Environmental Tectonics Corporation ("ETC" or the "Company") today announced that on July 17, 2007, it received a letter from the American Stock Exchange ("AMEX") that the Company was not in compliance with Sections 134 and 1101 of the AMEX Company Guide which requires timely filing with AMEX of all documents required to be filed with the Securities and Exchange Commission. As the Company disclosed in its Form 12b-25 filed on July 9, 2007, the Company's Form 10-Q ("10-Q") for the fiscal quarter ended May 25, 2007 was not able to be filed by July 9, 2007. The Company has also not been able to file its 10-Q within the 5-day extension period permitted by Rule 12b-25. The failure to file the 10-Q by July 16, 2007 has resulted in the non-compliance determination with Sections 134 and 1101 of the AMEX Company Guide.

The non-compliance with Sections 134 and 1101 of the AMEX Company Guide makes the Company's common stock subject to being delisted from the American Stock Exchange. In accordance with the procedures of the American Stock Exchange, the Company on July 16, 2007, published a press release noting its delay in the filing of its 10-Q and also announced preliminary results for the fiscal first quarter of fiscal 2008, which ended on May 25, 2007. The release of this information has allowed the Company's stock to continue to be traded, subject to additional AMEX Company Guide requirements.

The Company is required to submit a plan to the American Stock Exchange by August 16, 2007 advising the American Stock Exchange of the actions that it intends to take to bring the Company into compliance with Sections 134 and 1101 of the AMEX Company guide by January 17, 2008. The Company intends to submit a plan by such date. There can be no assurance that the American Stock Exchange will accept the Company's plan for compliance or, if accepted, that the plan will be implemented by January 17, 2008.

An indicator will be added to the Company's trading symbol noting the Company's non-compliance with Sections 134 and 1101 of the AMEX Company Guide until such time as the Company regains compliance with the applicable listing standards.

As previously disclosed in the Company's Annual Report on Form 10-K for the year ended February 23, 2007, in May 2003, the Company had filed a certified claim with the Department of the Navy (the "Government") seeking costs totaling in excess of $5.0 million in connection with a contract for submarine rescue decompression chambers. As of February 23, 2007, the Company had recorded $3.0 million in claims receivable for this claim. The Company had also previously disclosed, in a Current Report on Form 8-K dated June 28, 2007, that on June 14, 2007, the Government had amended its Answer to the Company's claim to add counterclaims. On June 27, 2007, Environmental Tectonics Corporation and the Government filed a Joint Motion to Dismiss with prejudice all of the Company's claims against the Government in connection with this contract. The Joint Motion to Dismiss was granted on June 28, 2007.

The Company has reached a tentative settlement, subject to necessary governmental approvals, regarding the Government's counterclaims, whereby the Company will pay to the Government $3.3 million and transfer the submarine rescue decompression chambers to the Government, at which time the Company will have no further obligations or claims under this contract. The approval process may take up to 90 days. There can be no assurance that such settlement will be finalized or approved. In the event that the settlement is not approved, the litigation regarding the Government's counterclaims will continue.

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