Form 10-K, Fiscal Year Ended December 31, 2021 — Enviro Technologies U.S., Inc.

Summary

Enviro Technologies U.S., Inc., a Florida company, filed this Form 10-K annual report for fiscal 2021 under Commission file number 000-30454 as a smaller reporting company. The cover gives the aggregate market value of non-affiliate common equity as $250,606 on June 30, 2021, and reports 5,570,125 shares of common stock outstanding as of April 15, 2022. The notes report a net operating loss carryforward of approximately $12,540,000 available through 2037. Under subsequent events, chief executive officer John A. DiBella advanced the company $30,000 on January 5, 2022, under a 4% unsecured promissory note, and board member Ray Veldman advanced $20,000 on April 12, 2022, on the same rate.

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Cite this document

“Form 10-K, Fiscal Year Ended December 31, 2021 — Enviro Technologies U.S., Inc.” Original at www.sec.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/enviro-technologies-u-s-inc-form-10-k-fiscal-2021-f13a210d66/, SHA-256 c4b5cf47c947089d1c73b3ce011dd311118bc486700aac8908bbb417f60aefa6.

Full text

UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549

FORM 10-K

(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 , 2021

o | TRANSITION
REPORT UNDER SECTION 13 OR 15( d ) OF THE SECURITIES
EXCHANGE ACT OF 1934

For
the transition period from __________________ to __________________________

Commission
file number: 000-30454

Enviro Technologies U.S., Inc.

( Exact
name of registrant as specified in its charter )

Florida | 65-0742890
(State or other
jurisdiction of incorporation or
organization) | (I.R.S. Employer Identification No.)
821 NW 57 Place , Fort Lauderdale , FL | 33309
(Address of principal executive offices) | (Zip Code)
Registrant’s telephone number, including area code: | ( 954 ) 958-9968

Securities registered
under Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on
which registered
None | None | None

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

Common stock,
par value $0.001 per share

(Title of class)

Indicate by check mark
if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes ☒ No

Indicate by check mark
if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐ Yes ☒ No

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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 o No

Indicate by check mark
whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (§232.4.05 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). x Yes o No

Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark
whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act 915 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. ☐

Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

State the aggregate
market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s most
recently completed second fiscal quarter. $ 250,606 on June 30, 2021.

Indicate the number
of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 5,570,125 shares of common stock are issued and outstanding as of April 15, 2022.

DOCUMENTS INCORPORATED
BY REFERENCE5

List hereunder the
following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant
to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes
(e.g., annual report to security holders for fiscal year ended December 24, 1980). None.

Table of Contents

CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report includes
forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties
and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future
results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but
not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,”
“targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions
or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and
future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial
needs. Forward-looking statements include, but are not limited to, statements about risks associated with:

· | Financial risks, including
· | our ability
to continue as a going concern;
· | our ability to generate
revenues and report profitable operations;
· | our ability to pay our
operating expenses; and
· | our ability to raise working
capital.
· | Business risks, including:
· | reliance on a limited number
of customers and the Grant Back License;
· | our ability to compete;
and
· | our dependence on our sole
executive officer.
· | Risks related to our common stock, including:
· | continuing material weaknesses
in our disclosure controls and internal control over financial reporting;
· | the illiquid nature of
the market for our common stock; and
· | the impact of penny stock
rules on our shareholders.

You should read thoroughly
this report and the documents that we refer to herein with the understanding that our actual future results may be materially different
from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those
made in Part I. Item 1A. Risk Factors appearing elsewhere in this report. Other sections of this report include additional factors, which
could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our
management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor,
or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except
for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release
publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These
forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering
the risks and uncertainties associated with these statements and our business.

OTHER
PERTINENT INFORMATION

All share data contained
herein gives pro forma effect to the 10:1 reverse stock split of our common stock which was effective on September 10, 2020.

Unless specifically
set forth to the contrary, when used in this report the terms “EVTN,” the “Company,” “we,” “our,”
“us,” and similar terms refers to Enviro Technologies U.S., Inc., a Florida corporation, and our subsidiary, Florida Precision
Aerospace, Inc., a Florida corporation which we refer to as “FPA”. In addition, “2020” refers to the year ended December
31, 2020, “2021” refers to the year ended December 31, 2021 and “2022” refers to the year ending December 31, 2022.
We maintain a corporate website at www.evtn.com. Unless specifically set forth to the contrary, the information which appears on our
website at www.evtn.com is not part of this report.

PART I

ITEM 1. | BUSINESS.

The Company developed
and manufactured the Voraxial Separator and currently manufactures and sells the V-Inline Separator, a unique separation technology that
efficiently separates large volumes of liquid/liquid, liquid/solids or liquid/liquid/solids fluid mixtures with distinct specific gravities.
Current and potential commercial applications and markets for the V-Inline Separator include mining, utilities, manufacturing, utilities,
waste-to-energy among other industries.

On March 13, 2017, we
entered into a Technology Purchase Agreement with Schlumberger Technology Corporation, a Texas corporation, Schlumberger Canada Limited,
a Canadian entity, and Schlumberger B.V., an entity organized under the laws of the Netherlands (collectively, “Schlumberger”)
pursuant to which we sold our intellectual property, substantially consisting of the Voraxial patents, marks, software and copyrights,
to Schlumberger in consideration of $4,000,000. As part of the agreement, Schlumberger granted us a non-exclusive, non-transferable,
worldwide, royalty-free licenses (the “Grant Back Licenses”), to make, use, sell, offer for sale, and import products and processes
embodying the Voraxial intellectual property outside the oil and gas market. Under the terms of the agreement, we can no longer use the
tradename Voraxial and we subsequently branded the technology licensed to us as the “V-Inline”. Our management believes that
the Grant Back Licenses can potentially provide additional revenues through the sale of V-Inline Separators outside the oil and gas industry,
including, but not limited to mining, utilities, sewage and industrial wastewater. In 2021 our customer successfully commissioned a wastewater
system at a nuclear facility comprised of multiple V-Inline Separators to separate solids and oil from their wastewater stream. The system
is being used to process and separate oil and solids from a flow of about 100 gallons per minute. The System includes different technologies
with the heart of the system being comprised of two V-Inline 2000 Separators working in parallel with a third V-Inline Separator being
utilized to further dewater the reject lines from the System. Management believes there are many opportunities similar to this installation
available for the V-Inline Separator not only in the utilities industry but other industries as well including those previously mentioned.

The V-Inline Separator
is a continuous flow turbo machine that generates a strong centrifugal force, a vortex, capable of separating light and heavy liquids,
such as oil and water, or any other combination of liquids and solids at extremely high flow rates. As the fluid passes through the machine,
the V-Inline Separator accomplishes this separation through the creation of a vortex. In liquid/liquid and liquid/solid mixtures, this
vortex causes the heavier compounds to gravitate to the outside of the flow and the lighter elements to move to the center where an inner
core is formed. The liquid stream processed by the machine is divided into separate streams of heavier and lighter liquids and solids.
As a result of this process, separation is achieved.

The benefits of the
V-Inline Separator include:

The V-Inline Separator
is a self-contained, non-clogging device that can be powered by an electric motor, diesel engine or by hydraulic power generation. Further,
its scalability allows it to be utilized in a variety of industries and to process various amounts of liquid. The following are the various
sizes and the corresponding capacity range:

While our net revenues
in 2021 have not rebounded from the pre-pandemic period, we remain firm in our belief that the need for effective and cost efficient
wastewater treatment and separation technology is global in scale. Moreover, virtually every industry requires some type of separation
process either during the manufacturing process, prior to treatment or discharge of wastewater into the environment, for general clean
up, or emergency response capability. Separation processes, however, are largely unknown to the average consumer. These processes are
deeply integrated in almost all industrial processes from oil to wastewater to manufacturing. Management believes that the separation
technology has applications in most, if not all major separation industries. The unique characteristics of the technology allow it to
be utilized either as a stand-alone unit or within an existing system to provide a more efficient and cost effective way to handle the
separation needs of the customer. We believe the separation technology can result in a cost savings and other benefits to the customer.
These benefits result in and include:

● | A reduction in water and energy usage,
● | Requires no pressure drop to perform separation,
● | Less space needed to implement the V-Inline Separator, the V-Inline
Separator weights less than some competing technologies ,
● | A reduction time to process and separate the fluids, allowing the customer
to be more efficient,
● | Creation of more efficient and faster process to treat water to increase
the overall productivity of the end-user,
● | Fewer employees needed to operate the system, and
● | Reduction of ongoing maintenance and servicing costs.

We believe that this
separation technology is a unique front-end solution for the separation industry that can offer increased productivity while reducing
the physical space and energy required to operate the unit. These advantages translate into the potential for substantial operating cost
efficiencies that would increase the profitability of the solution’s end user. The unique characteristic to conduct separation without
a pressure loss allows the unit to be installed in locations other technologies cannot. For instance, another separation technology called
a hydrocyclone requires a significant pressure loss to perform separation.

Although we have strong
beliefs in the potential of the technology, we do not have the funds to successfully market the technology. As such, we have focused
our efforts on finding a potential merger or acquisition candidate. During this period we have also marketed our manufacturing capabilities
to local South Florida companies.

Manufacturing

We manufacture and assemble
our products at our Fort Lauderdale, Florida facilities. The materials needed to manufacture the components of the products we sell, including the separation technology, have been provided by leading companies in the precision equipment industry. We do
not have any long term contracts with any supplier. We do not anticipate any shortage of component parts. We maintain a limited inventory
of finished parts until we receive a customer order. Most of our inventory is comprised of raw materials and finished Separator components
that can be used for future sales.

Marketing

During 2020 and 2021,
we limited our marketing and advertising due to COVID-19 and the downturn in the oil and gas markets and lack of available working capital.
Although the oil and gas markets have improved, we do not have sufficient funds to market the technology. We anticipate increasing spending
on marketing efforts, such as tradeshows, when, and if, our cash flow and market conditions improve. From June 2017 through June 2020,
we primarily focused our marketing

resources
to develop a strong rapport with Schlumberger, which included scaling up our manufacturing capabilities. In addition, we started to pursue
projects in industries outside of the oil and gas market, and primarily marketed our products by developing relationships within the
separation markets. Our marketing efforts were compromised as we anticipated using the revenues from the Schlumberger Supply Agreement
to invest in new applications and industries for the V-Inline Separator unit sales. However, sales from Schlumberger were lower than
management anticipated and the Supply Agreement has expired.

We have shifted our
near term focus to market our machining capabilities to companies located in South Florida to help stabilize cash flow. During 2022,
the Company does not currently have plans to present at any tradeshows.

Regulation

Our operations are subject
to extensive and frequently changing federal, state, and local laws and substantial regulation by government agencies, including the
United States Environmental Protection Agency (EPA), the United States Occupational Safety and Health administration (OSHA) and the Federal
Aviation Administration (FAA). Among other matters, these agencies regulate the operation, handling, transportation and disposal of hazardous
materials used by us during the normal course of our operations, govern the health and safety of our employees and certain standards
and licensing requirements for our aerospace components that we contract manufacture. We are subject to significant compliance burden
from this extensive regulatory framework, which may substantially increase our operational costs.

We believe that we have been and are in compliance with environmental requirements and believe that we have no liabilities under environmental requirements. Further, we have not spent any funds
specifically on compliance with environmental laws. However, some risk of environmental liability is inherent in the nature of our business,
and we might incur substantial costs to meet current or more stringent compliance, cleanup,
or other obligations pursuant to environmental requirements in the future. This could result in a material adverse effect to our results
of operations and financial condition.

Product Liability

Our business exposes
us to possible claims of personal injury, death or property damage, which may result from the failure, or malfunction of any component
or subassembly manufactured or assembled by us. However, until we start shipping the V-Inline Separator again, we do not plan to have
product liability insurance. Any product liability claim made against us may have a material adverse effect on our business, financial
condition or results of operations in light of our poor financial condition, losses and limited revenues. We also maintain general insurance
coverage.

Competition

We are subject to competition
from other manufacturing facilities who have greater manufacturing capacity, which allows them to utilize economy of scale to reduce
cost. We are also subject to competition from a number of companies who have greater experience, research abilities, engineering capability
and financial resources than we have to market and sell separation technology. Although we believe the separation technology offers applications
which accomplish better or similar results on a more cost-effective basis than existing products, other products have, in some instances,
attained greater market and regulatory acceptance.

Human Capital

As of the date of this
report we have five employees, including Mr. John A. DiBella, our sole executive officer, one individual who provides administrative
and support services to us and three individuals who are involved in the manufacturing, shipping and installation, if required, of our
products. All of our employees work from our principal offices in Fort Lauderdale, Florida, other than Mr. DiBella who works from time
to time remotely from his home. All of our employees are full-time and none are covered by collective bargaining agreements. Our non-executive
employees have been employed “at will” by our company from 5 years to 15 years.

Our executive officer
receives an annual salary and may receive bonuses at the discretion of the board of directors. Information regarding Mr. DiBella’s
compensation appear later in this report. All of our employees receive health insurance and one week paid leave. Our employees are compensated
based on their responsibilities as such, some are hourly while others are salaried. Our hourly employees may also receive overtime pay.
At the discretion of our management, the non-executive employees may receive bonus paid either at the end of the year or after completion
of certain projects.

Our History

The Company was incorporated
in Idaho on October 19, 1964 under the name Idaho Silver, Inc. In June 1996 we changed our corporate name to Enviro Voraxial Technology,
Inc. and in June 2017 we changed our corporate name to Enviro Technologies, Inc. On August 20, 2020, the Company’s shareholders
approved a change of domicile of the Company from Idaho to Florida. On December 28, 2020, the Company received the file stamped Certificate
of Domestication and Articles of Incorporation from the Secretary of State of Florida, which was effective on December 18, 2020, thereby
completing the change in domicile from Idaho to Florida. In connection with the change in domicile from Idaho to Florida, the Company’s
name changed to “Enviro Technologies U.S., Inc.”

Additional Information

We file annual and quarterly
reports on Forms 10-K and 10-Q, current reports on Form 8-K and other information with the Securities and Exchange Commission (“SEC”
or the “Commission”). The Commission also maintains an Internet site at http://www.sec.gov that contains reports, proxy
and information statements, and other information regarding issuers that file electronically with the Commission.

Other information about
the Company can be found on our website www.evtn.com. Reference in this document to that website address does not constitute incorporation
by reference of the information contained on the website.

ITEM 1A. | RISK FACTORS.

Before you invest in
our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all
of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and
uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected.

FINANCIAL RISKS

Our independent auditors have raised
substantial doubt about our ability to continue as a going concern.

Our consolidated financial
statements have been prepared assuming we will continue as a going concern. At December 31, 2021 we have a working capital deficit of
$1,160,325 and an accumulated deficit of $16,636,521. While our revenues increased approximately 34% in 2021 from 2020, for 2021 we reported
a net loss of $714,092. In addition, we used $499,511 in net cash in our operations during 2021. These factors, among others, raise substantial
doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Our ability to generate revenues or
profitable operations in the future is not assured.

Since entering into
the Grant Back License in June 2017, we have generated limited revenues under the terms of this agreement, nor are there any guarantees
that we will be able to generate any meaningful revenues in the future. Our ability to generate future revenues will depend on a number
of factors, many of which are beyond our control, including competitive efforts and general economic trends. In addition, we reported
a net loss of approximately $714,092 for 2021. There are no assurances we will be able to continue to generate revenues or report profitable
operations in the future.

If our revenues do not increase substantially,
we do not have sufficient funds to pay our operating expenses.

At December 31, 2021 we had $11,740 of cash and a working capital deficit of $1,160,325. We used $499,511 in net cash in our operations in 2021. We do
not have any external sources of liquidity. Although we believe our revenues will increase in 2022 from 2021, mainly initially due to
machining work for local South Florida customers, there are no assurances this is correct or that any increase in our revenues in 2022
will be sufficient to pay our operating expenses. In an effort to conserve our cash resources to sustain our operations until such time
as the economy begins returning to pre-Covid-19 pandemic activity levels, we reduced employee
hours, accrued a portion of management’s salary and have begun marketing our machining capabilities to local manufacturers. Our
management has also begun exploring possible opportunities for the Company involving mergers, acquisitions or other business combination
transactions in an effort to diversify our business. There are no assurances, however, that these efforts will be sufficient to permit
us to pay our operating expenses. In that event, our ability to continue as a going concern is in jeopardy. Furthermore, our PPP Loan
in the aggregate principal amount of $111,971 matures on May 4, 2022. While we believe our company has used the entire PPP Loan amount
for qualifying expenses and we applied for forgiveness of the PPP Loan in accordance with the terms of the CARES Act, there are no assurances
that the PPP Loan will be forgiven. We do not have available working capital to satisfy the PPP Loan in the event it becomes due and
payable.

We have been limited by insufficient
capital, and we may continue to be so limited.

In the past, we have
lacked the required capital to market the V-Inline Separator. Our inability to raise the funding or to otherwise finance our capital
needs could adversely affect our financial condition and our results of operations, and could prevent us from implementing our business
plan. We may seek to raise capital through public and private equity offerings, debt financing or collaboration, and strategic alliances.
Such financing may not be available when we need it or may not be available on terms that are favorable to us. If we raise additional
capital through the sale of our equity securities, your ownership interest will be diluted and the terms of the financing may adversely
affect your holdings or rights as a stockholder. If we fail to raise additional funds when needed, or do not have sufficient cash flows
from sales, we may be required to scale back or cease operations, sell or liquidate our assets and possibly seek bankruptcy protection.

BUSINESS RISKS

We currently rely on a limited
number of customers and the Grant Back License for our revenues.

Revenues from two customers accounted for
approximately 54% and 22% of total revenues, respectively, during 2021 and revenues from two customers accounted for approximately 20%
and 10% of total revenues, respectively, during 2020. As of December 31, 2021, two customers represented 52% and 38%, of total accounts
receivables. As of December 31, 2020, three customers represented 68%, 17% and 15%, respectively, of total accounts receivables. We do
not have any contracts with minimum guaranteed orders with these customers. Furthermore, we currently rely on the Grant Back License.
If these customers fail to order additional products or we are unable to attract new customers or we do not comply with the terms of
the Grant Back License, it could have an adverse effect on our financial condition and results of operations.

Our market is subject to intense competition.
If we are unable to compete effectively, our product may be rendered non-competitive or obsolete.

We are engaged in a
segment of the water filtration industry that is highly competitive and rapidly changing. Many large companies, academic institutions,
governmental agencies, and other public and private research organizations are pursuing the development of technology that can be used
for the same purposes as the V-Inline Separator. We face, and expect to continue to face, intense and increasing competition, as new
products enter the market and advanced technologies become available. We believe that a significant number of products are currently
under development and will become available in the future that may address the water filtration segment of the market. If other products
are successfully developed, it may be better received by the market or introduced before the V-Inline Separator. Our competitors' products
may be more effective, or more effectively marketed and sold, than any of our products. Many of our competitors have

significantly
greater financial, technical and human resources than we have and may be better equipped to discover, develop, manufacture and commercialize products; and more extensive experience in marketing water
treatment products. Competitive products may render the V-Inline Separator obsolete or noncompetitive.

We are dependent on key personnel.

We are dependent upon
the availability and the continued performance of the services of John A. DiBella, our Chief Executive Officer. We are not a party to
any employment agreement with him. The loss of the services of Mr. DiBella could have a material adverse effect on us.

RISKS RELATED
TO OUR COMMON STOCK

We have material weaknesses
in our disclosure controls and our internal control over financial reporting. If we fail to remediate any material weaknesses or if we
fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial
results could be adversely affected.

Our management is responsible
for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
in accordance with U.S. GAAP. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not
be prevented or detected on a timely basis. Historically we have reported material weaknesses
in our disclosure controls and internal control over financial reporting. As required by the rules and regulations of the SEC, our management
assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. Based on this assessment, and as
described later is this report, our management concluded that as of December 31, 2021, our internal control over financial reporting
was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. GAAP as a result of material weaknesses. Our failure to remediate the material weaknesses
or the identification of additional material weaknesses in the future could adversely affect our ability to report financial information,
including our filing of quarterly or annual reports with the SEC on a timely and accurate basis. Moreover, our failure to remediate the
material weaknesses identified above or the identification of additional material weaknesses could prohibit us from producing timely
and accurate financial statements, which may adversely affect the market price of shares of our common stock.

We do not know whether an active,
liquid and orderly trading market will develop for our common stock and as a result it may be difficult for you to sell your shares of
our common stock.

Our common stock is
quoted on the Pink tier of the OTC Markets and is thinly traded. An active trading market in our common stock may never develop or, if
developed, sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at
a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. Further, an
inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter
into business combinations with other companies by using our shares of common stock as consideration. The market price of our common
stock may be volatile, and you could lose all or part of your investment.

Because our stock currently
trades below $5.00 per share and is quoted on the Pink tier of the OTC Markets, our stock is considered a "penny stock" which can adversely
affect its liquidity.

As the trading price
of our common stock is less than $5.00 per share, our common stock is considered a "penny stock," and trading in our common stock is
subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced
securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The
broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser's written consent
prior to the transaction. SEC regulations also require additional disclosure in connection with any trades involving a "penny stock,"
including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated
risks.

These
requirements severely limit the liquidity of our common stock in the secondary market because few brokers or dealers are likely to undertake
these compliance activities. Purchasers of our common stock may find it difficult to resell the shares in the secondary market.

ITEM 1B. | UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. | PROPERTIES.

In December 2018, the
Company entered into a three year lease for an office and manufacturing facility located at 821 NW 57 Place, Fort Lauderdale, FL 33309.
The lease has a one-time renewal option for three years, which was exercised in October 2021. The Company has the option to terminate
the lease with three months’ notice. The lease is for approximately 9,000 square feet of executive and manufacturing space, at $4,839
per month, which includes common area maintenance, taxes and insurance.

ITEM 3. | LEGAL PROCEEDINGS.

Please see Note H
to the notes to consolidated financial statements appears later in this report for a discussion of the pending or threatened
litigation involving the Company.

ITEM 4. | MINE SAFETY DISCLOSURES.

Not applicable.

PART
II

ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES.

Our common stock is
quoted on the Pink tier of OTC Markets under the symbol “EVTN”.

The last sale price
of our common stock as reported on the Pink tier of the OTC Markets on April 5, 2022, was $0.069 per share. As of April 5, 2022, there
were approximately 791 record owners of our common stock.

Dividends

We have not paid a cash
dividend on the common stock since current management joined our company in 1996. The payment of dividends may be made at the discretion
of our board of directors and will depend upon, among other things, our operations, our capital requirements and our overall financial
condition. As of the date of this report, we have no intention to declare dividends.

Recent Sales of Unregistered Securities

Except for those unregistered
securities previously disclosed in reports filed with the Commission during the period covered by this report, we have not sold any securities
without registration under the Securities Act of 1933, as amended, during the period covered by this report.

Issuer Purchase of Equity Securities

None.

ITEM 6. | SELECTED FINANCIAL DATA.

RESERVED.

9
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion
of our financial condition and results of operations for 2021 and 2020 and should be read in conjunction with the financial statements
and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based
upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results
and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of
factors, including those set forth under Cautionary Statement Regarding Forward Looking Information, Item 1A. Business and Item 1A. Risk
Factors in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,”
“ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,”
“could,” and similar expressions to identify forward-looking statements.

Overview

The Covid-19 pandemic
has hurt our operations significantly. Prior to the Covid-19 pandemic, we experienced significant revenue growth in 2019 mainly through
the sale of Voraxial Separator and V-Inline Separators. However, 2020 and 2021 proved to be an extremely challenging and disappointing
period due to the Covid-19 pandemic. In 2021, our revenues were mainly derived from machining projects for local South Florida customers
and auxiliary parts for the Voraxial and V-Inline Separator. The drop in capital expenditures from the overall market, both from the
oil industry and industries outside of oil and gas, coupled with the lack of a sales and marketing budget, hindered sales opportunities
for the V-Inline Separator. Customer inquiries decreased significantly as well during this period due to a drop in capital expenditures.
The Supply Agreement we signed with Schlumberger in June 2017 as part of the Technology Purchase Agreement expired in 2020. As we did
not generate significant revenues from this agreement, we did not pursue an extension of such agreement under its initial terms. However,
we may continue to work together on a project by project basis with Cameron Solutions, Inc. until such time a new agreement is reached,
if at all. As we have reduced our marketing budget for the V-Inline Separator, we have shifted our near term focus on machining work
to help stabilize our cash flow.

We believe there is
a market for the V-Inline Separator in the mining, utilities, sewage and industrial wastewater industries, among others. We intend to
continue to seek opportunities for the V-Inline Separator through our rights under our Grant Back License. We have branded our licensed
products as the V-Inline Separator. In 2021, we commissioned a wastewater system at a nuclear facility that consisted of multiple V-Inline
Separators to separate solids and oil from their wastewater stream. The system is being used to process and separate oil and solids from
a flow of about 100 gallons per minute. The system includes different technologies with the heart of the system being comprised of two V-Inline 2000 Separators working in parallel with a third V-Inline Separator being utilized to further dewater the reject lines
from the System.

Going Concern

For 2021 we reported
a net loss of $714,092. At December 31, 2021, we had cash on hand of $11,740, a working capital deficit of $1,160,325 and an accumulated
deficit of $16,636,521. The report of our independent registered public accounting firm on our consolidated financial statements for
the year ended December 31, 2021 contains an explanatory paragraph regarding our ability to continue as a going concern based upon
our working capital deficit, accumulated deficit and negative cash flows from operations. These factors, among others, raise substantial
doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to raise capital, develop a
source of revenues, report profitable operations or to continue as a going concern, in which event investors would lose their entire
investment in our company.

Results of Operations

Revenues

Revenues for 2021 increased
by approximately 34% from 2020. Although our revenues increased from 2020, our revenues are down significantly from the higher historical
revenues we earned in the last fiscal year prior to Covid-19. The decrease in revenues as compared to historical revenues reflect the
harsh economic climate we faced in 2021 due to Covid-19 pandemic and the liquidity issues limiting our sales and marketing budget we
continue to experience since the start of Covid-19 pandemic. Although we achieved significant revenue growth in 2019 from the sale of
Voraxial Separator to the oil industry and the sale of a wastewater system that included multiple V-Inline Separators to a nuclear facility,
the damage experienced from the 2020 and 2021 pandemic may hinder our ability to generate sales and increase revenues quickly. We expect
that our revenues in 2022 from machine manufacturing will continue to increase and we expect that sales of Voraxial and V-Inline Separators
will begin to rebound. However, it may take longer than expected for business related to the V-Inline Separator to resume normal sales
cycle. Accordingly, at this time we are unable to predict the ultimate impact to our revenues in 2022.

Cost of goods

Cost of goods sold decreased
approximately 20% in 2021 from 2020, and reflects the change in the margins of the items sold during this period. Our cost of goods sold
as a percentage of revenues decreased to approximately 36% in 2021 from approximately 60% in 2020 as a result of the higher margin revenues
we earned with the sale of auxiliary parts for the Voraxial and V-Inline Separators projects we completed as compared to the lower margin
products manufactured in 2020, including the manufacturing of face shields. Further, in 2020 we experience inventory impairment as a
result of extra face shields we have in inventory. Our cost of goods continues to be reviewed by management in effort to obtain the best
available pricing while maintaining high quality standards.

Costs and expenses

Total costs and expenses
decreased by approximately 21% for 2021 as compared to 2020. The decrease was due to decrease in payroll expense, professional fees and
decreases in selling, general and administrative expenses.

Selling, general
and administrative expenses

Selling, general and
administrative expenses decreased by 28% for 2021 as compared to 2020. We continue to reduce our expenses. We experienced decreases in
our insurance expense of approximately $5,100 mainly from the termination of employee health insurance and D&O insurance and a decrease
in legal and professional fees of approximately $38,500 as a result of an effort to reduce expenditures.

Payroll
Expenses

Payroll expense in 2021
decreased by approximately 16% as compared to 2020. The decrease in payroll expense was due to a higher utilization and absorption of
labor cost into cost of goods sold as compared to 2020 and a reduction in payroll hours.

Professional
Fees

Professional fees decreased
by approximately 23% for 2021 from 2020. The decrease was primarily due to a decrease in advisory and consulting services as a result
of our cost cutting measure to conserve cash. A reduction in such fees may have a negative effect on future sales opportunities. Additionally,
legal fees decreased by approximately $40,000 and were partially offset by legal expenses for advancement of intellectual property claims.

Interest
Expense

Interest expense, which
represents interest we pay on an equipment note payable, increased approximately 43% in 2021 from 2020 as a result of the sale of our
CNC equipment and the fees associated with early termination.

Liquidity and Capital Resources

At December 31,
2021, cash was $11,740 as compared to $336,564 at December 31, 2020. Working capital deficit at December 31, 2021 was $1,160,325
as compared to a working capital deficit at December 31, 2020 of $750,481. At December 31, 2021, we had an accumulated deficit
of $16,636,521. Our current assets decreased by 69% at December 31, 2021 as compared to December 31, 2020, which reflects decreases
in our cash and cash equivalents and prepaid expenses which were offset by an increase in accounts receivable. Our current liabilities
increased 7% at December 31, 2021 as compared to December 31, 2020, which is primarily attributable to an increase accrued
expense-related party and Loans Payable – current portion as a result of the SBA loans and PPP loans we received. We expect that
such loans will be forgiven but we cannot provide any assurances. Increases were offset by decrease in equipment loans that was fully
paid.

We do not have any
external sources of liquidity and have been dependent upon the funds we received under the SBA and PPP loans and advances from our
chief executive officer and directors, and limited customer’s revenues to provide working capital for our company. We do not have any
commitment for capital expenditures. We anticipate we will need approximately $1 million to operate the business over the next
twelve months. Our ability to generate future revenues, generate sufficient cash flow to pay our operating expenses and report
profitable operations in future periods will depend on a number of factors, many of which are beyond our control. If we fail to
achieve profitability on a quarterly or annual basis, or to raise additional funds when needed, or do not have sufficient cash flows
from sales, we may be required to scale back or cease operations, sell or liquidate our assets and possibly seek bankruptcy
protection.

On January 5, 2022,
John A. DiBella, the Company’s chief executive officer, advanced the Company $30,000 pursuant to the terms of a 4% unsecured promissory
note. The note is payable on December 31, 2022 and accrues interest at a rate of 4% per annum. In addition, from February 15, 2022 through
April 7, 2022, Mr. DiBella has advanced the Company an additional $29,000 under the same terms as the note.

On April 12, 2022, Ray
Veldman, member of the Company’s Board of Directors, advanced the Company $20,000 pursuant to the terms of a 4% unsecured promissory
note. The note is payable on December 31, 2022 and accrues interest at a rate of 4% per annum.

Summary of cash flows

The following table
summarizes our cash flows:

Year Ended December 31,
2021 | 2020
Cash flow data:
Cash used in operating activities | $ | (499,511) | $ | (541,249)
Cash provided by (used in) investing activities | $ | 275,000 | $ | (8,228)
Cash (used in) provided by financing activities | $ | (100,313) | $ | 211,197

Net cash used in operating
activities in 2021 was primarily attributable to net loss and the gain on the forgiveness of PPP loan and interest , offset in part
by increases in accounts payable, accrued expenses and accrued expenses – related party.

Net cash used in operating
activities in 2020 was primarily attributable to net loss and a decrease in accounts payable and accrued expenses, offset in part by
a decrease in accounts receivable and an increase in accrued expenses – related party. Decrease in accounts receivable are a result
of some parts we manufactured and shipped in 2020 in fulfillment of orders we received in 2019. Decreases in deposit from customer is
primarily attributable to deposit recognized as revenues as a result of the shipment of the wastewater system to the utility company.

Net cash used in investing
activities in 2021 was attributable to the sale of our manufacturing equipment we purchased in 2017. Net cash used in investing activities
in 2020 was primarily attributable to an increase in manufacturing equipment we purchased for machining projects we pursued.

Net cash used in financing
activities during each of 2021 and 2020 was primarily attributable to the repayment of the equipment note payable and loan payable issuance
for the PPP and EIDL loans we received for the Covid-19 pandemic.

Looking Forward

As a result of the uncertainties
facing our company as discussed elsewhere in this report, we are unable to predict the overall impact in 2022 and beyond on our company
at this time. Our loss of revenues will materially impact our liquidity, and we do not expect to be able to access the capital markets
for additional working capital in the near future. Our senior management will continue to monitor our situation on a daily basis, however,
we expect that these factors and others we have yet to experience will materially adversely impact our company, its business and operations
for the foreseeable future. Our management has also begun exploring possible opportunities for the Company involving mergers, acquisitions
or other business combination transactions in an effort to diversify our business. We are not currently a party to any agreement or understandings
with any third parties, and there are no assurances even if our management locates an opportunity which it believes will be in the best
interests of our shareholders what we will ever consummate such a transaction. Accordingly, investors should not place undue reliance
on these efforts.

Our ability to generate
future revenues, generate sufficient cash flow to pay our operating expenses and report profitable operations in future periods will
depend on a number of factors, many of which are beyond our control. Our independent auditors have included in their audit report an
explanatory paragraph that states that our working capital deficits and accumulated deficit raises substantial doubt about our ability
to continue as a going concern. If we fail to achieve profitability on a quarterly or annual basis, or to raise additional funds when
needed, or do not have sufficient cash flows from sales, we may be required to scale back or cease operations, sell or liquidate our
assets and possibly seek bankruptcy protection. As a result of the above, there is substantial doubt about the ability of the Company
to continue as a going concern and the accompanying consolidated financial statements have been prepared assuming that the Company will
continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that may result from the
outcome of this uncertainty.

Critical Accounting Estimates

Our financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses. Note C of the Notes to Consolidated Financial Statements appearing later in this report
describes the significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant
accounting policies are considered to be critical accounting policies, as defined below.

A critical accounting
policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult,
subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically,
critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain
at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably
likely to occur, would have a material effect on our financial condition or results of operations.

Estimates and assumptions
about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various
other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as
additional information is obtained and as our operating environment changes. These changes have historically been minor and have been
included in the consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies
and the underlying judgments and uncertainties affecting the application of those policies, management believes that our consolidated
financial statements are fairly stated in accordance with U.S. GAAP, and present a meaningful presentation of our financial condition
and results of operations. We believe the following critical accounting policies reflect our more significant estimates and assumptions
used in the preparation of our consolidated financial statements:

Accounts Receivable

Accounts
receivable are presented net of an allowance for doubtful accounts. The company maintains allowances for doubtful accounts for estimated
losses. The company reviews the accounts receivable on a periodic basis and makes general and specific allowance when there is a doubt
as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers
many factors, including the age of the balance, customer’s historical payment history, and its current credit-worthiness and current
economic trends. Accounts are written off after exhaustive efforts at collections.

Inventory

Income Taxes

The Company accounts
for income taxes under ASC 740-10-25. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Recent Accounting Pronouncements

Recent accounting pronouncements
issued by the FASB, the AICPA and the SEC, did not, or are not believed by management, to have a material impact on the Company's present
or future financial statements.

Off Balance Sheet
Arrangements

As of the date of this
report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction,
agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising
under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to
such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

This information is
not required by smaller reporting company.

ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTING DATA.

The financial statements
required by this report are included, commencing on F-1.

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

None.

14
ITEM 9A. | CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and
Procedures

We maintain disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the
SEC, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

The Company’s management,
under the supervision and with the participation of the Company's Chief Executive Officer who also serves as our Chief Financial Officer,
carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined
in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2021. Based upon that evaluation at the end of the period covered
by this annual report our Chief Executive Officer concluded that our disclosure controls and procedures were not effective to ensure
that the information relating to our company, required to be disclosed in our SEC Reports (i) is recorded, processed, summarized and
reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communications to our management, including
our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of material weaknesses in our internal
control over financial reporting.

Management’s Report on Internal
Control over Financial Reporting

Our management assessed
the effectiveness of our internal control over financial reporting as of December 31, 2021 based on the 2013 criteria established
in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management's
assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness
of these controls. Based on this assessment, our Chief Executive Officer who also serves as our Chief Financial Officer has concluded
that as of December 31, 2021, our internal control over financial reporting was not effective to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP
as a result of material weaknesses. A “material weakness” is a significant deficiency, or combination of significant deficiencies,
that results in more than a remote likelihood that a material misstatement of our annual or interim financial statement will not be presented
or detected by our employees. The specific material weaknesses that management identified in our internal controls as of December 31,
2021 that persist are as follows:

● | we did
not have adequate staffing resources to provide appropriate segregation of duties;
● | we did not have a sufficient number of adequately trained technical accounting personnel
to support multiple level of review in the financial close process;
● | we did
not have personnel with sufficient experience with U.S. GAAP; and
● | we did
not have adequate personnel to document, timely review and support all transactions.

These listed material
weaknesses in our internal control over financial reporting are legacy issues dating back many years. In order to remediate these material
weaknesses in our internal control over financial reporting, we will need to:

● | create a position to segregate duties consistent with control objectives
and will increase our personnel resources; and
● | hire experienced independent third parties or consultants to provide
additional expert advice as needed.

We made efforts to improve
these weaknesses in our internal control over financial reporting results by focusing on upgrading our internal accounting processes
and managing the daily accounting responsibilities, maintaining the new accounting software and modifying the inventory system we implemented
in the past to manage inventory and having

duplicity
in reviewing our accounting records by retaining an outside CPA to review our financials on a quarterly and annual basis. We believe
these steps have helped and will continue to further mitigate issues that may arise from a limited staff. In 2022 we plan to further
improve our financial controls. Until such time, however, as we remediate the material weaknesses in our internal control over financial
reporting, there is a likelihood that our financial statements in future periods may contain errors which will require a restatement.

Limitations on Effectiveness of Controls
and Procedures

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

Changes in Internal Control over Financial
Reporting

There were no changes
to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during
our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 9B. | OTHER INFORMATION.

None.

PART III

ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and executive officers

The following sets forth
the names and ages of our officers and directors.

Name | Age | Position
John A. DiBella | 50 | Chief Executive Officer, President,
Chief Financial Officer and Director
Raynard Veldman | 61 | Director

John A. DiBella has
served as a member of the board of directors since August 2006 and Chief Executive Officer and Chief Financial Officer since November
2011. From 2000 through January 2002 Mr. DiBella provided consulting services to our Company. In January 2002 we hired him to serve as
a Vice President and Director of Business Development, and thereafter prior to be named Chief Executive Officer Mr. DiBella served as
our Chief Operating Officer. Mr. DiBella co-founded and served as President of PBCM, a financial management company located in New Jersey
from 1997 to 1999. Prior to co-founding PBCM, Mr. DiBella worked for Donaldson, Lufkin and Jenrette, a NYSE member firm. Mr. DiBella’s
operational experience with our company were factors considered by our board of directors in concluding that he should be serving as
a director of our company.

Raynard Veldman has
served as a director of the Company since August 2014. Since 2014, Mr. Veldman has operated Veldman Consulting Corporation which provides
consulting services, commission sales, and has made investments in the oil and gas and chemical industries where he is an active participant
in the businesses. He served as vice president for Magnablend, Inc., a custom chemical blending and manufacturing company from February
2012 to July 2014. From April 2001 through February 2012 he served as business and product manager for Weatherford, Inc. in their Engineered
Chemistry Division. He has over 30 years of experience in the domestic and international oil and gas industry. Mr. Veldman has a M.S.
in Chemical Engineering from the University of Houston and a B.S. in Chemical Engineering from the University of Texas. He has also periodically
served as a consultant to the Company since 2009. Mr. Veldman’s professional background as an engineer and his professional experience
in the oil and gas industry were factors considered by our board of directors in concluding that he should be serving as a director of
our company.

There are no family
relationships between any of the executive officers and directors.

Board of Directors

Each director is elected
at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected
and qualified. If any director resigns, dies or is otherwise unable to serve out his or her term, or if the Board increases the number
of directors, the Board may fill any vacancy by a vote of a majority of the directors then in office, although less than a quorum exists.
A director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor. Vacancies occurring by reason of the
removal of directors without cause may only be filled by vote of the stockholders.

Board leadership structure and
board’s role in risk oversight

The board of directors
is comprised of one member of our management and one independent director. Given the size of our company, our Board believes the current
leadership structure is appropriate for our company. As our company grows, we expect to expand our board of directors through the appointment
of independent directors.

Risk is inherent with
every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including credit
risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputation risk. Management is responsible for the day-to-day
management of the risks we face and have responsibility for the oversight of risk management in their dual roles as directors.

Committees of the board of directors;
stockholder nominations; audit committee financial expert

We have not established
any committees comprised of members of our board of directors, including an Audit Committee, a Compensation Committee or a Nominating
Committee, or any committee performing similar functions. The functions of those committees are being undertaken by our board of directors
as a whole.

We do not have a policy
regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications
for director candidates, nor has our board of directors established a process for identifying and evaluating director nominees, nor do
we have a policy regarding director diversity. We have not adopted a policy regarding the handling of any potential recommendation of
director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these
policies as we have never received a recommendation from any stockholder for any candidate to serve on our board of directors. While
there have been no nominations of additional directors proposed by our shareholders, in the event such a proposal is made, all members
of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board
will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different
viewpoint or experience to our Board.

None of our directors
is an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee
financial expert” is an individual member of the audit committee or board of directors who:

17
● | understands generally accepted accounting principles
and financial statements;
● | is able
to assess the general application of such principles in connection with accounting for estimates, accruals and reserves;
● | has experience
preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements;
● | understands
internal controls over financial reporting; and
● | understands
audit committee functions.

Our securities are not
quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject
to any law, rule or regulation requiring that all or any portion of our board of directors include “independent” directors,
nor are we required to establish or maintain an Audit Committee or other committee of our board of directors.

Code of Ethics

During the year ended
December 31, 2003 we adopted a code of ethics. The code of ethics was filed with the Company’s Form 10-KSB annual report for
the year ended December 31, 2003. The code of ethics may be obtained by contacting the Company’s executive offices. The code
applies to our officers and directors. The code provides written standards that are designed to deter wrongdoing and promote: (i) honest
and ethical conduct; (ii) full, fair, accurate, timely and understandable disclosure; (iii) compliance with applicable laws and regulations;
(iv) promote reporting of internal violations of the code; and (v) accountability for the adherence to the code.

Section 16(a) of the Exchange Act

Section 16(a) of the
Exchange Act, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of
our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes
in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively.
Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to
furnish us with copies of all Section 16(a) reports they file. Based solely upon a review of Forms 3 and 4 and amendments thereto furnished
to us under Rule 16a-3(d) of the Securities Exchange Act during the year ended December 31, 2021 and Forms 5 and amendments thereto furnished
to us with respect to the year ended December 31, 2021, as well as any written representation from a reporting person that no Form 5
is required, we are not aware that any officer, director or 10% or greater stockholder failed to file on a timely basis, as disclosed
in the aforementioned Forms, reports required by Section 16(a) of the Exchange Act of during the year ended December 31, 2021.

ITEM 11. | EXECUTIVE COMPENSATION.

The following table
summarizes all compensation recorded by us in the past two years for:

● | our principal executive officer or other individual serving
in a similar capacity;
● | our two most highly compensated named executive officers at December
31, 2021 whose annual compensation exceeded $100,000; and
● | up to two additional individuals for whom disclosure would have been
required but for the fact that the individual was not serving as an executive officer at December 31, 2021.
18

For definitional purposes,
these individuals are sometimes referred to as the “named executive officers.”

Summary Compensation
Table
Name
and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | No
equity incentive plan compensation ($) | Non-qualified deferred compensation earnings ($) | All other compensation ($)(1) | Total ($)
John A. DiBella, | 2021 | 210,000 | — | — | — | — | — | 25,936 | 235,936
President, Chief Executive Officer and Chief Financial
Officer | 2020 | 210,000 | — | — | — | — | — | 23,034 | 233,034

(1) Represents
healthcare b enefits.

Outstanding Equity Awards at December
31, 2021

There are no outstanding
equity awards held by our named executive officers at December 31, 2021.

How Mr. DiBella’s Compensation is
Determined

We are not a party to
an employment agreement with Mr. DiBella. His compensation is determined by the board of directors of which he is one of the two members.
Effective for 2021 and 2020, the Company incurred salary expenses for Mr. DiBella of $210,000 and $210,000, respectively. For 2021 and
2020, the Company paid Mr. DiBella $151,250 and $156,650, respectively, of salary and accrued salary have been paid. Of the $151,250
paid to Mr. DiBella in 2021, $26,250 was paid in cash and $125.000 was a reduction of his accrued salary for conversion into 500,000
shares of common stock of the company. Effective December 30, 2021, Mr. DiBella converted $125,000
of his accrued salary (the “Conversion Amount”) into 500,000 restricted shares of common stock of the Company in full satisfaction
of the Conversion Amount . Of the $156,650 paid to Mr. DiBella in 2020, $81,650 was a reduction of his accrued salary in payment
for the exercise of options, including some options of the Company’s employees and a related party. The unpaid accrued salary balances
as of December 31, 2021 and 2020, are $723,065 and $664,315, respectively. The timing of the payment of any of the accrued but unpaid
compensation due Mr. DiBella may be determined by the board of directors at any time. In addition, Mr. DiBella’s compensation may
be changed at any time by the board of directors.

Consulting Fees Paid to Mr. Veldman

In addition to his compensation
for serving as a member of the Company’s board of directors set forth below, since July 1, 2017, the Company has paid Mr. Veldman
a fee of $2,500 per month for consulting services. For 2021 and 2020, he received consulting fees of $30,000 and $30,000, respectively. Effective December 30, 2021, Mr. Veldman converted $30,000 of outstanding consulting fees
into 120,000 shares of restricted common stock of the Company in full satisfaction of $30,000 of accrued consulting fees. The
unpaid consulting fees and board of director’s fees balances as of December 31, 2021 and 2020, are $54,500 and $42,500, respectively.
The timing of the payment of any of the accrued but unpaid due Mr. Veldman may be determined by the board of directors at any time.

Director Compensation

Our board compensation
plan effective for non-management directors consists of a $1,000 monthly cash payment. In addition, board members may be reimbursed for
out-of-pocket expenses related to participation in board and committee meetings. No reimbursable payments were made during 2021. The
table below provides information concerning the compensation paid in 2021 to our non-management director for his services as a member
of our board of directors 2021. The information in the following table excludes the consulting fees paid to Mr. Veldman as described
earlier in this section.

19
Fees
earned or paid
in | Stock awards | Option awards | Non-equity
incentive Plan
compensation | Nonqualified
deferred compensation earnings | All other compensation | Total
Name | Year | cash
($) | ($) | ($) | ($) | ($) | ($) | ($)
Raynard Veldman | 2021 | $ | 12,000 | — | — | — | — | — | $ | 12,000
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

At April 5, 2022, we
had 5,570,125 shares of our common stock issued and outstanding. The following table sets forth information regarding the beneficial
ownership of our common stock as of that date by:

● | each
person known by us to be the beneficial owner
of more than 5% of our common stock;
● | each
of our directors;
● | each
of our named executive officers; and
● | our
named executive officers and directors as a group.

Unless specified below,
the business address of each shareholder is c/o 821 NW 57 Place, Fort Lauderdale, FL 33309. The percentages in the table have been calculated
on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares
of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges
owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed
below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power
may be shared with a spouse.

Name
of Beneficial Owner | No.
of Shares Beneficially Owned | %
of Class
John A. DiBella (1) | 1,626,462 | 29.2 | %
Raynard Veldman | 539,144 | 9.7 | %
All officers and directors as a group (two persons) | 2,165,606 | 38.9 | %
Adele DiBella | 609,550 | 10.9 | %

(1) The
number of shares of common stock beneficially owned by Mr. DiBella includes 15,000 shares held by his minor children.

Securities Authorized for Issuance Under
Equity Compensation Plans

The
following table sets forth securities authorized for issuance under any equity compensation plans approved by our shareholders as well
as any equity compensation plans not approved by our shareholders as of December 31, 2021.

Plan category | Number of securities to be issued
upon exercise of outstanding options, warrants and rights | Weighted average exercise price of
outstanding options, warrants and rights ($) | Number of securities remaining available
for future issuance under equity compensation plans (excluding securities reflected in column
Plans approved by our shareholders | 0 | n/a | n/a
Plans not approved by shareholders | 10,000 | 0.10 | n/a
20
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

During 2021 and 2020, Raynard Veldman, a
member of the Company’s board of directors, received total consulting fees of $30,000 and $30,000, respectively, in addition to
fees for serving on the board of directors. The Company currently pays Mr. Veldman $2,500 per month for consulting services. Effective
December 30, 2021 the Mr. Veldman converted $30,000 of outstanding consulting fees into 120,000 shares of restricted common stock
in full satisfaction of the $30,000 of outstanding consulting fees. During 2020, Mr. Veldman reduced his accrued expense by $10,000
to exercise his options.

Director Independence

The Company has one
independent director, Raynard Veldman. Mr. Veldman is considered “independent” as defined under Rule 5605 of the Nasdaq Marketplace
Rules.

PART
IV

ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table
shows the fees that were billed for the audit and other services provided by Liggett & Webb, P.A. for 2021 and 2020.

2021 | 2020
Audit Fees | $ | 32,000 | $ | 32,000
Audit-Related Fees | — | —
Tax Fees | — | —
All Other Fees | — | —
Total | $ | 32,000 | $ | 32,000

Audit Fees —
This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports
on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements
for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the
audit or the review of interim financial statements.

Audit-Related Fees — This category consists of assurance and related services by the independent registered public accounting firm that are reasonably
related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.”
The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange
Commission and other accounting consulting.

Tax Fees —
This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and
tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.

All Other Fees —
This category consists of fees for other miscellaneous items.

Our board of directors
has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure,
the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the
Board, or, in the period between meetings, by a designated member of the Board. Any such approval by the designated member is disclosed
to the entire Board at the next meeting. The audit and tax fees paid to the auditors with respect to 2021 were pre-approved by the board
of directors.

21
ITEM 15. | EXHIBITS AND FINANCIAL DATA SCHEDULES.
Incorporated
by Reference | Filed or
No. | Exhibit Description | Form | Date Filed | Exhibit Number | Furnished Herewith
2 | Agreement
and Plan of Reorganization | 10 | 11/03/99 | 2
3(i) | Articles
of Incorporation | 10 | 11/03/99 | 3(i)
3(ii) | Bylaws | 10-K | 3/01/21 | 3(II)
3(iii) | Articles
of Amendment to the Articles of Incorporation | 8-K | 11/13/17 | 3.2
3(iv) | Articles
of Amendment to the Articles of Incorporation | 8-K | 9/9/20 | 3(iv)
3(v) | Statement
of Domestication filed in the State of Idaho | 8-K | 12/28/20 | 3(iv)
3(vi) | Certificate
of Domestication and Articles of Incorporation filed in the State of Florida | 8-K | 12/28/20 | 3(v)
10.1 | Technology
Purchase Agreement between Schlumberger Technology Corporation, Schlumberger Canada Limited, and Schlumberger B.V. And Enviro Voraxial
Technology, Inc. and Florida Precision Aerospace, Inc. dated as of March 13, 2017 (1) | 8-K | 03/15/17 | 10.1
10.2 | Business
Lease Agreement dated December 14, 2018 | 04/01/19 | 10.2
10.3 | Promissory
Note dated May 4, 2020 between Florida Precision Aerospace, Inc. and Bank of America | 8-K | 5/14/20 | 10.1
10.4 | Loan
Authorization and Agreement dated June 23, 2020 | 10-Q | 8/14/20 | 10.2
10.5 | Bill
of Sale and Intellectual Property Agreement and Grant Back License Agreement June 8, 2017 | 10-K | 3/01/21 | 10.5
10.6 | First Amendment
to Business Lease Agreement dated October 28, 2021 | Filed
10.7 | John
A. DiBella Conversion Agreement dated December 30, 2021 | 8-K | 1/07/22 | 10.1
10.8 | Raynard
Veldman Conversion Agreement dated December 30, 2021 | 8-K | 1/07/22 | 10.2
10.9 | Form
of Promissory Note dated January 5, 2022 | 8-K | 1/07/22 | 10.3
14 | Code
of Ethics | 10-K | 04/15/04 | 14
21 | Subsidiaries
of the Registrant | 10 | 11/03/99 | 21
31.1 | Rule 13a-14(a)/15d-4(a)
Certification of Chief Executive Officer | Filed
31.2 | Rule 13a-14(a)/15d-4(a)
Certification of Chief Financial Officer | Filed
32.1 | Section 1350
Certification of Chief Executive Officer, Chief Financial Officer, principal executive officer and principal financial and accounting
officer | Filed
101.INS | XBRL Instance Document | Filed
101.SCH | XBRL Taxonomy Extension Schema Document | Filed
101.CAL | XBRL Taxonomy Calculation Linkbase Document | Filed
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained
in Exhibit 101)
(1) | Exhibits
and/or Schedules have been omitted. The Company hereby agrees to furnish to the Staff of
the Securities and Exchange Commission upon request any omitted information.
ITEM 16. | FORM 10-K SUMMARY.

The Company has elected
not to provide a summary of the information required by this form.

SIGNATURES

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

Enviro Technologies U.S., Inc.
April 15, 2022 | By: | /s/ John A. DiBella
John A. DiBella, President, Chief Executive Officer and Chief Financial Officer

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

INDEX TO FINANCIAL
STATEMENTS ENVIRO TECHNOLOGIES U.S., INC. CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM | F-2
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2021
AND 2020 | F-3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS
ENDED DECEMBER 31, 2021 AND 2020 | F-4
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY) FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 | F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS
ENDED DECEMBER 31, 2021 AND 2020 | F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | F-7
F-1

REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board
of Directors of:

Enviro Technologies U.S., Inc.

Opinion on the Consolidated Financial
Statements

We have audited
the accompanying consolidated balance sheets of Enviro Technologies U.S., Inc. and Subsidiary (the “Company”) as of December
31, 2021 and 2020, and the related consolidated statements of operations, changes in shareholders’ equity (deficiency) and cash
flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as “the consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2021 and 2020 and the results of its operations and its cash flows for each of the two years
ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph –
Going concern

The accompanying
consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
B to the consolidated financial statements, the Company has a working capital deficit, an accumulated deficit and negative cash flows
from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s
plan in regard to these matters are described in Note B of the consolidated financial statements. The consolidated financial statements
do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted
our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. Accordingly, we
express no such opinion.

Our audits included
performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures including examining, on a test basis, evidence regarding
the amounts and disclosures in the consolidated financial statements. Our audits include evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit
matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required
to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements
and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.

/s/ Liggett
& Webb, P.A.

We have served as the Company’s auditor
since 2012.

Boynton
Beach, Florida

April 15, 2022

F- 2

ENVIRO
TECHNOLOGIES U.S., INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS

December
31, 2021 | December
31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents | $ | 11,740 | $ | 336,564
Accounts receivable, net | 8,374 | 1,176
Inventory, net | 114,247 | 113,335
Prepaid expenses | 4,689 | 12,174
Total current assets | 139,050 | 463,249
FIXED ASSETS, NET | 7,325 | 312,468
OTHER ASSETS
Operating lease asset | 153,811 | 200,066
Security deposits | 10,143 | 10,143
Total other assets | 163,954 | 210,209
Total Assets | $ | 310,329 | $ | 985,926
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses | $ | 357,379 | $ | 322,981
Accrued expenses – related party | 777,565 | 706,815
Loans payable, current portion | 113,461 | 65,867
Equipment note payable, current portion | — | 71,812
Operating lease liability, current portion | 50,970 | 46,255
Total current liabilities | 1,299,375 | 1,213,730
LONG-TERM LIABILITIES
Operating lease liability, less current portion | 102,841 | 153,811
Equipment note payable, less current portion | — | 103,586
Loans payable, less current portion | 148,510 | 196,104
Total long-term liabilities | 251,351 | 453,501
Total Liabilities | 1,550,726 | 1,667,231
COMMITMENTS AND CONTINGENCIES (See Note H)
SHAREHOLDERS’ DEFICIENCY
Common stock, $ .001 par value, 250,000,000 shares authorized; 5,570,125 and 4,950,125 shares
issued and outstanding as of December 31, 2021 and December 31, 2020 | 5,571 | 4,951
Additional paid-in capital | 15,390,553 | 15,236,173
Accumulated deficit | ( 16,636,521 | ) | ( 15,922,429 | )
Total shareholders’ deficiency | ( 1,240,397 | ) | ( 681,305 | )
Total liabilities and shareholders’ deficiency | $ | 310,329 | $ | 985,926

The
accompanying notes are an integral part of the consolidated financial statements.

F-3

ENVIRO
TECHNOLOGIES U.S., INC. AND SUBSIDIARY

CONSOLIDATED
STATEMENTS OF OPERATIONS

Years ended December
31,
2021 | 2020
Revenues, net | $ | 107,315 | $ | 79,965
Cost of goods sold | 38,527 | 47,897
Gross profit | 68,788 | 32,068
Costs and Expenses:
Selling, general and administrative | 240,323 | 333,575
Payroll expenses | 451,183 | 536,733
Professional fees | 144,022 | 187,549
Research and development | — | 2,601
Total costs and expenses | 835,528 | 1,060,458
Loss from operations | ( 766,740 | ) | ( 1,028,390 | )
Other income (expenses):
Other income | 7,220 | 8,000
Gain on forgiveness of PPP loan and interest | 75,352 | —
Loss on sale of assets | ( 15,011 | ) | —
Interest expense | ( 14,913 | ) | ( 10,418 | )
Total other income (expenses) | 52,648 | ( 2,418 | )
Net loss before provision for income taxes | ( 714,092 | ) | ( 1,030,808 | )
Provision for income taxes | — | —
Net loss | $ | ( 714,092 | ) | $ | ( 1,030,808 | )
Net loss per share
Basic | $ | ( 0.14 | ) | $ | ( 0.24 | )
Diluted | $ | ( 0.14 | ) | $ | ( 0.24 | )
Weighted average number of common shares
Basic | 4,951,824 | 4,346,815
Diluted | 4,951,824 | 4,346,815

The
accompanying notes are an integral part of the consolidated financial statements.

F-4

ENVIRO TECHNOLOGIES
U.S., INC. AND SUBSIDIARY

CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY)

FOR
THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Common Stock | Additional Paid-In | Accumulated
Shares | Par Value | Capital | Deficit | Total
Balance - December 31, 2019 | 3,578,625 | $ | 3,579 | $ | 15,094,095 | $ | ( 14,891,621 | ) | $ | 206,053
Stock issued for exercise of options in exchange for accrued expenses – related parties and
accounts payable | 1,336,500 | 1,337 | 132,313 | — | 133,650
Stock issued for services to employees | 35,000 | 35 | 9,765 | — | 9,800
Net loss | — | — | — | ( 1,030,808 | ) | ( 1,030,808 | )
Balance - December 31, 2020 | 4,950,125 | $ | 4,951 | $ | 15,236,173 | $ | ( 15,922,429 | ) | $ | ( 681,305 | )
Stock issued in exchange for accrued expenses – related parties | 620,000 | 620 | 154,380 | — | 155,000
Net loss | — | — | — | ( 714,092 | ) | ( 714,092 | )
Balance - December 31, 2021 | 5,570,125 | $ | 5,571 | $ | 15,390,553 | $ | ( 16,636,521 | ) | $ | ( 1,240,397 | )

The
accompanying notes are an integral part of the consolidated financial statements.

F-5

ENVIRO TECHNOLOGIES
U.S., INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS
OF CASH FLOWS

Years Ended December 31,
2021 | 2020
Cash Flows from Operating Activities:
Net loss | $ | ( 714,092 | ) | $ | ( 1,030,808 | )
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation | 15,132 | 45,137
Stock issued for services of consultant | — | 9,800
Provision for bad debt | — | 6,790
Provision for slow moving inventory | — | 8,848
Gain on the forgiveness of PPP loan and interest | ( 75,352 | ) | —
Loss on sale of fixed assets | 15,011 | —
Amortization for operating lease | 46,255 | 42,973
Changes in assets and liabilities:
Accounts receivable | ( 7,198 | ) | 289,789
Inventory | ( 912 | ) | ( 4,199 | )
Prepaid expenses | 7,485 | 8,405
Accounts payable, accrued expenses and deposits | 34,665 | ( 62,011 | )
Accrued expenses – related party | 225,750 | 187,000
Operating lease liability | ( 46,255 | ) | ( 42,973 | )
Net cash used in operating activities | ( 499,511 | ) | ( 541,249 | )
Cash Flows from Investing Activities:
Proceeds on sale of fixed assets | 275,000 | —
Purchase of equipment | — | ( 8,228 | )
Net cash provided by (used in) investing activities | 275,000 | ( 8,228 | )
Cash Flows from Financing Activities:
Loan payable issuance – PPP & EIDL | 75,085 | 261,971
Repayments of Equipment Note Payable | ( 175,398 | ) | ( 50,774 | )
Net cash (used in) provided by financing activities | ( 100,313 | ) | 211,197
Net decrease in cash and cash equivalents | ( 324,824 | ) | ( 338,280 | )
Cash and cash equivalents, beginning
of year | 336,564 | 674,844
Cash and cash equivalents, end of year | $ | 11,740 | $ | 336,564
Supplemental Disclosure:
Cash paid during the year for interest | $ | 6,452 | $ | 10,418
Cash paid during the year for taxes | $ | — | $ | —

Supplemental Disclosure of non-cash investing
and financing activities:

Stocks issued
with exercise of options in exchange for accounts payable | $ | — | $ | 42,000
Stocks issued with exercise
of options for accrued expenses – related parties | $ | — | $ | 91,650
Stocks issued for conversion
of accrued expenses – related parties | $ | 155,000 | $ | —

The accompanying notes
are an integral part of the consolidated financial statements.

F-6

ENVIRO TECHNOLOGIES
U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

NOTE
A - ORGANIZATION AND OPERATIONS

Enviro Technologies U.S., Inc., a Florida
corporation (the “Company”), is a manufacturer and provider of environmental and industrial separation technology. The Company
developed, and now manufactures and sells the V-Inline Separator, a technology that efficiently separates liquid/liquid, liquid/solid
or liquid/liquid/solid fluid streams with distinct specific gravities. Current and potential commercial applications and markets include
mining, utilities, manufacturing, waste-to-energy among other industries. We also, through a Grant Back License with Cameron Solutions,
Inc. (“Cameron”) signed in June 2017, can utilize specific patents that were sold to Schlumberger Canada Limited, a Canadian
entity, and Schlumberger B.V., an entity organized under the laws of the Netherlands (collectively, “Schlumberger”) under Technology
Purchase Agreement for industries outside of oil and gas.

Florida Precision Aerospace, Inc., a Florida
corporation (“FPA”), is the wholly-owned subsidiary of the Company and is used to manufacture precision parts along with the
manufacture, assemble and test the V-Inline Separator. On August 20, 2020, the Company’s shareholders approved a change of domicile
of the Company from Idaho to Florida. On December 28, 2020, the Company received the file stamped Certificate of Domestication and Articles
of Incorporation from the Secretary of State of Florida, which was effective on December 18, 2020, thereby completing the change in domicile
from Idaho to Florida. In connection with the change in domicile from Idaho to Florida, the Company’s name changed to “Enviro
Technologies U.S., Inc.”.

NOTE
B – GOING CONCERN

Since entering into the Technology Purchase
Agreement, Supply Agreement and Grant Back License in June 2017 (see Note H), we have generated limited revenues, significantly less
than we anticipated, under the terms of any of these agreements. The Supply Agreement with Cameron expired in June 2020. As we did not
generate significant revenues from this agreement, we did not pursue Cameron for an extension in its current state. The Company’s
non-compete agreement in the oil and gas industry also expired in June 2020 which allows us to pursue projects in the oil and gas industry.
However, we may continue to work together on a project-by-project basis with Cameron until such time a new agreement is reached, if at
all. The Grant Back License did not expire. There are no assurances that the Grant Back License will ever generate any material ongoing
revenues. We intend to continue to seek opportunities for the V-Inline Separator. Our revenues increased
approximately 34 %
for the year ended December 31, 2021 as compared to the year ended December 31, 2020. We reported a net loss for 2021 of $ 714,092 as compared to a net loss of $ 1,030,808 in 2020. Our ability to increase
our revenues in future periods will depend on a number of factors, many of which are beyond
our control, including our ability to generate sales of the V-Inline Separator, our ability to leverage the Grant Back License to generate
additional revenues, competitive efforts and other general economic trends. There are no assurances we will be able to increase our revenues from 2021 levels or report profitable operations in the future.

At December 31, 2021, we had a working capital deficit of $ 1,160,325 ,
an accumulated deficit of $ 16,636,521 and used $ 499,511 in net cash in our operations during the year ended December 31, 2021. We do not have any
external sources of liquidity. In an effort to conserve our cash resources to sustain our operations until such time as we are able to
significantly increase our revenues, we have reduced employee hours and accrued a portion
of management’s salary. There are no assurances; however, that these efforts will be sufficient to permit us to pay our operating
expenses. In that event, we may be required to scale back or cease operations, sell or liquidate
our assets and possibly seek bankruptcy protection.

As a result of the above, there is substantial
doubt about the ability of the Company to continue as a going concern and the accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. The accompanying consolidated financial statements do not include
any adjustments that may result from the outcome of this uncertainty.

F-7

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

NOTE
C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles
of Consolidation

The consolidated financial statements include
the accounts of the parent company, Enviro Technologies U.S., Inc., and its wholly-owned subsidiary, Florida Precision Aerospace, Inc.
All significant intercompany accounts and transactions have been eliminated.

Estimates

The preparation of consolidated financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates
include the valuation of deferred tax assets, allowance for doubtful accounts, allowance for inventory obsolescence and valuation of
stock-based compensation. Actual results may differ.

Revenue
Recognition

We account for our revenues in accordance
with the Accounting Standard Codification Topic 606, “ Revenue from Contracts with Customers ” and all the related amendments.
This standards core principle is that a company should recognize revenue when it transfers promised goods or services to customers in
an amount that reflects the consideration to which the company expects to receive.

The Company derives its revenue from the
sale of the V-Inline Separators and some high precision manufacturing projects. We have also generated revenues from the sale of the
Voraxial Separator to one customer, Schlumberger, through the Supply Agreement which expired in June 2020.

Revenues that are generated from high precision
manufacturing projects are recognized when we satisfy a performance obligation by transferring control of the promised goods or services
to our customers at a point in time, in an amount specified in the contract with our customer and that reflects the consideration we
expect to be entitled to in exchange for those goods or services. The Company also assesses our customer’s ability and intention
to pay, which is based on a variety of factors including our customer’s historical payment experience and financial condition.

Revenues that are generated from sales of
V-Inline separators, auxiliary equipment and parts and face shields are typically recognized upon shipment. Our standard agreements generally
do not include customer acceptance or post shipment installation provisions. However, if such provisions have been included or there
is an uncertainty about customer order, revenue is deferred until we have evidence of customer order and all terms of the agreement have
been complied with. As of December 31, 2021, and December 31, 2020, respectively, there was $ 0 of deposits from customers.

Accounts
Receivable

Accounts receivable are presented net of
an allowance for doubtful accounts. The company maintains allowances for doubtful accounts for estimated losses. The company reviews
the accounts receivable on a periodic basis and makes general and specific allowance when there is a doubt as to the collectability of
individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including
the age of the balance, customer’s historical payment history, and its current credit-worthiness and current economic trends. Accounts
are written off after exhaustive efforts at collections. At December 31, 2021 and 2020, the Company has $ 7,044 and $ 7,044 in the allowance for doubtful accounts, respectively.

F-8

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

Fair
Value of Instruments

The carrying amounts of the Company's financial
instruments, including cash and cash equivalents, inventory, prepaid expense, accounts payable, accrued expenses and deposits from customers
at December 31, 2021 and 2020, approximate their fair value because of their relatively short-term nature.

ASC 820 “Disclosures about Fair Value
of Financial Instruments,” requires disclosures of information regarding the fair value of certain financial instruments for which
it is practicable to estimate the value. For purpose of this disclosure, the fair value of a financial instrument is the amount at which
the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale of liquidation.

The Company accounts for certain assets
and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring
fair value is observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest
level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1—inputs are based upon unadjusted
quoted prices for identical instruments traded in active markets. We have no Level 1 instruments as of December 31, 2021 and 2020.

Level 2—inputs are based upon quoted
prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active,
and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or
can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models
project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest
rate curves, foreign exchange rates, and forward and spot prices for currencies and commodities. We have no Level 2 instruments as of
December 31, 2021 and 2020.

Level 3—inputs are generally unobservable
and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.
The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.
We have no Level 3 instruments as of December 31, 2021 and 2020.

Cash
and Cash Equivalents

The Company considers all highly liquid
investments with a maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash balances
with various financial institutions. Balances at these institutions may at times exceed the Federal Deposit Insurance Corporate limits.
As of December 31, 2021 and 2020, we have a cash concentration in excess of the FDIC limit
of $ 0 and $ 80,014 ,
respectively.

Inventory

Inventory primarily consists of components,
including raw material and finished parts for the V-Inline Separator and face shields and is priced at lower of cost or net realizable
value. Net realizable value is defined as sales price less cost of completion and disposable and transportation. Inventory may include
units being rented on a short-term basis or components held by third parties in connection with pilot programs as part of the continuing
evaluation by such third parties as to the effectiveness and usefulness of the service to be incorporated into their respective operations.
The third parties do not have a contractual obligation to purchase the equipment. The Company maintains the title and risk of loss. Provisions
have been made to reduce excess or obsolete inventories to their net realizable value. Therefore, these units are included in the inventory
of the Company. As of December 31, 2021, and December 31, 2020:

F-9

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

Schedule of inventory
December 31, 2021 | December 31, 2020
Raw materials | $ | 24,142 | $ | 30,145
Work in process | 16,856 | 10,240
Finished goods | 73,249 | 72,950
Total | $ | 114,247 | $ | 113,335

Inventory amounts are presented net of allowance
for inventory reserves of $ 75,785 and
$ 75,785 as of December
31, 2021 and December 31, 2020 respectively.

Fixed
Assets

Fixed assets are stated at cost less accumulated
depreciation. The cost of maintenance and repairs is expensed to operations as incurred. Depreciation is computed by the straight-line
method over the estimated economic useful life of the assets ( 5 - 10 years). Gains and losses recognized from the sales or disposal of assets is the difference
between the sales price and the recorded cost less accumulated depreciation less costs of disposal.

Net
Income (Loss) Per Share

In accordance with the Accounting Standard
Codification Topic 260, “ Earnings per Share” basic earnings (loss) per share is computed by dividing net income (loss)
by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by
dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during the period.

As of December 31, 2021 and 2020, there
were 10,000 shares issuable upon the exercise of options, respectively. The Company had net losses for
the years ended December 31, 2021 and 2020; therefore, common stock equivalent shares are excluded from the computation of net income
per share if their effect is anti-dilutive.

Income
Taxes

The Company accounts for income taxes
under ASC 740-10-25. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date.

Business
Segments

The Company operates in one segment and
therefore segment information is not presented.

Research
and Development Expenses

Research and development costs, which includes
travel expenses, consulting fees, subcontractors and salaries are expensed as incurred. There was $ 0 and $ 2,601 ,
respectively, in research and development costs during the years ended December 31, 2021 and 2020, respectively.

Leases

The Company accounts for lease in accordance
with ASC Topic 842. Refer to Note I.

F-10

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

Advertising
Costs

Advertising costs are expensed as incurred
and are included in general and administrative expenses. There was $ 1,121 and $ 5,789 in advertising costs during December 31, 2021 and 2020, respectively.

Stock-Based
Compensation

Recent
Accounting Pronouncements

All other newly issued accounting pronouncements,
but not yet effective, have been deemed either immaterial or not applicable.

NOTE
D - RELATED PARTY TRANSACTIONS

For each of the years ended December 31,
2021 and 2020, the Company incurred salary expenses from the Chief Executive Officer of the Company of $ 210,000 and $ 210,000 ,
respectively. During the years ended December 31, 2021 and 2020, $ 151,250 and $ 156,650 ,
respectively, of salary and accrued salary have been paid. Of the $151,250 paid to Mr. DiBella in 2021, $26,250 was paid in cash and
$125,000 was a reduction of his accrued salary for conversion into 500,000 shares of common stock of the Company. Of the $ 156,650 paid to Mr. DiBella in 2020, $ 81,650 was a reduction of his accrued salary in payment for the exercise of options, including some
options of the Company’s employees and a related party. The unpaid balance has been included in accrued expenses- related party.
As of December 31, 2021 and 2020, the accrued salary is $ 723,065 and $ 664,315 ,
respectively.

Effective July 1, 2017, Raynard Veldman,
a member of the Company’s board of directors receives a fee of $ 2,500 per month for consulting services. For the years ended December 31, 2021 and 2020, Raynard
Veldman earned consulting fees of $ 30,000 and $ 30,000 ,
respectively. The unpaid balance has been included in accrued expenses- related party. As of December 31, 2021 and 2020, the accrued
salary is $ 30,500 and $ 30,500 ,
respectively. Of the $30,000 paid to Mr. Veldman in 2021, $30,000 was a reduction of his accrued fees for conversion into 120,000 shares
of common stock of the company.

During the years ended December 31, 2021
and 2020, Raynard Veldman, a member of the Company’s board of directors, earned compensation for being a member of the Company’s
board of directors of $ 12,000 and $ 12,000 ,
respectively. The unpaid balance has been included in accrued expenses- related party. As of December 31, 2021 and 2020, the accrued
compensation is $ 24,000 and $ 12,000 ,
respectively. Mr. John DiBella does not receive compensation for being a member of the Company’s board of directors.

On June 9, 2020, the Company issued 770,000 shares of its common stock to our Chief Executive Officer in connection with the exercise
of a stock option at an exercise price of $ 0.10 .
Mr. DiBella reduced his accrued salary in the amount of $ 77,000 for the exercise of options.

On June 9, 2020, the Company issued 100,000 shares of its common stock to Mr. Veldman in connection with the exercise of a stock option
at an exercise price of $ 0.10 .
Mr. Veldman reduced his accrued consulting and Board of Director fees in the amount of $ 10,000 for the exercise of options.

F-11

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

On June 9, 2020, the Company issued 16,500 shares of its common stock to two employees in connection with the exercise of a stock option
at an exercise price of $ 0.10 .
Mr. DiBella reduced his accrued salary in the amount of $ 1,650 for the exercise of options.

On June 9, 2020, the Company issued 380,000 shares of its common stock to a related party in connection with the exercise of a stock
option at an exercise price of $ 0.10 .
Mr. DiBella reduced his accrued salary in the amount of $ 3,000 for the exercise of options and an outside consultant agreed to reduce her payable in the
amount of $ 35,000 for the exercise of options.

NOTE
E - FIXED ASSETS

Schedule of fixed assets
Fixed assets as of December 31 consists of: | 2021 | 2020
Machinery and equipment | $ | 490,927 | $ | 941,473
Furniture and fixtures | 14,498 | 14,498
Autos and Trucks | — | 5,294
Total | 505,425 | 961,265
Less: accumulated depreciation | ( 498,100 | ) | ( 648,797 | )
Fixed Assets, net | $ | 7,325 | $ | 312,468

Depreciation expense was $ 15,132 and $ 45,137 for the years ended December 31, 2021 and 2020, respectively. The Company sold its CNC machining equipment
for a sales price of $ 275,000 and incurred a loss of $ 15,011 from the sale of equipment. See Note F below.

NOTE
F – EQUIPMENT NOTE PAYABLE

In July 2017, the Company entered into a
financing agreement for the purchase of CNC machining equipment valued at approximately $ 426,000 .
The machining equipment was received in July 2017 and was used for the manufacture of Voraxial Separators under the Supply Agreement
and sales of the V-Inline Separators. Under the terms of the agreement the Company made an initial down payment of $ 85,661 and is required to make monthly payments of $ 6,788 through January 2023. In April 2021, the Company entered into a purchase agreement to sell
its CNC machining equipment for $ 275,000 .
The Company sold the equipment as the utilization of the CNC machining equipment for customer specific projects and the separation equipment
decreased due to the Covid-19 pandemic. The Company can still manufacture the Voraxial and V-Inline Separators and manufacture customer
specific projects with its current manufacturing equipment. As of December 31, 2021 and 2020 the amount owed is $ 0 and $ 175,398 ,
respectively.

Schedule
of future minimum payments
December
31, 2021 | December
31, 2020
Equipment note payable | $ | — | $ | 175,398
Less:
current portion | — | ( 71,812 | )
Long-term
equipment note payable | $ | — | $ | 103,586
F-12

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

NOTE
G – SHAREHOLDERS’ EQUITY

Common Stock

On December 30, 2021, John A. DiBella, the
chief executive officer of the Company, and Raynard Veldman, a member of the Company’s board of directors and consultant to the
Company, entered into conversion agreements with the Company and agreed to accept a portion of their accrued salary and consulting fees,
respectively, in shares common stock of the Company at a price of $ 0.25 per share. Pursuant to the conversion agreements the Company issued an aggregate of 620,000 shares of restricted common stock in satisfaction of an aggregate of $ 155,000 of accrued salary and consulting fees payable to Mr. DiBella and Mr. Veldman. Mr. DiBella
converted $ 125,000 in return for 500,000 shares of restricted common stock. Mr. Veldman converted $ 30,000 in return for 120,000 shares of restricted common stock.

On June 9, 2020, the Company issued to 35,000 shares of its common stock to employees at $0.28 per share, or $ 9,800 ,
for services rendered. The Company valued these common shares based on the fair value at the date of grant.

On June 9, 2020, the Company issued 70,000 shares of its common stock to a consultant in connection with the exercise of a stock option
at an exercise price of $ 0.10 .
The consultant agreed to reduce her payable in the amount of $ 7,000 for the exercise of options.

On June 9, 2020, the Company issued 16,500 shares of its common stock to two employees in connection with the exercise of a stock option
at an exercise price of $ 0.10 .
Mr. DiBella agreed reduce his accrued salary in the amount of $ 1,650 for the exercise of options.

On June 9, 2020, the Company issued 380,000 shares of its common stock to a related party in connection with the exercise of a stock
option at an exercise price of $ 0.10 .
Mr. DiBella agreed reduce his accrued salary in the amount of $ 3,000 for the exercise of options and an outside consultant agreed to reduce her payable in the
amount of $ 35,000 for the exercise of options.

Options

The Company accounts for stock-based instruments
issued to employees for services in accordance with ASC 718 “Compensation – Stock Compensation.” ASC 718 requires companies
to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to
employees. The value of the portion of an employee award that is ultimately expected to vest is recognized as an expense over the requisite
service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with
the measurement and recognition criteria of ASC 505-50, “Equity-Based Payments to Non-Employees.” The Company estimates the
fair value of stock options by using the Black-Scholes option-pricing model.

F-13

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

The Black-Scholes option-pricing model was
developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the
Company’s stock options and warrants have characteristics different from those of its traded stock, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of such stock options. The risk-free interest rate is based upon quoted market yields
for United States Treasury debt securities with a term similar to the expected term. The expected dividend yield is based upon the Company’s
history of having never issued a dividend and management’s current expectation of future action surrounding dividends. Expected
volatility was based on historical data for the trading of our stock on the open market. The expected lives for such grants were based
on the simplified method for employees and officers.

On June 9, 2020, our Chief
Executive Officer exercised 770,000 stock options at an exercise price of $ 0.10 per share. Mr. DiBella agreed to reduce his accrued salary in the amount of $ 77,000 for the exercise of options.

On June 9, 2020, Mr. Veldman exercised 100,000 stock options at an exercise price of $ 0.10 per share. Mr. Veldman agreed to reduce his accrued consulting fees in the amount of $ 10,000 for the exercise of options.

On June 9, 2020, a consultant exercised 70,000 stock options at an exercise price of $ 0.10 per share. The consultant agreed to reduce the payables due in the amount of $ 7,000 for the exercise of options. In addition, a related party exercised 380,000 stock options at an exercise price of $ 0.10 per share. The consultant agreed to reduce the payables due in the amount of $ 35,000 for the exercise of options for the related party. In addition, Mr. DiBella reduced his accrued
salary in the amount of $ 3,000 for the exercise of options for the related party.

On June 9, 2020, two employees exercised 16,500 stock options at an exercise price of $ 0.10 per share. Mr. DiBella reduced his accrued salary in the amount of $ 1,650 for the exercise of options for these three employees.

Information with respect to options outstanding
and exercisable at December 31, 2021 and 2020 is as follows:

Schedule of options
Number Outstanding | Range of Exercise Price | Number Exercisable
Balance, December 31, 2019 | 1,346,500 | $ | 0.10 | 1,346,500
Issued | — | — | —
Expired | — | — | —
Exercised | ( 1,336,500 | ) | 0.10 | ( 1,336,500 | )
Forfeited | — | — | —
Balance, December 31, 2020 | 10,000 | $ | 0.10 | 10,000
Issued | — | — | —
Expired | — | —
Exercised | — | —
Forfeited | — | —
Balance, December 31, 2021 | 10,000 | $ | 0.10 | 10,000
F-14

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

The following table summarizes
information about the stock options outstanding at December 31, 2021 and 2020:

Schedule of stock options outstanding
Number Outstanding at December 31, 2021 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number Exercisable at December 31, 2021 | Weighted Average Exercise Price
10,000 | 1.88 | $ | 0.10 | 10,000 | $ | 0.10
Number Outstanding at December 31, 2020 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number Exercisable at December 31, 2020 | Weighted Average Exercise Price
10,000 | 2.88 | $ | 0.10 | 10,000 | $ | 0.10

The aggregate intrinsic value represents
the excess amount over the exercise price optionees would have received if all the options have been exercised on the last business day
of the period indicated based on the Company’s closing stock price for such day. The aggregate intrinsic value as of December 31,
2021 is $0 because the exercise price is higher than the closing stock price at December 31, 2021.

Reverse Split

On August 27, 2020 the Company filed Articles
of Amendment to its Articles of Incorporation which, on the effective date of September 10, 2020 (the “Effective Date”):

· | effected a ten for one (10:1) reverse
stock split of our outstanding common stock (“Reverse Stock Split”); and
· | eliminated
the existing class of preferred stock and create a new class of blank check preferred stock consisting of 5,000,000 shares.

These actions were approved by our shareholders
at our 2020 Annual Meeting held on August 20, 2020.

As a result of the Reverse Stock Split,
on the Effective Date each 10 shares of our common stock issued and outstanding immediately prior to the Effective Date became one share
of our common stock on the Effective Date. No fractional shares of common stock were issued to any shareholder in connection with the
Reverse Stock Split and all fractional shares which might otherwise be issuable as a result of the Reverse Stock Split were rounded up
to the nearest whole share. On the Effective Date, each certificate representing shares of pre-Reverse Stock Split common stock was deemed
to represent one-tenth of a share of our post-Reverse Stock Split common stock, subject to rounding for fractional shares.

The Reverse Stock Split also affected the
Company’s outstanding stock options which resulted in the underlying shares of such instruments being reduced and exercise price
being increased proportionally to the Reverse Stock Split ratio. All shares and per share data have been retroactively adjusted for all
periods presented to reflect the effects of the Reverse Stock Split.

NOTE
H - COMMITMENTS AND CONTINGENCIES

SBA and PPP Loans

On May 4, 2020, FPA received a loan (the
“PPP Loan”) from Bank of America, N.A. in the aggregate amount of $ 111,971 ,
pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March
27, 2020.

F-15

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

The PPP Loan, which was in the form of a
Note dated May
4, 2020 issued by FPA, matures on May
4, 2022 and bears interest at a rate of 1 %
per annum, payable monthly commencing on November
6, 2020 . The Note may be prepaid by FPA at any time prior to maturity with no prepayment
penalties. Funds from the PPP Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments,
rent, utilities, and interest on other debt obligations incurred before February 15, 2020. FPA believes it used the entire PPP Loan amount
for qualifying expenses. Under the terms of the PPP Loan, certain amounts of the PPP Loan may be forgiven if they are used for qualifying
expenses as described in the CARES Act. We applied for forgiveness of the PPP Loan in accordance with the terms of the CARES Act. We
are waiting for an approval from the bank, but there are no assurances that the full amount will be forgiven.

On April 5, 2021,
FPA received a loan (the “2021 PPP Loan”) from Cross River Bank. in the aggregate amount of $ 75,085 ,
pursuant to the PPP under the CARES Act. The 2021 PPP Loan, which was in the form of a promissory note dated April
5, 2021 issued by FPA, has a 60 month term and matures on April
5, 2026 and bears interest at a rate of 1.00 %
per annum. The note may be prepaid by FPA at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only
be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other
debt obligations. FPA intends to use the entire 2021 PPP Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts
of the 2021 PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. Loan payments are deferred
for borrowers who apply for loan forgiveness until SBA remits the borrowers loan forgiveness amount to the lender. We have been forgiven
for the full amount of the PPP Loan in accordance with the terms of the CARES Act. In accounting for the terms of the PPP Loan, the Company
is guided by ASC 470 Debt, and ASC 450-30 Gain contingency. Accordingly, the Company derecognized the PPP Loan liability and related
interest of $ 75,352 and
recorded it as Other Income, as the forgiveness was certain.

On May 5, 2020, FPA also received an $ 8,000 grant from the U.S. Small Business Administration. The Company recognized the grant as other
income during the year ended December 31, 2020.

On June 23, 2020, FPA executed the standard
loan documents required for securing a loan (the “EIDL Loan”) from the SBA under its Economic Injury Disaster Loan (“EIDL”)
assistance program in light of the impact of the Covid-19 pandemic on the Company’s business. Pursuant to that certain Loan
Authorization and Agreement, the principal amount of the EIDL Loan is up to $ 150,000 ,
with proceeds to be used for working capital purposes. On July 16, 2020, the Company requested $ 150,000 in disbursements under the EIDL Loan which were received on July 20, 2020. Interest accrues
at the rate of 3.75 %
per annum. Installment
payments, including principal and interest, are due monthly beginning June 23, 2021 (12 months from the date of the SBA note) in the
amount of $731. The balance of principal and interest is payable 30 years from the date of the SBA Note. In
connection therewith, FPA executed (i) a note for the benefit of the SBA, which contains customary events of default and (ii) a Security
Agreement, granting the SBA a security interest in all tangible and intangible personal property of FPA, which also contains customary
events of default.

On July 2, 2021 and July 7, 2021 we received
an SBA Grant in the amount of $ 5,000 and $ 2,000 respectively, under the COVID-19 Economic Injury Disaster Loan (EIDL) program. These grants
do not need to be repaid and recognized as Other Income on our consolidated statements of operations.

Schedule of loans payables
December 31, 2021 | December 31, 2020
Loans payable | $ | 261,971 | $ | 261,971
Less: current portion | ( 113,461 | ) | ( 65,867 )
Long-term loans payable | $ | 148,510 | $ | 196,104
F-16

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

Future
minimum loans payable at December 31, 2021 are as follows:

Schedule of future minimum loans payable
2022 | 127,267
2023 | 8,772
2024 | 8,772
2025 | 8,772
2026 | 8,772
2027 and thereafter | 206,290
Future Minimum Note Payable Payments | 368,645
Less Amount Representing Interest | ( 106,674 | )
Present Value of Minimum Note Payable Payments | 261,971
Less Current Portion | ( 113,461 | )
Long-Term Obligations under Note Payable | $ | 148,510

Litigation

On or about October 23, 2017, a claim was
filed in the 17th Judicial Circuit Court in and for Broward County in Fort Lauderdale, Florida, by the plaintiff, Industrial and Oilfield
Procurement Services, LLC, against our company. The case involves an alleged breach of contract between the parties relating to the purchase
and sale of a Voraxial unit in 2015. The plaintiff has demanded a refund and damages. In an effort to avoid the continued costs and expenses
of litigation, the parties entered into a settlement agreement on October 7, 2021 whereby the Company paid the plaintiff $ 15,000 and
the parties agreed to settle and release each party of disputed claims between the parties, which settlement is not to be construed as
an admission of liability on the part of either party. On November 3, 2021, the plaintiff filed a Notice of Voluntary Dismissal
with Prejudice with the 17th Judicial Circuit Court in and for Broward County whereby the plaintiff agreed to dismiss the entirety of
the action with prejudice.

Sale of Intellectual Property

On June 8, 2017, the Company and FPA, our
wholly owned subsidiary, closed the transactions contemplated by the Technology Purchase Agreement dated March 13, 2017 with Schlumberger
Technology Corporation, a Texas corporation, Schlumberger Canada Limited, a Canadian entity, and Schlumberger B.V., an entity organized
under the laws of the Netherlands (collectively, “Schlumberger”). As part of the agreement, Schlumberger granted us a non-exclusive,
worldwide, royalty-free licenses (the “Grant Back Licenses”), to make, use, sell, offer for sale, and import products and processes
embodying the Purchase Intellectual Property outside the oil and gas market.

For a period of three years following the
closing of the Technology Purchase Agreement, which expired in June 2020, the Company and Mr. Veldman and Mr. Di Bella have agreed to
not participate or cause participation in the oil-and-gas market in relation to phase or constituent sensing or separation which is defined
as, liquid-liquid, liquid-solid or liquid-gas separation and gas or liquid sensing, including all product lines and services related
thereto and including the Voraxial product line and services. As the term has expired, the Company may review opportunities in the oil
and gas industry.

NOTE
I - LEASE

In October 2021, the Company entered into
a first amendment to lease agreement for a three-year 3 lease renewal for an office and manufacturing facility located at 821 NW 57 th Place,
Fort Lauderdale, FL 33309. The lease is $ 4,839 per month, which includes common area maintenance, taxes and insurance and expires in September 2024. The
lease has a one-time renewal option for three 3 years and an increased base rent of 3 %.
The Company has the option to terminate the lease with three months’ notice. The Company accounts for lease in accordance with ASC
Topic 842.

Operating right of use asset and operating
lease liability are recognized at the lease commencement date. Operating lease liability represents the present value of lease payments
not yet paid. Operating right of use asset represent our right to use an underlying asset and are based upon the operating lease liability
adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets.
The Company used our incremental borrowing rate to determine the present value of lease payments not yet paid.

F-17

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

Supplemental balance sheet information related
to leases was as follows:

Schedule of supplemental balance sheet information
related to leases
Operating Leases | Classification | December 31, 2021 | December
31, 2020
Right-of-use assets | Operating lease assets | $ | 153,811 | $ | 200,066
Current lease liability | Current operating lease liability | 50,970 | 46,255
Non-current lease liability | Long-term operating lease liability | 102,841 | 153,811
Total lease liabilities | $ | 153,811 | $ | 200,066

Lease term and discount rate were as follows:

Schedule of lease term and discount rate
December 31, 2021 | December 31, 2020
Weighted average remaining lease term (years) | 2.75 | 3.75
Weighted average discount rate | 6.75 % | 6.75 %

The components of lease cost were as follows:

Schedule of components of lease cost
For the Year Ended December 31
2021 | 2020
Operating lease cost | $ | 58,353 | $ | 58,065
Variable lease cost
(1) | $ | 22,848 | $ | 18,128
Total lease cost | $ | 81,201 | $ | 76,193
(1) | Variable lease cost primarily relates to common
area maintenance, property taxes and insurance on leased real estate.
Schedule of maturities of lease liabilities
Maturities of lease liabilities were as follows as of December
31, 2021: | Operating Leases
2022 | 59,795
2023 | 59,795
2024 | 49,829
Total lease payments | 169,419
Less: imputed interest | ( 15,608 | )
Present value of lease liabilities | $ | 153,811

NOTE
J – MAJOR CUSTOMERS

For the year ended December 31, 2021, two
customers accounted for approximately 54 %
and 22 %
of total revenues, respectively. For the year ended December 31, 2020, two customers accounted for approximately 20 %
and 10 %
of total revenues, respectively. As of December 31, 2021, two customers represented 52 %
and 38 %,
of total accounts receivables. As of December 31, 2020, three customers represented 68 %, 17 %
and 15 %,
respectively, of total accounts receivables.

F-18

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

NOTE
K – INCOME TAX

The significant components of the deferred
tax asset at December 31, 2021 and 2020 were as follows:

Schedule of components of deferred tax asset
For the Years Ended December
31
2021 | 2020
Statutory rate applied to income (loss) before income
taxes | $ | ( 180,987 | ) | $ | ( 261,258 | )
Increase (decrease) in income taxes results from:
Change in tax estimate | 7,439 | ( 47,965 )
Non-deductible expense | 20,872 | 4,511
Change in valuation allowance | 152,676 | 304,712
Income tax expense (benefit) | $ | — | $ | —

The difference between income tax expense
computed by applying the federal statutory corporate tax rate and provision for actual income tax is as follows:

Schedule of effective income tax rate reconciliation
For the Years Ended December
31
2021 | 2020
Income tax expense (benefit) at U.S. statutory rate of
34% | 21.00 | % | 21.00 | %
Income tax expense (benefit) - State | 4.35 | % | 4.35 | %
Change in tax estimate | ( 1.05 ) | % | 4.65 | %
Non-deductible expense | ( 2.92 ) | % | ( 0.44 ) | %
Change in valuation allowance | ( 21.38 ) | % | ( 29.56 ) | %
Income tax expense (benefit) | — | —

Deferred income taxes
result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes.
The effects of temporary differences that gave rise to deferred tax assets are as follows:

Summary of deferred tax liability
For the Years Ended December
31
Deferred tax assets: | 2021 | 2020
Provision for inventory reserve | $ | 19,208 | $ | 19,208
Operating loss carryforwards | 3,178,643 | 3,025,967
Gross deferred tax assets | 3,197,851 | 3,045,175
Valuation allowance | ( 3,197,851 | ) | ( 3,045,175 | )
Net deferred income tax asset | $ | — | $ | —

Increase in the deferred income tax asset
is attributable to the estimated deferred income tax benefit arising from operating loss carry forward. The change in valuation allowance
for the years ended December 31, 2021 and 2020 was an increase of $ 152,676 and $ 304,712 ,
respectively.

The Company has made a 100% valuation allowance
of the deferred income tax asset at December 31, 2021, as it is not expected that the deferred tax assets will be realized. The Company
has a net operating loss carryforward of approximately $ 12,540,000 available to offset future taxable income through 2037. The Company has a net operating loss
carryforward of approximately $ 2,480,000 ,
which can be carried forward indefinitely subject to limitation.

The Company’s federal income tax returns
for 2018, 2019, 2020 and 2021 remain subject to examination by the Internal Revenue Services and state tax authorities.

F-19

ENVIRO
TECHNOLOGIES U.S., INC. and Subsidiary Notes to Consolidated Financial Statements December 31, 2021 and 2020

NOTE
L – SUBSEQUENT EVENTS

On January 5, 2022,
John A. DiBella, the Company’s chief executive officer, advanced the Company $ 30,000 pursuant to the terms of a 4 % unsecured promissory
note. The note is payable on December 31, 2022 and accrues interest at a rate of 4 % per annum. In addition, from February 15, 2022
through April 7, 2022, Mr. DiBella has advanced the Company an additional $ 29,000 under the same terms as the note.

On April 12, 2022,
Ray Veldman, member of the Company’s Board of Directors, advanced the Company $ 20,000 pursuant to the terms of a 4 % unsecured promissory
note. The note is payable on December 31, 2022 and accrues interest at a rate of 4 % per annum.

F-20

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