U.S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                 FORM 10-KSB
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2000      Commission File No. 0-23761

                     ADVANCED TECHNOLOGY INDUSTRIES, INC.
                     ------------------------------------
                (Name of small business issuer in its charter)

Delaware                                            13-4000208
--------                                            ----------
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization) Identification No.)


                          Taubenstrasse 20, D-10117
                               Berlin, Germany
                   (Address of principal executive offices)
                 Issuer's telephone number: 49 30 201-7780

                      Kurchatov Research Holdings, Ltd.
                           (Former name of issuer)

Securities registered pursuant to Section 12(b) of the Act:      None

Securities registered pursuant to Section 12(g) of the Act: Common Stock
                                                          (Title of class)

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best or 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. [ ]

Issuer's revenues for its most recent fiscal year:  $ 0

At April 9, 2001 there were 7,050,971 outstanding shares of registrant's common
stock held by non-affiliates, with a market value of approximately $1,762,743
based on a closing bid quotation on the NASD OTC Bulletin Board on that date of
$.25 per share.

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 and 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.    Yes; [ ] No; [ ]
                         Not applicable

At April 9, 2001, a total of 32,743,875 shares of registrant's common stock were
outstanding.

Documents incorporated by reference: None

Transitional Small Business Disclosure Format (check one):  Yes; [ ] No [X]


<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.

                                  PART I

ITEM 1.  Description of Business

BUSINESS DEVELOPMENT

         Advanced Technology Industries, Incorporated ("we" or "us"), was
incorporated under the laws of the State of Delaware on October 25, 1995. We
were organized to identify, assess, acquire and capitalize on innovative
technologies introduced and developed by scientists throughout the world with
particular emphasis on technologies originating is Israel, Russia, Germany and
the United States.

         Until recently, our principal activities encompassed identifying,
reviewing and assessing technologies for their commercial applicability and
potential. As of the date hereof, we have:

                  o        Made investments in or otherwise acquired interests
                           in three technologies and/or companies, namely, a
                           heating element technology, a waste conversion
                           technology, and a silicon (EKOR) compound technology
                           and

                  o        Acquired 100% of Cetoni
                           Umwelttechnologie-Entwicklungs GmbH, a German company
                           engaged in the development of consumer products and

                  o        Acquired 49% of Nurescell AG, a German company
                           engaged in the development of radiation shielding and
                           nuclear waste storage and management technologies and

                  o        Acquired 22% of Nurescell Inc., a U.S. company
                           engaged in the development of radiation shielding and
                           nuclear waste storage and management technologies.

 Our focus in the near term will be to:

                  o        Successfully commercialize our acquired technologies;

                  o        Develop technology incubators located in the closed
                           cities of the Russian Federation

                  o        Continue to identify and acquire new technologies,
                           specifically in Israel, Russia, Germany and the
                           United States.

BUSINESS OF ISSUER

         We acquire interests in a portfolio of technologies and companies.
Daily operation of our companies in which we have stock ownership is handled
directly by each company's existing management. All acquired technologies and
companies function fully autonomous of us. When we acquire an interest in a
company, we negotiate for representation on its board of directors. Our
designated representative is responsible for monitoring all aspects of our
investment and reporting material events directly to our Board of Directors. In
instances where we own a controlling interest in a portfolio company, we have
the ability to direct the development, marketing, and commercialization of
products. However, where we own only a minority interest or do not otherwise
exercise control over a portfolio company we must rely upon and be governed by
the decisions of management of those companies concerning those matters. In
additional, where we have a non-controlling interest in a portfolio company, in
the absence of other agreements (such as revenue sharing agreements), we will
earn revenues from the portfolio company only in the form of dividends which may
be declared by the portfolio company only in the form of dividends which may be
declared by the portfolio company and the declaration of said dividends are
solely within the discretion of the Board of Directors of the portfolio company.

         PORTFOLIO TECHNOLOGIES AND COMPANIES
         ------------------------------------

         Described below are the various technologies in which we presently own
an interest.

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         We have acquired a 20% interest in each of two Israeli companies,
Flexitech, Ltd. ("Flexitech") and Pirocat, Ltd. ("Pirocat"). Flexitech has
developed a heating element, which can be printed on a thin film substrate, and
Pirocat has developed a technology, which allows for conversion of plastic waste
into fuel, which can be used to produce gasoline, diesel fuel, and heating oil.

         A. Polymer Heating Element ("PHE") Technology.

PHE technology allows for the application of a proprietary polymer thick film
onto a polymer, ceramic or metal surface, which, when charged with an energy
source, emits heat. The surface to which the film is applied becomes a heating
element, thereby allowing for the application of heat directly to the surface to
be heated. The more energy supplied to the polymer film, the higher the
temperature emitted. The heating element involved is highly conductive, flexible
and energy efficient. The proprietary film which forms the basis of the PHE
technology may be applied onto multidimensional surfaces. The advantages of the
PHE technology over other existing heat sources include its higher heat
dissipation from the unit surface on the surface to be heated, its durability,
versatility, very low thermal mass and high price competitiveness with similar
heat technologies. The commercial applications of the PHE technology may include
consumer heating appliances, automotive industry for heated rear view mirrors
and industrial machinery requiring heating elements.

         B. Organic Waste Conversion Technology.

Organic Waste Conversion technology represents a process whereby organic
elements present primarily in plastics are converted into liquid fuel base
products, which are used to make market grade gasoline, diesel fuel and fuel
oils. The process is based on pyrolisis and catalytic cracking of the
hydrocarbons and fluidized bed technologies, which have been in use for many
years. More specifically, pyrolisis is the process of heating plastic into a
liquid. Once liquefied, plastic is subjected to catalytic cracking whereby the
plastic is broken down to elemental components, including hydrocarbons, which
comprise fuels such as gasoline. The process, when fully developed may offer oil
products that are both ecologically cleaner and more economical to produce.

         We have entered into agreements with Ofek Le-Oleh Foundation, Ltd. (the
"Foundation"), an Israeli company with the authority to manage and distribute
Israeli government funds needed to create the infrastructure for incubation
technologies. We have acquired a 20% equity interest in each of Flexitech, Ltd.
and Pirocat, Ltd. We have agreed to pay to each of Flexitech and Pirocat the sum
of $60,000 in four tranches of $15,000 each, all of which have been paid to
date. The agreements further provide that the inventor of the technology has an
option to purchase an additional 20% to 25% of the common equity of each company
from the Foundation for a sum to be determined in the future, which options are
exercisable for a period of 90 days commencing after the first year of the
Development Period (defined in each agreement as the period during which the
Foundation or the Israeli Technology Company is being financed by the government
of Israel). In addition, we have entered into a verbal agreement with the
inventors of each technology which permit us to (i) acquire from them an
additional 31% of each corporation's common equity, which verbal options are
exercisable at any time during the Development Period, each at an exercise price
to be negotiated in the future, (ii) acquire from the inventor of the technology
the shares of each company's stock which he has the option to acquire from the
Foundation, and (iii) direct the voting of the common equity in said entities
owned by the inventors of each of the technologies, giving us voting control of
each of Flexitech and Pirocat. There is no assurance that if and when such
options become exercisable we will have sufficient funds to exercise any of
them.

         Each of Flexitech and Pirocat are required to pay the Foundation a
royalty equal to 3% of the total annual revenues generated from the technologies
or products derived therefrom for the first three years after execution of the
respective agreements governing the transfer of the technology to us. The
royalty payable to the Foundation increases to 4% for the ensuing three years,
to 5% for the three years thereafter until all funds invested by the Foundation
in each of Flexitech and Pirocat have been repaid.

         At all times, we are represented by our agent on each of Flexitech's
and Pirocat's Board of Directors, which is comprised initially of four persons,
including two directors appointed by the Foundation and a director appointed by
the scientist, and all decisions of the Board must be carried by a majority of
the directors.

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         During the Development Period (generally two years commencing as of the
date of registration of the project as an Israeli corporation), the sale or
other transfer of 25% or more of the inventor's equity of each of Flexitech and
Pirocat requires the consent of the Chief Scientist of the Israeli Ministry of
Commerce and Technology. In the event we wish to transfer our shares in either
company, we would be required to pay to the Foundation a sum equal to 25% of the
value we receive for our shares in either company. Our options to acquire the
common equity of Flexitech and Pirocat from the respective inventors of the
technologies are exercisable within such two-year periods and any acquisition of
the common equity purchasable thereunder will, therefore, require the Chief
Scientist's consent. Although we presently expect, based upon discussions with
the Chief Scientist's office that, if requested, such consent would be given,
there is no assurance that such consent will be obtained.

         EKOR COMPOUND TECHNOLOGY

         We have acquired from Eurotech, Ltd., a former affiliate, an interest
which entitles us to receive 2% of the gross revenues generated by Eurotech (the
"EKOR Compound"). EKOR Compound is a patented silicon geo-polymer developed by
scientists at the Kurchatov Institute in Moscow, Russia, specifically designed
and developed for possible containment of ecologically hazardous radioactive
materials that persist from the 1986 explosion of the Chernobyl Nuclear Power
Plant Reactor 4 in Chernobyl, Ukraine. Application of the EKOR Compound foam
layer is intended to contain radioactive dust in an enclosed area by forming a
permanent barrier between the soil and the air thus trapping the contamination.
Eurotech, Ltd. has advised us that in tests conducted at the Kurchatov
Institute, the EKOR Compound has been shown to be highly resistant to radiation
and structural degradation from exposure to radiation, and is fire-resistant,
waterproof, and capable of being formulated in densities that display
considerable structural strength and weight-bearing properties. Eurotech has
stated that in high dosage radiation tests, the EKOR compound has met or
exceeded all specifications for containment materials developed by the Chernobyl
authorities. Eurotech has exclusive licensing rights to the production and
application of this compound, with the exception of the Former Soviet Union, and
is marketing it to the nuclear waste industry as a tested material capable of
containing radioactive waste for hundreds of years. Eurotech has publicly stated
that the EKOR compound has completed preliminary field and laboratory testing
and Eurotech has begun commercialization of the product. Eurotech advises us
that the EKOR compound has completed all testing.

         Our interest in the EKOR Compound is based upon a series of agreements
between us and Eurotech. During 1996, we entered into an agreement with
Eurotech, Ltd., which entitled us to receive 50% of the net profits (after
deducting development costs and related expenses attributable to EKOR) derived
from the sale of licensing by Eurotech of the EKOR Compound. In addition,
pursuant to two separate oral agreements, Eurotech granted to us the right to
(i) manufacture EKOR Compound and (ii) develop and manufacture the equipment by
which the EKOR Compound is applied. We funded the development of two generations
of EKOR Compound mixing and application equipment.

         By agreement dated November 30, 1999, we transferred to Eurotech all of
our rights to an interest in the EKOR Compound, including the right (i) to
receive 50% of the net revenues derived by Eurotech from the EKOR Compound, (ii)
the right to manufacture the EKOR Compound and (iii) the right to manufacture
the EKOR Compound mixing and application equipment. In consideration of ceding
these rights, Eurotech (i) issued to us 2,000,000 restricted shares of its
Common Stock with demand registration rights, for which we would be responsible
for all costs, (ii) granted to us a right to receive 2% of the gross revenues
derived by Eurotech from the sale, service and licensing of the EKOR Compound,
(iii) returned to us for cancellation 6,795,000 shares of our Common Stock; (iv)
assumed $1,200,000 of our debt (which included $750,000 of debt plus accrued
interest incurred by us pursuant to certain 8% Convertible Debentures issued by
us in 1999) and (v) transferred all of its right, title and interest in and to a
certain resealable can technology which we had contracted to purchase from
Eurotech in 1999. We and through our wholly-owned subsidiary had paid a total of
$150,000 towards the total purchase price of $495,000. Our obligation to pay an
additional $345,000 in cash for the right to the resealable can technology was
extended by Eurotech until September 30, 2000. On June 20, 2000 we entered into
an agreement with Eurotech whereby Eurotech agreed to (i) immediately purchase
500,000 shares of the restricted, unregistered Eurotech common stock owned by us
for $1,350,000 (ii) register the remaining 1,500,000 shares on or before August
20, 2000 or purchase an additional 500,000 shares of the Eurotech stock at the

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<PAGE>

then current market price (iii) register the remaining 1,000,000 shares by
September 20, 2000 or purchase said shares at the then current market price, and
(iv) pay for all registration expenses. In addition, we agreed to immediately
pay the remaining balance of $350,000 for the acquisition of the 50% interest in
the container technologies. The Eurotech shares were traded on the over the
counter bulletin board market as of June 20, 2000 and the closing price as of
that date was $4.03125 per share. However, the shares owned by us were
restricted and unregistered and we believe that the purchase price of $1,350,000
for 500,000 shares of Eurotech common stock ($2.70) per share constituting
approximately 67% of the then current market price) payable immediately was a
fair price for the shares. We also avoided the delay in obtaining registration
of these shares and the market risk associated therewith as well as the risk and
expense of selling a large block of shares in the open market, which could have
adversely effected the market price. This transaction was reported in an 8-K
filing made by us on July 5, 2000 and the transaction closed on July 14, 2000.
Subsequent to this agreement, Eurotech filed an S-3 registration statement cover
all shares of Eurotech common stock owned by us which was approved on February
15, 2000.

         CONSUMER PRODUCTS

         By agreement dated December 6, 1999, we acquired all of the outstanding
shares of the capital stock of Cetoni Unwelttechnologies-Entwicklungs GmbH
("Cetoni") in consideration for 5,000,000 shares of our common stock and agreed
to assume up to DM4,500,000 ($2,250,000) of Cetoni's liabilities. Cetoni is a
German based design and engineering firm focused on developing and patenting
technologies and products for the consumer market. Since 1995, Cetoni has
successfully designed and patented products for the beverage, automotive
accessory, sport, healthcare, household, office and general consumer markets.
Cetoni's products are designed to fill a gap in a market where products do not
exist or to make a significant improvement over products currently serving the
target market. The markets for Cetoni's products are the consumer beverage
(resealable aluminum beverage can and resealable tetra pak carton), automotive
accessory (Tool Star, Rain Safe, Car Plus and Ring Memory), healthcare
(Pharmaceutical packaging and Table Boy), household goods (butter dish, sugar
dispenser, candy dispenser, fruit peeler and fruit peeler with tray), sports
(Power Ball and Walk and Roll), office (Desk Organizer) and general consumer
markets (Light Boy, Inflatable Umbrella, Mega Contour, Cleaning Center, Alarm
Transmission System and Multi-Table System). Cetoni markets its products by way
of strategic partnerships and through entering into global distribution
agreements with major product wholesalers. Cetoni has completed the research and
development stage on the majority of its products and believes that they are
ready from commercialization in consumer markets. Cetoni has entered into
manufacturing agreements for the Tool Star, Rain Safe and Household Consumer
Goods. These agreements are with manufacturers located in low cost countries
which management believes allows Cetoni to offer quality products at competitive
prices. It is anticipated that the main emphasis for Cetoni in the calendar year
will be on the successful commercialization of its beverage packaging products
(resealable aluminum beverage can and resealable tetra pak carton), automotive
accessory products (Tool Star) and office products (desk organizer).

         NURESCELL AG

         By agreement dated August 23, 2000 ATI and Nurescell Inc. entered into
a transaction involving the formation of a German company named Nurescell AG, of
which we are a 49% shareholder. The technology being licensed is defined in the
License Agreement by Nurescell Inc. as a novel material for shielding and
internment of radioactive materials and radioactive waste as well as providing
attenuation of x-ray energy. The license Agreement further states that the
material demonstrates shielding and physical properties superior to commonly
used shielding materials such as concrete, steel or, in some cases, lead.

         Nurescell AG and Nurescell Inc. executed a License Agreement whereby
Nurescell Inc. granted an exclusive license to Nurescell AG in the countries of
the former Soviet Union, the Continent of Europe and the British Isles to
manufacture and market a proprietary technology owned by Nurescell Inc. The
license term is until August 15, 2020 or when certain patents expire which have
been applied for by Nurescell Inc., whichever later occurs.

         The License Agreement provides for the payment of a license fee of
$1,000,000 to Nurescell Inc. which is to be paid in four installments of
$250,000 each commencing upon the execution of the agreement and continuing each
quarter thereafter provided, however, that the entire $1,000,000 will be due at
the time that a minimum of $4,000,000 in capital is raised by Nurescell AG. We

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have agreed to advance the $1,000,000 to Nurescell AG as the payments come due
in consideration for our 49% interest therein. We are entitled under the
agreement to obtain credit against the $1,000,000 for certain sums advanced by
it for the formation of Nurescell AG. As of December 31, 2000, we have advanced
$773,965 in license fees, start-up capital and other business expenses for the
development of the Nurescell AG business.

         As part of the transaction dated August 23, 2000, Nurescell AG entered
into an Investment Agreement with Nurescell Inc., which reflects the percentage
ownership interest of Nurescell Inc. and ATI in Nurescell AG and further
provides that Nurescell AG, with our assistance will use its best efforts to
raise DM 20 Million (approximately $9.1 Million) in capital for Nurescell AG.
This capital will be raised by the issuance of stock by Nurescell AG provided,
however, that the additional shares cannot exceed 34% of the outstanding stock
of Nurescell AG, and, further provided, that the dilution in ownership shall
apply equally to Nurescell Inc. and ATI.

         The Investment Agreement further provides that for a period of five
years, Nurescell AG has the right to acquire up to $4 Million of the stock of
Nurescell Inc. from it. Nurescell AG and Nurescell Inc. have agreed that the
price for the stock will be 80% of the bid price of Nurescell Inc. determined at
specified times. Nurescell Inc. is traded on the OTC Bulletin Board. In
addition, Nurescell AG has been granted the right to have the shares registered
at the expense of Nurescell Inc. if the registration is incident to the
registration of other stock by Nurescell Inc. or at the expense of Nurescell AG
if it demands registration of the stock other than incident to the registration
of other stock by Nurescell Inc.

         The Investment Agreement also provides for the immediate resignation of
Mr. William A. Wilson as President of Nurescell Inc. and the election of Mr.
James Samuelson, a Vice President and Chief Financial Officer of ATI, as
President of Nurescell Inc. The agreement also provides for the appointment of
one director of Nurescell Inc. by Mr. Samuelson, of which Mr. Samuelson
appointed himself as a director.

Nurescell Inc.

         On August 23, 2000 we entered into an Agreement For Purchase of Stock
with Adrian Joseph and his wife Dianna Joseph to purchase 3,500,000 shares of
the $0.0001 par value common stock of Nurescell Inc. owned by them in
consideration for the issuance to the Joseph's of 3,500,000 shares of the
$0.0001 par value common stock of ATI. In addition, the Agreement provides that
the Joseph's may receive up to an additional 2,000,000 shares of the common
stock of ATI in the event that Nurescell AG achieves certain gross revenue
numbers over a period of five years. The shares of Nurescell Inc. to be received
by ATI constitute approximately 22.9% of the outstanding shares of Nurescell
Inc.

         The shares to be received by the Josephs are restricted shares. In
addition, the Agreement prohibits the Josephs from selling or otherwise
transferring in excess of 600,000 shares per year. However, the Agreement
provides for the execution of a Registration Rights Agreement giving the Josephs
the right to have up to 600,000 shares per year registered over a six year
period. The Josephs have the right to demand registration of their shares each
year at their expense, or, if ATI is filing a registration statement to register
other shares during that time, to require that their shares be registered at the
expense of ATI. In lieu of registering the shares ATI has the right to purchase
the shares at 80% of the average bid price at determined times. The Agreement
also provides for the execution of an Irrevocable Proxy by the Josephs, which
would give Mr. Kurt Seifman the right to vote any of the shares received by the
Josephs under the Agreement for a period of six years. Mr. Seifman and ERBC
Holdings, Ltd., which he owns, presently own 16,874,333 shares of the
outstanding $0.0001 per value common stock of ATI which constitutes
approximately 51.53% of the outstanding shares of ATI. The transaction closed on
January 11, 2001. These transactions were reported on Current Form 8-K's filed
on September 7, 2000 and January 22, 2001.


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CURRENT OPERATIONS

         The competition in the technology proliferation and transfer market is
highly intense and is based on product and technology recognition and
acceptance, novelty and marketability of an invention, price, and sales
expertise. Currently, we have the primary emphasis on product development,
dependability and patentability of our acquired technology. As a part of our
day-to-day operations, our employees and consultants review a number of
technologies, innovations, ideas and intellectual properties with the purpose of
evaluating the novelty of a technological idea, assessing additional research
and development investment required to bring an invention to a point where it
may be commercially exploited, and prospects for patentability and marketability
of a reviewed technology. We also estimate the costs and time required to
complete research and development of a technology necessary to achieve
commercial viability as well as the initial steps required for introducing the
technology to the market, e.g. production of samples and development of
marketing strategy and documentation required to obtain patent protection
covering the technology. A proposed acquisition of an invention or technology is
usually accomplished by means of equity investment, purchase, assignment and
licensing arrangements directly from the scientists or technology developers.

         We have not generated any revenues from any of its acquired
Technologies, and we are currently operating at a loss. We will require
additional funding to achieve our growth objectives. If we do not receive
additional funding, we will not be able to pursue the intended marketing plan
and, in such case, may not be able to successfully conduct our operations. There
is no assurance that we will be successful in marketing any of our technologies
or in generating any meaningful revenues from operations.

MARKETING
---------

         Our primary business focus is the acquisition and commercialization of
advanced technologies and the commercial products that result from these
efforts. We anticipate that e-commerce, automotive manufacturing, chemical
manufacturing, radioactive contamination containment, beverage packaging,
general consumer and transportation markets will be the primary markets for our
products and technologies. We have limited experience in marketing of products
and services in these fields and intend to rely on licensing and joint venture
opportunities with multi-national companies for the marketing and sale of its
technologies. Consequently, we will rely on our distribution partners and
affiliates to market our technologies worldwide.

         We believe that several of our acquired technologies and products are
ready for commercialization and marketing. As a result, we will devote
significant business activities and resources to the successful
commercialization and marketing of our acquired technologies and products. We
also have little experience marketing products of a technological or consumer
nature. The introduction of a new product or technology into the market place
requires vast capital resources and an increase in corporate personnel. Our
product marketing relies on the development of strategic alliances with global
distributors. This places the burden of marketing the products directly on the
strategic partners and keeps our cost risk low and reduces the amount of capital
resources we need to operate successfully. Conversely, the risks include the
inability to locate the proper partner and or the partner is ineffective.

         By the acquisition of Cetoni, we acquired a wide range of basic
consumer products that will be distributed both at the retail and wholesale
level worldwide. Cetoni's marketing plan is focused on developing strategic
alliances with global product distributors. Cetoni has entered into discussions
with several global product distributors that have expressed an interest in
marketing and distributing Cetoni's products on a European and world-wide basis.
It is believed that this strategy will reduce required marketing expenditures
and lower the overall risk profile of the firm. All product manufacturing is
outsourced to producers located in low cost countries. Current manufacturing for
Cetoni's products are with producers located in Kiskinfelegyhazo, Hungary and
Jimbolia, Romania. These agreements relate to the manufacture and distribution

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of the Tool Star and household goods products. Management of Cetoni believes
this strategy will allow its products to achieve market acceptance based upon
competitive prices as well as superior quality. Cetoni has entered into two
distribution agreements with Fackelmann GmbH & Co., a major manufacturer and
distributor of household and related goods, for the distribution of two consumer
products i.e. the butter dispenser dish and the Fruit Stripper products.
Additionally, Cetoni entered into an agreement with the Falcon Group Ltd., for
the exclusive marketing rights of the Cetoni resealable can technology for the
European Brewery market.

COMPETITION
-----------

         Competition in all of the areas in which we own and propose to purchase
technologies is intense. We compete against a wide range of companies,
universities, think tanks, consumer product companies and others, most which
possess substantially greater financial and marketing resources and experience
than us. Competition in our core business segments is typically based on product
recognition and acceptance, price, and sales and marketing expertise and
resources. Any one or more of our competitors or other enterprises not presently
identified by or known to us may develop technologies and/or products which are
superior to ours, less expensive than our products and technologies or market
more successfully existing or new competing products and technologies.

GOVERNMENT REGULATION
---------------------

         We are not aware of any U.S. or foreign laws or regulations that govern
the marketing, sale or use of any of its present technologies, other than U.S.,
Russian and Western European environmental safety laws and regulation pertaining
to the containment and remediation of radioactive contamination and the toxicity
of materials used in connection therewith (in the case of the EKOR and Nurescell
materials). Based on the results of tests conducted at the Kurchatov Institute
Eurotech believes that the EKOR compound meets applicable U.S. and German
regulatory standards. Based on the results of tests conducted at the University
of Missouri and by various Russian and German institutes, Nurescell believes
that the Nurescell material meets applicable U.S. and German regulatory
standards. However, there can be no assurance that more stringent or different
standards may not in the future be adopted or applied depending on EKOR or
Nurescell's intended use, or that if adopted or applied, they will not
materially increase the cost to Eurotech and Nurescell of licensing and using
the EKOR and Nurescell compounds, or prevent their use altogether. Moreover,
there can be no assurance that any or all jurisdictions in which we presently
operate or in the future may conduct our business will not enact laws or adopt
regulations which increase the cost of or prevent us from licensing or marketing
its other technologies or otherwise doing business therein. Particularly in the
case of Russia and the Ukraine, the enactment of such laws or the adoption of
such regulations may have a presently unquantifiable, substantial adverse impact
on our financial condition, business and business prospects.

         INTELLECTUAL PROPERTY
         ---------------------

         Set forth below is a description of all intellectual property rights
owned by us, Cetoni and Nurescell AG.

         Israeli PHE and Waster Conversion Patents. We have entered into
exclusive patent arrangements with Flexitech and Pirocat covering Heating
Element and Waste Conversion technologies. Patent applications for these
technologies have been filed in Israel. We intend to file additional patent
applications in the industrial countries of the world.

         EKOR Compound Technology. Eurotech, Ltd. holds all right, title and
interest, inclusive of all patent and other intellectual property rights, in and
to the EKOR Compound technology in Canada, China, Japan, Republic of Korea, the
United States of America, Ukraine and all member countries of the European
Patent Agreement until August 1, 2014. On March 23, 1999 Euro-Asian Physical
Society ("EAPS") was issued a patent on the process for manufacturing its EKOR
Compound from the United States Patent and Trademark Offices, Patent No.
5,886,060. On November 28, 1997, the Ministry of Health of the Russian
Federation certified the EKOR Compound and its components as non-toxic, thereby
allowing for EKOR's production, delivery, sale and use in the Russian
Federation.

         Cetoni has applied for patents covering twenty-two products developed
through its in-house research and development department in the major industrial
countries in the world. Currently, 17 patents and design patents have been
granted.

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         Nurescell Inc. has received a notice of allowance for it's patent
filing in the United States. Additionally, Nurescell has filed for patent
protection in the major countries in North America, Europe, Asia and South
America.

EMPLOYEES
---------

         We currently employ 10 full-time and 3 part-time employees. We engage a
number of independent consultants to assist in the identification, assessment,
acquisition and marketing of technologies in the regular course of our business.
Our subsidiary, Cetoni, currently employs seven full-time and one part-time
employee. Cetoni's employees engage in product research, development and
marketing. We have good relations with our employees.

Risk Factors.
-------------

         Set forth below are certain risks and uncertainties relating to our
business. These are not the only risks and uncertainties we face. Additional
risks and uncertainties not presently known to us or that we currently deem
immaterial may also impair our business. If any of the following risks actually
occur, our business, operating results or financial condition could be
materially adversely affected.

OUR ACCOUNTANTS HAVE EXPRESSED DOUBTS ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN

         The report of our independent public accountants and the notes to our
financial statements included elsewhere in this document state that the
continuation of our business as a going concern depends, among other things, on:

         o        obtaining additional funds to develop and implement our
                  marketing plan and to complete the commercialization of our
                  present technologies;

         o        the generation of significant future revenues and income; and

         o        market acceptance of our technologies and products

         We can provide no assurance that we will be able to achieve any of the
foregoing. See "Financial Statements - Independent Auditor's Report, - Note 1"
and "Risk Factors - Need for Additional Financing; Possibility of Future
Dilution."

WE HAVE A LIMITED OPERATING HISTORY; WE HAVE NOT GENERATED ANY REVENUES FROM
OPERATIONS; WE EXPECT TO INCUR SIGNIFICANT ADDITIONAL LOSSES.

         We were incorporated in 1995 and have conducted only limited operations
to date consisting primarily of activities related to identifying and acquiring
our technologies and products. We are subject to all of the business risks
associated with a new enterprise, including, but not limited to:

         o        our inability to successfully market our technologies and
                  products;

         o        risks of unforeseen capital requirements;

         o        failure of market acceptance of our technologies and products;

         o        failure to establish business relationships; and

         o        competitive disadvantages as against larger and more
                  established companies.


                                       9

<PAGE>

         We anticipate that we will continue to incur significant operating
losses through 2001. We may incur additional losses thereafter, depending upon
our ability to generate revenues from the license or sale of our technologies
and products or to enter into any or a sufficient number of joint ventures or
collaborations working. We have had no meaningful revenues to date. Although our
management believes that we may recognize revenues during 2001, based on
expressions of interest from third parties to acquire licenses to use our
technologies and purchase our products, there can be no assurance as to when or
whether we will be able to commercialize our products and technologies and
realize any revenues therefrom. Our products and technologies have never been
utilized on a large-scale commercial basis.

NEED FOR ADDITIONAL FINANCING; POSSIBLE LOSS OF ISRAELI TECHNOLOGIES;
POSSIBILITY OF FUTURE DILUTION

         In order to fully implement our business plan and marketing strategy,
we will require significant additional capital. Future capital requirements
could vary significantly and will depend upon certain factors, many of which are
not within our control. Factors, which may bear on our future capital
requirements, include:

         o        the timing of licensing of our technologies and sales of our
                  Products;

         o        market acceptance of our technologies and products;

         o        the existence and terms of any licensing and/or joint venture
                  agreements for the marketing and sales of our technologies and
                  products; and the ongoing development and testing of our
                  technologies and products; and

         o        the availability of financing.

         Our lack of marketing and operational experience and limited capital
resources could make it difficult to attract joint venture partners or to
consummate licensing or sales agreements and our failure to enter into joint
ventures or consummate any such agreements could have a material adverse effect
on our results of operations.

         In order to maintain our ownership interest in two Israeli incubator
companies (which developed the Pirocat Technology and Flexitech's PHE
technology), we must continue to make payments to those entities. If we are
unable to pay the third and fourth installments of the purchase price for our
ownership interests in these incubator companies, we will forfeit our interests
therein which would have a material adverse effect on our business and
negatively impact our future results of operations.

         In addition, we will require substantial additional capital to expand
our business to hire administrative, marketing, technical and operational
support personnel, and to a lesser extent, for research and development
activities. As of the date hereof, we have not identified any sources of and we
cannot provide any assurances that we ever will obtain the additional capital
necessary to fully effectuate our business goals. Moreover, we cannot provide
assurances that additional capital requirements will not arise, or that for
periods following fiscal year 2000 we will generate sufficient revenues to cover
our expenses or generate profits. If adequate financing is not available, we may
be required to delay, scale back or eliminate certain of its research and
development programs and marketing and sales programs, forego technology
acquisition opportunities, or license third parties to commercialize
technologies that we would otherwise seek to develop ourselves. To the extent we
raise additional capital by issuing equity securities, holders of our equity
securities will be diluted.

         No assurance can be given that we will be able to obtain any working
capital or complete any further offerings of securities, or that, if obtained or
completed, that such funding will be sufficient or that it will not cause
substantial dilution to our shareholders. Further, no assurance can be given as
to the completion of research and development activities and the successful
marketing of our technologies.

WE MAY FACE RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS, INVESTMENTS, STRATEGIC
PARTNERSHIPS OR OTHER VENTURES, INCLUDING WHETHER SUCH TRANSACTIONS CAN BE
LOCATED, COMPLETED AND THE OTHER PARTY INTEGRATED WITH OUR BUSINESS ON FAVORABLE
TERMS

                                       10

<PAGE>

         As part of our long-term growth strategy, we may seek to acquire or
make investments in complementary businesses, technologies, services or products
or enter into strategic relationships with parties who can provide access to
those assets, if appropriate opportunities arise. From time to time, we may
enter into discussions and negotiations with companies regarding our acquiring,
investing in, or partnering with their businesses, products, services or
technologies. We may not identify suitable acquisition, investment or strategic
partnership candidates, or if we do identify suitable candidates, we may not
complete those transactions on commercially acceptable terms or at all.
Acquisitions often involve a number of special risks, including the following:

         o   we may experience difficulty integrating acquired operations,
             products, services and personnel;

         o   the acquisition may disrupt our ongoing business;

         o   we may not be able to successfully incorporate acquired technology
             and rights into our service offerings and maintain uniform
             standards, controls, procedures, and policies;

         o   we may not be able to retain the key personnel of the acquired
             company;

         o   the businesses we acquire may fail to achieve the revenues and
             earnings we anticipated; and

         o   we may ultimately be liable for contingent and other liabilities,
             not previously disclosed to us, of the companies that we acquire.

         We may not successfully overcome problems encountered in connection
with potential future acquisitions. In addition, an acquisition could materially
adversely affect our operating results by:

         o   diluting your ownership interest;

         o   causing us to incur additional debt; and

         o   forcing us to amortize expenses related to goodwill and other
             intangible assets.

         Any of these factors could have a material adverse effect on our
business. These difficulties could disrupt our ongoing business, distract our
management and employees and increase our expenses. Furthermore, we may incur
indebtedness or issue equity securities to pay for any future acquisitions.

WE WILL RELY ON OUR RELATIONSHIPS WITH OUR STRATEGIC PARTNERS TO GENERATE A
PORTION OF OUR BUSINESS AND REVENUES AND OUR BUSINESS COULD SUFFER IF THESE
RELATIONSHIPS ARE TERMINATED

         We intend to enter into strategic partnerships, joint ventures and/or
teaming arrangements with regional and multinational corporations to promote our
technologies and products. In the event that we are unable to develop these
relationships or once developed maintain them for any reason, our business,
operating results and financial condition could be materially adversely
affected. Moreover, we can give you no assurances that any such relationships
will result in the sale or licensing of our technologies or products.

UNCERTAINTY OF MARKET ACCEPTANCE OF TECHNOLOGIES AND PRODUCTS

         None of the technologies or products we offer have been available on a
commercial basis in the past and we cannot assure you that any of these
technologies or products will gain acceptance among the potential users thereof.
If we are not successful in promoting our technology products in the future, our
ability to generate revenues and our results of operations will be materially
adversely effected. See "Business."

                                       11

<PAGE>

OUR MANAGEMENT HAS NO EXPERIENCE OPERATING A PUBLIC COMPANY

         None of the members of our current management team have ever operated a
public company. We must develop the skills and knowledge required to operate
effectively as a public company and there can be no assurance that we will be
able to do so. If we are not successful in developing these skills or do not
retain individuals who have significant experience operating a public company,
we may never be able to implement all or any portion of our business plan and
our business could be materially and adversely affected. Please see the
biographies of our management under Item 5. Directors and Executive Officers,
Promoters and Control Persons.

UNCERTAINTY OF PATENT PROTECTION AND PROPRIETARY TECHNOLOGY

         We have prepared and filed patent applications covering several of our
consumer products in industrial countries. We have not as yet filed patent
applications for all of our industrial technologies. Our success depends, in
part, on our ability to obtain and protect patents covering, and maintain trade
secrecy protection of our industrial technologies, as well as other, future
technologies, and to operate without infringing on the proprietary rights of
third parties. There can be no assurance that any of our pending or future
patent applications will be approved, that we will develop additional
proprietary technology that is patentable, that any patents issued to us will
provide us with a competitive advantage or will not be challenged by third
parties or that the patents of others will not have an adverse effect on our
ability to conduct business.

         Furthermore, there can be no assurance that others will not
independently develop similar or superior technologies, duplicate any of our
processes, or design around any technology that is patented by us. It is
possible that we may need to acquire licenses to, or to contest the validity of,
issued or pending patents of third parties relating to our products. There can
be no assurance that any license acquired under such patents would be made
available to us on acceptable terms, if at all, or that we would prevail in any
such contest. In addition, we would incur substantial costs in defending itself
in suits brought against us on our patents or in bringing patent suits against
other parties.

         In addition to patent protection, we rely on trade secrets, proprietary
know-how and technology which we seek to protect, in part, by confidentiality
agreements with our prospective working partners and collaborators, employees
and consultants. There can be no assurance that these agreements will not be
breached, that we would have adequate remedies for any breach, or that our trade
secrets and proprietary know-how will not otherwise become known or be
independently discovered by others.

OUR SERVICES AND REPUTATION MAY BE ADVERSELY AFFECTED BY PRODUCT DEFECTS OR
INADEQUATE PERFORMANCE

         In the event that our products do not perform to specifications or are
defective in any way, our reputation may be materially adversely affected and we
may suffer a loss of business and a corresponding loss in revenues.

IF WE ARE UNABLE TO RETAIN KEY EXECUTIVES OR HIRE NEW QUALIFIED PERSONNEL, OUR
BUSINESS WILL BE ADVERSELY AFFECTED

         Our success greatly depends on our ability to attract and retain key
technical, sales, marketing, information systems, and financial and executive
personnel. We are especially dependent on the continued services of our senior
management team, particularly Hans Joachim Skrobanek and Peter Goerke, our
President, and Vice President, respectively, and our key marketing personnel.
The loss of either of these persons could have a materially detrimental effect
on us. We have not entered into employment agreements with either of these
persons. We do not maintain key person life insurance on any of our personnel.
If we fail to attract, hire or retain the necessary personnel, or if we lose the
services of any member of our senior management team, our business could be
adversely affected.

                                       12

<PAGE>

RISKS OF DOING BUSINESS IN FOREIGN COUNTRIES

         We expect to conduct a significant portion of our business outside the
United States. Certain risks attach to operations in foreign countries, some of
which are described below:

         THE UNCERTAINTY OF THE ENFORCEABILITY OF OUR CONTRACTUAL RIGHTS MAY
HAVE A SERIOUS ADVERSE IMPACT ON OUR BUSINESS

         Legal systems in some of the nations in which we expect to conduct
operations, including the licensing of our technologies and selling our
products, may not be as developed as the United States legal system.
Consequently, contract rights which we take for granted in the United States may
be unenforceable in some of these jurisdictions. Any inability to enforce
contracts or collect payment from clients located in these areas would have
material adverse effect on our business and our results of operations.

         CURRENCY EXCHANGE RATE FLUCTUATION

         Some of the overseas contracts by which we provide products and
services will be denominated in currencies other than United States Dollars. As
a result, we will be subject to the effects of exchange rate fluctuations with
respect to any of these currencies.

         CURRENCY REPATRIATION RESTRICTIONS

         Some of the foreign countries in which our clients are located have or
may enact laws which restrict conversion of their currencies into United States
Dollars. Any inability to convert the entire amount received from contracts
performed overseas may limit our ability to utilize revenue generated in such
currencies outside of that jurisdiction and restrict us to fund our business
activities outside those countries

WE FACE SIGNIFICANT COMPETITION IN ALL ASPECTS OF OUR BUSINESS AND WE CANNOT
ASSURE YOU THAT WE CAN COMPETE AGAINST OUR COMPETITORS

         Our technologies and products, which include industrial technologies
and consumer products, cover a broad spectrum of industries. We compete against
a wide range of companies in all of our technology and product offerings from
multinational corporations to universities to local consumer product development
companies. Virtually all of our competitors in every business segment in which
we offer technologies and products are larger, have greater financial and
personnel resources and possess significantly more experience than us. Any one
or more of our competitors or other enterprises not presently known to us could
develop technologies and/or products which are superior to ours, significantly
underprice our products and technologies and/or more successfully market
existing, new or competing products and technologies. To the extent that our
competitors are able to achieve any of the foregoing, our ability to compete
could be materially adversely affected. We can offer no assurance that we will
be able to compete successfully against any of our competitors now existing or
which enter the market in the future.

RISKS RELATING TO OUR STOCK

FACTORS AFFECTING MARKET PRICE OF COMMON STOCK

         The price of our Common Stock will be influenced by many factors,
including:

         o        the depth and liquidity of the market for the Common Stock;

         o        investor perception of us and our technologies and products;
                  and

         o        general economic and market conditions.

         The market price of our Common Stock may also be significantly
influenced by factors such as announcements by us of new projects or similar
announcements by our competitors and quarter-to-quarter variations in our
results of operations.

                                       13

<PAGE>

FACTORS OUTSIDE OF OUR CONTROL MAY AFFECT OUR OPERATING RESULTS AND CAUSE OUR
RESULTS TO FLUCTUATE

         Our financial results may fluctuate significantly because of several
factors, many of which are beyond our control. These factors include:

         o        our inability to effectively market our technologies and
                  products;

         o        our failure to keep pace with changing technology;

         o        cost associated with marketing our products and services may
                  increase significantly;

         o        downward pressure on prices due to increased competition;

         o        changes in our operating expenses; and

         o        the effect of potential acquisitions.

         Fluctuations caused by these and other factors could cause our business
to suffer.

WE HAVE NO INTENTION TO PAY DIVIDENDS

         We have never paid any cash dividends on our common stock. We currently
intend to retain all future earnings, if any, for use in our business and do not
expect to pay any dividends in the foreseeable future.

THE FUTURE SALE OF OUR COMMON STOCK IN THE PUBLIC MARKET COULD EFFECT THE MARKET
FOR ANY OF OUR PUBLICLY TRADED SECURITIES

         We may have to sell and issue Common Stock or securities convertible
into Common Stock in order to obtain the funding necessary to support our
operations which will dilute your shareholdings and may negatively impact the
price of our Common Stock. In addition, the market price of our common stock
could fall if our stockholders sell substantial amounts of common stock,
including shares issued upon the exercise of outstanding options, in the public
market following this offering. Such sales might also make it more difficult for
us to sell equity securities in the future at a time and price that we deem
appropriate. Please refer to our discussion in "Shares Eligible for Future
Sale."

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

         This Form 10-KSB may include "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. We intend the forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements in these sections. All statements
regarding our expected financial position and operating results, our business
strategy, our financing plans and the outcome of any contingencies are
forward-looking statements. These statements can sometimes be identified by our
use of forward-looking words such as "may," "believe," "plan," "will,"
"anticipate," "estimate," "expect," "intend" and other phrases of similar
meaning. Known and unknown risks, uncertainties and other factors could cause
the actual results to differ materially from those contemplated by the
statements. The forward-looking information is based on various factors and was
derived using numerous assumptions. Although we believe that our expectations
that are expressed in these forward-looking statements are reasonable, we cannot
promise that our expectations will turn out to be correct. Our actual results
could be materially different from our expectations, including the following:

         -   we may not be able to secure funds to implement our marketing
             strategy;

         -   we may not successfully integrate technologies, operations,
             personnel or assets obtained through acquisitions;

                                       14

<PAGE>

         -   we may fail to compete with existing and new competitors;

         -   we may not adequately respond to technological developments; and

         -   we may not be able to find needed financing.

         This list is intended to identify some of the principal factors that
could cause actual results to differ materially from those described in the
forward-looking statements included elsewhere in this report. These factors are
not intended to represent a complete list of all risks and uncertainties
inherent in our business, and should be read in conjunction with the more
detailed cautionary statements included in this prospectus under the caption
"Risk Factors."

ITEM 2.  DESCRIPTION OF PROPERTY

         Our principal executive offices are at Berlin, Germany. The 800 square
feet executive space is located at Taubenstrasse 20, D-10117, Berlin, Germany
with a monthly rent of approximately $3,578 and a lease with a remaining term of
4 years. Our telephone number is (49) 30 201-7780.

         Centoni's principal executive offices are located in a 220 square meter
space at Patriching 26, D-94034, Passau, Germany and its telephone number
(49)851 955-260. The facility is leased with a monthly rent of $750 with no
expiration date. The facility is leased from a family member of the former
principal shareholder of Cetoni.

ITEM 3.  LEGAL PROCEEDINGS

         There is no current outstanding litigation in which we are involved and
we are unaware of any pending actions or claims against us.

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

         During 2000, there were no actions brought before our security holders.

                                   PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

GENERAL.

         Our authorized capital consists of 50,000,000 shares of common stock,
par value $.0001 per share, and 1,000,000 shares of Preferred Stock, par value
$.001 per share. On April 9, 2001 there were 32,743,875 shares of common stock
and no shares of Preferred Stock outstanding. Set forth below is a summary
description of certain provisions relating to our capital stock contained in our
Certificate of Incorporation and By-Laws and under the Business Corporation Law
of the State of Delaware. The summary is qualified in its entirety by reference
to our Certificate of Incorporation and By-Laws and the Delaware corporation
laws.

         COMMON STOCK

         Each share of Common Stock entitles the holder thereof to share ratably
in dividends and distributions, if any, on the Common Stock when, as and if
declared by the Board of Directors, from funds legally available. There are no
preemptive, subscription or conversion rights. Upon liquidation, dissolution or
winding up of the affairs of the company and after payment of creditors and
satisfaction of any amounts outstanding to holders of the Preferred Stock, the
assets legally available for distribution will be divided ratably on a
share-for-share basis among the holders of the outstanding shares of Common
Stock. The holders of the outstanding shares of Common Stock are not entitled to
cumulative voting and are entitled to one vote per share with respect to all
matters that are required by law to be submitted to a vote of shareholders,
including the election of Directors. Accordingly, the holders of more than 50%
of the outstanding shares of Common Stock will have the ability to elect all of
the Directors.

                                       15

<PAGE>

         PREFERRED STOCK

         As yet, no shares of Preferred Stock have been designated by the Board
of Directors. The Board of Directors has the authority, without further action
by the holders of the Common Stock, to issue Preferred Stock in one or more
series and to fix as to any such series the dividend rate, redemption prices,
preferences on liquidation or dissolution, sinking fund terms, if any,
conversion rights, voting rights and any other preference or special rights and
qualifications. Shares of Preferred Stock issued by the Board of Directors could
be utilized, under certain circumstances, as a method of raising additional
capital, for possible acquisitions or for any purpose. The Board of Directors
has not authorized the issuance of any series of Preferred Stock and there are
no agreements, understandings or plans for the issuance of any Preferred Stock.

MARKET INFORMATION.

         Our common stock is traded on the NASD OTC Bulletin Board currently
under the symbol AVDI. Prior to the change of the name from Kurchatov to ATI,
the common stock was traded under the symbol KRHL.

         The table below sets forth the range of high and low bid quotes of our
common stock for each quarter for the last two fiscal years as reported by the
OTC-BB. The bid prices represent inter-dealer quotations, without adjustments
for retail mark-ups, markdowns or commissions and may not necessarily represent
actual transactions.

1999                                     High            Low
----                                     ----            ---
First Quarter                            2.0625         1.875
Second Quarter                           2.6875         1.75
Third Quarter                            2.375          1.125
Fourth Quarter                           1.875           .875

2000
----
First Quarter                            3.00           1.50
Second Quarter                           3.0625         1.50
Third Quarter                            2.00            .96875
Fourth Quarter                            .9375          .15625

         There were approximately 525 shareholders of record of common stock as
of March 31, 2001.

         There are currently eleven (11) active market makers of our common
stock consisting of, Fleet Trading Division of Fleet Securities, GVR Company,
Hill Thompson Magid and Co. Inc., Herzog, Heine, Geduld, Inc., Knight
Securities, Inc., Ladenburg Thalmann & Co., Wm V. Frankel & Co., Mayer &
Schweitzer Inc, Paragon Capital Corporation, Meyerson (M.H.) & Co. Inc., and
Wien Securities Corp.

         Interwest Stock Transfer Company, located at 1981 East Holiday Road,
Salt Lake City, Utah, is the transfer agent and registrar for our common stock.

         We have never declared or paid cash dividends on our common Stock, and
we anticipate that future earnings, if any, will be retained for development of
our business. Payment of cash dividends in the future will be wholly dependent
upon our earnings, financial condition, capital requirements and other factors
deemed relevant by us. It is not likely that cash dividends will be paid in the
foreseeable future. In the event of the acquisition of a business by us or the
merger with another company, control of our company and our Board of Directors
may pass to others. In that event, the payment of dividends would be wholly
dependent upon such persons.

                                       16

<PAGE>

SALE OF UNREGISTERED SHARES

         During the last three years we have sold securities, which were not
registered under the Securities Act of 1933 (the "Act") as follows:

         1998
         ----

         None

         1999
         ----

         1.       On December 6, 1999 we issued 5,000,000 shares of common stock
                  to Cetoni GMBH incident to the acquisition by us of
                  substantially all of the assets of Cetoni
                  Umwelttechnologie-Entwicklungs GMBH. (1)

         2.       In January of 1999 we issued 1,009,411 shares of common stock
                  to various consultants, including related parties, for the
                  performance of services under one year consulting contracts.
                  (1)

         3.       In connection with the sale of certain debentures sold during
                  the first quarter of 1999, we issued 770,000 warrants to
                  certain persons who assisted in identifying investors in the
                  debentures, to legal counsel for services rendered in
                  connection with that transaction, and have reserved a like
                  number of shares of Common Stock for issuance upon exercise of
                  such Warrants. Each Warrant entitles the holder to purchase
                  one share of Common Stock at a price of $.65 per share or to
                  exercise the Warrants on a cashless basis for a number a of
                  shares determined based upon the market price for the Common
                  Stock on the date of any cashless exercise. Of the outstanding
                  Warrants, 270,000 of them may be exercised through March 5,
                  2004, 250,000 may be exercised through March 12, 2004 and
                  250,000 may be exercised through April 14, 2004. The exercise
                  price and the number of shares that a holder of the Warrants
                  is entitled to purchase is subject to adjustment under certain
                  circumstances. (1)

----------------
         (1) These transactions were exempt from registration pursuant to the
         provisions of Section 4(2) of the Act as not involving any public
         offering. The shares issued thereunder are restricted and cannot be
         transferred except in accordance with the rules and regulations of the
         Securities and Exchange Commission including, but not limited to, Rule
         144 of the Act.


         2000
         ----

         1.       On January 7, 2000 a consultant, who had been issued options
                  to purchase shares of our in consideration for services
                  performed, exercised options to purchase 30,000 shares of our
                  common stock at $.50 per share. (2)

         2.       On January 14, 2000 pursuant to a Plan and Agreement of
                  Regorganization, we acquired all of the outstanding shares of
                  common stock of Aberdeen Acquisition Corporation, a Delaware
                  corporation from the shareholders thereof, in exchange for
                  cash of $150,000, plus 400,000 shares of our common stock
                  valued at $500,000. (2)

         3.       In June, 2000 a consultant, who had been issued options to
                  purchase shares of our common stock in consideration for
                  services performed, exercised options to purchase 90,000
                  shares of our common stock at $.50 per share. (2)

         4.       In April, 2000 and June 2000 we issued 30,000 shares of common
                  stock and 60,000 shares of common stock, respectively, to a
                  third party as compensation for services performed. (2)

         5.       On October 26, 2000 we issued incentive stock options to
                  employees to purchase 470,000 shares of our common stock and
                  non-qualified stock options to other persons to purchase
                  615,000 of our common stock. These options were issued
                  pursuant to the Advanced Technology Industries, Inc. 2000
                  Stock Option Plan. These transactions were exempt from
                  registration pursuant to Section 4(2) of the Act as not
                  involving a public offering and Rule 701 of the Act.

                                       17

<PAGE>

         6.       On October 31, 2000 we issued 510,000 shares of our common
                  stock pursuant to a private offering reported on Current
                  Report on Form 8-K filed on November 8, 2000. The issuance of
                  these shares was exempt from registration pursuant to Section
                  4(2) of the Act as not involving a public offering and Rule
                  506 of the Act.

         7.       On December 4, 2000 we entered into an agreement with ERBC
                  Holdings, Ltd. to convert $1,560,000 of debt owed to it by us
                  for 13,054,393 shares of our Common Stock. (2)

         8.       In December of 2000 we issued 50,000 shares of stock each to
                  two officers of the company as a bonus, one of which was Mr.
                  Samuelson. The bonus was valued at $10,100 for each officer.
                  (2)

--------------------
         (2) These transactions were exempt from registration pursuant to
         Section 4(2) of the Act as not involving any public offering. The
         shares issued thereunder are restricted and cannot be transferred
         except in accordance with the rules and regulations of the Securities
         and Exchange Commission including, but not limited to, Rule 144 of the
         Act.

         As of April 9, 2001, we have a total of 32,743,875 shares of common
stock outstanding. Of these outstanding shares, 3,868,471 shares are freely
tradable, without restriction by or further registration under the Act by
persons other than our "affiliates," as defined in Rule 144 under the Act.

         All the other outstanding shares of common stock (28,875,404 shares)
are "restricted securities" for purposes of the Securities Act and may not be
sold unless they are registered under the Act or unless an exemption from
registration, such as that provided by Rule 144, is available.

         We can make no prediction as to the effect, if any, that market sales
of shares of Common Stock or the availability of shares for sale will have on
the market price prevailing from time to time. Nevertheless, sales of
significant numbers of shares of Common Stock in the public market could
adversely affect the market price of the Common Stock and could impair our
future ability to raise capital through an offering of its equity securities.


ITEM 6.  PLAN OF OPERATION

         The following discussion and analysis should be read in conjunction
with the remainder of this Annual Report on Form 10-KSB including, but not
limited to, the financial statements and notes thereto included herein.

         We are a development stage company and our efforts have been primarily
devoted to technology identification and acquisition, research and development,
organizational efforts and raising capital. This discussion provides an analysis
of our plan of operation for the next twelve months.

         We were formed to acquire and commercialize new or previously existing
but non-commercialized technologies particularly those developed by scientists
and engineers in Israel, Russia, and Germany. We may acquire a direct interest
in the technology, a right to use the technology, and/or an ownership interest
in the entity owning the technology. The acquisition of technologies by us may
be made by the issuance of our stock or securities, cash, or other consideration
or a combination thereof.

         During the next twelve months the Company intends to concentrate on (i)
the commercialization of certain products of Cetoni GmbH, its wholly owned
subsidiary, (ii) commercialization of the Nurescell technology (iii) completion
of evaluation of technologies being presently considered and the acquisition
thereof if appropriate, and (iv) identification, evaluation, and possible
acquisition of additional technologies.

CETONI
------

         It is anticipated that the main emphasis for Cetoni in the next twelve
months will be on the successful commercialization of its beverage packaging
products (resealable aluminum beverage can and resealable tetra pak carton),
automotive accessory products, office products, and consumer products. Cetoni
will seek out product wholesalers with which to enter into distribution
agreements.

         Cetoni has entered into two distribution agreements with Fackelmann
GmbH & Co, a major manufacturer and distributor of household and related goods,
for the distribution of two consumer products i.e. the butter dispenser dish and
FruitStripper products. In addition, Cetoni has entered into a distribution
agreement with Falcon Group, Ltd. for distribution of the resealable beverage
can.

                                       18

<PAGE>

         Cetoni has entered into manufacturing agreements for certain of its
products and will attempt to locate manufacturers for other products. It will
attempt to locate manufacturers in low cost countries in order to obtain the
manufacture of the products at the least cost possible in order to maximize the
competitiveness of its products. There is no assurance that it will be able to
locate distributors or manufacturers for some or all of the products upon
favorable terms, or at all.

         During the period of the plan Cetoni will be required to purchase the
tooling and equipment required to manufacture its products. It is anticipated
that this will amount to approximately $650,000. Cetoni believes that it can
obtain financing upon favorable terms for a substantial portion of this amount
from the manufacturers of the tooling and equipment. However, if financing is
not available, management believes that it will have the necessary funds to pay
for the tooling and equipment. The Company does not anticipate any additional
significant purchases or sales of plant or equipment during the period of the
plan.

         NURESCELL AG
         ------------

         The Nurescell nuclear shielding technology is a ceramic product that is
lighter than other products and provides for more shielding in many environments
than comparable products. Nurescell AG is presently developing a business plan
for the manufacture and marketing of the technology in the Soviet Union and
Continental Europe. Nurescell, Inc. states that the technology is suited for use
in radiation recovery rooms and accelerator rooms for isotope production. It may
also be used as radiation shielding against hot spots in nuclear power stations
and mixed waste applications for stabilization. However, we are informed by
Nurescell, Inc. that the technology has not actually been utilized for any of
these purposes. Nurescell AG is presently testing the technology in Russia and
Germany to verify its suitability for these applications as well as others.
Nurescell, Inc. is also developing the technology for use in dry cast containers
for the storing of nuclear waste and the coating protection for the burying of
nuclear submarines.

         We intend to be active in the development and marketing of the
Nurescell technology by Nurescell AG.

OTHER MATTERS
-------------

         During the period of the plan, we do not anticipate any significant
changes in the numbers of employees employed by us or Cetoni, our subsidiary.

         We do not anticipate incurring significant research and development
costs for the period of the plan.

         We may incur substantial expenses associated with performing due
diligence incident to the investigation of technologies suitable for
acquisition. The amount and type of expenses incurred will vary depending on the
technology being investigated and it is not possible to project what these
expenses might be during the period of the plan.

         Except for a nominal amount of revenue from the sale of Cetoni products
in the period covered by this report, we have not generated any revenue from
operations since our inception and we have not been profitable since our
inception. Although we believe that we will recognize additional revenues during
the next twelve months based on expressions of interest from third parties to
acquire licenses to use our technologies and purchase our products, there can be
no assurances as to when and whether we will be able to commercialize our
products and technologies and realize any revenues therefrom or that Nurescell
AG will be able to do so. Neither our products and technologies or those of
Nurescell AG have ever been utilized on a large-scale commercial basis.

         We expect that we will continue to generate losses until at least such
time as we can commercialize our technologies or those of Nurescell Inc., if
ever. No assurance can be given that the we can complete the development of any
technology or that, if any technology is fully developed, it can be manufactured
and marketed on a commercially viable basis. Furthermore, no assurance can be
given that any technology will receive market acceptance. Being a development
stage company, we are subject to all risks inherent in the establishment of a
developing or new business.

                                       19

<PAGE>

         As of December 31, 2000 we had working capital deficiency of
$1,690,229, shareholders' deficiency of 613,025 and an accumulated deficit of
($7,065,984). We anticipate that we will continue to incur significant operating
losses for the next twelve months. We may incur additional losses thereafter,
depending upon our ability or the ability of Nurescell AG to generate revenues
from the license or sale of technologies or products.

         We will require additional financing to continue to fund research and
development efforts, operating costs and to complete additional technology
acquisitions. We anticipate that we will be able to raise the needed funds for
continuing operations.

         We will attempt to raise this additional capital through the public or
private placement of our securities, debt or equity financing, joint ventures,
or the licensing or sale of our technologies and products. However, the Company
has not entered into any definitive agreements or arrangements to obtain any
such sources of capital and no assurance can be given that it can successfully
obtain additional capital.

         On June 20, 2000 we entered into an agreement with Eurotech, Ltd. to
sell to it 500,000 shares of the 2,000,000 shares common stock of that company
that we owned for $1,350,000. The transaction closed on July 14, 2000. As part
of said transaction we agreed to prepay Eurotech the sum of $350,000, which we
owed to it as a result of the acquisition by us of certain technologies from
Eurotech.

         We plan to either sell the remaining Eurotech shares or use them for
collateral for a loan to provide funds for operations. Eurotech filed a
registration statement on August 18, 2000, which included the entire 1,500,000
shares of stock owned by us. The registration statement became effective on
February 15, 2001. Subsequent thereto we pledged 216,700 of said shares for a
loan in the amount of $273,289.87 excluding costs and commissions. In addition,
as of April 16, 2001 we have sold 535,600 shares of the stock on the open market
resulting in net proceeds after commissions of $687,750.03. The common stock of
Eurotech, LTD. is traded on the American Stock Exchange. The closing price of
the stock on April 9, 2001 was $.95.

         In order to raise working capital for operation until the Eurotech
could be sold or used for collateral, on October 31, 2000 we commenced an
offering of $750,000 of six-month promissory notes (the "Note Offering") of
which we sold $510,000. This event was reported in Current Report on Form 8K
filed on November 15, 2000. We subsequently increased the offering to
$1,500,000, and extended the offering period to and including March 31, 2001,
which event was report on the Current Report on Form 8K filed on January 22,
2001. An additional $250,000 in notes were sold for the period ending March 31,
2001.

         We raised additional working capital by obtaining short term loans
totaling $123,700, at an interest rate of 1% per month. On March 12, 2001 said
loan and accrued interest were converted to a loan under the Note Offering and
126,651 shares of our common stock will be issued to the note holder in
accordance with the terms of the Note Offering.

         We raised further additional working capital by entering into a loan
transaction in the amount of DM 120,000 (US $53,571) with Hans Skrobanek, who is
one of our directors and President of our company. Said loan is evidenced by a
six month promissory note dated December 5, 2000. As additional consideration
for making said loan Mr. Skrobanek received 53,571 shares of our common stock.

         We anticipate that we will be able to raise the needed funds for
operations from one or more of the aforementioned sources. However, if we are
not able to raise the needed capital we will be required to curtail and possibly
discontinue operations. There is no assurance that we will be able to continue
to operate if additional capital is not obtained. Furthermore, if we are
required to curtail our operations this could have a serious negative impact on
our ability to proceed with our business plan and to commercialize and/or
develop existing technologies and products or to identify and acquire new
technologies.

                                       20

<PAGE>

Forward Looking Statements.
---------------------------

         This report on Form 10-KSB contains certain statements that are
"Forward Looking Statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Those statements, among other things, include the discussions of the
Company's expectations contained in the discussion by management of the
Company's Plan of Operation set forth below. Although the Company believes that
the expectations reflected in the Forward Looking Statements are reasonable,
management can give no assurance that such expectations will prove to have been
correct. Generally, these statements relate to business plans or strategies,
projected or anticipated benefits or other consequences of such plans or
strategies, or projections involving anticipated revenues, expenses, earnings,
levels of capital expenditures, liquidity or indebtedness, ability to raise
working capital, or other aspects of operating results or financial position. In
addition, these statements are further qualified in reference to Nurescell AG by
the factors set forth in Exhibit 99 to this Form 10-Q.

         All phases of the operations of the Company are subject to a number of
uncertainties, risks and other influences, many of which are outside the control
of the Company and any one of which, or a combination of which, could materially
affect the results of the Company's operations and whether the Forward Looking
Statements made by the Company ultimately prove to be accurate. Although not
always the case, Forward Looking Statements can be identified by the use of
words such as "believes", "expects", "intends", "projects", "anticipates",
"contemplates", or "estimates".

ITEM 7.  FINANCIAL STATEMENTS

         Our financial statements for the year ended December 31, 2000 are
attached hereto as pages F-1 through F-36.

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

         Our previous accountants were Tabb, Conigliaro & MCCann, P.C. located
in New York, New York. Effective January 1, 2001 Tabb, Congiliaro & McCann, P.C.
merged with Grassi & Co. P.C. located in New York and that firm remains as our
accountants.

                                    PART III

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

DIRECTORS AND OFFICERS

         As of December 31, 2000, our officers and Directors were:


NAME                                AGE               TITLE
----                                ---               -----

Hans-Joachim Skrobanek              50                President and Director

Peter Goerke                        40                Vice President

James Samuelson                     31                Vice President,
                                                      Chief Financial Officer,
                                                      Secretary

Jacques Saunder                     79                Director

Hans-Joachim Schuerholz             74                Director

         All directors hold office until the next annual meeting of stockholders
and until their successor have been elected and qualified. The Board of
Directors elects the officers annually.

         Hans-Joachim Skrobanek has been our President since October 27, 1999
and a Director since December, 1999. Mr. Skrobanek was previously engaged in
project financing and technology transfers from Russia and the Ukraine to the
West. From 1995 to 1999, Mr. Skrobanek was employed as a consultant to Eurotech,
Ltd. and was directly involved in technology transfers from Russia and Israel to
Western markets. Mr. Skrobanek graduated from the University of Frankfurt in
1976 with a Bachelor of Commerce degree.

                                       21

<PAGE>

         Peter Goerke joined us as a Vice President in March of 2000. Prior to
this he served as the Chief of Department of Intracamion, an international
transportation company. He also served as a consultant to the Treuhandanstalt.
Mr. Goerke has a Masters Degree in Politics from the Institute of International
Relations, Moscow, Russia. He is fluent in German, Russian, English and French.

         James Samuelson joined us as Vice President, Chief Financial Officer in
February 2000. Mr. Samuelson has also served as the Chief Operating Officer and
Chief Financial Officer of our wholly-owned subsidiary Cetoni. From February
1998 to January 2000, Mr. Samuelson served as a Vice President of Corporate
Finance for Eastbrokers AG/WMP Bank AG in Vienna, Austria, where he was
responsible for all aspects of the firm's Investment Banking activities. In
1997, Mr. Samuelson was employed as a Vice President from Grammont, Ltd., a
boutique investment banking firm in Paris, France, where he was responsible for
the firm's private placement and road show activities. Prior to 1997, Mr.
Samuelson was engaged in graduate studies. Mr. Samuelson received a Master of
Business Administration Degree in 1996, and a Bachelor of Science in Business
Administration degree in 1992, both from Creighton University.

         Jacques J. Saunder joined us as a Director in March, 1999. Mr. Saunder
also has served, at various times, as our Vice President and Secretary. For the
past five years, Mr. Saunder has been the President of Advanced Technologies
Industries and from inception until January 2000, President of that company. Mr.
Saunder graduated from College Royale Francais in Berlin, Germany in 1938 with a
degree in business, from the Haute Etude Commercial in Paris, France in 1949 and
from City College of New York in 1965.

         Hans-Joachim Schuerholz has served as one of our directors since May
1999. From 1995 to present, Mr. Schuerholz has served as a managing director and
consultant for a real estate company in Saxony, Germany. From 1993 to 1995, Mr.
Schuerholz was employed as a legal consultant to the City of Dresden, Germany,
in the area of restitution and priority investment law. He graduated from the
University of Menster I 1953 with a legal degree.

COMPLIANCE WITH SECTION 16(A) OF THE Exchange ACT

         We became a reporting company on January 14, 2001. At that time we did
not understand the responsibilities of our officers, directors, and certain
shareholders to file disclosure forms under Section `16(A) of the Exchange Act.
When we became aware of these responsibilities we immediately informed our
officers, directors, and the applicable shareholders. As a result the initial
Form 3's were filed delinquent by the following persons on the following dates:

         NAME                          DATE
         ----                          ----
H. R. Skrobanek                 August 25, 2000
Hans-Joaquim Schuerholz         August 25, 2000
James Samuelson                 August 25, 2000
Jacques Saunders                November 9, 2000
Peter Goerke                    August 25, 2000
Kurt Seifman                    September 7, 2000

         To the best of our knowledge none of these persons acquired or disposed
of our securities between January 14, 2001 and the date the Form 3's were filed.
In addition, to the best of our knowledge all of the above persons have filed
all other forms in a timely manner required under Section 16(A).

         To the best of our knowledge Cetoni Holdings Ltd. has not filed a Form
3 reflecting its ownership of 5,000,000 shares of common stock acquired as a
result of our acquisition of Cetoni Unwelttechnologies-Entwicklhungs, GmbH. To
the best of our knowledge Cetoni Holdings, Ltd. has not acquired or disposed of
any of our securities since it acquired ownership of the 5,000,000 shares.

                                       22

<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

CASH COMPENSATION

         The following table presents, for each of the last three fiscal years
ended December 31, 2000 the annual compensation earned by our chief executive
officer and our most highly compensated executive officers.

<TABLE>
<CAPTION>
                                    Summary Compensation Table

                       ANNUAL COMPENSATION                      LONG TERM COMPENSATION
                       -------------------                      ----------------------
                                                                        AWARDS
                                                                        ------
                                                              Securities        All Other
Name and Principal                                            Underlying          Annual
Position                Year     Salary      Bonus            Options/SAR      Compensation
--------                ----     ------      -----            -----------      ------------
<S>                     <C>      <C>         <C>              <C>              <C>
H. R. Skrobanek         1998 Not Applicable                            Not Applicable
                        1999      -0-                                          -0-
                        2000   $110,000                       See Below        -0-

James Samuelson         1998   Not Applicable                            Not Applicable
                        1999   Not Applicable                            Not Applicable
                        2000   $120,000      10,100(1)        See Below        -0-
</TABLE>
------------
(1)   Consists of 50,000 shares of Common Stock.

STOCK OPTIONS

         STOCK OPTIONS

         INCENTIVE STOCK OPTION PLAN. In 1996, we adopted an Incentive Stock
Option Plan whereby we reserved 500,000 shares of common stock for issuance to
our employees. No options had been issued under this plan. On October 22, 2000
our Board of Directors cancelled this plan and adopted a new stock option
entitled the Advanced Technology Industries, Inc. 2000 Stock Option Plan
("Plan"). Under the Plan options may be issued to directors, officers, key
employees, consultants, agents, advisors, and independent contractors who are in
a position to contribute materially to the prosperity of the company. The Plan
provides for the issuance of both Incentive Stock Options ("ISO"s") and
Non-Qualified Stock Options ("NQSO's"). ISO's are issued to employees and NQSO's
are generally issued to non-employees. The number of shares that are subject to
ISO's is limited to 3,000,000 under the Plan. The number of NQSO's that may be
issued is subject to the discretion of the Board of Directors.

         Our Board of Directors administers the Plan but may delegate such
administration to a committee, which shall consist of at least two members of
the Board. The Board or the Committee has the authority to determine the number
of options to be granted, when the options may be exercised and the exercise
price of the options, provided that the exercise price may never be less than
the fair market value of the shares of the Common Stock on the date the option
is granted (110% in the case of any employee who owns more than 10% of the
combined voting power or value of all classes of stock). Options may be granted
for terms not exceeding ten years from the date of the grant, except for options
granted to person holding in excess of 10% of the common stock, in which case
the options may not be granted for a term not to exceed five years from the date
of the grant.

         The Plan must be approved by the shareholders within one year from the
date of adoption of the Board. The shareholders have not yet approved the Plan.

         In 2000 our Board approved the issuance of ISO options to purchase
470,000 shares of common stock and NQSO's to purchase 615,000 shares. All of
said options were issued with an exercise price of $.343 per share.

         The following table presents information for each named officer in the
Summary Compensation Table with respect to options granted during fiscal year
ended December 31`, 2000.

                                       23

<PAGE>

                     Options/SAR Grants in Last Fiscal Year
                               (Individual Grants)
                               -------------------

                   Number of
                  Securities    Percent of total
                  Underlying   options/SARs granted     Exercise of
                  Options/SARs to employees in fiscal   base price   Expiration
NAME              GRANTED (#)          year               ($/Sh)         date
----              -----------          ----               ------         ----
H. R. Skrobanek    150,000            31.91%               $.343        10/25/10
James Samuelson    100,000            21.28%               $.343        10/25/10


         The following table presents information for each named officer in the
Summary Compensation Table with respect to options exercised during fiscal year
ended December 31, 2000 and unexercised options held as of the end of the fiscal
year.

<TABLE>
<CAPTION>

               Aggregated Option/SAR Exercises in Last Fiscal Year
                          And FY-End Option/SAR Values

                                                     Number of
                                                     Securities                  Value of
                                                     Underlying                  Unexercised
                                                     Unexercised                 In-the-Money
                                                     Options/SAR's               Options/SAR's
                        Shares                       At FY-End (#)               at FY=Emd ($)
NAME               Acquired     Value          EXERCISABLE/ UNEXERCISABLE  EXERCISABLE/ UNEXERCISABLE
----               --------     -----          --------------------------  --------------------------
<S>                <C>          <C>               <C>                           <C>
H. R. Skrobanek    -0-          -0-               150,000                       -0-
James Samuelson    -0-          -0-               100,000                       -0-

</TABLE>

         Values reflected about are based on the closing price of $.281 per
share of our common stock for the last business day of the fiscal year ended
December 31, 2000.

COMPENSATION OF DIRECTORS

         There is no standard or individual compensation package for any of the
directors.

EMPLOYMENT CONTRACTS

         There are no employment contracts with the executive officers listed in
the Summary Compensation Table.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table contains information regarding the shareholdings of
our current directors and executive officers and those persons or entities who
beneficially own more than 5% of its common stock (giving effect to the exercise
of the warrants held by each such person or entity):


                                       24

<PAGE>

                             Number of shares of         Percent of Common
                             Common Stock Beneficially   Stock Beneficially
                             Owned                       Owned (1)
                             -----                       ---------
Hans Joachim Skrobanek        228,571
President, Director

Jacques J. Saunder             15,000                      *
Director

Hans Joachim Schuerholz        15,000                      *
Director

James Samuelson, Vice-
President and Chief Fin-       50,000                      *
ancial Officer

Peter Goerke, Vice-            50,000                      *
President

Kurt Seifman (2)            3,844,940                     11.74%

Cetoni Holdings, Ltd. (3)   5,000,000                     15.27%

ERBC Holdings, Ltd. (4)    13,114,393                     40.05%

Adrian Joseph as Trustee    3,500,000                     10.68%
Of the Adrian Joseph
Separate Property Trust and
Dianna Joseph as Trustee of
he Dianna Joseph Separate
Property Trust

--------------------
         *        Less than 1%.

         (1)      Based upon 32,743,875 outstanding shares of common stock.
         (2)      Includes presently exercisable options to purchase 125,000
                  shares at per share.
         (3)      Cetoni Holdings, Ltd. is beneficially owned by A. Schlattel.
         (4)      ERBC Holdings, Ltd. is beneficially owned by Kurt Seifman

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         ERBC Holdings Ltd ("ERBC") has from time to time loaned money to us for
operations. On December 4, 2000 the amount of said loans was in excess of
$1,560,000.00 On that date we entered into an agreement with ERBC to convert
$1,156,000 of said loans (excluding accrued and unpaid interest) to our common
stock The conversion was based on 8.37 shares of our common stock for each $1.00
of debt converted. The conversion ratio was arrived at by taking the average
closing bid price of our common stock on the OTC Bulletin Board for the five
trading days ended November 30, 2000, which was approximately $.32 per share and
discounting that figure by 62.5%. The discount was determined based on
information received from an investment banking firm retained by both ERBC and
us that under its general guidelines for purposes of conducting valuation of
restricted stock a discount of 63.% was appropriate. This was based in part upon
a provision in the agreement requiring ERBC to hold the stock for at least two
years. Based upon the formula the $1,560,000 was converted into 13,054,393 of
common stock. This transaction was reported on Current Report on Form 8-K filed
on December 14, 2000.

         As of December 31, 2000 there was remaining debt plus accrued and
unpaid interest due to ERBC in the amount of $552,536.

         By letter agreement dated June 1, 1996 we engaged ERBC to provide
certain consulting services on a one year basis. Said agreement has been renewed
from year to year. In 2000 we incurred consulting fees of $240,000 under said
agreement. At December 31, 2000 we owed ERBC $653,048 under the agreement.

                                       25

<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)    Exhibits

                2.1     Agreement and Plan of Reorganization between Kurchatov
                        Research Holdings, Ltd. and Aberdeen Acquisition
                        Corporation filed as exhibit to Form 8-K filed January
                        14, 2000. (1)

                3.1     Articles of Incorporation of Advanced Technology
                        Industries, Inc. (2)

                3.2     By-Laws of Advanced Technology Industries, Inc. (2)

                4.1     Specimen Common Stock Certificate. (2)

                4.2     Specimen Warrant Certificate issued in connection with
                        an Offering of Debentures. (2)

                10.1    Agreement with Eurotech, Ltd. to Acquire Resealable Can
                        Technology. (2)

                10.2    Flexitech, Ltd. Acquisition Agreement. (2)

                10.3    Pirocat, Ltd. Acquisition Agreement. (2)

                10.4    Agreement with the Holder of All Outstanding Equity of
                        Cetoni Umwelttechnologies-Entwicklungs. (2)

                10.5    Agreement with Eurotech, Ltd. relating to Silicon (EKOR)
                        Compound. (2)

                10.6    Lease Agreement for Office Space in Berlin, Germany. (2)

                10.7    No Exhibit

                10.8    Letter Agreement with Eurotech dated June 20, 2000
                        concerning Eurotech Repurchase of Stock. (3)

                10.9    Distribution Agreement with Fackelmann GmbH & Co. dated
                        May 11, 2000 (Butter Dispenser Dish).  (4)

                10.10   Distribution Agreement with Fackelmann GmbH & Co. dated
                        May 11, 2000 (Fruit Stripper). (4)

                10.11   Investment Agreement between Nurescell, Inc. and
                        Nurescell AG. (5)

                10.12   License Agreement between Nurescell, Inc. and
                        Nurescell AG. (5)

                10.13   Agreement For Purchase Of Stock of Nurescell, Inc. by
                        Company. (5)

                10.14   Advanced Technology Industries, Inc. 2000 Stock Option
                        Plan.  (6)

                10.15   Loan Agreement.  (7)

                10.16   Conversion Agreement between ERBC Holdings Limited and
                        issuer.  (8)

                21.     List of Subsidiaries. (9)

                27.     Financial Data Schedule.

                        (1)   Filed as same numbered Exhibit to registrant's
                              Current Report on 8-K, filed January 14, 2000.

                        (2)   Filed as same numbered Exhibit to registrant's
                              Amended Current Report on 8-K, filed May 15, 2000.

                        (3)   Filed as same numbered Exhibit to registrant's
                              Amended Current Report on 8-K, filed July 5, 2000.

                        (4)   Filed as same numbered Exhibit to registrant's
                              Quarterly Report for quarter ended June 30, 2000,
                              filed August 21, 2000.

                        (5)   Filed as same numbered Exhibit to registrant's
                              Current Report on Form 8-K, filed September 7,
                              2000.

                        (6)   Filed as same numbered Exhibit to registrant's
                              Current Report on Form 8-K, filed November 8,
                              2000.

                        (7)   Filed as same numbered Exhibit to registrant's
                              Current Report on Form 8-K, filed January 22, 2001

                                       26

<PAGE>

                        (8)   Filed as same numbered Exhibit to registrant's
                              Current Report on Form 8-K, filed December 14,
                              2000

                        (9)   Filed as same numbered Exhibit to registrant's
                              Form 10QSB Quarterly Report for the First Quarter
                              of 2000, filed May 23, 2000

          (b)   Reports on 8-K

                The following Current Reports on Form 8-K were filed in the last
                quarter of 2000:

                i.      Current Report on Form 8-K filed November 8, 2000,
                        reporting Stock Option Plan

                ii.     Current Report on Form 8-K filed November 15, 2000,
                        reporting offering of $750,000 in Six Month Loan
                        Agreements. (1)

                iii.    Current Report on Form 8-K filed December 14, 2000,
                        reporting registrant's entry into a Conversion Agreement
                        with ERBC Holdings Limited, converting registrant's
                        principal debt in the amount of $1,560,000 to ERBC into
                        13,054,393 shares of registrant.

                       (1)  This offering was thereafter increased to
                            $1,500,000, as reported in the Current Report on
                            Form 8-K filed January 22,2001.

                                   SIGNATURES

         In accordance with Section 13 of 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.


                      ADVANCED TECHNOLOGY INDUSTRIES, INC.


Date: April 16, 2001                 By   /s/ Hans Joachim Skrobanek
                                          --------------------------------------
                                              President

Date: April 16, 2001                 By   /s/ James Samuelson
                                          --------------------------------------
                                              Chief Financial Officer



Name                                  Title               Date
----                                  -----               ----

/s/ Hans Joachim Skrobanek         Director            April 16, 2001
--------------------------

/s/ Hans Joachim Schuerholz        Director            April 16, 2001
---------------------------

                                       27

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                          CONSOLIDATED FINANCIAL REPORT

                               FOR THE YEARS ENDED
                           DECEMBER 31, 1999 AND 2000


<PAGE>

                       ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                       Page Nos.
                                                                       ---------

INDEPENDENT AUDITORS' REPORT                                              F-1


CONSOLIDATED BALANCE SHEET                                                F-2
  December 31, 2000


CONSOLIDATED STATEMENTS OF OPERATIONS                                     F-3
  For the Years Ended December 31, 1999 and 2000
  For the Period from Inception (October 25, 1995) to
    December 31, 2000


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)           F-4 - F-8
  For the Period from Inception (October 25, 1995) to
    December 31, 2000


CONSOLIDATED STATEMENTS OF CASH FLOWS                                     F-9
  For the Years Ended December 31, 1999 and 2000
  For the Period from Inception (October 25, 1995) to
    December 31, 2000


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                           F-10 - F-36


<PAGE>

Board of Directors and Stockholders
Advanced Technology Industries, Inc.


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

We have audited the accompanying consolidated balance sheet of Advanced
Technology Industries, Inc., formerly Kurchatov Research Holdings, Ltd. (the
"Company") (a development stage company) as of December 31, 2000 and the related
consolidated statements of operations, stockholders' equity (deficiency), and
cash flows for the year ended December 31, 2000 and for the period from
inception (October 25, 1995) to December 31, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The balance sheet of the Company as of December 31, 1999 and the
related statements of operations, stockholders' equity (deficiency) and cash
flows for the years ended December 31, 1998 and 1999 and for the period from
inception (October 25, 1995) to December 31, 1999 were audited by Tabb,
Conigliaro & McGann, P.C., who merged with Grassi & Co., CPAs, P.C. as of
January 1, 2001, and whose report, dated April 18, 2000, expressed an
unqualified opinion in those statements.

We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the 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 audit provides 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 Technology
Industries, Inc. (a development stage company) at December 31, 2000 and the
results of its operations and its cash flows for the year ended December 31,
2000 and for the period from inception (October 25, 1995) to December 31, 2000,
in conformity with generally accepted accounting principles in the United States
of America.

As discussed in Notes 1, 5 and 15, during November of 1999, the Company sold its
profit interest in certain technology in exchange for the purchaser's stock.
While these shares are restricted, their estimated fair value represents a
significant portion of the Company's assets and working capital. In addition,
the Company recognized an extraordinary gain of $3,368,644 related to the sale
of its profit interest, which significantly reduced its net loss for the year
ended December 31, 1999.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company incurred losses
from operations since inception and, as of December 31, 2000, had a deficit
accumulated during the development stage of $7,065,984. As discussed further in
Note 1 to the consolidated financial statements, these factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


                                                       GRASSI & CO., CPAs, P.C.

New York, New York
April 3, 2001

                                       F-1

<PAGE>

                     ADVANCED TECHNOLOGY INDUSTRIES, INC.
                        (A Development Stage Company)

                         CONSOLIDATED BALANCE SHEET

                              DECEMBER 31, 2000


                                   ASSETS
                                   ------
Current Assets:
  Cash                                                              $    99,767
  Prepaid expenses and other current assets                              53,773
  Securities available-for-sale                                       1,753,425
                                                                    ------------
        Total Current Assets                                          1,906,965

Equipment, net of accumulated depreciation                              133,124
License fee, net of accumulated amortization                            916,667
Due from related parties                                                 34,582
                                                                    ------------
        Total Assets                                                $ 2,991,338
                                                                    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current Liabilities:
  Notes payable                                                     $   713,571
  Accrued liabilities                                                 1,600,921
  Current portion of obligations under capital leases                    10,772
  Due to related parties                                              1,036,481
  License fee payable                                                   235,449
                                                                    ------------
      Total Current Liabilities                                       3,597,194
                                                                    ------------
Long-term portion of obligations under capital leases                     7,169
                                                                    ------------
      Total Liabilities                                               3,604,363
                                                                    ------------
Commitments and Other Matters (Notes 1,3,4,7,9,12,13
  16,17 and 18)

Stockholders' Equity:
  Preferred stock - $0.001 par value; 1,000,000 shares
    authorized; -0- shares issued and outstanding                             -
  Common stock - $0.0001 par value; 50,000,000 shares
    authorized; 29,281,875 shares issued and outstanding                  2,928
  Additional paid-in capital                                          6,368,525
  Accumulated other comprehensive income                                294,762
  Deficit accumulated during the development stage                   (7,065,984)
  Unearned financing costs                                             (168,256)
  Receivable on sale of stock                                           (45,000)
                                                                    ------------
      Total Stockholders' Deficiency                                   (613,025)
                                                                    ------------
      Total Liabilities and Stockholders' Equity                    $ 2,991,338
                                                                    ============

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

                                       F-2

<PAGE>

<TABLE>
                          ADVANCED TECHNOLOGY INDUSTRIES, INC.
                              (A Development Stage Company)

                          CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>

                                                                        FOR THE PERIOD
                                            FOR THE YEARS ENDED         FROM INCEPTION
                                                 DECEMBER 31,          (OCTOBER 25,1995)
                                        -----------------------------   TO DECEMBER 31,
                                            1999            2000             2000
                                        -------------   -------------   -------------
<S>                                     <C>             <C>             <C>
Revenues                                $          -    $          -    $          -
                                        -------------   -------------   -------------
Costs and Expenses:
  Research and development                 1,098,192       1,347,075       3,017,449
  Stock-based compensation                 1,070,411         825,208       2,950,619
  Consulting fees                            348,023         524,648       1,451,424
  Other general and administrative
    expenses                                 382,226       1,490,802       2,451,699
  Depreciation and amortization
    expense                                   58,883         124,555         234,034
  Interest and amortization of
    debt issuance costs                    1,140,889         195,946       1,450,037
                                        -------------   -------------   -------------
    Total Costs and Expenses               4,098,624       4,508,234      11,555,262

Other (Income):
 Gain on sale of marketable
   securities                                      -        (815,625)       (815,625)
                                        -------------   -------------   -------------
Loss before extraordinary item            (4,098,624)     (3,692,609)    (10,739,637)

Minority interest in loss of
 consolidated subsidiary                           -         323,965         323,965

Extraordinary item - gain on sale
  of technology interest to former
  affiliate, net of income taxes
  of $-0-                                  3,349,688               -       3,349,688
                                        -------------   -------------   -------------
     Net Loss                           $   (748,936)   $ (3,368,644)   $ (7,065,984)
                                        =============   =============   =============
    Basic and diluted loss per share:
  Before extraordinary item             $       (.28)   $       (.21)
  Extraordinary item                             .23               -
                                        -------------   -------------
     Net Loss                           $       (.05)           (.21)
                                        =============   =============
Weighted average shares used in
  basic and diluted loss per share        14,573,509      15,866,790
                                        =============   =============

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

                                           F-3
</TABLE>

<PAGE>

<TABLE>
                                         ADVANCED TECHNOLOGY INDUSTRIES, INC.
                                            (A Development Stage Company)

                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

                      FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) THROUGH DECEMBER 31, 2000
<CAPTION>

                                                                          Common Stock             Additional
                                                     Date of      ----------------------------      Paid-in
                                                   Transaction       Shares          Amount         Capital
                                                  ------------    ------------    ------------    ------------
<S>                                                <C>             <C>            <C>             <C>
Period from Inception (October 25, 1995)
through December 31, 1997:
---------------------------------------------

Issuance of common stock to founders for
  subscriptions ($0.0001 per share)                   10/25/95     12,300,000     $     1,230     $         -
Issuance of stock for legal fees
  ($0.04 per share)                                   10/25/95        500,000              50          19,950
Issuance of stock under consulting agreement
  ($0.04 per share)                                   10/25/95      1,375,000             138          54,862
Issuance of stock under consulting agreements
  ($1.00 per share)                                   12/02/96        230,000              23         229,977
Net loss - 1996                                                             -               -               -
Issuance of stock under consulting agreements
  ($1.00 per share)                                   01/10/97        750,000              75         749,925
Issuance of stock for cash pursuant to
  offering ($2.00 per share)                       04/97-09/97        306,500              30         612,970
Offering costs                                           04/97              -               -         (50,000)
Comprehensive income:
  Net loss - 1997                                                           -               -               -
                                                                  ------------    ------------    ------------
Balance - December 31, 1997                                        15,461,500     $     1,546     $ 1,617,684
                                                                  ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                                                                       Deficit
                                                   Accumulated       Accumulated          Total
                                                      Other           During the      Stockholders'
                                                  Comprehensive       Development        Equity         Comprehensive
                                                  Income (Loss)         Stage         (Deficiency)      Income (Loss)
                                                  -------------     -------------     -------------     -------------
<S>                                               <C>               <C>               <C>               <C>
Period from Inception (October 25, 1995)
through December 31, 1997:
---------------------------------------------

Issuance of common stock to founders for
  subscriptions ($0.0001 per share)               $          -      $          -      $     1,230
Issuance of stock for legal fees
  ($0.04 per share)                                          -                 -           20,000
Issuance of stock under consulting agreement
  ($0.04 per share)                                          -                 -           55,000
Issuance of stock under consulting agreements
  ($1.00 per share)                                          -                 -          230,000
Net loss - 1996                                              -          (372,500)        (372,500)
Issuance of stock under consulting agreements
  ($1.00 per share)                                          -                 -          750,000
Issuance of stock for cash pursuant to
  offering ($2.00 per share)                                 -                 -          613,000
Offering costs                                               -                 -          (50,000)
Comprehensive income:
  Net loss - 1997                                            -        (1,267,567)       (1,267,567)     $ (1,267,567)
                                                  -------------     -------------     -------------     -------------
Balance - December 31, 1997                       $          -      $ (1,640,067)     $    (20,837)     $ (1,267,567)
                                                  =============     =============     =============     =============

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

                                                         F-4
</TABLE>

<PAGE>

<TABLE>
                       ADVANCED TECHNOLOGY INDUSTRIES, INC. AND SUBSIDIARY
                                  (A Development Stage Company)

                         STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

           FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) THROUGH DECEMBER 31, 2000
<CAPTION>

                                                                    Common Stock       Additional
                                          Date of    ----------------------------         Paid-in
                                      Transaction          Shares          Amount         Capital
                                     ------------    ------------    ------------    ------------
<S>                                   <C>             <C>            <C>             <C>
Year Ended December 31, 1998:
--------------------------------

Balance - December 31, 1997, as
 previously reported                                  15,461,500     $     1,546     $ 1,617,684
Effect of Cetoni pooling-of-
 interests                                             5,000,000             500          27,245
                                                     ------------    ------------    ------------
Balance - December 31, 1997,
 restated                                             20,461,500           2,046       1,644,929
Comprehensive income:
  Net loss, restated for Cetoni
    pooling-of-interests                                       -               -               -
  Other comprehensive income,
  net of tax:
    Translation adjustments                                    -               -               -
    Unrealized gains                                           -               -               -
                                                     ------------    ------------    ------------
Balance - December 31, 1998,
 Restated                                             20,461,500     $     2,046     $ 1,644,929
                                                     ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                                                             Deficit
                                       Accumulated       Accumulated             Total
                                             Other        During the     Stockholders'
                                     Comprehensive       Development            Equity     Comprehensive
                                     Income (Loss)             Stage      (Deficiency)     Income (Loss)
                                     -------------     -------------     -------------     -------------
<S>                                  <C>               <C>               <C>               <C>
Year Ended December 31, 1998:
--------------------------------

Balance - December 31, 1997, as
 previously reported                 $          -      $ (1,640,067)     $    (20,837)
Effect of Cetoni pooling-of-
 interests                                 36,122          (512,769)         (448,902)
                                     -------------     -------------     -------------
Balance - December 31, 1997,
 restated                                  36,122        (2,152,836)         (469,739)
Comprehensive income:
   Net loss, restated for Cetoni
     pooling-of-interests                       -          (795,568)         (795,568)     $   (795,568)
   Other comprehensive income,
   net of tax:
     Translation adjustments              (54,137)                -           (54,137)          (54,137)
     Unrealized gains                           -                 -                 -                 -
                                     -------------     -------------     -------------     -------------
Balance - December 31, 1998,
  Restated                           $    (18,015)     $ (2,948,404)     $ (1,319,444)     $   (849,705)
                                     =============     =============     =============     =============

     The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                               F-5

<PAGE>

<TABLE>
                        ADVANCED TECHNOLOGY INDUSTRIES, INC. AND SUBSIDIARY
                                   (A Development Stage Company)

                          STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

             FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) THROUGH DECEMBER 31, 2000
<CAPTION>

                                                                      Common Stock       Additional
                                            Date of    ----------------------------         Paid-in
                                        Transaction          Shares          Amount         Capital
                                       ------------    ------------    ------------    ------------
<S>                                         <C>         <C>            <C>             <C>
Year Ended December 31, 1999:
----------------------------------

Balance - December 31, 1998,
  Restated                                              20,461,500     $     2,046     $ 1,644,929

Cancellation of shares issued to
  founders                                  11/99       (6,795,000)           (679)            679
Stock issued pursuant to
  employment and consulting
  agreements                                01/99        1,009,411             101       1,009,310
Value assigned to stock options
  issued in connection with
  consulting agreement                      01/99                -               -          61,000
Value assigned to 770,000 warrants
  issued in connection with
  convertible debt                          03/99                -               -         531,000
Comprehensive income:
   Net loss                                                      -               -               -
   Other comprehensive income,
   net of tax:
     Translation adjustments                                     -               -               -
     Unrealized gains                                            -               -               -
                                                       ------------    ------------    ------------
Balance - December 31, 1999                             14,675,911     $     1,468     $ 3,246,918
                                                       ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                                                             Deficit
                                       Accumulated       Accumulated             Total
                                             Other        During the     Stockholders'
                                     Comprehensive       Development            Equity     Comprehensive
                                     Income (Loss)             Stage      (Deficiency)     Income (Loss)
                                     -------------     -------------     -------------     -------------
<S>                                  <C>               <C>               <C>               <C>
Year Ended December 31, 1999:
---------------------------------

Balance - December 31, 1998,
  Restated                           $    (18,015)     $ (2,948,404)     $ (1,319,444)

Cancellation of shares issued
  to founders                                   -                 -                 -
Stock issued pursuant to
  employment and consulting
  agreements                                    -                 -         1,009,411
Value assigned to stock options
  issued in connection with
  consulting agreement                          -                 -            61,000
Value assigned to 770,000
  warrants issued in connection
  with convertible debt                         -                 -           531,000
Comprehensive income, net of tax:
  Net loss                                      -          (748,936)         (748,936)     $   (748,936)
  Other comprehensive income,
  net of tax:
     Translation adjustments               92,899                 -            92,899            92,899
     Unrealized gains                   1,117,500                 -         1,117,500         1,117,500
                                     -------------     -------------     -------------     -------------
 Balance - December 31, 1999         $  1,192,384      $ (3,697,340)     $    743,430      $    461,463
                                     =============     =============     =============     =============

      The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                                F-6

<PAGE>


<PAGE>

<TABLE>
                                         ADVANCED TECHNOLOGY INDUSTRIES, INC.
                                             (A Development Stage Company)

                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

                      FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) THROUGH DECEMBER 31, 2000
<CAPTION>

                                                                                                          Accumulated
                                                                    Common Stock           Additional        Other
                                                Date of     ---------------------------     Paid-in      Comprehensive
                                              Transaction      Shares         Amount        Capital      Income (Loss)
                                             ------------   ------------   ------------   ------------   -------------
<S>                                                 <C>       <C>           <C>            <C>           <C>
Year Ended December 31, 2000:
----------------------------

Balance - December 31, 1999                                   14,675,911    $     1,468    $ 3,246,918    $ 1,192,384

Stock options exercised                             01/00         30,000              3         14,997              -
Shares issued for acquisition of Aberdeen           01/00        400,000             40        499,960
Compensatory issuance of stock                      04/00         30,000              3         44,997              -
Value assigned to stock options issued in                                                                           -
  connection with consulting agreements             04/00              -              -        472,500
Stock options exercised                             06/00         90,000              9         44,991
Compensatory issuance of stock                      06/00         60,000              6         89,994              -
Compensatory issuance of stock                      12/00        128,000             13        152,495              -
Value assigned to stock as additional
  consideration for financing activities            11/00        713,571             71        222,788              -
Issuance of stock to retire debt from
  related party                                     12/00     13,054,393          1,305      1,558,695              -
Issuance of stock to officers for bonus             12/00        100,000             10         20,190              -
Amortization of unearned financing costs                               -              -              -              -
Comprehensive income:                                                                                               -
  Net loss                                                             -              -              -              -
  Other comprehensive income (loss), net of
   tax:
     Foreign currency translation
       adjustments                                                     -              -              -         69,578
     Unrealized holding losses arising
       during the year, net of taxes of $453,000                       -              -              -       (687,825)
     Less: Reclassification adjustments for
             gains included in net loss,
             net of taxes of $151,000                                  -              -              -       (279,375)
                                                             ------------   ------------   ------------   ------------
Balance - December 31, 2000                                   29,281,875    $     2,928    $ 6,368,525    $   294,762
                                                             ============   ============   ============   ============

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

                                                         F-7
</TABLE>

<PAGE>

<TABLE>
                                             ADVANCED TECHNOLOGY INDUSTRIES, INC.
                                                (A Development Stage Company)

                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

                          FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) THROUGH DECEMBER 31, 2000
<CAPTION>

                                              Deficit
                                            Accumulated                                          Total
                                            During the        Unearned        Receivable      Stockholders'
                                            Development       Financing       on Sale of         Equity         Comprehensive
                                               Stage            Costs            Stock         (Deficiency)     Income/(Loss)
                                            ------------     ------------     ------------     ------------     ------------
<S>                                         <C>              <C>              <C>              <C>              <C>

Year Ended December 31, 2000:
----------------------------

Balance - December 31, 1999                 $(3,697,340)     $         -      $         -      $   743,430

Stock options exercised                               -                -                -           15,000
Shares issued for acquisition of
  Aberdeen                                            -                -                -          500,000
Compensatory issuance of stock                        -                -                -           45,000
Value assigned to stock options issued
  in connection with consulting
  agreements                                          -                -                -          472,500
Stock options exercised                               -                -          (45,000)               -
Compensatory issuance of stock                        -                -                -           90,000
Compensatory issuance of stock                        -                -                -          152,508
Value assigned to stock as additional
 consideration for financing
 activities                                           -         (222,859)               -                -
Issuance of stock to retire debt from
  related party                                       -                -                -        1,560,000
Issuance of stock to officers for
  bonus                                               -                -                -           20,200
Amortization of unearned financing
  costs                                               -           54,603                -           54,603
Comprehensive income:
  Net loss                                   (3,368,644)               -                -       (3,368,644)     $(3,368,644)
  Other comprehensive income (loss),
    net of tax:
     Foreign currency translation
       adjustments                                    -                -                -           69,578           69,578
     Unrealized holding losses arising
       during the year, net of taxes
       of $453,000                                    -                -                -         (687,825)        (687,825)
     Less: Reclassification
       adjustments for gains included
       in net loss, net of taxes of
       $151,000                                       -                -                -         (279,375)        (279,375)
                                            ------------     ------------     ------------     ------------     ------------
Balance - December 31, 2000                 $(7,065,984)     $  (168,256)     $   (45,000)     $  (613,025)     $(4,266,266)
                                            ============     ============     ============     ============     ============

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

                                                             F-8
</TABLE>

<PAGE>

<TABLE>
                                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                                          (A Development Stage Company)

                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                                                   FOR THE PERIOD
                                                                         FOR THE YEARS ENDED       FROM INCEPTION
                                                                             DECEMBER 31,         (OCTOBER 25,1995)
                                                                     ---------------------------   TO DECEMBER 31,
                                                                         1999           2000            2000
                                                                     ------------   ------------   ------------
<S>                                                                  <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                           $  (748,936)   $(3,368,644)   $(7,065,984)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
      Acquisition of Aberdeen                                                  -        650,000        650,000
      Gain on sale of marketable securities                                    -       (815,625)      (815,625)
      Extraordinary gain                                              (3,349,688)             -     (3,349,688)
      Stock-based compensation                                         1,070,411        825,208      2,950,619
      Receivable on sale of stock                                              -        (45,000)       (45,000)
      Interest and amortization of debt issuance costs                 1,068,191         54,603      1,122,794
      Research and development costs                                     437,368              -        437,368
      Depreciation and amortization                                       58,883        124,555        234,035
  Cash provided by (used in) the change in assets and liabilities:
     Decrease in prepaid expenses                                        (14,567)       (26,993)       (53,773)
     Increase in cumulative translation adjustment                        92,899         69,578        144,462
     Increase in accrued liabilities                                     746,409         77,052      1,588,168
                                                                     ------------   ------------   ------------
    Net Cash Used in Operating Activities                               (639,030)    (2,455,266)    (4,202,624)
                                                                     ------------   ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
 Capital expenditures                                                    (37,057)      (109,175)      (246,521)
 License fee                                                                   -       (764,551)      (764,551)
 Proceeds from sale of marketable securities                                   -      1,350,000      1,350,000
                                                                     ------------   ------------   ------------
    Net Cash (Used in) Provided by Investing Activities                  (37,057)       476,274        338,928
                                                                     ------------   ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from exercise of options                                             -         15,000         15,000
 Proceeds from issuance of common stock                                        -              -        641,975
 Offering costs                                                                -              -        (50,000)
 Proceeds from loans                                                           -        713,571        713,571
 Proceeds from convertible debentures                                    750,000              -        750,000
 Financing costs                                                         (75,000)             -        (75,000)
 Advances from related parties                                             4,746      1,451,095      1,987,281
 Payments under capital lease obligations                                 (6,353)       (13,011)       (19,364)
                                                                     ------------   ------------   ------------
    Net Cash Provided by Financing Activities                            673,393      2,166,655      3,963,463
                                                                     ------------   ------------   ------------
(Decrease) Increase in Cash                                               (2,694)       187,663         99,767

Cash Overdraft - Beginning of Year                                       (85,202)       (87,896)             -
                                                                     ------------   ------------   ------------
Cash - End of Year                                                   $   (87,896)   $    99,767    $    99,767
                                                                     ============   ============   ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest                                                         $    72,898    $    28,775    $   101,673
                                                                     ============   ============   ============
    Income taxes                                                     $         -    $         -    $         -
                                                                     ============   ============   ============
SUPPLEMENTAL SCHEDULE OF NON-CASH AND FINANCING ACTIVITIES:
  Equipment purchased under capital lease obligations                $    23,415    $         -    $    37,305
                                                                     ============   ============   ============
  Convertible debentures and interest assumed by Eurotech            $ 1,212,188    $         -    $ 1,212,188
                                                                     ============   ============   ============
  Debt converted to equity                                           $         -    $ 1,560,000    $ 1,560,000
                                                                     ============   ============   ============

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

                                                      F-9
</TABLE>

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1 -  BUSINESS AND CONTINUED OPERATIONS

Description of Business
-----------------------

Advanced Technology Industries, Inc. (the "Company", or "ATI") was incorporated
under the laws of the State of Delaware on October 25, 1995. On February 1,
2000, the Company changed its name from Kurchatov Research Holdings, Ltd. to
Advanced Technology Industries, Inc. The Company was organized to identify,
assess and commercialize technologies introduced and developed by scientists
throughout the world with particular emphasis on technologies originating in
Israel, Germany and Russia.

The Company is in the development stage and its efforts, until recently,
included the appointment of Russian scientists to the Company's technical
advisory board, the negotiation of an agreement with ERBC Holdings, Ltd.
("ERBC") to manage the Company's operations in Russia, the review of certain
technologies for commercialization, the negotiation of an agreement with
Eurotech, Ltd. ("Eurotech"), a development-stage technology transfer, holding,
marketing and management company, to undertake commercialization of the
technologies and products which may be identified by the technical advisory
board, including the introduction of a certain compound technology known as
"EKOR" to Eurotech (Note 3).

During April of 1999, the Company acquired a 20% equity interest in two Israeli
technology companies, Flexitech, Ltd. and Pirocat, Ltd. (Note 4). Further, in
December of 1999, the Company acquired all of the outstanding capital stock of
Cetoni Umwelttechnologie Entwicklungs GmbH ("Cetoni"), a German-based design and
engineering firm focused on developing and patenting technologies and products
for the consumer market.

In November of 1999, the Company sold its profit interest in the EKOR technology
to Eurotech (see Note 15).

In August of 2000, the Company acquired a 49% interest in Nurescell AG, a German
company, which has licensed a technology owned by Nurescell, Inc. ("Nurescell
US") (see Note 4).

Reorganization
--------------

Pursuant to an Agreement and Plan of Reorganization, effective January 14, 2000,
the Company acquired all the outstanding shares of common stock of Aberdeen
Acquisition Corporation ("Aberdeen"), a Delaware corporation, from the
shareholders thereof, in an exchange for cash of $150,000, plus 400,000 shares
of common stock of the Company valued at $500,000. As a result of this
transaction, Aberdeen has become a wholly-owned subsidiary of ATI effective on
January 14, 2000. The costs of this transaction were charged to operations
during the year ended December 31,2000.

To date, the Company, Cetoni and Nurescell AG have not generated any significant
revenues from operations.

                                      F-10

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1 -  BUSINESS AND CONTINUED OPERATIONS (Continued)

Continued Existence
-------------------

The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. However, as shown in the
accompanying consolidated financial statements, the Company has incurred losses
from operations since inception. Management anticipates incurring substantial
additional losses in 2001. Further, the Company may incur additional losses
thereafter, depending on its ability to generate revenues from the licensing or
sale of its technologies and products, or enter into any or a sufficient number
of joint ventures. The Company has no significant revenue to date. There is no
assurance that the Company can successfully commercialize any of its
technologies and products and realize any revenues therefrom. The Company's
technologies and products have never been utilized on a large-scale commercial
basis and there is no assurance that any of its technologies or products will
receive market acceptance. There is no assurance that the Company can continue
to identify and acquire new technologies. As of December 31, 2000, the Company
had an accumulated deficit since inception of $7,065,984.

Management's business plan will require additional financing. To support its
operations during 2000, the Company borrowed monies from individual investors
and certain stockholder in the amount of $713,571 and $1,451,095,
respectively(see Note 9). During July of 2000, the Company sold 500,000 shares
of its Eurotech stock for $1,350,000. Eurotech's common shares are listed and
traded on the American Stock Exchange under the symbol "EUO". The Company plans
on either borrowing funds secured by these securities or selling all or a
portion of such securities to fund its operations in the near future. The market
value of the remaining 1,500,000 shares of Eurotech securities approximated
$1,753,425 at December 31, 2000.

While no assurance can be given, management believes the Company can raise
adequate capital to keep the Company functioning during 2001. No assurance can
be given that the Company can continue to obtain any working capital or sell all
or any of its Eurotech securities, or obtain a loan against its Eurotech
securities, or if obtained, that such funding will not cause substantial
dilution to shareholders of the Company. If the Company is unable to raise
additional funds, it may be forced to change or delay its contemplated marketing
and business plans.

Being a start-up stage entity, the Company is subject to all the risks inherent
in the establishment of a new enterprise and the marketing and manufacturing of
a new product, many of which risks are beyond the control of the Company. All of
the factors discussed above raise substantial doubt about the Company's ability
to continue as a going concern.

                                      F-11

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1 -  BUSINESS AND CONTINUED OPERATIONS (Continued)

Continued Existence (Continued)
-------------------

These consolidated financial statements do not include any adjustments relating
to the recoverability of recorded asset amounts that might be necessary as a
result of the above uncertainty.

NOTE  2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation
---------------------------

The consolidated financial statements include the accounts of ATI and its
wholly-owned German subsidiary, Cetoni, and its majority-controlled German
subsidiary, Nurescell AG, (collectively, the "Company"). Although ATI owns 49%
of the equity of Nurescell AG, ATI consolidates such subsidiary because ATI has
complete operational and financial control and has a majority of the Board. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

Use of Estimates
----------------

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

Equity Method of Accounting for Unconsolidated Foreign Affiliates
-----------------------------------------------------------------

Investments in companies in which the Company has a 20% to 50% interest and has
the ability to exercise significant influence over operating and financial
policies are accounted for on the equity method. Accordingly, the Company's
proportionate share of its undistributed earnings or losses are included in the
statement of operations.

At December 31, 2000, investments in companies accounted for under the equity
method consist of the following foreign development-stage technology companies:

                Flexitech, Ltd. ("Flexitech")                      20%
                Pirocat, Ltd. ("Pirocat")                          20%

                                      F-12

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments
-----------------------------------

The consolidated financial statements include various estimated fair value
information at December 31, 2000, as required by Statement of Financial
Accounting Standards 107, "Disclosures about Fair Value of Financial
Instruments". Such information, which pertains to the Company's financial
instruments, is based on the requirements set forth in that Statement and does
not purport to represent the aggregate net fair value to the Company. The
following methods and assumptions were used to estimate the fair value of each
class of financial instruments for which it is practicable to estimate that
value:

Cash and cash equivalents: The carrying amount approximates fair value because
of the short-term maturity of those instruments.

Investment in marketable securities: The fair value of investments in marketable
securities is based on quoted prices.

Receivables and payables: The carrying amounts approximate fair value because of
the short maturity of those instruments.

Notes and loans payable: The carrying amounts of notes payable approximate fair
value due to the length of the maturities. The interest rates being tied to
market indices and/ordue to the interest rates not being significantly different
from the current market rates available to the Company.

All of the Company's financial instruments are held for purposes other than
trading.

Cash and Cash Equivalents
-------------------------

The Company considers all highly liquid investments with original maturity dates
of three months or less to be cash equivalents.

                                      F-13

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments in Marketable Securities
------------------------------------

The Company accounts for its investments using Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in debt and Equity
Securities" ("SFAS No. 115"). This standard requires that certain debt and
equity securities be adjusted to market value at the end of each accounting
period. Unrealized market value gains and losses are charged to earnings if the
securities are traded for short-term profit. Otherwise, such unrealized gains
and losses are charged or credited to comprehensive income.

Management determines the proper classifications of investments in obligations
with fixed maturities and marketable equity securities at the time of purchase
and reevaluates such designations as of each balance sheet date. At December 31,
2000, all securities covered by SFAS No. 115 were designated as available for
sale. Accordingly, these securities are stated at fair value, with unrealized
gains and losses reported in comprehensive income. Realized gains and losses on
sales of investments are determined on a specific identification basis.

Equipment
---------

Equipment is stated at cost. Depreciation is calculated using the straight-line
method over the estimated useful life of 3 to 5 years.

Licensing Fees
--------------

Licensing fees are being amortized on a straight-line basis over 5 years.

Impairment of Assets
--------------------

The Company evaluates the recoverability of long-lived assets by measuring the
carrying amount of the assets against the estimated undiscounted future cash
flows associated with them. At the time such evaluations indicate that the
future undiscounted cash flows of certain long-lived assets are not sufficient
to recover the carrying value of such assets, the assets are adjusted to their
fair values. Based on these evaluations, there were no adjustments to the
carrying value of long-lived assets.

Advertising Expenses
--------------------

Advertising expenses are charged to operations when incurred. There were no
advertising expenses for the years ended December 31, 1999 and 2000.

                                      F-14

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes
------------

Deferred tax liabilities and assets are determined based on the difference
between the financial statement carrying amounts and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.

Revenue Recognition
-------------------

The Company expects that it will derive substantially all of its revenue from
the sale, licensing and sub-licensing of its technologies and products. Revenue
from the sale of technology will be recognized in the year of sale. Revenue from
licensing and sub-licensing will be recognized in the periods when the fees have
been earned.

Research and Development
------------------------

Research and development costs are charged to expense as incurred, unless they
are reimbursed under specific contracts. Losses incurred on the equity basis in
the Company's interest in two Israeli technology companies are included in
research and development expenses. In addition, a technology acquisition
concluded during 1999 by its German subsidiary, aggregating $495,000, was
charged to research and development expenses during 1999.

Stock-Based Compensation
------------------------

The Company follows Statement of Financial Accounting Standards No. 123 (SFAS
123), "Accounting for Stock-Based Compenation". SFAS 123 establishes accounting
and reporting standards for stock-based employee compensation plans. This
statement allows companies to choose between the fair value-based method of
accounting, as defined in this statement, and the intrinsic value-based method
of accounting, as prescribed by Accounting Principles Board Opinion No. 25 (APB
25), Accounting for Stock Issued to Employees". The Company has elected to
continue to follow the accounting guidance provided by APB 25, as permitted.

Translation of Foreign Currencies
---------------------------------

In accordance with Statement No. 52 of the Financial Accounting Standards Board,
balance sheet accounts are translated at the exchange rate as of the balance
sheet date and income statement accounts are translated at the average rate of
exchange prevailing during the period. Translation adjustments arising from the
use of different exchange rates from period to period are included in
Comprehensive Income.

                                      F-15

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loss Per Share of Common Stock
------------------------------

Basic net loss per share of common stock has been computed based on the weighted
average number of common shares outstanding during the periods presented.

Common stock equivalents, consisting of options and warrants, discussed in Note
11, were not included in the calculation of diluted loss per share because their
inclusion would have had the effect of decreasing the loss per share otherwise
computed.

Deferred Financing Costs
------------------------

Financing costs in connection with the October 2000 offering are being amortized
over the expected life (180 days) of the obligation. The expected life was
determined to be the conversion date that was most beneficial to the noteholder,
in accordance with Emerging Issues Task Force ("EITF") topic no. D-60.

Segment Information
-------------------

Effective January 1, 1998, the Company adopted the provisions of SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information". SFAS No.
131 establishes standards for the way public enterprises report information
about operating segments in annual consolidated financial statements and
requires those enterprises to report selected information about operating
segments in interim financial reports issued to stockholders. Adoption of SFAS
No. 131 did not have a material effect on the Company's financial position or
results of operations, but did affect the disclosure of segment information, as
presented in Note 15.

Software
--------

In March 1998, the American Institute of Certified Public Accountants issued SOP
98-1, "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use", which revises the accounting for software development costs and
will require the capitalization of certain costs. The adoption of SOP 98-1 did
not have an effect on the Company's financial position or results of operations.

                                      F-16

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income
--------------------

Accumulated other comprehensive income, at December 31, 2000, consists of the
following:

                Foreign currency translation adjustments           $ 144,462
                Unrealized gains on investments                      150,300
                                                                   ----------
                                                                   $ 294,762
                                                                   ==========

Reclassifications
-----------------

Certain prior year balances have been reclassified to conform with the current
year presentation.

Impact of Recently Issued Accounting Standards
----------------------------------------------

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and
Hedging Activities" (FAS 133), which establishes accounting and reporting
standards for derivative instruments and hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. In June 1999, the FASB issued
SFAS No. 137, Accounting for Derivative Instruments -- Deferral of the Effective
Date of SFAS Statement No.133 and in June 2000, the FASB issued SFAS 138,
Accounting for Certain Derivative Instruments -- an amendment of SFAS 133,
Accounting for Derivative Instruments and Hedging Activities. As a result of
SFAS No. 137, SFAS No. 133 and SFAS No. 138 will be effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The Company does not
expect that the adoption of this standard will have a material impact on its
financial position and results of operations.

                                      F-17

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impact of Recently Issued Accounting Standards (Continued)
----------------------------------------------

In June 2000, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 138 (FAS 138), Accounting for Certain Derivative
Instruments -- an amendment of FAS 133, Accounting for Derivative Instruments
and Hedging Activities. FAS 138 shall be effective for all fiscal quarters of
all fiscal years beginning after June 15, 2000. The Company does not expect this
to have a material impact on its financial position and results of operations.

In December 1999, the SEC issued Staff Accounting Bulletin 101, Revenue
Recognition ("SAB 101"), which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements filed with the
SEC. SAB 101 outlines the basic criteria that must be met to recognize revenue
and provides guidance on disclosure related to revenue recognition policies. The
Company believes that it currently complies with SAB 101.

NOTE  3 -  RESEARCH AND DEVELOPMENT AGREEMENT

In 1996, the Company executed an agreement with Eurotech, a former affiliate,
pursuant to which Eurotech will remit to the Company 50% of the net profits
derived from the commercialization of, or other income generated from, any
technologies furnished to Eurotech by the Company's technical advisory board.
Under this agreement, the Company's technical advisory board will identify
technologies and forward such technologies to Eurotech which will seek avenues
for their commercialization.

Under the agreement with Eurotech, the Company has identified and introduced to
Eurotech a certain technology known as "EKOR" with potential uses in connection
with containing both solid and liquid radioactive materials, suppressing
radioactive dust and preventing such materials and dust from escaping into the
atmosphere and from leaching into and contaminating ground/water supplies. There
can be no assurance that this technology will be commercially saleable or
profitable.

On November 30, 1999, the Company sold its profit interest in the EKOR
technology to Eurotech (see Note 15).

                                      F-18

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  4 - ACQUISITIONS

Investments in Israeli Technology Companies
-------------------------------------------

During April of 1999, pursuant to agreements with Ofek Le-Oleh Foundation, Ltd.
(the "Foundation"), an Israeli incubator with authority from the Israeli
government, the Company has invested in two Israeli technology companies:
Flexitech, Ltd. and Pirocat, Ltd. Under those agreements, the Company received
20% of each Israeli technology company's common equity in exchange for its
investment of $60,000 in each company.

The investment is payable in installments of $15,000, to each company, due in
April of 1999, October of 1999, April of 2000 and October of 2000. In connection
with these investments, the Company also has obtained an option to purchase an
additional 20% to 25% of the common equity for a sum to be determined in the
future, which options are exercisable for a period of 90 days commencing after
the first year of the development period (generally two years from registration
as an Israeli corporation). During the development period, the sale or other
transfer of 25% or more of the inventor's equity of each of Flexitech and
Pirocat requires the consent of the Chief Scientist of the Israeli Ministry of
Commerce and Technology. The Company's options to acquire additional common
equity of the Israeli technology companies are exercisable within such two-year
periods and any acquisition of the common equity purchasable thereunder will,
therefore, require the Chief Scientist's consent. The agreements require the
Company to pay royalties on future revenue generated from the commercialization
of the technologies developed by these Israeli companies.

The Company's share of losses incurred from these research companies has been
accounted for on the equity basis and is included in research and development
expenses. The amount charged to research and development expenses for each of
the years ended December 31, 1999 and 2000 was $60,000, which reduced the
Company's investment in these two companies to zero.

There can be no assurance that these development projects will result in useful
technologies or that the same will be commercially saleable or profitable.

Cetoni Umwelttechnologie-Entwicklungs GmbH - Pooling-of-Interests
-----------------------------------------------------------------

On December 6, 1999, the Company completed the acquisition of all of the
outstanding shares of the capital stock of Cetoni Umwelttechnologie-Entwicklungs
GmbH ("Cetoni"), a development-stage company, for 5,000,000 shares of the
Company's restricted common stock. Cetoni is a German-based design and
engineering firm focused on developing and patenting technologies and products
for the consumer market. Since 1995, Cetoni has designed and patented products
for the beverage, automotive accessory, sport, healthcare, household, office and
general consumer markets. Cetoni has not generated any revenues from operations
to date.

                                      F-19

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  4 - ACQUISITIONS (Continued)

The acquisition has been accounted for as a pooling-of-interests. Accordingly,
the Company's consolidated financial statements have been restated for all
periods prior to the business combination to include the combined results of ATI
and Cetoni.

Net sales, loss before extraordinary item and net loss for the individual
companies reported prior to the business combination were as follows:

                                                                    Year Ended
                                                                   December 31,
                                                                       1999
                                                                   -----------
               Net Sales:
                 ATI                                               $         -
                 Cetoni                                                      -
                                                                   ------------
                     Total                                         $         -
                                                                   ============
               Loss Before Extraordinary Item:
                 ATI                                               $(2,916,735)
                 Cetoni                                             (1,181,889)
                                                                   ------------
                     Total                                         $(4,098,624)
                                                                   ============
               Net Income (Loss):
                 ATI                                               $   432,953
                 Cetoni                                             (1,181,889)
                                                                   ------------
                     Total                                         $  (748,936)
                                                                   ============

The conforming of the accounting practices of ATI and Cetoni resulted in no
adjustments to net loss or shareholders' equity. There have been no significant
intercompany transactions between ATI and Cetoni other than loans by ATI to
Cetoni.

Nurescell AG
------------

On August 22, 2000, the Company entered into a joint agreement with Nurescell
US, a Nevada corporation, to form a German company named Nurescell AG, which is
owned 51% by Nurescell US and 49% by ATI.

In addition, Nurescell AG and Nurescell US executed a license agreement granting
an exclusive license to Nurescell AG in the countries of the former Soviet
Union, the continent of Europe and the British Isles to manufacture and market a
proprietary technology owned by Nurescell US. The technology being licensed is
defined in the license agreement by Nurescell US as a material for shielding and
internment of radioactive materials, radioactive waste, as well as providing
attenuation of x-ray energy. (The license term is until August 15, 2020, or when
certain patents expire, which have been applied for by Nurescell US, whichever
later occurs.)

                                      F-20

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  4 - ACQUISITIONS (Continued)

Nurescell AG (Continued)
------------

The license agreement provides for the payment of a license fee of $1,000,000 to
Nurescell US, which sum is to be paid in four installments of $250,000,
commencing upon execution of the agreement and continuing each quarter
thereafter provided, however, that the entire $1,000,000 will be due at the time
that a minimum of $4,000,000 in capital is raised by Nurescell AG. ATI has
agreed to advance the sum of $1,000,000 to Nurescell AG in consideration for its
49% interest therein. During 2000, ATI has advanced payments of $450,000 against
the license fee directed to Nurescell US, which has been paid to Nurescell US.
ATI funded $635,225 of expenses on behalf of Nurescell AG which was used to fund
the operating expenses of Nurescell AG. Nurescell AG reduced the monies due
Nurescell US by $323,965 representing Nurescell US share of the funding for
2000.

The 51% interest of Nurescell US in Nurescell AG was acquired by it as
additional consideration for the granting of the license to Nurescell AG.

As part of the transaction, Nurescell AG entered into an investment agreement
with Nurescell US in that Nurescell AG, with ATI's assistance, will use its best
efforts to raise DM20 Million (approximately $9.1 Million) in capital for
Nurescell AG.

In exchange for raising the above capital, the sale of Nurescell AG shares of
stock cannot exceed thirty-four percent of the outstanding shares of AG. It is
agreed that any such dilution shall apply equally to the holding of Nurescell AG
by ATI and Nurescell US, respectively.

The investment agreement provides that, for a period of five years, Nurescell AG
has the right to acquire up to $4 Million of stock of Nurescell US. Nurescell AG
and Nurescell US have agreed that the price for the stock shall be 80% of the
bid price of Nurescell US determined at specified times. Nurescell US is traded
on the OTC Bulletin Board. In addition, Nurescell AG has been granted the right
to have the shares registered at the expense of Nurescell US, if the
registration is incident to the registration of other stock by Nurescell US, or
at the expense of Nurescell AG, if it demands registration of the stock other
than incident to the registration of other stock by Nurescell US.

                                      F-21

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  4 - ACQUISITIONS (Continued)

Resealable Can Technology
-------------------------

During 1999, the Company's German subsidiary acquired from Eurotech the rights
to a certain resealable can technology for $150,000 in cash and $345,000 due on
September 30, 2000. The purchase price of $495,000 was charged to research and
development expenses during the year ended December 31, 1999. The purchase price
was paid in full in July of 2000.

NOTE  5 - SECURITIES AVAILABLE-FOR-SALE

Securities available-for-sale consist of 1,500,000 shares of Eurotech restricted
common stock, which trade in the over-the-counter market and are quoted through
the American Stock Exchange. The fair value of such equity securities at
December 31, 2000 was estimated at $1,753,325. The amortized cost basis was
$1,603,125 and the unrealized gain was $150,300 at December 31, 2000.

                                      F-22

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  6 - EQUIPMENT

Equipment at December 31, 2000 consisted of the following:

          Machinery and equipment                           $ 165,890
          Transportation equipment                             72,317
          Office furniture and fixtures                        85,206
          Software                                              7,621
                                                            ----------
          Less: Accumulated depreciation                      331,034
                                                             (197,910)
                                                            ----------
                                                            $ 133,124
                                                            ==========

Depreciation expense for the years ended December 31, 1999 and 2000 amounted to
$58,883 and $41,222, respectively.

NOTE 7 - LICENSING FEES

Licensing fees at December 31, 2000 consisted of the following:

          Licensing fee - discussed in Note 4               $1,000,000
          Less: Accumulated amortization                        83,333
                                                            -----------
                                                            $  916,667
                                                            ===========

The Company is amortizing this license fee over 5 years, on a straight-line
basis, which the Company believes is its economic life.

Amortization expense for the years ended December 31, 1999 and 2000 amounted to
$-0- and $83,333, respectively.

                                      F-23

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  8 - CONVERTIBLE DEBENTURES

During March and April 1999, the Company completed a private placement of
$750,000 of 9% convertible debenture notes, due in March and April of 2001.
Interest on the debentures is payable in cash or in shares of common stock
calculated by dividing the interest accrued by the lesser of $1.05 or 60% of the
average closing bid price per share of common stock for the five trading days
preceding the interest payment date. As additional consideration, the Company
issued separate warrants to the purchasers to acquire an aggregate of 375,000
shares of the Company's common stock at $0.65 per share. The value of the
warrants issued to the purchasers was estimated at $259,000, as further
described in Note 8, and was charged to operations as interest expense over the
six-month period ended September 30, 1999. The warrants are exercisable over
five years. In addition, the Company issued warrants to the finders of the
transaction and its counsel to purchase an aggregate of 395,000 shares of common
stock at a price of $0.65 per share, exercisable for a five-year period after
the closing of the transaction. Further, the holders of the warrants were
granted piggy-back registration rights with respect to the shares of common
stock underlying the warrants.

The debenture agreement permits the holders of the debentures to convert the
debt into shares of common stock at beneficial conversion rates over the
two-year term of the debentures. The conversion price is the lower of $1.05, or
the average bid price per share of the Company's common stock for five trading
days immediately preceding the conversion date, multiplied by 60%. The Company,
at its option, may redeem the debentures at $1,162,500. The excess of the
redemption price of $1,162,500 over $750,000, or $412,500, was charged to
operations as interest expense over the six-month period ended September 30,
1999.

Costs in connection with the $750,000 Convertible Debenture offering allocated
to the Convertible Debentures were comprised of: (i) a placement fee to an
unrelated party amounting to $75,000 and (ii) warrants issued to the placement
agent and its counsel to purchase 395,000 shares of the Company's common stock
at $0.65 per share, valued at $272,000, as further described in Note 8. The
Company amortized such costs as interest expense over the six-month period ended
September 30, 1999.

Proceeds of the offering were used to pay the first payment for the acquisition
of equity interests in two Israeli technology companies, past due legal fees,
and advances to Cetoni.

On November 30, 1999, as part of the sale of the Company's rights to the EKOR
technology, all outstanding principal, interest and other fees related to the
convertible debentures were assumed by Eurotech. The Company accounted for the
assumption of the debt by Eurotech as if the Company had redeemed the debt.

                                      F-24

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  9 - NOTES PAYABLE

During October 2000, the Company, in order to provide working capital, planned
to issue up to $750,000 in promissory notes, with a maturity date of six months.
Interest is payable at the rate of 1% per months cumulative. The Company has the
option to pay the interest in cash or restricted stock. If the option is
exercised by the Company to pay the interest in stock, the number of shares to
be delivered to the lender will be determined by multiplying (i) the average
closing bid price of the stock for the five trading days prior to the maturity
date by (ii) 85% and dividing the interest due by the resulting multiple. In
addition, each lender shall receive one share of the common stock for each $1.00
loaned up to the Company. As of December 31, 2000, the Company has received an
aggregate amount of $713,571 from three investors. Accordingly, the Company has
issued 713,571 shares of its common stock to such investors valued at $222,859.
The Company is amortizing the $222,859 as interest expense over the six-month
period.

Effective on December 28, 2000, the Company has increased its offering from not
to exceed $750,000 to not to exceed $1,500,000 and has extended the sale period
through, and including March 31, 2001. All other terms and conditions of the
promissory notes remain the same.

NOTE 10 -  INCOME TAXES

The Company was not required to provide for a provision for income taxes for the
years ended December 31, 1999 and 2000, as a result of net operating losses
incurred during those years.

The components of deferred tax assets and liabilities at December 31, 2000 are
as follows:

          Deferred Tax Assets:
            Net operating loss carryforwards                $  920,000
            Compensatory element of stock issuances            760,000
                                                            -----------
              Total Gross Deferred Tax Assets                1,680,000

            Less:  Valuation allowance                       1,620,000
                                                            -----------
              Net Deferred Tax Assets                       $   60,000

          Deferred Tax Liability:
            Unrealized gains on available-for-sale
              securities                                        60,000
                                                            -----------

              Net Deferred Tax Liability - Current          $        -
                                                            ===========

                                      F-25

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 -  INCOME TAXES (Continued)

The net change in the valuation allowance for deferred tax assets was an
increase of approximately $1,102,000 during the year ended December 31, 2000.

As of December 31, 2000, the Company had available approximately $2,400,000 of
net operating losses ("NOL") for income tax purposes that may be carried forward
to offset future taxable income, if any. The NOL carryforwards from December 31,
1999 and 2000 expire in the years 2018, and 2019, respectively. Pursuant to
Section 382 of the Internal Revenue Code, substantial restrictions are imposed
on the utilization of net operating loss carryforwards in the event of an
ownership chnge. The Company's foreign subsidiary has a net operating loss
carryforward of approximately $660,000. Utilization of this carryover is
dependent upon future income earned by its foreign subsidiary.

A reconciliation between the statutory federal income tax rate (34%) and the
Company's effective rate is as follows:

                                                  FOR THE YEARS ENDED
                                                       DECEMBER 31,
                                              -----------------------------
                                                  1999            2000
                                              -------------   -------------

          Federal statutory rate                  (34.0)%        (34.0)%
          Non-deductible expenses and
           unutilized foreign losses               54.0           46.0
          Change in valuation allowance           (20.0)         (12.0)
                                              -------------   -------------
            Effective rate                         -0-  %          -0- %
                                              =============   =============

NOTE 11 -  ACCRUED LIABILITIES

Accrued liabilities at December 31, 2000 consist of the following:

                     Professional fees                           $  362,137
                     Consulting fees                                978,383
                     Payroll and other taxes                         68,222
                     Other                                          192,179
                                                                 -----------
                           Total                                 $1,600,921
                                                                 ===========

                                      F-26

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - OBLIGATIONS UNDER CAPITAL LEASES

The Company is the lessee of transportation equipment under capital leases
expiring in 2002. The assets and liabilities under capital leases are recorded
at the lower of the present value of the minimum lease payments or the fair
market value of the asset.

The assets are depreciated over their estimated productive lives. Depreciation
of assets under capital leases is included in depreciation expense for the years
ended December 31, 1999 and 2000.

As of December 31, 2000, property held under capital leases was as follows:

          Transportation equipment                             $50,849
          Less: Accumulated depreciation                        23,379
                                                               --------
                                                               $27,470
                                                               ========

Minimum future lease payments under capital leases are as follows:

                As of December 31,
                -----------------

          2001                                                 $11,710
          2002                                                   7,170
          2003                                                     226
                                                               --------
          Total minimum lease payments                          19,106
          Less: Amount representing interest                     1,165
                                                               --------
          Obligations Under Capital Leases                     $17,941
                                                               ========

Interest rates on capitalized leases vary from 6.868% to 7.502%, based upon the
lower of the Company's incremental borrowing rate at the inception of the lease
or the lessors' implicit rate of return.

          Current portion of obligations under
            capital leases                                     $10,772
          Long-term portion of obligations
            under capital leases                                 7,169
                                                               --------

                                                               $17,941
                                                               ========

                                      F-27

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 - RELATED PARTY TRANSACTIONS

Amounts due to related parties represent various demand notes, including
interest at 10%, payable to certain shareholders, relatives of shareholders and
companies affiliated with shareholders. Interest expense accrued on these demand
notes totalled $72,850 in 1999 and $185,418 in 2000.

NOTE 14 -  STOCKHOLDERS' EQUITY

Preferred stock
---------------

The Company has authorized 1,000,000 shares of preferred stock, par value -
$.001 per share. The Board of Directors of the Company has broad discretion to
create one or more series of preferred stock and to determine the rights,
preferences and privileges of any such series.

Common Stock
------------

In connection with the organization of the Company, in October 1995, the Company
issued 12,300,000 shares to its founders, CIS Development Corp. ("CIS") and
ERBC, for subscriptions totalling $1,230.

For the period from inception (October 25, 1995) through December 31, 1996, the
Company issued 2,105,000 shares of common stock as consideration for legal and
consulting services performed by various consultants, including related parties,
through December 31, 1996. Shares issued under these arrangements were valued at
$305,000, which was charged to operations for the year ended December 31, 1996.

During the year ended December 31, 1997, the Company issued 750,000 shares of
common stock pursuant to consulting arrangements with various consultants,
including related parties. Shares issued under these arrangements were valued at
$750,000, which was charged to operations during 1997.

Pursuant to an offering under Rule 504 of Regulation D of the Securities Act of
1933, the Company offered for sale 487,500 shares of its common stock at $2.00
per share. During 1997, the Company sold 306,500 shares of its common stock
under this offering, and derived aggregate proceeds of $613,000. Costs in
connection with this offering approximated $50,000 and were charged against
paid-in capital during the year ended December 31, 1997.

In January of 1999, the Company issued 1,009,411 shares of its common stock
pursuant to one-year consulting agreements with various consultants, including
related parties. Shares issued under these agreements were valued at $1,009,411,
which was charged to operations during 1999.

In December of 1999, in connection with the acquisition of the capital stock of
Cetoni, the Company issued 5,000,000 shares of its common stock to the
shareholders of Cetoni (Note 4).

                                      F-28

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 -  STOCKHOLDERS' EQUITY (Continued)

Common Stock (Continued)
------------

In January of 2000, the Company issued 400,000 shares of common stock to the
shareholders of Aberdeen in connection with the acquisition of Aberdeen (see
Note 1).

On December 4, 2000, the Company entered into an agreement that provided for
$1,560,000 of the outstanding loan from a related party and significant
shareholder, exclusive of interest, to be converted to 13,054,393 shares of the
common stock of the Company. The agreement prohibits the related party from
transferring or conveying the shares for a period of two years from the date of
the agreement. The related party had loaned the Company money from time to time
for the operations of the Company and to provide the Company with working
capital.

During the year ended December 31, 2000, the Company issued 218,000 shares of
common stock pursuant to consulting arrangements with various consultants.
Shares issued under these arrangements were valued at $287,508, which was
charged to operations during 2000.

During January and June of 2000, a consultant exercised options and purchased
120,000 shares of the Company's stock for $60,000.

In connection with a private placement of debt during the 2000, the Company
issued 713,571 shares of common stock as additional consideration to the
purchasers.

In December of 2000, the Company issued 100,000 shares of common stock to two
officers of the Company as a bonus, which was valued at $20,200, and charged to
operations during 2000.

Warrants
--------

At December 31, 1999 and 2000, there were warrants outstanding to purchase
770,000 shares of the Company's common stock at $0.65 per share as described in
Note 8. The warrants were valued at $531,000 and was charged to financing costs
in 1999 using the Black-Scholes pricing model with the following assumptions:

                     Risk-free interest rate                5.0%
                     Expected life                          2 years
                     Expected volatility                    65.0%
                     Dividend yield                         0%

                                      F-29

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 -  STOCKHOLDERS' EQUITY (Continued)

Options - Outside the Stock Option Plan
---------------------------------------

Pursuant to a 1999 financial consulting agreement, the Company granted to the
consultant options to purchase 100,000 shares of its common stock at prices
ranging from $0.50 to $2.00 per share. The options expire on December 31, 2000.
30,000 options were exercised during the six months ended June 30, 2000 at $0.50
per share. These options were valued at $0.61 each on the grant date using the
Black-Scholes option-pricing model with the following assumptions:

                Risk-free interest rate                     5.0%
                Expected life                               2 years
                Expected volatility                         65.0%
                Dividend yield                              0%

In February 2000, the Company entered into a new agreement with the same
consultant providing for 90,000 options to be granted on April 1, 90,000
options, July 1 and on October 1, 2000 with an exercise price of $0.50 per
share. These options expire on October 31, 2000. These options were valued at
$1.75 each on the grant date using the Black-Scholes option pricing model with
the following assumptions:

                Risk-free interest rate                     5.5%
                Expected life                               90 days
                Expected volatility                         65.0%
                Dividend yield                              0%

Compensation costs charged to operations was $61,000 and $472,500 in 1999 and
2000, respectively.

In June 2000, the consultant exercised 90,000 options and the Company recorded a
receivable for $45,000.

Stock Option Plan
-----------------

In 1996, the Company adopted an incentive stock option plan. Under the plan,
which authorizes the granting of incentive stock options or non-incentive stock
options, the maximum number of shares of common stock, for which options may be
granted, is 500,000 shares. Options may be granted for terms not exceeding ten
years from the date of grant, except for options granted to persons holding in
excess of 5% of the common stock, in which case the options may not be granted
for a term not to exceed five years from the date of grant. On October 26, 2000,
the Board of Directors adopted the Advanced Technology Industries, Inc. 2000
Stock Option Plan ("Plan"). On that date, the Board, which is the Plan
Administration under the Plan, awarded employees and officers incentive stock
options to purchase 470,000 shares of common stock. In addition, consultants and
advisors were awarded non-qualifed stock options to purchase a total of 615,000
shares. All of the options have an exercise price of $.343 per share, which was
the closing price of the stock on October 25, 2000.

                                      F-30

<PAGE>

                                    ADVANCED TECHNOLOGY INDUSTRIES, INC.
                                        (A Development Stage Company)

                                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 -  STOCKHOLDERS' EQUITY (Continued)

Stock Option Plan (Continued)
-----------------

In addition, the Board terminated the 1996 Stock Option Plan.

<TABLE>
<CAPTION>
                                                                                                   Weighted
                                                                Weighted                           Average
                                              Incentive         Average           Non-Qualified    Exercise
                                              Stock Options     Exercise Price    Stock Options      Price
                                              -------------     --------------    -------------    ---------
<S>                                              <C>            <C>                <C>             <C>

Outstanding - 12/31/98                                 -        $      -                 -         $      -
                                                ---------       ---------         ---------        ---------
Options granted - 1999:
  Outside the option plan - consultant                 -               -           100,000              .50
Options expired/cancelled:
  Outside the plan                                     -               -                 -                -
Options exercised                                      -               -                 -                -
                                                ---------       ---------         ---------        ---------
Outstanding - 12/31/99                                 -               -           100,000              .50


Options granted - 2000:
  In the plan                                    470,000             .34           615,000         $    .34
Options granted - 2000:
  Outside the option plan                              -               -           270,000               50
Options expired/cancelled:
  Outside the plan                                     -               -          (250,000)              50
Options exercised
  Outside the plan                                     -               -          (120,000)              50
                                                ---------       ---------         ---------        ---------
Outstanding - 12/31/00                           470,000        $    .34           615,000         $    .34
                                                =========       =========         =========        =========

Composition at 12/31/00:
------------------------
 2000 stock option plan ($.34/share)             470,000        $    .34           615,000         $    .34
                                                ---------       ---------         ---------        ---------
Outstanding - 12/31/00                           470,000        $    .34           615,000         $    .34
                                                =========       =========         =========        =========


Total Value at Option Price                              $  161,210                         $  210,945
                                                         ===========                        ===========
Total Exercisable Value at Option Price                  $  161,210                         $  210,945
                                                         ===========                        ===========
</TABLE>

                                                    F-31

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 -  STOCKHOLDERS' EQUITY (Continued)

Earnings Per Share
------------------

Securities that could potentially dilute basic earnings per share ("EPS") in the
future that were not included in the computation of diluted EPS because to do so
would have been anti-dilutive for the periods presented consist of the
following:

     Options to purchase common stock                              1,085,000
     Warrants to purchase common stock                               770,000
                                                                   ----------
     Total as of December 31, 2000                                 1,855,000
                                                                   ==========
     Substantial issuances after December 31, 2000
       through March 31, 2001:
           Stock purchase agreement with the Josephs               3,500,000
                                                                   ==========

NOTE 15 - EXTRAORDINARY GAIN ON SALE OF RIGHTS TO TECHNOLOGY

On November 30, 1999, the Company transferred to Eurotech its rights to receive
50% of the net revenues derived by Eurotech from the EKOR technology. In
consideration of ceding these rights, Eurotech (i) issued to the Company
2,000,000 restricted shares of its common stock valued at $2,137,500; (ii)
granted the Company a right to receive 2% of the gross revenues derived by
Eurotech from the sale, service and licensing of the EKOR technology; (iii)
returned to the Company for cancellation 6,795,000 shares of the Company's
common stock previously issued to one of its founders; (iv) assumed $1,212,188
of the Company's debt, which included $750,000 of debt, plus accrued interest,
incurred by the Company, pursuant to certain 9% Convertible Debentures issued by
the Company in 1999; and (v) transferred its royalty rights to a certain
resealable can technology, which the Company's German subsidiary had purchased
from Eurotech earlier in 1999. The Company recognized an extraordinary gain of
$3,349,688 related to the sale of its profit interest in the EKOR technology at
December 31, 1999.

NOTE 16 -  COMMITMENTS AND OTHER MATTERS

Consulting Agreement - ERBC
---------------------------

By letter dated June 1, 1996, the Company engaged ERBC, an affiliate of the
Company by virtue of common shareholders, as a consultant for a one-year period
to undertake all aspects of the Company's operations in Russia. Pursuant to the
letter agreement, the Company agreed to pay ERBC a fee of $115,000 for the year
during which it has been engaged. During June 1997, the Company renewed the
agreement with ERBC for an additional one year period on like terms. During June
1998, the Company renewed the agreement with ERBC for an additional one year
term and agreed to pay ERBC a fee of $168,577 for the year during which it has
been engaged. This agreement was extended under the same terms for one-year
periods commencing June 1, 1999. For the years ended December 31, 1998, 1999 and
2000, the Company incurred $146,253, $146,253 and $240,000, respectively.
Included in accrued liabilities as of December 31, 2000 is $653,048 related to
this agreement.

                                      F-32

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16 -  COMMITMENTS AND OTHER MATTERS (Continued)

Consulting Agreement - CIS
--------------------------

By letter dated January 1, 1997, the Company engaged CIS, an affiliate of the
Company by virtue of common shareholders, and common management, as a consultant
for a three-year period to review technologies developed by the Russian
researchers and scientists and to identify commercial outlets for such
technology. The agreement automatically renews for a two-year period upon
expiration of the initial term. Under the terms of the agreement, CIS will
receive $125,000 per year. The agreement was cancelled effective December 31,
1999.

Included in accrued liabilities as of December 31, 1999 is $230,000 related to
this agreement.

Acquisition of Nurescell US Common Stock
----------------------------------------

On August 23, 2000, ATI had entered into an Agreement for Purchase of Stock
("Agreement") with Adrian Joseph and his wife, Dianna Joseph (the "Josephs") to
purchase 3,500,000 shares of the $.0001 par value common stock of Nurescell US
owned by them in consideration for the issuance to the Josephs of 3,500,000
shares of the $.0001 par value common stock of ATI. In addition, the Agreement
provides that the Josephs may receive up to an additional 2,000,000 shares of
the common stock of ATI in the event that Nurescell AG achieves certain gross
revenue numbers over a period of five years. Adrian Joseph was the Chief
Executive Office of Nurescell, Inc. until December 4, 2000. The transaction
closed on January 11, 2001.

The shares of Nurescell US to be received by ATI constitute approximately 22.9%
of the outstanding shares of Nurescell US.

The ATI shares received by the Josephs are restricted shares. In addition, the
Agreement prohibits the Josephs from selling or otherwise transferring in excess
of 600,000 shares per year. However, the Agreement provides for the execution of
a Registration Rights Agreement giving the Josephs the right to have up to
600,000 shares per year registered over a six-year period. The Josephs have the
right to demand registration of their shares each year at their expense, or, if
ATI is filing a registration statement to register other shares during that
time, to require that their shares be registered at the expense of ATI. In lieu
of registering the shares of ATI has the right to purchase the shares at 80% of
the average bid price at determined times.

International Operations
------------------------

The Company has strategic alliances, collaboration agreements, licensing
agreements with entities which are based and/or have operations in Russia and
Ukraine. Both of these countries have experienced volatile and frequently
unfavorable economic, political and social conditions. The Russian economy and
the Ukrainian economy are characterized by declining gross domestic production,
significant inflation, increasing rates of unemployment and underemployment,
unstable currencies, and high levels of governmental debt as compared to gross
domestic production. The prospects of wide-spread insolvencies and the collapse
of various economic sectors exist in both countries.

                                      F-33

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16 -  COMMITMENTS AND OTHER MATTERS (Continued)

International Operations (Continued)
------------------------

In view of the foregoing, the Company's business, earnings, asset values and
prospects may be materially and adversely affected by developments with respect
to inflation, interest rates, currency fluctuations, government policies, price
and wage controls, exchange control regulations, taxation, expropriation, social
instability, and other political, economic or diplomatic developments in or
affecting Russia and Ukraine. The Company has no control over such conditions
and developments, and can provide no assurance that such conditions and
developments will not adversely affect the Company's operations.

Lease Obligations
-----------------

On February 28, 2000, the Company entered into a lease agreement for office
space in Berlin, Germany for a period of five years. Under the lease agreement,
annual rent will amount to DM10,088, or $6,505, for each year, commencing March
1, 2000, subject to certain escalation adjustments.

Minimum lease payments to be received as of December 31, 2000 for each of the
next 5 years are:

                Year Ended December 31,                       Amount
                -----------------------                      ---------

                2001                                         $ 78,060
                2002                                           78,060
                2003                                           78,060
                2004                                           78,060
                2005                                           19,515

Rent expense for all premise operating leases was approximately $40,790 and
$88,030 for the years ended December 31, 1999 and 2000, respectively.

                                      F-34

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 17 - SEGMENT REPORTING

The Company's business is organized on a geographic basis, and the Company's
Chief Operating Decision Maker assesses performance and allocates resources on
this basis. The information provided in the following section is representative
of the information used by the Chief Operating Decision Maker in deciding how to
allocate resources and in assessing performance.

The Company has two geographic reportable segments: U.S.A. and Germany. The
accounting policies of the segments are the same as described in the summary of
significant accounting policies. The Company evaluates segment performance based
on income (loss) before interest and extraordinary item. Segment results for
1999 and 2000 are as follows:

<TABLE>
<CAPTION>
                                    U.S.A.           Germany       Eliminations   Consolidated
                                  -------------    -----------     ------------   ------------
<S>                               <C>              <C>             <C>            <C>
  1999:
  ----

  Loss before interest
   and extraordinary
   item                           $  (1,848,547)   $(1,109,188)    $        -     $(2,957,735)
                                  ==============   ============    ===========    ============
  Depreciation and
   amortization                   $      42,500    $    16,383     $        -     $    58,883
                                  ==============   ============    ===========    ============

  Identifiable Assets             $   4,248,988    $    91,951     $ (389,988)    $ 3,950,951
                                  ==============   ============    ===========    ============

  2000:
  ----

  Loss before interest
   and extraordinary
   item                           $  (1,102,183)   $(2,070,515)    $        -     $(3,172,698)
                                  ==============   ============    ===========    ============
  Depreciation and
   amortization                   $           -    $   124,555     $        -     $   124,555
                                  ==============   ============    ===========    ============

  Identifiable Assets             $   1,760,484    $ 2,032,959     $ (757,105)    $ 3,036,338
                                  ==============   ============    ===========    ============
</TABLE>

                                      F-35

<PAGE>

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 18 - SUBSEQUENT EVENTS

Securities Available-For-Sale
-----------------------------

Eurotech filed a registration statement on August 18, 2000, which includes the
entire 1,500,000 shares of Eurotech common stock owned by the Company. The
registration statement became effective on February 15, 2000.

The Company has pledged 216,300 of its Eurotech common stock for a loan in the
amount of $273,290, excluding costs and commission. In addition, as of April
3,2001, the Company sold 535,660 shares of Eurotech common stock on the open
market, resulting in net proceeds of $687,750.

                                      F-36

<PAGE>