U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549

                                  FORM 10-KSB

               [X] ANNUAL REPORTS PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
           For the fiscal years ending December 31, 1997
                                       OR
             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
           For the transition period from____________ to_____________

                         Commission file number 0-23892

                              ENVIROMETRICS, INC.
             (Exact Name of Registrant as Specified in its Charter)

                              Delaware 57-0941152
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)
                             9229 University Blvd.
                       Charleston, South Carolina 29406
              (Address of principal executive offices) (Zip code)

       Registrant's telephone number, including area code (843) 553-9456

      Securities registered pursuant to Section 12(b) of the Exchange Act

         Title of Each Class Name of Each Exchange of Which Registered

                                   None None

          Securities registered pursuant to Section 12(g) of the Act::
                         Common Stock, $.001 par value
                                (Title of Class)

     Check whether the Registrant (1) has filed all reports required to be filed
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months,  and (2) has been subject to such filing  requirements  for
the past 90 days. Yes NO X

            Transitional Small Business Disclosure Format Yes NO X

     Check if there is no disclosure  of  delinquent  filers in response to item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

     The issuer's net  revenues for its most recent  fiscal year ended  December
31, 1998 were $843,500.  The aggregate  market value of the voting stock held by
non-affiliates for the issuer as of January 3, 2000 was $794,015.




                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

     The number of shares  outstanding of the registrant's  Common Stock,  $.001
Par Value, on January 3, 2000 was 3,640,880 shares.

                   Documents incorporated by reference: None

<PAGE>


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS
-------  -----------------------

GENERAL
-------
     The  Company is a public  holding  company.  It  formerly  had 3  operating
subsidiaries: Trico Envirometrics, Inc., Envirometrics Products Company ("EPC"),
and Azimuth,  Inc. As a result of a  "Turnaround"  phase which began in 1996, it
currently  has one  operating  subsidiary:  Azimuth,  Incorporated  ("Azimuth").
Azimuth provides the following services: industrial hygiene laboratory services;
environmental health and occupational health and safety consulting; and asbestos
testing services.

     On July 26, 1996 the Company  entered into an agreement with its then Chief
Operating Officer, the former owner of both Trico Engineering & Surveying,  Inc.
and Land  Planning & Design,  Inc.  (collectively  "Old  Trico"),  Mr. Andrew C.
Gillette,  to repurchase the operations of Trico  Envirometrics,  Inc., its then
wholly owned  subsidiary  ("Trico").  The sale  resulted from failure to achieve
anticipated  synergy  between the Company's  core  operations  and the Old Trico
assets.  The Company was not able to leverage the Old Trico assets to expand its
work beyond the local area and to include environmental services successfully in
its service  offering.  The acquisition of Old Trico from Mr. Gillette closed on
November  30,  1994.  During  1996 it was  determined  that Trico was not a cash
contributor  to the  operations  of the  Company,  and due to the  nature of its
business the Company was unable to finance Trico's trade receivables.  Under the
terms of Mr.  Gillett's  repurchase,  the  Company  received  Trico's  note for
$600,000,  representing  net  advances by the Company to the former  subsidiary,
45,000  shares of  Envirometrics  common stock,  and a pledge of Mr.  Gillette's
Trico stock and his personal guarantee to secure repayment of the $600,000 note.

     During  December  1996 the  Company  entered a formal  "Turnaround"  phase.
Management  analyzed all operations of the Company to determine which operations
were  draining  cash  flow.  The  extreme  debt  load  (see  Item  7.  Financial
Statements)  and poor cash  position  required that  significant  steps be taken
immediately.  The  asbestos  air  monitoring  product  business  had become very
competitive  and profit  margins had  deteriorated  to the point that a business
decision  was made to sell off this  product line and mediate debt to the extent
possible. The core product in this line was the 25mm air monitoring cassette and
the supplier  that produced the plastic  cassette  component of this product was
owed approximately $250,000. The supplier informed the Company that it could not
continue  to  manufacture  the  cassette  parts if it could  not be  assured  of
payment.  On  April  28,  1997  the  Company  entered  into  an  agreement  with
Multi-Metrics,  Inc. for the sale of the Company's  injection molds for cassette
production,  with the  proceeds  of this  sale  going to  reduce  related  trade
payables  (see  Item  6.  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations).

                                       1
<PAGE>

     The  Company  had  also  developed,   demonstrated  and  commercialized  an
innovative   technology  for  passive   on-site  and  real-time   monitoring  of
atmospheric hazardous and toxic chemicals for personal exposure safety. Products
based  upon this  technology,  sold  under the name of the ACT  Monitoring  Card
System ("ACT"),  consisted of personal  badges for specific  chemicals  and an
electronic/optical  reader.  These products were used to measure  chemicals in a
variety of industrial (chemical, pulp and paper,  petrochemical,  semiconductor,
etc.) and commercial (hospitals, etc.) environments.

     In its  prior  effort  to  commercialize  ACT,  the  Company  had  signed a
definitive  Master  Distribution   Agreement  with  Zellweger  Analytics,   Inc.
("Zellweger")  in January 1996. This agreement (the "Zellweger  Agreement") gave
Zellweger  exclusive  worldwide  distribution  rights  to  ACT.  Zellweger  is a
division of Zellweger Luwa  Organisation,  a major  world-wide Swiss supplier of
environmental and pollution monitoring systems.

     The initial term of the Zellweger Agreement was for two (2) years beginning
in January 1996. The Zellweger  Agreement was to automatically  renew at the end
of such two-year period, but only on terms and conditions mutually acceptable to
both parties. Although it was not obligated to meet any sales targets, Zellweger
forecasted  minimum  purchases  of  $675,000  in 1996  and  $2,058,000  in 1997.
Zellweger  advanced  purchase  deposits to the Company  based on its forecast of
purchases.

     Zellweger  produced  actual  sales in 1996 of  $180,150  in  comparison  to
$482,693 of direct sales produced by the Company in 1995.  Zellweger submitted a
revised forecast for 1997 of $191,812. Envirometrics considered this forecast to
be unacceptable based on 1995 sales and the perceived potential for the product.
Upon notifying  Zellweger of its refusal to accept the 1997 forecast,  Zellweger
canceled the contract on January 13, 1997 and demanded  repayment of the prepaid
purchase  deposits  of  $494,849  advanced  to the  Company.  Unable to reach an
acceptable resolution,  the Company notified Zellweger on March 12, 1997 that it
had also terminated the contract and commenced  notifying all ACT customers that
Zellweger was no longer the exclusive distributor of ACT.

     On November 14, 1997, the Company sold the ACT technology to Zellweger in a
settlement  of  the  Master   Distribution   Agreement  disputes  (see  Item  6.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations).

     In  1998  the  Company  ceased  operation  of  its  environmental  products
businesses.  In addition to ACT,  this  business had  encompassed  sales of many
varieties  of  equipment  and  supplies,   primarily  for  asbestos  monitoring,
surveying and abatement services,  including standard air sampling cassettes and
its patented Bellmouth cassette which could be utilized for sampling atmospheric
lead,  asbestos and other ceramic or man-made vitreous fibers.  The Company also
sold and  distributed  asbestos  sampling  products  under its own  trade  name,
"Asbestos  Analytics",  as well as those of other manufacturers with whom it had
distributorship agreements.

                                       2
<PAGE>

     The Company's only current operating subsidiary,  Azimuth, operates a fully
accredited  Industrial  Hygiene  ("IH")  laboratory,  certified  by the American
Industry Hygiene  Association  ("AIHA"),  to perform analyses of air samples for
asbestos,  metals and organic vapors.  Azimuth also provides related  consulting
services to its clients.

     The  Company's  first  steps  to  exit  the  "Turnaround"  phase  focus  on
increasing  the revenue of Azimuth.  The  increase in revenue is  predicated  on
changing the Azimuth service offering from mainly Industrial Hygiene Services to
broader based Safety Services (see "Company  Services--Consultative  Services"),
and  cultivating the rising emphasis placed on Indoor Air Quality (see "Industry
Overview").  Management  and the Board of Directors  agree that,  with the small
existing revenue base currently generated from Azimuth, sizable growth must come
from a merger  and  acquisition  strategy.  The  Company's  ongoing  process  of
attempting to continue financial  stabilization through internal growth, as part
of its first steps in exiting the  "Turnaround"  phase,  is expected to expedite
the  Company's  merger and  acquisition  strategy.  Any  merger and  acquisition
activity is anticipated  to bring further  dilution to the  shareholders  of the
Company.  In addition,  as part of exiting the "Turnaround"  phase,  in January
1999,  the Company was able to obtain  prepayment of the purchase  price for the
sale of Trico, evidenced by a promissory note bearing $600,000 principal,  for a
cash  payment of $260,000  (current  balance at the time of sale was  $364,400),
which  payment was applied to working  capital for further  debt  mediation  and
rebuilding of operations.

Historical Background
---------------------
     The  consultative  and  laboratory  services now  conducted by Azimuth were
begun in 1984 as an asbestos  consulting  partnership  founded by Mr. Richard D.
Bennett, CIH, current President of Azimuth, and Charles E. Feigley,  Ph.D., CIH,
a current Director . Between 1987 and 1989, the Azimuth  laboratory evolved from
an asbestos  laboratory to a fully accredited AIHA Industrial Hygiene laboratory
for testing asbestos,  metals and organic vapors (e.g., solvents) and capable of
analyzing air samples taken to evaluate worker exposure to toxic chemicals.  The
Company  believes  that  such  accreditation  provides  it  with  a  significant
advantage in light of more  stringent,  costly and time consuming  accreditation
procedures  now  applicable  to  existing  and  potential   competitors  seeking
industrial hygiene accreditation for their laboratories.

     With an accredited laboratory,  the Company was able to expand its services
into the area of  industrial  hygiene and  diversify  from its earlier  focus on
purely asbestos  consulting.  In 1988, the Company  obtained a contract from the
National  Cancer  Institute  in which  Azimuth  evaluated  levels of exposure to
formaldehyde in the embalming and mortician fields.  This project  terminated in
1990.

     In 1989, the Company entered into an agreement with Palmetto Hospital Trust
("PHT") to conduct annual surveys and manage worker  exposure to a comprehensive
range of workplace  industrial  hygiene and safety  matters.  PHT is the general
agent for stop-loss/workers'  compensation insurance for its 72-member hospitals

                                       3
<PAGE>

and long-term care facilities.  The Company  continues to provide these services
to PHT. On September 4, 1997 the Company entered into a Strategic  Alliance with
PHT  Services,  Ltd.("PHTS").  PHTS  grew out of PHT and was  created  to broker
services to the  members of PHT.  Under the terms of this  Agreement,  PHTS will
actively market the services of Azimuth to the members of PHT and in return will
receive 10% of the gross revenue from contracts it obtains from its members less
subcontracted expenses.

     On May 10, 1991 the Company was incorporated in Delaware for the purpose of
consolidating the operations of Azimuth and certain of its former  environmental
products businesses and acquiring the assets of four general  partnerships which
were then leasing real estate and laboratory and other  equipment to Azimuth and
the  products  businesses.  The  acquisition  was  accomplished  pursuant  to an
agreement  dated  November 15, 1991, at which time the Company also acquired the
assets of the four  partnerships  by the  assumption  of existing  mortgage  and
installment notes and by the issuance of subordinated notes to the partners. The
partners  of  these   partnerships   were  also   shareholders  in  Azimuth  and
Envirometrics, Inc.

     In September  1991, the Company began to manufacture and sell ACT cards and
in August  1992  acquired  a license to  manufacture  and sell  electronic  card
readers.  These  items  provided a  convenient  monitoring  system for  personal
exposure to hazardous chemicals.  The Company manufactured the ACT cards under a
proprietary  process and had an exclusive  worldwide  license to manufacture and
sell readers with the ACT cards.

     On April  27,  1993,  the  Company  was  issued a patent  on its  Bellmouth
cassette.  Sales of the Bellmouth  cassette  effectively  began in 1994, and the
Company  received  approval for this product from the relevant  Federal agencies
(OSHA, EPA and NIOSH).

     On November 30, 1994, the Company acquired  substantially all the operating
assets of Old Trico.  These  businesses  specialized in engineering,  surveying,
landscape architecture, tank management, RCRA/CERCLA site management and Phase I
and II  environmental  services.  This  acquisition  was  intended to enable the
Company to make available from one source a more complete line of  environmental
consulting and professional  engineering  services. On July 26, 1996 the Company
sold the Old Trico  businesses  that it had  operated  as Trico (see  "General",
above).

     On August 8, 1995, the Company acquired certain operating assets, including
cassette  injection  molds,  of the Corning  Costar  Nucleopore  Air  Monitoring
Division,  which  assets  (and  others  of  its  former  environmental  products
businesses) were sold on April 28, 1997 to  Multi-Metrics,  Inc. As part of this
sale,  Multi-Metrics agreed to sell the non-cassette  inventory of this business
for the Company on a  consignment  basis.  This sale was prompted by the need to
reduce debt and cut unprofitable business lines as a part of the "Turnaround".

     In January  1996 the Company  signed the  Zellweger  Agreement  pursuant to
which  Zellweger was granted the exclusive  marketing  rights  worldwide for the

                                       4
<PAGE>

Company's  proprietary  ACT  technology.  On November 14, 1997, to terminate and
settle the Zellweger Agreement:  the Company sold ACT to Zellweger for $344,849,
which the  Company  used to repay  certain  prepaid  purchase  deposits  made by
Zellweger  under the  Zellweger  Agreement;  Zellweger  exchanged,  $140,000  of
additional  prepaid purchase deposits for the Company's issuance to Zellweger of
70,000 shares of Series A Preferred  Stock;  and the Company made a cash payment
to Zellweger of $10,000.

     In 1996 the Company entered into a "Turnaround" phase. The major components
of this "Turnaround"  strategy  included:  salary cuts of 5% to 30% that spanned
all levels of employees from  management to hourly  employees,  with the highest
paid employees taking the largest  percentage cut; the sale of Trico back to the
original  owner in July 1996,  thus  eliminating  a cash  intensive,  marginally
profitable  subsidiary;  in December 1996 all of the Company's real property was
sold to retire the mortgage with Bank of America (formerly  NationsBank),  which
was due to mature in early 1997, and a $100,000  operating loan made by a former
Director;  in April 1997 the Company sold its air  monitoring  cassette molds to
Multi-Metrics,  Inc.  with the proceeds  used to retire  approximately  50% of a
trade  payable  owed to  Precision  Southeast,  Inc.,  the former  molder of the
Company's cassettes;  and in November 1997 the Company entered into a settlement
of the Zellweger Agreement,  retiring in excess of $490,000 in debt and avoiding
the  potential of a costly legal  confrontation.  During the twelve month period
ending 1998,  trade  payables  were mediated and a gain of $325,900 was realized
for financial reporting purposes.  On June 29, 1998, Company's secured creditors
converted $546,500 of outstanding indebtedness to an aggregate of 281,268 shares
of  Series B and C  Preferred  Stock of the  Company.  As a result  of this debt
conversion,  certain notes  receivable  in favor of the Company,  which had been
held as collateral for these creditors were released,  payments were made to the
Company and the  proceeds  were used for needed  operating  capital (see Item 6.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations).

Industry Overview
-----------------
     The occupational health and safety industry (the "Industry") represents the
convergence  of  safety  and  industrial  hygiene,  both  of  which  consist  of
professionals  and  product  manufacturers   specializing  in  the  recognition,
evaluation and control of hazardous chemical,  physical and biological agents in
or around the workplace. The Company's principal areas of focus for provision of
these services are Industrial Hygiene Consulting,  Industrial Hygiene Laboratory
Services, Occupational Safety and Health consulting, and Indoor Air Quality.

        Occupational Health and Safety
        ------------------------------
     The   occupational   health  and  safety   segment  of  the   Industry  has
traditionally been the domain of the certified  industrial hygienist (the "CIH")
and the certified safety  professional (the "CSP").  The CIH is an expert in the
recognition,  evaluation  and control of  hazardous  chemicals  and physical and
biological  agents in the work place.  The Company also employs  CSP's to assist
with determining OSHA regulation  compliance and identifying potential liability

                                       5
<PAGE>

resulting  from  non-compliance.  The Company has a  multi-disciplinary  program
called   Occupational   HealthGuard   that   combines  all  of  the   Company's
environmental   health  and  occupational   health  and  safety  consulting  and
laboratory  services.  This  program  involves  performing  OSHA/EPA  compliance
Strategic  Diagnostic  Review  ("SDR")  assessments  for the OSHA and/or the EPA
component.  The Company uses this  proprietary  SDR process to enable clients to
identify  problem  areas,  rank the  importance  of such  non-compliance  areas,
quantify exposure and implement appropriate action plans for remediation.

        Indoor Air Quality
        ------------------
     This segment  includes the testing,  remediation  and control of indoor air
pollutants and is also serviced by the CIH, reflecting the demand for consulting
and analytical services as well as indoor environmental  monitors.  This area of
the market is experiencing  considerable attention as occupants of buildings are
becoming  more attuned to the  potential for  contaminants  adversely  affecting
health.  For example,  the Company began a large project in December 1998, which
was completed in July 1999, involving mold contamination in a public school. The
Company acted in a project management  capacity and the reaction to this growing
problem is  exemplified in the  requirement  for evacuation of the occupants and
complete facility wide abatement of the contamination  under strict  containment
conditions.

        Factors Affecting the Industry
        ------------------------------
     Governmental Regulation.  Governmental regulation is a key factor affecting
the development of the Industry.  The two principal regulatory agencies are OSHA
and the EPA. These agencies complement each other, as OSHA is concerned with the
worker and the environment within a corporate facility, and the EPA is concerned
with the  general  public  and the  environment  generally  outside a  corporate
facility.  OSHA regulations have established permissible exposure limits over an
eight-hour  period  as well as  short-term  exposure  limits in  fifteen  minute
intervals for certain specified types of hazardous or toxic chemicals.

     Rising  Legal/Criminal  Liability Risk and Penalties.  Many violations that
formerly   involved  only  civil   penalties  for  violation  of   environmental
regulations  applicable to the Industry, now carry potential criminal liability.
The  language  in  the  Clean  Air  Act,  the  Clean  Water  Act,  the  Resource
Conservation  and  Recovery Act (RCRA),  the Oil  Pollution  Act, the  Pollution
Prosecution Act of 1990, and the U.S.  Sentencing  Commission  Guidelines Manual
are exposing  corporations and their personnel to significantly  increased fines
and  criminal  sanctions.  The  referral  of  criminal  cases  by the EPA to the
Department of Justice has significantly  increased since 1993, and the number of
criminal cases  prosecuted  and the number of cases ending in  convictions  have
also significantly increased in that time period.

                                       6
<PAGE>

Company Services
----------------

        Laboratory Services
        -------------------
     The Company's  certified  industrial  hygiene  laboratory,  operated by its
Azimuth   subsidiary,   is  one  of  approximately  130  AIHA  fee  for  service
laboratories  in the  United  States.  This  laboratory  services  clients  on a
nation-wide  basis, but the majority of its clients are located primarily in the
southeastern part of the United States. The synergy of a full service laboratory
is consistent with the Company's overall strategic plan,  supports the Company's
Occupational  HealthGuard and consulting  programs,  and facilitates  immediate
market  expansion  through  increased  services to existing  industrial  hygiene
customers.    The   market   for   industrial    hygiene    analyses    includes
architects/engineers,  environmental consultants,  industrial hygienists, safety
professionals,  manufacturing  companies in the private sector and  governmental
agencies,  such as the  Department of Energy,  Department  of Defense,  Federal,
state and local government agencies.

     The Company's  laboratory is accredited by the American  Industrial Hygiene
Association.  The Company's laboratory has also received accreditation under the
AIHA,  Environmental Lead Laboratory Accreditation Program, New York State Dept.
of Health  accreditation for Lead and other metals in non-potable water, air and
emissions, and solid and hazardous waste.

     Industrial hygiene laboratory  services involve the analyses of air samples
taken to evaluate worker exposure to hazardous or toxic  chemicals.  The samples
are called "air samples",  but the media analyzed is not air. Rather,  analyzing
devices extract particles of the chemical from the air. These devices are called
sampling  media and consist of filters,  sorbent  tubes,  liquids,  cassettes or
other specialty sampling devices. The sampling media and instrumentation used by
the  industrial  hygienist  depend  on the type of  chemical  being  tested.  An
industrial hygienist is primarily concerned with airborne chemicals,  respirable
particulates,  metals  including lead, and organic vapor (i.e.  vapor containing
carbon and hydrogen).

     The Laboratory is a leading provider of lead analytical  services,  and was
one of the first  industrial  hygiene  laboratories  in the  nation  to  receive
accreditation  under the AIHA/EPA  Environmental  Lead Laboratory  Accreditation
Program (ELLAP).

     The  Company,  through its  laboratory,  provides  laboratory  services for
Housing Environmental Services (HES), a major, national consultant in Cambridge,
Massachusetts.  HES provides lead based paint assessment to housing  authorities
in accordance with HUD guidelines.

        Consultative Services
        ---------------------
         Consultative services are grouped into five categories:

                                       7
<PAGE>

     - Safety  Consulting  Services -  involves  program  development  for fire,
electrical and process safety and OSHA compliance;

     -  Industrial  Hygiene  Consulting  Services - involves  on-site  audit and
assessment surveys for compliance with OSHA standards in the areas of indoor air
quality and worker  exposure to toxic  chemicals and metals;  and other physical
health hazards;

     - Asbestos  and Lead  Consulting  Services -  includes  hazard  assessments
(surveys,  sampling and analyses),  design  engineering,  project management for
abatement and removal of asbestos or lead; and

     - Training - involves the establishment of programs and subsequent delivery
of safety,  asbestos,  lead and industrial hygiene,  and OSHA and EPA compliance
training.

     The Company's  Occupational  HealthGuard service is a  multi-disciplinary
program that combines all of the Company's environmental health and occupational
health and safety  consulting and  laboratory  services.  This program  involves
performing  OSHA/EPA  compliance  SDR  assessments  for the OSHA  and/or the EPA
component,  together with a comprehensive  range of corrective action,  training
and on-going  monitoring  services.  The review is  conducted by a  two-to-three
person  team  of  Company  environmental  and  occupational  safety  and  health
professionals.  Depending upon the size and complexity of the assignment, such a
review costs between $3,000 and $5,000 per day, plus expenses,  and takes one to
two days of on-site work to complete. The work product from this effort consists
of a written  report to the customer that lists and  prioritizes  non-compliance
findings and delineates a custom  designed,  cost effective,  corrective  action
plan. The corrective  action plan is then implemented by the customer  utilizing
its own internal technical resources,  the Occupational  HealthGuard  technical
professionals,  or a combination  thereof. The efficacy of the corrective action
and the status of on-going  compliance are then  evaluated  through a quarterly,
semi-annual or annual compliance audit.

     Asbestos   consulting  services  had  been  performed  by  Azimuth's  field
operators  until 1996,  when it made a transition  to providing  these  services
through  subcontractors.  Through the  subcontractor,  the Company  continues to
offer these  services  including  both asbestos and lead  services  inclusive of
building  surveys,  operations and maintenance  plan  development,  removal cost
estimates, removal specifications,  project management, and on-site air sampling
and analysis for abatement  projects.  The Company has relationships  with three
individuals,  two  who  were  former  employees  of the  Company,  which  act as
subcontractors  providing Asbestos consultative services. Two of these providers
operate  under an oral  agreement  and the other  under a written  subcontractor
agreement.

     In October 1999 the Company  implemented  a plan to change the focus of its
service  offering  from  mainly  Industrial  Hygiene  Services to an emphasis on
expanded Safety Services.  Safety Services are specialty  consulting and on-site

                                       8
<PAGE>

training  products which assist  clients to set goals and achieve  reductions in
frequency and severity of accidental  losses  through the process of identifying
and  controlling  harmful  employee  behavior and  hazardous  conditions  in the
workplace.  Safety Services,  when properly implemented,  assist clients achieve
compliance with regulatory  requirements  established by state and Federal OSHA,
transportation,  and  environmental  agencies.  Management  believes that Safety
Services represent a broader need within the industry,  especially for employers
having between 50 and 150 employees.  This industry segment makes up the greater
percentage of the market potential for the services of the Company and comprises
the segment in which the Company is focusing its greatest  sales  effort.  It is
Management's  belief,  based on market trends, that leading with Safety Services
establishes a customer relationship that allows other services,  i.e. Industrial
Hygiene Services and Environmental Services, to be sold to the same customer.

Former Company Products
-----------------------

        ACT Cards and Electronic Card Readers
        -------------------------------------
     Prior to November  1997,  when the ACT card business was sold to Zellweger,
the  Company  manufactured,   sold  and  distributed  ACT  cards  and  sold  and
distributed   electronic  card  readers  through  its   environmental   products
subsidiary.  In 1996 the Company distributed this product line through Zellweger
under the terms of the Zellweger  Agreement.  The terms of this  agreement  gave
Zellweger  exclusive  world-wide   distributor  rights  to  the  ACT  cards  and
electronic  card readers.  The ACT cards and readers  provided a  chemical-free,
on-site monitoring system for measuring personal exposure to hazardous chemicals
in  a  variety  of  industrial  and  medical  environments.  See  "General"  and
"Historical  Background",   above,  for  information  concerning  the  Company's
relationship with Zellweger.

     The ACT cards  (sometimes  referred to as badges)  could be worn by all, or
certain designated  personnel within a selected area. The ACT cards were able to
detect  specified  levels of  formaldehyde,  hydrogen  sulfide,  sulfur dioxide,
methyl ethyl ketone, ammonia, chlorine, nitrogen dioxide, ethylene oxide, carbon
monoxide and  glutaraldehyde  in the air.  These toxic and  hazardous  chemicals
exist in many industrial and healthcare environments.

     Using passive diffusion and colorimetric chemistry, the Company's ACT cards
provided  both  visual  indicators,  through  color  changes,  and  quantitative
readings of air levels of exposure to hazardous or toxic chemicals.

     On March 26, 1992 the Company  entered  into an  agreement,  which was also
amended in 1996, with Computer  Control  Corporation  ("CCC") of Pompton Plains,
New Jersey,  to develop the electronic card reader for  quantitative  ACT cards.
Under the agreement,  CCC granted to the Company an exclusive world-wide license
to manufacture  and sell in perpetuity  electronic card readers for use with ACT
cards;  provided,  that CCC retained the non-exclusive  right to manufacture and
sell  electronic  card  readers to the  Company.  On August 25, 1997 the Company

                                       9
<PAGE>

received  notice from CCC that it was canceling  the 1992  Agreement and amended
1996 Agreement because of failure by the Company to cure certain defaults.  Cash
flow problems and the sale of ACT to Zellweger prevented the Company from curing
the defaults.

        Air Sampling Cassettes and Industrial Hygiene Supplies
        ------------------------------------------------------
     The Company's  former  environmental  products  business  manufactured  and
marketed air sampling cassettes,  including its patented Bellmouth cassette, for
the  monitoring of levels of asbestos and certain  metals and fibers in the air.
It also sold and  distributed a  diversified  line of equipment and supplies for
the  industrial  hygiene  and  occupational  health  and safety  consultant  and
laboratory  markets. On April 28, 1997, the Company sold the principal operating
assets of the  environmental  products  business.  See "General" and "Historical
Background", above, for information concerning this sale.

Intellectual Property
---------------------

        Patents and Licenses
        --------------------
     The  Company's  only  patent  was  issued on April 27,  1993  covering  the
Bellmouth cassette technology. This cassette technology, including patent rights
was  sold  to  Multi-Metrics,  Inc.  in  1997.  See  "General"  and  "Historical
Background".

     The Company  manufactured its ACT cards under  proprietary  chemistry.  The
Company  had  negotiated  a revised  employment  agreement  with each of its two
chemists  to include a base salary and a royalty  equal to 2.5% of annual  gross
sales of all ACT  cards and a cash  bonus of  $5,000  for each new card that was
developed.  The initial  term of the  employment  agreement  was to extend until
December 31, 2000 with two year automatic renewals at the end of the first term.
On October 20, 1997 the Company signed a Mutual  Release of Claims  Agreement to
supersede the  Employment,  Royalty and  Non-disclosure  Agreement dated May 15,
1996. The Mutual  Release  Agreement  released the chemists from  employment and
released the Company from its obligations under their employment agreement.

     On March 26, 1992,  the Company  entered into an agreement with CCC for the
development of the electronic card readers.  Under such  agreement,  the Company
(i) advanced  $30,000 to CCC,  (ii) agreed to reimburse  CCC for up to $5,000 of
expenses  incurred  in  prosecuting  any  letters  patent  in  respect  to  such
electronic card reader, and (iii) agreed to pay CCC a royalty equal to 3% of net
sales of all ACT cards  using the ACT  electronic  card  readers for a period of
five  years  from  February  2, 1993 (the date of the first  sale of an ACT card
reader),  subject to minimum annual  royalties to CCC of $25,000 and $30,000 per
annum for the first and second years of the five-year period,  respectively.  In
addition,  the  Company  agreed  to pay CCC a  royalty  equal  to 10% of all net
proceeds received by the Company from the sale or rental of ACT card readers for
a period of five  years,  subject  to  extending  the  period of payment of such
royalty to the life of any patents  which CCC may obtain during the initial five
year  period.

                                       10
<PAGE>

     Under the  agreement,  CCC granted to the Company an  exclusive  world-wide
license to manufacture  and sell in perpetuity  electronic  card readers for use
with  ACT  cards;  provided,  that  CCC  retained  the  non-exclusive  right  to
manufacture  and sell  electronic  card readers to the Company.  The Company was
prohibited from sublicensing or assigning the license to any third party without
CCC's  consent.  All  technology  developed  under  the  agreement  was the sole
property of CCC;  provided  that CCC must  disclose to the Company  (and may not
disclose to any third  party other than the  Company)  all  technical  know-how,
trade secrets and other  proprietary  information which was required in order to
manufacture the electronic card readers.

     On June 18, 1996 CCC and the Company  amended the 1992  Agreement.  In this
amendment CCC addressed certain defaults of the Company and dates in which those
defaults must be cured. The defaults were failure by the Company to make certain
payments due to CCC under the terms of the 1992  Agreement.  The 1996  amendment
extended  the Monitor and Reader  Royalty  Period that was due to expire in 1997
until June 30, 2000.  On July 17, 1997 CCC noticed the Company again that it had
defaulted  under the terms of the 1992 and 1996 amended  Agreement.  The Company
had cured some of the stated defaults in the 1996 amendment, but because of cash
flow problems  were unable to cure all defaults.  On August 25, 1997 the Company
received  notice  from CCC that it was  canceling  the  1992  and  amended  1996
Agreement  and pursuing all remedies  available to it under the  Agreements.  On
April 9, 1998 the  Company  and CCC signed a Mutual  Settlement  and  Release in
which the Company  conveyed to CCC 31,713  shares of its common stock in lieu of
the $31,712 of  outstanding  royalties  owed CCC.  None of this  technology  was
conveyed to Zellweger in the sale of ACT in 1997.

        Trademarks and Trade Names
        --------------------------
     AirChem Technologies ("ACT")and the ACT logo were registered trademarks of
the Company's  Envirometrics  Products  Company  subsidiary.  Under the purchase
agreement  with  Zellweger,  these  trademarks  were  sold as apart of the asset
purchase.

     Azimuth and  Occupational  Healthguard  are  registered  service marks of
Azimuth. Asbestos Analytics is a registered trademark of Envirometrics Products
Company.  "Envirometrics"  is a registered  servicemark  with the State of South
Carolina.

Former Manufacturing
--------------------
     The company  manufactured  and  assembled air sampling  cassettes,  in both
standard  25mm and 37mm sizes and its  patented  Bellmouth  cassette  at a 4,800
square  foot  leased  facility  (see  ITEM  2.  DESCRIPTION  OF  PROPERTIES)  in
Summerville,  South Carolina,  and  manufactured the ACT cards at a 1,200 square
foot leased facility in Raleigh,  North Carolina.  Under the terms of settlement
with the chemists  employed to manufacture the ACT cards, the lease of the 1,200
square foot facility in Raleigh, NC was assumed by the chemists. Under the terms
of the previously  discussed asset purchase  agreements by Zellweger  Analytics,
Inc. and Multi-Metrics,  Inc. the Company no longer  manufactures or sells these

                                       11
<PAGE>

products.  ACT card readers  were  produced  exclusively  for the Company by CCC
under a  manufacturing  requirements  agreement  until  August 25, 1997 when CCC
canceled  the  agreement  because  of failure  by the  Company  to cure  certain
defaults. For terms of settlement with CCC see "Intellectual Property" above.

Sales and Marketing
-------------------
     The  Company's  laboratory  services  are  marketed  through  telemarketing
efforts and by attending local and national  Industrial Hygiene and Safety trade
conferences.

     As the Company exits the  "Turnaround"  phase,  emphasis has been placed on
internal growth of the consultative  services in the state of South Carolina. In
South Carolina there exists an industrial corridor that  geographically  extends
along Interstate 85 that crosses the northern quadrant of the state. The Company
has never had an office or a  presence  in this area.  In  October  1999 a sales
representative  domiciled in this  corridor was hired to make direct sales calls
in this geographic area.

     The Company has determined  that employers  having from 50 to 150 employees
typically  do not  have the  internal  resources  to  comply  with  OSHA and EPA
regulations and have the greatest need to secure outside  services.  This is the
target  market to which the Company is  directing  its sales focus for growth of
Azimuth sales.

     Management  has  evaluated a strategy to increase its revenue per customer.
It has determined that by offering Safety Services,  a greater  potential exists
to generate  higher sales per customer  and allow for the  integration  of other
Company service offerings,  i.e. Industrial Hygiene and Environmental  Services.
This shift in marketing  strategy is anticipated to generate higher revenues per
customer in the future.

EMPLOYEES
---------
     Presently the Company has a total of 13 employees down from 95 in 1996. The
number  of  employees  at  December  31 of  each  fiscal  year  was as  follows:

 Year    Total   Parent  Lab & Consultative   Products   Engineering
 ----    -----   ------  ------------------   --------   -----------
 1996      95       9           21                30          35
 ----    -----   ------  ------------------   --------   -----------
 1997      21       6           11                 4
 ----    -----   ------  ------------------   --------   -----------
 1998      15       2           13
 ----    -----   ------  ------------------   --------   -----------

     None of the Company's  employees are  represented by a labor  organization.
The Company considers its relations with employees to be satisfactory.

     The Company utilizes the services of three  subcontractors in the provision
of Asbestos Consultative services (see "Company Services--Consultative Services"
above).

                                      12
<PAGE>

 Insurance
 ---------
     The  Company  presently  maintains  insurance  as  required  by law  (e.g.,
workers' compensation insurance),  and liability insurance in respect to hazards
on the  Company's  business  premises.  The Company  continues to carry  product
liability insurance for its former products, generally providing for coverage of
$1.0  million for each  occurrence  or  project,  plus a $3.0  million  umbrella
liability  insurance  policy  that also  covers  product  liability  claims.  In
addition,  the  Company  maintains  up to $1.0  million of errors and  omissions
insurance for consultative services. The Company believes that such insurance is
adequate to cover potential  claims  relating to its past and existing  business
activities. To date, its claims history has been minimal.

Competition
-----------
     Technological  competition from other and longer established  environmental
and industrial  hygiene  companies is significant and expected to increase.  Cut
backs in the early  1990's of large  Occupational  Health and  Safety  corporate
staffs have  resulted in a  fragmentation  of the Industry  through the entry of
such released personnel into private consulting  practice.  The Company believes
that environmental and industrial hygiene laboratories and consulting firms will
compete intensely to maintain or improve their revenue levels and market shares.
The Company's  competitors  have, or are  developing,  consulting and laboratory
services similar to the Company's  current service line. Most of these companies
have  substantially  greater  capital  resources  than  the  Company  and can be
expected to be long-term competitors.

     The Company believes that its primary market  competition for environmental
consulting and laboratory services comes from the General Engineering Laboratory
division of Coastal Marine Trading Company,  Clayton Environmental  Consultants,
Inc., Dames and Moore,  Inc.,  Schneider  Laboratory and Data Chem Laboratories.
The Company believes that its laboratory  services benefit from its full service
orientation,  its technical understanding of its related consulting services and
the reputation of the Company founder, Richard D. Bennett, CIH.

Post "Turnaround" Phase
-----------------------
     During 1996 the Company entered a formal  "Turnaround" phase as a result of
the critical  financial  condition that the Company was then facing.  Management
analyzed  all  operations  of the Company to  determine  which  operations  were
draining cash flow. The extreme debt load (see Item 7. Financial Statements) and
poor cash position  required that significant  steps be taken  immediately.  The
Company embarked on a plan to mediate debt through the sale of real estate, sale
of other Company  assets and  negotiation  with vendors.  The result is that the
Company  has  reduced  its debt load from  $3,203,600  at  December  31, 1995 to
$477,200 at December 31, 1999.

                                       13
<PAGE>

     The Company has now turned its attention to moving out of the  "Turnaround"
phase.  Management has devised a plan to accomplish this exit in two steps. Step
One will focus on the internal  growth of Azimuth and Step Two will focus on the
development and implementation of a merger and acquisition strategy.

     Step One. In October 1999,  Azimuth changed its service  provision to shift
more focus to broader  Safety  Services  offerings.  This  change is expected to
expand the  customer  base by offering a wider range of services  and by leading
the  sales  process  with  Safety  Services.  Once a  customer  relationship  is
established with Safety Services,  it is expected to allow for the sale of other
service  offerings,  resulting  in  a  higher  revenue  base  per  customer  and
ultimately an internal growth in revenue. In October 1999, Azimuth hired a sales
representative  to increase the  visibility of Azimuth in the strong  industrial
base along the  Interstate  85 corridor  located in the upper  quadrant of South
Carolina. The combination of the change in service offering focus and the hiring
of an  additional  sales  representative  in a  strong  industrialized  area  is
expected to produce an increase in revenue for Azimuth.

     Step Two. The Company and its management agree that any appreciable  growth
in revenue will only result through a strategy of mergers and/or acquisitions or
other  consolidation  with other  service  providers  operating in the Company's
fragmented  industry.  The Company doesn't compete in a market that lends itself
to quick internal growth; therefore, substantial increases in revenues must come
from a roll-up  of other  synergistic  companies.  The  occupational  health and
safety consulting segment of the Industry is very fragmented and lends itself to
a roll-up  strategy model.  The Company is in the midst of developing its merger
and acquisition  strategy.  Although the Company is not currently a party to any
binding agreements with respect to any specific targets in the implementation of
this strategy,  a broad profile of target  companies around which this plan will
be  developed  consists  of the  following:

     1. Companies that are operating profitably.

     2. Companies that have depth of personnel with the requisite  experience to
     fill needs in the Company's expanding service offerings.

     3.  Companies  that are  strategically  and  geographically  located in the
     Eastern United States .

     4. Companies whose  principals have the potential to fill senior  corporate
     positions with the Company as the need develops.

     Management  believes that an important first step in the post  "Turnaround"
phase is Step One.  The  execution  of Step One further  stabilizes  the Company
financially  and  brings  credibility  to the merger  and  acquisition  strategy
described in Step Two. Steps One and Two will be executed concurrently,  but the
Company expects Step One to take the highest priority through June 2001.

                                       14
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTIES
----------------------------------

     The following table sets forth information as to each of the principal real
properties  owned or leased by the  Company as of  December  31,  1996,  and the
current  ownership lease status of that property.  No other properties have been
purchased or leased since December 31, 1996.


 Location & Use       Title/Lessor     Expiration    Annual    Square      Lien
 --------------       ------------        Date       Rental      Ft       Holder
                                          ----       ------      --       ------

4055 Faber Place Dr.  LPC of SC.,Inc.   1/31/99    $133,018    9,094        N/A
SUITE 201               Expired &
Charleston, SC  29405  not Renewed

1019 BANKTON DRIVE    SOLD                N/A          N/A     7,680        N/A
CHARLESTON, SC        12/96                                     1.14 acres
(Manufacturing, distribution
and warehouse)

9229 UNIVERSITY BLVD   SOLD 12/96 &    12/30/01     $66,271    6,694        N/A
Charleston, SC         Leased back
(Corporate offices,    James W. Miller
Consulting offices
& Laboratory)

1018-E Morrisville Pkwy   Reba H.      4/30/97      $10,825    1,732        N/A
Raleigh, NC               Wilkinson
(Research, Development    Expired
and production facility
for Act Monitoring Card System(TM))

OakBrook Center          Nicholas &    8/14/97       $19,200   4,800        N/A
10040 Dorchester Rd.    Thalia Pavlatos
SUMMERVILLE, SC 29485   Expired

     All leases are on a "net,  net" basis which requires the Company to pay its
pro-rata share of all utilities, heat, air conditioning, taxes and other charges
assessed against the leased premises.  Annual rental figures shown exclude sales
taxes, if any.

     The Company  believes that its  facilities are adequate for its current and
anticipated requirements for the foreseeable future.


ITEM 3.  LEGAL PROCEEDINGS
--------------------------
     The Company currently has no legal proceedings pending.

                                       15
<PAGE>


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

     In November  1996,  Mr.  Richard  Bennett  resigned as  President  and CEO.
Because of the  financial  difficulty  that the  Company was facing the Board of
Directors  directed  the  new  President  and CEO to  develop  and  implement  a
"Turnaround"  plan.  Because  the cash  position  of the  Company  was  severely
deteriorated,  past  audit fees were not paid to the  auditor,  as well as other
vendors.  This  non-payment  created a delay in performing the annual audits for
1996-98.  Because no audits were completed,  no 10KSB's were filed and no annual
meetings of shareholders were conducted. As a result, there have been no matters
submitted for vote to the security holders since 1995.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
------------------------------------------------------------------

     The Company's  Common Stock has been  publicly  traded  separately  and was
initially  quoted on the  Nasdaq  Smallcap  Market  ("Nasdaq")  under the symbol
"EVRM" on August 12, 1994.  Upon the  divestiture  of the Trico  subsidiary  the
Company fell below the listing  requirements of Nasdaq. On December 3, 1996, the
Company's  common  stock and warrants  were  delisted  from The Nasdaq  SmallCap
Market and were  subsequently  traded on Over the  Counter  Bulletin  Board.  On
January  4,  1999,  the  Securities  and  Exchange   Commission  (SEC)  approved
amendments  to NASD Rules 6530 and 6540 to limit  quotations on the OTC Bulletin
Board  ("OTCBB")  to the  securities  of companies  that report  their  current
financial  information  to the SEC. On November 18, 1999,  the Company's  common
stock and warrants  were  delisted from the OTCBB because of failure to have the
required SEC periodic  filings  submitted by that date. Price Quotations for the
Company's   common  stock  are  currently  listed  on  the  National  Bureau  of
Quotation's Electronic Pink Sheets (the "Pink Sheets"). It is expected that once
the Company has become  current with filing its period filings with the SEC, the
necessary  number of market makers will re-file the  appropriate  forms with the
OTCBB to permit the Company's common stock to be re-listed on OTCBB.

     On December 31, 1999 there were approximately 453 shareholders of record of
the  Company's  common  stock,  based on  information  provided by the Company's
transfer  agent.  The Company also has  warrants,  each to purchase one share of
Common Stock (the  "Warrants"),  which were previously quoted on OTCBB under the
symbol "EVRMW".  On December 31, 1999, there were approximately 244 holders of
record of the Warrants,  based on information provided by the Company's transfer
agent.

     On April 15, 1999 the Company  amended its Warrant  Agreement to extend the
expiration  date of the Warrants from April 29, 1999 until April 30, 2001.  This
extension  was  executed  to permit the  Company to retain the ability to obtain
additional  capital without  incurring the expense and  experiencing  the delays
inherent  in  either a  secondary  public  offering  or a private  placement  of
securities.

                                       16
<PAGE>

Price Range of Outstanding Common Stock
---------------------------------------
     The  following  table sets forth the high and low bid prices for the Common
Stock as reported in the trading media and for the periods  reflected  above for
each fiscal  quarter  commencing  January  1996 through  December 31, 1998.  The
quotations  listed below reflect  inter-dealer  prices,  without retail mark-up,
mark-down on commission and do not necessarily represent actual transactions.


       1996              HIGH        LOW
       ----              ----        ---
    First Quarter         2.7344      1.5
    Second Quarter        2.375       1.1875
    Third Quarter         1.375       0.75
    Fourth Quarter        1.125       0.1875

      1997
      ----
    First Quarter         0.375       0.187
    Second Quarter        0.593       0.031
    Third Quarter         0.125       0.031
    Fourth Quarter        0.156       0.020

      1998
      ----
    First Quarter         1.250       0.02
    Second Quarter        0.812       0.25
    Third Quarter         0.625       0.125
    Fourth Quarter        0.437       0.062

     On December 30, 1999, the last sale price of a share of Common  Stock as
reported in the Pink Sheets was $0.025.

DIVIDENDS
---------
     The  Company  has never paid  dividends  on its  Common  Stock and does not
anticipate  that it will do so in the  foreseeable  future.  For the foreseeable
future any future earnings or funds otherwise available, if any, for the payment
of dividends will be used to pay dividends on the  outstanding  Preferred  Stock
(see Item 6.  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations) or for reinvestment in the Company's business. Any future
determination  to  pay  cash  dividends  on  the  Common  Stock  will  be at the
discretion  of the  Board of  Directors  and will  reflect  such  other  factors
(including contractual requirements) as the Board of Directors deems relevant.

     The Company was in arrears for payment of dividends of its Preferred  Stock
in the  approximate  amount of $19,700 at December 31, 1998 ($34,700 at December
14, 1999). In addition,  under the terms of the Preferred  Stock, the holder can
"put" outstanding  shares of Preferred Stock back to the Company for repurchase.
As discussed in the financial  statements,  "put"  obligations  for 1999 through

                                       17
<PAGE>

2003 range from  $35,000 to $89,000  annually.  The Company  will not be able to
meet these obligations if its current revenue trends continue.

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

     The following  discussion and analysis  should be read in conjunction  with
the Consolidated Financial Statements and Notes thereto,  appearing elsewhere in
this Form 10-KSB.

General Overview
----------------
     As discussed earlier, the Company formerly had 3 operating subsidiaries. As
a result of a  "Turnaround"  phase which  began in 1996,  it  currently  has one
operating  subsidiary,  Azimuth,  Incorporated,  which  provides  the  following
services:  industrial  hygiene  laboratory  services;  environmental  health and
occupational  health and  safety  consulting;  and  asbestos  services.  Azimuth
operates a fully accredited  Industrial Hygiene ("IH") laboratory,  certified by
the American Industry Hygiene Association  ("AIHA"),  to perform analyses of air
samples  for  asbestos,  metals and organic  vapors.  In October  1999,  Azimuth
changed its service offering to put more focus on broader Safety  Services.  See
Item 1. Description of Business -"General" and "Historical Background".

     Pursuant  to  authority  expressly  granted  to and  vested in the Board of
Directors by the Certificate of Incorporation,  in connection with effecting the
mediation of  outstanding  obligations  of the Company,  the Board  ratified the
creation and issuance of the following  Series (the "Series") of Preferred Stock
(the  "Preferred  Stock") and Classes of each such  Series  (the  "Classes")  to
Company  creditors,  all of which  are  currently  issued  and  outstanding  and
non-voting.

     1. Shares of Preferred  Stock  designated  "Series A Preferred  Stock",  to
consist of 70,000 shares divided into four Classes as follows:

         Class 1                              17,500 Shares
         Class 2                              17,500 Shares
         Class 3                              17,500 Shares
         Class 4                              17,500 Shares

     No dividends will be paid on the Series A Preferred Stock, and the Series A
Preferred  Stock is  convertible at the ratio of one such share for three shares
of Company  Common  Stock.  All shares of Series A Preferred  Stock can be "put"
back to the Company by holders, at $2.00 per share, on the following schedule:

               Class 1                  -             From December 31, 1999 to
                                                      December 31, 2003;
               Class 2                  -             From December  31, 2000 to
                                                      December 31, 2003;
               Class 3                  -             From December 31, 2001 to
                                                      December 31, 2003; and
               Class 4                  -             From December 31, 2002 to
                                                      December 31, 2003.

     Any shares of Series A Preferred  Stock that are neither  converted nor put
to the Company on or prior to  December  31,  2003,  shall at that time lose all
such conversion and redemption rights.

     2. Shares of  Preferred  Stock  designated  "Series B Preferred  Stock," to
consist of 208,640 shares divided into five Classes as follows:

         Class 1                              41,728 Shares
         Class 2                              41,728 Shares
         Class 3                              41,728 Shares
         Class 4                              41,728 Shares
         Class 5                              41,728 Shares

     Shares of Series B Preferred Stock bear cumulative dividends at the rate of
$.14 per annum,  and the Series B Preferred Stock is convertible at the ratio of
one such share for five shares of Company  Common Stock.  All shares of Series A
Preferred  Stock can be "put" back to the  Company by holders at the amounts per
share and on such timing as meets the following schedule:

               Class 1                  $2.36         From June 15, 2004 to
                                                      June 14, 2009;
               Class 2                  $2.42         From June 15, 2005 to
                                                      June 14, 2009;
               Class 3                  $2.48         From June 15, 2006 to
                                                      June 14, 2009;
               Class 4                  $2.54         From June 15, 2007 to
                                                      June 14, 2009; and
               Class 5                  $2.60         From June 15, 2008 to
                                                      June 14, 2009.

     Series B Preferred  Stock can be  "called" by the Company by the  Company's
payment of the following redemption amounts on the following schedule:

                         Call Date                             Amounts Per Share
         -        From June 15, 1998 to                              $2.00;
                  June 14, 1999
         -        From June 15, 1999 to                              $2.06;
                  June 14, 2000
         -        From June 15, 2000 to                              $2.12;
                  June 14, 2001
         -        From June 15, 2001 to                              $2.18;
                  June 14, 2002
         -        From June 15, 2002 to                              $2.24;
                  June 14, 2003
         -        From June 15, 2003 to                              $2.30;
                  June 15, 2004
         -        From June 15, 2004 to                              $2.36;
                  June 14, 2005
         -        From June 15, 2005 to                              $2.42;
                  June 14, 2006
         -        From June 15, 2006 to                              $2.48;
                  June 14, 2007
         -        From June 15, 2007 to                              $2.54; and
                  June 14, 2008
         -        From June 15, 2008 to                              $2.60.
                  June 14, 2009

     Any shares of Series B Preferred Stock that are not converted or put to the
Company on or prior to June 14, 2009,  or tendered by the Company  pursuant to a
"call"  by the  Company,  shall  not be  entitled  thereafter  to any  dividend,
conversion, put or other rights.

     3. Shares of  Preferred  Stock  designated  "Series C Preferred  Stock," to
consist of 74,878 shares divided into three Classes
as follows:

         Class 1                              24,959 Shares
         Class 2                              24,959 Shares
         Class 3                              24,960 Shares

     Shares of Series C Preferred Stock bear cumulative dividends at the rate of
$.14 per annum,  and the Series C Preferred Stock is convertible at the ratio of
one such share for five shares of Company  Common Stock.  All shares of Series C
Preferred  Stock can be "put" back to the  Company by holders at the amounts per
share and on such timing as meets the following schedule:

               Class 1                  $2.12         From June 15, 2000 to
                                                      June 14, 2003;
               Class 2                  $2.18         From June 15, 2001 to
                                                      June 14, 2003; and
               Class 3                  $2.24         From June 15, 2002 to
                                                      June 14, 2003.

     Series C Preferred  Stock can be  "called" by the Company by the  Company's
payment of the following redemption amounts on the following schedule:

                         Call Date                            Amounts Per Share
         -        From June 15, 1998 to                              $2.00;
                  June 14, 1999
         -        From June 15, 1999 to                              $2.06;
                  June 14, 2000
         -        From June 15, 2000 to                              $2.12;
                  June 14, 2001
         -        From June 15, 2001 to                              $2.18; and
                  June 14, 2002
         -        From June 15, 2002 to                              $2.24.
                  June 14, 2003

     Any shares of Series C Preferred Stock that are not converted or put to the
Company on or prior to June 14, 2003,  or tendered by the Company  pursuant to a
"call"  by the  Company,  shall  not be  entitled  thereafter  to any  dividend,
conversion, put or other rights.


                                       18
<PAGE>



                             RESULTS OF OPERATIONS
                             ---------------------

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------------------------

     Revenue for the year ended December 31, 1996 amounted to $2,302,000,  which
was  $1,585,600  (40.8%) lower than the  $3,887,600  reported for the year ended
December 31, 1995 after restatement for discontinued  operations of the Products
Division.  Included in the Service Division revenue reduction of $1,585,600 is a
decrease of $999,500  related to the Trico business,  which was disposed at July
31, 1996.  The Service  Division  reported  $586,100  less  revenues for 1996 as
compared to 1995.

     The  Products  Division  lost  revenues  of $766,100  (29.3%) and  reported
$1,852,500  for the year ended  December 31, 1996 as compared to $2,618,500  for
the year ended  December 31,  1995(with  such amounts  included in  discontinued
operations).

     Cost of revenue decreased by 40.2% or $1,180,800 to $1,760,100 for the year
ended  December 31, 1996 as compared to  $2,941,000  reported for the year ended
December 31, 1995. Included in the Service Division cost of revenue reduction of
$1,180,800 is a decrease of $758,000  related to the Trico  business,  which was
disposed at July 31, 1996. The Service Division  reported  $422,800 less cost of
revenues for 1996 as compared to 1995.

     The  Products  Division  cost of revenue  decreased  by $85,500  (5.7%) and
reported  $1,428,000  for the  year  ended  December  31,  1996 as  compared  to
$1,513,500  for the year ended December 31,  1995(with such amounts  included in
discontinued operations).

                                       19
<PAGE>
     The  gross  profit  for the year  ended  December  31,  1996  decreased  by
$404,800,  a decrease of 42.8% to $541,900 as compared to $946,700  for the year
ended  December 31, 1995. The Services  Division's  decrease in its gross profit
for 1996 as  compared to 1995 is related to the  decrease  in revenue  discussed
above.

     Excluding  discontinued  operations  of the  Products  Division,  the gross
profit decrease for 1996 would have been $1,084,500  lower, a decrease of 52.9%,
or $967,200 as compared to $2,051,700 for the year ended December 31, 1995. The
Products  Division  also  experienced  a  significant  decrease  of 61.6%,  or a
$680,500  reduction,  in its gross  profit for 1996 as  compared  to 1995 due to
significant  declines in the gross margins on sales of its air sampling cassette
products  resulting  from an agreement with a major  customer(with  such amounts
included in discontinued operations).

     Percentage  comparisons  of gross  margins  reported  by the Company are as
follows:

Year Ended                 Total
December 31, 1996          23.5%
December 31, 1995          24.4%

     Percentage  comparisons of gross margins  reported by the Company,  without
reporting the Products Division as discontinued operations are as follows:

Year Ended                 Total          Services          Products
December 31, 1996          23.3%            23.6%             22.9%
December 31, 1995          31.5%            24.4%             42.2%

     Operating  expenses were $563,300  lower and amounted to $1,257,300 for the
year ended  December 31, 1996, as compared to  $1,871,600  reported for the year
ended December 31, 1995, after restatement for discontinued  operations  related
to the Products  Division.  Sales and marketing expenses decreased by $29,700 to
$98,800  for  1996 as  compared  to  $128,500  for  1995  due to  reductions  in
personnel.  General and  administrative  costs decreased by $533,400 to $989,300
for 1996, as compared to $1,522,700  reported for 1995. Included in 1996 general
and administrative  expenses is the recovery of approximately $80,000 of amounts
expensed in 1995  related to a financial  settlement  with a former  officer.  A
significant portion of the decrease, $243,900 is due to a reduction in personnel
and  restructuring of costs to the disposition of the Trico business.  Purchased
services  decreased by $135,600 for 1996 as a result of the  restructuring of an
agreement  with  The  United  States  Company  and  disposal  of  a  subsidiary;
facilities  and  equipment  costs  decreased  by $98,300  for 1996 and  supplies
decreased by $17,200 for 1996.  Depreciation and amortization costs decreased by
$51,200 to  $169,200  for 1996 as compared  to  $220,400  for 1995.  Most of the
decreases  discussed  above are  attributable  to the  disposition  of the Trico
business group.

                                       20
<PAGE>
     The Company incurred an operating loss before  discontinued  operations and
extraordinary  item of $715,400 for the year ended December 31, 1996 as compared
to an operating loss before  discontinued  operations and extraordinary  item of
$924,900 for the year ended December 31, 1995 based on the reasons stated above.

     Interest  income for 1996 was  $7,400  higher  and  amounted  to $18,000 as
compared to $10,600 recorded for 1995. All interest earned in 1996 resulted from
a note  that was  exchanged  in  connection  with the  disposition  of the Trico
business  completed on July 31, 1996.  Interest expense of $239,900 for 1996 was
$58,100  higher  than the amount  reported  for 1995,  which was  $181,800.  The
increase is  attributable  to the  increasing  principal of debt and  additional
interest related to the mortgage and asset based line of financing.

     The  Company  recorded a net gain of  $102,300  for 1996,  most of which is
attributable to the sale of its real property.  $96,700 of gain,  related to the
real  property  disposition,  was  deferred  at  December  31,  1996  due to the
leaseback of the University Boulevard property,  the Company's current operating
facility,  and will be  recognized  over the 5-year  initial  term of the lease.
Included  in 1996 is a net  charge  of  approximately  $490,400  related  to the
disposition of the Trico business in July 1996, that had been acquired  November
30, 1994.  Amortization of loan costs for 1996 was $48,600 and was $70,400 lower
than the $119,000  reported for 1995.  These lower net  amortization  costs were
related to pay-off of certain debt;  however,  the asset based line of financing
initiated in May 1996 and the  refinancing of the mortgage in July 1996 resulted
in  additional  loan costs to be amortized  over the terms of those  agreements.

     The Company  incurred a loss from  continuing  operations of $1,374,100 for
1996 as compared to a loss from continuing operations of $1,215,100 for 1995 due
to the items  discussed  above.  The loss from  continuing  operations for 1996,
excluding  the one time charge of  $490,400  related to the  disposition  of the
Trico business and the recovery of approximately  $80,000 of amounts  previously
expensed,  would have been  $963,700,  which is $251,400  (20.1%) lower than the
$1,215,100 reported for 1995.

     Discontinued  operations related to the Products Division for 1996 resulted
in a loss of $358,900 as  compared to income of $19,500 for 1995.  The  Products
Division  experienced  significant  declines  in the  gross  margins  on its air
sampling  cassettes  products due to an agreement with a major  customer.  Gross
profit for that group  decreased by $680,500.  Operating  expenses  decreased by
$297,500,  of which  $261,200  was a  savings  of sales and  marketing  expenses
attributable  to the agreement  with Zellweger for the  distribution  of the ACT
product line.

     The Company recorded an  extraordinary  item, gain from mediation of vendor
debt, of $18,200 in 1996.

                                       21
<PAGE>
     The Company  incurred a net loss of $1,714,800  for year ended December 31,
1996 as compared to a net loss of  $1,195,700  for the year ended  December  31,
1995. The net loss for 1996,  excluding the Trico business which was disposed on
July 31, 1996, would have been $1,223,700,  which is $491,100 (28.6%) lower than
the $1,714,800 reported for 1996.


Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
---------------------------------------------------------------------

     Revenue for the year ended December 31, 1997 amounted to $908,000 which was
$1,394,100  (60.6%)  lower  than the  $2,302,000  reported  for the  year  ended
December  31,  1996.  Included in the Service  Division  revenue  reduction is a
decrease of nearly $1,000,000 ($999,500) related to the Trico business which was
disposed at July 31, 1996. The Service Division  reported $394,600 less revenues
for 1997 as compared to 1996.  This revenue  decrease is a result of the general
cut backs in Asbestos field operations industry-wide in 1997.

     The Products  Division  lost  revenues of  $1,097,500  (59.2%) and reported
$755,000 for the year ended  December 31, 1997 as compared to $1,852,500 for the
year ended  December  31,  1996  (with such  amounts  included  in  discontinued
operations for both years).

     Cost of revenue decreased by 65.0%, or $1,143,500, to $616,600 for the year
ended  December 31, 1997, as compared to $1,760,100  reported for the year ended
December 31, 1996. Included in the Service Division cost of revenue reduction is
a decrease of $758,000 related to the Trico business, which was disposed at July
31, 1996. The Service Division  reported $385,500 less cost of revenues for 1997
as compared to 1996.

     The Products  Division  decreased its cost of revenue by $903,500 or 63.3%,
to  $524,500  for 1997 as  compared to  $1,428,000  for 1996 (with such  amounts
included  in  discontinued  operations  for  both  years).  The  reason  for the
reduction in Products Division revenue is related to the decrease in activity in
the asbestos air  monitoring  industry and the  disposition of this product line
during 1997.

     The  gross  profit  for the year  ended  December  31,  1997  decreased  by
$250,600, a decrease of 46.2%, to $291,300, as compared to $541,900 for the year
ended December 31, 1996. Included in the Service Division gross profit reduction
is a decrease of $241,400  related to the Trico business,  which was disposed at
July 31,  1996.  Excluding  the  decrease  from  the  disposition  of the  Trico
business, the gross profit for the remaining services decreased by $9,200, which
is related to the reduced revenue discussed above.

     The  Products  Division  decreased  gross  profit by $193,900  and reported
$236,600 of gross  profit for 1997 as  compared to $424,500  for 1996 (with such
amounts included in discontinued  operations for both years). The reason for the

                                       22
<PAGE>

reduction  in the Products  Division  revenue is the decrease in activity in the
asbestos air monitoring industry and the disposition of this product line during
1997.

     Percentage  comparisons  of gross  margins  reported  by the Company are as
follows:

Year Ended                 Total
December 31, 1997          32.1%
December 31, 1996          23.5%

     Percentage  comparisons of gross margins  reported by the Company,  without
reporting the Products Division as discontinued operations are as follows

Year Ended                 Total          Services          Products
December 31, 1997          31.4%            32.1%             30.5%
December 31, 1996          23.3%            23.6%             22.9%

     The reason for the  significantly  improved  gross  margin in the  Services
Division  and the $250,600  decrease in the amount of gross  profit  reported by
that group is  related to the Trico  business,  which was  disposed  at July 31,
1996,  and the efficiency  gained from  downsizing of personnel and reduction of
nonbillable expenses, including compensation.

     Operating  expenses  were  $554,800  lower and amounted to $702,500 for the
year ended December 31, 1997, as compared to $1,257,300  reported for year ended
December 31, 1996.  The  operating  expenses for 1996 include  $223,500  routine
operating  expenses  for  the  Trico  business.  Sales  and  marketing  expenses
decreased by $52,500 from $98,800 in 1996 to $46,300 in 1997, which savings were
attributable  to a reduction  in  personnel.  General and  administrative  costs
decreased by $406,900 to $582,400 for 1997, as compared to $989,300 reported for
1996. Included in the 1996 general and administrative  expenses is approximately
$84,700 of consulting fees and expenses that were related to a contract that was
terminated  in August  1996 and  $180,500 of amounts  attributable  to the Trico
business, which was disposed on July 31, 1996. In addition,  $74,700 of expenses
related to terminated merger activities were expensed during 1997.  Depreciation
and  amortization  costs decreased by $95,400 to $73,800 for 1997 as compared to
the $169,200  reported for 1996, of which $43,000 was  attributable to the Trico
business which was disposed on July 31, 1996.

                                       23
<PAGE>
     The Company incurred an operating loss before  discontinued  operations and
extraordinary item of $433,300 for the year ended December 31, 1997, as compared
to an operating loss before  discontinued  operations and extraordinary  item of
$1,374,100  for the year ended  December 31,  1996.  The  operating  loss before
discontinued  operations and extraordinary  item for the year ended December 31,
1996 would have been $867,000,  excluding the Trico business, which was disposed
on July 31, 1996.

     Interest  income for 1997 was  $41,800  higher and  amounted  to $59,800 as
compared to the $18,000 reported for 1996. Interest income in 1997 resulted from
interest  earned on a note that was exchanged in connection with the disposition
of the Trico  business  completed on July 31, 1996 and a mortgage  note that was
recorded as a result of the sale of real  property in  December  1996.  Interest
expense of $87,700  for 1997 was  $152,200  lower than the amount  reported  for
1996,  which was $239,900.  The decrease in interest  expense is attributable to
reduced  borrowing under the Company's  asset based factoring  agreement and the
payoff of mortgages in December 1996 when the related real estate was sold.

     Amortization of loan costs for 1997 was $21,500, and was $27,100 lower than
the $48,600 reported for 1996.

     The Company reported a loss from continuing operations of $433,300 for 1997
as compared to a loss from  continuing  operations  of $1,374,100 in 1996 due to
the reasons discussed above.

     Discontinued operations for 1997 resulted in net income of $106,300,  which
is  comprised  of a loss from  operations  of $154,600 and a gain on disposal of
discontinued  operations of $260,900.  The asbestos product line was disposed in
April 1997 at  approximately a break-even  amount,  and the ACT product line was
disposed  in November  1997.  The loss from  operations  of $154,600 in 1997 was
$204,300 less than the $358,900 loss  reported for 1996.  The Products  Division
experienced  significant  declines  in the  gross  margins  on its air  sampling
cassettes  products due to an agreement with a major customer.  Gross profit for
that group decreased by $193,900.  Operating expenses decreased by $409,200,  of
which $143,300 was a savings of sales and marketing expenses attributable to the
agreement with Zellweger for the  distribution of the ACT product line.  General
and  administrative   expenses  decreased  by  $119,200  due  to  reductions  in
personnel. Other operating expenses related to the ACT product line decreased by
$147,700, which was disposed in 1997.

     The Company recorded an  extraordinary  item, gain from mediation of vendor
debt, in 1997 of $15,500 as compared to $18,200 reported for 1996.

     The Company  incurred a net loss of $311,500  for 1997 as compared to a net
loss of  $1,714,800  for  1996.  The net  loss for  1996,  excluding  the  Trico
business, which was disposed on July 31, 1996, would have been $491,100 lower or
$1,223,700.  Exclusion of the discontinued  operations of the Products  Division
would have  resulted in reporting  $417,800 in net loss for 1997 and $824,800 in
net loss for 1996.


Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
---------------------------------------------------------------------

     The following  financial  information  reports operating trends taking into
account the discontinued  operations of the Products Division for 1997.  Revenue
for the Service Division, which is comprised of Azimuth (the remaining operating

                                       24
<PAGE>
subsidiary),  for the year ended  December 31, 1998 amounted to $843,500,  which
was $64,500 (7.1%) lower than the $908,000  reported for the year ended December
31, 1997.  $61,600 of the decrease is  attributable  to reduced sample  analysis
during  the  year  ended  1998.  $32,400  of  the  decrease  resulted  from  the
elimination of air quality services from the consultative  service offering when
employee  positions  were not filled.  Additional  revenue  that would have been
reported  without  discontinuation  of the  Products  Division  would  have been
$755,000 for 1997.

     Cost of revenue was  $26,700  lower and  amounted to $590,000  for the year
ended  December  31, 1998,  as compared to $616,700  reported for the year ended
December 31, 1997.  Most of the  decrease is due to reduced  laboratory  revenue
volume discussed above. The Service Division  experienced  higher direct service
costs from the use of subcontractors on an "as needed" basis. Additional cost of
revenue  that  would  have been  reported  without  the  discontinuation  of the
Products Division would have been $524,500 for the year ended December 31, 1997.

     The gross profit for the year ended December 31, 1998 decreased by $37,800,
a decrease of 13.0% to  $253,500,  as  compared  to $291,300  for the year ended
December 31, 1997. Additional gross profit that would have been reported without
the  discontinuation  of the Products  Division would have been $230,500 for the
year ended December 31, 1997.

     The Company  reported a 30.1% gross  margin for 1998 as compared to a 32.1%
gross margin for the same period in 1997.  The reason for the  deterioration  in
gross margin in the Services  Division is due to the higher  consultative  group
costs discussed above.

     Operating  expenses  were  $200,500  lower and amounted to $502,000 for the
year ended  December 31, 1998 as compared to the $702,500  reported for the year
ended  December 31, 1997.  Sales and marketing  expenses  increased by $4,300 to
$50,600 for 1998 as compared to $46,300  reported for 1997, which increases were
mostly attributable to a reallocation of staff responsibilities in this area for
1998.  General and  administrative  costs  decreased by $177,400 to $405,000 for
1998 as compared to the $582,400 for 1997. Approximately $40,000 of the decrease
was due to reduced  personnel costs;  $75,600 of terminated merger costs in 1997
were reported that year. In addition,  lower insurance and outside  professional
services' costs contributed to the cost reduction in 1998 over 1997.

     The  Company  negotiated  the  sale  of  the  Trico  note  receivable  to a
shareholder,  which  resulted in a loss on the  transaction  of  $104,400.  Cash
received by the Company amounted to $260,000, of which $200,000 was collected in
January 1999.

     Depreciation and amortization costs decreased overall by $27,500 to $46,300
in 1998 from  $73,800 in 1997 due to the  reduction  in the  number of  vehicles
owned by the Service Division for 1998.

                                       25
<PAGE>
     The Company incurred an operating loss (before discontinued  operations and
extraordinary  item) of $248,400 in 1998 as compared to the  $411,200  operating
loss (before  discontinued  operations and extraordinary item) reported for 1997
due to the reasons  discussed above.  Additional  operating loss that would have
been reported without the  discontinuation  of the Products  Division would have
been $154,600 for 1997.

     Interest  income for the year ended December 31, 1998 was $54,300  compared
to $59,800 reported for the year ended December 31, 1997. The decrease is due to
the reduction in the principal  balance  outstanding  for a note receivable that
was  executed  during  1996 in  connection  with the  disposition  of the  Trico
business.  The note was sold in January 1999 and a loss of $104,400 was recorded
at December 31, 1998.

     Interest  expense of  $27,300  for 1998 was  $60,400  lower than the amount
reported  for 1997  which was  $87,700.  The  decrease  in  interest  expense is
attributable to elimination of borrowing under the Company's asset based lending
arrangement  for the  Products  Division  which  was  disposed  during  1997 and
conversion of long-term  debt to equity at June 30, 1998.  Amortization  of loan
costs for the first  nine  months of 1998 was $9,900  and  $21,500  for the same
period in 1997.

     The Company reported a loss from continuing  operations of $320,400 for the
year ended December 31, 1998 as compared to a loss from continuing operations of
$433,300 for the year ended 1997 for the reasons stated above.

     Discontinued operations for the year ended 1997 resulted in $106,300 of net
income, comprised of a loss of $154,600 from operational activities and the gain
on disposal of the discontinued operations of $260,900 for 1997.

     The Company  reported  $325,900 of  extraordinary  gain from  mediation  of
vendor debt in 1998 as compared to $15,500 extraordinary gain for 1997.

     Net income for the year ended  December  31,  1998 was  $5,500,  which is a
$316,900  improvement over the net loss of $311,500  reported for the year ended
1997.


FINANCIAL CONDITION
-------------------
     The Company's financial condition  significantly  improved during 1998 over
1997 due principally to conversion of debt of secured  creditors to equity,  and
negotiation  of trade payable  balances with  vendors.  However,  the Company is
continuing to experience cash flow problems.

     Approximately $551,000 of debt was converted to shares of Company Preferred
Stock (see"General Overview") and approximately $21,800 of debt was converted to
shares of Common  Stock of the Company  during 1998.  $232,100 of  extraordinary
gain was recorded when vendor trade payables were negotiated during 1998.

                                       26
<PAGE>
     The  working  capital  deficiency  has  decreased  by  $1,219,300,  from  a
deficiency  of $1,222,400 at December 31, 1997 to a deficiency of only $3,100 at
December  31,  1998.  This is primarily  due to the  conversion  of debt owed to
related party secured  creditors to preferred stock,  sale of a note receivable,
and mediation of vendor trade payables as discussed in the following paragraphs.

     Shakespeare  Partners,  LTD, whose general  partner is a stockholder of the
Company,  had  outstanding  notes due from the Company  amounting  to  $195,000,
$287,685 and $250,000 at December 31, 1998, 1997 and 1996, respectively.  During
1998,  approximately $149,700 of outstanding debt was converted to 74,878 shares
of Series C Preferred Stock of the Company.

     In December  1998 the Company  entered into an agreement  with  Shakespeare
Partners,  LTD and its  General  Partner  to sell  the  Company's  secured  note
receivable  from  Trico  Incorporated,  received  upon  the  sale  of the  Trico
business,  bearing outstanding  principal of $364,427, to such General Partner's
retirement  plan  for  $260,000.  This  resulted  in a loss  to the  Company  of
$104,427, which was recorded in December 1998.

     The United States  Company,  a stockholder of the Company,  had outstanding
notes due from the Company  bearing  principal  of $208,727 and $221,000 in 1997
and 1996,  respectively.  Certain  principals in the United States Company serve
the Company as Secretary,  Treasurer and as directors. During 1998, $207,296 (93
%) of debt to the United  States  Company  was  converted  to 111,648  shares of
Series B Preferred Stock.

     The  President and CEO  converted to equity 100% of his  outstanding  notes
during  1998.  Approximately  $17,700 was  converted to 8,835 shares of Series B
Preferred Stock.

     Vendor  trade  payables of $171,800  during 1998 were  converted  to 85,907
shares of Series B Preferred  Stock of the  Company.  An  extraordinary  gain of
$325,900  was  recognized  in 1998 by  settlement  of  $232,100  for cash and by
settlement of $93,800 for options and common stock.

     On  November  14,  1997  the  Company  disposed  of its  manufacturing  and
distribution  operations,  related to ACT, to Zellweger for: $344,849, which was
used by the Company to reduce an equivalent liability to Zellweger; the issuance
of 70,000 shares of Series A Preferred  Stock;  and a cash payment of $10,000 in
settlement of liabilities under the Zellweger Agreement.

     Trade accounts receivable  increased  approximately  $63,900 to $183,200 at
December 31, 1998 from $117,300 at December 31, 1997 due to a large project with
a public school system that was initiated during the last quarter of 1998.

                                       27
<PAGE>
     The Company received  interest income in 1998 of  approximately  $5,000 per
month from two notes receivable executed during 1996, related to the disposition
of the Trico  business  on July 31, 1996 and sale of the real estate in December
1996.

     The Company was in arrears for payment of dividends on its Preferred  Stock
in the  approximate  amount of $34,700 at December 14, 1999. In addition,  other
terms of the  Preferred  Stock issued during 1997 and 1998 permit the holders to
"put" the shares back to the Company. As discussed in the financial  statements,
"put"  obligations for 1999 through 2003 range from $35,000 to $89,000 annually.
The Company will not be able to meet these  obligations  if its current  revenue
trends continue.

     During  1999,  the Company  continued  to  eliminate  its debt and recorded
approximately $56,000 of extraordinary gain from mediation of vendor debt.

     In  January  1999,  the  Company  was  able to  liquidate  the  Trico  note
recievable  and net  $260,000  in  working  capital.  These  funds  were used to
continue debt  mediation and begin a focused exit from the  "Turnaround"  phase.
The first  steps to exit the  "Turnaround"  phase now  focus on  increasing  the
revenue of Azimuth,  Inc. The increase in revenue is  predicated on changing the
service offering from mainly Industrial Hygiene Services to broader based Safety
Services,  and  cultivating  the rising  emphasis  placed on Indoor Air Quality.
Management and the Board of Directors  agree that,  with the small revenue base,
which  currently is generated in the one operating  subsidiary,  sizable  growth
must come  from a merger  and  acquisition  strategy.  The  process  of  further
financial  stabilization  through internal growth in the first steps exiting the
"Turnaround"  phase is expected to expedite the Company's merger and acquisition
strategy.  Any merger and  acquisition  activity is anticipated to bring further
dilution to the shareholders of the Company. The Company, in turn, is developing
its  merger  and  acquisition   strategy  to  minimize  the  impact  on  current
shareholders,  especially with respect to earnings per share,  anticipating  the
dilution that will inevitably occur.

     The Company will be required to invest in certain equipment and supplies to
better  service  its  expanded  client  base  both in its  laboratory  and field
operations.  Equipment  is not being  replaced  currently  because of tight cash
constraints  being  experienced by the Company.  Additional  amounts required to
replace  laboratory  and  field  equipment  will be  funded  by cash  flow  from
operations when and if it is available considering the current cash requirements
at that time.  However,  there is no guaranty  that the Company  will be able to
finance the acquisition of such needed equipment resulting in a material adverse
impact on the Company's continuing operations.

Effects of Inflation
--------------------
     Inflation has not been a material factor affecting the Company's  business.
However, the Company's consulting,  laboratory and manufacturing  operations are
subject to the effects of inflation to the extent that it may  adversely  affect
interest  rates and the  availability  of credit which  directly  and  adversely
affects the construction  industry, a primary user of the Company's products and
services.

                                       28
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS
-----------------------------                                           Page No.

     Independent  Auditor's  Report - Welch, Roberts & Amburn
     Certified Public Accountants, LLP                                     30

     Independent  Auditor's  Report - McGladrey & Pullen,
     LLP Certified  Public Accountants and Consultants                     31

     Consolidated Balance Sheets as of December 31, 1998,1997 & 1996      32-33

     Consolidated Statements of Operations for the years
     ended December 31, 1998, 1997, 1996, and 1995                         34

     Consolidated  Statements  of  Stockholders'  Equity
     for the years ended December 31, 1998, 1997, 1996, and 1995           35

     Consolidated  Statements  of Cash Flows for the years
     ended  December 31, 1998, 1997, 1996, and 1995                       36-37

     Notes to the Consolidated Financial Statements                       38-48


                                       29


<PAGE>

                          Independent Auditors' Report





To the Board of Directors
Envirometrics, Inc.
Charleston, South Carolina



We have audited the accompanying  consolidated  balance sheets of Envirometrics,
Inc. and  subsidiaries  as of December 31, 1998,  1997 and 1996, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each  of the  three  years  then  ended.  These  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these  financial  statements  based on our audits.  The  consolidated
statements of operations,  stockholders' equity and cash flows of Envirometrics,
Inc. and  subsidiaries  for the year ended  December  31, 1995,  were audited by
other  auditors  whose report dated  February 6, 1996,  included an  explanatory
paragraph  describing   conditions  that  raised  substantial  doubt  about  the
Company's ability to continue as a going concern.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Envirometrics,  Inc.
and  subsidiaries  as of December  31, 1998,  1997 and 1996,  and the results of
their operations and their cash flows for each of the three years ended December
31, 1998, in conformity with generally accepted accounting principles.





Welch, Roberts & Amburn, LLP
December 10, 1999, except for Note 16 as
to which the date is December 30, 1999.


                                       30

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT



To the Board of Directors
Envirometrics, Inc.
Charleston, South Carolina

We  have  audited  the  accompanying   consolidated  statements  of  operations,
stockholders' equity, and cash flows of Envirometrics, Inc. and subsidiaries for
the  year  ended  December  31,  1995.   These  financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

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

The accompanying  consolidated  financial statements have been prepared assuming
that the Company  will  continue as a going  concern.  The Company has  suffered
recurring  losses  from  operations  and  has  a  deficit  working  capital  and
stockholders' equity position. This raises substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

                          /s/McGladrey and Pullen, LLP




Charlotte, North Carolina
February 6, 1996, except for
Note 8 to which the date is
December 10, 1999

                                       31
<PAGE>


                      ENVIROMETRICS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>

                                                                      1998                1997              1996
                                                                   -----------        ------------      -----------
ASSETS
------
<S>                                                              <C>                <C>                 <C>

Current Assets
--------------
Cash and cash equivalents                                         $    40,934        $    54,096        $    29,604
Notes receivable, current portion                                     418,294            100,548             95,421
Trade receivables, less allowance for doubtful accounts
   1998 $5,000; 1997 $28,081; 1996 $36,353                            183,155            117,280            411,065
Other receivables                                                      22,213                501              2,000
Inventories                                                            14,974             17,334            287,541
Prepaid expenses                                                       27,077             53,821             87,867
                                                                  -----------        -----------        -----------
     Total Current Assets                                             706,647            343,580            913,498
                                                                  -----------        -----------        -----------


Other Assets and Intangibles
----------------------------
Deposits                                                                2,951             21,093             30,737
Notes receivable, less current portion                                      -            596,197            696,745
Organization and loan costs, net of accumulated
 amortization 1998 $-0-; 1997 $51,958; 1996 $41,981                         -              9,880             31,801
License and distribution agreements, net of accumulated
 amortization 1996 $8,000                                                   -                  -             22,000
Other, net of accumulated amortization 1996; $16,695
                                                                            -                  -             55,512
                                                                  -----------        -----------        -----------
                                                                        2,951            627,170            836,795
                                                                  -----------        -----------        -----------

Property and Equipment
----------------------
Furniture and equipment                                               997,754          1,079,738          1,240,727
Vehicles                                                                9,490             44,033             88,991
                                                                  -----------        -----------        -----------
                                                                    1,007,244          1,123,771          1,329,718
Less accumulated depreciation and amortization                        913,919            963,843            961,431
                                                                  -----------        -----------        -----------
                                                                       93,325            159,928            368,287
                                                                  -----------        -----------        -----------
                                                                  $   802,923        $ 1,130,678        $ 2,118,580
                                                                  ===========        ===========        ===========





<FN>
                 See Notes to Consolidated Financial Statements
</FN>
                                       32
</TABLE>
<PAGE>

                      ENVIROMETRICS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>


                                                                          1998             1997             1996
                                                                       -----------     ------------     -----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
<S>                                                                    <C>              <C>              <C>
Current Liabilities
-------------------
Notes payable                                                          $   23,260       $   26,570       $   80,762
Current maturities of long-term debt
   Stockholders                                                           195,000          557,031          157,112
   Other                                                                   32,094          189,844          130,296
Accounts payable                                                          247,074          546,669          884,583
Customer deposit                                                                -                -          509,724
Accrued expenses and other                                                212,328          245,864          126,993
--------------------------                                            -----------      -----------      -----------
                                                                          709,756        1,565,978        1,889,470
                                                                      -----------      -----------      -----------
     Total Current Liabilities
Noncurrent Liabilities
----------------------
Long-Term Debt - Less current maturities
   Stockholders                                                                 -                -          439,507
   Other                                                                   85,350          107,167          149,098
 Deferred gain on asset sale                                               48,333           72,499           96,665
 ---------------------------                                          -----------      -----------      -----------
    Total Noncurrent Liabilities                                          133,683          179,666          685,270
                                                                      -----------      -----------      -----------


Redeemable Preferred Stock
---------------------------
 Par value $.001; authorized 2,500,000 shares;
 issued 1998 - 353,518 shares; 1997 - 70,000 shares                       700,974          140,000               -
                                                                      -----------      -----------      -----------
Common Stock and Accumulated Deficit
------------------------------------
Common stock, par value $.001;authorized 10,000,000shares
  shares; issued 1998 - 3,010,186 shares; 1997 - 2,667,399
 shares; 1996 - 2,469,123 shares                                            3,010            2,667            2,469
Additional paid-in capital                                              5,103,334        5,095,673        5,083,219
Accumulated deficit                                                    (5,847,834)      (5,853,306)      (5,541,848)
                                                                      -----------      -----------      -----------
                                                                         (741,490)        (754,966)        (456,160)
                                                                      -----------      -----------      -----------
                                                                     $    802,923     $  1,130,678      $ 2,118,580
                                                                     ============     ============      ===========



<FN>

                 See Notes to Consolidated Financial Statements
</FN>
                                       33
</TABLE>
<PAGE>

                      ENVIROMETRICS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               YEARS ENDED DECEMBER 31, 1998, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
<S>                                                        <C>               <C>                <C>                <C>

                                                                  1998              1997             1996               1995
                                                            ------------      ------------      ------------       ------------
Service Revenue                                             $    843,497      $    907,961      $  2,302,034       $  3,887,633
---------------

Direct Service Costs                                             589,975           616,652         1,760,117          2,940,957
--------------------                                        ------------      ------------      ------------       ------------

   Gross Profit                                                  253,522           291,309           541,917            946,676

Operating Expenses
------------------
Sales and marketing                                               50,621            46,269            98,820            128,485
General and administrative                                       405,020           582,429           989,336          1,522,774
Depreciation and amortization                                     46,328            73,817           169,169            220,361
                                                            ------------      ------------      ------------       ------------
                                                                 501,969           702,515         1,257,325          1,871,620
                                                            ------------      ------------      ------------       ------------
   Operating Loss                                               (248,447)         (411,206)         (715,408)          (924,944)


Other Income (Expense)
----------------------
Interest income                                                   54,275            59,813            17,961             10,603
Interest expense                                                 (27,268)          (87,721)         (239,927)          (181,776)
Gain on disposition of property                                   15,350            27,343           102,289                  -
Loss on disposition of subsidiary                                      -                 -         (490,385)
Loss on note receivable                                         (104,427)                 -                -                   -
Amortization of loan costs                                        (9,880)          (21,500)          (48,597)          (119,017)
                                                            ------------      ------------      ------------       ------------

(Loss) From Continuing Operations                               (320,397)         (433,271)       (1,374,067)        (1,215,134)
                                                            ------------      ------------      ------------       ------------
Discontinued Operations
-----------------------
Income (loss) from operations                                          -         (154,650)         (358,929)             19,469
Gain on disposal of discontinued operations                            -          260,948                 -                  -
                                                            ------------      ------------      ------------       ------------
   Total                                                               -          106,298          (358,929)             19,469

Loss before extraordinary item                                 (320,397)         (326,973)       (1,732,996)        (1,195,665)
Extraordinary item - gain on vendor debt
  mediation                                                     325,869            15,515            18,201                   -
                                                            ------------      ------------      ------------       ------------
Net Income (Loss)                                           $     5,472       $  (311,458)      $(1,714,795)      $ (1,195,665)
                                                            ------------      ------------      ------------       ------------
Earnings Per Common Share
-------------------------
Continuing operations                                             (.115)            (.167)            (.553)             (.501)
                                                            ============      ============      ============       ============
Net loss before extraordinary item                                (.126)            (.126)            (.697)             (.493)
Extraordinary item                                                 .117              .006              .007                   -
                                                            ------------      ------------      ------------       ------------
Net (Loss) Per Common Share                                 $    (0.009)      $    (0.120)      $    (0.690)       $    (0.493)
                                                            ============      ============      ============       ============
Weighted average number of common shares
 outstanding                                                $  2,786,695      $  2,589,795      $  2,484,849       $  2,424,929
                                                            ============      ============      ============       ============


<FN>

                 See Notes to Consolidated Financial Statements
</FN>
                                       34
</TABLE>
<PAGE>

                      ENVIROMETRICS, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF COMMON STOCK AND ACCUMULATED DEFICIT
               YEARS ENDED DECEMBER 31, 1998, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
<S>                                                         <C>                <C>                   <C>

                                                                                 Additional          Accumulated
                                                             Common Stock      Paid-in Capital         Deficit
                                                             ------------      ---------------       -----------
Balance, December 31, 1994                                         2,225           4,781,493         (2,631,388)
   Net loss                                                            -                   -         (1,195,665)
   Issuance of 150,000 shares of common stock in
    consideration of interest and loan costs                         150              84,473                   -
   Issuance of 125,000 shares of common stock in
     connection with Regulation S offering                           125             244,476                   -
   Issuance of 300,000 warrants to purchase shares
   of common stock                                                     -               7,500                   -

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

Balance, December 31, 1995                                    $      2,500      $  5,117,942        $(3,827,053)
   Net loss                                                              -                 -         (1,714,795)
   Issuance of 13,923 shares of common stock
   in consideration of vendor debts                                     14             2,732                   -
   Common stock retired                                                (45)          (44,955)                  -
   Issuance of 300,000 warrants to purchase shares
    of common stock
                                                                         -             7,500                   -
                                                              ------------      ------------        ------------

Balance, December 31, 1996                                    $      2,469      $  5,083,219        $(5,541,848)
   Net loss                                                              -                 -           (311,458)
   Issuance of 170,000 shares of common stock
     in consideration of loan cost                                     170             7,486                   -
   Issuance of 28,273 shares as compensation to
     employees
                                                                        28             4,968                   -
                                                              ------------      ------------        ------------

Balance, December 31, 1997                                    $      2,667      $  5,095,673        $(5,853,306)
   Net income                                                                                             5,472
   Issuance of 180,287 shares of common stock
     in consideration of vendor debt                                   180            21,810                   -
   Issuance of 162,500 shares of common stock in
     consideration of loan cost                                        163            15,478                   -
   Dividends accrued and accretion on preferred
     shares
                                                                         -           (29,627)                  -
                                                              ------------      ------------        ------------
Balance, December 31, 1998                                    $      3,010      $  5,103,334        $(5,847,834)
                                                              ============      ============        ============


<FN>

                 See Notes to Consolidated Financial Statements
</FN>
                                       35
</TABLE>
<PAGE>

                      ENVIROMETRICS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               YEARS ENDED DECEMBER 31, 1998, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
<S>                                                        <C>                <C>               <C>              <C>


                                                                1998              1997               1996               1995
                                                            ------------      ------------      ------------       ------------
Cash Flows From Operating Activities
Net income/(loss)                                                $   5,472      $  (311,458)   $ (1,714,795)     $  (1,195,665)
Adjustments to reconcile net income/(loss) to net cash
  provided by (used in) operations:
     Depreciation                                                   46,328           88,416        176,891              211,467
     Amortization                                                    9,880           60,761         97,887              156,265
     Provision for doubtful accounts                                 5,385           11,021         10,039               56,000
     Non-cash expense paid by issuance of warrants                       -                -          7,500                7,500
     Non-cash expense paid by issuance of common
      stock                                                              -           12,652              -                    -
     (Gain) loss of disposal of property & equipment               (15,350)         (27,343)      (102,289)               7,974
     Extraordinary Item - Gain on debt restructuring              (325,869)         (15,515)       (18,201)                   -
     Gain on sale of discontinued operations                             -         (260,948)              -                   -
      Loss on disposition of subsidiary                                  -                 -       490,385                    -
      Loss on sale of note receivable                              104,427                 -              -                   -
      Change in assets and liabilities, net of effect of
       Trico:
       (Increase) decrease in cash, restricted                           -                 -        125,644             511,309
       (Increase) decrease in accounts receivable                  (92,972)          284,263        321,654           (476,436)
       (Increase) decrease in inventory                              2,360           185,419        276,440           (150,103)
       (Increase) decrease in prepaid expenses                      26,744            34,046           (935)             48,818
       (Increase) decrease in other assets                          18,142            32,060       (128,037)           (38,451)

       Increase (decrease) in accounts payable and
         accrued expenses                                           68,266          (276,459)       331,779             736,733
                                                              ------------      ------------   ------------        ------------
       Net Cash Provided by (Used in) Operations                  (138,187)         (183,085)      (126,038)          (124,589)
                                                              ------------      ------------   ------------        ------------
Cash Flows From Investing Activities
------------------------------------
Proceeds from sale of property and equipment                        3,456            167,758         71,819              22,616
Purchase of property and equipment                                      -                  -       (129,949)          (101,665)
Collections on notes receivable                                   174,023             95,421         37,834                   -
                                                              ------------      ------------   ------------        ------------
      Net Cash Provided by (Used in) Investing
       Activities                                                 177,479            263,179        (20,296)           (79,055)


Cash Flows From Financing Activities
------------------------------------
Proceeds from borrowing on revolving credit
  agreements and short-term notes                                       -                  -        242,346             610,697
Principal payments on revolving credit agreements
  and short-term notes                                             (3,310)           (54,192)      (408,064)          (378,972)
Proceeds from long-term borrowing                                  20,000            349,492        478,062                   -
Principal payments on long-term borrowing                         (69,144)          (350,902)      (189,549)          (222,834)
Proceeds from issuance of common stock: 125,000
shares
                                                                        -                  -               -            244,601
                                                              ------------      ------------   ------------        ------------
     Net Cash Provided by (Used in) Financing
      Activities                                                  (52,454)           (55,602)       122,795             253,492
                                                              ------------      ------------   ------------        ------------

Net Increase (Decrease) in Cash and Cash Equivalents              (13,162)            24,492        (23,539)             49,848

</TABLE>
                                       36
<PAGE>

                      ENVIROMETRICS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               YEARS ENDED DECEMBER 31, 1998, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
<S>                                                          <C>                <C>            <C>                 <C>
                                                                 1998                1997           1996               1995
                                                             ------------       ------------   ------------        ------------

Cash and Cash Equivalents
Beginning                                                          54,096             29,604         53,143               3,295
                                                             ------------       ------------   ------------        ------------

Ending                                                       $     40,934       $     54,096   $     29,604        $     53,143
                                                             ============       ============   ============        ============
Supplemental Disclosure of Cash Flow Information
------------------------------------------------
Cash Payments for Interest                                   $      2,972       $     69,871   $    220,963        $    151,969
                                                             ============       ============   ============        ============

Supplemental Schedule of Noncash Investing and
----------------------------------------------
  Financing Activities
  --------------------
Conversion of Debt to Preferred Stock                         $    551,035                 -               -                  -
                                                              ============      ============   ============        ============
Debt Assumed on Disposition of Property and
  Equipment                                                   $      8,003      $     22,569   $    799,940                   -
                                                              ============      ============   ============        ============
Issuance of Common Stock in Settlement of Vendor
  Debt                                                        $     21,810      $     12,652              -                   -
                                                              ============      ============   ============        ============
Issuance of Options in Settlement of Vendor Debt                         -      $      3,272              -                   -
                                                              ============      ============   ============        ============
Receipt of Note Receivable on Sale of Building                           -                 -   $    230,000                   -
                                                              ============      ============   ============        ============
Property and Equipment Additions Financed Through
 Issuance of Debt                                                        -                 -              -        $    146,650
                                                              ============      ============   ============        ============

<FN>
                 See Notes to Consolidated Financial Statements
</FN>
</TABLE>
                                       37
<PAGE>


                      ENVIROMETRICS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1. Nature of Business and Significant Accounting Policies
        ------------------------------------------------------
Nature  of  Business.  The  Company  functions  as a  holding  company  for its
subsidiaries;   Azimuth,  Incorporated,   ("Azimuth"),   Envirometrics  Products
Company,  ("EPC"),and Trico Envirometrics,  Inc., ("Trico"). Azimuth operates as
consultants in  environmental  and  occupational  health matters and in addition
provides the services of an American Industrial Hygiene Association ("AIHA") and
National  Voluntary  Laboratory   Accreditation   Program  ("NVLAP")  accredited
industrial hygiene laboratory.  Trico provided civil engineering,  surveying and
environmental  consulting  services  until its  disposition  in 1996.  EPC was a
manufacturer  and  distributor  of equipment  and  supplies  for the  industrial
hygiene industry until its disposition in 1997. The Company's primary facilities
are located in  Charleston,  South  Carolina,  with sales  throughout the United
States.

A summary of the Companies' significant accounting policies follows:

Principles of Consolidation.  The consolidated  financial statements include the
accounts of the  Company  and its  subsidiaries.  All  significant  intercompany
accounts and transactions have been eliminated in consolidation.

Cash and Cash  Equivalents. For purposes of  reporting  the  statements  of cash
flows,  the  Company  considers  all cash  accounts,  which are not  subject  to
withdrawal  restrictions  or penalties,  and all highly liquid debt  instruments
purchased with a maturity of three months or less to be cash equivalents.

Accounts  Receivable. Accounts  receivable are evaluated for  collectibility  by
aging,  with an allowance for doubtful  accounts  maintained based on historical
losses and recoveries. Accounts are written off when deemed to be uncollectible.

Inventories.  Inventories are stated at the lower of cost  (first-in,  first-out
method) or market. Inventory consisted of the following at December 31:

                                              1998        1997          1996
                                              ----        ----          ----

               Merchandise held for sale   $      -     $      -     $  90,197
               Supplies                      14,974       17,334        31,771
               Raw materials                      -            -       165,573
                                           --------     --------      --------
                                          $  14,974     $ 17,334     $ 287,541

Property and Equipment.  Property and equipment is stated at cost.  Depreciation
is computed  using  primarily  accelerated  methods,  over the following  useful
lives:

Furniture and equipment       5 - 7 years
Vehicles                      3 - 5 years

Organization  and Loan Costs.  The organization and loan costs were amortized on
the straight-line basis over 5 years.

Goodwill.  Goodwill  includes the excess of acquisition costs over fair value of
the net assets  acquired in the purchase of Trico and was being amortized on the
straight-line basis over 20 years.  Acquisition costs relate to the direct costs
associated with the acquisition of Trico and were amortized on the straight-line
basis  over 20 years.  The  remaining  unamortized  portion  of such  costs were
written off in June 1996.

Revenue Recognition.  Revenue from services are recognized when the services are
performed.  Revenue  from  product  sales are  recognized  when the products are
shipped to the customer.

                                       38
<PAGE>

Note 1.  Nature of  Business  and  Significant  Accounting  Policies-  continued
         -----------------------------------------------------------------------

License  Agreement.  The Company had entered  into a license  agreement  for the
manufacture of equipment specific to an ACT Monitoring Card System. The original
cost of the agreement was $30,000.  The Company began to amortize the license in
1995 on a straight-line basis over 5 years. The remaining unamortized portion of
such costs were written off in 1997 upon disposition of that product line.

Income Taxes. Deferred taxes are provided on a liability method whereby deferred
tax assets are  recognized for deductible  temporary  differences  and operating
losses, and tax credit carryforwards and deferred tax liabilities are recognized
for taxable  temporary  differences.  Temporary  differences are the differences
between  the  reported  amounts of assets and  liabilities  and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management,  it is more likely than not that some portion or all of the deferred
tax assets may not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.

Concentration of Credit Risk. Financial instruments that potentially subject the
Company  to  credit  risk  consists  principally  of cash,  notes  and  accounts
receivable.  The  Company  provides  product and  services to various  local and
national clients and, therefore,  issues credit under binding contracts to these
entities.  The  Company  places its cash with a high  credit  quality  financial
institution. At times such cash may be in excess of the FDIC insurance limit.

Notes  receivable  resulted from the  disposition of "Trico" and of certain real
property.  The "Trico" note is collateralized by all of "Trico's" assets and the
personal guarantees of its shareholders.  The real property note is secured by a
mortgage on the property. Management believes the collateral is sufficient.

Loss per Common Share.  Loss per common share is based upon the weighted average
number of common shares  outstanding.

Loss  before  extraordinary  item  attributable  to  common  shareholders  is as
follows:
<TABLE>
<CAPTION>
         <S>                                       <C>              <C>            <C>               <C>
                                                       1998             1997            1996              1995
                                                       ----             ----            ----              ----

         Loss before extraordinary item            $ (320,397)     $   (326,973)   $  (1,732,996)     $ (1,195,665)

         Preferred stock dividend require-
           ments                                       29,677                 -                -                 -
                                                   ----------      ------------    -------------      -------------
         Loss before extraordinary item
           attributable to common share-
           holders                                 $ (350,074)     $   (326,973)   $  (1,732,996)     $ (1,195,665)
                                                   ==========      ============    =============      =============
         Per share amount                          $    (.126)     $      (.126)   $       (.697)     $      (.493)
                                                   ==========      ============    =============      =============

         Weighted average number of
          common shares outstanding                $2,786,695      $  2,589,795     $  2,484,849      $   2,424,929
                                                   ==========      ============     ============      =============

</TABLE>

Primary and fully diluted earnings per common share and common share equivalents
are calculated  using the weighted  average number of common shares  outstanding
during  the year and on the net  additional  number  of  shares  which  would be
issuable upon the exercise of all stock options and warrants,  assuming that the
Company  used the  proceeds  received to purchase  additional  common  shares at
market value. The impact of the incremental shares is anti-dilutive.

                                       39
<PAGE>

Note 1.  Nature of Business and 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
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period.  Actual results could differ from those estimates.

Reclassifications. Certain  amounts in the 1995 financial  statements  have been
reclassified to conform to the presentation adopted for 1996 through 1998.

Note 2.  Notes Receivable
         ----------------
Notes receivable are comprised of the following:
<TABLE>
<CAPTION>
<S>                                                    <C>              <C>               <C>
                                                           1998            1997             1996
                                                           ----            ----             ----

Mortgage note receivable payable interest only
at 10% per annum through January 1999.                 $  218,294       $  230,000        $  230,000

Note receivable from former shareholder due
$10,979 per month including interest at 7%
through July 15, 2008 (see Note 7)                        200,000          466,745           562,166
                                                       ----------       ----------        ----------
                                                          418,294          696,745           792,166

Less current portion                                      418,294          100,548            95,421
                                                       ----------       ----------        ----------
                                                       $        -       $  596,197        $  696,745

                                                       ==========       ==========        ==========
</TABLE>

Note 3.  Notes Payable, Long-Term Debt and Pledged Assets
         ------------------------------------------------
<TABLE>
<CAPTION>

         Notes payable at December 31, consisted of the following:
<S>                                                           <C>            <C>             <C>

                                                                  1998            1997           1996
                                                                  ----            ----           ----
         A note with interest at 8% per annum due in
           monthly principal and interest payments
           beginning at $1,000 and increasing to $2,345
           with a final payment due in January 1998.          $   22,129     $   22,129      $   22,975

         Due to factor                                             1,131          4,441          57,787
                                                              ----------     ----------      ----------
                    Total                                     $   23,260     $   26,570      $   80,762
                                                              ==========     ==========      ==========
</TABLE>

In 1996, the Company  entered into a two year agreement to factor up to $800,000
of eligible accounts receivable. Interest under the agreement on the uncollected
amounts  remitted  to the Company is at the rate of 4.75% in excess of the prime
interest rate.

                                       40
<PAGE>

Note 3.  Notes Payable, Long-Term Debt and Pledged Assets - continued
         ------------------------------------------------------------
Long-term debt at December 31 consisted of the following:
<TABLE>
<CAPTION>
<S>                                                                  <C>            <C>            <C>

                                                                          1998         1997           1996

U.S. Small Business Administration (SBA) loans (two loans)
4% interest rate, due in monthly installments of $1,408,
including interest, due July 2005,collateralized by equipment,
furniture and fixtures.                                               $  98,520     $ 110,019      $ 121,786

Various installment loans, with interest rates ranging from
6% to 24%, due in monthly installments ranging from
$290 to $2,500, including interest due collateralized by
vehicles, equipment and furniture and fixtures.
The final payment is scheduled for June 1999.                            18,924       186,992        157,608

Note payable to stockholders, collateralized by shares of
stock of certain officers, directors and former employees.              195,000       557,031        596,619
                                                                     ----------    ----------     ----------
                                                                        312,444       854,042        876,013

Less current maturities                                                 227,094       746,875        287,408
-----------------------                                              ----------    ----------     ----------
                                                                     $   85,350    $  107,167     $  588,605
</TABLE>


 Maturities of long-term debt are as follows:

       December 31:
       ------------
       1999                                                           $  227,094
       2000                                                               13,708
       2001                                                               14,267
       2002                                                               14,848
       2003 and thereafter                                                42,527
                                                                      ----------
                                                                      $  312,444

At December 31, 1998, substantially all Company assets are pledged as collateral
on the above-mentioned debt agreements.

Note 4.  Operating Leases
         ----------------
The Company leases various office facilities and equipment under  noncancellable
operating  leases.  The Company also sublet an office  facility.  Rental expense
from operating leases were as follows:

                                                  Sublease           Net
                            Rent Expense       Rental Income     Rental Expense
     December 31,
     1995                 $    170,182        $       -         $   170,182
     1996                      230,872           (38,056)           192,816
     1997                      285,198          (127,989)           157,209
     1998                      242,488          (142,106)           100,382

                                       41
<PAGE>

Note 4.  Operating Leases - continued
         ----------------------------
Future  obligations  for minimum rentals on remaining  noncancellable  leases in
excess of one year are as follows:

                 1999                             $    84,624
                 2000                                  84,624
                 2001                                  84,624
                 2002                                  70,710
                 2003                                  70,557

                 Thereafter                           223,848

During 1996, the Company sold its laboratory  and office  facilities  along with
other properties resulting in a gain of $223,120.  Concurrently  therewith,  the
Company  entered into a lease with the  purchaser  for the  continued use of the
facilities for a five year term at $66,276 per year. In accordance with SFAS 13,
gain in the amount of $120,831 has been deferred and is being  recognized in the
financial statements over the lease term, $24,166 per year.

Note 5.  Income Taxes
         ------------
As explained  in Note 1, the  liability  method  requires  the  recognition  of
deferred tax assets and liabilities for the expected future tax  consequences of
temporary differences between the reported amounts of assets and liabilities and
their tax bases.

Net deferred tax assets consist of the following components as of December 31:

1998                               Current          Long-Term            Total
----                               -------          ---------            -----

Deferred tax assets:
Receivable allowances          $     1,950       $       -         $      1,950
Other                                2,535               -                2,535
Operating loss carryforwards             -        1,739,527           1,739,527
Less valuation allowance            (4,485)      (1,935,331)         (1,739,816)
                               -----------       ----------        -------------
                                         -            4,196               4,196

Deferred tax liability:
Property and equipment                   -           (4,196)             (4,196)
                               -----------       ----------        -------------
                               $         -       $        -       $            -
                               ===========       ==========        ============


1997                               Current          Long-Term            Total
----                               -------          ---------            -----

Deferred tax assets:
Receivable allowances          $     7,052       $       -         $      7,052
Other                                2,535               -                2,535
Operating loss carryforwards             -        1,740,488           1,740,488
Less valuation allowance            (9,587)      (1,734,781)         (1,744,368)
                               -----------       ----------        -------------
                                         -            5,707               5,707

Deferred tax liability:
Property and equipment                   -           (5,707)             (5,707)
                               -----------       ----------        -------------
                               $         -       $        -        $           -
                               ===========       ==========         ============

                                       42
<PAGE>
Note 5. Income Taxes - continued
        ------------------------

1996                               Current          Long-Term            Total
----                               -------          ---------            -----

Deferred tax assets:
Receivable allowances          $    10,356       $       -         $      10,356
Other                                2,535               -                2,535
Operating loss carryforwards             -        1,639,602           1,639,602
Less valuation allowance           (12,891)      (1,620,157)         (1,633,048)
                               -----------       ----------        -------------
                                         -           19,445              19,445

Deferred tax liability:
Property and equipment                   -          (19,445)            (19,445)
                               -----------       ----------        -------------
                               $         -       $        -        $           -
                               ===========       ==========         ============


The  Company  recorded a  valuation  allowance  of  $1,617,066,  $1,560,089  and
$1,463,759  on  deferred  tax  assets  at  December  31,  1998,  1997 and  1996,
respectively.  Realization of deferred tax assets is dependent  upon  sufficient
future taxable income during the period that  deductible  temporary  differences
and carryforwards are expected to be available to reduce taxable income. The net
valuation allowance increased  (decreased)  $(4,552),  $104,766 and $430,757 for
the years ended December 31, 1998, 1997 and 1996, respectively, due primarily to
the change in loss carryforwards.

Loss  carryforwards for tax purposes as of December 31, 1998, have the following
expiration dates:

             Expiration Date                                         Amount

                  2001                                         $      9,469
                  2002                                                3,027
                  2003                                               33,108
                  2004                                              118,331
                  2005                                              132,119
                  2006                                              280,783
                  2007                                              633,538
                  2008                                              226,315
                  2009                                              518,545
                  2010                                              890,256
                  2011                                            1,312,613
                  2012                                              258,683
                                                                -----------
                                                               $  4,416,787
                                                               ============

The following is a reconciliation of income tax at the federal statutory rate to
the Company's income tax provision.

                                                1998         1997         1996
                                                ----         ----         ----

Tax (benefit) at statutory rate of 35% ..    $  1,915    $(109,010)   $(600,178)
State tax (benefit) - net ...............         219      (12,458)     (68,592)
Non deductible charges ..................       2,808       23,684      239,460
Change in valuation allowance ...........      (4,552)     104,766      430,757
Other net ...............................        (390)      (6,982)      (1,447)
                                             ---------    ---------    ---------
   Provision for taxes ..................    $       -    $       -   $        -
                                             ---------    ---------    ---------

                                       43
<PAGE>

Note 6. Debt Mediation
        --------------
During 1996,  the Company began an active  campaign to mediate debt with vendors
and  suppliers.  Extraordinary  gain is recognized to the extent the  applicable
debt exceeds the cash or the fair market value of stock issued and is summarized
as follows:

                                                    1998       1997         1996
                                                    ----       ----         ----
Debt settled for cash .......................  $ 232,061   $      -     $      -
Debt settled for options and common stock ...     93,808     15,515       18,201
                                                --------   --------     --------
                                               $ 325,869   $ 15,515     $ 18,201
                                               =========   ========     ========

Note 7. Disposition of Subsidiary
        -------------------------
During 1996 the Company  sold the Trico  business  to a former  shareholder  and
director as follows.

           Note received                                           $  600,000
           Liabilities assumed                                        383,425
           Common stock retired                                        45,000
           Book value of assets sold including goodwill            (1,518,810)
                                                                   ----------
                Loss on disposition                                $ (490,385)

Note 8. Discontinued Operations
        -----------------------
In November 1997, the Company  disposed of its  manufacturing  and  distributing
operations.  Accordingly,  the results of the  operations as well as the gain on
the sale of its assets have been reported separately as discontinued  operations
in the  accompanying  statements of operations.  Prior years have been restated.
Operating results for the discontinued operations are as follows:

                                             1997        1996            1995
                                             ----        ----            ----
Operating revenue                      $   755,017    $1,852,470     $ 2,618,529
                                       ===========    ==========     ===========
Income/(Loss) from operations          $  (154,650)   $ (358,929)    $    19,469
                                       ===========    ==========     ===========
Per share                              $    (0.060)   $   (0.144)    $     0.008
                                       ===========    ==========     ===========

In  connection  with the  disposition,  the  Company  sold  certain  assets  and
technology  and  issued  70,000  preferred  shares  (see  Note  8) to  Zellweger
Analytics, Inc. in settlement of deposits held by the Company as follows:

Customer deposit retained ...............................            $  484,850
Preferred shares issued .................................              (140,000)
Cost incurred ..........................................                (35,000)
Book value of assets sold                                               (48,902)
                                                                     ----------
     Gain on disposition ................................            $  260,948
                                                                     ==========

                                       44
<PAGE>

Note 9.  Redeemable  Preferred Stock
         ---------------------------
In 1997 the Company issued 70,000 shares of Series A preferred  stock, $2 stated
value,  which have preferences in the event of a liquidation of the Company,  to
settle  all  liabilities  with  Zellweger  Analytics,   Inc.(Zellweger).   These
preferred shares are convertible into common shares at the ratio of one share of
preferred stock for three shares of common stock and are puttable, 17,500 shares
annually by Zellweger  beginning in December 1999 through 2002 at a put price of
$2 for each preferred  share.  Shares not put back to the Company may be carried
forward to the next year.

During  1998,  the  Company  issued  283,518  shares of Series B and C preferred
stock, $2 stated value, to certain  officers and related parties in exchange for
the  conversion of  outstanding  debt by the Company.  These shares  provide for
cumulative  dividends of $.14 per share, per annum.  The preferred  shareholders
have the right at any time on or before June 14, 2009 (the  "Maturity  Date") to
convert all or a portion of the Preferred Stock, into shares of Company's Common
Stock,  upon sixty (60) days prior  written  notice to Company.  At all times up
until the Maturity Date,  the  conversion  ratio shall be one share of Preferred
Stock for five shares of Common Stock. If the shareholder elects to convert less
than all of the Preferred  Stock owned by it, all remaining  shares of Preferred
Stock  shall be  convertible  under the same  terms.  As an  alternative  to the
conversion  into Common stock as set forth above,  the shareholder has the right
to put the shares of Preferred  Stock issued back to the Company in exchange for
a cash payment.  The put price on these shares of preferred  stock accretes at a
rate of three percent annually.  Shares that are not put by the shareholder back
to the Company in any given year may be carried  forward to the next year at the
price for that year.

        Obligations under the put options discussed above are as follows:
          1999                                       $     35,000
          2000                                             35,000
          2001                                             87,913
          2002                                             89,411
          2003                                             55,910
          Thereafter                                      519,428
                                                     ------------
                                                     $    820,662
                                                     ============

Dividends on Preferred Shares
-----------------------------
The Company is in arrears for payment of dividends of its preferred stock in the
amount of $34,652 ($.1225 per share) at December 14, 1999. The Company continues
to accrue dividends at the stated rate of $.14 per share per annum.  This amount
accrued for the first year (through June 30, 1999) and is to be divided  equally
among and added to the  quarterly  payments  for the second  year.  The  accrued
amount at December 31, 1998 was $19,689. The next payment of $17,326 will be due
on January 1, 2000. This consists of $7,403 for 1998 and $9,923 for 1999.

<PAGE>

Note 10.  Unregistered  Stock and Regulation S Offering
          ---------------------------------------------
During  1995,  the  Company  issued  150,000  shares  of  unregistered  stock in
consideration  of interest  and loan costs on a note  payable  (See Note 3). The
loan  agreement  provides  the lender with  piggyback  registration  rights.  In
addition,  the agreement provides that the lender may demand registration at any
time after April 29, 1996. The transaction was recorded at a discounted price of
approximately  $.56 per  share  due to a lack of  marketability,  liquidity  and
control related to the shares issued.

On April 27, 1995 the Company  completed an offering of 125,000 shares of common
stock pursuant to Regulation S under the Securities Act of 1993, as amended. The
Company recognized net proceeds of $244,601 from the offering.

                                       45
<PAGE>

In  consideration  of loan costs on notes payable to  shareholders,  the company
issued 170,000 and 162,500 shares of unregistered common stock in 1997 and 1998,
respectively. The transactions were recorded at discounted prices due to lack of
marketability, liquidity and control related to the shares issued.

During 1998 the Board of Directors  approved the issuance of options for 700,000
shares  subject to  approval  by the  shareholders.  The options had an exercise
price of $.10 per share.  As of  December  31,  1998 the  options  had yet to be
approved  and  accordingly,  no amounts  have been  recorded in these  financial
statements.

     Note     11.      Related     Party      Transactions      and     Balances
                       ---------------------------------------------------------
     Shakespeare  Partners,  LTD, whose general  partner is a stockholder of the
Company,  had  outstanding  notes due from the Company  amounting  to  $195,000,
$287,685  and $250,000 at December 31,  1998,  1997 and 1996,  respectively.  No
interest was paid by the Company.  During 1998,  approximately  $149,700 of debt
was converted to 74,878 preferred shares.

In  December  1998  the  Company  entered  into an  agreement  with  Shakespeare
Partners,  LTD and its General  Partner to sell its note  receivable  from Trico
Incorporated  amounting to $364,427 to the General Partner's retirement plan for
$260,000 which resulted in a loss to the Company of $104,427 and was recorded in
December 1998.

     The United States Company,  a stockholder,  had outstanding  notes due from
the  Company  in the  amounts  of  $208,727  and  $221,000  in  1997  and  1996,
respectively.  Certain principals in the United States Company serve the Company
as Secretary,  Treasurer  and  directors.  During 1998,  $207,296 of debt to the
United States Company was converted to 111,648 preferred shares.

     The President and CEO converted 100% of his outstanding  notes during 1998.
No interest  was paid by the  Company.  Approximately  $17,700 was  converted to
8,835 preferred shares.

A  shareholder/employee  advanced the Company $90,000 in 1996. Interest was paid
at the rate of prime plus 3.25%.  The amount due under the arrangement  amounted
to $55,000 and $10,000 at December 31, 1996 and 1997, respectively.

An officer  converted  $4,500 of  accrued  salary to 2,250  preferred  shares in
December 1998.

In addition to the related party  transactions  discussed  above,  approximately
$171,812 of vendor debt was converted to 85,907 preferred shares during 1998.

Note 12. Stock Option Plan
         -----------------
In January  1994,  the Board of Directors of the Company  adopted the  Company's
Stock  Option Plan,  (the  "Plan") as  previously  authorized  by the  Company's
stockholders.   Under  the  Plan,  officers,  directors,  key  employees  and/or
consultants of the Company can receive  incentive stock options and nonqualified
stock options to purchase up to an aggregate of 150,000  shares of the Company's
common  stock (of which no more than 50,000  shares may be pursuant to incentive
stock options,  and no more than 100,000 shares may be pursuant to  nonqualified
stock options). In January 1994, the Company's Board of Directors awarded, under
the Plan,  nonqualified  stock options for an aggregate of 75,000 shares, all of
which  provide  for an  exercise  price  of $2.00  per  share,  are  exercisable
beginning on January 1, 1995 and expire on December  31, 1998  (subject to prior
termination in accordance with the applicable stock option agreements).

                                       46
<PAGE>
Note 12.  Stock Option Plan - continued
          -----------------------------
On March 31, 1995, the Board of Directors awarded, under the Plan, non-qualified
stock options to purchase an aggregate of 34,500 shares.  The Board of Directors
granted   23,000   incentive   stock  options  to  certain   employees,   10,000
non-qualified  stock options to a Director and 1,500 non-qualified stock options
to an individual  under its stock option plan.  All such options  provide for an
exercise  price of $3.625 per share,  all are  exercisable at the grant date and
all expire on March 20, 2005 (subject to prior  termination  in accordance  with
the applicable  stock option  agreements).  The exercise price  applicable under
such outstanding  stock options  represents 100% of the fair market value of the
underlying  Common  Stock as of the date  that such  options  were  granted,  as
determined  by the  Board of  Directors  of the  Company  on the date  that such
options were granted.

On April 17, 1996 the Board of Directors  awarded under the Plan incentive stock
options to purchase an aggregate of 23,750 shares.  All such options provide for
an exercise price of $1.88 per share,  all are exercisable at the grant date and
all expire on April 16, 2006 (subject to prior  termination  in accordance  with
the  applicable  stock  option  agreements).  On December  10, 1996 the Board of
Directors  awarded  under the Plan  non-qualified  stock  options to purchase an
aggregate of 30,000  shares.  All such options  provide for an exercise price of
$2.38  per  share,  all are  exercisable  at the  grant  date and all  expire on
December 9, 2004 (subject to prior termination in accordance with the applicable
stock option  agreements).  The exercise price applicable under such outstanding
stock options  represents 100% of the fair market value of the underlying common
stock as of the date that such options were granted,  as determined by the Board
of Directors of the Company on the date that such options were granted.

The Company applied Accounting  Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" in accounting for stock-based  employee  compensation
arrangements  whereby no compensation  cost related to stock options is deducted
in determining net income (loss).  Had compensation cost for the Company's stock
option  plans  been  determined  pursuant  to  SFAS  No.  123,  "Accounting  for
Stock-Based  Compensation,"  the effect on the  Company's  net income (loss) and
earnings (loss) per share would not have been material.

In 1997,  the Company  issued  options to purchase  100,000  shares at $0.25 per
share in  consideration  of vendor debt.  The  settlement  resulted in a gain of
$15,515 as described in Note 6.

Note  13.  Fair  Value  of  Financial  Instruments
           ---------------------------------------
The following  disclosure of estimated  fair value of financial  instruments  is
made in accordance with the requirements of Financial  Accounting  Standards No.
107,  Disclosure About Fair Value of Financial  Instruments.  The estimated fair
value  amounts  have been  determined  by the  Company  using  available  market
information.  Accordingly,  the estimates presented herein may not be indicative
of the amounts the Company could realize in a current market  exchange.  The use
of different market  assumptions or valuation  methodologies may have a material
effect on the estimated fair value amounts.

The carrying values of cash, accounts receivable and account payable approximate
fair values due to the short-term  maturities of these instruments. The carrying
value of note  receivable,  notes payable and long-term  debt  approximate  fair
values based on the  discounted  cash flow of those  instruments,  using current
interest rates and remaining maturities at December 31, 1998.

                                       47
<PAGE>

Note 14.  Other
          -----
Loss of Listing from NASDAQ

The Company's Common Stock has been publicly traded separately and was initially
quoted on the Nasdaq  Smallcap  Market  ("Nasdaq")  under the  symbol  "EVRM" on
August  12,  1994.  Upon  the  divestiture  of  the  Trico  Envirometrics,  Inc.
subsidiary  the  Company  fell below the  listing  requirements  of  Nasdaq.  On
December 3, 1996 the Company's  common stock and warrants were delisted from The
Nasdaq  SmallCap  Market and were  subsequently  traded on the Over the  Counter
Bulletin Board. On January 4, 1999, the Securities and Exchange Commission (SEC)
approved  amendments to NASD Rules 6530 and 6540 to limit  quotations on the OTC
Bulletin  Board  ("OTCBB")  to the  securities  of  companies  that report their
current  financial  information  to the SEC. On November 18, 1999 the  Company's
common stock and warrants  were  delisted  from the OTCBB  because of failure to
have the required SEC periodic filings  submitted by that date. Price Quotations
for the Company's  common stock are currently  listed on the National  Bureau of
Quotation's  Electronic Pink Sheets (the "Pink Sheet"). It is expected that once
the Company has become  current with filing its period filings with the SEC, the
necessary  number of market makers will re-file the  appropriate  forms with the
OTCBB to permit the Company's common stock to be re-listed on OTCBB.

Note 15. Going Concern
         -------------
The Company incurred losses from continuing operations of $320,397, $433,271 and
$1,374,067 for the years ended December 31, 1998,  1997 and 1996,  respectively.
At December 31, 1998, current liabilities  exceeded current assets by $3,000. In
December 1996 the Company  initiated a formal  "Turnaround"  plan because of the
severe financial condition it was facing.

The  Company  has now turned  its  attention  to moving out of the  "Turnaround"
phase.  Management has devised a plan to accomplish this exit in two steps. Step
One will focus on the internal  growth of Azimuth and Step Two will focus on the
development and implementation of a merger and acquisition strategy.

Step One. In October 1999,  Azimuth changed its service provision to shift more
focus to broader Safety  Services  offerings.  This change is expected to expand
the customer base by offering a wider range of services and by leading the sales
process with Safety Services.  Once a customer  relationship is established with
Safety  Services,  it is  expected  to  allow  for  the  sale of  other  service
offerings,  resulting in a higher  revenue base per customer and  ultimately  an
internal growth in revenue.

Step Two. The Company and its management  agree that any appreciable  growth in
revenue will only result  through a strategy of mergers and/or  acquisitions  or
other  consolidation  with other  service  providers  operating in the Company's
fragmented  industry.  The Company is in the midst of developing  its merger and
acquisition  strategy and  although the Company is not  currently a party to any
binding  agreements  with respect to any specific  targets of this  strategy,  a
broad profile of target companies has been developed.

Note 16.  Subsequent Event
          ----------------
On  December  30,  1999 the Board of  Directors  awarded  stock  options  to the
directors to purchase an aggregate of 350,000  shares.  All such options provide
for an exercise price of $.10 per share,  all are  exercisable at the grant date
and all expire on December 30, 2004.  The exercise price  applicable  under such
outstanding  stock  options  represent  100% of the  fair  market  value  of the
underlying  common  stock as of the date  that such  options  were  granted,  as
determined  by the  Board of  Directors  of the  Company  on the date  that such
options were granted.

                                       48
<PAGE>

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

CHANGE IN AUDITOR
-----------------

     The Company contacted its auditor,  McGladrey & Pullen,  LLC ("McGladrey"),
in May of 1999 to  discuss  the need to  complete  the  audits of its  financial
statements for the years ended December 31, 1998, 1997 and 1996 so that it could
file the require  annual10-KSB  reports for those years. The Company had $37,812
outstanding  in past due fees to McGladrey of which $20,657  related to fees for
the 1995 audit;  $12,750  related to accounting  services in connection with due
diligence  services for a terminated merger and regulatory  matters during 1996;
and $4,405 related to fees in connection with preliminary audit services for the
1996 calendar year  performed in early 1997. The 1996 audit was not completed as
the Company was experiencing severe cash flow problems.

     In  discussing  the  past  due  fees  and  the  audit  services,  McGladrey
communicated  that it might not be possible  for them to  continue as  auditors.
Company  management  indicated to McGladrey that it would consider  alternatives
and make a decision regarding these matters.

     In connection with the audit of financial statements as of and for the year
ended December 31, 1995,  there were no  disagreements  with McGladrey & Pullen,
LLP on any matter of accounting  principles,  financial disclosure,  or auditing
scope or procedures,  which  disagreements if not resolved to their satisfaction
would have caused them to make reference in connection with their opinion to the
subject matter of the disagreement.

     The audit report of McGladrey & Pullen,  LLP on the consolidated  financial
statements of Envirometrics, Inc. as of and for the year ended December 31, 1995
did not contain any adverse opinion or disclaimer of opinion;  however, the 1995
opinion  was  modified  with  respect  to  an  emphasis  of a  matter  paragraph
discussing  recurring  losses from  operations and decreases in working  capital
issues confronting the Company.

     In October 1999 the Company notified McGladrey that it had engaged the firm
of Welch,  Roberts & Amburn,  Certified Public Accountants,  LLP, to conduct the
audits of its financial  statements for the years ended December 31, 1998,  1997
and 1996.

                                       49
<PAGE>
                                    PART III

ITEM 9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS  AND
--------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
-------------------------------------------------

     On January  26,  1996  Robin A.  Bowers was  elected  as  Secretary  of the
Company.  On February 28, 1996, Patrick H. Cooper,  Vice President of Operations
of the Company's  subsidiary,  Envirometrics  Products  Company,  resigned as an
Officer and Director of the Company. On March 22, 1996, at a regularly scheduled
meeting of the Board of Directors,  Richard D. Bennett submitted his resignation
as  Chairman  of the Board of  Directors,  a position  he held since March 1995.
Richard H.  Guilford was elected as Chairman of the Board at that time.  At that
meeting the following  Directors were also elected;  Ward W. Johnson,  Andrew C.
Gillette and Maurizio F. Giabbai.

     As of May 4,  1996,  Mr.  Bennett  L.  Helms  resigned  from  the  Board of
Directors.  Mr. Andrew C. Gillette  resigned as Director on July 31, 1996. David
R. Drescher  resigned as a Director on October 15, 1996. In November  1996,  Mr.
Ward Johnson  resigned from the Board of Directors.

     On November 14, 1996, Mr. Richard D. Bennett  resigned as President & Chief
Executive  Officer  and  Director  of  Envirometrics,  Inc.  At that  time,  the
remaining Board of Directors requested that Mr. Walter H. Elliott, III step into
the position as acting  President and CEO. Mr.  Elliott  accepted such positions
and also became a member of the Board of Directors of the Company.

     On  October  31,  1997  Ms.  Robin  Bowers  resigned  as  Secretary  of the
Corporation  and as an  employee.  Ms. Elsie L. Rose was elected as Secretary at
that time.

     On January 28, 1999 Ms.  Elsie L. Rose was  appointed  as a Director of the
Company.

     The following table sets forth certain information concerning the directors
and executive officers of the Company as of December 31, 1999.

Directors and Executive Officers
--------------------------------
      Name                    Age    Position
      ----                    ---    --------
Walter H. Elliott, III         44    President,Chief Executive Officer; Director
Elsie L. Rose, CPA             44    Treasurer, Acting Chief Financial Officer,
                                     Secretary; Director

                                       50
<PAGE>

Charles E. Feigley, Ph.D.      54    Director
Richard H. Guilford            70    Chairman of the Board of Directors
Maurizio F. Giabbai, Ph.D.     50    Director

     Walter H. Elliott, III - President,  Chief Executive Officer & Director. He
joined the Company in 1988 as Director of Marketing  for Azimuth,  Inc. and took
on these duties as well for Envirometrics  Products in 1989. He subsequently was
appointed as the Chief Operating Officer in March 1990, with  responsibility for
complete business operations at Envirometrics  Products. Mr. Elliott brings many
years of marketing and sales experience which he gained as a sales and technical
service representative and Product Manager from 1982 to 1986 at Organon Teknika,
Inc. (formerly Litton Bionetics,  Inc.), a provider of health care products. Mr.
Elliott   graduated  with  honors  from  Clemson   University  with  a  B.S.  in
Microbiology (1977).

     Elsie L. Rose,  CPA - Ms.  Rose was  elected  Treasurer  of the  Company in
August  1995,  Acting CFO in November of 1996 and  Director in January 28, 1999.
Ms. Rose was a founder of of The United States Company and is a Director and its
Treasurer.  The United States  Company is a privately  held  management  company
specializing  in forming  strategic  partnerships  with  small and medium  sized
businesses  to  provide  management,   financing,  accounting,   marketing,  and
technology  support.  Ms. Rose has  practiced  public  accounting,  primarily in
Richmond, Virginia, for over 18 years. Ms. Rose was a senior manager at Deloitte
&  Touche,  LLC  before  joining a local  Richmond,  Virginia  Certified  Public
Accounting  Firm in 1989.  She began  practicing as a sole  practitioner  before
formation  of the firm of Rose,  Sanderson & Creasy,  LLC, in 1992.  Ms. Rose is
currently a member of that firm.  Ms. Rose  graduated  with honors from Virginia
Commonwealth University with a B.S. in Accounting in 1979.

     Charles E. Feigley,  Ph.D.,  MSPH,  CIH - Dr. Feigley  co-founded  Azimuth,
Incorporated  while serving as Chairman of Environmental  Health Sciences at the
University  of South  Carolina.  Dr.  Feigley  brings  extensive  experience  in
engineering and research  through his employment  history with the University of
South Carolina as an Assistant and Associate Professor,  a Research Associate at
the  University  of North  Carolina,  as an  Environmental  Control  Engineer at
Diamond  Shamrock  Chemical  Company,  a  chemical   manufacturer,   and  as  an
Engineering Aid with the U.S. Naval Marine Engineering  Laboratory.  Dr. Feigley
is a Board  Member of the Company,  and  currently  serves in various  positions
within industry councils and professional  societies.  He is also a Diplomat for
the American  Academy of Industrial  Hygiene and a member of the Editorial Board
of Applied  Industrial  Hygiene.  Dr. Feigley is a graduate of the University of
Delaware  with  a  B.S.  degree  in  Chemical  Engineering  (1967),  of  Rutgers
University  with a M.S.  degree in  Environmental  Sciences  (1971),  and of the
University  of  North  Carolina  with a  Ph.D.  in  Environmental  Sciences  and
Engineering (1977). He is certified in the "Comprehensive Practice of Industrial
Hygiene" by the American Board of Industrial Hygiene.

                                       51
<PAGE>

     Richard H. Guilford - Mr.  Guilford is currently  employed by and serves as
the  Executive  Vice  President  and Director of Imtek,  Incorporated  and Imtek
Office Solutions,  Inc. From March 1995 until August 1999, Mr. Guilford had been
the Chairman of The United States Company,  a privately held management  company
specializing  in forming  strategic  partnerships  with  small and medium  sized
business to provide management,  financing, accounting, marketing and technology
support. Mr. Guilford was a founder of HazWaste Industries  Incorporated in 1987
and served as Chairman of the Board and Treasurer until February 1995.  HazWaste
was ranked by Inc.  Magazine  among the top 500 fastest  growing  privately held
companies in the Untied States in 1992,  1993 and 1994. In early 1995,  HazWaste
Industries Incorporated was acquired by The Earth Technology Corporation, USA, a
publicly owned international  environmental company. Mr. Guilford graduated from
the Executive  Management  Program of the University of Virginia Graduate School
of Business in 1964 where he was  President  of his class.  He was a finalist in
the  Entrepreneur  of the Year  contest  in 1993 and 1994  conducted  by Merrill
Lynch, Ernst & Young, and Inc. Magazine.

     Maurizio F.  Giabbai,  Ph.D.  - Dr.  Giabbai  was  elected  Director of the
Company in March 1996.  Dr.  Giabbai a co-founder  of The STAR* Group  (formerly
HazWaste  Inc.) and is Chairman of The United States  Company.  Dr.  Giabbai has
over 23  years  of  professional  experience  in  analytical  and  environmental
chemistry and  management of major projects  applied to  environmental/hazardous
waste management programs.  He held positions in academia for over 10 years as a
research  scientist,  and has over 10 years  business  management  experience of
environmental   consulting/engineering/remediation   companies.   He   was   the
co-founder  of  HazWaste   Industries   Incorporated  in  1987,  a  $50  million
consulting/remediation  firm, which was listed for three consecutive years among
the Inc. 500 fastest  growing  companies in U.S. Dr.  Giabbai was with  HazWaste
Industries  Incorporated  until February 1995. He is a graduate of the Technical
Institute G.L.  Bernini (1968).  He received his Doctorate in Chemistry from the
University of Rome in 1976 and served as Post-doctoral Research Associate at the
University  of Alabama in 1977-1978  when he  relocated to the United  States of
America.  He recently completed the MBA program at Georgia State University (May
1999).

Significant Employees
---------------------
     Richard  D.  Bennett,   MSPH,  CIH  -  Mr.  Bennett   co-founded   Azimuth,
Incorporated  and  serves  as its  President.  He also  serves  as  Senior  Vice
President  of the  Company  and the  Director of  Technical  Services.  Prior to
co-founding  Azimuth,  Mr. Bennett was the supervising  Industrial  Hygienist at
Charleston  Naval  Hospital  (1983 to  1986),  an  Industrial  Hygienist  at the
Charleston  Naval  Shipyard  (1981 to  1983),  an  Industrial  Hygiene  Research
Assistant at the  University  of South  Carolina  (1980-1981),  and a Chemist at
Campbell Soup Company (1977 to 1979). Mr. Bennett  graduated with a B.S. degree,
cum laude, from Clemson University in 1977 and earned an MSPH (Master of Science
in Public Health) in  Environmental  Health  Sciences,  School of Public Health,
University  of South  Carolina in 1982.  He is certified  in the  "Comprehensive
Practice of Industrial Hygiene" by the American Board of Industrial Hygiene.

                                       52
<PAGE>
     Mr. Bennett has recently informed the Company's  management that he intends
to resign his  positions  as Senior Vice  President  and  Director of  Technical
Services for the Company, and President of Azimuth, effective February 18, 2000.
(The Company  intends to commence an executive  search to find a replacement for
Mr. Bennett in advance of his departure).

     James W. Brown, CSP, CHMM - Mr. Brown joined Azimuth, Inc. in October, 1999
and is Director of Risk  Management  Services  for  Azimuth,  Incorporated.  His
expertise in OSHA,  EPA, and DOT regulatory  compliance  consulting,  safety and
environmental program  administration,  technical training,  and risk management
decision-making  spans 21 years in Federal government and private industry.  Mr.
Brown's    employment     history    includes     assignments    as    Corporate
Safety/Environmental   Manager  for  an  international  machining  and  assembly
company;  Commercial  Sales  Executive for an insurance  broker  providing  loss
prevention and environmental  liability products; Risk Control Consultant for an
insurance company  servicing  clients in general industry and construction;  and
Safety  Director for a  manufacturing  plant in the  secondary  lead  smelting &
refining industry. Mr. Brown holds a B.S. in Engineering/Management  from the U.
S. Naval  Academy  and an M.S.  in Systems  Management  from the  University  of
Southern   California.   He  is  designated  a  Certified  Safety   Professional
(CSP/Comprehensive   Practice)  and  a  Certified  Hazardous  Materials  Manager
(CHMM/Senior  Level).  Mr. Brown is  President-Elect  of the American Society of
Safety  Engineers' Low Country  Chapter in Charleston,  SC. He is a Commander in
the U.S. Navy Reserves.

Board Committees
----------------
     The Company has Audit and Compensation Committees.  The responsibilities of
the Audit Committee  include  recommending to the Board of Directors the firm of
independent  accountants  to be  retained  by the  Company,  reviewing  with the
Company's  independent  accountants  the scope and results of their audits,  and
reviewing  with  the  independent   accountants  and  Management  the  Company's
accounting  and reporting  principles,  policies and  practices,  as well as the
Company's   accounting,   financial  and  operating   controls  and  staff.  The
Compensation   Committee  has  responsibility  for  establishing  and  reviewing
employee  compensation  plans. The  Compensation  Committee also administers the
Company's stock option plan.

     During the "Turnaround" phase of the Company's  operations,  the full Board
of Directors has acted to function as the Audit and  Compensation  Committees of
the  Board of  Directors  and there  have not been  separate  meetings  of those
committees.

Compliance with Section 16(a) Of the Exchange Act.
--------------------------------------------------
     To the  knowledge of the Company,  except as set forth below,  no officers,
directors,  beneficial  owners  of more than 10  percent  of any class of equity
securities of the Company  registered  pursuant to Section 12 of the  Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act"),  or any other person
subject to Section 16 of the Exchange Act with respect to the Company, failed to
file on a timely  basis  reports  required by Section  16(a) of the Exchange Act
during the fiscal years, which ended December 31, 1996, 1997 and 1998.

                                       53
<PAGE>

     None of Walter H. Elliott, III, Richard H. Guilford, Elsie L. Rose, Charles
E. Feigley,  Maurizio F. Giabbai, Richard D. Bennett, The United States Company,
H. E. Igoe and Shakespeare Partners, L.P. who are all Directors, Officers and/or
10% stock holders have timely filed reports under Section 16 of the Exchange Act
with respect to the Company  since the  beginning of the  Company's  1996 fiscal
year.  On January 27, 2000 each of such persons  filed a Form 5 under Section 16
of the Exchange Act with respect to their holdings of relevant equity securities
of the Company as of the end of the Company's 1999 fiscal year.





ITEM 10. EXECUTIVE COMPENSATION
-------------------------------

                           SUMMARY COMPENSATION TABLE
                           --------------------------
                              Annual Compensation*
                              --------------------                Other Annual
                                     Year    Salary     Bonus    Compensation($)
                                     ----    ------     -----    ---------------
                                        ($)   ($)

Name and Principal Position
---------------------------


Walter H. Elliott, III                1998   $59,500      0           0
President and Chief                   1997    59,500      0           0
Executive Officer (Nov.96             1996    85,000      10,000      0
until present)                        1995    65,000      0           0
President, EPC (Until Nov 96)         1994    65,000      0           0

Richard D. Bennett                    1996    90,000      0           0
President and Chief Executive         1995    90,000      0           0
Officer (Feb.95-Nov.96)               1994    90,000      0           0
Ex. V.P. (Until Feb.95)
================================================================================

                             Long-Term Compensation
                             ----------------------
                               Awards                   Payouts
                               ------                   -------

                                           Securities
                            Restricted    Underlying
                             Stock        Options/     LTIP         All Other
                             AWARD(S)     SARS(#)(1)  PAYOUTS($) COMPENSATION(2)
                             --------     ----------  ---------- ---------------
                               ($)                                     ($)
Walter H. Elliott, III
                       1998      0          0           0            0
                       1997      0          0           0            0
                       1996      0          0           0            0
                       1995    5,000        0           0            0
                       1994      0          0           0            0

Richard D. Bennett
                       1996      0        15,000        0            0
                       1995      0        15,000        0            1,871
                       1994      0        15,000        0            1,828
================================================================================

               * Does not include personal  benefits and other forms of non-cash
          compensation that did not in the aggregate exceed 10% of the aggregate
          amount of cash compensation for the subject individual.

               (1) Represents  stock options granted in January 1994. See "Stock
          Option Plan".

                                       54
<PAGE>

               (2) Amounts for Richard D.  Bennett  includes:  Company  matching
          payments to Section  401(k) Plan - $15 for 1994 and $18 for 1995,  and
          disability insurance premiums of $1,813 for 1994 and $1,873 for 1995.

Employment  Agreements
---------------------
     Effective as of September 1, 1991 (as amended  effective  October 1, 1993),
the   Company   entered   into  a  separate   employment,   non-disclosure   and
non-competition agreement with each of Messrs. Richard D. Bennett and Charles E.
Feigley,  pursuant to which such persons  agreed to serve as President and Chief
Executive  Officer and Executive  Vice  President and Vice  President of Azimuth
Incorporated, respectively, through December 31, 1996. Mr. Bennett was appointed
to the  positions  of Chairman,  President  and Chief  Executive  Officer of the
Company in February 1995. (Mr. Bennett served as the Chairman of the Board until
March 22, 1996 and as President and CEO until November 14, 1996). The employment
agreements  (as  amended)  provide for minimum  annual base  salaries to each of
Messrs. Bennett and Feigley of $90,000 and $12,000,  respectively,  and benefits
comparable to those provided to other Company employees.  The agreements further
provide that each such executive officer is required to (i) devote substantially
all of his business time to the  performance of his duties and  responsibilities
to  the  Company,  (ii)  assign  to  the  Company  all  proprietary  technology,
inventions and other intellectual  property relating to the Company's  business,
designed,  developed  or  created  by any one or more of such  persons  or their
affiliates,  and (iii) keep  confidential  all  proprietary  information,  trade
secrets and other  confidential  information  acquired or obtained by him during
the course of his employment.  Each of such employment  agreements prohibits the
employee from engaging in any competitive activities with the Company during the
course  of his  employment  with  the  Company,  and for a  period  of one  year
following  termination of employment if such employee  terminates his employment
or is terminated for cause (as defined).

     In January 1997 the Company  terminated  employment with Charles E. Feigley
because of the  financial  condition of the Company.  Dr.  Feigley  continues to
serve as a Director of the Company and works for the Azimuth subsidiary under an
informal subcontractor arrangement.

     On November  14, 1996 Mr.  Richard  Bennett  resigned as  President,  Chief
Executive Officer and Director.  Effective January 1997 the Company entered into
a separate  employment  agreement with Mr. Bennett pursuant to which Mr. Bennett
agreed to serve as  Senior  Vice  President  of the  Company  and  President  of
Azimuth, Inc. The employment agreement provides for a minimum annual base salary
to the employee of $65,000 and benefits  comparable  to those  provided to other
Company  employees.  In addition to the base salary,  the  employment  agreement
provides for a Performance Bonus Plan whereby a bonus is paid when "New Clients"
contribute  Net Revenues.  Net Revenues are defined as gross  revenues minus any
subcontractor expenses. The bonus equates to 3% of the first $100,000, 4% of the
second  $100,000 and 5% of the third  $100,000 in Net Revenues.  The  employment
agreement  prohibits the employee from  engaging in any  competitive  activities
with the Company during the course of his employment with the Company, and for a
period of six months following termination of employment for any reason.

                                       55
<PAGE>

     On May 15, 1996 the Company  entered  into a revised  employment  agreement
with each of its two chemists,  Thomas Wilkie and Cameron Stephens.  In addition
to the base salary of $60,000, the Company agreed to pay each a royalty equal to
2.5% of annual  gross sales of all ACT cards and a cash bonus of $5,000 for each
new chemical for which a monitoring card was developed.  The initial term of the
employment  agreement  terminated on December 31, 2000, with two-year  automatic
renewals at the end of the first term. On October 20, 1997, the Company signed a
Mutual Release of Claims Agreement with Messrs. Wilkie and Stephens to supersede
the Employment,  Royalty and Non-disclosure  Agreement,  dated May 15, 1996. The
Mutual Release Agreement  released the chemists from employment and released the
Company from its future obligations under their employment agreements. Under the
terms of this  Agreement  the  chemists are granted  options to purchase  50,000
shares each of the Common Stock of the Company at $0.25 per share.

Stock Option Plan
-----------------
     In  January  1994,  the  Board of  Directors  of the  Company  adopted  the
Company's  Stock  Option  Plan,  as  previously   authorized  by  the  Company's
stockholders (the "Plan").  Under the Plan, officers,  directors,  key employees
and/or  consultants  of the  Company  can receive  incentive  stock  options and
non-qualified  stock options to purchase up to an aggregate of 150,000 shares of
the Company's  Common Stock (of which no more than 50,000 shares may be pursuant
to incentive  stock options,  and no more than 100,000 shares may be pursuant to
non-qualified  stock  options).  On  January  1, 1994,  the  Company's  Board of
Directors  awarded  under the Plan  non-qualified  stock  options to purchase an
aggregate of 75,000 shares. All of such options were granted to the then serving
officers of the Company,  all provide for an exercise  price of $2.00 per share,
all were  exercisable  beginning  on January 1, 1995 and all expired on December
31, 1998 (subject to prior  termination in accordance with the applicable  stock
option  agreements).  The exercise price applicable under such outstanding stock
options  represents 100% of the fair market value of the underlying Common Stock
as of the date that such options were  granted,  as  determined  by the Board of
Directors of the Company on the date that such options were granted.

     On March  31,  1995 the Board of  Directors  awarded  under the Plan  stock
options to  purchase  an  aggregate  of 34,500  shares.  The Board of  Directors
granted 23,000 incentive stock options,  and 11,500  non-qualified stock options
to plan  participants.  All of such  options  provide for an  exercise  price of
$3.625 per share,  all are  exercisable  at the grant date and 23,000  incentive
stock  options  expire on March 20,  2005,  1,500  non-qualified  stock  options
expired on March 20, 1998 and 10,000 non-qualified stock options expire on March
20, 2003 (subject to prior  termination in accordance with the applicable  stock
option  agreements).  The exercise price applicable under such outstanding stock
options  represents 100% of the fair market value of the underlying common stock
as of the date that such options were  granted,  as  determined  by the Board of
Directors of the Company on the date that such options were granted.

                                       56
<PAGE>

     On April 17, 1996 the Board of Directors  awarded under the Plan  incentive
stock  options to purchase an  aggregate of 23,750  shares.  All of such options
provide for an exercise  price of $1.88 per share,  all are  exercisable  at the
grant date and all expire on April 16,  2006  (subject to prior  termination  in
accordance with the applicable  stock option  agreements).  On December 10, 1996
the Board of Directors  awarded  under the Plan  non-qualified  stock options to
purchase an  aggregate  of 30,000  shares.  All of such  options  provide for an
exercise price of $2.38 per share, all are exercisable at the grant date and all
expire on December 9, 2004 (subject to prior  termination in accordance with the
applicable  stock option  agreements).  The exercise price applicable under such
outstanding  stock  options  represents  100% of the  fair  market  value of the
underlying  common  stock as of the date  that such  options  were  granted,  as
determined  by the  Board of  Directors  of the  Company  on the date  that such
options were granted.

     During  the  period  1996  through  1998,  23  employees  who were  holding
incentive  stock options left the employment of the Company  without  exercising
their options. Subject to the stock option agreements,  their options terminated
on the  effective  dates of their  resignations.  Of the 88,250 issued in March,
1995 and  April  and  December,  1996,  42,250  options  have  expired,  (40,750
incentive stock options and 1,500 non-qualified stock options).

     On January 28, 1999 the Board of Directors awarded under the Plan incentive
stock  options to purchase an  aggregate of 40,000  shares.  All of such options
provide for an exercise  price of $0.10 per share,  all are  exercisable  at the
grant date and all expire on January 27, 2009 (subject to prior  termination  in
accordance  with the  applicable  stock option  agreements).  The exercise price
applicable  under such  outstanding  stock options  represents  100% of the fair
market  value of the  underlying  common  stock as of the date that such options
were granted, as determined by the Board of Directors of the Company on the date
that such options were granted. 10,000 options expired on September 4, 1999 when
the employee resigned employment.

     With  respect  to  incentive  stock  options,  the Plan  provides  that the
exercise  price of each such  option  must be at least equal to 100% of the fair
market  value of the common  stock on the date that such option is granted  (and
110% of fair  market  value in the  case of  stockholders  who,  at the time the
option is granted, own more than 10% of the total outstanding common stock), and
requires that all such options have an expiration  date not later than that date
which is one day before the tenth  anniversary  of the date of the grant of such
options  (or the  fifth  anniversary  of the  date of  grant  in the case of 10%
stockholders).  However, with certain limited exceptions,  in the event that the
option  holder  ceases to be  associated  with the Company,  or engages in or is
involved with any business similar to that of the Company,  such option holder's
incentive options immediately terminate. Pursuant to the provisions of the Plan,
the  aggregate  fair market value,  determined  as of the date(s) of grant,  for
which incentive  stock options are first  exercisable by an option holder during
any one calendar year cannot exceed $100,000.

                                       57
<PAGE>

     With respect to  non-qualified  stock  options,  the Plan requires that the
exercise  price of all such options be at least equal to 100% of the fair market
value of the Common  Stock on the date such  option is  granted,  provided  that
non-qualified  options may be issued at a lower  exercise price (but in no event
less than 85% of fair market value) if the net pre-tax  income of the Company in
the full fiscal year immediately  preceding the date of the grant of such option
(the "Prior Year")  exceeded 125% of the mean annual  average net pre-tax income
of the Company for the three fiscal years immediately preceding such Prior Year.
Non-qualified  options  must have an  expiration  date not later  than that date
which is the day before the eighth  anniversary  of the date of the grant of the
subject option. However, with certain limited exceptions,  in the event that the
option holder ceases to be associated with the Company, or engages in or becomes
involved with any business similar to that of the Company,  such option holder's
non-qualified options immediately terminate.

     The Plan further  provides  that  non-qualified  options may (but need not)
include a provision  that, in the event of any change in control and  management
of the Company or any sale of the business of the Company,  except to the extent
that the subject option holder  affirmatively  elects during a limited period of
time  following  such event to  permanently  revoke and  terminate  the  subject
non-qualified option (in whole or in part) and/or to reaffirm all or any portion
of such non-qualified  option without giving effect to the reduction in exercise
price herein described,  then the otherwise applicable exercise price in respect
of such option may thereafter be reduced (but not by more than 50%) in the event
that,  and at such time(s) as, the subject  option holder  thereafter  exercises
such option (or the non-revoked and non-reaffirmed  portion thereof, as the case
may be).

     The Plan is  administered  by the  Compensation  Committee of the Company's
Board of Directors,  which has wide  discretion in determining the recipients of
options,  the amounts of options awarded, and various other terms and conditions
applicable to options granted under the Plan. In determining whether and to what
extent specific  employees will be awarded options,  the Compensation  Committee
takes into account the value of the specific employee's services to the Company,
the  employee's  time in service,  the  long-term  prospects for the employee to
handle additional responsibilities within the Company, and such other factors as
the Compensation Committee may deem relevant in order to reward and motivate the
Company's key employee.

     The  following  tables set forth  information  concerning  the  exercise of
options  during the 1996,1997 and 1998 fiscal years,  the number of  unexercised
options,  and the value of such unexercised  options, for the executive officers
named in the Summary Compensation Table.

                                       58
<PAGE>

<TABLE>
<CAPTION>

                         Aggregated Option/SAR Exercise
            in Fiscal Year ended 12/31/96 and FY-End Option/SAR Value
<S>                         <C>           <C>         <C>                   <C>
                                                                           Value of Unexercised in the
                              Shares                      Number of             Money Options/
                            Acquired On     Value     Unexercised Options/      SAR at FY-End($)
Name                         Exercise#    Realized($) SAR AT Year End(#)    Exercisable/Unexercisable
----                        -----------   ----------- -------------------   -------------------------

Walter H. Elliott, III          -            -            ---/5,000                $---/$938

Richard D. Bennett              -            -            ---/15,000               $---/$2,814


                         Aggregated Option/SAR Exercise
            in Fiscal Year ended 12/31/97 and FY-End Option/SAR Value
                                                                           Value of Unexercised in the
                              Shares                      Number of             Money Options/
                            Acquired On     Value     Unexercised Options/      SAR at FY-End($)
Name                         Exercise#    Realized($) SAR AT Year End(#)    Exercisable/Unexercisable
----                        -----------   ----------- -------------------   -------------------------

Walter H. Elliott, III          -            -            ---/5,000                $---/$100


                         Aggregated Option/SAR Exercise
            in Fiscal Year ended 12/31/98 and FY-End Option/SAR Value
                                                                           Value of Unexercised in the
                              Shares                      Number of             Money Options/
                            Acquired On     Value     Unexercised Options/      SAR at FY-End($)
Name                         Exercise#    Realized($) SAR AT Year End(#)    Exercisable/Unexercisable
----                        -----------   ----------- -------------------   -------------------------

Walter H. Elliott, III          -            -            ---/5,000                $---/$310

</TABLE>


Compensation Policy and Other Compensation
------------------------------------------
     During the fiscal years ended  December 31, 1996 through 1998 the Company's
Board of Directors determined all compensation matters relating to the Company's
executive officers.

     The Board of Directors of the Company in the past  determined that the best
way to  attract  and  retain  highly  capable  employees  on a basis  that  will
encourage them to perform at increasing levels of effectiveness and to use their
best  efforts to promote  the growth and  profitability  of the  Company and its
subsidiaries,  was to enter into employment agreements with its senior executive
officers. Mr. Bennett is employed under such a contract with the Company. During
the "Turnaround"  phase there have been no additional senior executive  officers
recruited and Mr. Elliott has served without an employment contract. The Company
believes that its compensation  levels as to all of its employees are comparable
to industry standards. See "Employment Agreements".

                                       59
<PAGE>

     In setting levels of compensation under Mr. Bennett's  employment contract,
and in  approving  management's  compensation  of all  other  Company  employees
(including  Mr.  Elliott),  the Board of Directors  has  evaluated the Company's
overall  performance,  the  contribution  of particular  individuals  to Company
performance and industry compensation standards.

     The Company has adopted a policy of compensating  non-employee Directors at
the rate of $500 per meeting (plus reasonable out-of-pocket expenses in a manner
consistent with past practice) for attendance at meetings of the Company's Board
of Directors.  At this time,  Richard H.  Guilford,  Maurizio F.  Giabbai,  PhD,
Charles E. Feigley,  PhD and Elsie L. Rose, CPA are the only directors  eligible
to be  compensated  pursuant to this  policy.  The Board  agreed to suspend this
policy until such time as the Company is financially stable.

     On December 30, 1999 the Board of Directors  awarded stock options  outside
of the Plan to members of the Board of Directors and to Mr.  Elliott to purchase
an aggregate  of 350,000  shares.  All of such  options  provide for an exercise
price of $.10 per share, all are exercisable at the grant date and all expire on
December 29, 2004. The exercise price applicable  under such  outstanding  stock
options  represents 100% of the fair market value of the underlying common stock
as of the date that such options were  granted,  as  determined  by the Board of
Directors of the Company on the date that such options were granted.

Item 11. STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------

     The following  table sets forth  certain  information  regarding  shares of
common stock beneficially owned as of December 31, 1999 by (i) each person known
by the Company to be the beneficial owner of more than 5% of outstanding  common
stock,  (ii) each of the  Company's  officers  and/or  directors,  and (iii) all
officers and directors as a group.  Except as otherwise  indicated,  the Company
believes,  based on  information  furnished by such owners,  that the beneficial
owners of the Common Stock listed  below have sole  investment  and voting power
with  respect  to  such  shares,   subject  to  community  property  laws  where
applicable.

                                       60
<PAGE>

================================================================================
                              Amount of Common Stock   Percentage of Outstanding
     Name                       Beneficially Owned           Common Stock
================================================================================
Richard D. Bennett                   384,597(1)                 10.56%
107 Springfield Place
Goose Creek, SC  29445
--------------------------------------------------------------------------------
Charles E. Feigley, PhD              187,864(10)                 5.09%
2538 Wheat Street
Columbia, SC  29205
--------------------------------------------------------------------------------
Walter H. Elliott, III               349,849(2)(3)(6)(11)        9.11%
205 Walnut Hill Drive
Summerville, SC 29485
--------------------------------------------------------------------------------
Patrick H. Cooper                    221,614                     6.09%
3306 Cottonfield Drive
Mt. Pleasant, SC 29464
--------------------------------------------------------------------------------
Jack E. Bennett                      229,503(5)                  6.30%
403 E. Marion Street
Kershaw, SC  29067
--------------------------------------------------------------------------------
Shakespeare Partners, L.P.           584,730(9)                 14.56%
21 Legare Street
Charleston, SC  29401
--------------------------------------------------------------------------------
H. E. Igoe                           724,730(8)                 18.05%
21 Legare Street
Charleston, SC 29401
--------------------------------------------------------------------------------
Michael McGehee                      304,080                     8.35%
1 North Adgers Wharf
Charleston, SC 29401
--------------------------------------------------------------------------------
The United States Company            683,240(7)                 16.27%
1051 Technology Park Drive
Glen Allen, Virginia   23060
--------------------------------------------------------------------------------
Richard H. Guilford                  277,747(7)(10)              7.16%
5900 Patterson Avenue, Chalet 9
Richmond, Virginia   23226
--------------------------------------------------------------------------------
Maurizio F. Giabbai, PhD             277,747(7)(10)              7.16%
5652 Buttonwood Court
Stone Mountain, Georgia   30087
--------------------------------------------------------------------------------
Elsie L. Rose                        340,280 (4)(7)(10)          8.75%
12645 Mount Hermon Road
Ashland, Virginia   23005
================================================================================
All Directors and Executive Officer  1,433,486(2) (3) 4)(6)     31.10%
as a group (five persons)                     (7)(10)(11)
================================================================================

                                       61
<PAGE>

(1) Includes 127,011 shares issued in November 1999.

(2) Includes 93,174 shares issued in November 1999.

(3) Includes  exercisable options to purchase up to 5,000 shares of Common Stock
at $3.63 per share granted under the Plan.

(4)  Includes  14,400  shares  issued in lieu of 1998  accrued  compensation  in
January 1999 and 31,884 shares issued in November 1999.

(5) Includes  exercisable options to purchase up to 2,000 shares of Common Stock
at $2.00 per share granted under the Plan.

(6) Includes 44,175 shares of Common Stock assuming  conversion of shares of the
Series B  Preferred  stock  held at a 5  shares  of  Common  Stock to 1 share of
Preferred Stock conversion rate.

(7) Includes  125,000 shares of Common Stock issued to The United States Company
("USC").  Includes  558,240 shares of Common Stock,  assuming  conversion of the
shares of Series B Preferred Stock held at a 5 shares of Common Stock to 1 share
of Preferred Stock conversion rate.  Richard H. Guilford,  Chairman of the Board
of the Company, Maurizio F. Giabbai, Ph.D., a Director of the Company, and Elsie
L. Rose,  CPA, the  Treasurer of the Company,  are  principals  in USC.  Messrs.
Guilford and Giabbai, and Ms. Rose, each owns a one-third interest in The United
States Company and based upon the organizational documents of USC has beneficial
ownership of  one-third of the  securities  in which it invests  (including  the
Company's Securities).

(8) H. E Igoe is the  General  Partner of  Shakespeare  Partners,  LP.  Includes
shares of Common Stock and Preferred Stock held by Shakespeare  Partners,  L.P.,
of which Mr. Igoe has beneficial ownership.

(9) Includes 374,390 shares of Common Stock, assuming conversion of the Series C
Preferred Stock held at a 5 shares of Common Stock to 1 share of Preferred Stock
conversion rate.

(10)  Includes  exercisable  options to purchase  up to 50,000  shares of Common
Stock at $0.10 per share, awarded in December 1999 to Directors: Guilford, Rose,
Giabbai and Feigley.

(11)  Includes  exercisable  options to purchase up to 150,000  shares of Common
Stock at $0.10 per share, awarded in December 1999.


Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

     Pursuant to a Loan Agreement,  dated March 9, 1995 (the "Loan  Agreement"),
by and among the Company,  Messrs. Richard D. Bennett,  Robert J. Nagy (a former
officer) and Patrick H. Cooper (a former director) (the "Pledgors"),  and H. E.
Igoe,  Jr.  ("Igoe"),  Igoe  agreed to lend to the Company up to $300,000 in two
installments of $150,000 each  (collectively,  the "Loan  Principal").  To date,
150,000  shares of common  stock have been issued to Igoe's  designee  under the
Loan  Agreement.  On January 15, 1996,  $100,000 was paid to Igoe's designee and
the agreement was modified and the due date on the remaining balance of $200,000
was  extended to January 15,  1997.  The note  agreement  contains a  conversion

                                       62
<PAGE>

option  which  allows the  stockholder/lender  to convert  the note to shares of
common  stock at a conversion  price of $1.50 per share.  Igoe  released  95,340
shares of Company  common  stock  pledged by Richard D. Bennett  and 141,133 of
shares of Company  common stock pledged by Patrick H. Cooper,  which resulted in
226,020 of shares of Company common stock pledged by the Pledgors.

     On July 11,  1995 the Company  entered  into an  agreement  with The United
States Company  ("USC") for USC to provide  management  services to the Company.
The agreement  provided for monthly  expense fees of $15,000 and for warrants to
purchase up to 600,000  shares of the Company's  stock at a price of $2.0625 per
share.  The  warrants,  which  are  unregistered,  vested  based on  performance
standards  and  time.   During  the  year  ended  December  31,  1995,   300,000
unregistered  warrants were issued under this  agreement.  During 1996,  300,000
additional warrants were issued under this agreement.

     On December 24, 1996,  the  Company,  USC and each of Messrs. Guilford and
Giabbai and Ms. Rose (with such individuals  being  collectively  referred to as
the "USC  Principals")  entered into an agreement (the "Memorandum  Agreement")
pursuant to which certain  outstanding  indebtedness  owed to USC by the Company
and all other expense  reimbursements  and compensation which may have been owed
by the Company at that date to any of USC or the USC Principals, was settled and
paid with the delivery by the Company of two promissory  notes (the "New Notes")
in the aggregate principal of $171,000, which New Notes were made payable by the
Company to USC. The  principal  of the New Notes was to be paid as follows:  (i)
out of the  proceeds  of  certain  mortgage  loans  held by the  Company  (which
resulted from the Company's sale of certain real  property),  with the resulting
note  bearing  interest  at 8.75% per  annum;  and (ii)  $136,000  being due and
payable in 60 equal monthly  installments  of $2,629.26  (including 6% per annum
interest),  with  the  final  payment  to be made on  December  15,  2001,  with
principal  payments  to USC only made to the extent  that the  Company  receives
interest  payments  under a  specified  second  mortgage  held by the Company on
property owned by a non-affiliate of the Company.

     Any  unpaid  principal  due under the New Notes is  payable  out of the net
proceeds of a public or private securities  offering by the Company which exceed
$1,000,000.

     Repayment of the New Notes was secured under a security  agreement granting
to USC (i) a security  interest in the Company's rights under the $600,000 Trico
Note  delivered to the Company  upon its sale of the Trico  Business on July 26,
1996; and (ii) all of the Company's rights under a pledge agreement,  dated July
26,  1996,  between  Andrew  Gillette  and the  Company,  pursuant  to which Mr.
Gillette  pledged to the  Company  all of his  interest  in the Trico  shares he
acquired from the Company in connection with his purchase of the Trico business.
As part of the  Memorandum  Agreement,  the  Company  also issued to USC 125,000
unregistered shares of its Common Stock (the"Exchange Shares").

                                       63
<PAGE>

     As a result  of the  Memorandum  Agreement,  all  outstanding  or  unissued
warrants, options or other rights for the issuance of Company shares held by USC
or the USC principals were terminated and released, and the Company, USC and the
USC principals extended mutual releases of all existing and potential claims and
liabilities one against the other, related to that certain agreement, dated July
11,  1995,  between USC and the Company (see  above).  The Exchange  Shares were
subject  to limited  demand and  piggyback  registration  rights  granted by the
Company.

     The United  States  Company,  had  outstanding  notes due from the  Company
bearing  principal  of $208,727  and  $221,000  in 1997 and 1996,  respectively.
During 1998,  $207,296 (93 %) of debt to the United States Company was converted
to 111,648 shares of Series B Preferred Stock. Richard H. Guilford,  Chairman of
the Board of the Company, Maurizio F. Giabbai, Ph.D., a Director of the Company,
and Elsie L. Rose, CPA, the Treasurer of the Company, are Principals in USC.

     Shakespeare  Partners,  LTD, whose general  partner is a stockholder of the
Company,  had  outstanding  notes due from the Company  amounting  to  $250,000,
$287,685 and $195,000 at December 31, 1998, 1997 and 1996, respectively.  During
1998,  approximately $149,700 of outstanding debt was converted to 74,878 shares
of Series C Preferred Stock.

     In December  1998 the Company  entered into an agreement  with  Shakespeare
Partners,  LTD and its  General  Partner  to sell  the  Company's  secured  note
receivable  from  Trico  Incorporated,  received  upon  the  sale  of the  Trico
business,  bearing outstanding  principal of $364,427,  to the General Partner's
retirement  plan  for  $260,000.  This  resulted  in a loss  to the  Company  of
$104,427, which was recorded in December 1998.

     The  President and CEO  converted to equity 100% of his  outstanding  notes
during  1998.  Approximately  $17,700 was  converted to 8,835 shares of Series B
Preferred Stock.

     Pursuant to an agreement,  dated February 4, 1999, Azimuth agreed to engage
Patrick Cooper as an  independent  contractor to provide  asbestos  analysis and
other consulting  services.  The services are provided at rates specified in the
Agreement  (generally  50% of the  rate  charged  to  Azimuth  clients  for work
performed  by Mr.  Cooper),  with  the  term of the  agreement  being  initially
one-year,  subject to successive  one-year renewal periods;  provided,  that the
agreement may be terminated by either party on 30 days notice.

                                       64
<PAGE>

     On November 23, 1999, the Board of Directors who were recipients of options
to acquire an aggregate of 700,000  shares of Company Stock at an exercise price
of $0.10 per  share,  agreed to  terminate  all such  options  (the  "Terminated
Option").  On December 30, 1999 the Board of  Directors  awarded  stock  options
outside of the Plan to the Board of  Directors  and CEO to purchase an aggregate
of 350,000 shares. All of such options provide for an exercise price of $.10 per
share (the "New Options"),  all are exercisable at the grant date and all expire
on December 29, 2004. The exercise price applicable under such outstanding stock
options  represents 100% of the fair market value of the underlying common stock
as of the date that such options were  granted,  as  determined  by the Board of
Directors of the Company on the date that such options were granted.  All of the
Terminated Options and the New Options were granted by the Board of Directors to
the  recipients in lieu of directors fees and other  monetary  compensation,  in
order to  maintain  the  continued  service of the  recipients  on behalf of the
Company. All references to stockholdings give effect to all prior stock splits.


                                       65
<PAGE>

ITEM 13.   EXHIBITS, LIST AND REPORTS ON FORM 8-K
-------------------------------------------------

 (a) The following exhibits are filed along with this Report on Form 10-KSB:

Number  Description of Exhibit
------  ----------------------

  3.1   Amended and Restated Certificate of Incorporation of Registrant ........
  3.2   Amended and Restated By-laws of Registrant .............................
  3.3   Certificate of  Designation  of Series A, B, and C Preferred  Stock of
        Envirometrics, Inc.
  4.2   1993 Stock Option Plan, including form of Stock Option Agreement. (1.)
  4.3   Warrant Amendment Extension dated April 15, 1999.
  10.1  Share Purchase Agreement dated October 17, 1991 between the Registrant
        and J.  Buck  Dowdy  holder  of all  outstanding  stock  of  Optichem,
        rightful owner of the ACT Card technology.
  10.2  March 26, 1992 Agreement between  Registrant and Computer Control
        Corporation regarding the development of electronic card readers.
  10.3  Employment, Non-Disclosure and Non-Competition Agreement between
        Registrant and Richard Bennett, effective October 1, 1993. (1.)
  10.4  Certifications of accreditation from American Industrial Hygiene
        Association and State of New York Department of Health in respect of
        of Registrant's Azimuth Laboratory. (1.)
  10.5  Master  Distributorship  Agreement, dated as of  January 1,  1996 by and
        between Envirometrics Products Company and Zellweger Analytics, Inc.
  10.6  Office Lease at 4055 Faber Place dated January 17,  1996  between  Trico
        Envirometrics, Inc. (a wholly owned subsidiary of Registrant) and LPC of
        SC, Inc.
  10.7  Lease Amendment dated April 9, 1996 by and between the Registrant and
        Reba H. Wilkinson for research facility in NC.
  10.8  Master Factoring Agreement dated May 3, 1996 by and between Registrant,
        it's subsidiaries and Reservoir Capital Corporation
  10.9  Employment,  Royalty and  Non-Disclosure  Agreement between  Registrant
        and Cameron Stephens, chemist responsible for the ACT Card.
  10.10 Employment, Royalty and Non-Disclosure  Agreement between Registrant and
        Tom Wilkie, chemist responsible for the ACT Card.
  10.11 Amendment to the March 26,1992 Agreement between Registrant and Computer
        Control Corporation dated June 18, 1996.

                                       66
<PAGE>

  10.12 Stock Purchase Agreement for Trico Envirometics, Inc. dated July 26,
        1996 between Registrant, Andrew C. Gillette and Trico Envirometics, Inc.
  10.13 Unconditional Guaranty Agreement dated July 26, 1996 between Registrant,
        Andrew C. Gillette and Deborah B. Gillette in favor of Registrant.
  10.14 Security  Agreement dated  July 26, 1996  between  Registrant and  Trico
        Envirometrics, Inc.
  10.15 Pledge  Agreement dated July 26, 1996 between  Registrant  and Andrew C.
        Gillette.
  10.16 $600,000 Promissory Note for the repurchase of Trico Envirometrics, Inc.
        dated July 26, 1996.
  10.17 Sublease of Suite  102  at  4055  Faber  Place  by   Registrant,   Trico
        Envirometrics, Inc.("Sublessee") and LPC of SC, Inc.(a subsidiary of The
        Liberty Corporation).
  10.18 Lease Agreement dated August  8,  1996  between  Envirometrics  Products
        Company (wholly owned subsidiary of Registrant) and Nicholas and Thalia
        Pavlatos.
  10.19 Commercial Real Estate Sales Agreement  between the Registrant and James
        W. Miller, M.D. dated October 7, 1996, regarding 9229 University Blvd.
  10.20 Commercial Real Estate Sales Agreement  between the Registrant and James
        W. Miller, M.D. dated October 7, 1996, regarding 1019 Bankton Dr.
  10.21 Lease Expiration Amendment dated November 13, 1996 by and between
        Azimuth, Inc.(wholly owned  subsidiary of the  Registrant) and Centoff
        Realty Co., Inc.
  10.22 Lease Agreement dated November 19, 1996 between Envirometrics  Products
        Company (wholly owned  subsidiary of Registrant) and Nicholas and Thalia
        Pavlatos.
  10.23 Lease Agreement dated  December 17, 1996 by and between  Registrant  and
        James W. Miller, M.D.  for  the  Corporate  Facitlity  located  at  9229
        University Blvd.
  10.24 Title to Real Estate from the Registrant to James W. Miller dated
        December 19, 1996, for Charleston County property.
  10.27 Title to Real Estate from the  Registrant to James W. Miller dated
        December 19, 1996, for Berkeley County property.
  10.28 Memorandum of Lease between  Registrant and its subsidiaries dated
        December 19, 1996.
  10.29 Tenant's Estoppel Certificate  from  Registrant,   in  favor  of  Beard
        Development Corporation dated December 19, 1996.
  10.30 Subordination Agreement by and between Registrant and Beard  Development
        Corporation, dated December 19, 1996, for Charleston County.
  10.31 Promissory  Note from James W. Miller to Registrant dated  December  19,
        1996, in the amount of $230,000.

                                       67
<PAGE>

  10.32 Mortgage and Security Agreement from James W. Miller to Registrant,
        dated December 19, 1996 for Berkeley County.
  10.33 Mortgage and Security Agreement from James W. Miller to Registrant,
        dated December 19, 1996 for Charleston County.
  10.34 Assignment of Leases and Guaranties from James W.  Miller to  Registrant
        dated December 19, 1996 for Berkeley County.
  10.35 Assignment of Leases and Guaranties from James W.  Miller to  Registrant
        dated December 19, 1996 for Charleston County.
  10.36 Closing Statement for Seller and Buyer dated December 19, 1996.
  10.37 Collateral  Assignment of  Proceeds for the James W.  Miller,  M.D. Real
        Estate Promissory Note by and between the Registrant and certain secured
        parties dated December 20, 1996.
  10.38 Employment Agreement for Richard  Bennett after resignation as President
        and CEO.
  10.39 Sublease of Suite 210 at  4055  Faber  Place  dated  March  18,  1997 by
        Registrant,Chase Mortagage Brokers, Inc.("Sublessee")and LPC of SC, Inc.
  10.40 Asset Purchase Agreement dated April 28, 1997  between  Registrant  and
        Multi-Metrics, Inc.
  10.41 Amendment to Master Factoring Agreement dated May 14, 1997 by and be-
        tween Registrant, its subsidiaries and Reservoir Capital Corporation.
  10.42 Agreement and Mutual Release of Claims between Registrant  and Thomas A.
        Wilkie and Cameron R. Stephens.
  10.43 Asset Purchase Agreement dated November 14, 1997 between  Registrant and
        Zellweger Analytics, Inc.
  10.44 Mutual Settlement and Release dated November 14, 1997 between Registrant
        and Zellweger Analytics, Inc.
  10.45 Preferred Stock Subscription and Conversion  Agreement  and  Investment
        Representations dated November 14, 1997 by Zellweger Analytics, Inc.
  10.46 Agreement by J. Buck Dowdy to settle due and unpaid royalties of $47,723
        under the October 17, 1991 Share Purchase Agreement for Common Stock.
  10.47 Collateral  Assignment of  Proceeds for the  Trico  Envirometrics,  Inc.
        Promissory Note by and between the Registrant and certain secured
        parties dated January 1, 1997.
  10.48 Promissory Note for Precision Southeast, Inc. in the amount of
        $275,958.27 dated January 23, 1997.
  10.49 Promissory Note and Security Agreement for Shakespeare Partners, L.P. in
        the amount of $50,000.
  10.50 Letter of Settlement between Registrant and Reservoir Capital Corpora-
        tion dated December 2, 1999.
  10.51 Letter from LeClair Ryan in settlement of $25,200 of legal fees for
        Common Stock of the Registrant.

                                       68
<PAGE>

  10.52 Mutual  Settlement  and Release  between Registrant and Computer Control
        Corporation dated April 9, 1998.
  10.53 Preferred  Stock  Agreement between Registrant and Ten State Street, LLP
        dated June 30, 1998.
  10.54 Preferred Stock Agreement between Registrant and The United States
        Company dated June 30, 1998.
  10.55 Preferred Stock Agreement between Registrant and Precision Southeast,
        Inc. dated June 30, 1998.
  10.56 Preferred Stock  Agreement between Registrant and Shakespeare Partners,
        L.P. dated June 30, 1998.
  10.57 Preferred Stock Agreement between Registrant and Walter H. Elliott,  III
        dated June 30, 1998.
  10.58 Letter  to Gast  Manufacturing, Inc. in settlement  of a  trade  payable
        equaling $21,856 for Common Stock of the Registrant.
  10.59 Preferred Stock Agreement between  Registrant  and Elsie L.  Rose  dated
        January 1, 1999
  10.60 Promissory  Note from the  Registrant to Shakespeare Partners LLP in the
        principal amount of $20,000.
  10.61 Assignment of Trico Note to Salomon Smith Barney for the benefit of H.E.
        Igoe.
  10.62 PHT Services, LTD. Strategic Alliance Agreement with Azimuth, Inc. dated
        September 4, 1998.
  10.63 Amendment to Lease Agreement  dated  January  18,  1999  by and  between
        Registrant and James W. Miller, M.D. for the Corporate Facility located
        at 9229 University Blvd.
  10.64 Payoff  Letter Re: Promissory  Note and Mortgage from James W. Miller to
        Registrant
  10.65 Consulting Agreement  by and between Azimuth, Inc. and Patrick H. Cooper
        dated February 4, 1999.
  10.66 Memorandum of Agreement and Mutual Release by and between Registrant and
        The United States Company dated December 24, 1996.


Item 21 - Subsidiaries of Registrant.

     (1) Incorporated by reference, filed as an Exhibit to Report on Form 10-KSB
for 1995, filed on March 25, 1996, (SEC File No. 0-23892).

                                       69
<PAGE>

     (b) No reports were filed on Form 8-K during 1996, 1997 or 1998 except the
following: January 12, 1996;  August 15, 1996;  November 5, 1996;  November 6,
1996; December 3, 1996 and December 5, 1996.

                                       70

<PAGE>

     SIGNATURES In accordance  with Section 13 or 15(d) of the Exchange Act, the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

Dated: January 28, 2000

                              ENVIROMETRICS, INC.

                          BY: S/WALTER H. ELLIOTT, III

                        Walter H. Elliott, III, President

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

SIGNATURES                             TITLE                       DATE
 s/Richard H. Guilford

------------------------  Chairman of the Board               January 28, 2000
Richard H. Guilford

 s/Walter H. Elliott, III
                          Director, President, Chief
------------------------  Executive Officer                   January 28, 2000
Walter H. Elliott, III

 s/Elsie L. Rose
                          Treasurer, Chief Accounting Officer
------------------------  & Acting Chief Financial Officer    January 28, 2000
Elsie L. Rose

 s/Charles E. Feigley

------------------------  Director                            January 28, 2000
Charles E. Feigley

 s/Maurizio F. Giabbai

------------------------  Director                            January 28, 2000
Maurizio F. Giabbai

                                       71
<PAGE>


EXHIBIT 21 SUBSIDIARIES OF ENVIROMETRICS, INC.
----------------------------------------------

     1.   Azimuth, Incorporated
                                       72