UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB

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

                  For the Fiscal Year Ended: September 30, 2005

                        Commission File Number: 000-32249


                     ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
           -----------------------------------------------------------
           (Name of small business issuer as specified in its charter)

           Florida                                   98-0222013
 --------------------------------                -------------------
 (State or other jurisdiction of                  (I.R.S. Employer
  incorporation or organization)                 Identification No.)

                         3233 Grand Avenue, Suite N-353
                       Chino Hills, California 91709-1489
          -------------------------------------------------------------
          (Address and telephone number of principal executive offices)

                                 (909) 623-2502
                           ---------------------------
                           (Issuer's telephone number)

          -------------------------------------------------------------
          (Former name or former address, if changed since last report)


                         Joseph I. Emas, Attorney at Law
                          `   1224 Washington Avenue
                           Miami Beach, Florida 33139
                             Telephone: 305.531.1174
            ---------------------------------------------------------
            (Name, address and telephone number of agent for service)

         Securities Registered Under Section 12(b) of the Exchange Act:

                                      None

         Securities Registered Under Section 12(g) of the Exchange Act:

                              Common Stock, $0.001

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation SB 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  10KSB or any
amendment to this Form 10KSB. |X|

State issuer's revenues for its most recent fiscal year: $6,225,000

Indicate if the  registrant  is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes |_| No |X|

The aggregate  market value of the issuer's common stock held by  non-affiliates
of the registrant as of December 27, 2005 was approximately $822,000. Solely for
purposes  of  the  foregoing  calculation,  all of the  issuer's  directors  and
officers are deemed to be affiliates.

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares  outstanding of the issuer's Common Stock,  par value $.001
per share (the "Common Stock"), as of December 27, 2005, was 33,630,840.

Transitional Small Business Disclosure Format:

Yes|_| No |X|

<PAGE>

                     ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
                              Report on Form 10-KSB
                  For the Fiscal Year Ended September 30, 2005

                                TABLE OF CONTENTS

                                                                            Page
                                     PART I

Item 1.   Description of Business..........................................    1

Item 2.   Description of Property..........................................   10

Item 3.   Legal Proceedings................................................   11

Item 4.   Submission of Matters to Vote of Security Holders................   12

                                     PART II

Item 5.   Market for Common Equity, Related Stockholder Matters
          and Small Business Issuer Purchases of Equity Securities.........   13

Item 6.   Management's Discussion and Analysis or Plan of Operation........   15

Item 7.   Financial Statements.............................................   22

Item 8.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure.........................................   23

Item 8A.  Controls and Procedures..........................................   23

Item 8B.  Other Information................................................   23

                                    PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
          Compliance with Section 16(a) of the Exchange Act................   24

Item 10.  Executive Compensation...........................................   26

Item 11.  Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters..................................   28

Item 12.  Certain Relationships and Related Transactions...................   30

Item 13.  Exhibits.........................................................   31

Item 14   Principal Accountant Fees and Services...........................   35

Signatures ................................................................   36

<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

FORWARD-LOOKING STATEMENTS

This  Annual  Report  on  Form  10-KSB  contains,   in  addition  to  historical
information,   forward-looking   statements   regarding   Entech   Environmental
Technologies,  Inc. (the "Company" or "Entech"),  which  represent the Company's
expectations or beliefs including, but not limited to, statements concerning the
Company's operations, performance, financial condition, business strategies, and
other  information and that involve  substantial  risks and  uncertainties.  The
Company's  actual results of operations,  some of which are beyond the Company's
control, could differ materially.  For this purpose, any statements contained in
this  Report  that are not  statements  of  historical  fact may be deemed to be
forward-looking  statements.  Without  limiting the generality of the foregoing,
words  such as  "may,"  "will,"  "expect,"  "believe,"  "anticipate,"  "intend,"
"could,"  "estimate," or "continue" or the negative or other variations  thereof
or comparable terminology are intended to identify  forward-looking  statements.
Factors that could cause or contribute to such differences  include, but are not
limited  to,  history of  operating  losses and  accumulated  deficit;  need for
additional financing;  dependence on future sales of our services;  competition;
dependence  on  management;  risks  related to  proprietary  rights;  government
regulation; and other factors described under "Risk Factors" and throughout this
Annual Report on Form 10-KSB.  Actual results may differ  materially  from those
projected.  These  forward-looking  statements  represent our judgment as of the
date of the filing of this Annual Report on Form 10-KSB.  We disclaim any intent
or obligation to update these forward-looking statements

General Development of Business
-------------------------------

We were  initially  incorporated  in 1998 in Florida as Cyber Public  Relations,
Inc.  for the  purpose of  providing  Internet  electronic  commerce  consulting
services to small and medium size  businesses.  Cyber Public Relations never had
any material operations or revenues.  On January 21, 2004, pursuant to a Capital
Stock Exchange Agreement between the stockholders of Environmental Technologies,
Inc.,  a  Nevada  corporation,   the  Environmental   Technologies  stockholders
transferred all of their shares of the Environmental Technologies stock to Cyber
Public  Relations in exchange for 9,550,000  shares of the common stock of Cyber
Public Relations.

We changed our name to Entech Environmental Technologies, Inc. on March 22, 2004
to more  accurately  reflect the focus of our business.  We provide a variety of
services to  customers  ranging  from large  corporations  to retail  consumers,
through H.B. Covey,  Inc.  ("HBC"),  a 58 year old  construction and maintenance
company that specializes in the installation and maintenance of fueling systems.
Beginning  in  October  2004,  we  expanded  our scope of  services  to  include
installation of major household appliances for major retailers.  We are based in
southern California and currently provide our services primarily in California.

                                       -1-
<PAGE>

As a result of the stock exchange discussed above,  Environmental  Technologies,
Inc.  became a  wholly-owned  subsidiary  of  Cyber  Public  Relations,  and the
Environmental Technologies stockholders acquired 96.81 percent of the issued and
outstanding  shares of the common stock of Cyber Public  Relations.  Immediately
following  the exchange,  Barron  Partners LP acquired  2,000,000  shares of our
common stock and  warrants  for the  purchase of 7,150,000  shares of our common
stock.   However,   on  September  30,  2004,  Barron  Partners  agreed  to  the
cancellation of the warrants for the purchase of 7,150,000  shares of our common
stock.

Our  wholly-owned  subsidiary,   Environmental   Technologies,   Inc.  a  Nevada
corporation  located in Chino  Hills,  California,  was  formerly  known as Parr
Development,  Inc.  which was  incorporated  in 2001.  Before the mergers of its
subsidiaries  described in this section, Parr Development had not engaged in any
operations.  Parr Development  changed its name to  Environmental  Technologies,
Inc. in 2003. We are the result of the combination of several companies:

-  HBC,  a  California  corporation  incorporated  in 1971 but which has been in
   business since 1948, a construction,  diagnostic and maintenance company that
   specializes in the construction  and maintenance of fueling systems,  through
   which we conduct all of our current operations;

-  Christie-Peterson  Development, a California corporation incorporated in 1995
   herein   referred  to  as "CPI"),  a provider of  construction,  repair,  and
   maintenance  services  for petroleum service stations in California,  Nevada,
   and  Arizona,  which  was placed into Chapter 7 bankruptcy  on September  30,
   2004, and is no longer actively engaged in business; and

-  Advanced   Fuel   Filtration   Services,   Inc.,  a  California   corporation
   incorporated   in  1995  (herein  referred  to  as  "AFFS"),  a  provider  of
   comprehensive  environmental management solutions for the petroleum industry,
   with  operations  including fuel and chemical  transportation,  hazardous and
   non-hazardous  waste disposal,  emergency  HAZMAT  response,  and underground
   storage tank cleaning and filtration services,  which was placed into Chapter
   7 bankruptcy  on September  30, 2004,  and is no longer  actively  engaged in
   business.

We also acquired from the stockholders of AFFS all of the issued and outstanding
shares of Advanced Petroleum Transport,  Inc., a California  corporation.  As of
the date of this report,  Advanced  Petroleum  Transport,  Inc. has conducted no
operations.

The mechanics of the combination of the component  companies of Entech initially
occurred with the reverse triangular mergers between each of  Christie-Peterson,
HBC and AFFS with three  subsidiaries  of  Environmental  Technologies.  In each
case, the  stockholders of  Christie-Peterson,  HBC and AFFS existing before the
mergers  received  shares of the common stock of  Environmental  Technologies in
exchange for all of their shares in the merged companies.  Following the reverse
triangular   mergers,   Environmental   Technologies   had   four   wholly-owned
subsidiaries,  Christie-Peterson,  HBC, AFFS, and Advanced Petroleum  Transport,
Inc.

On December 9, 2005, we acquired all the assets and the right to use the name of
Pacific Coast Testing, a California corporation, at a price of $125,000, $75,000
payable at closing, the remainder payable over a twelve month period, subject to
certain offsets.

                                       -2-
<PAGE>

GENERAL

H.B.  COVEY,  INC.  Our  HBC  subsidiary  is  a 58  year  old  construction  and
maintenance  company that specializes in construction  and maintenance  services
for the retail petroleum  industry,  commercial and industrial users,  municipal
organizations, and in support of major equipment manufacturers. HBC expanded its
scope of services to include  installation  of major  household  appliances  for
major retailers in October 2004.

HBC's business is western  states  oriented with the heaviest  concentration  of
infrastructure  located in California.  On occasion, we will provide services in
various other states in order to provide a "one stop" support capacity to a core
customer or to take advantage of a target opportunity. The industry, as a whole,
is fueled by a constant barrage of environmental  regulations  which continue to
evolve and become  increasingly  restrictive.  Traditionally,  HBC has  targeted
select  opportunities within these sectors that support the core competencies of
its work force. Examples of these skill sets include:

   o  Complete fuel system installations and upgrades;

   o  Installation of monitoring and point of sale equipment;

   o  Alternative fueling systems including CNG and LNG;

   o  Installation and removal of hoists,  clarifiers,  and underground  storage
      tanks;

   o  Installation of soil and groundwater remediation equipment;

   o  Complete  maintenance  and support of all major  equipment and electronics
      supported by a 24 hour per day maintenance dispatch center; and

   o  Installation of major household appliances  including;  hot water heaters,
      water softeners, garbage disposals, garage door openers, etc.

CLIENT  BASE.  HBC  management  has  categorized  its  customer  base  into  six
categories  in  order  to  efficiently   develop,   maintain  and  maximize  our
opportunities.  A focused  approach and  determination  of viability is made for
each  potential  customer.  Our ideal  client  spends in excess of $5 million in
capital and maintenance  each year. It should have  centralized  decision-making
structure  and its  payment  terms must be timely.  It is our goal to retain our
"relationship  based"  clients  and  maximize  the amount of  opportunities  and
activities with those clients.  Each category has differences in target services
and expectation of potential  revenue.  The categories are guidelines and should
not be considered exclusive of any opportunity not listed.

     Category I - Major Oil and Retail  Companies.  These companies sell fuel as
their primary retail strategy;  have budgeted  capital  expenditures on a yearly
basis;  have in excess of 250 locations and complementary  geographic  coverage;
engage in yearly maintenance contracts; and rely heavily on contracted services.
These companies include BP, Exxon Mobil  Corporation,  Chevron,  Shell,  Valero,
Wal-Mart (Sam's Club), Sears, and Kroger.

                                       -3-
<PAGE>

     Category II - Large  Independent  and Regional  Operators.  Generally these
companies  are similar to the Category I list,  however,  they are smaller (less
than  250  stations)  and  more  regionally   located.   They  have  centralized
decision-making  structure and have a significant  requirement for our services.
These companies  include USA Petroleum,  Pilot  Corporation,  Giant  Industries,
Travel  Centers of America,  Tower Energy,  United Oil, Quick Stop Markets Inc.,
Nella Oil, and Jayco.

     Category III -  Industrial/Commercial.  The  industrial/commercial  clients
view their fueling  operations as "a necessary  evil." They do not sell fuel but
rather install and maintain  fueling systems to facilitate their primary revenue
generating  functions.  They  typically lack  knowledgeable  personnel to manage
their  fuel  dispensing  activities  and  rely  heavily  on  relationships  with
consultants and contractors. This group represents a significant opportunity for
relationship  building and complete  package  sales.  This group  includes Ryder
Corporation,  Hertz  Corporation,  UPS,  Overnight  Transport,  Yellow  Freight,
Roadway, Penske Leasing, Sempra Energy, and Consolidated Freight.

     Category IV - Municipal  Organizations.  These  potential  clients  operate
large fleets of vehicles that utilize both traditional and alternate fuel power.
Although  bidding  opportunities  are commonly open to the public,  we have been
able  to  foster  longstanding   relationships  and  extended  contracts.  These
opportunities  typically  require  bid  and  performance  bonds.  The  size  and
complexity   of  the  bid   offerings   coupled  with  the   documentation   and
capitalization  requirements create a barrier of entrance that is often daunting
to our competition.  Along with upgrades to traditional fueling systems mandated
by legislation these customers are aggressively converting fleets to alternative
fuel sources and taking advantage of substantial  incentives and grant programs.
This group includes the City of Los Angeles,  the United States Postal  Service,
and the California Highway Patrol.

     Category V - Original Equipment  Manufacturers and Distributors.  HBC is an
authorized  service  company for the  majority of the fueling  equipment  in use
today. We derive value from our ability to provide  maintenance  services during
the start up of the original  equipment,  in the performance of preventative and
warranty  services,  and  engaging  in time  and  material  contracts  with  our
customers,  the OEM's, and the  distributors.  The fueling equipment that HBC is
authorized to service includes, but is not limited to, equipment manufactured by
Tokheim Corporation,  Gilbarco,  Dresser Wayne, Gas Boy, Veeder Root, API Ronan,
Allied, EBW, FE Petro, EMCO,  Hasstek,  Healy, Incon, Red Jacket, Ruby Verifone,
SSI Blue Line, and CNG.

     Category VI - Targets of Opportunity.  These clients are small  independent
operators. They offer one-time opportunities and on-going maintenance contracts.
They are typically high maintenance requiring frequent communication with senior
management.  There  is  limited  opportunity  for  repeat  business  and  we are
constantly wary of  under-capitalization  issues that often lead to disputes. We
are very selective in our analysis of these  opportunities  and typically  quote
work  with  higher  contingency  percentages  to  offset  our  exposure  to  the
aforementioned risks.

                                       -4-
<PAGE>

FUTURE AND ON-GOING OPPORTUNITIES.  Management has observed that the industry as
a whole has undergone an intense period of change. Retail petroleum divisions of
oil companies are redefining  themselves as "retailers" as opposed to operators.
More  emphasis,  we believe,  is being placed on  profitability  facilitated  by
reductions in operating  costs.  The market is in a period of  contraction  with
mergers and  acquisitions  occurring in hopes of creating higher margins through
enhanced  efficiencies and reduced  competition.  Non-traditional fuel retailers
(Costco, Sam's Club, K-Mart,  Wal-Mart, etc.) are focusing on customer retention
by offering expanded services including fueling operations at their existing and
new facilities.

Independent of the ongoing corporate shuffling,  various oversight agencies have
imposed  restrictive  compliance  deadlines  and  created  effective  methods to
monitor compliance.  Legislation continues to provide substantial incentives and
judicial mandates for operators to convert fleets to clean burning fuel sources.
These directives have provided HBC numerous  opportunities to service  customers
in all categories.

HBC is currently involved in major oil capital rollout programs designed to meet
deadlines  set by the  California  Air Recourse  Board,  South Coast Air Quality
Management District,  and Regional Water Quality Control Boards. The most urgent
programs  have  various  compliance  deadlines  ranging  from  December 31, 2002
through  December  31,  2008.  Levels of  compliance  vary  through  the various
categories.  However,  we estimate that the industry as a whole is 60 percent to
70 percent  compliant.  All fuel  system  operators  will be forced to  allocate
larger  portions of their capital budgets to regulatory  compliance.  Additional
funds will be allocated to programs focused on image improvement, new technology
implementation, and installation of alternative fueling systems.

We  anticipate  that retail  companies  will have an  increased  expectation  of
service to develop  sophisticated  metrics to measure  performance.  It is hoped
that these metrics and our commitment to service and operational excellence will
differentiate  us from our  competitors  and  allow  us  continued  growth.  The
technology utilized in today's fueling systems has become relatively  high-tech.
HBC continues to train its employees  and study  regulations  to provide a value
added approach in its sales effort.

HBC management  anticipates a robust, sellers market, for the foreseeable future
(one to three  years).  Sales in all  categories  will be  fueled  primarily  by
opportunities  mandated by regulatory  compliance.  We will align ourselves with
select  partners  (i.e.,  testing  companies and  environmental  consultants) to
maximize referral business. Although opportunities are expected to be plentiful,
the group  will be  limited  by our  ability  to employ a  well-trained,  highly
competent,   work  force.  Additional  challenges  will  come  in  the  form  of
capitalization  and  financial   stability.   Competition  to  retain  qualified
management and skilled craftsmen will be intense.  The most successful companies
will be those that are diverse enough to endure unpredictable capital cycles and
provide robust employment packages to its employees.

CORPORATE OFFICES

The mailing  address of our  principal  executive  office is 3233 Grand  Avenue,
Suite N-353,  Chino  Hills,  California  91709.  Our  telephone  number is (909)
623-2502  and  our  fax  number  is  (909)  865-1244.   Our  e-mail  address  is
entech@onebox.com. Our operational offices are located in Chino, California.

                                       -5-
<PAGE>

EMPLOYEES

We currently employ 16 petroleum service  technicians and support personnel,  11
consumer services technicians and support personnel, 10 construction and support
personnel,  and 5 management and administrative  employees.  As we grow, we will
need to attract an unknown number of additional qualified employees. Although we
have  experienced  no work  stoppages  and  believe our  relationships  with our
employees are good,  we could be  unsuccessful  in attracting  and retaining the
persons  needed.  None of our  employees are  currently  represented  by a labor
union.  Considered one of the fastest  growing areas in the United  States,  the
Inland Empire area of southern California,  where we are located, is expected to
provide a ready source of available labor to support our growth.

RISK FACTORS

THIS ANNUAL REPORT ON FORM 10-KSB INCLUDES FORWARD-LOOKING  STATEMENTS ABOUT OUR
BUSINESS AND RESULTS OF OPERATIONS THAT ARE SUBJECT TO RISKS AND  UNCERTAINTIES.
SEE  "FORWARD-LOOKING  STATEMENTS" ABOVE. FACTORS THAT COULD CAUSE OR CONTRIBUTE
TO SUCH  DIFFERENCES  INCLUDE  THOSE  DISCUSSED  BELOW.  IN ADDITION TO THE RISK
FACTORS   DISCUSSED   BELOW,  WE  ARE  ALSO  SUBJECT  TO  ADDITIONAL  RISKS  AND
UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL. IF
ANY OF THESE  KNOWN  OR  UNKNOWN  RISKS OR  UNCERTAINTIES  ACTUALLY  OCCUR,  OUR
BUSINESS COULD BE HARMED SUBSTANTIALLY.

WE ARE NOT LIKELY TO SUCCEED UNLESS WE CAN OVERCOME THE MANY OBSTACLES WE FACE.

As an investor, you should be aware of the difficulties,  delays and expenses we
encounter, many of which are beyond our control,  including unanticipated market
trends,  employment  costs, and  administrative  expenses.  We cannot assure our
investors  that our  proposed  business  plans as  described in this report will
materialize  or  prove  successful,  or that we  will  ever be able to  finalize
development  of our  products or services  or operate  profitably.  If we cannot
operate profitably,  you could lose your entire investment in our securities. As
a  result  of the  nature  of our  business,  initially  we  expect  to  sustain
substantial operating expenses without generating significant revenues.

OUR AUDITORS HAVE STATED WE MAY NOT BE ABLE TO STAY IN BUSINESS.

Our  auditors  have issued a going  concern  opinion,  which means that there is
doubt that we can continue as an ongoing business for the next 12 months. Unless
we can raise  additional  capital,  we may not be able to achieve our objectives
and may have to suspend or cease operations.  See  "Management's  Discussion and
Analysis of Financial Condition and Results of Operations."

                                       -6-
<PAGE>

WE HAVE NOT ACHIEVED  PROFITABLE  OPERATIONS,  WE HAVE A HISTORY OF LOSSES AND A
LARGE  ACCUMULATED  DEFICIT AND WE EXPECT FUTURE LOSSES THAT MAY CAUSE OUR STOCK
PRICE TO DECLINE.

We incurred net losses of approximately  $1.2 million in fiscal year 2005, $28.9
million in fiscal  year 2004,  $457,000 in fiscal year 2003.  Our  expenses  are
currently greater than our revenues.  Our ability to operate  profitably depends
on generating  sales and achieving  sufficient  gross profit margins.  We cannot
assure you that we will achieve or maintain profitable operations in the future.

We may  continue to incur losses as we spend  additional  capital to develop and
market our services and establish our infrastructure and organization to support
anticipated  operations.  We  cannot  be  certain  whether  we will  ever earn a
significant  amount of revenues or profit, or, if we do, that we will be able to
continue earning such revenues or profit.  Also, the current  economic  weakness
may limit our  ability  to  develop  and  ultimately  market  our  products  and
services. Any of these factors could cause our stock price to decline and result
in you losing a portion or all of your investment in our securities.

INTENSE  COMPETITION IN THE CONSTRUCTION  AND MAINTENANCE  INDUSTRY COULD REDUCE
OUR MARKET SHARE AND PROFITS.

We serve  markets  that are highly  competitive  and in which a large  number of
local and  regional  companies  compete.  In  particular,  the  engineering  and
construction  markets are highly competitive and require  substantial  resources
and  capital  investment  in  equipment,   technology,  and  skilled  personnel.
Competition  also places  downward  pressure on our  contract  prices and profit
margins.   Intense  competition  is  expected  to  continue  in  these  markets,
presenting  us with  significant  challenges  to our  ability to achieve  strong
growth  rates and  acceptable  profit  margins.  If we are  unable to meet these
competitive  challenges,  we could  lose  market  share to our  competitors  and
experience an overall reduction in our profits.

OUR ACQUISITION STRATEGY INVOLVES A NUMBER OF RISKS.

We intend to pursue growth through the opportunistic acquisition of companies or
assets  that  will  enable  us to  expand  our  service  lines to  provide  more
cost-effective  customer solutions.  We routinely review potential acquisitions.
This strategy involves certain risks,  including difficulties in the integration
of operations  and systems,  the diversion of our  management's  attention  from
other  business  concerns,  and the potential  loss of key employees of acquired
companies. We may not be able to successfully acquire, and/or integrate acquired
businesses into our operations.

OUR PROJECTS EXPOSE US TO POTENTIAL PROFESSIONAL  LIABILITY,  PRODUCT LIABILITY,
OR WARRANTY OR OTHER CLAIMS.

We construct and maintain large fueling station and storage  facilities in which
system failure could be disastrous.  Notwithstanding  the fact that we generally
will not  accept  liability  for  consequential  damages in our  contracts,  any
catastrophic  occurrence  in excess of  insurance  limits at projects  where our
services  are  performed  could result in  significant  warranty or other claims
against us. Such  liabilities  could  potentially  exceed our current  insurance
coverage and the fees we derive from those  services.  A partially or completely
uninsured claim, if successful and of a significant magnitude, could potentially
result in substantial losses.

                                       -7-
<PAGE>

WE ARE EXPOSED TO POTENTIAL ENVIRONMENTAL LIABILITIES.

We  are  subject  to  environmental   laws  and  regulations,   including  those
concerning:

   -  Emissions into the atmosphere;

   -  Discharge into soil and ground water;

   -  Handling and disposal of waste materials; and

   -  Health and safety.

Our  business  often  involves  working  around  and with  volatile,  toxic  and
hazardous  substances  and  other  highly  regulated  materials,   the  improper
characterization,  handling or disposal of which could constitute  violations of
federal,  state or local  statutes  and laws,  and result in criminal  and civil
liabilities. Environmental laws and regulations generally impose limitations and
standards for certain  pollutants or waste  materials and require us to obtain a
permit and comply with various other requirements.  Governmental authorities may
seek to impose fines and  penalties on us, or revoke or deny issuance or renewal
of  operating   permits,   for  failure  to  comply  with  applicable  laws  and
regulations.

The environmental health and safety laws and regulations to which we are subject
are constantly changing, and it is impossible to predict the effect of such laws
and  regulations  on us in the  future.  We cannot  ensure  that future laws and
regulations will not significantly adversely affect us.

LACK OF INDEPENDENT DIRECTORS.

We  cannot  guarantee  that our  board of  directors  will  have a  majority  of
independent directors in the future. In the absence of a majority of independent
directors,  our  executive  officers  could  establish  policies  and enter into
transactions without independent review and approval thereof. This could present
the  potential  for a conflict  of  interest  between  us and our  stockholders,
generally, and the controlling officers, stockholders or directors.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Our  officers  and  directors  are  required  to  exercise  good  faith and high
integrity in our  management  affairs.  Our articles of  incorporation  provide,
however,  that  our  officers  and  directors  shall  have no  liability  to our
stockholders for losses  sustained or liabilities  incurred which arise from any
transaction in their respective managerial capacities unless they violated their
duty of loyalty, did not act in good faith, engaged in intentional misconduct or
knowingly  violated the law,  approved an improper dividend or stock repurchase,
or derived an improper  benefit  from the  transaction.  Our articles and bylaws
also provide for the indemnification by us of the officers and directors against
any losses or liabilities they may incur as a result of the manner in which they
operate  our  business  or  conduct  the  internal  affairs,  provided  that  in
connection  with these  activities  they act in good faith and in a manner  that
they  reasonably  believe to be in, or not opposed to, our best  interests,  and
their  conduct does not  constitute  gross  negligence,  misconduct or breach of
fiduciary obligations.

                                       -8-
<PAGE>

MANAGEMENT OF POTENTIAL GROWTH.

We may  experience  rapid  growth which will place a  significant  strain on our
managerial,  operational,  and financial systems  resources.  To accommodate our
current size and manage  growth,  we must  continue to implement and improve our
financial strength and our operational systems, and expand, train and manage our
sales  and  distribution  base.  There is no  guarantee  that we will be able to
effectively  manage the  expansion of our  operations,  or that our  facilities,
systems,  procedures  or  controls  will be  adequate  to support  our  expanded
operations.  Our inability to effectively  manage our future growth would have a
material adverse effect on us.

SECURITIES  AND  EXCHANGE   COMMISSION  RULES  CONCERNING  SALES  OF  LOW-PRICED
SECURITIES MAY HINDER RE-SALES OF OUR COMMON STOCK.

Because our common  stock has a market  price that is less than five dollars per
share,  our common stock is not listed on an exchange or quoted on Nasdaq and is
traded on the OTC Bulletin  Board,  our shares are referred to as "penny stocks"
within the  definition  of that term  contained  in Rules  15g-1  through  15g-9
promulgated under the Securities  Exchange Act of 1934, as amended.  These rules
impose sales practices and disclosure requirements on certain broker-dealers who
engage in certain  transactions  involving penny stocks.  These additional sales
practices and disclosure  requirements  could impede the sale of our securities,
including  securities  purchased  herein,  in the secondary  market. In general,
penny  stocks are low  priced  securities  that do not have a very high  trading
volume. Consequently, the price of the stock is volatile and you may not be able
to buy or sell the  stock  when you want.  Accordingly,  the  liquidity  for our
securities may be adversely affected,  with related adverse effects on the price
of our securities.

Under the penny stock  regulations,  a  broker-dealer  selling  penny  stocks to
anyone other than an established customer or "accredited  investor"  (generally,
an  individual  with a net  worth in  excess  of  $1,000,000  or  annual  income
exceeding  $200,000 or  $300,000  together  with his or her spouse)  must make a
special  suitability  determination  for the  purchaser  and  must  receive  the
purchaser's  written  consent to the transaction  prior to the sale,  unless the
broker-dealer is otherwise exempt. In addition,  unless the broker-dealer or the
transaction  is  otherwise  exempt,  the penny  stock  regulations  require  the
broker-dealer  to deliver,  prior to any transaction  involving a penny stock, a
disclosure  schedule prepared by the Securities and Exchange Commission relating
to the penny stock.  A  broker-dealer  is also required to disclose  commissions
payable to the  broker-dealer  and the  Registered  Representative  and  current
quotations for the securities.  A broker-dealer is additionally required to send
monthly statements disclosing recent price information with respect to the penny
stock held in a customer's  account and information  with respect to the limited
market in penny stocks.

                                       -9-
<PAGE>

THERE MAY BE LIMITED  LIQUIDITY IN OUR COMMON STOCK AND ITS PRICE MAY BE SUBJECT
TO FLUCTUATION.

There is only a limited market for our common stock,  which is currently  traded
on the OTC Bulletin  Board. We can provide no assurances that we will be able to
have our common  stock listed on an exchange or quoted on Nasdaq or that it will
continue to be quoted on the OTC Bulletin  Board.  If there is no trading market
for our common  stock,  the market price of our common stock will be  materially
and adversely affected.

TO DATE, WE HAVE NOT PAID ANY CASH  DIVIDENDS AND NO CASH DIVIDENDS WILL BE PAID
IN THE FORESEEABLE FUTURE.

We do  not  anticipate  paying  cash  dividends  on  our  common  shares  in the
foreseeable  future, and we cannot assure an investor that funds will be legally
available to pay dividends or that even if the funds are legally available, that
the dividends will be paid.

VOLATILITY  IN OUR COMMON SHARE PRICE MAY SUBJECT US TO  SECURITIES  LITIGATION,
THEREBY  DIVERTING OUR RESOURCES WHICH MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR
RESULTS OF OPERATIONS.

The  market  for  our  common  shares  is  characterized  by  significant  price
volatility when compared to seasoned issuers, and we expect that our share price
will  continue to be more  volatile  than a seasoned  issuer for the  indefinite
future.  In the past,  plaintiffs have often initiated  securities  class action
litigation against a company following periods of volatility in the market price
of its  securities.  We may in the future be the  target of similar  litigation.
Securities  litigation  could result in substantial  costs and  liabilities  and
could divert management's attention and resources.

THE TRADING  PRICE OF OUR COMMON STOCK MAY  DECREASE  DUE TO FACTORS  BEYOND OUR
CONTROL.

The stock  market  from time to time has  experienced  extreme  price and volume
fluctuations,  which have  particularly  affected the market prices for emerging
growth   companies  and  which  often  have  been  unrelated  to  the  operating
performance  of the  companies.  These broad market  fluctuations  may adversely
affect  the  market  price  of  our  common  stock.  If  our  shareholders  sell
substantial amounts of their common stock in the public market, the price of our
common stock could fall. These sales also might make it more difficult for us to
sell  equity  or  equity  related  securities  in the  future at a price we deem
appropriate.

ITEM 2.  DESCRIPTION OF PROPERTY

We lease our 8,000 square foot  warehouse and office space in Chino,  California
from Burr D. Northrop, our President. The monthly rental rate is $6,500, and the
lease provides for 3% annual  increases in rent  beginning in August,  2007. The

                                      -10-
<PAGE>

lease term is for five years,  and expires in July,  2010. Total future payments
under the lease as of September 30, 2005 total  $391,400.  We believe that these
facilities are adequate for our current  operations.  However, we expect that we
could locate other suitable  facilities at comparable rates, should we need more
space.

We lease a storage  yard  near our  warehouse  and  office  space in Chino.  The
monthly rent under the lease was $1,000 per month. This lease expired in October
2005, and we are on a month to month basis with a new monthly rent of $1,050 per
month.

We lease two storage  units in Los Angeles  County for  storing  water  heaters,
parts and equipment  that we utilize in our Consumer  Services  Division.  These
leases are on a month to month basis,  and the  combined  monthly rent for these
two units is $526 per month, or $6,312 per year.

Future payouts under the leases for the warehouse, office and storage spaces are
as follows:

  Year           Amount
---------    -------------
  2006       $   79,000

  2007           78,400

  2008           80,800

  2009           83,200

  2010           71,000
             -------------
             $  392,400
             =============

ITEM 3.  LEGAL PROCEEDINGS

Entech was named as a defendant  in several  legal  proceedings  in the State of
California  alleging  breach of contract and various fees in connection with the
activities of our  subsidiaries,  Christie-Peterson  Development,  Advanced Fuel
Filtration  Systems,  Inc., and H. B. Covey,  Inc. The plaintiffs  seek monetary
damages.  CPI and AFFS commenced  Chapter 7 bankruptcy  proceedings on September
30, 2004.

The proceedings described below are in various stages. While the ultimate effect
of the legal actions  described  below cannot be predicted  with  certainty,  we
expect  that  the  proceedings  against  our  subsidiaries  will not  result  in
liability to us due to the ongoing bankruptcy of CPI and AFFS.

We do not expect the outcome of these  matters to have a material  effect on our
financial  condition or the results of our  operations.  The following  lawsuits
have been filed against us:

NK Heating & Air  Conditioning  filed  complaint  against  the  Company  and its
formerly owned subsidiary , CPI Development, Inc. in Los Angeles County Superior
Court.  The  complaint  alleges a breach of  contract,  and  alleges  damages of
$98,000.   The  Company  believes  that  it  has  meritorious  defenses  to  the
plaintiff's   claims  and  intends  to  vigorously  defend  itself  against  the
Plaintiff's claims.

                                      -11-
<PAGE>

Corona  Service Park, et al filed  complaint  against the Company in the Central
District of  California  of the United  States  District  Court.  The  complaint
alleges a breach of  contract.  The  Company  believes  that it has  meritorious
defenses to the  plaintiff's  claims and  intends to  vigorously  defend  itself
against the Plaintiff's claims.

The Company is also subject to other legal proceedings and claims which arise in
the ordinary course of its business.  Although  occasional  adverse decisions or
settlements may occur, the Company  believes that the final  disposition of such
matters will not have material adverse effect on its financial position, results
of operations or liquidity

Other than described above, we are not engaged in any other litigation,  and are
unaware of any claims or complaints that could result in future  litigation.  We
will  seek  to  minimize   disputes   with  our   customers  but  recognize  the
inevitability of legal action in today's business  environment as an unfortunate
price of conducting business.

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

During the fourth  quarter of the fiscal  year ended  September  30,  2005,  the
shareholders of the Company elected Burr D. Northrop and Terence F. Leong to the
Company's  Board of Directors to hold office until the Company's  Annual Meeting
of  Stockholders  in 2006  or  until  their  successors  are  duly  elected  and
qualified;  and ratified the appointment of Russell Bedford Stefanou Mirchandani
LLP, as the Company's  independent  certified  public  accountant for the fiscal
year ending September 30, 2005.

                                      -12-
<PAGE>

                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASES OF EQUITY SECURITIES

Market Information
------------------

Our common stock is quoted on the OTC Bulletin Board under the symbol "EEVT.OB."
If we fail to stay current with our required filings under the Exchange Act, our
shares will only be quoted on the "pink sheets."

The below quotations reflect inter-dealer prices, without mark-up,  mark-down or
commission, and may not represent actual transactions.

Year ended 09/30/04           High             Low
----------------------    ------------    -------------
      First quarter       $  0.26         $  0.01

      Second quarter      $  3.00         $  0.26

      Third quarter       $  3.00         $  1.80

      Fourth quarter      $  1.95         $  0.16

Year ended 09/30/05           High             Low
----------------------    ------------    -------------
      First quarter       $  0.16         $  0.05

      Second quarter      $  0.10         $  0.05

      Third quarter       $  0.09         $  0.05

      Fourth quarter      $  0.08         $  0.06

At  September  30,  2005,  there  were  28,405,825  shares of our  common  stock
outstanding,  and 4,428,536 shares of our common stock are subscribed for future
issuance.  Our shares of common stock are held by  approximately 87 stockholders
of record.  The number of record holders was determined  from the records of our
transfer  agent and does not  include  beneficial  owners of common  stock whose
shares  are  held  in the  names  of  various  security  brokers,  dealers,  and
registered clearing agencies.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

None.

RECENT SALES OF UNREGISTERED SECURITIES

In October  2004,  the Company  entered into an agreement  with an individual to
settle claims  against one of the Company's  de-consolidated  entities  totaling
$398,000.  The Company  issued  500,000  shares of Company  common stock and the
$398,000  was  recorded  as a  reduction  in the amount  due to  de-consolidated
entities.

                                      -13-
<PAGE>

During the three  months  ended March 31,  2005,  the Company  issued  1,500,000
shares  of  common  stock  to  a  former   officer  and  director  and  recorded
compensation  expense of $90,000. The shares were recorded at their market price
of $.06 per share as of the date of the agreement pertaining to the issuance.

During the three months ended June 30, 2005, the Company issued 16,667 shares of
common  stock to  investors  in an  earlier  sale of common  stock as a goodwill
restructuring  of the terms of the previous sale. The Company charged the amount
of $17 to additional paid-in capital.

During the three  months  ended  September  30,  2005,  the  Company  subscribed
4,000,036  shares of common stock to investors at $.025 per share for cash,  and
received proceeds of $100,001. As of September 30, 2005, the shares had not been
issued by the  transfer  agent,  and the shares are  recorded  in the  financial
statements as "shares subscribed, not issued." The Company issued 800,000 shares
to a related party to convert  $50,000 of notes and $10,000 of interest  payable
when the fair market value of the stock was $.075 per share.  The Company issued
200,000  shares as incentive  compensation  to an employee  when the fair market
value of the stock was $.075 and recorded $15,000 as compensation expense.

The offer and sale of such shares of our common stock were  effected in reliance
on the exemptions for sales of securities  not involving a public  offering,  as
set forth in Rule 506  promulgated  under the Securities Act of 1933, as amended
(the  "Securities  Act") and in Section 4(2) and Section 4(6) of the  Securities
Act and/or Rule 506 of Regulation D, based on the  following:  (a) the investors
confirmed to us that they were "accredited investors," as defined in Rule 501 of
Regulation  D  promulgated  under the  Securities  Act and had such  background,
education  and  experience  in financial  and business  matters as to be able to
evaluate the merits and risks of an investment in the securities;  (b) there was
no public offering or general solicitation with respect to the offering; (c) the
investors  were  provided  with  certain  disclosure  materials  and  all  other
information   requested   with  respect  to  our  company;   (d)  the  investors
acknowledged  that all securities being purchased were  "restricted  securities"
for purposes of the Securities  Act, and agreed to transfer such securities only
in a transaction registered under the Securities Act or exempt from registration
under the  Securities  Act;  and (e) a legend  was  placed  on the  certificates
representing each such security stating that it was restricted and could only be
transferred if subsequently  registered  under the Securities Act or transferred
in a transaction  exempt from registration  under the Securities Act. All of the
investors  took  their  securities  for  investment  purposes  without a view to
distribution  and had access to information  concerning  Entech and our business
prospects, as required by the Securities Act.

                                      -14-
<PAGE>

SECTION 15(G) OF THE EXCHANGE ACT

The shares of our common stock are covered by Section 15(g) of the Exchange Act,
and Rules 15g-1 through 15g-6  promulgated  thereunder,  which impose additional
sales practice requirements on broker-dealers who sell our securities to persons
other than established customers and accredited investors.

Rule 15g-2 declares  unlawful any  broker-dealer  transactions in "penny stocks"
unless the  broker-dealer  has first  provided  to the  customer a  standardized
disclosure document.

Rule 15g-3  provides  that it is  unlawful  for a  broker-dealer  to engage in a
"penny  stock"  transaction   unless  the  broker-dealer   first  discloses  and
subsequently  confirms to the customer the current  quotation  prices or similar
market information concerning the penny stock in question.

Rule 15g-4 prohibits  broker-dealers  from completing "penny stock" transactions
for a customer  unless the  broker-dealer  first  discloses  to the customer the
amount of compensation or other  remuneration  received as a result of the penny
stock transaction.

Rule 15g-5 requires that a broker-dealer  executing a "penny stock" transaction,
other than one exempt under Rule 15g-1, disclose to its customer, at the time of
or prior to the transaction, information about the sales person's compensation.

Our common stock may be subject to the foregoing  rules.  The application of the
"penny  stock" rules may affect our  stockholders'  ability to sell their shares
because  some  broker-dealers  may not be willing to make a market in our common
stock because of the burdens imposed upon them by the "penny stock" rules.

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

The matters discussed in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations"  contain  forward-looking  statements  that
involve risks and uncertainties. See "Forward-Looking Statements."

OVERVIEW

Our HBC subsidiary is a 58 year old  construction  and maintenance  company that
specializes in construction  and maintenance  services for the retail  petroleum
industry,  commercial  and industrial  users,  municipal  organizations,  and in
support of major equipment manufacturers.  HBC expanded its scope of services to
include  installation  of major  household  appliances  for major  retailers  in
October 2004.

                                      -15-
<PAGE>

HBC's business is western  states  oriented with the heaviest  concentration  of
infrastructure  located in California.  On occasion, we will provide services in
various other states in order to provide a "one stop" support capacity to a core
customer or to take advantage of a target opportunity. The industry, as a whole,
is fueled by a constant barrage of environmental  regulations  which continue to
evolve and become  increasingly  restrictive.  Traditionally,  HBC has  targeted
select  opportunities within these sectors that support the core competencies of
its work force. Examples of these skill sets include:

   o  Complete fuel system installations and upgrades;

   o  Installation of monitoring and point of sale equipment;

   o  Alternative fueling systems including CNG and LNG;

   o  Installation and removal of hoists,  clarifiers,  and underground  storage
      tanks;

   o  Installation of soil and groundwater remediation equipment;

   o  Complete  maintenance  and support of all major  equipment and electronics
      supported by a 24 hour per day maintenance dispatch center; and

   o  Installation of major household appliances  including;  hot water heaters,
      water softeners, garbage disposals, garage door openers, etc.

HBC is generally divided into three divisions:  Construction,  Maintenance,  and
Consumer  Services.  We are  currently  developing a fourth  division  that will
provide a variety of testing  services.  We will  bolster the  testing  division
client list by  marketing  testing  services to our  existing  construction  and
maintenance  customers,  and will capitalize on marketing  opportunities for our
construction and maintenance divisions afforded by the existing testing division
customers.   The  diversity  of  the  four  divisions   provides  stability  and
diversification, yet focuses on basic core competencies.

ACCOUNTING POLICIES INVOLVING MANAGEMENT ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and  assumptions in certain  circumstances  that affect amounts  reported in the
accompanying  financial  statements and related  footnotes.  In preparing  these
financial  statements,  management  has made its best estimates and judgments of
certain amounts included in the financial  statements,  giving due consideration
to  materiality.  We do not believe there is a great  likelihood that materially
different amounts would be reported related to the accounting policies described
below.  However,  application of these accounting policies involves the exercise
of judgment and use of assumptions as to future  uncertainties and, as a result,
actual  results could differ from these  estimates.  Our senior  management  has
discussed the  development and selection of the critical  accounting  estimates,
and related disclosures, with the Audit Committee of our Board of Directors.

                                      -16-
<PAGE>

Financial  Reporting  Release No. 60, which was released by the  Securities  and
Exchange Commission, or SEC, in December 2001, requires all companies to include
a discussion of critical  accounting policies or methods used in the preparation
of financial statements. The Notes to Consolidated Financial Statements included
in our  Annual  Report on Form  10-KSB  for the year ended  September  30,  2005
includes a summary of our  significant  accounting  policies and methods used in
the  preparation  of our  financial  statements.  In preparing  these  financial
statements,  we have made our best  estimates and  judgments of certain  amounts
included in the financial  statements,  giving due consideration to materiality.
The application of these accounting  policies  involves the exercise of judgment
and use of  assumptions  as to future  uncertainties  and,  as a result,  actual
results could differ from these estimates.  Our critical accounting policies are
as follows:

REVENUE  RECOGNITION.  The Company  recognizes  revenues  from  fixed-price  and
modified  fixed-price  construction  contracts  on the  percentage-of-completion
method,  measured by the percentage of cost incurred to date to estimated  total
cost for each contract. Provisions for estimated losses on uncompleted contracts
are made in the  period in which  such  losses  are  determined.  Changes in job
performance, job conditions, and estimated profitability may result in revisions
to costs and income,  which are  recognized in the period in which the revisions
are  determined.  Changes in  estimated  job  profitability  resulting  from job
performance, job conditions, contract penalty provisions, claims, change orders,
and  settlements,  are  accounted  for as changes in  estimates  in the  current
period.

The  Company  recognizes  revenue  from  repair and  installation  services,  in
accordance with SEC Staff Accounting  Bulletin No. 101, "Revenue  Recognition in
Financial  Statements"  ("SAB 101").  SAB 101 requires that four basic  criteria
must be met before  revenue can be  recognized:  (1)  persuasive  evidence of an
arrangement  exists;  (2) delivery has occurred or services have been  rendered;
(3) the  selling  price is fixed and  determinable;  and (4)  collectibility  is
reasonably assured.

The SEC's Staff  Accounting  Bulletin,  or SAB,  No. 104,  Revenue  Recognition,
provides guidance on the application of generally accepted accounting principles
to selected revenue  recognition issues. We believe that our revenue recognition
policy is  appropriate  and in accordance  with  generally  accepted  accounting
principles and SAB No. 104.

ALLOWANCE  FOR DOUBTFUL  ACCOUNTS.  We also  maintain an allowance  for doubtful
accounts  for  potential  uncollectible  accounts  receivable  arising  from our
customers'  inability to make required  payments.  Our estimate is determined by
analyzing historical bad debts, customer payment history and patterns,  customer
creditworthiness,  and economic,  political or regulatory  factors affecting the
customer's ability to make the required payments.

INVENTORIES AND RELATED  ALLOWANCES.  Net inventories are valued at the lower of
the first-in,  first-out, or FIFO, cost or market value and have been reduced by
an allowance for excess, obsolete and potential scrap inventories. The estimated
allowance for excess and obsolete  inventories  is based on  inventories on hand
compared  to  estimated  future  usage  and  sales  and  assumptions  about  the
likelihood of scrap or obsolescence.

                                      -17-
<PAGE>

RECENT DEVELOPMENTS

As previously stated, in December 2005, Entech/HBC entered into discussions with
Pacific Coast Testing ("PCT") regarding the acquisition of its assets.  PCT is a
regional  company  operating in Southern  California that specializes in testing
and certifying the integrity of underground  tank and line systems.  Pursuant to
the discussions,  the companies  entered into a definitive  agreement and PCT is
currently being integrated into HBC's operations.  The testing capabilities will
compliment the existing services offered by HBC and provide additional synergies
and opportunities to the group.

RESULTS OF CONTINUING OPERATIONS

Years ended September 30, 2005 and 2004
---------------------------------------

REVENUE

Revenues  totaled $6.2  million for 2005,  an increase of $4.5 million over 2004
when revenues  totaled $1.7 million.  During 2005, we recognized $2.6 million in
revenue from construction services,  $2.5 million from maintenance services, and
$1.1 million from consumer  services.  We had more  construction and maintenance
contracts in 2005 than 2004, accounting for $3.4 of the increase in revenues. We
entered  into the  contract  with a major home  product  retailer to install hot
water heaters in October 2004,  and we recognized  $1.1 million in revenue under
this contract in 2005, accounting for the remaining $1.1 million of the increase
in revenues.

The  increase  in  construction  and  maintenance   revenues  is  attributed  to
management's focus on organic growth within these sectors. The team continued to
maximize  opportunities afforded by its current customer base and was successful
in winning and completing other lucrative contracts.

COST OF GOODS SOLD

Cost of goods sold totaled  $3.6  million for 2005,  an increase of $2.3 million
over 2004 when costs of goods sold  totaled  $1.3  million.  Our gross margin in
2005 was 42.1% compared to 23.1% in 2004.  Cost of sales increased as a function
of increased sales, and our gross margin improved due to proficient  management,
controlled overhead expenses and improved purchasing power.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling,  general and  administrative  expenses totaled $2.8 million for 2005, a
decrease of $3.2  million  from 2004 when  selling,  general and  administrative
expenses totaled $6.0 million. Decreases and increases in components of selling,
general and administrative expense are discussed below.

In 2004, we recorded $1.3 million in expenses  related to resolving  issues with
the  reorganization,  and we recorded  only  $150,000 of expense  related to the
reorganization in 2005. In 2004, we recorded $534,000 in organizational expenses

                                      -18-
<PAGE>

related to the reorganization,  and we did not incur these expenses in 2005. Our
bad debt expense  decreased by $584,000 from 2004 to 2005, when we had unusually
high collectibility exposure related to our receivables.  Our use of consultants
decreased  significantly  after  the  reorganization,   and  consulting  expense
decreased  by  $456,000  from 2004 to 2005.  We  recorded a  $430,000  inventory
reserve  in  2004,  and  had  no  such  expense  in  2005.  As a  result  of the
reorganization  and  stream-lining  of our  operations,  our general office type
expenses decreased by $340,000 from 2004 to 2005.

Our expenses  related to the truck fleet increased by $65,000 in 2005 over 2004,
and  this was  primarily  the  result  of  higher  fuel  costs  and  repair  and
maintenance costs of the aging vehicles. Our employee related costs increased by
$57,000 in 2005 over 2004,  and this was  primarily the result of us having more
employees on board,  and fewer  consultants  as noted above.  Our phone  related
expenses  increased by $47,000 in 2005 over 2004, and this was primarily related
to our  increased  reliance  on cell  phones.  Our  general  liability  and auto
insurance premiums increased during 2005,  resulting in an increase in insurance
expense of $31,000 in 2005 over 2004.  Our rent expense  increased by $28,000 in
2005 over 2004,  primarily because we rented  additional  storage space to store
hot water heaters and other  plumbing  parts and fixtures that we utilize in the
Consumer Services Division.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization  expense for 2005 totaled $59,000,  an increase of
$10,000 over 2004 when  depreciation and  amortization  expense totaled $49,000.
The increase is due to higher depreciable asset balances throughout the majority
of the year ended September 30, 2005.

GOODWILL IMPAIRMENT

During 2004, we wrote-off the goodwill  recorded in its acquisitions of AFFS and
CPI in the aggregate amount of $7.0 million.  There was no such write-off during
2005.

WRITE-OFF RECEIVABLES FROM DISCONTINUED OPERATIONS

During 2004,  we wrote-off  $3.3 million of  receivables  from its  discontinued
operations. There was no such write-off in the current fiscal year.

INTEREST EXPENSE

Interest expense for 2005 totaled $1.0 million, and includes amortization of the
note discount of $526,000 on the  convertible  notes  payable  issued to Barron,
liquidated  damages of $371,000  related to our  failure to file a  registration
statement to register the common shares underlying the convertible notes payable
and warrants issued to Barron, and the remainder  represents  "regular" interest
on our outstanding  obligations.  Interest expense was minimal last year because
we did not issue the notes and warrants to Barron until September 30, 2004.

LOSS FROM CONTINUING OPERATIONS

For the reasons  stated  above,  the loss from  continuing  operations  for 2005
totaled $1.2 million,  an  improvement  of $14.8 million over 2004 when the loss
from continuing operations was $16.0 million.

                                      -19-
<PAGE>

RESULTS OF DISCONTINUED OPERATIONS

As discussed in Item 1 - Business,  two former subsidiaries filed for bankruptcy
in 2004.  The assets and  liabilities  of these  entities  were  conveyed to the
bankruptcy  trustees  in early  2005,  and we did not  record any  activity  for
discontinued operations in 2005. We recorded a loss from discontinued operations
of $12.9 million for 2004 related to the  de-consolidated  entities discussed in
Item 1 - Business.

LIQUIDITY AND CAPITAL RESOURCES

During the year ended  September 30, 2005,  we incurred a net operating  loss of
$1.2 million,  we used cash in operating  activities  of $588,000;  we purchased
property and equipment  totaling  $44,000,  and we raised  $591,000  through the
issuance of convertible notes payable and the subscription to purchase of common
stock. We financed our operations primarily through the use of these proceeds.

At September 30, 2005, we have negative working capital of $1.4 million,  and we
owe Barron $1.1 million  that is due  September  30,  2006.  We have not filed a
registration  statement to register the shares  underlying the convertible notes
payable,  and will continue to incur  liquidated  damages at the rate of 36% per
year on the  outstanding  balance of the notes payable  until such  registration
statement is effective.

In order to execute our business plan, we will need to acquire  additional  debt
or equity financing. Our independent certified public accountants have stated in
their  report,  included  in this  Form  10-KSB,  that  due to our net  loss and
negative  cash flows  from  operations,  in  addition  to a lack of  operational
history,  there is a substantial  doubt about our ability to continue as a going
concern.  In the  absence  of  significant  revenue  and  profits,  we  will  be
completely dependent on additional debt and equity financing arrangements. There
is no  assurance  that any  financing  will be  sufficient  to fund our  capital
expenditures,  working capital and other cash  requirements  for the fiscal year
ending  September 30, 2005.  No assurance can be given that any such  additional
funding  will be  available  or that,  if  available,  can be  obtained on terms
favorable to us. If we are unable to raise needed funds on acceptable  terms, we
will not be able to execute  our  business  plan,  develop  or enhance  existing
services,  take  advantage  of future  opportunities  or respond to  competitive
pressures or  unanticipated  requirements.  A material  shortage of capital will
require  us to take  drastic  steps  such  as  further  reducing  our  level  of
operations,  disposing of selected assets or seeking an acquisition  partner. If
cash is insufficient, we will not be able to continue operations.

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2004, the Financial  Accounting Standards Board ("FASB") issued SFAS
151,  Inventory  Costs,  an amendment of ARB No. 43,  Chapter 4. This  Statement

                                      -20-
<PAGE>

amends the guidance in ARB No. 43,  Chapter 4,  "Inventory  Pricing," to clarify
the accounting for abnormal amounts of idle facility expense,  freight, handling
costs,  and  wasted  material  (spoilage).  Paragraph  5 of ARB 43,  Chapter  4,
previously  stated that "under some  circumstances,  items such as idle facility
expense,  excessive  spoilage,  double freight,  and rehandling  costs may be so
abnormal as to require  treatment  as current  period  charges"  This  Statement
requires that those items be recognized as current-period  charges regardless of
whether they meet the criterion of "so  abnormal." In addition,  this  Statement
requires  that  allocation  of  fixed  production  overheads  to  the  costs  of
conversion be based on the normal  capacity of the production  facilities.  This
Statement  is  effective  for  inventory  costs  incurred  during  fiscal  years
beginning after June 15, 2005.  Management does not believe the adoption of this
Statement will have any immediate material impact on the Company.

In  December  2004,  the FASB issued SFAS  No.152,  "Accounting  for Real Estate
Time-Sharing Transactions, an amendment of FASB Statements No. 66 and 67" ("SFAS
152) The amendments  made by Statement 152 This Statement  amends FASB Statement
No.  66,  Accounting  for  Sales of Real  Estate,  to  reference  the  financial
accounting and reporting guidance for real estate time-sharing transactions that
is  provided in AICPA  Statement  of Position  (SOP) 04-2,  Accounting  for Real
Estate Time-Sharing Transactions.  This Statement also amends FASB Statement No.
67,  Accounting for Costs and Initial Rental Operations of Real Estate Projects,
to state that the guidance for (a) incidental  operations and (b) costs incurred
to sell  real  estate  projects  does  not  apply  to real  estate  time-sharing
transactions.  The accounting  for those  operations and costs is subject to the
guidance in SOP 04-2.  This Statement is effective for financial  statements for
fiscal years beginning after June 15, 2005. with earlier application encouraged.
The Company does not anticipate  that the  implementation  of this standard will
have a material impact on its financial position,  results of operations or cash
flows.

In December 2004, FASB published Statement of Financial Accounting Standards No.
123 (Revised 2004),  Share-Based  Payment ("SFAS 123R"). SFAS 123R requires that
compensation cost related to share-based  payment  transactions be recognized in
the financial  statements.  Share-based payment transactions within the scope of
SFAS 123R include  stock  options,  restricted  stock  plans,  performance-based
awards,  stock  appreciation  rights,  and employee  share purchase  plans.  The
provisions of SFAS 123R are effective as of the first interim period that begins
after June 15,  2005.  Accordingly,  the  Company  will  implement  the  revised
standard  in the fourth  quarter of fiscal  year 2005.  Currently,  the  Company
accounts for its share-based  payment  transactions  under the provisions of APB
25, which does not necessarily  require the recognition of compensation  cost in
the  financial  statements.  Management is assessing  the  implications  of this
revised  standard,   which  may  materially  impact  the  Company's  results  of
operations in the fourth quarter of fiscal year 2005 and thereafter.

In December 2004, FASB issued  Statement of Financial  Accounting  Standards No.
153,  Exchanges  of  Nonmonetary  Assets,  an  amendment  of APB Opinion No. 29,
Accounting for Nonmonetary  Transactions ("SFAS 153"). This statement amends APB
Opinion 29 to  eliminate  the  exception  for  nonmonetary  exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
nonmonetary assets that do not have commercial  substance.  Under SFAS 153, if a
nonmonetary  exchange of similar productive assets meets a  commercial-substance
criterion and fair value is determinable,  the transaction must be accounted for

                                      -21-
<PAGE>

at fair  value  resulting  in  recognition  of any  gain or  loss.  SFAS  153 is
effective for  nonmonetary  transactions in fiscal periods that begin after June
15,  2005.  The Company  does not  anticipate  that the  implementation  of this
standard  will have a  material  impact on its  financial  position,  results of
operations or cash flows.

In May 2005, FASB issued  Statement of Financial  Accounting  Standards No. 154,
Accounting Changes and Error  Corrections,  a replacement of APB Opinion No. 20,
Accounting  Changes and FASB  Statement No. 3, Reporting  Accounting  Changes in
Interim Financial  Statements ("SFAS 154"). This Statement  replaces APB Opinion
No. 20 and FASB Statement No. 3, and changes the requirements for the accounting
for and reporting of a change in accounting principle. This Statement applies to
all  voluntary  changes  in  accounting  principle.  It also  applies to changes
required  by an  accounting  pronouncement  in the  unusual  instance  that  the
pronouncement  does  not  include  specific   transition   provisions.   When  a
pronouncement includes specific transition  provisions,  those provisions should
be followed.  Opinion 20  previously  required  that most  voluntary  changes in
accounting  principle be  recognized by including in net income of the period of
the change the cumulative  effect of changing to the new  accounting  principle.
This Statement  requires  retrospective  application to prior periods' financial
statements of changes in accounting  principle,  unless it is  impracticable  to
determine  either the  period-specific  effects or the cumulative  effect of the
change. When it is impracticable to determine the period-specific  effects of an
accounting  change  on one or more  individual  prior  periods  presented,  this
Statement requires that the new accounting  principle be applied to the balances
of assets and  liabilities as of the beginning of the earliest  period for which
retrospective  application is practicable and that a corresponding adjustment be
made  to  the  opening  balance  of  retained  earnings  (or  other  appropriate
components of equity or net assets in the  statement of financial  position) for
that  period  rather  than being  reported  in an income  statement.  When it is
impracticable  to  determine  the  cumulative  effect  of  applying  a change in
accounting principle to all prior periods,  this Statement requires that the new
accounting  principle  be applied as if it were adopted  prospectively  from the
earliest  date  practicable.  SFAS 154 is effective for  accounting  changes and
corrections of errors made in fiscal years beginning after December 15, 2005 The
Company does not anticipate that the implementation of this standard will have a
material impact on its financial position, results of operations or cash flows.

Other significant recent accounting pronouncements issued by the FASB (including
its Emerging Issues Task Force  ("EITF")),  the American  Institute of Certified
Public Accountants, and the SEC may be discussed elsewhere in these notes to the
consolidated  financial  statements.  In the opinion of management,  significant
recent accounting  pronouncements  did not or will not have a material effect on
the consolidated financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

ITEM 7.  FINANCIAL STATEMENTS

The financial  statements  required by this Item, the accompanying notes thereto
and the reports of  independent  accountants  are  included as part of this Form
10-KSB immediately following the signature page, beginning at page F-1.

                                      -22-
<PAGE>

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

ITEM 8A   CONTROLS AND PROCEDURES

We carried out an evaluation,  under the supervision and with the  participation
of our  management,  including our Chief  Executive  Officer and Chief Financial
Officer,  of the  effectiveness  of the design and  operation of our  disclosure
controls and procedures (as defined in Sections  13a-14(c) and 15d- 14(c) of the
Securities Exchange Act of 1934, as amended) as of the end of the period covered
by  this  report.  The  evaluation  was  undertaken  in  consultation  with  our
accounting personnel.  Based on that evaluation, the Chief Executive Officer and
Chief Financial  Officer  concluded that our disclosure  controls and procedures
are effective to ensure that  information  required to be disclosed by us in the
reports  that we file or submit  under the  Securities  Exchange  Act of 1934 is
recorded,  processed,  summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms.

There were no significant  changes in our internal  controls or in other factors
that could  significantly  affect  internal  controls  subsequent to the date of
their evaluation.

Effective on October 25, 2005, the Company  dismissed  Russell Bedford  Stefanou
Mirchandani,  LLP ("RBSM") by declining to renew the  engagement  of RBSM as the
independent  accountant engaged to audit the financial statements of the Company
and engaged Mendoza Berger & Co., LLP as its new independent  registered  public
accounting firm for fiscal year ending September 30, 2005.

While we believe our disclosure controls and procedures and our internal control
over  financial  reporting are  adequate,  no system of controls can prevent all
error and all fraud. A control system, no matter how well designed and operated,
can provide only reasonable,  not absolute,  assurance that the control system's
objectives will be met. Further, the design of a control system must reflect the
fact that there are resource  constraints,  and the benefits of controls must be
considered relative to their costs.  Because of the inherent  limitations in all
control systems,  no evaluation of controls can provide absolute  assurance that
all control issues and instances of fraud,  if any, within our company have been
detected.  These  inherent  limitations  include the realities that judgments in
decision-making  can be faulty,  and that breakdowns can occur because of simple
error or mistake.  Controls can also be  circumvented  by the individual acts of
some persons,  by collusion of two or more people, or by management  override of
the controls. The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving  its stated goals under all  potential
future conditions.  Over time, controls may become inadequate because of changes
in conditions or  deterioration in the degree of compliance with its policies or
procedures.  Because of the inherent  limitations  in a  cost-effective  control
system, misstatements due to error or fraud may occur and not be detected.

ITEM 8B  OTHER INFORMATION

None.

                                      -23-
<PAGE>

                                    PART III

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

The following  table and  information  sets forth the name, age, and position of
each executive officer and director who have served during the fiscal year ended
September 30, 2005 and the term of office of each director of the Company.

        Name             Age               Position
-------------------     ------    --------------------------------------------

 Burr D. Northrop        42        President/Principal Financial Officer/
                                   Principal Accounting  Officer/Chairman of
                                   the Board of Directors

 Terence F. Leong        40        Director

Directors of the Company hold their offices until the next annual meeting of the
Company's  shareholders  until  their  successors  have  been duly  elected  and
qualified or until their earlier  resignation,  removal of office or death.  The
Board of Directors  met three times in fiscal 2005.  The officers of the Company
are  elected by the Board of  Directors  to serve  until  their  successors  are
elected and qualified.

BURR D. NORTHROP.  Burr D. Northrop managed compliance  programs and fuel system
renovations at Connor  Environmental  from March 1990 until June 1993. He served
as president of Kaliber  Construction  and Engineering from June 1992 until June
1994, where he undertook soil and groundwater  remediation  projects.  From 1992
until the present, he has served as vice president,  secretary,  treasurer,  and
president of H.B. Covey,  Inc., our wholly-owned  subsidiary.  He was elected as
our president on September 28, 2004.

TERENCE F.  LEONG.  Terence F. Leong,  since 1996,  has been the owner of Walker
Street Associates, a management consulting firm. Mr. Leong started assisting the
Company in August, 2004 by preparing a comprehensive  review of the Company, its
management  and its  operations.  Mr.  Leong  joined the Board of  Directors  in
September,  2004. He assists the Company on its capital requirements,  strategic
and operational management of its current and future operations.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

To the best of our knowledge,  during the past five years, none of the following
occurred  with respect to a present or former  director or executive  officer of
the Company:  (1) any  bankruptcy  petition  filed by or against any business of
which such person was a general partner or executive  officer either at the time
of the  bankruptcy or within two years prior to that time; (2) any conviction in
a  criminal  proceeding  or  being  subject  to a  pending  criminal  proceeding
(excluding  traffic  violations and other minor offenses);  (3) being subject to

                                      -24-
<PAGE>

any order, judgment or decree, not subsequently reversed,  suspended or vacated,
of  any  court  of  any  competent  jurisdiction,   permanently  or  temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities or banking activities; and (4) being found by a court of
competent  jurisdiction  (in  a  civil  action),  the  Securities  and  Exchange
Commission  or the  commodities  futures  trading  commission to have violated a
Federal or state  securities or  commodities  law, and the judgment has not been
reversed, suspended or vacated.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires our
executive officers,  directors and persons who own more than 10% of a registered
class of our equity  securities  to file certain  reports with the SEC regarding
ownership of, and transactions in, our securities. Such officers,  directors and
10%  shareholders  are also  required  by the SEC to furnish us with all Section
16(a) forms that they file.

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's  directors and executive  officers,  and persons who  beneficially own
more than 10% of a registered class of the Company's equity securities,  to file
reports of  beneficial  ownership  and changes in  beneficial  ownership  of the
Company's  securities  with the SEC on Form 3 (Initial  Statement of  Beneficial
Ownership),  Form 4 (Statement of Changes of Beneficial Ownership of Securities)
and Form 5 (Annual Statement of Beneficial Ownership of Securities).  Directors,
executive  officers  and  beneficial  owners of more  than 10% of the  Company's
Common Stock are required by SEC  regulations to furnish the Company with copies
of all Section 16(a) forms that they file. Except as otherwise set forth herein,
based solely on review of the copies of such forms furnished to the Company,  or
written representations that no reports were required, the Company believes that
for the fiscal year ended  September 30, 2005,  beneficial  owners complied with
Section 16(a) filing requirements applicable to them, except that our executives
are in the process of completing the  appropriate  forms but have not filed such
forms for fiscal year ended September 30, 2005.

CODE OF ETHICS

We have  adopted  a code of  ethics  that  applies  to our  principal  executive
officer,   principal   financial  officer,   principal   accounting  officer  or
controller,  or  persons  performing  similar  functions.  The code of ethics is
designed to deter wrongdoing and to promote:

   -  Honest and ethical  conduct,  including the ethical  handling of actual or
      apparent   conflicts  of  interest   between   personal  and  professional
      relationships;

   -  Full, fair, accurate, timely, and understandable disclosure in reports and
      documents  that we file with,  or submits to, the SEC and in other  public
      communications made by us;

   -  Compliance with applicable governmental laws, rules and regulations;

   -  The prompt internal  reporting of violations of the code to an appropriate
      person or persons identified in the code; and

   -  Accountability for adherence to the code.

                                      -25-
<PAGE>

     A copy of our  code of  ethics  that  applies  to our  principal  executive
officer,   principal   financial  officer,   principal   accounting  officer  or
controller, or persons performing similar functions was filed as Exhibit 14.1 to
the Annual Report on Form 10-KSB for September 30, 2004.

     We will provide to any person without charge,  upon request,  a copy of our
code of ethics.  Any such request should be directed to our corporate  secretary
at 3233 Grand Avenue, Suite N-353, Chino Hills, California 91709.

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The  following  table  provides  certain  summary  information   concerning  the
compensation earned by the named executive officers (determined as of the end of
the most recent fiscal year) for services  rendered in all  capacities to Entech
Environmental Technologies, Inc. and our subsidiaries for the fiscal years ended
September 30, 2005,  September 30, 2004, and December 31, 2003. No other officer
had compensation of $100,000 or more for 2005, 2004, and 2003.

<TABLE>
<CAPTION>

                                                             Summary Compensation Table
----------------------------------------------------------------------------------------------------------------------------------
                                             Annual compensation                              Long term compensation
                                  -----------------------------------------  -----------------------------------------------------
                                                                                                   Awards                Payouts
                                                                                             ----------------------  -------------
                                                                                             Securities
                                                              Other annual    Restricted     underlying    LTIP       All other
   Name and principal     Year        Salary        Bonus     compensation    stock awards   options       payouts   compensation
        position                       ($)           ($)           ($)            ($)         / SARs         ($)          ($)
----------------------   ------   --------------  ----------  -------------  --------------  ----------  ----------  -------------
<S>                      <C>      <C>             <C>         <C>            <C>             <C>         <C>         <C>

Burr D. Northrop (1)      2005        150,007        70,000           --               --           --          --      17,568
                          2004        147,598            --           --          480,000           --          --      12,000
                          2003             --            --           --               --           --          --          --

Kenneth Green (2)         2005        119,998            --           --           15,000           --          --       6,300
                          2004         73,847            --           --               --           --          --          --
                          2003             --            --           --               --           --          --          --

Douglas L. Parker (3)     2004        161,122            --           --               --           --          --      10,000
                          2003             --            --           --               --           --          --          --

</TABLE>

(1) Mr.  Northrop  served as  co-president  with Mr. Parker until  September 28,
2004, at which time Mr. Northrop became president.  Annual compensation includes
salary paid to Mr. Northrop. Restricted stock awards include 3,000,000 shares of
our restricted common stock. All other compensation includes a car allowance and
health insurance reimbursements.  We recorded a bonus to Mr. Northrop of $70,000
for 2005, none of which has been paid as of the date of this report.

(2) Mr. Green serves as a vice president.  Annual  compensation  includes salary
paid to Mr.  Green.  Restricted  stock  awards  include  200,000  shares  of our
restricted common stock. All other compensation consists of a car allowance.

(3) Mr. Parker served as  co-president  with Mr.  Northrop  until  September 28,
2004.  Annual  Compensation  includes  salary  paid  to Mr.  Parker.  All  other
compensation includes a car allowance and health insurance reimbursements.

                                      -26-
<PAGE>

EMPLOYMENT   AGREEMENTS,   TERMINATION  OF  EMPLOYMENT   AND   CHANGE-IN-CONTROL
ARRANGEMENT

There are no current employment  agreements between the named executive officers
in the table above and us. In August,  2005, we executed an employment agreement
with Kenneth Green, our newly appointed Vice President. The employment agreement
with Kenneth Green has a term of three years, with an initial salary of $120,000
per year.  In  addition,  Mr.,  Green was awarded an initial  payment of 200,000
restricted  shares  of our  common  stock.  There  are  no  changes  of  control
arrangements,  either by means of a compensatory plan, agreement,  or otherwise,
involving  our current or former  executive  officers.  Our former  chairman and
chief executive  officer,  Steven  Rosenthal did not agree to the termination of
his  employment  agreement  with  us.  As of the  date  of this  report,  we are
disputing Mr. Rosenthal's claim that our obligations to him under the employment
contract  are still in force and  effect.  No  litigation  has been  filed  with
respect to Mr. Rosenthal at this time.

Pursuant to the agreement with Mr. Rosenthal, which was to terminate on November
30, 2006, he was to receive a salary of $360,000 per year, plus bonuses, cost of
living increases,  and other benefits. The agreement was renewable. In addition,
Mr.  Rosenthal  received  1,000,000 shares of our common stock upon execution of
his  agreement.  We  have  taken  the  position  that  the  agreement  has  been
terminated.

OPTIONS AND STOCK APPRECIATION RIGHTS GRANT TABLE

There were no grants of stock options to the Named Executive Officers during the
fiscal year ended September 30, 2005.

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE

We did not have any outstanding  stock options or stock  appreciation  rights at
end the fiscal year ended September 30, 2005.

LONG-TERM INCENTIVE PLAN AWARDS TABLE

We do not have any Long-Term Incentive Plans.

COMPENSATION OF DIRECTORS

During 2005, we did not  compensate  any of our directors for their  services as
board members.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Florida  Business  Corporation  Act (the  "Florida  Act")  permits a Florida
corporation  to  indemnify  a  present  or former  director  or  officer  of the
corporation (and certain other persons serving at the request of the corporation
in related  capacities) for  liabilities,  including legal expenses,  arising by
reason of service in such capacity if such person shall have acted in good faith
and in a manner  he  reasonably  believed  to be in or not  opposed  to the best
interests of the corporation,  and in any criminal proceeding if such person had

                                      -27-
<PAGE>

no reasonable cause to believe his conduct was unlawful. However, in the case of
actions brought by or in the right of the corporation, no indemnification may be
made with respect to any matter as to which such  director or officer shall have
been adjudged  liable,  except in certain limited  circumstances.  The Company's
Articles of Incorporation provide that the Company shall indemnify directors and
executive  officers  to the fullest  extent now or  hereafter  permitted  by the
Florida Act. The  indemnification  provided by the Florida Act and the Company's
Articles  of  Incorporation  is not  exclusive  of any  other  rights to which a
director  or  officer  may be  entitled.  The  general  effect of the  foregoing
provisions may be to reduce the  circumstances  which an officer or director may
be  required  to bear the  economic  burden  of the  foregoing  liabilities  and
expense. It is possible that we will be required to pay certain judgments, fines
and expenses incurred by an officer or director,  including reasonable attorneys
fees, as a result of actions or proceedings in which such officers and directors
are  involved by reason of being or having been an officer or director  provided
that said officers or directors acted in good faith.

The Company may also  purchase  and  maintain  insurance  for the benefit of any
director or officer that may cover claims for which we could not indemnify  such
person.

DISCLOSURE OF SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES

Insofar as indemnification  for liabilities arising under the Securities Act may
be permitted to our directors,  officers and controlling persons pursuant to the
foregoing provisions,  or otherwise, we have been advised that in the opinion of
the SEC such  indemnification  is  against  public  policy as  expressed  in the
Securities Act and is, therefore, unenforceable.

In the event that a claim for  indemnification  against such liabilities  (other
than  the  payment  of  expenses  incurred  or paid by a  director,  officer  or
controlling person of Intelligent Business Systems Group, Inc. in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling  person in connection with the securities  being  registered,  we
will,  unless in the  opinion of our  counsel  the  matter  has been  settled by
controlling  precedent,  submit  to a  court  of  appropriate  jurisdiction  the
question  whether  such  indemnification  by  it is  against  public  policy  as
expressed in the Securities  Act and will be governed by the final  adjudication
of such issue.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of December 27, 2005,  information concerning
ownership of our securities by:

   -  Each  person  who  owns   beneficially  more  than  five  percent  of  the
      outstanding shares of our common stock;

   -  Each director;

   -  Each named executive officer; and

   -  All directors and officers as a group.

                                      -28-
<PAGE>

The  number  and  percentage  of  shares  beneficially  owned is  determined  in
accordance with Rule 13d-3 and 13d-5 of the Securities Exchange Act of 1934, and
the  information is not necessarily  indicative of beneficial  ownership for any
other  purpose.  We  believe  that  each  individual  or  entity  named has sole
investment  and  voting  power  with  respect  to the  securities  indicated  as
beneficially   owned  by  them,   subject  to  community  property  laws,  where
applicable, except where otherwise noted.

                                             Shares beneficially owned (2)
                                            -------------------------------
    Name of beneficial owner (1)               Number             Percent
-----------------------------------------   -------------       -----------

Burr D. Northrop                              4,283,524             12.7%
Kenneth Green                                 1,000,000              3.0%
Terence F. Leong                                950,000              2.8%

All directors and executive officers
  as a group (three persons)                  6,233,524             18.5%

Robert K. Christie (3)                        5,583,333             16.6%
Horizon Capital Investors LP (4)              2,085,000              6.2%
Douglas L. Parker                             1,753,265              5.2%
William Greene                                1,750,000              5.2%

(1) Unless otherwise  indicated,  the address for each of these  stockholders is
c/o Entech  Environmental  Technologies,  Inc. 3233 Grand  Avenue,  Suite N-353,
Chino Hills, CA, 91709. Also, unless otherwise  indicated,  each person named in
the table above has the sole  voting and  investment  power with  respect to our
shares of common stock which he or she beneficially owns.

(2)  Beneficialownership  is  determined  in  accordance  with the  rules of the
Securities and Exchange  Commission.  As of December 26, 2005, there were issued
and outstanding 34,034,361 shares of our common stock.

(3) Mr.  Christie is a former  officer and director,  and we may be obligated to
issue him an  additional  1,000,000  shares  pursuant to an agreement we reached
with him in September  2004.  We are  disputing  the issuance of the  additional
shares,  and have  recorded a liability on the balance sheet as of September 30,
2005 related to the potential issuance.

(4) These shares were acquired on December 17, 2004 from Barron Partners LP in a
private transaction.

There are no  arrangements,  known to us,  including any pledge by any person of
our  securities,  the  operation of which may at a  subsequent  date result in a
change in control of Entech Environmental Technologies, Inc.

                                      -29-
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We lease our 8,000 square foot  warehouse and office space in Chino,  California
from Burr D. Northrop, our President. The monthly rental rate is $6,500, and the
lease provides for 3% annual  increases in rent  beginning in August,  2007. The
lease term is for five years,  and expires in July,  2010. Total future payments
under the lease as of September 30, 2005 total $391,400.

We have an outstanding note payable of $146,000 to Burr D. Northrop at September
30,  2005.  The  Company  issued the note in August  2005 as payment  for tenant
improvements  to the  leased  facility.  As noted  above,  Mr.  Northrop  is the
landlord of the leased facility. The note bears interest at 8%, and provides for
monthly payments of $3,041 through July 2010.

We converted a $50,000  note payable and $10,000 of interest  payable to Kenneth
Green into common stock  through the issuance of 800,000  shares of common stock
in August 2005.

We entered into a note purchase  agreement with Barron  Partners LP in September
2004,  and have  borrowed a total of $1.1 million under this  agreement  through
September 30, 2005. The notes issued  pursuant to the agreement are  convertible
into 42.5 million  shares at  September  30,  2005.  We also issued  warrants to
purchase 15.9 million shares at $0.15 per share.

In 2005, we paid Terence Leong,  a board member,  or his company an aggregate of
$46,000 for consulting services provided to the Company.

Except as noted above,  no related  party had any material  interest,  direct or
indirect,  in any transaction with us or in any presently  proposed  transaction
that has or will materially affect us:

   o  Any of our directors or officers;

   o  Any person proposed as a nominee for election as a director;

   o  Any person who beneficially owns, directly or indirectly,  shares carrying
      more than 10% of the voting rights attached to our  outstanding  shares of
      common stock;

   o  Any of our promoters;

   o  Any  relative or spouse of any of the  foregoing  persons who has the same
      house as such person.

                                      -30-
<PAGE>

ITEM 13. EXHIBITS.

1.1**        Investment  Banking Agreement with Windstone Capital Partners dated
             October 24, 2003

2.1**        Plan and  Agreement  of  Triangular  Merger  Between  Environmental
             Technologies,  Inc.,  Parr  Sub  One,  Inc.  and  Christie-Peterson
             Development dated December 29, 2003

2.2**        Agreement of Merger between Christie-Petersen  Development and Parr
             Sub One, Inc. filed December 30, 2003

2.3**        Plan and  Agreement  of  Triangular  Merger  Between  Environmental
             Technologies, Inc., Parr Sub Two, Inc. and Advanced Fuel Filtration
             Systems, Inc. dated December 29, 2003

2.4**        Agreement of Merger between Advanced Fuel Filtration, Inc. and Parr
             Sub Two, Inc. filed December 30, 2003

2.5**        Plan and  Agreement  of  Triangular  Merger  Between  Environmental
             Technologies, Inc., Parr Sub Three, Inc. and H.B. Covey, Inc. dated
             December 29, 2003

2.6**        Agreement of Merger  between H.B.  Covey,  Inc. and Parr Sub Three,
             Inc. filed December 30, 2003

3.1.1**      Articles of  Incorporation of Cyber Public  Relations,  Inc., filed
             June 18, 1998

3.1.2**      Amended and  Restated  Articles of  Incorporation  of Cyber  Public
             Relations,  Inc.,  changing the name of the  corporation  to Entech
             Environmental Technologies, Inc., filed March 22, 2004

3.1.3**      Articles of  Incorporation  of Point 2 Point Services,  Inc., filed
             April 5, 2001

3.1.4**      Certificate  of Amendment to Articles of  Incorporation  of Point 2
             Point Services,  Inc., changing the name of the corporation to Parr
             Development, Inc., filed December 31, 2002

3.1.5**      Amended and Restated Articles of Incorporation of Parr Development,
             Inc.,  changing  the  name  of  the  corporation  to  Environmental
             Technologies, Inc., filed November 25, 2003

3.1.6**      Articles of  Incorporation of Parr Sub One, Inc. filed December 19,
             2003

3.1.7**      Articles of  Incorporation of Parr Sub Two, Inc. filed December 19,
             2003

3.1.8**      Articles of  Incorporation  of Parr Sub Three,  Inc. filed December
             19, 2003

3.1.9**      Articles of Incorporation of  Christie-Petersen  Development  filed
             September 15, 1995

3.1.10**     Articles of Incorporation of YLD/Clean Fuels,  Inc. filed September
             18, 1995

3.1.11**     Certificate of Amendment of Articles of  Incorporation of YLD/Clean
             Fuels, Inc.,  changing the name of the corporation to Advanced Fuel
             Filtration, Inc., filed September 27, 1997

3.1.12**     Articles of Incorporation of H.B. Covey, Inc., filed March 19, 1971

3.2.1**      Bylaws of Cyber Public Relations, Inc., adopted July 5, 1998

3.2.2**      Amended Bylaws of Cyber Public Relations, Inc. adopted February 16,
             2004

3.2.3**      Amended and Restated Bylaws of Entech  Environmental  Technologies,
             Inc., adopted April 28, 2004

3.2.4**      Bylaws of Point 2 Point Services, Inc

                                      -31-
<PAGE>

3.2.5**      Bylaws of Parr Sub One, Inc. , adopted December 29, 2003

3.2.6**      Bylaws of Parr Sub Two, Inc., adopted December 29, 2003

3.2.7**      Bylaws of Parr Sub Three, Inc., adopted December 29, 2003

3.2.8**      Bylaws of Christie-Petersen Development, adopted September 22, 1995

3.2.9**      Bylaws of YLD/Clean Fuels, Inc. dated October 6, 1995

3.2.10**     Bylaws of Entech Environmental Technologies,  Inc. adopted February
             4, 2004

3.2.11**     Restated Bylaws of H.B. Covey, Inc. adopted April 1, 1999

3.3.1**      Charter of the Audit  Committee  of the Board of Directors of Cyber
             Public Relations, Inc., adopted January 29, 2004

3.3.2**      Charter of the Compensation  Committee of the Board of Directors of
             Cyber Public Relations, Inc., adopted January 29, 2004

4.1**        Registration  Rights Agreement with Barron  Partners,  LP regarding
             registration of shares, dated January 23, 2004

4.2**        Registration   Rights  Agreement  with  Wood  Capital   Associates,
             regarding registration of shares, dated January 23, 2004

4.3**        Registration  Rights Agreement with Patricia L. Fiorese,  regarding
             registration of shares, dated January 23, 2004

4.4**        Registration   Rights  Agreement  with  Vance  Luedtke,   regarding
             registration of shares, dated January 23, 2004

4.5**        Registration  Rights  Agreement  with  Diane  C.  Burge,  regarding
             registration of shares, dated January 23, 2004

4.6**        Registration   Rights  Agreement  with  Clayton  Chase,   regarding
             registration of shares, dated January 23, 2004

4.7**        Registration Rights Agreement with James W. Moldermaker,  regarding
             registration of shares, dated January 23, 2004

4.8**        Registration  Rights  Agreement  with  J.  Kevin  Wood,   regarding
             registration of shares, dated January 23, 2004

4.9**        Registration  Rights  Agreement  with  Thomas  Sheridan,  regarding
             registration of shares, dated January 23, 2004

4.10**       Registration  Rights Agreement with San Diego Torrey Hills Capital,
             regarding registration of shares, dated January 23, 2004

4.11**       Registration  Rights  Agreement  with Norman E.  Clarke,  regarding
             registration of shares, dated January 23, 2004

4.12**       Registration  Rights  Agreement  with  Steven R.  Green,  regarding
             registration of shares, dated January 23, 2004

10.1**       Robert K. Christie Employment Agreement, dated December 15, 2003

10.2**       Steven D. Rosenthal Employment Agreement, dated December 15, 2003

10.3**       Douglas L. Parker Employment Agreement, dated December 15, 2003

10.4**       James R. Christ Employment Agreement, dated December 31, 2003

10.5**       Stock Pledge Agreement between Robert K. Christie and Environmental
             Technologies, Inc. dated December 29, 2003

10.6**       Stock Purchase Escrow Agreement between Barron Partners,  LP, Cyber
             Public Relations,  Inc. and Harbour,  Smith, Harris &Merritt,  P.C.
             dated January 21, 2004

10.7**       Capital Stock  Exchange  Agreement  between the  Registrant and the
             Stockholders of Environmental Technologies, Inc., dated January 21,
             2004

10.8**       Stock Purchase Agreement between Environmental  Technologies,  Inc.
             and Barron Partners, LP dated January 14, 2004

10.9**       Amendment  to  Stock  Purchase   Agreement  between   Environmental
             Technologies, Inc. and Barron Partners, LP dated January 21, 2004

10.10**      Lease Agreement, effective October 1, 1999

                                      -32-
<PAGE>

10.11**      Lease Agreement, effective September 1, 2001

10.12**      Lease Agreement, effective November 15, 2002

10.13**      Amendment No. 2 to Lease, effective July 31, 2003

10.14**      First Amendment to Lease, effective September 3, 2003

10.15**      Cyber Public  Relations,  Inc. A Warrant for the Purchase of Common
             Stock

10.16**      Cyber Public  Relations,  Inc. B Warrant for the Purchase of Common
             Stock

10.17**      Cyber Public  Relations,  Inc. C Warrant for the Purchase of Common
             Stock

10.18**      Cyber Public  Relations,  Inc. D Warrant for the Purchase of Common
             Stock

10.19**      Cyber Public  Relations,  Inc. E Warrant for the Purchase of Common
             Stock

10.20**      Cyber  Public  Relations,  Inc.  Warrant for the Purchase of Common
             Stock, Wood Capital Associates

10.21**      Cyber  Public  Relations,  Inc.  Warrant for the Purchase of Common
             Stock, Patricia L. Fiorese

10.22**      Cyber  Public  Relations,  Inc.  Warrant for the Purchase of Common
             Stock, Vance Luedtke

10.23**      Entech Environmental Technologies, Inc. Warrant for the Purchase of
             Common Stock, Diane C. Burge

10.24**      Entech Environmental Technologies, Inc. Warrant for the Purchase of
             Common Stock, Clayton Chase

10.25**      Entech Environmental Technologies, Inc. Warrant for the Purchase of
             Common Stock, James W. Moldermaker

10.26**      Entech Environmental Technologies, Inc. Warrant for the Purchase of
             Common Stock, J. Kevin Wood

10.27**      Entech Environmental Technologies, Inc. Warrant for the Purchase of
             Common Stock, Thomas Sheridan

10.28**      Entech Environmental Technologies, Inc. Warrant for the Purchase of
             Common Stock, San Diego Torrey Hills Capital

10.29**      Entech Environmental Technologies, Inc. Warrant for the Purchase of
             Common Stock, Norman E. Clarke

10.30**      Entech Environmental Technologies, Inc. Warrant for the Purchase of
             Common Stock, Steven R. Green

10.31**      Settlement Agreement with Norman T. Reynolds, Esq., dated September
             23, 2004

10.32**      Settlement Agreement with Stonegate Securities, dated September 21,
             2004

10.33**      Settlement Agreement with Russell Bedford Stefanou Mirchandani LLP,
             dated September 21, 2004

10.34**      Settlement  Agreement with Birch Advisors Ltd. dated  September 30,
             2004

10.35**      Settlement Agreement with Gerald Foster dated September 30, 2004

10.36**      Secured Convertible Note between Entech Environmental Technologies,
             Inc. and Barron Partners, L.P. dated September 30, 2004

10.37**      Cyber  Public  Relations,  Inc.  Warrant for the Purchase of Common
             Stock, Barron Partners, L.P.

10.38**      Note Purchase Agreement between  Environmental  Technologies,  Inc.
             and Barron Partners, LP dated September 30, 2004

                                      -33-
<PAGE>

10.39**      Registration  Rights Agreement with Barron  Partners,  LP regarding
             registration of shares, dated September 30, 2004

10.40**      Entech Environmental Technologies, Inc. Warrant for the Purchase of
             Common Stock for Barron Partners, LP

10.41**      Escrow Agreement between Entech Environmental  Technologies,  Inc.,
             Robert K. Christie and Norman T. Reynolds dated September 29, 2004

10.42**      Warrant  Cancellation  from Barron Partners,  L. P. dated September
             30, 2004

10.43**      Settlement  Agreement  with San Diego  Torrey Hills  Capital,  Inc.
             dated September 1, 2004

10.44**      Settlement  Agreement with Donald G. St. Clair, CPA dated September
             30, 2004

10.45**      Termination of Investment Banking Agreement dated September 1, 2004

21.*         Subsidiaries

23.1*        Consent of Independent Auditors

23.2*        Consent of Independent Auditors

31.1*        Certification  of Chief  Executive  Officer  pursuant  to 18 U.S.C.
             Sec.1350,  as adopted pursuant to Sec.302 of the Sarbanes-Oxley Act
             of 2002.

31.2*        Certification  of  Principal   Financial  and  Accounting   Officer
             pursuant to 18 U.S.C.  Sec.1350,  as adopted pursuant to Sec.302 of
             the Sarbanes-Oxley Act of 2002.

32.2*        Certification  of Chief  Executive  Officer  pursuant  to 18 U.S.C.
             Sec.1350,  as adopted pursuant to .906 of the Sarbanes-Oxley Act of
             2002.

32.2*        Certification  of  Principal   Financial  and  Accounting   Officer
             pursuant to 18 U.S.C.  Sec.1350, as adopted pursuant to .906 of the
             Sarbanes-Oxley Act of 2002.

----------
*   Filed  herewith.
**  Previously  Filed

                                      -34-
<PAGE>

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Year ended 2005:
----------------

AUDIT FEES

The aggregate fees billed by Russell  Bedford  Stefanou  Mirchandani LP ("RBSM")
for  professional  services  rendered  for the  audit  of our  annual  financial
statements  for 2005 were minimal  prior to being  replaced by Mendoza  Berger &
Company, LLP ("Mendoza").

As of September 30, 2005,  Mendoza had not billed us for any services related to
the audit of our annual financial  statements for 2005. Through the date of this
report, Mendoza had billed us approximately $8,000. We have an engagement letter
with Mendoza for the 2005 audit that provides for  estimated  audit fees ranging
from $20,000 to $25,000.

AUDIT-RELATED FEES

The aggregate  fees billed by RBSM for  assurance and related  services that are
reasonably  related to the  performance  of the audit or review of our financial
statements for 2005 were $0.

ALL OTHER FEES

There  were no other fees  billed by RBSM for  professional  services  rendered,
other than as stated under the captions  Audit Fees and  Audit-Related  Fees for
2005.

Year ended 2004:

AUDIT FEES

The aggregate  fees billed by RBSM for  professional  services  rendered for the
audit of our annual financial statements for 2004 were $28,000.

AUDIT-RELATED FEES

The aggregate  fees billed by RBSM for  assurance and related  services that are
reasonably  related to the  performance  of the audit or review of our financial
statements for 2004 were $0.

ALL OTHER FEES

There  were no other fees  billed by RBSM for  professional  services  rendered,
other than as stated under the captions  Audit Fees and  Audit-Related  Fees for
2004.

AUDITOR INDEPENDENCE

Our Board of  Directors  considers  that the work done for us in the year  ended
September 30, 2005 by RBSM is compatible with maintaining  RBSM's  independence.
Our Board of Directors  considers that the work done for us related to the audit
for the year ended September 30, 2005 by Mendoza is compatible with  maintaining
Mendoza's independence.

AUDITOR'S TIME ON TASK

All of the work expended by RBSM and Mendoza on our September 30, 2005 audit was
attributed to work performed by their full-time, permanent employees.

                                      -35-
<PAGE>

                                   SIGNATURES

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


                                         ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.

     Signature                    Title                              Date

/s/ Burr D. Northrop    Chief Executive Officer and Director   January 13, 2006
--------------------
Burr D. Northrop

/s/ R. B. Lassetter     Principal Accounting Officer           January 13, 2006
--------------------
R. B. Lassetter

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

     Signature                    Title                              Date

/s/ Burr D. Northrop    Chief Executive Officer and Director   January 13, 2006
--------------------
Burr D. Northrop

/s/ Terence F. Leong    Director                               January 13, 2006
--------------------
Terence F. Leong


<PAGE>

                     Entech Environmental Technologies, Inc.

                          INDEX TO FINANCIAL STATEMENTS

Reports of Independent  Registered Certified Public Accounting Firm
on Financial Statements..................................................... F-1

Consolidated Balance Sheet as of September 30, 2005......................... F-3

Consolidated Statements of Operations for the years ended September 30,
2005 and 2004............................................................... F-4

Consolidated  Statements  of Deficiency  in  Stockholders'  Equity for
the years ended September 30, 2005 and 2004................................. F-5

Consolidated Statements of Cash Flows for the years ended September 30,
2005 and 2004............................................................... F-6

Notes to Consolidated Financial Statements.................................. F-7

<PAGE>

                REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

To the Board of Directors and Stockholders
of Entech Environmental Technologies, Inc.

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Entech
Environmental Technologies,  Inc. (Company) and subsidiaries as of September 30,
2005, and the related  consolidated  statements of income,  stockholders' equity
(deficit),  and cash flows for the year then ended. These consolidated 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. The financial statements of Entech Environmental  Technologies,  Inc.
as of  September  30, 2004 were audited by another  auditor,  whose report dated
March 11, 2005 on those statements included an explanatory  paragraph describing
conditions that raised substantial doubt as to the Company's ability to continue
as a going concern as discussed in Note Q to the financial statements.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe 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 consolidated financial position of Entech
Environmental  Technologies,  Inc. and subsidiaries as of September 30, 2005 and
the results of their  operations and their cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
the Company will continue as a going  concern.  As discussed  further in Note 1,
the  Company  has  incurred  significant  losses.  The  Company's  viability  is
dependent  upon its ability to obtain  future  financing  and the success of its
future  operations.  These factors raise  substantial  doubt about the Company's
ability to continue  as a going  concern.  Management's  plan in regard to these
matters is also described in Note 1. The  consolidated  financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

Mendoza Berger & Company, LLP


Irvine, California
January 13, 2006

                                       F-1

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Entech Environmental Technologies, Inc.

We have  audited  the  accompanying  consolidated  statements  of  operations  ,
stockholders'  deficiency and cash flows for the year ending  September 30, 2004
of Entech  Environmental  Technologies,  Inc (the " Company").  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 auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated results of operations and cash flows of
Entech  Environmental  Technologies,  Inc.  for the year  September  30, 2004 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
the Company will continue as a going  concern.  As discussed  further in Note 1,
the  Company  has  incurred  significant  losses.  The  Company's  viability  is
dependent  upon its ability to obtain  future  financing  and the success of its
future  operations.  These factors raise  substantial  doubt about the Company's
ability to continue  as a going  concern.  Management's  plan in regard to these
matters is also described in Note 1. The  consolidated  financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

                  /s/ RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP


March 11, 2005
New York, New York

                                       F-2
<PAGE>

                     ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2005

ASSETS

Current assets:
Cash                                                              $     113,153
Accounts receivable, net allowance for doubtful accounts
  totaling $72,242                                                    1,095,237
Costs and estimated earnings in excess of billings on
  uncompleted contracts                                                  19,652
Inventories, net of reserve for excess and obsolete parts
  totaling $388,034                                                     198,490
Prepaid expenses and other                                               32,186
                                                                  -------------
Total current assets
                                                                      1,458,718

Property and equipment, net                                             411,836

Other assets                                                             35,420
                                                                  -------------
Total assets                                                      $   1,905,974
                                                                  =============

LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY:

Current liabilities:
Accounts payable                                                  $     696,477
Accrued interest and other                                              541,369
Accrued payroll                                                         181,331
Billings in excess of costs and estimated earnings on
  uncompleted contracts                                                  92,625
Due to de-consolidated entities                                         813,025
Current portion of notes payable, net of discount
  totaling $536,333                                                     525,679

Current portion of note payable - related party                          25,756
                                                                  -------------
Total current liabilities
                                                                      2,876,262

Note payable - related party, net of current portion                    120,147

Commitments and contingencies                                                --

Deficiency in stockholders' equity:
Preferred stock, $.001 par value; 10,000,000 shares
  authorized; none issued and outstanding                                    --

Common stock, $0.001 par value; 100,000,000 shares authorized;
  28,405,825 shares issued and outstanding                               28,406
Additional paid-in capital                                           15,943,420
Common stock subscribed, 4,228,536 shares                               136,598
Accumulated deficit                                                 (17,198,859)
                                                                  --------------
Total deficiency in stockholders' equity
                                                                     (1,090,435)
                                                                  --------------

Total liabilities and deficiency in stockholders' equity          $   1,905,974
                                                                  ==============

        See accompanying notes to the consolidated financial statements.

                                       F-3
<PAGE>

                     ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                 For the years ended September
                                                               30,
                                                -------------------------------
                                                     2005              2004
                                                --------------   --------------

Revenues, net                                   $    6,225,031   $    1,703,148
Cost of goods sold                                   3,602,453        1,310,090
                                                --------------   --------------
Gross profit                                         2,622,578          393,058

Operating expenses:
Selling, general, and administrative
  expenses                                           2,784,802        6,025,401
Depreciation and amortization                           58,794           48,876
Goodwill impairment                                         --        7,049,020
Write-off receivables from discontinued
  operations                                                --        3,256,068
                                                --------------   --------------
      Total operating expenses                       2,843,596       16,379,365

                                                --------------   --------------
Loss from operations                                  (221,018)     (15,986,307)

Interest expense                                    (1,010,242)          (5,284)
                                                --------------   --------------
Loss before provision for income taxes
  and discontinued operations                       (1,231,260)     (15,991,591)

Provision for income taxes                                  --               --
                                                --------------   --------------
Loss from continuing operations                     (1,231,260)     (15,991,591)

Loss from discontinued operations                           --      (12,925,500)
                                                --------------   --------------
Net loss                                        $   (1,231,260)  $  (28,917,091)
                                                ==============   ==============

Net loss per share - basic and fully diluted    $        (0.05)  $        (2.89)
                                                ==============   ==============

Net loss per share - continuing operations      $        (0.05)  $        (1.60)
                                                ==============   ==============

Net loss per share - discontinued operations    $           --   $        (1.29)
                                                ==============   ==============
Basic and diluted weighted average
  number of shares outstanding                      24,154,031       10,018,691
                                                ==============   ==============


        See accompanying notes to the consolidated financial statements.

                                       F-4
<PAGE>

                     ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
                 STATEMENT OF DEFICIENCY IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2005

<TABLE>
<CAPTION>
                                                                                                                       Deficiency
                                                          Common Stock         Additional   Common Stock                   In
                                                    ------------------------    Paid In     Subscribed,  Accumulated   Stockholders'
                                                      Shares       Amount       Capital     Not issued     Deficit       Equity
                                                    -----------  -----------  ------------  -----------  ------------  ------------
<S>                                                 <C>           <C>         <C>           <C>          <C>           <C>

Balances at September 30, 2003                               --  $        --  $    710,345  $        --  $   (477,818) $    232,527
Shares of Cyber public held by existing
     stockholders                                     2,199,000        2,199        (2,199)          --            --            --
Shares retained in connection with merger
     with Cyber Public                                  315,000          315          (315)          --            --            --
Shares canceled in connection with merger
     with Entech                                     (2,199,000)      (2,199)        2,199           --            --            --
Shares issued to stockholders in exchange
     for Entech shares                                8,550,000        8,550     5,006,231           --            --     5,014,781
Shares issued to employees at $0.001 per share          500,000          500            --           --            --           500
Shares issued for investment and legal services
     at $0.001 per share                              1,000,000        1,000            --           --            --         1,000
Shares sold  to investors at $1.00 per share
     pursuant to private placement memorandum         2,000,000        2,000     1,998,000           --            --     2,000,000
Shares sold  to investors at $2.00 per share
     pursuant to private placement memorandum           310,000          310       619,690           --            --       620,000
Shares sold to investors at $1.50 per share
     pursuant to private placement memorandum           857,498          858     1,285,390           --            --     1,286,248
Shares sold to investors at $2.00 per share
     pursuant to private placement memorandum           145,000          145       289,855           --            --       290,000
Shares sold to investors at $1.50 per share
     pursuant to private placement memorandum           773,334          773     1,159,228           --            --     1,160,001
Shares subscribed, not issued to convert notes
     payable to eight members of management  to
     equity at $1.00 per share, 2,134,705 shares             --           --            --    2,134,705            --     2,134,705
Shares subscribed, not issued to six directors
     and members of management as incentive
     compensation at $0.16 per share, 6,400,000
     shares                                                  --           --            --    1,024,000            --     1,024,000
Shares subscribed, not issued to two vendors
     and service providers at $0.16 per share
     to settle amounts owed, 297,000 shares                  --           --            --       47,520            --        47,520
Shares subscribed, not issued to two service
     providers at $0.17 per share to settle
     amounts owed, 750,000 shares                            --           --            --      127,500            --       127,500
Shares subscribed, not issued in settlement of
     debt at $0.17 per share, 500,000 shares                 --           --            --       85,000            --        85,000
Shares subscribed, not issued to a service
     provider at $0.52 per share to settle
     amount owed, 33,869 shares                              --           --            --       17,533            --        17,533
Shares subscribed, not issued in September to
     investors in previous private placement
     offering as an adjust to terms, 976,252
     shares                                                  --           --            --           --            --            --
Value of services contributed by a service
     provider for no consideration                           --           --       375,000           --            --       375,000
Value of warrants issued with convertible note               --           --       388,890           --            --       388,890
Value of beneficial conversion feature of
     convertible note                                        --           --       173,020           --            --       173,020
De-consolidate equity of discontinued operations             --           --      (515,720)          --    13,427,310    12,911,590
Loss from discontinued operations                            --           --            --           --   (12,925,500)  (12,925,500)
Loss from continuing operations                              --           --            --           --   (15,991,591)  (15,991,591)
                                                    -----------  -----------  ------------  -----------  ------------  ------------
Balances at September 30, 2004                       14,450,832       14,451    11,489,614    3,436,258   (15,967,599)   (1,027,276)


                                       F-5
<PAGE>
                                                                                                                        Deficiency
                                                          Common Stock         Additional   Common Stock                   In
                                                    ------------------------    Paid In     Subscribed,  Accumulated   Stockholders'
                                                      Shares       Amount       Capital     Not issued     Deficit       Equity
                                                    -----------  -----------  ------------  -----------  ------------  ------------
Shares issued to a service provider at
     $0.65 per share                                     75,000           75         4,800           --            --         4,875
Shares issued to former employee at
     $0.06 per share                                  1,500,000        1,500        88,500           --            --        90,000
Shares issued in June to investors in previous
     private placement offering as an adjustment
     to terms                                            16,667           17           (17)          --            --            --
Shares issued in legal settlement                       500,000          500       397,625           --            --       398,125
Shares issued for conversion of note and
     interest payable to a related party                800,000          800        59,200           --            --        60,000
Shares issued as incentive compensation                 200,000          200        14,800           --            --        15,000
Issuance of previously subscribed shares             10,863,326       10,863     3,388,798   (3,399,661)           --            --
Shares subscribed, not issued, at $.025 per share
     to investors, 4,000,036 shares                          --           --            --      100,001            --       100,001
Value of warrants issued with convertible note               --           --       353,053           --            --       353,053
Value of beneficial conversion feature of
     convertible note                                        --           --       147,047           --            --       147,047
Loss from continuing operations                              --           --            --           --    (1,231,260)   (1,231,260)
                                                    -----------  -----------  ------------  -----------  ------------  -------------
Balances at September 30, 2005                       28,405,825  $    28,406  $ 15,943,420  $   136,598  $(17,198,859) $ (1,090,435)
                                                    ===========  ===========  ============  ===========  ============  =============

</TABLE>

        See accompanying notes to the consolidated financial statements.

                                       F-6
<PAGE>

                     ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                  For the years ended
                                                                     September 30,
                                                            ------------------------------
                                                                2005              2004
                                                            ------------      ------------
<S>                                                         <C>               <C>

Net loss from continuing operations                         $ (1,231,260)     $(15,991,591)

Cash flows from continuing  operating  activities:
Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
   Depreciation and amortization                                  58,794            48,876
   Amortization of note discount                                 525,679                --
   Common stock issued for services                              109,875             1,500
   Common stock subscribed for services                               --           277,553
   Common stock subscribed for incentive compensation                 --         1,024,000
   Value of services contributed for no consideration                 --           375,000
   Goodwill impairment                                                --         7,049,020
   Write-off receivables from discontinued operations                 --         3,256,068
   Reserve for bad debts                                          72,242           511,723
Changes in:
   Accounts receivable                                          (925,376)           34,151
   Due to de-consolidated entities                                23,573         1,187,577
   Inventory                                                    (106,192)          419,917
   Construction in progress                                      170,496           (97,523)
   Other assets                                                   (9,271)          (37,571)
   Accounts payable and accrued expenses                         723,024           230,881
                                                            ------------      ------------
Net cash (used in) continuing operating activities              (588,416)       (1,710,419)

Cash flows from investing activities:
   Purchases of property and equipment                           (43,628)               --
                                                            ------------      ------------
   Net cash used in investing activities                         (43,628)               --

Cash flows from financing activities:
   Proceeds from notes payable                                  491,200            561,910
   Proceeds from note payable - related party                         --            50,000
   Cash received from sale of common stock                            --         5,356,249
   Cash received from subscription of common stock               100,001                --
   Principal payments on notes payable                            (4,097)         (120,000)
                                                            ------------      ------------
   Net cash provided by financing activities                     587,104         5,848,159

Net cash used in discontinued operations                              --        (4,130,575)
                                                            ------------      ------------
Net increase (decrease) in cash                                  (44,940)            7,165

Cash at beginning of period                                      158,093           150,928
                                                            ------------      ------------
Cash at end of period                                       $    113,153      $    158,093
                                                            ============      ============

                                       F-7
<PAGE>
Supplemental Disclosures of Cash Flow Information:

Cash paid during the period for interest                    $      6,652      $      5,284
                                                            ============      ============

Cash paid during the period for income taxes                $         --      $     34,000
                                                            ============      ============

Common stock issued to employees for services               $         --      $        500
                                                            ============      ============

Common stock issued to consultants for services             $      4,875      $      1,000
                                                            ============      ============

Common stock issued to convert note payable and interest    $     60,000      $         --
                                                            ============      ============
Common stock issued in satisfaction of amounts
  owed to former management                                 $     90,000      $         --
                                                            ============      ============
Common stock subscribed in satisfaction of amounts
  owed to management or former management                   $         --      $  2,134,705
                                                            ============     =============

Common stock issued in legal settlement                     $    398,125      $         --
                                                            ============     =============

Common stock issued as incentive compensation
  to management                                             $     15,000      $         --
                                                            ============     =============
Common stock subscribed as incentive compensation
  to management                                             $         --      $  1,024,000
                                                            ============     =============

Value of services contributed for no consideration          $         --      $    375,000
                                                            ============      ============
Common stock subscribed in satisfaction of
  amounts owed to vendors and service providers             $         --      $    277,553
                                                            ============      ============
16,667 additional shares of common stock
  issued to investors in previous private placement         $         17      $         --
                                                            ============      ============
976,252  additional shares of common stock
  subscribed to investors in previous private placement     $         --               977
                                                            ============      ============

Value of warrants issued with convertible note payable      $    353,053      $    388,890
                                                            ============      ============

Beneficial conversion feature of convertible note payable   $    147,047      $    173,020
                                                            ============      ============

De-consolidate equity of discontinued operations            $         --      $ 12,911,590
                                                            ============      ============
Acquisition of CPI:
Net liabilities assumed in excess of assets                 $         --         3,238,483
Note payable                                                          --                --
                                                            ------------      ------------
Total consideration paid/Goodwill                           $         --      $  3,238,483
                                                            ============      ============
Acquisition of Advanced Fuel:
Net liabilities assumed in excess of assets                 $         --         1,855,626
Note payable                                                          --         1,000,000
                                                            ------------      ------------
Total consideration paid/goodwill                           $         --      $  2,855,626
                                                            ============      ============
Acquisition of H.B. Covey:
Net assets acquired in excess of liabilities                $         --      $    (45,089)
Note payable                                                          --         1,000,000
                                                            ------------      -------------
Total consideration paid/goodwill                           $         --      $    954,911
                                                            ============      ============
Acquisition of Cyber:
Common stock retained                                       $         --      $        315
Liabilities assumed in excess of assets                               --            22,263
Cash paid                                                             --           275,000
                                                            ------------      ------------
Total consideration paid/organization cost                  $         --      $    297,578
                                                            ============      ============

</TABLE>

        See accompanying notes to the consolidated financial statements.

                                       F-8
<PAGE>

                     ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2005 AND 2004


NOTE 1 - BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN ISSUES

Entech Environmental  Technologies,  Inc. ("Entech" or the "Company"),  formerly
Cyber Public  Relations,  Inc.,  was formed in June,  1998 under the laws of the
State of Florida.  The  Company,  through its H.B.  Covey  subsidiary,  provides
construction  and  maintenance  services to  petroleum  service  stations in the
southwestern  part of the United  States of America,  and provides  installation
services for consumer home products in Southern California.

The accompanying  financial  statements  include the accounts of the Company and
its wholly-owned  subsidiary,  H.B. Covey, Inc., a California corporation ("H.B.
Covey").  All  significant  intercompany  transactions  and  balances  have been
eliminated in the consolidated financial statements.

Business Combination and Corporate Recapitalization
---------------------------------------------------

On December 30, 2003, Environmental Technologies,  Inc. , a company formed under
the laws of the State of Nevada ("Entech NV") acquired  through a Share Exchange
Agreement,  all of the issued and outstanding  stock of CPI  Development,  Inc.,
formally Christie Peterson Development Corporation,  Inc. ("CPI"), Advanced Fuel
Filtration Systems Inc. ("Advanced Fuel") and H.B. Covey. From its inception and
up to December  30, 2003,  Entech NV had no  significant  assets or  operations.
Subsequent  to the  acquisition,  CPI,  Advanced  Fuel,  and H.B.  Covey  became
wholly-owned  subsidiaries  of Entech NV. The value of Entech NV's common  stock
issued was the historical cost of Entech NV's net tangible assets, which did not
differ  materially  from their fair  value.  In  accordance  with  Statement  of
Financial  Accounting  Standards No. 141, Business  Combinations,  CPI, Advanced
Fuel and H.B. Covey were collectively the acquired entities.

In connection with Entech NV's acquisition of CPI , the total consideration paid
was $3,238,483 and the significant components of the transaction are as follows:

Net liabilities assumed in excess of assets     $  3,238,483
Cash paid                                                 --
                                                ------------
Total consideration paid / goodwill             $  3,238,483
                                                ============

On  September  30,  2004,  CPI  filed  bankruptcy  under  Chapter  7 of the U.S.
Bankruptcy Code (see Note 15).

In  Connection  with  Entech  NV's  acquisition  of  Advanced  Fuel , the  total
consideration  paid  was  $2,855,626  and  the  significant  components  of  the
transaction are as follows:

Net liabilities assumed in excess of assets     $  1,855,626
Note payable                                       1,000,000
                                                ------------
Total consideration paid / goodwill             $  2,855,626
                                                ============

On September  30, 2004,  Advanced Fuel filed  bankruptcy  under Chapter 7 of the
U.S. Bankruptcy Code (see Note 16).

                                       F-9
<PAGE>

In  connection  with  Entech  NV's   acquisition  of  H.B.   Covey,   the  total
consideration   paid  was  $954,911  and  the  significant   components  of  the
transaction are as follows:

Net assets acquired in excess of liabilities    $    (45,089)
Note payable                                       1,000,000
                                                ------------
Total consideration paid / goodwill             $   954,911
                                                ============

On January 21, 2004,  Entech NV  completed a Capital  Stock  Exchange  Agreement
("Agreement")  with Cyber Public Relations,  Inc. ("Cyber") an inactive publicly
registered  shell  corporation  with no significant  assets or  operations.  For
accounting  purposes,  Entech NV was the surviving  entity.  The transaction was
accounted for using the purchase method of accounting.  The total purchase price
and carrying value of net assets acquired of Cyber was $297,578.  From June 1998
until  the  date  of the  merger,  Cyber  was an  inactive  corporation  with no
significant  assets and  liabilities.  As Cyber  Public  Relations,  Inc. was an
inactive  corporation with no significant  operations,  the Company recorded the
carryover historical basis of net tangible assets acquired, which did not differ
materially from their historical  cost. The results of operations  subsequent to
the date of merger are  included in the  Company's  consolidated  statements  of
losses.

Effective with the Agreement,  all of the previously issued  outstanding  common
stock, preferred stock, options and warrants owned by the Entech NV shareholders
were exchanged for an aggregate of 9,550,000 shares of Cyber's restricted common
stock. As a result of the Agreement, there was a change in control of the Cyber.
Subsequent   to  the   recapitalization,   Cyber  changed  its  name  to  Entech
Environmental Technologies, Inc.

Effective with the Agreement,  all shares previously  outstanding  common stock,
preferred stock,  options and warrants other than 315,000 shares of common stock
owned by a  significant  Cyber  stockholder  were  returned  to the  Company for
cancellation.  In accordance  with SOP 98-5,  the Company  expensed  $297,578 as
organization costs.

The total consideration paid was $297,578 and the significant  components of the
transaction are as follows:

Common stock retained                              $        315
Liabilities assumed in excess of assets                  22,263
Cash paid                                               275,000
                                                   ------------
Total consideration paid / organization costs      $    297,578
                                                   ============

Discontinued Operations and Deconsolidation
-------------------------------------------

The Company's  business plan contemplated the integration of CPI, Advanced Fuel,
and H.B. Covey into a coordinated  group  providing a broad spectrum of services
to fuel  distribution  facilities.  The  Company  was  unable to  complete  this
integration  and realize its business plan, and encountered  severe  operational
and  cash  flow  problems.  In June  2004,  the  Company's  board  of  directors
authorized management to proceed with the disposal of two subsidiaries,  CPI and
Advanced Fuel. On September 30, 2004,  the Company  formally filed for Chapter 7
bankruptcy  protection  for  CPI  and  Advanced  Fuel  in  Los  Angeles  County,
California (see Note 16).

The consolidated  financial  statements include the accounts of the Company, and
its  wholly-owned  subsidiary,  H.B.  Covey,  Inc. The balance sheets of CPI and
Advanced Fuel have been  de-consolidated  as of September 30, 2004,  and are not
included in the balance  sheet of the Company.  The results of operations of CPI
and  Advanced  Fuel are included in  discontinued  operations  in the  Company's
consolidated  statement of operations and  consolidated  statement of cash flows
for the year ended September 30, 2004, and there were no discontinued operations
for the year ended September 30, 2005.

                                       F-10
<PAGE>

Going Concern Issues
--------------------

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of  liabilities in the normal course of business.  As shown in the  accompanying
financial  statements  during the years ended  September 30, 2005 and 2004,  the
Company  incurred  losses from  continuing  operations of $1.2 million and $16.0
million, respectively; and had negative cash flows from continuing operations of
$588,000 and $1.7 million,  respectively.  As of September 30, 2005, the Company
has negative  working capital of $1.4 million,  an accumulated  deficit of $17.2
million,   current   portion  of  notes  payable  of  $1.1  million  after  full
amortization of the note discount,  and accounts payable and accrued expenses of
$1.4 million.

Other  than  cash  received  from the  collection  of  accounts  receivable  for
construction,  maintenance and consumer  services,  the Company's cash resources
are  generally  limited  to  borrowings  under the Note  Purchase  Agreement  as
discussed in Note 8. To date,  the Company has borrowed  $1.1 million  under the
agreement  which provides for total  aggregate  borrowings of $1.5 million.  The
Note Purchase Agreement  provides certain  restrictions on the Company's ability
to raise funds from other resources. As a result,  payments to vendors,  lenders
and employees may be delayed.

These factors raise substantial doubt about the Company's ability to continue as
a going  concern.  The  accompanying  financial  statements  do not  include any
adjustments  that  might  result  from  the  outcome  of this  uncertainty.  The
Company's existence is dependent upon management's ability to develop profitable
operations and to resolve its liquidity  problems.  Management  anticipates  the
Company  will attain  profitable  status and improve its  liquidity  through the
continued  development,  marketing  and  selling of its  services,  and  through
additional debt or equity investment in the Company.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant  accounting  policies applied in the preparation of
the accompanying consolidated financial statements follows.

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

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America 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 reported  periods.  Actual results could materially differ from those
estimates.

Revenue Recognition
-------------------

Construction Contracts

The Company  recognizes  revenues  from  fixed-price  and  modified  fixed-price
construction contracts on the  percentage-of-completion  method, measured by the
percentage of cost incurred to date to estimated  total cost for each  contract.
That  method is used  because  management  considers  total  cost to be the best
available   measure  of   progress  on  the   contracts.   Because  of  inherent
uncertainties in estimating  costs, it is at least reasonably  possible that the
estimates used will change within the near term.

Contract  costs include all direct  material and labor costs and those  indirect
costs related to contract  performance.  Selling,  general,  and  administrative
costs are charged to expense as incurred.  Provisions  for  estimated  losses on
uncompleted  contracts  are  made  in  the  period  in  which  such  losses  are
determined.   Changes  in  job  performance,   job  conditions,   and  estimated
profitability may result in revisions to costs and income,  which are recognized
in the period in which the  revisions are  determined.  Changes in estimated job
profitability resulting from job performance,  job conditions,  contract penalty
provisions, claims, change orders, and settlements, are accounted for as changes
in estimates in the current period.

The asset,  "Costs and estimated  earnings in excess of billings on  uncompleted
contracts,"  represents  revenues  recognized in excess of amounts  billed.  The
liability,  "Billings in excess of costs and estimated  earnings on  uncompleted
contracts," represents billings in excess of revenues recognized.

                                       F-11
<PAGE>

Repair and Installation Services

The  Company  recognizes  revenue  from  repair and  installation  services,  in
accordance with SEC Staff Accounting  Bulletin No. 101, "Revenue  Recognition in
Financial  Statements"  ("SAB 101").  SAB 101 requires that four basic  criteria
must be met before  revenue can be  recognized:  (1)  persuasive  evidence of an
arrangement  exists;  (2) delivery has occurred or services have been  rendered;
(3) the  selling  price is fixed and  determinable;  and (4)  collectibility  is
reasonably  assured.  Determination  of  criteria  (3)  and  (4)  are  based  on
management's  judgments  regarding the fixed nature of the selling prices of the
products  delivered/services  rendered and the  collectibility of those amounts.
Provisions  for  discounts  and  rebates to  customers,  estimated  returns  and
allowances,  and other  adjustments  are  provided  for in the same  period  the
related sales are recorded. The Company defers any revenue for which the product
has not been  delivered  or  services  have not been  rendered  or is subject to
refund until such time that the Company and the customer jointly  determine that
the product has been  delivered or services have been rendered or no refund will
be required.

On December 17, 2003, the SEC staff released Staff Accounting Bulletin (SAB) No.
104,  Revenue  Recognition.  The staff updated and revised the existing  revenue
recognition in Topic 13, Revenue Recognition,  to make its interpretive guidance
consistent with current accounting  guidance,  principally EITF Issue No. 00-21,
"Revenue  Arrangements with Multiple  Deliverables".  Also, SAB 104 incorporates
portions of the Revenue  Recognition in Financial  Statements - Frequently Asked
Questions  and  Answers  document  that the SEC staff  considered  relevant  and
rescinds  the  remainder.   The  company's  revenue  recognition   policies  are
consistent with this guidance.

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

The Company  measures its financial  assets and  liabilities in accordance  with
accounting  principles  generally accepted in the United States of America.  The
estimated  fair  values   approximate  their  carrying  values  because  of  the
short-term  maturity  of these  instruments  or the  stated  interest  rates are
indicative of market interest rates.

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

Financial  instruments and related items, which potentially  subject the Company
to  concentrations  of credit risk,  consist primarily of cash, cash equivalents
and receivables. The Company places its cash and temporary cash investments with
credit quality institutions.  At times, such investments may be in excess of the
FDIC insurance limit. The Company  periodically reviews its trade receivables in
determining  its  allowance  for doubtful  accounts.  The allowance for doubtful
accounts is $72,242 as of September 30, 2005.

Accounts Receivable
-------------------

Accounts  receivable  are recorded when invoices are issued and are presented in
the balance sheet net of the allowance for doubtful  accounts.  Receivables  are
written off when they are  determined  to be  uncollectible.  The  allowance for
doubtful  accounts is estimated based on the Company's  historical  losses,  the
existing economic conditions in the industry, and the financial stability of its
customers.

                                      F-12
<PAGE>

Inventory
---------

Net  inventories  are valued at the lower of the first-in,  first-out,  or FIFO,
cost or market value and have been reduced by an allowance for excess,  obsolete
and potential scrap inventories. The estimated allowance for excess and obsolete
inventories is based on  inventories on hand compared to estimated  future usage
and  sales  and  assumptions  about  the  likelihood  of scrap or  obsolescence.
Components of inventory as of September 30, 2005 are as follows:

                                                     Amount
                                                 -------------
Parts inventory                                  $    586,524
Less reserve for excess and obsolete parts           (388,034)
                                                 -------------
Net inventory                                    $    198,490
                                                 =============

Property and Equipment
----------------------

Property and equipment are valued at cost.  Depreciation  and  amortization  are
provided  over  the   estimated   useful  lives  up  to  five  years  using  the
straight-line  method. The estimated service lives of property and equipment are
as follows:

  Transportation equipment              Five years
  Tools and equipment                   Five years
  Office furniture and equipment        Three years
  Leasehold improvements                Five years

Long-lived Assets
-----------------

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 144
("SFAS  144").  The  Statement  requires  that  long-lived  assets  and  certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  Events relating to recoverability  may include
significant  unfavorable changes in business conditions,  recurring losses, or a
forecasted  inability to achieve  break-even  operating results over an extended
period. The Company evaluates the recoverability of long-lived assets based upon
forecasted  undiscounted cash flows. Should an impairment in value be indicated,
the carrying value of intangible assets will be adjusted,  based on estimates of
future  undiscounted cash flows resulting from the use and ultimate  disposition
of the asset. SFAS No. 144 also requires assets to be disposed of be reported at
the lower of the carrying amount or the fair value less costs to sell.

Stock Based Compensation
------------------------
On December 16, 2004, FASB published Statement of Financial Accounting Standards
No. 123 (Revised 2004),  Share-Based  Payment ("SFAS 123R").  SFAS 123R requires
that compensation cost related to share-based payment transactions be recognized
in the financial  statements.  Share-based payment transactions within the scope
of SFAS 123R include stock options,  restricted  stock plans,  performance-based
awards,  stock  appreciation  rights,  and employee  share purchase  plans.

The Company did not issue any share based employee compensation during the years
ended September 30, 2005 and 2004.

                                      F-13
<PAGE>

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

The Company has implemented the provisions on Statement of Financial  Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires
that income tax accounts be computed using the liability method.  Deferred taxes
are  determined  based  upon the  estimated  future tax  effects of  differences
between  the  financial   reporting  and  tax  reporting  bases  of  assets  and
liabilities given the provisions of currently enacted tax laws.

Net Loss Per Common Share
-------------------------

The  Company  computes  earnings  (loss) per share  under  Financial  Accounting
Standard No. 128,  "Earnings Per Share" ("SFAS 128").  Net loss per common share
is computed by dividing  net loss by the  weighted  average  number of shares of
common stock and dilutive common stock equivalents  outstanding during the year.
Dilutive common stock equivalents  consist of shares issuable upon conversion of
convertible notes and the exercise of the Company's  warrants  (calculated using
the treasury stock method).  During 2005 and 2004,  common stock equivalents are
not  considered  in the  calculation  of the weighted  average  number of common
shares outstanding  because they would be anti-dilutive,  thereby decreasing the
net loss per common share.

Segment Information
-------------------

Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS 131") establishes standards for
reporting   information   regarding   operating  segments  in  annual  financial
statements and requires selected  information for those segments to be presented
in interim financial  reports issued to stockholders.  SFAS 131 also establishes
standards for related  disclosures  about  products and services and  geographic
areas.  Operating  segments are identified as components of an enterprise  about
which separate discrete financial information is available for evaluation by the
chief operating  decision maker, or  decision-making  group, in making decisions
how to allocate resources and assess performance. Beginning in October 2004, the
Company operates in three segments: Construction Services; Maintenance Services,
and Consumer Services. See Note 15.

Reclassifications
-----------------

Certain reclassifications have been made in prior year's financial statements to
conform to classifications used in the current year.

New Accounting Pronouncements
-----------------------------

In  December  2003,  FASB  issued  a  revision  of  SFAS  No.  132,  "Employers'
Disclosures   About   Pensions   And  Other   Postretirement   Benefits."   This
pronouncement,  SFAS No. 132-R,  expands  employers'  disclosures  about pension
plans and other post-retirement benefits, but does not change the measurement or
recognition of such plans required by SFAS No. 87, No. 88, and No. 106. SFAS No.
132-R retains the existing disclosure requirements of SFAS No. 132, and requires
certain  additional  disclosures  about defined benefit  post-retirement  plans.
Except as described in the following  sentence,  SFAS No. 132-R is effective for
foreign  plans for fiscal years ending after June 15, 2004;  after the effective
date, restatement for some of the new disclosures is required for earlier annual
periods. Some of the interim-period disclosures mandated by SFAS No. 132-R (such
as the components of net periodic benefit cost, and certain key assumptions) are
effective  for foreign  plans for quarters  beginning  after  December 15, 2003;
other interim-period  disclosures will not be required for the Company until the
first  quarter of 2005.  Since the  Company  does not have any  defined  benefit
post-retirement  plans,  the  adoption  of this  pronouncement  did not have any
impact on the Company's results of operations or financial condition.

In November 2004, FASB issued SFAS 151, Inventory Costs, an amendment of ARB No.
43,  Chapter 4. This  Statement  amends the  guidance in ARB No. 43,  Chapter 4,
"Inventory  Pricing," to clarify the  accounting  for  abnormal  amounts of idle
facility  expense,  freight,  handling costs,  and wasted  material  (spoilage).
Paragraph  5  of  ARB  43,  Chapter  4,  previously   stated  that  "under  some
circumstances,  items such as idle facility expense,  excessive spoilage, double
freight,  and  rehandling  costs may be so abnormal as to require  treatment  as
current period  charges" This Statement  requires that those items be recognized
as current-period  charges  regardless of whether they meet the criterion of "so
abnormal."  In  addition,  this  Statement  requires  that  allocation  of fixed
production  overheads to the costs of conversion be based on the normal capacity
of the production  facilities.  This Statement is effective for inventory  costs
incurred during fiscal years beginning after June 15, 2005.  Management does not
believe the adoption of this Statement will have any immediate  material  impact
on the Company.

                                      F-14
<PAGE>

In  December  2004,  the FASB issued SFAS  No.152,  "Accounting  for Real Estate
Time-Sharing  Transactions,an amendment of FASB Statements No. 66 and 67" ("SFAS
152) The amendments  made by Statement 152 This Statement  amends FASB Statement
No.  66,  Accounting  for  Sales of Real  Estate,  to  reference  the  financial
accounting and reporting guidance for real estate time-sharing transactions that
is  provided in AICPA  Statement  of Position  (SOP) 04-2,  Accounting  for Real
Estate Time-Sharing Transactions.  This Statement also amends FASB Statement No.
67,  Accounting for Costs and Initial Rental Operations of Real Estate Projects,
to state that the guidance for (a) incidental  operations and (b) costs incurred
to sell  real  estate  projects  does  not  apply  to real  estate  time-sharing
transactions.  The accounting  for those  operations and costs is subject to the
guidance in SOP 04-2.  This Statement is effective for financial  statements for
fiscal years beginning after June 15, 2005, with earlier application encouraged.
The Company does not anticipate  that the  implementation  of this standard will
have a material impact on its financial position,  results of operations or cash
flows.

On December 16, 2004, FASB published Statement of Financial Accounting Standards
No. 123 (Revised 2004),  Share-Based  Payment ("SFAS 123R").  SFAS 123R requires
that compensation cost related to share-based payment transactions be recognized
in the financial  statements.  Share-based payment transactions within the scope
of SFAS 123R include stock options,  restricted  stock plans,  performance-based
awards,  stock  appreciation  rights,  and employee  share purchase  plans.  The
provisions of SFAS 123R are effective as of the first interim period that begins
after June 15,  2005.  Accordingly,  the  Company  will  implement  the  revised
standard  in the fourth  quarter of fiscal  year 2005.  Currently,  the  Company
accounts for its share-based  payment  transactions  under the provisions of APB
25, which does not necessarily  require the recognition of compensation  cost in
the  financial  statements.  Management is assessing  the  implications  of this
revised  standard,   which  may  materially  impact  the  Company's  results  of
operations in future periods.

On December 16, 2004, FASB issued  Statement of Financial  Accounting  Standards
No. 153,  Exchanges of Nonmonetary  Assets,  an amendment of APB Opinion No. 29,
Accounting for Nonmonetary Transactions (" SFAS 153"). This statement amends APB
Opinion 29 to  eliminate  the  exception  for  nonmonetary  exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
nonmonetary assets that do not have commercial  substance.  Under SFAS 153, if a
nonmonetary  exchange of similar productive assets meets a  commercial-substance
criterion and fair value is determinable,  the transaction must be accounted for
at fair  value  resulting  in  recognition  of any  gain or  loss.  SFAS  153 is
effective for  nonmonetary  transactions in fiscal periods that begin after June
15,  2005.  The Company  does not  anticipate  that the  implementation  of this
standard  will have a  material  impact on its  financial  position,  results of
operations or cash flows.

In May 2005, FASB issued  Statement of Financial  Accounting  Standards No. 154,
Accounting Changes and Error  Corrections,  a replacement of APB Opinion No. 20,
Accounting  Changes and FASB  Statement No. 3, Reporting  Accounting  Changes in
Interim Financial  Statements ("SFAS 154"). This Statement  replaces APB Opinion
No. 20 and FASB Statement No. 3, and changes the requirements for the accounting
for and reporting of a change in accounting principle. This Statement applies to
all  voluntary  changes  in  accounting  principle.  It also  applies to changes
required  by an  accounting  pronouncement  in the  unusual  instance  that  the
pronouncement  does  not  include  specific   transition   provisions.   When  a
pronouncement includes specific transition  provisions,  those provisions should
be followed.  Opinion 20  previously  required  that most  voluntary  changes in
accounting  principle be  recognized by including in net income of the period of
the change the cumulative  effect of changing to the new  accounting  principle.
This Statement  requires  retrospective  application to prior periods' financial
statements of changes in accounting  principle,  unless it is  impracticable  to
determine  either the  period-specific  effects or the cumulative  effect of the
change. When it is impracticable to determine the period-specific  effects of an
accounting  change  on one or more  individual  prior  periods  presented,  this
Statement requires that the new accounting  principle be applied to the balances
of assets and  liabilities as of the beginning of the earliest  period for which
retrospective  application is practicable and that a corresponding adjustment be
made  to  the  opening  balance  of  retained  earnings  (or  other  appropriate
components of equity or net assets in the  statement of financial  position) for
that  period  rather  than being  reported  in an income  statement.  When it is
impracticable  to  determine  the  cumulative  effect  of  applying  a change in
accounting principle to all prior periods,  this Statement requires that the new
accounting  principle  be applied as if it were adopted  prospectively  from the
earliest  date  practicable.  SFAS 154 is effective for  accounting  changes and
corrections of errors made in fiscal years beginning after December 15, 2005 The
Company does not anticipate that the implementation of this standard will have a
material impact on its financial position, results of operations or cash flows.

                                      F-15
<PAGE>

Other significant recent accounting pronouncements issued by the FASB (including
its Emerging Issues Task Force  ("EITF")),  the American  Institute of Certified
Public Accountants, and the SEC may be discussed elsewhere in these notes to the
consolidated  financial  statements.  In the opinion of management,  significant
recent accounting  pronouncements  did not or will not have a material effect on
the consolidated financial statements.

NOTE 3 - ACCOUNTS RECEIVABLE

Accounts receivable at September 30, 2005 consist of the followings:

                                                    Amount
                                                 -----------
Construction contract billings                   $   715,921
Maintenance billings                                 286,183
Consumer billings                                    165,375
                                                 -----------
                                                   1,167,479
Less allowance for uncollectible amounts             (72,242)
                                                 -----------
                                                 $ 1,095,237
                                                 ===========

NOTE 4 - UNCOMPLETED CONSTRUCTION CONTRACTS

The summary of activity on  uncompleted  construction  contracts as of September
30, 2005 is as follows:

                                                                Amount
                                                             -----------
Estimated earnings                                           $   951,252
Less billings to date                                           (931,600)
                                                             -----------
Costs and estimated earnings in excess of billings                19,652



Less billings in excess of costs and estimated earnings          (92,625)
                                                             -----------
                                                             $   (72,973)
                                                             ===========

                                      F-16
<PAGE>

NOTE 5 - PROPERTY AND EQUIPMENT

Major  classes of property and  equipment  at September  30, 2005 consist of the
followings:

                                                                Amount
                                                             -----------
Transportation equipment                                     $   654,172
Tools and equipment                                              149,038
Office furniture and equipment                                   216,386
Leasehold improvements                                           150,000
                                                             -----------
                                                               1,169,596
Less accumulated depreciation and amortization                  (757,760)
                                                             -----------
Net property and equipment                                   $   411,836
                                                             ===========

Depreciation  expense  totaled $59,000 and $49,000 for the years ended September
30, 2005 and 2004, respectively.

NOTE 6 - IMPAIRMENT OF GOODWILL

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No.  142
"Goodwill and Other  Intangible  Assets"  ("SFAS No. 142")  effective  August 1,
2002.   SFAS  No.  142  addresses  how  intangible   assets  that  are  acquired
individually  or with a  group  of  other  assets  should  be  accounted  for in
financial  statements upon their  acquisition.  This statement requires goodwill
amortization  to  cease  and  for  goodwill  to  be  periodically  reviewed  for
impairment.

Under  SFAS No.  142,  goodwill  impairment  occurs  if the net book  value of a
reporting  unit  exceeds its  estimated  fair value.  The test  completed in the
second and third quarter of 2004  indicated  that the recorded book value of the
goodwill  exceeded its fair value, as determined by discounted  cash flows.  The
decrease in fair value is a result of:

   -  significant operating losses during the past nine months

   -  unanticipated decline in revenues and profitability

   -  loss of key personnel

As a result of these events and circumstances,  Company management believed that
the fair value of the goodwill  (CPI -  $3,238,483;  AFFS -  $2,855,626;  and HB
Covey - $954,911;  see Note 1) had been reduced below its carrying  value.  As a
result, management performed an evaluation of the tangible and intangible assets
for purposes of determining  the implied fair value of goodwill at September 30,
2004.  Upon  completion  of  the  assessment,  management  recorded  a  non-cash
impairment  charge of  $(7,049,020)  net of tax, or $(0.70) per share during the
year ended  September 30, 2004, to reduce the carrying  value of goodwill to its
estimated value of zero at September 30, 2004.  Considerable management judgment
is necessary to estimate  fair value.  Accordingly,  actual  results  could vary
significantly from managements' estimates.

NOTE 7 - DUE TO DE-CONSOLIDATED ENTITIES

As  discussed in Note 1, the Company  completed a  reorganization  in 2004,  and
after  failing to realize the then current  business  plan,  two of the entities
filed  for  bankruptcy   protection  in  September  2004.  These  entities  were
de-consolidated  as of September 30, 2004. The Company wrote-off its receivables
from  these  entities  in 2004.  As of  September  30,  2005,  the  Company  has
liabilities to the  de-consolidated  entities  totaling  $813,000.  The ultimate
payment or  satisfaction  of these  liabilities is dependent upon the outcome of
the bankruptcy proceedings, which have not been finalized as of the date of this
report.

                                      F-17
<PAGE>

NOTE 8 - NOTE PURCHASE AGREEMENT

In September 2004, the Company entered into a Note Purchase Agreement (the "Note
Purchase  Agreement") whereby the Company would borrow a minimum of $100,000 and
a maximum of  $1,500,000  pursuant  to a secured  note or notes  (the  "Notes").
Through September 30, 2005, the Company has borrowed $1.1 million under the Note
Purchase  Agreement,  and  this  amount  is due on  September  30,  2006.  As of
September 30, 2005, the Notes issued pursuant to the Note Purchase Agreement are
convertible  into 42.5 million shares of common stock.  Pursuant to the terms of
the Note  Purchase  Agreement,  the Company  has granted  warrants to purchase a
total of 15.9 million shares of common stock at $0.15 per share.

The Notes are convertible into common stock of the Company at the rate of $0.025
per share (the  "Conversion  Price").  The Notes bear interest at the rate of 8%
per annum,  and are secured by a first lien and security  interest on all assets
of the Company and its subsidiary. The Company has no right to prepay the Notes.
The note  holder may  convert the Notes at any time.  In  addition,  the Company
issued  common stock  purchase  warrants  (the "Note  Warrants")  to purchase 15
shares of common  stock for every  $1.00 of  principal  borrowed  under the Note
Purchase Agreement. The Note Warrants have an exercise price of $0.15 per share,
and a term of five years. See Note 11 for detail on outstanding warrants.

In September 2004, the Company also entered into a Registration Rights Agreement
(the  "Registration  Rights  Agreement")  regarding  the shares of common  stock
underlying the Notes and the Note Warrants (the "Registrable Shares") . Pursuant
to the  Registration  Rights  Agreement,  the Company agreed to prepare and file
within one hundred fifty days from the date of the Registration Rights Agreement
a registration  statement covering the Registrable Shares. The Company agreed to
use its  best  efforts  to  cause  the  Registration  Statement  to be  declared
effective by the SEC on the earlier of (i) 210 days  following  the Closing Date
with respect to the  Registration  Statement,  (ii) ten (10) days  following the
receipt of a "No  Review" or similar  letter from the SEC or (iii) the first day
following the day the SEC determines the Registration  Statement  eligible to be
declared  effective.  If,  after 7  months  from  the  date of the  Registration
Statement,   in  the  event  the  Company  does  not  register  the  Registrable
Securities,  or if the  Registration  Statement filed pursuant to Section 2.2 of
the  Registration  Rights  Agreement  is  not  declared  effective,  or  if  the
Registrable  Securities  are  registered  pursuant to an effective  Registration
Statement  and  such  Registration  Statement  or other  Registration  Statement
including  the  Registrable  Securities  is not  effective  in the period from 7
months from September 30, 2004 through two years  following  September 30, 2004,
the Company shall, for each such day, pay the Purchaser,  as liquidated  damages
and not as a penalty,  an amount equal to 36% of the  Purchase  Price per annum;
and for any  such  day,  such  payment  shall be made no  later  than the  first
business day of the calendar  month next  succeeding the month in which such day
occurs.  In  addition,  if the  Company has not filed a  registration  statement
within  the  thirty  day  period  after  closing  as  specified  in  2.2  of the
Registration Rights Agreement, the Company shall, for each such day after thirty
days from  closing  and until the filing of a  registration  statement,  pay the
Purchaser, as liquidated damages and not as a penalty, an amount equal to 36% of
the Purchase  Price per annum;  and for any such day, such payment shall be made
no later than the first business day of the calendar  month next  succeeding the
month in which such day occurs.

The Registration  Rights  Agreement was effective  September 30, 2004, and as of
the  date  of the  financial  statements,  the  Company  had  not  yet  filed  a
registration   statement  as  required  by  the  Registration  Right  Agreement.
Accordingly,  liquidated  damages  totaling  $371,000  were  charged to interest
expense  during the year ended  September 30, 2005. The Company has not paid any
of the liquidated damages as of September 30, 2005.

                                      F-18
<PAGE>

Borrowings  under the Note Purchase  Agreement and the related  discounts are as
follows as of September 30, 2005:

                                                         Amount
                                                      -----------
Note proceeds                                         $ 1,062,012
Discount for value assigned to Note Warrants             (741,944)
Discount for value assigned to Beneficial
  Conversion Feature                                     (320,068)
Amortization of discounts                                 525,679
                                                      -----------
Net carrying value of note payable                    $   525,679
                                                      ===========

The values assigned to the Beneficial  Conversion  Feature and the Note Warrants
are  treated as a discount  to the Notes,  and are being  amortized  to interest
expense  over the  terms of the  Notes.  Since  the date of the  first  Note was
September 30, 2004,  there was no  amortization  of the discount during the year
ended September 30, 2004. Interest expense for the year ended September 30, 2005
includes $526,000 of the amortized note discounts.

NOTE 9 - NOTES PAYABLE TO RELATED PARTIES

The Company has an outstanding note payable of $146,000 to Burr D. Northrop, the
Company's  President,  at  September  30, 2005.  The Company  issued the note in
August  2005 as payment  for tenant  improvements  to the leased  facility.  Mr.
Northrop is the landlord of the leased property.  The note bears interest at 8%,
and provides for monthly payments of $3,041 through July 2010.

The Company  converted a $50,000 note payable and $10,000 of interest payable to
a related  party into common  stock  through the  issuance of 800,000  shares of
common stock in August 2005.

NOTE 10 - CAPITAL STOCK

Issued and Outstanding
----------------------

The Company is authorized to issue 10,000,000  shares of preferred stock, with a
par value of $0.001 per share.  As of September  30,  2005,  the Company had not
issued any  preferred  stock.  The Company is  authorized  to issue  100,000,000
shares of common  stock,  with a par value of $0.001 per share.  As of September
30,  2005,  the  Company  has  28,405,825  shares of  common  stock  issued  and
outstanding. As discussed below, the Company has 4,478,536 shares subscribed for
future issuance as of September 30, 2005.

In December 2003, the Company acquired through a Share Exchange  Agreement,  all
of the issued and outstanding  stock of CPI  Development  Inc. and Advanced Fuel
Filtration  Systems,  Inc. and H.B.  Covey,  Inc.  The total shares  acquired of
67,824 were canceled  subsequent to the  acquisition.  The Company also canceled
500 shares of treasury stock for $1,250,000 relating to CPI Development Inc.

During the year ended September 30, 2004, the Company  completed a Capital Stock
Exchange Agreement ("Agreement") with Cyber Public Relations,  Inc., an inactive
publicly  registered shell corporation with no significant assets or operations.
Effective with the Agreement,  all except 315,000 out of total 2,199,000  shares
of common  stock were  canceled  and, in exchange,  8,550,000  shares of Cyber's
restricted common stock were issued.  Also, the Company issued 500,000 shares to
the employees in relation to the acquisition.

During the year ended  September  30, 2004,  the Company  issued an aggregate of
1,000,000  shares  of common  stock to  various  outside  service  providers  in
exchange for  investment and legal  services.  The shares were issued at the par
value of $0.001 per share, which represented the fair value of the stock issued,
which did not differ materially from the value of the services rendered.

During the year ended September 30, 2004, the Company issued 4,085,832 shares of
common stock pursuant to private placement  agreements and received net proceeds
of $5,536,249.  As part of a goodwill  restructuring of the terms of the private
placement  agreements,  the Company subscribed 976,252 shares of common stock to
these investors, and issued the shares in fiscal year 2005.

                                      F-19
<PAGE>

During the year ended  September  30,  2004,  the Company  subscribed  2,134,705
shares of common stock to members of  management  for the  conversion of amounts
owed to them totaling $2,134,705. The Company issued these shares in fiscal year
2005. The Company also subscribed 6,400,000 shares of common stock to members of
management  as  incentive   compensation  at  $0.16  per  share,   and  recorded
compensation  expense of $1,024,000.  The fair value of the stock subscribed did
not materially differ from the value of the services rendered. The shares issued
for incentive compensation were issued in fiscal year 2005.

During the year ended  September  30,  2004,  the Company  subscribed  1,580,869
shares of common stock to vendors and service  providers,  and recorded expenses
totaling $277,553. The fair market value of the shares issued did not materially
differ from the value of the services rendered.  The Company issued 1,352,369 of
the  subscribed  shares in fiscal  year 2005,  and 228,500  shares  remain to be
issued.

During the year ended  September 30, 2005, the Company issued 75,000 shares to a
service provider,  and recorded expense of $4,875.  The fair market value of the
shares issued did not materially differ from the value of the services rendered.

During the year ended September 30, 2005, the Company issued 1,500,000 shares of
common  stock to a former  officer and director  pursuant to the  reorganization
discussed in Note 1, and recorded $90,000 of expense related to the transaction.
The fair market value of the shares  issued did not  materially  differ from the
value of the services  rendered.  The Company may be obligated to issue  another
1,000,000  shares to the same person pursuant to the  reorganization  agreement,
and the Company  recorded  $60,000 of expense  related to the  transaction,  and
accrued this amount as a liability. The Company is disputing the issuance of the
additional 1,000,000 shares.

During the year ended  September 30, 2005,  the Company  issued 16,667 shares of
common  stock to an  investor in an earlier  sale of common  stock as a goodwill
restructuring  of the terms of the previous sale. The Company charged the amount
of $17 to additional paid-in capital.

During the year ended  September 30, 2005, the Company entered into an agreement
with an individual to settle claims against one of the de-consolidated  entities
totaling  $398,125.  The Company  issued  500,000 shares of common stock and the
$398,125  was  recorded  as a  reduction  in the amount  due to  de-consolidated
entities.

During the year ended  September 30, 2005,  the Company issued 800,000 shares of
common stock to satisfy a $50,000  note payable and $10,000 of interest  payable
to a related party.  The Company also issued 200,000 shares at $.075, the market
value  on the  date  of  issuance,  to  the  same  related  party  as  incentive
compensation,  and  recorded  compensation  expense  of  $15,000  related to the
issuance.

During the year ended September 30, 2005, the Company issued  10,863,326  shares
of common stock that were subscribed in 2004.

                                      F-20
<PAGE>

Shares Subscribed, Not Issued
-----------------------------

During the year ended  September  30,  2005,  the Company  subscribed  4,000,036
shares of common stock at $.025 per share to  investors in a private  placement.
The shares had not been issued as of September 30, 2005.

Following is a summary of the subscribed share activity:

<TABLE>
<CAPTION>

                                                Common Stock Subscribed, Not Issued (Shares)
---------------------------------------------------------------------------------------------------------------------
                                                        Incentive
                                          Cash         Compensation       Services         Other              Total
                                      ------------     ------------     ------------    ------------    -------------
<S>                                   <C>              <C>              <C>             <C>             <C>

Balance at September 30, 2003                   --               --               --              --               --

Shares subscribed                               --        6,400,000        1,580,869       3,110,957       11,091,826
Issuance of subscribed shares                   --               --               --              --               --
                                      ------------     ------------     ------------    ------------    -------------
Balance at September 30, 2004                   --        6,400,000        1,580,869       3,110,957       11,091,826

Shares subscribed                        4,000,036               --               --              --        4,000,036
Issuance of subscribed shares                   --       (6,400,000)      (1,352,369)     (3,110,957)     (10,863,326)

                                      ------------     ------------     ------------    ------------    -------------
Balance at September 30, 2005            4,000,036               --          228,500              --        4,228,536
                                      ============     ============     ============    ============    =============
</TABLE>

NOTE 11 - WARRANTS TO PURCHASE COMMON STOCK

The  Company  granted  warrants  in 2005 and  2004 in  connection  with  capital
formation  efforts  under the Note  Purchase  Agreement  (see Note 8). The value
attributed to the warrants has been credited to additional paid-in capital.  The
Company did not grant any stock  options  during the years ended  September  30,
2005 or 2004.

Transactions involving warrants are summarized below:

                                                              Weighted
                                                               average
                                           Warrants           exercise
                                          outstanding           price
                                         --------------     ------------
Balance at September 30, 2004                16,854,055       $     1.25
Granted                                       7,501,500             0.15
Exercised                                            --
Cancelled                                            --
                                         --------------      -----------
Balance at September 30, 2005                24,355,555       $     0.91
                                         ==============      ===========

                                      F-21
<PAGE>

The following is a further breakdown of the warrants outstanding as of September
30, 2005:

<TABLE>
<CAPTION>
                                          Weighted average            Weighted average
   Exercise       Number outstanding    remaining contractual    exerciseprice  outstanding
    prices         and exercisable          life (years)              and exercisable
  -----------    -------------------   ----------------------   ---------------------------
  <S>            <C>                   <C>                      <C>

  $   0.15           15,930,180                 4.05                $     0.15
      1.00            3,150,000                 3.33                      1.00
      1.10              475,375                 3.33                      1.10
      2.00            2,000,000                 3.33                      2.00
      2.50              400,000                 1.38                      2.50
      3.00              400,000                 1.38                      3.00
      4.00            1,000,000                 3.33                      4.00
      6.00            1,000,000                 3.32                      6.00

                 -------------------   ----------------------   ---------------------------
                     24,355,555                 3.74                $     0.91
                 ===================   ======================   ===========================
</TABLE>

NOTE 12 - INCOME TAXES

The Company  adopted  Financial  Accounting  Standard No. 109 which requires the
recognition of deferred tax  liabilities  and assets for the expected future tax
consequences of events that have been included in the financial statement or tax
returns.  Under this method,  deferred tax liabilities and assets are determined
based on the difference between financial statements and tax bases of assets and
liabilities  using  enacted  tax  rates in  effect  for the  year in  which  the
differences  are  expected to reverse.  Temporary  differences  between  taxable
income  reported for  financial  reporting  purposes and income tax purposes are
insignificant.

For income tax reporting purposes,  the Company's aggregate unused net operating
losses   approximate  $15.3  million  which  expire  through  2023,  subject  to
limitations  of Section  382 of the  Internal  Revenue  Code,  as  amended.  The
deferred tax asset related to the carry forward is approximately $5,697,000. The
Company  has  provided a  valuation  reserve  against the full amount of the net
operating  loss  benefit,  because in the opinion of  management  based upon the
earning  history of the  Company,  it is more likely than not that the  benefits
will not be realized.

Components of deferred tax assets as of September 30, 2005 are as follows:

                                        Amount
                                     -------------
Non-current:
Net operating loss carryovers        $   5,697,000
Valuation allowance                     (5,697,000)
                                     -------------
Net deferred tax asset               $          --
                                     =============

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Leases
------

The Company  leases 8,000  square feet of  warehouse  and office space in Chino,
California from Burr D. Northrop,  the Company's  President.  The monthly rental
rate is $6,500, and the lease provides for 3% annual increases in rent beginning
in August,  2007. The lease term is for five years,  and expires in July,  2010.
Total future  payments under the lease as of September 30, 2005 total  $391,400.
Management   believe  that  these   facilities  are  adequate  for  our  current
operations. However, we expect that we could locate other suitable facilities at
comparable rates, should we need more space.

                                      F-22
<PAGE>

The Company  leases a storage yard near the warehouse and office space in Chino.
The  monthly  rent under the lease was $1,000 per month.  This lease  expired in
October  2005,  and the lease is now month to month with a new  monthly  rent of
$1,050 per month.

The  Company  also leases two  storage  units in Los Angeles  County for storing
water  heaters  and  related  equipment  that  we use in the  consumer  services
division.  These leases are on a month to month basis,  and the combined monthly
rent for these two units is $526 per month.

Future payouts under the leases for the warehouse,  office and storage space are
as follows:

    Year           Amount
  ---------    ------------
    2006       $    79,000
    2007            78,400
    2008            80,800
    2009            83,200
    2010            71,000
               ------------
               $   392,400
               ============

Litigation
----------

The Company was named as a defendant in several legal  proceedings  in the State
of California  alleging  breach of contract and various fees in connection  with
the activities of our subsidiaries, Christie-Peterson Development, Advanced Fuel
Filtration  Systems,  Inc., and H.B.  Covey,  Inc. The plaintiffs  seek monetary
damages.  CPI and AFFS commenced  Chapter 7 bankruptcy  proceedings on September
30, 2004.

The proceedings described below are in various stages. While the ultimate effect
of the legal actions  described  below cannot be predicted  with  certainty,  we
expect  that  the  proceedings  against  our  subsidiaries  will not  result  in
liability to us due to the ongoing bankruptcy of CPI and AFFS.

We do not expect the outcome of these  matters to have a material  effect on our
financial  condition or the results of our  operations.  The following  lawsuits
have been filed against us:

NK Heating & Air  Conditioning  filed  complaint  against  the  Company  and its
formerly owned subsidiary , CPI Development, Inc. in Los Angeles County Superior
Court.  The  complaint  alleges a breach of  contract,  and alleges  damages  of
$98,000.   The  Company  believes  that  it  has  meritorious  defenses  to  the
plaintiff's   claims  and  intends  to  vigorously  defend  itself  against  the
Plaintiff's claims.

Corona  Service Park, et al filed  complaint  against the Company in the Central
District of  California  of the United  States  District  Court.  The  complaint
alleges a breach of  contract.  The  Company  believes  that it has  meritorious
defenses to the  plaintiff's  claims and  intends to  vigorously  defend  itself
against the Plaintiff's claims.

The Company is also subject to other legal proceedings and claims which arise in
the ordinary course of its business.  Although  occasional  adverse decisions or
settlements may occur, the Company  believes that the final  disposition of such
matters will not have material adverse effect on its financial position, results
of operations or liquidity

Other than described above, we are not engaged in any other litigation,  and are
unaware of any claims or complaints that could result in future  litigation.  We
will  seek  to  minimize   disputes   with  our   customers  but  recognize  the
inevitability of legal action in today's business  environment as an unfortunate
price of conducting business.

Other
-----

Our former chairman and chief executive officer,  Steven Rosenthal did not agree
to the  termination of his employment  agreement with us in 2004. As of the date
of this report,  we are disputing Mr.  Rosenthal's claim that our obligations to
him under the employment  contract are still in force and effect.  No litigation
has been filed with respect to Mr. Rosenthal at this time.

                                      F-23
<PAGE>

Pursuant to the agreement with Mr. Rosenthal, which was to terminate on November
30, 2006, he was to receive a salary of $360,000 per year, plus bonuses, cost of
living increases,  and other benefits. The agreement was renewable. In addition,
Mr.  Rosenthal  received  1,000,000 shares of our common stock upon execution of
his  agreement.  We  have  taken  the  position  that  the  agreement  has  been
terminated.

NOTE 14 - RELATED PARTY TRANSACTIONS

The Company  leases 8,000  square feet of  warehouse  and office space in Chino,
California from Burr D. Northrop,  the Company's  President.  The monthly rental
rate is $6,500, and the lease provides for 3% annual increases in rent beginning
in August,  2007. The lease term is for five years,  and expires in July,  2010.
Total future  payments under the lease as of September 30, 2005 total  $391,400.
Management  believes that these facilities are adequate for current  operations.
However,  management  expects that we could locate other suitable  facilities at
comparable rates, should more space be needed.

In 2005, we paid Terence Leong,  a board member,  or his company an aggregate of
$46,000 for consulting services provided to the Company.

Also, see Note 9, Notes Payable to Related Parties.

NOTE 15 - SEGMENT INFORMATION

Prior to  September  30,  2004,  the Company  operated and reported its business
operations  internally in one business segment. With the signing of the contract
with  Sears in October  2004 to install  hot water  heaters  and other  consumer
products,  the  Company  began  reporting  its  operations  internally  in three
business  segments:  Construction  Services,  Maintenance  Services and Consumer
Services.

These segments  operate in the United States,  and their markets are regional to
the West  Coast.  During  the  years  ended  September  30,  2005 and  2004,  we
recognized  approximately  44.5 percent and 40.0 percent,  respectively,  of our
consolidated   revenue  from  continuing   operations  from  three   significant
customers.  While  we  consider  our  relationships  with  the  customers  to be
satisfactory,  given the concentration of our sales to a few key customers,  our
continued  relationships  may be subject to the  policies  and  practices of the
customers. We continue to concentrate our efforts on expanding our customer base
in order to reduce our reliance on our current customers.  Intersegment revenues
are not material and are not shown in the following tables.

In September 2004, we formally filed for Chapter 7 bankruptcy protection for two
of our subsidiaries,  CPI and Advanced Fuel. All operations for CPI and Advanced
Fuel are  reflected  as  discontinued  operations  and are not  included  in the
segment information below.

Construction Services
---------------------

Construction  Services specializes in construction of fueling  installations for
the retail  petroleum  industry,  commercial  and  industrial  users,  municipal
organizations,  and  major  equipment  manufacturers.  Customers  are  primarily
located in California.  In 2005,  construction  contracts  ranged in value up to
$1.0 million.

Maintenance Services
--------------------

Maintenance  Services  provides  services  to  fueling  installations.  Services
consist of procedures to ensure the proper  maintenance  and  functioning of the
fueling installations. Customers are primarily located in California.

Consumer Services
-----------------

In October 2004, we entered into a contract with Sears for installation services
related to hot water heaters, water softener systems, garbage disposals,  garage
door openers, etc. The service area covers 35 stores across southern California.
Consumer  Services,  a new business  segment,  includes our business  activities
under the Sears contract.

                                      F-24
<PAGE>

Other
-----

The  Company's  Other  segment  includes  corporate  general and  administrative
expenses and interest expense.

The following table provides selected summary financial data by segment:
<TABLE>
<CAPTION>


                                                          For the year ended September 30, 2005
                                    ----------------------------------------------------------------------------------
<S>                               <C>             <C>                <C>              <C>             <C>

                                    Construction      Maintenance        Consumer          Other           Total
                                    ------------    --------------     -------------    ------------    ------------
Revenues                            $  2,556,708    $    2,542,066     $   1,112,893    $     13,364    $  6,225,031
Cost of sales                          1,315,755         1,581,328           705,370              --       3,602,453
Gross profit                           1,240,953           960,738           407,523          13,364       2,622,578
Operating expenses                       365,221           593,313           489,475       1,395,587       2,843,596
Income (loss) from operations            875,732           367,425          (81,952)      (1,382,223)       (221,018)
Interest expense                              --                --                --      (1,010,242)     (1,010,242)
Segment assets                           783,264           458,911           296,900         366,899       1,905,974

</TABLE>

NOTE 16 - DISCONTINUED OPERATIONS

In June 2004,  management  received  the  authority  to proceed with the plan of
disposal of its CPI and AFFS  subsidiaries.  These subsidiaries were placed into
bankruptcy on September 30, 2004.  The assets and  liabilities  were conveyed to
the bankruptcy trustees after filing the bankruptcies, and both bankruptcies are
open as of September 30, 2005. We are not aware of the assets and liabilities of
the bankrupt  entities as of September 30, 2005, and no assets or liabilities of
the  bankrupt  entities  are included in the  consolidated  balance  sheet as of
September 30, 2005.

The  financial  statements  reflect the  operating  results of the  discontinued
operations  separately from  continuing  operations.  Operating  results for the
discontinued operations for the years ended September 30, 2005 and 2004 were:

                      2005             2004
                 -------------     -------------
Revenue          $          --     $  20,893,299
Expenses                    --        33,818,799
                 -------------     -------------
Net loss         $          --     $ (12,925,500)
                 =============     =============

NOTE 17 - SUBSEQUENT EVENTS

In October 2005, the Company executed a settlement agreement with Northwest Pump
&Equipment Co.  ("Northwest") to settle a lawsuit filed by Northwest against the
Company.  Pursuant to the terms of the  agreement,  all claims were released and
the Company  agreed to pay $45,000 to Northwest,  $25,000 upon  execution of the
agreement, and $2,000 per month until the balance is paid in full.

On December 7, 2005, the Company entered into a settlement agreement with Glast,
Philips & Murray, P.C., a Texas professional  corporation,  and two individuals,
to settle fees for legal services provided to the Company. The Company agreed to
pay $35,000 and to issue an  aggregate  of  1,225,000  shares of common stock to
satisfy liabilities of $163,000. The closing price of the Company's common stock
on December 7, 2005 was $.09 per share.

On December 9, 2005, we acquired all the assets and the right to use the name of
Pacific Coast Testing, a California corporation, at a price of $125,000, $75,000
payable at closing, the remainder payable over a twelve month period, subject to
certain offsets.

                                      F-25