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


                           Amendment 1 To 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.


                                                                               2
<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


                                                                               3
<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 Proposed Products


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            (4,635,186)        673,274       1,783,047
                                   ------------    ------------    ------------
Operating Profit (Loss)              (4,635,186)       (673,274)     (1,744,779)
Total Other (Expense) Income/
  Extraordinary Gain                   (475,241)            312         (18,472)
                                   ------------    ------------    ------------
(Loss) Before Income Taxes           (5,110,427)       (672,692)     (1,763,251)
Provision for Income Taxes                   --              --              --
                                   ------------    ------------    ------------
Net (Loss)                         $ (5,110,427)   $   (672,692)   $ (1,763,251)
                                   ============    ============    ============
Net (Loss) Per Share:
    Basic                          $       (.07)   $       (.01)   $      (.035)
    Diluted                        $       (.07)   $       (.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                      $     30,154    $     10,020    $     46,800


                                                                              17
<PAGE>


Working Capital                      (1,424,473)       (668,232)             --
Total Assets                         19,714,622         876,723          51,300
Total Debt                            9,007,570       1,231,002         946,847
Total Stockholders'
  (Deficiency)/Equity                10,707,052        (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  $4,635,186 and $673,274
respectively.  Of  these  amounts,  $3,409,038  and  $148,379,  or 74%  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   write-off  of  the  World  IP
receivable.

Depreciation and amortization  expense for the year ended June 30, 2000 includes
the  amortization  of  goodwill of $246,495  and  depreciation  of $4,000 on the
Company's office equipment and fixtures.



                                                                              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. In addition,
$192,474 of other income was recognized on the  abandonment of certain  accounts
payable and accrued expenses of MFI.

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 and a gain of $34,507 on settlement of
the Grassland loan payable.


(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 $30,154,
an increase of $20,134 from the balance of $10,020 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 Ladenberg Thalman &
Co., Inc.  ("LTCO") and Wanquay Limited to underwrite a credit facility totaling
$12,000,000. Under the agreement the Company is able to draw down up to $500,000
per month based on an  underwriting  formula which takes into account the volume
weighted average price of our stock. This facility will only be available to the
Company upon the successful filing of an S-1 registration  statement which is to
be filed in the immediate future.

We believe that our cash and cash equivalent balances, and the net proceeds from
the LTCO offering will be  sufficient  to satisfy our cash  requirements  for at
least the next twelve months. We are, however,  uncertain on the timing of when,
if ever, the LTCO  underwriting  will be available to the Company.  The estimate
for the period for which we expect the net proceeds from 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.

Due to the  uncertain  nature of the LTCO facility the Company may need to raise
additional  capital to meet the rapid expansion of initially planned  operations
or the 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/                                                           October 11, 2000
    ------------------------------------------
    By:  Roger May
    Chief Executive Officer

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

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

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

/s/                                                           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-20
<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.

As discussed in Note 18 to the financial statements, certain errors resulting in
an overstatement of previously  reported assets and understatement of previously
reported operating expense and stockholders  deficiency as of June 30, 2000 were
discovered by management of the Company during the subsequent year. Accordingly,
an adjustment has been made to the investment, loss from operations, accumulated
deficit during development stage and accumulated other  comprehensive loss as of
June 30, 2000 to correct the error.

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 net loss of
$5,110,427 for the year ended 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 (Except for Notes 1(E), 1(J),
3, 4, and 8 as to which the date is August 28, 2001)


<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, net                                     19,017,687
    Deposits                                                             45,525
                                                                   ------------
TOTAL OTHER ASSETS                                                   19,615,337
                                                                   ------------
TOTAL ASSETS                                                       $ 19,714,622
                                                                   ============

                      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                     (5,783,389)
    Less:  Common stock advances                                       (375,000)
                                                                   ------------
TOTAL STOCKHOLDERS' EQUITY                                           10,707,052
                                                                   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $ 19,714,622
                                                                   ============


           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               250,495           2,635         253,130
  Professional fees                         3,409,038         148,379       3,557,417
  Other selling, general,
    administrative expenses                   412,110         105,594         517,704
                                         ------------    ------------    ------------
      Total Operating Expenses              4,635,186         673,274       5,308,460
                                         ------------    ------------    ------------
LOSS FROM OPERATIONS                       (4,635,186)       (673,274)     (5,308,460)
                                         ------------    ------------    ------------
OTHER INCOME/(EXPENSE)
  Interest Income                               8,070              --           8,070
  Interest expense                           (747,110)         (5,580)       (752,690)
  Loss from investment in affiliate           (85,818)             --         (85,818)
  Realized loss on decline in
    marketable securities                    (119,925)             --        (119,925)
  Other income                                192,474           5,892         198,366
                                         ------------    ------------    ------------
      Total Other Income/(Expense)           (752,309)            312        (751,997)
                                         ------------    ------------    ------------
LOSS BEFORE EXTRAORDINARY GAINS            (5,387,495)       (672,962)     (6,060,457)

EXTRAORDINARY GAINS
  Gain on extinguishment of debt              277,068              --         277,068
                                         ------------    ------------    ------------
NET LOSS                                 $ (5,110,427)   $   (672,962)   $ (5,783,389)

OTHER COMPREHENSIVE LOSS, NET
  OF TAX
Unrealized loss on marketable
  securities                                       --         (97,500)             --
                                         ------------    ------------    ------------
COMPREHENSIVE LOSS                         (5,110,427)       (770,462)     (5,783,389)
                                         ============    ============    ============
Net loss per share - basic and diluted   $      (0.07)   $      (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
                                         COMMON STOCK         DEFICIT DURING      OTHER             COMMON
                                  -------------------------    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                 --       (110,800)             --              --                 --       (110,800)
  placement
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               30,000          9,900              --              --                 --          9,900
  furniture
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                     --             --              --          97,500                 --         97,500
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                           --             --      (5,110,427)             --                 --     (5,110,427)
                                  ----------   ------------    ------------    ------------       ------------    -----------

BALANCE, JUNE 30, 2000            82,227,280   $ 16,865,441    $ (5,783,389)   $         --       $   (375,000)   $10,707,052
                                  ==========   ============    ============    ============       ============    ===========
</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
                                                 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>
Cash flows from operating activities
   Net loss                                     $(5,110,427)    $(672,962)    $(5,783,389)
Adjustments to reconcile net
 loss to net cash used:
  Depreciation and amortization                     250,495         2,635         253,130
  Interest expense - amortization of
    debt costs                                       65,000            --          65,000
  Realized loss on marketable securities            119,925            --         119,925
  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                   (277,068)           --        (277,068)
  Gain on settlement of note receivable              (8,070)           --          (8,070)
  Forgiveness of accounts payable                  (192,474)           --        (192,474)
  Loss on minority interest in affiliate             85,818            --          85,818
  Provision for doubtful account                    125,000            --         125,000
  Accrued compensation                              120,000       (20,000)        100,000
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)
  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)
                      CONSOLIDATED 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-Australia").  (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-Australia (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.

            Declines  in  the  fair  value  of  individual  available  for  sale
            securities  below  their  cost that are other than  temporary  would
            result in  write-downs  of the  individual  securities to their fair
            value.  The  related  write-downs  would be  included in earnings as
            realized losses.

            (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.



                                      F-8
<PAGE>


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

            (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 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.



                                      F-9
<PAGE>


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

            (J) Revenue Recognition

            Revenue  is  generally  recognized  at the  time  telephone  service
            minutes are used and based on the volume of call service provided to
            customers  and  processed  by  the  Company's   contractual  service
            providers.

            In  general,  customers  are  required  to prepay for  communication
            services.  Any  funds  received  in  advance  of the  service  being
            provided to the customer is recorded as deferred revenue.

            (K) 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.

            (L) 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.

            (M) 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-Australia  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.



                                      F-10
<PAGE>


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

NOTE 3      INVESTMENT IN AFFILIATE

            In April  2000,  the  Company  acquired  20% of the common  stock of
            ACT-Australia,  an affiliate (See Note 11(B)). The purchase price of
            the investment amounted to $19,350,000,  and was comprised of a note
            payable for $7,500,000 (See Note 1(d)) and the issuance of 5,000,000
            shares of restricted common stock valued at $11,850,000.  The shares
            issued were valued at the average  quoted  trading  price during the
            acquisition  period.  The  fair  value  of  the  investment  at  the
            acquisition date was determined to be $3,657,472.  The excess of the
            purchase price of $19,350,000  over the fair value of the investment
            of $3,657,472, in the amount of $15,692,528,  has been accounted for
            as Goodwill (See Note 18).

            The Company's 20% interest in ACT-Australia,  is accounted for using
            the equity method of accounting  and is stated at the amortized cost
            of  Goodwill  and  the  equity  in   undistributed   earnings  since
            acquisition. The equity in earnings of ACT-Australia is adjusted for
            the amortization of the Goodwill as discussed above. Amortization is
            computed on a straight-line  basis over fifteen years. The Company's
            share of the losses for the fiscal year ended June 30, 2000  totaled
            $85,818,  and the  amortization  cost of Goodwill  charged to income
            from the date of acquisition to June 30, 2000 totaled $246,495.

            The components of the investment in  ACT-Australia at June 30, 2000,
            are as follows:

                                  Investment        Goodwill          Total
                                  -----------     ------------     ------------
At date of acquisition            $ 3,657,472     $ 15,692,528     $ 19,350,000

Investment loss                       (85,818)              --          (85,818)

Amortization of goodwill                   --         (246,495)        (246,495)
                                  -----------     ------------     ------------
Balance at June 30, 2000          $ 3,571,654     $ 15,446,033     $ 19,017,687
                                  ===========     ============     ============

            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.

            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-Australia. The stock was valued at the quoted
            trading price on the grant date.



                                      F-11
<PAGE>


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

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.  Declines in the fair value that are
            other than  temporary  result in  write-downs  of the securities and
            included  in earnings as  realized  losses.  The Company  determined
            there was a permanent  decline in the fair value of these securities
            at June 30,  2000 and the  Company  wrote down these  securities  to
            their fair  value.  This  resulted  in the prior  years  accumulated
            unrealized  loss of $97,500 along with an  additional  $22,425 being
            recognized  in the  statement of  operations  as a realized  loss on
            marketable securities for the year ended June 30, 2000.

            The  composition  of  marketable  securities  at June 30, 2000 is as
            follows (See Note 18):

                                                      Realized    Fair
                                             Cost      (Loss)     Value
                                           --------   ---------   ------
            Available-for-sale
              Securities (OTC):
                                           --------   ---------   ------
                Global Games Corp          $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.  During fiscal
            June 30, 2000,  $120,000 was accrued and charged to consulting  fees
            on the  statement of  operations.  The Company  owed the  individual
            $231,550 at June 30, 2000.



                                      F-12
<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 debenture subscribers as a result of
            their purchase of common stock under the



                                      F-13
<PAGE>


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

            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 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.



                                      F-14
<PAGE>


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

            (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  stock upon
            execution of the  agreement.  In addition,  the individual was to be
            granted 750,000 employee incentive stock options over the employment
            term.



                                      F-15
<PAGE>


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

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



                                      F-16
<PAGE>


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

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



                                      F-17
<PAGE>


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

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



                                      F-18
<PAGE>


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

            (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  $5,110,427  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)).

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



                                      F-19
<PAGE>


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

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.

NOTE 18     RESTATEMENT

            During  management's  review  of its  investment  in  ACT-AU  it was
            determined  that Goodwill had not been recorded for this  investment
            in accordance  with APB 18. The Company has recorded such adjustment
            reflecting a balance of $15,446,033  for goodwill (See Note 3) after
            a reduction of $246,495 for amortization. The Company also decreased
            its  unrealized  loss and  increased its realized loss on marketable
            securities  for  $119,925  to  effect a  permanent  decline  in such
            securities.



                                      F-20