UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20529

                                   FORM 10-KSB

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

                     For the Fiscal Year Ended June 30, 2000

                          Commission File No. 000-30486

                   ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as specified in its charter)

             FLORIDA                                     95-4743438
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or organization)

               19200 Von Karman Ave., Suite 500, Irvine, CA 92612
               --------------------------------------------------
                    (Address of principal executive offices)

                                 (949) 622-5566
                         -------------------------------
                         (Registrant's telephone number)

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

                   Title of each class to be registered: None

          Securities registered pursuant to section 12(g) of the Act:

        Title of each class to be registered: Common Stock, No Par Value

                             Name of exchange: None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.
<PAGE>

The aggregate  market value as of September 30, 2000 of the voting common equity
held by non-affiliates is $22,518,429.

              APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                    PROCEEDINGS DURING PRECEDING FIVE YEARS

Indicate by checkmark whether the Registrant has filed all documents and reports
to be filed by Section 12, 13 or 15(d) of the  Securities  Exchange  Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.

                               YES ____   NO ____

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock , as of the latest  practicable  date.  As of  September  30, 2000,
there were  82,197,280  shares of the Company's no par value common stock issued
and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

None.

This  Form  10-KSB  contains   "forward-looking   statements"  relating  to  the
Registrant  which  represent the  Registrant's  current  expectations or beliefs
including,  but not limited to, statements concerning  Registrant's  operations,
performance,  financial  condition and growth. For this purpose,  any statements
contained in this Form 10-KSB that are not  statements  of  historical  fact are
forward-looking  statements.  Without  limiting the generality of the foregoing,
words  such  as  "may",   "anticipation",   "intend",  "could",  "estimate",  or
"continue"  or the  negative or other  comparable  terminology  are  intended to
identify  forward-looking  statements.  These statements by their nature involve
substantial  risks and  uncertainties,  such as  credit  losses,  dependence  on
management and key personnel and  variability of quarterly  results,  ability of
Registrant to continue its growth strategy and competition, certain of which are
beyond  the  Registrant's  control.  Should  one  or  more  of  these  risks  or
uncertainties  materialize or should the underlying assumptions prove incorrect,
actual outcomes and results could differ  materially from those indicated in the
forward-looking statements.


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<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

Organization and Business History

Advanced  Communications  Technologies,   Inc.  ("ACT"  or  the  "Company")  was
incorporated on April 30, 1998. The Company was inactive from April 1998 to June
1998 except for the  issuance of founders'  shares.  The Company owns the entire
rights and interests for the region of continental North and South America, to a
development  project  called  Universal  Wide  Spectrum  Cellular  which will be
marketed  under the name  "SpectruCell".  The rights and  interests are licensed
from  the  Company's  Australian  affiliate,  Advanced  Communications  Pty Ltd.
("ACT-Australia"). The Company's fiscal year end is June 30.

On  April  7,  1999,  Media  Forum   International,   Inc.  ("MFI"),  a  Florida
corporation,  acquired all of the outstanding stock of ACT. The merger agreement
stipulated  that MFI issue to the  shareholders  of the  Company  nine shares of
MFI's common stock for every one share held by the Company's shareholders.  As a
result of the merger, the shareholders of the Company received 60,224,227 shares
and became  shareholders  of  approximately  90% of MFI.  Pursuant to the merger
agreement,  MFI was the surviving  entity but  subsequently  changed its name to
Advanced Communications Technologies, Inc.

Upon  completion of the merger with MFI, the Company  changed its trading symbol
and began trading on the  Over-The-Counter  Bulletin Board  maintained by Nasdaq
under the symbol  "ADVC." On January 4, 1999,  the NASD  advised  that all OTCBB
companies would be required to become  "reporting  companies" in accordance with
the rules and  regulations  of the  Securities  and  Exchange  Commission  or be
subject to deletion from the OTCBB.  The NASD provided a phase in schedule based
on each company's  trading symbol on January 4, 1999. Since the Company's symbol
on January  4, 1999 was MFMI,  the  Company's  stock was  subject  to  delisting
effective February 10, 2000 if it had not become reporting. On January 31, 2000,
the  Company  acquired  Smart  Investments.com,  Inc.  ("SICI")  through a stock
exchange  with SICI's sole  shareholder.  Immediately  upon  completion  of that
acquisition, the Company elected successor issuer status in accordance with Rule
12g-3 promulgated under the Securities Act of 1934, as amended, and consequently
became a "reporting company" in compliance with the NASD's requirements.

On July 20, 1999 Advanced Global  Communications,  Inc. ("AGC") was incorporated
in the State of Florida as a  wholly-owned  subsidiary  of the Company.  AGC was
formed  as the  operational  arm  of  the  Company  for  all  telecommunications
operations  and network  development  and is the holding  company for all future
planned acquisitions of other switching and  telecommunications  companies.  The
Company  through AGC, plans to  aggressively  pursue the  acquisition of smaller
telecommunications  enterprises  which  specialize  in  providing  international
origination  and  termination  telephone  services via


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<PAGE>

ATM switching and VoIP.  Presently,  AGC has established an  international  long
distance telephone service connection from the U.S. to Pakistan.

On November 10, 1999, the Company's wholly-owned subsidiary, AGC entered into an
agreement (the "World Agreement") with the shareholders of World IP Incorporated
("World") and its wholly-owned foreign subsidiaries Sur Comunicaciones,  S.A. (A
Chilean Corporation) and Acinel, S.A. (An Argentinean Corporation),  hereinafter
the "World  Group",  to acquire a 51%  controlling  interest in the World Group.
Under  the  terms  of the  World  Agreement,  500,000  shares  of the  Company's
restricted  common stock plus $95,000 in cash was  exchanged for 1,020 shares of
stock  representing 51% of the then issued and outstanding  shares of World. The
500,000  shares of  restricted  common stock were valued at the trading price on
the closing date and together with the cash consideration resulted in a purchase
price of $470,000.

The World Group provides  wholesale  international  telephone  services from the
U.S. to Chile and Argentina.

On October 4, 2000, the Company  notified  World's  management and  shareholders
that it intends to rescind the World  Agreement  because the Company was unable,
after repeated requests, to obtain from World's management financial records and
audited financial statements. Consequently, the Company's management deemed that
it was in its best  interest to  unilaterally  rescind the World  Agreement.  On
October 6, 2000,  the Company  filed suit in the  Circuit  Court in and for Palm
Beach  County,  Florida  against  the  World  Group  and  its  shareholders  for
rescission of the World Agreement and for monetary damages  resulting from World
and its management's breach of the World Agreement.

On April 5,  2000 the  Company  entered  into a Stock  Purchase  Agreement  (the
"Agreement")  with Advanced  Communications  Technologies  (Australia)  Pty Ltd.
("ACT-Australia").  Under the  Agreement,  the Company  will  receive 20% of the
outstanding  shares of  ACT-Australia  in exchange for  5,000,000  shares of the
Company's Common Stock and $7,500,000 payable in installments.

On July 24, 2000, the Company formed Australon USA, Inc., a Delaware Corporation
owned 50% by the Company and 50% by Australon  Enterprises  Pty.,  Ltd.,  an 80%
owned subsidiary of ACT-Australia,  for the purpose of marketing and selling the
Australon suite of products in the U.S., Canada and South America.

Industry Background

Growth of the Wireless Telecom Industry

The  wireless  telecom  industry  is one of the most  rapidly  growing  business
sectors  in the  world  today,  driven  by the  dramatic  increase  in  wireless
telephone  usage, as well as strong demand for wireless  Internet and other data
services.  Since 1992,  wireless  has been the  fastest-growing  telecom  market
sector, according to Forrester Research.  International Data Corporation expects
that by 2003, the U.S.  wireless  subscriber base


                                                                               4
<PAGE>

will grow to over 185 million,  generating revenues in excess of $68 billion. In
April 1999,  Dataquest  estimated that the number of users of wireless  handsets
worldwide  will  grow to over 500  million  by 2002.  The  demand  for  wireless
Internet  access and other data  services is  accelerating  the  adoption of new
technologies  such as  those  embodied  in the  emerging  third-generation  (3G)
standard.  High speed fiber networks are being coupled with  broadband  wireless
technologies  to deliver  enhanced  telecom  capabilities  and  features  to new
customers and markets.  According to Dataquest in February  1999, the market for
broadband  wireless  access  services  in North  America  alone is  expected  to
generate $7.8 billion in revenue by 2003.

Wireless carriers must continuously upgrade their networks with new technologies
and  expand  into new  geographic  regions  in order to remain  competitive  and
satisfy the demand for seamless wireless service. Additionally, new carriers are
entering  the market as a result of  deregulation,  the issuance of new licenses
and the demand for new services,  fueling the development of new networks.  As a
result,  carriers  are  deploying  new network  equipment  both in the U.S.  and
internationally.  In April 1999,  Dataquest  estimated that  worldwide  sales of
wireless  telecom  equipment will reach $31.8 billion in the calendar year 1999.
New  technologies,  such as broadband  wireless,  are helping to fuel demand for
more advanced wireless equipment. In February 1999, Dataquest estimated that the
market for broadband  wireless  equipment in North America would grow from $90.7
million in 1998 to $901.3  million in 2002,  a compound  annual  growth  rate of
77.5%.

Changes in the Wireless Telecom Industry

Carriers  face  significant  competition  as they  deploy  their  networks.  The
competitive landscape has changed for wireless carriers through privatization in
the 1980s and deregulation in the 1990s, both domestically and  internationally.
For carriers to  differentiate  themselves  and remain  competitive  in this new
environment, they are deploying networks to:

      o     provide  seamless  nationwide  coverage and avoid expensive  roaming
            costs on  competitors'  networks  in markets  where  carriers do not
            currently own infrastructure;

      o     offer PCS service in new geographic markets;

      o     offer enhanced services, such as one rate plans, calling party pays,
            caller ID, text messaging and emergency 911 locator services;

      o     implement the new third-generation  (3G) network standard to deliver
            wireless  broadband data  services,  including  Internet  access and
            two-way e-mail;

      o     introduce other emerging data networking and broadband technologies,
            such as LMDS, MMDS and other point-to-multipoint  architectures, for
            the provision of high speed data wireless  Internet access and other
            broadband services; and


                                                                               5
<PAGE>

      o     offer wireless local loop systems  domestically to bypass  incumbent
            wireline  competitors  and in developing  countries  lacking  modern
            wireline telephone infrastructure.

The  convergence  of traditional  wireless,  wireline and cable services is also
adding  complexity  to the  telecom  environment  as  carriers  deploy  networks
spanning  traditional  wireless/wireline  boundaries  to  offer  these  enhanced
services and new technologies.

New Challenges for Wireless Carriers and Equipment Vendors

Due to this  increasingly  competitive  environment,  carriers  need to focus on
satisfying  customer demand for enhanced  services,  seamless and  comprehensive
coverage,  better quality, more bandwidth and lower prices. The proliferation of
carriers and new technologies  has created an environment  where speed to market
is an  essential  element of a wireless  carrier's  success.  Carriers  are also
experiencing challenges managing increasingly complex networks and technologies.
For example,  the introduction of wireless Internet  technologies and the growth
in broadband  wireless  services  requiring the transmission of large amounts of
data creates additional new technological  hurdles for carriers  establishing or
upgrading their networks. In this dynamic environment,  customer acquisition and
retention are the most important  determinants of success. This has led carriers
to increasingly prioritize their resources, focusing on mission critical revenue
generating  activities  such  as  marketing,   billing  and  customer  care  and
outsourcing whenever they can do so effectively.

The changing environment is also placing significant  operational  challenges on
carriers.  Carriers must make critical  decisions about which geographic markets
to serve and which  services  and  technologies  to offer.  They are striving to
avoid the cost uncertainties and considerable  operational challenges associated
with the staffing and process  implementation  software for the  deployment  and
management of their networks. Furthermore, the rapidly changing and increasingly
complex  nature of wireless  technologies  has made it difficult for carriers to
optimize  employee training and utilization for what are often one-time upgrades
for  each  generation  of  new  technology.  Additionally,  networks  are  being
implemented  with equipment from unrelated  vendors,  posing system  integration
challenges.  This  situation is exacerbated  by  consolidation  in the industry,
which often entails the integration of disparate networks.

Equipment vendors are facing numerous challenges in the current environment,  as
carriers are requiring  them to develop new  generations  of equipment  that are
capable of handling increased features and functionality.  In addition,  vendors
must provide equipment that can be deployed within a carrier's  existing network
and integrate with equipment offered by other vendors.  Carriers are more likely
to  select a vendor  that  provides  a full  suite of  products  and  deployment
services.  Given the rapid pace of technological  change,  equipment vendors are
finding it increasingly difficult to justify using resources for the deployment,
integration and optimization of their current  generation of products.  This has
increasingly led equipment  vendors to focus on their core competencies to offer
competitive solutions in this rapidly changing technological  environment and to
outsource  network  design,  deployment  and management  services.


                                                                               6
<PAGE>

Conventional Wireless Communications Technology

Conventional mobile networks primarily rely upon  long-established  mobile radio
technology  and  traditional  voice  channel  transmission.  This  was the  only
suitable  technology  available  when cellular  communications  first evolved 20
years ago. The SpectruCell  Technology represents a departure from this somewhat
antiquated technology.

Conventional  telephone  networks  were  traditionally  configured  with a major
Central Office Switch (CO) and numerous  smaller switches (Points of Presence or
POPS)  throughout the network.  The POPS collect calls from the outlying reaches
of the network and route them back to the CO for  processing  and routing to the
call termination.

Cellular  telephone  networks  evolved  from the long  established  mobile radio
telephone  technology  and the  traditional  call  processing  and voice channel
transmission  applications  associated  with that  technology.  Much of the call
processing and routing is done at the cell site and this can be very restrictive
because it depends upon the number of voice channels and processing  capacity at
each cell site. In a conventional  telephone network environment any upgrades or
call capacity  changes can be effected at the Central Office Switch,  whereas in
the present cellular network environment hundreds of cell sites would have to be
upgraded individually.

The Company's Technologies

SpectruCell

The  SpectruCell  concept was  originally  developed in the United  States in an
entirely  different format and configuration to the current product design.  The
request to develop the  SpectruCell  Wireless Base Station concept was presented
to the Royal Melbourne Institute of Technology  University ("RMIT") in the first
quarter of 1998 for evaluation and development.  The current  technology for the
SpectruCell Wireless Base Station unit has been developed entirely in Melbourne,
Australia  by  the  ACT-Australia   "Vision  Team"  in  collaboration  with  the
Department of Computer Systems Engineering at RMIT.

ACT-Australia  has developed and is currently  testing a wireless  communication
network  technology  that will be  trademarked  and  marketed as  "SpectruCell".
Unlike existing communications networks, SpectruCell supports a wireless network
architecture designed to process and transmit numerous communications  protocols
(AMPS,  CDMA, TDMA, GSM,  W-CDMA,  UMTS, 3G, Voice IP, etc.) as well as wireless
Internet  applications,  all within  one  network.  By  utilizing  the  multiple
protocol  wireless  base  station,  network  providers  will be able to  support
substantially  all current and future  protocols  with the same equipment on the
same  network  through  software  upgrades,  a distinct  departure  from current
technology.  For example,  Telstra Australia's recently spent approximately $500
million  implementing  a new CDMA  network  to  compliment  their  existing  GSM
network. With SpectruCell,  Telstra could plug in the new base stations to their
existing GSM network,  enabling it to carry both protocols (CDMA and GSM) on the
same network.


                                                                               7
<PAGE>

The SpectruCell  system  architecture is a distinct  departure from conventional
Cellular/PCS network structure.  The SpectruCell  architecture provides a method
of transmitting the entire base bank spectrum from the receiving Antenna/Cell to
a centralized  Mobile Telephone  Switching Office (MTSO) for call processing and
redistribution,   rather  than  processing   calls  at  the  cell  site.   Until
approximately three years ago almost all cellular  transmissions were Analog. In
the current cellular network  environment,  additional call processing  hardware
has to be added to each  cell  site  (usually  around  200+  cells  per  average
network),  for network  operators  to transmit  evolving  new digital  protocols
(CDMA, TDMA, GSM, W-CDMA, etc.) over their existing cellular networks. This is a
very expensive undertaking.

In a SpectruCell  network  environment,  the additional hardware and/or software
upgrades would only be required at the MTSO/Central Office Switch location.  The
potential savings in network  implementation  and establishment  costs, and cell
site maintenance costs savings would be very substantial. In addition, given the
SpectruCell  network's  ability to carry all  current,  evolving and future call
protocols,  there is also a significant  potential  for increased  revenues from
foreign roaming calls.

Another  major  feature of  SpectruCell  is the capacity to  dynamically  assign
channels and spectrum (i.e.  call carrying  capacity) to the cells  requiring it
most.  In a sense,  the Cellular  operator  would  possess a so-called  "elastic
capacity" at cells in the system.  Since all voice  channels  would be centrally
located at the switch instead of at the  cell/antenna  sites,  individual  voice
channels and RF trunks can be distributed as needed to busy cell/antenna  sites.
Channels  would be essentially  "borrowed"  from  surrounding  cells and used to
support call traffic at the busier  sites  during call volume  peaks.  This is a
distinct  departure from present  "honeycomb  style" systems where each cellular
network is dedicated to a single  protocol and each cell has fixed call carrying
capacity or bandwidth, that is limited by the number of voice channels installed
at each cell site. In essence, the SpectruCell architecture provides a basis for
a  paradigm  shift  from  the  conventional  telecommunications  central  office
switching structure for evolving wireless networks.

For carriers to support  multiple  protocols such as GSM and CDMA digital mobile
phones, current wireless communications  technology requires separate cell sites
with  separate  equipment  for  each  protocol  carried.   Upon  implementation,
SpectruCell, however, will allow carriers to maintain and utilize their existing
networks  within a modern  network  platform  that will  enable  them to support
evolving protocols. By utilizing the SpectruCell multiple protocol wireless base
station,  network  providers  will  be  able  to  support  current  and  in  all
probability  future  protocols  with the  same  equipment  on the same  existing
networks.  Future  protocols  would  be added to the  network  through  software
upgrades.

Benefits of the SpectruCell network include:

      o     significantly lower rollout cost due to the network being wireless;


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<PAGE>

      o     cost effective  upgrades to existing  networks to handle  additional
            protocols  through  utilization of existing  network  infrastructure
            rather than creating a new structure;

      o     fewer dropped calls and busy signals in current mobile networks that
            are caused through bottlenecks,  as calls on the SpectruCell network
            would be  configured  through a  distributed  network  rather than a
            centralized switching facility; and

      o     direct  access to Internet  services  for cellular  subscribers  via
            mobile IP and other evolving data protocols (such as ITU 3G).

In third  world  countries  or regions of the world with  little or no  existing
communications  infrastructure,  the  SpectruCell  system would  provide for the
deployment  of a  wireless  communications  network  infrastructure  (known as a
"greenfield-installation").  This  could be  achieved  at lower  cost,  and in a
shorter time frame than an equivalent land-based infrastructure network.

The internal  architecture of a SpectruCell  base station is designed to provide
flexibility  for  future  upgrades.  In  its  present  form,   SpectruCell  uses
processors which, to a certain degree,  limits the network's bandwidth capacity.
In the  current  configuration,  some of that  processing  is done in  dedicated
hardware with more  processors  added as needed in a parallel  architecture.  As
processor  speeds  increase,  the capability of a SpectruCell  base station also
increases.

Spectrum Efficient Microwave ("SEM")

Under current cellular network technology, each cell is connected to the network
via some form of  backbone  connection.  A  backbone  connection  is  normally a
high-speed  link.  These backbone  connections  are typically fiber optic cable,
coaxial cable or point-to-point  microwave. The advantage of using microwaves is
that the service  provider  would not have the expense and time delays  involved
with laying cables in the ground or other hard-wired  applications.  In built up
cities the cost of laying cable can be  prohibitive.  In  mountainous  areas the
terrain can make cable laying  impossible.  Traditionally,  microwave links have
been  limited in their data  throughout,  and have been  expensive  to implement
because they use a large  component of radio  spectrum.  Radio  spectrum must be
licensed and is costly.

In an effort to mitigate these constraints and problems, ACT-Australia is in the
process of developing  an enhanced  microwave  link with spectral  efficiency of
approximately six times current technology,  with a data rate of 155 MB's, which
is substantially  equivalent to fiber optic cable  backbones.  The SEM technique
has  applications  in the  provision  of the  medium  and  high  rate  backbones
necessary for the deployment of mobile communications networks.

One advantage of the SEM technique is that it has the  capability to transmit up
to 10 times  the  traffic  of an  existing  system,  without  increasing  use of
bandwidth or radio  spectrum.  This could allow  existing  network  providers to
increase  their  capacity  in the


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<PAGE>

same  spectrum  by as much as six times.  The Company  believes  that demand for
increased  bandwidth will continue to develop and consequently sees this as both
an exciting  opportunity in the marketplace and an integral part of the proposed
SpectruCell  network. In a greenfield  installation an efficient  point-to-point
microwave link could further enhance the attraction of a distributed SpectruCell
network.

These microwave links are complementary to the SpectruCell technology.  Perhaps,
most  importantly,  the combination of the two technologies has the potential to
create a new wireless network  architecture.  The Company's management perceives
an unprecedented demand for this technology within the communications  industry,
and believes further that this demand will continue to grow as the need for high
speed Internet access continues to expand at an increasingly rapid rate.

LonWorks

Australon  is the only  accredited  LonWorks  Independent  Developer  (L.I.D) in
Australia.  LonWorks is a technology  developed by Echelon Corporation which was
recently adopted by Cisco Corporation as its Internet integration  technology of
choice.  LonWorks is based upon a Neuron Chip that is  manufactured  by Motorola
and Toshiba  under  license from  Echelon.  It provides a foundation  to develop
numerous  control systems and monitoring  applications  that can be accessed via
the Internet.

Australon has developed a Neuron generic  interface card module based around the
LonWorks  technology  that  allows for  Australon  to  rapidly  build and deploy
specifically  designed  independent  units for  control  applications  in spread
monitoring applications. Applications include:

      o     Smart Office  Buildings.  Australon is able to perform such specific
            functions  as turning  the lights on and off,  opening  and  locking
            security doors,  starting and stopping  elevators and connecting all
            functions to a central locking system;

      o     Homeowners. An array of services can be performed from operating the
            VCR to the sprinkler  system from a touch-tone phone from any remote
            location;

      o     Factories.  Control over  conveyer  belts,  inventory,  pump valves,
            emergency stop systems or even fire control systems remotely in mine
            systems; and

      o     Marine Navigation Beacons.  Beacons have been developed that operate
            from a central location with an alarm and fault  diagnostic  service
            capability.

Custom  built  units can be  produced  and  maintained  by adding  hardware  and
software  modifications to the generic model. LonWorks is also able to interface
a range of products from different  manufacturers by utilizing a system known as
Standard  Network  Variable  Types.  This  enables  LonWorks  to be placed  into
existing networks enabling them to achieve an increased level of intelligence.

The potential advantages of Australon's LonWorks product include:


                                                                              10
<PAGE>

      o     Cost Effective Implementation.  A control network can be implemented
            that  does not rely on a  centralized  controller;  the  network  is
            centrally monitored but does not have a central point of failure;

      o     Simple Upgrades. The product is upgradeable via software,  which can
            be  implemented  by the customer  without the help of a  specialized
            technical programmer; and

      o     Integration.  Utilizing the Australon product enables products to be
            integrated into the control network and monitored over the Internet.

Australon  intends to  establish a  distribution  center for  LonWorks  devices,
training facilities,  testing and support networks,  and a focused marketing and
integration plan to expand  Australon/LonWorks  technology sales into Australian
developers.  Currently  negotiations are being conducted with several  companies
worldwide for the marketing and distribution  rights to the Australon  developed
LonWorks products.

Australon and the Company have formed a Delaware  corporation  owned 50% by each
of them to market  LonWorks  products  in the United  States and North and South
America.

Australon has been  appointed an official beta tester for CISCO's i.Lon LonWorks
Internet gateway. Developed and certified under the Cisco NetWorks* program, the
i.LON 1000 is a new product that can bring everyday devices into the Internet-or
an Internet Protocol (IP) based intranet, LAN, or WAN. Already the i.Lon 1000 IP
Server enables  everyday  devices  networked  worldwide with Echelon's  LonWorks
technology in homes, buildings,  factories, and transportation systems to become
part  of  the  Web,   delivering  cost,  revenue,   quality,   and  productivity
improvements  and paving the way for new markets and  applications  for industry
and consumers alike.

Marketing Strategy

The Company intends to conduct marketing focused directly at the executive level
of prospective customers utilizing the relationships that the Company management
has established within the telecommunication  industry. The direct emphasis will
be focused on:

o     Third World Countries. SpectruCell has the ability to provide "greenfield"
      networks in third world  countries.  In regions with little or no existing
      communications infrastructure, the SpectruCell system will provide a means
      for the deployment of a wireless communications network infrastructure, at
      a reduced cost, and in a shorter time frame than an equivalent  land-based
      network;

o     Major Telecommunication Companies. ACT-Australia will look to partner with
      major telecommunication companies in each region. The SpectruCell unit has
      advantages due to its capability of handing multiple protocols; and


                                                                              11
<PAGE>

o     Test Market through Advanced Global  Communications.  AGC will provide the
      platform for the Company to launch its  prototype  in late 2000.  The test
      phase will be supervised personally by Roger May and James Rennie. AGC was
      formed to become  the  operational  arm of the  Company  for all North and
      South  American  based  communication  operations  as well as the  holding
      company for all currently owned switching operations, planned acquisitions
      of other switching and communications companies.

Sales Strategy

The Company plans to take advantage of the  established  sales and  distribution
channels  that are already  established  within other  companies.  As such,  the
Company  will  look  to  establish  joint  venture  marketing  and  distribution
agreements with established reputable companies in key demographic and marketing
locations.  In markets  where  suitable  joint  venture  arrangements  cannot be
established,  the Company  will look to  establish  its own regional or national
distributors.

Sources of Revenue

Company revenues will be derived from three sources:  SpectruCell unit sales for
new systems,  existing network upgrades (SpectruCell can be added to an existing
network and run in conjunction with other system architecture),  and the sale of
RF wireless circuitry boards.  There is an additional  potential for the sale of
licensing arrangements.


                                                                              12
<PAGE>

Competition

The  SpectruCell  system  will  compete  with  traditional   cellular  telephone
technology  and  other  wireless  communication  technology.  Without  a  doubt,
existing wireless communications  companies have substantially greater resources
and market  penetration  than the  Company.  We will have to  differentiate  our
technology  through  cost  savings in  implementation  and  upgrades and through
improved service.

Some of the competitive  advantages of the SpectruCell system are more efficient
equipment utilization,  reduced capital equipment costs (preliminarily estimated
at 50%-70% less),  and higher revenues from increased U.S. and foreign  roaming,
or multiple  protocol,  calls handled in domestic  networks.  One very important
advantage is that SpectruCell can be implemented into domestic networks. Another
very important  advantage is that  SpectruCell can be implemented  into existing
cellular  networks  and  run in  parallel  with  conventional  cellular  network
technology.  It does not require the complete  redesign and  replacement  of the
existing  cellular  network  structure.  Rather it can be implemented in stages,
until  the  entire  network  structure  has  been  upgraded  to the  SpectruCell
architecture.

We cannot  be sure that we will be able to  effectively  compete  with  existing
wireless  network  companies or that we will gain acceptance for the SpectruCell
system.

Government Regulation

The Company's proposed provision of wireless  communications services is subject
to  substantial  government  regulation.  Federal law regulates  interstate  and
international   telecommunications,   while   states  have   jurisdiction   over
telecommunications  that originate and terminate within the same state.  Changes
in  existing   policies  or   regulations   in  any  state  or  by  the  Federal
Communications  Commission  ("FCC") could have a material  adverse effect on our
financial condition or results of operations. There can be no assurance that the
regulatory  authorities  in one or more  states or the FCC will not take  action
having an adverse  effect on the business or  financial  condition or results of
operations of the Company.

Patents

ACT-Australia  is currently  preparing  Patent  applications for the SpectruCell
technology  and  expects  to file the  applications  shortly.  ACT-Australia  is
confident that its  applications  for patent  protection  will be granted by the
Australian regulatory authorities.

Employees and Consultants

As of  September  30,  2000,  the  Company  has eight  full time  employees  and
consultants.  ACT-Australia  and its  affiliates  had 79 full time  employees of
which 49 are engaged in


                                                                              13
<PAGE>

research and development and technical  support and 30 in management,  sales and
administration.  Of these  employees,  ten are sales,  marketing and  management
executives,  seven  are  involved  in  information  technology  and 13  work  in
administrative  offices. None of the Company's or ACT-Australia's  employees are
covered by any collective bargaining agreement.

ITEM 2. DESCRIPTION OF PROPERTY

Facilities

Our  principal  executive  offices are  located at 19200 Von Karman,  Suite 500,
Irvine,  California  92612.  The Company has a one-year  lease for such  offices
expiring in March 2001 for  offices in Irvine  California.  The monthly  rent is
$5,525.00.  At the end of the  lease's  term for our rental  space,  the Company
believes that it can lease the same or comparable  offices at approximately  the
same monthly rate.

ITEM 3. LEGAL PROCEEDINGS

Pending Litigation

The Company is a defendant in four pending lawsuits. The first, Nancy Needham et
al v. Advanced Communications  Technologies,  Inc. et al is an action brought in
state court in Florida  seeking (i)  injunctive  relief  against the Company and
others  requiring  it to permit the transfer of shares of the  Company's  Common
Stock held by two  shareholders  (who are former  officers and  directors of the
Company) and (ii) damages in an unspecified  amount.  The lawsuit is at an early
stage and the Company is unable, at the present time, to predict its outcome.

The second action was brought by Bank Insinger, the holder of $150,000 principal
amount of the  Company's  12%  Secured  Convertible  Debentures,  for  breach of
contract and other claims. The Company is in default with respect to $650,000 of
its 12% Secured Convertible  Debentures.  The action is brought in Federal Court
in the  Eastern  District  of New  York.  The  Company  intends,  following  the
effectiveness of its registration  statement,  to offer Bank Insinger registered
shares of its Common Stock or cash in settlement  of its claim.  There can be no
assurance that the Company will be able to effectuate  such  settlement on terms
it deems acceptable.

The third  action is Star Multi  Care  Services,  Inc v Advanced  Communications
Technologies,  Inc  filed in the  Fifteenth  Judicial  Circuit  in the  State of
Florida  on  September  18,  2000.  The suit has been  filed by Star  Multi Care
Services,  Inc ("Star")  against the Company for alleged  breach of contract and
the  recovery  of a  break-up  or  termination  fee  in  excess  of  $50,000  in
conjunction with the Company's failure to consummate a proposed merger with Star
in January  2000.  The Company  believes that the suit is without basis and will
vigorously defend the alleged claim.


                                                                              14
<PAGE>

The fourth action brought against the Company is Grassland Capital Group v Media
Forum  International,  Inc filed in the State of  Florida  against  Media  Forum
International,  Inc., the Company's predecessor for enforcement of a convertible
promissory  note.  In May 2000,  the  parties  agreed to settle the matter for a
fixed  sum of  $200,000  of  which  the  Company  paid  $50,000.  As part of the
settlement  agreement,  the  plaintiff  agreed to release to the Company  75,000
shares of the Company's  restricted common stock held in escrow. The Company was
to pay the  remaining  balance due from  proceeds to be derived from the sale of
the 75,000 shares.  The Company  neither sold the shares nor paid the balance of
the  amounts  due. In August 2000 the  plaintiff  filed and  received a judgment
against the Company for the $150,000 outstanding amount due.

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

There were no votes submitted during the fiscal year end.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) MARKET INFORMATION

Our common stock is currently  traded on the National  Association of Securities
Dealers  Automated  Quotation  System Over the Counter  Bulletin Board ("OTCBB")
under the symbol "ADVC".  As of September 30, 2000, there were 82,197,280 common
shares  outstanding.  There is limited trading  activity in our securities,  and
there can be no assurance a regular  trading market for our common stock will be
sustained.

The following table sets forth, for the fiscal periods indicated,  the bid price
range of our common stock:

                                                        High Bid         Low Bid
                                                        --------         -------
1999
Quarter Ended September 30, 1998                        $   1.03        $    .12
Quarter Ended December 31, 1998                              .25             .01
Quarter Ended March 31, 1999                                1.28             .06
Quarter Ended June 30, 1999                                  .62             .14

2000
Quarter Ended September 30, 1999                        $    .72        $    .24
Quarter Ended December 31, 1999                             5.50             .31
Quarter Ended March 31, 2000                                7.19            2.00
Quarter Ended June 30, 2000                                 2.62            1.03
Quarter Ended September 30, 2000                            1.25             .56


                                                                              15
<PAGE>

Such market  quotations  reflect the high bid and low prices as reflected by the
OTCBB or by prices, without retail mark-up,  markdown or commissions and may not
necessarily represent actual transactions.

(b) HOLDERS

As of September 30, 2000 there were  approximately  301 holders of record of our
common stock.

(c) DIVIDENDS

We have not paid  any cash  dividends  since  our  inception,  and the  Board of
Directors does not contemplate doing so in the near future.  Any decisions as to
future payment of dividends  will depend on our earnings and financial  position
and such other factors, as the Board of Directors deems relevant.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

The  following  discussion  should  be read in  conjunction  with our  financial
statements and the related notes and the other financial  information  appearing
elsewhere  in this  prospectus.  In  addition  to  historical  information,  the
following discussion and other parts of this Form 10-KSB contain forward-looking
information  that involves  risks and  uncertainties.  Our actual  results could
differ materially from those anticipated by such forward-looking information due
to factors discussed under "Business" and elsewhere in this Form 10-KSB.

The statements that are not historical constitute "forward-looking  statements".
Said  forward-looking  statements involve risks and uncertainties that may cause
the  actual  results,  performance  or  achievements  of  the  Company  and  its
subsidiaries to be materially different from any future results,  performance or
achievements,  express  or  implied by such  forward-looking  statements.  These
forward-looking statements are identified by their use of such terms and phrases
as   "expects",   "intends",   "goals",   "estimates",    "projects",   "plans",
"anticipates", "should", "future", "believes", and "scheduled".

The variables which may cause differences  include,  but are not limited to, the
following:  general economic and business  conditions;  competition;  success of
operating initiatives; operating costs; advertising and promotional efforts; the
existence  or absence of adverse  publicity;  changes in  business  strategy  or
development  plans; the ability to retain  management;  availability,  terms and
deployment   of  capital;   business   abilities   and  judgment  of  personnel;
availability  of  qualified  personnel;  labor  and  employment  benefit  costs;
availability and costs of raw materials and supplies; and changes in, or failure
to comply with various  government  regulations.  Although the Company  believes
that the assumptions underlying the forward-looking  statements contained herein
are reasonable, any of the assumptions could be inaccurate, and therefore, there
can be no assurance that the  forward-looking  statements  included in this Form
10-KSB  will prove to be  accurate.


                                                                              16
<PAGE>

In  light  of the  significant  uncertainties  inherent  in the  forward-looking
statements  included  herein,  the inclusion of such  information  should not be
regarded as a  representation  by the Company or any person that the  objectives
and expectations of the Company will be achieved.

SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA

The selected data  presented  below under the captions  "Condensed  Consolidated
Statement of Operations  Data" and "Condensed  Consolidated  Balance Sheet Data"
for, and as of the end of, each of the years in the three-year period ended June
30, 2000, are derived from the consolidated financial statements of the Company,
which  financial  statements  have been audited by Weinberg & Company,  P.A. our
independent  certified public accountants.  The audited  consolidated  financial
statements  as of June 30,  2000 and June 30,  1999,  and  report  thereon,  are
included in the financial  statement  section of the Form 10-KSB.  When you read
this selected  historical  financial  data, it is important  that you read along
with it the  historical  financial  statements and related notes as well as this
Management's  Discussion  and  Analysis of  Financial  Condition  and  Operating
Results. Historical results are not necessarily indicative of future results.

                                           For the Years Ended June 30,
                                   --------------------------------------------
                                       2000            1999            1998
                                   ------------    ------------    ------------
Consolidated Statement of
  Operations Data:
Revenue                            $         --    $         --    $    160,865
Cost of Revenue                              --              --         122,597
                                   ------------    ------------    ------------
Gross Profit                                 --              --          38,268
Selling, General and
  Administrative Expenses             4,388,691         673,274       1,783,047
                                   ------------    ------------    ------------
Operating Profit (Loss)              (4,388,691)       (673,274)     (1,744,779)
Total Other (Expense) Income/
  Extraordinary Gain                   (355,316)            312         (18,472)
                                   ------------    ------------    ------------
(Loss) Before Income Taxes           (4,744,007)       (672,692)     (1,763,251)
Provision for Income Taxes                   --              --              --
                                   ------------    ------------    ------------
Net (Loss)                         $ (4,744,007)   $   (672,692)   $ (1,763,251)
                                   ============    ============    ============
Net (Loss) Per Share:
    Basic                          $       (.06)   $       (.01)   $      (.035)
    Diluted                        $       (.06)   $       (.01)   $      (.035)
Pro Forma Weighted
  Average Shares:
    Basic                            77,107,560      60,619,676       5,000,292
                                   ============    ============    ============
    Diluted                          77,107,560      60,619,676       5,000,592
                                   ============    ============    ============

                                          For the Years Ended June 30,
                                   --------------------------------------------
                                       2000            1999            1998
                                   ------------    ------------    ------------
Consolidated Balance
  Sheet Data:
Cash and Cash
  Equivalents                      $     36,979    $     39,270    $     46,800


                                                                              17
<PAGE>

Working Capital                          36,979         412,770              --
Total Assets                         19,961,117         876,723          51,300
Total Debt                            9,007,570       1,231,002         946,847
Total Stockholders'
  (Deficiency)/Equity                10,953,547        (354,279)       (895,547)

(a) RESULTS OF OPERATIONS

Comparison  of Results  for the Year Ended June 30,  2000 to the Year Ended June
30, 1999

Revenue.  The Company  realized no revenue  during  either the fiscal year ended
June 30,  2000 nor the year ended June 30,  1999.  The  Company is  entitled  to
license and  distribution  revenue for products  currently under  development by
ACT-Australia.  Such products were still in the development stage as of June 30,
2000.  In  addition,  the  Company,  through  AGC,  has  developed  a  wholesale
telecommunications  network  for  service  into  Pakistan  which  was not  fully
operational as of June 30, 2000

General and Administrative Expenses. General and administrative expenses for the
fiscal years ended June 30, 2000 and June 30, 1999 were  $4,388,691 and $673,274
respectively.  Of  these  amounts,  $3,409,038  and  $148,379,  or 78%  and  22%
respectively,  were for professional  services  rendered to the Company of which
$3,009,388  (88%)  during the fiscal  year ended June 30,  2000 was paid via the
issuance of restricted common stock and represent a non-cash expense. During the
fiscal  years ended June 30, 2000 and June 30, 1999,  the Company paid  $215,756
and $148,378  respectively,  in cash fees for  professional  services  rendered.
Professional fees increased substantially from the prior year due principally to
the fact that a majority of the Company's  shares  issued in the current  fiscal
year in  exchange  for  services  were  issued when the stock was trading in the
price range of $2.50 to $4 per share.

Consulting fees, which includes employee  payments,  increased $146,877 from the
prior  year  due  principally  to an  increase  in  staff  and the  issuance  of
restricted  common stock at a higher  market price to third party  marketing and
promotional organizations. For the fiscal years ended June 30, 2000 and June 30,
1999,  $259,970  and  $330,166  respectively,  was  paid  via  the  issuance  of
restricted common stock and represents a non-cash expense.

Other  general and  administrative  expenses  (exclusive of  professional  fees,
consulting  expenses and other  non-cash  charges)  amounted to $412,110 for the
fiscal year ended June 30,  2000,  an increase of $306,516  from the fiscal year
ended June 30, 1999.  This  increase is  attributable  to  additional  corporate
overhead  expenses  resulting  from the  expansion  of the  Company's  corporate
headquarters  in  California  and the $125,000 bad debt reserve for the World IP
receivable.


                                                                              18
<PAGE>

Interest  expense  increased  from $5,580 to  $747,110  or by $741,530  from the
fiscal  year  ended June 30,  1999 as a result of the  issuance  of the  Secured
Convertible  Debentures  in  September  1999.   Approximately  $650,000  of  the
Company's  interest  expense of $741,530 for the fiscal year ended June 30, 2000
is attributable to the intrinsic value of the convertible debentures executed by
the Company.  Bond issuance costs being amortized during the current fiscal year
accounted for an additional $65,000 charged to interest expense.

Other income (loss) includes a ($85,818) loss  (expressed in U.S.  dollars) from
the Company's  investment in ACT-Australia  for the period April 5, 2000 through
June 30, 2000, as determined under the equity method of accounting.

Extraordinary  Gains (Losses).  Extraordinary Gains (Losses) include $242,561 of
gain on the  extinguishments  of prior shareholder loans in exchange for 600,000
of the Company's  restricted  common stock,  a gain of $8,070 on the recovery of
the Kentel loan  receivable and a gain of $34,507 on settlement of the Grassland
loan  payable.  In  addition,  $192,474 of other  income was  recognized  on the
abandonment of certain accounts payable and accrued expenses of MFI.

(b) LIQUIDITY AND CAPITAL RESOURCES

Since our inception,  we have primarily financed our operations through the sale
of common stock and convertible  debentures.  We have raised  $1,650,000  before
offering costs through the sale of these securities.

At June 30, 2000, the Company's cash and cash equivalents balance was $36,979, a
decrease of $2,291 from the balance of $39,270 at June 30, 1999. During the year
ended  June 30,  2000,  cash  provided  by (used in)  operations  and  investing
activities amounted to ($777,526) and ($215,390), respectively. Cash provided by
financing  activities  during the fiscal year ended June 30,  2000,  amounted to
$1,013,050 and consisted of loans from the Company's  principal  shareholder and
the sale of common stock and convertible  debentures.  In July 1999, the Company
realized  $273,500  net of  offering  costs  from the sale of common  stock.  In
December 1999, the Company received $488,050 net of offering costs from the sale
of convertible debentures.

During the year the Company terminated financing agreements that it entered into
with Bridgewater Capital Corporation and Trinity Capital Advisors, Inc.

On June 27, 2000, the Company entered into an agreement with Ladenburg  Thalmann
& Co., Inc.  ("LTCO")  pursuant to which LTCO will use its best efforts to raise
up to  $12,000,000  for the  Company  through  the  sale of  Common  Stock.  The
financing is proposed to be raised tranches of $500,000 each at a price equal to
85% of the Average  Daily Price for the Draw Down  Pricing  Period as such terms
are defined in the Company's agreement with LTCO.

We believe that our cash and cash equivalent balances, and the net proceeds from
the LTCO offering (which will be included in a S-1 Registration  Statement to be
filed shortly) will be sufficient to satisfy our cash  requirements for at least
the next twelve months.  The estimate for the period for which we expect the net
proceeds from the LTCO


                                                                              19
<PAGE>

offering,  together with our available cash  balances,  to be sufficient to meet
our capital requirements is a forward-looking  statement that involves risks and
uncertainties.  The amount of our capital  requirements  will depend on numerous
factors,  including  the  timing  of the  commercialization  of the  SpectruCell
technology,   the  possible   acquisitions   of   complementary   businesses  or
technologies,  the financial  resources we dedicate to new  technologies and new
markets and market demand for our suite of services.

We may need to raise additional capital if we expand more rapidly than initially
planned,  undertake development of other unplanned  technologies and/or services
to respond to new competitive pressures, or acquire complementary  businesses or
technologies.  If additional  funds are raised through the issuance of equity or
convertible  debt  securities,  such securities may have rights,  preferences or
privileges  senior  to  those  of our  stockholders,  who  may  also  experience
additional dilution. There can be no assurance that additional financing will be
available or on terms  favorable to us. If adequate  funds are not  available or
are not available on acceptable  terms, our ability to fund our expansion,  take
advantage  of  unanticipated  opportunities,  expand  our suite of  services  or
otherwise  respond to competitive  pressures could be significantly  limited and
our business may be harmed by such limitations.

(c) ACQUISITIONS

On November 10, 1999, the Company's wholly-owned subsidiary, AGC entered into an
agreement  with the  shareholders  of World IP  Incorporated  ("World")  and its
wholly-owned   foreign   subsidiaries  Sur   Comunicaciones,   S.A.  (A  Chilean
Corporation)  and Acinel,  S.A. (An  Argentinean  Corporation),  hereinafter the
"World Group",  to acquire a 51%  controlling  interest in the World Group.  The
World Group provides wholesale international telephone services from the U.S. to
Chile and Argentina. On October 4, 2000, the Company notified World's management
and  shareholders  that it intends to rescind the  November  10, 1999  Agreement
because the Company was unable, after repeated requests,  to obtain from World's
management financial records and audited financial statements. Consequently, the
Company's  management  deemed that it was in its best  interest to  unilaterally
rescind the Agreement.  On October 6, 2000 the Company filed suit in the Circuit
Court in and for Palm Beach  County,  Florida  against  the World  Group and its
shareholders for rescission of the Agreement and for monetary damages  resulting
from World and its  management's  breach of the Agreement.  As of June 30, 2000,
the Company is owed $125,000 from World IP which it will seek to recover and has
fully reserved against.

On January 31,  2000,  the Company  acquired  all of the issued and  outstanding
shares of  SmartInvestment.com.  Inc.,  an inactive  reporting  company fully in
compliance with reporting  requirements of the Securities  Exchange Act of 1934,
for  200,000  shares of its  restricted  Common  Stock.  A Form 8-K was filed on
February  3,  2000  disclosing  this  acquisition.   Under  generally   accepted
accounting  principles,  the Company treated the purchase as a  recapitalization
and did not record any goodwill associated with the acquisition.


                                                                              20
<PAGE>

On April 5, 2000,  the  Company  pursuant  to a Stock  Purchase  Agreement  with
ACT-Australia  acquired a 20% equity interest in ACT-Australia for $7,500,000 in
cash and 5,000,000 shares of the Company's restricted common stock.

The Company's strategy is to generate  substantial revenue through the licensing
of the SpectruCell product being developed and tested by ACT-Australia,  through
the marketing of Australon's LonWorks based products and through the acquisition
of telephone network  distribution  companies.  As part of this growth strategy,
the Company will continue to evaluate and pursue  opportunities to acquire other
companies,  assets  and  product  lines  that  either  complement  or expand the
Company's  existing  businesses.  The Company intends to use available cash from
operations,  if any,  and  authorized  but  presently  unissued  common stock to
finance any such acquisitions, including funds raised through the LTCO offering.

(d) SUBSEQUENT EVENTS

On September 29, 2000 the Company's  board of directors  adopted a resolution to
issue 5,000,000 shares of the Company's restricted common stock to ACT-Australia
in partial  repayment of the  Company's  $7.5 million  obligation.  The 5,000,00
shares were valued at $.70 per share resulting in a $3.5 million repayment.

ITEM 7. FINANCIAL STATEMENTS

The financial  statements of the Company are submitted as a separate  section of
this Form 10-KSB on pages F-1 through F-19.

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

None.

                                    PART III

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

The following  table sets forth the names and ages of the current  directors and
executive officers of the Company, their principal offices and positions and the
date each such person  became a director or  executive  officer.  Our  executive
officers are elected  annually by the Board of Directors.  Our  directors  serve
one-year terms until their successors are elected.  The executive officers serve
terms of one year or until their death,  resignation  or removal by the Board of
Directors.  There are no family  relationships or


                                                                              21
<PAGE>

understandings between any of the directors and executive officers. In addition,
there was no arrangement or understanding  between any executive officer and any
other person pursuant to which any person was selected as an executive officer.

Our directors and officers are as follows:

<TABLE>
<CAPTION>
Name and Address                                                         Age      Position
----------------                                                         ---      --------
<S>                                                                      <C>      <C>
Roger May, 19200 Von Karman Ave., Irvine, CA 92612                       54       Chief Executive Officer,
                                                                                  Chairman of the Board
                                                                                  and Director
Wayne I. Danson, 420 Lexington Ave., New York, NY 10170                  47       Chief Financial Officer
                                                                                  and Director
Jonathan J. Lichtman, 4800 N. Federal Hwy., Boca Raton, FL 33431         48       Director
Dr. Michael Finch, 37 Walnut Street, Wellesley, MA 02481                 52       Director
Randall Prouty, 19200 Von Karman Ave., Irvine, CA 92612                  48       Director
Wilbank J. Roche, 2530 Wilshire Blvd., Santa Monica, CA 90403            54       Director
</TABLE>

The  directors  named  above will  serve  until the next  annual  meeting of our
shareholders  or until  their  successors  shall be  elected  and  accept  their
positions. Mr. May is a party to a written employment agreement with the Company
that  entitles  him to a salary of $120,000 per year.  Mr.  Danson is party to a
written  consulting  agreement as extended orally that pays him $5,000 per month
for the period  December  1, 1999  through  March 31, 2000 and $10,000 per month
thereafter.   Both  Mr.  May  and  Mr.  Danson  are  reimbursed  for  reasonable
out-of-pocket  expenses  relating  to  their  activities  for  the  Company.  In
addition,  Mr. May is reimbursed for his automobile  expenses in connection with
Company business.

The  Company  currently  does not pay any fees to its  directors.  However,  all
directors are reimbursed for out-of-pocket  expenses incurred in connection with
the rendering of services as a director.

The Company  has no deferred  compensation,  stock  options,  SAR or other bonus
arrangements  for its employees and/or  directors.  During the fiscal year ended
June 30, 2000, all decisions concerning executive  compensation were made by the
Board of Directors.

Roger May, Chief Executive  Officer,  Chairman of the Board and Director.  Roger
May has been the Chairman and Chief Executive Officer of the Company since March
10, 1997. In 1991 he founded  America's  first  nationwide  central  reservation
system known as Independent  Reservation  Services Ltd. ("IRSL") In 1997 Mr. May
negotiated  the  sale  of  IRSL  to  a  Florida  public  company,   Teleservices
International  Group.  In 1987,  Mr. May began his focus on  telecommunications,
first establishing  nationwide  distribution  networks for a private network and
then marketing discounted telecommunications products and associated services to
the hospitality industry. He established  successful joint ventures with Cable &
Wireless,  and relationships with Rochester Telephone,  Bell


                                                                              22
<PAGE>

Atlantic,  Frontier Communications and others. Mr. May moved to Los Angeles from
Australia in 1980 to capitalize on export  incentive  allowances  offered by the
Australian  government.  He began  operating a wool  exporting  company and then
purchased  a franchise  for  International  Business  Exchange,  Inc.,  a barter
exchange company. Mr. May began his marketing career in Australia in 1969, where
he was a General Manager for the largest General Motors dealership in Australia.

Wayne I. Danson, Chief Financial Officer and Director.  Mr. Danson has served as
the Company's Chief Financial Officer since December 1, 1999 and was appointed a
director on January 3, 2000. Mr. Danson is the Managing  Director and Founder of
Danson  Partners,   LLC  a  financial   advisory  and  investment  banking  firm
specializing  in middle  market  companies  in the real  estate  and  technology
industries. Prior to forming Danson Partners, LLC from August 1996 to April 1999
Mr. Danson was co-head of and Managing Director of PricewaterhouseCoopers  LLP's
Real Estate Capital Markets Group. Prior to joining PricewaterhouseCoopers, from
1988 through 1995 Mr. Danson was a Managing Tax Partner with Kenneth Leventhal &
Company in New York and Washington D.C.,  where he was also Kenneth  Leventhal's
national Director of its International and Debt Restructure Tax Practices. Prior
to his involvement with Kenneth  Leventhal,  Mr. Danson was a Managing  Director
with Wolper Ross & Co.,  Ltd. in New York,  a closely  held  financial  services
company  specializing in financial tax, pension consulting,  designing financial
instruments and providing venture capital and investment  banking services.  Mr.
Danson  graduated  with honors  from  Bernard M.  Baruch  College  with a BBA in
Accounting  and an MBA in Taxation.  He is a certified  public  accountant and a
member of the AICPA and the New York State Society of CPAs.

Jonathan J.  Lichtman,  Director.  Mr.  Lichtman was appointed a Director of the
Company on November 9, 1999 and is currently an attorney with the Boca Raton law
firm of Levinson & Lichtman,  LLP, where he specializes in structuring corporate
and partnership transactions including real estate syndications. Mr. Lichtman is
also  currently a general  partner of several  real estate  partnerships  in New
York,  North  Carolina  and  Florida.  Prior to forming  his current  firm,  Mr.
Lichtman was an attorney  since 1988 with English,  McCaughan  and O'Bryan,  PA,
where he performed legal work for domestic and international  clients as well as
real estate partnerships and development. Mr. Lichtman obtained his J.D. degree,
cum  laude,  from  Syracuse  University  College  of Law and his LLM  degree  in
taxation  from the  University  of Miami  School of Law.  He is also a certified
public accountant and is licensed to practice law in Florida and New York.

Dr. Michael Finch,  Director.  Dr. Finch was appointed a Director of the Company
on March 10, 1997 and since 1998, has been Chief Technology Officer of New Media
Solutions,  responsible for the conception,  planning,  creation,  execution and
deployment  of all  software  products and  projects.  For the four years before
that,  he was  employed by Media Forum  (first in the UK, and then in the US) as
Director  of  Product  Development.   He  was  responsible  for  developing  and
implementing  Media  Forum's  software   capabilities  and  strategy,   managing
technical  and complex  software  projects for high-end  clients,  and pre-sales
demonstrations  to clients of Media Forum's software stance and expertise.  From
1983 to 1993 Dr. Finch was a Financial  Software Engineer,  who


                                                                              23
<PAGE>

designed,  wrote and implemented  sophisticated  real-time computer programs for
trading  Financial  Instruments  and  Commodities  on the  Chicago  and New York
Futures  exchanges.  Prior  to 1983  Dr.  Finch  was a  research  scientist  and
mathematician,  with an academic career at four UK  universities.  He obtained a
Doctorate  of  Mathematics  at Sussex  University  for  original  research  into
Einstein's Theory of General Relativity and its application to Neutron Stars. He
lectured at Queen Mary's College London on advanced mathematics.

Randall Prouty,  Director.  Mr. Prouty, a co-founder of the Company and Director
since March 10, 1997, is currently  the  President and CEO of World  Associates,
Inc. a publicly traded  development stage company.  He is also the sole owner of
Bristol Capital, Inc., a firm active in consulting and business development work
for  companies  seeking  access to  capital  markets,  and  through  which he is
incubating other e-business  ventures.  Mr. Prouty is a licensed real estate and
mortgage  broker in the State of  Florida  and is  considered  an expert in real
estate finance.  His technical  background  includes being a qualified webmaster
and developing e-businesses on the web.

Wilbank J. Roche, Director. Mr. Roche was appointed a Director of the Company on
March 25, 1999 and is currently a principal with the law firm of Roche & Holt in
Santa Monica,  California.  Mr. Roche was an honors graduate from the University
of  California  in 1976 as well as from  Loyola  University  School of Law,  Los
Angeles,  in 1979. He was admitted to the  California  State Bar in 1979 and has
been  practicing law actively since that time. Mr. Roche worked for law firms in
the Los Angeles area from 1976 to 1983, when he opened his own office.  In 1985,
he formed Roche & Holt.  Mr.  Roche's law practice has revolved  largely  around
representing  small businesses and their owners. In that regard, he has provided
legal services in connection with the formation, purchase, sale, and dissolution
of numerous entities,  as well as in connection with their on-going  operations.
In the past several  years,  he has devoted  substantial  time to clients in the
telecommunications business.

ITEM 10. EXECUTIVE COMPENSATION

Summary Compensation Table

The following summary compensation table shows certain compensation  information
for services  rendered in all capabilities for the three fiscal years ended June
30, 1998, 1999 and 2000. Other than as set forth herein, no executive  officer's
cash salary and bonus  exceeded  $100,000 in any of the  applicable  years.  The
following information includes the dollar value of base salaries,  bonus awards,
the number of restricted shares granted and certain other compensation,  if any,
whether paid or deferred.


                                                                              24
<PAGE>

                                 June 30, 1998    June 30, 1999    June 30, 2000
                                 -------------    -------------    -------------
Roger May, CEO                     $ 91,550(1)      $120,000(2)      $120,000(3)

Wayne I. Danson, CFO                     --               --           50,000(4)

----------
(1)   Accrued and unpaid  compensation.  No cash was  received by Mr. May during
      the fiscal year ended June 30, 1998. Mr. May did receive 500,000 shares of
      the Company's stock valued at $25,000 as a signing bonus.

(2)   $20,000 of this amount remains  unpaid.  During the fiscal year ended June
      30, 1999,  Mr. May received cash  compensation  of $65,000 and in exchange
      for $35,000 of accrued and unpaid compensation, received 700,000 shares of
      Company stock.

(3)   Mr. May's  compensation for the fiscal year ended June 30, 2000 is accrued
      and unpaid. Effective July 1, 2000, Mr. May's salary has been increased to
      $180,000 per annum.

(4)   Mr.  Danson became Chief  Financial  Officer of the Company on December 1,
      1999  and  such  amount  reflects  the  cash  compensation  (exclusive  of
      reimbursement  of expenses) paid to him during the period December 1, 1999
      - June 30, 2000. Mr. Danson also received  100,000 shares of the Company's
      stock as a signing bonus.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table contains  information about the beneficial  ownership of our
common stock as of September 30, 2000 for:

      o     each  person  who  beneficially  owns more than five  percent of the
            common stock;

      o     each of our directors;

      o     the named executive officers; and

      o     all directors and executive officers as a group.

Unless otherwise indicated, the address for each person or entity named below is
c/o Advanced  Communications  Technologies,  Inc.,  19200 Von Karman Ave., Suite
500, Irvine, CA 92612.


                                                                              25
<PAGE>

Beneficial  ownership  is  determined  in  accordance  with  the  rules  of  the
Securities and Exchange  Commission and generally  includes voting or investment
power with respect to securities.  Except as indicated by footnote,  and subject
to community  property  laws where  applicable,  the persons  named in the table
below have sole voting and investment power with respect to all shares of common
stock  shown as  beneficially  owned  by  them.  The  percentage  of  beneficial
ownership  is based on  82,197,280  shares of  common  stock  outstanding  as of
September 30, 2000.

                                              Number of Shares   Percentage of
                                                Beneficially        Shares
                                                   Owned          Outstanding
                                              ----------------    -----------
Roger May                                       30,520,000(1)(2)       37.1%
Nancy Needham                                   11,958,801(3)*         14.6%
R.H. Du Pont                                     6,200,383(4)*          7.5%
Wayne Danson                                       160,000               **
Jonathan J. Lichtman                               875,000(5)          1.06%
Dr. Michael Finch                                  100,000               **
Randall Prouty                                   1,057,500              1.3%
Wilbank J. Roche                                    50,000               **
All Officers and Directors as a Group           32,762,500             39.9%

----------
(1)   No shares are owned directly by Mr. May. All shares  beneficially owned by
      Mr. May are owned through affiliated entities and/or by family members.

(2)   Includes   5,000,000   shares    beneficially   owned   through   Advanced
      Communications Technologies Pty Ltd.

(3)   Includes 4,790,347 shares held by Mrs. Needham's adult children.

(4)   Includes 5,173,572 shares held by Mr. DuPont's adult children and in trust
      for Rhett DuPont, a minor.

(5)   Includes 130,000 shares beneficially owned through various family trusts.

*     The Company presently is disputing the ownership of these shares.

**    Less than 1%.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. May, the Company's principal shareholder, through a family trust established
in  Australia  by the  May  family,  indirectly  owns  a  majority  interest  in
ACT-Australia.

During the year, the Company acquired a 20% equity interest in ACT-Australia, an
entity that is majority owned by the May family, for 5,000,000 restricted shares
of common stock and a note for $7,500,000. In addition, as of June 30, 2000, the
Company advanced $552,125 to ACT-Australia in partial support of its development
activities.


                                                                              26
<PAGE>

During the fiscal year ended June 30,  2000,  the Company was indebted to Global
Communications  Technologies  Ltd.,  an entity owned by Mr. May for $251,500 for
advances made to the Company.  In addition,  Mr. May has deferred  receiving his
annual  compensation and is owed $231,550 in accrued and unpaid  compensation as
of June 30, 2000.

Effective  July 1, 2000,  the Company and Mr. May  entered  into a revised  oral
employment  agreement that provides for Mr. May to receive  $15,000 per month in
compensation and a special bonus of $50,000.

On September 1, 2000,  Mr. Danson entered into a one year  consulting  agreement
with the Company for the period September 1, 2000 through August 31, 2001. Under
the terms of the consulting agreement, Mr. Danson will receive $10,000 per month
in cash and $10,000 per month in stock for his services.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

ITEM 13A.

Not applicable.

ITEM 13B.

Not applicable.


                                                                              27
<PAGE>

SIGNATURES

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

Registrant:
Advanced Communications Technologies, Inc.

/s/ Roger May                                                 October 11, 2000
    ------------------------------------------
    By:  Roger May
    Chief Executive Officer

/s/ Wayne I. Danson                                           October 11, 2000
    ------------------------------------------
    By:  Wayne I. Danson
    Chief Financial Officer and Director

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

/s/ Randall Prouty                                            October 11, 2000
    ------------------------------------------
    Randall Prouty
    Director

/s/ Jonathan Lichtman                                         October 11, 2000
    ------------------------------------------
    Jonathan Lichtman
    Director

/s/ Michael Finch                                             October 11, 2000
    ------------------------------------------
    Michael Finch
    Director

/s/ Wilbank Roche                                             October 11, 2000
    ------------------------------------------
    Wilbank Roche
    Director


                                                                              28
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)

                        CONSOLIDATED FINANCIAL STATEMENTS

                               AS OF JUNE 30, 2000
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 2000

                          INDEX TO FINANCIAL STATEMENTS

                                                                        Page(s)
                                                                        -------

Independent Auditor's Report                                            F-1

Consolidated Balance Sheet as of June 30, 2000                          F-2

Consolidated Statements of Operations  for the Years
     Ended June 30, 2000 and 1999 and for the Period
     April 30, 1998 (Inception) through
     June 30, 2000                                                      F-3

Consolidated Statement of Changes in Stockholders'
     Equity for the Period April 30, 1998 (Inception)
     through June 30, 2000                                              F-4

Consolidated Statements of Cash Flows for the Years
     Ended June 30, 2000 and 1999 and for the Period
     April 30, 1998 (Inception) through June 30, 2000                   F-5, F-6

Notes to Consolidated Financial Statements                              F-7-F-19
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors of:
   Advanced Communications Technologies, Inc. and Subsidiary

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Advanced
Communications   Technologies,   Inc.,  and  Subsidiary  (a  development   stage
enterprise)  as of June 30,  2000 and the  related  consolidated  statements  of
operations,  changes in stockholders'  equity and cash flows for the years ended
June 30, 2000 and 1999,  for the period from April 30, 1998  (inception) to June
30, 2000. These consolidated  financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly  in  all  material   respects,   the   financial   position  of  Advanced
Communications   Technologies,   Inc.  and  Subsidiary  (a   development   stage
enterprise)  as of June 30, 2000, and the results of its operations and its cash
flows for the years  ended June 30,  2000 and 1999 and for the period from April
30, 1998  (inception)  to June 30, 2000 in conformity  with  generally  accepted
accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern.  As discussed in Note 16 to
the consolidated  financial  statements,  the Company's  significant  cumulative
losses, of $5,416,969  through June 30, 2000, and working capital  deficiency at
June 30,  2000,  of  $1,424,473,  raise  substantial  doubt about its ability to
continue as a going concern.  Management's plans in regards to these matters are
also described in Note 16. The accompanying consolidated financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

WEINBERG & COMPANY, P.A.
Boca Raton, Florida
September 27, 2000


<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                           CONSOLIDATED BALANCE SHEET
                               AS OF JUNE 30, 2000

                                     ASSETS
CURRENT ASSETS
    Cash                                                           $     30,154
    Marketable securities                                                 6,825
    Prepaid expenses                                                     46,118
                                                                   ------------
TOTAL CURRENT ASSETS                                                     83,097
                                                                   ------------
PROPERTY & EQUIPMENT - NET                                               16,188
                                                                   ------------
OTHER ASSETS
    Due from affiliate                                                  552,125
    Investment in affiliate                                          19,264,182
    Deposits                                                             45,525
                                                                   ------------
TOTAL OTHER ASSETS                                                   19,861,832
                                                                   ------------
TOTAL ASSETS                                                       $ 19,961,117
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
 CURRENT LIABILITIES
    Accounts payable                                               $    210,970
    Accrued compensation                                                231,550
    Deferred revenue                                                     50,000
    Note payable                                                        150,000
    Loan payable to affiliate                                           251,500
    Convertible debentures                                              613,550
                                                                   ------------
TOTAL CURRENT LIABILITIES                                             1,507,570

LONG-TERM LIABILITIES
    Notes payable-affiliate                                           7,500,000
                                                                   ------------
TOTAL LIABILITIES                                                     9,007,570
                                                                   ------------
STOCKHOLDERS' EQUITY
    Common stock, no par value, 100,000,000
      shares authorized, 82,227,280 shares
      issued and outstanding                                         16,865,441
    Accumulated deficit during development stage                     (5,416,969)
    Accumulated other comprehensive loss                               (119,925)
    Less:  Common stock advances                                       (375,000)
                                                                   ------------
TOTAL STOCKHOLDERS' EQUITY                                           10,953,547
                                                                   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $ 19,961,117
                                                                   ============

           See accompanying notes to consolidated financial statements


                                       F-2
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                         FOR THE
                                                                       PERIOD FROM
                                         FOR THE         FOR THE      APRIL 30, 1998
                                        YEAR ENDED      YEAR ENDED   (INCEPTION) TO
                                      JUNE 30, 2000   JUNE 30, 1999   JUNE 30, 2000
                                      -------------   -------------   -------------
<S>                                    <C>             <C>             <C>
OPERATING EXPENSES
  Consulting fees                      $    563,543    $    416,666    $    980,209
  Depreciation and amortization               4,000           2,635           6,635
  Professional fees                       3,409,038         148,379       3,557,417
  Other selling, general,
    administrative expenses                 412,110         105,594         517,704
                                       ------------    ------------    ------------
      Total Operating Expenses            4,388,691         673,274       5,061,965
                                       ------------    ------------    ------------

LOSS FROM OPERATIONS                     (4,388,691)       (673,274)     (5,061,965)
                                       ------------    ------------    ------------

OTHER INCOME/(EXPENSE)
  Interest expense                         (747,110)         (5,580)       (752,690)
  Loss from investment in affiliate         (85,818)           --           (85,818)
  Other income                                 --             5,892           5,892
                                       ------------    ------------    ------------
      Total Other Income/(Expense)         (832,928)            312        (832,616)
                                       ------------    ------------    ------------

LOSS BEFORE EXTRAORDINARY GAINS          (5,221,619)       (672,962)     (5,894,581)

EXTRAORDINARY GAINS
  Gains on extinguishments of debt          477,612            --           477,612
                                       ------------    ------------    ------------

NET LOSS                               $ (4,744,007)   $   (672,962)   $ (5,416,969)

OTHER COMPREHENSIVE LOSS, NET OF TAX
Unrealized loss on marketable
  securities                                (22,425)        (97,500)       (119,925)
                                       ------------    ------------    ------------

COMPREHENSIVE LOSS                       (4,766,432)       (770,462)     (5,536,894)
                                       ============    ============    ============

Net loss per share - basic
  and diluted                          $      (0.06)   $      (0.01)   $      (0.08)
                                       ============    ============    ============

Weighted average number of shares
  outstanding during the period -
  basic and diluted                      77,107,560      60,619,676      68,426,745
                                       ============    ============    ============
</TABLE>

           See accompanying notes to consolidated financial statements


                                      F-3
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
         FOR THE PERIOD FROM APRIL 30, 1998 (INCEPTION) TO JUNE 30, 2000

<TABLE>
<CAPTION>
                                                                 ACCUMULATED    ACCUMULATED
                                                               DEFICIT DURING      OTHER         COMMON
                                        COMMON STOCK             DEVELOPMENT   COMPREHENSIVE      STOCK
                                    SHARES         AMOUNT           STAGE           LOSS         ADVANCES        TOTAL
                                  ----------    ------------    ------------    ------------    ---------    ------------
<S>                               <C>           <C>             <C>             <C>             <C>          <C>
Founders' stock issued for cash   55,568,011    $      1,160    $       --      $       --      $    --      $      1,160
                                  ----------    ------------    ------------    ------------    ---------    ------------
BALANCE, JUNE 30, 1998            55,568,011           1,160            --              --           --             1,160

Stock issued for cash              4,656,216          56,116            --              --           --            56,116
Contribution of capital                 --             5,600            --              --           --             5,600
Recapitalization:
  Stock issued to Media Forum
    International, Inc.
    stockholders                   6,733,803       2,834,490      (3,726,539)        (97,500)        --          (989,549)
  Reclassification of
    accumulated deficit                 --        (3,726,539)      3,726,539            --           --              --
Stock issued for services          1,259,250         330,166            --              --           --           330,166
Stock issued for debt                 95,000          25,990            --              --           --            25,990
Stock issued for cash              5,000,000       1,000,000            --              --           --         1,000,000
Offering costs of private
  placement                             --          (110,800)           --              --           --          (110,800)
Net loss for the year ended
  June 30, 1999                         --              --          (672,962)           --           --          (672,962)
                                  ----------    ------------    ------------    ------------    ---------    ------------
BALANCE, JUNE 30, 1999            73,312,280         416,183        (672,962)        (97,500)        --          (354,279)

Stock issued for services          2,585,000       3,384,358            --              --           --         3,384,358
Stock issued for office
  furniture                           30,000           9,900            --              --           --             9,900
Stock issued for debt                600,000         180,000            --              --           --           180,000
Stock issued for acquisitions      5,700,000      12,225,000            --              --           --        12,225,000
Change in unrealized loss on
  securities for sale                   --              --              --           (22,425)        --           (22,425)
Interest on beneficial
  conversion of debentures              --           650,000            --              --           --           650,000
Common stock advances                                                                            (375,000)       (375,000)
Net loss for the year ended
  June 30, 2000                         --              --        (4,744,007)           --           --        (4,744,007)
                                  ----------    ------------    ------------    ------------    ---------    ------------

BALANCE, JUNE 30, 2000            82,227,280    $ 16,865,441    $ (5,416,969)   $   (119,925)   $(375,000)   $ 10,953,547
                                  ==========    ============    ============    ============    =========    ============
</TABLE>

           See accompanying notes to consolidated financial statements


                                      F-4
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                        FOR THE PERIOD FROM
                                                                                                          APRIL 30, 1998
                                                             FOR THE YEAR ENDED    FOR THE YEAR ENDED     (INCEPTION) TO
                                                                JUNE 30, 2000         JUNE 30, 1999        JUNE 30, 2000
                                                             ------------------    ------------------   -------------------
<S>                                                               <C>                  <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                       $(4,744,007)         $  (672,962)         $(5,416,969)
Adjustments to reconcile net loss to net cash used:
  Depreciation and amortization                                         4,000                2,635                6,635
  Interest expense - amortization of debt costs                        65,000                 --                 65,000
  Expenses incurred in exchange for common stock                    3,384,358              330,166            3,714,524
  Inter-company transaction                                              --                (15,000)             (15,000)
  Interest for beneficial conversion feature                          650,000                 --                650,000
  Gain on extinguishment of debt                                     (477,612)                --               (477,612)
  Loss on minority interest in affiliate                               85,818                 --                 85,818
  Provision for doubtful account                                      125,000                 --                125,000
Changes in operating assets and liabilities:
(Increase) decrease in assets
  Prepaid expense                                                     (46,118)                --                (46,118)
  Other deposits                                                      (40,000)                --                (40,000)
  Security deposits                                                    (5,525)                --                 (5,525)
Increase (decrease) in liabilities:
  Accounts payable                                                    184,450               (7,855)             176,595
  Interest payable                                                    (17,890)               5,548              (12,342)
  Accrued compensation                                                120,000              (20,000)             100,000
  Other liabilities                                                  (115,000)             115,000                 --
  Deferred revenue                                                     50,000                 --                 50,000
                                                                  -----------          -----------          -----------
  Net cash used in operating activities                              (777,526)            (262,468)          (1,039,994)
                                                                  -----------          -----------          -----------
Cash flows from investing activities
  Loan to affiliated company                                         (242,125)            (310,000)            (552,125)
  Purchase of fixed assets                                             (6,335)              (6,588)             (12,923)
  Investment in Kentel LLC                                            158,070             (150,000)               8,070
  Investment in World IP                                             (125,000)                --               (125,000)
                                                                  -----------          -----------          -----------
  Net cash used in investing activities                              (215,390)            (466,588)            (681,978)
                                                                  -----------          -----------          -----------
Cash flows from financing activities
   Loan proceeds from affiliate                                       251,500                 --                251,500
   Offering costs                                                        --                (10,800)             (10,800)
   Proceeds from issuance of common
     stock, net of offering costs                                     273,500              748,716            1,023,376
   Proceeds from issuance of convertible
     debt, net                                                        488,050                 --                488,050
                                                                  -----------          -----------          -----------
   Net cash provided by financing activities                        1,013,050              737,916            1,752,126
                                                                  -----------          -----------          -----------

Net increase in cash                                                   20,134                8,860               30,154

Cash and cash equivalents at beginning
 of period                                                             10,020                1,160                 --
                                                                  -----------          -----------          -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                        $    30,154          $    10,020          $    30,154
                                                                  ===========          ===========          ===========
</TABLE>


                                       F-5
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF CASH FLOWS

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the year ended June 30,  2000,  the  Company  acquired  20% of the common
stock of Advanced Communications  Technologies,  Pty, an Australian corporation.
This resulted in an investment totaling $19,350,000, comprised of a note payable
of $7,500,000  and the issuance of 5,000,000  shares of restricted  common stock
for $11,850,000. (See note 3).

During the year ended June 30, 2000, the Company issued 500,000 shares of common
stock, valued at $375,000, related to a rescinded acquisition. (See note 13). As
of June 30,  2000,  the Company  has not  received  the funds for these  shares;
therefore,  a common stock advance has been recorded in the equity  section,  in
the amount of  $375,000,  to offset the value of the shares  that were issued at
year end.

On January 31, 2000 the Company issued 200,000 shares of common stock to acquire
100% of Smart Investment.com Inc. (see Note 1(A)).

During the year ended June 30, 2000, the Company accrued  interest of $32,110 on
a note payable.  The terms of the obligation were  renegotiated  and an interest
accrual of $34,507 was incorporated in the gain on extinguishment of debt.

           See accompanying notes to consolidated financial statements


                                       F-6
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

NOTE 1            SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

                  (A) Organization

                  Advanced Communications Technologies,  Inc. (the "Company"), a
                  development stage enterprise which is in the telecommunication
                  industry,  and was incorporated on April 30, 1998. The Company
                  was  inactive  from  April  1998 to June 1998  except  for the
                  issuance of founders' shares.

                  The Company owns the rights for North and South America,  to a
                  development  project called  Universal Wide Spectrum  Cellular
                  which will be marketed  under the name of  "Spectrucell".  The
                  rights are licensed from the Company's  Australian  affiliate,
                  Advanced  Communications  Technologies  Pty Ltd. ("ACT Pty.").
                  (See notes 2, 3 and 11).

                  On April 7, 1999, Media Forum  International,  Inc. ("MFI"), a
                  Florida corporation,  acquired all of the outstanding stock of
                  ACT. The merger  agreement  stipulated  that MFI issue, to the
                  shareholders of the Company, nine shares of MFI's common stock
                  for every one share held by the Company's  stockholders.  As a
                  result of the merger, the shareholders of the Company received
                  60,224,227 shares and became shareholders of approximately 90%
                  of MFI. MFI then  changed its name to Advanced  Communications
                  Technologies,  Inc. Generally accepted  accounting  principles
                  require that the company whose shareholders  retain a majority
                  voting  interest  in a  combined  business  be  treated as the
                  acquirer for accounting purposes.  As a result, the merger was
                  treated  as an  acquisition  of MFI by  the  Company  and as a
                  recapitalization of the Company. Accordingly, the consolidated
                  financial  statements  include the following:  (1) the balance
                  sheet consists of the Company's net assets at historical  cost
                  and MFI's net assets at historical  cost and (2) the statement
                  of operations includes the Company's operations for the period
                  presented and the operations of MFI from the date of merger.

                  On January 31, 2000 the  Company  acquired  all the issued and
                  outstanding  shares of  SmartInvestment.com  Inc.  an inactive
                  reporting  company for 200,000 shares of its restricted common
                  stock. The Company elected successor issuer status to become a
                  fully reporting company. The Company treated the purchase as a
                  recapitalization, and has not recorded any goodwill associated
                  with the acquisition.

                  On April 5, 2000, the Company acquired 20% of the common stock
                  of ACT Pty. (See note 3).


                                       F-7
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                  The Company's activities during the development stage included
                  the raising of capital,  acquisition of intangible assets, and
                  the funding of its Australian affiliate.

                  (B) Principles of Consolidation

                  The accompanying consolidated financial statements include the
                  accounts  of the  Company  and its  wholly  owned  subsidiary,
                  Advanced Global Communications,  Inc. ("AGC"). All significant
                  intercompany transactions and balances have been eliminated in
                  consolidation.

                  (C) Use of Estimates

                  In preparing  consolidated  financial statements in conformity
                  with generally accepted accounting  principles,  management is
                  required to make  estimates  and  assumptions  that affect the
                  reported  amounts of assets and liabilities and the disclosure
                  of  contingent  assets  and  liabilities  at the  date  of the
                  consolidated  financial  statements  and revenues and expenses
                  during the reported  period.  Actual results could differ from
                  those estimates.

                  (D) Fair Value of Financial Instruments

                  The  carrying  amounts  of  the  Company's  accounts  payable,
                  accrued liabilities, and loans payable approximates fair value
                  due to the  relatively  short  period  to  maturity  for these
                  instruments.

                  (E) Marketable Securities

                  Management  determines the appropriate  classification  of its
                  investments at the time of acquisition  and  reevaluates  such
                  determination  at each balance sheet date.  Available-for-sale
                  securities are carried at fair value, with unrealized  losses,
                  reported as a separate component of stockholders' equity

                  (F) Property and Equipment

                  Property  and  equipment  are stated at cost and  depreciated,
                  using accelerated methods,  over the estimated economic useful
                  lives of 5 years.

                  (G) Long-Lived Assets

                  During 1995,  Statement of Financial  Accounting Standards No.
                  121,  "Accounting for the Impairment of Long-Lived  Assets and
                  for  Long-Lived  Assets to be Disposed Of" ("SFAS  121"),  was
                  issued.  SFAS 121  requires  the Company to review  long-lived
                  assets and certain identifiable assets related to those assets
                  for impairment  whenever  circumstances  and situations change
                  such that there is an


                                       F-8
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                  indication  that the carrying  amounts may not be recoverable.
                  The adoption of this  pronouncement did not have a significant
                  impact on the  Company's  financial  statements as of June 30,
                  2000 and 1999.

                  (H) Income Taxes

                  Deferred tax assets and  liabilities  are  recognized  for the
                  future tax  consequences  attributable to differences  between
                  the financial  statement  carrying  amounts of existing assets
                  and liabilities and their  respective tax bases.  Deferred tax
                  assets and  liabilities  are measured  using enacted tax rates
                  expected  to apply to  taxable  income  in the  years in which
                  those  temporary  differences  are expected to be recovered or
                  settled.  The effect on deferred tax assets and liabilities of
                  a change in tax rates is  recognized  in income in the  period
                  that includes the enactment date.  There was no current income
                  tax expense in the periods  ended June 30, 2000 due to the net
                  loss.

                  The deferred tax asset,  of  approximately  $1,841,769,  as of
                  June 30, 2000,  arising from a net operating loss carryforward
                  of $2,032,611 and stock issued for services of $3,384,358, has
                  been fully offset by a valuation allowance. In addition, a net
                  operating  loss  carryforward,  of  approximately  $2,300,000,
                  resulting   from  the   pre-merger   losses  of  Media   Forum
                  International,  Inc.  is  available  subject  to annual  usage
                  limitations under the Internal Revenue Service Code.

                  (I) Comprehensive Income

                  The Company accounts for Comprehensive Income (Loss) under the
                  Financial  Accounting  Standards Board Statements of Financial
                  Accounting Standards No. 130, "Reporting Comprehensive Income"
                  (Statement No. 130").  Statement No. 130 establishes standards
                  for  reporting  and  display of  comprehensive  income and its
                  components,  and is effective for fiscal years beginning after
                  December 15, 1997.

                  The unrealized  gains and losses,  net of tax,  resulting from
                  the valuation of  available-for-sale  marketable securities at
                  their  fair  market  value at year end are  reported  as Other
                  Comprehensive Income (Loss) in the Statement of Operations and
                  as   Accumulated   Other   Comprehensive   Income   (Loss)  in
                  Stockholders'  Equity and in the  Statement  of  Stockholders'
                  Equity

                  (J) Concentration of Credit Risk

                  The  Company  maintains  its  cash in bank  deposit  accounts,
                  which, at times,  may exceed  federally  insured  limits.  The
                  Company has not  experienced  any losses in such  accounts and
                  believes it is not exposed to any  significant  credit risk on
                  cash and cash equivalents.


                                       F-9
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                  (K) Loss Per Share

                  Net loss per common share is computed  based upon the weighted
                  average common shares outstanding.

                  At June 30, 2000 there was an estimated 4,242,820 common stock
                  equivalents in the form of convertible  debt. Such convertible
                  debt is subject to  litigation  (See note 8). The common stock
                  equivalents  have  not been  included  in the  computation  of
                  diluted loss per share since the effect was anti-dilutive.

                  (L) Recent Accounting Pronouncements

                  Statement No. 133, "Accounting for Derivative  Instruments and
                  Hedging Activities",  as amended by Statement No. 137 and 138,
                  establishes  accounting and reporting standards for derivative
                  instruments and related contracts and hedging activities. This
                  statement  is  effective  for all fiscal  quarters  and fiscal
                  years beginning after June 15, 2000. The Company believes that
                  its  adoption  of  pronouncement  No.  133,  as amended by No.
                  137and 138,  will not have a material  effect on the Company's
                  financial position or results of operations.

NOTE 2            DUE FROM AFFILIATE

                  The Company has  advanced  funds to ACT Pty.  that is majority
                  owned by a principal  stockholder  of the Company and in which
                  it has a 20% investment.  (See note 3 and 11(B)).  These funds
                  were  provided in order to  establish  the  related  company's
                  operations. The Company has advanced $552,125 through June 30,
                  2000.  Additional funds have been provided  subsequent to June
                  30, 2000.

NOTE 3            INVESTMENT IN AFFILIATE

                  In April 2000, the Company acquired 20% of the common stock of
                  ACT Pty,, an affiliate  (See note 11(B)).  This resulted in an
                  investment  of  $19,350,000,  comprised  of a note  payable of
                  $7,500,000  (see note  1(d))  and the  issuance  of  5,000,000
                  shares of restricted common stock for $11,850,000.  The shares
                  issued were valued at the average  quoted trading price during
                  the acquisition period. The investment has been recorded using
                  the equity method of accounting.  Therefore, the investment in
                  affiliate  has  been  reduced  by  20%  of  the  prorated  net
                  operating loss of Advanced Communications  Technologies,  Pty,
                  for the year ended June 30, 2000, which amounted to $85,818.

                  The note payable, of $7,500,000,  is non-interest bearing with
                  payments to be made in three equal monthly  installments.  The
                  debt is classified as long-term,  since the agreement does not
                  state a specified maturity date.


                                      F-10
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                  During  September  2000, the Company agreed to issue 5,000,000
                  shares of restricted common stock, for $3,500,000, as a credit
                  against the outstanding debt of $7,500,000 owed by the Company
                  for the 20% equity  purchase of ACT Pty.  The stock was valued
                  at the quoted trading price on the grant date.

NOTE 4            MARKETABLE SECURITIES

                  The Company's  marketable  securities  are comprised of equity
                  securities,  all classified as  available-for-sale,  which are
                  carried  at their fair  value  based  upon the  quoted  market
                  prices of those  investments  at June 30,  2000.  Accordingly,
                  unrealized  gains and losses  are  included  in  stockholders'
                  equity.

                  The  composition of marketable  equity  securities at June 30,
                  2000 is as follows:

                                                            Gross
                                                          Unrealized
                                                 Cost       (Loss)    Fair Value
                                              ---------   ---------   ----------
                  Available-for-sale
                    Securities:
                      Common Stock            $ 126,750   $(119,925)   $  6,825

NOTE 5            PROPERTY AND EQUIPMENT

                  Computer and office equipment                        $ 22,823
                  Less: Accumulated depreciation                         (6,635)
                                                                       ========
                      Property and equipment - net                     $ 16,188
                                                                       ========

                  Depreciation expense for the year ended June 30, 2000 and 1999
                  is $4,000 and $2,635, respectively.

NOTE 6            ACCRUED COMPENSATION

                  The Company has an agreement  with an  individual  to serve as
                  the Chief Executive  Officer of the Company (See note 14 (A)).
                  The individual agreed to defer payment of the amounts owed him
                  pursuant to the agreement due to the Company's  lack of funds.
                  The Company owed the individual $231,550 at June 30, 2000.


                                      F-11
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

NOTE 7            NOTE AND LOAN PAYABLE

                  (A) Note Payable

                  MFI was  obligated to pay $150,000 to a company (the  "Payee")
                  pursuant to a convertible  promissory  note.  During  December
                  1997,  MFI issued  75,000 of its  common  shares to settle the
                  amounts  due to the  payee.  However,  a  dispute  arose as to
                  whether the payee  authorized the issuance of the shares.  The
                  payee filed during  December  1997 to enforce the  convertible
                  promissory note. Total interest payable was $84,507 as of June
                  30, 2000 resulting in the total principal and accrued interest
                  payable  to the payee at June 30,  2000 of  $234,507.  In June
                  2000,  the  parties  agreed to  settle  the  litigation  for a
                  payment of $200,000. This resulted in a gain on extinguishment
                  of debt in the amount of $34,507.  The Company  made a payment
                  of $50,000 by June 30, 2000. The remainder was to be paid with
                  proceeds  from the  75,000  shares of stock and any  remaining
                  balance to be paid by the Company.  The revised obligation was
                  to be paid by August 14,  2000.  The Company is  currently  in
                  default on this obligation and a judgement against the Company
                  has been entered (See note 14(E)(ii). Management believes that
                  the amount recorded on its consolidated  financial  statements
                  at June 30, 2000, in the amount of $150,000,  fairly  reflects
                  the Company's potential liability.

                  (B) Loan Payable to Affiliate

                  As of June 30, 2000,  the Company owed an affiliate  $251,500.
                  These funds were  advanced  to the Company to provide  working
                  capital for normal business operations.

NOTE 8            CONVERTIBLE DEBENTURES

                  On  September  30,  1999,  the Company  entered into a secured
                  convertible  debenture  purchase agreement with two companies,
                  who are  already  stockholders  of the  Company,  whereby  the
                  Company sold  $500,000 of 12% Secured  Convertible  Debentures
                  due April 1, 2000, and which were  convertible  into shares of
                  the Company's Class A Common Stock. In addition,  on September
                  30, 1999, the Company issued another convertible  debenture to
                  an unrelated  party in the amount of $150,000.  The debentures
                  are convertible, at the holder's option, into shares of common
                  stock in whole or in part at any time from time to time  after
                  the original  issue date. The number of shares of common stock
                  issuable upon a conversion is to be determined by dividing the
                  outstanding principal amount of the debenture to be converted,
                  plus all accrued but unpaid interest, by the conversion price.
                  The conversion  price in effect on any conversion  date is 50%
                  of the average of the bid price during the twenty trading days
                  immediately  preceding the applicable conversion date. $60,500
                  overpayments  received  from the


                                      F-12
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                  debenture  subscribers as a result of their purchase of common
                  stock under the private placement (See note 10(B)) was applied
                  to amounts due. Of the $650,000 total debentures only $613,550
                  were  received.  As of  the  date  of the  accompanying  audit
                  reports the debentures  were not converted and the Company was
                  in  default  based on the  April 1,  2000 due date  (See  note
                  14(E)(i)).

                  The  convertible  debentures  contain a beneficial  conversion
                  feature   computed  at  its  intrinsic   value  which  is  the
                  difference  between the conversion price and the fair value on
                  the debenture issuance date of the common stock into which the
                  debt is  convertible,  multiplied by the number of shares into
                  which the debt is convertible at the  commitment  date.  Since
                  the beneficial  conversion feature is to be settled by issuing
                  equity,  the amount  attributed to the  beneficial  conversion
                  feature, of $650,000,  was recorded as an interest expense and
                  a  component  of  equity  on  the  issuance   date  (See  note
                  14(E)(i)).

                  For the  year  ended  June 30,  2000,  the  Company  amortized
                  $65,000 in  debenture  issuance  costs  which is  included  in
                  interest expense of $747,110.

NOTE 9            SETTLEMENT OF DEBT

                  As of  June  30,  1999,  the  Company  owed  certain  minority
                  stockholders  $422,561.  On May 25, 1999,  the Company,  along
                  with two of its  stockholders  and  directors,  entered into a
                  settlement agreement with these stockholders.

                  The  Company  agreed to issue  600,000  shares  of  restricted
                  common stock within five days of the signing of the settlement
                  agreement and the stock option agreement. The option agreement
                  was  signed  in July  1999 and the  shares  were  issued.  The
                  Company  recognized  an  extraordinary  gain of  approximately
                  $242,561  on the  extinguishment  of debt in the  fiscal  year
                  ended June 30, 2000 based on the quoted  trading  price of the
                  common stock on the agreement date.

NOTE 10           STOCKHOLDERS' EQUITY

                  (A) Private Placement

                  During the period of April  1999 to July 1999,  pursuant  to a
                  private  placement  under  Regulation D, Rule 504, the Company
                  issued 5,000,000 shares of common stock at $.20 per share. The
                  Company received $1,060,500 from the investors, which included
                  an overpayment  of $60,500.  The  overpayment  was included in
                  other  liabilities until it was credited to the same investors
                  who  subscribed to convertible  debentures in September,  1999
                  (See  note 8).  The  Company  incurred  offering  expenses  of
                  $100,000  cash and issued 33,750 shares of common stock valued
                  at  $10,800,  based on the quoted  trading  price on the grant
                  date,  in lieu of


                                      F-13
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                  the  non-accountable  expense  reimbursement (See note 14(C)).
                  The value of the cash and  common  stock has been  charged  to
                  equity as direct costs to the offering. (B) Conversion of Debt

                  During April 1999,  the Company  issued  55,000  shares of its
                  common stock to an individual as payment for amounts owed. The
                  common stock was value at $11,990 based on the quoted  trading
                  price of the common stock.  The individual was owed $20,303 at
                  the time of issuance. A gain on the extinguishment of debt was
                  recorded,  in the amount of $8,312, for the difference between
                  the fair market value and the actual liability and is included
                  in other  income  (See  note 9 for  additional  conversion  of
                  debt).

                  (C) Stock Issued For Services

                  During  the year  ended  June 30,  2000,  the  Company  issued
                  3,085,000  shares of common stock for services.  The stock was
                  valued based on the quoted  trading  price on the grant dates,
                  which aggregated $3,384,358.

NOTE 11           RELATED PARTIES

                  (A) Global Communications Technology Consultants, Inc.

                  Global Communications Technology Consultants,  Inc., a related
                  party,  is  wholly  owned by the  individual  who owns  Global
                  Communications  Technologies Ltd., a principal  stockholder of
                  the Company.

                  (B) Advanced Communications Technologies Pty. Ltd.

                  Advanced Communications  Technologies Pty. Ltd., an Australian
                  company, is majority owned by entities beneficially related to
                  a principal stockholder.

                  (C) Legal Counsel

                  Certain of the Company's legal counsel are stockholders of the
                  Company.

                  (See  Notes 2, 3, 9, and 14(A) for  additional  related  party
                  disclosures).

NOTE 12           EXECUTIVE EMPLOYMENT AGREEMENTS

                  On November 7, 1999,  the Company  entered into an  employment
                  agreement  with an  individual  to serve as  President  of the
                  Company,  for a term of three  years.  The  individual  was to
                  receive a salary of $150,000 per year on a monthly  basis.  As
                  additional consideration,  the Company agreed to issue 500,000
                  shares of restricted


                                      F-14
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                  stock  upon  execution  of the  agreement.  In  addition,  the
                  individual was to be granted 750,000 employee  incentive stock
                  options  over  the  employment  term.  In  January  2000,  the
                  individual  resigned  from  the  position  of  President.  The
                  Company never issued the 500,000 shares of restricted stock or
                  the employee  incentive stock options and  transferred  40,000
                  shares of its  restricted  common stock to the  individual  in
                  full settlement.

                  On November 29, 1999,  the Company  entered into an employment
                  agreement  with  a  consulting  organization  to  provide  the
                  functions  customarily  provided by a Chief Financial Officer.
                  As compensation  for these  services,  the Company pays $5,000
                  monthly in  advance,  plus  100,000  restricted  shares of the
                  Company's common stock.  Starting April 1, 2000,  compensation
                  for  these  services  increased  to  $10,000  per  month.  The
                  issuance of stock was recorded as consulting  expense over the
                  service  period  based  upon the quoted  trading  price of the
                  stock at the agreement date.

NOTE 13           ACQUISITIONS

                  In  November  of  1999,   AGC,  the  Company's   newly  formed
                  subsidiary  (See note 14 (A)),  entered into an agreement with
                  World IP Incorporated  ("World IP"), Sur Comunicaciones,  S.A.
                  (a Chilean corporation) ("Sur"),  Acinel, S.A. (an Argentinean
                  corporation)  (Acinel),  and the shareholders of World IP (See
                  legal matters below). Under this agreement, AGC subscribed for
                  the purchase of 1,020 shares, or 51%, of World IP common stock
                  for $95,000 cash paid in January  2000.  At the closing  date,
                  World IP  executed a  shareholder  agreement  with AGC and its
                  former  shareholders.  In  addition  to the cash  paid for the
                  stock, AGC was to pay $60,000, to World IP, to be used to open
                  a point of presence in Venezuela. As additional  consideration
                  for the  issuance  of the stock,  the Company  issued  500,000
                  shares of restricted  common stock to the former  shareholders
                  of  World  IP.  Six  months  from  the  closing  date  of  the
                  agreement,  AGC and the Company  were to measure the  combined
                  performance of World IP, Sur and Acinel,  and issue additional
                  common stock to the former  shareholders  of World IP based on
                  its performance. The amount of additional shares of ACT common
                  stock to be issued to the  shareholders of World IP were to be
                  equal  to the  lesser  of (i)  1,000,000  shares,  or (ii) the
                  number  of  shares  according  to a  schedule  based  upon the
                  combined gross monthly income of World IP, Sur and Acinel.

                  Subsequent  to  June  30,  2000,  the  Company  rescinded  the
                  acquisition and is pursuing litigation to resolve this matter.
                  Due to  the  uncertainty  of  this  event,  all  related  cash
                  advances, totaling $125,000, have been written off as advances
                  receivable  with  a 100%  reserve  for  uncollectable  amounts
                  resulting  in a bad debt expense of $125,000 in 2000 (See note
                  2). The 500,000  common  shares  issued and valued at $375,000
                  based upon the quoted  trading  price  during the  acquisition


                                      F-15
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                  period are reflected as common stock advanced,  a component of
                  equity. (See note 14(E)(v)).

NOTE 14           COMMITMENTS AND CONTINGENCIES

                  (A) Consulting / Employment Agreement

                  On November  21,  1997,  MFI entered  into an  agreement  with
                  Global Communications  Technology  Consultants,  Inc. ("GCTC")
                  whereby MFI engaged  GCTC as  consultants  to MFI, and hired a
                  GCTC employee as Chief  Executive  Officer ("CEO") of MFI with
                  the  primary  duties  of  identifying  suitable  acquisitions,
                  procuring new  financing and assisting  with any of MFI's fund
                  raising  efforts in order to build and establish a substantial
                  revenue and earnings stream for MFI.

                  The Company charged $150,000 to consulting expense pursuant to
                  the  consulting  agreement  during the period  from the merger
                  date through June 30, 2000.  The Company  accrued the majority
                  of the fees owed to the individual due to lack of funding (See
                  note 6). As of June 30, 2000,  the Company owed the individual
                  $231,550.  This  consists of  $131,500  owed at March 31, 1999
                  pursuant to MFI's financial statement; $150,000 accrued on the
                  Company's records and $50,000 paid during May and June 1999.

                  (B) Employment Agreements

                  On April 22, 1997,  MFI entered into an  employment  agreement
                  with an  individual  for the  position  of  account  and sales
                  executive.  The term was for 12 months at an  initial  rate of
                  $5,500 per month with  commissions on sales of between 3-5% of
                  the individual's  gross sales dependent on the individual sale
                  profitability.  The contract was not extended past its initial
                  term. As of March 31, 1999,  MFI owed the  individual  $11,580
                  for services  rendered which was included in accounts payable.
                  In June 1999,  the Company  issued 40,000 shares of its common
                  stock with a fair market value of $14,000, based on the quoted
                  trading  price of the  common  stock,  in full  payment of the
                  obligation.  A loss on the extinguishment of debt was recorded
                  in the amount of $2,420 for the  difference  between  the fair
                  market value and the actual liability and is included in other
                  income for 1999.

                  (C) Consulting Agreement

                  On March 4, 1999, MFI entered into a consulting agreement with
                  an  investment  resource  company to arrange  for funding of a
                  reverse  merger of a target  into MFI (See  note 1 (A)).  Upon
                  successful  completion of the merger, the consulting firm also
                  structured  for funding a Regulation D, Rule 504 investment up
                  to $1,000,000.


                                      F-16
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                  MFI agreed to compensate  the  consultant in the amount of 10%
                  of the gross  amount  funded to MFI and 3% in  non-accountable
                  expenses.

                  The Company  received an  aggregate of  $1,060,500  during the
                  period  from  April  1999  to  July  1999   pursuant  to  this
                  agreement.    In   lieu   of   the   non-accountable   expense
                  reimbursement  due to the consulting  firm, the Company issued
                  33,750  shares of common  stock having a fair value of $10,800
                  to the consultants in June 1999. (See note 10(A)).

                  (D) Sublease Agreement

                  The Company has an agreement for the rental of its offices, at
                  $5,525 per month with a lease term of twelve months commencing
                  on the first day of April 2000 with an option to automatically
                  extend the lease. The minimum lease payments for the remaining
                  life of the lease is $44,200.

                  (E) Legal Matters

                        (i)   As of June 30, 2000,  the Company is in default on
                              its  obligation to the debenture  holders based on
                              the April 1, 2000 due date.  (See note 8).  One of
                              the debenture holders holding a $150,000 debenture
                              filed a lawsuit  during  July 2000 to enforce  the
                              agreement.  The  outcome  of  this  litigation  is
                              unknown.

                        (ii)  In June  2000,  the  partners  agreed  to settle a
                              dispute regarding the convertible promissory note.
                              The  Company is in default on this  obligation.  A
                              judgement  against the  Company has been  entered.
                              The potential  loss is believed to be the recorded
                              liability  at June 30, 2000 of $150,000  (See note
                              7).

                        (iii) In July 2000, several stockholders filed an action
                              against the  Company to allow  shares of the stock
                              to   be    transferred    from    restrictive   to
                              unrestrictive  under  a Rule  144  exemption.  The
                              outcome of this litigation is unknown.

                        (iv)  In  September  2000, a Third Party  complaint  was
                              filed  against the Company  which alleges that the
                              Company  failed to pay a break-up  or  termination
                              fee in excess of $50,000.  This  allegedly was due
                              to a failure of the parties to consummate a merger
                              agreement.  The  outcome  of  this  litigation  is
                              unknown.

                        (v)   In October  2000,  the Company  filed suit against
                              the  World  Group  and  its  stockholders  for the
                              rescission  of the  World  IP  agreement  and  for


                                      F-17
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                              monetary  damages   resulting  from   management's
                              alleged breach of the agreement. (See note 13).

                  (F) Common Stock Offering

                  In June 2000,  the Company  entered into an  agreement  with a
                  placement   agent  to  offer  up  to   $12,000,000  in  equity
                  securities of the Company.  In general,  the  placement  agent
                  will receive 6% warrant  coverage as a commitment fee once the
                  investor  executes  the  agreement,  a cash fee  payable  upon
                  initial and each subsequent  closing equal to 6% of the amount
                  drawn  down  by  the  Company  at  each  closing  and  $35,000
                  non-accountable expense allowance.  Once the private placement
                  exceeds $1,000,000, the non-accountable expense allowance will
                  be waived.  This  agreement  will remain in effect  until July
                  2001.

NOTE 15           ACQUISITION

                  The Company  transferred  funds to a potential  acquiree  (the
                  "acquiree")  in the amount of  $150,000  during  June 1999 and
                  $20,000  during  July  1999.  Subsequently,  a  dispute  arose
                  between  the  Company  and  acquiree.  The  Company  collected
                  $13,000  and a $157,000  promissory  note,  dated  December 1,
                  1999,  secured by deed of trust from a member of the potential
                  acquirees CEO's family. The sum of $157,000 plus interest from
                  November 1, 1999 at ten percent was due on or before  February
                  1, 2000.

                  In June 2000, the parties entered into a settlement  agreement
                  and the  Company  received  $165,070 in full  settlement.  The
                  Company has recorded a gain on the  extinguishment of debt for
                  $8,070 in 2000.

NOTE 16           GOING CONCERN

                  The Company's  consolidated  financial statements for the year
                  ended  June 30,  2000 have been  prepared  on a going  concern
                  basis,  which  contemplates  the realization of assets and the
                  settlement of liabilities and commitments in the normal course
                  of business. The Company incurred a net loss of $4,744,007 for
                  the  year  ended  June 30,  2000,  and has a  working  capital
                  deficiency, of $1,424,473, at June 30, 2000.

                  The ability of the  Company to continue as a going  concern is
                  dependent on the Company's ability to raise additional capital
                  and implement its business plan.  Management  anticipates that
                  the issuance of additional securities will generate sufficient
                  resources to assure continuation of the Company's  operations.
                  (See note 14(F)).


                                      F-18
<PAGE>

            ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARY
                        (A DEVELOPMENT STAGE ENTERPRISE)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                  The  consolidated  financial  statements  do not  include  any
                  adjustments  that  might  result  from  the  outcome  of  this
                  uncertainty.

NOTE 17           SUBSEQUENT EVENTS

                  Effective  July 1,  2000,  the  Company  and  Chief  Executive
                  Officer entered into an employment  agreement that compensates
                  the individual at $15,000 per month and a bonus of $50,000.

                  On July 24,  2000,  the Company  found  Australon  USA Inc., a
                  Delaware  corporation,  owned  50% by the  Company  and 50% by
                  Australon  Enterprises,  Pty, Ltd., an 80% owned subsidiary of
                  ACT-Pty.

                  On  September  1, 2000,  the Company  entered  into a one year
                  agreement with the Chief Financial  Officer.  As compensation,
                  the  individual  will  receive  $10,000  per month in cash and
                  $10,000 per month in stock.


                                      F-19