought vast experience in forecasting/budgeting, cash management, financial
analysis, corporate and operational accounting. Prior to joining Kemron, Mr.
Heishman worked for Computer Sciences Corporation and in public accounting with
Ernst & Young. He holds a BBA in accounting from James Madison University, and
is a Certified Public Accountant in Virginia.

Item 10.  Executive Compensation

Cash Compensation

The following sets forth the compensation earned by the Company's Chief
Executive Officer and any highly compensated executive officers. There has been
no supplemental compensation of restricted stock awards, stock appreciation
rights, or long term incentive plans. Bonus plans are strictly based on
performance objectives within each individual fiscal year. Mr. Wilbur's position
was effectively eliminated in July 1997, therefore, compensation only represents
a partial year.

<TABLE>
<CAPTION>
                                               Annual Compensation
                                                                    Other Annual
Name and Principal Position     Year      Salary        Bonus       Compensation
<S>                              <C>      <C>           <C>         <C>
Juan J. Gutierrez, CEO          1999      $114,063      $91,000       $   -0-
                                1998      $ 50,000          -0-           -0-

John M. Dwyer,                  1999      $114,711      $45,500       $   -0-
Vice President                  1998        96,736       18,000       13,607

David Vandenberg,               1999      $108,519      $45,500       $   -0-
Vice President                  1998        96,736       22,500       13,607

Mark Wilbur, COO                1999      $    -0-      $   -0-       $   -0-
                                1998        16,908          -0-           -0-
</TABLE>

The salary for Juan J. Gutierrez for fiscal year 1998 represents noncash
compensation based on estimated  services provided for the period.  There was no
accrual recognized for this salary, as it was treated as additional paid in
capital to the Company.

Compensation Pursuant to Plans

No compensation was paid to executive officers pursuant to any plan during the
fiscal year just ended

Other Compensation

  None
<PAGE>

Item 11.  Security Ownership of Certain Beneficial Owners and Management

Beneficial Ownership Following Acquisitions

The following table sets forth as of the report date, the names of persons who
own of record, or were known by the Company to own beneficially, more than five
percent of its total issued and outstanding common stock and the beneficial
ownership of all such stock as of that date by executive officers and directors
of the Company and all such executive officers and directors as a group. Exept
as otherwise noted, each person listed below is the sole beneficial owner of the
shares and has sole investment and voting power as to such shares.

<TABLE>
<CAPTION>
                       Name and Address                Amount & Nature of          Percent of
Title of Class         Of Beneficial Owner             Beneficial Ownership           Class

<S>                    <C>                                     <C>                      <C>
Common Stock,          Juan J. Gutierrez                      3,450,000            73.2%  1,2
$.00001 par value      8150 Leesburg Pike, Suite 1200
                       Vienna, Virginia  22182

SAME                   David Vandenberg                         191,666               4.1%  2
                       109 Starlite Park
                       Marietta, Ohio  45750

SAME                   John M. Dwyer                            191,666               4.1%  2
                       1300 Spring Street
                       Atlanta, Georgia  30309

SAME                   John S. Heishman                             - 0 -                 - 0 -
                       8150 Leesburg Pike, Suite 1200
                       Vienna, Virginia  22182

SAME                   InterAmerica Technologies, Inc.          887,778               18.8% 1
                       8150 Leesburg Pike, Suite 1400
                       Vienna, Virginia  22182

<S>                .   All executive officers and
                       Directors as a group (4 persons)       3,833,332               81.3%
</TABLE>

/1/Mr. Gutierrez is the sole owner of InterAmerica Technologies, Inc., and
claims beneficial ownership of shares held by that entity.

/2/Include shares of the common stock subject to purchase upon the exercise of
options granted under the Company's 1997 Compensatory Stock Option Plan,
including 350,000 (Juan Gutierrez), 25,000 (John Dwyer), and 25,000 (David
Vandenberg).

Changes in Control

None


Item 12.  Certain Relationships and Related Transactions

The President/CEO has provided a personal guarantee to the Company operating
subsidiary's principal lender along with other financial lenders for equipment.
The Company is attempting to discharge the personal guarantee with each lender
as the Company's credit position continues to strengthen.
<PAGE>

The laboratory facility in Marietta, OH is leased through a related party. In
addition, certain administrative resources are provided through a separate
related party. Refer to the notes to the audited financial statements for
further details.

The company has no understandings with its officers or directors, or other
shareholders, pursuant to which such persons have agreed to contribute capital
to the Company or otherwise provide funds to the Company. There are no other
reportable transactions involving promoters, executive officers, or directors of
the Company as required by Item 404 of Regulation S-B.


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

  (a)    Exhibits. The following exhibits are filed with this report, except
         those indicated as having previously been filed with the Securities and
         Exchange Commission and are incorporated by reference to another
         report, registration statement or form. References to the "Company"
         mean Whitney American Corporation.

         3.0   Certificate of Incorporation (incorporated by reference to
               Exhibit 3.0 to Registration Statement No. 33-17397-D, effective
               March 7, 1988)
         3.05  Certificate of Amended and Restated Certificate of Incorporation
               of the Company (incorporated by reference to Exhibit 3.1 to Form
               8-K dated February 12, 1997)
         3.1   Bylaws of the Company (incorporated by reference to Exhibit 3.1
               to Registration Statement No. 33-173797-D, effective March 7,
               1988)
         3.2   Amendment to Bylaws of the Company (incorporated by reference to
               Exhibit 3.2 to Registration Statement No. 33-17397-D, effective
               March 7, 1988)
         3.3   Restated Bylaws of the Company (incorporated by reference to
               Exhibit 3.2 to Form 8-K dated February 12, 1997)
         4.0   Specimen Stock Certificate (incorporated by reference to
               Registration Statement No. 33-17397-D effective March 7, 1988)
         10.2  1997 Stock Option Plan (incorporated by reference to Exhibit 10.1
               to Form 8-K dated February 12, 1997)
         10.3  1997 Employee Stock Compensation (incorporated by reference to
               Exhibit 10.2 to Form 8-K dated February 12, 1997)


  (b)    The Company filed the following Current Reports on Form 8-K during the
         three months ended May 31, 1999.

         Filing of Form 8-K on May 12, 1999 of Settlement Agreement between the
         Company and Costa Real Corporation, Coastline International, New
         Horizons, Heatherlynn Colburn, Charles Colburn III, Twenty First
         Century Trust, and Hector I. Hernandez, Sr.

         Filing of Form 8-K on April 26, 1999 for the resignation of Hector I.
         Hernandez from the Board of Directors.

  (c)    Financial statements and supplementary data.

<TABLE>
<CAPTION>
         <S>                                                                                <C>
         Financial Statements Independent Auditors' Report - Reznick, Fedder, & Silverman   F-1

         Consolidated Balance Sheets as of May 31, 1999 and 1998                            F-2

         Consolidated Statements of Operations for the years ended May 31, 1999 and 1998    F-3
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
          <S>                                                                                <C>
          Consolidated Statements of Changes in Stockholders' Equity for the years
               ended May 31, 1999 and 1998                                                   F-4

          Consolidated Statements of Cash Flows for the years ended May 31, 1999 and 1998    F-5

          Notes to Financial Statements                                                      F-7

</TABLE>
<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.


                                        WHITNEY AMERICAN CORPORATION


                                        By  /s/  JUAN J. GUTIERREZ
                                            ----------------------
                                            JUAN J. GUTIERREZ
                                            PRESIDENT AND CEO

                                        DATED:   SEPTEMBER 10, 1999


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

<TABLE>
<CAPTION>
Name                                         Title                        Date
<S>                            <C>                                 <C>
/s/  Juan J. Gutierrez          Chief Executive Officer, President  September 10, 1999
------------------------        and Chairman of the Board
Juan J. Gutierrez

/s/  John M. Dwyer              Executive Vice President            September 10, 1999
------------------------        and Director
John M. Dwyer

/s/  Dave Vandenberg            Executive Vice President            September 10, 1999
------------------------        and Director
Dave Vandenberg

/s/ John S. Heishman            Secretary, Treasurer                September 10, 1999
------------------------        and Director
John S. Heishman
</TABLE>



<PAGE>

                         INDEPENDENT AUDITORS' REPORT


To the Stockholders and Board of Directors
Whitney American Corporation


     We have audited the accompanying consolidated balance sheets of Whitney
American Corporation and Subsidiary, as of May 31, 1999 and 1998, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the years then ended.  These consolidated financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements 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 consolidated financial statements are
free of material misstatements.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 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 consolidated financial position of
Whitney American Corporation and Subsidiary as of May 31, 1999 and 1998, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.


/s/ Reznick, Fedder & Silverman
-------------------------------
Bethesda, Maryland
July 28, 1999

                                      F-1
<PAGE>

                   Whitney American Corporation and Subsidiary

                           CONSOLIDATED BALANCE SHEETS

                              May 31, 1999 and 1998
<TABLE>
<CAPTION>
                                            ASSETS
                                                                       1999            1998
                                                                   -------------   -------------
<S>                                                              <C>             <C>
CURRENT ASSETS
    Cash                                                         $        1,000  $        1,000
    Accounts receivable, net of allowance
    of $199,963 and $172,830                                          3,775,797       3,336,701
    Prepaid expenses and other assets                                    94,989          50,627
                                                                   -------------   -------------

       Total current assets                                           3,871,786       3,388,328
                                                                   -------------   -------------



EQUIPMENT AND LEASEHOLD IMPROVEMENTS
    Leasehold improvements                                              244,566         158,052
    Equipment                                                         2,412,945       2,326,841
    Automobiles                                                         251,930         188,546
    Furniture and fixtures                                               36,186          42,232
                                                                   -------------   -------------

                                                                      2,945,627       2,715,671

    Less accumulated depreciation and amortization                    1,944,316       1,930,126
                                                                   -------------   -------------

       Net equipment and leasehold improvements                       1,001,311         785,545
                                                                   -------------   -------------



OTHER ASSETS
    Intangibles, net of amortization                                     17,744          20,133
    Deposits and other net assets                                        58,409          62,804
    Note receivable                                                           -          34,593
                                                                   -------------   -------------

       Total other assets                                                76,153         117,530
                                                                   -------------   -------------

       Total assets                                              $    4,949,250  $    4,291,403
                                                                   =============   =============
</TABLE>

<TABLE>
<CAPTION>
                              LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                       1999             1998
                                                                   -------------    -------------
<S>                                                              <C>              <C>
CURRENT LIABILITIES
    Line of credit                                               $      350,000   $    1,490,000
    Note payable, current maturities                                      3,829           59,568
    Notes payable - related party, current maturities                         -           45,992
    Notes payable - equipment, current maturities                       205,930           61,873
    Capital lease liability, current maturities                         142,127           52,912
    Accounts payable and accrued expenses                             1,572,344          968,926
    Accrued payroll and related liabilities                             412,216          361,705
    Due to related parties                                              105,745          147,174
                                                                   -------------    -------------

       Total current liabilities                                      2,792,191        3,188,150
                                                                   -------------    -------------

LONG-TERM DEBT
    Notes payable, net of current maturities                             19,343                -
    Notes payable - equipment, net of current maturities                 44,146          201,557
    Capital lease liability, net of current maturities                  274,420           85,890
                                                                   -------------    -------------

       Total long-term liabilities                                      337,909          287,447
                                                                   -------------    -------------

       Total liabilities                                              3,130,100        3,475,597
                                                                   -------------    -------------

COMMITMENTS AND CONTINGENCIES                                                 -                -

STOCKHOLDERS' EQUITY
    Preferred stock, $.00001 par value, 5,000,000 shares
    authorized, none issued                                                   -                -
    Common Stock, net of subscriptions receivable, $.00001 par value,
    50,000,000 shares authorized, 4,266,020 and 4,211,020 shares
    issued and outstanding                                                   42               42
    Additional paid-in capital                                        1,658,684        1,654,984
    Retained earnings (accumulated deficit)                             160,424         (839,220)
                                                                   -------------    -------------

       Total stockholders' equity                                     1,819,150          815,806
                                                                   -------------    -------------

       Total liabilities and stockholders' equity                $    4,949,250   $    4,291,403
                                                                   =============    =============
</TABLE>

                See notes to consolidated financial statements

                                      F-2
<PAGE>

                   Whitney American Corporation and Subsidiary

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                        Years ended May 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                     1999             1998
                                                                ---------------  ---------------

<S>                                                           <C>              <C>
REVENUE FROM SERVICES                                         $     13,514,743 $     10,771,227

COST OF SERVICES                                                     9,565,061        7,978,704
                                                                ---------------  ---------------

     GROSS PROFIT                                                    3,949,682        2,792,523
                                                                ---------------  ---------------

OPERATING EXPENSES
     Overhead                                                        1,436,764        1,184,625
     General and administrative                                      1,242,392          913,978
     Bad debts                                                         100,629          107,061
                                                                ---------------  ---------------

        Total operating expenses                                     2,779,785        2,205,664
                                                                ---------------  ---------------

INCOME FROM OPERATIONS                                               1,169,897          586,859

OTHER INCOME
     Interest                                                                -           10,775
     Gain on sale of assets                                             13,617                -
     Other                                                                 984                -
                                                                ---------------  ---------------

                                                                        14,601           10,775
                                                                ---------------  ---------------
OTHER EXPENSES
     Interest                                                         (184,854)        (219,734)
     Loss on sale of assets                                                  -          (15,932)
     Impairment of note receivable                                           -         (170,000)
     Failed merger costs                                                     -          (79,567)
                                                                ---------------  ---------------

                                                                      (184,854)        (485,233)
                                                                ---------------  ---------------

INCOME BEFORE INCOME TAXES                                             999,644          112,401

     INCOME TAXES                                                            -                -
                                                                ---------------  ---------------

NET INCOME                                                    $        999,644 $        112,401
                                                                ===============  ===============


Basic net income per common share                             $           0.24 $           0.03
                                                                ===============  ===============

Weighted average common share outstanding                            4,237,321        3,541,308
                                                                ===============  ===============

Diluted net income per common share                           $           0.21 $           0.03
                                                                ===============  ===============

Weighted average common share outstanding                            4,685,321        3,646,075
                                                                ===============  ===============
</TABLE>
                See notes to consolidated financial statements

                                      F-3
<PAGE>

                   Whitney American Corporation and Subsidiary

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                        Years ended May 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                        Retained
                                       Common stock               Additional            earnings
                                  --------------------------                          (accumulated
                                     Shares          Amount     paid-in capital         deficit)             Total
                                  -------------     --------    ----------------    -----------------    --------------
<S>                               <C>             <C>          <C>                 <C>                  <C>
Balance, May 31, 1997                      315    $       3    $      1,612,300    $        (951,621)   $      660,682

     Redemption of common stock            (16)           -                (570)                   -              (570)

     Sale of common stock                   16            -              30,477                    -            30,477

     Stock issuance - Merger         4,053,173           37             (63,604)                   -           (63,567)

     Subscription receivable                 -            -             (13,000)                   -           (13,000)

     Stock options exercised           157,532            2              39,381                    -            39,383

     Additional paid in capital              -            -              50,000                    -            50,000

     Net income                              -            -                   -              112,401           112,401
                                  -------------     --------    ----------------    -----------------    --------------

Balance, May 31, 1998                4,211,020           42           1,654,984             (839,220)          815,806

     Stock issuance                     25,000            -               3,700                    -             3,700

     Stock options exercised            30,000            -                   -                    -                 -

     Net income                              -            -                   -              999,644           999,644
                                  -------------     --------    ----------------    -----------------    --------------

Balance, May 31, 1999                4,266,020    $      42    $      1,658,684    $         160,424    $    1,819,150
                                  =============     ========    ================    =================    ==============
</TABLE>
                See notes to consolidated financial statements

                                      F-4
<PAGE>

                   Whitney American Corporation and Subsidiary

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                        Years ended May 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                       1999              1998
                                                                                   --------------     ------------
<S>                                                                              <C>                <C>
Cash flows from operating activities
Net income                                                                       $       999,644    $     112,401
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization                                                            455,924          353,110
(Gain) loss on sale of assets                                                            (13,617)          15,932
Allowance for doubtful accounts                                                           27,133          (65,785)
Impairment of note receivable                                                                  -          170,000
Failed merger costs                                                                            -           41,676
Additional paid in capital                                                                     -           50,000
Changes in operating assets and liabilities:
       (Increase) decrease in accounts receivable                                       (466,229)         131,754
       (Increase) decrease in prepaid expenses and other assets                          (44,362)         133,267
       (Increase) decrease in deposits                                                     4,395          (20,933)
       Increase (decrease) in accounts payable and accrued expenses                      607,118         (303,359)
       Increase (decrease) in accrued payroll and related liabilities                     50,511          (53,399)
       Increase (decrease) in accounts payable - related party                           (41,429)          10,306
                                                                                   --------------     ------------

Net cash provided by operating activities                                              1,579,088          574,970
                                                                                   --------------     ------------

Cash flows from investing activities
Purchases of property and equipment                                                     (307,214)        (300,479)
Proceeds received from sale of fixed assets                                               32,000            2,987
Proceeds received from discontinued operations                                                 -           29,423
Notes receivable funded                                                                        -         (184,500)
Proceeds from notes receivable                                                            34,593                -
                                                                                   --------------     ------------

Net cash used in investing activities                                                   (240,621)        (452,569)
                                                                                   --------------     ------------

Cash flows from financing activities
Net payment on line of credit                                                         (1,140,000)         (40,000)
Payment of note payable                                                                  (61,196)         (40,432)
Payment of notes payable - equipment                                                     (68,354)         (81,350)
Proceeds from note payable                                                                24,800          100,000
Proceeds from note payable - equipment                                                    55,000
Payments on related party advances                                                       (45,992)         (90,618)
Principal payments under capital lease obligations                                      (102,725)         (22,910)
Proceeds from issuance of common stock                                                         -           53,479
Redemption of common stock                                                                     -             (570)
                                                                                   --------------     ------------

Net cash provided by (used in) financing activities                                   (1,338,467)        (122,401)
                                                                                   --------------     ------------

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS                                                                           -                -

Cash and cash equivalents, beginning                                                       1,000            1,000
                                                                                   --------------     ------------

Cash and cash equivalents, end                                                   $         1,000    $       1,000
                                                                                   ==============     ============
</TABLE>
                See notes to consolidated financial statements

                                      F-5
<PAGE>

                   Whitney American Corporation and Subsidiary

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                        Years ended May 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                      1999           1998
                                                                                   ------------   -----------
<S>                                                                              <C>            <C>
Supplemental disclosure of cash flows information:
Cash paid during the year for interest                                           $     184,854  $    176,594
                                                                                   ============   ===========

Supplemental disclosures of noncash transactions:
Liabilities assumed  in the acquisition of Whitney American Corporation          $     105,740  $    101,862
                                                                                   ============   ===========

Fair value of stock and options issued in connection with failed merger          $           -  $     37,891
                                                                                   ============   ===========

Fair value of stock issued in exchange for services                              $       3,700  $          -
                                                                                   ============   ===========

Liabilities for equipment under capital leases                                   $     380,469  $    145,211
                                                                                   ============   ===========

Salary contributed                                                               $           -  $     50,000
                                                                                   ============   ===========
</TABLE>
                See notes to consolidated financial statements

                                      F-6
<PAGE>

                  Whitney American Corporation and Subsidiary

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              May 31, 1999 and 1998




1.  ORGANIZATION

  Whitney American Corporation (the "Company") was incorporated in the State of
  Delaware in June 1987.  The Company, through its acquisition of Kemron
  Environmental Services, Inc. ("Kemron"), acquired a multi-disciplinary
  environmental engineering, consulting and remediation firm headquartered in
  Vienna, Virginia.  Incorporated in June 1975 in the State of New York, Kemron
  provides environmental engineering, consulting and remediation services
  principally to commercial and industrial clients and to Federal and state
  environmental regulatory and non-regulatory agencies as well.  Kemron also
  provides environmental laboratory testing services to this client base.  With
  headquarters in Vienna, Virginia, Kemron maintains engineering and consulting
  operations at Vienna, Virginia; Atlanta Georgia; and Marietta, Ohio.  Kemron's
  testing laboratory is also situated in Marietta, Ohio.

2.  SIGNIFICANT ACCOUNTING POLICIES

  Basis of Presentation and Consolidation
  ---------------------------------------

  The consolidated financial statements for the fiscal years ended May 31, 1999
  and 1998 include the accounts and operations of the Company and its wholly
  owned subsidiary, Kemron.  The Company acquired Kemron during the fiscal year
  1998 (see note 3) and began presenting results of operations on a consolidated
  basis.  All significant intercompany balances and transactions have been
  eliminated in consolidation.

  Concentration of Credit Risk
  ----------------------------

  The Company provides services to customers in multiple industries such as oil
  and gas, metals, chemicals, textiles and automotive.  Approximately 41% of the
  Company's customer base is comprised of the federal and state governments.
  The majority of the Company's customers are located in the midwest, northeast,
  and southeast regions of the United States.

  Allowance for Doubtful Accounts
  -------------------------------

  The Company establishes an allowance for doubtful accounts based upon several
  factors, such as credit risk and analysis of specific customer accounts.

                                      F-7
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998



2.  SIGNIFICANT ACCOUNTING POLICIES (Continued)

  Equipment and Leasehold Improvements
  ------------------------------------

  Equipment and leasehold improvements are stated at cost.  Depreciation is
  computed using the straight-line method based on the estimated useful lives of
  the assets.  Amortization of leasehold improvements is computed on the term of
  the lease or its useful life, whichever is less.

  Segment Disclosures
  -------------------

  Effective for the year ended May 31, 1998, the Company adopted Statement of
  Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of
  an Enterprise and Related Information."  SFAS No. 131 establishes standards
  for reporting information about operating segments and related disclosures
  about products and services, geographic areas and major customers.

  Contract Revenue
  ----------------

  The Company recognizes revenue as the related services are provided.  On fixed
  price contracts, revenue is recognized on the basis of the estimated
  percentage of completion of services rendered.  On cost reimbursement
  contracts, revenue is recognized as costs are incurred and includes applicable
  fees earned essentially in the proportion that costs incurred bear to total
  estimated final costs.  Materials and subcontract costs reimbursed by client
  are included in revenue from services.  Anticipated losses are recognized in
  the period in which the losses are reasonably determinable.

  A significant portion of contracts with the United States Government and State
  Agencies are subject to audit and adjustment.  Revenue has been recorded in
  amounts expected to be realized on final settlement.  Included in accounts
  receivable are revenues from claims where recovery is probable in the opinion
  of management.

                                      F-8
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998


2.  SIGNIFICANT ACCOUNTING POLICIES (Continued)

  Use of Estimates
  ----------------

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

  Stock-Based Compensation
  ------------------------

  SFAS No. 123, "Accounting for Stock-Based Compensation," requires expanded
  disclosures of stock-based compensation arrangements with employees and
  encourages (but does not require) compensation cost to be measured based on
  fair value of the equity instrument awarded (see note 16).  The Company has
  chosen to continue to account for employee stock-based 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 costs for stock options is measured as the excess,
  if any, of the quoted market price of the Company's stock at the date of the
  grant over the amount the employee must pay to acquire stock.

  Intangible Assets
  -----------------

  Intangible assets represent costs in excess of the net assets acquired by the
  Company and are being amortized by the straight-line method over 15 years,
  which is management's estimate of the remaining economic useful life.

  Impairment of Long-Lived Assets
  -------------------------------

  The Company complies with SFAS No. 121, "Accounting for the Impairment of
  Long-Lived Assets and for Long-Lived Assets to be Disposed Of."  SFAS No. 121
  requires that long-lived assets and certain identifiable intangibles held and
  used by an entity be reviewed for impairment whenever events or changes in
  circumstances indicate that the carrying amount of an asset may not be
  recoverable.  To determine recoverability of its long-lived assets, the
  Company evaluates the probability that future undiscounted net cash flows will
  be less than the carrying amounts of net assets.  Impairment, if any, is
  measured at fair value.

                                      F-9
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998



2.  SIGNIFICANT ACCOUNTING POLICIES (Continued)

  Income Taxes
  ------------

  The Company accounts for income taxes in accordance with SFAS No. 109,
  "Accounting for Income Taxes."  Under the liability method prescribed by SFAS
  No. 109, a deferred tax asset or liability is determined on the differences
  between the financial statement and tax basis of assets and liabilities as
  measured by the enacted tax rates which will be in effect when these
  differences reverse.  Deferred income taxes are also recognized for operating
  losses that are available to offset future taxable income.

  Net Income per Common Share
  ---------------------------

  Basic net income per common share is computed based upon the weighted average
  number of common shares outstanding during the period.

  Diluted earnings per share is computed on the basis of the average number of
  shares outstanding plus the effect of outstanding stock options using the
  "treasury stock" method.  In connection with the Merger (see note 3), the
  weighted average shares outstanding for purposes of presenting net loss per
  common share on a comparative basis has been retroactively restated to reflect
  the effect of the recapitalization that occurred in the reverse acquisition.

<TABLE>
<CAPTION>
                                                                      Year ended                   Year ended
                                                                     May 31, 1999                 May 31, 1998
                                                                -----------------------        ------------------
<S>                                                          <C>                           <C>
Net income available to common shareholders (A)              $                 999,644     $             112,401
                                                                -----------------------        ------------------

Average outstanding:
Common stock (B)                                                             4,237,321                 3,541,308
Employee stock options                                                         448,000                   104,767
                                                                -----------------------        ------------------

Common stock and common stock equivalents (C)                                4,685,321                 3,646,075
                                                                -----------------------        ------------------

Earnings per share:
Basic (A/B)                                                  $                    0.24     $                0.03
                                                                =======================        ==================

Dilutive (A/C)                                               $                    0.21     $                0.03
                                                                =======================        ==================
</TABLE>

                                      F-10
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998


2.  SIGNIFICANT ACCOUNTING POLICIES (Continued)

  Fair Value of Financial Instruments
  -----------------------------------

  The following disclosure of estimated fair value of financial instruments is
  made in accordance with the requirements of SFAS No. 107, "Disclosure about
  Fair Value of Financial Instruments."  The estimated fair value amounts have
  been determined using available market information, assumptions and valuation
  methodologies.

  Notes Receivable

   Management believes that it is not practicable to estimate the fair value of
   notes because notes with similar characteristics are not available from the
   Company.

  Line of Credit and Notes Payable

   The carrying amounts approximate fair value.


3.   MERGER

  On March 10, 1998, Kemron Environmental Services, Inc. ("Kemron") merged with
  and into Whitney American Corporation ("Whitney").  Pursuant to the merger
  agreement, each outstanding share of Kemron common stock was converted into a
  share of common stock of Whitney. Upon consummation of the Merger, the
  stockholders of Kemron became the owners in the aggregate of approximately 86%
  of the outstanding common stock of Whitney; and the directors and officers of
  Kemron became directors and officers of Whitney.  Prior to the Merger, Whitney
  had no operating activities.

                                      F-11
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998


3.   MERGER (Continued)

  The Merger was treated as a reverse acquisition, with Kemron retaining the
  majority voting interest in the merged entity.  A reverse acquisition is a
  business combination accounted for by the purchase method in which the
  continuing entity is not assumed to be the acquirer.  The substance of the
  reverse acquisition is that of an initial public offering, and the acquisition
  costs incurred by the Company have therefore been treated as a reduction in
  paid-in capital.  The Company has reflected in its consolidated financial
  statements the assets, liabilities and equity of Kemron at their historical
  book values.  Accordingly, the consolidated results of the operations and
  financial position of the Company for periods and dates prior to the Merger
  are the historical results of the operations and financial position of Kemron
  for such period and dates.

  All historical shares of common stock and per-share amounts for periods prior
  to the Merger have been retroactively adjusted to reflect the Whitney shares
  issued to the Kemron shareholders at the time of the Merger.

4.  SEGMENT INFORMATION

 The Company's reportable segments are strategic business units that offer
 different services.  The Company has two reportable segments: analytical and
 consulting services.  Analytical services include lab testing services for
 varying analytical programs such as NPDES, RCRA, CERCLA and OSHA.  Consulting
 services provide investigations and assessment services at non-regulated
 contaminated sites and at sites covered by RCRA and CERCLA regulations, which
 investigations may include preliminary assessments, site investigations,
 groundwater assessments, remedial investigations, feasibility studies, and
 remedial action plans.  The accounting policies of the segments are the same as
 those described in the summary of significant accounting policies (note 2).

                                      F-12
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998

4.  SEGMENT INFORMATION (Continued)

 Sales, operating income (loss) and identifiable assets by reportable segment
 for the years ended May 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                     (Dollars in thousands)                                 1999                       1998
                                                                      -----------------          -----------------
<S>                                                               <C>                       <C>
Sales to unaffiliated customers:

Analytical services                                               $              7,071      $               6,182
Consulting services                                                              6,444                      4,589
                                                                      -----------------          -----------------

Total                                                             $             13,515      $              10,771
                                                                      =================          =================


Operating income (loss):

Analytical services                                               $                807      $                 586
Consulting services                                                                648                        177
Other                                                                             (285)                      (176)
                                                                      -----------------          -----------------

Total                                                             $              1,170      $                 587
                                                                      =================          =================


Identifiable assets:

Analytical services                                               $              2,458      $               1,875
Consulting services                                                              1,344                      1,283
                                                                      -----------------          -----------------

Total                                                             $              3,802      $               3,158
                                                                      =================          =================

</TABLE>

                                      F-13
<PAGE>

                 Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998

5.  ACCOUNTS RECEIVABLE

  Accounts receivable consist of the following:
<TABLE>
<CAPTION>

                                                                            1999                   1998
                                                                      -----------------      -----------------
<S>                                                               <C>                  <C>
Billed (includes retention of $212,412 and $196,599)              $          3,164,694 $            2,888,524

Unbilled                                                                       811,066                621,007

Less allowance for doubtful accounts                                          (199,963)              (172,830)
                                                                      -----------------      -----------------

                                                                  $          3,775,797  $           3,336,701
                                                                      =================      =================
</TABLE>

  The unbilled receivables on long-term contracts consist primarily of month-end
  revenue accrued but not billed as of May 31, 1999 and 1998.  Such billings
  occur in the following month.

  The retention balances reported as of May 31, 1999 and 1998 include amounts of
  $29,457 and $124,519, respectively, anticipated to be collected beyond 12
  months from the balance sheet date.

6.    NOTES PAYABLE AND LINE OF CREDIT

 Notes payable and the line of credit at May 31, 1999 and 1998 consisted of the
 following:
<TABLE>
<CAPTION>
                                                                                               1999                  1998
                                                                                        -------------------    -----------------
<S>                                                                                    <C>                   <C>
Line of credit with a bank, $1,800,000 payable on demand, bearing interest at
10.5%, secured by accounts receivable and the personal guarantee of the
corporation's majority stockholder.                                                    $           350,000   $        1,490,000
                                                                                        ===================    =================
Note payable with a bank, $100,000 term loan, monthly principal payments of
$8,333 plus interest at 10.5%, secured by equipment and personal guarantee of
majority stockholder.                                                                  $                 -   $           59,568
                                                                                        ===================    =================
Note payable with the lessor of the Atlanta office, $24,800 term loan, monthly
principal payments of $331 plus interest at 10%, for buildout of lease space           $            23,172   $                -
                                                                                        ===================    =================
</TABLE>

                                      F-14
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998


6.    NOTES PAYABLE AND LINE OF CREDIT (Continued)

 Maturities of long-term debt and the line of credit for the five years
 succeeding May 31, 1999 are as follows:

           May 31, 2000       $     353,829
                   2001               4,230
                   2002               4,673
                   2003               5,162
                   2004               3,568

7.  NOTES PAYABLE - EQUIPMENT

  Notes payable for equipment at May 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                                             1999                  1998
                                                                                      -------------------    -----------------
<S>                                                                                  <C>                   <C>
Equipment notes bearing interest ranging from 8.4% to 10.75%. Interest is
payable monthly with aggregate monthly principal payments of $8,903 with
maturities through February 2004. The notes are collateralized by equipment.         $           250,076   $          263,430

Less: current maturities                                                                        (205,930)             (61,873)
                                                                                      -------------------    -----------------

                                                                                     $            44,146   $          201,557
                                                                                      ===================    =================
</TABLE>

  Maturities of notes payable - equipment for each of the five years succeeding
  May 31, 1999 are as follows:

           May 31, 2000       $            205,930
                   2001                     10,259
                   2002                     11,155
                   2003                     12,129
                   2004                     10,603
                                -------------------

                              $            250,076
                                ===================

                                      F-15
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998

8.  OBLIGATIONS UNDER CAPITAL LEASES

  The Company leases computers and other equipment under capital leases with
  maturities through April 2003.  The following is a schedule by years of future
  minimum lease payments under capital leases, together with the present value
  of net minimum lease payments at May 31, 1999.

<TABLE>
<CAPTION>


<S>                                  <C>                                                <C>
                                 May 31,  2000                                          $          185,260
                                          2001                                                     182,878
                                          2002                                                      88,442
                                          2003                                                      40,992
                                          2004                                                           -
                                                                                          -----------------

Total mimimum lease payments                                                                       497,572
Less amount representing interest                                                                  (81,025)
                                                                                          -----------------

Present value of net minimum lease payments                                                        416,547
Less current maturities                                                                           (142,127)
                                                                                          -----------------

Total non-current obligations under capital leases                                      $          274,420
                                                                                          =================
</TABLE>

 Included in fixed assets are the following assets under capital leases:

<TABLE>
<CAPTION>
                                                                       May 31, 1999         May 31, 1998
                                                                     -----------------    -----------------
<S>                                                                <C>                  <C>
Computers/office equipment                                         $           75,179   $           39,821
Automobiles                                                                   131,917              100,889
Other equipment                                                               705,707              508,657
                                                                     -----------------    -----------------

                                                                              912,803              649,367
Less accumulated depreciation                                                (409,930)            (288,477)
                                                                     -----------------    -----------------

                                                                   $          502,873   $          360,890
                                                                     =================    =================
</TABLE>

                                      F-16
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998
9.    COMMITMENTS AND CONTINGENCIES

  Office and Facilities Leases
  ----------------------------

  The Company conducts its operations in leased facilities under operating
  leases expiring at various dates through 2007.  Approximate minimum rental
  commitments for five years as of May 31, 1999 are as follows:

           May 31, 2000   $           319,359
                   2001               323,322
                   2002               327,367
                   2003               331,496
                   2004               287,214

  Other facilities are leased under short-term agreements.  Rent expense for all
  leases for the years ended May 31, 1999 and 1998, was $390,634 and $420,103,
  respectively.

  Equipment Leases
  ----------------

  The Company has entered into various equipment operating leases expiring
  between August 1999 and May 2003.  Lease expense for the years ended May 31,
  1999 and 1998, was $247,519 and $167,713, respectively.  A schedule of the
  future minimum lease commitments for five years as of May 31, 1999 are as
  follows:

           May 31, 2000   $           244,978
                   2001               165,934
                   2002               121,039
                   2003                57,267
                   2004                     -

  Government Contracts
  --------------------

  Certain contracts with the federal government and state and local governments
  are subject to audit and adjustment, and the ultimate realization of revenues
  recognized is contingent upon the outcome of such audits.  Revenue has been
  recorded in amounts expected to be realized in full upon final settlements
  with the respective contracting agency.  As of May 31, 1998, an outstanding
  claim exists under a contract performed for the State of New York.  An audit
  was conducted by a state-appointed firm and the audit findings noted
  questioned costs in the amount of $370,000.  The Company has disputed the
  claim and there has been no indication that this matter will be pursued by the
  State of New York.

                                      F-17
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998


9.    COMMITMENTS AND CONTINGENCIES (Continued)

  Legal Proceedings
  -----------------

  The Company is involved in two separate legal proceedings with former
  employees relating to discharge and discrimination.  The former employees are
  requesting lost wages, damages and expenses of approximately $1,660,000.  The
  outcomes in these cases are unknown; however, management believes it will
  prevail in its defense, and resolution of the matters will not have a material
  adverse effect on the financial statements.

10.  EMPLOYEE BENEFIT PLAN

  The Company participates in a 401(k) plan, the InterAmerica/Kemron 401(k) Plan
  and Trust.  The plan is available to all employees who are at least 21 years
  old, with certain exceptions, primarily for leased employees and those covered
  by collective bargaining agreements.  The Company will make compensation
  deferral contributions for the benefit of all eligible employees in the amount
  directed by each employee up to the limits set by the Internal Revenue
  Service.

  The Company will make annual matching contributions of three percent of the
  employee's Matched Compensation Deferral.  The plan provides for a vesting of
  Company contributions to the employee over a period of six years.  During the
  years ended May 31, 1999 and 1998, the Company's matching contributions
  totaled $63,618 and $51,922, respectively.

11.  RELATED PARTY TRANSACTIONS

  Due to Related Parties
  ----------------------

  An affiliated company provides computer and other services to the Company at
  cost.  Certain expenses at headquarters facilities of the affiliated company
  such as administrative support, LAN and telecommunications support, and human
  resources are shared among the companies. During the years ended May 31, 1999
  and 1998, annual expenditures totaled $289,992 and $285,142 at headquarters
  of the affiliated company, respectively, of which $89,790 and $80,880,
  respectively, were charged to the Company.

  As a result of the merger, (see note 3), a liability to two stockholders has
  been recorded. The amounts payable are noninterest bearing and payable upon
  demand.

                                      F-18
<PAGE>

11.  RELATED PARTY TRANSACTIONS (Continued)

  Due to Related Parties (Continued)
  -----------------------

  Amounts due to affiliate and stockholders are as follows:


                                 May 31, 1999           May 31, 1998
                               -----------------      -----------------

Due to affiliate             $                -     $           37,729
Due to stockholders                     105,745                109,445
                               -----------------      -----------------

                             $          105,745     $          147,174
                               =================      =================

  Notes Payable - Related Party
  -----------------------------

  The Company issued two promissory notes payable to the Company's majority
  stockholder in the original amounts of $600,000.  The notes bear interest at
  the rate of 10% per annum with monthly installments of principal and interest
  of $8,350.  The amount of interest expense for the years ended May 31, 1999
  and 1998, was $1,293 and $9,582, respectively.

  Rent Expense - Related Party
  ----------------------------

  The Company leases its Vienna, Virginia headquarters office from a related
  party under a sublease agreement.  The amount of rent expense paid to the
  related party for the years ended May 31, 1999 and 1998 was $181,560 and
  $148,820, respectively.

  The Company leases its Marietta, Ohio office from a related party.  The amount
  of rent expense paid to the related party for the years ended May 31, 1999 and
  1998, was $125,304 and $125,304, respectively.

12.   INCOME TAXES

  As of May 31, 1999 and 1998, the Company has a net operating loss carryforward
  of approximately $261 thousand and $1.3 million, respectively, for income tax
  purposes, that expires in fiscal years ending 2009 through 2012, which may be
  used to reduce future taxable income and tax liabilities.

                                      F-19
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998

12.   INCOME TAXES (Continued)

  Deferred income taxes reflect the net tax effects of temporary differences
  between the carrying amounts of assets and liabilities for financial reporting
  purposes and the amounts reported for income tax purposes.

  The provision for income tax consists of the following:

<TABLE>
<CAPTION>

                                                                           May 31, 1999         May 31, 1998
                                                                         -----------------    -----------------
<S>                                                                    <C>                  <C>
Current:
Federal                                                                $          324,895   $          (42,153)
State                                                                              63,482              (11,368)
                                                                         -----------------    -----------------

                                                                                  388,377              (53,521)
                                                                         -----------------    -----------------
Deferred:
Federal                                                                          (324,895)              42,153
State                                                                             (63,482)              11,368
                                                                         -----------------    -----------------

                                                                                 (388,377)              53,521
                                                                         -----------------    -----------------

                                                                       $                -   $                -
                                                                         =================    =================

The tax effects of temporary differences that give rise to deferred tax assets
are as follows:
<CAPTION>
                                                                           May 31, 1999         May 31, 1998
                                                                         -----------------    -----------------
<S>                                                                    <C>                  <C>
Net tax operating loss carryforwards                                   $          260,927   $        1,279,982
                                                                         =================    =================

Deferred tax assets                                                    $           91,351   $          461,306
Less valuation allowance                                                          (91,351)            (461,306)
                                                                         -----------------    -----------------

Net deferred tax asset                                                 $                -   $                -
                                                                         =================    =================
</TABLE>

13.  MAJOR CUSTOMERS

  Earned revenue and the related accounts receivable from major customers are as
  follows:

<TABLE>
<CAPTION>
                                                                                                  Accounts
                                                                        Earned Revenue           Receivable
                                                                       -----------------      -----------------
<S>                                                                  <C>                    <C>
As of May 31, 1999

Private sector (seven customers)                                     $        4,027,336     $        1,026,011
                                                                       =================      =================

Public sector (four customers)                                       $        5,529,959     $          901,738
                                                                       =================      =================
</TABLE>

                                      F-20
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998

13.  MAJOR CUSTOMERS (Continued)

<TABLE>
<CAPTION>
                                                                                              Accounts
                                                                         Earned Revenue      Receivable
                                                                      -----------------  -------------------
<S>                                                                 <C>                  <C>
As of May 31, 1998

Private sector (six customers)                                      $        3,409,941   $          727,723
                                                                      =================    =================

Public sector (three customers)                                     $        3,795,510   $        1,159,322
                                                                      =================    =================
</TABLE>

14.  DISCONTINUED OPERATIONS

  During fiscal year 1997, the Company discontinued its wholly-owned subsidiary,
  Kemron Construction Corporation.  This construction company was established at
  the beginning of the fiscal year, but as a result of significant startup costs
  for the new business as well as the low profit margins experienced, the
  operation was terminated.  In addition, the Cincinnati consulting office,
  which has historically demonstrated erratic profit with little contract
  backlog, was shutdown.  The Cincinnati office performed in areas of NEPA
  services and cultural resource investigations, which were not an important
  component of the consulting group's strategy.

15. IMPAIRMENT OF NOTE RECEIVABLE

  In June 1997, the Company made a loan totaling $170,000 to a target company in
  a potential acquisition.  The original note bore interest at 12% per annum and
  was due in 1997.  Management subsequently broke-off acquisition discussion and
  has written-off the loan due to the target company's inability to repay the
  loan.

16.  STOCK COMPENSATION PLANS

  The Company adopted stock option plans in 1997 under which pools of 2,000,000
  and 1,500,000 shares of the Company's common stock have been reserved.  The
  plans are administered and terms of option grants are established by a
  committee appointed by the Board of Directors.  Under terms of the plans,
  options may be granted to the Company's employees to purchase shares of common
  stock.  Options become exercisable immediately upon grant and expire ten years
  from the date of the grant, six months after termination of employment without
  cause, or one year after death or permanent disability of the employee.  The
  committee appointed by the Board of Directors determines the option price (not
  less than 85% fair market value) at the date of the grant.  The Company has
  applied APB Opinion No. 25 and related Interpretations in accounting for the
  plans.

                                      F-21
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998

16.  STOCK COMPENSATION PLANS (Continued)

  Had compensation cost been determined in accordance with FASB Statement No.
  123, the Company's net income per share would have been the proforma amounts
  indicated below:

<TABLE>
<CAPTION>

                                                                               Year Ended May 31,
                                                                   -------------------------------------------
                                                                         1999                     1998
                                                                   ------------------      -------------------
<S>                                                              <C>                     <C>
Net income
As reported                                                      $           999,644     $            112,401
Proforma                                                         $           999,644     $             32,910
Net income per common share - Basic:
As reported                                                      $              0.24     $               0.03
Proforma                                                         $              0.24     $               0.01
Net income per common share - Diluted:
As reported                                                      $              0.21     $               0.03
Proforma                                                         $              0.21     $               0.01
</TABLE>

  All options granted during the years ended May 31, 1999 and 1998 were issued
  pursuant to the stock options plans.  The fair value of each option granted
  under the plan is estimated on the date of grant using each option granted
  under the Black-Scholes option-pricing model.  The following weighted average
  assumptions for 1999 were used: expected dividend yield of 0%, expected
  volatility rate of 200%, risk-free rate of 5.5% and expected lives of four
  years.

  During the fiscal year ending May 31, 1998, the Company granted options for
  635,532 shares of common stock at the exercise price of $.25 per share.  The
  Company granted no options prior to the fiscal year ending May 31, 1998.  The
  options expire in 2008.

  The following depicts activity in the plans for years ended May 31, 1999 and
  1998:

<TABLE>
<CAPTION>
                                                                           Year Ended May 31, 1999
                                                                  ------------------------------------------
                                                                       Options               Per Share
                                                                     Outstanding          Exercise Price
                                                                  -------------------   --------------------
<S>                                                                          <C>        <C>
Outstanding May 31, 1998                                                     478,000    $              0.25
Options granted                                                                    -                      -
Options exercised                                                            (30,000)                  0.25
                                                                  -------------------

Outstanding May 31, 1999                                                     448,000
                                                                  ===================
</TABLE>

                                      F-22
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998

16.  STOCK COMPENSATION PLANS (Continued)

<TABLE>
<CAPTION>
                                                                           Year Ended May 31, 1998
                                                                  ------------------------------------------
                                                                        Options              Per Share
                                                                      Outstanding          Exercise Price
                                                                  -------------------    -------------------

<S>                                                               <C>                     <C>
Outstanding May 31, 1997                                                           -      $               -
Options granted                                                              635,532                   0.25
Options exercised                                                           (157,532)                  0.25
                                                                  -------------------

Outstanding May 31, 1998                                                     478,000
                                                                  ===================
</TABLE>

17.  FAILED MERGERS

  Concurrently with the Merger with and into Whitney (see note 3), the Company
  entered into a merger agreement with three additional entities: Exeter Group,
  Inc. ("Exeter"), Coastline International, Inc. ("Coastline"), and New
  Horizons, Inc. ("New Horizons").  As a result of management differences and
  the Company's lack of the management control over these entities, the Company
  entered into separate rescission agreements on October 19, 1998, April 26,
  1998 and May 12, 1999, respectively, which collectively address the Company
  and Exeter, Coastline and New Horizons agreements that involved the return of
  the respective shares originally issued by the Company in connection with the
  failed mergers.

  Under terms of the settlement agreements, the Company was successful in
  recovering all but 190,973 shares of common stock and stock options for
  135,532 shares of common stock, at the exercise price of $.25 per share,
  issued in connection with the failed mergers.  The 190,973 shares and 135,532
  stock options are deemed unrecoverable due to the shares being transferred to
  third parties and management's attempts to arrange for any form of
  repossession of these shares have failed.

  The failed merger costs, representing the fair value of the unrecoverable
  shares and stock options, have been treated as a increase in paid-in capital.

  Based on legal opinions received by management concerning the issuance of
  stock in the failed mergers, and the subsequent rescission agreements,
  management considers the failed mergers a nullity and void ab initio.
  Accordingly, the accounts and operations of Exeter, Coastline and New Horizons
  have been omitted from the Company's consolidated financial statements.  All
  common stock, stock options and per-share amounts from the date of the failed
  mergers to May 31, 1999 have been retroactively adjusted to reflect the
  nullification of the issuance of the original stock and stock options.

                                      F-23
<PAGE>

                   Whitney American Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                              May 31, 1999 and 1998

18.  YEAR 2000 (Unaudited)

  The Company is in the process of upgrading its computer applications to ensure
  functionality with respect to the Year 2000.  The Year 2000 issue affects most
  corporations and concerns the inability of information systems, primarily
  computer software programs, to properly recognize and process date-sensitive
  information relating to the Year 2000 and beyond.  The Company believes it is
  pursuing appropriate courses of action to identify and address Year 2000
  readiness.

  The principal operating functions that are dependent on information systems
  have been identified, primarily the accounting system and operating systems
  that support the laboratory instruments.  Most of the related information
  systems have already been converted and tested for Year 2000 compliance.  Any
  remaining Year 2000 initiatives are scheduled to be complete by mid-year 1999.

  The Company is giving consideration to the status of compliance by third party
  suppliers.  Failure by third party suppliers to become Year 2000 compliant
  could impact the Company's ability to obtain products or services as
  scheduled, which could potentially result in delays in meeting client orders.
  The Company has undertaken initiatives to review the Year 2000 readiness of
  clients which are material to the Company's business.  Failure by material
  customers to become Year 2000 compliant could result in the Company's
  inability to obtain or perform work on a timely basis for such customers,
  leading to delays in receipt of revenue.

  A formal contingency plan will not be formulated unless the Company identifies
  specific areas where there is substantial risk of Year 2000 problems
  occurring, and no such areas have been identified as of this date.

  The costs incurred by the Company through the fiscal year ended May 31, 1999
  are approximately $50,000.  The Company does not anticipate any future costs
  relating to Year 2000 compliance.

                                      F-24