| **SECURITIES AND EXCHANGE COMMISSION****Washington, D.C.  20549** |
|------------------------------------------------------------------------|

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**FORM 10-QSB**

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| (Mark One)           [X]       | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                    |
|----------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|
|                                                                                  | For the quarterly period ended **December 31, 2002** OR                                                    |
|           [   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] |
|                                                         | For the transition period from __________ to __________                                                    |
|                                                         | Commission File No. 0-11582                                                                                |

****

| **ADVANCED CELLULAR TECHNOLOGY, INC.**                                                                                                                         |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (Exact Name of Registrant as Specified in its Charter)                                                                                                         |
| **            California            ** | **          ** | **      94-2915849      ** |
| (State or other jurisdiction of incorporation or organization)                                                                                                 | **          ** | (I.R.S. Employer Identification Number) |

****

| **2755 Campus Drive, Suite 155                    San Mateo, CA94403                    ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (Address of principal executive offices, including zip code)                                                                                                                                                                                                                                       |
| **                    ****(650)377-4381                    **                              |
| (Registrant’s telephone number, including area code)                                                                                                                                                                                                                                         |

       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 thepreceding 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 **     **    No  X  

       Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

| Class                      |       | Outstanding at December 31, 2002 |
|----------------------------|--------------------------------|----------------------------------|
|                            |       |                                  |
| Common stock, no par value |       | 29,158,809                       |

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| **ADVANCED CELLULAR TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) TABLE OF CONTENTS** |
|----------------------------------------------------------------------------------------|

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|                                    |                                                                                                                                                                                                                             | **PAGE** |
|------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                    |                                                                                                                                                                                                                             |          |
| **PART I.**                        | **FINANCIAL INFORMATION**                                                                                                                                                                                                   |          |
| **     ** | **     **                                                                                                                                                                                          |          |
| Item 1.                            | Financial Statements                                                                                                                                                                                                        |          |
| **     ** | **     **                                                                                                                                                                                          |          |
|                               | Balance Sheet – December 31, 2002..................................................................                                                                                                                   | 3        |
| **     ** | **     **                                                                                                                                                                                          |          |
|                                    | Statements of Operations – Three and Six Months Ended December 31, 2002 and 2001, and Cumulative Operations During the Development Stage............................................................................. | 4        |
| **     ** | **     **                                                                                                                                                                                          |          |
|                                    | Statements of Cash Flows – Six Months Ended December 31, 2002 and 2001, and Cumulative Operations During the Development Stage.............................................................................           | 5        |
| **     ** | **     **                                                                                                                                                                                          |          |
|                                    | Notes to Financial Statements..............................................................................                                                                                                                 | 6 - 10   |
| **     ** | **     **                                                                                                                                                                                          |          |
| Item 2.                            | Plan of Operation................................................................................................                                                                                                           | 11 - 13  |
| **     ** | **     **                                                                                                                                                                                          |          |
| Item 3.                            | Controls and Procedures.....................................................................................                                                                                                                | 14       |
| **     ** | **     **                                                                                                                                                                                          |          |
| **PART II.**                       | **OTHER INFORMATION**                                                                                                                                                                                                       |          |
| **     ** | **     **                                                                                                                                                                                          |          |
| Item 1.                            | Legal Proceedings...............................................................................................                                                                                                            | 15       |
| **     ** | **     **                                                                                                                                                                                          |          |
| Item 2.                            | Changes in Securities and Use of Proceeds..........................................................                                                                                                                         | 15       |
| **     ** | **     **                                                                                                                                                                                          |          |
| Item 3.                            | Default Upon Senior Securities............................................................................                                                                                                                  | 16       |
| **     ** | **     **                                                                                                                                                                                          |          |
| Item 4.                            | Submission of Matters to a Vote of Security Holders...........................................                                                                                                                              | 16       |
| **     ** | **     **                                                                                                                                                                                          |          |
| Item 5.                            | Other Information................................................................................................                                                                                                           | 16       |
| **     ** | **     **                                                                                                                                                                                          |          |
| Item 6.                            | Exhibits and Reports on Form 8-K......................................................................                                                                                                                      | 16       |
| **     ** | **     **                                                                                                                                                                                          |          |
|                                    | Signatures...........................................................................................................                                                                                                       | 18       |

**PART I.          FINANCIAL INFORMATION**

**ITEM 1.  FINANCIAL STATEMENTS**

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**ADVANCED CELLULAR TECHNOLOGY, INC.(A DEVELOPMENT STAGE COMPANY)**

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**BALANCE SHEET**

### ****

| ******ASSETS**                                                                                                                                                   | **      December 31,              2002               **(Unaudited) |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                  |                                                                                                                                                                                                                                         |
| **Assets:**                                                                                                                                                      |                                                                                                                                                                                                                                         |
| Installment contracts receivable                                                                                                                                 |   $               72,467                                                                                                                           |
| Deferred Charges                                                                                                                                                 |                    18,594                                                                                                                |
| **                    Total assets**                         |   $               91,061                                                                                                                           |
|                                                                                                                                                                  |                                                                                                                                                                                                                                         |
| **LIABILITIES AND STOCKHOLDERS’ DEFICIENCY**                                                                                                               |                                                                                                                                                                                                                                         |
|                                                                                                                                                                  |                                                                                                                                                                                                                                         |
| **Liabilities:**                                                                                                                                                 |                                                                                                                                                                                                                                         |
| Bank overdraft                                                                                                                                                   |   $                        5                                                                          |
| Accounts payable                                                                                                                                                 |                    34,359                                                                                                                |
| Loans holding                                                                                                                                                    |                    72,467                                                                                                                |
| Notes payable – related party                                                                                                                              |                    25,916                                                                                                                |
| Notes payable                                                                                                                                                    |                    12,000                                                                                                                |
| Accrued liabilities                                                                                                                                              |                    32,512                                                                                                                |
| **                    Total liabilities**                    |                  177,259                                                                                                                           |
|                                                                                                                                                                  |                                                                                                                                                                                                                                         |
| **Stockholders’ deficiency:**                                                                                                                              |                                                                                                                                                                                                                                         |
| Common stock, no par value, 100,000,000 shares                                                                                                                   |                                                                                                                                                                                                                                         |
|   authorized; 29,158,809 shares issued and outstanding                                                                                                 |               2,526,378                                                                                                                                           |
| Accumulated deficit                                                                                                                                              |              (2,561,233)                                                                                                                                               |
| Deficit accumulated in the development stage                                                                                                                     |                   (51,343)                                                                                                                    |
| **                    Total stockholders’ deficiency** |                   (86,198)                                                                                                                    |
|                                                                                                                                                                  |                                                                                                                                                                                                                                         |
| **          Total liabilities and stockholders’ deficiency**                                             |   $               91,061                                                                                                                           |

** **

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**See Accompanying Notes to Financial Statements.**

| ****
**ADVANCED CELLULAR TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY)****STATEMENTS OF OPERATIONS (Unaudited)** |
|-------------------------------------------------------------------------------------------------------------------|

|                                           |                                                                                                                                  |
|------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|
|                                                |                                                                                                                                  |  |  |  | **Cumulative   Operations   During The   Development       Stage        ** |   |
|                                                |                                                                                                                                  |  |  |  | ** ** |
|                                                | **Three Months     Ended          December 31, 2002**      |  | **Six Months       Ended          December 31, 2002** |  | ** ** |
|                                                |                                                                                                                                  |  | ** ** |
|                                                |                                                                                                                                  |  | ** ** |
|                                                |                                                                                                                                  |  |  |  |  |   |
| **Revenue:**                                   |                                                                                                                                  |  |  |  |  |   |
|   Interest and other finance revenue | $                    -       |  | $                    - |  | $                    - |   |
|                                                |                                                                                                                                  |  |  |  |  |   |
| **Expenses:**                                  |                                                                                                                                  |  |  |  |  |   |
|   General and administrative         |             26,397                                                   |  |             36,106 |  |           (51,405) |   |
|                                                |                                                                                                                                  |  |  |  |  |   |
| **Operating Loss:**                            | (26,397)                                                                                                                         |  | (36,106) |  | (51,405) |   |
|                                                |                                                                                                                                  |  |  |  |  |   |
| **Interest Expense:**                          | (360)                                                                                                                            |  | (720) |  | (16,560) |   |
|                                                |                                                                                                                                  |  |  |  |  |   |
| **Loss from continuing operations:**           | (26,757)                                                                                                                         |  | (36,826) |  | (67,965) |   |
|                                                |                                                                                                                                  |  |  |  |  |   |
| **Income from discontinued operations:**       | -                                                                                                                                |  | - |  | 16,622 |   |
|                                                |                                                                                                                                  |  |  |  |  |   |
| **Net Loss**                                   | $        (26,757)                                                                        |  | $        (36,826) |  | $        (51,343) |   |
|                                                |                                                                                                                                  |  |  |  |  |   |
| **Net Loss per share**, basic and diluted      | $                     - |  | $                     - |  | $                     - |   |
|                                                |                                                                                                                                  |  |  |  |  |   |
| **Weighted Average Shares**                    |                                                                                                                                  |  |  |  |  |   |
| **  Outstanding,**basic and diluted  | 29,158,809                                                                                                                       |  | 29,158,809 |  | 29,158,809 |   |
|                                                |                                                                                                                                  |  |  |  |  |   |
|                                                | **Three Months    Ended         December 31, 2001**                  |  | **Six Months       Ended          December 31, 2001** |  |  |   |
|                                                |                                                                                                                                  |  |  |   |
|                                                |                                                                                                                                  |  |  |   |
| **Revenue:**                                   |                                                                                                                                  |  |  |  |  |   |
|   Interest and other finance revenue | $                    -       |  | $                    - |  |  |   |
|                                                |                                                                                                                                  |  |  |  |  |   |
| **Expenses:**                                  |                                                                                                                                  |  |  |  |  |   |
|   General and administrative         | 200                                                                                                                              |  | 400 |  |  |   |
| **Operating Loss:**                            | (200)                                                                                                                            |  | (400) |  |  |   |
| **Interest Expense**                           | (360)                                                                                                                            |  | (720) |  |  |   |
| **Income from discontinued operations:**       | -                                                                                                                                |  | - |  |  |   |
| **Net Loss**                                   | $             (560)                                             |  | $          (1,120) |  |  |   |
| **Net Loss per share**, basic and diluted      | $                     - |  | $                     - |  |  |   |
| **Weighted Average Shares**                    |                                                                                                                                  |  |  |  |  |   |
| **  Outstanding,**basic and diluted  | 29,158,809                                                                                                                       |  | 29,158,809 |  |  |   |

**See Accompanying Notes to Financial Statements.**

| **ADVANCED CELLULAR TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS (Unaudited)** |
|-----------------------------------------------------------------------------------------------------------|

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|                                                           |                                                                                                                     |  | **Cumulative Operations During The Development     Stage     **   |
|-----------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|--|---------------------------------------------------------------------------------------------------------------------|
|                                                           |                                                                                                                     |
|                                                           |                                                                                                                     |
|                                                           | **Six Months Ended December 31,****   **                                                             |
|                                                           | **         2002      **                  |  | **      2001      **                                    |  |
| Cash flow from operating activities                       |                                                                                                                     |  |                                                                                                                     |  |  |
| Net Loss from continuing operations                       | $       (36,826)                                                                 |  | $          (1,120)                                                |  | $       (67,965) |
|                                                           |                                                                                                                     |  |                                                                                                                     |  |  |
| Adjustments to Reconcile Net Loss To Net Cash Provided    |                                                                                                                     |  |                                                                                                                     |  |  |
|   By (Used In) Operating Activities             |                                                                                                                     |  |                                                                                                                     |  |  |
| Changes in Assets and Liabilities                         |                                                                                                                     |  |                                                                                                                     |  |  |
|   Increase in accounts payable                  | 28,779                                                                                                              |  | -                                                                                                                   |  | 34,359 |
|   Increase in accrued liabilities               | 720                                                                                                                 |  | 1,120                                                                                                               |  | 25,295 |
|                                                           |                                                                                                                     |  |                                                                                                                     |  |  |
| Net cash provided by (used in) continuing operations      | (7,327)                                                                                                             |  | -                                                                                                                   |  | (8,311) |
| Net cash provided by (used in) discontinued operations    | -                                                                                                                   |  | -                                                                                                                   |  | - |
| Net Cash Flows Provided By (Used In) Operating Activities |          (7,327)                                                       |  |                    - |  |          (8,311) |
|                                                           |                                                                                                                     |  |                                                                                                                     |  |  |
| Cash flow from investing activities                       |                    - |  |                    - |  |                    - |
|                                                           |                                                                                                                     |  |                                                                                                                     |  |  |
| Cash flow from financing activities                       |                                                                                                                     |  |                                                                                                                     |  |  |
|   Bank overdraft                                | 5                                                                                                                   |  |                                                                                                                     |  | 5 |
|   Debt issue costs – net                  | (18,594)                                                                                                            |  | -                                                                                                                   |  | (18,594) |
|   Advances from related party                   |           25,916                                                  |  |                  -   |  |           25,916 |
| Net cash flows provided by financing activities           | 7,327                                                                                                               |  |                                                                                                                     |  | 7,327 |
|                                                           |                                                                                                                     |  |                                                                                                                     |  |  |
| Increase (Decrease) in Cash and Cash Equivalents          |                    - |  |                    - |  |             (984) |
| Cash and Cash Equivalents, Beginning of Period            | -                                                                                                                   |  | -                                                                                                                   |  | 984 |
| Cash and Cash Equivalents, End of Period                  | $                 -            |  | $                 -            |  | $                 - |
|                                                           |                                                                                                                     |  |                                                                                                                     |  |  |
| Supplemental information on non-cash transactions:        |                                                                                                                     |  |                                                                                                                     |  |  |
| Funded installment contracts receivable                   | $        72,467                                                             |  | -                                                                                                                   |  | $        72,467 |
| Rescission of Serra                                       | -                                                                                                                   |  | -                                                                                                                   |  | $      139,879 |
| Forgiveness of debt-treated as a capital contribution     | -                                                                                                                   |  | -                                                                                                                   |  | $          8,700 |
| Write off accounts payable-discontinued operations        | -                                                                                                                   |  | -                                                                                                                   |  | $        16,622 |
| Cash paid for interest                                    | -                                                                                                                   |  | -                                                                                                                   |  | $                  - |
| Cash paid for income taxes                                |                    - |  |                    - |  | $          1,231 |

**See Accompanying Notes to Financial Statements.**

| **ADVANCED CELLULAR TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY)**

**NOTES TO FINANCIAL STATEMENTS (Unaudited)** |
|---------------------------------------------------------------------------------------------------------------------|

****____________________________________________________________________________________________
| **1.   ** | **Statement of Information Furnished****:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                          | The accompanying unaudited financial statements of Advanced Cellular Technology, Inc. ("the Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and theinstructions to Form 10-QSB.  Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (which include onlynormal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for all periods presented have been made.                          |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                          | Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses.  Actual results may differ from these estimates.The results of operations for the three and six month period ended December 31, 2002 are not necessarily indicative of the operating results that may be expected for the entire year ending June 30, 2003.  These financial statements should be readin conjunction with theManagement's Discussion and Analysis and financial statements and notes theretoas of and for the year ended June 30, 2002, filed with the Company's Annual Report on Form 10-KSB. |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                          | Certain accounts from prior years have been reclassified to conform to the current period's presentation.  These changes had no effect on previously reported results of operations or total stockholders’equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **2.   ** | **Organization and Summary of Significant Accounting Policies:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                          | *Organization*– The Company was formed as a Transcontinental Printing Corporation in 1981 to develop and market cellular mobile telephone control units.  The present name ofAdvanced Cellular Technology, Inc. was adopted in 1983.                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                          | In September 1988, the Company acquired all of the issued and outstanding shares of Serra Communications, Inc. (“Serra”), a reseller of PBX communication equipment for 27,533,848 shares of the Company’scommon stock, as approved by a majority of the Company’s shareholders.  The operations of Serra and the Company have been consolidated in 1988.  In October 1989, this transaction was rescinded (see Note 9).                                                                                                                                                                                                                                   |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                          | The Company substantially ceased operations during 1991 and has been inactive since July 1, 1991.  The Company, therefore, became a development stage enterprise and losses since that date have been recorded as deficitaccumulated during the development stage.  Activities of the Company prior to this date have been reflected as discontinued operations.                                                                                                                                                                                                                                                                                                                   |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                          | Subsequent to June 30, 2002, the Company has raised additional funds, primarily through a private placement of notes and has commenced limited lending activities of non-prime consumer installment contracts (see Notes 3 and10).                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                          | *Property and Equipment**–*Property and equipment are stated at cost.  Depreciation is computed using the straight-line method.  When assets areretired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations as incurred; significant renewals and betterments are capitalized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|                          | *Revenue Recognition*-- Interest income from installment sales contracts is recognized using the interest method.  Loan origination service fees and certain direct costs, if applicable,are capitalized and recognized as an adjustment of the yield of the related loan using the interest method.  Accrual of interest income and accretion of unearned purchase discounts, if applicable, continue until installment contracts are collected in full,become 60 days delinquent, or are charged-off.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                          | The portion of the discount arising from purchases of installment contracts receivable which is not considered to be a nonrefundable reserve for credit losses is recorded as an unearned discount.  Unearned discounts aredeferred and accreted to income using the interest method over the contractual life of the related receivables.  The Company periodically reassesses the amount of contract purchase discount accreted to interest income to reflect changes in delinquency andcharge-off experience.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|                          | *Deferred charges***– Deferred charges represent direct, incremental costs of issuing the related security and are amortized on the straight-line basis overthe life of the security.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|                          | *Loss Per Share*– Basic earnings or loss per share is calculated by dividing the loss available to common stockholders (numerator) by the weighted average number of common sharesoutstanding (denominator) for the periods presented.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.  There were no options outstanding orother potential common stock outstanding for the periods presented.  All per share and per share information are adjusted retroactively to reflect stock splits and changes in par value, when applicable.  All earnings or loss per share amounts in thefinancial statements are basic loss per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **3.   ** | **Continued Operations and Going Concern****:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                          | The Company is in the development stage and has no revenue producing assets nor cash flow from operations. Management intends to begin operations in December 2002 as a specialty finance company, focusing on higher credit riskloans, generally financing purchases of used vehicles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                          | The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  Continuation of the Companyis dependent upon raising additional capital and ultimately, achieving net profits and positive cash flow from operations.  To meet these objectives, management is actively seeking additional capital (see Note 10) and potential merger candidates, however, theultimate success of these efforts are unknown.  During 2003, the Company has raised $350,000 pursuant to a private placement of unsecured convertible notes.  In connection with this offering, the Company paid the placement agent approximately $52,000, whichwill be amortized into expense over the period the notes are outstanding.  The notes have an interest rate of 9.25% and are convertible into common stock at $0.005 per share, which management estimates is the current market value of the shares.  During thequarter ended December 31, 2002, the Company received advances of approximately $26,000 from affiliated entities.  These advances were repaid from proceeds of the note offering.  The Company has negotiated a $1,000,000 line of credit with a bank.  Theterms of this line of credit are interest at the lesser of 11% or 7% over prime.  Advances under the line are subject to 80% of the Company’s eligible receivables. |
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|                          | Should the Company be unable to successfully accomplish the above objectives, it will not be able to continue operations.  The financial statements do not include any adjustments should the Company be unable to continueoperations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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| **4.   ** | **Discontinued Operations****:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|                          | Prior to July 1, 1991, the Company was a manufacturer of and reseller of cellular phones throughout the United States.  These operations substantially ceased during fiscal 1991.  In 1996, the Company wrote-offpayables of $16,622 related to discontinued operations as a result of exceeding the California statute of limitations in connection with such liabilities.  The Company has not received any claims for payment on these past payables and believes it is remote thatany future claims will be made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **5.   ** | **Notes Payable****:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                          | Notes payable consists of a 12% convertible debenture dated May 1987, which is in default.  The note is convertible to common stock at $.05 per share.  No formal claims for payment have been made on this outstandingdebt.  Accrued interest on this debt is approximately $19,800.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **6.   ** | **Commitments and Contingences****:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                          | *SEC Filings*– The Company is delinquent in various filings with the Securities and Exchange Commission (SEC).  The Company is in the process of bringing such delinquent filingscurrent.  Such filings, including the accompanying financial statements, will be subject to review and comment by the SEC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                          | *License Fee*– The Company has entered into an informal license agreement with Gateway Credit Holdings, Inc. (“Gateway”), a company with a common officer and shareholder, topay Gateway a fee of $150 per funded receivable contract for use of Gateway’s computer systems and software in qualifying prospects.  This license agreement is subject to change based on the execution of a formal agreement between the companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **7.   ** | **Stockholders’ Equity****:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                          | *Investment Banking Agreement*– In November 2002, the Company entered into an agreement with an investment banking firm (“firm”) to provide corporate financing activities tothe Company.  During February 2003, the firm received 1,000,000 shares of the Company’s common stock. Of these shares, 158,809 came directly from the Company’s President and 841,191 were issued by the Company. Under this agreement, the Company paid anon-refundable advisory fee of $25,000 to the investment banking firm.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                          | *Equity Transactions**–*During fiscal 1990, the Company rescinded the merger with Serra (see Note 9).  As a result, 23,466,848 shares of common stockwere returned to the Company.  As of June 30, 1990, the father of an officer/director contributed a non-interest bearing note payable of $8,700 to the Company.  This amount is reflected as a capital contribution.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                          | *Stock Option Plan*– In 1984, the stockholders approved the Company’s 1984 Stock Option Plan (the “Plan”).  Under the Plan, options to purchase up to 2,269,000shares of the Company’s common stock can be granted to employees, officers, directors, and consultants of the Company and of its affiliates.  The Plan provided that the option price be the fair market value of the stock at the date of grant as determinedby the Board of Directors.  Options granted become exercisable and expire as determined by the Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                          | The following is a summary of the transactions under the Plan:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

|                                                  |  | Number of Shares Under    Options             |  | Weighted Average Option Price   Per Share      |
|--------------------------------------------------|--|---------------------------------------------------------------------------------------|--|------------------------------------------------------------------------------|
|                                                  |  | 1990                                                                                  |  | 1990                                                                         |
|                                                  |  |                                                                                       |  |                                                                              |
| **Balance,** beginning of year                   |  | 375,000                                                                               |  | $          .025            |
|      Options granted    |  |         –                               |  |                                                                              |
|      Options terminated |  | (375,000)                                                                             |  |             .025 |
|      Options exercised  |  |              – |  |                                                                              |
|                                                  |  |                                                                                       |  |                                                                              |
| **Balance,** end of year                         |  |              – |  |                                                                              |

|                           | These options are exercisable one year after the date of grant and expire five years after the date of the grant.  All options as of June 30, 1990 expired without exercise upon termination of the employee, who held theoption.  The plan expired in 1994.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **8.   **  | **Income Taxes**:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                           | As of June 30, 2002, the Company has net operating loss carryforwards available to offset future Federal taxable income of approximately $305,000, which expire at various dates through 2021.  The availability ofthose losses to offset future income may be limited if the Company successfully completes a merger or otherwise issues significant additional common shares pursuant to Internal Revenue Code Section 382.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                           | The difference between the expected tax rate and the zero benefit recorded is a result of the valuation allowance offsetting the expected tax benefit in all years.  The Company has a deferred tax asset for operating losscarryforwards of approximately $104,000 as of June 30, 2002, which has been fully reserved due to uncertainty of utilization.  The change in the valuation allowances is solely caused by the net loss of each year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **9.   **  | **Serra Acquisition/Rescission**:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                           | On September 30, 1988, the Company acquired all of the issued and outstanding shares of Serra Communications, Inc. (“Serra”), a reseller of PBX communication equipment for 27,533,848 shares of the Company’scommon stock.  This exchange was approved by a majority of the Company’s shareholders at its 1988 annual meeting on September 29, 1988.  The operations of Serra had been consolidated with the Company’s as of October 1, 1988.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                           | In October 1989, the Company rescinded the Serra merger due to prior problems with Serra’s management. Law enforcement agencies brought criminal action against a former officer of Serra for purchasing stolen merchandiseduring a period prior to the merger with the Company.  Company’s current management understands this former officer of Serra was subsequently convicted.  The Company’s management was not aware of this problem at the time of the merger.  TheCompany, along with appropriate authorities, have investigated the activities of Serra during the period it was owned by the Company and determined that these prior illegal transactions had no effect on the financial results reported by the Company.  When theCompany discovered the problem, they entered into an agreement to rescind the merger with Serra.  The net assets of Serra distributed to the Serra shareholders upon the dissolution had a cost basis of $141,000, which approximated the fair market value of theshares received.  The Serra shareholders were allowed to retain 4,067,000 shares based on the earnings of Serra, while the two companies operated together, which were retained by the Company. |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **10.   ** | **Subsequent Events**:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                           | The Company has executed non-binding letters of intent to acquire loan portfolios of Gateway and Epic Financial Services (“Epic”).  An officer of Epic has subsequently become an officer of the Company. These letters of intent are subject to various conditions, including execution of formal agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                           | Upon refiling with the State of California on payment of past state taxes, the Company was only obligated to pay a portion of the total accrued amount, which will result in approximately $6,000 being recorded as other incomein fiscal 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                           | In January 2003, the Company raised $135,000 pursuant to a private placement of unsecured convertible notes.  In connection with this offering, the Company paid Brookstreet Securities Corporation(“Brookstreet”) approximately $20,000, which will be amortized into expense over the period the notes are outstanding.  The notes have an interest rate of 9.25% and are due November 1, 2003.  The notes are convertible into common stock at$.005 per share, which management estimates is the current market value of the shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                           | In August 2003, the Company raised an additional $215,000 pursuant to a private placement of unsecured convertible notes.  In connection with this offering, the Company paid Brookstreet approximately $32,250 which will beamortized into expense over the period the notes are outstanding.  The notes have an interest rate of 9.25% and are due May 1, 2004.  The notes are convertible into common stock at $.005 per share, which management estimates is the current market value ofthe shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                           | Subject to a shareholder vote, the Company intends to change its name to Auto Underwriters of America, Inc., do a reverse stock split of 100 to 1, increase the authorized capital and change the domicile of the corporation fromCalifornia to Colorado.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

**ITEM 2.          PLAN OF OPERATION**

#### **Cautionary Statement Regarding Forward Looking Information**

       This form 10-QSB for the quarter ended December 31, 2002 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of theSecurities Exchange Act of 1934, including statements regarding, among other items, growth strategies, anticipated trends in the Company’s business and future results of operation, market conditions in the automobile finance industry and the impact ofgovernmental regulation. These forward-looking statements are based largely on its expectations and are subject to a number of risks and uncertainties, many of which are beyond the Company’s control. Actual results could differ materially from theseforward-looking statements as a result of, among other things:

| •       | The creditworthiness of contract obligors;                                                 |
|--------------------------------------------|--------------------------------------------------------------------------------------------|
| •       | Economic factors affecting delinquencies;                                                  |
| •       | The Company’s ability to retain and attract experienced and knowledgeable personnel; |
| •       | The Company’s ability to purchase installment sales contacts; and                    |
| •       | The Company’s ability to compete in the consumer finance industry.                   |

       In addition, the words “believe,” “may,” “will,” “estimate,” “continue,” “ anticipate,” “intend,”“expect,” and similar expressions, as they relate to the Company, its business or its management, are intended to identify forward-looking statements.

       The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date ofthis Form 10-QSB. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this Form 10-QSB may not occur and actual results could differ materially from those anticipated or implied in the forward-lookingstatements.

# **Overview**

       Advanced Cellular Technology, Inc.is a publicly held company that was previously engaged in the business of developing, assembling, marketing and sellingcellular mobile telephones and peripheral products.  For all practical purposes, the Company ceased operations in December 1990 due to extensive competition in the wireless communication industry and lack of capital to fund continued operations. The Company iscurrently reorganizing and instituting new management headed by the Company’s original founder, Dean Antonis.  Once reorganized, the Company intends to become a non-prime, automobile finance company that will use advanced software, including the internet,to engage in the purchasing and servicing of non-prime installment sales contracts (“Installment Contracts”) originated by automobile dealers in the sale of new and used automobiles.  The Company will acquire directly or through intermediariesInstallment Contracts originated by automobile dealers in connection with their sale of new and used automobiles, vans, SUVs and light duty trucks to borrowers with limited credit histories or past credit problems (“Non-prime Consumers”).  To achievean acceptable rate of return and provide adequate protection from excessive credit risks, Installment Contracts will be purchased from dealers at a discount to the remaining principal balance.

        As part of the Company’s reorganization, the Company will seek additional financing from public and private sources.  To facilitate this financing, the Companybelieves it is essential to regain its public status and obtain a listing on a recognized trading exchange.  Accordingly it is filing annual and other reports as are required by the Securities and Exchange Act of 1934.  In addition, the Company intends tohold an annual meeting of shareholders in the upcoming fiscal year to approve the election of directors,change its name to Auto Underwriters of America, Inc., change the domicile of the corporation from California to Colorado,increase the authorized capital of the Company and effectuate a reverse stock split.

#### **Plan of Operation**

       The Company’s goal is to become a leading lender engaged in the purchasing and servicing of Non-prime Consumer Installment Contracts.  To help the Company accomplish thisgoal, it intends to consummate several transactions in the next several months.  The Company has entered into non-binding letters of intent with two other non-prime automobile finance companies whereby the Company will purchase the loan portfolios of thosecompanies.  Specifically, the Company intends to enter into an agreement with Epic Financial Services (“Epic”) to purchase Epic’s non-prime automobile loan portfolio, which the Company values at $3.7 million, in exchange for the Company’sCommon Stock and cash.  It is estimated that the Company will issue to Epic shares of Common Stock representing approximately 38.9% of the Company’s outstanding Common Stock as consideration.  In connection with this proposed transaction, WilliamKellagher, the current President and co-founder of Epic, became the Vice President of the Company in October 2002.  Additionally, the Company has executed a non-binding letter of intent with Gateway Credit Holdings, Inc. (“Gateway”), a related partyalso engaged in the non-prime automobile finance industry.  Gateway has developed proprietary software, called AutoUnderwriter.com, that allows an automobile dealer or borrower to input various fields of information into an online financing application, conductsthe credit screening process, and provides an answer to the applicant within thirty seconds of the application’s submittal.  The non-binding letter of intent provides for the Company to purchase Gateway’s software applications and existing loanportfolio in exchange for the Company’s Common Stock and cash.  It is estimated that the Company will issue to Gateway shares of Common Stock representing approximately 38.9% of the Company’s outstanding Common Stock as consideration.  TheCompany values the software at $300,000 and the loan portfolio at $2.5 million.  Prior to the consummation of a definitive agreement with Gateway, the Company will use AutoUnderwriter.com and pay Gateway an estimated fee of $150 per funded contract.

       AutoUnderwriter.com, Gateway’s proprietary software, allows an automobile dealer or borrower to input various fields of information into an online financing application, conductsthe credit screening process, and provides an answer to the applicant within thirty seconds of the application’s submittal.

       The Company believes that its to be developed website should provide the following benefits:

|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •       | *Instant Credit Decisions*.  The Company’s website should provide dealers and consumers with online credit decisions within thirty seconds after an online application is submitted. After the online decision is made, the Company will verify the loan documentation sent by the dealer and ensure that the loan and the borrower satisfy the Company’s internal criteria for financing.  The Company’s verification process should normallybe completed within three days of the receipt of the loan documentation.  Management believes that the speed at which dealers and consumers can receive a credit decision for the financing of a loan will encourage dealers and consumers to use the website and willultimately result in more financing opportunities.          |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| •       | *Automatic Deal Structures*.  Dealers will have the option of (i) entering financing deals that they already structured and the Company will give the dealer a decision on whether the Companywill finance the deal, or (ii) the Company will process the application and provide the dealer an approval with the maximum contract limits that will enable the Company to purchase the contract.                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| •       | *Decisions 24 hours a day/7days a week/365 days a year*.  The Company’s website will allow for applications to be submitted 24 hours a day, 7 days a week.  Many auto sales take placein the evenings and on the weekends when financial institutions are closed.  Many finance companies are only open Monday through Friday from 9am to 5pm.  The Company’s website will provide instant decisions during these peak evening and weekend hours,even though such hours are outside normal business hours.  This instant decision process should help increase dealer sales and help reduce dealer “roll-backs” which occur when a dealer finances a vehicle and is later forced to reclaim the vehiclebecause the dealer is unable to sell the financing structure. |

       The Company intends to provide extensive product and pricing information that it hopes will lead to increased customer satisfaction.  As the Company grows and implements itsbusiness model it intends that credit officers and loan administrators will be employed to provide telephone and email support to dealers and consumers. 

       The Company plans to undertake the collection process for all accounts contractually delinquent, and subsequently undertake all repossession functions.  TheCompany’s servicing activities will include (i) monitoring installment contracts and collateral, (ii) accounting for and posting all payments received, (iii) responding to customer inquiries, (iv) taking all action to maintain the security interest granted inthe financed vehicle, (v) investigating delinquencies and communicating with the borrowers to obtain timely payment, and (vi) pursuing deficiencies in installment contacts.

       At the time of a purchase of a financed vehicle, the Company notifies the borrower that the Company has purchased the financing contract and will direct the borrower how to makepayments.  The Company will also undertake the collection functions.

       Other than the activity described in this report, including the information disclosed in the notes to the financial statements and Part II of this report, the Company has engaged invery little business activity and has not hired any employees. The Company estimates that it can satisfy its cash requirements in the next twelve (12) months through revenues from future customer accounts, a bank line of credit, and the proceeds from the offering ofunsecured notes to accredited investors.

**ITEM 3.          CONTROLS AND PROCEDURES**

       The Company maintains a system of controls and procedures designed to provide reasonable assurance as to the reliability of the financial statements and other disclosures included inthis report, as well as to safeguard assets from unauthorized use or disposition.  The Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures as defined in Exchange Act Rule 13a-15 under supervision and with theparticipation of its principal executive officer and principal financial officer, as of August 31, 2003.  Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosurecontrols and procedures are effective in timely alerting him to material information required to be included in the Company’s periodic Securities and Exchange Commission filings.  No significant changes were made to the Company’s internal controls orother factors that could significantly affect these controls subsequent to the date of their evaluation.  The design of any future system of controls and procedures is based in part upon certain assumptions about the likelihood of future events.  There canbe no assurance that any design will succeed in achieving its stated goals under all potential future conditions regardless of how remote.

**PART II.         OTHER INFORMATION**

| **ITEM 1.    ** | **LEGAL PROCEEDINGS.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                          | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| **ITEM 2.    ** | **CHANGES IN SECURITIES AND USE OF PROCEEDS.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|                                          | The Company did not sell any equity securities during the quarter ended December 31, 2002.  However, in January 2003 and August 2003, the Company offered and sold 9.25% unsecured convertible promissory notes (the“Notes”) pursuant to a Private Placement Memorandum dated November 20, 2002 and a Supplement dated May 30, 2003.  The Company sold a total of $350,000 worth of Notes to seventeen (17) accredited investors.  The Notes were offered on a“best efforts” basis on behalf of the Company by Brookstreet Securities Corporation, a NASD licensed broker-dealer (“Brookstreet”).  Brookstreet received a sales commission of ten percent (10%) and a non-accountable expense allowance offive percent (5%).  The offering was made in reliance upon Section 4(2) of the Securities Act of 1933, as amended, and Regulation D and Rule 506 promulgated thereunder.  No general or public solicitation or advertising was employed in theoffering.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                          | The Notes are an unsecured general obligation of the Company, limited in aggregate principal amount to $350,000.  The Notes issued pursuant to the Memorandum dated November 20, 2002 mature on November 1, 2003 and theNotes issued pursuant to the Supplement dated May 30, 2003 mature on May 1, 2004.  The Notes bear interest at 9.25% per annum from the date of issuance, payable semi-annually on May 1, 2003 and November 1, 2003 or November 1, 2003 and May 1, 2004, dependingupon the issuance date, to the persons in whose names such Notes are issued.  Interest on the Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months.  To the extent lawful, any installment of interest on the Notes whichis not paid when due will accrue interest at the lesser of 18%, compounded quarterly, or the highest lawful rate of interest from the due date until paid.  At any time prior to maturity, any Noteholder has the option to convert all or part of the unpaidprincipal balance due on the Note into that number of shares of Common Stock of the Company equal to all or such part of the unpaid principal balance of the Note divided by half a cent ($0.005) per share of Common Stock, any such fractional shares to be paid incash.  Interest due on the Notes is not convertible into Common Stock of the Company.  To exercise the option, a Noteholder must surrender the Note to the Company, accompanied by written notice of Noteholder’s intention to convert the Note into CommonStock, which notice shall set forth the principal amount of the Note, if not the entire unpaid principal balance, to be converted into Common Stock.  Within ten (10) business days of the Company’s receipt of the notice and the Noteholder’s surrenderof the Note, the Company will deliver to the Noteholder, shares of Common Stock in the Noteholder’s name. |
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|                                          | The Notes are redeemable for cash at any time at the option of the Company, in whole or in part, upon not less than 30 days nor more than 60 days notice to each Noteholder without prepayment premium or penalty.  Noticewill be mailed to all Noteholders setting forth (i) the redemption date, (ii) the redemption price including the amount of accrued and unpaid interest to be paid upon such redemption, (iii) a statement that the Notes must be delivered to the Company, and (v) astatement that interest on the Notes, or portion thereof being redeemed, ceases to accrue on and after the redemption date.  In the case of notice to the holder of any Note to be redeemed in part, a new Note or Notes in principal amount equal to the unredeemedportion of such Note will be issued. In the event of partial redemption of the Notes, the Notes to be redeemed in whole or in part will be selected on a pro rata basis, or in such other manner as the Company deems appropriate and fair.  The Notes may be redeemedin multiples of $1,000 only.  Any Noteholder, upon receipt of the Company’s notice of redemption, may elect to convert the Note into shares of the Company’s Common Stock as described above.  In the event of a reverse stock-split or other form ofre-capitalization which effects the number of shares outstanding, all shares outstanding and Notes convertible into shares of Common Stock will be adjusted proportionally to any such stock-split or re-capitalization without further action by the holder or theCompany.                                                                                                                                                                                                                                                                                                                                                                                |
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|                                          | In addition, in February 2003, the Company issued a total of 841,191 shares of its Common Stock to Brookstreet Securities Corporation pursuant to an investment banking agreement between Brookstreet and the Company datedNovember 4, 2002.  The shares were issued as partial consideration for Brookstreet’s corporate financing activities, including the sale of the Notes described above.  The issuance was made in reliance upon Section 4(2) of the Securities Act of1933, as amended, and related state private offering exemptions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| **ITEM 3.    ** | **DEFAULT UPON SENIOR SECURITIES.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|                                          | The Company is currently in default on two 12% convertible debentures dated May 1987.  The notes are convertible to common stock at $0.05 per share.  Accrued interest expense related to this debt is approximately$19,800.  No formal claims for payment have been made on this outstanding debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| **ITEM 4.    ** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|                                          | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| **ITEM 5.    ** | **OTHER INFORMATION.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|                                          | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| **ITEM 6.    ** | **EXHIBITS AND REPORTS ON FORM 8-K.** |
|------------------------------------------|---------------------------------------|
|                                          |                                       |

| (a)                                                                                                                                                                                                         | Exhibits                                                                                      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                           |                                                                                               |
|                                                                                                                                                                                                                                           |                                                                      |
| 31.1                                                                                                                                                                                                                                      | Principal Executive Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002 |
|                                                                                                                                                                                                                                           |                                                                      |
| 31.2                                                                                                                                                                                                                                      | Principal Financial Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002 |
|                                                                                                                                                                                                                                           |                                                                      |
| 32.1                                                                                                                                                                                                                                      | Principal Executive Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002 |
|                                                                                                                                                                                                                                           |                                                                      |
| 32.2                                                                                                                                                                                                                                      | Principal Financial Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002 |
|                                                                                                                                                                                                                                           |                                                                      |
| (b)      Reports on Form 8-K                                                                                                                                                                                |
|                                                                                                                                                                                                                  |                                                                      |
| No reports on Form 8-K were filed during the quarter ended December 31, 2002.  However, reports on Form 8-K were filed on June 13, 2003 and July 1, 2003 reporting under Item 4, Change in Registrant’s CertifyingAccountants. |

**SIGNATURES**

****

       Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

|                                                                              | **ADVANCED CELLULAR TECHNOLOGY, INC.**                                                                                                                                                                         |
|------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                |                                                                                                                                                                                  |
| Date:   September 5, 2003       | By: /s/ DEAN ANTONIS                                |
|                                                                              |      Dean Antonis                                                                                                                                                                     |
|                                                                              |      President and Treasurer                                                                                                                                                          |