<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                          ----------------------------

                                  FORM 10-KSB
(Mark One)

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

    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000


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

    FOR THE TRANSITION PERIOD FROM  ___________ TO ___________

                         Commission File Number: 0-19793
                          ----------------------------

                           METRETEK TECHNOLOGIES, INC.
                 (Name of small business issuer in its charter)

           DELAWARE                                               84-1169358
(State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization)                              Identification No.)

         600 17TH STREET, SUITE 800 NORTH, DENVER, CO 80202 (Address of
                principal executive offices, including Zip Code)

                                 (303) 416-9200
                (Issuer's telephone number, including area code)

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

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

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                     --------------------------------------
                                (Title of Class)

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

The issuer's revenues for its most recent fiscal year ended December 31, 2000
were $21,657,750.

As of March 1, 2001, the aggregate market value of the shares of the issuer's
Common Stock, the only class of voting or non-voting common equity of the
registrant, held by non-affiliates was $7,257,107, based upon $1.63, the last
sale price of the Common Stock on such date as reported on the Nasdaq National
Market.

As of March 1, 2001, 5,908,067 shares of Common Stock were outstanding.

Transitional Small Business Disclosure Format (check one): Yes [_] No [x]

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE
<PAGE>   2
                           METRETEK TECHNOLOGIES, INC.

                                   FORM 10-KSB
                      FOR THE YEAR ENDED DECEMBER 31, 2000

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                Page
                                                                               Number
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<S>                                                                            <C>
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS ................................       1

PART I
  Item 1.  Description of Business ........................................       2
  Item 2.  Description of Property ........................................      14
  Item 3.  Legal Proceedings ..............................................      14
  Item 4.  Submission of Matters to a Vote of Security Holders ............      14

PART II
  Item 5.  Market for Common Equity and Related Stockholder Matters .......      15
  Item 6.  Management's Discussion and Analysis of  Financial Condition and
           Results of Operations ..........................................      16
  Item 7.  Financial Statements ...........................................      35
  Item 8.  Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure ...........................................      35

PART III
  Item 9.  Directors, Executive Officers, Promoters and Control Persons;
           Compliance With Section 16(a) of the Exchange Act ..............      36
  Item 10. Executive Compensation .........................................      39
  Item 11. Security Ownership of Certain Beneficial Owners and Management .      46
  Item 12. Certain Relationships and Related Transactions .................      50
  Item 13. Exhibits and Reports on Form 8-K ...............................      50


SIGNATURES ................................................................      S-1

INDEX TO FINANCIAL STATEMENTS .............................................      F-1

EXHIBIT INDEX .............................................................      X-1
</TABLE>
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                   SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

      This Annual Report on Form 10-KSB contains "forward-looking statements"
within the meaning of and made under the safe harbor provisions of Section 27A
of the Securities Act of 1933 (the "Securities Act") and Section 21E of the
Securities Exchange Act of 1934 (the "Exchange Act"). From time to time, we may
publish or otherwise make forward-looking statements of this nature.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance, and underlying assumptions and
other statements, which are not statements of historical facts. The words "may",
"could", "should", "will", "project", "intend", "continue", "believe",
"anticipate", "estimate", "expect", "plan", "intend" "potential", "scheduled",
variations of such words, and similar expressions are intended to identify
forward-looking statements. Examples of forward-looking statements include
statements regarding, among other matters, our plans, intentions, beliefs and
expectations about the following:

      -     our future prospects, including our revenues, income, margins,
            profitability, cash flow, liquidity, financial condition and results
            of operations;

      -     our products and services, market position, market share, business,
            growth, and strategic relationships;

      -     our business plans and strategies;

      -     customer demand for and customer benefits attributable to our
            products and services;

      -     industry trends, competition and market conditions, segments and
            trends;

      -     the sufficiency of funds, from operations, available borrowings and
            other capital resources, to meet our future working capital, capital
            expenditure and business growth needs, including but not limited to
            our ability to renew or replace our existing line of credit;

      -     our ability to successfully develop and operate our PowerSecure
            business;

      -     our ability to successfully develop, implement and operate
            PowerSpring;

      -     the effects of pending litigation; and

      -     future economic, business and regulatory conditions.

      These forward-looking statements are based on the current plans,
intentions, beliefs and expectations of management, as well as assumptions made
by and information currently available to management. You are cautioned not to
place undue reliance on these forward-looking statements. Forward-looking
statements are not guarantees of future performance or events, but are subject
to and qualified by substantial risks and uncertainties. Any or all of these
forward-looking statements could turn out to be wrong. Forward-looking
statements will be affected by inaccurate assumptions we might make or by known
or unknown risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by the forward-looking statements.
These risks and uncertainties include, but are not limited to, the factors
described under "Additional Factors That May Affect Our Business and Future
Results" in Item 6 below, as well as other risks and uncertainties discussed
elsewhere in this Report, in documents that we included as exhibits to or
incorporated by reference in this Report and in our other reports and filings
with the Securities and Exchange Commission ("SEC"). We do not intend, and we
undertake no duty or obligation, to update or revise any forward-looking
statements for any reason, whether as a result of new information, future events
or otherwise.


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                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS

BACKGROUND

      Metretek Technologies, Inc., through its subsidiaries ("Metretek" or
"we"), is a diversified provider of energy technology measurement products,
services and data management systems to industrial and commercial users and
suppliers of natural gas and electricity. Metretek was incorporated in Delaware
on April 5, 1991. In June 1999, Metretek changed its name from "Marcum Natural
Gas Services, Inc." to "Metretek Technologies, Inc." We currently conduct our
continuing operations through four subsidiaries:

      -     Metretek, Incorporated ("Metretek Florida"), based in Melbourne,
            Florida, which designs, manufactures and sells electronic devices
            and systems, commonly referred to as automatic meter reading systems
            ("AMRs"), that automatically monitor, record and transmit data from
            natural gas custody transfer meters, electronic flow correctors and
            computers, and other energy measurement products and services.

      -     Southern Flow Companies, Inc. ("Southern Flow"), based in Lafayette,
            Louisiana, which provides a wide variety of natural gas measurement
            services principally to producers and operators of natural gas
            production facilities.

      -     PowerSecure, Inc. ("PowerSecure"), based in Denver, Colorado, which
            provides a turn-key program of distributed generation to industrial
            and commercial users of electricity.

      -     PowerSpring, Inc. ("PowerSpring"), currently based in Denver,
            Colorado but being relocated to Melbourne, Florida, which designs
            and markets a web-enabled energy information management system.

      During 1998, we decided to discontinue the operations of Marcum Gas
Transmission, Inc. ("MGT"). We formed MGT as a wholly-owned subsidiary to
acquire or finance the acquisition of natural gas assets through private
programs, and then to manage and maintain a small ownership interest in those
programs. Our decision to discontinue MGT's operations was based on the
declining prospects of the markets for these types of programs and in order to
enable us to focus on operations with better potential. In December 1997, MGT
sold one-third of its interests in two of the three programs it then managed,
and in March 1998, MGT liquidated the third program. We do not intend to form or
manage any new programs, although MGT will continue to manage the remaining two
programs that operate natural gas related assets until we sell MGT's interest in
those programs or liquidate those programs.

BUSINESS STRATEGY

      Our business strategy is to position ourself as an integrated provider of
data management products, services and systems that enhance the flow of
information to the energy industry. Our products and services have historically
been aimed primarily at the natural gas industry, but we are directing more of
our products and services to other segments of the energy industry, especially
the electricity industry. The energy industry generally is undergoing
fundamental regulatory and structural changes and trends. Our strategy is to
acquire, develop and operate businesses that are positioned to take advantage of
these trends.

      In implementing our business strategy, we have made several important
acquisitions:

      -     In 1993, we acquired substantially all of the assets of the Southern
            Flow Companies division of Weatherford International Incorporated
            ("Weatherford").

      -     In 1994, we acquired Metretek Florida.

      -     In 1998, we acquired the electronic corrector business from American
            Meter Company ("American Meter").

      -     In March 2000, we acquired Mercator Energy Incorporated
            ("Mercator").


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While we regularly engage in discussions relating to potential acquisitions and
dispositions, we have not entered into any agreement with respect to any
material acquisition or disposition except as set forth above.

RECENT DEVELOPMENTS

      During 2000, a major part of our business strategy was focused upon the
development of two new businesses: PowerSecure, our distributed generation
business and PowerSpring, our Internet-based energy services business. The goal
of PowerSecure is to provide a turn-key program of distributed generation to
industrial and commercial users of electricity. PowerSecure acts as an
integrator of distributed peak generation and energy information systems,
allowing customers to make use of real-time pricing, peak-shaving and load
interruption utility incentives. The goal of PowerSpring was to provide
comprehensive energy consumption data and a broad array of additional
information designed to facilitate the purchase and management of natural gas
and electricity by commercial users of natural gas and electricity. PowerSpring
was also intended to provide commercial gas and electricity users with a
mechanism to manage their energy needs and reduce their energy costs. Our
initial focus was the development of a website to provide a single source of
information and services for commercial energy users. We are in the process of
completely restructuring PowerSpring and its business. Most of the business
operations of PowerSpring have been discontinued, with the remaining operations
being transferred to Metretek Florida.

      On February 4, 2000, we completed a $14,000,000 private placement (the
"Units Private Placement") of 7,000 units ("Units"), including 1,450 Units we
issued on December 9, 1999. Each Unit consisted of 200 shares of Common Stock, 1
share of Series B Preferred Stock and warrants ("Unit Warrants") to purchase 100
shares of Common Stock. In the Units Private Placement, we issued 1,400,000
shares of Common Stock, 7,000 shares of Series B Preferred Stock and Unit
Warrants to purchase 700,000 shares of Common Stock. The Units Private Placement
was approved and ratified by our stockholders at a special meeting of
stockholders held on February 3, 2000. The Units were issued to institutional
investors and other "accredited investors" (as defined under Regulation D under
the Securities Act). The primary purpose of the Units Private Placement was to
raise capital to enable us to develop the Internet-based business of
PowerSpring. A portion of the proceeds was also used to repay outstanding
indebtedness.

      On March 17, 2000, we acquired Mercator through a merger with a
wholly-owned subsidiary of PowerSpring. Mercator is a Denver-based natural gas
services and brokerage company that acts as an independent broker-agent for both
producers and users. In consideration for the acquisition of Mercator, we
delivered to John A. Harpole, the President and sole shareholder of Mercator
prior to the acquisition, $408,334 in cash, a $741,666 non-negotiable promissory
note payable by PowerSpring over two years and secured by a general security
interest in the assets of PowerSpring, and 2,500,000 shares of common stock of
PowerSpring. Subsequent to the acquisition of Mercator, we own 87.5% of the
outstanding shares of PowerSpring common stock, Mr. Harpole owns 12.5% of the
outstanding shares of PowerSpring common stock, and Mercator has become a
wholly-owned subsidiary of PowerSpring.


METRETEK, INCORPORATED

      We acquired Metretek Florida in March 1994. Metretek Florida was founded
in 1977 in Melbourne, Florida as a developer, manufacturer, and marketer of
automated systems for remotely monitoring and recording energy consumption from
a central location. The "Metretek System" consists of three components:

      -     a solid state, electronic metering data collection product, with a
            built-in modem;

      -     a communication link; and

      -     a software system for managing the collection and presentation of
            recorded data.

     Products. Metretek Florida's manufactured products fall into three
categories: metering data collection products; electronic gas flow computers and
volume correctors; and application specific recording products. All manufactured
products


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are designed on similar platforms and then customized and configured for
application specific and customer specific requirements.

      Metering data collection products, also known as automatic meter readers
or AMRs, are installed on existing energy meters. The AMRs are designed to
automatically collect and transmit metering data according to a schedule
predetermined and preset by the customer. The AMRs contain an electronic printed
circuit board ("PCB") assembly, which is designed and programmed to interface
with an energy meter at the point of energy consumption. The PCB contains a
microprocessor and modem, is packaged with AC or DC power and is installed on,
or in close proximity to, the energy meter. Energy consumption data is
collected, time-stamped, stored, and then transmitted by the AMR to a central
location on which Metretek Florida software, running on a PC, or a PC network,
manages the data collection and processing as well as storing the data in a
Metretek Florida database. Communication from the remotely located AMRs to the
central software system is usually accomplished using existing, standard voice
grade telephone lines. In some instances, cellular telephones or radios are used
for communications, depending upon the availability and expense of telephone
lines and upon customer preferences. Energy distribution companies use data from
the Metretek System for multiple purposes including system balancing, customer
contract compliance, meter synchronization, and billing.

      As a result of a strategic acquisition of assets from American Meter
Company ("American Meter") in May 1998, Metretek Florida also manufactures and
markets a complete line of electronic natural gas flow computers and volume
correctors. The corrector product line provides the following features and
functions:

      -     instantaneous, real time correction of metered volumes for
            variations in flowing gas pressure and temperature;

      -     on board microprocessor and memory for calculation (per American Gas
            Association formulas) and storage of corrected gas volumes;

      -     standard built in modem for remote interrogation, configuration, and
            data collection; and

      -     user configurable electronic outputs for control and alarm purposes.

      In addition to the AMR and corrector product lines, Metretek Florida
manufactures and markets systems consisting of remote recorders and central
system software for monitoring and recording gas pipeline pressure and for
monitoring cathodic protection systems, and distributed electrical generation
systems.

      Services. Metretek Florida provides custom software development, various
levels of technical support, and training to its customers. It also offers
"Total Data Services" to customers who are unable or unwilling to purchase and
operate a complete Metretek System. This turn-key service includes providing and
installing the remote recorders, collecting the data in Melbourne, Florida and
furnishing timely, accurate, properly formatted data to the customer by means
of e-mail, file transfer, or the Internet. The customer is charged monthly,
based on the quantity of data collected and the frequency at which it is
collected.

      In 1997, Metretek Florida acquired two small printed circuit board
contract manufacturing firms, Sigma VI, Inc. ("Sigma VI") and Quality Contract
Manufacturing, Inc. ("QCMI"). These strategic acquisitions facilitated Metretek
Florida to obtain greater control over the quality and timeliness of its PCB
requirements and diversifying and expanding the business of Metretek Florida
outside of the utility industry. The automated assembly equipment and
experienced personnel acquired permit Metretek Florida to offer contract
manufacturing services to local electronics manufacturers who have short run,
high quality, quick turnaround requirements. The contract manufacturing
business, now operating as Marcum Contract Manufacturing, generates incremental
revenue and margin and makes staffing during utility business peaks and valleys
more manageable.

      Markets. Historically, Metretek Florida's AMR Systems have been sold to
natural gas distribution companies who use the system to remotely and
automatically monitor and record the consumption of their largest industrial and
commercial accounts. Sixty of the largest one hundred gas distribution utility
companies in North America currently use the Metretek System. In a deregulated
environment, the timely and accurate consumption data provided by the Metretek
System is of great value to the gas supply, gas control, marketing, customer
service, and billing functions within the gas distribution utility. Electronic
gas volume correctors are sold to gas distribution utility companies, gas
pipeline companies, gas producers and gatherers, and industrial consumers of
natural gas. Contract manufacturing services are marketed in the State of
Florida, primarily in Brevard County and surrounding counties.


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      Marketing and Customer Service. Metretek Florida utilizes a direct sales
force in the United States and the United Kingdom, and has agreements with
independent representatives and distributors for the promotion, sale, and
support of its products outside these two countries. Metretek Florida provides
its customers with system installation and start up service, 24/7 telephone
technical support, regularly scheduled product training, custom software
development, system monitoring and troubleshooting, and network management
services.

      Metretek Florida regularly participates in utility industry conferences,
symposiums, and trade shows and maintains membership in several national and
regional utility company associations. Metretek Florida also advertises in and
contributes editorially to industry trade journals, utilizes direct mail/e-mail
and telemarketing and has a home page on the Internet (www.metretekfl.com).

      International. Outside the United States, Metretek Florida has sold AMR
Systems to gas distribution utility companies in the United Kingdom,
Netherlands, Pakistan, Australia, Argentina, Brazil, and Canada. All of the six
major gas distribution utility companies in Canada own and operate Metretek
Systems. Metretek Europe Ltd, a wholly owned subsidiary of Metretek Florida,
located in Camberley, Surrey, United Kingdom, promotes, sells, and supports
Metretek Florida products in the United Kingdom and Western Europe. Metretek
Florida also sells gas volume correctors in Canada, Columbia, Brazil, Argentina,
Australia, Taiwan, and Korea. Over the past three years, between 11% and 21% of
Metretek Florida's annual sales have been generated in international markets.

      Acquisitions. Metretek Florida's business strategy includes the
acquisition of, and strategic alliances with, metering equipment manufacturers
and software application developers that can utilize or enhance the sale of
Metretek Florida's products and services.

      In 1991, Metretek Florida acquired Sigma VI and QCMI, which were small
printed circuit board contract manufacturing firms. In 1998, Metretek Florida
acquired substantially all of the assets and business of American Meter
pertaining to electronic gas volume correctors and pressure recorders and non
radio frequency meter reading devices traditionally sold to the utility
industry. In connection with that acquisition, American Meter agreed not to
compete with Metretek Florida in the acquired business for five years from the
closing date. Under a separate agreement, American Meter and its affiliates have
the right to continue to sell the acquired products in markets outside the U.S.
by purchasing the products from Metretek Florida at certain agreed upon prices
and re-selling to utility companies at negotiated or market prices.

      PowerSpring. As discussed below, we are in the process of restructuring
PowerSpring such that the PowerSpring product line, and certain assets and
obligations of PowerSpring, are being transferred to Metretek Florida, in
anticipation that PowerSpring will become a product line of Metretek Florida.
See "-- PowerSpring" below.

SOUTHERN FLOW COMPANIES, INC.

      Southern Flow provides a variety of natural gas measurement services
principally to customers involved in natural gas production, gathering,
transportation and processing. We commenced our operations in this line of
business in 1991 by acquiring an existing business. This business was expanded
significantly in 1993 when we acquired substantially all of the assets of the
Southern Flow Companies division of Weatherford. Through its predecessors,
Southern Flow has provided measurement services to the natural gas industry
since 1953.

      Southern Flow provides a broad array of integrated natural gas measurement
services, including on-site field services, chart processing and analysis,
laboratory analysis, and data management and reporting. Southern Flow's field
services including the installation, testing, calibration, sales and maintenance
of measurement equipment and instruments. Southern Flow's chart processing
operations include analyzing, digitizing and auditing well charts and providing
custom reports as requested by the customer. Southern Flow also provides
laboratory analysis of natural gas and natural gas liquids chemical and energy
content. As part of its services to its customers, Southern Flow maintains a
proprietary database software system which calculates and summarizes energy
measurement data for its customers and allows for easy transfer and integration
of such data into customer's accounting systems. As an integral part of these
services, Southern Flow maintains a comprehensive inventory of natural gas
meters and metering parts, and derives approximately 25% of its annual revenues
from its "parts resale" business. Southern Flow provides its services through 9
division offices located throughout the Gulf of Mexico, Southwest, Mid-Continent
and Rocky Mountain regions.


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      Natural gas measurement services are used by producers of natural gas and
pipeline companies to verify volumes of natural gas custody transfers. To ensure
that such data is accurate, on-site field services and data collection must be
coordinated with chart integration and data development and management to
produce timely and accurate reports.

      The market for independent natural gas measurement services is fragmented,
with no single company having the ability to exercise control. Many natural gas
producers and operators, and most natural gas pipeline and transportation
companies, internally perform some or all of their natural gas measurement
services. In addition to price, the primary consideration for natural gas
measurement customers is the quality of services and the ability to maintain
data integrity, because natural gas measurement has a direct effect on the
natural gas producer's revenue and royalty and working interest owner
obligations. We believe that we are able to effectively compete by:

      -     providing dependable integrated measurement services;

      -     maintaining local offices in proximity to our customer base; and

      -     retaining experienced and competent personnel.

POWERSECURE, INC.

      We formed PowerSecure in the fall of 2000 to engage in the business of
distributed generation, and PowerSecure received its first distributed
generation contract in January 2001. The goal of PowerSecure is to be a national
integrator of distributed generation and energy information management systems,
allowing customers, primarily industrial and commercial users of electricity, to
make use of real-time pricing, peak-shaving and load interruption utility
incentives. Distributed generation is on-site power generation that supplements
or bypasses the public power grid by generating power at the customer's site.
PowerSecure provides a power supply, typically a diesel generator system built
on the customer's site, to serve as an alternative source of power for the
customer's business needs. PowerSecure's turn-key program covers virtually all
elements of the peak-power supply chain, including system design, installation,
financing, operation, rate analysis and contract re-negotiation.

      Distributed Generation Background. The demand for distributed generation
is driven primarily by the need for high quality, high reliability power. The
need for power quality and reliability, in turn, is driven directly from
end-users, especially industrial and commercial users of energy, due to the
rapidly growing demand for computer-grade reliability and the reliance upon
sensitive digital electronics, the outstripping of electricity supply by new
demand and the emergence of an Internet-based economy. This need for reliable
power has become apparent in light of brown-outs and black-outs in California
this winter and in the U.S. midwest in 1998 and 1999. Distributed generation
allows a business to improve reliability by providing a back-up power supply
when the host utility can no longer provide electricity. Distributed generation
can also protect businesses from power outages produced by storms, utility
equipment failures and black-outs and brown-outs that result from instability on
the utility power grids. In addition, businesses utilizing distributed
generation are able to mitigate their exposure to energy price increases by
being able to supply their own electricity through alternative sources. Spikes
in power prices, due to wild electricity spot price savings, have led many
businesses to seek alternative sources of power to protect against these price
spikes by "peak shaving". Peak shaving means utilizing distributed generation to
avoid the high power prices charged by utilities during "peak" energy use
periods.

      In addition, due to the current fragmentation of the energy markets,
real-time energy information has become more critical to have and at the same
time become increasingly more difficult to obtain. Many energy suppliers,
especially utilizers, have complicated pricing standards that are difficult for
energy users to understand and make it harder for them to monitor and manage
their energy usage and costs. Energy deregulation adds to this complexity in
managing energy usage and costs. In order to effectively manage their energy
needs, commercial and industrial users of energy require real-time energy
consumption information. PowerSecure offers its customers the opportunity to
combine its distributed generation package with an accurate energy information
management system.

      Several distributed generation technologies are available. PowerSecure
currently utilizes a diesel-powered generator, which is widely used and is a
proven, cost-effective distributed generation technology. Diesel-powered
generators are able to generate power with reasonable efficiency at a reasonable
cost. However, several new distribution generator technologies are emerging, and
PowerSecure intends to utilize one or more of them as they demonstrate the
ability to be commercially viable and affordable, as well a reliable and
reputable power source. These new technologies include microturbines, which
generate power using a small-scale natural gas-fueled turbine, fuel cells which
combine hydrogen and oxygen as an electrochemical process to produce
electricity, and solar cells, also known as photovoltic cells, which convert the
sun's energy into electricity. Of these newer technologies, microturbines


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currently are the most available and, in our opinion, provide the most
commercially viable source of electricity generation.

      PowerSecure provides a solution to these needs of industrial and
commercial users of energy. By providing a turn-key program of distributed
generation, combined with an energy information management system, the
PowerSecure system provides energy users with a seamless interoperative active
communication between the supply-side and demand-side components of the
customer's power system to capture peak-shaving opportunities and to quickly
respond to emergency and interruption situations. The elements of PowerSecure's
distributed generation package include:

      -     designing and engineering the distributed generation project;

      -     negotiating with the utility to establish the electricity
            inter-connect with the utility;

      -     acquiring and installing the generators;

      -     acquiring or building and installing the switch gear;

      -     performing and managing the installation;

      -     assisting in obtaining the third-party financing of the project; and

      -     providing ongoing monitoring and servicing of the project.

      Sales and Marketing. PowerSecure markets its distributed generation
systems primarily through utilities. It partners with utilities to combine its
distributed generation package with other products or services that the
utilities offer, and assist the utilities in the process of marketing our
distributed generation package to their customers. In addition, PowerSecure
maintains a small direct sales force in the United States to market its
offerings directly to industrial and commercial users of electricity.
PowerSecure's marketing efforts are primarily focused on brand building, product
awareness and lead generation, as well as advertising, seminars and conferences.
PowerSecure also seeks to leverage the customer relationships of Metretek
Florida.

      Contracts and Backlog. As of December 31, 2000, PowerSecure had not
commenced any distributed generation projects. To date in 2001, PowerSecure has
acquired contracts for distributed generation projects with an aggregate present
value equal to approximately $6.4 million. These contracts are scheduled to be
completed during the summer of 2001. The current distributed generation projects
have an approximate three to four month lead time from commencement to
completion, although we anticipate larger projects may require longer lead
times.

POWERSPRING, INC.

      PowerSpring was organized to operate as our Internet-based energy services
subsidiary. We formed PowerSpring as a wholly-owned subsidiary incorporated in
Delaware in August 1999 under the name "Metretek Internet Services, Inc.", and
in February 2000 we changed its name to "PowerSpring, Inc." On March 17, 2000,
PowerSpring acquired Mercator Energy Incorporated, a Denver-based natural gas
services and brokerage company, in exchange for which we issued, among other
consideration, 12.5% of the outstanding capital stock of PowerSpring. As of the
date of this Report, we own 87.5% of the outstanding capital stock of
PowerSpring.

      We originally formed PowerSpring to carry out our Internet-based business
objective to be the leading Internet provider of energy information products,
services and technologies. The goal of PowerSpring was to create a proprietary
virtual energy management system to enable us to take our measurement
information products, services and data management technologies to a broader
market of end-users of natural gas and electricity. We sought to accomplish this
through PowerSpring by creating a comprehensive marketplace on the Internet for
energy consumers and suppliers to take advantage of deregulated energy markets.
The core concept of the PowerSpring business model was for PowerSpring to
provide its customers with Internet-based energy services, including near real
time energy consumption information, which would be derived through the use of
Metretek Florida's AMR technology and new PowerSpring Internet-enabled energy
management tools. In addition, PowerSpring would assist its customers in
procuring natural gas and electricity in the deregulated energy markets.

      PowerSpring's offerings were to be marketed to a large base of commercial
and industrial natural gas and electricity consumers through various sales
methods, including direct sales managers, telemarketing and aggressive,


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Internet-based advertising and marketing campaigns. PowerSpring set out to build
an efficient, technologically-based operation that could be scaled to service
and support the requirements of a very large number of electricity and natural
gas end-users. Being first to market, and obtaining significant capital
financing to support both the development of PowerSpring technologies and the
cost of the aggressive growth plans of the business, were two elements key to
the success of the PowerSpring objective. In September 1999, in furtherance of
our Internet-based business strategy, we entered into an agreement and strategic
relationship with Scient Corporation ("Scient"), an eBusiness systems designer
and innovator, to assist us in designing, developing and implementing a viable
Internet-based business strategy.

       In order to finance the initial phase of the development of PowerSpring,
we took several actions at the Metretek Technologies level to raise capital. In
September 1999, we entered into an amendment to the terms of our credit
facility, which amendment modified certain covenants of our credit facility to
provide the initial financing of PowerSpring. In February 2000, we completed the
$14 million Units Private Placement, the proceeds of which were used principally
to develop the Internet technologies to be used by PowerSpring to support the
needs of its potential customers. In August 2000, we completed a call of
outstanding warrants we had issued as a dividend in 1998, which warrant call
resulted in total proceeds of approximately $2.6 million that provided
additional funding for PowerSpring.

      In October 2000, PowerSpring entered into an agreement with the Institute
of Real Estate Management ("IREM"), under which IREM exclusively sponsors and
endorses PowerSpring products to its members, and under which IREM granted to
PowerSpring an exclusive, revocable license to use certain IREM trademarks in
connection with the marketing of the PowerSpring program. Under the IREM
agreement, PowerSpring pays to IREM a quarterly royalty, on a commission basis
based upon actual purchases and usage of PowerSpring systems by IREM members.
PowerSpring will also pay to IREM a sales royalty, on a commission basis, if
members of other real estate organizations become customers of PowerSpring after
such real estate organization formally sponsors PowerSpring's products and
services. In addition, PowerSpring issued to IREM a warrant to purchase
100,000 shares of PowerSpring common stock exercisable at $0.60 per share so
long as the agreement remains in effect. The agreement is terminable by either
party if certain target criteria are not satisfied after two years.

      The initial focus of our Internet-based business strategy was to develop
and launch a website providing the means for management of real time energy
information and the exchange of energy products. In June 2000, PowerSpring
launched its website: PowerSpring.com. During the development of PowerSpring, we
recognized that once the initial development stage was completed and the website
was launched, the further development and growth of PowerSpring would require
significant additional funds to support its growth plans, including its
continuing and growing overhead, its plans for an aggressive direct sales and
marketing effort, and its anticipated capital expense needs, including the
capital costs associated with the installation of Metretek Florida's AMR
equipment on new customer sites. In order to develop and expand PowerSpring, we
attempted to raise significant additional funds, beyond the proceeds of the
capital financings at the Metretek Technologies level discussed above, from the
proceeds of private equity and venture capital funding at the PowerSpring level.
Unfortunately, we believe that due primarily to the down-turn in the public
equity markets for technology stocks in general, and Internet stocks in
particular, and the resulting negative effect on private investments in those
sectors, we were unable to raise any further capital to finance PowerSpring. As
our capital resources were consumed by the costs of developing PowerSpring, we
were required to explore other avenues of financing and to re-think our
Internet-based business strategy. We explored all available avenues of
continuing the business of PowerSpring, including methods of raising capital,
strategic alliances, partnerships and combinations, and restructuring. By
December 31, 2000, PowerSpring had abandoned plans for any significant
financings from external sources, and had enacted several significant changes in
its business model.

      Over the past several months, PowerSpring has been substantially scaled
down and has laid off most of its employees. The project with Scient has been
completed, and the development costs of PowerSpring have been almost entirely
terminated. Management is in the process of discontinuing PowerSpring as an
independent operating subsidiary. The Internet-based offerings of PowerSpring,
along with the markets to which its products will be sold, have been
substantially restructured and re-defined. Management intends to transfer the
PowerSpring product line and website to the Metretek Florida, in consideration
for which Metretek Florida will pay certain expenses and assume certain
obligations of PowerSpring in anticipation that PowerSpring will become an
additional product offering, the web-based product offering, of Metretek
Florida. Management anticipates that both the existing PowerSpring website and
the PowerSpring name will survive as a product line that is identifiable
with and sold by Metretek Florida. Also, in furtherance of this discontinuance
of the PowerSpring subsidiary and the restructuring of its business, we are in
the process of eliminating virtually all existing overhead associated with
the PowerSpring subsidiary.


                                       8
<PAGE>   11
       The PowerSpring offerings are being redefined to be marketed as an
Internet-based set of energy management tools that includes near real-time
energy consumption information. However, the concepts of aggressively marketing
the PowerSpring programs directly to multitudes of industrial and commercial
end-users of energy and of procuring natural gas and electricity for consumers
have been abandoned. We now intend to market and sell the PowerSpring product
line to commercial and industrial customers exclusively through private labeling
and partnering joint ventures and programs with natural gas and electricity
utility companies and their affiliates and through our relationship with IREM.
PowerSpring is marketing an Internet-based software platform which provides
utility companies with an immediate web-enabled Internet energy portal
specifically designed for industrial and commercial customers. This PowerSpring
software platform can be privately labeled for individual utility companies
enabling customers as well as employees and affiliates to have access to near
real time energy consumption data and timely energy industry news and
information. This PowerSpring software platform is being marketed as an
additional product offering of Metretek Florida. To support this effort, we are
continuing to develop the capability and functionality of the PowerSpring.com
website, and expect to release a new version with major enhancements in April
2001.

      Although we are in the process of substantially restructuring the
PowerSpring product line, business strategies, target markets, and sales and
marketing strategies, we continue to endorse many of the original PowerSpring
concepts. As a result of rapidly increasing energy prices and changing energy
markets, we believe that commercial and industrial energy consumers will seek
better tools to assist in their pursuit to better manage energy costs,
conservation and consumption. Rather than abandoning the PowerSpring business in
its entirety, we are seeking a methodical and substantially more cost-effective
approach to the marketing of the PowerSpring product offerings by incorporating
them into Metretek Florida's business. However, because this restructuring of
PowerSpring is currently in process, we can offer no assurance or guaranty as to
the future of PowerSpring, either as an entity or as a product line, or as to
the extent of any further restructuring and modifications. In addition, we
cannot offer any assurance that the PowerSpring offerings will ever be
commercially viable or acceptable, or will ever generate substantial revenues or
any profits for us.

COMPETITION

      The markets for energy products, services, technology and information are
highly competitive and subject to rapidly changing technology, new and emerging
products, services and technologies, frequent product and service performance
improvements and evolving industry standards. The growth potential and
deregulatory environment of the energy market have attracted and are anticipated
to continue to attract many new start-ups as well as established businesses from
different industries. Competition may also increase as a result of industry
consolidation. Increased competition could result in price reductions, reduced
gross margins, loss of market share, inability to penetrate new markets or to
develop new markets, any of which could have a material and adverse effect on
our business.

      Our current and prospective competitors include:

            -     large and well established provider of AMR systems, such as
                  Itron Corp, Badgar and Invensys;

            -     large, well established and diversified companies like
                  Schlumberger, Emerson and Asea Brown Boveri that have
                  divisions or subsidiaries devoted to our markets;

            -     in-house services provided by utilities and major oil and gas
                  companies;

            -     large, well established and diversified oil and gas companies
                  like Enron Corp., Duke Energy Corp. and Williams Energy; and

            -     numerous prospective competitors that may offer energy
                  information.

      We believe that our ability to compete successfully will depend upon many
factors, many of which are outside of our control. These factors include:

            -     performance and features functionality and benefits of our,
                  and our competitors', products and services;

            -     speed of development and implementation of new and enhanced
                  products and services;


                                       9
<PAGE>   12
            -     our responsiveness to customers needs;

            -     ease of use of products and services;

            -     quality and reliability of our, and our competitor's products
                  and services;

            -     reputation;

            -     sales and marketing efforts;

            -     our ability to develop and maintain our strategic
                  relationships;

            -     price of competitors' products and services; and

            -     the timing and market acceptance of new products and services
                  and enhancements to existing products and services developed
                  by us and our competitors.

      We believe that we currently compete favorably with respect to the above
factors. We do not typically attempt to be the low cost product or procedure.
Rather, we endeavor to compete primarily on the business of products and service
quality rather than price. In order to be successful in the future, we must
continue to respond promptly and effectively to the challenges of technological
change and our competitors' innovations. We cannot guarantee that our products
and services will continue to compete favorably or that we will be successful in
facing the increasing competition for new products and enhancements introduced
by our existing competitors or new competition entering the market.

      Many of our existing competitors, as well as a number of potential new
competitors, have better name recognition, longer operating histories, larger
customer bases and greater financial, technical, marketing, manufacturing and
other resources than we do. This may enable our competitors to respond more
quickly to new or emerging technologies and changes in customer requirements or
preferences and to devote greater resources to the development, promotion and
sale of their products and services than we can. Our competitors may be able to
undertake more extensive marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to potential employees, customers,
strategic partners and suppliers and vendors than we can. Our competitors may
develop products and services that are equal or superior to the products and
services offered by us or that achieve greater market acceptance than our
products do. In addition, current and potential competitors have established or
may establish cooperative relationships among themselves or with third parties
to improve their ability to address the needs of our existing and prospective
customers. As a result, it is possible that new competitors may emerge and
rapidly acquire significant market share or impede our ability to acquire market
share in new markets. Increased competition could also result in price
reductions, reduced gross margins and loss of market share, and the inability to
develop new businesses, which could materially and adversely affect our
business. We cannot assure that we will have the financial resources, technical
expertise, or marketing and support capabilities to successfully compete.

      The market for Metretek Florida's products and services is very
competitive. Although Metretek Florida's product offering is very specific to
the requirements for industrial and commercial meter reading/monitoring in
natural gas distribution utility companies, many suppliers of residential meter
reading systems also offer products for commercial and/or industrial
applications and can be formidable competitors for utility companies desiring to
implement residential meter reading and to have all automatic/remote meter
reading, including industrial and commercial, performed on a single system.
Also, major natural gas meter and instrument manufacturers offer systems to
remotely read and interrogate their own equipment, and utility companies that
use certain manufacturers' meters exclusively may also choose to buy their
communication and data collection products as well. We believe that several
large suppliers of equipment, services or technology to the utility industry
have developed or are currently developing products or services for the market
in which Metretek Florida is currently or is intending to compete. Most of
Metretek Florida's present and potential competitors have substantially greater
financial, marketing, technical and manufacturing resources, as well as greater
name recognition and experience, than Metretek Florida. Metretek Florida
competes with a large number of existing and potential competitors in these
markets, some of which do not compete in all of the same markets as Metretek
Florida. In addition, current and potential competitors may make strategic
acquisitions or establish cooperative relationships among themselves or with
third parties that increase their ability to address the needs of Metretek
Florida's prospective customers. Metretek Florida competes primarily on the
basis of product quality and reliability, applications expertise, and the
quality of its service and support.


                                       10
<PAGE>   13
      Numerous companies compete directly with Southern Flow in the natural gas
measurement services industry, including companies which provide the same
services as Southern Flow and those which provide additional or related field
services. Although a majority of natural gas measurement services is currently
performed internally by natural gas producers and pipeline companies, most of
Southern Flow's direct competition consists of small measurement companies
providing limited services and serving limited geographical areas. Southern Flow
offers a complete range of natural gas measurement services over a wide
geographical area which management believes offers Southern Flow advantages over
its competitors.

      The market for distributed generation products are highly competitive and
rapidly changing and evolving. PowerSecure's competition is primarily from
existing distributors of generators, such as Caterpillar, Inc., Detroit Diesel,
Cummins Inc., Kohlers and Generac, as well as small regional electric
engineering firms compete in certain aspects of distributed generation
production. Also, PowerSecure faces competition in some specific portions of its
distributed generation business. For example, some small regional electric
engineering firms specialize in the engineering aspects of the distributed
generation. Similarly, several well established companies have developed
microturbines used in distributed generation, such as Capstone Microturbines,
Honeywell (formerly Allied Signal), Elliot/General Electric Company, and NREC
(Ingersoll-Rand), as well as a number of major automotive companies. A number of
companies are also developing alternative generation technology such as fuel
cells and solar cells.

REGULATION

      Regulation of Natural Gas. Our operations are affected in various degrees
by political developments and federal and state laws and regulations. In
particular, natural gas production, operations and economics are affected by
price controls, by environmental, tax and other laws relating to the natural gas
industry, by changes in such laws and by changing administrative regulations and
the interpretations and application of such laws, rules and regulations. Natural
gas industry legislation and agency regulation is periodically changed for a
variety of political, economic and other reasons. Natural gas sales have been
deregulated at the wholesale, or pipeline, level since Federal Energy Regulatory
Commission Order 636 was issued in 1992. Since that time, individual states have
been studying various methods for deregulating natural gas sales at the retail
level. Some states have already deregulated natural gas sales for industrial
customers and certain classes of commercial and residential customers. Other
states are currently conducting pilot programs that allow residential and small
commercial consumers to select a provider of their choice, other than the local
distribution company, to supply their natural gas. As natural gas sales are
deregulated, on a state by state basis, we believe that timely collection and
reporting of consumption data will be needed and desired by certain customers,
utility companies and energy service providers. We believe that we may benefit
from such a regulatory environment.

      Regulation of Electricity. The electric utility industry is undergoing
fundamental structural changes due to deregulation. The traditional utility
structure, consisting of a vertically integrated system operating as a natural
monopoly with rates set in relation to cost, has historically presented
utilities with little incentive to improve service quality or operating
efficiency. Customer demands and regulatory mandates by federal and state
governments are opening the electric utility market to competition, forcing
electric utilities to transform themselves from regulated monopolies into
competitive enterprises. While regulatory initiatives vary from state to state,
many involve a shift away from vertically integrated operations and
rate-of-return rate making, in which an electric utility's rates are determined
by its return on assets, to performance-based rate making, in which an electric
utility's rates and profitability are based upon its cost, efficiency, and
service quality. This deregulatory movement in the electricity industry follows
a similar deregulatory movement in the natural gas utility industry. Today, many
commercial and industrial natural gas customers can purchase natural gas
directly from producers or brokers, while utilities are required to provide
transportation of such natural gas to customers' facilities. We expect a similar
result from electricity deregulation.

      Several major electric utilities have recently entered into merger
agreements and other consolidation transactions and bought and sold generation
assets. The restructuring has also focused on opening the electric power
production industry, in certain markets, to full competition in the next few
years and ultimately providing customers access to multiple suppliers. Federal
legislation, such as the National Energy Policy Act of 1992 (the "Energy Policy
Act"), has opened utility transmission lines to independent power producers in
an effort to increase competition in the wholesale electric power generation
market. Under the Energy Policy Act, individual states have the sole authority
to mandate the transport and delivery or "wheeling" of electric power to retail
customers. As a result, many states now have legislation or final commission
orders to mandate retail wheeling and most of the other states are in various
stages of considering the implementation of retail wheeling and unbundling, both
at legislative and regulatory levels. Meanwhile, a number of other states are
also requiring utilities to "unbundle," or offer as separate services, metering,
billing and collection, and more states are formally investigating such
unbundling.


                                       11
<PAGE>   14
Unbundling implies that a third party, such as a new power market participant,
would be free to own the electric meter that measures usage and attaches to a
commercial, industrial or residential customer's premises. Traditionally, the
owner of the meter has been the electric utility which has also had a monopoly
in providing metering, billing, and collection services. In California, one
state that has advanced in the deregulation process, the California Public
Utility Commission mandated competitive retail wheeling and unbundling. By
mandating retail wheeling the California PUC allows the customer to choose among
energy service providers. The California PUC has also mandated hourly metering
capability for commercial and industrial customers choosing direct access and
which require more than 50kW of power, which will be decreased to 20kW in the
year 2002.

      The changing regulatory environment means that new power market
participants will be entering into a market traditionally dominated by
established utilities. For example, dozens of parties have registered with
the California PUC as Registered Energy Service Providers to provide electric
services in California. The established utilities are focused on retaining and
increasing their market share as a result of competition. Both new power market
participants and established utilities will be striving to optimize their
offerings and to distinguish themselves in the market. The same capabilities
will enable energy service providers to meet regulatory metering and forecasting
requirements, offer superior, competitively-priced services, collect customer
information and diversify by adding additional applications as available.

      We believe that deregulation will require recordation of electric power
consumption data more frequently than is presently customary through a much
wider use of daily, hourly and possibly even more frequent meter readings. In
fact, hourly meter reading has already been mandated for commercial and
industrial customers in California. Other deregulating states which require
hourly metering for commercial and industrial customers include Michigan and
Arizona. It is possible that other states will follow. We believe that our AMR
technology, or meter reading technology similar to it, will be needed to do such
hourly meter reading.

      We believe that regulatory reform will result in new opportunities for us
to provide our products and services, such as AMR and other functions typically
performed by utilities, directly to end-user customers. In addition, we believe
there are a number of new business opportunities that we will be able to develop
for capitalizing on the value of the information that can be derived from our
products and services.

      Regulation of International Operations. Our international operations are
also subject to the political, economic and other uncertainties of doing
business abroad including, among others, risks of war, cancellation,
expropriation, renegotiation or modification of contracts, export and
transportation regulations and tariffs, taxation and royalty policies, foreign
exchange restrictions, international monetary fluctuations and other hazards
arising out of foreign government sovereignty over certain areas in which we
conduct, plan to conduct or in the future may conduct operations.

      Regulation of Environment. While various federal, state and local laws and
regulations covering the discharge of materials into the environment, or
otherwise relating to the protection of the environment, may affect our
operations as a result of their effect on natural gas development, exploration,
production, transportation and dispensing operations, our operations are not
currently subject to substantial environmental laws and regulations. We believe
we are in material compliance with those environmental laws and regulations to
which we are subject. It is not anticipated that we will be required in the near
future to expend amounts that are material in relation to our total capital
expenditures program by reason of environmental laws and regulations. However,
inasmuch as such laws and regulations are frequently changed, we are unable to
predict the ultimate effect on us and on the cost of compliance.

EMPLOYEES

      At February 28, 2001, we had 233 full-time employees. None of our
employees are covered by a collective bargaining agreement. We believe that our
relations with our employees are good.

RESEARCH AND DEVELOPMENT

      In the past, most of our basic research and development activities have
been conducted by Metretek Florida. Metretek Florida research and development is
focused on enhancements to its product and service offering that address
anticipated customer requirements and potential new markets. Current research
and development projects at Metretek Florida include development of data
collection products that utilize the paging network for communication as a less
costly alternative to telephonic communication, an Internet-based data logger,
Internet software applications, and an improved electronic gas volume corrector
with new set-up and configuration software.


                                       12
<PAGE>   15
      Recently, we engaged in an extensive research and development program for
the business of PowerSpring. We incurred $2,226,000 and $9,917,000 for research
and development expenses during the years ended December 31, 1999 and 2000,
respectively, of which $1,196,000 and $9,181,000, respectively, were
attributable to PowerSpring. We intend to continue and expand our research and
development efforts to enhance our existing products and services and
technologies and to develop new products, services and technologies, but we do
not anticipate significant research and development expenditures will be devoted
in the future to PowerSpring. However, we do intend to develop the Internet
capabilities of PowerSecure, Metretek Florida and Southern Flow.

RAW MATERIALS

      Our subsidiaries purchase memory chips, electronic components, printed
circuit boards, diesel generators, fabricated sheet metal parts, machined
components, aluminum, metallic castings and various other raw materials for
their products. While, in the opinion of management, the loss of any one
supplier of materials would not have a material adverse impact on our business
or operations, shortages in certain components such as memory chips, supply
problems from our suppliers or our inability to develop alternative sources of
supply quickly or cost-effectively could materially impact our ability to
manufacture our products and therefore could adversely affect our business and
operations. We attempt to mitigate this risk by maintaining an inventory of such
materials. In addition, some of the raw materials used in PowerSecure's business
have significant lead times before they are available, which may affect the
timing of PowerSecure's project completions.

PROPRIETARY RIGHTS

      Our success and ability to compete are dependent in part upon our
proprietary rights and technology. We rely primarily on a combination of
copyrights, trademarks and trade secret laws to establish and protect our rights
in our products and proprietary technology. We do not believe that our
competitive position is dependent upon intellectual property laws or that our
operations are dependent upon any individual copyrights, trademark or other
intellectual property right. Rather, we believe that, due to the rapid pace of
technology and change within the energy industry, the following factors are more
important to our ability to establish and maintain a position of technology
leadership:

      -     the technological and creative skills of our personnel;

      -     new products and service development;

      -     frequent product and service enhancements;

      -     name recognition;

      -     customer training and support; and

      -     reliable product support.

      We generally require our employees and consultants to enter into
nondisclosure and assignment of invention agreements to limit use of, access to
and distribution of proprietary technology. There can be no assurance that our
means of protecting our proprietary rights in the United States or abroad will
be adequate. In addition, the laws of some foreign countries may not protect our
proprietary rights as fully or in the same manner as do the laws in the United
States. Despite our efforts to protect our proprietary rights, it may be
possible for unauthorized third parties to copy, reverse engineer or otherwise
obtain, use or exploit aspects of our products, develop similar technology
independently or otherwise obtain and use information that we regard as
proprietary. Our actual and potential competitors may independently develop
technologies similar or superior to our technology or design around the
proprietary rights owned by us. Although we are not aware that our products or
technologies infringe on the proprietary rights of third parties, we cannot
provide any assurance that others will not assert claims of infringement against
us in the future or that, if made, such claims will not be successful or will
not require us to enter into royalty arrangements or result in costly and
time-consuming litigation.

      We rely on certain technology which we license from third parties. Our
success will depend in part on a continued ability to obtain and use licensed
technology that is important to the functionality of our products and services.
Our inability to continue to procure or use such technology could have a
material adverse effect on our business, financial condition and operating
results.


                                       13
<PAGE>   16
ITEM 2. DESCRIPTION OF PROPERTY

      We lease our principal executive offices located in downtown Denver,
Colorado. The leased space contains 3,443 square feet. The lease currently has a
monthly rental obligation of $4,906, including operating costs, expires July 31,
2001, and contains a market-rate renewable lease provision. In order to
consolidate facilities and achieve cost savings, we moved our principal
executive officers to PowerSpring's facility in December 2000.

      Metretek Florida leases its principal business offices, located in
Melbourne, Florida, for its executive, manufacturing, engineering, warehouse and
marketing operations. This facility has 50,000 square feet and a current monthly
rental obligation of $29,856, including operating costs. The lease expires July
30, 2005. Metretek Florida has sub-leased 2,380 square feet of its space for
$1,896 monthly rental.

      Southern Flow leases office facilities in the following locations:
Lafayette, Belle Chasse and Shreveport, Louisiana; Jackson, Mississippi; Houston
and Victoria, Texas; Tulsa, Oklahoma; and Aztec, New Mexico. These offices have
an aggregate of approximately 66,000 square feet, total monthly rental
obligations of approximately $31,000 and terms expiring at various times through
2001. In addition, Southern Flow owns and occupies land and an 8,600 square foot
office building in Dallas, Texas.

      PowerSpring leases its principal business office located in downtown
Denver, Colorado. The leased space contains 13,221 square feet. The lease
currently has a monthly rental obligation of $11,017 and expires December 31,
2001.

      We intend to locate new principal executive offices in Denver, Colorado by
the end of 2001, and will examine the facilities needs of PowerSecure, as
well as of our other subsidiaries, during 2001.


ITEM 3. LEGAL PROCEEDINGS

      On January 5, 2001, Douglas W. Heins, individually and purportedly on
behalf of a putative class of other persons similarly situated, filed a
complaint in the District Court for the City and County of Denver, Colorado
against us, Marcum Midstream 1997-1 Business Trust (the "Trust"), Marcum
Midstream-Farstad, LLC, Marcum Gas Transmission, Inc., Marcum Capital Resources,
Inc., Farstad Gas & Oil, LLC, Farstad Gas & Oil, Inc., W. Phillip Marcum,
Richard M. Wanger, Jeff Farstad and Daniel J. Packard. The complaint alleges
that the plaintiffs, either directly or as "controlling persons", violated
certain provisions of the Colorado Securities Act in connection with the sale of
interests in Marcum Midstream 1997-1 Business Trust, an energy program of which
MGT, a wholly-owned subsidiary of Metretek, is the managing trustee and Messrs.
Marcum, Wanger and Farstad are the active trustees. Specifically, the plaintiff
claims that his damages resulted from the defendants allegedly recklessly or
intentionally making false and misleading statements, and/or willfully
participating in a scheme or conspiracy and/or aiding or abetting violations of
Colorado law, which scheme and statements related to the specification of the
natural gas liquids product to be delivered under certain contracts, for the
purpose of selling the Trust's units. The Trust raised $9.25 million from
investors in a private placement in 1997 in order to finance the purchase,
operation and improvement of a natural gas liquids processing plant located
in Texas. The plaintiff seeks, among other things, to have the court declare the
suit a proper class action and award compensation and/or punitive damages in an
unspecified amount, together with interest, attorneys fees and other costs. On
March 5, 2001, we filed a motion to dismiss the complaint. The court has
not ruled on the motion to dismiss or on the request for class certification.
Because this litigation is in the early stages, we cannot predict the outcome of
this litigation or the impact the resolution of this claim will have on our
business, financial position or results of operations. We intend to vigorously
defend the claims against us and our officers, directors and certain trustees.

      From time to time, we are involved in other disputes and legal actions
arising in the ordinary course of business. We intend to vigorously defend all
outstanding claims against us. Although the ultimate outcome of these claims
cannot be predicted with certainty due to the inherent uncertainty of
litigation, in the opinion of management, based upon current information, none
of the other currently pending or overtly threatened disputes is expected to
have a material adverse effect on our business, financial condition or results
of operations.


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

      None.


                                       14
<PAGE>   17
                                     PART II


ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


      Our Common Stock is traded on the Nasdaq National Market under the symbol
"MTEK." Our "Dividend Warrants", which were issued as a dividend to stockholders
on September 18, 1998, were traded on the Nasdaq SmallCap Market under the
symbol "MTEKW" until we redeemed them on August 14, 2000. The following table
sets forth, for the periods indicated, the range of the high and low closing
sale prices of the Common Stock, as reported on the Nasdaq National Market, and
of the Dividend Warrants, as reported on the Nasdaq SmallCap Market:


<TABLE>
<CAPTION>
                                          COMMON STOCK            DIVIDEND WARRANTS
                                     --------------------       ---------------------
                                      HIGH          LOW          HIGH           LOW
                                     ------        ------       ------         ------
<S>                                  <C>           <C>          <C>            <C>
YEAR ENDED DECEMBER 31, 1999:
First Quarter ...............        $ 2.31        $ 1.56       $ 0.63         $ 0.31
Second Quarter ..............          2.25          1.44         0.56           0.25
Third Quarter ...............          7.56          2.16         3.81           0.41
Fourth Quarter ..............          6.75          4.44         3.38           1.75

YEAR ENDED DECEMBER 31, 2000:

First Quarter ...............         17.63          4.25        13.63           1.63
Second Quarter ..............         11.88          5.88         7.63           2.50
Third Quarter ...............          6.75          2.63         9.38*          0.06*
Fourth Quarter ..............          4.31          0.88           --             --
</TABLE>

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

* Through August 14, 2000.

HOLDERS

      As of March 1, 2001, there were 245 holders of record of our Common Stock.
Because many of the shares of Common Stock are held by brokers and other
institutions on behalf of stockholders, we are unable to determine precisely the
total number of stockholders represented by these record holders, but we
estimate, based upon available information, that there are at least 3,000
beneficial owners of our Common Stock.

DIVIDENDS

      We have never declared or paid any cash dividends on our Common Stock, and
we do not anticipate declaring or paying any cash dividends on the Common Stock
in the foreseeable future. We currently intend to retain all future earnings, if
any, for use in the operation of our business. In addition, the terms of our
credit facility prohibit the payment of dividends (other than on the Series B
Preferred Stock) without the consent of our lender, and the terms of our Series
B Preferred Stock contain certain restrictions on our ability to pay dividends
on our Common Stock. Future dividends, if any, will be determined by our Board
of Directors, based upon our earnings, financial condition, capital
requirements, charter restrictions, contractual restrictions and such other
factors as our Board of Directors deems relevant.

      Holders of Series B Preferred Stock are entitled to receive dividends in
cash at the rate of 8% per annum, which dividends may be paid or accrued, plus
any additional dividends declared by the Board of Directors, and are entitled,
under specified circumstances, to participate in dividends declared or paid on
the Common Stock.

RECENT SALES OF UNREGISTERED SECURITIES

      On November 7, 2000, as a royalty payment to a licensor under a license
agreement, we issued 14,598 shares of Common Stock to the licensor. This
issuance was made in reliance upon an exemption from the registration
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act as a transaction not involving a public offering. We reasonably believed
that the licensor had such knowledge and experience in financial and business
matters to be capable of evaluating the risks and merits of the investment, and
the lien represented its intention to acquire the securities for investment
purposes only and not with a view to or for the sale in connection with any
unregistered distribution thereof. No broker or dealer was involved in the
transaction, and the securities were not publicly offered. The licensor had
adequate access, through contractual provisions and/or its relationship with us,
to information about us, our business and operations, and the securities.
Appropriate restrictive


                                       15
<PAGE>   18
legends were affixed to the certificate issued to the licensor.


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

INTRODUCTION

      The following discussion and analysis of our results of operations for the
years ended December 31, 2000 and 1999 and of our consolidated financial
condition as of December 31, 2000 should be read in conjunction with our
consolidated financial statements and related notes included elsewhere in this
Report.

      The discussion in this item, as well as other items in this Form 10-KSB,
contains forward-looking statements within the meaning of and made under the
safe harbor provision of Section 27A of the Securities Act and Section 21E of
the Exchange Act. Forward-looking statements include statements concerning
plans, objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements, which are not historical facts. The
words "may", "could", "should", "will", "project", "intend", "continue",
"believe", "anticipate", "estimate", "expect", "plan", "intend", "potential", or
"scheduled", and variations of such words, and similar expressions, are intended
to identify forward-looking statements. These forward-looking statements involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those we discuss below in this item and elsewhere in this Report.
These forward-looking statements speak only as of the date of this Report, and
we caution you not to rely on these statements without also considering the
risks and uncertainties associated with these statements and our business that
are addressed in this Report.

RESULTS OF OPERATIONS

      The following table sets forth information related to our current primary
business segments and is intended to assist you in understanding our results of
operations for the periods presented.


<TABLE>
<CAPTION>
                                                       YEARS ENDED
                                                         DECEMBER 31,
                                                 ------------------------------
                                                   2000                  1999
                                                 --------              --------
                                                  (dollar amounts in thousands)
<S>                                              <C>                   <C>
REVENUES:
     Southern Flow .................             $ 11,335              $ 11,112
     Metretek Florida ..............                8,999                 8,234
     PowerSpring ...................                1,160                    --
     PowerSecure ...................                   --                    --
     Other .........................                  164                    19
                                                 --------              --------
     Total .........................             $ 21,658              $ 19,365
                                                 ========              ========

GROSS PROFIT (LOSS):
     Southern Flow .................             $  2,931              $  2,656
     Metretek Florida ..............                2,258                 2,929
     PowerSpring ...................                 (351)                   --
     PowerSecure ...................                  (40)                   --
                                                 --------              --------
     Total .........................             $  4,798              $  5,585
                                                 ========              ========

SEGMENT PROFIT (LOSS):
     Southern Flow .................             $  1,193              $    977
     Metretek Florida ..............               (1,450)               (1,715)
     PowerSpring ...................              (15,720)               (1,506)
     PowerSecure ...................                 (243)                   --
     Other .........................               (1,568)               (1,432)
                                                 --------              --------
     Total .........................             $(17,788)             $ (3,676)
                                                 ========              ========
</TABLE>

     We currently have four reportable business segments: automated energy data
management; natural gas measurement services; Internet-based energy information
and services; and distributed generation.


                                       16
<PAGE>   19
     The operations of our automated energy data management segment are
conducted by Metretek Florida. Metretek Florida's manufactured products fall
into three categories: remote data collection products; electronic corrector
products; and application-specific products. Metretek Florida also provides
energy data collection and management services and post-sale support services
for its manufactured products.

     The operations of our natural gas measurement services segment are
conducted by Southern Flow. Southern Flow's services include on-site field
services, chart processing and analysis, laboratory analysis, and data
management and reporting. These services are provided principally to customers
involved in natural gas production, gathering, transportation and processing.

     The operations of our Internet-based energy information and services
segment are conducted by PowerSpring. PowerSpring commenced limited revenue
generating operations in the second quarter of 2000.

     The operations of our distributed generation segment are conducted by
PowerSecure. PowerSecure commenced limited operations in September 2000. For the
year ended December 31, 2000, PowerSecure did not incur significant revenues or
expenses.

     We evaluate the performance of our operating segments based on income
(loss) before income taxes, nonrecurring items and interest income and expense.
Other profit (loss) amounts in the table above include corporate related items,
results of insignificant operations, and income and expense not allocated to our
operating segments.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

      Revenues. Our consolidated revenues for the year ended December 31, 2000
increased $2,293,000, or 11.8%, compared to the same period in 1999. The
increase was primarily due to the generation of revenue by PowerSpring, an
increase in revenues by Metretek Florida and Southern Flow, and an increase in
other revenues. PowerSpring recorded revenues of $1,160,000 for the twelve
months ended December 31, 2000. There were no comparable revenues for the same
period in 1999. Metretek Florida's revenues increased $765,000, or 9.3%,
compared to the same period in 1999, consisting of an increase in domestic sales
of $634,000 and an increase in international sales of $131,000. The increase in
Metretek Florida's domestic sales was primarily the result of an increase in
circuit board assembly sales. The increase in international sales is
attributable to an increase in sales of Metretek Florida's remote data
collection products and systems in the United Kingdom. A comparison of Metretek
Florida's current domestic and international product mix is as follows:

<TABLE>
<CAPTION>
                                          YEAR ENDED DECEMBER 31,
                                      2000                       1999
                                     ------                     ------
                                       (dollar amounts in thousands)
<S>                                  <C>           <C>          <C>           <C>
Remote data collection
   products and systems .....        $4,964        55.2%        $4,861        59.0%
Electronic corrector products         1,927        21.4%         2,370        28.8%
Circuit board assembly sales          2,108        23.4%         1,003        12.2%
                                     ------                     ------

Total .......................        $8,999                     $8,234
                                     ======                     ======
</TABLE>

Southern Flow's revenues increased $223,000, or 2.0%, for the year ended
December 31, 2000, compared to the same period in 1999. Other revenues increased
by $145,000, or 747.2%, primarily due to increased interest income generated by
higher cash balances during the period.

      Costs and Expenses. Costs of measurement sales and services include
materials, labor, personnel and related overhead costs incurred to manufacture
products and provide services. Cost of sales and services for the year ended
December 31, 2000 increased $2,935,000, or 21.3%, compared to the same period in
1999. Metretek Florida's cost of sales and services for the year ended December
31, 2000 increased $1,436,000, or 21.7%, compared to the same period in 1999.
This increase was due primarily to a higher mix of contract manufacturing
business during the year ended December 31, 2000 compared to the same period in
1999. Contract manufacturing requires higher costs relative to revenues than
Metretek Florida's AMR and corrector sales business, and, as a result, Metretek
Florida's overall gross profit margin decreased from 35.6% to 32.9% compared to
the same period in 1999. Southern Flow's cost of sales and services for the year
ended December 31, 2000 decreased $52,000, or 0.6%, compared to the same period
in 1999. Southern Flow's gross profit margin for the year ended December 31,
2000 increased from 23.9% to 25.9% compared to the same period in 1999, which is
within the range of normal fluctuations. PowerSpring incurred


                                       17
<PAGE>   20
costs of sales and services in the amount of $1,511,000 during the year ended
December 31, 2000, for which there were no comparable costs during the same
period in 1999. PowerSource incurred costs of sales and services in the amount
of $40,000 during the year ended December 31, 2000, for which there were no
comparable costs during the same period in 1999.

      General and administrative expenses include personnel and related overhead
costs for support and administration functions. General and administrative
expenses for the year ended December 31, 2000 increased $2,115,000 or 61.4%,
compared to the same period in 1999, due principally to general and
administrative expenses attributable to PowerSpring and PowerSecure, for the
year ended December 31, 2000, for which there were no comparable costs during
the same period in 1999.

      Selling, marketing and service expenses consist of personnel and related
overhead costs, including commissions for the sale and marketing activities,
together with advertising and promotion costs. Selling, marketing and service
expenses for the year ended December 31, 2000 increased $212,000, or 10.3%,
compared to the same period in 1999. The increase in selling, marketing and
service expenses relate to expenses incurred by PowerSpring of $868,000, for
which there were no material comparable costs during the same period in 1999,
partially offset by a decrease in selling related costs by Metretek Florida of
$656,000.

      Depreciation and amortization expenses include the depreciation and
amortization of real property, customer list, goodwill and capitalized software
development costs. Depreciation and amortization expenses for the year ended
December 31, 2000 increased $440,000, or 34.7%, compared to the same period in
1999, due to the addition of depreciable equipment in connection with the
development of PowerSpring.

      Research and development expenses include payments to third parties,
personnel and related overhead costs for product and service development,
enhancements, and upgrades. Research and development expenses for the year ended
December 31, 2000 increased $7,692,000, or 345.6%, compared to the same period
in 1999. The increase is the result of PowerSpring development expenditures in
2000 of approximately $9,181,000 compared to $1,196,000 during the same period
in 1999, partially offset by a decrease in research and development costs by
Metretek Florida of $293,000.

     Interest, finance charges and other expenses include interest and finance
charges on our credit facility as well as other non-operating expenses.
Interest, finance charges and other expenses for the year ended December 31,
2000 decreased $149,000, or 52.1%, compared to the same period in 1999. The
decrease reflects reduced borrowings in 2000 compared to the same period in 1999
as we utilized private placement proceeds to limit borrowings on our credit
facility.

      Loss on impairment of assets includes the write down of property, plant,
equipment, goodwill and other intangible assets to their estimated fair value.
Loss on impairment of assets for the year ended December 31, 2000 was
$3,160,961, relating to the write down of certain equipment and goodwill of
PowerSpring. No impairment losses were incurred for the year ended December 31,
1999.

SEASONALITY AND CYCLICALITY

      Metretek Florida historically derives substantially all of its revenues
from sales of its products and services to the utility industry. Metretek
Florida has experienced variability of operating results on both an annual and a
quarterly basis due primarily to utility purchasing patterns and delays of
purchasing decisions as a result of mergers and acquisitions in the utility
industry and changes or potential changes to the federal and state regulatory
frameworks within which the utility industry operates. The utility industry,
both domestic and foreign, is generally characterized by long budgeting,
purchasing and regulatory process cycles that can take up to several years to
complete. Metretek Florida's utility customers typically issue requests for
quotes and proposals, establish committees to evaluate the purchase, review
different technical options with vendors, analyze performance and cost/benefit
justifications and perform a regulatory review, in addition to applying the
normal budget approval process within a utility. Purchases of Metretek Florida's
products are, to a substantial extent, deferrable in the event that utilities
reduce capital expenditures as a result of mergers and acquisitions, pending or
unfavorable regulatory decisions, poor revenues due to weather conditions,
rising interest rates or general economic downturns, among other factors.


                                       18
<PAGE>   21
FINANCIAL CONDITION AND LIQUIDITY

      We require capital principally for (1) the financing of inventory and
accounts receivable, (2) research and development expenses, (3) capital
expenditures for property and equipment and software development, and (4) the
funding of possible future acquisitions.

      Net cash used by operating activities was approximately $13,188,000 for
the year ended December 31, 2000, which was the net result of the following: (1)
approximately $12,701,000 of cash used to fund continuing operations, before
changes in assets and liabilities; (2) approximately $280,000 of cash provided
by changes in working capital and other asset and liability accounts; and (3)
approximately $207,000 of cash used by discontinued operations.

      We plan to continue our research and development efforts to enhance our
existing products and services and to develop new products. We incurred research
and development expenses in the amount of $9,917,000 in the year ended December
31, 2000, of which $9,181,000 was attributable to the development of
PowerSpring. We have terminated virtually all future PowerSpring research and
development costs. We anticipate that our research and development costs in 2001
will be approximately $720,000, of which $600,000 is expected to relate to
Metretek Florida's business and $120,000 is expected to be incurred in
connection with developing the business of PowerSecure.

      Capital expenditures for the year ended December 31, 2000 totaled
approximately $3,293,000. We anticipate capital expenditures in 2001 of
approximately $200,000, primarily for computer software and hardware production
and laboratory equipment.

      On April 14, 1998, we entered into a loan and security agreement (the
"Loan Agreement") with a commercial bank (the "Lender") providing for a combined
$5,000,000 credit facility consisting of loans (the "Loans") and letters of
credit subject to limitations described below. The Loan Agreement provides for
daily advances in the form of Loans to fund capital requirements, and daily
paydowns on outstanding balances of the Loans from collection of customer
accounts receivable. We make monthly interest payments computed at prime plus 1%
(10.5% at December 31, 2000) on outstanding balances of the Loans. On March 1,
2001, the Loan Agreement was amended to extend the maturity date from March 14,
2001 to May 31, 2001. As part of that
amendment, the Lender waived, as of December 31, 2000, certain covenants in the
Loan Agreement with which we were not in compliance on that date. We intend to
either renew this credit facility on a long-term basis prior to its expiration
or to enter into a replacement credit facility with a new lender. However, we
cannot provide any assurance that we will be able to renew or replace our
current credit facility.

      The Loans are secured by our tangible and intangible assets, including the
equipment, inventory, receivables and cash deposits, and the pledge of the
shares of our subsidiaries. The Loan Agreement requires us to maintain a minimum
tangible net worth, a maximum debt to tangible net worth ratio, minimum annual
net income (or maximum annual net loss in 2000), a minimum debt service coverage
ratio, and contains other standard covenants related to our operations,
including prohibitions on the payment of dividends and the issuance or
repurchase of securities (with certain exceptions) without the Lender's consent.
Under the terms of our Series B Preferred Stock, our borrowings under the Loan
Agreement cannot exceed $3 million without the consent of the holders of a
majority of the outstanding shares of Series B Preferred Stock.

      Borrowings on the Loans are limited to the sum of 80% of eligible accounts
receivable of Southern Flow and Metretek Florida and 50% of raw materials and
finished goods inventory (up to a combined maximum of $1,500,000) of Southern
Flow and Metretek Florida. At December 31, 2000, we had a combined $3,644,347
Loan availability, of which $1,011,541 had been borrowed by Southern Flow and
Metretek Florida, leaving $2,632,806 in unused Loan availability.

      On July 14, 2000, pursuant to the provisions of our Warrant Agency
Agreement, dated as of September 10, 1998 (the "Warrant Agreement"), with
Computershare Trust Company, Inc. (formerly known as American Securities
Transfer & Trust, Inc.) (the "Warrant Agent"), we sent a written Notice of
Redemption to all holders of our Common Stock Purchase Warrants (the "Warrants")
issued under the Warrant Agreement. We had issued the Warrants as a dividend in
September 1998 to all holders of our Common Stock. Pursuant to the Notice of
Redemption and the Warrant Agreement, we have redeemed all Warrants that
remained outstanding and unexercised at 5:00 p.m., Denver, Colorado time, on
August 14, 2000 (the "Redemption Date"), the date fixed for the redemption of
the Warrants. Until 5:00 p.m., Denver, Colorado time, on the Redemption Date,
each Warrant was exercisable for one share of Common Stock at an exercise price
of $4.00 per share. A total of 694,046 Warrants were exercised, for 694,046
shares of Common Stock, after the Notice of Redemption was given, resulting in
net proceeds to us, after fees and expenses, of approximately $2.6 million.
These expenses included the fees and expenses of Stifel, Nicolaus & Company,
Inc., which served as the dealer manager in connection with the redemption of
the Warrants. We used the net proceeds from the Warrant exercises primarily to
fund the development of PowerSpring. On the Redemption Date, the 145,629
Warrants that were not exercised ceased to be exercisable and holders thereof
became entitled only to the redemption price of $.01 per Warrant. As of December
31, 2000, 38,168 Warrants remained outstanding and un-redeemed.

      On March 17, 2000, we acquired Mercator Energy Incorporated through a
merger of Mercator with a wholly-owned subsidiary of PowerSpring. Mercator is a
Denver-based natural gas services and brokerage company that acts as an
independent broker-agent for both producers and consumers of natural gas. In
consideration for the acquisition of Mercator, we delivered to John A. Harpole,
the President and sole shareholder of Mercator prior to the acquisition,
$408,334 in cash, a $741,666 non-negotiable promissory note payable by
PowerSpring over two years and secured by a general security interest in the
assets of PowerSpring, and 2,500,000 shares of common stock of PowerSpring.
Subsequent to the acquisition of Mercator, we own 87.5% of the outstanding
shares of PowerSpring common stock, Mr. Harpole owns 12.5% of the outstanding
shares of PowerSpring common stock, and Mercator has become a wholly-owned
subsidiary of PowerSpring. We, PowerSpring and Mr. Harpole entered into a
stockholders agreement that addresses certain rights related to Mr. Harpole's
PowerSpring common stock, including a right for Mr. Harpole to put his shares of
PowerSpring common stock back to PowerSpring at an appraised value for cash
payable over three years if PowerSpring has not completed an initial public
offering or has not sold its


                                       19
<PAGE>   22
business within two years. PowerSpring also entered into a two-year employment
agreement with Mr. Harpole, who will serve as the Executive Vice President,
Chief Operating Officer and a director of PowerSpring. Under the employment
agreement, Mr. Harpole received an option to purchase 60,000 shares of our
Common Stock, exercisable at $17.88 per share, and an option to purchase 200,000
shares of PowerSpring common stock, exercisable at $.30 per share.

      On September 13, 1999, prior to the merger with Mercator, we had entered
into a consulting and joint venture agreement with Mercator, under which
Mercator provided its energy procurement services to us on a consulting basis.
In connection with our acquisition of Mercator, we issued to Mercator a warrant
to purchase 60,000 shares of Common Stock. The Mercator warrant vested in three
tranches from the date of issuance through March 2001, with exercise prices
ranging between $4.50 and $5.50 per share, and expires in September 2002. In
connection with our acquisition of Mercator, the consulting agreement, and a
related stock option agreement between TotalPlan and Mercator, were terminated,
and Mercator transferred the Mercator warrant to Mr. Harpole.

      On February 4, 2000, we completed the $14,000,000 Units Private Placement
by issuing 7,000 Units, including 1,450 Units we issued on December 9, 1999.
Each Unit consisted of 200 shares of Common Stock, 1 share of Series B Preferred
Stock and Unit Warrants to purchase 100 shares of Common Stock. In the Units
Private Placement, we issued 1,400,000 shares of Common Stock, 7,000 shares of
Series B Preferred Stock and Unit Warrants to purchase 700,000 shares of Common
Stock. The Units Private Placement was approved and ratified by our stockholders
at a special meeting of stockholders held on February 3, 2000. The Units were
issued to institutional investors and other "accredited investors" (as defined
under Regulation D under the Securities Act). The primary purpose of the Units
Private Placement was to raise capital to enable us to develop the
Internet-based business of PowerSpring and to repay outstanding indebtedness.

      On September 13, 1999, we entered into a strategic relationship with
Scient to assist us in designing and creating an Internet-based business to
enable us to take its measurement information products, services, and data
measurement technologies to the market of end-users of natural gas and
electricity. The Internet project was developed and has been operated through
PowerSpring. In connection with the development of PowerSpring, we issued to
Scient a warrant to purchase 125,000 shares of Common Stock (the "Scient
Warrant"). The Scient Warrant became exercisable in September 2000, at exercise
prices split between $5.00 and $10.00 per share, and expires in September 2002.

      On September 28, 2000, we issued a $2.8 million unsecured convertible
promissory note to Scient in fulfillment of our account payable to Scient. The
convertible note is payable in quarterly installments, due March 31, 2002, and
is convertible at any time at Scient's discretion into either shares of our
Common Stock at the rate of $5.94 per share or shares of PowerSpring common
stock at the rate of $0.60 per share.

      The initial development phase of PowerSpring, which was completed in
September 2000, required aggregate expenditures of approximately $12.1 million,
consisting primarily of research and development costs, consulting fees and
expenses and costs of acquiring the requisite technology, including hardware and
software.

      In order to fund the initial development of PowerSpring, we entered into
an amendment with the Lender (the "Loan Amendment") to the terms of the Loan
Agreement. The Loan Amendment amended certain covenants of the Loan Agreement,
including our minimum annual net income (or maximum annual net loss in 2000),
minimum tangible net worth and minimum debt service coverage ratio. The Loan
Amendment also permitted us to utilize up to $700,000 of the credit facility to
finance expenditures on the first phase of PowerSpring's development. In
connection with the Loan Amendment, we paid customary fees to the Lender and
issued a warrant to purchase 20,000 shares of Common Stock. The Lender warrant
is exercisable for three years at an exercise price of $5.00 per share. The
Lender has registration rights with respect to the Common Stock issuable upon
the exercise of the Lender warrant.

      Compensation expense for the fair value of the Scient, Mercator and Lender
warrants is being recognized in accordance with the provisions of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation," over the period in which the services are being performed or the
remaining term of the Loan Agreement. Compensation expense associated with the
warrants in the amount of $133,200 has been recognized in the consolidated
statement of operations during the year ended December 31, 2000.



                                       20
<PAGE>   23

      On May 4, 1998, we acquired substantially all of the assets and business
of a subsidiary of American Meter pertaining to electronic correctors and
non-radio-frequency meter reading devices in the natural gas and electric
utility industry. In consideration for this purchase, we delivered to American
Meter an aggregate purchase price consisting of $1,300,000 in cash, 439,560
unregistered shares of Common Stock, and a $600,000 convertible subordinated
promissory note. In March 2000, American Meter converted the note into 105,495
shares of Common Stock under the terms of the note. Until it was converted, the
note bore interest on the unpaid principal balance at a fixed rate equal to 7.5%
per annum, payable quarterly in arrears, and was due and payable on May 4, 2002.

      Based on our current plans and assumptions, management believes that our
capital resources, including cash and cash equivalents, amounts available under
an existing credit facility (assuming our current credit facility is either
renewed or extended on a long-term basis or we enter into a new credit facility
of comparable size) and funds generated from continuing operations will be
sufficient to meet our currently anticipated cash needs, including our working
capital needs, capital requirements and debt service requirements. However,
unanticipated events, over which we may have no control, could increase our
operating costs or decrease our ability to generate revenues from product and
service sales. In addition, we will require additional capital in the future in
order to make any significant acquisition of businesses or technologies.

      Obtaining additional financing will depend on many factors, including
market conditions, our operating performance and investor sentiment. Terms of
debt financing could restrict our ability to operate our business, or to expand
our operations. In addition, if we raise additional capital by issuing capital
stock or securities convertible into capital stock, stockholders could suffer a
significant dilution of their percentage ownership interests, and the new
capital stock or other new securities could have rights, preferences or
privileges senior to those of our current stockholders. Our capital raising will
be subject to the consent of the Lender, if our credit facility is then in
effect. In addition, depending on how it is structured, our capital raising
could require the consent of the holders of our Series B Preferred Stock. We
cannot assure you that we will be able to renew or replace our current credit
facility. We also cannot assure you that sufficient additional funds will be
available to us on a timely basis or that, if available on a timely basis, such
funds can be obtained on terms satisfactory to us, to our lender and to the
holders of our Series B Preferred Stock, if their consents are required. Our
inability to obtain sufficient capital on a timely basis on terms that are
acceptable to us would have a material adverse effect on our business, financial
condition and results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

      In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards in No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("FAS 133"). FAS 133 was amended
in June 2000 by Statement of Financial Accounting Standards No. 138, "Accounting
for Certain Derivative Instruments and Certain Hedging Activities". FAS 133, as
amended, establishes methods of accounting for derivative financial instruments
and hedging activities related to those instruments as well as other hedging
activities including hedging foreign currency expenses. We have adopted FAS 133
for our fiscal year ending December 31, 2001. Because we do not utilize
derivative financial


                                       21
<PAGE>   24
instruments, the adoption of FAS 133 did not have a material impact on our
financial position or results of operations.

      In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 provides guidance on the recognition, presentation and disclosure
of revenue in financial statements filed with the SEC, and was required to be
adopted in the fourth quarter of 2000, retroactive to the beginning of 2000.
Management believes that its historic revenue recognition practices complied
with the guidance in SAB No. 101.

      In March 2000, FASB issued interpretation No. 44, "Accounting for Certain
Transactions involving Stock Compensation - an interpretation of APB Opinion No.
25" ("FIN 44"). This interpretation clarifies the definition of employee for
purposes of applying Accounting Practice Board Opinion No. 25, "Accounting for
Stock issued to Employees", the criteria for determining whether a plan
qualifies as a noncompensatory plan, the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and the
accounting for an exchange of stock compensation awards in a business
combination. This interpretation became generally effective on July 1, 2000, but
certain conclusions in this interpretation cover specific events that occurred
after either December 15, 1998 or January 12, 2000. The provisions of FIN 44
did not have a material impact on our financial position or results of
operations.

ADDITIONAL FACTORS THAT MAY AFFECT OUR BUSINESS AND FUTURE RESULTS

      Our business and future operating results may be affected by many factors,
risks and uncertainties, including those set forth below and those contained
elsewhere in this Report. In addition, the risks described below are not the
only risks facing us. There may be additional risks and uncertainties that we do
not currently consider material or that are not presently known to us. If any of
the following risks were to occur, our business, prospects, assets, financial
condition, results of operations and cash flows could be materially and
adversely affected. When we say that something could or will have a material
adverse effect on us or our business, we mean that it could or will have one or
more of these effects.

      WE HAVE A HISTORY OF LOSSES, AND WE MAY NEVER BECOME PROFITABLE

      We have incurred net losses on an annual basis during each year since our
incorporation. We incurred net losses of approximately $3.7 million in 1999 and
$22.4 million in 2000. At December 31, 2000, we had an accumulated deficit of
approximately $47.6 million. Our losses in 2000 were due primarily to the costs
we incurred in connection with the design and the development of PowerSpring, as
well as the preferred stock deemed distribution. Although the significant costs
of the development of PowerSpring have been concluded, other than ongoing
payments on the promissory note to Scient, we anticipate expenses in excess of
revenue in 2001 as we restructure PowerSpring and as we develop and implement
PowerSecure and we will continued to accrue the preferred stock deemed
distribution through 2004. We may never generate sufficient revenues to achieve
profitability. Even if we do achieve profitability, we may not be able to
sustain or increase that profitability on a quarterly or annual basis in the
future.

      WE WILL REQUIRE A SUBSTANTIAL AMOUNT OF ADDITIONAL CAPITAL TO FINANCE OUR
      BUSINESS AND ITS GROWTH BUT WE MAY NOT BE ABLE TO OBTAIN A SUFFICIENT
      AMOUNT OF FUNDS TO DO SO

      In order to develop and expand our business, we will need to raise
significant additional funds, which we may do from the proceeds of public or
private equity financings, debt financing or from other sources. We may raise
additional capital to fund the development and operations of an individual
subsidiary through financing at the Metretek Technologies, Inc. or at the
subsidiary level, depending upon the availability of capital, market conditions,
our consolidated operations and the operations of that subsidiary. If we cannot
raise sufficient funds on a timely basis, then our business will be materially
and adversely affected.

      In addition to our need to raise capital to fund the cash flow
requirements and growth of our existing businesses, we will need to raise
additional capital in the future to either repay or refinance any indebtedness
we incur in the future to finance our operations, the growth of our current
business or acquisition opportunities. The Series B Preferred Stock bears a
cumulative dividend at the rate of 8% per year and, if not earlier converted
into Common Stock, is subject to mandatory redemption on December 9, 2004 at a
redemption price equal to the liquidation preference, which as of December 31,
2000 was $7,000,000 plus accumulated dividends of approximately $541,000. In
addition, unanticipated events, over which we may have no control, could also
increase our operating costs or decrease our ability to generate revenues from
product and service sales. We will also require


                                       22
<PAGE>   25
additional capital in the future to make any significant acquisitions of
businesses or technologies. We have a $5 million revolving line of credit with
our current lender which expires on May 31, 2001. Our ability to borrow funds
under this credit facility is limited to our loan availability based upon our
assets, primarily our accounts receivable and inventory. Under the terms of the
Series B Preferred Stock, our borrowings under this credit facility cannot
exceed $3 million without the consent of the holders of a majority of the
outstanding shares of Series B Preferred Stock. As of December 31, 2000, we had
a total loan availability of approximately $3,644,000, and of that we
had borrowed approximately $1,012,000. The amount of our loan
availability, as well as the amount we borrow, will change in the future
depending on our asset base and our capital requirements. Any amount outstanding
under our credit facility on May 31, 2001 will need to either repaid by us or
refinanced by a new lender or investor, or our credit facility will need to be
renewed by our current lender. We cannot assure you that we will be able to
repay, refinance or extend our bank indebtedness at that time, and our failure
to do so would have a material adverse effect on our business, financial
condition and results of operations.

      If our operating performance does not support our cash flow requirements,
we may breach our credit facility. Our current credit facility has, and any
renewal or replacement credit facility would most likely have, a number of
financial and operating performance covenants that we will have to satisfy for
the remainder of the credit facility. Our ability to satisfy those covenants and
to service debt that we incur under any credit facility depends principally upon
our ability to achieve positive operating performance and to successfully manage
our working capital in order to support our cash flow requirements. We were not
in compliance with several covenants under our credit facility as of December
31, 2000, but we obtained waivers from our lender as to those covenants. If our
quarterly operating performance falls substantially below our expectations or if
we are not able to effectively manage our collection efforts or cash
expenditures in a given quarter, we may not be able to fully support our cash
flow requirements. In that case, we may be unable to fully satisfy the financial
and operating performance covenants of a credit facility or to meet our debt
service obligations, thereby breaching the terms of the credit facility. We have
secured our obligations under our current credit facility by pledging
substantially all of our assets as collateral. Additionally, our subsidiaries
have guaranteed the repayment of our obligations under the credit facility, and
we have pledged the capital stock of our subsidiaries to the lenders. Any breach
of our covenants or inability to satisfy our debt service requirements could
result in a default under our credit facility and an acceleration of payment of
all outstanding debt owed, which would materially and adversely affect our
business.

      Virtually any capital raising will be subject to the consent of our lender
on our credit facility, if the credit facility is then in effect. In addition,
depending on how it is structured, any capital raising could require the
consent of the holders of our Series B Preferred Stock. We cannot assure you
that any additional funds will be available to us in the future or that, if
available, funds can be obtained on terms favorable to us, and on terms
acceptable to our lender, if its consent is required, and on terms acceptable to
the holders of the Series B Preferred Stock, if their consent is required. In
addition, we cannot assure you that available capital will be sufficient for the
successful operation and growth of our businesses. Our inability to raise
sufficient additional funds to meet our capital requirements would have a
material adverse effect on our business, financial condition and results of
operations.

      Additional financing may not be available to us when we need it or, if
available, it may not be on terms satisfactory to us, or we may not be able to
obtain the required consents to complete the financing. Obtaining additional
financing will depend on many factors, including market conditions, our
operating performance and investor sentiment. Terms of debt financing could
restrict our ability to operate our business, or to expand our operations. In
addition, if we raise capital by issuing capital stock or securities convertible
into capital stock, our stockholders could suffer a significant dilution of
their percentage ownership interests, and the new capital stock or other new
securities could have rights, preferences or privileges senior to those of our
current stockholders. If we are unable to raise sufficient additional financing
on terms satisfactory to us, then our business will be materially and adversely
affected.

      FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS MAY ADVERSELY AFFECT THE
      TRADING PRICE OF OUR COMMON STOCK

      Our quarterly revenues, expenses, margins and results of operations are
difficult to predict and have fluctuated significantly in the past and are
expected to continue to fluctuate significantly in the future due to a variety
of factors, many of which are outside of our control and any of which may cause
the trading price of our Common Stock to fluctuate. These factors include:

      -     the size, timing and terms of sales and orders, including customers
            choosing to push out their purchase commitments, or purchases in
            smaller than expected quantities;


                                       23
<PAGE>   26
      -     our ability to implement our business plans and strategies and the
            timing of such implementation;

      -     the timing, pricing and market acceptance of our new products and
            services, and those of our competitors;

      -     the pace of development of our new businesses;

      -     the success of our brand building and marketing campaigns for our
            PowerSecure and PowerSpring products and services;

      -     the growth of the market for distributed generation and online
            energy products, services and information;

      -     changes in our pricing policies and those of our competitors;

      -     variations in the length of our product and service implementation
            process;

      -     the mix of products and services sold;

      -     the mix of international and domestic revenues;

      -     the life cycles of our products and services;

      -     budgeting cycles of utilities;

      -     general economic and political conditions;

      -     economic conditions in the energy industry in general and the
            natural gas and electricity industries in particular;

      -     the effects of governmental regulations and regulatory changes in
            our current and new markets;

      -     prices charged by our suppliers;

      -     our ability to make successful acquisitions of technology or
            businesses, and the costs related to such acquisitions;

      -     changes in our operating expenses; and

      -     the development and maintenance of business relationships with
            strategic partners.

      Because many of our operating expenses are relatively fixed, a shortfall
in anticipated revenue or delay in recognizing revenue could cause our operating
results to vary significantly from quarter-to-quarter and could result in
significant operating losses in any particular quarter. The timing of large
individual sales is also difficult for us to predict. If our revenues fall below
our expectations in any particular quarter, our business could be materially
adversely affected. If our revenues fall below our expectations, we will not be
able to reduce our expenses rapidly in response to the short-fall and could
suffer significant operating losses.

      Due to all of these factors and the other risks discussed in this Report,
you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of our future performance. It is possible that in
some future periods our results of operations may be below the expectations of
public market analysts and investors. As a result, the trading price of our
Common Stock may fall.

      BECAUSE POWERSECURE AND POWERSPRING HAVE VERY LIMITED OPERATING HISTORIES
      AND OUR BUSINESS STRATEGIES ARE STILL BEING DEVELOPED AND ARE UNPROVEN,
      LIMITED INFORMATION IS AVAILABLE UPON WHICH YOU CAN EVALUATE POWERSECURE
      AND POWERSPRING

      Our business strategy and future success is highly dependent upon our
ability to develop new businesses and product lines such as PowerSecure and
PowerSpring. Our plans and strategies are based on unproven business models,
and our operating, sales and other strategies are still being developed. Our
PowerSecure business strategy depends on our ability to obtain distributed
generations contracts for large users of electricity and to successfully act as
a turn-key provider of distributed generation energy. Our PowerSpring business
strategy depends on the willingness of commercial users of natural gas and
electricity to purchase, at a price profitable to us, a package consisting of
energy data management equipment and energy purchasing resources. Our success
depends on our ability to develop these businesses that they will generate
significant revenues, profits and cash flow through the offering of energy
products, services and information. PowerSpring was launched in June 2000 and
PowerSecure commenced limited operations in September 2000, so they have
virtually no operating history to provide you upon which you can evaluate these
businesses. In addition, we have substantially restructured and down-sized our
PowerSpring business, and changed its business strategy.


                                       24
<PAGE>   27
      As a company developing new businesses in the rapidly evolving energy
markets, we face numerous risks and uncertainties which are described in this
Item as well as other parts of this Report. Some of these risks relate to our
ability to:

      -     anticipate and adapt to the changing regulatory climate for energy
            products and services;

      -     attract customers to our new businesses;

      -     anticipate and adapt to the changing Internet market;

      -     collect energy research and other energy information adequate to
            support a market for our product and services;

      -     implement our sales and marketing initiatives, both domestically and
            internationally;

      -     attract, retain and motivate qualified personnel;

      -     respond to actions taken by our competitors;

      -     integrate acquired businesses, technologies, products and services;

      -     generate revenues and sales of new products and services;

      -     implement an effective marketing strategy to promote awareness of
            our new businesses; and

      -     develop and deploy successful versions of the software necessary for
            our services.

      Our business and financial results in the future will depend heavily on
market acceptance and profitability of our new businesses and product lines.
If we are unsuccessful in addressing these risks or in executing our business
strategies, our business would be materially and adversely affected.

      BECAUSE OUR FUTURE GROWTH, IN OUR TRADITIONAL BUSINESSES AND IN OUR NEW
      BUSINESSES, IS DEPENDENT IN LARGE PART UPON THE DEREGULATION OF THE
      ELECTRICITY INDUSTRY, DELAYS IN THE DEREGULATION OF THE ELECTRICITY
      MARKETS, OR IN THE ELECTRICITY INDUSTRY'S COMPETITIVE RESPONSE TO
      DEREGULATION, MAY MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS

      The electricity industry is currently undergoing fundamental structural
changes due to deregulation, similar to what the natural gas utility industry
has undergone. A key component of our business strategies, in both our
traditional businesses, especially Metretek Florida, and our new businesses,
PowerSecure and PowerSpring, is to take advantage of opportunities created by
the deregulation of the electricity industry as the result of the need for more
and more frequent electricity consumption information. A principal expected
benefit to us of electricity deregulation is the ability of commercial and
industrial electricity customers to purchase electricity directly from multiple
suppliers, rather than solely from the local utility. This will require these
electricity customers to obtain timely electricity consumption data. If the
deregulatory environment does not continue or slows down, or if the market is
slow to respond to the opportunities made available by the changes in the
deregulation of the electricity industry, then commercial electricity customers
may not purchase our products, may purchase less of our products or may not
purchase our products until later than we anticipate. Failure of electricity
industry deregulation to result in a significant increase in the purchases of
our products and services would materially and adversely affect our business.

      BECAUSE WE ARE DEPENDENT UPON THE UTILITY INDUSTRY FOR A SIGNIFICANT
      PORTION OF OUR REVENUE, CONTINUED REDUCTIONS OF PURCHASES OF OUR PRODUCTS
      AND SERVICES BY UTILITIES CAUSED BY REGULATORY REFORM MAY MATERIALLY AND
      ADVERSELY AFFECT OUR BUSINESS

      We currently derive a significant portion of our revenue from sales of our
products and services to the utility industry, and particularly the natural gas
utility industry. We have experienced variability of operating results on both
an annual and quarterly basis due primarily to utility purchasing patterns, and
delays of purchasing decisions by utilities, as the result of mergers and
acquisitions in the utility industry or potential changes to the federal and
state regulatory framework within which the utility industry operates. The
utility industry is generally characterized by long budgeting, purchasing and
regulatory process cycles that can take up to several years to complete. Our
utility customers typically issue requests for quotes and proposals, establish
committees to evaluate the purchase proposals, review different technical
options with vendors, analyze performance and cost/benefit justifications and
perform a regulatory review, in addition to applying a normal budget approval
process within the utility. In addition, utilities may defer purchases of our
products and services if the utilities reduce capital expenditures as the result
of mergers and acquisitions, pending or unfavorable regulatory decisions, poor
revenues due to weather


                                       25
<PAGE>   28
conditions, rising interest rates or general economic downturns, among other
factors. The natural gas utility industry has been virtually the sole customer
for our automatic meter reading systems. However, over the last few years, the
uncertainty in the utility industry that has resulted from the regulatory
uncertainty in the current era of deregulation, has caused utilities to defer
even further purchases of our products and services. The continuation of this
uncertain regulatory climate will materially and adversely affect our revenues
from sales of meter reading devices.

      The domestic utility industry is currently the focus of regulatory reform
initiatives in virtually every state. These initiatives have resulted in
significant uncertainty for industry participants and raise concerns regarding
assets that would not be considered for recovery through rate payer charges.
This regulatory climate has caused most utilities to delay purchasing decisions
that involve significant capital commitments. As a result of these purchasing
decision delays, utilities have reduced their purchases of our products and
services. While we expect some states will act on these regulatory reform
initiatives in the near future, we cannot assure you that the current regulatory
uncertainty will be resolved in the short term. In addition, new regulatory
initiatives could have a material and adverse effect on our business. Moreover,
in part as a result of the competitive pressures in the utility industry arising
from the regulatory reform process, many utilities are pursuing merger and
acquisition strategies. We have experienced considerable delays in purchase
decisions by utilities that have become parties to merger or acquisition
transactions. Typically, capital expenditure purchase decisions are put on hold
indefinitely when merger negotiations begin. If this pattern of merger and
acquisition activity among utilities continues, our business may be materially
and adversely affected.

      In addition, if any of the utilities that account for a significant
portion of our revenues decide to significantly reduce their purchases of our
products and services, our business may be materially and adversely affected.

      RESTRICTIONS IMPOSED ON US AS A RESULT OF THE TERMS OF OUR CURRENT
      INDEBTEDNESS AND OUR SERIES B PREFERRED STOCK COULD LIMIT HOW WE CONDUCT
      OUR BUSINESS AND OUR ABILITY TO RAISE ADDITIONAL CAPITAL

      The terms of our current credit facility and of our Series B Preferred
Stock contain financial and operating covenants that limit the discretion of our
management. These covenants place significant restrictions on our ability to:

      -     incur additional indebtedness;

      -     create liens or other encumbrances;

      -     issue or redeem securities;

      -     make dividend payments and investments;

      -     amend our charter documents;

      -     sell or otherwise dispose of our assets;

      -     liquidate or dissolve;

      -     merge or consolidate with other companies; or

      -     reorganize, recapitalize or engage in a similar business
            transaction.

      Any future financing arrangements will likely contain similar or more
restrictive covenants. As a result of these restrictions, we may be:

      -     limited in how we conduct our business;

      -     unable to raise additional debt or equity financing to operate
            during general economic or business downturns; and

      -     unable to compete effectively or to take advantage of new business
            opportunities.

      DIVIDENDS ON THE SERIES B PREFERRED STOCK WILL INCREASE OUR FUTURE NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS AND OUR NET LOSS PER COMMON SHARE

      Due to our issuance of the Series B Preferred Stock, we recognize the 8%
coupon rate and certain "deemed distributions" as dividends on the Series B
Preferred Stock. The proceeds from the sale of the Units were allocated to the
Common Stock, the Unit Warrants and the Series B Preferred Stock based on the
relative fair value of each.


                                       26
<PAGE>   29
This allocation process resulted in the Series B Preferred Stock that we sold on
February 4, 2000 being initially recorded at a discount from its $1,000 per
share liquidation value. This discount will be recorded as a distribution over
the term of the Series B Preferred Stock. Another discount resulted from the
increase in the fair market value of a share of our Common Stock from the date
we offered to sell 5,550 Units to February 4, 2000, the date we actually issued
the Units. This increase caused the conversion feature of the Series B Preferred
Stock to be "in the money" on February 4, 2000. The discount related to the "in
the money" conversion feature has been recorded as a distribution between
February 4, 2000 and June 9, 2000, after which date the Series B Preferred Stock
can first be converted into our Common Stock. The Series B Preferred Stock
dividends significantly increased this year, and will increase in future years
through 2004, the net loss available to common shareholders and net loss per
common share, which could adversely affect the trading price of our Common
Stock.

      RAPID TECHNOLOGICAL CHANGES MAY PREVENT US FROM REMAINING CURRENT WITH OUR
      TECHNOLOGICAL RESOURCES AND MAINTAINING COMPETITIVE PRODUCT AND SERVICE
      OFFERINGS

      The markets in which our businesses operate are characterized by
rapid technological change, frequent new and enhanced product and service
introductions, evolving industry standards and changes in customer needs.
Significant technological changes could render our existing and planned new
products, services and technology. Our future success will depend, in part, on
our ability to:

      -     effectively use and develop leading technologies;

      -     continue to develop our technical expertise;

      -     enhance our current products and services;

      -     develop new products and services that meet changing customer needs;
            and

      -     respond to emerging industry standards and technological changes in
            a cost-effective manner.

      If we are unable to successfully respond to these developments or do not
respond to them in a cost-effective manner, then our business will be materially
and adversely affected. We cannot assure you that we will be successful in
responding to changing technology or market needs. In addition, products,
services and technologies developed by others may render our products, services
and technologies uncompetitive or obsolete.

      Even if we do successfully respond to technological advances and emerging
industry standards, the integration of new technology may require substantial
time and expense, and we cannot assure you that we will succeed in adapting our
products, services and technology in a timely and cost-effective manner. We may
experience financial or technical difficulties that could prevent us from
introducing new or enhanced products or services. Furthermore, these new or
enhanced products and services may contain problems that are discovered after
they are introduced. We may need to significantly modify the design of these
products and services to correct problems. Rapidly changing technology and
operating systems may impede market acceptance of our products and services. Our
business could be materially and adversely affected if we experience
difficulties in introducing new or enhanced services and products or if these
products and services are not received favorably by our customers.

      Development and enhancement of our products and services will require
significant additional expenses and could strain our management, financial and
operational resources. The lack of market acceptance of our products or services
or our inability to generate sufficient revenues from this development or
enhancements to offset their costs could have a material adverse effect on our
business. We have experienced delays in releasing new products and product
enhancements and may experience similar delays in the future. These delays or
problems in the installation of implementation of our new products and services
and enhancements may cause customers to forego purchases of our products and
services to purchase those of our competitors.

      CHANGES IN OUR PRODUCT MIX COULD MATERIALLY AND ADVERSELY AFFECT OUR
      BUSINESS

      The margins on our revenues from some of our product and service offerings
is higher than the margins on our other product and service offerings. For
example, revenues from some of Metretek Florida's AMR devices have significantly
higher margins than Metretek Florida's contract manufacturing revenues. In
addition, due to the limited operating histories, we cannot currently accurately
estimate the margins of our future PowerSpring and PowerSecure products and
services, although we believe the margins on PowerSecure will be less than in
Metretek Florida and Southern Flow. These new products and services may have
lower margins than our current products and services. If in the future we derive
a proportionately greater percentage of our revenues from lower margin


                                       27
<PAGE>   30
products and services, then our overall margins on our total revenues will
decrease and, accordingly, will result in lower net income, or higher net
losses, and less cash flow on the same amount of revenues.

      OUR MANAGEMENT OF PRIVATE ENERGY PROGRAMS PRESENTS RISKS TO US

      MGT is our subsidiary that manages and holds a small ownership interest in
two private energy programs that own natural gas assets. The operations of MGT
have been discontinued and MGT does not intend to form any new private programs.
MGT is pursuing the sale of the existing energy programs but will continue
managing the two business trusts that operate these energy programs only until
those programs are sold or liquidated or until MGT's interests and management
obligations in those programs are sold. These private programs were financed by
private placements of equity interest raising capital to acquire the assets and
business operated by the programs. Our management of these energy programs
presents risks to us, including:

      -     lawsuits by investors in these programs who become dissatisfied with
            the result of these programs, including a putative class action suit
            described in Item 3 "Legal Proceedings";

      -     material and adverse changes in the business, results of operations
            and financial conditions of the programs due to events, conditions
            and factors outside the control of MGT, such as general and local
            conditions affecting the energy market generally and the revenues of
            the programs specifically;

      -     changes in the regulatory environment relating to these programs;

      -     reliance upon significant suppliers and customers by these programs;

      -     hazards of energy facilities; and

      -     changes in technology.

      If any of these risks materialize and we are unsuccessful in addressing
these risks, our business could be materially and adversely affected.

      OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO MANY RISKS AND UNCERTAINTIES

      We market and sell some of our products and services in international
markets. Our revenues from sales into international markets were approximately
5% of our consolidated revenues in fiscal years 1999 and 2000. One component of
our strategy for future growth involves the expansion of our products and
services into new international markets and the expansion of our marketing
efforts in our current international markets. This expansion will require
significant management attention and financial resources to establish additional
offices, hire additional personnel, localize and market products and services in
foreign markets and to develop relationships with international service
providers. However, we have only limited experience in international operations,
including developing localized versions of our products and services and in
developing relationships with international service providers. We cannot assure
you that we will be successful in expanding our international operations, or
that revenues from international operations will be sufficient to offset these
additional costs. If revenues from international operations are not adequate to
offset the additional expense from expanding these international operations, our
business could be materially and adversely affected.

      In addition to the uncertainty regarding our ability to generate
sufficient revenues from foreign operations and to expand our international
presence, there are risks inherent in doing business on an international level,
including:

      -     adverse changes in applicable laws and regulatory requirements;

      -     import and export restrictions;

      -     export controls relating to technology;

      -     tariffs and other trade barriers;

      -     less favorable intellectual property laws;

      -     difficulties in collecting international accounts receivable and
            longer collection periods;

      -     the impact of local economic conditions and practices;

      -     difficulties in staffing and managing foreign operations;


                                       28
<PAGE>   31
      -     difficulties in complying with foreign regulatory and commercial
            requirements;

      -     increased costs associated with maintaining international marketing
            efforts;

      -     political and economic instability;

      -     fluctuations in currency exchange rates;

      -     potential adverse tax consequences;

      -     cultural and language difficulties;

      -     the potential exchange and repatriation of foreign earnings; and

      -     localization and translation of products and services.

      Our success in expanding our international operations will depend in large
part of our ability to anticipate and effectively manage these and other risks.
We have limited experience in conducting our business outside the United States
and may encounter unforeseen difficulties in conducting operations in foreign
countries. In addition, while our current products are designed to meet relevant
regulatory requirements of foreign markets in which they are sold, any inability
to obtain any required foreign regulatory approval and any changes in foreign
regulatory requirements could have a material adverse effect on our ability to
conduct business in these markets. In addition, we may confront significant
challenges in developing and implementing localized versions of our systems due
to many factors including the different standards among utilities on a country
by country basis. We cannot assure you that we will be able to successfully
market, sell and deliver our products and services in these foreign markets.

      OUR MARKETS ARE HIGHLY COMPETITIVE, AND THE COMPETITION WE FACE COULD
      MATERIALLY AND ADVERSELY AFFECT OUR ABILITY TO SELL OUR CURRENT PRODUCTS
      AND SERVICES, EXPAND OUR CURRENT BUSINESSES AND DEVELOP OUR NEW BUSINESSES

      The markets for energy products, services, technology and information are
highly competitive and subject to rapidly changing technology, new and
converging products, services and technologies, frequent product and service
performance improvements and evolving industry standards. The growth potential
and deregulatory environment of the energy market have attracted and are
anticipated to continue to attract many new start-ups as well as established
businesses from different industries. Competition may also increase as a result
of industry consolidation. Increased competition could result in price
reductions, reduced gross margins, loss of market share, inability to penetrate
new markets or to develop new markets, any of which could have a material and
adverse effect on our business.

      Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical, marketing,
manufacturing and other resources than we do. This may enable our competitors to
respond more quickly to new or emerging technologies and changes in customer
requirements or preferences and to devote greater resources to the development,
promotion and sale of their products and services than we can. Our competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
employees, customers, strategic partners and suppliers and vendors than we can.
Our competitors may develop products and services that are equal or superior to
the products and services offered by us or that achieve greater market
acceptance than our products do. In addition, current and potential competitors
have established or may establish cooperative relationships among themselves or
with third parties to improve their ability to address the needs of our existing
and prospective customers. As a result, it is possible that new competitors may
emerge and rapidly acquire significant market share or impede our ability to
acquire market share in new markets. Increased competition is likely to result
in price reductions, reduced gross margins and loss of market share, and the
inability to develop new businesses, which could materially and adversely affect
our business. We cannot assure you that we will have the financial resources,
technical expertise, portfolio of market or services or marketing and support
capabilities to successfully compete.

      WE MAY BE UNABLE TO SUCCESSFULLY ACQUIRE OTHER COMPANIES, FORM STRATEGIC
      ALLIANCES OR SUCCESSFULLY INTEGRATE ANY ACQUISITION OR ALLIANCE

      In the past, we have grown by acquiring complimentary businesses,
technologies, services and products and entering into strategic alliances with
complimentary businesses. We evaluate potential acquisition opportunities from
time to time, including those that could be material in size and scope. As part
of our growth strategy, we intend to continue to evaluate potential
acquisitions, investment opportunities and strategic alliances on an on-going
basis as they present themselves to facilitate our ability to enhance our
existing products and services and introduce


                                       29
<PAGE>   32
new products and services on a timely basis. However, we do not know if we will
be able to identify any future opportunities that we believe will be beneficial
for us. Even if we are able to identify an appropriate acquisition opportunity,
we may not be able to successfully finance the acquisition. A failure to
identify or finance future acquisitions may impair our growth and adversely
affect our business.

      Any future acquisition involves risks commonly encountered in business
relationships, including:

      -     difficulties in assimilating and integrating the operations,
            personnel, technologies, products and services of the acquired
            businesses;

      -     technologies, products or businesses that we acquire may not achieve
            levels of revenue, profitability or productivity comparable to our
            existing technologies, products and operations;

      -     difficulties in retaining and training key personnel;

      -     diversion of management's time and resources away from our normal
            daily operations;

      -     difficulties in successfully incorporating licensed or acquired
            technology and rights into our product and service offerings;

      -     difficulties in maintaining uniform standards, controls, procedures
            and policies within the combined organizations;

      -     changes in management resulting from an alliance or acquisition
            could impair relationships with employees and customers of the
            acquired company;

      -     risks of entering markets in which we have no or limited direct
            prior experience;

      -     potential disruptions of our ongoing businesses;

      -     unexpected costs and liabilities associated with the acquisitions;

      -     potential unknown liabilities associated with the acquired
            businesses; and

      -     potential additional expenses associated with amortization of
            acquired intangible assets, integration costs and unanticipated
            liabilities or contingencies.

      We cannot assure you that any acquisition of new businesses or technology
will lead to the successful development of new or enhanced products and
services, or that any new or enhanced products and services, if developed, will
achieve market acceptance or prove to be profitable.

      For these reasons, future acquisitions could materially and adversely
affect our existing businesses. Moreover, we cannot predict the accounting
treatment of any acquisition, in part because we cannot be certain whether
current accounting regulations, conventions or interpretations will prevail in
the future.

      In addition, to finance any future acquisitions, it may be necessary for
us to incur additional indebtedness or raise additional funds to public or
private financings. This financing may not be available to us or may be
available on terms satisfactory to us or to those whose consents are required
for our financing. Available equity or debt financing available may materially
and adversely affect our business and operations and, in the case of equity
financings, may significantly dilute the percentage ownership interests of our
stockholders.

      We cannot assure you that we will make any additional acquisitions or
that any acquisitions, if made, will be successful, will assist us in the
accomplishment of our business strategy, or will generate sufficient revenues to
offset the associated costs and other adverse effects or will otherwise result
in us receiving the intended benefits of the acquisition.

      IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR IF WE
      FACE CLAIMS OF INTELLECTUAL PROPERTY INFRINGEMENT BY THIRD PARTIES, WE
      COULD LOSE IMPORTANT INTELLECTUAL PROPERTY RIGHTS OR BE LIABLE FOR
      SIGNIFICANT DAMAGES WHICH COULD MATERIALLY AND ADVERSELY AFFECT OUR
      BUSINESS

      Our success and ability to compete depends, in substantial part, upon our
intellectual property rights and technology. We rely primarily on copyright,
trademark and trade secret laws, along with confidentiality procedures,
contractual provisions and licensing arrangements, to establish and protect our
proprietary rights. Although we hold


                                       30
<PAGE>   33
copyrights and trademarks in our business, we believe that the success of our
business depends more upon our proprietary technology, information, processes
and know-how than on patents or trademarks. Much of our proprietary information
and technology may not be patentable. Moreover, we have applied for registration
of a number of key trademarks and service marks and intend to introduce new
trademarks and service marks. We may not be successful in obtaining registration
for one or more of these marks.

      Despite our efforts to protect our intellectual property rights, our
actions may be inadequate to protect these rights or to prevent others from
claiming violations of their proprietary rights. It may be possible for
unauthorized third parties to copy, reverse engineer or otherwise obtain, use or
exploit aspects of our products and services, develop similar technology
independently, or otherwise obtain and use information that we regard as
proprietary. We cannot assure you that our competitors will not independently
develop technology similar or superior to our technology or design around our
proprietary rights. We generally require our employees, consultants and
strategic partners to enter into confidentiality and proprietary invention
agreements with us to limit use of, access to, and distribution of our
proprietary technology. Our intellectual property rights with respect to
PowerSpring may not be viable or of value in the future because of validity,
enforceability and scope or protection of proprietary rights in Internet-related
industries is uncertain and still evolving. In addition, the laws of some
foreign countries may not protect our proprietary rights as fully or in the same
manner as the laws of the United States.

      We may need to resort to litigation to enforce our intellectual property
rights, to protect our trade secrets, and to determine the validity and scope of
other companies' proprietary rights, or to defend against claims of infringement
or validity in the future. However, litigation could result in significant costs
or the diversion of management and financial resources. We cannot assure you
that any litigation will be successful or will prevail over counterclaims
against us. As a result, any litigation could materially and adversely affect
our business.

      Although we are not aware that any of our products, services or
technologies infringe on the proprietary rights of third parties, we cannot be
certain that our products, services and technologies do not or will not infringe
valid intellectual property rights held by third parties. In addition, we cannot
assure you that third parties will not claim that we have infringed their
intellectual property rights. We may be subject to legal proceedings and claims
from time to time relating to the intellectual property of third parties in the
ordinary course of our business. We may incur substantial expenses in defending
against these third party infringement claims, regardless of their merit.
Successful infringement claims against us could result in substantial monetary
liability or may materially disrupt the conduct of our business. In addition,
even if we prevail on these claims, this litigation could be time-consuming and
expensive to defend, and could result in the diversion of our time and
attention, which could materially and adversely affect our business.

      FROM TIME TO TIME, WE ARE SUBJECT TO LAWSUITS THAT, IF THEY ARE
      SUCCESSFULLY PROSECUTED AGAINST US, COULD MATERIALLY AND ADVERSELY AFFECT
      OUR BUSINESS

      We and several of our subsidiaries and affiliates and their officers,
directors and trustees are defendants to a pending putative class action filed
on January 5, 2001 in the District Court for the City and County of Denver,
Colorado, involving sales of interests in Marcum Midstream 1997-1 Business
Trust, which is managed by Marcum Gas Transmission, Inc. This lawsuit is
described in Item 3 "Legal Proceedings." We have filed a motion to dismiss the
action and intend to defend against it vigorously. While the litigation is at an
early stage and it is not possible at this time to predict the outcome of the
litigation or the impact this litigation will have on our business, an adverse
judgment against us could have a material adverse effect on our business,
financial condition and results of operations.

      From time to time we are also involved in other disputes and legal actions
that arise in the ordinary course of business. Although we do not expect any
currently pending legal proceedings to have a material adverse impact on us,
because the outcome of litigation is inherently uncertain, we cannot provide any
assurance that present or future litigation could not materially and adversely
affect our business.

      WE FACE SOME RISKS THAT ARE INHERENT IN NATURAL GAS OPERATIONS

      Some of our operations are subject to the hazards and risks inherent of
the servicing and operation of natural gas assets, including encountering
unexpected pressures, explosions, fire, natural disasters, blowouts, cratering
and pipeline ruptures, which could result in personal injuries, loss of life,
environmental damage and other damage to our properties and the properties of
others. These operations involve numerous financial, business, regulatory,
environmental, operating and legal risks. Damages occurring as a result of these
risks may give rise to product liability claims against us. We have product
liability insurance generally providing up to $6 million


                                       31
<PAGE>   34
coverage per occurrence and $7 million annual aggregate coverage. Although we
believe that our insurance is adequate and customary for companies of our size
that are engaged in operations similar to ours, losses due to risks and
uncertainties could occur for uninsurable or uninsured risks or could exceed our
insurance coverage. Therefore, the occurrence of a significant adverse effect
that is not fully covered by insurance could have a material and adverse effect
on our business. In addition, we cannot assure you that we will be able to
maintain adequate insurance in the future at reasonable rates.

      WE COULD BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION THAT AFFECTS
      OUR ABILITY TO OFFER OUR PRODUCTS AND SERVICES OR THAT AFFECTS DEMAND FOR
      OUR PRODUCTS AND SERVICES

      Our business operations are subject to varying degrees of federal, state,
local and foreign laws and regulations. Regulatory agencies may impose special
requirements for implementation and operation of our products, services or
technologies that may significantly impact or even eliminate some of our target
markets. We may incur material costs or liabilities in complying with government
regulations. In addition, potentially significant laws, regulations and
requirements may be adopted or imposed in the future. Furthermore, our potential
utility customers must comply with numerous laws and regulations. The
modification or adoption of future laws and regulations could adversely affect
our business and our ability to continually modify or alter our methods of
operations at reasonable costs. We cannot provide any assurances that we will be
able, for financial or other reasons, to comply with all applicable laws and
regulations. If we fail to comply with these laws and regulations, we could
become subject to substantial penalties which could materially and adversely
affect our business.

      OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO CONTINUE TO ATTRACT AND
      RETAIN KEY MANAGEMENT AND TECHNICAL PERSONNEL

      We believe our future success will depend in large part upon our ability
to attract and retain highly qualified technical, managerial, sales and
marketing, finance and operations personnel. Competition for qualified personnel
is intense, and we cannot assure you that we will be able to attract and retain
these key employment in the future. We do not maintain key person life insurance
policies for any key members of our management team. The loss of the services of
one or more of our key personnel could have a material adverse effect on our
business. We cannot assure you that we will be able to retain our current key
personnel or that we will be able attract or retain other highly qualified
personnel in the future. We have from time to time in the past experienced, and
we expect to continue to experience in the future, difficulty in hiring and
retaining highly skilled employees with appropriate qualifications. A shortage
in the number of trained technical and marketing personnel could limit our
ability to increase sales of our existing products and services and launch new
product and service offerings.

      OUR BUSINESS COULD SUFFER IF WE CANNOT MAINTAIN AND EXPAND OUR CURRENT
      STRATEGIC ALLIANCES AND DEVELOP NEW ALLIANCES

      A key element of our business strategy is the formation of corporate
relationships such as strategic alliances with other companies to provide
products and services to existing and new markets and to develop new products
and services and enhancements to existing products and services. We believe that
our success in the future in penetrating new markets will depend in large part
on our ability to maintain these relationships and to cultivate additional or
alternative relationships. However, we cannot assure you that we will be able to
develop new corporate relationships, or that these relationships will be
successful in achieving their purposes. Our failure to continue our existing
corporate relationships and develop new relationships could materially and
adversely affect our business.

      OUR SUPPLIERS AND MANUFACTURERS MAY NOT SUPPLY US WITH A SUFFICIENT AMOUNT
      OF COMPONENTS OR COMPONENTS OF ADEQUATE QUALITY, AND WE MAY NOT BE ABLE TO
      PRODUCE OUR PRODUCT

      We depend on sole or limited source suppliers or key components of our
products, and if we are unable to obtain these components on a timely basis, we
will not be able to deliver our products to customers. Also, we cannot guarantee
that any of the parts or components that we purchase, if available at all, will
be of adequate quality or that the prices we pay for these parts or components
that we purchase, if available at all, will be of adequate quality or that the
prices we pay for these parts or components will not increase. For example,
there is currently an industry-wide shortage of several electronic components,
some of which we use in our products. We may experience delays in production if
we fail to identify alternate vendors, or any parts supply is interrupted or
reduced or there is a significant increase in production costs, each of which
could materially adversely affect our business and operations.


                                       32
<PAGE>   35
      AS A RESULT OF THEIR BENEFICIAL OWNERSHIP OF A LARGE PERCENTAGE OF OUR
      COMMON STOCK, OUR DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
      STOCKHOLDERS COULD EXERT SIGNIFICANT INFLUENCE OVER MATTERS REQUIRING
      STOCKHOLDER VOTES

      As of March 1, 2000, our executive officers, directors and 5% or greater
stockholders beneficially owned, in the aggregate, approximately 63.0% of our
outstanding Common Stock, assuming they exercise or convert all stock options,
warrants and other rights exercisable within 60 days of that date. As a result,
these stockholders could, as a practical matter, be able to exercise significant
control over matters requiring approval by our stockholders, including the
election of directors and the approval of mergers, sales of substantially all of
our assets and other significant corporate transactions. The interests of these
stockholders may differ from the interests of other stockholders. In addition,
this concentration of stock ownership may have the effect of delaying or
preventing a change in control of us.

      VIRTUALLY ALL OF OUR SHARES ARE ELIGIBLE FOR FUTURE SALE BY OUR CURRENT
      STOCKHOLDERS, AND SIGNIFICANT SALES OF THESE SHARES COULD RESULT IN A
      DECLINE IN OUR STOCK PRICE

      If our stockholders sell a significant number of shares of our Common
Stock in the public market, including shares issuable upon the exercise of
outstanding options, warrants and other rights, or if there is a perception that
these sales could occur, then the market price of our Common Stock could fall.
These sales also might make it more difficult for us to sell equity securities
in the future at a time and price that we deem appropriate.

      On March 1, 2001, 5,908,067 shares of Common Stock were outstanding. On
the same date, options to purchase 615,010 shares of Common Stock were
outstanding, and shares acquired upon exercise of these stock options are
eligible for sale on the public market from time to time subject to vesting. On
the same date, 7,000 shares of Series B Preferred Stock convertible into
2,497,957 shares of Common Stock, and warrants and other rights to purchase
986,620 shares of Common Stock, were outstanding. The resale of virtually all
shares underlying these warrants and other rights are covered by a currently
effective registration statement. The exercise or conversion of outstanding
options, warranties and other rights to purchase our Common Stock will dilute
the remaining ownership of other holders of our Common Stock. In addition, the
sale in the public market of a significant number of these shares issuable upon
the exercise of options, warrants and other rights, or the perception that such
sales could occur, could cause the price of the Common Stock to decline.

      OUR SECOND RESTATED CERTIFICATE OF INCORPORATION, BY-LAWS AND STOCKHOLDER
      RIGHTS PLAN, AND DELAWARE LAW, CONTAIN ANTI-TAKEOVER PROVISIONS THAT COULD
      DISCOURAGE A THIRD-PARTY ACQUISITION OF OUR COMMON STOCK AT A PREMIUM TO
      THE MARKET PRICE

      Some provisions in our Second Restated Certificate of Incorporation
("Second Restated Certificate"), our Amended and Restated By-Laws ("By-Laws"),
and our stockholder rights plan, as well as some provisions of Delaware law,
could make it more difficult for a third party to acquire us or discourage a
third party from attempting to acquire us, even if doing so would be beneficial
to stockholders. These provisions could also limit the price that investors
might be willing to pay in the future for shares of our Common Stock. These
provisions include:

      -     a classified Board of Directors in which only approximately 1/3 of
            the total Board members are elected at each annual meeting;

      -     authority for our Board of Directors to issue Common Stock and
            Preferred Stock, and to determine the price, voting and other
            rights, preferences, privileges and restrictions of undesignated
            shares of Preferred Stock, without any vote by or approval of our
            stockholders (other than the consent of holders of Series B
            Preferred Stock relating to any senior or equal ranking securities);


                                       33
<PAGE>   36
      -     the existence of large amounts of authorized but unissued shares of
            Common Stock and Preferred Stock;

      -     super-majority voting requirements to effect material amendments to
            our Second Restated Certificate and By-Laws;

      -     limiting the persons who may call special meetings of stockholders;

      -     prohibiting stockholder action by written consent;

      -     our stockholders rights plan;

      -     a fair price provision that sets minimum price requirements for
            potential acquirers;

      -     anti-greenmail provisions which limit our ability to repurchase
            shares of Common Stock from significant stockholders;

      -     restrictions under Delaware law on mergers and other business
            combinations between us and any 15% stockholders; and

      -     advance notice requirements for director nominations and for
            stockholder proposals.

      WE DO NOT INTEND TO PAY DIVIDENDS ON OUR COMMON STOCK, AND OUR ABILITY TO
      PAY DIVIDENDS ON OUR COMMON STOCK IS LIMITED

      We have never declared or paid any cash dividends on our Common Stock.
Therefore, a stockholder will not experience a return on its investment in our
Common Stock without selling its shares, because we currently intend on
retaining any future earnings to fund our growth and do not expect to pay
dividends in the foreseeable future on the Common Stock.

      Under Delaware law, we are not permitted to make a distribution to our
stockholders, including dividends on our capital stock, if, after giving effect
to the payment, we would not be able to pay our debts as they become due in the
usual course of business or if our total assets would be less than the sum of
our total liabilities plus the amount which would be needed if we were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of stockholders whose preferential rights are superior to those
receiving the distribution. Consequently, if we fail to meet these criteria, we
will be unable to pay dividends on the Series B Preferred Stock.

      Our ability to pay dividends on our Common Stock is restricted by our
current credit facility. If we fail to pay dividends on the Series B Preferred
Stock, we will be prohibited from paying dividends on the Common Stock until all
unpaid dividends on the Series B Preferred Stock have been paid in full. In the
future, our Board of Directors will determine whether we pay dividends on the
Series B Preferred Stock or on our Common Stock. We cannot assure you that we
will pay dividends on the Series B Preferred Stock or on our Common Stock.

      OUR STOCK PRICE IS SUBJECT TO EXTREME PRICE AND VOLUME FLUCTUATIONS

      The market price and volume of our Common Stock has in the past been, and
in the future is likely to continue to be, highly volatile. The stock market in
general has been experiencing extreme price and volume fluctuations for years.
The market prices of securities of technology companies have been especially
volatile. We cannot assure you that our Common Stock will continue to trade at
recent price and volume levels. The following factors could cause wide
fluctuations in the market price and trading volume of our Common Stock in the
future:

      -     actual or anticipated variations in our results of operations;

      -     announcements of technological innovations;

      -     changes in, or the failure by us to meet, securities analysts'
            estimates and expectations;

      -     introduction of new products and services by us or our competitors;

      -     conditions or trends in the energy services and information
            industries in general and in the Internet and other technology
            industries in particular;

      -     announcements by us or our competitors of significant technical
            innovations, contracts, acquisitions, strategic relationships, joint
            ventures or capital commitments;

      -     announcements by us or our competition of the success or status of
            our business;

      -     changes in the market valuation of other energy or technology
            companies;


                                       34
<PAGE>   37
      -     general market conditions;

      -     additions or departures of key personnel;

      -     sales of our Common Stock by directors, executive officers and
            significant stockholders; and

      -     the gain or loss of significant customer orders.

      Many of these factors are beyond our control. These factors may decrease
the market price of our Common Stock, regardless of our operating performance.

      In addition, broad fluctuations in price and volume have been unrelated or
disproportionate to operating performance, both of the market in general and of
us in particular. Any significant fluctuations in the future might result in a
material decline in the market price of our Common Stock. In the past, following
periods of volatility in the market price of a company's securities, securities
class action litigation has often been brought against that company. We may
become involved in this type of litigation in the future. Litigation is often
expensive and diverts management's attention and resources, which could have a
material adverse effect on our business, even if we ultimately prevail in the
litigation.

      WE MAY ISSUE ADDITIONAL PREFERRED STOCK RANKING JUNIOR TO THE SERIES B
      PREFERRED STOCK, WHICH COULD DILUTE THE INTERESTS OF HOLDERS OF COMMON
      STOCK

      The terms of the Series B Preferred Stock do not limit the issuance of
additional series of Preferred Stock ranking junior to the Series B Preferred
Stock, but do require the approval of the holders of a majority of the
outstanding shares of Series B Preferred Stock to issue any stock senior to or
on a parity with the Series B Preferred Stock. The issuance of additional shares
of Preferred Stock ranking junior to the Series B Preferred Stock could dilute
the interest of holders of our Common Stock.


ITEM 7. FINANCIAL STATEMENTS

           The information required by this Item is set forth on pages F-1
through F-23 of this Report.


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

           None


                                       35
<PAGE>   38
                                    PART III


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

DIRECTORS AND EXECUTIVE OFFICERS

      Our executive officers and directors, and their ages and positions, are as
follows:

<TABLE>
<CAPTION>
NAME                              AGE           POSITION(S)
----                              ---           -----------
<S>                               <C>           <C>
W. Phillip Marcum                 57            President, Chief Executive Officer,
                                                   Chairman of the Board and Director
A. Bradley Gabbard                46            Executive Vice President, Chief
                                                   Financial Officer, Treasurer and
                                                   Director
Jeffrey B. Wood                   30            Controller, Principal Accounting
                                                   Officer and Assistant Secretary
Ronald W. McKee                   53            President of Metretek Florida and
                                                   Director
Basil M. Briggs (1)               65            Director
Kevin P. Collins (1)              50            Director
Robert Lloyd (2)                  62            Director
Stephen E. McGregor (1)           51            Director
Anthony D. Pell (2)               62            Director
Albert F. Thomasson (2)           59            Director
</TABLE>

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

(1)  Member of the Compensation Committee

(2)  Member of the Audit Committee


      W. PHILLIP MARCUM, one of our co-founders, has served as our President,
Chief Executive Officer, Chairman of the Board and a director since our
incorporation in April 1991. He also serves as the Chairman and Chief Executive
Officer of each of our direct wholly-owned subsidiaries. Mr. Marcum currently
serves on the board of directors of Key Energy Services, Inc., East Brunswick,
New Jersey ("Key"), an oilfield service provider, a director of WellTech, Inc.
("WellTech") from January 1994 until March 1996 when WellTech was merged into
Key, and one privately-held corporation, Test America, Inc., Asheville, North
Carolina, a water analysis company.

      A. BRADLEY GABBARD, one of our co-founders, has served as a director since
our incorporation in April 1991. He has served as our Executive Vice President
since July 1993, as our Chief Financial Officer and Treasurer from April 1991
through July 1993 and since August 1996 and as our Secretary since June 2000. He
also served as our Vice President and Secretary from April 1991 through July
1993. Mr. Gabbard also serves as the President and Chief Executive Officer of
PowerSpring and the Chief Financial Officer of each of our other subsidiaries.

      JEFFREY B. WOOD has served as our Controller, Principal Accounting Officer
and Assistant Secretary since May 2000. From September 1995 through May 2000,
Mr. Wood was employed in the Denver, Colorado office of Ernst &Young LLP,
providing accounting and assurance services to clients primarily in the real
estate industry.

      RONALD W. MCKEE has served as a director of Metretek since August 1997 and
has served as the President and Chief Operating Officer of Metretek Florida
since September 1995. Mr. McKee had previously served as the Vice President of
Marketing of Metretek Florida since he joined Metretek Florida in 1989. From
1970 to 1989, Mr. McKee held various sales and marketing management positions
with Rockwell International, Pittsburgh, Pennsylvania, and became the general
sales and marketing manager for Rockwell International's plug valve business in
1987.

      BASIL M. BRIGGS has served as a director of Metretek since June 1991. He
has been a practicing attorney in Detroit, Michigan since 1961, practicing law
with Cox, Hodgman & Giarmarco, P.C., Troy, Michigan, since January 1997. He was
of counsel with Miro, Weiner & Kramer, P.C., Bloomfield Hills, Michigan, from
1987 through 1996. Mr. Briggs was the President of Briggs & Williams, P.C.,
Attorneys at Law, from its formation in 1977 through 1986. Mr. Briggs was the
Secretary of Patrick Petroleum Company ("PPC"), Jackson, Michigan, an oil and
gas


                                       36
<PAGE>   39
company, from 1984, and a director of PPC from 1970, until PPC was acquired by
Goodrich Petroleum Corporation ("GPC"), Houston, Texas, an oil and gas company,
in August 1995. From August 1995 until June 2000, he served as a director of
GPC.

      KEVIN P. COLLINS has served as a director of Metretek since March 2000.
Mr. Collins has been a Managing Member of The Old Hill Company LLC, Westport,
Connecticut, which provides corporate financial and advisory services, since
1997. From 1992 to 1997, he served as a principal of JHP Enterprises, Ltd., and
from 1985 to 1992, he served as Senior Vice President of DG Investment Bank,
Ltd., both of which were engaged in providing corporate finance and advisory
services. Mr. Collins has served as a director of Key since March 1996; a
director of The Penn Traffic Company, Syracuse, New York, a food retailer, since
June 1999; and a director of London Fog Industries, Inc, Eldesburg, Maryland, an
outerwear designer and distributor, since 1999. Mr. Collins also serves as the
director of one privately-held company, Avanti Petroleum, Inc., a convenience
chain store.

      ROBERT LLOYD has served as a director of Metretek since July 1993. He
currently manages his personal investments. From 1988 to 1989 he was an
Executive Director of Interallianz London Limited, the wholly owned corporate
finance subsidiary of Interallianz Bank Zurich A.G. Mr. Lloyd formerly held
several positions with Drexel Burnham Lambert Inc. and its affiliates, including
Managing Director and Senior Corporate Finance Officer in Europe.

      STEPHEN E. MCGREGOR has served as a director of Metretek since June 2000
and had previously served as director of Metretek from July 1993 until August
1997. From July 1997 until June 1999, Mr. McGregor was an Executive Vice
President and the Chief Financial Officer of Key. From July 1995 until
July 1997, he was Senior Advisor to BT Wolfensohn and its predecessor James D.
Wolfensohn, Inc. Mr. McGregor was the President and a Member of Pacific Century
Group LLC from September 1993 until July 1995. From 1982 until 1993 he was a
partner, and from 1993 until March 1996 he was of counsel, in the law firm of
Skadden, Arps, Slate, Meagher & Flom in its Washington, D.C. and London, England
offices. Mr. McGregor also served as Deputy Assistant Secretary for Oil and Gas
Policy during the Carter Administration. Prior thereto he was counsel to the
United States Senate Commerce Committee.

      ANTHONY D. PELL has served as a director of Metretek since June 1994. Mr.
Pell is a director of Rochdale Investment Management, Inc., New York, New York.
He was the President and a co-owner of Pell, Rudman & Co., Boston,
Massachusetts, an investment advisory firm, from 1981 until 1993, when it was
acquired by United Asset Management Company, since which time he has served as a
consultant. Mr. Pell was a director of Metretek Florida from 1985 until Metretek
Florida was acquired by us in March 1994. Mr. Pell was associated with the law
firm of Coudert Brothers from 1966 to 1968 and with the law firm of Cadwalder,
Wickersham and Taft from 1968 to 1972, specializing in estate and tax planning.
In 1972, Mr. Pell joined Boston Company Financial Strategies, Inc. as a Vice
President and was appointed a Senior Vice President in 1975.

      ALBERT F. THOMASSON has served as a director of Metretek since March 1994.
Mr. Thomasson was a director of Metretek Florida from 1981 until it was acquired
by us in March 1994. For the past five years, Mr. Thomasson has been President
of AFT Corporation, which provides management consulting services to selected
businesses in the Birmingham, Alabama area; President of AFTCO Properties, Inc.
and Brookhaven Properties, III, Inc., which are engaged in residential real
estate development in the Birmingham area; President of Thomasson, Coal & Coke,
Inc., which was a manufacturer of alloy block for foundries until it merged into
AFT Corporation in 1996; Managing General Partner of Opto Oil and Gas Company,
which owns working interests in oil and gas fields; and Chairman of the Board of
DailyAccess.com, Inc., Mobile, Alabama, which is an Internet-based retirement
plan processing and service distribution platform.

      Our Board of Directors currently consists of nine members divided into
three classes, with members of each class holding office for staggered
three-year terms. The Class I Directors, whose terms expire at the 2001 Annual
Meeting of Stockholders, are Messrs. Marcum, Briggs and Lloyd. The Class II
Directors, whose terms expire at the 2002 Annual Meeting of Stockholders, are
Messrs. Gabbard, McKee and Thomasson. The Class III Directors, whose terms
expire at the 2003 Annual Meeting of Stockholders, are Messrs. Collins, Pell and
McGregor. In March 2001, the Board of Directors decided to reduce the size of
the Board from its current nine members to five members, effective as of the
2001 Annual Meeting of Stockholders. Accordingly, as of that date, Mr. Lloyd
will not seek re-election to the Board when his term expires and Messrs.
McGregor, McKee and Thomasson will resign their positions on the Board, thereby
reducing the size of the Board of Directors to five.

      Harry I. Skilton, who had served on our Board of Directors since May 1998,
did not seek re-election when his term expired at the 2000 Annual Meeting of
Stockholders.


                                       37
<PAGE>   40
      So long as at least 2,000 shares of our Series B Preferred Stock remain
outstanding, the holders of Series B Preferred Stock, voting separately as a
class, have the right to elect one member of our Board of Directors. In March
2000, Mr. Collins was elected to the Board of Directors by the holders of the
Series B Preferred Stock. All other directors are elected by the holders of the
Common Stock. Each director serves in office until his successor is duly elected
and qualified, or until his earlier death, resignation or removal. In the
future, any new members added to the Board of Directors will be distributed
among the three classes so that, as nearly as possible, each class will consist
of an equal number of directors. Our officers are appointed by our Board of
Directors and serve at its discretion, subject to their employment agreements,
as described in "Item 10. Executive Compensation."

OTHER KEY EMPLOYEES

      Information concerning other key employees of Metretek is set forth below:

      WOOD A. BREAZEALE, JR., 71, has served as the President, Chief Operating
Officer and a director of Southern Flow since May 1993. Mr. Breazeale was the
President and Chief Operating Officer of Southern Flow Companies, a division of
Homco International, Inc., and a Vice President of Homco International, Inc.,
from 1979 until we purchased the assets of the Southern Flow Companies division
of Weatherford in April 1993. Mr. Breazeale founded Southern Flow Companies in
1953.

      SIDNEY HINTON, 38, has served as the President and Chief Executive Officer
and a director of PowerSecure since its incorporation in September 2000. He also
served as the President and Chief Executive Officer of PowerSpring from May 2000
until January 2001, and continues to serve as a director of PowerSpring. From
February 2000 until May 2000, Mr. Hinton was an Executive in Residence with
Carousel Capital, Charlotte, North Carolina, a private equity firm. From
February 1999 until December 1999, he was the Vice President of Market Planning
and Research for Carolina Power & Light, Raleigh, North Carolina. From August
1997 until February 1998, Mr. Hinton was the President and Chief Executive
Officer of IllumElex, Raleigh, North Carolina, a national lighting company. From
1982 until 1997, Mr. Hinton was employed in several positions with Southern
Company and Georgia Power Company, Atlanta, Georgia.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Exchange Act ("Section 16(a)") requires our directors
and executive officers, and beneficial owners of more than 10% of our
outstanding Common Stock, to file initial reports of ownership on Form 3 and
reports of changes in ownership on Form 4 or Form 5 with the SEC, and to furnish
us with copies of all such reports that they file. Based solely upon our review
of the copies of such forms we have received, and written representations from
certain directors and executive officers that no Form 5s were required to be
filed, we believe that, during 2000, all reports required by Section 16(a) to be
filed by such persons were timely filed, except for one report regarding a stock
option exercise inadvertently filed late by Mr. Briggs and the initial reports
of beneficial ownership inadvertently filed late by Messrs. Collins and
McGregor.


                                       38
<PAGE>   41
ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

      The following table sets forth the total compensation that we paid or
accrued for services rendered to us in all capacities during the last three
fiscal years by our Chief Executive Officer and by our two other executive
officers (the "Named Executive Officers") whose total salary and bonus exceeded
$100,000 in the fiscal year ended December 31, 2000 ("fiscal 2000"):

                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>

                                                                                                 LONG TERM
                                                                                            COMPENSATION AWARDS
                                                                                            -------------------
                                                            ANNUAL COMPENSATION(1)               SECURITIES
                                                          -------------------------              UNDERLYING            ALL OTHER
NAME AND PRINCIPAL POSITION                 YEAR          SALARY($)         BONUS($)            OPTIONS(#)(2)     COMPENSATION($)(3)
---------------------------                 ----          ---------         --------            -------------     ------------------
<S>                                         <C>           <C>               <C>             <C>                    <C>
W. Phillip Marcum ...................       2000          $295,000          $150,000                    0             $  6,438
     President and Chief                    1999           210,000                 0                    0                6,400
     Executive Officer                      1998           200,000                 0              120,000(4)             6,436

A. Bradley Gabbard ..................       2000           175,000            75,000                    0                6,170
     Executive Vice                         1999           152,500                 0               12,500(5)             5,826
     President and Chief                    1998           145,000                 0               44,500(4)             6,249
     Financial Officer

Ronald W. McKee .....................       2000           125,000            12,500               10,000(5)             4,176
     President of Metretek Florida          1999           121,010                 0               12,500(5)             4,318
                                            1998           130,000                 0               25,000(4)             4,102
</TABLE>


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

(1)   Excludes perquisites and other personal benefits, if any, which were less
      than the lesser of $50,000 or 10% of the total annual salary and bonus
      reported for each Named Executive Officer.

(2)   The number of securities underlying options has been adjusted to reflect
      the one-to-four reverse split of the Common Stock effected on July 6,
      1998.

(3)   Includes amounts paid or accrued on behalf of the Named Executive Officers
      in 2000 for (i) matching contributions under our 401(k) plan of $5,250 for
      Mr. Marcum, $5,000 for Mr. Gabbard, and $3,327 for Mr. McKee; (ii)
      premiums for group term life insurance of $768 for Mr. Marcum, $750 for
      Mr. Gabbard, and $549 for Mr. McKee; and (iii) premiums for long-term
      disability insurance of $420 for Mr. Marcum, $420 for Mr. Gabbard, and
      $300 for Mr. McKee.

(4)   Includes options originally granted prior to 1998 (120,000 to Mr. Marcum,
      44,500 to Mr. Gabbard and 12,500 to Mr. McKee) that were cancelled and
      regranted pursuant to a stock option repricing in 1998.

(5)   These options vest in three equal annual installments: one-third on date
      of grant, one-third on the first anniversary of the grant and one-third on
      second anniversary of the grant.


                                       39
<PAGE>   42
EMPLOYMENT AGREEMENTS, CHANGE IN CONTROL ARRANGEMENTS AND OTHER COMPENSATION
ARRANGEMENTS

      In December 1991, we entered into employment agreements, which have been
amended several times, with W. Phillip Marcum, our President, Chief Executive
Officer and Chairman of the Board, and A. Bradley Gabbard, our Executive Vice
President and Chief Financial Officer. These employment agreements were most
recently amended effective January 1, 2000 to provide for an extension of the
employment term until December 31, 2003 for Mr. Marcum and until December 31,
2001 for Mr. Gabbard, with automatic additional one-year renewal periods when
the term expires, unless either party gives six months prior written notice of
termination. The base salaries under these employment agreements, which are
subject to annual upward adjustments at the discretion of the Board of
Directors, are currently set at $295,000 for Mr. Marcum and $175,000 for Mr.
Gabbard. In addition to the base annual compensation, the employment agreements
provide, among other things, for standard benefits commensurate with the
management levels involved. The employment agreements also provide for us to
establish an incentive compensation fund, to be administered by our Compensation
Committee, to provide for incentive compensation to be paid to each officer or
employee (including Messrs. Marcum and Gabbard) deemed by the Compensation
Committee to have made a substantial contribution to us in the event of a change
of control of Metretek or of the sale of substantially all of our assets or
similar transactions. The total amount of incentive compensation from the fund
available for distribution will be determined by a formula based on the amount
by which the fair market value per share of the Common Stock exceeds $10.08,
multiplied by a factor ranging from 10-20% depending upon the ratio of the fair
market value to $10.08. In the case of the sale of a significant subsidiary or
substantially all of the assets of a significant subsidiary, a similar pro rata
distribution is required. As amended, the employment agreements with Messrs.
Marcum and Gabbard provide that if the employment period expires without being
renewed, then the executive is entitled to receive a lump-sum severance payment
equal to 12 months, for Mr. Marcum, and six months, for Mr. Gabbard, of his then
base salary, and continued participation in all our insurance plans for such
additional period. The employment agreements also contain certain restrictions
on each executive's ability to compete, use of confidential information and use
of inventions and other intellectual property.

      As amended, the employment agreements with Messrs. Marcum and Gabbard also
include "change in control" provisions designed to provide for continuity of
management in the event we undergo a change in control. The agreements provide
that if within three years after a change in control, the executive is
terminated by us for any reason other than for "cause", or if the executive
terminates his employment for "good reason" (as such terms are defined in the
employment agreements), then the executive is entitled to receive a lump-sum
severance payment equal to two times, for Mr. Marcum, and one times, for Mr.
Gabbard, the amount of his then base salary, together with certain other
payments and benefits, including continued participation in all our insurance
plans for a period of two years for Mr. Marcum and one year for Mr. Gabbard.
Under these employment agreements, a "change in control" will be deemed to have
occurred only if: (1) any person or group becomes the beneficial owner of 50% or
more of our Common Stock; (2) a majority of our present directors are replaced,
unless the election of any new director is approved by a two-thirds vote of the
current (or properly approved successor) directors; (3) we approve a merger,
consolidation, reorganization or combination, other than one in which our voting
securities outstanding immediately prior thereto continue to represent more than
50% of our total voting power or of the surviving corporation following such a
transaction and our directors continue to represent a majority of our directors
or of the surviving corporation following such transaction; or (4) we approve a
sale of all or substantially all of our assets.

STOCK OPTION GRANTS

      The following table sets forth certain information with respect to stock
options granted during fiscal 2000 to the Named Executive Officers. We did not
grant any stock appreciation rights, alone or in tandem with stock options, in
fiscal 2000.


                                       40
<PAGE>   43
                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                               INDIVIDUAL GRANTS
                                     --------------------------------------------------------------------------------------
                                                                  % OF TOTAL
                                     NUMBER OF SECURITIES      OPTIONS GRANTED TO
                                           UNDERLYING            EMPLOYEES IN         EXERCISE               EXPIRATION
NAME                                  OPTIONS GRANTED (#)(1)     FISCAL YEAR (2)     PRICE ($)(3)              DATE (4)
----                                  ----------------------     ---------------     ------------              --------
<S>                                  <C>                       <C>                   <C>                     <C>
W. Phillip Marcum...............                0                     0%                  N/A                     N/A

A. Bradley Gabbard.............                 0                     0%                  N/A                     N/A

Ronald W. McKee................            10,000                   8.4%                 $6.50               June 10, 2010
</TABLE>

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

(1)   The options in this table are incentive stock options granted under our
      1998 Stock Incentive Plan. All options have ten year terms from the date
      of initial grant and vest in three equal installments: one-third upon
      grant, one-third after 1 year and one-third after two years.

(2)   Based upon 119,500 options granted during 2000 to employees.

(3)   The exercise price of the option is the fair market value of the Common
      Stock on the date of grant, based upon the last sale price of the Common
      Stock on such date as reported on the Nasdaq National Market.

(4)   These options may terminate before their terms expire due to the
      termination of the optionee's employment or the optionee's disability or
      death.

STOCK OPTION EXERCISES AND VALUES

      The following table sets forth information with respect to stock options
exercised during fiscal 2000 and stock options held by the Named Executive
Officers on December 31, 2000.


                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES


<TABLE>
<CAPTION>
                                                                     NUMBER OF SECURITIES              VALUE OF UNEXERCISED
                                                                 UNDERLYING UNEXERCISED OPTIONS      IN-THE-MONEY OPTIONS AT
                                    SHARES          VALUE              AT FISCAL YEAR-END (#)          FISCAL YEAR-END ($)(2)
                                   ACQUIRED        REALIZED      -----------------------------      -----------------------------
NAME                            ON EXERCISE (H)     ($) (1)      EXERCISABLE      UNEXERCISABLE     EXERCISABLE     UNEXERCISABLE
----                            ---------------     -------      -----------      -------------     -----------     -------------
<S>                             <C>                <C>           <C>              <C>               <C>             <C>
W. Phillip Marcum ......                0                0          120,000                0          $     0          $     0

A. Bradley Gabbard .....            7,500          $16,875           45,334            4,166                0                0

Ronald W. McKee ........                0                0           36,668           10,832                0                0
</TABLE>


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

(1)   For purposes of this table, the value realized is calculated as the
      excess, if any, of the fair market value of the underlying Common Stock,
      based upon the last sale price of the Common Stock as reported on the
      Nasdaq National Market, on the date of exercise over the exercise price of
      the options, and does not necessarily indicate that the optionee sold the
      shares of Common Stock acquired upon such exercise.

(2)   For purposes of this table, the value of unexercised in-the-money options
      is calculated based upon the difference between $1.00, the closing sale
      price of the Common Stock on December 29, 2000, the last


                                       41
<PAGE>   44
      trading day of 2000, as reported on the Nasdaq National Market, and the
      option exercise price. An option is "in-the-money" if the fair market
      value of the underlying shares of Common Stock exceeds the exercise price
      of the option. Because the exercise price of all options in this table
      exceeded $1.00, none of the options were "in-the-money" on December 31,
      2000.

DIRECTOR COMPENSATION

      Directors who are also our officers or employees do not receive any
additional compensation for serving on the Board of Directors. All directors are
reimbursed for out-of-pocket costs of attending meetings of the Board of
Directors and its committees. Directors who are not our officers or employees
("Non-Employee Directors") currently receive a fee of $1,000 for attendance at
each meeting of the Board of Directors. Non-Employee Directors also receive
stock options. Until June 1998, these options were granted under our Directors'
Stock Option Plan (the "Directors' Plan"). Since June 1998, these options have
been granted under our 1998 Stock Incentive Plan (the "1998 Plan"). Under the
formula for these stock option grants, each person who is first elected or
appointed to serve as a Non-Employee Director is automatically granted an option
to purchase 5,000 shares of Common Stock. On the date of the Annual Meeting of
Stockholders each year, each Non-Employee Director (who has been such for at
least six months) is automatically granted an option to purchase 2,500 shares of
Common Stock. All options vest and become exercisable immediately upon grant.
Additional non-formula options can be granted to Non-Employee Directors under
the 1998 Plan in the discretion of the Board of Directors.

      Each Non-Employee Director has the right to irrevocably elect on an annual
basis in advance to receive additional stock options under the 1998 Plan
("Meeting Options") in lieu of cash fees for attending meetings of the Board of
Directors. The Meeting Options are granted on the date of each Annual Meeting of
Stockholders and vest in 25% increments on the date of each of the subsequent
four regular quarterly meetings of the Board of Directors attended by such
Non-Employee Director. The number of shares of Common Stock exercisable upon the
exercise of Meeting Options are such that the value of the Meeting Options
granted is equal to the amount of fees waived.

      All options granted to Non-Employee Directors are non-qualified stock
options exercisable at a price equal to the fair market value of the Common
Stock on the date of grant and have ten year terms, subject to earlier
termination in the event of the termination of the optionee's status as a
director or the optionee's death. Options typically remain exercisable for one
year after a Non-Employee Director dies and for that number of years after a
Non-Employee Director leaves the Board of Directors (for any reason other than
death or removal for cause) equal to the number of full or partial years that
the Non-Employee Director served as a director, but not beyond the ten year term
of the option. As of December 31, 2000, options to purchase 65,000 shares of
Common Stock were outstanding to Non-Employee Directors under the Directors'
Plan and options to purchase 46,341 shares of Common Stock were outstanding to
Non-Employee Directors under the 1998 Plan, at exercise prices ranging from
$1.75 to $17.38 per share.

      On March 8, 2001, the Company granted options to purchase 30,000 shares of
Common Stock to each of the four directors who would be either resigning from or
not seeking re-election to the Board of Directors at the 2001 annual meeting of
stockholders. These options were granted under the 1998 Plan, are non-qualified
stock options and are exercisable at an exercise price of $1.50 per share for a
period of five years commencing on the date of the 2001 annual meeting of
stockholders.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


      The following table sets forth information regarding the beneficial
ownership of our Common Stock as of March 1, 2001 by:

      -     each person who is known by us to beneficially own 5% or more of the
            outstanding shares of our Common Stock;

      -     each of our directors;

      -     each of the Named Executive Officers; and

      -     all of our directors and executive officers as a group.


                                       42
<PAGE>   45
      Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Unless otherwise indicated below, to our
knowledge, each stockholder named in the table below has sole voting and
investment power with respect to the shares of Common Stock beneficially owned,
subject to applicable community property laws. In computing the number of shares
beneficially owned by a person and the percent of outstanding shares
beneficially owned by that person, beneficial ownership includes any shares of
Common Stock issuable under options, warrants, conversion rights and other
rights that are currently exercisable or exercisable within 60 days of March 1,
2001. These underlying shares, however, are not included for purposes of
computing the beneficial ownership of any other person. The percentage of
beneficial ownership is based upon 5,908,067 shares of Common Stock outstanding
on March 1, 2001.


<TABLE>
<CAPTION>
                                                                                  SHARES BENEFICIALLY OWNED
                                                                         ---------------------------------------------
NAME OF BENEFICIAL OWNER                                                 NUMBER OF SHARES              PERCENT OF CLASS
-------------------------                                                ---------------              ----------------
<S>                                                                       <C>                         <C>
DDJ Capital Management, LLC(1)...........................                    1,974,158                       27.1
     141 Linden Street, Suite S-4
     Wellesley, Massachusetts 02482
Special Situations Funds (2).............................                      911,900                       13.4
     153 East 53rd Street
     New York, New York 10022
Credit Suisse Asset Management, LLC (3)..................                      655,950                       10.3
      153 East 53rd Street, 57th Floor
     New York, New York, 10022
Kenneth B. Funsten (4)...................................                      655,646                       10.7
     121 Outrigger Mall
     Marina del Ray, California  90292
RS Investment Management Co., LLC (5)....................                      510,000                        8.6
     388 Market Street, Suite 200
     San Francisco, California  94111
Famco Value Income Partners, L.P. (6)....................                      330,537                        5.5
     121 Outrigger Mall
     Marina del Ray, California  90292
American Meter Company (7)...............................                      325,054                        5.5
     300 Welsh Road
     Horsham, Pennsylvania 19044
W. Phillip Marcum (8)....................................                      248,608                        4.1
Albert F. Thomasson (9)..................................                      127,639                        2.1
A. Bradley Gabbard (10)..................................                      124,116                        2.1
Stephen E. McGregor (11).................................                       65,458                        1.1
Robert Lloyd (12)........................................                       58,415                        1.0
Ronald W. McKee (13).....................................                       52,987                        0.9
Anthony D. Pell (14).....................................                       40,407                        0.7
Kevin P. Collins (15)....................................                        7,708                        0.1
Basil M. Briggs (16).....................................                        6,181                        0.1
All directors and executive officers
     as a group (10 persons)(17).........................                      736,094                       11.9
</TABLE>

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

(1)   Information based, in part, on Amendment No. 4 to Schedule 13D filed with
      the SEC on December 27, 2000, by DDJ Capital Management, LLC ("DDJ"), B
      III-A Capital Partners, L.P. ("B III-A") and GP III-A, LLC ("GP III-A").
      The shares of Common Stock are owned by B III-A Capital Partners (329,028
      shares), the DDJ Canadian High Yield Fund (987,079 shares) and an account
      established for an institutional investor (658,051 shares). GP III-A is
      the general partner of, and DDJ is the investment manager for, B III-A
      Capital Partners. DDJ is also the investment manager for , B III-A Capital
      partners. DDJ is also the investment manager for the account established
      for the institutional investor and the investment advisor to the DDJ
      Canadian High Yield Fund. Includes 300,000 shares of Common Stock that may
      be acquired upon the exercise of currently exercisable warrants, of which
      warrant to purchase 50,000 shares are owned by B III-A Capital Partners,
      warrants to purchase 150,000 shares are owned by DDJ Canadian High Yield
      Fund,


                                       43
<PAGE>   46
      and warrants to purchase 100,000 shares are owned by the institutional
      account. Also includes 1,074,158 shares of Common Stock that may be
      acquired upon the conversion of 3,000 shares of Series B Preferred Stock,
      of which 500 shares of Series B Preferred Stock convertible into 179,028
      shares of Common Stock are owned by B III-A, 1,500 shares of Series B
      Preferred Stock convertible into 537,079 shares of common Stock are owned
      by DDJ Canadian High Yield Fund, and 1,000 shares of Series B Preferred
      Stock convertible into 358,051 shares of Common Stock are owned by the
      institutional account.

(2)   Information based, in part, upon Schedule 13G filed with the SEC on
      February 10, 2001, by Special Situations Fund III, L.P., Special
      Situations Cayman Fund, L.P., Special Situations Private Equity Fund,
      L.P., Special Situations Technology Fund, L.P., MGP Advisors Limited
      Partnership, AWM Investments Company, Inc., MG Advisors, L.L.C., SST
      Advisors, L.L.C., Austin W. Marxe and David M. Greenhouse. MGP Advisors is
      the general partner of and the investment advisor to the Special
      Situations Fund s III. AWM Investments company is the general partner of
      MGP Advisors and the general partner of and investment adviser to the
      Special Situations Cayman fund. MG Advisers is the general partner of the
      Special Situations Private Equity Fund. SST Advisors is the general
      partner of the Special Situations Technology Fund. Austin W. Marxe and
      David M. Greenhouse are the officers, directors and members or principal
      shareholders of MG Advisors, MGP Advisors, AWM Investment Company and SST
      Advisors. The shares of Common Stock are owned by Special Situations Fund
      III (376,159 shares), Special Situations Private Equity Fund (227,875
      shares), Special Situations Technology Fund (182,380 shares) and Special
      Situations Cayman Fund (125,386 shares). Includes 200,000 shares of Common
      Stock that may be acquired upon the exercise of currently exercisable
      warrants, of which warrants to purchase 82,500 shares are owned by Special
      Situations Fund III, warrants to purchase 50,000 shares are owned by
      Special Situations Private Equity Fund, warrants to purchase 40,000 shares
      are owned by Special Situations Cayman Fund. Also includes 711,900 shares
      of common Stock that may be acquired upon the conversion of 2,000 shares
      of Series B Preferred Stock, of which 825 shares of Series B Preferred
      Stock convertible into 293,659 shares of Common Stock are owned by Special
      Situations Fund III, 500 shares of Series B Preferred Stock convertible
      into 177,975 shares of Common Stock are owned by Special Situations
      Private Equity Fund, 400 shares of Series B Preferred Stock convertible
      into 142,380 shares of Common Stock are owned by Special Situations
      Technology Fund, and 275 shares of Series B Preferred Stock convertible
      into 97,886 shares of Common Stock are owned by Special Situations Cayman
      Fund.

(3)   Credit Suisse Asset Management, LLC is the investment advisor for SEI
      Institutional Management Trust, Bost & Co., Warburg Pincus High Yield
      Fund, The Common Fund, CSAM Investment Trust - U.S. HYLD Series and SEI
      Global - High Yield Fixed Income Fund. The shares of Common Stock are
      owned by SEI Institutional Management Trust (196,785 shares), Bost & Co.
      (131,190 shares), Warburg Pincus High Yield Fund (98,382 shares), The
      Common Fund (98,382 shares), CSAM Investment Trust - U.S. HYLD Series
      (98,382 shares) and SEI Global - High Yield Fixed Income Fund (32,798
      shares). Includes 100,000 shares of Common Stock that may be acquired upon
      the exercise of currently exercisable warrants, of which warrants to
      purchase 30,000 shares are owned by SEI Institutional Management Trust,
      warrants to purchase 20,000 shares are owned by Bost & Co., warrants to
      purchase 15,000 shares are owned by Warburg Pincus High Yield Fund,
      warrants to purchase 15,000 shares owned by The Common Fund, warrants to
      purchase 15,000 shares are owned by CSAM Investment Trust - U.S. HYLD
      Series, and warrants to purchase 5,000 shares are owned by SEI Global -
      High Yield Fixed Income Fund. Also includes 355,952 shares of Common Stock
      that may be acquired upon the conversion of 1,000 shares of Series B
      Preferred Stock, of which 300 shares of Series B Preferred Stock
      convertible into 106,785 shares of Common Stock are owned by SEI
      Institutional Management Trust, 200 shares of Series B Preferred Stock
      convertible into 71,190 shares of Common Stock are owned by Bost & Co.,
      150 shares of Series B Preferred Stock convertible into 53,392 shares of
      Common Stock are owned by Warburg Pincus High Yield Fund, 150 shares of
      Series B Preferred Stock convertible into 53,392 shares of Common Stock
      are owned by The Common Fund, 150 shares of Series B Preferred Stock
      convertible into 53,390 shares of Common Stock are owned by CSAM
      Investment Trust - U.S. HYLD Series, and 50 shares of Series B Preferred
      Stock convertible into 17,798 shares of Common Stock are owned by SEI
      Global - High Yield Fixed Income Fund.

(4)   Information based, in part, upon amendment No. 1 to Schedule 13 and Form 3
      filed by Kenneth B. Funsten with the SEC on December 29, 2000. Kenneth B.
      Funsten is the president and the portfolio manager of Funsten Asset
      Management Company. Funsten Asset Management Company is the general
      partner of Famco VIP. Mr. Funsten is a director of Famco Offshore, Ltd.,
      Mr. Funsten holds sole voting and investment power over the securities
      owned by Famco VIP and Famco Offshore. The shares of Common Stock are
      owned by Mr. Funsten (234,835 shares), Famco VIP (330,537 shares) and
      Famco Offshore (90,274 shares). Includes 50,000 shares of Common Stock




                                       44
<PAGE>   47

      that may be acquired upon currently exercisable warrants, of which
      warrants to purchase 18,100 shares are owned by Mr. Funsten, warrants to
      purchase 27,000 shares are owned by Famco VIP, and warrants to purchase
      4,900 shares are owned by Famco Offshore. Also includes 177,976 shares of
      Common Stock that may be acquired upon the conversion of 500 shares of
      Series B Preferred Stock, of which 181 shares of Series B Preferred Stock
      convertible into 64,427 shares of Common Stock are owned by Mr. Funsten,
      270 shares of Series B preferred Stock convertible into 96,107 shares of
      Common Stock are owned by Famco VIP, and 49 shares of Series B Preferred
      Stock convertible into 17,442 shares of Common Stock are owned by Famco
      Offshore. Does not include 4,100 shares owned by an employee of Funsten
      Asset Management Company which cannot be sold or further added to without
      permission by Mr. Funsten by virtue of restrictions that are placed on
      securities transactions by employees of Funsten Asset Management Company,
      because Mr. Funsten has no investment or voting authority over the shares
      of the employee and Mr. Funsten expressly disclaims beneficial ownership
      of these shares.

(5)   Information as of December 31, 2000 based upon Schedule 13G filed with the
      SEC on February 15, 2001 regarding shared voting and dispositive power of
      such shares by RS Investment Management Co., LLC and RS Investment
      Management, L.P.

(6)   Information based upon Amendment No. 1 to Schedule 13G and Form 3 filed by
      Kenneth B. Funsten with the SEC on December 29, 2000. According to the
      information contained therein, includes 27,000 shares of Common Stock that
      may be acquired by Famco VIP upon the exercise of currently exercisable
      warrants and 96,107 shares of Common Stock that may be acquired upon the
      conversion of 27,000 shares of Series B Preferred Stock owned by Famco
      VIP. Kenneth B. Funsten and Funsten Asset Management Company are the
      general partners of Famco VIP. In this table, the shares owned by Famco
      VIP are also included in the shares beneficially owned by Mr. Funsten. See
      note (4) above. Does not include 4,100 shares owned by an employee of
      Funsten Asset Management Company which cannot be sold or further added to
      without permission by Mr. Funsten by virtue of restrictions that are
      placed on securities transactions by employees of Funsten Asset Management
      Company, because Famco VIP has no investment or voting authority over the
      shares of such employee and Famco VIP expressly disclaims beneficial
      ownership of such shares.

(7)   Information based upon Amendment No. 2 to Schedule 13D filed by American
      Meter Company, as successor in interest to its former subsidiary Eagle
      Research Corporation, with the SEC on August 31, 2000.

(8)   Includes 120,000 shares that may be acquired by Mr. Marcum upon the
      exercise of currently exercisable stock options.

(9)   Includes 2,338 shares held of record by Mr. Thomasson's wife and 29,880
      shares held in family trusts. Also includes 25,171 shares that may be
      acquired by Mr. Thomasson upon the exercise of currently exercisable stock
      options and 12,587 shares that may be acquired by Mr. Thomasson or his
      wife or their family trusts upon the exercise of currently exercisable
      warrants.

(10)  Includes 2,187 shares owned by Mr. Gabbard's minor son and 45,334 shares
      that may be acquired by Mr. Gabbard upon the exercise of currently
      exercisable stock options.

(11)  Includes 30,458 shares that may be acquired by Mr. McGregor upon the
      exercise of currently exercisable stock options.

(12)  Includes 5,000 shares owned by a trust of which Mr. Lloyd and his wife are
      the majority trustees, and 15,665 shares that may be acquired by such
      trust upon the exercise of currently exercisable stock options.

(13)  Includes 36,668 shares that may be acquired by Mr. McKee upon the exercise
      of currently exercisable stock options.

(14)  Includes 2,937 shares held by Mr. Pell's wife. Also includes 2,958 shares
      that may be acquired by Mr. Pell upon the exercise of currently
      exercisable stock options.

(15)  Includes 5,458 shares that may be acquired by Mr. Collins upon the
      exercise of currently exercisable stock options.


                                       45
<PAGE>   48
(16)  Includes 2,500 shares owned by Mr. Briggs' wife. Also includes 3,681
      shares that may be acquired by Mr. Briggs' wife upon the exercise of
      currently exercisable stock options.

(17)  See notes (8) through (16).



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Any material transaction between us and any related party must be approved
by a majority of the members of our Board of Directors who are disinterested in
the transaction.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)   EXHIBITS

      (2)   PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
            SUCCESSION:

            (2.1)   Agreement and Plan of Merger, dated as of March 16, 2000, by
                    and between TotalPlan, Inc. and PowerSpring, Inc.
                    (Incorporated by reference to Exhibit 2.2 to Metretek's
                    Annual Report on Form 10-KSB for the fiscal year ended
                    December 31, 1999.)

            (2.2)   Agreement and Plan of Merger, dated as of March 17, 2000, by
                    and among PowerSpring, Inc., MERC Acquisition Corp.,
                    Mercator Energy Incorporated and John A. Harpole.
                    (Incorporated by reference to Exhibit 2.3 to Metretek's
                    Annual Report on Form 10-KSB for the fiscal year ended
                    December 31, 1999.)

      (3)   ARTICLES OF INCORPORATION AND BY-LAWS:

            (3.1)   Second Restated Certificate of Incorporation of Metretek
                    Technologies, Inc. (Incorporated by reference to Exhibit 4.1
                    to Metretek's Registration Statement on Form S-3,
                    Registration No. 333-96369.)

            (3.2)   Amended and Restated By-Laws of Metretek Technologies, Inc.
                    (Incorporated by reference to Exhibit 3.3 to Metretek's
                    Annual Report on Form 10-KSB for the year ended December 31,
                    1998.)

      (4)   INSTRUMENT DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
            INDENTURES:

            (4.1)   Specimen Common Stock Certificate. (Incorporated by
                    reference to Exhibit 4.1 to Metretek's Registration
                    Statement on Form S-18, Registration No. 33-44558.)

            (4.2)   Specimen Series B Preferred Stock Certificate. (Incorporated
                    by reference to Exhibit 4.4 to Metretek's Registration
                    Statement on Form S-3, Registration No. 333-96369.)

            (4.3)   Form of Certificate representing warrants to purchase shares
                    of Common Stock of Metretek Technologies, Inc. issued to
                    former holders of warrants of Metretek, Incorporated.
                    (Incorporated by reference to Exhibit 4.2 to Metretek's
                    Registration Statement on Form S-4, Registration No.
                    33-73874.)

            (4.4)   Rights Agreement, dated as of December 2, 1991, between
                    Metretek Technologies, Inc. and American Securities
                    Transfer, Inc. (Incorporated by reference to Exhibit 10.6 to
                    Metretek's Registration Statement on Form S-18, Registration
                    No. 33-44558.)

            (4.5)   Amendment No. 1 to Rights Agreement, dated as of March 23,
                    1998, between Metretek Technologies, Inc. and American
                    Securities Transfer & Trust, Inc. (Incorporated by


                                       46
<PAGE>   49
                    reference to Exhibit 2 to Metretek's Registration Statement
                    on Form 8-A/A, Amendment No. 1 filed April 3, 1998.)

            (4.6)   Amendment No. 2 to Rights Agreement, dated as of December 9,
                    1999, between Metretek Technologies, Inc. and American
                    Securities Transfer & Trust, Inc. (Incorporated by reference
                    to Exhibit 1 to Metretek's Registration Statement on Form
                    8-A/A, Amendment No. 4 filed December 23, 1999.)

            (4.7)   Form of Registration Rights Agreement among Metretek
                    Technologies, Inc. and the former warrant holders of
                    Metretek, Incorporated. (Incorporated by reference to
                    Exhibit 4.4 to Metretek's Registration Statement on Form
                    S-4, Registration No. 33-73874.)

            (4.8)   Securities Purchase Agreement, dated as of December 9, 1999,
                    by and among Metretek Technologies, Inc. and certain
                    purchasers of securities of Metretek Technologies, Inc.
                    (collectively, the "Unit Purchasers"). (Incorporated by
                    reference to Exhibit 4.1 to Metretek's Current Report on
                    Form 8-K filed December 22, 1999).

            (4.9)   Form of Common Stock Purchase Warrant issued by Metretek
                    Technologies, Inc. to the Unit Purchasers. (Incorporated by
                    reference to Exhibit 4.3 to Metretek's Current Report on
                    Form 8-K filed December 22, 1999).

            (4.10)  Registration Rights Agreement, dated as of December 9, 1999,
                    by and among Metretek Technologies, Inc. and the Unit
                    Purchasers. (Incorporated by reference to Exhibit 4.4 to
                    Metretek's Current Report on Form 8-K filed December 22,
                    1999).

            (4.11)  Form of Common Stock Purchase Warrant issued by Metretek
                    Technologies, Inc. to Scient Corporation. (Incorporated
                    by reference to Exhibit 4.12 of Metretek's Registration
                    Statement on Form S-3, Registration No. 333-96369).

            (4.12)  Form of Common Stock Purchase Warrant issued by Metretek
                    Technologies, Inc. to John A. Harpole. (Incorporated by
                    reference to Exhibit 4.13 of Metretek's Registration
                    Statement on Form S-3, Registration No. 333-96369).

            (4.13)  Form of Common Stock Purchase Warrant issued by Metretek
                    Technologies, Inc. to National Bank of Canada. (Incorporated
                    by reference to Exhibit 4.14 of Metretek's Registration
                    Statement on Form S-3, Registration No. 333-96369).

            (4.14)  Form of Common Stock Purchase Warrant issued by Metretek
                    Technologies, Inc. to Silverman Heller Associates.
                    (Incorporated by reference to Exhibit 4.15 of Metretek's
                    Registration Statement on Form S-3, Registration No.
                    333-96369).

            (4.15)  Form of Common Stock Purchase Agreement issued by Metretek
                    Technologies, Inc. to First Albany Corporation, William
                    Reinert, John S. Koodrich and Lawrence C. Petrucci.
                    (Incorporated by reference to Exhibit 4.16 of Metretek's
                    Registration Statement on Form S-3, Registration No.
                    333-96369).

      (10)  MATERIAL CONTRACTS:

            (10.1)  1991 Stock Option Plan, as amended and restated December 5,
                    1996. (Incorporated by reference to Exhibit 10.2 to
                    Metretek's Annual Report on Form 10-KSB for the year ended
                    December 31, 1996.)*

            (10.2)  Directors' Stock Option Plan, as amended and restated
                    December 2, 1996. (Incorporated by reference to Exhibit 10.3
                    to Metretek's Annual Report on Form 10-KSB for the year
                    ended December 31, 1996.)*


                                       47
<PAGE>   50
            (10.3)  Employment Agreement, dated as of June 11, 1991, by and
                    between Metretek Technologies, Inc. and W. Phillip Marcum.
                    (Incorporated by reference to Exhibit 10.4 to Metretek's
                    Registration Statement on Form S-18, Registration No.
                    33-44558.)*

            (10.4)  Amendment No. 1 to Employment Agreement, dated June 27,
                    1997, by and between Metretek Technologies, Inc. and W.
                    Phillip Marcum. (Incorporated by reference to Exhibit 10.1
                    to Metretek's Quarterly Report on Form 10-QSB for the
                    quarterly period ended September 30, 1997.)*

            (10.5)  Amendment No. 2 to Employment Agreement, dated December 3,
                    1998, by and between Metretek Technologies, Inc. and W.
                    Phillip Marcum. (Incorporated by reference to Exhibit 10.5
                    to Metretek's Annual Report on Form 10-KSB for the year
                    ended December 31, 1998.)*

            (10.6)  Amendment No. 3 to Employment Agreement, dated as of January
                    1, 2000, by and between Metretek Technologies, Inc. and W.
                    Phillip Marcum. (Incorporated by reference to Exhibit 10.6
                    to Metretek's Annual Report on Form 10-KSB for the year
                    ended December 31, 1999.)

            (10.7)  Employment Agreement, dated as of June 11, 1991, by and
                    between Metretek Technologies, Inc. and A. Bradley Gabbard.
                    (Incorporated by reference to Exhibit 10.4 to Metretek's
                    Registration Statement on Form S-18, Registration No.
                    33-44558.)*

            (10.8)  Amendment No. 1 to Employment Agreement, dated June 27,
                    1997, by and between Metretek Technologies, Inc. and A.
                    Bradley Gabbard. (Incorporated by reference to Exhibit 10.2
                    to Metretek's Quarterly Report on Form 10-QSB for the
                    quarterly period ended September 30, 1997.)*

            (10.9)  Amendment No. 2 to Employment Agreement, dated December 3,
                    1998, by and between Metretek Technologies, Inc. and A.
                    Bradley Gabbard. (Incorporated by reference to Exhibit 10.8
                    to Metretek's Annual Report on Form 10-KSB for the year
                    ended December 31, 1998.)*

            (10.10) Amendment No. 3 to Employment Agreement, dated as of January
                    1, 2000, by and between Metretek Technologies, Inc. and A.
                    Bradley Gabbard.* (Incorporated by reference to Exhibit
                    10.10 to Metretek's Annual Report on Form 10-KSB for the
                    year ended December 31, 1999.)*

            (10.11) Loan and Security Agreement, dated April 14, 1998, by and
                    between National Bank of Canada, Metretek Technologies,
                    Inc., Metretek, Incorporated and Southern Flow Companies,
                    Inc. (Incorporated by reference to Exhibit 10.1 to
                    Metretek's Quarterly Report on Form 10-QSB for the quarterly
                    period ended March 31, 1998.)

            (10.12) Amendment No. 1 to Loan and Security Agreement, dated as of
                    November 10, 1998, by and among National Bank of Canada,
                    Metretek Technologies, Inc., Metretek, Incorporated and
                    Southern Flow Companies, Inc. (Incorporated by reference to
                    Exhibit 10.12 to Metretek's Annual Report on Form 10-KSB for
                    the year ended December 31, 1998.)

            (10.13) Second Amendment to Loan and Security Agreement and Loan
                    Documents, dated as of September 13, 1999, by and among
                    National Bank of Canada, Metretek Technologies, Inc.,
                    Metretek, Incorporated and Southern Flow Companies, Inc.
                    (Incorporated by reference to Exhibit 10.1 to Metretek's
                    Current Report on Form 8-K filed September 14, 1999.)

            (10.14) Third Amendment to Loan and Security Agreement and Loan
                    Documents, dated as of December 9, 1999, by and among
                    National Bank of Canada, Metretek Technologies, Inc.,
                    Metretek, Incorporated and Southern Flow Companies, Inc.
                    (Incorporated by reference to Exhibit 10.1 to Metretek's
                    Current Report on Form 8-K filed December 22, 1999.)


                                       48
<PAGE>   51
            (10.15) Fourth Amendment to Loan and Security Agreement and Loan
                    Documents, dated as of March 22, 2000, by and among National
                    Bank of Canada, Metretek Technologies, Inc., Metretek,
                    Incorporated and Southern Flow Companies, Inc.

            (10.16) Fifth Amendment to Loan and Security Agreement and Loan
                    Documents, dated as of March 1, 2001, by and among National
                    Bank of Canada, Metretek Technologies, Inc., Metretek,
                    Incorporated and Southern Flow Companies, Inc.

            (10.17) Metretek Technologies, Inc. 1998 Stock Incentive Plan,
                    amended and restated as of February 3, 2000 (Incorporated by
                    reference to Exhibit 10.2 to Metretek's Current Report on
                    Form 8-K filed on February 22, 2000).*

            (10.18) Employment Agreement, dated as of March 17, 2000, between
                    PowerSpring, Inc. and John A. Harpole. (Incorporated by
                    reference to Exhibit 10.17 to Metretek's Annual Report on
                    Form 10-KSB for the year ended December 31, 1999.)*

            (10.19) Stockholders Agreement, dated as of March 17, 2000, among
                    Metretek Technologies, Inc., PowerSpring, Inc. and John A.
                    Harpole. (Incorporated by reference to Exhibit 10.18 to
                    Metretek's Annual Report on Form 10-KSB for the year ended
                    December 31, 1999.)

            (10.20) Non-Negotiable Promissory Note, dated March 17, 2000, made
                    by PowerSpring, Inc. to John A. Harpole. (Incorporated by
                    reference to Exhibit 10.19 to Metretek's Annual Report on
                    Form 10-KSB for the year ended December 31, 1999.)

            (10.21) Security Agreement, dated March 17, 2000, between
                    PowerSpring, Inc. and John A. Harpole. (Incorporated by
                    reference to Exhibit 10.20 to Metretek's Annual Report on
                    Form 10-KSB for the year ended December 31, 1999.)

            (10.22) Form of Indemnification Agreement between Metretek
                    Technologies, Inc. and each of its directors. (Incorporated
                    by reference to Exhibit 10.21 to Metretek's Annual Report on
                    Form 10-KSB for the year ended December 31, 1999.)

            (10.23) Employment and Non-Competition Agreement, dated as of May 8,
                    2000, between PowerSpring, Inc. and Sidney Hinton.*

            (10.24) Prototype - Basic Plan Document for the Metretek - Southern
                    Flow Savings and Investment Plan. (Incorporated by reference
                    to Exhibit 4.7 to Metretek's Registration Statement on Form
                    S-8, Registration No. 333-42698.)*

            (10.25) Adoption Agreement for the Metretek - Southern Flow Savings
                    and Investment Plan. (Incorporated by reference to Exhibit
                    4.8 to Metretek's Registration Statement on Form S-8,
                    Registration No. 333-42698.)*

            (10.26) Non-Negotiable Convertible Promissory Note, dated September
                    28, 2000, issued by Metretek Technologies, Inc. to Scient
                    Corporation. (Incorporated by reference to Exhibit 10.1 to
                    Metretek's Quarterly Report on Form 10-QSB for the quarter
                    ended September 30, 2000.)

            (10.27) PowerSpring, Inc. 2000 Stock Incentive Plan*

      (21)  SUBSIDIARIES OF THE SMALL BUSINESS ISSUER:

            (21.1)  Subsidiaries of Metretek Technologies, Inc.


                                       49
<PAGE>   52
      (23)  CONSENT OF DELOITTE & TOUCHE LLP:

            (23.1)  Deloitte & Touche LLP


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

      *Management contract or compensation plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 13(a) of Form 10-KSB.

(b)   REPORTS ON FORM 8-K

      Metretek did not file a Current Report on Form 8-K during the quarter
ended December 31, 2000.


                                       50
<PAGE>   53
                                   SIGNATURES


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

                                          METRETEK TECHNOLOGIES INC.


                                          By:   /s/ W. Phillip Marcum
                                                --------------------------------
                                                W. Phillip Marcum, President and
                                                Chief Executive Officer
                                                Date: March 27, 2001

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

<TABLE>
<CAPTION>
Signature                     Title                                                 Date
---------                     -----                                                 ----
<S>                           <C>                                                   <C>
/s/ W. Phillip Marcum         of the Board, President,                              March 27, 2001
-----------------------         Chief Executive Officer and Director
W. Phillip Marcum               (Principal executive officer)


/s/ A. Bradley Gabbard        Executive Vice President, Chief Financial             March 27, 2001
-----------------------         Officer, Treasurer, Secretary and Director
A. Bradley Gabbard              (Principal financial officer)


/s/ Jeffrey B. Wood           Controller and Principal                              March 27, 2001
-----------------------         Accounting Officer and
Jeffrey B. Wood                 Assistant Secretary
                                (Principal accounting officer)


/s/ Ronald W. McKee           Director                                              March 27,2001
-----------------------
Ronald W. McKee


/s/ Basil M. Briggs           Director                                              March 27, 2001
-----------------------
Basil M. Briggs


/s/ Robert Lloyd              Director                                              March 27, 2001
-----------------------
Robert Lloyd


/s/ Anthony D. Pell           Director                                              March 27, 2001
-----------------------
Anthony D. Pell


/s/ Albert F. Thomasson       Director                                              March 27, 2001
-----------------------
Albert F. Thomasson


/s/ Stephen E. McGregor       Director                                              March 27, 2001
-----------------------
Stephen E. McGregor


/s/ Kevin P. Collins          Director                                              March 27, 2001
-----------------------
Kevin P. Collins
</TABLE>


                                      S-1
<PAGE>   54
                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                        PAGE
<S>                                                                     <C>
CONSOLIDATED FINANCIAL STATEMENTS OF
   METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

Independent Auditors' Report                                             F-2

Consolidated Balance Sheets as of December 31, 2000 and 1999             F-3

Consolidated Statements of Operations for the Years Ended
   December 31, 2000 and 1999                                            F-5

Consolidated Statements of Stockholders' Equity for the Years
   Ended December 31, 2000 and 1999                                      F-6

Consolidated Statements of Cash Flows for the Years Ended
   December 31, 2000 and 1999                                            F-7

Notes to Consolidated Financial Statements                               F-8
</TABLE>
<PAGE>   55
INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
  Metretek Technologies, Inc.:

We have audited the accompanying consolidated balance sheets of Metretek
Technologies, Inc. and subsidiaries (the "Company") as of December 31, 2000 and
1999, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Metretek Technologies, Inc. and
subsidiaries at December 31, 2000 and 1999, and the results of their operations
and their cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.





Deloitte & Touche LLP

Denver, Colorado
March 21, 2001


                                      F-2
<PAGE>   56
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                              ----------------------------------
ASSETS                                                                            2000                   1999
<S>                                                                           <C>                    <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                   $   468,813            $   361,658
  Trade receivables, less allowance for doubtful accounts
    of $548,153 and $125,573, respectively                                      4,476,841              3,802,818
  Other receivables                                                                 7,960                  2,818
  Inventories                                                                   3,226,995              4,155,429
  Net assets of discontinued operations (Note 6)                                  545,454                338,455
  Prepaid expenses and other current assets                                       768,474                435,734
                                                                              -----------            -----------

      Total current assets                                                      9,494,537              9,096,912
                                                                              -----------            -----------

PROPERTY, PLANT AND EQUIPMENT, AT COST
  Equipment                                                                     4,391,990              2,453,492
  Vehicles                                                                        468,089                 52,277
  Furniture and fixtures                                                          612,087                508,490
  Land, building and improvements                                                 460,340                718,604
                                                                              -----------            -----------
      Total                                                                     5,932,506              3,732,863
  Less accumulated depreciation                                                 2,862,990              2,179,015
                                                                              -----------            -----------

      Property, plant and equipment, net                                        3,069,516              1,553,848
                                                                              -----------            -----------

OTHER ASSETS:
  Customer list (net of accumulated amortization of $3,401,183 and
    $2,955,939, respectively)                                                   5,491,704              5,936,948
  Goodwill and other intangibles (net of accumulated amortization
    of $1,611,225 and $1,048,676, respectively)                                 2,462,361              2,842,036
  Other assets                                                                    277,773                180,690
                                                                              -----------            -----------

      Total other assets                                                        8,231,838              8,959,674
                                                                              -----------            -----------

TOTAL                                                                         $20,795,891            $19,610,434
                                                                              ===========            ===========
</TABLE>


See notes to consolidated financial statements.


                                      F-3
<PAGE>   57
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                          -------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY                                           2000                     1999
<S>                                                                       <C>                      <C>
CURRENT LIABILITIES:
  Accounts payable                                                        $    780,173             $  1,073,900
  Accrued and other liabilities                                              1,278,867                  951,963
  Notes payable                                                              2,419,874
  Deposits and capital lease obligations                                       207,058                    5,587
                                                                          ------------             ------------

      Total current liabilities                                              4,685,972                2,031,450
                                                                          ------------             ------------

LONG-TERM NOTES PAYABLE (NOTE 7)                                             1,929,759                  869,968
                                                                          ------------             ------------

COMMITMENTS AND CONTINGENCIES (NOTE 8)

REDEEMABLE PREFERRED STOCK - SERIES B,
  $.01 PAR VALUE; AUTHORIZED, 1,000,000 SHARES;
  7,000 AND 1,450 ISSUED AND OUTSTANDING,
  RESPECTIVELY; REDEMPTION VALUE $1,000
  PER SHARE (NOTE 3)                                                         6,903,485                1,450,000
                                                                          ------------             ------------

STOCKHOLDERS' EQUITY (NOTE 10):
  Redeemable preferred stock - Series A, $.01 par value;
    authorized, 1,000,000 shares; none issued and outstanding
  Redeemable preferred stock - Series C, $.01 par value;
    authorized, 500,000 shares; none issued and outstanding
  Common stock, $.01 par value; authorized, 25,000,000 shares;
    issued and outstanding, 5,908,067 and 3,784,045 shares,
    respectively                                                                59,081                   37,840
  Additional paid-in-capital                                                54,814,659               40,441,998
  Accumulated other comprehensive loss                                          (5,926)                  (4,098)
  Accumulated deficit                                                      (47,591,139)             (25,216,724)
                                                                          ------------             ------------

      Total stockholders' equity                                             7,276,675               15,259,016
                                                                          ------------             ------------

TOTAL                                                                     $ 20,795,891             $ 19,610,434
                                                                          ============             ============
</TABLE>

See notes to consolidated financial statements.


                                      F-4
<PAGE>   58
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   Year Ended
                                                                   December 31,
                                                        -------------------------------------
                                                            2000                     1999
<S>                                                     <C>                      <C>
REVENUES:
  Natural gas measurement sales and services            $ 21,493,180             $ 19,345,771
  Other                                                      164,570                   19,425
                                                        ------------             ------------

      Total revenues                                      21,657,750               19,365,196
                                                        ------------             ------------

COSTS AND EXPENSES:
  Cost of measurement sales and services                  16,695,131               13,760,360
  General and administrative                               5,556,703                3,442,126
  Selling, marketing and service                           2,268,948                2,057,355
  Depreciation and amortization                            1,709,590                1,268,835
  Research and development                                 9,917,346                2,225,758
  Interest, finance charges and other                        137,454                  286,804
  Loss on impairment of assets (Note 5)                    3,160,961                       --
                                                        ------------             ------------

      Total costs and expenses                            39,446,133               23,041,238
                                                        ------------             ------------

OPERATING LOSS                                           (17,788,383)              (3,676,042)

MINORITY INTEREST IN LOSS                                    860,143                       --

INCOME TAXES (Note 9)                                             --                       --
                                                        ------------             ------------

NET LOSS                                                 (16,928,240)              (3,676,042)

PREFERRED STOCK DEEMED DISTRIBUTION                       (5,446,175)                  (7,310)
                                                        ------------             ------------

NET LOSS APPLICABLE TO COMMON SHAREHOLDERS              $(22,374,415)            $ (3,683,352)
                                                        ============             ============

NET LOSS PER BASIC AND DILUTED COMMON SHARE             $      (4.13)            $      (1.06)
                                                        ============             ============

WEIGHTED AVERAGE BASIC AND DILUTED COMMON
  SHARES OUTSTANDING                                       5,412,024                3,487,915
                                                        ============             ============
</TABLE>


See notes to consolidated financial statements.


                                      F - 5
<PAGE>   59
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2000 AND 1999
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                  ACCUMULATED
                                        COMMON STOCK               ADDITIONAL        OTHER
                                -----------------------------       PAID-IN      COMPREHENSIVE     ACCUMULATED
                                   SHARES           VALUE           CAPITAL       INCOME (LOSS)       DEFICIT           TOTAL
                                ------------     ------------     ------------     ------------     ------------     ------------
<S>                             <C>              <C>              <C>              <C>              <C>              <C>
BALANCE,
  JANUARY 1, 1999                  3,489,181     $     34,892     $ 38,930,724     $      6,657     $(21,533,372)    $ 17,438,901

Comprehensive loss:
  Foreign currency
    translation adjustments                                                             (10,755)                          (10,755)
  Net loss                                                                                            (3,676,042)      (3,676,042)
                                                                                                                     ------------
Total comprehensive loss                                                                                               (3,686,797)
Exercises of stock
  options and warrants                34,765              347           68,519                                             68,866
Warrant compensation                                                   203,228                                            203,228
Repurchases of
  common stock                       (39,028)            (390)         (85,146)                                           (85,536)
Stock issued for royalty
  payments                             9,127               91           49,909                                             50,000
Stock issued in private
  placement, net of offering
  costs                              290,000            2,900        1,274,764                                          1,277,664
Preferred stock
  distribution                                                                                            (7,310)          (7,310)
                                ------------     ------------     ------------     ------------     ------------     ------------

BALANCE,
  DECEMBER 31, 1999                3,784,045           37,840       40,441,998           (4,098)     (25,216,724)      15,259,016

Comprehensive loss:
  Foreign currency
    translation adjustments                                                              (1,828)                           (1,828)
  Net loss                                                                                           (16,928,240)     (16,928,240)
                                                                                                                     ------------
Total comprehensive loss                                                                                              (16,930,068)
Exercises of stock
  options and warrants               893,929            8,940        3,185,897                                          3,194,837
Conversion of
   Note payable                      105,495            1,055          598,945                                            600,000
Stock issued for royalty
  payments                            14,598              146           49,854                                             50,000
Stock issued in private
  placement, net of offering
  costs                            1,110,000           11,100       10,537,965                                         10,549,065
Preferred stock
  distribution                                                                                        (5,446,175)      (5,446,175)
                                ------------     ------------     ------------     ------------      -----------     ------------

BALANCE,
  DECEMBER 31, 2000                5,908,067     $     59,081     $ 54,814,659     $     (5,926)    $(47,591,139)    $  7,276,675
                                ============     ============     ============     ============     ============     ============
</TABLE>


See notes to consolidated financial statements.


                                      F - 6
<PAGE>   60
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                 Year Ended
                                                                                                December 31,
                                                                                     -------------------------------------
                                                                                        2000                    1999
<S>                                                                                  <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                           $(16,928,240)            $(3,676,042)
  Adjustments to reconcile net loss to net cash used by
    continuing operations:
    Loss from asset impairments                                                         3,160,961
    Depreciation and amortization                                                       1,709,590               1,268,835
    Minority interest in PowerSpring                                                     (860,143)
    Stock based compensation expense                                                      133,200                  70,029
    Royalty payments made with restricted stock                                            50,000                  50,000
    Loss on disposal of property, plant and equipment                                      34,043                   5,784
  Changes in other assets and liabilities, net of effect of acquisitions:
      Trade receivables                                                                  (674,023)              1,204,096
      Inventories                                                                         928,434                 256,671
      Other current assets                                                               (465,940)                172,615
      Other noncurrent assets                                                              (5,142)                 10,541
      Accounts payable                                                                    121,272                 353,441
      Accrued and other liabilities                                                      (185,111)               (106,513)
                                                                                     ------------             -----------
      Net cash used by continuing operations                                          (12,981,099)               (390,543)
      Net cash used by discontinued operations                                           (206,999)                 (5,541)
                                                                                     ------------             -----------
      Net cash used by operating activities                                           (13,188,098)               (396,084)
                                                                                     ------------             -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant and equipment                                             (719,058)               (300,298)
  Acquisitions                                                                           (463,484)
  Proceeds from sale of property, plant and equipment                                      11,249                   7,800
                                                                                     ------------             -----------
      Net cash used in investing activities                                            (1,171,293)               (292,498)
                                                                                     ------------             -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from private placement                                                  10,549,065               2,720,354
  Net borrowings on line of credit                                                        735,987
  Payments on notes payable to bank                                                                            (2,291,734)
  Exercise of stock options and warrants                                                3,205,150                  68,866
  Repurchase of common stock                                                                                      (85,536)
  Payments on capital lease obligations                                                   (23,656)                 (1,158)
                                                                                     ------------             -----------
      Net cash provided by financing activities                                        14,466,546                 410,792
                                                                                     ------------             -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                      107,155                (277,790)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                            361,658                 639,448
                                                                                     ------------             -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                             $    468,813             $   361,658
                                                                                     ============             ===========
</TABLE>


See notes to consolidated financial statements.


                                      F - 7
<PAGE>   61
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      ORGANIZATION - The accompanying consolidated financial statements include
      the accounts of Metretek Technologies, Inc. ("MTEK") and its subsidiaries,
      PowerSpring, Inc. ("PowerSpring"), PowerSecure, Inc. ("PowerSecure"),
      Southern Flow Companies, Inc. ("Southern Flow"), Metretek, Incorporated
      ("Metretek") (and its wholly-owned subsidiaries, Metretek Europe, Limited
      ("Metretek Europe"), and Sigma VI, Inc. ("Sigma VI")), Marcum Gas
      Transmission, Inc. ("MGT") (and its wholly-owned subsidiary Marcum Capital
      Resources, Inc. ("MCRI")), and Marcum Denver, Inc. (formerly Marcum Fuel
      Systems, Inc.), collectively referred to as the "Company."

      MTEK was incorporated on April 5, 1991. The focus of the Company's
      continuing business operations is in four areas relating to the natural
      gas industry: 1) the design, manufacture and distribution of automated
      energy consumption monitoring and recording systems, 2) natural gas
      measurement services, 3) Internet based business to business energy
      information and services, and 4) distributed generation. Metretek designs,
      manufactures and sells automated systems to monitor and record natural gas
      consumption of commercial and industrial customers of natural gas utility
      companies. Southern Flow provides natural gas measurement services.
      PowerSpring provides Internet based business-to-business energy
      information and services. PowerSecure is involved in the design and
      construction of electric generation equipment and controls directly within
      a commercial or industrial customer's facility. Each area of business
      operation is considered to be a reportable segment - see Note 11.

      PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
      include the accounts of MTEK and its subsidiaries after elimination of
      intercompany accounts and transactions.

      USE OF ESTIMATES - The preparation of the Company's consolidated financial
      statements in conformity with generally accepted accounting principles
      requires management to make estimates and assumptions that affect the
      amounts reported in these financial statements and accompanying notes.
      Actual results could differ from those estimates.

      REVENUE RECOGNITION - Equipment and supply sales are recognized when
      delivered, and natural gas measurement revenues are recognized as services
      are provided. In December 1999, the Securities and Exchange Commission
      issued Staff Accounting Bulletin No. 101, "Revenue Recognition in
      Financial Statements" ("SAB 101"). The Company believes that its revenue
      recognition practices comply with the guidance of SAB 101.

      STATEMENT OF CASH FLOWS - The Company considers all investments with a
      maturity of three months or less at time of purchase to be cash
      equivalents. Supplemental statement of cash flows information is as
      follows:

<TABLE>
<CAPTION>
                                              2000                1999
<S>                                         <C>                <C>
      Cash paid for interest                $48,868            $249,036

      Cash paid for income taxes            $44,671            $ 24,596
</TABLE>



                                     F - 8
<PAGE>   62
      In September 2000, the Company issued a $2.8 million unsecured convertible
      promissory note in fulfillment of an account payable.

      A capital lease obligation of $228,816 was incurred in July 2000 when the
      Company entered into a lease for new web-site equipment.

      In April 2000, 105,495 shares of common stock were issued upon the
      conversion of a $600,000 long-term note payable.

      In March 2000, the Company issued a $741,666 non-negotiable promissory
      note payable and  2.5 million shares of PowerSpring in connection with the
      acquisition of Mercator (Note 4).

      In 2000, a non-cash distribution to preferred stockholders of $4,915,865
      was recognized upon the amortization of a discount recorded when the
      preferred stock was sold with a beneficial conversion feature.

      INVENTORIES - Inventories are stated at the lower of first-in, first-out
      cost or market. Inventories at December 31, 2000 and 1999 are summarized
      as follows:

<TABLE>
<CAPTION>
                                                   2000                  1999
<S>                                            <C>                   <C>
      Raw materials and supplies                $1,211,219            $1,274,424
      Work in process                            1,459,952             1,878,522
      Finished goods and merchandise               555,824             1,002,483
                                                ----------            ----------

      Total                                     $3,226,995            $4,155,429
                                                ==========            ==========
</TABLE>

      PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is stated at
      cost and is generally depreciated on the straight-line basis over
      estimated useful lives ranging from 2 to 40 years

      INTANGIBLE ASSETS - Southern Flow customer lists are being amortized over
      20 years using the straight-line method. Goodwill and other intangibles
      are being amortized over periods ranging from 10 to 20 years. The Company
      capitalizes software development costs integral to its products once
      technological feasibility of the products and software has been
      determined. Software development costs are being amortized over five
      years, using the straight-line method. Unamortized software development
      costs at December 31, 2000 and 1999 are $140,684 and $283,618,
      respectively. Patents and license agreements are amortized on a
      straight-line basis over the lesser of their estimated economic lives or
      their legal term of existence, generally 10 to 17 years.

      IMPAIRMENT OF ASSETS - When events and circumstances so indicate, the
      Company assesses the recoverability of property, plant, equipment,
      goodwill and other intangible assets based on undiscounted cash flows. If
      an impairment is indicated, assets are written down to estimated fair
      value. During the fourth quarter of 2000, the Company recorded an
      impairment loss of $3,160,961 (Note 5).


                                     F - 9
<PAGE>   63
      ACCRUED AND OTHER LIABILITIES - Accrued and other liabilities at December
      31, 2000 and 1999 are summarized as follows:

<TABLE>
<CAPTION>
                                                                       2000                1999
<S>                                                                 <C>                   <C>
      Payroll, employee benefits and related liabilities            $  504,449            $490,723
      Deferred revenue                                                 344,355             159,300
      Sales, property and other taxes payable                          126,102              85,878
      Insurance premiums and reserves                                  216,870             103,202
      Interest payable                                                  35,050               5,160
      Preferred stock distribution                                          --               7,310
      Other                                                             52,041             100,390
                                                                    ----------            --------

      Total                                                         $1,278,867            $951,963
                                                                    ==========            ========
</TABLE>


      FOREIGN CURRENCY - The assets and liabilities of Metretek Europe are
      translated at the rate of exchange at year end while sales and expenses
      are translated at the average rates in effect during the year. The net
      effect of translation adjustments is shown in the accompanying financial
      statements as a component of other comprehensive income.

      COMPREHENSIVE INCOME (LOSS) - The Company's other comprehensive income
      (loss) consists of foreign currency translation adjustments and is
      presented in the Consolidated Statement of Stockholders' Equity.

      INCOME (LOSS) PER SHARE - The Company's net loss per share is based on the
      net loss applicable to common shareholders and weighted average shares of
      common stock outstanding during the periods presented. The assumed
      conversion of stock options and warrants is excluded because their effect
      is antidilutive.

      STOCK BASED COMPENSATION - The Company utilizes the intrinsic value method
      to account for employee stock options as well as stock options issued to
      independent members of the board of directors. The Company utilizes the
      fair value method to account for stock based compensation to
      non-employees.

      DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - In June 1998, the
      Financial Accounting Standards Board issued Statement of Financial
      Accounting Standard (SFAS) 133, "Accounting for Derivative Instruments and
      Hedging Activities," which, as amended by SFAS 137, is effective for
      all fiscal quarters of fiscal years beginning after June 15, 2000. SFAS
      133 requires that all derivatives be recognized at fair value in the
      statement of financial position, and that the corresponding gains or
      losses be reported either in the statement of operations or as a component
      of comprehensive income if a qualifying hedging relationship exists. The
      Company adopted SFAS 133 on January 1, 2001 without impact on its
      financial position or results of operations.

      COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE - In
      March 1998, the Accounting Standards Executive Committee issued Statement
      of Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software
      Developed or Obtained for Internal Use," which the Company adopted January
      1, 1999. The adoption of SOP No. 98-1 did not have a material effect on
      the financial position or results of operations of the Company.

      RECLASSIFICATION - Certain 1999 amounts have been reclassified to conform
      to current year presentation.


                                     F - 10
<PAGE>   64
2.    RESTRUCTURING OF INTERNET-BASED BUSINESS

      On September 13, 1999, the Company entered into a strategic relationship
      with Scient Corporation ("Scient") to assist the Company in designing and
      creating an Internet-based business to enable the Company to take its
      measurement information products, services, and data measurement
      technologies to the market of end-users of natural gas and electricity
      (the "Internet Project"). The Internet Project was developed through
      PowerSpring. Simultaneously, the Company entered into a joint venture
      agreement with Mercator Energy Incorporated ("Mercator") whereby Mercator
      provided consulting services (the "Mercator Consulting Agreement") to the
      Company.

      The initial focus of the Internet Project was to develop and launch a web
      site providing the means for management of real time energy information
      and the exchange of energy products. In June 2000, PowerSpring launched
      its web site: PowerSpring.com. During the development of PowerSpring, the
      Company recognized that once the initial development stage was completed
      and the web site was launched, the further development and growth of
      PowerSpring would require significant additional funds to support its
      growth plans, including its continuing and growing overhead, its plans for
      an aggressive direct sales and marketing effort, and its anticipated
      capital expense needs, including the capital costs associated with the
      installation of Metretek Florida's automated meter reading (AMR) equipment
      on new customer sites. In order to develop and expand PowerSpring, the
      Company attempted to raise significant additional funds from the proceeds
      of private equity and venture capital funding at the PowerSpring level.
      However, due to various factors, the Company was unable to raise any
      further capital to finance PowerSpring and was therefore required to
      re-think its Internet-based business strategy. As of December 31, 2000,
      PowerSpring has abandoned plans for any significant financings from
      external sources, and has enacted several significant changes in its
      business model.

      As of December 31, 2000 the Company is in the process of discontinuing
      PowerSpring as an independent operating subsidiary. The Internet-based
      offering of PowerSpring, along with the markets to which its products will
      be sold, has been substantially restructured and re-defined. The Company
      intends to transfer the PowerSpring product line and web site to the
      control of Metretek Florida, in anticipation that PowerSpring will become
      an additional product offering, the web-based product offering, of
      Metretek Florida. In addition, in furtherance of this discontinuance of
      PowerSpring as an independent subsidiary and restructuring of
      PowerSpring's business, the Company will eliminate virtually all existing
      overhead associated with the PowerSpring subsidiary.

      PowerSpring is being redefined to be marketed as an Internet-based set of
      energy management tools that includes near real-time energy consumption
      information. However, the concepts of aggressively marketing the
      PowerSpring programs directly to multitudes of industrial and commercial
      end-users of energy and of procuring natural gas and electricity for
      consumers have been abandoned. The Company now intends to market and sell
      the PowerSpring product line to commercial and industrial customers
      exclusively through private labeling and partnering joint ventures and
      programs with natural gas and electricity utility companies and their
      affiliates. PowerSpring is marketing an Internet-based software platform
      that provides utility companies with an immediate web-enabled Internet
      energy portal specifically designed for industrial and commercial
      customers. This PowerSpring software platform can be privately labeled for
      individual utility companies enabling customers as well as employees and
      affiliates to have access to near real time energy consumption data and
      timely energy industry news and


                                     F - 11
<PAGE>   65
      information. This PowerSpring software platform is being marketed as an
      additional product offering of Metretek Florida.

3.    PRIVATE PLACEMENT

      On February 4, 2000, the Company completed a $14,000,000 private placement
      (the "Units Private Placement") of 7,000 units ("Units"), including 1,450
      Units the Company issued on December 9, 1999. Each Unit consisted of 200
      shares of common stock, 1 share of Series B Preferred Stock and warrants
      ("Unit Warrants") to purchase 100 shares of common stock. In the Units
      Private Placement, the Company issued 1,400,000 shares of common stock,
      7,000 shares of Series B Preferred Stock and Unit Warrants to purchase
      700,000 shares of common stock. The Units Private Placement was approved
      and ratified by the stockholders of the Company at a special meeting held
      on February 3, 2000.

      Each share of Series B Preferred Stock is mandatorily redeemable on
      December 9, 2004 at a liquidation preference of $1,000 per share plus
      accrued and unpaid dividends, accrues dividends at 8% annually payable
      quarterly in arrears, and became convertible at any time after June 9,
      2000 at the option of the holder at an initial conversion price of $5.9334
      per share of common stock, which constitutes an initial conversion rate
      (based upon the initial liquidation preference of $1,000) per share of
      168.5374 shares of common stock of the Company. Pursuant to the terms of
      the Series B Preferred Stock, the conversion price of the Series B
      Preferred Stock was adjusted downward on December 9, 2000 to $3.0571 per
      share of common stock (reflecting an average conversion rate of 352.39
      shares of common stock per share of Series B Preferred Stock as of
      December 31, 2000 (based upon the liquidation preference of $1,000 plus
      accrued and unpaid dividends)), which price was the average closing bid
      price of the Company's common stock for the 30 trading days immediately
      preceding that date. The Series B Preferred Stock is also subject to
      certain anti-dilution provisions. In addition, the Company has the right
      to redeem the Series B Preferred Stock on or after December 9, 2000, if
      the Company's common stock is trading at 200% of the conversion price of
      the Series B Preferred Stock.

      Each Unit Warrant entitles the holder to purchase one share of the
      Company's common stock. Pursuant to the terms of the Unit Warrants, the
      initial exercise price of the Unit Warrants of $6.7425 per share was
      adjusted downward on December 9, 2000 to $3.4740, the average closing bid
      price of the Company's common stock for the 30 trading days immediately
      preceding that date.

      The proceeds from the sale of the Units, including the 1,450 Units issued
      on December 9, 1999, have been allocated to common stock, the Unit
      Warrants, and the Series B Preferred Stock based on the relative fair
      value of each on the date of issuance. This allocation process resulted in
      the Series B Preferred Stock issued on February 4, 2000 being initially
      recorded at a discount of $141 per share from its $1,000 per share
      liquidation value. This discount will be recorded as a distribution over
      the term of the Series B Preferred Stock. Another discount resulted from
      the increase in the fair market value of a share of the Company's common
      stock from the date the Company offered to sell 5,550 Units to February 4,
      2000, the date the Units were issued. This increase caused the conversion
      feature of the Series B Preferred Stock to be "in the money" on February
      4, 2000. The discount of $859 per share related to the "in the money"
      conversion feature was recorded as a distribution between February 4 and
      June 9, 2000, the date the Series B Preferred Stock was first convertible
      into common stock of the Company.

      The primary purpose of the Units Private Placement was to raise capital to
      enable the Company to develop the Internet-based business of PowerSpring
      and to repay outstanding indebtedness.



                                     F - 12
<PAGE>   66
4.    ACQUISITION

      On March 17, 2000, the Company acquired Mercator through a merger with a
      wholly-owned subsidiary of PowerSpring. Mercator is a Denver-based natural
      gas services and brokerage company that acts as an independent
      broker-agent for both producers and users. This acquisition provided
      PowerSpring with Mercator's expertise in the area of energy procurement,
      an important element in the Company's Internet business strategy.

      In consideration for the acquisition of Mercator, the Company delivered to
      the sole shareholder of Mercator prior to the acquisition, $408,334 in
      cash, a $741,666 non-negotiable promissory note payable by PowerSpring
      over two years and secured by a general security interest in the assets of
      PowerSpring, and 2,500,000 shares of common stock of PowerSpring, valued
      at $750,000 based on the Board of Directors determination of fair value.
      Subsequent to the acquisition of Mercator, the Company owns 87.5% of the
      outstanding shares of PowerSpring common stock, and Mercator has become a
      wholly-owned subsidiary of PowerSpring. PowerSpring and Metretek entered
      into a stockholder's agreement with the former owner of Mercator that
      addresses certain rights related to PowerSpring common stock, including a
      right for the former owner of Mercator to put his shares of PowerSpring
      common stock back to PowerSpring at an appraised value over three years if
      PowerSpring has not completed an initial public offering or has not sold
      its business within two years.

      The acquisition was accounted for as a purchase with the operating results
      of Mercator included in the consolidated statements of operations from the
      date of acquisition. The purchase price of the Mercator acquisition,
      subject to future minor adjustment, was allocated as follows:

<TABLE>
<S>                                                        <C>
                  Property, plant and equipment            $   14,000
                  Goodwill                                  1,993,000
                                                           ----------
                                                           $2,007,000
                                                           ==========
</TABLE>

      In connection with the Company's plans to restructure its Internet-based
      business strategy (Note 2), the unamortized goodwill balance as of
      December 31, 2000 of $1,842,385 was determined to be impaired and was
      therefore written off.

      Pro forma results of operations for the twelve months ended December 31,
      2000 and 1999 assuming the acquisition had occurred on January 1, 2000 and
      1999 have not been included herein as the effects of the acquisition were
      not material to the Company's results of operations.

      PowerSpring also entered into a two-year employment agreement with the
      former owner of Mercator which included an option to purchase 60,000
      shares of common stock of the Company exercisable, at $17.88 per share,
      and an option to purchase 200,000 shares of PowerSpring common stock,
      exercisable at $.30 per share.

      In September 1999, the Company had entered into a consulting and joint
      venture agreement with Mercator, under which Mercator provided energy
      procurement consulting services to the Company. In connection with the
      acquisition of Mercator, the consulting and joint venture agreement and a
      related stock option agreement were terminated.

5.    IMPAIRMENT LOSS

      Due to the restructuring of the Company's Internet-based business
      described in Note 2, certain long-term assets of PowerSpring were
      considered to be impaired. Accordingly, during the fourth quarter of
      2000, the Company reported a non-cash impairment loss of $3,160,961
      related to a write-down of goodwill and equipment of PowerSpring.
      The impaired equipment has been written down to its fair value based


                                     F - 13
<PAGE>   67
      on the salvage value of the assets. The impairment loss related to the
      write down of equipment was $1,318,576. In addition, the unamortized
      goodwill balance of $1,842,385 relating to the acquisition of Mercator
      (Note 4) was determined to have no forward value to the Company and,
      therefore, the entire amount was written off.

6.    DISCONTINUED OPERATIONS

      During 1998, the Company decided to discontinue the operations of MGT, a
      directly owned subsidiary of the Company that was formed to acquire or
      finance the acquisition of natural gas assets through privately financed
      programs, and then to manage and maintain a small ownership interest in
      those programs. This decision was based on the declining prospects of the
      markets and in order to enable the Company to focus on its other
      operations. In December 1997, MGT sold one-third of its interests in two
      of the three programs it then managed, and in March 1998, MGT liquidated
      the third program. MGT does not intend to form or manage any new programs,
      although it will continue to manage the remaining two programs that
      operate natural gas related assets until MGT's interest in these programs
      are sold.

      Net assets of the discontinued operations at December 31, 2000 and 1999
      consisted of the following:

<TABLE>
<CAPTION>
                                                                               2000                  1999
<S>                                                                          <C>                   <C>
      Current assets                                                         $     6,492           $  23,816
      Other assets, net                                                          564,874             321,949
      Accounts payable, accrued expenses and other disposal costs                (25,912)             (7,310)
                                                                             -----------           ---------

      Net assets of discontinued operations                                  $   545,454           $ 338,455
                                                                             ===========           =========
</TABLE>


7.    DEBT

      The balance of notes payable at December 31, 2000 and 1999 consists of the
      following:

<TABLE>
<CAPTION>
                                                                                2000                 1999
<S>                                                                          <C>                   <C>
        Term loans                                                           $ 3,338,092           $ 600,000
        Lines of credit                                                        1,011,541             269,968
                                                                             -----------           ---------
                                                                               4,349,633             869,968
        Less current maturities                                               (2,419,874)                 --
                                                                             -----------           ---------

        Long-term notes payable                                              $ 1,929,759           $ 869,968
                                                                             ===========           =========
</TABLE>

      On April 14, 1998, the Company and its wholly owned subsidiaries, Southern
      Flow and Metretek, entered into a loan and security agreement (the "Loan
      Agreement") with a commercial bank (the "Lender") providing for a combined
      $5,000,000 credit facility consisting of loans (the "Loans") and letters
      of credit to Southern Flow and Metretek, subject to limitations described
      below. The Loan Agreement provides for daily advances to Southern Flow and
      Metretek in the form of Loans to fund capital requirements, and daily
      paydowns on outstanding balances of the Loans from collection of customer
      accounts receivable. The Company makes monthly interest payments computed
      at prime plus 1% (10.5% at December 31, 2000) on outstanding balances of
      the Loans. The Loan Agreement was amended on March 1, 2001 whereby the
      maturity date was extended from March 14, 2001 to May 31,


                                     F - 14
<PAGE>   68
      2001. The Loans are secured by the tangible and intangible assets of the
      Company, Southern Flow, and Metretek, including equipment, inventories,
      receivables, and cash deposits, and the pledge of the shares of the
      Company's subsidiaries. Borrowings on the Loans are limited to the sum of
      80% of eligible accounts receivable of Southern Flow and Metretek and 50%
      of raw materials and finished goods inventories (up to a combined maximum
      of $1,500,000) of Southern Flow and Metretek.

      The Loan Agreement requires the Company to maintain a minimum tangible net
      worth, a maximum debt to tangible net worth ratio, minimum annual net
      income (maximum loss), a minimum debt service coverage ratio, and contains
      other standard covenants related to operations of the Company, including
      prohibitions on the payment of dividends and the issuance or repurchase of
      securities (with certain exceptions) without the Lender's consent. As of
      December 31, 2000, the Company was not in compliance with certain of its
      covenants under the Loan Agreement. In connection with the March 1, 2001
      amendment of the Loan Agreement extending the maturity date, the Lender
      waived all covenant non-compliances as of December 31, 2000.

      At December 31, 2000, the Company had a combined availability under the
      Loan of $3,644,347, of which $1,011,541 had been borrowed by Southern Flow
      and Metretek, leaving $2,632,806 in unused Loan availability. Under the
      terms of our Series B Preferred Stock, our borrowings under the Loan
      Agreement cannot exceed $3 million without the consent of the holders of a
      majority of the outstanding shares of Series B Preferred Stock. Proceeds
      from initial advances under the Loan Agreement were used to extinguish the
      Company's existing loans, lines of credit, and accrued interest with two
      commercial bank lenders in the aggregate amount of $468,993, including
      $279,021 of a term loan and accrued interest owed by the Company's
      discontinued MGT segment to a commercial bank lender.

      On September 28, 2000, the Company issued a $2.8 million unsecured
      convertible promissory note to Scient in fulfillment of our account
      payable to Scient. The convertible note is payable in quarterly
      installments, due March 31, 2002 and is convertible at any time at
      Scient's discretion into either shares of the Company's common stock at
      the rate of $5.94 per share or shares of PowerSpring common stock at the
      rate of $0.60 per share.

      On March 17, 2000, in partial consideration for the acquisition of
      Mercator (Note 4), the Company issued a $741,666 non-negotiable promissory
      note payable to the prior owner of Mercator, due in two installments on
      March 17, 2001 and 2002. The Company is currently negotiating a settlement
      of this promissory note and therefore, as of March 21, 2001, no payments
      have been made.

      On May 4, 1998, the Company acquired substantially all of the assets and
      business of a subsidiary of American Meter Company pertaining to
      electronic correctors and non-radio-frequency meter reading devices in the
      natural gas and electric utility industry. Part of the consideration for
      this purchase was a $600,000 convertible subordinated promissory note. In
      April 2000, American Meter Company converted the note into 105,495 shares
      of Common Stock under the terms of the note. Until it was converted, the
      note bore interest on the unpaid principal balance at a fixed rate equal
      to 7.5% per annum, payable quarterly in arrears, and was due and payable
      on May 4, 2002.

8.    COMMITMENTS AND CONTINGENCIES

      LEGAL PROCEEDINGS - On January 5, 2001, Douglas W. Heins, individually and
      purportedly on behalf of a putative class of other persons similarly
      situated, filed a complaint in the District Court for the City and County
      of Denver, Colorado against Metretek Technologies, Inc., Marcum Midstream
      1997-1 Business Trust (the "Trust"), Marcum Midstream-Farstad, LLC, Marcum
      Gas Transmission, Inc., Marcum Capital Resources, Inc., Farstad Gas & Oil,
      LLC, Farstad Gas & Oil, Inc., W. Phillip Marcum, Richard M. Wanger, Jeff
      Farstad and Daniel J. Packard. The complaint alleges that the plaintiffs,
      either directly or as "controlling persons", violated certain provisions
      of the Colorado Securities Act in connection with the sale of interests in
      Marcum Midstream 1997-1 Business Trust, an energy program of which MGT, a
      wholly-owned subsidiary of Metretek, is the managing trustee and Messrs.
      Marcum, Wanger and Farstad are the active trustees. Specifically, the
      plaintiff claims that his damages resulted from the defendants allegedly,
      recklessly or intentionally making false and misleading statements, and/or
      willingful participating in a scheme or conspiracy and/or aiding or
      abetting violations of Colorado law, which scheme and statements related
      to the specification of the natural gas liquids product to be delivered
      under certain contracts, for the purpose of selling the Trust's units. The
      Trust raised $9.25


                                     F - 15
<PAGE>   69
      million from investors in a private placement in 1997, in order to finance
      the purchase, operation and improvement of a natural gas liquids
      processing plant located in Texas. The plaintiff seeks, among other
      things, to have the court declare the suit a proper class action and award
      compensation and/or punitive damages in an unspecified amount, together
      with interest, attorneys fees and other costs. On March 5, 2001,
      defendants filed a motion to dismiss the complaint. The court has not
      ruled on the motion to dismiss or on the request for class certification.
      Because this litigation is in the early stages, the Company cannot predict
      the outcome of this litigation or what impact the resolution of this claim
      will have on our financial position or results of operations. However, the
      Company intends to vigorously defend the claims against it and its
      officers, directors and trustees.

      From time to time, the Company is involved in other disputes and legal
      actions arising in the ordinary course of business. The Company intends to
      vigorously defend all outstanding claims against it. Although the ultimate
      outcome of these claims cannot be predicted with certainty due to the
      inherent uncertainty of litigation, in the opinion of management of the
      Company, based upon current information, none of the other currently
      pending or overtly threatened disputes is expected to have a material
      adverse effect on the business, financial condition or results of
      operations of the Company.

      OPERATING LEASES - The Company leases business facilities and vehicles
      under operating lease agreements which specify minimum rentals.
      Substantially all leases have renewal provisions. Rental expense for the
      years ended December 31, 2000 and 1999 totaled $1,136,360 and $1,155,305,
      respectively.

      Future minimum rental payments under noncancelable operating leases having
      an initial or remaining term of more than one year are as follows:

<TABLE>
<CAPTION>
        YEAR ENDING DECEMBER 31:
<S>                                                                   <C>
          2001                                                        $  893,103
          2002                                                           597,540
          2003                                                           569,374
          2004                                                           452,779
          2005                                                           239,718
                                                                      ----------
        Total                                                         $2,752,514
                                                                      ==========
</TABLE>

      EMPLOYEE BENEFIT PLANS - The Company has a defined contribution savings
      and investment plan (the "401(k) Plan") under Section 401(k) of the
      Internal Revenue Code. All employees age 21 or older with at least one
      year of service are eligible to participate in the 401(k) Plan. The 401(k)
      Plan provides for discretionary contributions by employees of up to 15% of
      their eligible compensation. The Company may make discretionary matching
      contributions up to 50% of participant contributions, subject to a maximum
      of 6% of each participant's eligible compensation. The Company's 401(k)
      Plan expense for the years ended December 31, 2000 and 1999 was $190,531
      and $148,934, respectively.

      LICENSE AGREEMENT - Metretek has a commitment to pay in cash or restricted
      shares of common stock of the Company a 5% royalty on sales of certain
      royalty-bearing products of Metretek with a minimum annual royalty of
      $50,000 through the year 2002. Royalty expense of $50,000 has been
      recognized in each of 2000 and 1999 under the license agreement.


                                     F - 16
<PAGE>   70
9.    INCOME TAXES

      No tax expense or benefit has been recognized during the years ended
      December 31, 2000 and 1999 because of net operating losses incurred and
      because a valuation allowance has been provided for 100% of the net
      deferred tax assets at December 31, 2000 and 1999.

      The components of the Company's deferred tax assets and liabilities at
      December 31, 2000 and 1999 are shown below:


<TABLE>
<CAPTION>
                                                                             2000                    1999
<S>                                                                     <C>                      <C>
        Assets:
          Net operating loss carryforwards                              $ 12,173,000             $ 7,914,000
          Tax credit carryforwards                                           120,000                 128,000
          Allowance for bad debts                                            186,000                  38,000
          Excess of financial statement impairment losses
             over income tax amounts                                         515,000
          Other                                                                                      129,000
                                                                        ------------             -----------
                                                                          12,994,000               8,209,000
                                                                        ------------             -----------
        Liabilities:
          Excess of income tax depreciation and amortization
            over financial statement amounts                                                         460,000
          Other                                                               41,000                  47,000
                                                                        ------------             -----------
                                                                              41,000                 507,000
                                                                        ------------             -----------

        Net deferred tax asset                                            12,953,000               7,702,000
        Valuation allowance                                              (12,953,000)             (7,702,000)
                                                                        ------------             -----------

        Total                                                           $          0             $         0
                                                                        ============             ===========
</TABLE>

      At December 31, 2000, the Company had unused net operating losses to carry
      forward against future years' taxable income of approximately $35,802,000
      expiring in various amounts from 2001 to 2014. At December 31, 2000, the
      Company had unused investment tax credits, general business tax credits,
      and research and development tax credit carryforwards expire in various
      amounts from 2001 to 2008.

      As a result of its acquisition of Metretek in 1994, the Company acquired a
      remaining net operating loss carryforwards for tax purposes of $2,240,000
      ($1,524,000, net of current limitation) expiring in 2001. As a result of
      the change in ownership upon acquisition, utilization of the carryforwards
      is limited to approximately $762,000 annually under Section 382 of the
      Internal Revenue Code.

      As a result of an acquisition in 1991, the Company acquired a remaining
      net operating loss carryforwards for tax purposes of approximately
      $800,000 ($165,000, net of current limitation). Such carryforwards expire
      in 2001 through 2005. As a result of the change in ownership upon
      acquisition, utilization of these net operating loss carryforwards is
      limited to approximately $33,000 annually. If the benefits related to the
      net operating loss carryforwards that were not recognized at the
      acquisition date are recognized in a subsequent period, they will first
      reduce to zero any goodwill related to the acquisition, then reduce to
      zero all other noncurrent intangible assets, and then reduce income tax
      expense.

10.   CAPITAL STOCK

      WARRANT DIVIDEND AND REDEMPTION - On September 18, 1998, the Company
      distributed 886,442 common stock Purchase Warrants (the "Warrants") as a
      dividend to stockholders of the Company on


                                     F - 17
<PAGE>   71
      the basis of one Warrant for each four shares of common stock outstanding
      on September 10, 1998, the record date for the Warrant dividend. Each
      Warrant was exercisable, for a five-year period, for one share of common
      stock at an exercise price of $4.00. The Warrants were subject to
      redemption by the Company, at $.01 per Warrant, in the event the Common
      Stock trades at or above $6.50 per share for 20 consecutive trading days.
      The registration statement and prospectus covering the common stock
      issuable upon exercise of the Warrants also covered the resale of up to
      155,081 Warrants by a selling security holder. No accounting recognition
      was given to the warrant dividend.

      On July 14, 2000, pursuant to the provisions of the Warrant Agency
      Agreement, dated as of September 10, 1998 (the "Warrant Agreement"),
      between the Company and Computershare Trust Company, Inc. (formerly known
      as American Securities Transfer & Trust, Inc.) (the "Warrant Agent"), the
      Company sent a written Notice of Redemption to all holders of its Warrants
      issued under the Warrant Agreement. Pursuant to the Notice of Redemption
      and the Warrant Agreement, the Company has redeemed all Warrants that
      remained outstanding and unexercised at 5:00 p.m., Denver, Colorado time,
      on August 14, 2000 (the "Redemption Date"), the date fixed for the
      redemption of the Warrants. Until 5:00 p.m., Denver, Colorado time, on the
      Redemption Date, each Warrant was exercisable for one share of Common
      Stock at an exercise price of $4.00 per share. A total of 694,046 Warrants
      were exercised, for 694,046 shares of Common Stock, after the Notice of
      Redemption was given, resulting in net proceeds to the Company, after fees
      and expenses, of approximately $2.6 million. These expenses included the
      fees and expenses of Stifel, Nicolaus & Company, Inc., which served as the
      dealer manager in connection with the redemption of the Warrants. The
      Company used the net proceeds from the Warrant exercises primarily to fund
      the development of PowerSpring. On the Redemption Date, the 145,629
      Warrants that were not exercised ceased to be exercisable and holders
      thereof became entitled only to the redemption price of $.01 per Warrant.
      As of December 31, 2000, 38,168 Warrants remained outstanding and
      un-redeemed.

      STOCK INCENTIVE PLAN - In March 1998, the Board of Directors of the
      Company adopted the Metretek Technologies, Inc. 1998 Stock Incentive Plan
      (the "1998 Stock Incentive Plan"), which was approved by the Company's
      stockholders at the Annual Meeting of Stockholders held on June 12, 1998.
      The 1998 Stock Incentive Plan authorizes the Board of Directors to grant
      non-qualified stock options, incentive stock options, stock appreciation
      rights, restricted stock, performance awards and other stock-based awards
      to officers, directors, employees, consultants and advisors of the Company
      and its subsidiaries for up to 250,000 shares of the Company's common
      stock. The 1998 Stock Incentive Plan replaced the Company's existing 1991
      Stock Option Plan and the Company's Directors' Stock Option Plan (the
      "Prior Plans"), and no new awards will be made under the Prior Plans,
      although options outstanding under the Company's Prior Plans were not
      affected by the adoption of the 1998 Stock Incentive Plan. On February 3,
      2000, the stockholders of the Company, at a special meeting, adopted a
      proposal by the Board of Directors to increase the number of shares
      available under the 1998 Stock Incentive Plan to a total of 750,000 shares
      of common stock of the Company.

      STOCK REPURCHASE PLAN - In September 1998, the Board of Directors of the
      Company adopted a stock repurchase plan (the "Stock Repurchase Plan")
      pursuant to which the Company was authorized to purchase up to
      approximately 7% of its outstanding common stock in open market
      transactions, from time to time as management deems appropriate, based on
      the market price of the Company's stock. The Stock Repurchase Plan was
      discontinued on September 20, 1999. Under the Stock Repurchase Plan during
      1999, the Company repurchased 96,116 shares of its common stock at an
      average price of $2.22 per share. The repurchased shares have been
      retired.

      STOCK OPTIONS - In December 1991, the Company adopted the 1991 Stock
      Option Plan which was amended and restated on June 4, 1996 ("1991 SOP")
      and the Director's Stock Option Plan ("Director


                                     F - 18
<PAGE>   72
      SOP"). Under the 1991 SOP, incentive stock options and nonqualified stock
      options may be granted to officers and employees for up to 350,000 shares
      of common stock. Under the 1991 SOP, options granted must be at exercise
      prices not less than the fair market value of the Company's common stock
      on the date of grant. The 1991 SOP options have a term of ten years with
      the vesting terms determined on the date of the grant. The Director SOP
      permits the granting of nonqualified stock options for up to 162,500
      shares of common stock to nonemployee directors of the Company. Each
      Director SOP option is exercisable at a price not less than the fair
      market value of the Company's common stock on the date of grant. The
      Director SOP options have a term of ten years and are vested on the date
      of grant. Options granted to certain officers and non-employee directors
      contain limited rights for receipt of cash for appreciation in stock value
      in the event of certain changes in control.

      Options to purchase shares of common stock are summarized as follows:

<TABLE>
<CAPTION>
                                  1998 STOCK             DIRECTORS STOCK              1991 STOCK
                                INCENTIVE PLAN              OPTION PLAN               OPTION PLAN               OTHER OPTIONS
                            ---------------------      ---------------------      ---------------------      --------------------
                                         WEIGHTED                   WEIGHTED                   WEIGHTED                  WEIGHTED
                            NUMBER       AVERAGE       NUMBER        AVERAGE       NUMBER       AVERAGE       NUMBER      AVERAGE
                              OF         OPTION          OF          OPTION          OF          OPTION         OF         OPTION
                            SHARES        PRICE        SHARES         PRICE        SHARES         PRICE       SHARES        PRICE
                            ------        -----        -------        -----        -------        -----        -----        -----
<S>                        <C>          <C>           <C>           <C>            <C>         <C>            <C>        <C>
Outstanding at
  January 1, 1999           36,178        $2.23        110,000        $2.00        275,562        $2.00        1,558        $2.00

Granted                    168,732         3.76
Forfeited                   (2,000)        4.63                                     (1,250)        2.00
Expired                                                                                                       (1,468)        2.00
Exercised                  (10,951)        1.86        (17,500)        2.00         (5,812)        2.00          (90)        2.00
                           -------                      ------                     -------                    ------

Outstanding at
  December 31, 1999        191,959         3.57         92,500         2.00        268,500         2.00           --           --

Granted                    141,575        11.82
Forfeited                   (1,181)        2.74
Exercised                  (37,002)        3.17        (27,500)        2.00        (54,341)        2.00
                           -------                      ------                     -------                    ------

Outstanding at
  December 31, 2000        295,351        $7.58         65,000        $2.00        214,159        $2.00           --        $  --
                           =======                      ======                     =======                    ======

Exercisable at
  December 31:
  2000                     186,851        $7.58         65,000        $2.00        210,518        $2.00           --        $  --
                           =======                      ======                     =======                    ======

  1999                      88,929        $3.13         92,500        $2.00        251,985        $2.00           --        $  --
                           =======                      ======                     =======                    ======
</TABLE>


      The weighted average grant date fair values of options granted, during the
      years ended December 31, 2000 and 1999 were $0.45 and $1.60 per option,
      respectively. During the year ended December 31, 2000, 119,500 of the
      grants were incentive stock options granted to employees and 22,075 of the
      grants were nonqualified stock options granted to nonemployee directors of
      the Company. During the year ended December 31, 1999, 141,000 of the
      grants were incentive stock options granted to employees and 27,732 of the
      grants were nonqualified stock options granted to nonemployee directors of
      the Company. The following table summarizes information about the
      Company's stock options outstanding at December 31, 2000:

<TABLE>
<CAPTION>

                              OPTIONS OUTSTANDING
                              -------------------
   RANGE OF                                 WEIGHTED AVERAGE    WEIGHTED AVERAGE
EXERCISE PRICES     NUMBER OF SHARES         EXERCISE PRICE      REMAINING LIFE
---------------     ----------------         --------------      --------------
<S>                 <C>                    <C>                  <C>
$1.75 to $2.50           339,154                 $ 2.01               4.85
$2.51 to $7.00            94,010                   4.69               8.57
$7.01 to $17.38          141,346                  11.83               9.22
---------------          -------                  -----               ----
$1.75 to $17.38          574,510                 $ 4.87               6.54
===============          =======                 ======               ====
</TABLE>



      If the fair value based method of accounting for stock options had been


                                     F - 19
<PAGE>   73
      applied, the Company's net loss and net loss per share would have
      increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                        2000                  1999
<S>                                                               <C>                   <C>
      Net loss applicable to common shareholders - as reported    $  (22,374,414)       $   (3,676,042)
      Net loss applicable to common shareholders - pro forma      $  (23,996,171)       $   (3,959,885)
      Loss per basic and diluted Common Share - as reported       $        (4.13)       $        (1.06)
      Loss per basic and diluted Common Share - pro forma         $        (4.43)       $        (1.14)
</TABLE>

      The fair values of stock options were calculated using the Black-Scholes
      stock option valuation model with the following weighted average
      assumptions for grants in 2000 and 1999: stock price volatility of 99% and
      43%, respectively; risk-free rate of return of 5.75% and 5.6%,
      respectively; dividend rate of $0.00 per year; and an expected term of 4
      years for options granted to employees and 10 years for options granted to
      directors.

      POWERSPRING STOCK OPTION PLAN - On March 13, 2000, the Board of Directors
      of PowerSpring adopted, and PowerSpring's then sole stockholder approved,
      the PowerSpring, Inc. 2000 Stock Incentive Plan (the "PowerSpring Stock
      Plan"). The PowerSpring Stock Plan authorizes the PowerSpring Board of
      Directors to grant non-qualified stock options, incentive stock options,
      stock appreciation rights, restricted stock, performance awards and other
      stock-based awards to officers, directors, employees, consultants and
      advisors of PowerSpring and its subsidiaries for up to 6,000,000 shares of
      PowerSpring common stock. As of December 31, 2000, options exercisable for
      a total of 3,475,500 shares of PowerSpring common stock had been granted
      and were outstanding at exercise prices ranging from $0.30 to $0.60.

      STOCKHOLDER RIGHTS PLAN - On December 12, 1991, the stockholders of the
      Company approved the Stockholder Rights Plan ("Plan"). The Plan calls for
      the issuance of one preferred share purchase right ("Right") for each
      share of Common Stock held by stockholders of record on December 2, 1991.
      Each Right represents the right to purchase four one-hundredths of a share
      of Series C Preferred Stock of the Company at an initial exercise price of
      $25 per share. The Rights are exercisable through December 1, 2001, unless
      earlier redeemed by the Company. In the event that any person or group
      (with certain exceptions) acquires 15% or more of the Company's
      outstanding Common Stock, the Rights provide for the holder to acquire
      Common Stock of the Company, or acquiring company, at a 50% discount. The
      rights are redeemable by the Company at $.04 per Right.

      METRETEK STOCK WARRANTS - Metretek stock warrants were issued by Metretek
      in prior periods in connection with issues of common stock and debentures.
      Stock warrants were also issued by Metretek to certain stockholders as
      remuneration for loans provided to Metretek and to a venture capital
      company as remuneration for services rendered in connection with a new
      issue of special preference stock. At December 31, 2000, stock warrants
      outstanding allow the holders to purchase a total of 36,620 shares of
      Common Stock at prices ranging from $44.48 to $88.96 per share. The
      Metretek stock warrants are exercisable over periods expiring at various
      dates through 2004. No accounting recognition was given to the Metretek
      stock warrants, all of which were granted prior to guidance set forth in
      Emerging Issues Task Force Issue No. 96-13, "Accounting for Derivative
      Financial Instruments Indexed to, and Potentially Settled in, a Company's
      Own Stock."


                                     F - 20
<PAGE>   74
      The shares of the Company's Common Stock issuable upon the exercise of the
      Metretek Warrants cannot be resold unless such resale is registered under
      the Securities Act and under applicable state securities laws or is made
      pursuant to an available exemption therefrom. The holders of the Metretek
      Warrants have the right, under certain circumstances, to require the
      Company to register the shares of the Company's Common Stock issuable upon
      exercise of the Metretek Warrants under the Securities Act and applicable
      state securities laws.

      OTHER STOCK WARRANTS - In order to finance the initial phase of its
      Internet Project, the Company entered into an amendment to the terms of
      its $5,000,000 credit facility with its commercial lender (Note 7). In
      connection with the Loan Amendment, the Company issued a warrant (the
      "Lender Warrant") to purchase 20,000 shares of common stock of the
      Company. The Lender Warrant is exercisable for three years at an exercise
      price of $5.00 per share. The commercial lender has registration rights
      with respect to the common stock issuable upon the exercise of the Lender
      Warrant.

      In connection with the Internet Project (Note 2), the Company issued to
      Scient a warrant (the "Scient Warrant") to purchase 125,000 shares of
      common stock of the Company. The Scient Warrant is exercisable in until
      September 2002, at exercise prices split between $5.00 and $10.00 per
      share. Scient has registration rights with respect to the common stock
      issuable upon the exercise of the Scient Warrant.

      Pursuant to the Mercator Consulting Agreement (Note 2), the Company issued
      to Mercator a warrant (the "Mercator Warrant") to purchase 60,000 shares
      of common stock of the Company. The Mercator Warrant vests in three
      tranches from the date of issuance through March 2001, with exercise
      prices ranging between $4.50 and $5.50 per share, and expires in September
      2002. Mercator has registration rights with respect to the common stock
      issuable upon the exercise of the Mercator Warrant.

      Compensation expense for the fair value of the Scient, Mercator and Lender
      Warrants is was recognized over the period in which the services were
      being performed or the remaining term of the Loan Agreement. Compensation
      expense associated with the warrants in the amount of $133,200 has been
      recognized in the consolidated statement of operations during the year
      ended December 31, 2000.

      As of December 31, 2000, in addition to the warrants described above,
      warrants to purchase 276,373 shares of common stock at exercise prices
      ranging from $2.47 to $14.50 per share were outstanding. These warrants
      expire at various dates ranging from 2002 through 2004. The Company issued
      these warrants for consulting and other advisory services rendered to the
      Company by the warrant holders.


11.   SEGMENT AND RELATED INFORMATION

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

      The Company has four reportable business segments: automated energy data
      management; natural gas measurement services; Internet-based energy
      information and services; and distributed generation.

      The operations of the Company's automated energy data management segment
      are conducted by Metretek. Metretek's manufactured products fall into
      three categories: remote data collection products; electronic corrector
      products; and application-specific products. Metretek also provides energy
      data collection and management services and post-sale support services for
      its manufactured products.


                                     F - 21
<PAGE>   75
      Historically, Metretek's products and services have been provided
      principally to natural gas local distribution companies ("LDCs").
      Typically LDCs install Metretek products in conjunction with custody
      transfer meters on their larger customers for the purpose of meeting
      deregulation requirements.

      The operations of the Company's natural gas measurement services segment
      are conducted by Southern Flow. Southern Flow's services include on-site
      field services, chart processing and analysis, laboratory analysis, and
      data management and reporting. These services are provided principally to
      customers involved in natural gas production, gathering, transportation
      and processing.

      The operations of the Company's Internet-based energy information and
      services segment are conducted by PowerSpring. PowerSpring commenced
      limited revenue generating operations in the second quarter of 2000.

      The operations of the Company's distributed generation segment are
      conducted by PowerSecure. PowerSecure commenced operations in September
      2000. For the year ended December 31, 2000, PowerSecure did not incur
      significant revenues or expenses.

      The accounting policies of the reportable segments are the same as those
      described in Note 1 of the Notes to Consolidated Financial Statements. The
      Company evaluates the performance of its operating segments based on
      income (loss) before income taxes, nonrecurring items and interest income
      and expense. Intersegment sales are not significant.

      Summarized financial information concerning the Company's reportable
      segments is shown in the following table. The "Other" column includes
      corporate related items, results of insignificant operations and, as it
      relates to segment profit, income and expense not allocated to reportable
      segments. Amounts are reported in thousands.


<TABLE>
<CAPTION>
                                                                      INTERNET-BASED
                                         AUTOMATED      NATURAL GAS       ENERGY
                                        ENERGY DATA     MEASUREMENT    INFORMATION      DISTRIBUTED
                                         MANAGEMENT      SERVICES      AND SERVICES      GENERATION        OTHER          TOTAL
                                         ----------      --------      ------------      ----------        -----          -----
<S>                                     <C>             <C>           <C>               <C>             <C>             <C>
2000
      Revenues                            $ 8,999        $11,335         $  1,160                          $ 164        $ 21,658
      Segment profit (loss)                (1,450)         1,193          (15,720)         $(243)         (1,568)        (17,788)
      Total assets                          7,519          9,690            2,666              8             913          20,796
      Capital expenditures                     25            114            3,145              8               1           3,293
      Depreciation and amortization           612            609              472              1              16           1,710

1999
      Revenues                            $ 8,234        $11,112                                        $     19        $ 19,365
      Segment profit (loss)                (1,715)           977         $ (1,506)                        (1,432)         (3,676)
      Total assets                          8,752         10,040               95                            723          19,610
      Capital expenditures                    168             88                                              44             300
      Depreciation and amortization           642            612                                              15           1,269
</TABLE>


                                     F - 22
<PAGE>   76
      The following table presents revenues by geographic area based on the
      location of the use of the product or service:

<TABLE>
<CAPTION>
                                                        2000              1999
<S>                                                <C>               <C>
      United States                                $20,608,834       $18,455,954
      United Kingdom                                   655,363           366,211
      Canada                                           361,066           466,030
      Australia                                         19,308            44,062
      Argentina                                         13,179            31,227
      Other                                        -----------             1,712
                                                                     -----------

      Total                                        $21,657,750       $19,365,196
                                                   ===========       ===========
</TABLE>



                                    * * * * *


                                     F - 23
<PAGE>   77
                           METRETEK TECHNOLOGIES, INC.

                                   FORM 10-KSB
                      FOR THE YEAR ENDED DECEMBER 31, 2000

                                  EXHIBIT LIST


(2)   PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
      SUCCESSION:

      (2.1)   Agreement and Plan of Merger, dated as of March 16, 2000, by and
              between TotalPlan, Inc. and PowerSpring, Inc. (Incorporated by
              reference to Exhibit 2.2 to Metretek's Annual Report on Form
              10-KSB for the fiscal year ended December 31, 1999.)

      (2.2)   Agreement and Plan of Merger, dated as of March 17, 2000, by and
              among PowerSpring, Inc., MERC Acquisition Corp., Mercator Energy
              Incorporated and John A. Harpole. (Incorporated by reference to
              Exhibit 2.3 to Metretek's Annual Report on Form 10-KSB for the
              fiscal year ended December 31, 1999.)

(3)   ARTICLES OF INCORPORATION AND BY-LAWS:

      (3.1)   Second Restated Certificate of Incorporation of Metretek
              Technologies, Inc. (Incorporated by reference to Exhibit 4.1 to
              Metretek's Registration Statement on Form S-3, Registration No.
              333-96369.)

      (3.2)   Amended and Restated By-Laws of Metretek Technologies, Inc.
              (Incorporated by reference to Exhibit 3.3 to Metretek's Annual
              Report on Form 10-KSB for the year ended December 31, 1998.)

(4)   INSTRUMENT DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES:

      (4.1)   Specimen Common Stock Certificate. (Incorporated by reference to
              Exhibit 4.1 to Metretek's Registration Statement on Form S-18,
              Registration No. 33-44558.)

      (4.2)   Specimen Series B Preferred Stock Certificate. (Incorporated by
              reference to Exhibit 4.4 to Metretek's Registration Statement on
              Form S-3, Registration No. 333-96369.)

      (4.3)   Form of Certificate representing warrants to purchase shares of
              Common Stock of Metretek Technologies, Inc. issued to former
              holders of warrants of Metretek, Incorporated. (Incorporated by
              reference to Exhibit 4.2 to Metretek's Registration Statement on
              Form S-4, Registration No. 33-73874.)

      (4.4)   Rights Agreement, dated as of December 2, 1991, between Metretek
              Technologies, Inc. and American Securities Transfer, Inc.
              (Incorporated by reference to Exhibit 10.6 to Metretek's
              Registration Statement on Form S-18, Registration No. 33-44558.)

      (4.5)   Amendment No. 1 to Rights Agreement, dated as of March 23, 1998,
              between Metretek Technologies, Inc. and American Securities
              Transfer & Trust, Inc. (Incorporated by reference to Exhibit 2 to
              Metretek's Registration Statement on Form 8-A/A, Amendment No. 1
              filed April 3, 1998.)

       (4.6)  Amendment No. 2 to Rights Agreement, dated as of December 9,
              1999, between Metretek Technologies, Inc. and American Securities
              Transfer & Trust, Inc. (Incorporated by reference to Exhibit 1 to
              Metretek's Registration Statement on Form 8-A/A, Amendment No. 4
              filed December 23, 1999.)


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<PAGE>   78
      (4.7)   Form of Registration Rights Agreement among Metretek
              Technologies, Inc. and the former warrant holders of Metretek,
              Incorporated. (Incorporated by reference to Exhibit 4.4 to
              Metretek's Registration Statement on Form S-4, Registration No.
              33-73874.)

      (4.8)   Securities Purchase Agreement, dated as of December 9, 1999, by
              and among Metretek Technologies, Inc. and certain purchasers of
              securities of Metretek Technologies, Inc. (collectively, the "Unit
              Purchasers"). (Incorporated by reference to Exhibit 4.1 to
              Metretek's Current Report on Form 8-K filed December 22, 1999).

      (4.9)   Form of Common Stock Purchase Warrant issued by Metretek
              Technologies, Inc. to the Unit Purchasers. (Incorporated by
              reference to Exhibit 4.3 to Metretek's Current Report on Form 8-K
              filed December 22, 1999).

      (4.10)  Registration Rights Agreement, dated as of December 9, 1999, by
              and among Metretek Technologies, Inc. and the Unit Purchasers.
              (Incorporated by reference to Exhibit 4.4 to Metretek's Current
              Report on Form 8-K filed December 22, 1999).

      (4.11)  Form of Common Stock Purchase Warrant issued by Metretek
              Technologies, Inc. to Scient Corporation. (Incorporated by
              reference to Exhibit 4.12 of Metretek's Registration Statement on
              Form S-3, Registration No. 333-96369).

      (4.12)  Form of Common Stock Purchase Warrant issued by Metretek
              Technologies, Inc. to John A. Harpole. (Incorporated by reference
              to Exhibit 4.13 of Metretek's Registration Statement on Form S-3,
              Registration No. 333-96369).

      (4.13)  Form of Common Stock Purchase Warrant issued by Metretek
              Technologies, Inc. to National Bank of Canada. (Incorporated by
              reference to Exhibit 4.14 of Metretek's Registration Statement on
              Form S-3, Registration No. 333-96369).

      (4.14)  Form of Common Stock Purchase Warrant issued by Metretek
              Technologies, Inc. to Silverman Heller Associates. (Incorporated
              by reference to Exhibit 4.15 of Metretek's Registration Statement
              on Form S-3, Registration No. 333-96369).

      (4.15)  Form of Common Stock Purchase Agreement issued by Metretek
              Technologies, Inc. to First Albany Corporation, William Reinert,
              John S. Koodrich and Lawrence C. Petrucci. (Incorporated by
              reference to Exhibit 4.16 of Metretek's Registration Statement on
              Form S-3, Registration No. 333-96369).

(10)  MATERIAL CONTRACTS:

      (10.1)  1991 Stock Option Plan, as amended and restated December 5, 1996.
              (Incorporated by reference to Exhibit 10.2 to Metretek's Annual
              Report on Form 10-KSB for the year ended December 31, 1996.)*

      (10.2)  Directors' Stock Option Plan, as amended and restated December 2,
              1996. (Incorporated by reference to Exhibit 10.3 to Metretek's
              Annual Report on Form 10-KSB for the year ended December 31,
              1996.)*

      (10.3)  Employment Agreement, dated as of June 11, 1991, by and between
              Metretek Technologies, Inc. and W. Phillip Marcum. (Incorporated
              by reference to Exhibit 10.4 to Metretek's Registration Statement
              on Form S-18, Registration No. 33-44558.)*

      (10.4)  Amendment No. 1 to Employment Agreement, dated June 27, 1997, by
              and between Metretek Technologies, Inc. and W. Phillip Marcum.
              (Incorporated by reference to Exhibit 10.1 to Metretek's
              Quarterly Report on Form 10-QSB for the quarterly period ended
              September 30, 1997.)*


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<PAGE>   79
      (10.5)  Amendment No. 2 to Employment Agreement, dated December 3, 1998,
              by and between Metretek Technologies, Inc. and W. Phillip Marcum.
              (Incorporated by reference to Exhibit 10.5 to Metretek's Annual
              Report on Form 10-KSB for the year ended December 31, 1998.)*

      (10.6)  Amendment No. 3 to Employment Agreement, dated as of January 1,
              2000, by and between Metretek Technologies, Inc. and W. Phillip
              Marcum. (Incorporated by reference to Exhibit 10.6 to Metretek's
              Annual Report on Form 10-KSB for the year ended December 31,
              1999.)

      (10.7)  Employment Agreement, dated as of June 11, 1991, by and between
              Metretek Technologies, Inc. and A. Bradley Gabbard. (Incorporated
              by reference to Exhibit 10.4 to Metretek's Registration Statement
              on Form S-18, Registration No. 33-44558.)*

      (10.8)  Amendment No. 1 to Employment Agreement, dated June 27, 1997, by
              and between Metretek Technologies, Inc. and A. Bradley Gabbard.
              (Incorporated by reference to Exhibit 10.2 to Metretek's
              Quarterly Report on Form 10-QSB for the quarterly period ended
              September 30, 1997.)*

      (10.9)  Amendment No. 2 to Employment Agreement, dated December 3, 1998,
              by and between Metretek Technologies, Inc. and A. Bradley
              Gabbard. (Incorporated by reference to Exhibit 10.8 to Metretek's
              Annual Report on Form 10-KSB for the year ended December 31,
              1998.)*

      (10.10) Amendment No. 3 to Employment Agreement, dated as of January 1,
              2000, by and between Metretek Technologies, Inc. and A. Bradley
              Gabbard.* (Incorporated by reference to Exhibit 10.10 to
              Metretek's Annual Report on Form 10-KSB for the year ended
              December 31, 1999.)*

      (10.11) Loan and Security Agreement, dated April 14, 1998, by and between
              National Bank of Canada, Metretek Technologies, Inc., Metretek,
              Incorporated and Southern Flow Companies, Inc. (Incorporated by
              reference to Exhibit 10.1 to Metretek's Quarterly Report on Form
              10-QSB for the quarterly period ended March 31, 1998.)

      (10.12) Amendment No. 1 to Loan and Security Agreement, dated as of
              November 10, 1998, by and among National Bank of Canada, Metretek
              Technologies, Inc., Metretek, Incorporated and Southern Flow
              Companies, Inc. (Incorporated by reference to Exhibit 10.12 to
              Metretek's Annual Report on Form 10-KSB for the year ended
              December 31, 1998.)

      (10.13) Second Amendment to Loan and Security Agreement and Loan
              Documents, dated as of September 13, 1999, by and among National
              Bank of Canada, Metretek Technologies, Inc., Metretek,
              Incorporated and Southern Flow Companies, Inc. (Incorporated by
              reference to Exhibit 10.1 to Metretek's Current Report on Form
              8-K filed September 14, 1999.)

      (10.14) Third Amendment to Loan and Security Agreement and Loan Documents,
              dated as of December 9, 1999, by and among National Bank of
              Canada, Metretek Technologies, Inc., Metretek, Incorporated and
              Southern Flow Companies, Inc. (Incorporated by reference to
              Exhibit 10.1 to Metretek's Current Report on Form 8-K filed
              December 22, 1999.)

      (10.15) Fourth Amendment to Loan and Security Agreement and Loan
              Documents, dated as of March 22, 2000, by and among National Bank
              of Canada, Metretek Technologies, Inc., Metretek, Incorporated
              and Southern Flow Companies, Inc.

      (10.16) Fifth Amendment to Loan and Security Agreement and Loan
              Documents, dated as of March 1, 2001, by and among National Bank
              of Canada, Metretek Technologies, Inc., Metretek, Incorporated
              and Southern Flow Companies, Inc.

      (10.17) Metretek Technologies, Inc. 1998 Stock Incentive Plan, amended
              and restated as of February 3, 2000 (Incorporated by reference to
              Exhibit 10.2 to Metretek's Current Report on Form 8-K filed on
              February 22, 2000).*


                                      X-3
<PAGE>   80
      (10.18) Employment Agreement, dated as of March 17, 2000, between
              PowerSpring, Inc. and John A. Harpole. (Incorporated by reference
              to Exhibit 10.17 to Metretek's Annual Report on Form 10-KSB for
              the year ended December 31, 1999.)*

      (10.19) Stockholders Agreement, dated as of March 17, 2000, among
              Metretek Technologies, Inc., PowerSpring, Inc. and John A.
              Harpole. (Incorporated by reference to Exhibit 10.18 to
              Metretek's Annual Report on Form 10-KSB for the year ended
              December 31, 1999.)

      (10.20) Non-Negotiable Promissory Note, dated March 17, 2000, made by
              PowerSpring, Inc. to John A. Harpole. (Incorporated by reference
              to Exhibit 10.19 to Metretek's Annual Report on Form 10-KSB for
              the year ended December 31, 1999.)

      (10.21) Security Agreement, dated March 17, 2000, between PowerSpring,
              Inc. and John A. Harpole. (Incorporated by reference to Exhibit
              10.20 to Metretek's Annual Report on Form 10-KSB for the year
              ended December 31, 1999.)

      (10.22) Form of Indemnification Agreement between Metretek Technologies,
              Inc. and each of its directors. (Incorporated by reference to
              Exhibit 10.21 to Metretek's Annual Report on Form 10-KSB for the
              year ended December 31, 1999.)

      (10.23) Employment and Non-Competition Agreement, dated as of May 8,
              2000, between PowerSpring, Inc. and Sidney Hinton.*

      (10.24) Prototype - Basic Plan Document for the Metretek - Southern Flow
              Savings and Investment Plan. (Incorporated by reference to
              Exhibit 4.7 to Metretek's Registration Statement on Form S-8,
              Registration No. 333-42698.)*

      (10.25) Adoption Agreement for the Metretek - Southern Flow Savings and
              Investment Plan. (Incorporated by reference to Exhibit 4.8 to
              Metretek's Registration Statement on Form S-8, Registration No.
              333-42698.)*

      (10.26) Non-Negotiable Convertible Promissory Note, dated September 28,
              2000, issued by Metretek Technologies, Inc. to Scient
              Corporation. (Incorporated by reference to Exhibit 10.1 to
              Metretek's Quarterly Report on Form 10-QSB for the quarter ended
              September 30, 2000.)

      (10.27) PowerSpring, Inc. 2000 Stock Incentive Plan*



(21)  SUBSIDIARIES OF THE SMALL BUSINESS ISSUER:

      (21.1)  Subsidiaries of Metretek Technologies, Inc.

(23)  CONSENT OF DELOITTE & TOUCHE LLP:

      (23.1)  Deloitte & Touche LLP

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

      *Management contract or compensation plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 13(a) of Form 10-KSB.

(b)   REPORTS ON FORM 8-K

      Metretek did not file a Current Report on Form 8-K during the quarter
ended December 31, 2000.


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